Cornell Business Review - Spring 2014

CORNELL BUSINESS REVIEW

Exclusive Interview with Richard Baker The man behind Lord & Taylor and Sak’s Fifth Avenue Behind the Smoke and Mirrors The Real Reason CVS Stopped Selling Cigarettes Robinhood The new zero-commission stock trading app

Spring 2014 | Volume IV | Issue 2

Bitcoin The Future of Currency?

CONTENTS EDITOR’S LETTER 03

GOVERNMENT A TAXING WORRY FOR THE 04 FINANCIAL INDUSTRY

by Nicholas Piccone

THE IMPLICATIONS OF A 06 COMCAST-TIME WARNER MERGER

by Austin Opatrny

INDUSTRY MICROSATELLITES 08 A Small but Mighty Industry

by Grace Gorenstein

SPOTLIGHT 27 YVE-CAR MOMPEROUSSE

Founder and CEO of Kreyol Essence

29 ALI HAMED

Founder of the Popshop and CoVenture

FINANCE 31 COVER: BITCOIN

The Future of Currency?

by Kelli Keith

34 EDUCATION’S NEW BUSINESS MODEL

by Nicholas Rawlinson

THE RETURN OF THE CITY 10 Urban Real Estate Rises Again

36 ROBINHOOD

CORPORATE SOCIAL 13 RESPONSIBILITY A Battleground for Public Opinion

INTERNATIONAL

by Jack Henry Kapp

by Shohini Kundu

BUILDING THE GOOGLE 15 OF THINGS

by Shamika Dighe

BEHIND THE SMOKE 17 AND MIRRORS The Real Reason CVS Stopped Selling Cigarettes

by Casey Breznick

SKYPE AS A BUSINESS TOOL 18 How Skype has Changed the Workplace

by Todd Wei

FEATURE RICHARD BAKER 21 An exclusive interview with the CEO who operates Lord & Taylor and Saks Fifth Avenue

The Future of Trading

by Alexndre Marinier

37 MNIMUM WAGE HIKES

by Sagar Galani

38 EVENTS GALLERY

E@C, Gates Hall & Speaker Series

CORNELL BUSINESS REVIEW Fall 2014 | Volume IV | Issue 2 Aaron Weiner Catherine Chen BUSINESS MANAGER Susan Jiang DESIGN EDITOR Lillian Chen ASSOCIATE EDITORS Shamika Dighe, Grace Gorenstein & Nicholas Piccone

BUSINESS TEAM Ashini

Casey Breznick, Sagar Galani, Benjamin Hearns, Jack Henry Kapp, Kelli Keith, Shohini Kundu, Steve Oluoch, Austin Opatrny, Nicholas Rawlinson & Todd Wei

CONTRIBUTORS

EDITOR-IN-CHIEF

MANAGING EDITOR

WRITING TEAM

Ganesalingsam, David Hauser, Nabiha Keshwani, Julia Krupski, Rosie O’Regan, Cyril Pietrafesa, Kartik Ramkumar, Zoey Tang, Aaron Weinstein & Sheng Nan Zhao DESIGN TEAM

Alvin Cao, Emily He & Arpit Sheth Charlie Tark & Matt Tomlinson

LETTER FROM THE EDITOR Throughout the creation of our 7th publication it was, at times, difficult to strike a balance between incorporating innovative topics and maintaining our focus on traditional business issues.

Our magazine has grown over the years to portray a comprehensive outlook on the world, not only through the eyes of a student, but those of a critical thinker. We provide a unique perspective on the most pertinent issues of our time while also highlighting leaders of our community. This issue exemplifies such success through interviews with Richard Baker ‘88, who has helped create some of the most prominent brand names and companies in the United States, as well as Ali Hamed and Yve-Car Momperousse, both inspirational entrepreneurs currently studying at Cornell University.

With so many important events constantly making headlines, it can be a challenge to decide which issues to explore. When selecting topics to discuss in our publication, we strive to accurately capture the most prominent news stories of the semester. This issue has achieved a balanced coverage through the hard work of the 30 members of our staff and strong alumni support. I am confident this publication will continue to provide the Cornell community with critical insight into important innovations currently taking place.

In my role as Editor-in-Chief, I will continue to strive to expand on our past success by working to increase Cornell Business Review’s exposure beyond our undergraduate campus. This endeavor is a natural progression as a stronger Cornell presence emerges outside of Ithaca, especially with the construction of the NYC Tech Campus. Cornellians across the world are constantly at the forefront of each shift in the economy - from M&A transactions to critical entrepreneurial breakthroughs. As our readership continues to expand, we look forward to taking advantage of emerging opportunities within the growing Cornell community both in and out of New York State, as well as connecting to other university campuses across the nation.

We would like to thank each of the Cornell’s seven colleges, especially the Charles H. Dyson School of Applied Economics & Management, the School of Hotel Administration, and the School of Industrial & Labor Relations for their continued support of our magazine. Furthermore, we would like to thank the students, faculty, alumni, and each of our interviewees for their insights and valuable time. Lastly, I cannot express how much I appreciate the hard work of our incredible Editorial, Business, and Design staff on another successful publication.

Thank you for taking the time to read our issue. We hope you continue to cherish the Cornell Business Review for many more years to come.

Aaron Weiner Class of 2015 Editor-in-Chief

3 | CORNELL BUSINESS REVIEW

GOVERNMENT

A Taxing Worry for the Financial Industry

BY NICHOLAS PICCONE »» Congressman Dave Camp’s proposed tax reform bill aims to drastically change tax code for both individuals and corporations. »» The proposed increases of taxes on the nation’s largest financial institutions has caused outrage throughout the financial industry.

Above: Congressman Camp plans to simplify and reduce both corporate and individual income taxes.

T

AX REFORM IS A CONSTANT topic of debate in both the political and business worlds. Tax codes have a major impact on how businesses operate — through a direct impact on a firm’s cost as well as affecting the amount of income individuals have to spend on goods and services. Congressman Dave Camp, a Republican from Michigan, aims to revamp federal tax codes for both individuals and corporations as his proposed bill could become the United States’ single largest tax reform since the Reagan administration’s tax cuts in 1986. Congressman Camp’s proposed 979­-page tax bill has become a major point of discussion in 2014, as well as a cause for uproar in the financial industry due to some spe-

cific and rather revolutionary changes to federal tax code.

Congressman Camp plans to simplify and reduce both corporate and individual income taxes. He claims that his reform will create “a simpler, fairer tax code that leads to a stronger economy.” Under his CONGRESSMAN proposal, the highDAVE CAMP est corporate tax CLAIMS THAT rate would be cut HIS REFORM from 35% to 25% WILL CREATE for even the largest “A SIMPLER, companies, and the FAIRER TAX CODE highest individuTHAT LEADS TO al taxes would deA STRONGER crease from 39.6% ECONOMY.” to 35%. This rate

would only be paid by the wealthiest individuals—those with an annual income greater than $400,000. Additionally, the number of individual income tax brackets would be reduced from seven to just three tax brackets of 10%, 25%, and 35%.

Thus, Congressman Camp’s proposed bill would help free up income for almost all American households while ensuring that the heaviest tax burden is paid by the richest Americans. The proposed reductions to income taxes would be offset by the elimination of dozens of tax breaks and loopholes. It would also broaden what constitutes “income” for many individuals to include items such as municipal bond interest, which was formerly tax­exempt, and employer­provided health insurance.

Congressman Camp’s tax bill would redefine what is considered income for many managers of financial institutions.

Under current tax law, managers of certain financial institutions, such as hedge funds or private equity firms, are able to file their income as “carried interest” from investments, which is currently taxed at the capital gains tax rate of only 20%. Under Congressman Camp’s proposed bill, carried interest would be subject to an effective tax rate of 25%, subjecting these extremely wealthy financiers to a higher tax rate, though still below what the rest of America’s wealthiest would pay. As a result, Congressman Camp projects this tax increase to generate at least $3.1 billion in federal government revenue through the year 2023.

In addition to imposing greater taxes on the income of some of the wealthiest investors in the country, Congressman Camp’s tax reform aims to levy a new tax on the assets of some of the largest financial institutions in the world. The tax reform plan proposes a quarterly tax of 3.5 basis points on the assets of financial institutions that hold more than $500 billion worth in assets. In other words, the largest banks and insurers in the nation will have pay a .035% tax four times a year if the value of their assets is greater than $500 billion. Thus, JPMorgan Chase

CORNELL BUSINESS REVIEW | 4

GOVERNMENT

THE NATION’S LARGEST BANKS, INSURERS, AND INVESTORS MUST PREPARE FOR THE RISK OF INCREASED COSTS IN THE NEAR FUTURE. & Co., which claims assets in excess of $2.4 trillion, would pay an additional $2.7 billion in taxes annually. The proposed tax on assets is projected to bring with it an increase in government revenue of $86.4 billion over the next decade.

While this tax will only affect about 10 to 20 companies, such as Goldman Sachs and AIG, it has unsurprisingly sparked outrage from the financial industry. Rob Nichols, president of the Financial Services Forum, a group comprised of the CEOs of the 18 largest financial institutions operating in the United States, has criticized the proposed asset tax, claiming, “A tax that singles out one specific industry is utterly inconsistent with the fundamental goals of tax

reform to lower rates, broaden the base, and remove industry­specific treatments.”

Congressman Camp’s proposed tax code is thus shifting the tax burden, perhaps unfairly, away from the majority of individual households and instead onto large financial institutions and their managers, which could thus have large negative impact on lending throughout the nation as a result.

While it is highly unlikely that Congressman Dave Camp’s tax reform will be voted on this term, at least in its current form, it has created a very real foundation for future tax reform. The proposed bill has also sparked outrage among the financial institutions of America, which are run by some of the wealthiest and

most powerful men and women in the United States. If voting on such a bill does occur in the near future, Congressman Camp and his supporters should expect incredible lobbying efforts against its passing, funded in part by these extremely rich financial institutions. Although it is unlikely that the proposal will be passed in its entirety, it is possible that certain aspects of the bill may at some point be incorporated into federal tax code. As a result, the nation’s largest banks, insurers, and investors must prepare for the risk of increased costs in the near future.

Nicholas Piccone (nmp55@cornell.edu) is a sophomore at Cornell University majoring in Economics.

GOVERNMENT

CASTING A WIDE NET OVER AMERICA:

The Implications of a Comcast–Time Warner Merger

BY AUSTIN OPATRNY

O

N FEBRUARY 27TH COMCAST, THE LARGEST cable company in the world, announced that it had submitted a bid to purchase industry rival Time Warner Cable in an all­stock deal valued at $45 billion dollars. The combination of the two behemoths would give them a 30% market share of the American cable and internet provider market. The deal is part of Comcast CEO Brian Roberts’s plan to expand Comcast A COMBINATION OF THE TWO beyond its roots as a caCOMPANIES WILL PROVIDE ble and internet provider, SYNERGIES THAT WILL LEAD TO and transform it into a $1.5 BILLION IN COST SAVINGS technology company that PER YEAR. will deliver media to consumers in new and innovative ways. However, it will face unprecedented regulatory scrutiny to determine whether the merger would give Comcast unacceptable monopolist powers. The eventual ruling will certainly be a landmark decision studied for years afterwards.

Comcast has presented several justifications for its proposed merger with Time Warner. It has calculated that a combination of the two companies will provide synergies that will lead to $1.5 billion in cost savings per year. It also points out that the increased size will enable the combined company to invest more in updating the hardware underpinning the cable and internet networks. Comcast has been moving to create their own network of content distribution, giving customers access to media like pay­ per­ view streaming video.

Comcast recently purchased NBC Universal, the company behind popular television programs like 30 Rock, in an effort to begin capitalizing on the viewing habits of their subscribers. An expansion of Comcast’s subscriber base would make strategic sense for the company. Their most significant argument to counter worries about potential monopolistic activities is that Time Warner and Comcast do not currently directly compete

in any market. As a result, a merger of the two will not alter the competitive landscape in any regional market–Time Warner Cable customers in the New York area will simply send their checks to Comcast, rather than Time Warner.

This nullifies the arguments put forward by regulators to prevent the acquisition of cellular provider T­-Mobile by AT&T in 2011.

However, several concerns remain regarding the ramifications of any possible deal. While Comcast may talk about how a merger will enable them to invest in the fiber optic connections needed to bring American internet access to the next level, it is unlikely that investors will be inclined to stomach the high costs associated with installing this new technology. Politicians are beginning to classify high­speed internet access as an infrastructure cornerstone for any modern nation, and may call for more government intervention to prompt the creation of a nationwide network.

Critics also worry about the outsize bargaining power Comcast will have when working with television networks.

Because of the dominant position the merged company would hold, they would be able to bargain to pay lower fees to provide Comcast customers with certain channels. This is strategic behavior on the part of Comcast, and should not be interfered with by regulators. What is perhaps more worrying is the influence Comcast will hold over online media distributors. Netflix, the subscription­based video streaming company that is responsible for one­third of all American broadband usage, recently negotiated a deal with Comcast to ensure customers receive Netflix videos faster. Netflix achieved this by negotiating access to Comcast’s broadband network. In the future, Comcast may require internet compa-

Left: Comcast CEO Brian Robert’s plan to expand Comcast beyond its roots as a cable and internet provider.

CORNELL BUSINESS REVIEW | 6

GOVERNMENT

nies that transmit large amounts of data (such as YouTube or Hulu) to pay similar fees in order to ensure high speed delivery to consumers. This could ultimately lead to anticompetitive constrictions on the internet that would diminish its awe­ inspiring capabilities to deliver information quickly around the country.

Regardless of these concerns, it is likely that the Department of Justice (which is responsible for antitrust decisions) will approve the merger. The merger will not form a monopoly, under the terms defined by the Department as monopolistic. Comcast has promised to shed 3 million customers to make sure they only have 30% of subscribers, and thus falling outside of the definition of monopoly. It is up to legislators and other regulatory bodies, particularly the Federal Communications Commission, to proactively react to the merger and guide the nation’s telecommunications network towards a future of universal high speed access. No one wants to return to the time when one telecommunications giant (quasi­ -affectionately referred to as Ma Bell) controlled the majority of American telephone lines. This federally­ approved monopoly set nationwide prices and controlled the pace of innovation in telecommunications, going so far as to tell consumers what types of telephones they could or couldn’t purchase. Hopefully, the merger of Time Warner and Comcast (if approved) will not have a similar outcome.

A MEDIA GIANT The deal is part of Comcast CEO Brian Roberts’s plan to expand Comcast beyond its roots as a cable and internet provider, and transform it into a technology company that will deliver media to consumers in new and innovative ways.

However, it will face unprecedented regulatory scrutiny to determine whether the merger would give Comcast unacceptable monopolist powers.

INTERNET Combined, Comcast and Time Warner Cable control 40% of the broadband internet market.

2013 Broadband internet market share - out of 84 million total subscribers

Comcast

Time Warner Cable

AT&T

Verizon

Other

Source: BusinessInsider, February 13, 2014

TELEVISION Combined, Comcast and Time Warner Cable control 43 of the top 50 TV markets.

Each dot represents an area with 15,000 or more subscribers.

Austin Opatrny (abo27@cornell.edu) is a senior at Cornell University majoring in Economics and Asian Studies.

Source: CNN, February 14, 2014

7 | CORNELL BUSINESS REVIEW

INDUSTRY

Microsatellites – A Small but Mighty Industry

individual who wants to check up on their vacation home. Currently, Google Earth produces lower­resolution images that can be years old. Acquiring images for commercial purposes is expensive and inconsistent, though it is possible.

BY GRACE GORENSTEIN RS Metrics observes the parking lots of companies such as Chipotle, WalMart, »» In the satellite industry, David is starting to run circles around Goliath.

Lowe’s, Home Depot, Target, and Staples »» Microsatellites and start­ups are breaking the monopoly satellite imagery giants have held. and counts the number of cars in each lot. This information is then translated into meaningful predictions of store OR YEARS, A FEW MAJOR PLAY­ about to boom. sales, which is sold to investors ahead ers with the capital infrastructure and Launch prices have declined, and of earnings reports.. Most large image exclusive licenses to get satellite orbital the monopoly is breaking. This past Dedistributors require sample images be at clearance have dominated the geospacember, Elon Musk’s SpaceX rocket sucleast 25 km2 , with prices ranging from tial information systems industry. Cocessfully launched, proving that a launch $325­ 400 for pre existing images, and ordinating satellite images is much more can be done for less than $100 million. $575­ 2,600 for newly produced images. In complex than typical digital imagery, Currently, a joint venture between Lockaddition, given cloud coverage and orbitgiven cloud variability, orbital complicaheed Martin Corp. and Boeing Co. is al cycles, most companies can only offer tions, and triangulating the multiple data the only method for the government to images once or twice a month. sets necessary to produce a usable image. launch satellites. On average, a launch Mining companies, sciDigitalGlobe and Astrium have been the under the joint venture costs entists, insurance companies, two American companies able to coorbetween $300 and $500 milON AVERAGE, A and commodity traders utidinate the data collection, extraction, lion. A more competitive LAUNCH COSTS lize satellite technology to obconversion, and compilation of satellite launching arena, however, BETWEEN $300 AND serve clients or competitors. images. Then, the data must be managed will mean that more private $500 MILLION. For example Genscape does using an information management sysventures will see launching surveillance of the oil, electricity, and tem before any organization could work their own satellites and developing the natural gas fields using satellite imagery. with the images. However, the industry technological infrastructure for managRates of extraction or well densities are is changing. Launches are getting less ing their satellite data as both viable and measured, and this information is then expensive and more competitive, and profitable. sold to clients like Goldman Sachs, J.P. satellites are getting more efficient. As a However, the major catalyst for the Morgan, Deutsche Bank, as indicators of result, the business of satellite imagery is satellite­industry boom is a twelve inch future prices. microsatellite. Microsatellites, far less exPlanet Labs is not the only company pensive to build than the WorldView and entering the orbit. Also San Francisco­ GeoEye satellites built by DigitalGlobe based, Skybox launched a high­resolution and Astrium, have resolution capabiliimaging satellite this past year. In addities as high as one meter, making them tion, UrtheCast will stream video from functionally comparable to their larger the Russian portion of the International competitors. Planet Labs, a San FrancisSpace Station.

More players in the indusco based startup, recently launched their try mean that the frequency and availFlock­1 of 28 microsatellites, and have ability of images will increase.

As a result, already signed contracts for $13 million related industries such as data manageworth of satellite imagery. Currently, the ment and analytic systems will also expeimages will be sold only to those familiar rience a boom. with raw satellite imagery. Planet Labs Microsatellites and declining launch hopes to expand their big data capabilcosts signal a coming boom in the satelities in order to bring satellite imagery lite imagery industry. As costs continue more easily into the commercial sphere. to decline and competition increases, Planet Labs, for example, wants to satellite imagery will be more readily market its images to companies lookAbove: This past December, Elon Musk’s SpaceX rocket available for commercial use, and the successfully launched, proving that a launch can be done for ing to count cars in a parking lot, or an

F

less than $100 million.

CORNELL BUSINESS REVIEW | 8

INDUSTRY

Above: One of the first photos of Earth taken by the small Dove 1 satellite on April 24, 2013 during a satellite test flight by Planet Labs, Inc. of San Francisco, California.

GENSCAPE’S SATELLITE IMAGERY SURVEILLANCE OF OIL, ELECTRICITY, AND NATURAL GAS SECTORS IS THEN SOLD TO CLIENTS LIKE GOLDMAN SACHS, J.P. MORGAN, DEUTSCHE BANK, AS INDICATORS OF FUTURE PRICES. analytics to process these large volumes of data will need to remain in the loop.

As the business of microsatellite imagery explodes, the applicability will carry forwards into the consumer sector. For example, checking up on the vacation home could involve a reasonably priced

9 | CORNELL BUSINESS REVIEW

real­time feed from a microsatellite imagery company.

Grace Gorenstein (geg62@cornell.edu) is a junior at Cornell University majoring in History and Economics.

INDUSTRY

THE RETURN OF THE CITY:

Urban Real Estate Rises Again

BY JACK HENRY KAPP

T

HE REAL ESTATE MARKET IS IN THE ironically, many people are now returning to midst of a return to urbanization. In a cities to escape the traffic problems created by In 2011­-2012, suburban reversal of historical trends, the population their previous desire to live in the suburbs. In markets grew by only is now growing at a faster rate in U.S. cities today’s fast-paced and high tech world, Gen than in suburban areas. In fact, the U.S. CenY’s want instantaneous access to a variety of sus Bureau estimates that urban markets grew amenities and services—and these trends are by 1.12% from 2011-2012, while suburban expected to continue and even grow, as the markets grew by only 0.97%. This trend is a Brookings Institution now estimates that by big change from this past decade when suburban markets 2050, the urban U.S. population will contain 100 million were growing quite steadily at 1.38% compared to urban more people than it does today. markets in which growth was only about a third as much Real estate development taking place today in urban (0.42%). It is the first time since the 1920s that city living areas is also decidedly different than before — trying to is outpacing suburban growth, which has created a whole achieve much more than simply bricks and mortar. Buildnew direction in real estate. ings today are very different from former large-scale city This re-urbanization trend is redefining the type of developments. Investors, tenants, owners, visitors, and ocreal estate development taking place in the United States. cupants are demanding unparalleled efficiency, superior Like other products, real estate development is influenced design, and a sense of identity to the locations where they by market trends and consumer preferences. In past delive and work. cades, the explosion of automobile ownership and deteriIn cities such as Miami, Swire Properties’ Brickell City orating conditions in many cities induced a flight to subCentre project packs approximately 5.4 million square feet urban markets. However, the Urban Land Institute now of mixed-use space that includes office, residential, hotel, explains that “studies are consistently showing…that the retail, and entertainment space, wellness facilities, and two major demographic groups, the aging baby boomers two-level underground parking into a mere 9.1 acres in a and their kids, the echo boomers or Generation Y, have a downtown urban core. Two-levels of underground parking growing preference for more urban living.” Today, urban is not only expensive, but in a coastal city like Miami, it areas have improved the quality of life in many different is also an incredible feat of engineering. Additionally, the ways, even compared to just a few years ago. Cities are now project will include the construction of the tallest tower safer, cleaner, and feature more lifestyle amenities such as in the United States outside of New York City and Chicamuseums and culgo. For the multi-billion dollar project to meet efficiency REAL ESTATE DEVELOPMENT TAKING tural institutions, and sustainability standards, the developer is seeking the PLACE TODAY IN URBAN AREAS IS ALSO open spaces, and LEED Gold certification. LEED, or the U.S. Green Building DECIDEDLY DIFFERENT THAN BEFORE, parks that provide Council’s Leadership in Energy and Environmental DeTRYING TO ACHIEVE MUCH MORE THAN cultural identity. sign, represents the industry standard in evaluating buildSIMPLY BRICKS AND MORTAR. Members of ing sustainability. The project will incorporate a “Climate Generation Y, specifically, do not have the same desire as Ribbon,” a new technology that will, according to Swire, reprevious generations to live in single-family homes in the duce costs and electricity use by creating natural-like trade suburbs. Instead, people want urban areas made for interwinds flowing through public areas as a natural air condiaction and connectivity. Efficient public transportation has tioning. In other words, natural winds are created through reduced the necessity to own a car in most major cities, the design of the structures as a substitute for an enclosed making them feel less congested. Interestingly, the historic air-conditioned space. Swire also estimates that the project shift to the suburbs created horrible rush hours and comwill save about 5 million gallons of water annually by colmuting nightmares in many urban areas. So, somewhat lecting rainwater and thus eliminating the need to pump

0.97%

CORNELL BUSINESS REVIEW | 10

INDUSTRY

and store water in aboveground facilities.

In New York City, the Related Group is currently working on a massive $20 billion development that will revolutionize the area along the Hudson River between 30th and 34th Street. The Hudson Yards project marks one of the largest, mixed-use urban neighborhood environments to ever be built. The project will also meet LEED Gold certification and aims to be New York City’s most efficient complex ever. It will feature an array of systems including an energy peak load management system to reduce energy use, an organic waste management system, a thermal microgrid to share warm water between buildings, and regenerative elevators that will collect and 11 | CORNELL BUSINESS REVIEW

reuse energy, among other environmentally-friendly features. The 12-acre project will feature entirely glass exteriors, natural curves and zigzags, as it aims to be New York’s most modern design. Additionally, the Hudson Yards project will be integrated into New York City’s former elevated freight line, which has been redesigned into a public open park, High Line Park, to help blend modern design with the city’s historic past.

Brickell Citi Centre and Hudson Yards, as well as many other urban projects, have adapted the idea of a “lifestyle development” that caters to sustaining a healthy, happy, connected, and productive balanced way of life. Part of the key to creating this balanced lifestyle is pro-

Above: Brickell City Centre is a $1.05 billion mixed-use development. Strategically located in the center of the Brickell financial district, this is the single largest project currently underway in downtown Miami. Brickell City Centre is anticipated to bring a whole new level of urban living and sophistication to the area.

INDUSTRY

URBAN SPRAWL THE CONCEPT OF “CONNECTED SPACES” LENDS ITSELF TO THE IDEA OF INTEGRATING AND UTILIZING SPACES FOR MULTIPLE USES. viding a sense of culture and identity to the real estate projects being built. And, to help cultivate this sense of culture or soul into new mixed-use projects, companies are looking to find adaptive uses of old properties for new developments.

In Miami, Swire’s project follows the idea of introducing a new lifestyle development to the Miami Brickell area. To help infuse part of the cultural elements that people are now looking for, the company seeks to capitalize on the new arts and cultural district developments. Not only will people have access to live, work, eat, shop, and take care of themselves directly at Brickell City Centre, but they will also be close to the City of Miami’s nearby redevelopment of Bicentennial Park into what will now be known as Museum Park. There, people will have access to the new $220 million Pérez Art Museum Miami and the new $275 million Patricia and Phillip Frost Museum of Science, as well as the recently built Adrienne Arsht Center for the Performing Arts. Combining all of these amenities in a core urban area enables people to live in a way that incorporates a balanced lifestyle in an urban environment.

Connectivity is also playing an ever-growing role inside urban real estate developments. Offices are no longer about creating closed private spaces. Instead, walls are coming down, widows are getting larger, and the “open office” is emerging. Mixed-use projects that incorporate hotels are doubling or tripling the size of their lobbies and ditching traditional designs for comfortable modern spaces to talk, work, and hang out. All of this is happening in the name of connecting individuals to each other for increased interaction. The concept of “connected spaces” lends itself to the idea of integrating and utilizing spaces for multiple uses. For example, one might use a hotel lobby an office during

the morning, a restaurant for lunch with a client during the day, and a cocktail lounge for a nighttime social event.

All of this does not mean the downfall of the suburbs. In fact, the suburbs will continue to grow, albeit that the urbanizing population will simply grow at a faster pace. And the type of development taking place in the suburbs will change too. In part, it will be influenced by the changes in urbanized real estate.

New developments in the suburbs will increasingly become more mixed-use, but will be less dense than those in the city. And, similar to their counterparts, mixed-use developments in the city will try to market themselves as lifestyle developments, providing the amenities of a balanced-lifestyle.

This new development of urban real estate signifies major changes in the way people work, connect with other individuals, and the way they simply go about living their entire lives. Instead of such new developments influencing this change, it seems that changing lifestyles and the desire to live more balanced lives, as well as technological advancements are now influencing the new rhythm and design of urban real estate development. No longer do people wish to own the largest house in the suburb or own a fancy car to make the long commute to work. Today, they seek to live healthy lifestyles, with instant access to services and amenities, connected spaces, and areas of culture with the intention of becoming more integrated in the new urban core.

While both types of areas are growing for major metropolitan centers, Americans are increasingly choosing the city over suburbia.

2010-2011 Population Growth of Major Cities = 0.2% Population Growth

WASHINGTON D.C.

DENVER

ATLANTA

NEW YORK CITY

Jack Henry Kapp (jhk248@cornell.edu) is a freshman at Cornell University majoring in Hotel Administration.

Source: William H. Frey Census Bureau Estimates, June 29, 2012

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INDUSTRY

CORPORATE SOCIAL RESPONSIBILITY:

A Battleground for Public Opinion

DONATE the time and expertise of

their employees

BY SHOHINI KUNDU MAKE donations in the form of cash

or products/services APPLY their unique business assets,

such as technology and research to speed solutions to social and environmental problems

RAISE awareness for an issue and

educate their consumers and employees

I

N RECENT DECADES, CORPORA­ TIONS have come under increasing pressure from various groups to act in socially and environmentally responsible ways. In 1987, a group of Vermonters started a national campaign called McToxics to ban the use of styrofoam in food packaging. This campaign attracted students, animal rights activists, and even church groups. Even though McDonalds initially resisted pressure from the campaigners due to concerns about packaging cost and its impact on profit, it was in their long­term business interest to not alienate customer groups. Consequently, McDonald announced that they would phase out use of Styrofoam and reduce their solid waste output by 90%.

More recently, Chick­-fil­-A was embroiled in a public controversy in 2012, when chief operating officer Dan Cathy expressed opposition to same­sex marriage. In fact, the family operated business had contributed millions to organizations opposing LGBT rights. Once Dan Cathy’s comments became widely known, Mayor of Boston Tom Meni-

13 | CORNELL BUSINESS REVIEW

As a result, companies such as Zara, El Corte Inglés, and Loblaw set up a $40 million compensation fund for the workers in Bangladesh. These companies were under no legal obligation to do so, seeing as they did not violate any laws in Banno pledged to stop Chick­ -fil-­ A from gladesh. Nevertheless, there was pressure opening franchises in Boston. Soon this to apply ethical standards prevalent in protest expanded to other cities, like Europe and the Americas.

Chicago, as well as university campuses Corporations today have to balance country­wide. As a result of public presboth the profit interest of the shareholdsure, the Cathy family backed down from ers as well as the ethical, social, and entheir position and promised to end fundvironmental interest of all stakeholders. ing groups that oppose LGBT rights.

This has led to the emergence of what Such pressures force companies to is known as corporate social responsiadopt standards that are ethically acbility, or CSR. CSR is also referred to as ceptable, as well as socially and environcorporate citizenship or corporate conmentally responsible. science. CSR can take Even though ethical many forms including CORPORATIONS TODAY HAVE standards vary from clean­up activities, doTO BALANCE BOTH THE PROFIT country to country, INTEREST OF THE SHAREHOLDERS nation of employee global corporations AS WELL AS THE ETHICAL, SOCIAL time on volunteer often face pressure AND ENVIRONMENTAL INTEREST activities, and direct to apply higher stancharity. For example, OF ALL STAKEHOLDERS. dards of ethical prinbigbox retailers such ciples while doing business in under­ as Target and Walmart have communideveloped countries. On April 24, 2013, ty grant programs that donate money to garment factory Rana Plaza collapsed in local schools, homeless shelters, or other Bangladesh and more than 1100 worklocalized charitable organizations. The ers died under the rubble. Labor groups typical amount of these grants are less in Europe and the Americas mounted a than $2500, representing a small cost campaign against retailers to improve the to the corporations but large benefit in conditions for workers in Bangladesh. terms of goodwill generated in the com-

INDUSTRY

CHANGE the way they operate,

for example sourcing materials more responsibly or reducing the environmental impact of their factories

DEVELOP a new product or service

(or enhance an existing one) that can help solve a social issue or is less harmful to the environment (2013)/help solve a social or environmental need (2011)

SEEK feedback from develop

partnerships with key stakeholders around social and environmental issues, for example with government agencies, nonprofits or other companies

Source: CSRwire, Nov 20, 2013

CHARGES HAVE BEEN BROUGHT THAT CSR IS NOTHING BUT WINDOW­DRESSING, AN ATTEMPT TO FOOL THE PUBLIC AND THE REGULATORS.

the company, but an imperative. For exmunity. In the absence of a positive loample, McDonalds and the impact public cal presence, local groups may focus on pressure has had on the fast food indusissues such as unfair labor practices or try would support this claim. McDonalds displacement of small community based has been criticized for poor pay for its retailers. Establishing a positive local workers while it advertises their giving presence through charity dissipates negto Ronald McDonald House Charities, ative publicity and helps these businesses which some claim is corporate hypocriin the long­term. sy. When companies engage in charity, However, CSR is not an absolute they also seek publicity and mount megood. It is also controversial. In a recent dia campaigns to promote goodwill. article in Forbes magazine, David Fogel An example of such promotion can argues that while there are examples of be seen in pharmaceutical companies superior performance at companies from who run programs to give away certain better CSR programs, there are at least expensive medications for free to qualias many companies where that is not the fied patients (rxassist.org) and advertise case. He argues that majority of consumtheir charity heavily. The actual cost to ers do not care about ethical, social and the companies is low because few patients environmental behavior of qualify, but the promotion is the companies. When CSR beneficial to image. Examples imposes tangible costs to Compensation fund for such as this one have brought workers in Bangladesh companies, profits suffer as charges that CSR is nothing does shareholder value. He but window­ dressing, an atMIL cites Starbucks as an examtempt to fool the public and ple. Starbucks has generous the regulators. labor policies and is comHowever, not all charimitted to sound environmental practices table acts are selfish or for self­-interest. by its suppliers, yet its share performed Americans cherish capitalism and profit poorly in the stock market. Whole Foods making, but they also value contributions and Timberlands, other companies that to society. Bill Gates, the wealthiest man are known for strong CSR, had similar on the planet, started the Bill and Melindeclines in stock prices. da Gates Foundation. He is committed to There has been a spate of articles that giving away his wealth to promote social claim that CSR is no longer a choice for well­being, be it through works such as

$40

early childhood immunization, education, or health programs. Warren Buffet, the “Oracle of Omaha”, known for his spectacular stock picks and investments, is also giving away his fortunes and urging other billionaires to do so. The key difference is that these donations are personal, not corporate. While no one objects to private charity, corporate giving is a more complex subject.

Some argue that profits should be distributed to shareholders, and not given to charitable causes. David Henderson, in his book “Misguided Virtue: False Notions of Corporate Social Responsibility” argues against diluting the primary profit­making mission of a corporation.

CSR has its champions and critics. It has been variously portrayed as an act of charity, a product of competitive pressure, an act of rational self­interest, or an act of window­dressing. It is surely a battleground for public opinion which the companies must win using public relations and CSR to succeed in the long term.

Shohini Kundu (sk2288@cornell.edu) is a freshman at Cornell University majoring in Economics and Computer Science.

CORNELL BUSINESS REVIEW | 14

INDUSTRY

Building the Google of Things

BY SHAMIKA DIGHE

I

N 1999, KEVIN ASHTON, CO­ founder and then executive director of the Auto­ID Center at the Massachusetts Institute of Technology, coined the phrase “Internet of Things” to describe a technological ecosystem in which sensors and active data collection greatly diminished the human­dependency of computers. Today, over a decade later, Google is embracing the prospect of an increasingly connected world and integrating the Internet of Things into its corporate strategy through the course of several strategic acquisitions. Following the tech giant’s mission “to organize the world’s information and make it universally accessible and useful,” Google’s ventures into home automation, advanced robotics, and artificial intelligence build a framework for a world in which computers are empowered to, as Kevin Ashton puts it, “see, hear, and smell the world for themselves.”

WHAT IS THE INTERNET OF THINGS?

Technology research firm Gartner defines the Internet of Things as “the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.” Systems in the Internet of Things use low­cost sensors like radio­-frequency identification (RFID) tags and micro electromechanical systems (MEMS) to monitor an object’s surroundings and capture data. In addition, an Internet of Things system often has actuators to enable a coordinated action as a result of the data processing. Although the Internet of Things is still in the early stages of adoption, the technology is being implemented with much success throughout the public and private sector. Manufacturers are optimizing product quality and operational efficiency by using visual sensors to track the flow of products through a factory floor. Shipping companies are using ad-

15 | CORNELL BUSINESS REVIEW

vanced trackers to provide customers with the ability to monitor a package’s physical conditions like temperature and humidity. Tech­savvy cities, such as San Francisco, are using Internet of Things solutions to connect and manage public infrastructure, such as parking meters, to provide better service-­delivery to its residents. Even humans are a part of Internet of Things systems, through the use of wearable healthcare monitoring devices like smart heart rate monitors and fitness activity trackers.

GOOGLE’S RECENT ACQUISITIONS

Technology giants like Google have primarily used M&A deals to support their company’s core­business. Apple’s iPhone 5S fingerprint scanner came from its acquisition of mobile security provider AuthenTec. Facebook used its acquisition of facial recognition company Face.com to bolster its photo­ tagging feature.

THE “INTERNET However, many of OF THINGS” ERA Google’s latest acIS COMING, AND quisitions, which IS ESTIMATED TO include eight ro- BE A $19 TRILLION botics firms in MARKET 2013, indicate that Google is looking far beyond its core­ business. Through analyzing this group of recently purchased technologies, we uncover insights into how Google can use this technology to generate a more­ connected world.

Nest Labs Inc. Google’s $3.2 billion acquisition of smart thermostat maker Nest Labs Inc. is perhaps the most direct indication that Google can bring an Internet of Things ecosystem into our homes. Nest thermostats, which “learn” its users temperature preferences over time, are the first step to a connected home network. We could even see Google connect Nest technology with its home entertainment hard-

ware, Chromecast, or even embed it with Google’s Android operating system.

When asked if Android could be the operating system for an Internet of Things system, Google CFO Patrick Pichette alluded that the success of a Google Internet of Things system will come from its ability to be supplemented by third­party applications. He noted, “We should never think we have the monopoly of innovation. What really matters is you enable a couple of applications that you’re really excited about, but that mesh with so many others.”

Boston Dynamics One of Google’s most exciting acquisitions of 2013 included that of Boston Dynamics, a company with strong ties to the US Department of Defense. Boston Dynamics is widely known for its animal-­ like robots that swiftly cover uneven terrain and can run faster than Usain Bolt, the world’s fastest man.

While it is unlikely that Google will soon provide personal robots for the consumer market, its drive in advanced robotics could be a way to garner the most advanced sensors, software, and machinery, to both supplement its existing business operations, such as improving automated factory processes, and implement in future Internet of Things endeavors. Advanced robots could form the machine-­to-­machine network of actuators that characterize an Internet of Things system.

DeepMind Technologies Google’s more than $400 million acquisition of London­ -based startup DeepMind Technologies marks a recent trend in tech acquisitions to amass experts in artificial intelligence. DeepMind is a research firm that specializes in reinforcement learning, which involves using an algorithmic approach to solve complex decision­making problems given limited feedback. DeepMind’s novel project using this technology is software that was able to master several Atari 2600 computer games using only the visual display of the game as input and no prior knowledge of how the games are played.

ACQUISITION PRICE

LIKE A KID IN A CANDY STORE

= $100 MILLION

GOOGLE HAS OUTSPENT ALL ITS RIVALS COMBINED ON ACQUISITIONS. HERE’S A SAMPLING OF DEALS RANKED BY RELVANCY TO THE AD BIZ.

10

= $1 BILLION

AdMob

DoubleClick

Teracent

Applied Semantics

Invite Media Admeld Wildfire Interactive

9 8

YouTube ITA Software Next New Networks

7

Channel Intelligence

6 Like.com

5

Zagat

Android Global IP Solutions

4

Waze Aardvark

FeedBurner

PushLife

3

BeatThatQuote.com Slide.com BumpTop On2

Current Communications Group

2

DailyDeal

GrandCentral

Jambool

BufferBox Motorola Mobility

1

Meebo

2003

2004

2005

2006

With such advancements in deep learning technology, Google positions itself to create new products that are better able understand and react to the external environment. Applications of this could range from software that better analyzes data and helps users make the most informed decisions, which would greatly complement a vast amount of Google’s existing products, such as Google Glass, and provide an intelligent backbone to connect future Internet of Things devices.

When we consider the variety of futuristic technologies that Google has collected throughout the years, it becomes apparent that a competitive advantage in implementing an Internet of Things system, should Google choose to do so, will come from Google’s ability to combine

2007

2008

2009

2010

the strengths of its acquisitions. Google’s individual investments in Internet of Things technologies will provide the building blocks to create an even greater network of devices.

However, it will be several decades before consumers see a large­scale, Google of Things ecosystem, as an Internet of Things solution like smart homes and autonomous vehicles will face several obstacles before achieving mass adoption.

With the possibility of an increasingly digitized world come concerns of personal privacy, data security, and overall social autonomy. In addition, Internet of Things technologies will carry the cost of maintaining utility, as smart platforms will require constant software updates.

Lastly, widespread adoption of an Internet of Things network will require scalability­affordable, easy to implement

Flutter Wavii

FlexyCore

Makani Power Boston Dynamics

Quiksee

Postini

0

Nest

2011

2012

2013

2014

products.

According to McKinsey, machine-­ to­-machine devices have experienced a 300% increase in the past 5 years. Furthermore, Cisco estimates that by 2020, 50 billion things will be connected to the Internet, resulting in an eventual $19 trillion Internet of Things market. Google has always been a first mover; by establishing the foundation for more Internet of Things products, the tech titan will be set to be a leader in this exciting new market.

Shamika Dighe (sd547@cornell.edu) is a sophomore at Cornell University majoring in Economics.

CORNELL BUSINESS REVIEW | 16

INDUSTRY

BEHIND THE SMOKE AND MIRRORS:

The Real Reason CVS Stopped Selling Cigarettes

BY CASEY BREZNICK »» CVS is stamping out its cigarette and tobacco product sales in order to capitalize on the booming healthcare provider industry. »» Recent healthcare legislation will also provide CVS’s in­store MinuteClinics, which offer high­demand healthcare services at low cost, with throngs of newly insured customers.

en by over 42% in the past year. In addition to strong financials, CVS’s business structure is also well suited to transition towards healthcare provision.

Figures provided by CVS indicate that 54.2% of its revenue and more than one third of its profits come exclusively from the sale of prescription drugs from its Pharmacy Services Segment. Thus it is prudent that CVS now looks to orient its business structure and brand image to focus more on healthcare provision than consumer retail. Moreover, with over 750 MinuteClinics – CVS’s walk­in health centers – and contracts with over 250 commercial and government health plans, including Medicare Part D, CVS is physically well­suited to provide limited, albeit cost­effective, healthcare services.

This strategy was affirmed in CVS’s 2013 Form 10­K, where the company reported that its stores’ focus is “shifting from primarily dispensing prescriptions to also providing services.” Accordingly, CVS plans to open nearly 150 new MinuteClinics in 2014.

HEALTHCARE INDUSTRY TRENDS: NOWHERE BUT UP

I

N A SHOCKING AND UNPREC­ JUST THE NUMBERS edented move, pharmacy and retail Analysts estimate the decision to forgo behemoth CVS Caremark announced cigarette and tobacco sales will cost CVS earlier in February that its more than about $2 billion in lost revenue in 2014 7,600 retail pharmacy stores will stop and similar amounts for the foreseeable selling all cigarette and tobacco products future. The net financial impact, howby October 1st of this year. Anti­tobacco ever, will be miniscule, if not negligible. and public health lobbying groups such Tobacco sales account for less than 2% of as the American Cancer Society have CVS’s revenue, and by all accounts CVS praised CVS for its seemingly progresis in good financial health otherwise. sive, people-­first, profits-­second motive.

Last year CVS’s net revenues expePresident Barack Obama, himself a forrienced 3% year­on­year growth to $126.8 mer smoker, applauded CVS billion and net income inand its “national campaign creased by 18.8% to $4.6 bilto help millions of Amerilion, both of which were nearcans quit smoking.” Howevly double those of its nearest Average retail price er, contrary to the President’s competitor, Walgreens. CVS’s per pack of cigarettes remarks, CVS’s decision to market capitalization is nearin the US. end tobacco product sales is ly one third greater than in fact more strategic than alWalgreens’, and in 2013 CVS truistic. CVS’s true aim is to orient away Caremark ranked fortieth in the Forfrom its convenience store image in order tune Global 500 list of the world’s largest to capitalize on the booming pharmacy companies – the thirteenth largest in the and healthcare provision industries.

United States. CVS’s share price has ris-

$5.51

17 | CORNELL BUSINESS REVIEW

CVS booted tobacco products from its shelves in order to build its image as a legitimate healthcare provider. By ridding its shelves of products that are responsible for an estimated 443,000 deaths each year, CVS will pave the way for better relationships with doctors, hospitals, insurance providers, and a public in high demand of healthcare services.

In 2011, The World Bank reported that $2.78 trillion, 17.8% of US GDP, was spent on healthcare. The Centers for Medicare and Medicaid Services (CMCS) estimates healthcare spending is expected to increase at an annual rate of 5.8% from 2012-­2022, outgrowing projected annual GDP growth by at least 1% during this period. CMCS’s findings identify improving economic conditions, increased insurance coverage, and an aging population as the major factors driving this growth. By rebranding itself as a legitimate healthcare provider, CVS is poising itself to scoop up more of this increasingly lucrative pie.

INDUSTRY

Much of this increasing insurance coverage will stem from the implementation of The Patient Protection and Affordable Care Act. Passed in 2010, the Affordable Care Act is a major driver of In 1965,

41.7% of adults smoked In 2010, that number dropped to

19.3%

the push towards healthcare provision for CVS and competitors like Walgreens, which after CVS’s announcement to end tobacco sales conceded that it too was “evaluating this product category.” Already, insurance companies and other third­party payers account for nearly 85% of the payments made to MinuteClinics.

CVS itself estimates that 82% of those eligible to use Obamacare exchanges have existing relationships with the company and has high hopes for the revenue stream coming from those newly insured under the public exchanges formed by the ACA. Private exchanges, i.e., those operated by insurance companies, on the other hand, offer a less rosy future for CVS. According to Morgan Stanley, by 2017, these private exchanges may include up to 30 million people, mostly

SKYPE AS A BUSINESS TOOL:

How Skype Has Changed the Workplace

BY TODD WEI » » Social networking doesn’t stop. In an increasingly competitive market, businesses take Skype to new innovative levels.

S

INCE ITS INCEPTION IN 2003, Skype has connected people around the world through its popular peer­-to-­ peer networking platform. The name Skype evolved from the originally proposed title, Sky peer­to­peer. The idea was that as more people use Skype, the more reliable the connection becomes for each person. In that way, there is no need for a central server or middleman to regulate the connections. The program became extremely popular given that it was fast, free, easy­-to-­use, and provided high quality calls. The video and sound quality is top notch when compared to other peer­to­peer software, and the Skype team still asks for feedback after every call to further improve their services. Today, Skype has over 300 million users worldwide.

Skype remains a powerful tool in

the business world. Companies from all over the world use Skype as a means to conduct interviews, reach out to customers, host video conferences, and provide their individualized services. Person­ to­person calls are free anywhere in the world, and low rates exist for mobile and landline calls. Skype’s website boasts that you can pay as you go at rates as low as a penny per minute. Further, the software includes file­sharing, screen­sharing, and instant messaging that ultimately helps businesses communicate better internally within the office as well as externally with clients. Today, Skype has been used for personal and commercial reasons around the world and is an invaluable resource for business operations.

One of the company’s proud features is its Skype for business edition. Administrators can create Skype Manager

employees or former employees of large corporations. CVS stands to lose around 5% of its business as companies like Xerox, which previously had contracts with CVS, move their retired workers to private exchanges.

The net result for CVS, however, will be positive. Though the company stands to lose some business due to lost contracts, it stands to gain much more from more public dollars entering its MinuteClinic and pharmacy coffers. Thus, ending tobacco product sales in a healthcare services center is not only the “the right thing to do” as CVS put it, but also the right and profitable thing to do.

Casey Breznick (cb628@cornell.edu) is a freshman at Cornell University majoring in Economics.

accounts to set up, manage, and report their company’s Skype usage. For example, the account allows a manager to keep track of calling costs that each employee has accumulated. Managers can also assign all of its members Skype Premium and Skype credit, which comes with numerous features. Besides removing advertisements, one of Skype Premium’s main features is that it upgrades standard video calls to group video calls that can hold up to ten people. Skype credit opens up opportunities for call forwarding to a mobile or landline, cheap SMS messaging, and more. Depending on what a company is looking for in developing their business model, these services can be very cost­effective and efficient.

O

N A TRIP TO SHANGHAI, RYAN Frankel became awfully sick. He forced himself to get to a pharmacy but was unable to communicate with the pharmacist. He returned to his hotel, feeling worse than before.  Since then, Frankel made it his goal to ensure that language never becomes a barrier in any conversation.

With co­ founder Kunal Sarda, Frankel started VerbalizeIt, a translation business that uses Skype as one of its most valuable methods to quickly connect clients CORNELL BUSINESS REVIEW | 18

Illustration by Charlie Tark

with human translators.

Frankel’s dream to have on­ the­ go translators at your disposal needed a variety of ways to reach out to the public.

His company thus began to make effective use of Skype’s high quality video and voice services. As a partner with Skype, VerbalizeIt provides interpreters on demand. Customers just need to make a simple call via Skype or telephone to request an available employee. The company claims that a professional interpreter will be on the line in fifteen seconds.

Translators can join in on a Skype conversation between people of different languages and provide live interpretation for two dollars a minute. Frankel believes his business is a much more affordable and effective service that makes translations easier and faster for the public.

“Lots of small businesses use Skype, so, for us, it is a natural relationship. And it allows people to communicate within their preferred medium. We are proud to say that we just had our first company negotiate terms of a business deal with a Chilean counterpart via Skype with a VerbalizeIt Spanish translator.” - Interview with Ryan Frankel on Skype Blogs 7.30.2012 VerbalizeIt is just one of many businesses that have incorporated Skype into their business models. Parliament Tutors uses Skype as a means to provide customers with easy access to its tutoring and test preparation services. Sole proprietorships such as Jenné Clairbone’s Nourishing Vegan and Marc Thompson’s virtufit.net use Skype to educate and assist people with their health.

19 | CORNELL BUSINESS REVIEW

Parliament Tutors, a prospering tutoring business, has 30% of its tutoring services over Skype. Students have the option to pay between $49 and $89 per hour for a Skype tutoring session or $50 to $125 per hour for in­person tutoring.

During Hurricane Sandy, tutors were able to host 1­on­1 Skype calls for students who had already purchased SAT preparation packages. Given the flexibility and accessibility of the program, the company sealed a contract with the Department of Defense Education Activity. By doing so, Parliament’s services can help with the instruction of students in American schools around the world. The business is also seeking the opportunity to engage in sign­ language tutoring for deaf students. Parliament Tutors’ founder David Greenberg expects this year’s revenue to rise from last year’s $500,000 to $1 million. Skype sessions are thus expected to represent 30% of that revenue.

Individuals have also adopted Skype as an integral part of their business model. A company called The Nourishing Vegan offers virtual one­on­one cooking classes through Skype where the founder, Jenné Claiborne, shows people how to make various vegan meals such as Pad Thai, pineapple coconut balls, pumpkin pie, and kale salad in real time. Clairbone started her Nourishing Vegan business in order to offer her chef services, cooking classes, and health coaching tips to the public. With Skype, Clairbone can teach people from all over the world, while saving time and traveling costs. Personal trainer Marc Thompson has also started his own website, virtufit.net, in order to

reach out to people in the United States and abroad who request a virtual personal fitness trainer. Additionally, he created a Virtual Personal Trainer accreditation program to allow other trainers the opportunity to conduct virtual sessions.

Based on the service’s growing popularity, one can surely expect many more business models implementing Skype in the future.

Although these new business models are built around the accessibility Skype provides, there are some potential drawbacks. For one, many people prefer to have face-­to-­face meetings, so a company that is only available through Skype may be missing potential business with those in a localized geographical area.

Also, the time needed to set up video conferences and repair technical issues can lead to inefficiencies and unproductive interactions. Small budget­ minded companies should be wary about investing into Skype services because if the software does not meet up to their expectations, they may be losing valuable time and money.

There are also concerns about the privacy and security of a business’s content on Skype. Any software or server with an instant messaging client can be a potential gateway for malware to spread across a company network. However, Skype has never been the victim of any serious malware attacks, and the company claims to have highly secure encryption algorithms as well as methods to prevent malicious attackers from trying to obtain user’s personal information.

Even with the concerns, the benefits clearly outweigh the potential downside.

Skype has proven its usefulness time and time again as a convenient, competitive, and cost­effective method to enhance the way businesses operate. This is not to say that having Skype in your business is a recipe for success and profits. From what we have learned, people must use Skype efficiently and appropriately for it to work as a legitimate approach to provide another business’s services.

Todd Wei (tcw59@cornell.edu) is a freshman at Cornell University majoring in Industrial and Labor Relations.

FEATURE

Exclusive Intervew with

Richard Baker

R

ichard Baker ’88 is the owner, governor, and chief executive officer of the Hudson’s Bay Company, the world’s oldest trading company, which owns department stores Lord & Taylor and Saks Fifth Avenue in the United States as well as Hudson’s Bay and Home Outfitters in Canada. Baker grew up in Greenwich, Connecticut and graduated from Cornell’s School of Hotel Administration. After graduation, Baker began his career in real estate, working with his father in their family business, National Reality & Development Corporation. In 2006 Baker led the take over of Lord & Taylor from Macy’s for $1.2 billon, and in 2008 the business’s investment arm bought the Hudson’s Bay Company. Baker currently sits on the Advisory Board of Cornell’s School of Hotel Administration and the Baker Program in Real Estate.

What are some of your fondest memories from your undergraduate tenure at Cornell?

Richard Baker: What I liked the most about Cornell was two things. The student body at Cornell was very specific and entrepreneurial. Whether it was the Hotel, Architecture, or ILR School, most of the people that came to Cornell had a very specific goal or mindset, and they knew they wanted to go and were very serious people. That was what I enjoyed. I enjoyed spending time with people my age, my peers, who knew exactly what they wanted to do and were very motivated to achieve their goals. I also enjoyed Cornell because they brought a lot of people on campus from the real world. You got to hear a lot of people’s stories, how accomplished they were and what they accomplished, whether they were artists or business people. Those are the real aspects of Cornell that I enjoyed most.

What is your day-to-day life as CEO? RB: I spend two to three days a week on average traveling where I either get on a plane flying to Canada or somewhere in North America, Europe, or Asia.

When I travel, I do it with different associates, team

21 | CORNELL BUSINESS REVIEW

members, or partners from different locations. I think it is very important to get out and visit our different stores and visit our associates and experience exactly what our team is doing. When I am in New York, I help to get the kids off to school in the morning, and then I leave my house at seven o’clock. I drive to New York City, which can take an hour and half to two hours a day. Then I schedule phone calls during that drive. Once I get to the City, I have meetings all day with vendors, partners, or associates about different aspects of the business. Then, I get back into the car and head back home to Connecticut to be with my family.

As CEO of the oldest commercial corporation in North America, do you ever find it difficult to drive innovation and steer strategy in an evolving retail industry while trying to uphold the historical integrity and founding principles of the company? Jumping off that question, what is your philosophy on change?

RB: It’s a good question—I think our history is very important and related to our future. The Hudson Bay Company was started in 1670 by King Charles II who signed a charter giving his cousin Rupert 1/12 of the Earth’s surface—all of the land and trains to the Hudson Bay. Rupert began a business where he sent people to what is now known as Canada, then known as Rupert’s Land, right at the edge of the Hudson Bay. He would send people in, in order to bring beaver

FEATURE

Richard Baker is the Governor and CEO of the Hudson’s Bay Company, which operates companies such as Saks Fifth Avenue.

FEATURE

Above: Window of Saks Fifth Avenue in Cincinnati.

pelts out of North America and bring them back to Europe because, of course, beaver pelts were used for top hats of that period. The original people that came from the Hudson’s Bay Company would stay for two years and live in this foreign land, if you can imagine in the late 1600s and early 1700s, and they would do their work in Canada. You had to be a real adventurer and willing to take risks in order to do that. On the shore of the Hudson Bay, they built a huge trading post—a big white building, you can go online and see it.

In order to understand the history and spirit of our company, my son Jack and I traveled across Canada and flew from Winnipeg north on a plane, and then we got on a helicopter—because that’s the only

23 | CORNELL BUSINESS REVIEW

way to get there. We helicoptered to the very shore of the Hudson Bay where, still intact, was the large, beautiful Hudson Bay building, called the York Factory. That facility continued to operate until the 1950s, when the Canadian Parks Association took control of the property. We landed there, got a tour of the building, and visited the cemetery where many, many Hudson Bay original associates are now resting. We also visited with the Cree Indian nation leaders, who were the nation people who worked with the Hudson Bay Company throughout all those years.

When I think about the dedication and the risk that was needed in the early days of the Hudson’s Bay Company, it really helps me think about the kind of dedication and the kind of risk-taking that we’re pre-

FEATURE

pared to do in 2014. The world might move a whole lot faster today than it did back then, but it’s still the kind of ability to take risks prudently that helps drive businesses to success today like it did back then.

Left: Lord & Taylor flagship in New York City

What has been the most important strategic decision made by the company since you purchased Hudson’s Bay Company in 2008?

RB: I think it was very important for us, when we bought the company for $1.3 billion dollars, that two years later we had sold off our least profitable and least important division, Zellers, which was the Kmart of Canada. We sold that business to Target for $1.85 billion, which was extremely relevant because it brought in a lot of cash to pay off our debt and it got us out of a business in which we couldn’t possibly be successful over the long term.

Can you also walk us through the decision to bring Hudson’s Bay Company public in 2012?

RB: By 2012 we had reorganized the business, having sold Zellers and having put Lord and Taylor underneath the Hudson’s Bay Company. We had always felt that the Hudson’s Bay Company was an iconic Canadian company and that it should be listed on the Canadian Stock exchange and owned by Canadians as much as possible. So, at that time, we decided to take the company public again on the Toronto stock exchange. While we still own a large majority of the company, Canadians have an opportunity to own and share in the success of their most iconic company.

What drove you to push for the recent acquisition of Saks Fifth Avenue, and how do you see it affecting your bottom line over the next few years?

RB: Saks Fifth Avenue was a perfect match for the Hudson’s Bay Company. We worked on buying Saks for five years before making the transaction. The first reason it was a perfect fit was by combining the two companies we were able to reap a hundred million dollars a year plus savings due to synergies between the companies. Two, because of our infrastructure in Canada we were able to roll out Saks Fifth Avenue stores in Canada. Three, Saks had a very successful and well-organized online business.

What we were able to do was to capitalize on that asset and we have now reorganized the business so that all of our online businesses work together logistically – all underneath the Saks Fifth Avenue digital leadership. Additionally, Saks has a sale business called Saks Off Fifth. This online business we believe has tremendous growth opportunity and that’s a big driver for our growth going forward. Lastly, Saks gets us really into the luxury business, and in a

big-profile way. Saks Fifth Avenue is, arguably, one of the great distributors of luxury products in the United States and maybe someday internationally. The last thing was because of Saks’ tremendous real estate portfolio. We believe the value of real estate of Saks was worth more than we paid the entire company, so when you add all of those reasons together it was a very appealing opportunity for the Hudson Bay Company.

What lessons did you learn from the disappointment of your Linens ‘n Things deal?

RB: Life is about being able to deal with and overcome failure and then to being able to go on to do something else. Everyday all of us fail in different aspects of what we do, and successful people are able to overcome the disappointment of failure in order to accomplish their goals and be successful the next day.

I spent a lot of time talking to my team about how important it is to fail because if you never fail, you are not pushing the envelope hard enough; you are not trying hard enough. Great learning comes from failure; it is something we embrace and work through.

What trends do you foresee/have you seen that will help shape the future of the retail industry? How do you see the future of online retail and mobile commerce?

RB: I think online retail and brick and mortar retail CORNELL BUSINESS REVIEW | 24

FEATURE

“THE REAL ESTATE BUSINESS IS A VERY INEFFICIENT BUSINESS THAT GIVES YOU THE OPPORTUNITY TO POTENTIALLY BE VERY SUCCESSFUL.” are evolving very rapidly. What I believe is happening is that the winning formula is something that we call Omni channel. Omni channel is being able to service your customer anyway that he/she wants to be serviced. So, if a customer wants to buy products from us on their mobile device, on their computer, in a store, we have to be available to provide that capability. You can now shop any of our brands in that way but additionally, you can go to our store and if we don’t have something in stock or the right size and color that you want, we can ship it to you and have it to you in 2 or 3 days. This Omni channel version of retail gives large branded companies like Saks, Lord & Taylor, or Hudson Bay, the opportunity to be as successful or more successful at selling their products than an Amazon or an eBay. Customers still enjoy the entertainment and excitement of visiting a well-edited and well-operated retail store. Our analysis shows that customers are more likely to buy online from a retailer that they trust and a retailer that has a brick and mortar presence in the neighborhood or the vicinity in which they spend time. I think now there is a lot of change going on now and a lot of change ahead of us. I do think that the combination of online and brick and mortar make a very useful solution for people’s shopping needs.

Through the lens of an active alumnus, how have you seen the university - particularly the real estate and business curricula offered - evolve over the past few decades?

RB: Let’s talk about how important I feel my School of Hotel Administration education was to me even though I never went into the hotel business. The reason is, at SHA, they are teaching you about a concept called hospitality. And hospitality means taking care of your customers. All of us in business have customers whether you are an attorney, a dentist, a retailer, 25 | CORNELL BUSINESS REVIEW

or computer software designer. You have customers, and your responsibility is to take care of your customers, treat them the way they want to be treated, service them the way they need to be serviced. If you go through SHA and learn nothing else - real estate, accounting, marketing, operations - but you learn how important it is to take care of other people, to make other people happy, to take care of your customers, I think you have learned a whole lot.

And, I think, while the curriculum has changed over the years, the basics are still true, which is at SHA you are learning the business school type basic curriculum, and in SHA’s case, it is through the lens of being in the hospitality business. While I think this education obviously applies to the hospitality industry, I think that everything you learn in SHA is applicable towards other business ventures as well.

Do you have any advice for students interested in entering the real estate or retail industries?

RB: My personal recommendation is that you should get as much experience as possible in smaller firms or places where you will have exposure to transactions so that you can learn the day-to-day nuances of the real estate business. The real estate business is a very inefficient business that gives you the opportunity to potentially be very successful because not everyone understands what every building or what every space is worth at any given time. Unlike someone who is in the business of trading, buying, and selling stocks, everybody always knows the price of Google stock on any given day, a piece of real estate or a space inside of a building can change in an inefficient manner, which means that certain people can create profit at any given time.

Spotlight LOCAL ENTREPRENEURS

Yve-Car Momperousse Y

ve-Car Momperousse is the founder and CEO of Kreyol Essence, an agribusiness specializing in luxury beauty products made from organic ingredients from Haiti. In addition to being a social entrepreneur, she has founded eight non-profits throughout her career.

Yve-Car is currently pursuing a Master’s degree in International Agriculture and Rural Development here at Cornell and is the former Director of Cornell’s Diversity Alumni Program.

To begin with, could you tell us how you came across the idea for Kreyol Essence? What was your main inspiration or motivation for creating the company?

Yve-Car Momperousse: I had an event to go to at the University of Pennsylvania so I decided to straighten my hair for the occasion. My hair looked great for the event but, unfortunately, when I washed my hair a few days later, clumps of hair fell out. After crying and realizing that I had heat damage, it dawned on me that whenever we had any issue (hair, skin, body aches, etc.), my mom used Haitian Black Castor Oil, or as its known in Haiti, “Lwil Maskriti,” to solve the problem. There was always a little bottle under the bed where she kept this magic oil. I searched in stores and online for this organic castor oil but to no avail. Instead, I found a number of different women who wanted to get their hands on the oil without having to sneak it in from Haiti. I spoke to my mom and jokingly said that I should start a castor oil business, and she said it was a pretty good idea! We started to think about what the social benefits could be for Haiti: hiring women, working with farmers, 27 | CORNELL BUSINESS REVIEW

and so much more. From there, Kreyol Essence was born.

How has Kreyol Essence tangibly impacted Haiti?

YM: It is too early to share specific data, as we just completed our proof of concept phase. However, our investors, Haitian government officials, and community leaders are excited about the tangible impact we will have in the next three years. Kreyol Essence will solve complex economic, environmental, and social ills all through the sale of raw ingredients to manufacturers and beauty products to consumers.

There is a major need for small and medium enterprises (SEM’s) to operate in Haiti and create jobs; SEM’s are the economic engines to every society. My company will create over 300 jobs in the next three years. The company’s success will encourage other entrepreneurs to invest in Haiti.

Every year, hundreds to millions die from mudslides, hurricanes, and other environmental challenges. Since our products are made by planting castor beans on marginal land, the castor bean is one of the few plants that can restore degraded land in 6 months. This enables subsistence farmers to intercrop food on what was unusable land. Paying farmers to plant the castor bean as a business also helps with reforestation. Haiti has less than 1% of its forest intact. We will plant about 55,000 castor trees that generate continuous income. Other forestation projects have failed in the past because people make more money cutting trees than planting. Additionally, the castor plant will help with greenhouse gas emissions and global warming. These are some of the benefits that our investors

such as USAID, Yunus Social Business, and Deutsche Bank are excited about.

How will Kreyol Essence have an impact on women in Haiti, where women are considered the backbone of the country but are often the most vulnerable? Is there an impact on women in the United States?

YM: One woman told me that she had never had a formal job and that her husband abused her because she was completed dependent on him financially.

He reminded her that her job was to bear children and have sex with him. Once hired as a producer, she not only had money, but pride to stand up for herself.

I knew that I was going to help women get jobs, but I didn’t think that it would allow them to remove themselves from situations that are both mentally and physically dangerous for them.

Another woman with four kids told me that it would typically take her four-hours to travel to Portau-Prince to sell small quantities of castor oil.

Not only was her family suffering because she wasn’t home, but the market place she frequented is controlled by gangs who charge Right: Yve-Car Momperousse is a multifaceted social entrepreneur, institutional strategist and solutions engineer with a transnational focus on social and economic development.

Above: Yve-Car and her husband, Stephane Jane-Baptiste, displaying the range of their products.

women to sell their goods and steal from them. Since I am purchasing a steady supply of product from her, she doesn’t have to leave her village or her family to make money. I have a number of testimonials from our women producers and farmers that we hope to place on our website (www.kreyolessence.com) soon.

Here in the States, one benefit that I did not expect is that women have really responded to the diversity we showcase in our marketing. In addition to creating beauty products, I like to think of myself as an ambassador for what the standards of beauty are. Eurocentric beautify is not the standard and all women should be celebrated.

How do you see Kreyol

Essence growing in the future? (5 years from now, 10 years from now) YM: In the next few mvvvnths I will complete fundraising for our series A round of 1 million dollars.

Our goal is to reach 3 million in sales and create over 300 jobs by 2017. Kreyol Essence will disrupt the beauty industry by sourcing exotic ingredients and products from a country that is untapped and overlooked.

Forget the South of France; Kreyol Essence is going to make the South of Haiti the epicenter for natural and luxury cosmetics! We will be the first cosmetic brand from the Caribbean to reach scale through our hybrid B2B and B2C model.

who are interested in starting their own businesses?

YM: Mark Twain said, “to succeed in life, you need two things: ignores and confidence.”

A bit of ignorance is good. When you don’t know what your barriers are “supposed” to be as a woman or as a young person, you are not constrained.

I attribute many of my accomplishments to a bit of ignorance. So enjoy not knowing everything.

Confidence is paramount. Women feel they must master a skill or topic before they leap into it. Men are the exact opposite. Women should trust self, their destiny, and use their resources. Have people in your circle who are going to remind you that you are amazing, beautiful, smart, and that you can accomplish anything you want! This is important because the world is going to tell you differently.

As someone who is not What is your opinion on only female but of Haitian corporate social responsibildescent, and Black, when Proportion of Haitian forests currently intact ity? Do you think companies I walk into many rooms, today are pressured to make I am the only person who a positive contribution to looks like me, thinks like society? me, and has my backCastor trees to be planted YM: I think corporate ground. That can be seen as

by Kreyol Essence social responsibility is an advantage, but can also important, but needs to be something that shakes go beyond a 5-10% budget line item. me confidence. When I go to meetings From the onset, as a social entrepreneur, in Haiti, it is still very patriarchal. People I created a company that solves many of ask to speak to Mr. Momperousse or they today’s pressing problems in developing address my fiancé and business partner countries. Social responsibility is intefirst. I secretly enjoy their looks of disgrated into everything we do at Kreyol may when they find out I am the head of Essence so it’s not a forced activity. It is the company. part of the company’s DNA and is part Lastly, identify your outlets for of business as usual. Anyone with a difstress. Mine is prayer, CrossFit exercise, ferent belief system would not fit into the carrot cake, motivational speeches, and culture at Kreyol Essence. But just to be hanging out with very close friends. clear- that does not mean we don’t focus Whatever works for you, identify it beon sales and numbers like any other cause you will need it. business. If anything, as a social business, we focus on profit and sales even more because lives are at stake.

1%

55,000

As a successful female entrepreneur, what advice would you give to young women

CORNELL BUSINESS REVIEW | 28

SPOTLIGHT LOCAL ENTREPRENEURS

A

li Hamed, Cornell’s Class of 2014, is the co-founder of the Popshop and the founder of CoVenture, a firm that invests $30,000 worth of software plus $20,000 in cash into pre-seed startups before helping them raise their next round of financing. In the last year, CoVenture portfolio companies have raised 7 rounds of financing at over $5 million, done close to $10 million in revenue, and have been featured in publications such as Forbes, Fast Company, Refinery 29, Vogue, Mashable, Techcrunch, Venturebeat, and others. Ali is also a mentor to LaunchPad. io, Startup Labs, and multiple non-profits.

He blogs at medium.com/@alibhamed.

Tell us about yourself.

Ali Hamed: In high school I played right field better than I did in college. In college, I was hurt; I broke my back in few places. It’s hard to play baseball with two fractures in your L4 vertebrae. While I was hurt, I had time to build a website. I had the intention of making news easier to read.

I got interested to co-found a startup with someone I met through a mutual friend. We did the startup, hired a couple of people, and started building a company that was trying to use a natural language processing which extracts emotional sentiment from the news. Then, we would license that emotional sentiment to financial institutions, so that they can trade on public markets based on emotion. We thought the markets were based on the emotion of the market and the media. Ultimately, we ran out of money.

After that I did consulting for a bit, I wanted to start investing in startups, but we couldn’t write big enough checks where we could get into a deal that no one else could. So I got together with my clients and we said, “Look, we keep seeing these engineers at Google building big beautiful products that nobody needs because they don’t understand the 29 | CORNELL BUSINESS REVIEW

market problems right now. We keep on seeing college students build apps that help white affluent college students share photos and those aren’t solving problems for the world. While the companies that were giants in the ‘90s, like Oracle, Microsoft, and Google were solving technical problems. Today you have Airbnb, Uber, and companies that are getting really big, but those aren’t technical problems.

They are market problems. What kind of founder is going to solve the market problems? It’s going to be a different market founder than from the past.

Yet VC firms are still tailored towards past problems, those [technical] engineers. What if instead of writing them $25,000 or $50,000 checks, we could actually build their initial software.

Only take equity, not take cash, become their technical partner and help them raise their first round of institutional capital.

Our thesis has evolved in a couple of ways. First, we find people with domain expertise. That means that they worked in the industry for a while and they get the nuances of it. For example, one of our companies realized that one-third of the world’s hotels are not bookable online because they use something like excel or chalkboard to manage their inventory.

They said if we connect these people with inventory software and get them the hands of travel agents, then travel agents can see their real time inventory. All of a sudden, we’re bringing on these hotels from Africa onto the Internet and into the digital age. It’s the biggest industry in Africa. It’s totally archaic.

Why isn’t it in the digital age yet? It’s because people like me and people in Silicon Valley don’t see it.

What has been the most useful resource at Cornell that has supported your

interests in entrepreneurship?

AH: The Popshop. A few years ago, I didn’t have access or I didn’t know how to access entrepreneurial resources on campus. At the same time as the tech campus started to evolve, a group of students (I was included, luckily) got involved in co-founding the Popshop. The Popshop is a co-working space located off campus. We started very modestly.

We tested it out. We got enough rent money to make rent for one month in the store front. And we got furniture in there and asked people to show up. We tried to create this center for entrepreneurship and people just kept on coming.

As founders of the Popshop, there are six of us. One is now at Google[X] building Google Glass. One of them made partner at Andersen Horowitz, a venture capital firm. One is starting a company called Matter.io that was formerly out of Boston. It’s a great place where we can learn from each other and benchmark ourselves off of each other.

These are some of my best friends and they are incredibly motivating to me.

Cornell has done a better job as well.

Zach Shulman is a big supporter of the startups on campus. Dan Cohen from eLAB is a big supporter and brings alumni back. Professor Ben Daniel has been an incredibly inspiring person as Below: Ali working in the Popshop

Source: The Cornell Daily Sun

Ali Hamed

SPOTLIGHT

well and it has been great getting to work with them.

What advice do you have for someone who wants to start a business?

AH: I would say don’t start a business that targets college students. They are awful customers and have small life-time value. They are out in four years. They are not spending their own money; they are spending their parents’ money. They don’t care about saving money. You have to market to them individually, and to each campus individually. Don’t do a book swap/selling idea. I know it sounds great but it’s not worth it. The life-time value is small. Don’t try to help students figure out where the parties are or where they can hang out with each other. I hear these over and over and over again. I don’t care about photo-startups except Facebook, which has already happened. I would say go out and solve real problems.

Startups are so risky, so why not solve real problems. Swing for the fences.

Startups are like a 100mph fastball— they’re hard to hit—you might as well try to hit a home run.

What is the most valuable class you have taken at Cornell?

AH: Ben Daniel’s class was great. He is a very straightforward thinker. I think a lot of people think about entrepreneurship and think too hard about it. Just make something and just sell it to someone for more than it cost to make it and you have a business.

When you are using that analysis, what makes you choose the type of companies that you support?

AH: We look at the founders. Is the founder seeing something unique? Why are they uniquely positioned that they can solve the problem? Is it in a good market where the pendulum shift is really big in that market where we think that it’s about to hit an inflection point?

Do they have a clear revenue path?

Do they know how to make money? If those things check out, we love it when they run the business offline and try to

productize it by putting it online. We do background checks and check sales and see if they know how to manage a team.

We are interviewing them to be a CEO of a company. That’s what a lot of our due diligence looks like.

class in commerce and iOS etc. Another is convincing people they should work with us. Venture capital is not about picking good companies; it’s about picking good ideas that they should work with you.

Just what you took away from your first company. What it taught you?

AH: Don’t ask for money if you don’t know how to make more money later.

Also, make sure when building, know how to get from Point A to Point B to Point C and Point D. Another thing it taught me was to make sure that you are on the same page as your investors.

Where do you see CoVenture five years from now?

AH: We want to raise funding on top of what we have now. We think we have a proprietary source of deal flow due to the service we offer and the unique founders we work with. We want to put a fund on top of it to take advantage of this unique deal flow. The way we want to tackle institutions is through this experiment that we pick good companies. We can’t take our pro-rata typically. Pro-rata means that if we get diluted due to a company raising follow on financing, we have the right to invest more money to keep our equity stake. However, we can’t do this now because we don’t have enough cash. So, we want to raise money to keep our pro-rata so we can see our portfolio value in the future.

We are excited about the trajectory of the company, and hopefully we can raise the micro-seed fund or a bigger fund on top of that. Maybe one day we can have a holding company structure.

We can only do it a couple steps in a row.

We have to find 15 amazing people for the companies that make sense and help them take their steps forward.

Let’s move to CoVenture. how do you find these companies?

AH: Almost all of them come through our network. We have an application button in our website that I actually look at. But most of them come through our network: friends at accelerators, lawyers, business “STARTUPS ARE LIKE A develop100MPH FASTBALL— ment peoTHEY’RE HARD TO HIT— ple, people YOU MIGHT AS WELL TRY who work TO HIT A HOME RUN” in industries we are excited about, entrepreneurs we have invested in, and our own investors.. I have friends in different cities at VC firms and if the deal is too early for them, they send them to us.

What were some of the challenges you faced when starting CoVenture? How did you overcome these challenges?

AH: There are four things that will make it successful. One is having good deal flow so people know about us. The second is learning how to do due diligence.

The third is building amazing products.

The fourth is helping those companies raise money through financing.

Our network wasn’t as big when we started and we hadn’t built as many products as we have now. Every time we build a marketplace app we now build a marketplace where there was none before and know how to build new marketplaces. I think we are first in class in marketplaces and hopefully we will be first in

How do you incentivize talented people to join CoVenture?

AH: We are building companies that are going to change the world. You can go to a company, go write code, and never see the light of day. You might be working on a project that might be shut down. But, at CoVenture you are really important in helping build the company that if you don’t exist or write bad code, the company might fail. You are doing something incredibly meaningful that could be incredibly big one day. Every single project you touch, if that doesn’t get you excited, you shouldn’t be working for us.

CORNELL BUSINESS REVIEW | 30

FINANCE

COVER

Bitcoin: The Future of Currency?

BY KELLI KEITH INCEPTION

Bitcoin is a virtual peer­-to-­peer currency that was introduced in January 2009 by a programmer or group of programmers using the name Satoshi Nakamoto. In the aftermath of the financial crisis and the resulting monetary easing policies, Bitcoin was created to alleviate growing concerns of government manipulation of currency.

Bitcoin is designed as a decentralized currency that is not subject to fiscal manipulation by central banks. It provides users with an anonymous and secure means of exchanging goods and services electronically, without any intermediary such as a bank or credit card company. It is not backed by any precious metal and derives its value from complex mathematical coding.

“Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.” - M ­ arc Andreessen Bitcoin users can create or “mine” new Bitcoins by lending their computer resources to the network so that the validating and processing transactions can occur. The supply of Bitcoin is permanently limited to 21 million, of which approximately 12.5 million are currently in existence. These 12.5 million bitcoins can be broken down into infinitely small units. Therefore, the finite supply of the currency should not impede its circulation.

CURRENCY

There is growing debate as to whether Bitcoin demonstrates the necessary values to be considered a successful currency. Money is economically defined as anything that can be used as a medium of exchange, unit of account and a store of value.

Bitcoin, a currency still in its infancy, may or may not demonstrate the values of a successful currency. There are a few key events

FINANCE

BITCOIN GIVES US, FOR THE FIRST TIME, A WAY FOR ONE INTERNET USER TO TRANSFER A UNIQUE PIECE OF DIGITAL PROPERTY TO ANOTHER INTERNET USER that must occur for Bitcoin to become a sustainable currency. First, the price volatility of Bitcoin must stabilize. Bitcoins began in 2013 at a valuation of $13 per coin, and ended the year at $800 per coin.

This volatility will prevent widespread adoption of the currency, which is the second component necessary to make Bitcoin successful. Currently, 47 people own 29% of all Bitcoins, 930 people own 50%, and 10,000 people hold 75% of all Bitcoins in existence. This disproportional distribution of Bitcoins is an obstacle because approximately 90% of all Bitcoins are hoarded for speculative purposes. A survey conducted by The Street concluded that 74% of the public have never used a crypto­currency and did not have the desire to do so. However, more stable and secure exchanges could reduce the liquidity problems Bitcoin currently experiences. The collapse of Mt. Gox, a Bitcoin exchange based in Tokyo, Japan, after 850,000 bitcoins, the equivalent of $450 million, was stolen, exemplifies the need for secure and reliable exchanges.

The final element Bitcoin needs for success is the presence of start­ups to create products supporting its usage. There has been $117 million invested in Bitcoin start­ups worldwide, and there have been numerous supporters in Silicon Valley who see Bitcoins as a transformative technology with significant potential.

BITCOIN AND GOVERNMENT REGULATION

The issue of potential regulation of Bitcoin is controversial. Though only a fledgling currency, Bitcoin has already survived major scandals. One such scandal involved Silk Road, an online black market that specialized in the exchange of illegal drugs and other illegal products. Silk Road used Bitcoin’s technology, which allowed buyers and sellers to be connected and anonymously exchange goods. The FBI shut down Silk Road in October 2013, and seized 174,000 bitcoins, worth around $34.5 million, approximately 3.5% of all the Bitcoins in existence. This scandal raised questions about the legitimacy of Bitcoins, and

resulted in several countries releasing statements detailing their stance on Bitcoin.

Both China and Russia have declared bans against the use of Bitcoins. This regulation prevents Bitcoin being used for legitimate business practices. It is also inefficient since the major appeal of Bitcoin is that it can be used anonymously. Other countries such as Germany have made official statements that Bitcoin is not legal tender and cannot be used to satisfy legal obligations. Canada has taken a different approach and declared all Bitcoin transactions are taxable.

The United States has made strides to regulate Bitcoin to make it safer for consumers. In February 2014, New York State Department of Financial Services held a two­day conference to discuss the regulation of Bitcoin. This department is pushing for the issuance of “Bitlicenses” which will provide regulation to Bitcoin operators. Although no official requirements have been announced, Benjamin Lawsky, the head of the department, has indicated it will be looking for appropriate cyber security measures, capital reserves and a strong management team.

These are key in order to ensure Bitcoin exchanges are a secure, liquid and a safe investment for its customers.

BITCOIN’S POTENTIAL FOR LONG-LASTING IMPACT

The advent of Bitcoin creates a host of interesting new avenues for businesses, the first of which is in emerging markets.

HOW TO BUY BITCOIN

1. Before a bitcoin can be purchased, a user must install a virtual “wallet” onto a personal computer or mobile device.

The wallet, which is similar to personal finance software, keeps track of your bitcoin balance and all transactions.

2. To buy a bitcoin, real money must either be deposited through an online payment company or transferred directly from a bank account into an account on a third-party website that connects bitcoin buyers and sellers.

3. Once the funds are available, a buyer can place an order for a bitcoin, similar to trading stocks, through an exchange such as Bitstamp.

4. Bitcoins can also be purchased from third parties such as Bitinstant, which sends the coins directly into the virtual wallet.

Source: The Washington Post, April 4, 2013

CORNELL BUSINESS REVIEW | 32

FINANCE Bitcoin value varies, by typically averages

$14-$17 In 2011, there were

6,300,000 bitcoins in existence.

In 2016, there are predicted to be

15,000,000 bitcoins in existence.

WHAT CAN YOU DO WITH A BITCOIN?

Bitcoins can be used to buy from online vendors, such as George’s Famous Baklava in New Hampshire, which sold a dark chocolate pastry for 14 bitcoins in 2011 (worth about $1,900 today). Bitcoins are also being bought and traded as investments.

HELPFUL TERMS Bitcoin Client: Software that receives and sends Bitcoins.

Bitcoin Address: An alphanumeric identifier representing a payment destination, similar to email, required to send someone Bitcoins.

Wallet: Most often referring to a file that stores Bitcoin addresses and the private keys needed to use them.

Blockchain: A public list of all transactions ever sent. This allows everyone to know which Bitcoins belong to whom.

Private Key: A hidden secret number related to an address, which permits access to send Bitcoins. If the key is lost, the currency in the wallet is gone forever.

Bitcoin Network: The network of computers through which Bitcoin transactions are broadcasted. It also helps maintain the blockchain.

Bitcoin Protocol: This means that every node in the network is required to download a copy of every Bitcoin transaction.

Miner: Someone who helps create blocks added to the blockchain. If a valid block is created, the miner receives 50 new Bitcoins from the Bitcoin protocol. This is the process through which all Bitcoins come into existence.

33 | CORNELL BUSINESS REVIEW

Illustration by Charlie Tark

Currently, only 20 countries in the world have fully developed brick­ and­ mortar modern banking and payment systems.

This prevents fully­online services from capturing these markets. However, Bitcoin provides a secure reliable payment system where businesses can receive payment from anyone, anywhere. Due to this important feature, Bitcoin can bring an important feature to businesses in emerging markets that do not yet have modern banking and payment systems.

Bitcoin has the possibility to greatly reduce the amount of money people pay throughout the world. There are two major groups that this will impact. First, there are remittances that emigrants send back to their home countries. These payments are estimated at $550 billion this year according to World Bank, and commercial banks charge 9% remittance fees and an additional 5% if the consumer wants to turn the payment into cash.

Using Bitcoin technology, Buttercoin, a start­up company, is proposing to transfer remittances for under 1% commission.

Allowing these workers to send money home will increase the general usage of Bitcoins.

Additionally, Bitcoins will make it easier and cheaper for companies to ac-

cept online payments. Bitcoins have no transaction fees like banks or credit card companies. Using products like Bitpay, another start­up using Bitcoin technology, companies are able to turn their Bitcoins into immediate cash.

THE FUTURE

Looking towards the future, what would it take for Bitcoin to become a successful business currency? The most pressing step is the need to make Bitcoin a generally accepted method of payment. Bitcoin has a little or no transaction fees, which makes it very appealing to businesses with low margins. However, many businesses are skeptical to use Bitcoin because of the risk involved. In order for Bitcoin to become a universally accepted form of currency, there would need to be increased security measures to prevent the theft of Bitcoins. This is where government regulation should step in, in order to make sure that these companies are legitimate and safe for consumers. As the infrastructure for Bitcoin’s continues to develop, it is definitely a currency to watch.

Kelli Keith (kak293@cornell.edu) is a junior at Cornell University majoring in Applied Economics and Management.

FINANCE

Education’s New Business Model

BY NICHOLAS RAWLINSON

F

OLLOWING A DECADE OF TRE­ mendous growth, American universities are facing numerous challenges that are forcing them to implement significant structural changes to their business models. From 2001 to 2009, for­profit higher education enrollment exploded, growing by 325%. Since 2011, however, that trend reversed and a steady decline in for­profit enrollment has begun. At the same time, low degree completion rates continue to pose a major problem to all universities—an issue worsened by the mixture of reduced state funding and increased cost of university maintenance.

Average tuition today consumes almost 40% of the median earnings in the US, when only a decade ago it accounted for less than a quarter of household income.

As a result, total student debt had exceeded $1 trillion in 2013.

Despite its problems, the value of receiving a four­ year degree remains substantial. According to a study conducted last year by DePaul University, college graduates earn 64% more than those with only high school degrees, and there is an estimate of an annual 15% fi-

group takes in order to meets individuals needs, the managing and organizing of the group to produce its products or services, and the effective structuring of costs and resources to remain financially sound. In the 21st century, business models for both profit and non­profit universities must begin to address its results and effectiveness by combining a host of metrics like job placement rates, salary growth, cost per degree, student satisfaction and other indirect measures.

Recently, Massive Open Online Courses (MOOCs) have generated a great deal of interest within academia and the public. On March 2nd, Cornell opened up two new MOOCs to the public for free, one titled “Networks, Crowds, and Markets” and the other “American Capitalism: A History.” Cornell now has four MOOCs operating online as part of its partnership with edX, a MOOC platform created by MIT and Harvard that aims to increase the accessibility of university­ level courses. MOOCs are exciting, and have a role in shaping future university nancial return for those with college debusiness models primarily for two reagrees. Furthermore, universities remain sons. First of all, they allow universities incredibly important to generating ecoto physically expand and add students nomic growth and business development without the financial constraints that for their surrounding communities. One new infrastructure or increased labor recent study found that for every dollar would otherwise demand. As The Econinvested in the University of Minnesota, omist wrote last month, “Adding stu$13.20 was generated for the state. The dents is expensive — and so a university’s importance of higher education in enmarginal cost of production is high... in hancing the quality of American labor is a competitive market, where price cononly increasing as well, as skills needed verges toward marginal cost, modern to be effective in the 21st century contineducation is dear.” Second, MOOCs can ue to demand training in a host of techfundamentally change higher education nical skills. In order by distributing its serto best deal with the MOOCS CAN FUNDAMENTALLY vices or products to issues it faces and to CHANGE HIGHER EDUCATION BY the masses, in a highly continue to grow as DISTRIBUTING ITS SERVICES OR democratizing manan industry, higher PRODUCTS TO THE MASSES, IN A ner. Underprivileged education must be- HIGHLY DEMOCRATIZING MANNER. communities can, gin to reevaluate its more easily than ever business models and incorporate aspects before, gain exposure to professors and of high quality online education into its experts of the highest quality on a host of structure. topics of their choosing.

A business model does not necesThere are indeed valid issues relatsarily refer to an organization that is creing to MOOCs. MOOCs have very high ated or managed like a traditional busidropout rates, which in some occasions ness with the aim of maximizing profits. can reach 90%. Online education firms Instead, it means the approach that a insist that the vast majority of students CORNELL BUSINESS REVIEW | 34

FINANCE

who enroll in a MOOC with the stated intention of completing it do so, and that the dropout rate reflects the great number of people eager to explore this free, online product. That being said, it is certainly a phenomenon that needs to be examined more closely. Next, there are obviously learning model impracticalities that arise from being taught over the web. Issues from how to generate stimulating discussion with active student participation to the difficulty to properly grade thousands upon thousands of papers arise. The emotion and feedback that activities such as discussions and personalized comments can provide are at risk of being lost online.

Critics of MOOCs often point to the vast differences between MOOCs and traditional classrooms as evidence of the difficulty to effectively create and practice education in an online platform. As UC Berkeley professor David Kirp wrote, “While modified MOOCs hold great promise, the pure MOOC model looks like a failure...there’s there’s no cheap solution to higher education’s woes, no alternative to making a serious public investment, no substitute for the professor who provokes students into confronting their most cherished beliefs.” Many of those who question the pure MOOC approach are right—MOOCs and college classrooms are not the same thing, and online education is not a fix­it­all solution.

Yet recognizing this should not throw MOOCs under the bridge. MOOCs must not be viewed as a replacement for the familiar classroom setting, but rather they should be viewed with a nuanced outlook that is excited to explore their immense potential to provide education for the masses.

Contrary to some negative press reports and the occasionally negative attitudes of university administrators, online education is not a threat to traditional education. The launching of MOOCs has served as a supplement to the role of the actual classroom, allowing universities to both cut costs and provide educational resources to any who seek it.

Higher education institutions must now embrace 21st century realities and inte35 | CORNELL BUSINESS REVIEW

grate far­reaching online education into their framework, or else their longevity will indeed be threatened. As MOOCs become more commonplace and a greater number of universities begin to offer expansive online courses, existing issues like how best to provide course materials, proctor exams, and provide personalized attention while stimulating critical thinking, can be solved. MOOCs are flexible, and their growth rate implies with little doubt that they are here to stay.

In impleHIGHER EDUCATION menting modMUST BEGIN TO ern business REEVALUATE ITS models these BUSINESS MODELS institutions AND INCORPORATE must recogASPECTS OF HIGH nize how best QUALITY ONLINE to compete EDUCATION INTO ITS in this comSTRUCTURE. petitive and dynamic market. In terms of strategy, a university can either look to offer a wide range of products to its customers–students, or to appeal to a niche market

and excel in a few, focused programs.

Both strategies can be highly effective depending on the nature of the institution. Branding and the different marketable attributes of a university will become increasingly important, as students will have a broadened choice in what courses or universities to enroll in. Universities can use MOOCs to build this unique brand, as well as develop their online technologies to enhance learning options, and provide students will increased flexibility to expand their own educational goals. Through acting boldly and embracing 21st century online and technological realities, revised higher educational strategies can help institutions deal with many of their most pressing challenges while transforming the institutions for the better, and for the future.

Nicholas Rawlinson (nmr55@cornell.edu) is a sophomore at Cornell University majoring in Government.

FINANCE

Robinhood: The Future of Trading

BY ALEXANDRE MARINIER

F

OR THE SMALL­TIME ASPIR­ ing investor, trading through an online brokerage such as E*Trade or Scottrade comes with costly commission fees–usually $9.99 to buy or sell a position. Robinhood founders Vladimir Tenev and Baiju Bhatt are looking to shake up the traditional brokerage model by offering zero commission trades via their new mobile platform. The aptly named Robinhood is a trading application that lets users trade for free and does not require an account minimum. Free trading levels the playing field and opens the doors to younger investors with less capital to invest in financial markets. With a sleek and easy to use mobile interface, the Robinhood app is set to capture the finance­minded college demographic.

So how does Robinhood make money? First of all, operating costs are kept to a minimum by using state of the art trading technology. After the founders dropped out of Stanford almost a decade ago, the two of them headed to Wall Street to build sophisticated high­frequency trading platforms for some of the world’s largest hedge funds. After noticing that their big time Wall Street customers only paid fractions of a penny when placing trades, they decided to launch a company that would bring the same highly efficient technology to the everyday investor. Robinhood also cuts out all the fat that makes traditional brokerages expensive such as costly advertising, legacy technology, and hundreds of storefront locations. Its revenue will come from the interest derived from lending money to investors for margin trading, and later offering premium services for more active investors. It does not take much to support such a lean, electronically based brokerage platform, and Robinhood wants to pass on the savings to its users in the form of free trading.

Robinhood, however, is not the first company to attempt a commission free trading model. A company named Zecco, (which derives its name from “zero commission cost), launched in late 2006 with a similar business model.

As its name suggests, the firm initially offered free trading to its customers. Yet by 2008, free trading was restricted to

customers with a minimum balance of $2,500. The next year, free trading was restricted to customers with a minimum balance of $25,000. Finally in 2011, Zecco came forward and halted free trading altogether as it could not manage its costs. The company was plagued by other problems such as customer service complaints and an embarrassing incident on April 1st when a glitch caused many Zecco accounts to show a multi­million dollar account balance.

A Robinhood spokesperson was adamant that his company would not be another Zecco.

He explained that Robinhood had done their research on Zecco’s failed commission free model, and that the same cutting edge technology the founders brought from their high frequency trading days would ensure a reliable, efficient, and free service. It also helps that Robinhood currently has some of the brightest young minds from schools like MIT, Caltech, Stanford, and from companies such as Facebook , Oracle, and E*Trade working in their Redwood City, California office.

The employees of Robinhood are not the only ones who believe commission free trading can work. The fledgling company has already raised over $3 million in its seed round from several of the most credible names in Venture Capital including Andreessen Horowitz and Google Ventures. In addition, Robinhood has already preregistered close to 300,000 future users. The beta, launched in late March 2014, began granting access to the first few thousand on the waiting list. Expect a public launch in the coming months, and in the meantime one can preregister for the app at robinhood.com. For the future Warren Buffets of the world who might not yet have billions of dollars to spare, Robinhood offers a sleek and free mobile solution to trading and has the potential to revolutionize the brokerage industry.

Alexandre Marinier (adm258@cornell.edu) is a senior at Cornell University majoring in Hotel Administration.

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INTERNATIONAL

Minimum Wage Hikes

imum wage and demographic changes could potentially remove this obstacle.

BY SAGAR GALANI

IMPACT ON DOMESTIC BUSINESS

»» USA and China are increasing their minimum wage at the same time. How will this affect American businesses? »» An increase in minimum wage has implications that go far beyond the labor market.

I

N 1938, PRESIDENT FRANKLIN D. Roosevelt implemented the first minimum wage in the United States as a means of creating fair labor conditions for workers. Today, the decision of a government to manipulate the minimum wage goes far beyond looking at just employment conditions. Recently, the United States and China have both indicated that they will increase the minimum wage in their respective countries.

Through the evaluation of the economic impact of raising the minimum wage and the trade relations between China and the United States, it is clear that American businesses will potentially face increased demands in the agricultural and waste sectors while facing lower prices in the technological sector.

nomic Institute reported that an increase in the minimum wage has an overall long term positive effect on a nation’s GDP. An increase in GDP will create jobs, thus counteracting the short term job loss.

GENERAL IMPLICATIONS OF MINIMUM WAGE INCREASE

CHINA

USA

President Obama’s campaign to raise the minimum wage to $10.10 an hour has caused much controversy in the nation.

The Congressional Budget Office (CBO) reports that although an increase in the minimum wage would result in a loss of jobs, “the number of workers who would get a raise far outweighs those displaced.”

The research also indicated that the wages of families with higher incomes would decrease by 0.4% due to increased costs and reduced profits.

China does not have a nationwide minimum wage, but instead certain municipal and provincial governments are responsible for setting their own minimum wages. That being said, like the government of the United States, the Chinese government has stated that they intend on increasing the average minimum wage by 13% annually until 2015.

China has also set its sights on becoming the new reserve currency. The only issue with its plan is that its currency is too volatile. An increase in the min-

Studies by the World Bank conclude that changes in minimum wage more notably affect the wage of workers in smaller firms as opposed to larger ones. According to the Federal Reserve Bank of Cleveland, workers earning near the minimum wage are negatively affected while higher paid workers are affected much less by such policy changes. This is because the distribution of higher wages is implemented through changes in hours worked and employees hired. The Eco-

»»

Manufacturing activity moves to countries with cheaper costs

Relaxing the One-Child Policy

»»

Increase in Chinese Population

»»

Economy can develop into a serviceoriented one

»»

Larger workforce & greater demand for goods

»»

Increase in minimum wage

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»»

Reduces volatility in the currency

An increase in China’s minimum wage implies that there will be an increase in consumption. Currently, China’s biggest imports from America are agricultural products and waste & scrap. Since Chinese consumers are demanding more, it is likely that their demand for foreign goods will increase as well. Hence, China is more likely to import from these sectors. America’s agricultural exports to China have increased in value from $5 billion in 2003 to $26 billion in 2012 making China America’s largest agricultural importer. An increase in minimum wage would push this growth.

The government stated that an estimated 500,000 jobs will be lost by the end of 2016 due to the increase in the minimum wage. Noting that smaller businesses are the ones most affected by such policy changes, we can expect drastic employment effects in the United States.

The most likely effects will be a reduction in training positions and wages and employed hours, especially in smaller firms.

These factors could contribute to a reduction in overall earned income.

CONCLUSION

As we can see, the simultaneous increase of the minimum wage in China and the United States impacts trade relations on a global scale, and significantly impacts American businesses as well. While members of the technology, agricultural, and scrap/waste sectors would benefit from the increased international demands and higher incomes, certain small businesses will undergo a certain level of job cuts. However, any data used for analyses in predicting minimum wage implications is at best, a guess. The extent to which American businesses will be impacted depends on how quickly the minimum wage laws are enacted in both countries, and the relationship between China and America.

Sagar Galani (sg674@cornell.edu) is a sophomore at Cornell University majoring in Applied Economics and Management.

EVENTS GALLERY

April 10-11, 2014

E@C Demo Day On April 11th and 12th, Entrepreneurship @ Cornell hosted a Celebration Conference with events ranging from a business roundtable with the chairman of Priceline to the Big Idea Competition. Overall, this annual conference fosters communication between students interested in entrepreneurship and allows them to participate in related activities. One of the popular competitions – the Big Idea Competition allows undergraduate students to submit creative ideas and pitch it to an audience of entrepreneurs, faculty and peers with the possibility of winning cash. The main goal of this project is to help students who think they might be interested

to have support and the opportunity to gain some first hand experience and feedback. A similar event during the conference was the Playground Start-Up Career Fair sponsored by RECESS – music and ideas festival aimed to bring together new startups and inspire upcoming entrepreneurs. The conference will likely continue to grow and attract more students in the coming years.

-Nabiha Keshwani PHOTOGRAPH BY EMILY HE

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EVENTS GALLERY

April 8, 2014

Bill & Melinda Gates Hall One of the newest additions to our Cornell campus is Bill & Melinda Gates Hall. The new building is home to Cornell’s CIS departments, which consist of Computer Science, Information Science, and Statistics. The building mission is to combine technology and research. Since the building’s opening this past August, the programs offered within the CIS departments have reached thousands of Cornellians, across multiple colleges.

The new building was completely funded with no additional debt before ground broke in April 2013. The Bill & Melinda Foundation generously donated $25 million to start the project and another $60 million was funded through donors from almost every Cornell college. CIS associates stressed the need for open, well-lit, and collaborative space, so the world-renowned architecture firm, Morphosis Architects was contracted.

Morphosis Architects, founded by Thom Mayne, is known for its innovative and iconic buildings. Overlooking the Hoy Baseball Field, CIS students have glass box-seats to every game. This iconic 101,455 square foot building is also very focused on sustainability. Gates Hall is LEED Gold certified and making an effort to be as green as possible. As a relatively young program—a 14-year-old college-level interdisciplinary program—CIS has flourished. The Cornell CIS departments, have stated their bold mission, “to be the national model for education and research that supports the information economy,” and Bill & Melinda Gates Hall is giant leap forward to achieving that goal.

-Benjamin Hearns PHOTOGRAPH BY ALVIN CAO

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EVENTS GALLERY

April 9, 2014

Life Changing Labs Speaker Series On Wednesday, April 9, Life Changing Labs presented a double feature event with Cornell Alumni, JB Osborne and Eric Young. The event took place at the co-working, entrepreneurial space, the Popshop, and featured roughly thirty students all linked with a shared passion for the venture, and startup fields. The event also included two student start-up pitches, both of which were critiqued and advised

by Osborne and Young. This networking event is just one among many that Life Changing Labs hope to sponsor in their continual efforts to foster a growing entrepreneurial community here on campus.

JB Osborne is the CEO and founder of Red Antler, a startup-focused branding and design agency base in New York and San Francisco that has worked with VEVO, Birchbox, Stumbleupon, Maria Sharapova, Rent the Runway, and many other startups.

Osborne began by discussing the unique characteristics of his company and went on to debunk many of the misconceptions in the branding and marketing industry.

Osborne finished with a Q&A session where he discussed his transition from a global advertising agency to starting his own company and the plethora of challenges he faced along the way. Osborne left the audience with a final thought, “You’re going to have to sacrifice if you believe in what you’re doing”.

Eric Young is a co-founder and managing partner for venture capital firm Canaan Partners, which has over $3.5 billion under management and has invested in successful startups for the past 25+ years.

Prior to Canaan, Eric was a Senior VP of GE Venture Capital, where he led successful investments in companies such as Nellcor and Octel Communications. Eric discussed the rising trends in the venture field and also addressed the importance of female presence in the entrepreneurial sphere.

-David Hauser PHOTOGRAPH BY ALVIN CAO

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