Talk Business and Politics July/August 2015 by Talk Business & Politics

July/August 2015

John Brummett Hillary, Huckabee & Arkansas Voters Sen. Hattie Caraway On the Money The Mediator PSC Chair Ted Thomas Technology Roundtable The Internet of Things Lt. Gov. Tim Griffin Common Core: What Weâ&#x20AC;&#x2122;ve Learned So Far

AEDC Chief Mike Preston

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Contents July/August 2015 5 Publisher’s Letter Commentary

7 Frank D. Scott, Jr.

Welcoming Silicon Valley

9 Kathy Deck

Hurry Up and Wait

61 Lt. Gov. Tim Griffin

The Common Core Learning Curve

63 Martin Thoma

Startups Need Branding Strategy

64 Pat O’Brien

Cuban Cultural Exchange Profiles

18 Impact Management Group’s Steady Expansion

22 Business Is a Summer Breeze For These Entrepreneurs

26 PSC Chair Ted Thomas

Prepared For Life

30 Amy Bradley-Hole Gets Saucy Industry

42 Transportation

A River Runs Way Through It

44 Construction

A Highway Funding Slowdown

48 Sports

The SEC Wins Again

50 Energy

A Decade Low For Drilling

52 Manufacturing

Getting Into Gear

54 Health Care

66 68 70

State’s Medical Providers Not Ready for Coding Switch Hometown: Texarkana The Optimistic Renovation of the Grim Hotel Regional Northwest Arkansas Qbox Survives to Succeed Wal-Mart’s CEO on the Past, Present & Future Benton County Wage Growth Leads Nation In Improvement Northeast Arkansas

72 Ritter Communications CEO 73 Hattie Caraway for the $10 Bill

82 32 Cover Story: The New Jobs Chief

Mike Preston is Gov. Asa Hutchinson’s new executive director at the Arkansas Economic Development Commission. Rex Nelson finds out what he’s bringing from the Sunshine State to the Natural State.

Features

10 Hillary, Huckabee and Arkansas John Brummett explores voter psyches as two semi-home state candidates take

41 Insights 80 Leadership

Sixth Sense: The Signature Job Interview Question

national center stage in the 2016 presidential race.

74 Tech Roundtable: Are You Ready For This?

82 Executive Q&A

Wyzerr’s Bjorn Simmons

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Three technology leaders in Arkansas offer their thoughts on the future of technology, its impact on your everyday life, and how to grow the next generation of leadership.

COVER PHOTO BY BOB OCKEN

From the Publisher

Don’t Sit Still Talk Business & Politics is owned by River Rock Communications and is published six times a year. For additional copies, to be included in our mailing list, or for information about advertising, contact Katherine Daniels at katherine@talkbusiness.net. July/August 2015 Publisher & Editor-in-Chief Roby Brock roby@talkbusiness.net Art Director Bryan Pistole DesignMatters LLC bryan@designmattersllc.com Editor Bill Paddack bill@talkbusiness.net Contributing Writers Larry Brannan Steve Brawner Jeanni Brosius Wesley Brown John Brummett Kerri Jackson Case Michael Cook Rex Nelson Casey Penn Kim Souza Michael Tilley Jason Tolbert Michael Wilkey Photographers Stephanie Dunn dunnmsteph09@yahoo.com Tim Rand pix@trand.com Bob Ocken bob@ockenphotography.com Kat Wilson katographic@gmail.com Vice President Operations Stephanie Baker stephanie@talkbusiness.net Vice President Sales & Marketing Katherine Daniels katherine@talkbusiness.net

If you have a personal conversation with our cover story subject – new Arkansas Economic Development Commission Executive Director Mike Preston – you’ll be immediately struck by a few first observations. He is a good listener. He doesn’t come into the conversation suggesting he has answers to Arkansas’ economic problems, although I do think he has some ideas. He seems genuinely kind and eager. And, he exudes an aura of energy – Mike Preston strikes me as the kind of guy who doesn’t sit still. I like people with that energetic force. In old school terms, they are considered “movers and shakers.” In new school terms, they are “entrepreneurs or doers.” They tend to make things happen in a positive way. I hope you’ll read more of Rex Nelson’s cover story on Preston to learn more about what the young 30-something Preston brings to the table and to understand better the state’s economic development history, which has fundamentally changed over the last 50 years and is on course for another major transformation. At Talk Business & Politics, as we continue in our 16th year, I’m amazed at how much has changed in the last decade and a half and where I see the future of media heading. We are certainly omni-channel with our focus on TV, radio, web, magazine, email and several new directions we’re heading. One of those directions I hope you’ll learn much more about will provide many of our business and political readers a greater in-depth approach to the news. We have embarked on a series of new microsites to focus on more industry-specific reporting. In addition to our daily business and political news feeds that you’ll find on our home page at TalkBusiness.net, you can also read deeper coverage of important industry sectors, such as Startups, Tech, Manufacturing, Energy, Health Care and Tourism. Just type in TalkBusiness.net/Startup for example and you’ll land on the page. You’ll find daily news stories in these categories that may not always make it to our general readership front page because the subject matter is more industry in-depth. You’ll also find opinion columns and videos from industry experts and links to additional industry resources, such as regional or national reports or other websites carrying information of interest. More microsites (and other platforms) are being planned in some obvious and not-soobvious categories, so stay tuned. “Don’t sit still” is a good motto for us at Talk Business & Politics these days. We’re not making changes for the sake of change. We’re making moves to provide you better access to our news and to help you stay on top of your game. As always, your ideas and input are welcome. I hope you’ll share as we all move forward. Sincerely,

Printer Democrat Printing & Litho River Rock Communications 8308 Cantrell Road Little Rock, AR 72227 501.529.1737

Roby Brock Publisher & Editor-in-Chief

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Commentary

Why Silicon Valley Juggernauts Should Put Down Roots Here By Frank D. Scott, Jr. Frank D. Scott, Jr., regularly writes opinion columns that appear on talkbusiness.net. He can be reached by email at fdscottjr@gmail.com. Follow him on Twitter: @FrankDScottJr

ov. Asa Hutchinson recently spent time in Silicon Valley where he visited Facebook, LinkedIn, Google and several other tech leaders. Many think this visit was already planned, but expedited due to recent developments surrounding Arkansas’ Religious Freedom Restoration Act (RFRA). Whatever the catalyst for the governor’s trip, this is a great move in furthering the state’s push to attract tech companies, and with them, much-needed jobs. As I discussed in an earlier article (available on talkbusiness.net) about our state’s startup culture, Arkansas colleges and universities have a track record of offering programs including pitch competitions and business plan contests that help prepare students to be entrepreneurs and innovative problem solvers – exactly the kind of talent tech companies need.

It is as important as ever that we continue to embrace innovative approaches to show tech companies why they should call the Natural State home.

ARKANSAS’ ASSETS Now, our state is leading the way as the first state in the nation to pass legislation and set aside funding for all high schools to offer computer science courses to students. The combination of these existing and newly launched efforts puts Arkansas on the path to building a strong pipeline of highly-skilled tech and innovation workers. Arkansas also has many assets that would be highly beneficial to tech companies seeking to attract additional millennials from outside the state. Our state’s low cost of living, family-friendly communities, and low home prices are a great fit for millennials who are still early in their

careers, but looking to put down roots somewhere their hard-earned income can afford them a high-quality lifestyle. Moreover, Arkansas workers avoid the crazy commute times that have climbed upwards of one hour for many in Silicon Valley. Arkansans can instead spend the time they would have spent sitting in traffic exploring the beautiful mountains, trails, rivers, lakes and wildlife that give us our name the Natural State. Beyond the human capital advantages our state has to offer, we have also fostered an environment very conducive to doing business. Arkansas is home to seven Fortune 500 companies, most of which were homegrown. The state also has a relational atmosphere that allows business leaders to collaborate and get things done. In this way, the Natural State’s small size is an advantage as it allows easy access and coordination between business, community and political leaders. THE COMPETITION Despite all we have going for us, we have to keep in mind that Arkansas is not the only state in the region making a play to attract tech giants from Silicon Valley. The state of Georgia touts its high-quality university systems, low cost of doing business and strategic positioning as an international transportation hub thanks to its network of ports, railways and Atlanta’s Hartsfield Jackson International Airport. Louisiana has also thrown its hat into the ring, turning itself into a gaming hub by luring companies like Electronic Arts and Gameloft largely through tax incentives and customized job training programs. As we look to strengthen our state’s economy with good quality jobs, it is as important as ever that we continue to embrace innovative approaches to show tech companies why they should call the Natural State home. The computer coding initiative is a good first step, but let’s don’t stop there. Our neighbors and competitors are unlikely to stop their efforts, so it’s incumbent that our leaders bring additional innovative thinking to the forefront.

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Commentary

Despite Employment Gains, It’s Still Hurry Up and Wait By Kathy Deck Kathy Deck is the director of the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas.

s the Arkansas and United States economies hum along, enjoying month after month of employment gains, a sense of unease about this expansion remains firmly planted in the public mind. In the U.S., more than 14.6 million jobs have been created since the bottom of the Great Recession in January 2010, 80,600 of those jobs in Arkansas. Those paces of job creation are respectable when viewed in any historical context and are more than respectable when the duration of the expansion (more than five years) is considered. But, even though employment has grown so well, the stagnation in average income growth has left many people feeling like the economic expansion is a lie.

Employers in both the state and nation continue to report that the available workforce is missing the skills that they are looking for.

LOW GROWTH RATES In the nation, average hourly earnings at private businesses have grown only 1.9% annually since January 2010 and in Arkansas average hourly earnings have only increased 1.1% annually. Growth in average personal disposable income

(adjusted for inflation) has been 1.5% per year. These low growth rates in income correspond to a time period where inflation has been quite modest, growing at only 1.7% per year since 2010. All of these “one-point-something” growth rates tell the story of an economy where pricing pressures are constrained. Workers have not been able to argue successfully for higher pay and businesses have not been able to ramp up the prices of their products, by and large.

There are signals that this stranglehold on wages is under strain. A number of large companies, including Arkansas’ own Walmart, have announced that they will increase the hourly wage rates of their lowest paid employees over the next couple of years. The National Federation of Independent Business, a small business advocacy group, reported the highest level of increased labor compensation among its membership since January 2008. Various states (including Arkansas) and municipalities have passed legislation to increase the minimum wage, in the hope that these extra dollars will help make ends meet for those workers. In many places, health-care costs are growing more slowly than in the recent past, which opens the door for employers to reward their workers with raises rather than with increased contributions to health insurance premiums. The most recent data on job openings showed that the country has more than 5.3 million available and the quits rate (an indicator of worker confidence) was at nearly pre-recession levels at 1.9%. If workers feel like better wages are available at their next employer, then there will be economy-wide upward pressure on pay. But, these would-be newly hired workers have to prove their value to the firm. PRODUCTIVITY DOWN Employers in both the state and nation continue to report that the available workforce is missing the skills that they are looking for. Another disconcerting sign is that worker productivity, as measured by output per hour, has fallen during three of the last five quarters and the growth rate has been trending down during the recovery period. On a monthly basis, economists in Arkansas and the rest of the country are right to note the strong job growth that this recovery has provided. There will be even more reason to celebrate when solid income gains accompany that employment picture. As ever, the data provide some hope that those wage increases are imminent and also some caution that the wait is not over yet.

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Feature

HILLARY, E E B A K C U H THOSE - AND

FICKLE

S A S N A ARK S R E T O V

Musings on lingering sentiments for the semi-home presidential candidates in Arkansasâ&#x20AC;&#x2122; new political climate. By John Brummett The author of this article is a regular columnist for the Arkansas Democrat-Gazette. ILLUSTRATION BY SHAFALI ANAND

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Feature: Hillary, Huckabee

rkansas, ever a peculiar place, either has two presidential candidates or none, unless you could say, as you probably can, that it has one more than it has the other. Hillary Clinton, a native Chicagoan, left Arkansas in January 1993 to join her husband in residence in the White House. She, and he, now live in Chappaqua, N.Y., but are residents of the world, really.

Mike Huckabee, from Hope, left Arkansas not long after losing his bid for the Republican presidential nomination in 2008 and landing a nice-paying gig as host of a Saturday night talk and entertainment show on Fox News. By 2011 he had built for himself and his wife Janet a big Ramada Inn-looking mansion within yards of the gulf waters on the Redneck Riviera in Florida, where, by the way, the state charges

no income tax. So the question for these purposes is whether there is a true Arkansas candidate in the presidential field. Is there a significant continued relationship with Arkansas for either of these candidates? Is there significant residual favorite-son or favorite-daughter identification and support in either case? The best and fairest answer seems to be that Huckabee has a stronger continuing personal presence. And it is that he also enjoys the advantage of the state’s having gone wholesale Republican since he left, and in a way he could not influence himself in nearly a dozen years as a minority governor. And there is new polling to confirm that. MAKING A CASE FOR DAD Sarah Huckabee Sanders, Mike and Janet’s daughter and campaign manager for her dad, makes a case, and not a bad one, that her dad is still at least partly Arkansan. For one thing, Sarah herself lives in Little Rock and has bestowed grandchildren, including one born this spring, on the proud Huckabees, who continue to maintain a residence in North Little Rock and spend occasional evenings there. Hillary, on the other hand, has a granddaughter who lives in Manhattan in a $10 million block-long apartment – the longest apartment in the city, it is said. Hillary has no residence in Arkansas, and, in fact, lived only briefly in the state in anything other than public housing. Huckabee has placed his presidential campaign headquarters in Little Rock. Hillary’s campaign headquarters is in Brooklyn. Huckabee announced his candidacy in Hope, perhaps to advance his theme as a veteran Clinton rival. Hillary announced her candidacy on Roosevelt Island on the East River in New York City. Huckabee was governor of the state recently enough – for nearly a dozen years until January 2007 – that he still has a sufficient number of appreciative associates and patronage recipients in Arkansas to have put together in early June a series of well-attended fundraisers in the state. Official hosts of those events included

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

every current statewide constitutional office-holder and congressional delegate except U.S. Sen. Tom Cotton, an alwaysspecial case. Cotton is financially and philosophically tied to the economically conservative Club for Growth, which sees Huckabee as a big-spending populist. And Cotton is rather clearly ambitious for himself, though apparently not in the presidential context for 2016. The vice presidential context might be another matter. Even Gov. Asa Hutchinson, once considered a rival of Huckabee for state Republican preeminence, has signed on as an endorser of Huckabee, though it’s probably for convenience. Formally aligning with a home-state associate who may not last long in the presidential race gives Hutchinson an excuse not to choose now among fellow Republican governors running or perhaps to run – Chris Christie of New Jersey, Scott Walker of Wisconsin, John Kasich of Ohio, Bobby Jindall of Louisiana and Rick Perry of Texas. Two current constitutional officers – Attorney General Leslie Rutledge and Treasurer Dennis Milligan – are close former associates of Huckabee. Rutledge worked for Huckabee’s governor’s office and Milligan’s chief of staff is Huckabee’s brother-in-law. Lt. Gov. Tim Griffin works now for Huckabee’s campaign as a consultant, though, as Griffin publicly insists, he is unpaid. LONGTIME SUPPORTERS The Huckabee fundraisers were hosted otherwise mostly by usual suspects, such longtime Huckabee-ites as Lisenne Rockefeller, Johnny Allison, Steve Landers, Ed Bethune and Rick Caldwell. Perhaps the most notable host was the multi-millionaire class action lawyer from Texarkana, Johnny Goodson. He has become perhaps the state’s most active political money man and power broker. That’s up to and including being married to Courtney Goodson, the justice on the Arkansas Supreme Court likely to run next year for chief justice. “He’s a personal friend. He’s been very

kind to me,” Goodson says of Huckabee. He explains that their relationship is a Texarkana thing, based largely on mutual friends and going back to Huckabee’s early-1990s stint as pastor of the Beech Street Baptist Church there. It also is possible that Goodson, once identified as a Democrat, is performing the perfunctory motions of supporting Huckabee because of the coalescence

around the former governor of the state Republican establishment, which his wife will need in her supposed nonpartisan race for chief justice in a newly Republicanized state. It probably should be noted that daughter Sarah helps Huckabee with his continued Arkansas ties. While he’s been entertaining in New York and living on the beach and traveling to give speeches, she has run a

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Feature: Hillary, Huckabee Republican consulting business in Arkansas and worked for John Boozman, French Hill and others. By Sarah’s planning, Huckabee spoke at a series of rallies last fall for the overwhelmingly victorious Republican ticket. His help might not have been needed or even of much consequence. But it was appreciated. Hillary, on the other hand, has only remnants of remaining personal relationships in Arkansas, where the politics has roamed far from the domination, or even the influence, of her husband. Her closest and dearest Arkansas associates – her parents, Diane Blair, Vince Foster – are deceased. She is said to stay somewhat in touch with Ann Henry of Fayetteville and Patty Howe Criner of Little Rock. Otherwise, her chief political friends currently operating in her behalf in Arkansas seem to be Bob Nash, who worked for Bill as governor and president, and Sheila Bronfman, a long Clinton associate and political consultant in Little Rock who,

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ORGANIZATIONAL MEETINGS Bronfman says that she and Nash and others have helped put together small grassroots organizational gatherings for Hillary supporters in Little Rock, Fayetteville, Texarkana, Russellville, Hot Springs, Helena and Conway. Actually, the Hillary campaign – adopting the Barack Obama ground-game model – has been holding such gatherings across the country. Bronfman says that about half the people attending have been unknown to her, a confirmed Clintonite since 1978. House parties around the state on the occasion of Hillary’s formal announcement were hosted mostly by people she didn’t know, Bronfman says. That’s a good thing, and by design. The New York Times has explained that Hillary is basing her campaign more on Obama’s experience in 2008 and 2012 than her husband’s in 1992 and 1996. She is running to appeal to a narrower leftish base and devoting efforts early to organizing from the grassroots with new and younger blood.

(Those gatherings are to be distinguished from a briefing conducted for about 70 or

The Republicans are electing 30-somethings and the Democrats are having appreciation dinners for yesteryear’s superstars pushing 70. At least that’s how some see it.

80 confirmed and veteran Clinton insiders, aides and donors at a private residence in Little Rock in early May by John Podesata, former chief of staff to Bill and now Hillary’s campaign chairman. He reportedly laid out national strategy and stressed the need for early donations and ground-level organizing, but didn’t commit any particular effort in Arkansas.) Hillary likely won’t be competitive in Arkansas if she gets to the general election, as expected, regardless of the Republican nominee, who, most people predict, won’t be Huckabee. But Arkansas Democrats say she can raise money here, line up workers here for deployment elsewhere and generally buoy the beleaguered state party by energizing the base. In fact, Hillary will speak July 18 at the state party’s Jefferson-Jackson Day Dinner at Verizon Arena. She will generate dollars for the party. She will create buzz. She will bring energy. She will fire up old friends and true believers.

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Feature: Hillary, Huckabee Beyond that, though, there seems to be a schism of sorts among Arkansas Democrats – one that’s a little generational, actually – about the lingering umbilical cord linking the gloried Clinton heritage in Arkansas and the contemporary focus of a generally devastated state Democratic Party. THE POST-CLINTON ERA It is about whether and how to negotiate

what seems to be the post-Clinton era. Dale Bumpers is within days of his 90th birthday. David Pryor is 80. Bill Clinton and Mike Beebe push hard against 70. There are exasperated younger Democrats – not to be identified for obvious reasons in the seeming heresy they express – who complain about the party’s self-destructive unweaning from past glories, even a continuing obsession with them, while the

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party has collapsed and the Arkansas Republicans have advanced and elected a new generation – Cotton, Griffin, Rutledge. The Republicans are electing 30-somethings and the Democrats are having appreciation dinners for yesteryear’s superstars. At least that’s how some see it. Some Democratic activists – younger, mostly – say the party needs to set about rebuilding from the county level up, and by promoting rural Democratic officials in addition to higher-profile younger ones in Little Rock such as state Reps. Clarke Tucker and Warwick Sabin. They say that any surviving notion that Hillary’s presence on the ballot in 2016 will revive happy days is sadly misguided. She’ll do better than Obama, but probably no better that Al Gore, who lost the state and thus the presidency, most trained Arkansas political observers agree. Indeed, even Bronfman, chief among the unreconstructed Clintonites, agrees that the last election cycle proved that there is no applicable Clinton magic anymore in the state. “Bill did everything he could,” she says. He came to the state time and again to speak at rallies, to keep his word to Democrats who’d waged their campaigns with his promise of timely help, and Democrats got utterly creamed. That’s why, Bronfman says, it’s wise that Hillary is running a different kind of campaign and organizing from the bottom up to attract new people. Even so, Bronfman says she has a list of about 600 persons signed up to be “Arkansas Travelers” and go to New Hampshire or Iowa or elsewhere for Hillary. She says she never had more than 550 or so signed up at any one time for Bill. There are some mostly younger Arkansas Democrats who think a continued reliance on the Clintons as a source of hope and optimism is at risk of destructive perpetuation through Hillary’s presence on the ballot in 2016. Bronfman says she accepts the political reality and is inclined to believe Hillary can’t win Arkansas ... except, she stresses, for that ever-present factor she calls “you never know.”

She recalls that she and everyone else assumed throughout 1991 that George H.W. Bush, fresh from the war victory liberating Kuwait, could not possibly be denied a second term. In a few months, she was celebrating that her friend Bill Clinton had beaten him. For the time being, though, the latest polling shows with great clarity that everything points to a better climate in Arkansas for Huckabee – and not so much for him personally as for any Republican – than for Hillary, or for anyone associated with Obama or running by his model. THE SURVEY SAYS In a survey of 1,183 voters conducted June 8-11 by Talk Business & Politics along with Impact Management Group and Hendrix College, respondents – 80% robo-called and 20% participating online – provided this snapshot of the Arkansas electorate: • 43% said they’d vote in the Republican primary March 1 and 30% said they’d vote Democratic that day. • Obama’s approval-disapproval rating in Arkansas remains in previously unencountered territory in terms of unfavorability, with 33% of respondents approving and 63% disapproving. • Hillary Clinton’s approval rating is 38% and her negative 53%. • Huckabee’s approval rating is 47% and his negative 35%. • In head-to-head competition, Huckabee defeats Hillary by 51-37%. • But a generic Republican candidate actually beats Hillary by a wider margin, 50-33%, than the 14-point one that the semi-home state GOP candidate Huckabee can fashion. Clinton picks up four percentage points herself, and peels one point from the opposition, when paired against Huckabee specifically rather than any old Republican candidate. The empirical data thus confirms the anecdotal. Arkansas is a Republican state now, first and foremost because of the uncommon

popularity of Obama, to whom Clinton is tied. “I still see one more anti-Obama election in Arkansas,” says Richard Bearden, head of Impact Management. Obama won’t be on the ballot in November 2016, but he’ll still be in office and the news, still irking for whatever reason nearly 70% of Arkansas voters. The Floridian Huckabee is not over-

whelmingly popular in Arkansas in a personal sense. He is less popular than a generic Republican, in fact. But that association alone – Republican, that is, not native Arkansan – gives him powerful advantages in the state of his grandchildren. That’s especially so when he is paired against a New York woman who was Obama’s secretary of state and is running a campaign like Obama’s.

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Profiles Service PHOTO BY BOB OCKEN

(Left to right) Robert Coon, Terry Benham, Richard Bearden and Clint Reed.

Making an Impact Well-connected consulting firm is on the cutting edge in its multi-practice areas, but still places a real value on relationships. By Steve Brawner

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

ow connected is the Impact Management Group in Arkansas politics? As a political consulting firm, it’s helped two-thirds of the state’s current Republican lawmakers get elected and yet still has good relations with many Democrats. Two of its principals and two of its staff members have served as executive directors of the Republican Party of Arkansas (RPA). As a lobbying firm, it scored a 92% success rate on the issues it tried to influence in the 2015 General Assembly. That’s not bad for a firm that started with two young Republicans being “patted on the head” by the state’s political establishment. Impact Management was founded in December 1999 by Richard Bearden, who had been the RPA’s executive director, and Terry Benham, a former RPA field director and political director. The two had grown up in an era of Democratic dominance but became Republicans nonetheless. Most of Benham’s family members were Democrats; his uncle, in fact, was a “hauler” in Lee County, which Benham said meant he was “the guy that gets the pickup truck on Election Day and goes and fills it up” with voters. But Benham’s grandfather was a Republican, which piqued his curiosity, and he came of age when Ronald Reagan was president. As for Bearden, “I was 16 years old in 1980,” he said. “I put up yard signs for Ronald Reagan and Frank White, and Ronald Reagan and Frank White won not only the Smackover box but Union County, and I was convinced beyond a shadow of a doubt it was all those durn yard signs I put up, so I was hooked.” EARLY WORK The two became political pros during the 1990s while working together for the RPA. At the time, the party controlled what barely can be described as a “minority” in the Legislature – 19 out of 135 members in 1996, the year Mike Huckabee became governor. Bearden left the RPA and formed his own consulting company, Capital Resource Management. Behham moved to Louisiana to become the Republican Party’s executive director in that state. When he returned to Arkansas to start his own company, the two didn’t want to compete, so they merged. During the early years, Impact’s work was

split in two directions: political campaigns in election years, and public affairs and lobbying work otherwise. Microsoft was their first big client. Republicans weren’t winning many races in Arkansas, and at the Capitol the two were “kind of the young puppies on the porch getting the scraps,” Bearden said. They were treated OK because no one saw them as a threat. According to Clint Reed, now a principal and previously, like Bearden, an RPA executive director, “They were patted on the head.” In 2003, the firm had one of its first big lobbying wins. The Legislature was debating

“From an issue standpoint, I don’t view them as Democrat or Republican. They represent issues that I don’t think strike a partisan tone.” – State Sen. Bruce Maloch, D-Magnolia

what eventually would become the Civil Justice Reform Act, a broad-based tort reform. Bearden and Benham wanted to work on the tort reform side, but no one would hire them and in fact, one business lobbyist pointedly told them they weren’t needed. Wilkes & McHugh, a law firm representing abused seniors, instead hired them to either kill the entire effort or remove the nursing home tort bill from the batch and kill it by itself. Impact succeeded in killing the nursing home bill. “We were lined up against pretty much everybody in the lobbying community, and

we won, and of course when we won, I think that kind of put us on the map a little bit. People started at least taking us seriously,” Benham said. ABILITY TO COMMUNICATE The firm expanded its political and public affairs activities throughout the South and at times beyond. It managed 38 media markets in six states for Ford Motor Company. In 2005, it hired Robert Coon, now a principal. In 2009, Reed joined the firm after serving as RPA executive director and then regional political director for the Republican National Committee during the 2008 cycle. The firm now has grown to 10: eight in Arkansas, and two in its Baton Rouge office, which opened in 2005. Two staff members, Chase Dugger and Megan Tollett, also served as RPA executive directors. Today, the business is divided into one-third lobbying, one-third public affairs and onethird elections. “That’s ultimately the skill set that we all have is communication, because whether it’s political campaigns, public affairs, lobbying, all of it, it’s the ability to communicate, the ability to take a client’s priority and figure out how to message it the right way to a constituency group,” Coon said. Balancing the campaigning and the public affairs/lobbying sides of the business can be a challenge. Bearden was lobbying one Democratic legislator at the Capitol who, as he turned to walk away, realized that Bearden had managed his opponent’s campaign and let Bearden know he had realized it. He voted against everything Impact supported, Bearden said. That’s still a difficult balance, but it’s easier now. The firm’s lobbying business has grown significantly now that the political establishment has realized the Republican majority probably will be the norm in Arkansas for a while. Impact has worked at some level, either directly or indirectly though the state party, to elect almost two of every three Republicans in the Legislature. In 2014, it did not lose a single Republican Party primary. It managed the Republican Governors Association campaign for the Arkansas governor’s race and managed the RPA’s coordinated legislative campaign. It also handled Congressman French Hill’s direct-mail efforts in the 2014 election. www.talkbusiness.net

Profiles: Impact Management All that work helping Republicans win their majority comes in handy during legislative sessions when Impact is working for its lobbying clients, which include the U.S. Chamber of Commerce, AT&T and Southwestern Energy. The firm says it had a 92% success rate in achieving its client goals in the past session, an impressive ratio considering lobbying firms often are hired to support things that are hard to pass. PRODUCTIVE RELATIONSHIPS “You hold these guys’ hands through political campaigns,” Reed said. “To me, that’s a distinct advantage I think we have among the lobbying community … we’re dealing with these guys 8, 9, 10 o’clock at night. They trust you. They value your opinion. They rely on you to give them good advice, and so when they’re at the Legislature, a lot of times you have an advantage in being able to communicate with those people.” Meanwhile, the firm has developed productive relationships with Democratic

lawmakers as well. State Sen. Bruce Maloch, D-Magnolia, said he “consider(s) Richard a friend.” “From an issue standpoint, I don’t view them as Democrat or Republican,” he said. “They represent issues that I don’t think strike a partisan tone.” Impact often has worked in a bipartisan fashion. In 2009, it helped Gov. Mike Beebe and a client pass a tobacco tax to pay for a statewide trauma center. It helped pass the private option, the program supported by a coalition of Republicans and Democrats that uses Medicaid dollars to purchase private insurance for lower-income Arkansans. Impact was criticized when the private option was hanging by a thread in the Legislature, and it worked to elect state Rep. Terry Rice, R-Waldron, a privateoption opponent, who was running against state Sen. Bruce Holland, R-Greenwood, a private-option supporter. Important people were calling saying there would be repercussions. But Rice and the firm had a longtime relationship, and besides, he was the client.

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

“We’re a communication firm,” Benham said. “We have run campaigns in this last campaign cycle where we had one candidate that was for the private option and one candidate that was against the private option, and we were dropping mail pieces almost within the same weeks advocating both sides of that issue. And why? Because we’re a communication firm. Our clients don’t come to us and say, ‘Hey, where do I need to be on this position?’ ... They say, ‘Here is my position on this issue. How do I best communicate that to the people I want to represent?’ And that’s what we do is we help them communicate.” EMBRACING DIGITAL MEDIA How the firm communicates is changing. Political campaigns are less about persuading people to support a candidate and more about defining voters and crafting the right message that will motivate them to go to the polls. The firm conducts extensive polling – more and more of it online. (It’s a polling partner of TB&P.) Meanwhile, enormous amounts of information on voters are available through digital analytics. The things voters buy and their online activities tell political firms like Impact Management much about how they will behave politically. At the same time, Impact is devoting more advertising to digital media for both its political campaigns and public-affairs efforts. Last year, it hired 20-something guru Skot Covert as its director of digital media. Unlike traditional media, digital media can be shared and take on a life of its own, and it can be measured. Benham said Impact had a client that wanted to do an issue campaign on the East Coast, so $30,000 was spent on a 60-second pre-roll ad – the kind that appears on YouTube before the video. It had more than half a million hits in three days, with an average view of 37 seconds when browsers could have clicked off the ad in 15. That’s a big change, but some things will remain the same. Former Speaker Tip O’Neill’s declaration that “all politics is local” may no longer be true, but making an impact politically is still about communication, and that’s what Impact has been doing since 1999.

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Profiles Service PHOTOS BY BOB OCKEN

Tara Allen and her children – Kizzie (left, getting a shaved ice from owner Jeff Burris), Camron and Carl – are regular customers at the Hobo Joe’s shaved-ice trailer on South Street near Interstate 30 in Benton that is run by Burris and his wife, Holly.

Standing Out Food stands – like Hobo Joe’s and Melon Boyz – smack of smart business sense. By Casey L. Penn

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

ould you walk or drive a short distance from home or work to buy a frozen treat, specialty dog or fresh-fromthe-patch melon? Arkansas food entrepreneurs Holly and Jeff Burris and Hunter Harris are betting on yes as the answer. Sources like Entrepreneur. com bear out such expectations in articles listing food-stand ventures (vegetable stands, ice-cream stands, hot dog carts, etc.) as low-investment, high-profit-potential business startups. It seems that capitalizing on the public’s yearning for roadside refreshment smacks of good business sense. SATISFYING A SWEET TOOTH Take Hobo Joe’s, a shaved-ice trailer known for its semi-permanent stand on South Street near Interstate 30 in Benton. Co-owner Holly Burris is a business major, certified teacher and mom; husband/ business partner Jeff is a hunting guide by trade. These days, you’ll find them in a small space, serving up finely shaved ice topped with one of 50 Hobo Joe’s flavors – favorites include Tiger’s Blood, Wedding Cake and Sugar-Free Strawberry. In addition to operating from South Street, the couple uses a trailer to take their product mobile. A big investment, the trailer is paying off by allowing Hobo Joe’s to serve regional businesses, ball tournaments, festivals, and schools and charitable organizations. Recent stops have included Riser Nissan in Hot Springs and Civitan in Benton, where they recently served 220 smalls in two hours. Customers include school kids, area business people, ball-team parents and anyone within about a 30-mile radius who has a sweet tooth. Prices range from 50 cents to $3 a “cone,” though what Hobo Joe’s serves is not a snow cone. “It’s normal for people to call it a snow cone, but it is shaved ice. With a snow cone, you’re eating chunks of ice and syrup at the bottom. Shaved ice is much finer. The flavor sticks better,” says Holly Burris, who believes that quality products and low prices are the company’s key customer incentives. “We don’t skimp on thick, sweet syrup, and we pride ourselves on low prices,” adds Burris. “Business-wise, Hobo Joe’s 50-cent small probably isn’t our best decision, but it’s a service to families who have four or

five kids if they can come to us and, for two dollars, get their kids – all of them – a treat. We would rather sell a bunch at a low price than to stand around hoping people will spend $4 on a shaved ice. We’re actually a quarter higher than Hobo Joe’s of Malvern, which we refer to as our ‘mother ship.’” Burris smiles as she speaks of the separate business owned by her aunt and uncle, Vickie and Kelly Hodges. Kelly Hodges bought a Hobo Joe’s 32 years ago, and the business has since remained in the family. “He sold it to my grandma, who later sold it back to him. Vickie runs it now, and serves as a good example for us to follow.” Vickie Hodges serves primarily from a stationary building on Moline Street in Malvern. She also has a small trailer that

“I knew that when it comes to getting started, people often don’t borrow enough money or don’t go big enough.” – Holly Burris

she uses for local events. “We’ve been here so long. Kids that worked for my husband 30 years ago bring their kids now. I hate to raise prices, because we have such a loyal customer base,” says Hodges, noting nearby competitors who charge three times as much. “I have a couple who drive from Hot Springs because, even with gas, it’s cheaper to buy here than to buy in Hot Springs.” WHY SHAVED ICE? Burris worked at Malvern’s Hobo Joe’s as a senior in high school – an experience that went into her family’s choosing to go into the business. “I learned to operate this business from familiarity. It’s not rocket science, and there’s a lot of work to it. You’re carrying ice, loading and unloading. It’s not glamourous, but customers usually wear

a smile. They stand in line for it, and kids think it’s just magic. They watch you make it and they enjoy it,” says Burris. Her husband, too, decided it was the right business for the family. “My husband had a guide service in the winter, and this fit well in the summer time, when it’s hard to find a job that lets you off three months out of the year. He recently sold his duck lodge. With us having two kids, his being gone for 60 days was not fun anymore. Instead, we’ve gone full time with Hobo Joe’s here in Benton.” Burris used her business knowledge to avoid common pitfalls of starting a business. “I knew that when it comes to getting started, people often don’t borrow enough money or don’t go big enough,” she said. With that in mind, the couple decided early on to establish one stand and wait until demand called for a second one. Their initial loan investment paid for an ice machine, a trailer, flavors and equipment while leaving them a little extra capital. Now in their second season, they’re closing in on the initial loan payoff, seeing plenty of demand, and thinking on the future. “Purchasing a truck would give us two windows and allow us to pull up, plug in, serve and get out of the way,” says Burris. “Challenges include funds and manpower. Trucks are expensive, and you have to find people you can trust to run them, who can go out on a whim. We want to go bigger, but it’s an uncertainty right now.” Burris encourages fellow-minded entrepreneurs to do their homework before starting a business. Know city licensing and ordinances and request help on the front end from small business centers such as the Small Business Development Center at Henderson State University. Check out Hobo Joe’s, which has officially started its second season in Benton. Plans also include extending the selling season, which went into October last year. Meanwhile, a different, but equally sweet foodbased business has been growing, freshfrom-the-vine, in the Heights area of Little Rock. IT STARTED WITH A WATERMELON Young entrepreneur Hunter Harris took quite a leap of faith during his sophomore year of high school. To be more specific, the young 16-year-old took a three-hour drive www.talkbusiness.net

Profiles: Standing Out that led to Cave City and, ultimately, to a thriving retail sales business centered on watermelons. “I can’t tell you how frightened I was to spend $700 on fruit,” says Harris, who, along with buddy Dillon Bond capitalized on an idea by bringing a handful of the state’s most famous watermelons (and cantaloupes) to Little Rock with which to set up shop. “When you double your money selling melons on the roadside, it feels good.” (A graduate of Pulaski Tech Culinary School, Bond is now a chef at Arthur’s Steakhouse.) Started that simply, Melon Boyz is still going strong in Central Arkansas, and Harris has graduated from Pulaski Academy and is now a part-time student at the University of Central Arkansas. He is the owner and operator of not one, but two businesses – the second being a production company centered on a television show called Spartan Outdoors on the Sportsmans Channel. The show, since this past January, has been airing on Sunday nights at 5:30 internationally (Canada, U.S., Africa and Europe). “I had the dream to start Spartan Outdoors even before the watermelons,” shared Harris, who saved his annual profits from the melons – it has more than doubled every year – to buy production equipment and hire a producer. “We went on television for

the first time just 10 days before my 19th birthday. Since then it’s paying for itself. It’s my main gig and what I do for a living, but I do the watermelons every summer. It’s something not a lot of young people have done, and it’s fun and rewarding.” And profitable. Melon Boyz has grown substantially each year, and now employs seven full-time sellers during the week and up to 15 most weekends. AN EARLY MORNING DRIVE “We operate stands in Little Rock – look for us out on Rahling and Pebble Beach and in front of Steinmart on Cantrell road,” Harris said. “We currently have extended to Hot Springs and Conway on the weekend, and we are growing. We’re looking to move into the Benton/Bryant area this season.” Daily operation, for Harris, begins with an almost daily drive to Cave City every weekday morning – as in, middle of the night. Harris gets up around 3 a.m. to start the drive, and is usually back to his crew by 9 to 10 each morning. “I’ll sell on the weekends, but during the week, my job is to go get the melons. After I divvy up melons, I’ll take a short nap and spend the rest of the day checking on the stands, taking care of everybody.” “Taking care” of his stands, which sell from 9:30 a.m. to dark or sold out, whichev-

er comes first, includes things like bringing workers water and lunch, supplying someone with a long break now and again, interacting with customers, and making sure the melons are sold when fresh. “We sell them

“Don’t let people tell you that limitations in your life … are going to set you back from doing something amazing.” – Hunter Harris

in one day, and if some are left, we’ll sell them the next day. We keep them shaded and stored overnight. If they go longer than that, we’ll take them to the Little Rock Zoo and feed them to the monkeys.” No joke. The monkeys benefit from Melon Boyz’ quality control. “We pride

Hunter Harris, now in his fourth melon-selling season, is a big believer in Cave City watermelons.

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

ourselves on being the best, and that’s why we ask $10 per watermelon because they’re big, sweet and fresh. And it works out well because I usually end up with season passes to the zoo.” Customer interaction is paramount, too. “We treat customers right,” says Harris, adding that 90% of his business is from repeat customers. Another 5% is new customers, and the last 5% is made up of area restaurants like Arthur’s and Chenal Country Club. In finding a supplier for Melon Boyz, Harris and buddies began by visiting every melon stand in Cave City. They ate a lot of watermelon (oh, the sacrifice!) until they found the sweetest melon. Once found, they sought out John Patterson, who is now their exclusive wholesale supplier. Harris talks about the challenges of starting such a business while in high school. “I started as a sophomore, the first year I could drive. It started out with just me selling from a trailer in front of Trinity Assembly of God Church (we’re no longer selling from

there). It was challenging. I was a football player. You get two weeks off all year long. We practice in the heat of the day. It meant many early mornings, super tired.” RUNS IN THE FAMILY Still, he did it thanks to a supportive family and an entrepreneurial spirit. “Everybody has their gifts. I can’t spell,” he said. “That’s something I’m really bad at. But I think I’m pretty good at problem solving. I love the experience.” Harris comes from a long line of entrepreneurs – a father in construction, a grandfather with a used car lot, a mother who owns Pout, a cosmetics store next to Bonefish Grill. “I believe I was born with an entrepreneurial spirit,” he said. “It’s watermelons, so it’s fun and it tastes good, but more than anything else, I love the business side – the managing of it. I feel the same about Spartan Outdoors. I love to hunt. I have a passion for it, but more than anything, the business is the rewarding part for me.” To others looking to turn their passion

into a business, Harris advises thankfulness, determination and willingness to work. “I don’t take credit for what I’ve done. I think God used me as a vessel. I’m blessed to be given opportunities and to capitalize on them,” he says. “I think of David. He was young, yet he was called to do something great. He made mistakes, but he was still anointed by God. Don’t let people tell you that limitations in your life – your age, your lack of degree, etc. – are going to set you back from doing something amazing. I know that with hard work – and with God – anything is possible.” Harris, who is in his fourth melon-selling season, backs up the statement by many Arkansans that Cave City melons really are the “the world’s sweetest melons,” as opposed to Hope’s melons. “That is true,” he assures. “Hope argues that it has the world’s largest watermelons. Cave City says they have the sweetest watermelons. The inside makes the melon. If you want a big melon, go to Hope. If you want a sweet watermelon, go to Cave City. It’s like candy.”

Arkansas Arts Council • Arkansas Historic Preservation Program • Arkansas Natural Heritage Commission Delta Cultural Center • Historic Arkansas Museum • Mosaic Templars Cultural Center • Old State House Museum ArkansasHeritage.com www.talkbusiness.net

Profiles Service PHOTOS BY BOB OCKEN

Great Fit State Public Service Commission Chairman Ted Thomas is perfectly suited for his new role as mediator. By Wesley Brown

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

or those familiar with the inner workings of the state Public Service Commission, there may not be a better equipped person than Ted. J. Thomas to handle the rigors, complexity and oversight of what many consider to be the state’s most important regulatory body. Appointed by Gov. Asa Hutchinson in January to chair the state department that regulates the intrastate rates and services of the public utilities operating in Arkansas, Thomas’ background perfectly matches the qualities the governor said he was looking for in an appointee for the post. “This appointment is a critical one – both in terms of economic development and consumer protection – and striking the right balance is key,” Hutchinson said in January. “Ted recognizes how important this balance is and understands the significant role it plays as we attempt to create a strong environment for economic growth in Arkansas. In addition, Ted is one of the brightest people I know, and I am confident he will make our state and people proud in his new position.” LEGAL BACKGROUND Thomas, a graduate of the University of Arkansas School of Law, is a former state representative from Little Rock. He served in the Legislature from 1995-1999, where he chaired the influential State Agencies and Governmental Affairs Committee during his final term. He also sat on the staff of former Gov. (and current Republican presidential candidate) Mike Huckabee as a budget aide, which prompted some political speculation that he would be named by Hutchinson to oversee the Department of Finance and Administration. Thomas also played an important role as a political strategist in the recent wins that gave the Republican Party all the constitutional offices and a majority in both the House and the Senate for the first time in state history. But it is Thomas’ legal background that makes him comfortable in his current position. The Conway native graduated with “high honors” in political science from the University of Arkansas at Fayetteville in 1986 and two years later received his Juris Doctorate from the university’s School of

Law. He is licensed to practice law before every level of the nation’s court system, all the way up to the U.S. Supreme Court. Not only has he served as the chief deputy prosecuting attorney for the 20th Judicial District, he spent seven years working as an administrative law judge at the very body that he now oversees.

“It is an honorable thing to be in the corporate world, and at times you can probably make more money doing that, but the focus and motivation that I get from public service is more gratifying.” – Arkansas PSC Chairman Ted J. Thomas

In a wide-ranging interview about his interesting and varied public service background, Thomas said he had eschewed a possible more lucrative career path in the corporate world for a calling in government because it “gets him up each morning” knowing the work he does will make a difference. “It is an honorable thing to be in the corporate world, and at times you can

probably make more money doing that, but the focus and motivation that I get from public service is more gratifying,” he said. “It is that motivation that you are helping people that makes you do a better job.” COMMISSION EXPERIENCE Although all those earlier preparations and career stops were excellent groundwork for his current role as PSC chairman, Thomas said it was his past time served at the commission that has allowed him to get back up to speed at a regulatory body where dockets include complex and voluminous rate case filings involving billions of dollars that sometimes take years to work through. The former lawmaker said there is less of a “learning curve” now because he is already familiar with the rules and day-to-day operations of the commission and has relations with most of the PSC staff. “The seven years I was here before was a positive professional experience. And a lot of the folks here are the same, although there has been some turnover and retirement, but part of my view coming in was that it was a good place to work. There are good folks here,” said the Republicanappointed chairman, adding that he has a great working relationship with fellow PSC commissioners (and Democratic appointees) Lamar Davis and Elena Wills. FINDING WORKABLE SOLUTIONS By definition, the PSC regulates the intrastate rates and services of the public utilities in Arkansas that provide electricity, natural gas, water, telephone service and pipeline safety. The tax division of the PSC also determines ad valorem assessments for property tax purposes on public utilities and carriers, including telecommunications providers, electric, gas and water utilities, pipeline companies, railroads, airlines, barge lines, cable television providers, motor carriers and bus lines. And even though the agency is almost always involved in adversarial cases with multiple parties and petitioners seeking an outcome that benefits their interests, Thomas said he enjoys sifting through all those varied viewpoints and coming up with workable solutions. “For me, I enjoy studying and reading, and getting as many perspectives as I can www.talkbusiness.net

Profiles: Great Fit get a hold of, including those that I tend to agree with and those that I might disagree with, to try to get as much information and sort through it,” Thomas said. “At this stage in life, I am fairly confident that when I have the time to do all of that, I feel I can find a reasonable answer.” Thomas said that he first sees his role as a PSC commissioner as working within the framework of Arkansas law. “While we have the authority to set rates, it is not a blank sheet of paper. The rates have to be set on the basis of costs.” Although Thomas cannot speak publicly about rate cases that are before the PSC, he is fully aware that one of the first major issues he will oversee is Entergy Arkansas’ recent rate case filing in April. Public hearings on the state’s largest utility’s request to recoup $167 million in new revenue for costs associated with upgrading the state’s electric grid will begin in early January 2016. In speaking generally about electric utility rate cases that come before the PSC, Thomas said there are usually two sides to the rate-making process. Primarily, there are proceedings where the PSC hears and takes testimony and then gathers information from the utility and the varied consumer interests. “That’s a proceeding to get the total amount of dollars that the utility is entitled to.” Secondly, the commissioners then have to figure out how to split out those costs between residential and commercial interests, he said. “Electric rates are an important factor in economic development, and we have to keep that in mind. But at the same time, when you drive through the cities and towns in Arkansas, you don’t see a lot of rich folks that can take a large increase in their electric bill.” CONFLICTING REGULATIONS When asked to name some of the key issues ahead for the state regulatory body, Thomas did not cite any specific cases or trends on the horizon. However, he said that the “volume of change” in the industries that the PSC regulates is impactful on every decision. “There is so much going on, and that

makes it a challenge,” Thomas said, specifically citing conflicting regulations by the U.S. Environment Protection Agency that could have a huge effect on future electric rates in Arkansas. For example, under the so-called Best Available Retrofit Technology, or BART, the EPA has mandated that the state must come up with a plan that makes “reasonable progress” toward protecting the Arkansas Buffalo National River, Ouachita National

Forest and Caney Creek wilderness area from haze and the harmful effects of pollution. The proposed guidelines also address “downwind” haze problems from Arkansas power plants and factories that cross statelines. To meet BART plan mandates, the state Department of Environmental Quality has proposed retrofitting nine units and six mills and power plants across the state to meet the EPA requirements to reduce 71,500 tons a year of sulfur dioxide emissions and up to 15,000 tons of nitrogen oxide annually. Under those EPA rules, the Domtar Paper Company in Ashdown will have to retrofit

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

two boiler units at its Ashdown Mill where the company is making $160 million in capital improvements to convert a machine assembly line into a “high quality fluff pulp line” that will produce a number of paper products. The EPA haze rule also affects two of the state’s oldest coal-fired facilities, White Bluff Electric in Jefferson County and the Independence Steam Electric Station near Newark in Independence County. At an EPA meeting held in Little Rock in April, utility officials said adding scrubbers, or pollution control devices, on smokestacks at the White Bluff plant alone would cost more than $400 million. Thomas said those aging facilities are also on the EPA’s list for possible shutdown under the president’s Clean Power Plan that would cut carbon emissions at existing power plants by 2030. “You’ve got to have a right answer. You can’t invest that kind of money in a plant and then turn around and shut it down,” Thomas said. “There is so much velocity of change in the energy business, and some of it is technology driven. And when you are dealing with 30- or 40-year lives of these [power plants], you have to make a decision. And when you zigzag in policy, there are all kinds of opportunities to have lost investments.” ‘IN A HOLDING PATTERN’ Thomas also said the PSC is anxiously waiting for the EPA to issue final draft rules on President Obama’s signature climate change initiative to cut carbon emissions at existing power plants later this summer. He said federal environmental officials have indicated that they expect to issue final draft rules on the EPA’s draft 111(d) rule by mid-August. Thomas said he and ADEQ Director Becky Keogh have had discussions with Gov. Hutchinson concerning the EPA rule since comments were submitted to federal officials in December following several stakeholder meetings called by former Gov. Mike Beebe. Thomas said once a final EPA rule is issued in 2015 and it has been reviewed, the ADEQ and APSC will restart the meetings

with stakeholder groups to develop a state implementation plan that would then be submitted to the EPA for approval. “We are in a holding pattern now until we get final rules,” Thomas said. “The process will begin again once we get a final rule. We have discussed it with the governor and there is legislation (Act 382) that essentially mandates that we submit a plan, or decide whether to file a plan or not.” Still, Thomas has very strong views about the climate change debate and the EPA’s Clean Power Plan mandate. He said while there is some evidence of human contribution to increasing temperatures, “I also believe this is the wrong question to ask. “The real question is whether humans can lower the temperature and if so, what is the cost?” Thomas said. “The first question that needs to be answered is what must be done to lower the temperature of the earth by one degree, and at what price. “Until that question can be answered, the science is incomplete,” he said of the ongoing climate change debate.

He also said that the EPA Clean Power Plan’s impact on global temperature is so small that it can’t be measured. “Electric rates could go up from 10% to 25%, and the impact on the problem they are trying to solve is minimal,” he said “The suggestion that objective science mandates a policy that costs money but does nothing is false.” The PSC chairman added that he believes some of the municipal utilities and electric cooperatives “will get hammered” by the EPA’s carbon emission-cutting plan that could shut down the state’s entire coal-fired power plant fleet. Additionally, Thomas said lower natural gas prices that have resulted from fracking have given the U.S. an advantage over other nations in energy costs. “To begin to throw this cost advantage away in pursuit of a policy that has no impact on global temperatures is both tragic and ignorant.” He also took a shot at politicians who say they advocate for the middle class, saying they should explain to Americans why their electric bills will go up under the EPA

mandate. “In my view, a candidate cannot be both for the American middle class and for a proposed ‘Clean Power Plan,’ (which) will cause the middle class to pay higher utility bills, yet have no impact on the global temperature.” PERSONAL PHILOSOPHY Although sounding much like a politician, Thomas would not say if he had future aspirations for a higher political office, or was interested in a possible appointment to a post on the Arkansas Supreme Court. For now, he said, the state Public Service Commission is where he wants to be. “To me, the best way to prepare for what’s out there is not to worry about it, but to focus on doing a good job where you are at now,” Thomas said. “The way I look at it, speculation on the future is entertainment, not work. “The best thing I can do now is do this job to the best of my ability, and that’s what I am going to do and the rest will take care of itself.”

Talk Business & Politics’ Roby Brock will interview Steve Clark, cofounder of Noble Impact, to kick off the 2015 Social Entrepreneurship Boot Camp. Come hear Clark’s thoughts on social entrepreneurship at 7 p.m. Friday, July 17, at the Winthrop Rockefeller Institute on Petit Jean Mountain. Tickets are free. The Institute’s River Rock Grill will also be open at 5 p.m. for dinner prior to the event. For registration and more information, go to www.rockefellerinstitute.org/ SEbootcamp. If you have questions, call 501-727-6255 or email pchristenberry@uawri.org.

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Profiles Service PHOTO BY BOB OCKEN

Saucy Lady Amy Bradley-Hole stays busy cooking up a taste of Tuscany in Central Arkansas. By Kerri Jackson Case

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

everal years ago, I was having a bad week. It wasn’t anything particularly tragic. In fact, I can’t even remember the details now. What I do remember is a jar of homemade, red garlic sauce appeared on my back steps from my friend Amy Bradley-Hole. That night we had pasta for supper, probably with a lot of wine. Life seemed a little better. Some version of that story is how a lot of people in Little Rock originally tasted what is now Bonta Toscana garlic sauce (www.bontatoscana.com). “It was a good gift to have on hand when someone had a baby or got sick or for some reason needed an easy dinner,” said Bradley-Hole. “I’d grab a jar from the pantry and pick up some pasta, throw in a loaf of bread, and done.” Over time, demand started to grow. People were asking for more of the sauce that seems to make a day a little better. “When people started asking for more and more jars, I finally said, ‘I’m going to have to start charging for this,’’’ she recalls. “Everyone immediately said, ‘Fine. We’ll pay.’ That’s when I started thinking there might be a business here.” THE TUSCANY CONNECTION The sauce originated from Tuscany, where Bradley-Hole’s family vacations regularly, although not as often as she would like. Several years ago, when they arrived at the home where they were staying, the maid knew they would have been traveling for long hours. She put out some snacks for the guests, including a garlic red sauce. The family fell in love. “We practically swandived into it,” she said. Even though the women had a significant language barrier, they managed to communicate well enough for Bradley-Hole to spend enough time in the kitchen watching her cook and taking notes so she could replicate it back in the States. Central Arkansas is also taking the plunge into Italian sauce. Bonta Toscana produces 400 to 500 jars per month. There is practically no inventory. It all sells at places like the Hillcrest Farmers’ Market, Strattons, Eggshells in the Heights and Arkansas Fresh in Bryant. “Little Rock has a young, energetic food scene that is eagerly supporting all kinds of

new talent,” said Steve Shuler, host of Little Rock Foodcast. “Bonta Toscana is a perfect match for what is happening now. It’s a high-quality product made locally that tastes great and has an identity with the city.” “I always say this is a product of Little Rock as much as of Tuscany,” said BradleyHole. “I don’t know if it would have happened in any other place at any other time. The food scene here is so supportive.

“There is a ripple effect for every decision I make. I want to be sure I’ve thought through every decision from jar size to labeling to nutritional information before I decide if I’m going to change a tomato distributor.” – Amy Bradley-Hole

If I need something, someone will say, ‘Oh, I know who you need to talk to.’ And then that person will talk to you.” Shuler said, “Amy is the kind of person everybody wants to succeed. She’s come up with a great product and has put in the hours and effort to make her business work. She simply makes Little Rock’s food scene better.” GROWING PAINS The business is now experiencing the kind of growing pains new businesses hope for.

No sooner did it get permanent space in a commercial kitchen than orders increased to maximize capacity. Currently, BradleyHole taste tests every single batch for quality control. Her required presence in the kitchen limits production, but assures the quality she calls herself picky enough to demand. Then she has to consider shipping and distribution logistical concerns. Initial talks are under way with larger retailers, but that means a major increase in production. Bradley-Hole is considering a couple of options to remedy the growth versus quality control tension she feels. “There are things you just don’t think about until you’re in the middle of something like this,” she said. “If there’s bad weather in China, and it affects their garlic crop, then suddenly everyone is trying to buy the California garlic that I typically buy, which drives up the price. I’m just saying, it didn’t occur to me to consider Chinese weather patterns when I decided to make a go of this.” She is a dreamer at heart. She imagines bringing chefs over from Italy for cooking workshops and doing more to promote the Italian “lifestyle.” She has new recipes percolating in her head. But for those to work, she has to remove herself from the day-to-day operations, and that’s going to require the proper partnerships, which she says must be carefully considered. “When I worked for other people, I would want to make big changes fast. I would say things like, ‘No more sacred cows!’ Now I have a better understanding of how sacred cows got to be sacred. “There is a ripple effect for every decision I make. I want to be sure I’ve thought through every decision from jar size to labeling to nutritional information before I decide if I’m going to change a tomato distributor. Because that one decision can affect everything else. “I’ve learned change is best done slowly and deliberately.” If things go according to Bradley-Hole’s plans, jars of sauce will continue to appear on neighbors’ porches during tough weeks, in baskets to celebrate births and help out during long illnesses. Those porches and baskets will just be nationwide, rather than only in Central Arkansas. www.talkbusiness.net

Cover Story

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Arkansas New AEDC Executive Director Mike Preston has hit the ground running, promoting the state and its economic opportunities. By Rex Nelson

ike Preston, the new executive director of the Arkansas Economic Development Commission, sits in his fourth-floor office overlooking Capitol Avenue in downtown Little Rock on a sunny late-spring afternoon, sipping from a can of the energy drink known as Red Bull. Heâ&#x20AC;&#x2122;s talking about the changes that were made when he was at Enterprise Florida, Inc., the public-private partnership between Florida businesses and state government that focuses on job creation. www.talkbusiness.net

Cover Story: Mike Preston “We put Enterprise Florida on steroids,” Preston says. “Wait. That’s probably not the best term. Let’s just say we put Enterprise Florida on Red Bull.” He takes a swig from the energy drink as he prepares to head to the airport for yet another flight and yet another economic development mission. Life has been a whirlwind since Preston became one of the country’s youngest state economic development directors at age 31 in early April, just as the regular session of the Arkansas Legislature was coming to an end. Preston, a graduate of the University of Florida, had an early interest in state government and politics. At age 19, he began working for a Florida state representative, who would go on to become the speaker of the Florida House of Representatives. After college, Preston became the chief of staff for a state senator who represented Gainesville (where the university is located) and several surrounding counties.

‘EXCITING STUFF’ “As his chief of staff, I was always out in the district,” Preston says. “I was at the chamber of commerce breakfasts, the civic club luncheons, all of those things where you’re expected to have a presence. I also got to work on economic development projects and became familiar with the efforts of Enterprise Florida. I remember thinking to myself: ‘This is exciting stuff. This is really interesting.’” Preston didn’t hesitate when he was offered a job with Enterprise Florida in late 2008. In 1996, when Lawton Chiles was governor, Florida became the first state in the country to place economic development and business image marketing in the hands of a public-private partnership. Chiles believed that the increased participation of business leaders in economic development would help Florida more quickly diversify its economy, which was based on agriculture and tourism. Chiles wanted Enterprise Florida to operate like a business with a board made up of appointed members and a

group of investors representing corporations with a strong presence in the state. The Great Recession, which gained momentum throughout 2008, hit Florida particularly hard as the state’s real estate bubble burst. Preston soon became frustrated with his career choice. “We were sitting there with 12 percent unemployment in 2010, and I questioning whether I had made the right move,” he says. Preston’s attitude began to change in November 2010 when former hospital executive Rick Scott was elected governor. Scott, a Southern Methodist University graduate who specialized after college in health-care mergers and acquisitions, put together a $6 billion bid in 1987 to purchase HCA, the Tennessee-based hospital firm founded by Drs. Thomas Frist Sr. and Thomas Frist Jr., the father and brother of former U.S. Sen. Bill Frist. When the offer was rejected, Scott and Texas billionaire Richard Rainwater started a hospital company called Columbia, which finally Expo Sponsors

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Cover Story: Mike Preston made a successful bid for HCA in 1994. Scott left the company in 1997 with $10 million in cash and $300 million in stocks and options. He became a venture capitalist and moved to Naples, Fla., in 2003. SWOOPE’S VISION Scott, an aggressive businessman, hired Gray Swoope in February 2011 to serve as Enterprise Florida’s president. Swoope, who had once worked at AEDC, had been the executive director of the Mississippi Development Authority since 2004. Swoope was the jobs czar for then-Gov. Haley Barbour of Mississippi. Among his coups was landing a Toyota assembly plant for northeast Mississippi that most people had thought was going to Marion, Ark. “I consider Gray the top economic development official in the country,” Preston says. “I bought into his vision, and he put me on his management team.” Enterprise Florida helped generate more than $10 billion in capital investment in the state and played a role in the creation of more than 147,000 jobs under Swoope’s leadership. The defense contractor Northrup Grumman brought 1,800 jobs to Florida, and Hertz moved its corporate headquarters and 700 jobs there. Those were among the projects on which Preston worked. Swoope announced in early March that he would be leaving Enterprise Florida to head a Tallahassee-based economic development consulting firm known as VisionFirst Advisors. Barbour is the VisionFirst chairman. “It was a good time,” Preston says of the Swoope era at Enterprise Florida. “We were landing the type of projects that would actually change things for the better.” DEMANDING SCHEDULE A headhunter contacted Preston about the Arkansas job. He had heard Swoope talk positively about his time in Arkansas. Preston, a political junkie, also knew about Gov. Asa Hutchinson. But he had never been to Arkansas until he flew to Little Rock to meet with Hutchinson earlier this year at the Governor’s Mansion. “We visited for more than an hour,” Preston says. “I got the same feeling from

him that I got from Gov. Scott: That this is a man who loves his state and has a plan in mind to make it better.” The job offer was extended, the recently married Preston accepted and life has been a blur ever since. During a recruiting trip to California with Hutchinson and Acxiom founder Charles Morgan, Preston says he woke up in his hotel room one morning wondering where he was. That pace doesn’t

“Economic development is a team sport. We have to recruit legislators to be a part of that team. There are things we need to do.” – AEDC Executive Director

Mike Preston

seem to be letting up. At the time of the interview, Preston was preparing to accompany Hutchinson to the Paris Air Show, where Arkansas would have a booth for the first time. Asked about his first impressions of Arkansas, Preston says: “The people who live here are some of the friendliest people I’ve ever been around. They come up to you in the grocery store and talk to you. They’re

passionate about their state. You especially see that kind of passion from entrepreneurs such as Charles Morgan. He went to California with us just because he wants to help his state attract more high-tech jobs.” The largest Arkansas companies – Walmart, Tyson Foods, J.B. Hunt, Dillard’s and Murphy Oil among them – weren’t recruited by AEDC from other states. They were built by Arkansas-based entrepreneurs. AEDC, in fact, is headquartered in the building that long housed the Dillard’s corporate offices. Preston is well aware that helping homegrown companies succeed is as much a part of his mission as attracting new firms. He wants to use Arkansas business leaders such as Morgan to help spread the gospel of Arkansas. “What I learned on our trip to California is that people in other states don’t have any idea about the things we’re doing here,” Preston says. “We have to do a better job of communicating with business decisionmakers in places such as New York, Illinois and California. Once they hear our story, I think they will like what they hear.” 60TH ANNIVERSARY In addition to telling the Arkansas story outside the state, Preston plans to travel to all parts of Arkansas and hear what business leaders think of AEDC and the job it’s doing. He says, “I need to figure out what they think we do well along with the things they think we can do better.” Preston inherits an agency that’s celebrating its 60th anniversary this year. In 1955, the Legislature created the Arkansas Industrial Development Commission to bring industries to a state that was rapidly losing population. Gov. Orval Faubus appointed Winthrop Rockefeller as the first AIDC chairman. Rockefeller, a billionaire New Yorker, had moved to the state a couple of years earlier to escape the Manhattan media spotlight that had shown brightly on him since a messy divorce. The state had six congressional districts in those days. Under the original legislation, there was to be an AIDC commissioner from each congressional district along with the president of the Arkansas Bankers Association, who would serve as an exwww.talkbusiness.net

Cover Story: Mike Preston officio member. In addition to Rockefeller, the original commissioners were W.W. Campbell of Forrest City, Earl Harris of Rogers, Leon Kuhn of Texarkana, William Smith of Lake Village, Elmer Yancey of Searcy and ABA President Louis Hurley of El Dorado. Rockefeller, who had fallen in love with his adopted state, took on the chairmanship with gusto. He created a group known as the Committee of 100 to raise $200,000 to supplement the $75,000 AIDC budget. Business leaders from every county were asked to give $100 each. On April 1, 1955, Rockefeller announced that the first industry had been lured to Arkansas – Gay Apparels Inc. of Cotter. By the end of the year, 123 industries with 5,090 jobs had been brought to Arkansas. The first full-time director of the AIDC, Bill Rock, began work on July 1, 1955. STOPPING OUT-MIGRATION The state was desperate at that point to halt out-migration. In his book “Arkansas in Modern America,” historian Ben Johnson of Southern Arkansas University declares that the state’s “most dramatic net loss was its people.” Writing for the autumn 2005 issue of the Arkansas Historical Quarterly, the late Donald Holley of the University of Arkansas at Monticello described out-migration as “the largest domestic event of the World War II era and postwar Arkansas.” “Pioneers emigrating mostly from Tennessee, Alabama and Georgia settled the state in the first half of the 19th century,” Holley wrote. “After the Civil War, Arkansas continued to gain population from in-migration. The state government, planters and railroads encouraged settlement during this period, soliciting people from as far away as China, Germany and Italy. Unfortunately, good land soon ran out, leaving many of the state’s rural areas

overpopulated in relation to arable soil. The earliest out-migration, beginning in the 1890s, was in part a response to this fundamental problem. Population losses continued in the first two decades of the 20th century. In the 1920s, Arkansas lost almost 200,000 people, a record high to that point. Migration slowed slightly during the depressed 1930s, but by the 1940s, when the national economy shifted to war production, the migration stream that had previously

state lost a greater proportion of its people than Arkansas did from 1940-60, leading to an inferiority complex among those Arkansans who stayed behind. Rockefeller used his own money to try to change that self-image. “The absence of this vast pool of workers created severe labor shortages, especially in agriculture,” Holley wrote. “These shortages remained critical even after the war and destroyed the old, inefficient plantation system, which had always Mike Preston visits with AEDC staff. been based on cheap labor. In postwar Arkansas, the number of sharecroppers and tenant farmers plunged so significantly that by 1959 the agricultural census stopped collecting data on them. In the same period, the number of farms declined but the average size of farms increased.” Rockefeller worked with Dun & Bradstreet to come up with a list of 30,000 companies that been a steady leak turned into a torrential the state needed to call on. By 1961, every flood. Arkansas, in fact, lost population in company on the list had been contacted. every decade between 1890 and 1970.” The Legislature increased the annual AIDC In the 1950s, Business Week had a story budget to $575,000 in 1957, enabling the headlined “Why do Arkansans vanish?” commission to triple its staff. By 1960, Holley wrote: “It was a valid question, and manufacturing employment had increased the answer was easy – the lack of well-payby almost 50 percent from five years earlier. ing jobs. Arkansas’ most significant export Rockefeller was elected governor in 1966 was not lumber, cotton or bauxite but peoand went on to serve a pair of two-year ple.” terms. During the agency’s 15th anniversary One Arkansas native who had left the celebration on April 1, 1970, at the Marion state told the Business Week reporter: Hotel in downtown Little Rock, the gover“There’s nothing for me back home. They nor noted that he had a hard time finding are talking about a new factory, but I don’t workers in the early 1950s when he began think they’ll get it. I don’t think any college building his ranch atop Petit Jean Mountain. graduates have ever come back to town “It was at that point that I became since I can remember.” interested in industrial development as a means of reversing the outflow,” he said. “I CHANGING THE IMAGE accepted the appointment as the first In the 1940s, Arkansas experienced the chairman, and for eight years we interlaced third largest population loss among the 48 our industrial brokerage function with states, trailing only Oklahoma and Mississome rather exciting exploration of regional sippi. In the 1950s, Arkansas’ out-migration development concepts and community percentage trailed only West Virginia. No action programs. I was convinced of the

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

www.talkbusiness.net

Cover Story: Mike Preston need to scatter industries in our smaller towns rather than let them pile up in a handful of urban areas. Arkansas is currently growing at a rate far exceeding that of the nation as a whole. Working under the scatter approach, we have generated some 3,000 new and expanded industries representing more than 145,000 new jobs.” The chairman of the commission at the time was banker Herbert McAdams. He

described the previous 15 years as a period of growth “so explosive that it is difficult to find proper words that describe it. At a time when Arkansas was seriously losing population because of a lack of jobs for its people, we brought those jobs in.” Frank White, who served as the AIDC director from 1975-77, would be elected to a single two-year term as governor in 1980. In a 1977 column, White wrote: “Having

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traveled more than 142,000 miles promoting the state, I find there is an enormous misconception of what Arkansas actually is. In November 1976, I was quoted by the state’s news media as saying the biggest problem we are faced with today is overcoming the Arkie image. This was not meant in a negative way for I am proud of our state’s folk culture heritage. But the frequently stereotyped image of Arkansans as backwoods, undereducated hillbillies or the racist image that still persists because of the Central High School incident in 1957 does not accurately portray what our state is. … The future is limited only by our leadership and our attitude.” DIVERSIFYING THE ECONOMY Preston doesn’t have to face the overall out-migration problems that plagued the state 60 years ago. Yet rural counties in large parts of eastern and southern Arkansas continue to lose population. There’s also the challenge of having a marketing budget that is far smaller than those in most of the states against which Arkansas must compete for projects. Preston believes his political experience – he was Enterprise Florida’s vice president for government affairs and spent much of his time at the state Capitol in Tallahassee – will help him convince Arkansas legislators that changes need to be made. “Economic development is a team sport,” Preston says. “We have to recruit legislators to be a part of that team. There are things we need to do. Our corporate income tax structure is outdated. We need to take a look at the size of the governor’s closing fund and other incentives. Incentives will never make a bad deal good, but they will make a good deal better. We need to attract companies in areas like biotechnology so more of the students in Arkansas will want four-year degrees and go to work for such companies. We want to further diversify our economy and find better ways to ensure a trained, skilled workforce to satisfy the job needs of that diversified economy.” With that, Preston takes another swig of Red Bull and is off to the airport to catch his flight. Just as Winthrop Rockefeller and Frank White before him, he has a state to sell.

Insights

Paint It … Red

Making a Difference: Walmart’s McMillon Walmart President & CEO Doug McMillon is among the leaders recently singled out by Southern Business & Development magazine as 10 “people who made a difference.” Here’s what the magazine said: “From an hourly summer associate in a distribution center to President and CEO today, Doug McMillon has worked for Walmart since 1984. The Jonesboro, Ark., native has been at the forefront of Walmart’s U.S. manufacturing initiative to purchase $250 billion more ‘Made in the USA’ products over the next 10 years. “McMillon truly made a difference recently when he personally managed the associate pay increase for current U.S. Walmart employees to $10 an hour or higher. The pay increases McMillon introduced will give raises to approximately 500,000 associates by the end of the summer quarter. He was also behind the Arkansas-based retailer’s launch of a new skills-based training program for Walmart associates. Walmart and the Walmart Foundation will commit $100 million over five years to strengthen the skills of its U.S. workforce.”

The Wall Street Journal, reporting on “the most Republican County in each state,” has singled out Crawford County in Arkansas, pointing out that in the 2012 presidential election the GOP’s Mitt Romney won 73.6% of the votes cast in the county in the western part of the state. It also noted that the county’s poverty rate of 20.2% from 2009 through 2013 was much higher than the national rate of 15.4% over the same period. As in the “reddest” county in many other states, the Journal said, Crawford County was also predominantly white, with 91.1% of its 61,796 residents identifying solely as white. And only 14.3% of its residents had at least a bachelor’s degree, about half the comparable national figure.

Magazine’s Listing Is Rich With

Waltons

A recent Forbes magazine compilation of “the richest person in every state” finds Wal-Mart heirs atop the rankings in three states. Jim Walton, with a net worth listed at $37.6 billion, is the richest person in Arkansas, according to the list. At $36.4 billion, Alice Walton is tops in Texas, and at $39.1 billion, Christy Walton and family head up the Wyoming list.

Droning On

The Chicago Tribune, citing a survey by reinsurance company Munich Re, reports that the use of drones could become common for about 40% of businesses in fewer than five years. The firm surveyed 100 executives at a recent Risk & Insurance Management Society conference in New Orleans, finding that 44% of risk managers surveyed believe their own companies would consider using drones if the Federal Aviation Administration eases rules. “Businesses have set their sights on new applications for drones that could speed product delivery, monitor crops or capture claims data, among dozens of other uses,” Munich Reinsurance America Senior Vice President Gerry Finley said.

Fighting Words “Every day of my life in politics

was a fight and sometimes it was an intense one. But any drunken redneck can walk into a bar and start a fight. A leader only starts a fight that he’s prepared to finish.” – Former Arkansas Gov. Mike Huckabee, who announced his candidacy for the presidency on May 5 in his hometown of Hope.

Insights is compiled by Talk Business & Politics Editor Bill Paddack. Possible items for inclusion can be sent to him at bill@talkbusiness.net. www.talkbusiness.net

Industry PHOTO BY ROBY BROCK

Aerial photo shows the extent of flooding along the Arkansas River near Morrilton.

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Heavy Rains Bring Big Declines in Traffic on the Arkansas River By Michael Tilley COURTESY OF THE CITY WIRE

he swollen Arkansas River has forced Marty Shell to use his small trucking fleet to haul raw materials from Mississippi River ports to customers in the Fort Smith and Northwest Arkansas areas. He said the trucks are keeping the doors open for a Northwest Arkansas customer that employs around 600 people. Unusually heavy rains during May forced the closure of many locks along the Arkansas River waterway from Tulsa down to where the waterway connects with the Mississippi. May tonnage on the river totaled 347,336 tons, down more than 61% compared to the 898,523 tons shipped in May 2014, according to figures from the U.S. Corps of Engineers. “June tonnage will probably be the same, to be honest with you. We are in week five, and financially it hurts a lot,” said Shell, who owns Van Buren-based Five Rivers Distribution and operates the Port of Fort Smith and port operations in Van Buren. Even barring more heavy rains, Shell wasn’t expecting barges to be moving again on the Arkansas River until the end of June. ALL MAJOR CATEGORIES DOWN For the first five months of the year, Arkansas River tonnage has totaled 4.065 million tons, down 18% compared to the same period in 2014. All major categories have double-digit percentage declines in the year-to-date comparison. Sand, gravel and rock shipments, often the largest tonnage category, is down 17% on the year with 1.035 million tons shipped January-May. The iron and steel category, a sign of construction and manufacturing activity, is down 15% with 601,725 tons shipped January-May.

Without gains in the remainder of the year, the river system could see two consecutive years of shipping declines. Tonnage totaled 11.719 million in 2014, down from the 12.139 million in 2013 but better than

“You might not live on the river and you might not work on the river, but in some shape, form or fashion, what happens on this river will impact you, directly or indirectly.” – Marty Shell

the 11.687 million in 2012 and the 10.6 million in 2011. The McClellan-Kerr Arkansas River Navigation System is 445 miles long and stretches from the confluence of the Mississippi River to the Port of Catoosa near Tulsa. The controlled waterway has 18 locks and dams, with 13 in Arkansas and five in Oklahoma. The river also has five ports:

Pine Bluff, Little Rock, Fort Smith, Muskogee, Okla., and the Tulsa Port of Catoosa. Shell said most of his customers try to keep 30 days of inventory on hand for such disruptions, but it will be “really, really close” if that strategy works for companies that depend on goods shipped via the river. One company in Northwest Arkansas is already using Shell’s trucks to haul in materials from other ports. “We’re dead heading them [sending empty trucks] to Rosedale [Miss.] and to New Orleans and taking them up to Northwest Arkansas to keep those operations running, to keep more than 600 people from having to be out of work,” Shell said. RIVER’S ECONOMIC IMPACT Shell said it’s been around 20 years since he’s seen river levels create this level of disruption. With that kind of time between events, Shell said people often take for granted the importance of river traffic on the economy. “You might not live on the river and you might not work on the river, but in some shape, form or fashion, what happens on this river will impact you, directly or indirectly,” Shell said. Delays and slow activity will be the norm for a few months even when water levels allow shipping to continue. A combination of a shortage of barges and high demand from companies who need to get materials in and out of Arkansas will create bottlenecks, Shell said. “July and August will be tough. … We will see a backlog of barges and everyone will want everything at once,” he said. However, he is optimistic about conditions returning to normal by September. www.talkbusiness.net

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

On Hold

Besides delaying projects, highway supporters say road funding inaction is costing construction jobs. By Steve Brawner

ongress’ inability to create a sufficient highway funding mechanism is costing the state not only needed pavement but also thousands of construction jobs, say supporters of increased funding. As a result of concerns over congressional inaction, the Arkansas Highway and Transportation Department has pulled 70 projects worth $282 billion this year, with plans to pull more if federal highway funding doesn’t materialize. Director Scott Bennett points to a 2014 Duke University study that found that $1 billion invested by the federal government in transportation infrastructure creates 21,671 jobs. “That’s ... jobs that should have been in the pipeline to create and sustain that we’re not able to move forward with, and that has a real impact on the economy and on employment,” he said. The Highway Department’s normal construction program is $400 million to $450 million a year. The Federal Highway Administration reimburses 70% of that out of the federal Highway Trust Fund almost as soon as the state pays its private sector contractors. During construction season, the department typically pays contractors $70 million monthly and then quickly is reimbursed $50 million. However, the Highway Trust Fund is on pace to become insolvent in August. The law authorizing highway funding, MAP-21, was set to expire May 31 until Congress granted a two-month extension that will expire at the end of July. The Federal Highway Administration has announced that, if it went into cash management mode because of the declining fund, those $50 million monthly payments would be reduced to $30 million a month. That would mean about $20 million would have to come out of the state’s cash balance every month to pay the contractors if the

state did not cancel projects. That cash balance, currently about $200 million, would fall to zero by the end of the year, Bennett said. Part of that $282 million in cancelled programs is a $50 million overlay program that resurfaces highways at a fraction of the cost ($200,000 per mile) it takes to reconstruct them (($1.5 million per mile). Why cancel such a cost-effective program? Cash flow. Bennett said the overlay program has to be paid the same year it occurs, while a construction program can be paid over two or three years. MAKING ADJUSTMENTS Mark Haines of Topeka, Kansas-based Koss Construction and chairman of the Arkansas Asphalt Pavement Association said he employs a mix of full-time supervisors plus seasonal hourly employees who are paid $13 to $22 per hour, plus benefits. The company pays for its seasonal employees’ health insurance during the off-season months. Without work to do, employees will be laid off or transferred to other states. “There are other contractors in the state of Arkansas that are looking at things the same way we are,” he said. “They’re taking a look at their businesses, and they have to make adjustments. If the work is not there to bid on, and the work is not there to build for the state or for the counties or for the cities, they’re going to have to make adjustments to their business models.” Haines said the summertime construction season is an especially bad time for highway constructors to face funding challenges. At the time he was interviewed, his company was finishing some jobs but had no work for the second half of the year. “It means that we are looking at delaying equipment purchases,” he said. “It means

we’re looking at the number of employees we have on staff, possibly looking at furloughs and layoffs and/or consolidating some of our crews.” The Arkansas Good Roads Foundation, which includes organizations and members supportive of transportation infrastructure, has been asking its member associations to survey their members on the impact of the funding impasse, said its executive director, Craig Douglass. “Contractors are either reducing crews, they’re cutting hours, they’re doing hiring freezes, or they’re looking at laying off workers beginning in July, and they are making no new capital investments in equipment. All of that’s on hold,” he said. Richard Hedgecock, executive vice president of the Arkansas Chapter of the Associated General Contractors of America, said his members are concerned. They are still working on projects that were already in the pipeline, but they can’t budget or plan for the future because of congressional inaction. “That’s no way to run a railroad, or a highway in this instance,” he said. MOTOR FUELS TAX The federal motor fuels tax, which traditionally has funded highway construction, has not been raised since 1993. Because it was not indexed to inflation, motorists in effect have been receiving an annual tax cut. Meanwhile, because cars are becoming more fuel-efficient and are using less gas, motorists are paying less in gas taxes. At the same time, construction costs have increased at an annual rate of 2 to 4%, Bennett said. The state motor fuels tax has remained the same since 2001. Arkansas voters approved a bond issue to pay for the Interstate Rehabilitation Program in 2011. In 2012, they approved a half-cent sales tax to fund the Connecting Arkansas Program www.talkbusiness.net

Industry: On Hold to relieve congestion. Together, those programs will affect only 3.8% of the state’s 16,400 highway miles. Other states, including Nebraska, Iowa and South Dakota, recently have increased their state fuel taxes. The AGC’s Hedgecock sees that as the best route to increase highway funding. “A fuel tax is a user fee,” he said. “You want to ride on the roads, and you want to do so in a safe manner. You want to increase capacity to make your commute easier, you want to create new roads to create new economic opportunities, the only way to pay for that is with revenue, and why not have it be a fee based on people who use those goods and services, which in this case are highways?” David Ray, state director of the prosmall government group Americans for Prosperity – Arkansas, doesn’t see a tax increase as the answer. Instead, he said, Highway Trust Fund dollars spent on bike lanes, light rail and landscaping should be redirected to highways.

“Building roads and highways is a core function of government, but the reason we build roads isn’t simply to create jobs,” he said. “We build roads so that we have the infrastructure to support a healthy and vibrant economy. The attitude that we should throw more money behind something simply because it puts people to work is the same logic that brought us President Obama’s misguided ‘stimulus’ package that spent $787 billion at a cost of $278,000 per job. Plus, roads are built with taxpayer dollars, and there’s an opportunity cost to every dollar we take out of the private economy: It makes it harder for families to buy their groceries each week, pay their medical bills, or save for their kid’s college.” GOVERNOR: FOUR OPTIONS Gov. Asa Hutchinson’s newly appointed 20-member Working Group on Highway Funding was to have its first meeting June 24 to consider various alternatives. In a speech to the Arkansas Good Roads

Foundation on June 11, Hutchinson pointed out that the working group is composed mostly of members inclined to increase highway revenues. He suggested the working group pay special attention to four options: a vehicle miles traveled tax, where drivers are assessed taxes based on the miles they drive; toll roads; a close examination of the role of local governments; and publicprivate partnerships. He did not rule out a fuel tax increase pending the task force’s recommendations, but he clearly is inclined to support a different approach. “I would like to see us really give close examination to a new funding model that starts very modestly,” he said. “I think that’s going to be the big debate … there will be many that will say we’ve got to have an immediate infusion because the needs are so great, but you have to deal in political reality, and the reality is you’ve got an anti-tax sentiment in terms of increasing taxes, and that you’re going to have to work through that.”

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Industry PHOTOS COURTESY OF ESPN IMAGES

Arkansas Coach Bret Bielema (right) visits with SEC Network commentators (from left) Tim Tebow, Marcus Spears and Paul Finebaum on the set of “SEC Nation” outside Donald W. Reynolds Razorback Stadium on Oct. 11, 2014, prior to the Hogs’ 14-13 loss to Alabama.

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

The SEC Wins at Everything … Even Network Television By Dale Nicholson

EC Commissioner Mike Slive broke the news in late May that many had been expecting. The SEC, and its namesake network, made lots of money last year – lots and lots of money. An NCAA record $455.8 million in revenues, to be exact. For comparison’s sake, last year the league reported $292.8 million in revenues. Each school will get a $31.2 million cut this year, versus the $20.9 million they took home last year. The league will distribute $436.8 million to its schools because $19 million was retained by the conference’s bowl participants. Of course, the SEC Network wasn’t the only change this past year that contributed to the SEC’s record year. The College Football Playoff debuted this fiscal year, and that contributed to a higher payout to the SEC, along with other, more lucrative bowl deals. In fact, the CFP has said the SEC would have received $34 million in the old BCS format for its teams’ bowl appearances last year. Under the new format, the CFP said the SEC should have received a payout of $87.5 million. IN 65 MILLION HOMES But it’s the SEC Network that is the chief driving force in this $163 million increase year to year. The scariest part of all of this, if you’re a fan of a conference that’s not the SEC, is that this number will likely only go up. Keep in mind, the SEC Network isn’t even a year old. The league had a record year thanks in large part to a nine-month-old cable network. On top of that, the league and its schools had to pay the startup costs in the first year of the network. ESPN actually owns the SEC Network and pays a rights fee to the SEC. It’s not a perfect split, either, because advertising dollars will far outweigh revenue from subscribers, and ESPN is the one dedicating manpower to running and selling ad space on the

network. ESPN took on all of the risk and must pay the taxes on the network, too. Slive did not divulge what the split is between the SEC and ESPN, but he did mention the channel is now available in 65 million homes across the country. More interesting than the number of homes is where those homes are located – 35 million of them are outside the SEC’s footprint. This is more than just some regional network catering to a small section of the country. The interest in the SEC’s success (and failure) goes coast-to-coast. The Big Ten Network (launched in 2007) has 90 million subscribers in the U.S. and Canada, while the Pac-12 Network (launched in 2012) is at 60 million subscribers. It’s clear, both from a fiscal and popularity sense, the SEC Network was a resounding success in its inaugural campaign. But what does it mean going forward? Without knowing the inner details of the revenue split, it’s difficult to say. However, allowing ESPN to retain ownership of the network seems to have been a very fortuitous move by the league. While the conference could never sell its own network to another provider, like the PAC 12 could, it hasn’t had to manage all that goes into running a television station, either. BOLD DECISION Where the SEC has the edge over its competitors is in its business partner. While the Pac 12 owns its network, the Big Ten split ownership of its network with Fox Entertainment Group. The SEC made the bold choice to allow ESPN to wholly own the network. But that could end up being the right move. ESPN is now fully vested in the success of this network. That could largely be the reason for its initial success, along with the league’s rabid fan base. In owning the network and taking on

the risk involved, ESPN will have ample reasons to promote the network and its league. The advertising revenue drives any network’s success, and the same will go for the SEC Network. Gone are the days of ESPN’s networks having their own individual identities. Graphics, music and talent have all been streamlined into one network with multiple outlets. That has meant an onslaught of resources from ESPN to make the SEC Network another member of the “Mothership,” as it’s sometimes called, rather than some also-ran acquisition. But the implications for what this means for the SEC and college sports are potentially dangerous. The league’s student athletes now have a permanent home in front of 65 million TV households, and that number is sure to increase. The days of amateurism seem to be all but over. With the current debate over paying players, the powers that be within these conferences and schools, not just in the SEC, may not be able to claim student-athlete status for the players much longer. These players are now TV personalities. In most other entertainment ventures, the talent eventually wants to get paid. When that day comes, the SEC will have the luxury its competing leagues don’t: its own TV channel cranking out millions of dollars in revenue. Each school has $10 million more this year than it did last year, thanks to a network still in its infancy. While that may turn up the heat in the amateur status debate for college athletes, the SEC’s balance sheets will be just fine. Editor’s note: Dale Nicholson, III, AAMS® is a financial advisor at Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC, located 100 Morgan Keegan Dr., Ste. 200, Little Rock. He is a former sportscaster for KATV and KFSM and can be reached by email at dale.nicholson@raymondjames. com. Any opinions stated are those of the author and not necessarily those of Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. www.talkbusiness.net

Industry PHOTO: SHUTTERSTOCK

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Drilling Rig Count Falls To Five Across the State – Lowest in a Decade By Wesley Brown

rkansas’ rig count has fallen to its lowest level in more than a decade as drillers and oilfield equipment companies have cut back substantially on upstream oil and gas capital projects for the remainder of the fiscal year. According to the Baker Hughes weekly rig count, the number of rigs operating in Arkansas is now down to only five, a level not seen since the week of May 5, 2005. A year ago, there were 11 rigs actively drilling for oil and gas across the state of Arkansas. Jack Dollarhide, CEO of Tulsa, Oklabased Longbow Asset Management, said as the U.S. energy marketplace approaches the one-year anniversary of the drastic decline in global crude oil prices, the domestic natural gas marketplace is mired in a nearly seven-year slump driven mainly by oversupply due to new drilling methods and technologies. “Not surprisingly, the U.S. rig count for oil and natural gas have predictably declined over the past 6-7 months as volatile commodity prices have been under immense pressure punctuated last week when the Baker Hughes rig count fell for the 27th consecutive week,” said the Tulsa investment strategist. Nationwide, the total number of rotary rigs exploring for oil and gas in the U.S. is only 859, down more than 53.7 % from year ago levels of 1,854. Of That total, 635 are drilling for oil, 221 for natural gas and three for other purposes. Overall, the number of natural gas-directed rigs is down 73% from its recent peak of 811, achieved in 2012. The all-time high of 1,606 was reached in late summer 2008. A

year ago, there were 310 active natural gas rigs operating across the U.S. Dollarhide said despite the downward pressure on coal and domestic oil prices, natural gas prices have failed to break out of

“Not surprisingly, the U.S. rig count for oil and natural gas have predictably declined over the past 6-7 months as volatile commodity prices have been under immense pressure…“ – Jack Dollarhide its long seven-year bear market. “In fact, many would argue that the pullback in the energy sector reflected in slashed drilling budgets, massive layoffs, and office closures can be blamed more on the inability of natural gas to make a sustained rebound than even the shocking decline in oil – which is not as shocking today since oil

has recovered about 40% since its February lows,” said the Tulsa money manager. In Monday’s trading session on the New York Mercantile Exchange, July natural gas futures jumped 13.7 cents, or nearly 5%, to $2.887 per million British thermal units (MMBtu). However, July crude futures on NYMEX fell 58 cents to $59.48 a barrel after gaining 1.4% in the prior week. In its most recent short-term forecast, the U.S. Energy Information Administration (EIA) predicted Brent crude oil prices will average $61 per barrel in 2015 and $67 per barrel in 2016. The 2016 price forecast is three dollars lower than in last month’s forecast. The nation’s benchmark crude, West Texas Intermediate (WTI), is expected to average $5 a barrel less than the Brent price in 2015 and 2016. The spot price of natural gas at Henry Hub averaged $2.85 per MMBtu in May, after averaging $2.61 per MMBtu in April. EIA expects monthly average natural gas prices to rise somewhat through the summer as air-conditioning demand increases, but remain below $4 per MMBtu throughout the forecast period. In every week since the April start of the natural gas storage injection season, weekly inventory builds have surpassed the previous five-year (2010-14) average. The 132 billion cubic feet (Bcf) increase in working gas inventories for the week ending May 29 was the largest injection in more than a decade. EIA forecasts inventories will total 3,912 Bcf at the end of October 2015, which would be 115 Bcf above the previous five-year average. www.talkbusiness.net

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Getting Into Gear The push to return manufacturing jobs to the U.S. remains ‘very strong’ at Wal-Mart, officials say. By Michael Tilley and Kim Souza COURTESY OF THE CITY WIRE

ichelle Gloeckler says Wal-Mart remains focused on helping return manufacturing jobs to the U.S., with the number of success stories growing and the 2015 manufacturing summit being moved to Bentonville to better connect buyers with products “that are ready to go.” “It is still alive, well and very strong,” Gloeckler, executive vice president, consumables and health and wellness and U.S. manufacturing lead, said when asked about Wal-Mart’s focus on its highly-touted manufacturing push. Former Walmart U.S. CEO Bill Simon was the initial champion of the 2013 pledge to buy $50 billion in U.S. made products in 10 years. At the time, Wal-Mart estimated that over the next decade the investment would total $250 billion. The Boston Consulting Group predicted that the $250 billion investment would create a million jobs, including the jobs in manufacturing and related services. The effort included a series of national television ads with popular pitch man Mike Rowe that ran in early 2014 during the Winter Olympics. Wal-Mart conducted a manufacturing summit in Orlando, Fla., in August 2013, with an estimated 500 suppliers attending and representatives from 38 state governments, including eight governors. Then-Arkansas Gov. Mike Beebe was one of the eight attending. A 2014 summit was held in Denver, Colo. ‘BETTER FILTER’ However, when Doug McMillon was selected over Simon as CEO of Wal-Mart Stores to succeed the retiring Mike Duke, Simon eventually left the company, and the focus on manufacturing seemed to be

pushed down the corporate chain of command. Gloeckler said it is a mistake to think the company has reduced its commitment to accelerate American manufacturing. She said the manufacturing summit planned for Bentonville will include a “better filter.” She said in years past they met with people who had product ideas, but this year they will focus on meeting with people and companies who “have a manufacturing plan” and can begin almost immediately to put products on shelves. The 2015 Walmart U.S. Manufacturing Summit is themed “Investing in American Jobs,” and is set for July 7-8. The event will be held in the Arend Arts Center at Bentonville High School. Gov. Asa Hutchinson and Walmart U.S. CEO Greg Foran are scheduled to speak. Also expected to attend is Harry Moser, founder of the Reshoring Initiative, a group founded in 2010 to help manufacturers and others in the supply chain find cost-effective ways to return production to the U.S. “Walmart will offer the unique opportunity to meet with buyers across our formats, as well as facilitate meetings for current and potential suppliers with key state economic development officials with knowledge of available U.S. manufacturing locations,” Wal-Mart noted on one of its websites touting the event. Information requested by Walmart in the eight-page “supplier initial questionnaire” includes details on the cost to produce items overseas compared to the U.S., why the company is interested in moving production back to the U.S., any plans or ability to add production capacity, and consumer demand for products.

RECENT SUCCESSES Wal-Mart officials said in October 2014 there were 150 projects being worked. Recent successes touted by Wal-Mart include a $16 million hosiery plant in Hildebran, N.C., and a $21 million investment by Korona Candles in Dublin, Va. The PEDS plant in Hildebran is expected to employ 150 in 2015 and grow to 205 jobs by 2018, according to the March 11 announcement. Socks made at the plant are also expected to be sold in Mexico and South Korea. An April 15 announcement from Korona said its new plant will employ up to 175 by 2017. “Korona Candles has made tremendous efforts to bring Walmart customers quality, U.S.-made tealight candles to our more than 5,000 stores across the country,” Gloeckler said in the Korona announcement. “We are proud to support manufacturers who share our passion to create jobs for American workers and strengthen local economies.” Some critics of Wal-Mart’s push say the $250 billion number is a small percentage compared to overall sales in the 10-year period. Wal-Mart is on track to reach $500 billion in annual sales. Others say Wal-Mart alone can’t make a significant impact on returning manufacturing jobs. Adrienne Selko, in a June 9 column in IndustryWeek, wrote about Wal-Mart being a trendsetter in reshoring, saying other retailers will need to do more. “Returning back to the original question, however, it remains to be seen if Walmart can push the needle of reshoring in a major way, and in fact become a trendsetter. They need to be joined by other big box retailers,” she noted. www.talkbusiness.net

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

State’s Medical Providers Not Ready For Coding Switch By Steve Brawner

n Oct. 1, the coding system used by Arkansas medical providers for billing insurance companies and the government will change. Many providers probably won’t be ready, and if they aren’t, they will have trouble getting paid. The federal government is requiring medical providers, including 38,000 in Arkansas, to switch from the ICD-9 system to ICD-10. Those who submit bills using ICD-9 after Sept. 30 will have their claims rejected, said Tami Harlan, deputy director of the state’s Medicaid program. Harlan said anecdotal evidence suggests many providers won’t be prepared. She expects a scramble after Oct. 1 as providers accelerate their changeover while requesting paper checks, which will take time to process and deliver. She has good reason to be concerned. David Wroten, executive vice president of the Arkansas Medical Society, said of the 95 clinics that have responded so far to a survey, only 16% said they are ready to implement ICD-10 today, and almost 30% do not believe they will be ready in October. About 60% said they had provided training for coding staff, while about 40% have trained clinical staff. He said some are waiting on software vendors, while others are delaying the switch because vendors are charging excessively high rates. DELAY NOT LIKELY Wroten said providers may assume that the switch to ICD-10, already delayed twice from its initial planned start in 2008, will be delayed again. The Arkansas Medical Society hopes Congress will create a grace period of one to two years where providers would not be penalized if they haven’t made

the switch. Harlan said a delay is not likely. The federal Center for Medicare and Medicaid Services seems determined to enforce the change, and no federal legislation is being debated that would delay the changeover a third time. She said DHS has been working on the switch to ICD-10 since 2012 and as of late has been working “feverishly.”

“They just are not taking this seriously enough to make sure that their practice is ready.” – Tami Harlan “I think it’s some people just don’t think it’s going to happen,” she said. “I think some people think it doesn’t apply to them. I think some people just have been slow to get ready. They just are not taking this seriously enough to make sure that their practice is ready.” “ICD” stands for International Classification of Diseases. Its earliest version was adopted by the World Health Organization in 1893, and it has been updated periodically since. FAR MORE SPECIFIC ICD-9, which has been in use in America since 1979, categorizes all medical ailments

and procedures into 13,000 codes. The ICD-10 system, which was endorsed by the World Health Organization in 1990, categorizes those procedures into 68,000 far more specific codes that detail the exact ailment (for example, which arm was broken) and its cause. The greater specificity allows for better collection of data that can spot waste and fraud, Harlan said. But Wroten said the switchover is costly and the codes so specific as to be comical. A study initiated by the American Medical Association estimates the cost of a medical practice switching to range from $56,639 to more than $8 million, depending on the practice’s size. According to the fact-checking site Politifact, ICD-10 includes nine separate codes for injuries related to turkeys, including one for being struck by a turkey and another for being pecked by one. Then there’s the concern that IT-related problems will occur. “Physicians are being advised by a lot of consultants to set aside three to six months of receivables expecting there to be a lot of problems when it first switches over,” he said. Wroten said that despite the complexity of the switch, “It’s not going to save the health care system one penny. It’s not going to improve health care services one iota. There’s no benefit to the patient. There’s no benefit to the institution. The only benefit this is for are researchers and numbercrunchers, yet we’re the ones having to pay for it.” Wroten would prefer that the United States skip ICD-10 entirely and wait for ICD-11, which the World Health Organization’s website says will be finalized in 2017. www.talkbusiness.net

Hometown, Arkansas

A Cheery Future for the Grim Historic hotel in Texarkana is set to get a new life as part of a revitalized downtown. By Jeanni Brosius PHOTOS COURTESY OF STEVE HARRELSON

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Photos on left: The Hotel Grim in its heyday was a centerpiece in downtown Texarkana. Photos on right: The Hotel Grim in its current state of disrepair; however, the elaborate details on the columns are still intact.

he Hotel Grim sits derelict, seemingly forgotten and left to become a shell for ghosts of its past. The eight-story hotel, which sits at 301 North State Line Ave., is a reminder of a bustling downtown Texarkana in the 1920s and 1930s. Rumor has it that Bonnie and Clyde once visited the Grim. The last time the hotel rented a room was in 1984, and some of the old cards with the names of guests and their room numbers are still strewn on the check-in counter. “There are still ornate light fixtures, and it is unbelievable how nice it still is after decades of nonuse,” Steve Harrelson said about the hotel that sits across from his

law office. “Old-timers told me stories that during prohibition there was a tunnel under State Line Ave. so they could run from one state to another when the revenuers would come.” There are more than just ghosts moving about in the 250 rooms of the Hotel Grim these days. Along with other downtown revitalization projects, the hotel will also be given a new life with loft-style apartments and retail spaces on the main floor. “The revitalization of the Hotel Grim would be the crown jewel of a redeveloped downtown Texarkana,” said Harrelson, who has pushed for the renovation of the Grim

since moving back to Texarkana in 2002. “A community’s downtown is a reflection of the community itself, and I’m hopeful that a renewed Grim would reflect the pride that exists in our downtown.” Harrelson, a former Arkansas state legislator, renovated the Foreman building that houses his law offices 10 years ago. He says it is 25 years older than the Grim. REDEVELOPMENT SPECIALIST In addition to Harrelson’s effort to garner interest for the revitalization, Texarkana resident William B. “Billy” Harrell of Rivergate Properties has hired Jim Sari, www.talkbusiness.net

Hometown: Texarkana CEO of Sari and Company in Austin, Texas, to breathe new life into the 103,200 square-foot hotel that is owned by Rivergate Properties LLC. Specializing in downtown or community redevelopment projects, Sari said he plans to put his 15 years of revitalization experience into the project and start construction on the hotel in the next six months. Sari said the plan is to have spaces open for rental by the end of 2016 with an estimated $13

million renovation project. “There will be 70 to 80 loft apartments and retail space on the bottom,” Sari said. Since he grew up in Texarkana, Harrell said this hotel renovation is a labor of love for him. “I was very familiar with downtown as a kid. In its heyday, I remember the Grim and the coffee shop there,” Harrell said. “I have always felt like our history is more important than just being discarded. For years I’ve

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About the Grim

• Located at 301 North State Line Ave. • Owned currently by Rivergate Properties LLC • Built in 1924 • Architects, George Mann and Eugene Stern • Named for William Rhodes Grim, prominent businessman • Cost to build $600,000 • Eight stories • 250 rooms • 103,200 square feet of floor space • Marble floors • Hot spot in the 1930s • Bonnie and Clyde were spotted there

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TALK BUSINESS & POLITICS | JULY/AUGUST 2015

• Abandoned in 1980s • Both cities have a population of about 60,000

Above: A ticket dating back to 1974 was among others still laying on the counter at the Hotel Grim. Photo on left: The new plan for the Hotel Grim by Jim Sari, who specializes in redevelopment projects.

been trying to get this hotel project done.” Harrell said many contractors build “boxes,” which he said is hardly restoring old property. He said finding people with skills to restore the architecture back to its former glory are hard to find. “I’ve always felt like we should restore as much of the historical stuff as we can,” Harrell said. “Personally, I’m pleased that we’ve got the momentum going on this project. … It was certainly a place that generated activity for folks in Texarkana. ... It’s central to the downtown restoration and redevelopment.” DISTINCTIVE TOWN Texarkana USA is a distinctive town because the Arkansas/Texas state line runs directly through the center of downtown. “Once people visit, they see other unique things about our town,” said Ina McDowell with Main Street Texarkana. “We have two of everything: two mayors, two governing bodies, two states. They both come together in downtown. … Many attempts have been made for development, but this is the first opportunity for something to seemingly happen [with the Grim]. A lot of people are

on board with support, and it’s a huge statement in the commitment to the downtown revitalization.” Another notable building with ongoing restoration in downtown Texarkana is the State Line Post Office and Federal Building, which straddles the state line and has two zip codes. This is the second most photographed courthouse in the country, second only to the Supreme Court in Washington, D.C. Texarkana, Texas, Mayor Bob Bruggeman said that even though the town does rest in two states, the governments work well together, especially when it comes to revitalizing the downtown. “We’ve had an ongoing revitalization through the downtown area,” he said. “We are in two different states and have good success with development in the downtown area. Most recently, Pecan Point, a restaurant and brewery.” Harrelson said there have been several renovation projects in the last decade, including his building and Silvermoon on Broad, which offers versatile options for meetings, weddings, parties and other occasions.

“There have been other small renovation projects, and as a whole, downtown has more activity currently than it has in many years,” Harrelson said. “One problem that affects downtown Texarkana as far as bringing in cars and tourists: it’s hard to get to. Unlike Little Rock’s River Market (I-30) and Dallas’ West End (I-30), there are no major thoroughfares that can bring people easily off the interstate and into our downtown. Interstate 30 is three miles and 12 stop lights away from downtown Texarkana.” The revitalization of the Grim Hotel is a huge statement for the downtown revitalization of Texarkana. “Downtown Texarkana has a classic southwestern feel to it,” Harrelson said. “There are two major buildings in need of repair—the Grim and the McCartney—and there are some unique buildings that offer a distinctly different architectural style—the Rialto building and the Ace of Clubs House. It is divided right down the middle by State Line Avenue, which brings both a unique aspect and a major dividing line, since it divides two cities, two counties and two states.” www.talkbusiness.net

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Commentary

Council on Common Core Hears Range of Viewpoints By Lt. Gov. Tim Griffin Former Congressman Tim Griffin was elected lieutenant governor on Nov. 4, 2014. He serves as chairman of Gov. Asa Hutchinson’s Council on Common Core Review.

n February, Gov. Asa Hutchinson assembled the 17-member Council on Common Core Review, which includes parents, teachers, educators and community leaders, with myself as chair. The governor, although not required by law, appointed the council and asked us to take an in-depth look into the Common Core State Standards (CCSS) – including testing and data privacy – and provide him with initial recommendations in early summer and final recommendations in the fall. As an Arkansan, and a father of two young children in the Little Rock public school system, this issue is not academic to me – it’s personal. The council’s priority has been to listen. I am convinced that one of the mistakes made years ago was the implementation of the CCSS without sufficient listening and communication with Arkansans, parents and teachers in particular. The process to make systemic change such as adoption of education standards must be bottom-up and cooperative, not top-down and bureaucratic.

We are committed to high standards, high expectations, high performance and an inclusive and transparent process as we improve our educational system.

PUBLIC INPUT We have relied heavily on public input, especially via our nine-city listening tour and public hearings held in the state Capitol. The listening tour allowed the council to hear from parents, teachers and concerned Arkansans in their communities for a total of 18 hours. The hearings were an opportunity to hear from teachers, educators, professors, recognized curriculum and standards experts, representatives of testing companies and government officials. Over five short weeks, we heard approximately

40 hours of testimony in five days, which included 16 panels and 50 witnesses. The council has worked diligently to separate myth from reality and let the facts lead us at every stage of the process, even when it wasn’t convenient or popular. We heard from folks who like Common Core, dislike Common Core and every view in between. I made a commitment to hear from a broad range of perspectives, and we did that. We reached a decision on testing and provided the governor an initial recommendation he could use before the looming mid-summer testing deadline: During the listening tour testing was raised by parents and teachers as much or more than the CCSS. The council voted to end the Partnership for Assessment of Readiness for College and Careers (PARCC) test and replace it with a test prepared by American College Testing (ACT). A number of factors led us to this decision, including the national recognition of ACT, the ACT’s reduced testing time and the ACT’s relevance to students. FINAL RECOMMENDATIONS Further, I believe that we must ultimately have comparability between states and on this point, I believe PARCC is a descendant brand from which states are fleeing, and ACT is becoming more and more attractive, especially for states who have decided to revise, rebrand or break from the CCSS. The governor endorsed the recommendation, but the Board of Education turned it down after a 7-1 vote. On the day of the board’s decision, I had a group of about five or six teachers stop me and tell me as I was picking up my 5-year-old son at one of the highest performing Little Rock public schools, “Get rid of PARCC.” The council will finalize and publicly release our final recommendations to the governor soon. Having worked closely with the 16 other members of the council, it is clear to me that we all want the very best for our children and Arkansas. We are committed to high standards, high expectations, high performance and an inclusive and transparent process as we improve our educational system. I appreciate all the work, time and commitment the governor’s 16 volunteers on the council have given and their selflessness in working for the benefit of all Arkansans.

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Commentary

Startups Need Brand Strategy That Addresses Fundamentals By Martin Thoma Martin Thoma writes about branding on talkbusiness.net and a longer version of this article appears there. Email him at martin@thomathoma.com or follow him on Twitter: @MartinThoma

here’s tremendous startup activity in Arkansas, and observing all this business-birthing makes me think of how important great branding is to the great startup. There’s often a notion in startup culture — informed by the “agile” and “lean” philosophies — that the race is to the swift. That is, the critical competency is to ship, and mistakes or bugs will be addressed in subsequent iterations. This may work in technology, but it doesn’t work with brands. After all, software bugs are easily repaired; reputational damage is not. There are good reasons not to fuss with branding in the initial startup phase. It’s easy enough to believe in the persuasive force of one’s own vision. It’s possible to argue that branding is too expensive, time-consuming, foreign or unnecessary due to the size of the startup and “free” digital and social platforms on which to build. On the other hand, a clear, cohesive brand strategy is the surest way to communicate value, engender loyalty and establish referability among all customer groups — partners, buyers, investors and employees. “You never get a second chance to make a first impression,” as a business mentor once counseled me. A startup brand strategy does not have to be elaborate or all-consuming. It does need to address three fundamentals, however, before you ship anything.

A great brand name is simple, memorable, unique and evocative.

BRAND IDENTITY Your identity is your name plus logo. There are some smart brand names cropping up in Arkansas. Collective Bias, Grainster and Nanomech come to mind. A great brand name is simple, memorable, unique and evocative. Without simply describing the business, it connotes it. “Collective Bias” does this well — using a commonplace phrase to evoke its core business, essentially a PR firm placing commercial content with a network of bloggers. Some terrible brand names include now-defunct

Qoop, Fairtilizer, Doostang, Heekya and Thoof. Some good recent vintages include Dropbox, Rent the Runway and Banjo. While logos range from cheap to expensive, the great include: memorable, evocative visuals, uniqueness that can be trademarked and some implicit connotation or reflection of your “brand DNA.” BRAND PURPOSE Why does your brand exist? What role does it serve and what value does it create for your customers? The purpose creates a basis for customers and employees to form emotional connections to your brand, your service and your company. Apple has held true to its core purpose from the day it was founded: create powerful technology that is simple to use. It executed so well that it changed the world – or at the very least whole categories – in the process. Today Apple is far afield from making the computers it started with, but it is still fulfilling its foundational purpose. BRAND CULTURE Well-crafted, well-executed brand strategies create meaning inside the company as well as outside. Mission, vision and values statements are often considered old school. Powerful brands are driven by a common organizational mindset, clearly articulated and advocated by leadership over many years. The way to do this successfully is to codify and communicate that system of values. A fantastic research paper produced by Forrester (email me for a copy) underscores that being close to your customers is actually a core competency of leading companies with leading brands. Customer-centric and brand-centric cultures are driven by six “C’s,” including common beliefs, constant communications, regular celebrations and compelling storytelling. The leader of a startup can get a leg up on the competition by mastering these early in the company’s development. While startups may be constrained by all number of limitations — financial, time, human resources, skill sets — they are also by nature at the most influential time of their lives to create and execute a brand strategy that will drive engagement, performance and sustainable results.

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Observations on Chamber’s Cuban Cultural Exchange By Pat O’Brien Pat O’Brien is a small business owner in Arkansas. He recently attended an Arkansas State Chamber of Commerce-organized trip to Cuba and he offered these observations. You can reach him by email at patrickhenryobrien@gmail.com.

he first meal I ate in Cuba included rice. So, did the last meal. As did most of the meals in between during my five-day trip to Cuba. Rice is a staple food there and it explains a great deal about the Cuban culture and current relations with the United States. As an Arkansan, I understand the importance of rice, too. After all, Arkansas represents only 1% of the overall population of the U.S. yet our state accounts for 48% of all rice production. Rice is big business in Arkansas. Cubans want to import more rice. This is something we should look into, right? I want to thank the Arkansas State Chamber of Commerce for sponsoring a trip to Cuba from June 3-8. Our delegation of more than 50 people was officially conducted as a “People to People Cultural Exchange.” That was necessary because the U.S. government does not allow tourist visas into Cuba. Since 1960, there has been an American embargo of Cuba. That embargo includes restrictions on travel in addition to the inability of U.S. companies to conduct ordinary business transactions. Hopefully, that will be changing soon.

Due to the embargo, we do not have the right to sell Arkansas rice to a hungry Cuban people that wish to purchase it.

CIGARS, RUM AND BASEBALL There were many things about Cuba that were not a surprise. Cuban citizens don’t have civil rights. When arrested, there is a presumption of guilt (instead of innocence) and you cannot hire a private attorney. There are elections, but you are not able to campaign for office by pointing out the weaknesses of your opponent. And, you don’t get to vote for president. Only the 609 members of the parliament get that honor. Also, I didn’t see anyone standing on a street corner bad-mouthing the Castro brothers. That would simply be unacceptable. The government controls the media. Cubans still drive around in old American cars that they bought in the 1950s. They love their cigars and their rum. They love baseball and soccer. They love jazz. They love their families. So much so, that most homes

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

include three generations of Cubans living together under the same roof. Cubans love their health care, which is socialist – like most everything else has been since 1960. Cubans are great hosts to the tourists from all the around the world that flock to their shores. These were all things you could learn without taking a visit to the island, though. There were many things about Cuba that did surprise. Cubans are really proud of their health-care system. They believe it is top notch. They boast about how the infant mortality rate is lower in Cuba than in the United States. There are 70,000 doctors in Cuba and the government exports their services to 69 countries around the world, generating income for the country numbering in the billions. Because the system is socialist, doctors cannot have private clinics and must work for the government. Some doctors drive taxis on weekends to make extra money because their salaries are no different than anyone else. Still, they practice medicine because it is their “calling.” HUNGRY FOR CHANGE Raul Castro has been encouraging private businesses in recent years. There is no comparison to the American free enterprise system, but there are now 190 private occupational licenses that Cubans can try to attain. These include driving taxis, repairing shoes and opening up private restaurants called paladares. Our group dined at several paladares and they approached the service and quality of any nice American version. And, they all served rice. Rice – that constant in Cuba – marks the history of the country. Most of the restaurants are still owned by the Cuban government. The rice dishes there are mostly bland. However, the rice dishes at the privately-run paladares are more exotic and bold. This is symbolic of the changing economy of Cuba. There is continuity beside rapid change. One of the most surprising things about Cuba was the openness to the Catholic Church. It has not always been this way. In 1961, the Castro regime nationalized all religious property, including that of the dominant Catholic Church. Clergy were expelled from the country and atheism became the official law. But, now, some 50 years later things are changing. People are allowed to worship again openly. Pope Francis will be visiting Cuba in September, and Raul Castro recently stated that he is thinking about praying again. The Cubans we encountered were proud and friendly. They can sense

that there is a better way to do things and that economic reforms will bring them greater prosperity. They are hungry for the change. And, they are hungry for staple foods such as rice. Because so many basic needs are paid for by the government, a Cuban spends 90% of his personal income on food. Cuba grows rice but it is not nearly enough to feed the 11 million inhabitants of the island. Therefore, Cuba imports 400,000 tons of rice each year. Most of the rice comes from China and Vietnam. The irony of this situation is stark. Due to the American embargo, it is very difficult for American farmers to sell rice to Cuba. All transactions must be done in cash – credit is not allowed. Instead of importing rice from the U.S., Cuba gets it from a country that avows itself as Communist (China) and a country that engaged in war with America in the 1960s and 1970s (Vietnam). And, Cuba pays more for that rice because of the higher shipping costs. It makes no sense. EMBARGO’S EFFECTS The embargo hangs over Cuba in profound ways. Every Cuban I personally spoke with believes that the American embargo only hurts the average Cuban – not the Castro brothers or the ruling class. Besides the need to import staples such as rice (and chicken), Cuba would like to export products to generate revenue. One of those items is cigars. Under a new rule, an American can purchase and bring back up to $100 worth of Cuban cigars. That is exactly what I did. But, why not more? Because the U.S. Congress made the embargo the law of the land and only Congress can fully normalize trade and relations with Cuba. Probably the greatest myth of all that our trip dispelled was that Cubans cannot come to the United States. Cubans are now free to travel anywhere in the world that they can afford to reach. Many of them want to visit the U.S.,

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but the American government has made that journey very difficult. A Cuban wanting to travel to the U.S. must pay a non-refundable fee of $160 CUCs (around $150) in applying for the visa. That amount is equivalent to several months’ salary for a Cuban. And, our government rejects a staggering 70% of the applications. The visa application fee is a much worse bet than gambling at a casino, of which Cuba has none. Before departing for the Havana airport on our last day, I ate a few bites of rice that were offered at our very nice hotel buffet. I don’t normally eat rice for breakfast. In fact, I never do. But, this time I wanted a reminder of something. I wanted a reminder that Cuba is a country full of people with hopes and dreams. They know there is a better way of life to be garnered and they believe that someday they will get their chance to experience it. As an American, I fully believe that it is time to move beyond the troubles of the past. Cuba is changing – slowly – for the better. In America, we have rights. We have the right to speak our minds in public. We have the right to run for elected office and to criticize our government. We have the right to make as much money as our talents and hard work will allow. And, we have the right to buy or sell our products to whoever wants to buy them … except when it comes to Cuba. Due to the embargo, we do not have the right to sell Arkansas rice to a hungry Cuban people that wish to purchase it. We don’t have that right because decades ago policies were enacted that no longer reflect the current realities. But, I am hopeful that will change. I am hopeful Cuba will continue to change for the better and that the United States will decide to be part of that change. They get some rice, we get some cigars. What could be more American than that?

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Regional: Northwest Arkansas

It’s Been a Long Journey From Winner to Profits For Startup Venture Qbox By Kim Souza

COURTESY OF THE CITY WIRE

Northwest Arkansas was buzzing in 2012 because of its unique startup accelerator dubbed ARK Challenge. The program, made possible from $2.15 million in federal funds, allowed 15 startups from the globe access to mentoring and seed money to try and launch their business ventures following a three-month bootcamp experience. ARK Challenge was a partnership between Winrock International, the University of Arkansas and NorthWest Arkansas Community College. Three winners that emerged from the competition were Btiques of Fayetteville, StackSearch of Fayetteville and MineWhat of Bangalore, India. Two of these companies are still up and running three years later, but it’s been anything but an easy road, they said. Qbox, former StackSearch, has had the most curious path to survival and success. QBOX STAMINA Mark Brandon, co-founder of StackSearch, now known as Qbox, said the path from winner to profits has been a long and arduous journey, despite the fact his venture has been able to raise enough capital ($600,000) to stay afloat thus far. Brandon’s co-founder Sloan Ahrens, who helped build StackSearch’s platform, is no longer part of the venture. Brandon said his dreams of building out the entire company in Fayetteville and adding local tech jobs to

this region have also changed. His tech team of three developers relocated to San Francisco. He has since added a manager of special projects who resides in Fayetteville, as does Brandon. The company’s head of sales lives in Austin, Texas, and the content curator offices in Boulder, Colo. “Our original product had some problems

been elevated to co-founder of Qbox,” Brandon said.

ALCHEMIST ACCELERATOR Brandon said Qbox was fortunate enough to be accepted into the Alchemist Accelerator in San Francisco recently. Having fast tracked the program, Brandon has already made his pitch to investors in that market via a Demo Day presentation May 21. He told investors “Qbox is on fire” with sales rising exponentially over the past year. “In April, we finished with $130,000 in recurring revenue which was up 30% over March which was up 55% over February. In May, the company was at $250,000 in monthly recurring revenue,” Brandon PHOTO: SHUTTERSTOCK told investors. trying to cater to e-commerce retailers. Our He also told investors that he could sales cycle with them was typically about confidently predict $450,000 in second eight months of trial and tests before they quarter revenue, which is already in the would buy. That is a problem if you only books, while he shared the revenue report have six months of cash in the bank,” he said. from the past year: Brandon said the company retooled its • $204,000, Q1 - 2015 product and began selling the technology • $162,000, Q4 - 2014 further upstream to developers so it could • $92,000, Q3 - 2014 be integrated into the retailer’s websites and • $59,000, Q2 - 2014 e-commerce capabilities. Brandon said he keeps thinking the law “We changed the name to Qbox and this of big numbers will eventually catch up to platform has been successful in part because him, but the company continues to sign of Ben Hundley, whose startup, Mass Vector, on more big users of their hosted data base didn’t win the ARK Challenge in 2012. Ben as a service offering. Qbox has brought on shelved his project and joined us. He has clients such as Home Depot, Nissan, H-E-B,

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Nordstrom, Williams-Sonoma, Trip Advisor, the Dallas Morning News, the Seattle Times, Adobe and CBRE Real Estate, Johns Hopkins University and Columbia University. WHAT’S NEXT Brandon said the mother of all trends is Big Data and their service helps a company improve search capabilities, which has resonated with data scientists at prestigious research centers such as Johns Hopkins and other areas outside of retail. “We said the company is also gaining steady footing in e-commerce retail because its product is being integrated into the retailer’s own sites at the development stage which allows it to run seamlessly while providing better search optimization that allows for speed and precise filtering,” Brandon said. He told analysts that Qbox is a solution provider in a $40 billion market. While he knows there are competitors, Brandon said there is ample room to grow Qbox to as much as $4 billion in revenue over the next few years.

Brandon said after presenting to investors at the Alchemist Accelerator, his phone and email were busy with potential interest from investors and he is confident Qbox will be able to raise more operating capital and expand its team. SAN FRANCISCO BASE Whether Brandon relocates to San Francisco with his family is still up in the air. “I love living in Fayetteville, but the interest and investment opportunity for my company is stronger in Silicon Valley. I had no trouble convincing my developers to move out there. Their office is next to the Twitter headquarters and the energy around tech startups is so much higher,” he said. That said, Brandon believes Northwest Arkansas has adequate talent to support his company going forward but he said the capital funding and fundamental understanding are still absent. Brandon said the mentoring he received from the ARK Challenge was stellar, but he said the local investors by and large are too dilutive and act too slowly to support entrepreneurial

growth around technology-based companies. He lauded he efforts of Jeff Amerine and Kristian Anderson, active investors in Gravity Ventures and mentors to the ARK Challenge participants. But he said there is not enough interest from investors locally compared to epicenters like San Francisco and Boulder. Brandon said the recent efforts of John James to try and launch Hayseed Ventures to provide seed money to local startups is notable, but unless the investor base rethinks the way it values companies based in Northwest Arkansas, there won’t be enough money flowing to companies in need. Valuations here are about one-fifth of what they are in the San Francisco Bay area, according to Brandon. Investors in true tech hubs are willing to pay more, he added. “Right now Northwest Arkansas does a pretty good job nurturing newborns, but when the kid is growing and needs some reinforcement they are often left to fly the nest to other regions who then reap the benefits of continued growth,” he said.

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Wal-Mart’s McMillon Talks Succession, Wages, Suppliers By Kim Souza

COURTESY OF THE CITY WIRE

al-Mart CEO Doug McMillon told the media on June 5 that shareholder week is his favorite week of the year though by the end of the Saturday morning meeting everyone is ready for a long nap. McMillon spent a few minutes fielding questions from the media following the annual shareholders meeting in Fayetteville. When asked about the change in board leadership that was announced at the meeting, McMillon said he looks forward to working with Greg Penner, the new chairman, in part because of his strong leadership and knowledge in e-commerce on a global scale. Penner, 45, was named vice chairman and successor to his father-in-law, Rob Walton, at the 2014 shareholder meeting. He is only the third board chairman in the company’s history. He reminded the audience that Walton, the outgoing chairman, will remain on the board and he “most assuredly will be watching very closely.” He was also asked if it was corporate policy to keep a family member as chairman and how much time went into making this board decision. He asked the media not to lose sight of the fact the board also has a very strong team of independent directors. Wal-Mart Stores is one of eight family owned Fortune 500 companies and is deemed a controlled company given the founder’s family owns at least 50% of the outstanding shares. The company has been criticized for the influence the Walton Family has on board selections. “We have a great board, they hold us accountable, they are supportive as appropriate,” McMillon said. Given the succession plan was announced last year, it’s been at least that long that the board has been in talks about succession, he said, adding that he believes board members

have done a great job of pushing management to be prepared for the future. He said changes in management and operations have come about because customers are demanding more, and not a result of slowed growth. “Our customers are changing more rapidly today and with today’s technology and what we anticipate coming we can imagine opportunities to serve customers more

“We have history all the way back to Sam Walton of changing, mixing things up and reinventing store formats.” – Wal-Mart CEO

Doug McMillon effectively. We have history all the way back to Sam Walton of changing, mixing things up and reinventing store formats. Today, it’s not just store formats, it’s not just the physical aspects of our business but it’s also the digital aspects and how they come together,” McMillon said. CHASING THE CUSTOMER The mission he said is saving people money and time and the company is positioning itself for the customer of the future. The customer of the present has been tough, also.

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Improved comp store sales and a 17% increase in global e-commerce sales were about the only highlights of the May 19 first quarter earnings report from Wal-Mart Stores. First fiscal quarter net income and total revenue were down 6.7% and 0.1%, respectively, from the same quarter in 2014. Earnings per share for the fiscal first quarter that ended April 30 was $1.03, down from $1.11 in the first quarter of 2014 and a cent below the consensus $1.04 per share among the 26 analysts who follow the retailer’s financial performance. The company said currency exchange rate issues reduced earnings by 3 cents per share. Total revenue in the quarter was $114.826 billion, down from $114.96 billion in the 2014 first quarter and below the consensus estimate of $116.32 billion. SUPERCENTER SUPPORT Reporters wanted to hear from McMillon why lower gasoline prices were not helping boost retail sales as analysts had originally predicted. McMillon said savings from lower gasoline prices are being absorbed somewhat by food inflation. He said others are paying down debt and saving more. He said in the short-term if fuel prices stay where they are, customers may become more comfortable with the overall environment. As to store performance, McMillon made it clear that Wal-Mart is not planning to close underperforming supercenters. “We are excited about the supercenter fleet that we have and we will still build some, but previously noted that we are moderating our supercenter growth and building a couple of hundred neighborhood markets. … Customers will always want to have a stock-up trip of some kind because it saves time. Our supercenters over time have been

Wal-Mart CEO Doug McMillon says raising wages is good for the economy and he supports wage increases happening now in retail.

reduced in size from 220,000 square feet to about 150,000 square feet today. We are excited about having a box in that size range that positions us for the future, including the capabilities we are building in digital,” McMillon said. He said raising wages is good for the economy and he supports wage increases happening now in retail. McMillon said Wal-Mart is committed to raising wages in the future as needed to attract and retain talent. Lastly, suppliers and customers can expect the Everyday Low Price strategy to be a constant under the leadership of McMillon. He said it supports loyalty and trust and if Wal-Mart can execute it right, it’s a winning strategy. “I say if, because it requires some investment and it requires some scale because we need to have enough influence with suppliers to get them to price the goods on a net-invoice cost basis. If the suppliers are volatile in their approach, playing games with customers it’s hard for us to manage that as we interact with customers. I believe over time Everyday Low Price works around the world when it’s executed properly,” McMillon said.

PHOTO COURTESY OF WALMART

N I P U L L A E R ’ E W . S S E N I S U B R U YO

t or black-tie gala, the ing a business even nn tures, pla e u’r yo r the Whe you need . To see fea nter has everything ter.com en nc tw it vis or Fayetteville Town Ce 44 ials, call 479-587-99 on tim tes d an ns floor pla www.talkbusiness.net

Regional: Northwest Arkansas

BENTON COUNTY

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

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Benton Co. Wage Growth Leads U.S. In Improvement By Wesley Brown

enton County, the state’s second-most populous county and home to WalMart Stores, Inc., corporate headquarters, had the largest over-the-year percentage increase in average weekly wages in the U.S. in 2014 with a huge spike of 9.9%, according to a newly released report by the U.S. Bureau of Labor Statistics (BLS). The overall wage growth was boosted by an average weekly wage gain of $209, or 16.2%, in the professional and business services sector, which made the largest contribution to the county’s overall payroll gains, the BLS report shows. STATE’S TRANSITION The new BLS report comes after Talk Business & Politics reported in November that the biggest trend that Arkansas’ labor pool of 1.3 million has undergone over the past decade has been the transition from a goods-producing, blue collar-based workforce to a fast-growing service sector that ranges from highly paid corporate CEOs to fast-food workers making minimum wage. That report, culled from BLS workforce data developed by the state Department of Workforce Services, also projected that Northwest Arkansas’ fast-growing professional and business services would see net growth of 7,136 jobs by the end of 2015. In addition, the Fayetteville-SpringdaleRogers area’s professional and business

service sector saw the largest economic expansion in September among the nation’s 381 largest metropolitan areas (MSAs) in

“We have seen wages increase across all sectors. This is broadbased. It gives me a lot of confidence in that we are seeing the labor force matching up with the needs of the employers.” – Kathy Deck 2013, increasing real gross domestic product (GDP) growth by 3.33 percentage points. Economist Kathy Deck, director of the Center for Business and Economic Research

in the Sam M. Walton College of Business at the University of Arkansas, said the BLS report is great news for the Northwest Arkansas economy because it shows that the region is seeing broad gains in both employment and wage growth. ACROSS THE SECTORS Besides the increase in average wages in the professional and business services sector, Deck said the university’s own research shows all major sectors have seen wage increases, except for the information sector. “We have seen wages increase across all sectors. This is broad-based,” Deck said. “It gives me a lot of confidence in that we are seeing the labor force matching up with the needs of the employers.” The University of Arkansas economist also said that Northwest Arkansas and the rest of the state still has a lot of room to grow on the wage front, mainly because Arkansas is generally behind the rest of the nation in annual income and wages. “We are starting from a low base, so there is plenty of room for growth,” she said. Besides Benton County, shale rich Washington, Pa., and Midland, Texas, counties followed the Northwest Arkansas region with the largest growth in average weekly wages in 2014 at 9.2% and 9%, respectively, according to the Department of Labor’s statistical analysis group. www.talkbusiness.net

Regional: Northeast Arkansas

Ritter’s Morse Weighs In On Cable Industry’s Future By Michael Wilkey Editor’s Note: Ritter Communications President Alan Morse recently spoke to Talk Business & Politics about changes in the cable industry. The company, with offices in Jonesboro, Marked Tree and Millington, Tenn., started in 1906 as a telephone company but now also offers internet and cable television. TB&P: You have expanded into cable TV. How has that gone? Morse: We’re very happy with our cable business and the acquisitions we have made along the way. Having cable and … the products we have to offer allows us to provide bundles to our customers. They can buy cable, telephone and high-speed Internet from us in a three-way bundle. By doing that, we are able to offer them a better value. In addition, the technology that the cable signal transmits on, being a hybrid of fiber optic and coaxial cable, is more current and more up-to-date technology than the old copper wire plant that the telephone system runs on. Therefore, the acquisition of the cable network allows us to provide high-speed data services to those customers that might not be able to use the old telephone copper plant.

the FCC made where they required all the broadcast channels to move from analog to digital a few years ago. Obviously, the advent of high-definition television was an outgrowth of people watching movies in their home, first on DVD and then on BluRay. And TiVo is a reaction to consumers wanting to time-shift their consumption of video programming. … All these technology advances have been designed to help people consume video content in a way that is most desirable and convenient for them.

their cable bill. They don’t see the cost of us providing that content, which is going up exponentially. In some cases, we have also seen cable

TB&P: You now have everything from digital to TiVo. Has that changed customer needs and wants? Morse: All of those changes have been in reaction to customer demand. So, serving in rural markets like we do, we get the advantage of seeing sort of the advance warning of what’s coming from technologies that are first introduced in what you call the “alpha” markets across the country – New York, Chicago, Los Angeles. We can see how customers in those markets react, what the market is … and we have a way to predict what we might see in our market once those technologies become available. But the advent of digital television was a reaction to a regulatory change that

TB&P: Where do you see the market in 10 years? Morse: The content that we transmit to our customers is content that has originated by other companies. For example, ABC/ Disney is a content provider that provides ESPN, all of the Disney channels, the ABC channels, etc. In addition to the broadcast channels, the local channels where you get your local news provide the content we re-transmit to customers over our cable network. We have to pay for that content, and those content costs continue to go up every year. One vendor that we deal with, one content provider raised its rates to us by 43% over the last year. Customers only see

providers go out and acquire content providers. For smaller providers like Ritter, what we have to try to do is join a consortium. We belong to one … and get the best deal we can for our customers. We’re seeing Internet video, or what is sometimes called “over the top” video, increase fairly dramatically. Young people, in particular, are very accustomed to viewing video content over their Internet devices ... and increasingly now going directly to the content provider’s website. So, net transitioning is happening. We are aware of those trends … and think that will continue although we continue to see a need for traditional cable programming into the future.”

“We continue to see a need for traditional cable programming into the future.” – Alan Morse

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Regional: Northeast Arkansas

Campaign Emerges to Place Hattie Caraway on the $10 Bill By Michael Wilkey A woman’s place is not in the kitchen – it’s on the $10 bill, and a group of Jonesboro leaders want to see an Arkansas historical and political icon earn that distinction. The Jonesboro Regional Chamber of Commerce is working on a campaign to place former Sen. Hattie Caraway, D-Ark., on the currency that currently displays founding father and former Secretary of the Treasury Alexander Hamilton on the money. Officials with the U.S. Treasury Department announced this week that a woman will be on the $10 bill starting in the year 2020 to honor the 100th anniversary of the 19th Amendment giving women the right to vote. The move is also part of a scheduled redesign of the $10 bill, a systematic process designed to ensure that new anti-counterfeiting safeguards are updated to protect the nation’s currency. Cari White, executive vice president and chief operating officer of the Jonesboro Chamber, said she is helping create a social media campaign to rally support for Caraway – the first female elected to the U.S. Senate – to be placed on the currency. The campaign was posted on the Arkansas State University Facebook page during a midJune launch of the effort. “Good morning

from Jonesboro. On this #TBT, we applaud the efforts of the Jonesboro Regional Chamber of Commerce and join them in their efforts to put Hattie Wyatt Caraway, the first woman elected to the U.S. Senate, on the $10 bill,” the post noted. “A Jonesboro resident, Sen. Caraway was instrumental in keeping A-State from closing its doors during the 1930s.” The post had over 150 likes in less than one day. White said Caraway, who was the first woman elected U.S. senator and the first woman to preside over the U.S. Senate, was a supporter of women’s and farmers’ rights as well as the New Deal policies of then-President Franklin D. Roosevelt. While Caraway has ties to Northeast Arkansas, White said she is hopeful that it is an issue that receives support statewide. “We hope to create a swell in Arkansas. And we want everyone in Arkansas to get behind it,”

White said. Hattie Ophelia Wyatt Caraway was appointed in 1931 to fill the vacancy created when her husband, Thaddeus, died. She won a special election in 1932, in part due to campaigning support from legendary Louisiana Sen. Huey P. Long. In 1938, Caraway successfully ran for re-election against Congressman John L. McClellan, whose campaign slogan was “We need another man in the Senate,” and she won with the support of veterans, women, and union members, according to the Encyclopedia of Arkansas website. Caraway was defeated by J. William Fulbright in 1944. Her term ended on January 2, 1945. While an announcement is expected by the end of the year on the new $10 bill persona, it will not go into circulation until 2020.

www.talkbusiness.net

Feature

Tech Roundtable:

Are You Ready For The Internet Of Things? 74

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

PHOTO: SHUTTERSTOCK

Three experts in the field of information technology Mainstream Technologies CEO John Burgess, Verizon Wireless Regional President Kristi Crum, and The Venture Center CEO Lee Watson – sat down for a roundtable conversation regarding their industries, what’s on the horizon, and the need for more STEM education.

By Talk Business Staff

ROUNDTABLE PHOTOS BY BOB OCKEN

www.talkbusiness.net

Feature: Tech Roundtable Roby: Let’s begin with the “Internet of Things.” Who wants to tell me what the “Internet of Things” is? John: The “Internet of Things” (IoT) is the next logical extension of getting the technology embedded in your everyday life. You used to have to go to a machine to work with technology. Then we put the technology in your hand. And now, the next wave of technology is ubiquitous in everything you do. It’s in your watch, it’s in your car, it’s in your toaster – literally there is no end as to where the technology is going to be. Kristi: Back in 2010, there was basically one connection for every person on the planet. In 2015, right now, there are 25 billion connected devices out there, which is three times the human population on the planet. By 2020, there will be over 50 billion connected devices. Roby: Which is almost double where we are now or 6.5 times the number of people on the planet… Kristi: Everything in your home is

connected. Pretty soon we’re going to have smart cities and it’s going to go on and on and on.” Roby: It’s not an irreversible trend. There’s no end in sight. Lee: Think about it as the Third Wave. So you had the computer revolution, then there was the Internet and this is really what’s next. It (IoT) will be that disruptive or more disruptive than what the Internet’s been. Roby: I want to get all of your perspectives on how you convince someone to transition from the old to the new. I think there’s a lot of different ways and different lenses you guys might look through for this. How do you convince a consumer or business owner that it’s time to upgrade? Kristi: Well we do that a lot. I think it’s really important from a business perspective to have a technology partner that you trust, that can teach you all of the technology in your business, not just in Arkansas but across the country. We sit down with businesses every day, we show them

what’s coming, you cannot miss a market transition. At some point there is a cost to not upgrading your technology. You have to weigh what is it today that I’m being asked to spend and at what point do I get more value out of that than holding on to this older technology… All of the latest technologies have a partner that understands that. Understand what all your competitors are coming to the table with. The days (are gone) of having backups, wireless backups, the POS systems going out. Why would you have that happen? There’s a cost for that every minute. Why would you have paper, why would you? There’s so many questions that I would ask that at some point the cost of that technology will absolutely be worth it in terms of productivity, efficiency, etc. Lee: I think you’ve got to know when the opportunity is there. You’ve got to really watch for that. You know some of the best start up examples that we see in newspapers all the time are companies that knew when to build something on top of a new platform that was getting traction. Facebook - not

(Left to right) Roby Brock, Lee Watson, Kristi Crum, John Burgess.

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

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Feature: Tech Roundtable the first social network - but knew what the market was doing, leveraged new technologies and they’re the player today. Nobody really remembers the other social network sites that were there before. Roby: Somebody remember what was the other social network site? John: MySpace. (laughter) Roby: There you go, showing your age. John, you deal with a lot of customers in legacy systems that are maybe 10, 15, 20 years old. John: There are plenty of pieces of software out there that are as old as I am. What we tell our customers is that no matter what your SIC code says that your business is you are in the technology business. And there’s different ways for technology to introduce new opportunities, but they also raise the bars to what the minimum expectation is. So if you’re the Internet age - late 90s early 2000s, the bubble - you go out and get your flashy website. Now with PDA, smartphones, that is passe. You know, there’s like a modernization requirement if you’re going to stay competitive in the marketplace. Lee: I think the trick is to really know when and where to make those changes and to have partners to walk you through. So I’ve got the Apple iWatch. I can go and pay using my Amex using the pay watch. Everything that happens behind the scenes is still running on mainframe software from the 1970s. So some of it just still works, so you really have to know when and where. John: And those drivers are more a system of engagement, which is on your wrist versus the system of record, which is where all the ledgers are balanced. Those opportunities are driven or those changes are driven more by the hardware and the infrastructure and the bandwidth broadband advances in the heavy lifting layer. So that some of that software is fine running on the 30-year old Cobalt system. But the cost of ownership as new server hardware, as new faster networking gear comes out, that presents opportunities to save money by modernizing that platform. Roby: Kristi, I talked to a telecom exec

one time who said you need to make the investment when it is going to give you a quantum leap in productivity. If it’s just a tiny incremental improvement, it might not be the right time to do it. Is that good advice to follow? Kristi: I think that’s great advice to follow.

are thinking about that right now, in the next 5 years, those are who I’m going to be doing business with. What does my technology look like right now and where do I need to be in the next 5 years to get to that customer satisfaction rate? Lee: You know badge processing is so last year. Kristi: That’s right, yes. Roby: Let’s talk about STEM education, STEAM education. STEM and STEAM stand for what? John: So STEM is Science Technology Engineering and Math, and in STEAM the A is Arts and the new term is e-STEAM.

Roby Brock

Lee Watson

So think about this, in the next 5 years Millennials are going to control 60% of the purchasing power. They want things now, they want things at this minute, they want technology, they were born into technology. They don’t want to wait. So they absolutely

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

Roby: Do we need to get rid of STEM and STEAM altogether and just call it e-STEAM from here on out? Should we? I’m letting you guys make the executive decision on this. You get to set the trend. (laughter) John: You know whatever we call it, we simply need more students graduating with these skills because there are not enough today and there won’t be enough 5 years from now. In 10 years, it’s really scary if we don’t start making some changes. Roby: Gov. Asa Hutchinson has passed a computer coding initiative which I would argue is a good first step in that direction. But it’s not the only step that we should be taking in that direction. Kristi. Kristi: You’re going to have an explosion of devices, we talked about that - 50 billion connected devices, 50 trillion gigabytes of data - there’s got to be teams of people who are making that happen. Eighty percent of the jobs in the very near future will be technology-related, which means that we will not have the workforce equipped to handle that in the near future. The other thing that initiative doesn’t cover is women in the tech segment. So, right now 60%, over 60% of girls in the fourth grade are interested in science, technology, engineering and math. By the time they make it to college, 18% of them actually pursue those careers. And so we’ve got a larger initiative, whether or not that requires the governor to get involved, I do believe it requires community leaders to get

involved as well. That’s something we’ve got to solve if we want to make sure we’re ready for the next generation. It’s happening, it’s going to happen and there’s nothing we can do about that. We just need to make sure we prepare our kids to be able to compete in that space. Roby: I wouldn’t have invited the three of you here if I didn’t think you had strong opinions on that. John, your company makes investments in e-STEAM activities. John: Yes, we believe very strongly in it as an economic game-changer for people to raise their standard of living. It’s a good time to be a programmer. It’s always in the highest, always in the highest top three starting salaries and career potential. In regard to women, I’ve seen those same numbers about where we lose the girls in middle school and high school despite the fact that software development, computer science careers are the most egalitarian from a compensation standpoint across males and females. The opportunities are wide open for women and we’re not getting the message out effectively. Roby: What should we be doing besides the computer coding initiative. You’ve got the Iron Yard coming in, you’ve got Girls of Code, you’ve got a bunch of nonprofit and private sector stuff happening. How do we build more, advance more, how do we get more momentum moving faster in this direction? Lee: There are a lot of organizations in Arkansas focused in this space like Noble Impact, that’s a start up focused on entrepreneurship and service in K-12. You have the Ozark STEM Coalition and the Arkansas STEM Coalition, looking at the entire pipeline and figuring out where those gaps are, building programs, getting sponsorships or grants to create a complete pipeline of talent. Roby: Where are the gaps right now? Where do you think we’re losing them? Lee: I think six months ago we would have said, it’s teaching kids how to code. But now we have the Innovation Hub in North Little Rock, and that’s one of their pieces –

taking K-12 students and mixing in the arts and coding and engineering, and printing things on a 3-D printer. So, that’s a really cool thing, and a big piece of that pipeline. There’s several others. John: Museum of Discovery does a great job.

Kristi Crum

John Burgess

Roby: But that doesn’t meet all of what we’re talking about here… Lee: No but it’s a good model of what to start with. You get the business community and the public sector involved and

take those models and expand the models around the rest of the state. And now you’ve got great examples of stuff that works, that needs to be replicated. Roby: That’s the word I was going to use, we need “replication.” John: And well, I think, as a society we have kind of changed this thought process that ‘I need to go to college.’ But the STEM disciplines are historically viewed as more difficult, more rigorous, you’re going to spend more time studying, more time with your nose in a book. And as a result, I think the attractiveness of those disciplines in college has waned. We’re producing more liberal arts, more soft science graduates. So I think up and down the chain we need to change the attractiveness, the perception. It might be a little harder to get the degree but the rewards are there if you stay with it. Lee: So that’s a big piece and I think that’s something this new computer science task force does. It shows what computer science really is, in the high school arena. When a student goes to college and they start a computer science degree, you know they don’t really have the math to do it. So they take that first class, there’s a 40% drop rate after the first class. Well it’s not that hard, you can get through it. It’s the intimidation factor. So if we can push through, then we can already get a 40% increase in the number of students that continue that program. Kristi: No I completely agree with what their saying, and I believe we need to command that we get this kind of education for our children. Either through these programs that we have coming through the Venture Center, and other great organizations we have coming through our schools. We recently gave a grant in Tulsa, Okla., to a charter school there. They already do 3-D printing in the 3rd grade. In the 3rd grade. So we need to make sure that our children in the state of Arkansas are getting the same opportunities as kids across the nation because we need our children here to come in compete, excel, and transform Arkansas and the nation. www.talkbusiness.net

Leadership

Sixth Sense:

Top Interview Questions When interviewing a prospective employee, managers have a relatively short time frame to inquire about experience, qualifications, accomplishments and expectations. What are the right questions to ask to help identify the right person to fit your needs? We asked six business leaders to tell us their “signature question” that they always ask in a job interview to differentiate a candidate from all others and to tell us how well that has worked for them. By Bill Paddack

Matthew Glass

Rod Cross

Franklin McLarty

My favorite interview question is easy and I ask it every time. “Would you rather be rich or famous?” I always ask this question for a couple of reasons and there is always a right answer. If I’m interviewing someone on the sales side, I want the candidate to respond with “famous.” If I’m interviewing someone on the administrative side, I want them to respond with “rich.” Most successful sales people crave attention. They like attention so much so that they would rather be recognized than compensated. When you encounter a person like this, you hire them. On the administrative side, I look for the complete opposite. Someone who would choose money over recognition tends to be more thorough and deliberate. Those are qualities we value in our administrative people. Last but not least, never ever hire the person who says “both.” Before you have even hired them they have not answered the question you asked.

At Waste Management, fairness and consistency in our candidate selection process begins with the online application and culminates with behavioral interviews by our hiring managers. Candidates are asked a series of questions designed to help us determine how they will perform in a specific job. The one question that we most commonly ask our prospective candidates is “tell me about a dangerous work-related task that you had to complete and how did you make sure that no one was injured?” The nature of our business dictates that we provide a safe environment not only for each of our employees, but the public at large. This question gives us insight into a candidate’s approach as it relates to safety and how they have put it into practice. We believe that past behavior is a pretty good predictor of future behavior. This process has worked well as we are able to attract and hire those candidates that promote Waste Management’s safety culture.

During job interviews, I like to pose the question to candidates, “Please provide examples of times when you’ve found creative ways to be useful to an organization outside the basic scope of your job duties.” The answer helps me immediately determine whether a candidate will be an asset to our team. I’ve found that individuals who independently identify and seize opportunities to be useful tend to add the most value to our company. Typically, they have an innate sense of service. Based on previous experience, I know that these individuals will be the employees who come into work every day looking for ways to help our company improve and grow. Six months after hiring them I often think, “How did we ever live without this person?”

President & CEO Fidelity Insurance Group West Memphis

Recruiter/Sourcing Specialist Waste Management Little Rock

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

CEO RML Automotive Little Rock

Tanner Chapman

Allison Cox

Michael Keck

One question that stands out is “Describe your current career objectives and how you have prepared yourself to accomplish your career objectives?” Though it seems very simple and straightforward, candidates often stumble on it and may not even be aware when doing so. It doesn’t bode well for a candidate when I am interviewing him/her for a particular position and their answer doesn’t relate to the job for which they applied. I remember asking a candidate this question during an interview as they had applied to a management position. The candidate answered that they were looking to break into public relations/advertising because that was their long-term career objective. The candidate worked hard to sell themselves on a PR/ advertising position, unfortunately, that was not the position I was filling. Even though the candidate thought they gave a savvy answer, in reality, they just potentially eliminated themselves as I was looking to fill a management role, not PR/advertising. A good tip for any candidate is to always relate their experiences to the qualifications of the job for which they are applying.

Signature question – that’s a good one. If I had only five minutes with a candidate, I’d ask the following flip sides of the same question: When have you been most satisfied in your career? When have you been least satisfied in your career? Those two questions measure motivational fit and are right-on when you want to match a candidate with your culture. Assuming you like the background and experiences of the candidate and are confident they can do the job, you really only need to evaluate if your company, the specific opportunity and the candidate are a fit for each other. So, ask these questions one at a time. Once you get the response from the candidate, ask “Why?” and say, “Tell me more …” multiple times. Then, stop talking. I’ve learned you can’t bail the candidate out – you have to force them to tell you what really excites them about jobs and companies, and subsequently, what drives them crazy. Once you get that, you’ll have what you need to know at the most basic level if they are a fit – or not.

When meeting a prospective candidate for employment, I want to know how well they think. No job is easy. Therefore, I want to know how they handle adversity. I want to know how well they utilize resources, how they approach demanding situations and when they know they have accomplished something. I have found the following series of questions to be most insightful and telling in seeing if they are a good match for our organization. Define the greatest challenge in your professional career. How did you approach this challenge? And when did you know you had achieved success and had overcome the challenge you faced?

Senior Human Resources Manager Cintas Corp. - Locations 570 & 650 Maumelle

HR Director – Talent Acquisition and Management Windstream Little Rock

Regional Sales Director CoreSource Little Rock

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Executive Q&A

Wyzerr’s Bjorn Simmons

Startup company is putting a new spin on measuring customer feedback and attitudes. By Roby Brock

ittle Rock native Bjorn Simmons is vice president for sales and marketing of startup Wyzerr – a company with a new spin on how to measure customer feedback and consumer attitudes.

originate and what exactly do you offer? Simmons: As bootstrapping founders, we completed a lot of customer feedback surveys over the years because many companies provide incentives like discounts PHOTO BY BOB OCKEN

TB&P: Where is this company headed? Do you get bought out, have expansion plans or some other route? Simmons: Our goal is IPO. We believe we have a business that’s sustainable and our timing couldn’t be more perfect. Businesses are becoming obsessed with surveys and customer feedback, but the current platforms aren’t effective. Wyzerr offers a solution that people like using. We’d also be open to being acquired by a company like Google or Yahoo that would allow us to continue innovating in the big data space.

Bjorn Simmons says Wyzerr offers a customer feedback solution that people actually like using.

The company touts “no more long boring surveys” as part of its offerings. Simmons was one of the featured speakers at Little Rock’s 1 Million Cups meeting on June 10 at the Arkansas Venture Center. A busy and talented young man, Simmons graduated from the University of Arkansas at Fayetteville and has experience and interest in the fields of public relations, government, education, tech and entertainment. In addition to his duties with Wyzerr, he currently serves as the special projects coordinator for the Georgia House Democratic Caucus. We asked him a few questions in advance of his talk in Little Rock. TB&P: Where did the idea for Wyzerr

people kept saying “this technology is great! But why would you use it to deliver ugly surveys that nobody wants? You have to build something that’s fun and fast.” So we started designing our own surveys and it evolved from there. Nowadays, we build surveys and analytic software that look and feel like games. We offer businesses the ability to obtain actionable insight about their customers’ experience in under 60 seconds.

or free food in exchange for your insight. These surveys were consistently really cumbersome, long and time-consuming. We never took a survey that we actually enjoyed. One of the biggest issues we saw was that surveys came to the consumer by way of a receipt – you had to copy a long URL in order to access the survey. So we originally built Wyzerr as a technology to ping customers directly in the store at point-ofsale. The idea was to engage customers as they leave the cashier while their experience is still fresh and BEFORE they leave the store without having the customer type anything out. Then as we pitched it to business owners,

TALK BUSINESS & POLITICS | JULY/AUGUST 2015

TB&P: What else is new? Simmons: We’re building a SaaS (software as a service) platform this summer that’s going to disrupt the market research and customer feedback space in a major way. Our SaaS platform makes market research, customer analytics/insights and data mining strategies that would normally cost brands and companies anywhere from $40k to the low six-figures affordable and accessible to small businesses. These tools have been proven to be the factor in why enterprise companies continue to grow and scale exponentially. Unfortunately, small businesses don’t have access to these tools. Wyzerr changes that and levels the playing field. We’re excited to get some feedback and insight on what people think of it.

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