The restaurateur reflects upon the strategy behind his company’s many successes
‘You cannot become a champion surfer in a bathtub,’ says Danny Meyer.
In the June issue of WSJ. Magazine, six successful businesspeople from a range of industries were asked to weigh in on their approach to strategy.
Restaurateur Danny Meyer, who’s having a pretty great year, was a member of the panel, along with Epic Records CEO L.A. Reid, professional sailor Stephanie Roble, Settlers of Catan creator Klaus Teuber, historian Doris Kearns Goodwin, and professional matchmaker Amy Van Doran.
Meyer, the founder of Union Square Hospitality Group, which counts among its businesses the ever-expanding Shake Shack enterprise and restaurants like Gramercy Tavern and Union Square Cafe, is well known for his particular talent for hospitality, and told the magazine that he spends about 80 percent of his time considering the culture of his company.
“Culture is our strategy,” Meyer told WSJ. Magazine. “At our restaurants we teach the motto of ‘constant, gentle pressure’ to master a world in which there are unexpected and sometimes very challenging variables tossed your way. It’s a technique for not getting knocked off your surfboard by the waves that are inevitably going to sneak up behind you. You cannot become a champion surfer in a bathtub. Some competitors are enormously motivated by whom they can beat — they want that knockout punch — while others are motivated by hating to lose.”
Read Meyer’s full response and the panel discussion online at WSJ. Magazine.
22 People to Watch in Westchester County
What&rsquos a Rockefeller? Who is Bill Clinton? Just about everyone starts small, and those lucky enough to make it big always watch over their shoulders (sometimes with pride, sometimes with dread) for the next generation. So who is in that next generation? Why, Westchester residents, of course.
From the young film editor impressing Spielberg and the singer who will become her own Barbie to the physician who may well eliminate most childhood cancer deaths, they&rsquore all your neighbors. Some have already grabbed headlines and honors (a leading NFL running back, anyone?) others aren&rsquot even out of school. All of them, though, have even greater things in front of them. If you want to know where film, football, music, medicine, green architecture, and gourmet cuisine are going, look no further than the people who are the future of these fields, our own Westchester People to Watch.
The Fashion Entrepreneurs April Bukofser and Marin MilioApril Bukofser of Pound Ridge and Marin Milio of White Plains met at Pace University, where they were both studying marketing. But it wasn&rsquot until they went their separate ways for their first full-time jobs (Bukofser doing PR and design at Cynthia Rowley Milio, event planning at MTV) and returned to Westchester to raise families that they teamed up for their successful custom clothing line, AprilMarin.
The two often talked about starting a business together, but they couldn&rsquot settle on a concept. Finally, they decided to create custom clothing. &ldquoThere aren&rsquot a lot of places out there that do women&rsquos custom clothing,&rdquo Milio says. &ldquoThere are a lot of places that do men&rsquos tailoring.&rdquo There was nothing stylish and contemporary.&rdquo
Enter AprilMarin, the line the duo launched in 2008, which now operates out of a showroom in White Plains and an office in Yonkers. &ldquoThe line was created to reinvent the old classics,&rdquo Bukofser says. &ldquoWe recreate dresses that are going to look good on every body type. Then we add adornments like a ruffled sleeve or a ruffled collar to make it modern.&rdquo
Their clothes have been featured on the Today show and have been worn by Wendy Williams during her daytime talk show. &ldquoHer stylist calls us frequently to ask us what&rsquos new,&rdquo Milio says. By November 2011, the line had sold between 25,000 and 30,000 pieces&mdashand the business is still growing.
The custom-made clothing is available primarily through their website, aprilmarin.com. &ldquoWe&rsquove been approached by tons of stores all over the country that want our clothes, but you can&rsquot make custom clothing for a store,&rdquo Bukofser says. &ldquoStill, we&rsquove heard the store market and want to respond to them. We launched a whole line of accessories, and we&rsquore looking into doing dresses in more standard sizes.&rdquo
&ldquoIt&rsquos good to have the interest from stores,&rdquo Milio says. &ldquoBut we still want to have that small-business feel. We have a huge repeat-customer base, and we know what our customers want. We want to say to them, &lsquoWe&rsquore not going to be too big for you.&rsquo&rdquo
The Educator Marc M. Jerome
It is somehow fitting that a man who lives with his wife, his three daughters, and a female Yorkshire terrier heads up a college with decidedly feminist origins. &ldquoMonroe College was started by my great aunt in the 1930s, a time when very few women were starting their own businesses,&rdquo Marc M. Jerome says. &ldquoThen my grandfather joined her&mdasha man following his sister-in-law into business was certainly not the norm.&rdquo Today, Jerome is the third generation of his family running Monroe, as executive vice president. He works side by side with his father, Stephen J. Jerome, who is president of the college.
The campus has long had a synergistic relationship with the Queen City. &ldquoIn 1983, our main campus was in the Bronx,&rdquo Jerome says. &ldquoAt that time, the South Bronx was burning, the movie Fort Apache, The Bronx came out, and we decided to open a second campus in Westchester.&rdquo Ironically, 10 years later, the Bronx was doing just fine&mdashbut New Rochelle was in trouble. At that point, Jerome&rsquos father asked him to join the family business. They decided to be bullish and invest in New Rochelle. &ldquoMonroe&rsquos fortunes are tied to the fortunes of the city,&rdquo Jerome says. He helped form a Business Improvement District in 1999 and was elected to be its first chairman, a post he still retains. &ldquoAlong with New Roc City, we have stabilized and energized this part of Main Street.&rdquo
Indeed, when he joined his father at the college, there were just 290 students and 40 staff and faculty members at the New Rochelle campus. The college has since grown nearly 10-fold to more than 2,200 students and 400 staff and faculty. Over the three campuses, including a new campus on the Caribbean island of St. Lucia, the school counts more than 8,000 undergrad and grad students and 11,000 employees. The school is considered a national leader in urban and international education, and its new culinary arts program is growing in size and stature.
With the dramatic growth, Jerome discovered that his background as a labor and employment lawyer (he graduated Tufts University magna cum laude with a degree in Political Science and went on to the University of Pennsylvania Law School) was &ldquothe best thing I ever did. I spend seventy percent of my time on human resources, working with staff and students,&rdquo he says. &ldquoAs a lawyer, I witnessed the consequences when management doesn&rsquot listen to their people.&rdquo
Not only does he listen, but says he can name 80 percent of his students. His practice is to shake the hand of every student on the first day of classes, and then again when they graduate. &ldquoSeeing them walk up to get their diploma is the most gratifying part of my job.&rdquo
The Media Master Caroline Clarke
Today, Caroline Clarke is executive editor and host of Black Enterprise Business Report, working both in front of and behind the scenes to put on the television show. But her media command goes further than speaking into a camera: from writing for daily newspapers to running a publishing imprint and writing a popular weekly business blog, the 46-year-old New Rochelle resident has found success across platforms, genres, and audiences.
In the early &rsquo90s, Clarke came to Black Enterprise, the African-American-targeted business and investment media company headed by Earl Graves, Sr., whose flagship magazine has four million readers. &ldquoThis was before dot-com, if anyone can remember such a time,&rdquo she says. &ldquoI&rsquove held almost every content job there is.&rdquo Clarke has served as senior editor and editor-at-large of the magazine editorial director for Black Enterprise&rsquos book imprint (which, in 2001, published her Take a Lesson: Today&rsquos Black Achievers on How They Made It and What they Learned Along the Way) editorial director of the Woman of Power Summit, one of the company&rsquos signature annual events and general manager for interactive media, helping to run blackenterprise.com, often performing multiple duties at once. She also writes a weekly blog.
&ldquoShe&rsquos an extraordinary, bright journalist,&rdquo says Earl &ldquoButch&rdquo Graves, Jr., the company&rsquos CEO and her brother-in-law. &ldquoShe&rsquos developed into a tremendous talent in broadcast journalism. You can teach people how to speak on television, but you can&rsquot teach the ability to engage people or to be warm to the camera. I look forward to her taking our show into bigger and better things I think she&rsquos got a very, very bright future.&rdquo Graves, Sr., even refers to her as the family&rsquos &ldquosecret weapon.&rdquo
Clarke&rsquos job at Black Enterprise Business Report came by surprise. She was working in interactive media when Graves, Jr., called her into his office. &ldquo&lsquoYou&rsquore perfect to do this,&rsquo&rdquo she recalls him saying. &ldquo&lsquoYou have two choices: you can say yes or you can say yes.&rsquo&rdquo
Growing up with West Indian&ndashAmerican parents in the Bronx, Clarke thought she would become an obstetrician, although she was attracted to both music and science. &ldquoMy parents both had advanced degrees they were both in education. In West Indian culture, education and ownership are the two pillars of life. They really pushed for tried-and-true careers&mdashdoctor, lawyer, teacher.&rdquo
At Smith, she majored in English, and her first boss out of college&mdashthe dean of Columbia&rsquos Teachers College&mdashencouraged her to go into journalism. At Columbia Journalism School, she covered stories right off the newswire. &ldquoI was lucky. I stumbled into my passion and a career I love, which really was the thing my parents always encouraged the most.&rdquo She bounced from the North Jersey Herald & News to the American Lawyer magazine in Manhattan before ending up at Black Enterprise.
Today, Clarke is aiming to grow the viewership for Black Enterprise Business Report, which currently airs on DirecTV and TV One, a network founded in 2004 and geared toward African Americans. The show currently is available in more than 54 million households (up from 38 million in 2007) in 210 markets, and she sees her work as part of the company&rsquos mission. &ldquoPeople need to keep kicking the ball forward. It is challenging at times, and we don&rsquot ignore that, but every problem has a solution, and we try to propose as many solutions as possible.&rdquo
The Rising-Star Chef Eric Gabrynowicz
When Eric Gabrynowicz was a teenager with only some dish-washing experience in a local bar, he wrote out a set of goals for himself: to work in a New York City restaurant by age 21, as a sous chef by 24, as an executive chef by 27, and to own his own restaurant by 30. When Restaurant North in Armonk opened in 2010, he&rsquod officially achieved all of these goals and had beaten his deadline by a year. Gabrynowicz, 30, is executive chef and partner at the highly touted restaurant, which was named a &ldquoTop Newcomer&rdquo and &ldquoTop Food&rdquo pick in this year&rsquos Westchester/Hudson Valley Zagat Survey. In 2011, Gabrynowicz was nominated for a national James Beard Foundation Award in the &ldquoRising Star Chef of the Year&rdquo category.
&ldquoIt was incredibly humbling,&rdquo he says. &ldquoThe most exciting career news I&rsquove ever gotten in my life.&rdquo
And Gabrynowicz hasn&rsquot stopped checking off accomplishments: he has cooked with Al Roker on Today, for Martha Stewart Living Radio, and on Good Morning America. North received a rave &ldquoDon&rsquot Miss&rdquo review from the New York Times and is on track to receive the first &ldquoSnail of Approval&rdquo in Westchester from Slow Food USA, a non-profit, member-supported organization founded to counteract the culture of fast food.
As a kid, Gabrynowicz, who grew up in Orange County, New York, worked on farms and had that dishwasher job at the bar. &ldquoI loved it immediately,&rdquo he says. &ldquoA place where you&rsquore playing with knives and fire? As a thirteen-year-old kid, I just got galvanized by that whole pirate mentality of the restaurant business.&rdquo After graduating from the Culinary Institute of America with honors in 2001, he began as a line cook in über-restaurateur Danny Meyer&rsquos Union Square Cafe, where he met his business partner, Stephen Paul Mancini, a &ldquocrazy lunatic,&rdquo says Gabrynowicz, to whom &ldquolunatic&rdquo is a high compliment. &ldquoWe&rsquore both diehard Mets and Jets fans,&rdquo he says. &ldquoWe commiserated often, usually over a bottle of really, really good wine.&rdquo
Gabrynowicz took spots at other Meyer restaurants, including Blue Smoke and the now-defunct Tabla, before he made the jump to executive chef at Tavern at Highlands Country Club in Garrison, New York, in 2007. By early 2010, Mancini had convinced him to come on board at a new restaurant. &ldquoOne of the important conversations you have to have when putting up your life savings is, what do you do if it fails? And that&rsquos a very uncomfortable, but important, conversation. I like to gamble, but I never gamble anything that I can&rsquot afford to lose. Could I have afforded to lose the restaurant? Probably not, but I didn&rsquot think that way.&rdquo He didn&rsquot have to. It&rsquos nearly impossible to get a reservation on a Saturday night at North. During the week, it isn&rsquot so easy, either. And odds are good there are going to be more restaurants where Gabrynowicz can wow diners. &ldquoWe definitely want more than North, but we won&rsquot think about opening number two until we have North exactly where we want it.&rdquo
The Hostess Clare Galterio
&ldquoShow me some dance moves,&rdquo Clare Galterio, 26, says to an older gentleman at a slot machine. Sure enough, he starts up with a jig of sorts. Galterio joins in.
&ldquoI deal with eighteen-year-olds all the way up to eighty-seven-year-olds,&rdquo Galterio says. &ldquoI need to be able to talk to anyone.&rdquo You want her to talk to you, too, because Galterio is the in-person and on-air hostess who does the big giveaways at the Empire City Casino at Yonkers Raceway. The public relations manager has given away cars, cash, even ShopRite gift cards to lucky gamblers. The filmed bits she does to promote the casino&rsquos prizes are simulcast on cable and shown in casinos, racetracks, and bars all over the country (and a few in Canada, too). She&rsquos also done segments for WPIX. Right now, she is auditioning for other TV hosting gigs.
Galterio&rsquos easy charm with people&mdashwhich lets people do goofy dances without feeling silly&mdashmakes her a natural host. &ldquoI grab people from the audience. I do trivia. We do dance-offs.&rdquo Then again, Galterio is no stranger to performing. Growing up in Bedford, she danced her way through the studios of Westchester. &ldquoI&rsquove been dancing my whole life, but being on TV has always been my dream.&rdquo
Soon, that dream will be realized on an even bigger screen. Recently, she was cast&mdashright off the casino floor&mdashin Imogene, a movie starring Kristen Wiig and Annette Bening. She plays, fittingly, someone who gives away a car. &ldquoI did a tour for the directors when they wanted to film at Empire City,&rdquo she says. &ldquoThey said, &lsquoListen, we have a part written for someone to give away a car. Would you like to be in the movie?&rsquo That was amazing because people don&rsquot just give away roles like that, especially for speaking parts.&rdquo
Auditioning for other hosting jobs is not always easy. For example, she auditioned to be the new Nets announcer&mdashon crutches. &ldquoI had to do it on a sprained ankle.&rdquo (She didn&rsquot book the job, but the basketball season was truncated anyway.) In the meantime, life is good at Empire City. &ldquoI make people really happy,&rdquo she says. &ldquoI&rsquom not the machine that they want to take out all of their frustrations on.&rdquo
The Franchiser Daniel E. Magnus
By 2008, Rye resident Daniel E. Magnus had already ascended to the highest levels of media, working as publisher and CEO of the free New York City daily Metro. A corporate reshuffle, however, sent the 48-year-old down a new path: running burger restaurants.
Elevation Burger is the first nationwide organic hamburger chain, and Magnus&rsquos company, Magnus LLC, owns the exclusive right to franchise the chains in Westchester and Fairfield Counties. Since October, Magnus has been capitalizing on his green-credentialed meat patties with his first franchise in Rye, and he has 10 to 12 planned for the next few years.
After working on campus publications in college, Magnus went into media advertising and publishing for top-shelf titles like Esquire, GQ, Bloomberg, and This Old House, which he helped found for Time Inc. &ldquoI really enjoyed the entrepreneurial side,&rdquo he says. &ldquoI love starting things.&rdquo
Hence, Elevation Burger. &ldquoThere weren&rsquot many great food options out there to grab something quickly and feel good about what you were eating,&rdquo says Magnus. &ldquoUSDA-certified, one-hundred-percent-organic, grass-fed beef is one of the healthiest meat products you can eat.&rdquo (And to make sure his investment would pass a taste test, Magnus drove to a New Jersey franchise and bought the entire menu.)
Magnus is planning to open those 10 and 12 restaurants in the next five years (nationwide, Elevation is planning 100 franchises by the end of next year). &ldquoI believe in what we&rsquore doing,&rdquo says Magnus, who maintains that he&rsquos had offers made on his two-county rights. Still, he&rsquos holding on. &ldquoI&rsquom a buyer, not a seller, of Elevation Burger.&rdquo In fact, Magnus says, he plans to expand beyond other counties if he can get the rights. As he says, everyone&rsquos gotta eat.
The Rule of Law Judge Walter Rivera
When Walter Rivera was campaigning for Greenburgh Town Justice, some voters were overwhelmed with emotion. &ldquoOne woman gave me a big hug and said, &lsquoI&rsquove been waiting for this for forty years,&rsquo&rdquo the 56-year-old Elmsford resident says. The emotion&mdashover what, for many, would be just a small-town election&mdashstems from the fact that Walter Rivera is the first elected Hispanic official in the history of the Town of Greenburgh, a town of almost 90,000 residents.
Many, including Greenburgh Town Supervisor Paul Feiner, feel certain he&rsquos destined for higher offices. &ldquoI would be shocked if he doesn&rsquot move up,&rdquo Feiner says. &ldquoI wouldn&rsquot be surprised if one day he becomes a federal judge.&rdquo
Rivera, an attorney with his own firm, Rivera & Colón, LLP, in Manhattan, has sat on the boards of the National Hispanic Business Group and the Puerto Rican Bar Association. He has been admitted to the Supreme Court of the U.S., has worked for the American Bar Association as a site visitor for law schools, and was appointed to the ethics subcommittee of the then Chief Judge of the State of New York&rsquos Task Force on the law profession.
Rivera&rsquos story begins in Manhattan&rsquos Hell&rsquos Kitchen, where his parents had moved after leaving Puerto Rico. He attended local public schools, but a scholarship from A Better Chance, a nonprofit devoted to helping gifted students of color, sent him to the elite Governor Dummer Academy (now Governor&rsquos Academy) in Massachusetts. &ldquoIt was a life-changing experience,&rdquo Rivera says. He went on to graduate from Columbia College in three years and receive a law degree from the University of Pennsylvania. After a two-year clerkship in the New York State Court of Appeals, he became an assistant attorney general for the state. In 1985, he started his own firm.
Rivera&rsquos newest job as one of three justices is part-time. &ldquoI don&rsquot know yet what the future will bear,&rdquo he says. &ldquoI do have a sense that this is a step in a new direction for me.&rdquo
The Entertainer Tiffany Giardina
Like most 18-year-olds, Waccabuc resident Tiffany Giardina is busy prepping for the SAT. But, unlike most of her peers, she is also writing and producing songs and music videos and touring the country, opening for the likes of Justin Bieber and Selena Gomez. The oldest of three sisters, Giardina doesn&rsquot come from a show-biz family: her dad is an insurance broker her mom, a homemaker. &ldquoI&rsquove always loved putting on a show,&rdquo she says. &ldquoAt family gatherings, I would take my cousins and sisters aside and we would plan out a show and then perform for our parents.&rdquo
When she was just five years old, Giardina played Molly in Annie at the Yorktown Stage at nine, she played Marta in The Sound of Music with the Paper Mill Playhouse Off-Broadway. She released her first Christmas album, We&rsquove Got Christmas, in 2005 and performed her single, &ldquoSure Don&rsquot Feel Like Christmas,&rdquo on Fox News in 2006. In between, she appeared in TV commercials for Cheerios and Major League Baseball, some of which are still airing.
Now, she&rsquos hoping for a much bigger audience as she makes the transition from teen to mainstream artist, using Stevie Nicks, Pat Benatar, Joan Jett, and Lady Gaga as role models. &ldquoI&rsquom at a turning point in my career now, working on a variety of different projects,&rdquo Giardina says. One of those is working with Mattel on a new animated film, The Princess and the Pop Star. &ldquoI&rsquom the voice of Keira, the pop star,&rdquo she says. &ldquoIt&rsquos one of the most fun projects I&rsquove ever worked on&mdashthey sync the animation to my facial and body movements, so the character really looks like me.&rdquo Along with a new princess Barbie, Mattel will be issuing a talking Keira doll in Giardina&rsquos likeness. (&ldquoWhen you push a button on the two dolls at the same time, our voices harmonize!&rdquo) The movie is slated for release this summer.
Tiffany works on her music every day, either writing some lines or a melody on her piano. When she is watching a movie, she often gets inspiration and writes about that. She wrote one song, &ldquoCasualties of Love,&rdquo with the upcoming film adaptation of The Hunger Games in mind.
What are her plans for the future? &ldquoMy next album will be an extension of what I&rsquom doing now, but with new music, a new sound. I hope my songs will be on TopForty music stations, but I love being on stage best. Offstage, I&rsquom very shy, but I become a different person when I perform&mdashsometimes I don&rsquot even remember the performance!&rdquo
The Film Editor Todd Sandler
You may not know the name Todd Sandler, but surely you have seen his work. Have you seen, for example, the promos for War Horse&mdashone of the biggest movies of the holiday season? Sandler edited them. He got the gig after Steven Spielberg saw his work at the Jacob Burns Film Center&rsquos 10th Anniversary Celebration, where Spielberg was the honoree. Sandler edited a tribute video for the event. &ldquoWhen I met him afterwards, the first thing he said was, &lsquoNobody&rsquos ever gotten me before, but you got me,&rsquo&rdquo Sandler recalls. Two days later, DreamWorks called asking if he would cut a theatrical trailer and TV promos for War Horse.
Oddly enough, Sandler, who was born in Mount Kisco and raised in Somers, didn&rsquot study film at SUNY Albany, where he attended college. Instead, he was enrolled in courses for actuarial science. But filmmaking was his true calling. Indeed, a short film, Corey, which he made with his brother while still in school, was recognized at both the Westchester Film Festival and Putnam Film Festival, and was picked up by the IFC Center&rsquos shorts program.
After graduation, Sandler enrolled in an intensive semester at NYU, studying all aspects of film post-production. When he finished, he got a position as the print traffic coordinator at the Jacob Burns Film Center&mdashwhere he stayed for the next eight years, working his way up until he became the Center&rsquos director of technology and in-house editor. He worked there until 2011, when he left to pursue other projects full-time.
Sandler also has edited Leave, a film written by and starring Band of Brothers&rsquo Rick Gomez and Frank John Hughes, with director Robert Celestino. It has been shown at a few film festivals so far, and its creators are looking for a distribution deal. &ldquoTodd is an extremely talented editor,&rdquo Celestino says. &ldquoHe has the uncanny ability to help weed away what isn&rsquot absolutely essential and pierce the core of a scene in ways that are not predictable. And he&rsquos a hell of a lot of fun to work with.&rdquo
Sandler has since collaborated with Celestino on two screenplays. In addition, he&rsquos co-producing a documentary, I&rsquom Carolyn Parker, with Jonathan Demme. But, for now, he&rsquos at home in the editing bay. &ldquoIn the editing phase, that&rsquos where it all begins,&rdquo he says.
The Adolescent Psychologist Jennifer Powell-Lunder, PsyD
Of the thousands of parenting and family books that come out each year, only a few hundred pertain to teens, and most of those gather dust. But Four Winds Hospital&rsquos Jennifer Powell-Lunder, PsyD&rsquos Teenage as a Second Language: A Parent&rsquos Guide to Becoming Bilingual is an international best seller. It&rsquos so far been through its second printing and has been a Top 100 seller on Amazon. Powell-Lunder and her co-author, Barbara Greenberg, PhD, have lectured at Harvard and have been featured on Yahoo! and AOL, in the Chicago Tribune, and on Fox. Mickey and Minnie have posed with the book, and the collaborators&rsquo website, talkingteenage.com, receives up to 10,000 hits monthly.
&ldquoTeens in conflict are not communicating well with their parents,&rdquo says South Salem resident Powell-Lunder, 44, a clinical child psychologist. &ldquoEven though they are speaking the same words, it is as if parents and kids are speaking a different dialect.&rdquo She is out to help parents and teens understand one another.
&ldquoLast Christmas, we saw a lot of kids buying this book for their parents,&rdquo says Powell-Lunder. She&rsquos already started writing two follow-ups, one for parents looking for guidance in specific situations and one for teenagers who want to learn to &ldquospeak parent.&rdquo
The Do-Gooder Stan Rosenberg
Stan Rosenberg is the founder and head of a successful&mdashand growing&mdashnot-for-profit organization. He&rsquos also a sophomore in college, studying marketing at NYU Stern.
His not-for-profit, Trip of a Lifetime, sends underprivileged teens from Westchester and New York City on trips to the West Coast&mdashprovided they demonstrate financial need, have good grades, and use the experience as a catalyst to make a difference when they return.
The idea was sparked when Rosenberg went on his own teen tour out West in the summer of 2007. &ldquoThe trip opened my mind and changed my perspective,&rdquo he says. But seeing the Grand Canyon and the Golden Gate Bridge cost upwards of $5,000. He realized he wanted to provide that kind of experience to those who did not have that kind of money for trips.
&ldquoEveryone told me it would be impossible to do,&rdquo he says. &ldquoIt wasn&rsquot until I was reminiscing with my friends about our trips that we decided we could do something.&rdquo Rosenberg and eight friends, all juniors at Scarsdale High School, found a couple of adult supervisors&mdashincluding a lawyer who helped them become an official 501(c)(3) pro bono&mdashand set out to start fundraising and organizing.
They began by contacting the companies that run teen tours. &ldquoTwo were happy to work with us,&rdquo he said. &ldquoOne of them said that they&rsquod sent ten thousand teens on trips, and I was the first one to want to do something about the high cost for people who couldn&rsquot afford it.&rdquo
The initial efforts were all grassroots: donations, bake sales, T-shirt sales, and a concert at the local community center. &ldquoMost of the donations we got were small: fifteen dollars, twenty-five dollars,&rdquo he says. Still, that first year, they raised enough to send two students on teen tours.
Since then, the organization has continued to grow. &ldquoWe&rsquore just starting to get more corporate donations,&rdquo he says. They&rsquove also been able to set up online auctions. In its second year, Trip of a Lifetime sent three students on trips this past year, seven students. &ldquoMy goal for next year is to send ten to twelve students on trips.&rdquo
Rosenberg still heads the nonprofit with the initial group of founders, even though they&rsquore scattered at colleges across the country. &ldquoTrip of a Lifetime is one of my greatest passions,&rdquo he says. &ldquoI see it has so much potential. I want to help it grow to be as big as possible.&rdquo
The Sculptor Malcolm D. MacDougall III
Artist Malcolm D. MacDougall III, 22, of Ardsley, works out of a 5,000-square-foot airplane-hangar-turned-studio along the Hudson River. &ldquoIt&rsquos a pretty bare-bones place, without running water or heat,&rdquo he says, &ldquobut it was the perfect place
Perfect because MacDougall needs the room. The Purchase College alum specializes in large, monumental sculptures. One of his works, Microscopic Landscape, made of 5,000 pounds of steel, is 24 feet long, 11 feet tall, and seven feet wide. The work won him Purchase&rsquos 2010 President&rsquos Award for Student Public Art, and the piece was displayed at the entrance of the college.
&ldquoIt was installed alongside a sculpture by Henry Moore and a sculpture by Andy Goldsworthy,&rdquo MacDougall says. &ldquoAt the moment, my work doesn&rsquot fit alongside those masters of sculpture. My goal is to earn a place alongside those types of people.&rdquo
He&rsquos also had his sculptures displayed with other emerging Hudson Valley artists, such as Emil Alzamora, Sarah Haviland, and Arnaldo Ugarte, at an outdoor sculpture exhibition at the Wilderstein Historic Site in Rhinebeck, New York. &ldquoMalcolm was invited to participate because of the strong presence and energy that radiates from his work,&rdquo says Gregory J. Sokaris, the site&rsquos executive director. When the exhibition ended, one of his pieces was put on display in the town of Hastings-on-Hudson.
Currently, he&rsquos working on a sculpture called Stromatolites, which will take up an area of approximately 100&rsquo x 100&rsquo. The work is made up of individual, undulating mounds&mdash12 in all&mdashwhich, taken together, comprise a landscape. It was inspired by &ldquotermite mounds,&rdquo he says, &ldquoas well as the effects of erosion on landscapes of varying density where basalt mounds rise above the ground.&rdquo
&ldquoMost of my work is inspired by the natural sciences,&rdquo MacDougall says. &ldquoWhen Stromatolites is installed, it&rsquoll seem like it fits in, like it&rsquos growing out of the landscape. But the material and processes used to make it turn it into an imposter in the landscape.&rdquo
Admittedly, he says, his art is &ldquonot the most practical. But it&rsquos interesting to realize a sculpture, and getting it installed and renting the cranes is exciting.&rdquo
The Whole-Body Dentist Sabrina Magid, DMD
Just two years into her practice, 29-year-old Sabrina Magid, DMD, is teaching her colleagues about what she sees as their roles in other fields of health: oral cancer, gastric reflux, sleep apnea, and even the difficulties faced by deaf and hard-of-hearing patients. She&rsquos a founding member of the American Academy for Oral Systemic Health, a national organization devoted to the intersection of oral health and the overall health of the body, and has been a part of the push to get dentists to screen their patients for oral cancer.
&ldquoIn training, I was struck by the number of patients who snore and have high blood pressure and gastric reflux,&rdquo Magid says. &ldquoAs I investigated the causes, I began to see articles linking these with obstructive sleep apnea.&rdquo Today, she teaches colleagues nationwide about the disorder, which may affect as many as 23 million Americans. &ldquoOSA is often a problem with the tongue and the shape of the dental arches. Dentists can, and should be, playing a role in the diagnosis and treatment of this problem.&rdquo
Magid grew up in Westchester in a dental family&mdashthree generations of dentists preceded her, including her father, Kenneth S. Magid, DDS, today her partner at Advanced Dentistry of Westchester in Harrison. The woman who would be referred to as the &ldquodental MacGyver&rdquo by fellow students didn&rsquot want to go into the family trade. &ldquoYou would think it would be an obvious choice,&rdquo she says, &ldquobut I had to come to my own conclusion. It was in my junior year of college when I decided, much to my family&rsquos surprise, that I wanted to be a dentist. I guess you could say it&rsquos in my blood.&rdquo
Dental school at the University of Pennsylvania, an award-winning residency at New York Methodist Hospital in Brooklyn, and a medical mission to set up clinics in rural Latin America followed. Magid, who has been studying American Sign Language (ASL) and deaf culture since high school and teaching ASL since college, has also been treating deaf and hard-of-hearing patients since dental school. &ldquoDeaf patients often don&rsquot get the warning that the treatment is starting,&rdquo she says. &ldquoMany deaf patients are also more sensitive to vibration, making treatment with a drill particularly unpleasant.&rdquo She uses a number of adaptations, including a speech-to-text converter, to ease the difficulties. She plans to start teaching dental students ASL at the NYU College of Dentistry.
The Environment&rsquos Savior Taylor Vogt
Taylor Vogt hasn&rsquot yet graduated college, but the 21-year-old Croton-on-Hudson resident and Pace University student is already the president of an international student sustainability organization, and he has chaired a student advisory council, both for IBM. As if that weren&rsquot enough, he may change the whole way our society produces alternative fuels.
The international organization that Vogt runs is IBM Students for a Smarter Planet, a 50-member organization that hopes to attract a 1,000-student membership. &ldquoI&rsquove always been interested in the environment,&rdquo Vogt says. His interest grew early, in large part because of 9/11. His father, Glenn Vogt, today the manager of Crabtree&rsquos Kittle House in Chappaqua, had worked at Windows on the World at the World Trade Center. And though his father wasn&rsquot at work that day, &ldquoas an eleven-year-old boy, I took a big step back and was like, &lsquoWhy is this happening?&rsquo&rdquo Instead of getting angry, he wanted to find&mdashand stop&mdashwhat he saw as the root causes of the terrorists&rsquo actions.
&ldquoThey didn&rsquot have certain things that they needed to survive that&rsquos why they were lashing out. I want to get them what they need,&rdquo says Vogt, who believes struggles for existence&mdashexacerbated by environmental degradation&mdashradicalized many who became members of Al Qaeda. &ldquoI decided to go into the field of environmental sustainability so this would never happen again.&rdquo
His work in sustainability recently has led him from studying the deer population at Teatown Lake Reservation and local cleanups to an internship at a composting firm producing methane gas out of organic waste. &ldquoTaylor has a unique visionary sense of an improved future&mdashsocially, environmentally, and economically,&rdquo says Michelle Land, a professor of environmental policy and director of Pace&rsquos Academy for Applied Environmental Studies. &ldquoAnd he doesn&rsquot simply talk about how things should be but ambitiously applies himself toward his vision.&rdquo
One big idea is to use cities&rsquo sewers to produce hydrogen fuel. &ldquoWe have flowing rivers underneath our cities in our sewers. If you can sequester the water, electrolyze it, and harness the hydrogen, you have a new, clean fuel source.&rdquo A self-described &ldquoideas man,&rdquo Vogt admits he&rsquoll need to find someone with an engineering background (preferably another young person) before this could become a reality, but he&rsquos hopeful. In the future, he&rsquod love to work as a grant-maker for the EPA or found a professional&rsquos version of Students for a Smarter Planet. First, though, he&rsquos going to work on that undergraduate degree.
The In-Demand Chef Alex Sze
Most restaurants start out practically begging customers to stop by. But when Alex Sze, the 29-year-old chef/owner of Juniper in Hastings and alum of the highly touted Michel Richard Citronelle in Washington, DC, tried to limit his restaurant&rsquos hours, it was the customers begging him to let them rush in.
Juniper, a 24-seat New American restaurant, opened in January 2010, but, by the following winter, the small space, long hours, and multiple concepts (including lunch café, BYOB dinner bistro, and take-out counter) had become taxing. So Sze, a resident of Eastchester, announced he was stopping dinner service. The move elicited an outcry from Hastings-on-Hudson food-world civilians as well as Sze&rsquos contemporaries, who include resident Andy Nusser, chef at Port Chester&rsquos Tarry Lodge.
&ldquoWe stopped for a few weeks,&rdquo says Sze of trying to stop dinner service, &ldquobut the town really wanted us to continue dinner, so it wasn&rsquot an option.&rdquo
While Sze was growing up, his parents owned a Chinese take-out place in New Haven, Connecticut, not far from Hamden, where they lived. But he didn&rsquot work in the family restaurant&rsquos kitchen&mdashor attend culinary school. &ldquoI majored in biology,&rdquo says Sze, who graduated from the University of Connecticut in 2004. &ldquoI was en route to either practice medicine or go into dentistry.&rdquo But after moving to the DC area, he found himself applying to the most highly rated restaurants in town, including Michel Richard Citronelle (&ldquowhich, at the time, was probably the best restaurant in DC&rdquo). He got a permanent job helping the pastry chef, which, turned into a second job at another DC standard&mdashMaestro at The Ritz-Carlton. &ldquoI was working two jobs, probably seventy hours a week. I got my basics and my foundation.&rdquo
&ldquoHe&rsquos doing really good city food in a small town,&rdquo Nusser says. &ldquoHe just makes things pretty delicious.&rdquo
As of this writing, Sze hasn&rsquot found more real estate for the restaurant, but he&rsquos keeping his eye out for space that will let him expand the restaurant and bring its success to more customers. He also hasn&rsquot started planning his January menu. (Because of the local emphasis, his cuisine is mostly seasonal.) He says, though, that he is thinking &ldquowintry soul food, kind of hearty.&rdquo If previous response is any indication, they&rsquoll both be a hit.
The Beekeeper Christine Lehner
When Christine Lehner&rsquos partner first got her involved in backyard beekeeping six years ago, the Hastings-on-Hudson resident didn&rsquot really expect that she&rsquod end up the owner of a company with hives producing almost 1,000 pounds of honey a year. Yet now every year she sells out of her myriad honey products&mdashhoney, lip balm, and hand and face creams. &ldquoWe could easily sell two or three times as much of the honey alone,&rdquo says 59-year-old Lehner, who also happens to be a full-time writer. &ldquoThe problem is the supply.&rdquo
Her company, Let It Bee Honey, has colonies in Irvington, Rye, and Bedford, as well as on the Lyndhurst estate in Tarrytown. In what she calls acts of &ldquoapian disobedience,&rdquo she even placed bee hives equipped with supers (the frame structures that allow beekeepers to remove honey) on rooftops in Manhattan before beekeeping was legalized in New York City, and on the headquarters of the famed National Resources Defense Council (NRDC) once it was.
Lehner grew up outside of Boston, an avid reader. Her interest in literature, strangely, brought her to beekeeping. After her partner, Charles Branch, signed them up for a class at The Back Yard Beekeepers Association in Weston, Connecticut, she quickly was drawn into the practice by reading about it. &ldquoThere is so much wonderful literature written about bees,&rdquo she says. She also reports happily that her hives at the NRDC, of which her brother is executive director, are cared for by an &ldquoapprentice who can discuss early American Gothic literature with the bees.&rdquo
In addition to the two books she&rsquos working on&mdashoh, and a research project on her favorite beekeepers&mdashLehner says she&rsquos always looking to expand the availability of her bees&rsquo products and, of course, expand the reach of the bees themselves.
The Running Back Philanthropist Ray Rice
Baltimore Ravens starting running back Ray Rice, a native of New Rochelle, is every bit the rising star&mdashon and off the football field.
After 10 regular-season games, Rice, 24, has achieved 1,176 yards, averaging more than 110 yards per game, with many speculating he&rsquoll eventually be joining the ranks of great running backs Marshall Faulk and Roger Craig with record-setting career yardages. Yet, off the field, he&rsquos already started his own charitable fund, raising money for cancer, disadvantaged kids, and special education.
Raymell Maurice Rice lost his father, a bystander in a drive-by shooting, when he was just a year old. A cousin was killed in 1998 by a drunk driver, and Rice was raised by his mother, a special education teacher. After he became successful, his background stuck with him and made him want to improve the lives of those like him. &ldquoWith everything that I&rsquove been through,&rdquo says Rice, &ldquoI have to give back.&rdquo
Meanwhile, Rice was already playing football at age five&mdashwith kids twice his age&mdashand, after a high school career that had recruiters buzzing, played three record-setting seasons for the Rutgers Scarlet Knights. In 2005, Rice&rsquos freshman year, the college had its first winning season in 14 years. Despite standing only 5&rsquo8&rdquo, Rice scored 49 touchdowns over three seasons and averaged 155 ground yards per game before entering the 2008 draft and being picked by the Ravens in the second round.
In 2009, Rice, who is currently in the last year of his contract, led all NFL running backs in both receptions and receiving yards, with a total of 2,041 yards from scrimmage, becoming one of only eight players in the history of the league to rack up 1,000 rushing yards and 700 receiving. &ldquoFootball is something that I&rsquove been blessed to do,&rdquo Rice says. &ldquoBut if you&rsquore just playing football, you&rsquore not fulfilling your role, and that&rsquos to impact people&rsquos lives in a positive way.&rdquo
The Ray Rice Charitable Fund raises money for cancer research (&ldquoI have a family that&rsquos been struck by cancer, and I know a lot of families that cancer has torn apart,&rdquo he says) and fosters community improvement in both Baltimore and New Rochelle. It also helps disadvantaged kids. In June, Rice hosts a football camp for more than 600 youngsters in New Rochelle, and, like his mother, he works with special-needs children, making hospital visits, supporting Special Olympics Maryland, and attending classes when he can to give kids a pep talk. This November he served Thanksgiving dinners at a homeless shelter. Rice is even known for visiting sick Ravens fans in the hospital and bringing along his teammates. &ldquoI want to be a guy who leaves his mark on the game,&rdquo Rice says, &ldquoand be remembered as a great player, and an even greater person off the field.&rdquo
The Cancer Doctor Mitchell S. Cairo, MD
In the late 1970s, when Mitchell S. Cairo, MD, began his work in childhood cancers and genetic disorders, he went to four funerals for every five children he diagnosed with childhood leukemia or non-Hodgkin&rsquos lymphoma. Today, due largely to his own wide-ranging research, the Armonk resident goes to one out of every 10, and he plans to bring the numbers down even further.
&ldquoHis contributions to the field are too numerous to count, but have guided the development of the field over the past two decades,&rdquo says Joanne Kurtzberg, MD, a leader in transplant and stem-cell therapy at Duke University who has written several papers with Dr. Cairo.
Dr. Cairo, 60, was recruited to New York Medical College in Valhalla in February 2011, and the world-famous childhood cancer and genetic disease expert was appointed to the faculty in an unprecedented five departments&mdashPediatrics, Medicine, Pathology, Microbiology and Immunology, and Cell Biology and Anatomy&mdashand then piled on titles there and at Westchester Medical Center like Chief of Pediatric Hematology, Oncology, and Stem Cell Transplantation and Director of the Children & Adolescents&rsquo Cancer and Blood Disease Center.
&ldquoCancer and serious genetic disease require a multi-disciplinary approach, sometimes a multi-institutional approach,&rdquo Dr. Cairo says. &ldquoYou cannot do that without having your own personal knowledge base be quite wide.&rdquo
Dr. Cairo did the first research on stem-cell transplants with donors who were unrelated to the recipients, and performed some of the first transplants under those conditions using cord blood (stem cell-rich blood that comes from the umbilical cord and the placenta). He likewise pioneered the use of stem-cell transplants for treatment of recessive dystrophic epidermolysis bullosa, a rare and fatal genetic disorder in which the epidermis is essentially unconnected to deeper layers of tissue. He has also used similar techniques to cure children with sickle cell anemia. When a daughter of baseball Hall-of-Famer Rod Carew was diagnosed with terminal leukemia in 1995, Dr. Cairo took care of her until her death, and the publicity around the case helped inform the public about importance of bone-marrow registries.
These days, Dr. Cairo is principal investigator of a national, eight-center consortium funded by a grant from St. Baldrick&rsquos Foundation. The consortium&mdashThe Childhood, Adolescent, and Young Adult Lymphoma Cell Therapy Consortium­&mdashis studying ways to re-engineer white blood cells of those with incurable lymphoma so that the immune cells will target cancers more aggressively than any previous treatment has. (A theoretically similar approach&mdashusing a different class of white blood cells&mdashmade headlines in August 2011 for its complete curing of two leukemia patients.)
Yet Dr. Cairo still has goals he wants to achieve&mdashto continue raising the cure rate for childhood cancer, keep discovering the uses of stem-cell biology in treatment of genetic disorders (he&rsquos opening three or four protocols for this next year), and advance regenerative therapy. &ldquoUnless some unfortunate accident happens to me, I believe that&rsquos within our grasp within ten years,&rdquo he says.
The Flu Fighter Jennifer Minieri Arroyo
It&rsquos sniffle season again, and, if you got your flu shot, know that New York Medical College (NYMC) doctoral student Jennifer Minieri Arroyo helps make the worldwide flu-fight possible.
Minieri Arroyo, 31, of Yonkers, researches the influenza virus at NYMC. &ldquoStudying influenza virus is fascinating,&rdquo says Minieri Arroyo, who today works in the lab of Doris Bucher, PhD, one of only three labs in the world growing influenza seed virus. &ldquoEach year, on average, five to twenty percent of the American population is infected, more than two hundred thousand people are hospitalized from flu-related complications, and deaths range from three thousand three hundred to forty-eight thousand six hundred per year. To conduct research that may be applied to preventing these negative impacts on human health is fulfilling work.&rdquo
Minieri Arroyo began her current work in Bucher&rsquos lab, where she has been studying the replication of influenza inside our cells. &ldquoLearning more about the strategies the virus uses to replicate in our cells could lead to future improvements in vaccine technologies and antiviral drug development.&rdquo
Minieri Arroyo has always been interested in science. She graduated with a BS in Biology from Fordham in 2002. After college, she worked at Valhalla&rsquos Institute for Cancer Prevention helping to identify carcinogens and cancer-preventing compounds, followed by a few years screening nervous-system drugs at a company called PsychoGenics. In 2006, she started work in a PhD program in Microbiology and Immunology at NYMC in Valhalla, learning along the way about the role her school played in producing the yearly flu vaccine. Her publications include a major paper on growing influenza.
Minieri Arroyo is, in fact, a prolific writer, for a scientist. &ldquoBeing able to clearly explain your work is very important,&rdquo she says. &ldquoScience is amazing and fascinating, and everyone deserves to have access to it.&rdquo Thus, she works with the Science Alliance of the New York Academy of Sciences to help graduate students gain career skills, including explaining their work to lay audiences.
Minieri Arroyo thinks she too will go into industry, hopefully continuing her work on influenza, and she&rsquos preparing for positions ranging from science writer to chief science officer.
The Architect Christina Griffin
What is good architectural design? To Hastings-on-Hudson architect Christina Griffin, it&rsquos a well-built, aesthetically appealing building with a timeless feel about it. &ldquoThere are some buildings that delight, like works by Gaudí and Gehry,&rdquo she says. &ldquoIn my own designs, I am always looking for ways to elevate the spirit.&rdquo But lately, the2010 AIA Westchester Hudson Valley Design Award winner adds another qualifier: good design should also be sustainable.
Her first sustainable project was the River Town House in Hastings-on-Hudson, a stunning home overlooking the river, which received the AIA&rsquos WHV&rsquos top design award, the Honor Award, and was rated LEED Platinum, the highest possible sustainability rating for homes. &ldquoThat was the turning point in my career,&rdquo Griffin says. &ldquoDuring the project, I&rsquod look for ways to reduce waste, salvage materials, and save energy through better insulation, solar power, and geothermal systems. I built a roof garden that is not only beautiful, but helps manage storm water and reduce the heat-island effect. My goal is to set an example for neighborhoods.&rdquo
To that end, Griffin is the former chair of the Hastings Architectural Review Board and the creator of an architecture design guide for Hastings, having written the guidelines on how to best restore buildings with rich detail and architectural elements. For example, she cites a local building, believed to be from the 1800s, with a brick façade and cast-iron headers that is ready to be completely redone. &ldquoThis is a great time to think about sustainability, creating a well-insulated shell and installing super-insulated windows.&rdquo
Of course, not everyone can afford to take these big steps. Little steps help, too, Griffin believes. &ldquoEnergy conservation in itself is sustainability. Although some clients initially balk at the cost of geothermal and solar, I ask them, &lsquoDon&rsquot you want to go off the grid?&rsquo After all these storms, they say, &lsquoyes.&rsquo&rdquo
The Producer Stephen Ferri
Harrison resident Stephen Ferri is a theatrical triple-threat&mdashbut you won&rsquot see him in the spotlight. Instead, he applies his theatrical talent to stage managing, musical directing, and producing.’
Ferri, 21, currently is a junior majoring in Theater Design Technology at Purchase College. But he&rsquos already founded two of his own theater companies. He launched the first, the Harrison Summer Theatre, because, he says, &ldquoI really wanted to do something for the residents&rdquo of Harrison. (The program now attracts non-Harrison residents, too.) The group has tackled musicals like All Shook Up and Rent, and, last year, it performed the regional New York premiere of Spring Awakening. The second company, the New Musical Theatre Series, looks more towards newer, emerging works. &ldquoWe give opportunities to take a work from page to stage,&rdquo he says. In the case of Songs for a New World, this included adding orchestrations&mdashit was performed with a 30-piece orchestra.
Ferri, who won a Helen Hayes Award for Outstanding Technical Achievement for a high school production of Miss Saigon, has his fingerprints on all aspects of these productions. &ldquoI do theater tech, where I stage-manage shows,&rdquo he says. &ldquoI&rsquom a musical director, where I hire and conduct the orchestra, and I might arrange the orchestrations. I produce the shows: organizing them, getting them on their feet, getting the rights. I sometimes do the scenic design or lighting design.&rdquo
And he does it all well. After Spring Awakening, theater reporter Peter D. Kramer for the Journal News wrote of Ferri: &ldquoHe got the rights, he produced, he was musical director and set designer. His band was pitch-perfect. The kid has skills, to be sure.&rdquo
Outside of his own two companies, Ferri has worked with other theaters, such as the White Plains Performing Arts Center, the Westchester Broadway Theatre, Westco Productions, and The Westchester Sandbox Theatre. He estimates he works on 15 to 20 shows per year. &ldquoIt&rsquos nice to have people call me and want me to work on their shows,&rdquo he says.&ldquoI&rsquom booked about a year in advance now.&rdquo
The Makeup Artist Jay Alvear
Jay Alvear may be only 22, but he&rsquos already been called to make Bethenny Frankel&rsquos lashes longer and Danica McKeller&rsquos cheeks rosier. Indeed, he&rsquos becoming the celebrities&rsquo favorite makeup artist.
Yet, Alvear didn&rsquot set out to be a makeup artist. He set out to be an art teacher. &ldquoThen I had an internship at an elementary school&mdashand it really wasn&rsquot for me,&rdquo he says. The Sound Shore resident turned to makeup. &ldquoMakeup is just like any other art form,&rdquo he says. &ldquoIt&rsquos just a different canvas.&rdquo
And, on his canvas, Alvear is a budding Picasso (only his faces wind up looking much prettier than Picasso&rsquos figures). He&rsquos been a key makeup artist at Mercedes-Benz Fashion Week and Fashion Week in Milan. He&rsquos worked editorial photo shoots for international fashion magazines. He&rsquos done special effects and theatrical stage makeup for Sleep No More, Stop the Virgins, and Broadway Bares. And he&rsquos done makeup for Kristi Yamaguchi, Taylor Dane, and Neil Sedaka. He&rsquos been sent to Paris, Milan, and Miami for shoots. &ldquoI do makeup for everything,&rdquo he says. &ldquoI&rsquom multimedia.&rdquo
He didn&rsquot attend cosmetology school. A self-professed makeup &ldquonerd,&rdquo he maintains there is a science behind the art form. &ldquoHigh definition has changed the world of makeup. It&rsquos like doing makeup under a magnifying glass. Any kind of shimmer or oil will show up ten times more. If you do lots of shimmer on a model&rsquos eyelids, it&rsquoll end up looking greasy.&rdquo
Alvear is also in the early stages of developing his own cosmetics line. &ldquoI&rsquoll be using it backstage on my shoots and may be distributing it to high-end makeup shops like Space NK and a few luxury salons. But it would be more for backstage use. There are a ton of consumer lines out there, but fewer lines for the makeup artistry. It&rsquoll be more about what shoots the best.&rdquo
Alvear wants his clients to know that killer makeup is an essential accessory, like a killer pair of shoes. &ldquoMakeup shouldn&rsquot be a chore you do in the mornings. You can be anyone you want.&rdquo
Tag Archives: Customer Experience
Many of today’s senior leaders were educated in an era where business school professors told them the sole purpose of a business was to create value for shareholders. This, at a time when only a few voices professed what revered thinker and writer, Peter Drucker, proposed that the purpose of a business is to create customers profitably. The two mindsets are complete opposites.
I recently watched the Netflix series: Dirty Money. It investigates three cases of big corporations where the only consideration by their senior leaders was the creation of shareholder value and their own bonuses at any cost.
Volkswagon was proven to have initiated and perpetuated (by senior leaders) built-in software to falsify carbon emissions in order to make claims about their cars to enable them to grow their business in the US with diesel-fuelled vehicles. Even when proven, senior leaders were in denial until indicted by the US government.
HSBC turned a blind eye to money laundering by the Mexican drug cartels through their banking network. Despite being castigated in US Senate investigations and regulators over a decade, there was no effective action taken and finally, the company was fined almost US $2billion with an admission to serious charges. This was a willful disregard of the consequences of their actions (or non-action) to achieve their profit goals at all costs.
Valiant Pharmaceuticals embarked on a merger and acquisition strategy to buy drug companies with unique monopoly brands as a basis for growth. Once acquired the prices of these life-saving products were hiked to levels where consumers could not pay for them – with life-threatening consequences. The CEO’s one stated aim was to create value for shareholders.
The senior leaders of all three companies gave no thought to the consequences for their customers and the community. In fact, they saw them as irrelevant. Excessive pollution from cars is a prime cause of the premature death of many consumers. Enabling money laundering financed drug lords and the associated violent deaths of innocents in Mexico and the drug habit in the US. Hiking pharmaceutical drug prices 10 or 20 fold over a short period created havoc and misery for many consumers with life-threatening illnesses. All of this because the senior leadership mindset and corporate culture were focused only on profit and their own bonuses.
I have heard this in many large businesses where people down the line tell me that the only concern of leadership is to meet profit goals at any cost. That cost is often lost jobs, unhappy and disengaged employees and frustration and disgust of customers.
Yet we know that the leaders of today’s most successful, modern large businesses have a totally different mindset. It is best illustrated by Jeff Bezos, who from day 1 at Amazon has built a culture around customer obsession and a focus on continually improving the value and experience delivered to its customers. He has never wavered from this mindset despite criticism at different times. What is the result? It is the most valuable and sustainable business on the planet – with a history of little more than 20 years.
We are starting to see this mindset in other leaders of long-established businesses. Richard Branson at Virgin is one. Paul Polman at Unilever is another. These leaders take the view that “what’s best for the customer is best for the business”. They truly believe that by creating a customer-obsessed culture in their leadership and employees they will deliver superior value to their customers and for their communities. And by so doing they will achieve long-term profitability and sustainability in their businesses as well as personal rewards and happy employees. They take a longer term and future-oriented view in their decision-making and their behavior.
This is foreign to many senior leaders and there is a lack of experience as to how to do it. In our research of more than 50 customer “obsessed” CEOs around the world and more than 300 businesses we now have a measurement tool that can create this mindset, benchmark your business against the best in the world and set out best practice steps to move you to the next level – a level that will be required for survival and success.
1. It iterates fast and let the market guide its products
Many fast-food chains spend years on R&D and focus groups, and millions of dollars, before testing out a new menu item.
Shake Shack favors an approach more in line with iterative design. It moves quickly, sometimes bringing an item from the kitchen to customers in its NYC test restaurant in a matter of weeks.
Once an item is on the menu upstairs, it collects real-time feedback (through questionnaires, qualitative observation, and sales data) and uses it to fine-tune things. If the item performs exceptionally well, they may opt to release it in a few other restaurants around the US, in markets where they perceive it could hit.
From there, they assess whether or not the item has the potential to go national (this was the case with their Chicken Bites, which excelled at every stage).
Rosati prepping burgers in the Innovation Kitchen (The Hustle)
“A lot of stuff will get to this part of the process,” said Rosati. “Sometimes we love an item, but just don’t know when to serve it, or where. So, we keep a big list of things we can roll out.”
A national roll-out, of course, requires a bit more time: It takes at least 3-4 months for Shake Shack to pass it by all the various departments, train its cooks, retrofit kitchens with the necessary equipment, and make sure ingredients can be sourced locally.
“There are risks when you bring customers into the testing process,” said Rosati, “but in the end, their feedback will always make the food better.”
2. It spares no expenses in learning about its customers
When Shake Shack decides to expand to a new city, Rosati will fly out and learn everything he can about what makes the region’s culinary palette unique.
“We’ll walk the streets of that city and try to find out what makes it tick, what makes the food different,” he said. “The R&D of flying people all over the world to find these things can be expensive — but it’s something we’re willing to invest in.”
- In Seattle, the supply chain team went on “two epic trips” all over northern Washington and toured 7 cattle ranches to find the right beef for its burgers.
- In St. Louis, they found a local cheesemaker and integrated Provel (a cheese unique to the region) into a burger.
- In Hong Kong, they sourced griddled ox tongue, Szechuan pepper, and Chinese bean sauce for a special burger.
- In México, they integrated traditional ingredients like mamey, horchata, and local chocolate into their menu.
When developing a new item, Shake Shack adheres to something of a “quality first, price later” philosophy.
Rosati prepared two experimental burgers during our visit: Left — A hatch green chile burger (left), available in Denver and right — A double-smoked bacon cheeseburger with Provel cheese, available in St. Louis (The Hustle)
As Shake Shack’s founder, Danny Meyer, told Reid Hoffman on the Masters of Scale podcast, the fast-food business has an unspoken rule: You can only choose two between quality, speed, and price — and most of the time, it’s speed and price. But fast-casual chains like Shake Shack strive to offer a lower-percentage mixture of all three.
“We try to create something that makes us happy first, and think about the price of those ingredients later,” said Rosati. “We might buy the most expensive, highest-quality ingredients out there try to make something with them. If we love a concept, we’ll figure out how we can scale it later.”
3. It doesn’t screw with what’s working
Of course, not everything should be tinkered with just for the sake of tinkering.
Back in 2013, Shake Shack learned this the hard way, when it decided to “upgrade” its crinkle-cut fries, the best-selling item on its menu.
The fries were the only frozen item the company sold and didn’t jive with its “everything is fresh” messaging. So, the culinary team decided to replace them with more premium hand-cut fries — a year-long process that came with a dramatic increase in labor, logistical, and equipment costs.
“We made these beautiful fries that we truly thought were better and rolled them out nationally,” said Rosati. “Right away, people were like, ‘Where the hell are my crinkle-cut fries?! You ruined my day!’”
Shake Shack’s NYC restaurant, where weekly experiments are tested out (The Hustle)
A year into the new fries, the chain realized it had made a grave mistake and made the decision to revert back to the frozen crinkle-cuts.
“At the end of the day, there was a nostalgic value attached to those crinkle-cut fries that we just didn’t get,” said Rosati. “We had ‘come-to-Jesus’ moment, where we realized we had to really listen to our customers and loop them in more.”
Today, Rosati recognizes that it might be best to leave the chain’s “staples” (its crinkle-cut fries and ShackBurger) relatively untouched and save most of the innovation for new creations.
Shares of Whole Foods have continued to rise on the company’s rapid growth. It is now a “tenbagger,” a term coined by the mutual fund manager Peter Lynch for an investment that appreciates tenfold. Though Mr. Sokoloff’s firm left several billion dollars on the table by unloading shares as they traded higher, he defended the sales as prudent risk management.
“Being a disciplined seller is as important as being a disciplined buyer,” said Mr. Sokoloff, who remains a Whole Foods director and still personally owns about $50 million of the company’s stock.
Mr. Sokoloff’s relationship with Whole Foods led to his firm’s latest food-industry deal. In 2011, Mr. Robb of Whole Foods invited Mr. Sokoloff, who was in New York, to stop by Gramercy Tavern, where he was dining with Mr. Tindell and Danny Meyer, the restaurant’s owner. A year later, Leonard Green acquired a stake in Mr. Meyer’s company, the Union Square Hospitality Group. The investment is helping to fuel the growth of Shake Shack, Mr. Meyer’s burger chain this winter, it plans to open an outpost in Moscow.
The Right Chemistry
During the stock market boom of the late 1990s, with the rest of Wall Street irrationally exuberant over tech and telecom companies, Joshua Harris was fixated on chemicals. A co-founder of Apollo, the private equity firm based in New York, Mr. Harris believed that the chemical industry was ignored and grossly undervalued. Epoxy resins, acrylic monomers and urethane additives became his obsessions. He also liked the cyclical nature of the business because it could provide big buying opportunities during downturns.
Apollo started investing in chemicals, and made numerous acquisitions over the next decade. But a favorite that had eluded his grasp was Lyondell, a polypropylene maker based in Houston. Mr. Harris had courted the company whenever he was in Texas, but to no avail.Image
In December 2007, Lyondell was acquired by Len Blavatnik, a friend and business rival of Mr. Harris. The two men had battled over other chemical makers in the past. Mr. Blavatnik, a Ukrainian-born, Harvard-educated industrialist, merged Lyondell with one of those prizes — Basell, a European company. The combination created LyondellBasell, the world’s third-largest chemical manufacturer with about 15,000 employees and $34 billion in sales.
The deal also created a company with too much debt at the very moment when the credit markets began seizing up and the chemical industry started to weaken. Just months after the transaction closed, it became clear to Mr. Harris that Mr. Blavatnik had overpaid, and that LyondellBasell was at risk of bankruptcy. On Wall Street, other peoples’ failures carry the seeds of success.
Mr. Harris, now 48, decided to make a run for LyondellBasell. He saw the company as a great business with a terrible balance sheet. Its chemicals were used to make everyday products from food packaging to vacuum cleaners to car parts. If it could restructure, he reasoned, it would recover with the broader economy. So he began acquiring the company’s senior secured loans, which would be paid back first in any bankruptcy and would thus provide protection in case it went under.
“We bought the debt at 60 cents on the dollar,” Mr. Harris said. “We bought more at 50, and then at 40. The low was 20. People were either panicked or forced sellers, and we bought from them all the way down.”
Mr. Harris’s strategy, known as a “loan to own” investment, was to purchase corporate debt at a discount and then try to take over the company in a restructuring. By the end of 2008, Apollo had acquired about $2 billion of LyondellBasell’s debt, becoming its largest creditor.
Business continued to worsen, and in December 2008, LyondellBasell was suffocating. Its cash was rapidly running out. A factory was idled. Some company managers stopped showing up for work. Apollo was sitting on paper losses of more than $500 million.
During the final week of the year, with the company and the markets melting down, Mr. Harris and Mr. Blavatnik both found themselves on family vacations in Anguilla, the island of choice for Wall Streeters, a sort of Hamptons of the Caribbean.
Mr. Harris visited Mr. Blavatnik on his 164-foot yacht, the Odessa. Over dinner, they brainstormed about how to save the company. Their best option was to put LyondellBasell into bankruptcy and secure emergency financing so it could continue to operate. Mr. Blavatnik knew that a reorganization might wipe out his investment, but hoped to salvage some value if the company survived.
Back in New York, the two butted heads over who controlled the bankruptcy financing. Mr. Harris ultimately prevailed, and secured the lead role providing loans to the company. This turned out to be a key victory for Mr. Harris, as it gave him leverage in the protracted restructuring negotiations.
In April 2010, after 15 months in Chapter 11, the company came out of bankruptcy in much better financial shape, shedding $17 billion in debt. Apollo’s loans were converted into a roughly 30 percent ownership stake in LyondellBasell.
Mr. Blavatnik, through his conglomerate, Access Industries, also participated in the recapitalization, buying $1.8 billion worth of newly issued shares in the revamped company.
LyondellBasell’s earnings recovered along with the rest of the chemical industry, more than tripling from a 2009 low. Its stock has followed suit, and Mr. Blavatnik has recouped his losses.
Apollo did even better. It has gradually been selling off its stake it also paid itself dividends, taking advantage of the company’s cleaned-up finances. Mr. Harris’s firm has turned its $2 billion investment into a profit of more than $10 billion, which, according to Bloomberg data, is the largest gain ever on a private equity deal.
Without his skill in maneuvering through the complex bankruptcy process, Mr. Harris would never have amassed such huge gains. But the mental side of investing played an equally important role.
“Many others ran for the hills during that scary time, cut their losses, doubted their own theses,” said Kenneth D. Moelis, a banker who helped restructure the company. “Josh never did.”
‘Grabbing at Falling Knives’
Howard Marks’s memos to his Oaktree clients have a cultlike following among the professional-investing cognoscenti. “Howard is a superb writer and a master of logical thinking,” Warren Buffett said in an email. “That combination makes his memos a must-read for me.”
Like Mr. Buffett’s much-anticipated annual letters, Mr. Marks’s memos are chockablock with observations on the financial markets and investor psychology. But Mr. Marks’s wife teases him that they are all pretty much the same. And she’s basically right. The dispatches — as well as a book, “The Most Important Thing” — harp on recurring themes: the paramount importance of price, the danger of hubris, the value of contrarianism, the inevitability of cycles.
In early 2007, cycles were at the top of his mind. If Mr. Marks, who is now 67, had come to believe anything in his four decades on Wall Street, it was that financial markets go from peak to trough, and back again. And as housing prices soared, banks’ lending standards loosened and cash sloshed around the world, he grew increasingly pessimistic.
“In terms of amplitude, breadth and potential ramifications, I consider it the strongest, most heated upswing I’ve witnessed,” Mr. Marks wrote in a July 2007 memo. “A lot of this is because people seem to think everything’s good and likely to stay that way.”
For much of that year, Mr. Marks flew around the globe, hat in hand, raising money for a new fund to buy the debt of troubled companies. As he met with clients in London, in Dubai, in Beijing, his message was the same: The market’s excesses were setting the stage for a major fall, and would create an ideal time in which to invest.
“In the period ahead, cash will be king, and those able and willing to provide it will be holding the cards,” Mr. Marks wrote to his clients in January 2008.
By May 2008, Oaktree had raised its largest-ever distressed-debt fund, totaling $11 billion. Its coffers filled, the firm now looked to Bruce Karsh to put the money to work. Mr. Karsh, a former lawyer, once served as an appellate clerk to Anthony M. Kennedy, now a Supreme Court justice. Now, he was Oaktree’s investment chief and started steadily deploying the money, spending almost $1.5 billion by September.
The week of Lehman’s demise, Mr. Karsh huddled with his team. As the financial world unraveled, Oaktree found itself deep in the red. But Mr. Karsh had been investing in distressed debt for two decades, and had never seen bargains like the ones flashing across his Bloomberg terminal. Senior bank loans — the ones first in line to be paid in a bankruptcy — were trading at lows of 60 cents on the dollar and offering annual yields of about 30 percent.
“Either this is the greatest buying opportunity of my career or the world is going to end,” Mr. Karsh told his staff. “And if it ends, our clients will have much bigger problems on their hands.”
With the markets reeling, Mr. Karsh turned aggressive. The steep downslide had produced a long list of great businesses saddled with too much debt. From mid-September through year-end, Mr. Karsh spent more than $6 billion on distressed loans of companies like Clear Channel Communications, Freescale Semiconductor and Univision. It was, by far, the fastest pace at which Oaktree had ever put money to work.
Clients grew anxious. Calls began streaming in to check Oaktree’s performance. In October, Mr. Marks tapped out another memo to assuage them.
“Our assets are declining in value like everything else, but we’re comfortable that we’re doing exactly what you hired us to do,” he wrote. “We’re grabbing at falling knives. The best bargains are always found in frightening environments.”
In some ways, Mr. Karsh was replicating a successful trade from earlier in the decade. In 2002, after the telecom sector cratered, he bought bonds of Lucent, Nortel, Qwest and Corning at fire-sale prices. The companies never missed an interest payment, the bonds recovered and Mr. Karsh racked up huge gains.
But the crisis in the fall of 2008 was on a whole other order of magnitude. For months, Oaktree continued to lose money. Mr. Marks tried to reassure his clients, saying it was inevitable that they would be buying on the way down, that even the most experienced investors couldn’t pinpoint when the market would stop dropping.
Looking back, Mr. Karsh, now 58, said that if had he waited until March 2009, the eventual market nadir, Oaktree would not have been able to invest as much as it did. By then, all of the hysterical selling had run its course, and there were fewer bonds to buy.
“If God had told us to wait until March 9, 2009, because that would be the low, and we waited to buy then, we never would’ve been able to put that much money to work,” Mr. Karsh said.
Soon after that low, the markets stabilized, the chaos subsided and the prices of Oaktree’s debt investments eventually recovered in value. They became, in trading parlance, “money good,” yielding billions in profits.
Last year, partly on the strength of the trade and the performance of the distressed-debt fund, Oaktree sold shares in its own initial public offering. Today, the stock market values the firm at $8.4 billion its assets under management have swelled to $80 billion.
Mr. Marks has also contemplated a new book. His theme? How to identify market cycles and the pendulum swings of investor psychology.
Today, he sees the markets as neither dangerously expensive nor extraordinarily cheap. He sees some signs of excessive risk-taking, but also sees continued uncertainty. As a result of the muddy outlook, Oaktree is investing with caution. For Mr. Marks, it’s easier to know what to do at the extremes than it is in the middle.
“Moments like 2008 will continue to present great opportunities for as long as emotion rules the markets,” Mr. Marks said. “In other words, forever.”
USHG's Danny Meyer to be featured in special session of Collective[i] Forecast on Clubhouse
NEW YORK , March 11, 2021 /PRNewswire/ -- Collective[i]®, a recognized leader in AI-enabled digital sales transformation, today announced that Danny Meyer , Founder and CEO of Union Square Hospitality Group (USHG) and Founder of Shake Shack, is confirmed to participate in Collective[i] Forecast, a series of live, virtual events, that features the world's preeminent leaders and innovators sharing their knowledge about the innovation that is disrupting and transforming how we work and live.
Collective[i] Forecast featuring Danny Meyer will take place on the audio-only social networking app, Clubhouse, Thursday, March 11, 2021 at 5:30 P.M. EST and will explore the topic: "SPACs, Enlightened Hospitality & No Kid Hungry."
The discussion will focus on USHG's distinctive culture of Enlightened Hospitality, which prioritizes employees first and foremost and has driven the company's ongoing evolution into a multifaceted hospitality organization. The discussion will also delve into how the hospitality industry is likely to evolve post-pandemic, as well as USHG's newly launched SPAC, and its support of No Kid Hungry, Share our Strength's national campaign dedicated to ending childhood hunger.
To learn more about this special session of Collective[i] Forecast featuring Danny Meyer , March 11 , visit: https://www2.collectivei.com/forecast-danny-meyer
Hosted by Collective[i] co-Founder and Chairperson, Heidi Messer , Collective[i] Forecast brings together a diverse group of attendees across all sectors and roles, including senior business executives, entrepreneurs, and journalists, as well as Collective[i] clients and partners, with the goal of helping our community adapt to a changing playing field and inspiring them to imagine what is possible.
Previous Forecast speakers include:
Scott Budnick | Filmmaker, CEO, One Community
Geoffrey Canada | Educator, Social Activist & Author
Renée Cummings | Criminologist & AI Ethicist
Dr. Oren Etzioni | CEO, Allen Institute for AI
Goldie Hawn | Academy Award Winning Actress
Dr. Ashish K. Jha | Dean, Brown University School of Public Health
Brittany Kaiser | Cambridge Analytica whistleblower and data activist
Juliette Kayyem | Professor, Harvard's Kennedy School of Government
Dr. Kai-Fu Lee | AI Expert & Author
Deanna Mulligan | Board Chair, Guardian Life
Oscar Munoz | Executive Chairman, United Airlines
Alan Murray | CEO, Fortune Media
Elizabeth Neumann | former Assistant Secretary for Counterterrorism and Threat Prevention, U.S. Department of Homeland Security
Vladimir Pozner | Journalist & Author
Dr. Mamphela Ramphele | South African anti-apartheid activist
Dr. Michael T. Osterholm | Director, Center for Infectious Disease Research & Policy, University of Minnesota
Xavier Rolet | former CEO, London Stock Exchange
Nouriel Roubini | Economist, Professor, NYU Stern School of Business, Chairman, Roubini Macro Associates
Eric Schmidt | former CEO, Google
Sir Martin Sorrell | Executive Chairman, S4 Capital Group
Randi Zuckerberg | Founder & CEO, Zuckerberg Media
About Collective[i]: Collective[i]® is a recognized leader in digital sales transformation. Collective[i]'s applications and network employ AI/ML to offer the on-demand intelligence that is essential to modern sales organizations. Collective[i] improves CRM data quality, provides daily forecasts, pipeline intelligence, dealrooms and other analyses and collaboration tools that boost productivity and grow revenue. Collective[i] also hosts Connectors™, the first social network designed to help sales leaders leverage valuable professional connections to improve and accelerate the buying experience. Collective[i]'s application and network augment traditional CRM with AI, surfacing every advantage a modern sales organization needs to win. Follow Collective[i] on LinkedIn or Twitter.
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Bitcoin’s Volatility Spawns New Crypto Balance Sheet Alternative
(Bloomberg) -- Corporate treasurers fed up with rock-bottom returns on their cash are about to get another pitch from the world of crypto.Circle Internet Financial Ltd., one of the digital-asset firms behind the so-called stablecoin dubbed USDC that is pegged 1-to-1 to the dollar, has cooked up an alternative for the legions too conservative to follow the likes of Elon Musk and Jack Dorsey into Bitcoin. Park your extra cash in USDC and earn as much as 7% annually through high-yield accounts, the marketing says -- more than 10 times the return on an ultra-safe 1-year Treasury bill.The idea may be appealing to some treasurers who were initially seduced by the big gains in crypto, especially following Bitcoin’s roughly 40% decline since mid-April. Stablecoins such as USDC are gaining increased attention because of their ability to maintain their pegs during the wild crypto price swings, suggesting they could actually serve as a store of value. Even so, not all long-term digital market observers are convinced.“If companies wish to put their corporate reserves into a stablecoin and that is fully audited, it is like putting their money in a bank account which is what they normally do,” John Griffin, professor of finance at the University of Texas at Austin, said in an email. “However, if the account is paying out a higher yield than bank account yields, then it is not merely invested in some risk-free asset.”Here’s how Circle’s program will work: Treasurers would open a “digital-dollar account” where the company’s fiat money is converted into USDC and interest is paid out in USDC. The yield is generated by Circle lending the digital dollars to a network of institutional investors that are willing to pay an interest rate for access to additional capital.The companies would lock in their return when the account is opened, similar to a bank certificate of deposit. Circle plans to offer accounts with maturities ranging from one month to a year, with no early withdrawals allowed. Rates available will be updated on a weekly basis, depending on demand for USDC loans.That’s a bit tamer than the strategy first highlighted last year by MicroStrategy Inc. Chief Executive Officer Michael Saylor, who advocated pouring company reserves into Bitcoin because he said the dollar is being debased by surging inflation. Musk’s February announcement that Tesla Inc. had added Bitcoin to its balance sheet helped fuel the rally that took the largest cryptocurrency to a record in April before it lost more than one-third of its value.“Corporate reserves are not for investing in stocks, going to Vegas, or something more volatile and more rigged against you like Bitcoin,” Griffin said.With few companies outside the crypto realm following MicroStrategy, Tesla and Dorsey’s Square Inc. into Bitcoin, Circle hopes that stablecoins may be the next logical step. The company is working with Genesis Global Capital, one of the largest crypto lenders.The service will be first made available in the U.S. and Switzerland, and will launch “imminently,” Jeremy Allaire, Circle’s CEO, said in an interview. Thousands of businesses are already on the waiting list, according to Circle.“We are seeing the opportunity for the treasury use-case grow a lot,” Allaire said.Other providers of stablecoins are rolling out similar offerings. On May 26, Gemini exchange -- the brainchild of the Winklevoss brothers -- said investors can earn up to 7.4% annually on Gemini dollars through a program called Gemini Earn. The Gemini token is also pegged to the dollar and its reserves are held with State Street Bank and Trust, the largest financial custodian in the world. Each month, the dollar deposit balance is examined by BPM LLP, an independent registered public accounting firm.USDC reserves are attested to monthly by accounting firm Grant Thornton LLP and published online.Various small crypto lenders already offer yield accounts for different coins, including less regulated stablecoins like Tether.For these products, “appropriate users would be people who invest in junk bonds or similar risky lending,” said Aaron Brown, a crypto investor and writer for Bloomberg Opinion. “It might offer a better risk-adjusted return than alternatives. . . or not. But whatever it is, it’s not a savings account in the way most people understand that term.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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Stock Splits Are Back. So Is the Debate Over Whether They Matter
(Bloomberg) -- Stock splits are back in vogue among big U.S. companies, reviving a debate about whether the practice that had fallen out of favor for years is worth the fuss.Last week, Nvidia Corp. became the eighth company in the S&P 500 Index to announce a split in the past year, joining big names like Apple Inc. and Tesla Inc. That’s the most over a comparable period in six years, according to data compiled by Bloomberg.The surge in splits comes amid a rally that’s pushed share prices of almost 600 stocks in the Russell 3000 Index above $100. Yet that has done little to settle the age-old-argument among investors about whether such stock-price engineering has any bearing on performance. In fact, recent developments such as soaring retail trading and fractional share ownership have only heated things up.“Arithmetically, there’s no merit to the notion that stock splits work,” said Mark Lehmann, chief executive officer of JMP Securities LLC. “But there is an optical hesitancy for certain stocks at certain prices and there is a segment of the investing public where that will never change.”The primary motivation cited by companies doing splits is simple: to make each share cheaper to buy. Nvidia, whose share price has more than quadrupled since the start of 2019 to reach almost $650, said in a statement announcing its 4-for-1 stock-split plan that its aim was to “make stock ownership more accessible to investors and employees.” A representative for the chipmaker declined to comment further.Once a reliable hallmark of bull-market exuberance, the practice had until recently fallen out of favor. In 2006 and 2007, when stocks were again setting records, there were 47 splits in the S&P 500. Three companies -- Nvidia, Paccar Inc. and Cummins Inc. -- even split twice. In 2019, there were only two.For Julian Emanuel, chief equity and derivatives strategist at BTIG, it’s harder to make the case for splitting a stock these days because of the rise of commission-free trading and brokerages offering fractional shares. Those developments “have largely rendered irrelevant the dollar value of a company’s share price,” he said in an interview.Brokerages like Robinhood now let investors buy a slice of a share for as little as $1 rather than forking over, say, more than $2,300 for a single share of Google-parent Alphabet Inc.Limited Benefits A look at the data backs up the case against splits providing long-term benefits to stock performance. The shares of companies that have split outperformed the S&P 500 on average in four of the last five years in the year the split was announced, according to Bloomberg data. The calendar year following the move, however, those same shares underperformed four of the five years.The recent rash of stock splits has sparked speculation that other large technology companies like Amazon.com Inc. that boast four-digit share prices may be next. Amazon split its stock three times in 1998 and 1999 and hasn’t done one since. Shares of the e-commerce giant trade around $3,200 and have gained more than 5,000% since its last split.Regardless of what the historical-performance record shows, the surge in retail trading over the past year may be altering the calculus for companies when it comes to evaluating splits.U.S. retail investors are now second in share trading only to market makers and independent high-frequency traders, according to Larry Tabb, director of market structure research at Bloomberg Intelligence. The retail segment is now larger than quantitative investors, hedge funds and traditional long-only participants, said Tabb.“A lot of investing is driven by psychology,” said Kevin Walkush, a portfolio manager with Jensen Investment Management. “Now, rather than a retail investor facing the challenge of buying a fractional share, a stock split means they can buy it outright. It just opens up the market that much more for retail investors.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Mortgage rates dip beneath 3% again, offering new refinance savings
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Huarong Wires $978 Million for Maturing Bonds as Doubts Persist
(Bloomberg) -- China Huarong Asset Management Co. made the biggest bond payment since confidence in its financial health began plunging two months ago, adding to signs that the company still has access to near-term liquidity.Huarong wired funds for a $900 million dollar bond due June 3, a person familiar with the matter said, asking not to be identified discussing private information. One of the company’s onshore units also paid a 500 million yuan ($78 million) bond that matured Sunday, people familiar said.While Huarong’s longer-dated bonds still trade at levels that imply a high risk of default, the state-owned company has yet to miss a payment since it spooked investors by failing to report annual results at the end of March. Huarong has reached funding agreements with state-owned banks to ensure it can repay debt through at least the end of August, by which time the company aims to have completed its 2020 financial statements, people familiar with the matter said earlier this month.China’s biggest bad-debt manager is trying to overhaul its business after an ill-fated expansion under former Chairman Lai Xiaomin, who was executed for crimes including bribery in January. The company has become a closely watched proxy for Beijing’s willingness to backstop government-owned borrowers amid a record wave of corporate defaults.Senior Chinese officials have so far been silent about whether the government will help Huarong meet its obligations, fueling concern among bondholders that the company will be allowed to default as part of a campaign to rein in moral hazard. Yet even if a default is part of Beijing’s long-term plan, authorities may be keen to avoid any major market disruptions around the politically sensitive 100th anniversary of the ruling Communist Party on July 1.Huarong has to repay or refinance about $6.2 billion of local and offshore bonds this year, including the domestic note that matured Sunday and the dollar bond due June 3, Bloomberg-compiled data show. The company declined to comment on its debt payments.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
China Huarong’s Journey From Safe Bet to Bad News: A Timeline
(Bloomberg) -- It’s nearly two months since turbulence erupted around China Huarong Asset Management Co.At the end of March, its 4% perpetual dollar bond was trading at 102 cents on the dollar as investors figured the January execution of former chairman Lai Xiaomin for bribery put a line under past wayward behavior. But the failure of the company to release 2020 results by a March 31 deadline, and a subsequent report by mainland media Caixin that the firm will restructure, sparked weeks of turmoil. The same bond is now at 57 cents.The heart of the matter is whether the central government will rescue a state-owned company that’s integral to the smooth running of the financial system. While there are signs Beijing wants to ensure China Huarong can repay its debts on time, uncertainty prevails.Here’s a look at the key events for China Huarong:May 28The company has wired funds to repay $978 million of notes maturing within the following week, according to Bloomberg News, the biggest bond payment since the 2020 results delay.May 27Liang Qiang, who currently heads another bad-debt manager, is on track to become president of China Huarong, reports Bloomberg News.May 24China Huarong dollar bonds climb after the managing editor of Caixin Media wrote in an opinion piece that the asset manager is “nowhere near” defaulting on its more than $20 billion of offshore notes.May 21Some of China Huarong’s thinly traded onshore bonds slump after having held up better than the company’s dollar-denominated notes, signaling broadening concern about the firm’s financial health.May 18China Huarong has transferred funds to repay a $300 million note maturing May 20, Bloomberg News reports, the first dollar bond to come due since the delayed 2020 results. Prices for the firm’s dollar bonds slump earlier in the day after the New York Times reports China is planning an overhaul that would inflict “significant losses” on both domestic and foreign China Huarong bondholders.May 17The company has reached funding agreements with state-owned banks to ensure it can repay debt through at least the end of August, by which time China Huarong aims to have completed its 2020 financial statements, according to a Bloomberg News report. That as at least two of its onshore bonds see big price declines in recent days, worrying some investors.May 13The firm says it’s prepared to make future bond payments and has seen no change in the level of government support, seeking to ease investor concerns after a local media report that regulators balked at China Hurarong’s restructuring plan.May 6The company says it transferred funds to pay five offshore bond coupons due the following day, its latest move to meet debt obligations amid persistent doubts about its financial health.April 30China Huarong breaks its silence, with an executive telling media it is prepared to make its bond payments and state backing remains intact. The official also says the week’s rating downgrades “have no factual basis” and are “too pessimistic.”April 29Moody’s Investor Service downgrades China Huarong by one notch to Baa1, adding the firm remains on watch for further downgrade. The cut reflects the company’s weakened funding ability due to market volatility and increased uncertainty over its future, according to the statement.April 27China Huarong units repay bonds maturing that day. The S$600 million ($450 million) bond was repaid with funds provided by China’s biggest state-owned bank, according to a Bloomberg News report.April 26Fitch Ratings downgrades China Huarong by three notches to BBB while dropping the company’s perpetual bonds into junk territory. The lack of transparency over government support for the firm may hamper its ability to refinance debt in offshore markets, Fitch said.April 25China Huarong says it won’t meet an April 30 deadline to file its 2020 report with Hong Kong’s stock exchange because auditors needed more time to finalize a transaction the company first flagged on April 1. Securities and asset-management units said in the days before that they wouldn’t release 2020 results by month’s end.April 22The China Banking and Insurance Regulatory Commission asks lenders to extend China Huarong’s upcoming loans by at least six months, according to REDD, citing two bankers from large Chinese commercial lenders.April 21China is considering a plan that would see its central bank assume more than 100 billion yuan ($15 billion) of China Huarong assets to help clean up the firm’s balance sheet, according to a Bloomberg News report. Peer China Cinda Asset Management Co. was said to be planning the sale of perpetual bonds in the second quarter.April 20China Huarong’s key offshore financing unit says it returned to profitability in the first quarter and laid a “solid” foundation for transformation. Reorg Research reports that regulators are considering options including a debt restructuring of the unit, China Huarong International Holdings Ltd.April 19Huarong Securities Co. says it wired funds to repay a 2.5 billion yuan local note.April 16The CBIRC says China Huarong’s operations are normal and that the firm has ample liquidity. These are the first official comments about the company’s troubles. Reuters reports Chinese banks have been asked not to withhold loans to Huarong.April 13Fitch and Moody’s both put the company on watch for downgrade. The finance ministry, which owns a majority of Huarong, is considering the transfer of its stake to a unit of the country’s sovereign wealth fund, Bloomberg News reports. Chinese officials signal they want failing local government financing vehicles to restructure or go bust if debts can’t be repaid.April 9China Huarong says it has been making debt payments “on time” and its operations are “normal.” Bloomberg News reports the company intends to keep Huarong International as part of a potential overhaul that would avoid the need of a debt restructuring or government recapitalization. S&P Global Ratings puts China Huarong’s credit ratings on watch for possible downgrade.April 8China Huarong is preparing to offload non-core and loss-making units as part of a broad plan to revive profitability that would avoid the need for a debt restructuring or government recapitalization, Bloomberg News reports.April 6Selling gains steam in China Huarong’s dollar bonds, following a holiday in China. Huarong Securities says there has been no major change to its operations, in response to a price plunge for its 3 billion yuan local bond.April 1China Huarong announces a delay in releasing 2020 results, saying its auditor is unable to finalize a transaction. Stock trading is suspended and spreads jump on the firm’s dollar bonds while China Huarong tells investors its business is running as usual. Caixin reports the company submitted restructuring and other major reform plans to government officials and shareholders.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
This Time Is Different: Outside OPEC+, Oil Growth Stalls
(Bloomberg) -- “This time is different” may be the most dangerous words in business: billions of dollars have been lost betting that history won’t repeat itself. And yet now, in the oil world, it looks like this time really will be.For the first time in decades, oil companies aren’t rushing to increase production to chase rising oil prices as Brent crude approaches $70. Even in the Permian, the prolific shale basin at the center of the U.S. energy boom, drillers are resisting their traditional boom-and-bust cycle of spending.The oil industry is on the ropes, constrained by Wall Street investors demanding that companies spend less on drilling and instead return more money to shareholders, and climate change activists pushing against fossil fuels. Exxon Mobil Corp. is paradigmatic of the trend, after its humiliating defeat at the hands of a tiny activist elbowing itself onto the board.The dramatic events in the industry last week only add to what is emerging as an opportunity for the producers of OPEC+, giving the coalition led by Saudi Arabia and Russia more room for maneuver to bring back their own production. As non-OPEC output fails to rebound as fast as many expected -- or feared based on past experience -- the cartel is likely to continue adding more supply when it meets on June 1.‘Criminalization’Shareholders are asking Exxon to drill less and focus on returning money to investors. “They have been throwing money down the drill hole like crazy,” Christopher Ailman, chief investment officer for CalSTRS. “We really saw that company just heading down the hole, not surviving into the future, unless they change and adapt. And now they have to.”Exxon is unlikely to be alone. Royal Dutch Shell Plc lost a landmark legal battle last week when a Dutch court told it to cut emissions significantly by 2030 -- something that would require less oil production. Many in the industry fear a wave of lawsuits elsewhere, with western oil majors more immediate targets than the state-owned oil companies that make up much of OPEC production.“We see a shift from stigmatization toward criminalization of investing in higher oil production,” said Bob McNally, president of consultant Rapidan Energy Group and a former White House official.While it’s true that non-OPEC+ output is creeping back from the crash of 2020 -- and the ultra-depressed levels of April and May last year -- it’s far from a full recovery. Overall, non-OPEC+ output will grow this year by 620,000 barrels a day, less than half the 1.3 million barrels a day it fell in 2020. The supply growth forecast through the rest of this year “comes nowhere close to matching” the expected increase in demand, according to the International Energy Agency.Beyond 2021, oil output is likely to rise in a handful of nations, including the U.S., Brazil, Canada and new oil-producer Guyana. But production will decline elsewhere, from the U.K. to Colombia, Malaysia and Argentina.As non-OPEC+ production increases less than global oil demand, the cartel will be in control of the market, executives and traders said. It’s a major break with the past, when oil companies responded to higher prices by rushing to invest again, boosting non-OPEC output and leaving the ministers led by Saudi Arabia’s Abdulaziz bin Salman with a much more difficult balancing act.Drilling DownSo far, the lack of non-OPEC+ oil production growth isn’t registering much in the market. After all, the coronavirus pandemic continues to constrain global oil demand. It may be more noticeable later this year and into 2022. By then, vaccination campaigns against Covid-19 are likely to be bearing fruit, and the world will need more oil. The expected return of Iran into the market will provide some of that, but there will likely be a need for more.When that happens, it will be largely up to OPEC to plug the gap. One signal of how the recovery will be different this time is the U.S. drilling count: It is gradually increasing, but the recovery is slower than it was after the last big oil price crash in 2008-09. Shale companies are sticking to their commitment to return more money to shareholders via dividends. While before the pandemic shale companies re-used 70-90% of their cash flow into further drilling, they are now keeping that metric at around 50%.The result is that U.S. crude production has flat-lined at around 11 million barrels a day since July 2020. Outside the U.S. and Canada, the outlook is even more somber: at the end of April, the ex-North America oil rig count stood at 523, lower than it was a year ago, and nearly 40% below the same month two years earlier, according to data from Baker Hughes Co.When Saudi Energy Minister Prince Abdulaziz predicted earlier this year that “‘drill, baby, drill’ is gone for ever,” it sounded like a bold call. As ministers meet this week, they may dare to hope he’s right.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Crypto Traders Defy China’s Crackdown With Secretive Bets
(Bloomberg) -- Chinese investors are paying little heed to the government’s biggest crackdown on cryptocurrency trading since 2017, underscoring the challenge for Beijing as it tries to rein in a speculative boom in digital assets.Knee-jerk selling has given way to a steady recovery on over-the-counter platforms that Chinese crypto traders have used since domestic exchanges were banned in 2017. One key gauge of local sentiment -- the exchange rate between China’s yuan and the stablecoin Tether -- fell as much as 4.4% after the government’s warning earlier this month but has since recouped more than half the loss, according to crypto data platform Feixiaohao, a Chinese equivalent of CoinMarketCap.China escalated its crackdown after a frenzied surge in Bitcoin and other tokens over the past six months heightened longstanding Communist Party concerns about the potential for fraud, money laundering and trading losses by individual investors. Yet the hard-to-trace nature of transactions on local OTC platforms and peer-to-peer networks means it will be extremely difficult for authorities to enforce a wholesale ban.That may come as a relief to global crypto enthusiasts after worries about a plunge in Chinese buying power contributed to the nearly $1 trillion selloff in digital assets from record highs in mid-May.As to the losses and the crackdown, “I don’t care,” said Charles, a 35-year-old real estate consultant in Shanghai who asked to be identified only by his English first name. He’s been buying cryptocurrencies since 2017 and claims to have lost $11 million over three days in the recent pullback. “To me it’s giving back the profits I made in the past few months,” he said. “I’m looking at the 10- to 20-year horizon.”Before China outlawed crypto exchanges in 2017, local investors owned an estimated 7% of the world’s Bitcoin and accounted for about 80% of trading, according to state media. The exchange ban has made it impossible to gauge those figures today, but Chinese investors are still widely believed to have a major presence in the crypto world via domestic OTC platforms and offshore venues that they access using virtual private networks.Domestic trades involving yuan and digital coins are difficult for China’s government to track because they typically take place in two separate steps.The first happens on OTC platforms operated by firms including Huobi and OKEx, which allow traders to post bids and offers. Once both sides agree on a price, the buyer will use a separate payments platform -- operated by their bank or a fintech company like Ant Group Co. -- to send yuan to the seller. The digital coins, usually held in escrow by the OTC platform until the yuan payment clears, are then transferred to the buyer. Chinese regulators often have no way to connect one step of the transaction to the other.Because the yuan leg of the trades take place entirely within China’s domestic financial system, the risk of large-scale capital outflows is low. But that hasn’t stopped the government from warning financial firms and individual investors to stay away from crypto.Regulators this month reminded Chinese banks and payments firms of the requirement to identify and block suspicious transactions, and pointed out that facilitating cryptocurrency trades often violates banking rules. China’s State Council called for a clamp down on Bitcoin trading and mining, vowing to “resolutely” prevent financial risks.Policy makers may be keen to avoid any major market disruptions around the politically sensitive 100th anniversary of the ruling Communist Party on July 1.After the government’s statement, Huobi said it stopped its miner hosting services in mainland China and is scaling back futures contracts and leveraged investment products in some markets. It’s unclear whether the firm plans to shut its OTC platform.Chinese regulators have so far stopped short of labeling individual trading illegal, but the crackdown will involve the public security department as some of the activities were suspected to have facilitated money laundering and terror financing, according to a person familiar with the matter.Police in Beijing have distributed printed warnings about potential risks associated with cryptocurrencies. Virtual currencies are among popular means for latest scams, and anyone “in a panic, having a hard time distinguishing or not sure what to do” should call the local police contact listed, according to one notice seen by Bloomberg.On social media, some crypto investors have made unverified claims that they were summoned by local police recently and warned against the risk of investing in cryptocurrencies. One investor said local authorities required him to sell his holdings. Another said police asked him to delete the trading app from his phone.Chinese officials see their success cleaning up the peer-to-peer lending industry two years ago as a model for its cryptocurrency crackdown, said the person familiar, asking not to be identified as the matter is private. The country purged the P2P industry after frauds and defaults became rampant, in some cases leading to suicide and street protests. In its heyday the sector had more than 50 million users and $150 billion in outstanding loans.The extreme price swings of cryptocurrencies have already left a mark. In one high-profile case, a Chinese man from the eastern city of Dalian killed his three-year-old daughter and tried to commit suicide with his wife after losing 20 million yuan ($3.1 million) on a leveraged bet on Bitcoin last June, according to local media reports.Peter, a Beijing tech worker, piled 20,000 yuan into cryptocurrencies three weeks ago, just in time for latest round of volatility. Within days, his portfolio grew to nearly 100,000 yuan, then quickly fell back down to 14,000 yuan. He echoed the carpe diem philosophy of crypto traders globally: “It doesn’t matter if it all goes to zero. But what if it brings me sudden wealth one day?”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Australia Central Bank Faces Taper Pressure as More Peers Shift
(Bloomberg) -- Australia’s central bank is approaching a decision on whether the economy is strong enough for it to join Canada and New Zealand in signaling a move away from emergency mode.While no change in policy settings is expected at Tuesday’s meeting, the Reserve Bank will likely hold preliminary discussions on whether to extend the three-year yield target and undertake further quantitative easing. Governor Philip Lowe said the board will make a call on both in July.The strength of recent economic data suggests the central bank could opt against rolling its yield target maturity to November 2024 from April 2024 and taper purchases under its longer-dated bond buying program. Melbourne’s latest Covid-19 outbreak is a reminder that a sluggish vaccine roll-out has the potential to jeopardize the recovery.“Covid hasn’t gone away, so that’s still the risk that bubbles around in the background,” said Gareth Aird of Commonwealth Bank of Australia. “But if you park that to one side, you couldn’t really ask for a better economic backdrop at the moment to try and meet the RBA’s objectives.”Central banks are beginning to edge away from their emergency monetary settings as vaccine roll-outs continue and economies reopen. The Reserve Bank of New Zealand surprised markets last week in presenting an outlook with projections of its official cash rate rising in the second half of next year.The RBA slightly shifted its tone in this month’s quarterly update as it lifted the economic outlook to reflect strong hiring, investment intentions and sentiment, while maintaining that it doesn’t expect to hike rates until 2024. A commitment to this dovish stance is keeping a lid on any currency appreciation, especially as other central banks pivot.Risks RemainMeantime, Australia’s gross domestic product data for the first three months of the year is due Wednesday. Economists estimate the economy expanded 1.1% from the prior quarter. The economy has rapidly recovered, but covid remains an ever present risk for a country heading into the Southern Hemisphere winter.What Bloomberg Economics Says. “A snap lockdown in Australia’s second-most populous state, Victoria, is likely to dent the recovery. Uncertainty may dent business and consumer sentiment across unaffected regions, and could weigh on the recovery in business investment.”-- James McIntyre, economistFor the full report, click here.The RBA is currently running a three-year yield target at 0.1% -- the same level as the cash rate -- and will decide at its July 6 meeting whether to roll it over. A decision to let it lapse would signal greater confidence in the outlook. Similarly, the bank needs to decide if it will extend its QE program that is currently due to expire in September.Lowe says wages growth will need to rise at a pace faster than 3% -- more than double the current rate -- for inflation to return sustainably to the central bank’s 2-3% target before he raises rates.Anecdotal evidence of labor shortages are growing in Australia, in a signal that employers may need to offer higher wages to attract workers. The government is also trying to help the RBA push down unemployment and boost wages with targeted fiscal assistance.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
ESG investment as important as divestment from fossil fuels: former Bank of England governor
Since leaving the top post at the Bank of England last year, former Governor Mark Carney has arguably been the most vocal advocate, in urging financial institutions to align themselves with emissions goals of the Paris climate agreement. But as shareholders increasingly step up pressure, and lawmakers call for stricter regulations around climate disclosures, Carney says fossil fuel divestments shouldn’t be the sole focus of tackling the global crisis.
Intel reiterates chip supply shortages could last several years
Intel Corp's CEO said on Monday it could take several years for a global shortage of semiconductors to be resolved, a problem that has shuttered some auto production lines and is also being felt in other areas, including consumer electronics. Pat Gelsinger told a virtual session of the Computex trade show in Taipei that the work-and-study-from-home trend during the COVID-19 pandemic had led to a "cycle of explosive growth in semiconductors" that has placed huge strain on global supply chains. "But while the industry has taken steps to address near term constraints it could still take a couple of years for the ecosystem to address shortages of foundry capacity, substrates and components."
Earnings to Watch Next Week: Zoom, Advance Auto Parts, Lululemon and Cooper Companies in Focus
Following is a list of company earnings scheduled for release May 31-June 4, along with earnings previews for select companies. Next week’s earnings are probably not much significant for major market movements, but it is adequate to gauge investors’ sentiment.
Exclusive-U.S. tyre maker Goodyear faces allegations of labour abuse in Malaysia, documents show
American tire manufacturer Goodyear Tire & Rubber Co is facing accusations of unpaid wages, unlawful overtime and threats to foreign workers at its Malaysian factory, according to court documents and complaints filed by workers. In interviews with Reuters, six current and former foreign workers, and officials with Malaysia's labour department, say Goodyear made wrongful salary deductions, required excessive hours and denied workers full access to their passports. The department confirmed it had fined Goodyear in 2020 for overworking and underpaying foreign employees.
How a customer culture has created “The Amazon Effect”: A vision of the Future
Ever since reading the classic Competing for the Future I realized that a business leader must have one eye on the present and the other on the future. Every organization is running two businesses – today’s business and tomorrow’s business! To build capabilities today for tomorrow’s business requires a cultural capability for agility, change and customer centricity. I call this cultural capability: peripheral vision – the extent to which leadership and staff in the business monitor, understand and respond to trends and changes in the larger environment including technological, economic, social, political, legal and the natural environment (such as climate change). This future oriented cultural capability also leads us to build disciplines around customer and competitor foresight – what will customers’ future needs be and who will be future competitors and where will they be coming from.
The need for organizations to build these cultural capabilities today is demonstrated by what I call the Amazon Effect. Amazon just announced the acquisition of Whole Foods, a natural and organic foods supermarket chain with 465 stores in North America and the UK. What are the implications? With its online technology capability, Amazon now has a bricks and mortar chain that can be leveraged with its delivery capabilities, elevating online selection and ordering of Whole Foods private label products. It will also bring change to the current retail format with new technology like no cash registers – all to add to the ease and convenience for consumers. This will have a huge impact on other supermarkets, food and grocery manufacturers and the entire retail industry.
What would be the impact in the car industry if Apple bought Tesla or in wearable technology if Google purchased Samsung? How is VISA dealing with PayPal and Apple Pay and hotel chains coping with AirBnB? Many of these challenges for established companies are yet to happen – but they will……and soon.
I am thinking about what this means for my own business and what cultural capabilities and strategy we need to build now to ensure its future. What is your Amazon Effect – the thing that would require you to totally reinvent your business? Building cultural disciplines in peripheral vision, customer foresight and competitor foresight will enable you to become prepared to face these challenges, make the changes you need to make, take up future opportunities and run a growing and sustainable business. Without them you will struggle at best, but more likely be consigned to the history books.
Preparing for your future business requires customer-centric leadership that galvanizes all your leaders and staff to build capabilities firmly focused on who your future customers and competitors will be and how the whole organization is geared to adapt and provide ongoing superior value for customers.
Learn more in our award winning book, the Customer Culture Imperative.
AND if you want to build this capability in your organization check out our MarketCulture Academy.
More items to explore
&ldquoGive and Take just might be the most important book of this young century. As insightful and entertaining as Malcolm Gladwell at his best, this book has profound implications for how we manage our careers, deal with our friends and relatives, raise our children, and design our institutions. This gem is a joy to read, and it shatters the myth that greed is the path to success.&rdquo
&mdashRobert Sutton, author of The No *sshole Rule and Good Boss, Bad Boss
&ldquoGive and Take is a truly exhilarating book&mdashthe rare work that will shatter your assumptions about how the world works and keep your brain firing for weeks after you've turned the last page.&rdquo
&mdashDaniel H. Pink, author of Drive and A Whole New Mind
&ldquoGive and Take is brimming with life-changing insights. As brilliant as it is wise, this is not just a book&mdashit's a new and shining worldview. Adam Grant is one of the great social scientists of our time, and his extraordinary new book is sure to be a bestseller.&rdquo
&mdashSusan Cain, author of Quiet
&ldquoGive and Take cuts through the clutter of clichés in the marketplace and provides a refreshing new perspective on the art and science of success. Adam Grant has crafted a unique, &lsquomust have&rsquo toolkit for accomplishing goals through collaboration and reciprocity.&rdquo
&mdashWilliam P. Lauder, Executive Chairman, The Estée Lauder Companies Inc.
&ldquoGive and Take is a pleasure to read, extraordinarily informative, and will likely become one of the classic books on workplace leadership and management. It has changed the way I see my personal and professional relationships, and has encouraged me to be a more thoughtful friend and colleague.&rdquo
&mdashJeff Ashby, NASA space shuttle commander
&ldquoWith Give and Take, Adam Grant has marshaled compelling evidence for a revolutionary way of thinking about personal success in business and in life. Besides the fundamentally uplifting character of the case he makes, readers will be delighted by the truly engaging way he makes it. This is a must read.&rdquo
&mdashRobert Cialdini, author of Influence
&ldquoGive and Take is a brilliant, well-documented, and motivating debunking of &lsquogood guys finish last&rsquo! I've noticed for years that generosity generates its own kind of equity, and Grant's fascinating research and engaging style have created not only a solid validation of that principle but also practical wisdom and techniques for utilizing it more effectively. This is a super manifesto for getting meaningful things done, sustainably.&rdquo
&mdashDavid Allen, author of Getting Things Done
&ldquoPacked with cutting-edge research, concrete examples, and deep insight, Give and Take offers extraordinarily thought-provoking&mdashand often surprising&mdashconclusions about how our interactions with others drive our success and happiness. This important and compulsively-readable book deserves to be a huge success.&rdquo
&mdashGretchen Rubin, author of The Happiness Project and Happier at Home
&ldquoOne of the great secrets of life is that those who win most are often those who give most. In this elegant and lucid book, filled with compelling evidence and evocative examples, Adam Grant shows us why and how this is so. Highly recommended!&rdquo
&mdashWilliam Ury, coauthor of Getting to Yes and author of The Power of a Positive No
&ldquoGood guys finish first&mdashand Adam Grant knows why. Give and Take is the smart surprise you can't afford to miss."
&mdashDaniel Gilbert, author of Stumbling on Happiness
&ldquoGive and Take is an enlightening read for leaders who aspire to create meaningful and sustainable changes to their environments. Grant demonstrates how a generous orientation toward others can serve as a formula for producing successful leaders and organizational performance. His writing is as engaging and enjoyable as his style in the classroom.&rdquo
&mdashKenneth Frazier, Chairman, President, and CEO of Merck & Co.
&ldquoIn this riveting and sparkling book, Adam Grant turns the conventional wisdom upside-down about what it takes to win and get ahead. With page-turning stories and compelling studies, Give and Take reveals the surprising forces behind success, and the steps we can take to enhance our own.&rdquo
&mdashLaszlo Bock, Senior Vice President of People Operations, Google
&ldquoGive and Take dispels commonly held beliefs that equate givers with weakness and takers with strength. Grant shows us the importance of nurturing and encouraging prosocial behaviors.&rdquo
&mdashDan Ariely, author of Predictably Irrational
&ldquoGive and Take defines a road to success marked by new ways of relating to colleagues and customers as well as new ways of growing a business.&rdquo
&mdashTony Hsieh, CEO, Zappos.com and author of Delivering Happiness
&ldquoA milestone! Well-researched, generous, actionable and important. Adam Grant has given us a gift, a hard-hitting book about the efficacy of connection and generosity in everything we do.&rdquo
&mdashSeth Godin, bestselling author of The Icarus Deception and Tribes
&ldquoGive and Take will fundamentally change the way you think about success. Unfortunately in America, we have too often succumbed to the worldview that if everyone behaved in their own narrow self-interest, all would be fine. Adam Grant shows us with compelling research and fascinating stories there is a better way.&rdquo
&mdashLenny Mendonca, Director, McKinsey & Co.
&ldquoAdam Grant, a rising star of positive psychology, seamlessly weaves together science and stories of business success and failure, convincing us that giving is in the long run the recipe for success in the corporate world. En route you will find yourself re-examining your own life. Read it yourself, then give copies to the people you care most about in this world.&rdquo
&mdashMartin Seligman, author of Learned Optimism and Flourish
&ldquoGive and Take presents a groundbreaking new perspective on success. Adam Grant offers a captivating window into innovative principles that drive effectiveness at every level of an organization and can immediately be put into action. Along with being a fascinating read, this book holds the key to a more satisfied and productive workplace, better customer relationships, and higher profits.&rdquo
&mdashChip Conley, Founder, Joie de Vivre Hotels and author, Peak and Emotional Equations
&ldquoGive and Take is a game changer. Reading Adam Grant's compelling book will change the way doctors doctor, managers manage, teachers teach, and bosses boss. It will create a society in which people do better by being better. Read the book and change the way you live and work.&rdquo
&mdashBarry Schwartz, author of The Paradox of Choice and Practical Wisdom
&ldquoGive and Take is a new behavioral benchmark for doing business for better, providing an inspiring new perspective on how to succeed to the benefit of all. Adam Grant provides great support for the new paradigm of creating a &lsquowin win&rsquo for people, planet and profit with many fabulous insights and wonderful stories to get you fully hooked and infected with wanting to give more and take less."
&mdashJochen Zeitz, former CEO and chairman, PUMA
&ldquoGive and Take is a real gift. Adam Grant delivers a triple treat: stories as good as a well-written novel, surprising insights drawn from rigorous science, and advice on using those insights to catapult ourselves and our organizations to success. I can&rsquot think of another book with more powerful implications for both business and life.&rdquo
&mdashTeresa Amabile, author of The Progress Principle
&ldquoAdam Grant has written a landmark book that examines what makes some extraordinarily successful people so great. By introducing us to highly-impressive individuals, he proves that, contrary to popular belief, the best way to climb to the top of the ladder is to take others up there with you. Give and Take presents the road to success for the 21st century.&rdquo
&mdashMaria Eitel, founding CEO and President of the Nike Foundation
&ldquoWhat The No *sshole Rule did for corporate culture, Give and Take does for each of us as individuals. Grant presents an evidence-based case for the counterintuitive link between generosity and finishing first.&rdquo
&mdashDouglas Stone and Sheila Heen, coauthors of Difficult Conversations
&ldquoAdam Grant is a wunderkind. He has won every distinguished research award and teaching award in his field, and his work has changed the way that people see the world. If you want to be surprised&mdashvery pleasantly surprised&mdashby what really drives success, then Give and Take is for you. If you want to make the world a better place, read this book. If you want to make your life better, read this book.&rdquo
&mdashTal Ben-Shahar, author of Happier
&ldquoIn an era of business literature that drones on with the same-old, over-used platitudes, Adam Grant forges brilliant new territory. Give and Take helps readers understand how to maximize their effectiveness and help others simultaneously. It will serve as a new framework for both insight and achievement. A must read!&rdquo
&mdashJosh Linkner, founder of ePrize, CEO of Detroit Venture Partners, and author of Disciplined Dreaming¶
From the Inside Flap
- Amazon's best books of 2013
- Financial Times books of the year
- Wall Street Journal favorite books of 2013
- Oprah 's riveting reads
- Fortune must-read business books
- Washington Post books every leader should read
- Apple iTunes best of 2013
- Inc. 's best books for entrepreneurs
- Amazon customer favorites: one of the top 100 print books of 2013
- Translated into two dozen languages
From the Back Cover
Susan Cain, author of Quiet
"A truly exhilarating book--the rare work that will shatter your assumptions about how the world works and keep your brain firing for weeks after you've turned the last page."
Daniel H. Pink, author of Drive and To Sell Is Human
"Perfectly timed and beautifully weighted . . . A refreshing change after years of reading angry indictments of fallen corporate idols. . . . [An] excellent book."
"Now shaking up the business world: science that may change the way the world does business."
Willie Geist, The Today Show
"Give and Take. might just be the best business book of the year."
"Give and Take is a very interesting book. I can't put it down."
Ryan Seacrest, host of American Idol, radio personality, and producer
"In this riveting and sparkling book, Adam Grant turns the conventional wisdom upside-down about what it takes to win and get ahead. With page-turning stories and compelling studies, Give and Take reveals the surprising forces behind success, and the steps we can take to enhance our own."
Laszlo Bock, senior vice president of people operations, Google
"Give and Take is a pleasure to read, extraordinarily informative, and will likely become one of the classic books on workplace leadership and management. It has changed the way I see my personal and professional relationships."
Jeff Ashby, NASA space shuttle commander
"Packed with cutting-edge research, concrete examples, and deep insight, Give and Take offers extraordinarily thought-provoking--and often surprising--conclusions about how our interactions with others drive our success and happiness."
Gretchen Rubin, author of The Happiness Project and Happier at Home
"Give and Take is an enlightening read. Grant demonstrates how a generous orientation toward others can serve as a formula for producing successful leaders and organizational performance. His writing is as engaging and enjoyable as his style in the classroom."
Kenneth Frazier, chairman, president, and CEO, Merck & Co.
"With Give and Take, Adam Grant has marshaled compelling evidence for a revolutionary way of thinking about personal success in business and in life. Besides the fundamentally uplifting character of the case he makes, readers will be delighted by the truly engaging way he makes it. This is a must read."
Robert Cialdini, author of Influence
"Give and Take provides a refreshing new perspective on the art and science of success. Adam Grant has crafted a unique, 'must have' toolkit for accomplishing goals through collaboration and reciprocity."
William P. Lauder, executive chairman, The Estée Lauder Companies Inc.
"Good guys finish first--and Adam Grant knows why. Give and Take is the smart surprise you can't afford to miss."
Daniel Gilbert, author of Stumbling on Happiness
"One of my favorite new business discoveries of 2013 ."
Claire Diaz-Ortiz, manager of social innovation, Twitter, and author of Twitter for Good
"Give and Take is a brilliant, well-documented, and motivating debunking of 'good guys finish last'! With fascinating research, engaging style, and practical wisdom, this is a super manifesto for getting meaningful things done, sustainably."
David Allen, author of Getting Things Done
"An important book, destined to be a classic."
Stephen Roulac, New York Journal of Books
"Give and Take is. garnering plaudits for the rigor of its science, the freshness of its arguments, and the pleasure of its prose."
Leigh Buchanan, Inc.
"Give and Take is just brimming with studies. They amaze and instruct. Thoughtful and well-researched. a book that means something."
Bryan Urstadt, Bloomberg BusinessWeek
"Grant's extraordinary book [is] my favorite on behavior since Quiet."
Kare Anderson, Forbes
" I was so enticed by Grant's research that I decided to enlist him to help me increase my giving."
Joel Stein, Time Magazine
"Give and Take. wields a large body of social science research. to challenge the idea that career success is a zero-sum game in which your gains equal my losses. Grant explodes that myth."
Emily Esfahani Smith, The Atlantic
"Give and Take defines a road to success marked by new ways of relating to colleagues and customers as well as new ways of growing a business."
Tony Hsieh, CEO, Zappos.com
"One of the great secrets of life is that those who win most are often those who give most. In this elegant and lucid book, filled with compelling evidence and evocative examples, Adam Grant shows us why and how this is so. Highly recommended!"
William Ury, coauthor of Getting to Yes and author of The Power of a Positive No
"Adam Grant has written a landmark book that examines what makes some extraordinarily successful people so great. By introducing us to highly impressive individuals, he proves that, contrary to popular belief, the best way to climb to the top of the ladder is to take others up there with you. Give and Take presents the road to success for the 21st century."
Maria Eitel, founding CEO and president of the Nike Foundation
"Give and Take dispels commonly held beliefs that equate givers with weakness and takers with strength. Grant shows us the importance of nurturing and encouraging prosocial behaviors."
Dan Ariely, author of Predictably Irrational
"Give and Take presents a groundbreaking new perspective on success. Along with being a fascinating read, this book holds the key to a more satisfied and productive workplace, better customer relationships, and higher profits."
Chip Conley, head of global hospitality, Airbnb
"Adam Grant, a rising star of positive psychology, seamlessly weaves together science and stories of business success and failure, convincing us that giving is in the long run the recipe for success in the corporate world. En route you will find yourself re-examining your own life. Read it yourself, then give copies to the people you care most about in this world."
Martin Seligman, author of Learned Optimism and Flourish
"Give and Take will fundamentally change the way you think about success. Unfortunately in America, we have too often succumbed to the worldview that if everyone behaved in their own narrow self-interest, all would be fine. Adam Grant shows us with compelling research and fascinating stories there is a better way."
Lenny Mendonca, director, McKinsey & Co.
"Give and Take is a game changer. Reading Adam Grant's compelling book will change the way doctors doctor, managers manage, teachers teach, and bosses boss. It will create a society in which people do better by being better. Read the book and change the way you live and work."
Barry Schwartz, author of The Paradox of Choice and Practical Wisdom
"Give and Take is a new behavioral benchmark for doing business for better, providing an inspiring new perspective on how to succeed to the benefit of all. Adam Grant provides great support for the new paradigm of creating a 'win win' for people, planet and profit with many fabulous insights and wonderful stories to get you fully hooked and infected with wanting to give more and take less."
Jochen Zeitz, former CEO and chairman, PUMA
"Give and Take is sensational, with fascinating insights on page after page. I learned much that I intend to incorporate into my life immediately. The lessons will not only make you a better person they will make you more capable of doing good for many people, including yourself."
Rabbi Joseph Telushkin
About the Author
Adam Grant is an organizational psychologist at Wharton, where he has been the top-rated professor for seven straight years. He is an expert in how we can find motivation and meaning, and lead more generous and creative lives. He is the #1 New York Times bestselling author of five books that have sold over 2 million copies and been translated into 35 languages: Give and Take, Originals, Option B, Power Moves, and with his wife, Allison Sweet Grant, The Gift Inside the Box. His books have been recognized as among the year’s best by Amazon, the Financial Times, Harvard Business Review, and the Wall Street Journal and been praised by J.J. Abrams, Richard Branson, Bill and Melinda Gates, Malcolm Gladwell, and Malala Yousafzai.
Adam’s TED talks have been viewed more than 20 million times. He hosts the chart-topping TED podcast WorkLife. His speaking and consulting clients include Google, the NBA, Bridgewater, and the Gates Foundation. He has been recognized as one of the world’s 10 most influential management thinkers, Fortune’s 40 under 40, Oprah’s Super Soul 100, and a World Economic Forum Young Global Leader, and received distinguished scientific achievement awards from the American Psychological Association and the National Science Foundation. Adam writes for the New York Times on work and psychology and serves on the Department of Defense Innovation Board. He received his B.A. from Harvard and his Ph.D. from the University of Michigan, and he is a former Junior Olympic springboard diver. He lives in Philadelphia with his wife, their two daughters, and their son.
Excerpt. © Reprinted by permission. All rights reserved.
The Dangers and Rewards of Giving More Than You Get The principle of give and take that is diplomacy—give one and take ten.
—Mark Twain, author and humorist
On a sunny Saturday afternoon in Silicon Valley, two proud fathers stood on the sidelines of a soccer field. They were watching their young daughters play together, and it was only a matter of time before they struck up a conversation about work. The taller of the two men was Danny Shader, a serial entrepreneur who had spent time at Netscape, Motorola, and Amazon. Intense, dark-haired, and capable of talking about business forever, Shader was in his late thirties by the time he launched his first company, and he liked to call himself the “old man of the Internet.” He loved building companies, and he was just getting his fourth start-up off the ground.
Shader had instantly taken a liking to the other father, a man named David Hornik who invests in companies for a living. At 5'4", with dark hair, glasses, and a goatee, Hornik is a man of eclectic interests: he collects Alice in Wonderland books, and in college he created his own major in computer music. He went on to earn a master’s in criminology and a law degree, and after burning the midnight oil at a law firm, he accepted a job offer to join a venture capital firm, where he spent the next decade listening to pitches from entrepreneurs and deciding whether or not to fund them.
During a break between soccer games, Shader turned to Hornik and said, “I’m working on something—do you want to see a pitch?” Hornik specialized in Internet companies, so he seemed like an ideal investor to Shader. The interest was mutual. Most people who pitch ideas are first-time entrepreneurs, with no track record of success. In contrast, Shader was a blue-chip entrepreneur who had hit the jackpot not once, but twice. In 1999, his first start-up, Accept.com, was acquired by Amazon for $175 million. In 2007, his next company, Good Technology, was acquired by Motorola for $500 million. Given Shader’s history, Hornik was eager to hear what he was up to next.
A few days after the soccer game, Shader drove to Hornik’s office and pitched his newest idea. Nearly a quarter of Americans have trouble making online purchases because they don’t have a bank account or credit card, and Shader was proposing an innovative solution to this problem. Hornik was one of the first venture capitalists to hear the pitch, and right off the bat, he loved it. Within a week, he put Shader in front of his partners and offered him a term sheet: he wanted to fund Shader’s company.
Although Hornik had moved fast, Shader was in a strong position. Given Shader’s reputation, and the quality of his idea, Hornik knew plenty of investors would be clamoring to work with Shader. “You’re rarely the only investor giving an entrepreneur a term sheet,” Hornik explains. “You’re competing with the best venture capital firms in the country, and trying to convince the entrepreneur to take your money instead of theirs.” The best way for Hornik to land the investment was to set a deadline for Shader to make his decision. If Hornik made a compelling offer with a short fuse, Shader might sign it before he had the chance to pitch to other investors. This is what many venture capitalists do to stack the odds in their favor.
But Hornik didn’t give Shader a deadline. In fact, he practically invited Shader to shop his offer around to other investors. Hornik believed that entrepreneurs need time to evaluate their options, so as a matter of principle, he refused to present exploding offers. “Take as much time as you need to make the right decision,” he said. Although Hornik hoped Shader would conclude that the right decision was to sign with him, he put Shader’s best interests ahead of his own, giving Shader space to explore other options.
Shader did just that: he spent the next few weeks pitching his idea to other investors. In the meantime, Hornik wanted to make sure he was still a strong contender, so he sent Shader his most valuable resource: a list of forty references who could attest to Hornik’s caliber as an investor. Hornik knew that entrepreneurs look for the same attributes in investors that we all seek in financial advisers: competence and trustworthiness. When entrepreneurs sign with an investor, the investor joins their board of directors and provides expert advice. Hornik’s list of references reflected the blood, sweat, and tears that he had devoted to entrepreneurs over the course of more than a decade in the venture business. He knew they would vouch for his skill and his character.
A few weeks later, Hornik’s phone rang. It was Shader, ready to announce his decision.
“I’m sorry,” Shader said, “but I’m signing with another investor.” The financial terms of the offer from Hornik and the other investor were virtually identical, so Hornik’s list of forty references should have given him an advantage. And after speaking with the references, it was clear to Shader that Hornik was a great guy.
But it was this very same spirit of generosity that doomed Hornik’s case. Shader worried that Hornik would spend more time encouraging him than challenging him. Hornik might not be tough enough to help Shader start a successful business, and the other investor had a reputation for being a brilliant adviser who questioned and pushed entrepreneurs. Shader walked away thinking, “I should probably add somebody to the board who will challenge me more. Hornik is so affable that I don’t know what he’ll be like in the boardroom.” When he called Hornik, he explained, “My heart said to go with you, but my head said to go with them. I decided to go with my head instead of my heart.”
Hornik was devastated, and he began to second-guess himself. “Am I a dope? If I had applied pressure to take the term sheet, maybe he would have taken it. But I’ve spent a decade building my reputation so this wouldn’t happen. How did this happen?”
David Hornik learned his lesson the hard way: good guys finish last.
According to conventional wisdom, highly successful people have three things in common: motivation, ability, and opportunity. If we want to succeed, we need a combination of hard work, talent, and luck. The story of Danny Shader and David Hornik highlights a fourth ingredient, one that’s critical but often neglected: success depends heavily on how we approach our interactions with other people. Every time we interact with another person at work, we have a choice to make: do we try to claim as much value as we can, or contribute value without worrying about what we receive in return?
As an organizational psychologist and Wharton professor, I’ve dedicated more than ten years of my professional life to studying these choices at organizations ranging from Google to the U.S. Air Force, and it turns out that they have staggering consequences for success. Over the past three decades, in a series of groundbreaking studies, social scientists have discovered that people differ dramatically in their preferences for reciprocity— their desired mix of taking and giving. To shed some light on these preferences, let me introduce you to two kinds of people who fall at opposite ends of the reciprocity spectrum at work. I call them takers and givers. Takers have a distinctive signature: they like to get more than they give.
They tilt reciprocity in their own favor, putting their own interests ahead of others’ needs. Takers believe that the world is a competitive, dog-eat-dog place. They feel that to succeed, they need to be better than others. To prove their competence, they self-promote and make sure they get plenty of credit for their efforts. Garden-variety takers aren’t cruel or cutthroat they’re just cautious and self-protective. “If I don’t look out for myself first,” takers think, “no one will.” Had David Hornik been more of a taker, he would have given Danny Shader a deadline, putting his goal of landing the investment ahead of Shader’s desire for a flexible timeline.
But Hornik is the opposite of a taker he’s a giver. In the workplace, givers are a relatively rare breed. They tilt reciprocity in the other direction, preferring to give more than they get. Whereas takers tend to be self-focused, evaluating what other people can offer them, givers are other-focused, paying more attention to what other people need from them. These preferences aren’t about money: givers and takers aren’t distinguished by how much they donate to charity or the compensation that they command from their employers. Rather, givers and takers differ in their attitudes and actions toward other people. If you’re a taker, you help others strategically, when the benefits to you outweigh the personal costs. If you’re a giver, you might use a different cost-benefit analysis: you help whenever the benefits to others exceed the personal costs. Alternatively, you might not think about the personal costs at all, helping others without expecting anything in return. If you’re a giver at work, you simply strive to be generous in sharing your time, energy, knowledge, skills, ideas, and connections with other people who can benefit from them.
It’s tempting to reserve the giver label for larger-than-life heroes such as Mother Teresa or Mahatma Gandhi, but being a giver doesn’t require extraordinary acts of sacrifice. It just involves a focus on acting in the interests of others, such as by giving help, providing mentoring, sharing credit, or making connections for others. Outside the workplace, this type of behavior is quite common. According to research led by Yale psychologist Margaret Clark, most people act like givers in close relationships. In marriages and friendships, we contribute whenever we can without keeping score.
But in the workplace, give and take becomes more complicated. Professionally, few of us act purely like givers or takers, adopting a third style instead. We become matchers, striving to preserve an equal balance of giving and getting. Matchers operate on the principle of fairness: when they help others, they protect themselves by seeking reciprocity. If you’re a matcher, you believe in tit for tat, and your relationships are governed by even exchanges of favors.
Giving, taking, and matching are three fundamental styles of social interaction, but the lines between them aren’t hard and fast. You might find that you shift from one reciprocity style to another as you travel across different work roles and relationships. It wouldn’t be surprising if you act like 3a taker when negotiating your salary, a giver when mentoring someone with less experience than you, and a matcher when sharing expertise with a colleague. But evidence shows that at work, the vast majority of people develop a primary reciprocity style, which captures how they approach most of the people most of the time. And this primary style can play as much of a role in our success as hard work, talent, and luck.
In fact, the patterns of success based on reciprocity styles are remarkably clear. If I asked you to guess who’s the most likely to end up at the bottom of the success ladder, what would you say—takers, givers, or matchers? Professionally, all three reciprocity styles have their own benefits and drawbacks. But there’s one style that proves more costly than the other two. Based on David Hornik’s story, you might predict that givers achieve the worst results—and you’d be right. Research demonstrates that givers sink to the bottom of the success ladder. Across a wide range of important occupations, givers are at a disadvantage: they make others better off but sacrifice their own success in the process.
In the world of engineering, the least productive and effective engineers are givers. In one study, when more than 160 professional engineers in California rated one another on help given and received, the least successful engineers were those who gave more than they received. These givers had the worst objective scores in their firm for the number of tasks, technical reports, and drawings completed—not to mention errors made, deadlines missed, and money wasted. Going out of their way to help others prevented them from getting their own work done.
The same pattern emerges in medical school. In a study of more than six hundred medical students in Belgium, the students with the lowest grades had unusually high scores on giver statements like “I love to help others” and “I anticipate the needs of others.” The givers went out of their way to help their peers study, sharing what they already knew at the expense of filling gaps in their own knowledge, and it gave their peers a leg up at test time. Salespeople are no different. In a study I led of salespeople in North Carolina, compared with takers and matchers, givers brought in two and a half times less annual sales revenue. They were so concerned about what was best for their customers that they weren’t willing to sell aggressively. Across occupations, it appears that givers are just too caring, too trusting, and too willing to sacrifice their own interests for the benefit of others. There’s even evidence that compared with takers, on average, givers earn 14 percent less money, have twice the risk of becoming victims of crimes, and are judged as 22 percent less powerful and dominant. So if givers are most likely to land at the bottom of the success ladder, who’s at the top—takers or matchers?
Neither. When I took another look at the data, I discovered a surprising pattern: It’s the givers again.
As we’ve seen, the engineers with the lowest productivity are mostly givers. But when we look at the engineers with the highest productivity, the evidence shows that they’re givers too. The California engineers with the best objective scores for quantity and quality of results are those who consistently give more to their colleagues than they get. The worst performers and the best performers are givers takers and matchers are more likely to land in the middle.
This pattern holds up across the board. The Belgian medical students with the lowest grades have unusually high giver scores, but so do the students with the highest grades. Over the course of medical school, being a giver accounts for 11 percent higher grades. Even in sales, I found that the least productive salespeople had 25 percent higher giver scores than average performers—but so did the most productive salespeople. The top performers were givers, and they averaged 50 percent more annual revenue than the takers and matchers. Givers dominate the bottom and the top of the success ladder. Across occupations, if you examine the link between reciprocity styles and success, the givers are more likely to become champs—not only chumps.
Guess which one David Hornik turns out to be?
After Danny Shader signed with the other investor, he had a gnawing feeling. “We just closed a big round. We should be celebrating. Why am I not happier? I was excited about my investor, who’s exceptionally bright and talented, but I was missing the opportunity to work with Hornik.” Shader wanted to find a way to engage Hornik, but there was a catch. To involve him, Shader and his lead investor would have to sell more of the company, diluting their ownership.
Shader decided it was worth the cost to him personally. Before the financing closed, he invited Hornik to invest in his company. Hornik accepted the offer and made an investment, earning some ownership of the company. He began coming to board meetings, and Shader was impressed with Hornik’s ability to push him to consider new directions. “I got to see the other side of him,” Shader says. “It had just been overshadowed by how affable he is.” Thanks in part to Hornik’s advice, Shader’s start-up has taken off. It’s called PayNearMe, and it enables Americans who don’t have a bank account or a credit card to make online purchases with a barcode or a card, and then pay cash for them at participating establishments. Shader landed major partnerships with 7-Eleven and Greyhound to provide these services, and in the first year and a half since launching, PayNearMe has been growing at more than 30 percent per month. As an investor, Hornik has a small share in this growth.
Hornik has also added Shader to his list of references, which is probably even more valuable than the deal itself. When entrepreneurs call to ask about Hornik, Shader tells them, “You may be thinking he’s just a nice guy, but he’s a lot more than that. He’s phenomenal: super-hardworking and very courageous. He can be both challenging and supportive at the same time. And he’s incredibly responsive, which is one of the best characteristics you can have in an investor. He’ll get back to you any hour—day or night—quickly, on anything that matters.”
The payoff for Hornik was not limited to this single deal on PayNearMe. After seeing Hornik in action, Shader came to admire Hornik’s commitment to acting in the best interests of entrepreneurs, and he began to set Hornik up with other investment opportunities. In one case, after meeting the CEO of a company called Rocket Lawyer, Shader recommended Hornik as an investor. Although the CEO already had a term sheet from another investor, Hornik ended up winning the investment.
Although he recognizes the downsides, David Hornik believes that operating like a giver has been a driving force behind his success in venture capital. Hornik estimates that when most venture capitalists offer term sheets to entrepreneurs, they have a signing rate near 50 percent: “If you get half of the deals you offer, you’re doing pretty well.” Yet in eleven years as a venture capitalist, Hornik has offered twenty-eight term sheets to entrepreneurs, and twenty-five have accepted. Shader is one of just three people who have ever turned down an investment from Hornik. The other 89 percent of the time entrepreneurs have taken Hornik’s money. Thanks to his funding and expert advice, these entrepreneurs have gone on to build a number of successful start-ups—one was valued at more than $3 billion on its first day of trading in 2012, and others have been acquired by Google, Oracle, Ticketmaster, and Monster.
Hornik’s hard work and talent, not to mention his luck at being on the right sideline at his daughter’s soccer game, played a big part in lining up the deal with Danny Shader. But it was his reciprocity style that ended up winning the day for him. Even better, he wasn’t the only winner. Shader won too, as did the companies to which Shader later recommended Hornik. By operating as a giver, Hornik created value for himself while maximizing opportunities for value to flow outward for the benefit of others.
If you’ve spent even a little bit of time on Media Twitter, you’re probably familiar with Rafat Ali.
Ali, the cofounder and CEO of the travel news site Skift, is a voracious advocate of focused, niche-driven media outlets — which he prefers to frame as vertical media.
Stat is my favorite big media vertical effort, watching it closely. So far making all the right moves. https://t.co/VHdiH0hTMv
&mdash Rafat Ali (@rafat) April 21, 2017
Gave a presentation yesterday to journalism profs, hopefully to amplify to their students that there is another way. pic.twitter.com/zjNKGYbFwP
&mdash Rafat Ali (@rafat) January 7, 2017
It’s an approach Ali has taken in leading Skift, which marks its fifth anniversary this month, and in his previous gig, launching the site paidContent, which covered the business of digital media.
“There’s an opportunity to go deep and create direct relationships with users. That’s what I’ve advocated,” Ali told me. “You’re not dependent on platforms or any other thing to build your brand. That’s been a big focus for us, and certainly that’s what I evangelize.”
Skift has built its business on three primary revenue streams — a free news site supported by native advertising, a paid research arm, and events — and the company is set to surpass $10 million in revenue next year, Ali said. Advertising and events contribute about 80 percent of Skift’s revenue, with research making up the final 20. Ultimately, Ali said, the company would like each of the components to even out at one-third of the business.
Ali and I spoke about how Skift has grown, what’s next for the site, and his support for subject-focused media. Here’s a lightly edited and condensed transcript of our conversation.
We are in expansion mode in all senses of that phrase as well. Geographically, we’re putting effort into Europe specifically. Not just because everybody has to do that, but because, in our case, from a travel perspective, Europe is the world’s largest destination as a continent. It gets the most number of visitors anywhere in the world. It’s also where people travel out from — Europeans travel more than anyone in the world. For us, Europe as an editorial coverage area, which also then means as a business focus, is big as we grow.
Then in Asia, we’re just beginning, too. We’re looking at doing a conference next year. That’s generally how we move in geographically. We did our first European conference this year in April in London. We’re likely moving it into the continent next year.
We’re also expanding from a topic perspective next year — going deeper into some of the subsectors of travel that have a mix of business potential and editorial disruption potential. We’re also expanding beyond travel into what we think is a very adjacent vertical, the business of dining. It’s essentially restaurants and innovation, restaurants and tech, and changes in behavior and customer experience.
We bought this newsletter, Chefs+Tech, last year. My cofounder Jason [Clampet] is now spending a majority of his time on Chefs+Tech — or he is in the process of spending a majority of his time on it, which we’re also renaming because Chefs+Tech is an existing newsletter that we bought and boxes us into just tech, which it’s not — it’s tech and innovation, user experience, customer habits, and stuff. We’re still trying to figure out what its name is going to be.
Expansion in all possible ways — but it’s still managed expansion. We’re not venture-funded at this stage. We’re venture-funded from a historical legacy perspective, but we’re not raising any money. This is all growth from cash flow.
Or if we need to buy some company that we think could fit into either our research division or our content studio division. Then we would need to raise money for it. We don’t have the capital to do that we have capital to grow on our own. We would raise it on the right circumstances that made sense. We have no plans today — certainly not on any horizon for the next year even.
I wrote an internal memo earlier this year and the title was is the year of the Skift subscriber.” Subscriber for us means anybody who is an email daily newsletter subscriber — and we now have six other newsletters beyond the daily newsletter, these are specialty newsletters within travel. Anybody who has an email relationship with us, and anybody who has a paid relationship with us — the research subscribers, which typically come out of the pool of the email subscribers. There will likely be an email subscriber that will convert to a paid subscriber.
A lot of focus for the last six months has been getting more data on our existing base of users. We are at the end of a four-month-long project on essentially data enhancement. We have emails from all these people — now how do we get more understanding of which industry they’re in, what titles the have? Initially, we didn’t ask for a lot of information beyond email address, but now we’ve wisened up and standardized the data. Any form on Skift will ask for X number of fields now.
We now know more about our users: Are they a meeting planner? Are they a corporate travel buyer? Are they a hotel manager? Are they a travel agent? Are they a tour operator? Do they work in digital marketing for Priceline or Expedia? That helps us, as you can imagine, in a million different ways from a business perspective. Understanding and getting the data on our existing subscribers and standardizing the data going ahead. Then being able to seamlessly move that data between [programs]. For our sales team, we use Salesforce, for our marketing and email newsletters we use HubSpot — moving data among all the backend systems. For our subscriptions, we use a semi-inbuilt but third-party software that we have totally optimized — that’s our subscription management software for our research. Moving data between all the systems has been a big of what we’ve been doing this year.
We are in a position, long story short, to have the luxury to do the things that will help us build for the next five years. A big part is understanding, segmenting, and customizing the users we have. We are the largest industry news site in the travel industry. That’s great. We achieved that 18 months in. But, as we grow bigger and bigger, sponsors are asking for more quantifiable data beyond just being big.
This is a big part of what we are — a big part of our revenue is advertising, but we don’t do typical advertising. It’s pretty much 100 percent branded content. We need understanding of our users. Our editorial needs understanding of our users to be able to figure out what sectors do we need more specialized coverage in. We’re likely going to hire a couple of more specialized editorial people — not this year, but early next year sometime.
We’re not going to focus on sales for the first year. That’s exactly the script we followed with Skift. Back then, we had raised a little bit of money at the start, and now we have our own money. We weren’t focused on sales for the first year. But at our Skift Global Forum — which really has become the biggest conference in the travel industry, and this year, and (obviously, this is me saying it, but) the speaker lineup is kind of mindblowing — we’re adding also food speakers. Danny Meyer is speaking this year. We’re adding some of the food element at our main conference. And at some point by next year, probably, it’ll be a full-day conference that’s maybe just a day before the main Skift conference. We’re going to start doing research next year at some point as well for the food vertical.
Food for us — it’s not all food. It’s restaurants, meaning dining out. That’s our focus. We’ll add research, we’ll add video, content studio, etc. We’ll do everything we did with Skift to make it as big, if hopefully not more. My sense is that it has a larger audience, because people dine out more than they travel. I think there may be a bigger audience industry-wise in dining out. It has similar characteristics to travel. When we entered, there were obviously a lot of trades that have existed forever. It’s actually not as bad as travel was when we entered travel, so we certainly have our path cut out for us. So we’re doing that.
I have my eye on one more vertical long-term. One is related to another, as you can imagine. Travel and dining are very complementary sectors. And I’m thinking retail — but I don’t know what that means beyond just saying “luxury retail” maybe at somepoint. I have no idea what that means at this point beyond just that phrase. That may become a part of it. You can imagine that, between these three sectors, this is where most of the disposable income for consumers is spent. If we become the pre-eminent business information company that focuses on the largest portion of consumer disposable income — meaning travel, dining, and luxury retail — that’s a powerful thing to build. That’s the goal for the next five years, if anybody is going to ask me that.
Historically, subscriptions and free are hard to build side-by-side. Or it’s primarily a subscription that has a free gateway — you know how many examples there are, the Times, the FT, the Journal, and others. We have existing free, robust, daily coverage of the travel industry, monetized through branded content.
Then we have the research. Over the past year, we’ve built from five full-time people, soon to be six. And, in addition, 10 people in editorial. They can’t be divorced from each other. Both from a coverage perspective and from a business perspective.
I know this is cliché to say, but there are a lot of lessons to learn from Amazon Prime that certainly we’re learning. Don’t create multiple subscription services — focus on one and build as much value into it. You can keep increasing the price depending on what value you build into it. That’s kind of our strategy. We’re not going to have a subscription service separate for hotel industry or airline industry or marketing people. It’s a single subscription service, a single price, that will have multiple things in it. We do 20 research reports per year, and then we’ve added analyst calls that we do once a month. Our analysts do a webinar kind of thing. Then we just added something called data sheets, which is original raw data that goes into the research. We’re now offering it for people to download as an Excel file.
We’re going to add more of this stuff. We just did this early access — they can get stories get as much as a day, sometimes a couple of days, earlier than free subscribers. That window may increase if it’s not a particularly newsy article but it is material information. So we’re going to continue to build stuff. We’re looking at integrating a third-party data service as part of the research service. It’s originally someone else’s, but our user base is a much bigger sales channel for this company that we’re tying up with potentially. So we’ll be able to offer that data service as part of our research service as well. Not charging anything separately, but just continuing to add value — and we’ll obviously increase prices as we put more value into it.
That’s the strategy with early access and subscribers in general. It doesn’t certainly affect anything on the advertising side — it’s not that our pageviews are going to come down, and in general our advertising is not dependent on pageviews anyway. We need to have a base of daily users coming to Skift for branded content to continue to be viable.
It turns out it was certainly a lot more global than we expected in terms of attendees coming from various parts. Last year, there were 35 different countries — a majority U.S., but 35 different countries — in New York. We just did our European conference and there were 26 or 27 different countries, including people from the U.S. who came from it.
The business of travel is global, and events tend to have an in-built business model. I’m not giving you any secret — everybody understands this. There are two business models in it: the ticket sales and the sponsorship stuff. It’s an age-old business model that works. We know how to get speakers. Any region we go into, we can get speakers. Our clout now is so much that we can instantly become the most high-level conference anywhere we go. Guaranteed.
We did our year one conference in London this year and we got big names that for a year one conference was unheard of. We’re going to Asia next year, if we do it. We’re still a couple weeks away from finalizing that decision for Asia next year. We’ll instantly get the biggest speakers we need there.
Biggest stokes our ego, sure, but it’s also it’s a really strong strategy in terms of entering an area and showing our editorial clout, which then helps us build our business clout. That’s the strategy. For Europe, what we did was we hired an editorial person about six or eight months earlier than the forum. And now our U.K./Europe editor, Patrick Whyte, he’s there full-time covering it. We hired a sales person — she came on board with the conference. Ideally, we would’ve liked her to have started six months before, but we couldn’t find the right person. The sales for the London European conference was done by our U.S. sales team. It worked out fine.
For our Asia one, we’re trying to figure out Singapore, or maybe Dubai or Abu Dhabi. We’re trying to make that decision in the next two weeks. We may hire somebody editorially six or eight months earlier — if it’s Singapore, it’s going to be someone in Singapore, and if you do Dubai or Abu Dhabi it’s likely going to be somebody in Dubai. That person then becomes a full-time person. You start building the coverage area and then the conference comes a few months later, and then you start building the business. That’s how we’ve seen the progress happen.
There’s an opportunity to go deep and create direct relationships with users. That’s what I’ve advocated. You’re not dependent on platforms or any other thing to build your brand. That’s been a big focus for us, and certainly that’s what I evangelize.
There’s a lot of innovation happening in vertical that doesn’t get covered by a lot of other media. I know Nieman Lab covers a lot, but the general mainstream media or media reporters in general — everything BuzzFeed does, or Vice, or Vox gets covered a lot. But there’s a ton of innovation happening in smaller companies.
One of the things that we’ve evangelized for a while is that there’s a more meaningful life for journalists and media people in general at these smaller companies than at a very large churn-and-burn type environment that exists at many of the names I just told you. We emphasize a lot about culture at Skift. People don’t really leave Skift. Coming up on two-and-a-half years, nobody has left Skift willingly as an employee. Obviously, you hire people and some people don’t work out, so firing has happened, but nobody has left Skift willingly. Which is a mindblowing thing if you look at any other company.
That’s because we put so much emphasis on work-life balance: 9:30 to 5:30 work hours, which is an unachievable goal. You’ll never be able to complete your work between 9:30 and 5:30 — but if you aim for it constantly, you’re somewhat close to it. Most of the people actually do get to do 9:30 to 5:30. Editorial tends to more, just because of the nature of the job — but even then, we try to cut back, cut back, cut back. That’s kind of my mantra: Editorial, you don’t have to churn. We’re not evaluating you based on the number of stories you’re doing, so why are you just filling the pipe? We’ve cut back a lot in terms of volume, even though we’re going deeper because there are more people. We’re creating more content, but in a meaningful way and in different sectors, as opposed to just doing for the sake of doing.
There’s a lot of meaningful innovation happening in these companies that doesn’t get highlighted as much. That’s why I evangelize it so much on Twitter and in general.
It’s what we live and breathe at Skift: We’re constantly launching new things. We have these 10 core values — which by the way, we’re editing down to six because I think 10 is too much. The first core value is this: Fresh, design-forward, and always launching new things. That’s our first core value. That’s essentially what we do. Our point of view is fresh our goal for the next five years is to keep it fresh. We’ll always be design-forward for being a small company. We don’t have the budget that Vox has, but for what we are, we’re very design-forward.
We continue to embrace the new, and new things from a publishing-technology perspective. And we’re always launching new things. One of the things that we try to do, and I think it has worked well for us, is to surprise and delight. Surprise and delight is a marketing tactic. In our case, it’s essentially constantly launching new things so that the industry is constantly surprised. Hence we are fresh in people’s minds, hence we can continue to build a business that people look to as relevant for the future. That’s worked for us.
Thanks for having me. Believe it or not, I've been thinking about giving this particular presentation for about a decade. I've been talking to the administration. I was inspired after studying the stories of three people that you might call luminaries. They were probably heroes of mine when I read about them, and I noticed an overlap of pattern amongst them. That's what I'm here to talk about. Now, how many people in the room have heard of the phrase Dream Job? Raise your hand. All right, everybody has heard the phrase, so you know what it means. It means chasing a career where you just have immense passion. My partner Kevin Harvey has a phrase that I love, and he says, “Life is a use or lose it proposition.” For most humans, they take one career path. If you've only got one shot, and then it's all over why not do what makes you most happy?
By the way, one of the reasons this is the audience, and I want to thank you for being here, this is the audience I wanted to do this presentation to first because I think coming to an MBA program is this amazingly unique opportunity you have. You've had your undergrad degree. You've worked a little bit, and now you have this chance to go do whatever you want. It's an amazing pivot point. For me, you're the opportune audience for this, and, obviously, I wanted to come back to Texas to do it. Thanks for having me.
What I'm going to do first is I'm going to start by telling three stories of these luminaries, and then after that I'm going to walk through five guidelines that I've inferred from what they did. Then there's some special stories at the end as well. I'm going to start in Orville, Ohio. Anyone know what company was founded in Orville in 1897? I'll give you 20 bucks if anybody knows, Smucker's. That has nothing to do with this presentation.
The first gentleman I'm talking about is a guy named Robert Montgomery that grew up in Orville. This is in 1940, and this is what the town looked like when he did. He attended Orville High School where he was a three-sport letter man, baseball, football, basketball. He was lucky enough one of his neighbors knew the coach, Fred Taylor at Ohio State, and he was able to get a spot on a really good basketball team. This is Robert, number 24. He's a point guard. That's him peering into the huddle. That's Fred Taylor, the coach of Ohio State at the time.
Robert wasn't a starter. He came off the bench, and he didn't get a ton of minutes, but this team had John Havlicek and John Cuzzie. His sophomore year they won the national championship. They played in the national championship his junior and senior year. Those two players that I mentioned went onto the NBA, and Robert went into coaching. He spent his first year as a JV coach at a high school, and then finagled his way onto the staff at Army. At 22, he was an assistant at Army, the Black Knights. They played here in Gillis Field House.
When he was 24 the head coach retired, and he begged for the job. This is him signing the contract. At 24, he became head coach of a D-1 school. Now, what ended up making Robert successful, from my point of view, isn't what happened inside the four walls of the gym where they practiced every day. It's what he did outside. In the first five years of his coaching career he befriended five of the top basketball minds on the East Coast. This is Red Auerbach, so Havlicek went to Boston, and Red was the coach at the time. He was able to build a relationship through that.
This is Joe Lapchick. Clair Bee coached at Long Island University and has the best record of any coach in the Basketball Hall of Fame. Robert met Clair when he was 25. When he was 27, Robert drove Clair to Clair's induction into the Basketball Hall of Fame and sat next to him. The next one is Henry Iba. He coached 36 years at Oklahoma State and was, at the time, probably one of the most successful basketball coaches of all time. That's Evert Dean from Indiana, and he met all of them and became friends. Two of them Lapchick and Iba, he just went to a coaches' luncheon where he knew they were going to be, and he begged, he said,”Can I sit next to you?” That's how he met both of them. Then he kept following up and hanging out.
A year later he met Pete Newell. Pete was the greatest basketball mind on the West Coast at the time. They became fast friends. Years later Pete would induct Robert into the Basketball Hall of Fame. He didn't limit his peer network to basketball coaches. He met football coaches as well. This was the coach of the Cincinnati Bengals, Bo Schembechler, who would go on to coach at Michigan, was his assistant on the basketball team at Army. He met Bill Parcells around the same time, way before Bill became a star in the National League. Then Doc Counsilman was the long-time swimming coach at Indiana, and also someone that Robert became friends with.
Now, I'm using the name Robert to obscure things a little bit. I'm talking about Bobby Knight. At age 31 Bobby Knight became head coach at Indiana University. Five years later at 36 they went undefeated, both in the regular season and the post season, and won the national championship. That's never been repeated since in over four decades. At Indiana, he would win three national championships, four coach of the year awards, 11 Big 10 titles, and when he retired he had 902 victories, the most of any coach at the time. As I said, Pete Newell inducted Bobby into the Hall of Fame.
I'm going to move onto the next story, and then I'll circle back, and you'll see where I'm going. Now I'm going to start in Hibbing, Minnesota. This is about two or three hours north of Minnesota. Another Robert, Robert Zimmerman, grew up in Hibbing. That's what Hibbing looked like when he was young. Even though it's pretty far north in Minnesota, there's a bit of an urban environment. Robert loved music, and in this early photo he's got a drum. He got a guitar when he was 10 years old, and by high school was playing in a band regularly. They used to cover Elvis and Little Richard. His yearbook says that he's likely to join Little Richard. That didn't happen.
What happened was he went to the University of Minnesota. He didn't go to class. He was hanging out in this place called Dinky Town, which is this photo right here. At the time, and this is late 50s, early 60s, there's a lot of new stuff happening. Even though he grew up playing rock and roll, he fell in love with folk music. Over, I would say, eight or nine months he studied every folk album he possibly could. He didn't have a lot of money. Back in the time you could walk into a record store and listen in a booth. He would do that for hours and hours and hours. He became friends with people that also liked folk music, but had money. He would go to their house and listen to their record collection. He's even accused of having “borrowed” their records and not returned them, which is a point of controversy even still today.
The next thing that happened, I think, is one of the most ambitious actions anyone that I know has taken to pursue their dream job. He hitch-hiked from Minneapolis to New York City. He had a guitar, a suitcase and $10, and it's 1,200 miles. If you ask him today why he did it, he'll talk a little bit about chasing the performers, so this is Dave Van Ronk, Peggy Seeger, the New Lost City Ramblers, these were people he was listening to in Minnesota, but these people were in New York City, and so he wanted to see them.
There was really one person he wanted to see, which is Woody Guthrie. Woody Guthrie had become his hero. If you just go to Wikipedia, once you find out who this is, if you don't know already, he went to New York to find Woody Guthrie. That was his pursuit because he had come to have this affection and love for the way Woody played, and he wanted to know everything he possibly could about it.
He went to New York. He found Woody Guthrie. He used to perform for him. Then he started hanging out at these three venues, the Café Wha?, The Gaslight Café and Gerde's Folk City. This was the epicenter of folk music at the time, and he would sit in each of these venues for hours upon hours and study what the other artists were doing. Years later Liam Clancy would say, “He could perform any one of our songs like us, including tonality, tempo, everything,” so he was a mimic. He was studying, studying, studying. He got a big break. He was asked to open for John Lee Hooker at Gerde's one day, and his career got started.
This gentleman is Joe Hammond. He was the producer for Aretha Franklin, Billie Holiday, Count Basie. One day he walked in and found this gentleman, 1961. I think he's 22, 23, something like that. The next year Robert Zimmerman changes his name to Bob Dylan. John releases the first album. The album does okay. In '63 they released The Freewheelin' Bob Dylan. This album goes to number 22 in the U.S. and number one in the UK. From there everything was off and to the races. In '63 he performed at the march on Washington with Joan Baez where Martin Luther King spoke his famous speech. A year later he performed for the first time with Johnny Cash, another one of his heroes. Johnny gave him a guitar and asked if he could record several of his song. Johnny asked Bob if he could record his songs, which he did.
The rest is history, as they say, 100 million albums sold, 11 Grammys, an Oscar, an Emmy. He was introduced into the Rock and Roll Hall of Fame, and then he took it to a whole new level, a Kennedy Center Award with Clinton, Barack Obama gave him a Medal of Freedom, and then he topped it off with something that's never been done. He won the Nobel Prize in literature. The only musician ever to be given such an award. That happened two years ago, amazing story.
All right, this one you won't know as well, but it's equally inspiring. Saint Louis, Missouri, the person this time is named Daniel. He grew up in Saint Louis. His father was an intelligence officer in the military, and moved around Europe quite a bit. After the war ended his father became a travel agent, and his mother worked with him, and so they traveled quite a bit. Now, because they were travel agents his mom told him he had to journal everything, so he was forced to go on vacation and take notes. He wasn't that interested in travel, but he loved food. When he went back and looked at all the journal notes he had always taken, they were always about the food they were eating wherever they were. He started to associate different places with the food that he went to.
He went to John Boroughs High School in Saint Louis. Ended up at Trinity College in Connecticut where he would spend every weekend in New York City eating food because that's what he was passionate about. He got a poly-sci major. He went and work on a campaign for a year, wasn't that interesting to him, so he went back to New York. Robert Zimmerman was chasing folk music, Danny was chasing food. His personal life was all about what he could do, and going to different restaurants and exploring.
He went to work for Check Point. They make those things that you attach to clothes in the store so that when you walk out the beeper goes off. This was early in Check Point's life. He did incredibly well there, and within a year was making 125K a year as a salesman, which, he spent the most of it on food in New York City. One night he was out to eat with his uncle and his aunt and his grandmother at Elio's, a restaurant that's open.
He told him that he was studying for the LSAT. He was going to take the LSAT next year and go up his career ladder again and become a lawyer, to which his uncle replied, “Will you just stop it? Why don't you go open a restaurant? You know that's what you're supposed to do.” Caught him a little off-guard, but woke him up. The next day he took the LSAT. He never sent the scores to a single school. Never applied to a single school. He quit his job as a salesman, and went to work at a restaurant called Pesca in the front office for $12,500 a year, so he took a 10x salary reduction.
The reason he chose Pesca is there was a chef there, an up-and-coming chef called Michael Romano. He wanted to be around this gentleman. He would work during the day in the front office, and then at night he'd beg to do the slop work in the kitchen just so he could get exposure to what was happening there. He was also taking a wine class at night, and he met this gentleman who happened to be the head or one of the top restaurant critics for the New York Times. They started hanging out together and going to different restaurants and talking and learning.
He did something really interesting. He made a list of 12 icons in the restaurant industry. These were new people that were doing innovative things around opening new high-end restaurants. Wolfgang Puck is the first one, but there were 12 different. A lot of these people are on celebrity chef shows today. He started studying them. He created a notebook for each and every one of them, what makes them special, what do they do unique? He started looking at their recipes.
Then he got even bolder and decided to go to Europe. He took every single one of the connections he had, both in the restaurant industry and the travel industry through his parents, plus when he was at Trinity he would go do tours in Europe for his parents, and so he had a lot of connections, and he did this. Now, I just had to look this up for the presentation. It's a stagiaire, which I think is a fancy French word for, “I'll work in a restaurant for free,” because that's what he did. One of the restaurants that he worked in he had to pay $500 a month, which I ran the math, and that's equal to a negative 25 thousand K a year salary. He's gone from making 125 to 12, to now he's upside down 25.
What he does is what you think he would do. He studies, so in each and every one of these places, each and every one of these restaurants he's watching the chef. He's watching the recipes. He goes on the sourcing trips to see how they pick food out of markets or from different fish markets. He just takes tons of notes. He looks at the décor, he looks at the wine list. On the way home from this nine-month journey he said it took the entire eight and a half hour flight just to organize the notes.
When he gets back to New York he'll spend another six or seven months searching a hundred locations to find the very best location to launch his first restaurant. He's 27 years old when he opened his Union Square Café. This is Danny Meyer for those of you that might know who he is. I love this quote. He's most proud of the studying he did on his own, not the studying that he did at Trinity College. He viewed this as the best work he had ever done as a student. Union Square Café is still open today, 11 times Zagat has said it's the very best restaurant in New York. Danny Meyer would go on to launch 16 high-end restaurants in New York City, four have won Michelin Stars. He is the undisputed king of high-end restaurants in New York City, but he wasn't done.
A lot of these restaurants, Danny would open in areas that needed re-gentrification. He had a philosophy that if he could build a restaurant it could become the bespoke place that people go, and then the community would evolve, that he would get a lift alongside that. He, typically, would look for areas that were on the rise, but needed help. One area that needed a lot of help was Madison Square Park, which wasn't far from Union Square. He and a bunch of other business people helped launch the Madison Square Conservancy that rebuilt the park. A few years after that happened they started improving the park. There was a decision made to allow there to be a restaurant in the center of the park. He applied, got the bid, and won. That was the location of the first Shake Shack.
A while later I'm going to go through something so you'll see the work that went into launching the first Shake Shack. If you go to the first Shake Shack, it doesn't look like this. If you want to eat it looks like this when it's open. There's always a line. I got to know Danny on the Open Table board. We worked together for over a decade, and he used to tell me I had to keep it a secret, but that this single venue made way-more profit than any of the white table cloth restaurants that he owned. Of course, fast-forward today. There's 190 Shake Shacks around the world. 2015 they took Shake Shack public on the NYSC, and it's now worth 2.2 billion. I think there's one here in Austin, correct?
These were the three stories. I had read them all independently, and I noticed that there was a similar strain that was running through each and every one of these stories. Now I've organized that, and I want to talk to you about it. The first one is the one that I can provide the least amount of help with you about because I don't know what your passions are. My first piece of advice would be to find your passion. Pick a profession in which you have a deep, personal interest.
There's nothing that's going to make you be more successful than if you love doing what you're doing because you're going to work harder than anybody else because it's going to feel like work. It's going to feel like fun. I think this is the most important decision you can possibly make in a career, is to make sure you have immense passion for what you're doing. This should be your personal passion, not your parents, not your sister's, not your family generation of expectation. It needs to be something that you're doing on your own. It might be that your passionate about the same thing as your parents. You don't have to run from them, but you need to know that this is something you're doing on your own.
Then, I also mention status and compensation. There are a lot of high-profile careers that make a lot of money, and they're generally perceived to be areas where successful people go. If you run at those things and don't have a passion for them you're going to burn out eventually. It's not going to be where you want to be. The last point is just you can't fake it. Somebody else sitting in some other MBA program has a deep passion for whatever career path you're going down, and they're going to smoke you if you don't have it yourself.
This is one of my favorite quotes from Bobby Knight. He says, “Everybody has the will to win. People don't have the will to practice.” I think this is the test for whether or not you're actually pursuing your dream job, which is the essence of it that would be considered studying or work or practice, do you enjoy that part? Do you enjoy the preparation? Everybody enjoys winning. Do you enjoy the preparation?
The second of the five guidelines I'd have for you is hone your craft constantly. It's extremely important to be obsessive about understanding everything you possibly can about your craft. Consider it an obligation. Hold yourself accountable. That requires you to keep learning over time. Study the history, know the pioneers. It's the bedrock foundation for what you're going to build upon, and it will help you in networking that you're able to talk the language of the people that came before you.
Strive to know more than everyone else about your particular craft. That can be in a subgroup. What do I mean by that? Let's say you love E-sports. Let's just say you've decided multiplayer gaming E-sports, like, this is it for you. You grew up gaming, “I love it.” All right? Within the first six months of being in this program you should be the most knowledgeable person at McCombs in E-sports. That's doable. You should be able to do that. Then, by the end of your first year you should be top five of all MBA students, and, hopefully, when you exit your second year you're number one of any MBA student out there. It doesn't mean you're the best E-sports person in the world, but you've separated yourself from everyone else that's out there. I can't make you the smartest or the brightest, but it's quite doable to be the most knowledgeable. It's possible to gather more information than somebody else, especially today.
Then, lastly, and this is a bit of a caveat, depending on what it is that you're chasing, you might want to go to where the epicenter is. The reason is there's just more networking available there if that's where the great people are. The next two bullet points will tie into that. This is an interesting story from Bobby Knight's biography. His second time he met with Pete Newell he walked into the room. This guy's like 32, Pete Newell is one of the most famous basketball coaches ever. He walks into the room with 74 plays diagrammed on three by five cards, sits down in the middle of the floor and says, “Hey, Pete, come go through these with me.” I don't know if it's audacious or brilliant or what, but some people would consider that over-the-top, but to get the number one mentor you can possibly find and make them go through that amount of tedious work, but he did it. Pete did it. They both learned from it, which is interesting.
These quotes from the movie “No Direction Home”, Martin Scorsese did against Dylan, really highlight the point that I'm trying to drive home to you. Most people would think, “Eh, Bob Dylan, folk singer. Probably just had the DNA, or got lucky or something.” He was studying. He used the word, “I'm a musical expeditionary.” I looked up expeditionary. An expedition is to travel for scientific research or exploration. That's what Dylan was doing. There was no one that knew more about folk music than he did when he broke out. He knew more than anybody. Another guy in Minneapolis that knew him called him a sponge. Then this, “There's a ruthlessness in the way Dylan finds sources, uses them and moves on,” constantly gathering information and putting it into his own repertoire.
I'm going to read from Danny's book for you because I want to drive home this point of studying. You can see I'm a huge fan of Danny. I've got all these markers here. He's one of the most genuine humans I've ever met. He has a restaurant in New York called Blue Smoke, which is actually a barbecue place. When they were thinking about launching that he says, “In the barbecue, within the 35 mile radius of Austin and the Texas hill country lie five towns I revere. Each with a distinctly different style of barbecue. The elements of barbecue are limited, ribs, brisket, pulled pork, chop mince pork, sausage, chicken, coleslaw, beans and a handful of sides, but it's become an American culinary language with thousands of dialects and accents. I tried to understand each variation.
During one 36 hour road trip through North Carolina I tasted 14 variations on chopped pork, each defined by subtle and dramatic differences in texture, the degree and type of smoke used, the amount of tomato or vinegar in the sauce, how much heat was applied to the meat and how well or how much or how little crackling got chopped up and tossed in.” That's the level of detail he thinks about food.
I really like this one because it has to do with Shake Shack, but, “As soon as we won the bid Richard Corrine, my most enthusiastic researcher of road food, and I set off to study burger and shake stands all over the country. We started out, of course, at Ted Drew's Steak and Shake in Saint Lewis,” which he grew up eating. “Continued on to Kansas City, and individually made stops in Michigan, Culver's, Los Angeles, In-N-Out Burger, Napa, Taylor's Automatic Refreshers, Chicago, Gold Coast Dogs, plus eight other establishments. Connecticut,” and he names three or four. “Always in search of the best of breed.” That's how they did research for Shake Shack. I think it drives home this point of like understand more than anybody else.
This is a bit of an aside. Does anybody know this painting? This is a painting called First Communion. It was painted by Pablo Picasso when he was 15 years old. Most people, I think, are brought up, and they're told about Picasso in their first art class. You look at these cubism pictures, and someone will say, “Oh, a seven year old could do that.” What they don't know that Picasso was a trained classic artist and had mastered it by the time he was 15. He had spent time studying the way you would if you had set out to be the greatest painter in the world, and that's why I made this statement, “Greatness isn't random, it's earned.” If you're going to research something, this is your lucky day. Information is freely available on the internet. That's the good news. The bad news is you have zero excuse for not being the most knowledgeable in any subject you want because it's right there at your fingertip, and it's free, which is excellent.
Three: Develop mentors in your field. I don't know if any of you will ever dare to be as aggressive as Dylan, hitch-hiking 1,200 miles to find your mentor, but that might be the type of attitude you want to think about in the back of your mind as you pursue mentors. Take every chance you can to find somebody who can teach you about the field you want to excel in. You can work your way up the stack. You don't have to jump straight to the top on day one. Treat them with respect. Debate things, learn from them. Document what you hear, share it with others. Try to get these mentors interested in you and your own development. How do you do this? Send them notes. Tell them when you use their advice to be successful. Send them gifts when you have accomplishments. Get them bought in. One of the reason American Idol works because you start voting or cheering for somebody, and not all of a sudden you feel like you're part of that process, right? Get them to feel that way about your own success.
Then, on the mentor thing, never stop. You've got to keep on pursuing. I had the remarkable fortune this year in my 20th year as an investor to meet Stan Druckenmiller and Howard Marks. They're two people I've admired for a very long time. I read everything that they write any time they speak. I got to sit down with both of them for a couple of hours and talk about investing. It was awesome. The things that they pushed on changed some of the actions that I'm taking today in my work.
I'd already walked you through these examples. Every one of these three luminaries had a mentor that was important to them. Funny story, last week when I was preparing for this presentation I was rereading Danny's book, and I went back to this notion when he was 25 and he made this list of people that he considered to be icons in the industry. I texted him and I said, “Danny, how many of those 12 icons have you ended up establishing a relationship with?” He sent me this emoji back. I was thrilled that he knew how to use emojis. He went on to tell me that four of them have become close, personal friends. I think it just documents this point I'm making about how searching for mentors and leaning on mentors is a never-ending task.
Four: Embrace peers in your field. Develop a relationship with them. Have discussions. Have arguments. This is a way you learn. This is a way that ideas get shared. This is a way you hone and innovate ideas. This is one thing I wish someone had told me. When I got to MBA school everybody said, “Network, network, network,” and I thought it was a social activity. I thought they were telling me, “Oh, you need to develop your social skills,” and they want me to randomly talk to people that I have no similar interests with. What I've come to realize is, no, it's not about that. It's about connecting with the people that you have the most overlap with because you'll be able to help each other along the way, along the journey.
Always share best practices and don't worry about giving any proprietary knowledge. It's a good trade. It's just smart. If you get caught in worrying about it, you're going to fail to advance. The activity of sharing with mentors and peers will lead to so many positive things that help you go up, that whatever the negative costs are aren't going to come anywhere close. Celebrate your peers' accomplishments as if they were your own. Cheer them, send them notes, be happy for them. That will come back to you in spades.
Then, lastly, peers don't need to be in your exact field. Bobby Knight had sat down with a swimming coach and got knowledge. Some of the entrepreneurs I work with and CEOs find that it's more interesting to go to a conference on a topic that's a little bit far away because they get more innovative ideas that they can bring back to their field. It doesn't have to be this close. It can be spread out.
Now, most of you know that this is the way you're supposed to network online, and you should certainly have a LinkedIn profile, and you should certainly connect with people. I'll give you one piece of advice, which is, I'd be a little stingy with who you link to. I have a rule where I only want to link to people that I would call and trust their advice because then when I'm searching for a candidate that I want a reference on or something I don't get random answers. I get people that I know I'm going to use. I think people over proliferate their LinkedIn account.
But, and for those of you who were here yesterday, I think there is a much more incredible resource, not an alternative, you should do this and Twitter. Twitter is the most amazing networking and learning network ever built. For someone that's pursuing their dream job or chasing a group of mentors or peers it's remarkable. In any given field 50% to 80% of the top experts in that field are in Twitter, and they're sharing ideas, and you can connect to them and follow them in your personal feed. If you get lucky enough and say something they find interesting they might follow you. The reason this becomes super-interesting is that unlocks direct message. Now all of a sudden you can communicate directly electronically whenever you want with that individual, very, very powerful. If you're not using Twitter you're missing out. I don't even own any shares anymore.
Last one, this should be obvious to people, but always give the majority of the credit to the other people that helped you up along the way. One, it's the right thing do to, and, two, it'll keep you from being an asshole when you're successful. I find all the greats do it. It's the right thing to do. Send letters, send gifts, anytime you accomplish something in your career take the time to send messages back to the people that helped you.
I'll tell you a personal story that's quite serious that'll help reinforce this. My favorite professor when I was here was Jim Fredrickson who, many of you know, passed away this year. Along the way along my journey three or four times I took the time to write him a letter, send him a note, send him a gift and tell him what an impact he had had on me. When he passed I didn't have all this anxiety like, “Oh, I didn't get a chance to tell him.” I took the chances to tell him, and I would encourage you guys to do that type of stuff along the way.
Then, lastly, eventually you've got to pay it back. You become the mentor, people start reaching out to you. Make sure you take the time. Here are a few examples of that. This is Bobby Knight. Shortly after one of his sessions with Pete Newell and the next year Indiana's playing one of Pete's teams. They end up in a tournament together. Bobby uses the stuff that Pete taught him and beats Pete on the field. He recalled that notion in the book, and he said, “You know, if Pete was willing to do that for me, I've got to do it for everybody else.”
Let me show you statistically a little bit of the impact of what Bobby did later in his career. This is from Wikipedia. These are Bobby's former players that are coaching either D-1 or NBA, and this is his former coaches that are coaching D-1 or NBA. It's an immense legacy of people that he developed that went on to be successful. If any deep, deep basketball fans in the room they know that his point guard at Army was none other Mike Krzyzewski, who is one of two people that have now passed him on career wins, 902. Krzyzewski asked Bobby Knight to induct him into the Hall of Fame, which is a moving video you can go watch on YouTube if you're interested.
This is Danny. He's probably the most wonderful human, or certainly one of the most wonderful humans I've ever met in my life. He talks here about graciousness. It's evident in every single thing that he does, how he talks to people, how he treats his staff. His book is worth reading, if you get a chance. As you can see, I'm a huge fan.
Now I'm going to tell you two more stories, if we have time. The reason, once again, that I wanted to talk to an MBA class is because an MBA degree, and when you're here, is an opportune time to chase your dream job. The next two stories I'm going to tell you are more contemporary. They both involve using an MBA program as a way to pivot into success.
Now we're in Marlow, Oklahoma. All these are in the Midwest. Sam is my next contestant. Sam grew up in Marlow. His father worked at Halliburton, which is in Duncan, a little bitty town right near. He went to Marlow High School where he also was a multi-sport athlete. Unfortunately, he was five-nine and 140, so he didn't get to keep playing in college. I'm about to show you the university he attended, and you'll know what to do. There we go. Okay, perfect. He went to the University of Oklahoma, ended up going to Bane. I think he actually worked anybody Bane Capital. He was pursuing his career path like he thought he was supposed to. They relocated in Sydney.
He's sitting in one of these high-rises overlooking the Sydney Opera House, and he hears about this book, Money Ball by Michael Lewis. He reads it in three days. He can't get it out of his head. It's consumed him. He decides immediately, not unlike Danny, in the restaurant that this is what he has to do. He starts applying to business schools. He gets accepted at Harvard and Stanford. In deciding which one he's going to go to he goes and he asks for tons of meetings with the schools, and he tells him what he's going to do, “I'm going to get a job in sports analytics, come hell or high water.” He claims Harvard looks at him like he's crazy. The Stanford staff says, “Come on. That'd be awesome. We want to introduce you to everyone that we know.”
He shows up at Stanford Graduate School of Business. Lo and behold, they have a sports management class. Lo and behold, Billy Bean from the Oakland A's and the Money Ball book is speaking his first semester. He gets to know Billy Bean. Billy Bean introduces him to Michael Lewis. They start spending time together. Michael lives in Oakland. The school lets him get to know people at the Niner's organization, and at several sports organizations all over the country. He combines it with hard work. He says he sent a hundred letters out to get summer interns. He ends up with one at the Texans. When he gets back from that Michael Lewis asks him to come over and talk football because he's working on the Blindside, so he helps Michael Lewis on the Blindside.
Eventually he gets a job with the Houston Rockets. He spent two and a half hours with Lex Alexander. Lex hires him at, I believe, 27 years old. Nine months later the Rockets hired Daryl Morey, and the two of them worked together for seven years, I think, and built the best basketball sports analytics department in the country. Daryl won executive of the year last year at the Rockets.
At age 35 Sam Hinkie's named general manager of the Philadelphia 76ers. This is, what, like nine years after he read Money Ball looking over the Sydney Opera House. For those of you that know the story, there's some good and some bad. Sam and Daryl had spent a lot of time studying the ways you could turn a program around. I've had long discussions with Daryl about it. It's fascinating the way they think through it. If you're in a particularly tough spot, the only way to do it is to shed your talent, improve your salary cap room, let your young players get tons of playing time, and win through the draft. Now, that's the plan Sam took, and like any good entrepreneur or business person he told all his constituents, “It's about the long-term, not the short-term. You've got to stay with me on this.” He wrote tons of letters. He's very thoughtful. He's very smart.
That strategy led to three of the worst seasons in the history of the NBA, but it also led to the drafting of Joel Embiid, who has become a close, personal friend of Sam's. Some of you may know the rest of the story. Eventually, the ownership got tired of this strategy and cut ties with Sam. About that exact same moment in time everything started getting better, and they started winning. There were a few fans that supported him along the way, and there were signs that are way worse than this one, “Now we're stinky, but I trust Hinkie.”
Today, for those of you that know, Vegas has the Sixers as the number-two team in the East right now. This is Durant. I chose the Texas jersey on purpose instead of the Warriors, talking about how they're the team to watch. Barkley goes further. He says if they stay healthy this will be a team to watch for 10 years. Three years are bad, 10 years are good. That's a pretty good trade if you're willing to make it. Not everyone was able to make it. Sam now is, especially in basketball circles, I hope he never goes back to basketball because it'll be more legendary that way. This phrase, this meme is now an internet meme that's outside of basketball, but some of the players started using this phrase when they were losing games and people were upset, “Trust the process.” No one used it more than Joel, and no one's a bigger fan of Hinkie's than Joel, which frustrates the ownership to no end. They're still missing a GM right now. They're having trouble finding one.
This is the new meme, which is a little more aspirational. During the draft when they drafted Ben Simmons there's a video on the web of a sports bar in Philly where they got everyone together for the draft. Before the draft they raised a banner of Hinkie and retired it. Joel won't stop, so this last year. Hinkie, I think, in a little bit of a jab, the Astros, for those of you who don't know, was also an analytics turnaround. When the Astros won last year Hinkie wrote, “I love it when a plan comes together.” Then Joel threw both memes back, “Trust the process. He died for our sins.” Then someone in Philly did this. This is a little over-the-top. You've got the resurrection with the players. I think it's an amazing story. One fun part about this, Sam's now back at Stanford. He's teaching two courses there. He may play two separate dream jobs. He's hanging out with startups, venture capitalist, and he may do it all over again, which I think is really cool.
All right, last one. This one's very near and dear to my heart. There's an executive I work with named Katrina Lake. She grew up in San Francisco, but she went to high school in Minnesota. I use the map of Minnesota so they could all be from the Midwest. I like that story better. This is the high school she went to. She went to Stanford, thought she was going to be premed, ended up not liking it very much, got an economics major. Went to work at a consulting firm called Parthenon. They had a number of clients in the retail and fashion space. She noticed that she had an affection for that and started hanging around those clients and focusing on those clients.
While she was visiting those places she kept asking herself questions like, “Why does this work this way?” She told me she was in a department store, and she's like, “Why are these clothes out here? Why isn't there just like one here, and you press a button and then it's put into your dressing room because you keep all the inventory in the back where you could stack it better?” She just kept saying, “Why? Why? Why? Why is this stuff organized this way?”
Finally, she decided, “I'm going to go do something about this,” and she came up with a notion of a company that would be a personal shopper for everybody. She didn't quite know how to launch it, so she decided to use her MBA program as a way to launch it. She told me that she planned to graduate, but not a much higher bar from a classroom perspective, but she wanted to use the platform as a way to build a company.
She ended up at Harvard. The first thing she did was scoured LinkedIn and the alumni directory to find anybody that had anything to do with fashion. She was mostly interested in sourcing and merchandising because she didn't have any knowledge there. She found all kind of contacts in New York. She made personal trips, asked for meetings, not unlike the other people that I've showed you.
Next, she found two founders that had launched startups. This is Joann from Trunk Club and Craig from Shop It To Me, in a similar space, but were a little different. She got them on the phone. She wanted to hear if what she was thinking about was different and better than what they had done because she wanted it to be different and better. There was a professor at Harvard that had run, had been CEO of a retail store named José Alvarez. She started writing drafts of what she wanted to do and got him to push back. At first, he was very skeptical, but she said the back and forth helped her and modified her plan quite a bit.
In the summer she went to, actually, a company we were invested in called Polyvore, which was a social fashion site where people aggregated likes on the web. Sukhinder Singh, who had run a huge chunk of the revenue at Google, was CEO there, so she built that relationship. She also got to study how fashion websites spend time with bloggers.
After graduating, she came to San Francisco to launch her company. She did two things that are miraculous for me from a mentoring standpoint. The first one is she found Eric Colson. He ran all of data science at Netflix. You remember the million dollar prize, all that stuff. That was under Eric. He had recently retired from Netflix and was looking for something to inspire him, and she did. He became an advisor to the company. Marka Hansen was over 20 years at GAP in merchandising, marketing, same story. Katrina found her, Marka was very exited about helping Katrina. Marka's still on the board today. Marka would spend a day a week, a day a month in the early days at the company helping her almost the way an executive chairman would.
She then found two other people, John Fleming was CEO of Walmart.com. Julie Bornstein I worked with back at Nordstrom years ago. She was CMO at Sephora and hanging out in San Francisco. She put Julie on the board. Then a feat I've never seen before, she recruited Eric and Julie off the board and into the company. They both work there. Julie as COO and Eric as head of data analytics, where he is still today. The company has 95 data scientists at a fashion company.
This is her at the very beginning. She's trying to figure out exactly what they were going to do. For those of you that don't know how it works, Katrina Lake runs a company called Stitch Fix. You fill out a 15 page profile about yourself. You give a lot of information, way more information than any other retailer has on you. Then you press a button. A stylist looks at your profile and picks five items. The stylist is sitting in front of a dashboard. There's a keep score for every single item in our inventory for every single shopper that's out there, unique to that individual shopper. As you buy more the data science studies what you like, what you don't like, and that's how the system works.
I was lucky enough to become an investor in this company, even though it has inventory, has a lot of inventory. There's five warehouses today. Along the way as it was starting to succeed this article ran, which was a nice tie to the last one. Forbes called her, “Fashionista Money Ball.” There are certainly elements that would cause that correlation. In her third year she went profitable. She only consumed 20 million dollars of venture capital in the company's life. When we went public there was 100 million in cash on the balance sheet. At year five she hit a billion in revenues.
At age 34 she became the youngest founder, CEO, female founder, CEO ever last fall when we took Stitch Fix public. That's me hiding in the back. I think one thing that really differentiates Katrina, if she were here today, she'd certainly be proud of this story, but I think she's more proud of how she's been able to use the platform to speak out on social change. This was an infographic that they released about a year ago. 31% of the engineers are female, 60% of the board, 62% of the management team and 86% of the entire org. She's not afraid to speak out on topics like this. When we did the bake-off for the IPO she insisted all the investment banks put their diversity record at the front of the pitch deck, every single one of them that came in, and they all did.
These are the five profiles that I shared with you. I would highlight a couple of things about this. First of all, in the first three if I said to you, “Hey.” You say, “I'm going to MBA school. I want to do something inspiring and have a great career.” You wouldn't think I would mention opening a restaurant or being a basketball coach or a folk singer. Those aren't things you would say. Yet, it didn't stop these people from being successful.
The other thing that I would highlight is all five of them, I don't think a single one of them started what they're doing for money. In each and every story they were chasing a passion and a dream that allowed them to want to study, going back to Bobby Knight saying about having the will to practice. They all did it on their own. Danny uses a phrase, “Professional research,” in his book constantly, which I think is an interesting phrase because most of us think about the studying and research we do around curriculum and a teacher. You don't think about if you're in finance or marketing or accounting, do you go home at night and study for yourself, like, to improve your own skillset? Most people don't do that. I think that's interesting.
For those of you who have decided your dream job is consulting, they say you've got to tell them what you're going to tell them, tell them, and then tell them what you told them, so this is for you. Pick a career about what you're passionate. Be obsessive about the learning. Lean on mentors, lean on peers. Give the credit to someone else, and pay it forward. For those into music, that like music, you know I stole the title of this speech from Tom Petty who, unfortunately, passed away this year. He was once asked what advice he'd have for people if he were giving it. While it's not as ambitious as what I've told you, it's almost the exact same thing on the exact same vector. I'll let you read that yourself. That's it. Thank you for allowing me to do that. I really appreciate it.
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