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19 Trailblazers Who Are Changing Your World (Some You Know and Some You Don’t—Yet) http://kwhs.wharton.upenn.edu

19 Trailblazers Who Are Changing Your World (Some You Know and Some You Don’t—Yet) © 2013 by Knowledge@Wharton

Knowledge@Wharton The Wharton School University of Pennsylvania 332 Steinberg Hall-Dietrich Hall Philadelphia, PA 19104

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Design by Lara Andrea Taber Contents

Introduction...... 5

Millionaire at 25: Jack Abraham on What It Takes to Be a Successful Entrepreneur...... 7 Generation Microfinance: Charlie Javice Believes in the Power of Students to Alleviate Poverty ...... 13 Serial Tech Entrepreneur Sachin Rekhi: Relationships Build Careers ...... 20 Chipotle’s Steve Ells: How a Classically Trained Chef Reinvented Fast Food...... 26

The Salwen Family: Doing Good, with the Power of Half...... 32 Roger Farah’s Strategy for Polo Ralph Lauren: Weaving “Left Brain” Discipline with “Right Brain” Creativity ...... 41 Pfizer’s Amy Schulman on What Women Need to Succeed in Their Careers ...... 46 Magic Johnson: Dominating the Business Arena After a Stellar Basketball Career ...... 51 Entrepreneur Elon Musk: Why It’s Important to Pinch Pennies on the Road to Riches ...... 55 Aramex’s Fadi Ghandour Unfolds His Roadmap for Budding Entrepreneurs in the Middle East ...... 60 Shokay’s Carol Chyau: Weaving Connections Between Herders and Knitters in China ...... 66

3 Joss Whedon’s Plan to Monetize Internet Content (Watch Out, Hollywood)...... 74 Vivek Ramaswamy: Breaking Down Barriers to Entrepreneurship ...... 86 Seth Goldman: Brewing Organic Tea with a Mission-based Business Model...... 93 Kareem Abdul-Jabbar: “The Things That You Achieve, You Achieve As a Team” ...... 99 Maria Mahdaly: Succeeding as a Female Entrepreneur in Saudi Arabia ...... 103 Under Armour’s Kevin Plank: Creating “the Biggest, Baddest Brand on the Planet” ...... 110 Tal Dehtiar: Looking for “Profit with a Purpose” from Socially Conscious Footwear Customers ...... 115 Seth Berger’s Full Court Press: Building a Company from the Ground Up ...... 120

About Knowledge@Wharton High School...... 131

4 Introduction

oday’s leaders are blazing trails in every industry, from fast food, Tfashion, and footwear to social entrepreneurism, philanthropy, and pharmaceuticals. If you’re considering heading down a specific career path, planning to start a business, or looking for leadership inspiration, there’s nothing like getting the lowdown from the people who have been there and done it. The editors of Knowledge@Wharton High School have selected 19 leaders (some you know and some you don’t—yet) who have learned a lot on their journeys—and have a lot to share. Drawn from some of the most engaging articles and interviews that have appeared in Knowledge@Wharton, this inspiring ebook offers wisdom and insights that will open your mind about the possibilities and the challenges of blazing a trail. Explore Jack Abraham’s qualities of a successful entrepreneur, including possibly the most important—the ability to sell. Learn about Steve Ells, a classically trained chef, who went against the grain of what people expect from fast food and started a restaurant called Chipotle, which now has more than $1 billion in revenues. Find out why the Salwens sold their home in order to invest their wealth for a social return rather than a financial one. Read about how Maria Mahdaly has overcome the challenge of being a female entrepreneur in Saudi Arabia to help other young women start businesses. Discover how Magic Johnson challenged people’s expectations to reinvent himself as a businessman after a top-notch career in basketball. Learn how an inconvenience inspired Kevin Plank to start Under Armour in his grandmother’s home after completing his football career. Read about how Carol Chyau has found a way to improve the lives of poor herders in remote Western China and women knitters in rural Shanghai by directly sourcing yak fiber and selling the finished products internationally. Meet Roger Farah, chief operating officer for Ralph Lauren, a company that is thriving despite the economic conditions. These leaders and others are sure to inspire you on your path. Enjoy!

5 19 Trailblazers Who Are Changing Your World Millionaire at 25: Jack Abraham on What It Takes to Be a Successful Entrepreneur

ack Abraham, 25, is a successful entrepreneur. In 2008, he left Wharton to Jfound Milo.com, a shopping engine that searches local store shelves in real time to find the best prices and availability for products of all kinds. In December 2010, eBay bought Milo.com for a reported $75 million. Today, Abraham still runs Milo.com, which is a unit within eBay, and he is the director of local for eBay marketplaces, which means that he develops the company’s position in integrating online and offline commerce. Abraham spoke with Knowledge@Wharton High school from his office in San Jose, Calif., about the triumphs and challenges of entrepreneurship—starting with his days at Langley High School in McLean, Va.—and what it takes to succeed.

An edited transcript of the conversation follows.

Knowledge@Wharton High School: How long have you been interested in starting your own business?

7 19 Trailblazers Who Are Changing Your World 8 (Some You Know and Some You Don’t—Yet)

“If you never give up, you have a 100% chance of success because eventually you’re going to get it.”

Jack Abraham: Since I was pretty young. I grew up in an entrepreneurial family and saw my parents start some cool businesses [Jack’s dad is Magid Abraham, founder of comScore, an Internet marketing research company]. I fell in love with the Internet and data and what was possible with both. I started a couple of businesses in high school and one while I was in college and then did Milo after that. I also had some failures, which is important because I could learn from them. Failures are one of the key ingredients to success. Look at Vinod Khosla [co-founder of Sun Microsystems] or even Steve Jobs [of Apple]. They had a series of failures that they were able to learn from and that ultimately helped them achieve success.

KWHS: What businesses did you start in high school?

Abraham: One was an SAT and AP prep tutoring company. The idea was that Kaplan and all these other companies charge you an arm and a leg for these classes to prepare for the SATs and APs, but the people who instruct the classes haven’t gotten into a great school themselves; they’re just going by a book. I tried to build a network of really smart tutors who might or might not have taken these classes and were willing to work with students in the Northern Virginia area. I learned the value of having a brand behind you. Part of the reason Kaplan is successful is not because it has great service; it is because they spend a gazillion dollars on advertising. Everyone knows them and thinks that they offer a high-quality service. It was a great business for high school. But it was never able to scale into a really big success. I also started a business making custom computers. We would talk to companies and ask what most of their people would be doing on the machines, and then optimize the machines for that use and sell to them. We got some good clients, but I learned that there were so many boundaries to scaling that business. You need business development, sales, longer lead times with businesses. It was a great idea, but it didn’t catch on. It teaches Millionaire at 25: Jack Abraham on 9 What It Takes to Be a Successful Entrepreneur

you a bunch of things about the approach you take, what companies you want to start and what companies you don’t want to start.

KWHS: Why did you start Milo.com?

Abraham: I wanted to start a big, consumer-based business that solved a pain point that people were facing. There was a lot of innovation happening in web 2.0 in social and video and other segments of the web that were being reinvented. Interestingly, shopping seemed totally stagnant and stuck in a web 1.0 world. So I got to thinking about what was happening in commerce and where shopping was going. One big trend was the Internet’s ability to drive offline behavior. I had this hunch that just like the Internet was starting to influence social interaction, it was also going to influence commerce in the real world in a very real way. I thought, “What if you start using the web to drive people into the store?” It’s a win for the consumer and a win for the store because they need more sales and foot traffic. We also discovered a really big pain point there. People loved looking at reviews, pictures and descriptions online, but they had a difficult time figuring out what was in stock right then at a store nearby, and who had the best price. The state-of-the-art at the time when we were founding Milo was literally calling from store to store to check inventory and/or driving around from store to store. In that scenario of people calling store to store, it’s literally a human looking at a computer screen and picking up the phone to talk to another human looking at a computer screen. There had to be a way programmatically to eliminate the need to do that. I left school early in 2008 to move out to the West Coast and start working on building Milo full-time. We had some early traction with five merchants, which was great in terms of validating the service.

KWHS: How did you start a business right when the recession was hitting?

Abraham: We were hunkering down for about six months on figuring out the product and distribution. And then the economy started tanking. That 19 Trailblazers Who Are Changing Your World 10 (Some You Know and Some You Don’t—Yet)

was a scary time to be running a business. It went from everything getting funded and high valuations and easy to raise money, to literally no one investing. Prior to this supercrash, I was fortunate enough to meet Keith Rabois, one of the early PayPal guys, an early investor in LinkedIn, Yelp and YouTube, and the COO [chief operating officer] of Squared. After two weeks of him ignoring me … I managed to get a meeting with him. Within 10 minutes of meeting me, he decided he wanted to invest. He introduced me to the co-founder of YouTube, Jawed Karim, who also decided he wanted to invest, and Kevin Hartz of Eventbrite, who also wanted to invest. I was getting very close to closing an angel round [angel investor] with them and the stock market started going down 5% a day. By the end of the week, the stock market had gone down more than 25%. This was the exact same week that Sequoia Capital, one of the best venture capital firms [in California], sent out a memo to all their portfolio companies with a big picture on the first slide of a grim reaper that said ‘RIP Good Times.’ Still, we pushed through and closed that first angel round [of financing] with Keith, Kevin and Jawed. The money was valuable, but what was really valuable was their time. They had a ton of success with business-to-consumer web companies, and I figured there was a lot to learn from them. As a part of the round, I negotiated spending an hour with each of them every Friday where I could tell them about what was happening in the business and get the chance to learn from them. That was an amazing experience for me. Kevin is this great serial entrepreneur who gave me advice on recruiting, setting a culture and setting goals and metrics for my team, raising money, positioning to investors and getting great advisors. Jawed was the tech and product guy who figured out YouTube. Keith was great with strategy, product, all across the board. I was like a sponge. We were able to build a great team. Before long, we were able to get about one million people a month using our product. During the four-month period in 2009 when we went out [to get further financing], we were one of four early-stage consumer Internet companies that got funding. A lot of people would have thrown their hands up and quit, but we still managed to pull it off and get that round done. We grew the retailer network and a great distribution network across the web. Millionaire at 25: Jack Abraham on 11 What It Takes to Be a Successful Entrepreneur

Big companies, everyone from Google, Microsoft, Yahoo! and eBay, started reaching out to us for partnerships. Through that process, we got to know a lot of companies very well, and eBay bought the bigger picture vision of what we were going after. We realized that there was so much more we could do if we joined forces, rather than a simple partnership. We weren’t looking at all to sell the business, but they made us an offer and we decided that was the best path for the company.

KWHS: Has it been difficult to give up some control of Milo to a bigger company?

Abraham: It’s really hard to go from a team of 25 or 30 core people to a company of 15,000. It’s a big transition. I had never worked for a big company before. Just like there is a lot of learning to be done to run a start- up company, there is also a lot of learning that needs to be done to be successful at a big company. EBay has given our team a fair amount of autonomy. We have our own house on eBay’s campus, which everyone calls the Milo House, and we’re still able to set most of our own direction. We’re plugged in at the right level of the organization. Sometimes when companies get acquired, they end up seven rungs beneath the CEO and can get lost in the shuffle. That’s when bad things can happen and companies get shut down. I have an awesome boss, Dane Glasgow, who is a brilliant guy. He dropped out of Cornell to found a company and sold it to Microsoft, and started a company after Microsoft that was bought by eBay. It’s been great having him as my mentor and boss because he understands the issues we face. I can still be very innovative within our direct team because that is what we value. Doing things across different business units and sections of eBay as a whole is really challenging. There are a lot more people. You can’t just have an hour-long meeting and then spend the rest of the time executing. A lot of coordination, consensus building and approvals have to happen.

KWHS: What are your top three qualities of a successful entrepreneur? 19 Trailblazers Who Are Changing Your World 12 (Some You Know and Some You Don’t—Yet)

Abraham: Persistence is one. The second would be resilience. Bad stuff always happens. Sometimes it’s in your control and in your domain and you can feel good about that because you can fix it. Sometimes it’s out of your control, like the macroeconomy implodes and the top newspaper sends out a [memo] to everyone in Silicon Valley saying the party is over, nobody gets funding and fire everyone. Or the initial idea didn’t work and it’s not the right time. Being able to bounce back from all those things and never give up is so important. If you never give up, you have a 100% chance of success because eventually you’re going to get it. The third thing is an attribute I’ve found in almost every successful entrepreneur I’ve met. You need the ability to sell. That doesn’t mean being a salesman. As a CEO and founder, you are always selling your ideas and your vision to your team, potential recruits, mentors, advisors, investors, partners. If you can’t sell, you are going to have a really hard time with most of the challenges you face as a founder. If you can sell, you can get a lot of people aligned on your side to a common vision that you want to execute against and galvanize a team toward doing superhuman work to get it done. Sell the idea, sell how big it can be and get great people involved in what you are doing.

KWHS: What about risk-taking?

Abraham: I think entrepreneurs take very calculated risks. They understand the potential benefits and the likelihood they’ll be able to reap them. Some people might think that entrepreneurs take crazy risks, like leaving school early to do a start-up. In my mind, it was the least possible risky thing to do. You have to be willing to put yourself outside your comfort zone and go for it.

KWHS: Where will you be in five years?

Abraham: I enjoy building products that solve pervasive, everyday problems. It’s highly likely that I’ll be doing that as an entrepreneur working on another startup. n Published: November 3, 2011, in Knowledge@Wharton High School Generation Microfinance: Charlie Javice Believes in the Power of Students to Alleviate Poverty

harlie Javice, a rising sophomore at The Wharton School, University Cof Pennsylvania, is founder of PoverUp, an online network that lets socially minded students learn, connect and invest in social businesses and microfinance – the concept that a little money can help poor people start businesses that will lift them out of poverty. In addition to getting high school and college students involved in microfinance through consulting work and internships with microfinance institutions and social businesses, PoverUp also gives individuals the chance to invest in small businesses globally and helps microfinance operators get the money they need to assist individuals and businesses. “I found that microfinance resonated with me, considering that $200 in Thailand, China and Laos, where I had been, makes a difference. You see that impact. We came back and said, ‘Wow, students can really play the most powerful role.’ You don't need a lot of money to do it.” PoverUp, which launched in April 2011, was named one of Inc. Magazine’s “11 Coolest College Startups,” and Javice, who is 19, was one of Fast Company’s “100 Most Creative People in Business 2011.” She spoke with Knowledge@Wharton High School editor Diana Drake for a video about the concept of “financial inclusion,” the true value of a small amount of money, and the technological challenges of building an online platform.

13 19 Trailblazers Who Are Changing Your World 14 (Some You Know and Some You Don’t—Yet)

An edited transcript of the conversation follows.

Knowledge@Wharton High School: We’re here today with Charlie Javice, a Wharton student and founder of PoverUp. Welcome.

Charlie Javice: Thank you, Diana.

KWHS: Please tell us about PoverUp.

Javice: PoverUp is a student microfinance and social business action platform for students to learn, connect and invest in microfinance and social business. In brief, what we do is offer students research fellowships all over the world and internships with different microfinance institutions and social businesses. [We also provide] a whole investment platform for you to invest your money through us and help alleviate poverty. So you could pick projects from around the world that included water, sanitation, microcredit and women’s empowerment as well as [projects] that concentrated on rural areas. You could tailor it for students and what you’re passionate about. All of this is built around a socially minded network for students to be able to share their passions, be able to get that support network. From there, you could plan events—organize a huge grassroots movement—which is what we’re aiming to do.

Knowledge@Wharton: When did your interest in global awareness and activism truly start, and how did that lead into PoverUp?

Javice: Throughout my life, I’ve been involved in community service. At my [high] school, I had already started a Thanksgiving soup kitchen with my brother, Elie Javice, who is going to be coming here next year as well. I had volunteered there for about seven years—loved the experience, and really loved helping people and seeing the benefit it had on Thanksgiving, Christmas and New Year’s. However, I kept on seeing the same people come back. Generation Microfinance: Charlie Javice Believes 15 in the Power of Students to Alleviate Poverty

And I started thinking, ‘How can we make something sustainable so that I don’t see these same faces, so that they can start moving up in the echelon of economic development?’ From that point, I started reading. I had heard about microfinance and started thinking, ‘Oh, this could be really cool. Two hundred dollars can have an impact.’ At the end of my 10th grade [year in high school], I was able to volunteer at the border of Thailand and Myanmar (or Burma). I taught English and got to see all these different entrepreneurial activities. What really struck me there was that a lot of people were asking me, “Why are you teaching English? These people need food. These people need other things than English—water or other basic substances.” And we were sitting there and saying, “Well, if you look at the economy of Thailand, [the English language] is the main driver as far as tourism. If you could speak English, you could get a job.” And it’s really teaching a man to fish from that point on [referring to the Chinese proverb, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”] I came back and wanted to continue my involvement globally. I found that microfinance did resonate with me, considering that $200 in Thailand, China and Laos where I had been, makes a difference. You see that impact. We came back and said, “Wow, students can really play the most powerful role.” You don’t need a lot of money to do it. It’s an investment, so you’re not throwing your money away or getting it back. And you can choose whatever you want [to focus on in the microfinance arena], even if you’re not passionate about financial services, because I know most people don’t grow up as a 4- year-old saying, “I want to do finance.” There are many other ways as far as combining financial services with health care or education, which are so much fun and really appeal to everyone. There’s no excuse not to get involved. As a high school student, what was there to do in this [microfinance] space? I found an outlet at the Penn Microfinance Conference that’s organized annually. I got to meet other past students—notably Sam Adelsberg, who founded LendforPeace, who is really inspiring. I found myself at 17 starting to introduce microfinance clubs [in high schools] and realized it’s such a fragmented movement that we should really get this 19 Trailblazers Who Are Changing Your World 16 (Some You Know and Some You Don’t—Yet)

going and spur it. That’s how PoverUp came to be. I’m so lucky to have an amazing team to work with. And that’s the core of it—having an amazing team, a big idea, and just going for it.

KWHS: At what stage of development is PoverUp right now? How has it grown this year?

Javice: This year has been really busy, I have to say. I was a freshman this year. So I came into college like everyone else with a business, sort of assessing where it was, where it should go and the potential it had. Before I came, I had started writing the business plan in the spring of my junior year, right after the conference. And then it developed from there. We started getting a network of schools, an amazing board of directors, a board of advisors, to really solidify that. Now we’re at the point where we’ve just signed a few partnerships with microfinance institutions. We launched our website beta version. We’re starting to get media exposure, which has been great. And we’re hoping to organize a conference in November and have the first “PoverUp Your World Day,” where you’ll have mobile giving to be able to choose your different projects in microfinance and, hopefully, raise awareness [about microfinance] around the world.

KWHS: Busy year!

Javice: It’s been growing at a really big rate, about 50 schools [joining the PoverUp network] every month or month-and-a-half.

KWHS: Microfinance has come under a microscope recently, particularly after aggressive pressure [on individuals] to repay microloans resulted in 35 suicides in India. What are your thoughts about the strengths and weaknesses of microfinance?

Javice: Microfinance, in my mind, is giving the opportunity to someone who wouldn’t [otherwise have one]. It’s giving loans—financial services— Generation Microfinance: Charlie Javice Believes 17 in the Power of Students to Alleviate Poverty

to a previously unbanked population. So obviously, you look at me as an entrepreneur. I have the opportunity to fail at the same time as I have the opportunity to succeed. And that’s the same for people living at the bottom of the pyramid on $2 a day as it is for me, except it’s harder for people, usually, on $2 a day or under. You look at it from that standpoint, and [microfinance] is financial inclusion—making sure the unbanked get banked and have access the same way I have access to financial services. I think that’s the beauty of microfinance and this movement. It’s based on the essence of fairness and equality. That’s what we’re trying to do here, is build an inclusive system for everybody to benefit from, I would say, capitalism or other things as such. That’s what microfinance is to me. However, right now, as you said, it has been at a tipping point. Where microfinance has built up, there’s been all this fairy dust, and we’ve made all these promises to alleviate poverty. We’ve seen book statements say, “Fifty percent of people who receive loans get out of poverty.” And we’re sitting here like—microfinance alone isn’t the solution. It comes with the infrastructure. It’s not only going to be based on a microcredit loan, per se. You need savings. You need health insurance. You need clinics. You need doctors. You need schools. Microfinance can spur [all of this] because it’s putting money into the system. However, it can’t be done alone. I think managing expectations was where we faulted.

KWHS: Describe your typical week. Are you able to successfully juggle school with all the demands of PoverUp?

Javice: That’s a tough question. I started in high school, and I went to a French school. So with the Baccalaureate—the French Baccalaureate—I was in school from 8:00 until probably 5:00 or 6:00 some days. So my school was great and flexible and allowed me to go for meetings. But it was very difficult. However, my grades managed not to drop. It’s the two things: you need the education to be able to succeed with your business, but at the same time, you need to work on your business. At Penn, I think I found a healthy balance where I’ve been able to take five 19 Trailblazers Who Are Changing Your World 18 (Some You Know and Some You Don’t—Yet)

classes—from classes in the law school to an MBA class last semester—and finish all the Wharton core [classes], hopefully soon—and then being able to do social impact consulting as well. I’m very involved in Hillel [a Jewish campus organization]. So it’s [learning to manage] a lot of different outlets.

KWHS: Describe a couple of the meetings you might have for PoverUp. What is some of the activity side of actually building this organization?

Javice: So the activity side of building this organization—I would say, one, it came through fieldwork. I had the opportunity to intern with PlaNet Finance [a non-governmental organization that aims to alleviate poverty around the world through the development of microfinance] in Buenos Aires and do a lot of fieldwork and see what it was like living on $2 a day and what was needed. I think that’s really important. As far as the typical meetings I would [attend] to build this—wow. This goes from meetings with CEOs of advertising agencies, to PR, to going to meet all these different microfinance institution partners, to flying and speaking at differences conferences—like the University of Chicago Booth’s Microfinance Conference and Microfinance USA. It’s being able to interact with the industry and see all the new research that’s coming out and being able to run around and meet all these students who are interested. That’s my favorite part—the student aspect and the industry professionals who are on the ground are what I love to do and interact with.

KWHS: What is the biggest mistake you’ve made in developing PoverUp, and what have you learned from it?

Javice: The biggest mistake was technology outsourcing. I think that is a very intricate detail. Yes, we did have some help from people at Oracle, and they found a team in India. However, technology—just assume it always takes longer than what you initially thought it would. So always budget in a few more months, and then I think you’ll be fine. From that standpoint, being able to manage that and having more manpower than you think you need in case something happens is where you really need to be careful. Generation Microfinance: Charlie Javice Believes 19 in the Power of Students to Alleviate Poverty

As far as other things I would say I’ve learned from PoverUp that weren’t necessarily mistakes—it’s very particular working with students, as you know, because [of our] schedules. We have finals. We have midterms. We have our other activities and extracurriculars. And either in high school or in college, it’s the same thing. It’s the opportunity cost of time—how much we’re willing to put in it and how much we aren’t. And it’s being able to juggle that, as you mentioned previously, when I discussed my weekly schedule. Not a lot of sleep.

KWHS: Why are today’s young people such a powerful tool in global change? You talked about loving your work with the students. Can you make a difference? Can young people make a difference, truly?

Javice: Of course. I mean, we’re doing it right now. So why can’t you? [is really the question to ask]. People these days value students; we’re starting to become assets and value-added. You go to all these companies [we work with through PoverUp] and they’re like, “Of course we’ll take consultants. We’ll take interns.” It’s really just a question of pushing for it. Especially when you are dealing with not only domestic issues, but abroad, a small amount of money goes a really long way. It’s about giving the opportunity to other people, and it ends up benefiting you as well. So it never hurts. And really, starting with $5, you could have [a meaningful] impact. I think that’s the most powerful part. n Published: July 20, 2011, in Knowledge@Wharton High School Serial Tech Entrepreneur Sachin Rekhi: Relationships Build Careers

few years back when Sachin Rekhi was working for Microsoft, one of Ahis management mentors taught him the value of walking the halls. “She used to tell me that I had these great ideas, but that at a company like Microsoft the ideas are worthless unless you can socialize them with your team and convince them of their value,” he says. “She helped me realize how to spend time building relationships through small and simple tactics.” So every morning, Rekhi would walk the halls to say hello to two or three people – a way, he adds, “to keep those relationships warm.” “Research shows that in terms of business relationships, the weak ties are the most important.” As a young technology professional, Rekhi, 28, learned that strong business relationships were as critical to the success of his career as the skills he had developed. With that idea in mind, he and his wife, Ada Chen, founded Connected in 2010, a contact management service to help people

20 19 Trailblazers Who Are Changing Your World 21 (Some You Know and Some You Don’t—Yet)

manage their relationship networks. They sold Connected to LinkedIn, an online network of professionals, in October 2011, and today Rekhi is the principal product manager at LinkedIn running the Connected team, which also includes Chen as the head of user growth. Before founding Connected, Rekhi fostered many business relation- ships. He was the co-founder of Anywhere.FM, a cloud music service that he started after leaving Microsoft and sold to imeem, a music and video sharing site, in 2007. After working with imeem for a few years, he was asked to join Trinity Ventures, a high-profile venture capital firm in Silicon Valley, as the entrepreneur-in-residence, where he was given resources, time and help to figure out his next start-up idea. Rekhi, a 2005 University of Pennsylvania graduate who studied both computer science and finance, spoke with Knowledge@Wharton High School about maximizing the potential of business relationships.

An edited transcript of the conversation follows.

Knowledge@Wharton High School: Why are relationships so important in business?

Rekhi: In the business world, so much that happens is because of the teams that you are working with and the relationships you are developing. Individuals don’t accomplish much in business; it is usually through the work of a team. In entrepreneurship [as in] any company, if a team gels well together and complements each other in terms of skills, it becomes an accelerator of the individual people within that relationship. The business relationships you have and maintain will help you get your next job, get key customers and hire the people you need to be successful in your company. All of these activities are more about the people you know and the relationships you’re able to maintain than anything else. One of the key nuances about this is that often people are very focused on their strong ties—their friends, their colleagues, their family. Research shows that in terms of business relationships, the weak ties are the most Serial Tech Entrepreneur Sachin Rekhi: 22 Relationships Build Careers

important. These are the people who have been a part of your life at some point, but that you are not proactively talking to every week or every month. Maybe it’s somebody you worked with at your previous company whom you are no longer working with. Keeping that weak tie warm is really helpful to your business success.

KWHS: What is relationship management?

Rekhi: Relationship management is all about the tactics and best practices you employ to proactively manage your relationships in your life. You can do it in a personal setting or a professional setting, but most people are doing it in both. The key thing about relationship management is the management piece. A lot of people use Facebook and LinkedIn to stay up with what is happening with their friends, but that’s not the same as proactively managing those relationships.

KWHS: How does social networking help us connect with more people, and how does it hurt that goal?

Rekhi: Social networking is by far the most exciting thing in terms of helping professionals manage the vast number of relationships they need. By having tools like Facebook, Twitter and LinkedIn, you can now stay up to date on what is happening in people’s lives much faster and much better than before. It’s amazing that I can go to LinkedIn and see that one of my college friends has switched jobs, or I’ll go to Facebook to see when one of my friends is in my city. Having that kind of information is amazing because you don’t have to call your friends up; you can get all that information online. At the same time, that also creates a lot of chaos. There’s just too much information to keep up with nowadays. We all have thousands of friends on Facebook and LinkedIn, and it becomes difficult to keep up with everything that is going on. We need a set of tools to help us prioritize the time and effort that we spend on these to proactively manage our 19 Trailblazers Who Are Changing Your World 23 (Some You Know and Some You Don’t—Yet)

relationships. Right now, when you go to Facebook, you read your feed, but that doesn’t help you focus on the people who are most important to you. You are losing touch with the people who aren’t posting as frequently. Part of our goal with Connected was to build a set of tools that helps you more proactively manage your relationships on these services; to figure out who is most important to you out of all the friends you are engaging with, and spend your time focusing on those relationships. For example, here is a set of people I want to make sure I talk to every quarter or at least once a year, and then telling you when there has been a gap of a year since you have had any communication with them. It helps you get back in touch with people whom you have lost touch with.

KWHS: How have relationships helped advance your career?

Rekhi: After I finished at imeem, I spent some time with a variety of venture capitalists to talk about opportunities I wanted to pursue. I became very close to Gus Tai at Trinity Ventures on both a personal and professional level. I would talk to him about my ideas, and he would give me feedback. He is the one who offered me the entrepreneur-in-residence opportunity at Trinity Ventures. That close relationship I had developed six months prior with Gus is what made it possible for me to have that role at Trinity and to launch Connected. Now fast forward to 2011, when LinkedIn purchased Connected. This happened because of a relationship that Ada had through her former employer, Mochi Media [in San Francisco]. The vice president of business development at Mochi Media knew some folks at LinkedIn and he’s the one who gave a positive intro to Ada and me to reach out to LinkedIn. Ada had left Mochi Media to start Connected with me, but she did it in such a way that everyone had a very positive reaction to her leaving. She maintained great relationships with everyone there.

KWHS: So there is something to be said for keeping past relationships strong and positive. Serial Tech Entrepreneur Sachin Rekhi: 24 Relationships Build Careers

Rekhi: Definitely. When you look at some of the most successful teams inside a company, they are usually composed of groups of people who have worked together in previous companies. Even here at LinkedIn, our CEO is from Yahoo and has brought a lot of his senior executives from Yahoo to join us. He knows he works well with those guys. I have this practice called a draft pick. In the sporting analogy, you always have your draft picks of the people you want to put on your team. Anytime I have a job or a role, I always think about the people who are my draft picks. If I were to start a company, who are the people on the team I’m currently working with that I would love to have work with me again? I actually tag these people as draft picks within Connected, and these are the people I know I need to stay in touch with throughout my career. I have everyone from people I was study buddies with in college to people I worked with at Microsoft, imeem and Everywhere.FM. I focus my relationship management efforts on them to make sure we stay in touch.

KWHS: What are a few ways that people keep their relationships warm?

Rekhi: Spend five minutes every morning reaching out to one person in your network who you don’t normally interact with on a daily basis. Post on their Facebook wall, say happy birthday, congratulate them on recent events in their life, or just say hi. A simple gesture goes a long way to keep a relationship warm.

KWHS: Were you entrepreneurial in high school?

Rekhi: In middle school and at Pittsford Sutherland High School near Rochester, N.Y., I started my first software company called Gumball Software. I made this little product called Vocabulary Master. You had all these spelling tests and you had to know the definitions of words. I made this software program that gave you the definition of a word and asked you what the word was. I actually made it available to a bunch of my friends. I recruited some of my classmates to help me sell it for $5 to other students. 19 Trailblazers Who Are Changing Your World 25 (Some You Know and Some You Don’t—Yet)

I was less focused [back then] on building a business, but instead focused on building products that were useful for my classmates.

KWHS: What advice do you have for high school students about networking and forging valuable relationships?

Rekhi: The big thing is to not let the current relationships you are focused on make you forget the past relationships that are important to you. When you first go to college, it’s really easy to focus on all the exciting new relationships you are making with your new college friends. You can forget about the great high school relationships you had. Every time you move into a new phase of life, it’s really important to reflect and find ways to stay connected to the people who have been important to you, both personally and professionally. You never know when these relationships will be useful to you in the business world. n Published: March 1, 2012, in Knowledge@Wharton High School Chipotle’s Steve Ells: How a Classically Trained Chef Reinvented Fast Food Kendall Whitehouse

t’s a classic variation of the American success story: An aspiring entre- Ipreneur starts a hole-in-the-wall restaurant serving food that’s quick and unpretentious. Pretty soon, he starts a second restaurant, and then a third. Investors flock to the company, attracted to the owner’s relentlessly perfectionist style. Before long, identical versions of that hole-in-the-wall have popped up in food courts and strip malls all across the country. And it’s only a matter of time before this simple fast-food joint decides to take on the world. On one level, that story describes the career of Steve Ells, who in 1993 founded a burrito restaurant in Denver that he called Chipotle Mexican

26 19 Trailblazers Who Are Changing Your World 27 (Some You Know and Some You Don’t—Yet)

Grill. Today, that restaurant is a publicly traded company with $1.3 billion in revenues from some 900 restaurants across North America. On November 14, 2009, Ells formally announced plans for the first European Chipotle, on London’s Charing Cross Road, set to open in the following April. In January 2010, Chipotle announced that it was also scouting potential locations in France and Germany. But, as he made clear in a November 2009 Wharton Leadership Lecture, Ells is not your average chain-restaurant tycoon, a Colonel Sanders in trendy eyewear. And the chain he founded is not your average fast-food behemoth. As such, it provides a case study in whether a firm can thrive even as it spends extra money to honor a set of non-economic values. Ells believes the answer is yes. “Chipotle now buys more naturally-raised meat—antibiotic-free and no growth hormones, and fed an all-vegetarian diet—than any other restaurant company in the world,” he said. “I’m very proud of that, and it’s more sustainable than the mass-produced commodity way.” The chain has also begun buying organic beans and trying to source vegetables locally in-season. “All of a sudden I find myself with this team of 25,000 Chipotle employees who are excited about feeding people really good, sustainably raised food.” According to Ells, “We have an opportunity to change the way people think about fast food, which is what most people in this country eat.” Much of it, he said, is based on the Ray Kroc model and the standard set by McDonald’s. “Now we have a business model that’s based on spending more for sustainably raised foods, and also making a very handsome profit and providing real growth opportunities.” A graduate of the famous Culinary Institute of America, Ells never meant to re-invent fast food. Quite the contrary: Having trained in classical French cooking and apprenticed at nationally celebrated gastronomic landmarks like San Francisco’s celebrated Stars restaurant, his goal was to start his own white-tablecloth, haute-cuisine palace. But restaurant start- ups are costly and risky. So he decided to move home to Denver and open a local version of the cheap, tasty taquerias that he had loved in California. Chipotle’s Steve Ells: How a Classically Trained 28 Chef Reinvented Fast Food

The plan was to use Chipotle as a cash cow to fund the “real” restaurant he dreamed about. That didn’t happen. Opened in an 800-square-foot former ice cream shop, Chipotle was an instant hit, making $30,000 a month. A rave newspaper review followed. The reviewer “said things like, ‘Everything has depth and character, nuance, layers and layers of flavor,’ describing it like it was some fine restaurant,” even though the dish in question was an oversized burrito that came wrapped in tinfoil, Ells noted. “After that, there was not only a line, but a line out the door. We ran out of food.”

Precision Cooking Using cash flow and a loan from his father, Ells opened a second Chipotle, which “blew away the first.” Despite his good fortune, Ells said, he actually felt guilty: He wanted to be a legendary chef, not a hustling fast-food entrepreneur. “So it was like, ‘Okay, I’m going to start just one more, and then I’ll start a real restaurant.’” But the chain’s growth kept putting that off. Eventually Ells chalked up Chipotle’s success to the fact that, unwittingly, he had been treating it like a real restaurant all along. “Every single customer who came through that door was precious,” he stated. “I had to give them a very special experience. I had a small crew. I taught them how to cook. I taught them how to grill the chicken just right and how to make beans—you have to toast the cumin seeds until they just start smoking a little bit, and then grind them in the mortar and pestle— and how to chop garlic so it doesn’t oxidize, so you get a nice, fresh garlicky flavor….It was very precise. We’re cooking burritos and tacos here, but I was applying the classical French chef mentality that I had learned in cooking school. I would throw things and yell, and I had a temper. It was really quite a scene.” Ells, whose chain was on track to add roughly 120 new restaurants in 2009, says he is “opening three real restaurants a week, sometimes four.” The Chipotles that have spread out from Denver still look a lot like the first store, right down to the simple corrugated metal surfaces that Ells installed back when he was doing his own manual labor. It’s been a lot trickier, though, to 19 Trailblazers Who Are Changing Your World 29 (Some You Know and Some You Don’t—Yet)

maintain his fastidious French chef-style control over ingredients and techniques. Much of his disdain for “mass-commodity” ingredients is a question of personal values. Once he became a big enough buyer of pork, he asked to see the facility the meat came from. “It really is terrifying,” he said. “There’s so much exploitation that I witnessed there, not only from the animal- protection point of view.” He was also disturbed by the envir onmental consequences of the waste run-off from the facility—and the public-health implications of having a pork supply kept on low-dose antibiotics to ward off diseases that could spread in industrial confinement. “I knew at that moment I did not want my success to be based on this kind of exploitation,” he said. “So we started buying all naturally-raised meat.” But it wasn’t just a question of being humane. His initial curiosity about the meat supply was actually prompted by the fact that he was unimpressed with the quality. By switching sources, he said, he wound up with a product that, to customers, just tasted better. Ells’ status as the anti-Ray Kroc is not without its ironies. As Chipotle began to take off and Ells began looking for sources of capital beyond family and cash flow, he wound up doing business with a certain global hamburger chain that was looking to invest in new business: McDonald’s. Following an initial investment in 1998, the company held a majority stake as of 2001. By the time McDonald’s divested, in 2006, Chipotle had 540 stores—up from 18 when they first linked arms.

Lords of the Rings “Culturally, Chipotle and McDonald’s are just worlds apart,” Ells noted, joking that his casually-dressed office staff referred to visiting McDonald’s bigwigs as “the rings” because of the jewelry on the men’s fingers. But he described the relationship as productive. “They really liked what I was doing,” he said, recounting how he took executives into his kitchens and commissaries to show them cooking procedures that must have looked extraordinarily cumbersome to a firm accustomed to taking an industrial approach to flavor. One of them, Ells recalled, said the young Chipotle founder reminded him of Kroc. Chipotle’s Steve Ells: How a Classically Trained 30 Chef Reinvented Fast Food

The firms decided to part ways in 2006, Ells said, because McDonald’s was eager to focus on its core business. And Ells was happy he no longer had to navigate the contrasting corporate cultures. “We just didn’t see eye to eye,” he said. Chipotle went public in an IPO that saw its share price double in one day—the second-best restaurant IPO of all time. McDonald’s, Ells added, ultimately made $1.2 billion after putting some $360 million into the chain. Among the major differences with the golden arches: McDonald’s wanted Chipotle to follow its franchise model. Ells—ever the detail-obsessed chef—resisted. “We wanted to own the economic model. You franchise if you want money and people. We had plenty of money for our growth rate, and we had great people.” Ultimately, he decided, the firm was going to grow the way he wanted. As someone with no particular business background, Ells has sur - rounded himself with seasoned pros, although he prefers not to hire top executives with a chain-restaurant background for fear that too much conventional wisdom will seep into the corporation. Four years ago, for example, Ells brought in as co-CEO an old friend named Montgomery F. Moran, whom he describes as an incredible leader of people. “He’s a trial lawyer. And he said, ‘Steve, I don’t know anything about the restaurant business. I can’t do this.’ And I’m like, ‘Perfect….I don’t want another seasoned fast-food executive.’ In fact, I don’t want any of them. I want them to think differently about things. This was one of my big mistakes during the McDonald’s years: I let some of that [attitude] come into the organization….We’re very proud of doing things on our own terms.” One of the favorite innovations with Moran, Ells said, is something called the “restaurateur” program, under which Chipotle managers are designated restaurateurs, a status that comes with significant possible financial benefits. To be a restaurateur, a manager has to have a perfect store—including a top-notch staff. “Every single person on the staff has to be somehow inspired and have characteristics that you can’t teach: infectious enthusiasm, honesty, clean, presentable, good hygiene, fun to talk to, great eye contact, the kind of stuff you look for in a friend,” he said. 19 Trailblazers Who Are Changing Your World 31 (Some You Know and Some You Don’t—Yet)

The result, he added, was that turnover went up as managers looked to rid themselves of subpar staffers who might keep them from becoming a restaurateur. In addition, restaurateurs get a $10,000 bonus whenever one of their staff becomes a store manager. “We want them to assemble a team of high performers,” he said. “The fast food business is plagued with people who are generally low performers….No fast-food chain fires staff. They’re like: ‘Please! Come work!’” Chipotle, with a reputation for better pay than many chains, according to Ells, is also in a better position to replace entry- level staff who have been pushed out. “Chipotle has been built on word-of-mouth primarily, and I think we have developed a good bond with a lot of our customers.” He said that sort of reputation could be extended through social media and a style that reflected Chipotle’s unpretentious stores. The son of a pharmaceutical executive, Ells grew up in Colorado and studied art history at the University of Colorado before switching gears and going to culinary school. He still lives in Denver, where Chipotle is headquartered. And, he says, he still loves a good burrito. The Chipotle mode—with its better ingredients, better staffers and slightly higher prices—is the wave of the future, Ells states, mostly because it matches the health, taste and philosophical priorities of the modern market. “We had a period of extraordinary, double digit same-store growth. I think it’s a testament to what people want to eat. I’m hoping that more companies use Chipotle’s model: Good food and not having preservatives or artificial [ingredients]….I hope it displaces the stuff that’s based on exploitation, not only of the land and animals, but of people’s taste buds and health.” n Published: January 20, 2010, in Knowledge@Wharton The Salwen Family: Doing Good, with the Power of Half Allison Shirreffs

he Salwen family decided that charity begins at home in a big way. They Tsold their home—a mansion in Atlanta—moved into a house worth half the value and donated the rest of the sales price to The Hunger Project and its work to end poverty in Ghana. Then they captured that simple but astonishing saga in The Power of Half: One Family’s Decision to Stop Taking and Start Giving Back, a book that is challenging a growing number of readers to find their own ways to share what they have with others and at the same time draw closer as a family. Stewart Friedman, a Wharton management professor, founder of the Total Leadership community, and director of the school’s Work/Life Integration Project, talked with Kevin Salwen and his daughter, Hannah, a high school junior, in a video interview about about their story of downsizing with a difference.

32 19 Trailblazers Who Are Changing Your World 33 (Some You Know and Some You Don’t—Yet)

An edited transcript of the conversation follows.

Stewart Friedman: You were the catalyst for your family’s decision, Hannah, when you were just 14. How did this come about?

Hannah Salwen: Well, one day I was riding in the car with my dad and we came to a stoplight. I looked to my left and saw a man holding up a sign that said, “Homeless. Please help.” I looked to my right and I saw a man in a Mercedes coupe. I kind of toggled back and forth between the haves and the have-nots of the situation and I said to my dad, “You know, dad, if that man in the Mercedes didn’t have such a nice car then the man over here—the homeless man—could have a meal.” My dad thought about it for a second and said, “Yeah, but, you know, if we didn’t have such a nice car, then that man could have a meal.” So that night when we went home and we talked to my mom and my brother, Joe, about it, my mom kind of in a fit of frustration said, “Well, what do you want to do? You want to sell the house?” And I said, “Yeah. That is what I want to do.” So that is what we did.

Friedman: Wow. Now that must have been a very difficult decision for you as a family to make. It really did transform your family in terms of your having to identify what matters most to you and where you are going to invest your resources. Tell us about the process of decision-making that led you to go through with this impulsive idea.

Kevin Salwen: We spend a lot of time in all of our lives thinking about how to invest money to make more money. But our family had never spent a lot of time thinking about how to invest money in order to make change in the world. So that was a process that my wife, Joan, essentially invented as we went forward. We would get together basically every Sunday over bagels and coffee and as a foursome—the two kids and the two adults—we would do research. We would go through discussions about a series of issues in the world—ranging from sexism to lack of education to lack of water to The Salwen Family: Doing Good, 34 with the Power of Half

poverty—to start to understand our values first and figure out how we wanted to invest our money. After nearly a year of discussion and research, we then voted—one person, one vote. And we decided we wanted to work in Africa with an organization that was very entrepreneurial and very grass roots. There were a whole series of criteria that our year of research took us to and The Hunger Project was the organization we decided to work with.

Friedman: One person, one vote is one of the more striking aspects of your story—your decision ultimately as parents to create a kind of collective decision-making where each of the four of you had an equal voice.

Kevin: That was crazy, wasn’t it? There is an irrationality to selling your house and giving away half of it. There is possibly something even more irrational about saying, “Okay, I’m going to let the hormonal teenagers have exactly the same say as the adults.” But, you know, my wife really insisted on this and it was fascinating because it’s probably the most important thing that we did. What she said was, “Look, who is selling their house? All four of us. Granted we bought the house, but the kids are giving up their rooms. They are giving up their backyard. They are moving just as we are.” To not make this a family project in which each family member has a say would be missing that point, so we completely flattened the hierarchy. One person, one vote. It was possibly the most empowering thing that ever happened for these kids.

Friedman: I’m sure that there might be some parents out there who are thinking that equal votes for children doesn’t quite square with our values and how we operate. I’m sure you must have met with some ambivalence in yourselves about moving to that model.

Kevin: I was nervous about it. When Joan first brought it up I actually didn’t love the idea, in part because I worried about how we would wall it off, not so much in this project but in other respects. How do I let my kids have a 19 Trailblazers Who Are Changing Your World 35 (Some You Know and Some You Don’t—Yet)

say over where we invest $800,000, which is what we ended up doing, and then turn around and say, “No, you can’t use the car.” Or “No, you have to do your homework before you go out with your friends.” I wondered where the boundary would be.

Friedman: So did it become harder to draw those limits?

Kevin: The amazing thing is that as we empowered the kids to make important decisions, they stepped up in other areas of their lives. And we essentially went from dial-up to broadband in the lines of communication. Now if Hannah is going to do something, or does do something, we talk about it. And I can trust her more to make better decisions about those things, like when she is going to drive the car. So I don’t even have to tell her most of the time. But when I do, she does respect that because she understands where I’m coming from because she knows me better and she knows Joan better.

Friedman: So you go through this process of making a decision ultimately to work with The Hunger Project and then travel to Ghana. Tell us what you encountered there and what you learned.

Hannah: When you go over to Ghana with The Hunger Project, you see that it does no hands-on work. They really believe in the Africans. They really believe that the people in these communities are the change agents of their own future. So when we went there, we did no hands-on work. I was expecting to build a well or maybe paint a church or build a school. It was shocking to me that what I was supposed to do was just to connect with the people there and to say, “I believe in you and this work that you are doing is going to change your life.” That’s really empowering for them, knowing that we stand behind them and that we are there for them no matter what. We did go to the opening of a corn mill. My favorite part of the whole trip was seeing how excited these people were over this corn mill—because it meant that their kids, mainly girls, didn’t have to walk six miles round- The Salwen Family: Doing Good, 36 with the Power of Half

trip to get their corn milled anymore, but could instead go to school and get an education. When I was leaving, my dad told me that the mill cost the same as Joe’s braces. At that moment, I knew that we were doing the right thing with our money and that we were really making a difference in these communities.

Kevin: Actually, if you think about it, we did the same thing at home that we were asked to do in Africa, which is to empower people to build their own futures. What is fascinating is the old saying that if you give a man a fish he’ll eat for a day, but if you teach a man to fish he’ll eat for a lifetime. Well, The Hunger Project’s perspective is that the man already knows how to fish. The man just doesn’t have the resources to be able to fish. The man could probably teach you how to fish. And, by the way, if you really want success, the man almost always has to be a woman. The Hunger Project’s focus is very much on women’s empowerment.

Friedman: Why is that?

Kevin: Because if you give a man $10 or a man earns $10, the first thing he will do is smoke some cigarettes, drink a few Coca-Colas, maybe go out for a beer with his friends, and then come back with a few bucks. What the woman will do is make sure the school fees are paid first, primarily for her daughter because the son is usually already taken care of, and then make sure the household is taken care of, and then if there is something left over we’ll have a conversation.

Friedman: This is truly a remarkable example of giving and of sacrifice, but I know that you have said extremely eloquently in the book that the return to you personally and to your family was much greater than the cost. Could you say a bit more about that?

Kevin: To me, it is amazing how we set out to do a little bit of good in the world and that what it has done for our family has been completely 19 Trailblazers Who Are Changing Your World 37 (Some You Know and Some You Don’t—Yet)

transformative. At a time when our teenagers are supposed to be going in every direction, our family has never been closer. There is a trust among us and a connectedness that we never had before.

Hannah: People always ask me, “Do you miss having the cool house?” Of course, I do.

Friedman: Including the elevator to your bedroom?

Hannah: Exactly. It was so cool when people would come over and say, “Come on. Let’s go ride the elevator. It’s my birthday. Please. Please.” But when I think about it, giving up the house is helping 40,000 villagers in Ghana and has helped our family grow closer and have trust in one another and I would make that trade any day.

Kevin: But it’s really important to say that we don’t expect anybody else to sell their house.

Hannah: Especially in this tough economy. We understand that people don’t have the resources to do that all the time. But we do think that everyone has more than enough of something in their lives that they can afford to give away half—and that can be time. Maybe if you watch six hours of TV a week, maybe you cut that down to three hours and then you spend three hours at a children’s shelter. Or maybe you decide to take half of your vacation that you would normally take and use that unspent time and money to donate to the Ronald McDonald house or visit kids in a cancer clinic. It really is all about finding that one thing in your life—whether it’s time, talent or treasure—that you can afford to give away half of.

Kevin: The real key to it is if you can get together with your family or your dorm or your sorority or fraternity and do it collectively, then you get that power that comes from the interconnectedness of your intentional actions. That’s where the personal gain comes in. The Salwen Family: Doing Good, 38 with the Power of Half

Friedman: And you didn’t know that it was coming. That was sort of an unintended byproduct of this amazing impulse that you had to try to heal the broken world.

Kevin: It healed our world. At the beginning, I would have said, “Well, maybe we can help some people in the developing world build themselves a better future.” And we ended up doing that, but also building ourselves a better future.

Friedman: You must encounter a great deal of skepticism from people saying, “Well, you could afford to do that. What you have downsized to is a lot more than what most people have to begin with.” How do you respond to those kinds of criticisms and also the notion of overseas support as opposed to helping the many, many people here in America who could also benefit from philanthropic giving?

Hannah: Well, first of all, this doesn’t have to be about money at all. You don’t need a lot of money to do a half project. It is all about finding anything in your life that you can afford to give away half of, whether that is the clothes in your closet or the amount of time you do XYZ or how much money you have. We had three main reasons for deciding to work overseas. The first reason is that we were already doing a lot of work locally. I work at Café 458, which is an Atlanta restaurant for homeless men. My dad is on the board of Habitat [for Humanity]. My brother loves the Humane Society. My mom and I work at the food bank. And we felt like we also wanted to work globally. But at the same time we did increase the amount of work we were doing locally. The second reason is we wanted to work in a place where our money would really be effective. We wanted to watch the project progress, see how the villagers were benefiting from it and be able to see the improvements that have been made. 19 Trailblazers Who Are Changing Your World 39 (Some You Know and Some You Don’t—Yet)

The third reason is there is no safety net in places like Ghana. They don’t have the luxury of having a soup kitchen down the street or a food pantry two blocks away. They don’t even have health care for tens of miles. So we wanted to work in a place where we were going to have the most impact.

Friedman: So how has this changed your outlook? Kevin, you were a Wall Street Journal editor and a successful writer and entrepreneur. This project now is probably taking up a good deal of your time and energy and opening up all kinds of new opportunities for you. How has your professional identity changed as a result of this transformative experience?

Kevin: What has happened in my professional life is that I have gone from being just a writer and an entrepreneur to being an evangelist because we have stumbled across something that has become very powerful for our family and for the world. So we want to tell that story. We want people to hear it because we think they can do great things with their own communities.

Friedman: How about you, Hannah?

Hannah: Well, I want to be a nurse. I was inspired by the nurses in Ghana and just seeing how much of an impact that they have on their communities. As for the future, I will always find half projects to do. So often in our lives we say, “I wish I could do more.” But there really is nothing to the word “more.” With half, it is so measurable. You can track it. I think that I will be doing half projects for my whole life.

Friedman: Could you give us an update on what is happening in Ghana with the early results of your contribution there?

Kevin: The way The Hunger Project works is they run a five-year program that helps villagers move from poverty to self-reliance. We are in year two with one set of villages and in year one with the other set. So the programs The Salwen Family: Doing Good, 40 with the Power of Half

will be going on for the next three to four years and the villages are on the path to self-reliance. We will go back over there very soon and do all the things that we do when we are there: spend more time in the villages, meet with the people, support them—and dance very badly. n Published: January 12, 2011, in Knowledge@Wharton Roger Farah’s Strategy for Polo Ralph Lauren: Weaving “Left Brain” Discipline with “Right Brain” Creativity

he recession and pullback by American consumers have dealt serious Tblows to the retailing landscape. Yet while some big names have gone under, Polo Ralph Lauren has emerged unscathed from the wreckage, according to company president and chief operating officer Roger Farah, who spoke on campus during the University of Pennsylvania’s Fashion Week, an event co-sponsored by Wharton. “Where others were groaning under the weight of loans and borrowed money and working capital constraints, we continued to invest during the last crisis. We did not take our foot off the gas pedal at all,” Farah reported. To hear Farah tell it, Polo Ralph Lauren’s ambitions have hardly been dampened by the turbulence of the last two years. The $5 billion company is now making a major push into the Asia-Pacific region. After buying back licenses to the company’s products in Japan, China, Hong Kong, Singapore and the rest of Asia, Farah is preparing to build a powerful operation there that he expects will generate one third of the company’s revenues in 10 years. “We are on a 10-year path to reinvent ourselves in Asia,” Farah stated. Succeeding will require the perfect union of what Farah called “left brain/right brain creativity.” And in many ways that is what Farah’s partnership with founder Ralph Lauren has been all about. Started 43 years ago when Ralph Lauren began with a simple line of ties, Polo Ralph Lauren evolved into a mega-brand that represented an almost Great Gatsby-like American lifestyle. The company went public in 1997 but immediately

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stumbled, missing earnings estimates. The stock, which hit the market at $33, was mired in the teens when Lauren hired Farah in 2000. Farah brought a heavy dose of left brain business acumen to Polo Ralph Lauren. Fresh off his job as chairman of Venator Group, the company that would eventually become Foot Locker, Farah began upgrading the less sexy but critical aspects of the business, including supply chain management, technology and distribution. He also began the process of reclaiming control of the Ralph Lauren brand, buying back licenses for the company’s products in Europe and other markets. “We had 1,000 employees when I joined in 2000, and now we have 18,000,” Farah said in an interview with Knowledge@Wharton before his speech. “We developed the management, and we have the balance sheet and talent to run all these businesses now.” Polo Ralph Lauren today is an amazingly complex machine, he noted. “It is manufacturing, transportation and logistics; currency hedging and financial controls, as well as all the things that go into what the customer actually sees.” The company has what Farah described as a pyramid of brands, with Ralph Lauren’s expensive runway collection at the top. That collection, which includes handmade products using the best materials, has limited distribution. Suits, sportswear and other premium items occupy the middle of the pyramid, and products designed for Kohl’s and JC Penney are on the lower rung. The company produced 175 million products last year in 45 countries and shipped them to more than 9,500 different points of distri bution around the world. On top of that, Polo Ralph Lauren handles advertising and store design in-house, requiring a large internal advertising team and an army of architects and design professionals who not only design the stores and displays for the company’s products, but also scour the world for antiques and flea market finds to make those settings unique. “I can stand here with great confidence and tell you nobody who has stood here before me has ever [handled] that kind of complexity,” Farah told the crowd. The level of intricacy will only grow as the company begins its offensive in Asia. Farah is hoping to replicate the success Polo Ralph Lauren has had in Europe. After buying back some core apparel and accessory licenses there Roger Farah’s Strategy for Polo Ralph Lauren: 43 Weaving “Left Brain” Discipline with “Right Brain” Creativity

10 years ago, the company pumped hundreds of millions of dollars into its operations and built a business that had been just a couple hundred million dollars into a nearly billion dollar operation. On April 15, 2010, the company opened a 13,000 square-foot flagship in an historic district in Paris. The progress came despite skepticism that Lauren’s distinctly American image would play well overseas. Farah noted that the brand now portrays less of an American-centric ideal and more of an “aspirational lifestyle” in general. Still, he acknowledged the company is wrestling with how to penetrate the Asian market, a push he said will require customizing some products, from color to fit, for clients in that region. Of all the challenges Asia presents, however, finding the right people to lead the charge is one of the greatest, Farah stated. To build and manage the business he envisions there, Farah calculates that Polo Ralph Lauren will need an army of thousands of people. “We talk about attracting and developing talent, [but] it is easier to talk about than to do.” That’s one reason he advised students in attendance to think about what the growth of Asia means for their own careers. “When I talk to young people at our company, I say part of our strategy is global, and that may mean over time an opportunity for you to work internationally. They all say ‘Great, I’d love to go to London or Paris’. Well yes, but there may be other parts of the world that have opportunities as well.”

Riding Out the Recession Polo Ralph Lauren’s ambitions for Asia aside, Farah also acknowledged that the recession has had an impact on the company. Net revenues for the first nine months of fiscal 2010 were down 4% to $3.6 billion, due in large part to the broad drop in consumer spending. Still, the company’s financial footing is solid with $1.3 billion in cash and short term investments on hand. In February, the company announced full year revenue would decline by a low single-digit rate—better than the mid–single digit figure expected earlier. The turmoil of the last two years is certainly impacting how people spend their money, Farah added. “I think the real change in this is not the wealthy customer spending money differently. It is the customer who was 19 Trailblazers Who Are Changing Your World 44 (Some You Know and Some You Don’t—Yet)

operating on borrowed resources. Whether it was excessive credit card debt or home equity loans, [spending by] the segment of the population that was spending today because tomorrow was going to be better … has changed. I think people will spend more in line with what their real income and prospects are.” And that, he said, will be a long-term positive factor for the U.S. economy. “The U.S. savings rate will go up. I think it had gone negative in 2007 and 2008, which means people were spending more than they were making. The U.S. was the only developed nation in the world [in that position].” Farah suggested that the reach of Polo Ralph Lauren’s brands from high end couture to mass market retailers, like Kohl’s, positions the company well for that shift. “We were already balanced in a way that allowed us to capture changing consumer sentiment,” he noted. “We did not change prices and we did not change marketing or distribution strategies. We obviously managed our balance sheet and our expenses carefully. And we probably shifted some capital to international opportunities. So we are spending proportionally more internationally and less domestically.” While Farah considers himself the left brain discipline to founder Ralph Lauren’s right brain creativity, he also has a true love of the retail world. He told the crowd that back in 1974 when he left Wharton for a job at Saks Fifth Avenue (he finished his studies early but returned in 1975 for the formal graduation ceremony at the urging of his mother), most of his fellow students were headed to Wall Street or consulting jobs. He figures his starting salary—$8,600 a year—was one half to one third of what others in his class were earning. “A lot of people thought I was crazy. I took a path that was unproven and untested.” But Farah said he knew it was the right road for him. “One of the things that was clear to me was I wanted a diversified day….And over the course of my career what has been particularly satisfying to me was I had a hand in marketing, finance, design and distribution.” He insisted that retail was also a great place to test yourself. “Retailing at the time was one of the few businesses where you could operate a fully integrated [company] at 23 or 24 years old. You had product, marketing, Roger Farah’s Strategy for Polo Ralph Lauren: 45 Weaving “Left Brain” Discipline with “Right Brain” Creativity

distribution and a P&L [profit and loss] statement. Here’s your name and here are your results. I thought that was important.” He started out at Saks and was president of Rich’s/Goldsmith’s Department Stores by the time he was in his mid-thirties. After years with Federated Department Stores, including some of that time running Macy’s, Farah left to head up struggling retailer F.W. Woolworth. In 1997, Farah shuttered the remaining Woolworth stores, focused the company on its Footlocker franchise and renamed the business Venator Group. In 2000, he made the leap to Polo Ralph Lauren. Having witnessed the end of a once great retailer like Woolworth, Farah noted that Polo Ralph Lauren’s longevity is a rarity. “I was a student here in the mid-1970s, and unfortunately most of the brands that were important then are no longer in business. Part of the reason for that was they did not properly control the distribution and pricing of their brand.” As for the greatest challenge facing Polo Ralph Lauren today, “Our risk is really in the execution,” Farah said. “While we have executed well to this point, we are looking to do some pretty big things. And as a company I think one of our in- house challenges is [asking whether] we are taking on too much at once.” n Published: May 12, 2010, in Knowledge@Wharton Pfizer’s Amy Schulman on What Women Need to Succeed in Their Careers

t was the early 1990s and Amy Schulman was a young lawyer about to Iconduct her first deposition. She arrived an hour and a half early for the appointment. She readied her Post-It notes and an outline, in case she got nervous and forgot what to say. But when the deposition started, she sat on a chair and promptly fell backwards with her skirt over her head and her legs in the air. Schulman had to pick herself up and move on, with a partner from her law firm watching her every move. In her quest to exert greater influence over witnesses by appearing taller and more imposing, Schulman had adjusted the chair seat to a higher position. But she rotated it from the base so much that the seat became completely unscrewed. The lesson she learned was a simple one: Be yourself. Schulman, now senior vice president and general counsel of pharmaceutical giant Pfizer, shared this and other career insights at the 12th Annual Wharton Women in Business Conference held in Philadelphia. An attorney and former partner at DLA Piper, she joined Pfizer two years ago and led the legal team in the drug maker’s $68 billion acquisition of Wyeth Pharmaceuticals in 2009. The National Law Journal named her to its list of the “20 Most Influential General Counsels” last year while Forbes magazine included her as one of “The World’s Most Powerful Women.” Such a career trajectory might imply that Schulman had it easy, that she always got things right. By her own admission, however, Schulman has made her share of mistakes but said she learned to accept and learn from them. Along

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the way, Schulman rose to a position she never imagined she would attain when she was starting out. As a teenager in 1979, Schulman thought she would spend her life organizing farm workers. But her path to a successful legal career was paved a little bit at a time by two generations of women in her family. Her grand - mother’s family did not have enough money to send the women to school, so Schulman’s grandmother became a legal secretary and ended up marrying her boss, a federal judge. Schulman’s mother married at 20, had two kids, divorced and went to law school at 45. Schulman attended Yale Law School at 28, and about two decades later achieved her current position at Pfizer. While rising through the ranks, she has learned valuable lessons about success. For one, she stressed that men and women don’t need to strive for perfection to do well because no one gets it right all of the time. The key is to acknowledge the missteps and use them to grow, without being paralyzed by the fear of showing flaws. Still, Schulman noted that ambitious women tend to operate in a “dutiful daughter” mode and do everything the employer wants, perfectly. Schulman admitted she felt the same way early on as a young attorney. “I was so scared that if anybody learned I wasn’t perfect I was immediately going to get thrown out,” she said. “We had to get it right. ‘Right’ meant you didn’t make a mistake.” But such a perfectionist mindset can be constricting to one’s career, Schulman pointed out, because there is no chance to learn and mature from the experience of getting things wrong. When a mistake is made, Schulman said, the tendency of many people is to either ignore it and hope no one else has noticed, or to think the error so glaring that it is all anyone can see. Instead, she advised the audience to strive for a balance and see the mistakes for what they are—and remember that everyone makes them. “The ability to say ‘I’ve made a mistake’ … requires a certain level of maturity that I think is particularly hard for those of us who grew up succeeding, because we were really good at making sure everything we did was perfect,” Schulman noted. According to Schulman, women also tend to internalize the dynamics of a situation more than men, and moderating this mental attitude is critical as Pfizer’s Amy Schulman on What Women 48 Need to Succeed in Their Careers

well. She should know: Not only did she rise up the ranks with more male than female colleagues, Schulman also has three sons at home. This experience helped her observe that when men lose a ball game, they say the field was wet or the referee was outrageously unfair. But women say, “‘I let everybody down. I can’t believe I didn’t handle better the fact that the field was so slippery,’” she noted. “It’s the difference between internalizing and externalizing.” Women and men interpret the same message differently, she said, and being aware of this difference can be critically important to thriving in the workplace. Schulman recalled that at one law firm, bosses were less than effusive with praise because that was their style. So at partnership reviews, mid-career female lawyers would be told they were doing OK. Women would react with surprise and disappointment. “[They would say] ‘OK? It’s just OK? What do you mean just OK?’” Schulman said. But the men saw the same message more positively and believed that “Everything’s OK! I’m on top of the world!” Later, when both sides compared reviews, Schulman noted, the men would brag about their stellar evaluations, while the women told the group that they had been judged as mediocre. In fact, they had both received the same message. Schulman suggested that such misinterpretations of messages by women contribute to many female attorneys leaving law firms a few years before they come up for partner. Companies tend to attribute such departures to a female employee’s desire to have a better balance between work and family—something a busy law firm cannot always provide. But Schulman said this pat response to such resignations lets the company off the hook, when instead they should be examining all the reasons behind the exodus. She cautioned that firms should not assume that the choice to leave “takes place absent social context and that women are all happier at home having balanced lives.”

No Perfect Balance Besides, striking a perfect balance between work and home is an illusion, Schulman maintained. At different points in life, one side will have more 19 Trailblazers Who Are Changing Your World 49 (Some You Know and Some You Don’t—Yet)

pressing needs than the other. “They are never in [balance] because they are not equally and perfectly weighted at any given moment,” she noted. “If you try and juggle them that way, then you are the proverbial parent on the soccer field on her Blackberry, and all you’re doing is cheating both.” Women should recognize that whatever choices they make at any given point—be it to spend more time with family or to accept a promotion even if it means working longer hours—are not necessarily set in stone for all time, Schulman said. Be open to non-judgmental conversations about choices between family and career, and realize that these choices may change. Once a decision is made, be at peace with it. “There is no doubt that I am not the parent or the mother I would have been had I been home full-time or even part-time,” Schulman noted. “I’m not sure I would have been a better parent or mother or wife….I just would have been a different one.” But choosing to focus more on one’s career than family does not mean making unnecessary sacrifices for work, Schulman pointed out. When Schulman had her second baby, she was a mid-level attorney at a big Wall Street law firm and hoped to make partner. She took her 13 weeks of maternity leave, but became anxious that she would be forgotten because of her absence. So when Schulman finally went back to work, she was determined to impress. That is why she quickly agreed to go to the Philippines on behalf of her client, Del Monte, which had some cases involving banana plantations. “I didn’t have to do it, but I didn’t know that. I thought I had to show that I was completely back in the game,” she said. “‘Hey, send me to the Philippines. No problem! It doesn’t matter that I’m still nursing.’” Schulman said if one of her staff offered to make a similar sacrifice today, she would tell them to spend time with the new baby. Only if the situation was absolutely critical would she ask them back to work before their leave was over. Schulman advised women to strike that balance as well: Give yourselves permission to take a break. By the time she had her third child, Schulman already was a partner at a law firm. She also could afford a nanny, so she took her youngest on the road with her. But then, something else bothered her: “I actually couldn’t Pfizer’s Amy Schulman on What Women 50 Need to Succeed in Their Careers

see the next 10 years. It just felt like more of the same,” Schulman noted. “So when the Pfizer job became open, I decided that this was something that was going to be more fun than what I was doing. Fun was the operative word.” Whatever one chooses to do, Schulman said, a career ultimately has to bring satisfaction and evoke a sense of passion. When Schulman interviews candidates for a job, one of the main qualities she seeks is enthusiasm. Lawyers who do not show much passion give the impression that they just want to beef up their resumes by working at Pfizer. Schulman prefers applicants who can show genuine interest in the company and the work. “The willingness to challenge and reinvent yourself and to say that fun matters is the biggest driver,” Schulman said. “Find those things that excite you and don’t be afraid to show it.” n Published: November 10, 2010, in Knowledge@Wharton Magic Johnson: Dominating the Business Arena After a Stellar Basketball Career

arvin “Magic” Johnson’s basketball career included five national Echampionships with the Los Angeles Lakers and a gold medal with the “Dream Team” at the 1992 Olympics. But domination on the court meant little when Johnson began approaching investors to launch his first business venture. “Everybody wanted the autograph, but nobody wanted to invest with me. At the beginning, I got turned down 10 times before someone said ‘yes.’ You know what they said? They said I was a dumb jock,” Johnson noted during a 2010 presentation at Wharton. Magic the businessman wasn’t the proposal’s only tough sell. Investors also doubted that there was any money to be made building high-quality movie theaters and restaurants in inner city neighborhoods. Over the past 20 years, however, Johnson has proven he has the acumen for more than hoops. Beverly Hills, Calif.-based Magic Johnson Enterprises now owns or operates gyms, Starbucks coffee shops, Burger Kings, movie theaters and other businesses in 85 cities across 21 states. His Canyon-Johnson Investment Fund has been behind nearly $4 billion in urban revitalization projects that resulted in the creation of 4.5 million square feet of retail and commercial space. Johnson credits his success to having a concrete business plan that he felt passionately about—and an ability to help partners see the potential in urban, predominantly African-American and Latino neighborhoods. “You’ve got to knock on the doors of corporations who have the same mindset as yours, who have the same heart as yours,” Johnson noted. “If I’m

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in New York, I can take [investors] to Harlem, I can take them to the Bronx, I can take them to Los Angeles, and I can take them to the South Side of Chicago. You’re going to have to find a way to touch their heart and spirit.”

Pound Cake and Sweet Potato Pie When Johnson was trying to broker a partnership with Starbucks in the 1990s, he told CEO Howard Schultz that “the growth of his business would be in urban America. He already had [coffee shops] on every street and across the street from each other.” But a boardroom pitch wasn’t enough to close the deal. Johnson invited Schultz to spend a Friday night at one of the 6-foot-9 former point guard’s movie theaters. The visit coincided with the opening night of the Whitney Houston vehicle Waiting to Exhale, and the theater’s lobby and screening rooms were packed. “Our biggest screen had 500 women inside. All of a sudden every woman thought she knew Whitney Houston personally and started talking to the screen,” Johnson recalled. “So Howard grabs me about 20 minutes in and says, ‘Earvin, I never had a movie-going experience quite like this.’ Guess what happened? That got me the deal.” Frappuccinos, lattes and Pike Place Roast are on the menu at a Magic Johnson-owned Starbucks, but there are subtle differences between the former basketball star’s coffee shops and the chain’s other locations. Instead of jazz standards and easy listening, R&B music plays on the stereo. There is extra space for meetings of community and church groups, and bulletin boards where local residents can post neighborhood news and events. “People said there’s no way Latinos and African-Americans will pay $3 for a cup of coffee. Yes, we will pay $3, but we don’t eat scones,” Johnson stated. “I had to take scones out of my Starbucks and put in pound cake, Sock It to Me cake and sweet potato pie—things that resonate with the urban consumer. You have to know your customer and you have to speak to that customer every day.” The strategy to focus on inner city communities was developed by Johnson when he was still playing basketball. Riding high after winning back-to-back championships as a stand-out college, and then NBA, player Magic Johnson: Dominating the Business 53 Arena After a Stellar Basketball Career

in 1979 and 1980, Johnson recalled returning home to neighborhoods of crumbling storefronts, where residents had to travel long distances to shop or eat at chains that were plentiful in the suburbs. “Most of the people who own the businesses in urban America don’t live in urban America, so they take the money to their communities and spend disposable income in their communities. We have trouble in our communities because we do not own the businesses,” Johnson noted. “Now that we put Starbucks there, those same people that live in the community, they spend money there and Mom and Pop stores have more traffic. Now they don’t have to close their doors because people have money to spend at those stores.” In addition to the Starbucks partnership launched in 1998, Magic Johnson Enterprises has also entered into agreements to develop T.G.I. Friday’s restaurants and 24 Hour Fitness locations in targeted markets. The company in 2008 entered into an alliance with Best Buy to help the electronics chain expand into urban areas and strengthen its appeal with multicultural customers. A deal with food service giant Sodexo includes contracts to feed employees of Toyota, John Deere and Disneyland, meaning “Mickey Mouse and all of them eat my food,” Johnson said with a chuckle. Johnson’s investments are run through a partnership with Bobby Turner, managing partner of Los Angeles-based asset management company Canyon Capital. Over two years beginning in 1998, the Canyon- Johnson Investment fund raised an initial $300 million. But Johnson noted that he achieved a 30% return on the initial fund and that it took a shorter period to raise $600 million for a subsequent endeavor. “The returns are everything, and when we returned them 30% on money spent on urban America, when they did not want to invest it initially, it raised a lot of eyebrows,” Johnson stated. “We just closed about a year ago on a billion in cash. It [required] a year because the economy is so bad….There’s a lot of deal flow out there, but a lot of bad deals.”

Earning His Nickname Johnson retired from the NBA in 1991 after announcing that he had HIV. His company’s interests also include a partnership with Abbott Labs to hold 19 Trailblazers Who Are Changing Your World 54 (Some You Know and Some You Don’t—Yet)

educational events and offer free testing in cities with high HIV infection rates. The business’s nonprofit arm, the Magic Johnson Foundation, organizes job fairs, operates community “empowerment” centers and offers college scholarships to minority high school students. “There have already been people who have made millions, so you’re not doing anything that anyone else hasn’t done before,” stated Johnson, whose net worth was estimated at nearly $500 million in a 2008 Los Angeles Times story. “But can you save and touch somebody’s life? Can you help a community get back on its feet? That hasn’t been done before. You can set yourself apart from everybody else if you can do something like that. That’s why I love what I do.” As one of 10 children who “grew up poor” in Lansing, Mich., Johnson often arrived home from late basketball practices to find that his siblings had eaten all the food his mother had prepared for dinner. A high school standout, the athlete was given his nickname by a local newspaper columnist and went on to lead Michigan State to victory in the 1979 NCAA championship. As point guard for the Lakers, Johnson earned three Most Valuable Player awards, made nine appearances in the NBA finals, played in 12 All-Star games and still holds the league record for highest average assists per game. Johnson is the only basketball player to win championships at the high school, college, professional and Olympic levels. Those successes come with a responsibility to give back, Johnson said. “Going down the street growing up, I knew if I turned left that trouble was there. Every time I would come to that street, everybody would say, ‘You’ve got to go that way, young man. You’ve got to go right.’ So I kept going right,” Johnson noted. “Just think of all the ballplayers and entertainers of color—somebody told them to go right, too. So why don’t you come back?...You’ve got to go back and you’ve got to help out. If you can touch and bring 10 people with you, then they bring 10 and then they bring 10 and now the community changes.” n Published: April 14, 2010, in Knowledge@Wharton Entrepreneur Elon Musk: Why It’s Important to Pinch Pennies on the Road to Riches

t 38, Elon Musk has been a co-founder of PayPal, which he and his Apartners sold to eBay for $1.5 billion, and rocket builder SpaceX, which aims to commercialize the launching of payloads into orbit. He is also an initial investor in electric-car pioneer Tesla Motors, where he designs cars in addition to guiding the business, and solar energy company SolarCity, which sells and services solar energy equipment. Musk discusses luck, innovation and the fundamentals of starting a business. In this podcast interview, he tells Knowledge@Wharton the story of his entrepreneurial begin nings and what he learned about the value of pinching pennies.

An edited transcript of the conversation follows.

Knowledge@Wharton: Elon, thank you so much for joining us today.

Elon Musk: You’re welcome.

Knowledge@Wharton: I wonder if you could start with a question about your entrepreneurial ventures. [To] name just a few of them: PayPal, SpaceX, Tesla Motors, SolarCity. They cover quite a wide range—so varied. And I wonder if there is some connecting thread among them or if there is some process you use to think about what kind of ventures you like to take up. What do you look for in these entrepreneurial activities?

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Musk: I guess the common thread would be things that I think will affect the world in some way—in a positive way. That has really been the basis for why I have [been] involved with those areas. [It is] not from the standpoint of ranking … the return on investment or anything like that; or even the probability of success. But just from the standpoint of, “These are things that I think are important and so I want to help make them happen.” That’s how I got into the Internet initially and then electric cars and space and solar power. But, yes, when I was in college there were three areas that I thought [were important to] the future of humanity and those were: the Internet, clean energy and space.

Knowledge@Wharton: Let’s … go back a little bit before you entered college. I’ve read that your very first venture was at age 12 when you created something called Blast Star. Was that the game?

Musk: Yes, Blast Star. It was just a computer game.

Knowledge@Wharton: Can you tell us about that experience? Did you learn anything from the [effort] that has stayed with you through your [entrepreneurial career]?

Musk: I would downplay that. My mother likes to talk about that, but when I was growing up in South Africa, computers—personal computers—were just starting to come out. This was in the late 1970s and early ‘80s. I had actually one of the first computer game systems. It was pre-Atari, very primitive. And then [I] upgraded to the much more sophisticated Atari. So I loved playing computer games when I was a kid. My motivation to do some software programming was [that] I also wanted to create games. So I saved up money—some combination of saved money and bugging my father—[and] I got to buy a computer, initially a Commodore VIC-20, which had about eight kilobytes of memory along with some books on how to [write] programs. So I taught myself how to program from those books. And then I found out that you could make money by selling computer Entrepreneur Elon Musk: Why It’s Important 57 to Pinch Pennies on the Road to Riches

programs. So I wrote and sold two—not for very much money but it was a lot of money to a kid at the time … several hundred dollars effectively in spending power.

Knowledge@Wharton: And were there any lessons you learned that sort of stayed with you or was it just the thrill of that [first sale]?

Musk: Wow. I haven’t really thought if there are any lessons there. I can’t think of any. If you make something that people want, they’ll pay you for it. That’s probably it.

Knowledge@Wharton: That’s a really good lesson.

Musk: Apart from that—I had various odd jobs like delivering papers and things….I also did a little bit of stock market stuff when I was about 15 or 16. I actually did pretty well just making bets on some stocks in South Africa. But I just made a few bets that did pretty well. I tripled my initial tiny stake and then that stopped because I just didn’t like it.

Knowledge@Wharton: Of course, multiplying your money many-fold is something that happened very successfully with X.com, which became PayPal. Could you help us understand how did you evaluate that business opportunity and, again, what were some of the lessons that other entre - preneurs could learn from your experience?

Musk: I need to think more about what lessons can be drawn from my experiences. But I would mention that there is a company that I started that predated PayPal, which was called Zip2. That’s the company that I started in the summer of ‘95 and then decided to continue … and [so] deferred graduate studies at Stanford. I thought that was a good sort of hedging bets strategy. You know, worst-case scenario if the business failed [was] I could just go to graduate studies. [That would have been] a pretty soft landing if things didn’t work out. And I thought they probably wouldn’t actually. If you had asked me, I would say the odds were likely that I would probably 19 Trailblazers Who Are Changing Your World 58 (Some You Know and Some You Don’t—Yet)

not succeed and, therefore, I would be back. But I thought I may as well give it a try. [One] lesson [is], spend very little money. That was a case where I had very little money, so there really wasn’t any choice. I only had a few thousand dollars. And then my brother came down and he had several thousand dollars. We just rented an office for $400 or $500 a month—some really tiny little office in Palo Alto. [It] was cheaper than an apartment. And then [we] bought futons that converted into a couch, which was sort of like a meeting area during the day. We would sleep there at night and shower at the YMCA, which was just a few blocks away. That was [an] extremely low burn rate. [It was] way cheaper than a garage. Garages are … expensive. So we were able to … putter along for several months until we got venture funding. I think that’s a good lesson….When you are first starting out you really need to make your burn-rate ridiculously tiny. Don’t spend more than you are sure you have. With Zip2, the idea was just to try to do something useful on the Internet that other companies would find useful and would pay us at least enough to keep the doors open. So we started off with maps and directions and Yellow Pages. We branched that into publishing and interfacing with heterogeneous legacy databases, particularly [those] that were of use to the newspaper industry. [The] newspaper industry was mostly not online in ‘95 and was trying to get online. And they had these old mainframes that had all the data and were very difficult to talk to. So what Zip2 essentially did was this model evolved into helping newspapers get online and create compelling web sites. So we had customers and investors—The New York Times, Knight Ridder, Hearst [and] a number of others. And we ended up being acquired by Compaq in early ‘99 for a little more than $300 million in cash, which at the time was the largest of all cash transactions for an Internet company. That was certainly a better outcome than I had ever expected. But I felt there was still more that could be done with the Internet. [This led to] X.com [and] evolved into PayPal. The idea was, “Let’s make a really convenient site that combines all of people’s financial needs into one seamless, easy-to-use location.” And then we had a feature which was the ability to send money and securities from Entrepreneur Elon Musk: Why It’s Important 59 to Pinch Pennies on the Road to Riches

one customer to the next. If you weren’t in the system it would just send an invitation to join the system. At the time it was … a very [simple] thing and we found people really responded to that feature. So we adjusted our focus and started going more and more in the direction of payments and … focused on creating a great payment system. Coincidentally], many of the financial elements [developed for the original business plan] turned out to be quite important in creating that payment system because the efficiency of our payments increased dramatically if people kept money in the system. So, by creating inducements to keep money in the system—such as a money market fund that PayPal had with Barclays Global, and a debit card that could directly access your PayPal account—[gave customers] reasons … to keep money in the system and not take it out. And the cost of a transaction to PayPal of somebody sending from their PayPal balance to another PayPal customer was essentially zero. Whereas if somebody was sending money to somebody else and funding it via credit card, it would cost us, inclusive of fraud … somewhere between 3% and 3.5%. So it is a gigantic difference. So those financial services elements ended up being quite important. And eBay [which bought PayPal for $1.5 billion in 2002] really should add some additional financial elements to that. In particular they should offer people checking [accounts] so you can write checks off your PayPal account, and direct deposit. And then why do you need a bank account. I’ve suggested this many times, but they don’t seem to see the merit of that for some reason. I don’t understand why.

Knowledge@Wharton: That’s a very good point. n Published: May 27, 2009, in Knowledge@Wharton Aramex’s Fadi Ghandour Unfolds His Roadmap for Budding Entrepreneurs in the Middle East

adi Ghandour needs little introduction, if any, in the Middle East. The Ffounder of global logistics and transportation company Aramex is arguably the region’s best-known entrepreneur, a mentor and role model for many young Arabs, an angel investor, and one who is more than happy to challenge traditional business and social values. Ghandour’s accomplishments have been hailed by many, including New York Times columnist Thomas Friedman who wrote in his book, The World Is Flat, that every Arab should know the Aramex story. Established in 1982 as an express operator for the Middle East and South Asia, Aramex became the first Arab-based company to trade its shares on Nasdaq in 1997. It returned to private ownership in 2002 and then went public three years later on the Dubai Financial Market as Arab International Logistics. It now has an alliance network of over 12,000 offices, 33,000 vehicles and 66,000 employees, providing freight forwarding, catalogue shopping, magazine and newspaper distribution and other services. Ironically, 2009 was probably the best year ever for Aramex. At a time when most companies across the world were battling through the economic downturn, it opened new businesses and reported a 25% increase in net profit for the year. Ghandour’s no-assets, no-debt policy helped as the business environment changed rapidly. Ghandour spoke with Arabic Knowledge@Wharton in Dubai about addressing the region’s weak business “ecosystem” and what needs to be done to help the next generation of innovators down the often bumpy road to entrepreneurial success.

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An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: What are the biggest challenges to entrepreneurship and innovation in the region? Are they purely economic or are there cultural, social and political reasons?

Fadi Ghandour: I don’t think there are any cultural, political or social reasons. They are partly economic and partly developmental, like building a “softer” loan structure, [having an] an ability to easily register companies with very low capital, and securing intellectual property rights. On the other hand, clearly there is a need to have venture capital, angel capital and early- stage capital. There is a business culture, as you might call it, in the region that focuses on oil and gas, government contracts, and trading— representing overseas companies. The story of entrepreneurship here is one without an ecosystem of capital, private-sector support and angel investors. There is also no mentoring, which is really important.

Arabic Knowledge@Wharton: You have been a mentor?

Ghandour: Yes, I do that. You are talking to me because I am an entrepreneur and I understand what they do. I am an angel investor and I find that while capital is important, what they need the most is advice. They need time. It is so much more important if you can tell them how to do things, what my experience has been—all that is not measured in terms of money.

Arabic Knowledge@Wharton: Did you get that kind of advice when you started?

Ghandour: I did and did not. The easiest way of getting a mentor is if your father understands what you are doing, understands business well and is willing to mentor you. I was mentored by a father who was an entrepreneur, Aramex’s Fadi Ghandour Unfolds His Roadmap 62 for Budding Entrepreneurs in the Middle East

but did not have time because he was a traveling man. You have to seek [out mentors]. Some of the networking events, some of the associations popping up for angel investors, etc., are a good step and helpful. You need to make the private sector and businessmen aware of how important it is for them to give their time. It is like talking to your son or daughter. They need advice and eventually they will run, but you have to help them take those first few steps.

Arabic Knowledge@Wharton: How much time are you able to give them?

Ghandour: Just before [this chat], I was emailing a brilliant lady entre - preneur, telling her that I was traveling but will be in touch to do a conference call. You have to get back to them because they are young. If you believe in this, you have to give it time.

Arabic Knowledge@Wharton: Do you see a lot of young people in the region taking the entrepreneurial route these days?

Ghandour: Yes, I see a lot. The Internet has created all sorts of possibilities that people of earlier generations did not have. [Young people] see what the world is doing. They see the low cost of developing businesses online. They learn from others. There are some businesses that have already been developed in other places, but need to be customized and “Arabized.” You will have the copycats and you will have the innovators. That is the nature of the beast.

Arabic Knowledge@Wharton: You once said the governments in the region are like mothers and the citizens are like their spoiled children. Do you see that changing quickly?

Ghandour: (Laughs) Yes, I stick to my position. An overprotective father is going to ruin the future of his child. He will not let him fail [and] he is not going to let him try or expose him to the world. It’s a vicious world out 19 Trailblazers Who Are Changing Your World 63 (Some You Know and Some You Don’t—Yet)

there and you learn only when you fail. A mentor, father or mother can tell you a lot of stories, but the best way to learn is to fail. You have to stumble.

Arabic Knowledge@Wharton: But failure is not taken too kindly in this part of the world, is it?

Ghandour: No, it’s not. Maybe it is in the U.S., the mother of all entre - preneurial countries. It has created that thing about an underdog. It is easy for people there to fail because that is seen as learning. If you tell people that it’s fine to fail but to get [back] up and run, you have to create the ecosystem that helps. Mothers can never take failures, families can’t. An entrepreneur, who has just started, was telling us about what his family had to say about the Maktoob-Yahoo deal [in which Yahoo bought the Arab portal in 2009]. His mother or father said they did not know what Maktoob does, “but why don’t you try and do something like that?” It catches on. It slowly becomes legitimate to try, which means that you don’t work for the government or a big company that gives a secure job, but try something on your own. That, by definition, means that it might work or it might not, and possible failure means I am at least trying.

Arabic Knowledge@Wharton: Are people in the region averse to risk because of the fear of failure?

Ghandour: Entrepreneurship is something that is learned. I am a product of that process. Entrepreneurship is not something you are born with. You learn not only by doing, but also by having the skills—making financial statements, the discovery, logical thinking. This is stuff you have to learn in schools. That’s where you get exposed to these things. You can throw somebody in the water and he can only become a good swimmer if he knows how to breathe. You have to give people the skill sets. You can teach people the rules of football and they can understand and enjoy it, but they can only play when they experience it themselves. Aramex’s Fadi Ghandour Unfolds His Roadmap 64 for Budding Entrepreneurs in the Middle East

Arabic Knowledge@Wharton: How do you find the right idea?

Ghandour: A right idea is a product of exposure, learning and curiosity, which are essential for any entrepreneur. The status quo has to be unacceptable and that’s what I keep saying in the organization. I tell people they need to question things. You can always do better by questioning anything that is in front of you. You can do something that is totally different if you have a plan that is acceptable. A new product can change the face of an industry. Entrepreneurship is all about questioning because that’s where ideas come from. You also have to look closely at what is happening in your industry and learn from it. Any technological advancement in an industry can have a huge impact. For example, with the arrival of email, a whole industry around sending letters from one place to another almost vanished.

Arabic Knowledge@Wharton: Do you believe that entrepreneurs have only one good idea and tend to lose interest in innovation once they have achieved the first goal?

Ghandour: No, there are many serial entrepreneurs. They exit one thing and start another. It depends entirely on your skills, exposure and mind. I started my business 28 years ago, but I do a lot of intra-department entrepreneurship. But there are some who make their money and go on a vacation. Human beings make their own choices. You don’t always have to be an entrepreneur.

Arabic Knowledge@Wharton: What are the better entrepreneurial stories in the region?

Ghandour: You have Orascom, which is a fantastic story, Maktoob, Consolidated Contractors Company—one of the biggest [diversified construc tion firms] in the world today—and Rubicon, one of the best animation companies. The region needs more but there are examples and 19 Trailblazers Who Are Changing Your World 65 (Some You Know and Some You Don’t—Yet)

role models. We need to document and celebrate them, and make people aware of them. There is nothing to be ashamed of in highlighting entrepren- eurship stories in the region. But the more relevant story to our youth is the small entrepreneur. You don’t need to be worth hundreds of millions of dollars. At $2 million or $3 million, you can create jobs and value that is attainable. I don’t want to scare people [by saying] entrepreneurship is about creating mega companies. It is about innovating the value and product you offer. You create wealth for the people who work for you, and [for] yourself.

Arabic Knowledge@Wharton: Are governments in the region doing enough to encourage entrepreneurship?

Ghandour: No, they need to do much, much more. They need to start with education, the regulatory environment and the enabling environment putting up seed money. The Arab world is facing a huge challenge of unemployment and the only way you can create jobs is by partnering with the private sector so that it becomes a public-private partnership. All those young people graduating from universities need to become job creators. That means creating companies and changing the tradition of working for governments.

Arabic Knowledge@Wharton: What are the three things you would tell a budding entrepreneur?

Ghandour: I would tell them they are in it for the long run, watch out for your cash and find a mentor. Finally, stop complaining. Don’t worry about government regulations. Go and do it. I know it is an issue, but it should not stop anyone. Just do it, as Nike would say. n Published May 4, 2010, in Arabic Knowledge@Wharton Shokay’s Carol Chyau: Weaving Connections Between Herders and Knitters in China

he notion of social enterprise gained popularity after Muhammad TYunus of Bangladesh’s Grameen Bank impressed the world by serving the rural poor through a sustainable banking business. Although understanding of the term varies, “social enterprise” is usually defined as a business that makes a social contribution while still remaining profitable. “The idea of social business is that investors have invested the money not for their own benefit, but to achieve a social objective. In the case of [joint venture] Grameen Danone, the objective is to bring nutrition to mal - nourished children,” Yunus said in an interview with Knowledge@Wharton in May 2009. For Carol Chyau, co-founder and CEO of Shokay, the goal is to improve the lives of poor herders in remote Western China and women knitters in rural Shanghai by directly sourcing yak fiber and then selling finished products to the international market. Chyau and Mario So started Shokay— which means “yak down” in Tibetan—two and half years ago. She is seeing her idea become a reality in China. “Social enterprise is an innovative, profit-making but not profit- maximizing solution to a social problem,” said Chyau. “I became interested in the concept of social enterprise during my years at Wharton. I was in Peru and Chile for one semester doing international development work when I realized that there is so much more you can do when you apply business concepts in socially impactful ways. And because I am from Taiwan, and my partner is from Hong Kong, as much as I was interested in

66 19 Trailblazers Who Are Changing Your World 67 (Some You Know and Some You Don’t—Yet)

Latin America, I thought we might be able to make a better contribution and manage faster growth in Asia.” But it’s not easy to achieve social objectives, especially when the business is in its start-up phase. “You have got to have a sustainable model even though profit maximizing is not your target. But social enterprises also have their own metrics. For us, we look at how many employment opportunities we could offer to herders and farmers and how much income growth we could bring to them,” said Chyau. In the highly competitive textile industry, for-profit companies often find it difficult to survive. What happens when good intentions enter the equation? How does Shokay manage to achieve its social objectives, and what kinds of challenges does it face as a growing business in China? China Knowledge@Wharton interviewed Chyau about her experience as a social entrepreneur.

An edited transcript of the conversation follows.

China Knowledge@Wharton: Based on your definition of social enterprise—“an innovative, profit-making but not profit-maximizing solution to a social problem”—what is innovative in your business model?

Chyau: No one bought yak fiber before. That’s the most innovative part of our business. Eighty percent of the world’s yak population is in China. In theory, it should be Chinese local companies who are the first to bring yak fiber into the market. But Chinese textile companies are not that forward thinking and customer focused; they are more traditional and reactive, so they just react to what their customers demand. But customers in Europe and the U.S. are not going to know about Yak fiber if textile companies don’t promote it. Historically, there has not been good information on this product so the market didn’t exist until we started it. Some people even use yak [fiber] to [make] fake cashmere, which traditionally is a luxury fiber. Anywhere in the world, when you say “cashmere,” you expect it to be expensive. But it’s very hard to sell yak Shokay’s Carol Chyau: Weaving Connections 68 Between Herders and Knitters in China

because nobody knows what it is. On the other hand, yak itself has some limitations when compared to cashmere. Its fiber is shorter than cashmere and it’s not easy to weave. In addition, its natural color is brown while cashmere is white, so it’s not easy to dye. But we think we can overcome these challenges, so we created a brand focused around the yak. Shokay is “yak down” in Tibetan. We are the first yak lifestyle shop in the world. And we [operate as] an integrator, because we work from raw material all the way to retail.

China Knowledge@Wharton: How is the business going now? Could you tell us a little bit about your operation?

Chyau: We started the company two and a half years ago, and our major customers are in Europe and Japan. We sell to more than 130 stores in the world, most of them knitting yarn stores. We didn’t sell to the Chinese market until late 2007, and we only directly manage two stores in China so far. All the rest of the products are sold to corporations for corporate gifts, other fashion brands for co-branded projects, wholesale boutiques and distributors. I have 13 people on my team here in Shanghai and two staff in Xi Ning [the capital of Qinghai Province, West China], who are local Tibetans managing fiber sourcing once a year.

China Knowledge@Wharton: What were the challenges you encountered after starting the business?

Chyau: We ran into some challenges….In the beginning, we only sold knitting yarn to the U.S., but that market was too small. It did not grow as fast as we needed it to grow to sustain the company. On the other hand, you can’t just sell knitting yarn, you have to create patterns. When customers came into the store, they needed to see the pattern for the finished products—“Oh, this hat is so lovely and cute, therefore I need to buy the yarn.” We had to provide some finished products and add them to our collections. 19 Trailblazers Who Are Changing Your World 69 (Some You Know and Some You Don’t—Yet)

We were also weaving the fiber into scarves and throws because it didn’t require as much design work. However, it’s hard to only have scarves and throws, because they actually belong to two different markets—one is home furnishing, one is accessories….You can’t enter the market with only one product and only one fabric….Your clients will expect different things every year when they buy from you, so we had to quickly expand our product line. And we did; we started to add in a lot of products to our collection—like pillows, handwarmers, hats, etc.—and we also entered the children’s market.

China Knowledge@Wharton: I have visited your Shokay store in Taikang Lu, and it looks like you are now in the fashion business?

Chyau: It wasn’t the original plan, but very quickly, we turned from a textile company into a fashion company. It’s a trade-off, too. Once you are in fashion, you need to have at least two seasons—Spring-Summer and Fall- Winter—although most fashion brands have at least three to four seasons. For us, it’s hard because most of our products are for the winter season. Initially, we wanted to make our collection very full, but because we are new to the market, customers were ordering very little of each product. Orders essentially became customized. The good thing is that most of our products are hand knit, so we can still make orders without very high minimum requirements. But we have gone too far in that direction. It’s very hard to make only customized items. It’s much easier to produce in greater quantities to achieve economies of scale. If everything is customized, it’s very hard to manage production. Now, we are standardizing our processes. For example, for one product, we used to offer 24 different colors for people to choose. Now we encourage our customers only to order from five featured colors. If they want something customized, we will still do it. But I think when you offer a lot of choices, most customers actually can’t handle it. We now have to learn how to be a fashion business—from design, colors, quality control, inventory management, all of that. Shokay’s Carol Chyau: Weaving Connections 70 Between Herders and Knitters in China

China Knowledge@Wharton: Back to the mission of a social enterprise: How do you measure your social impact?

Chyau: We are measuring it ourselves—for example, how many employ- ment opportunities we have provided and how much income growth we have been able to achieve. We also work with Qinghai Bureau of Animal Husbandry to organize training courses for herders. For example, we train them to do combing; if the herders do combing in a particular way, we will pay them more. And we also train the knitters in Chongming County [in rural Shanghai] in our specific patterns, quality and standards.

China Knowledge@Wharton: But if I were a for-profit company, wouldn’t I still do these things?

Chyau: It’s actually higher cost to directly source and organize trainings in such a remote place. So if I were just a textile company, I may not [be involved with the] raw material. Instead, I would just buy from man- ufacturers who source from suppliers or other traders, because they actually have an existing network for raw material. And it would be so much easier and cheaper for us. Actually, when we go to the manufacturers, they are pretty surprised to hear that we source directly from herders. Their usual response is: “Why? Isn’t that more challenging? I can give you materials….” There are also a lot of uncertainties in the manufacturing process. If I buy the raw material, it becomes my inventory, which is quite a burden for any company, especially a start-up. If I were purely a fashion brand, I would just design a product, give it to a factory to make it, and then sell that to the market. And I probably would not organize my own hand-knitter team, either, because we could just outsource that. But we want to work with herders and knitters because it is their income that we want to raise, so we have to start from the very beginning. These are the subtle differences between our social enterprise and the traditional business model. 19 Trailblazers Who Are Changing Your World 71 (Some You Know and Some You Don’t—Yet)

However, this kind of model creates a couple of challenges. In any country and in any industry, when you work all the way from raw materials to retail of finished goods, it’s actually pretty challenging. It may not be very efficient. Usually, vertically integrated companies are large companies who can achieve economies of scale, but it’s very challenging for a small company like ours.

China Knowledge@Wharton: Are there any unique challenges when it comes to doing business in China?

Chyau: One specific thing is that it’s very hard to work with manufacturers in China. Because China is good at mass production, there is a high minimum requirement to order from factories. For example, if I want to dye a color with an Italian mill, I may only need five kilos to start. In China, I need 50 kilos. Italian mills are used to working on small orders and their mills are smaller. In China, the mills are large, so the minimum requirement is very large. The second thing is it’s hard to find good, ethical local partners who can deliver on international standards. A lot of them don’t know what it means to deliver on time, or sometimes they lack quality control. You have to go there yourself and monitor. In the beginning, we visited over 30 factories and tried to find good partners. Now, we have narrowed them down, but it’s hard because we continuously need to look for more good manufacturers to be our partners. And sometimes, even if you find a very good partner, that partner is usually very busy, so you have to have your back-up partners. And because we are small, they will put off our orders. We have no bargaining power because we are a small company—we order small, and we order something they don’t usually make, so we really have to try to convince our partner that we are opening a new market with big potential. Even though we are ordering small now, yak has huge potential.

China Knowledge@Wharton: Do you have to explain to them that you are a social enterprise? Shokay’s Carol Chyau: Weaving Connections 72 Between Herders and Knitters in China

Chyau: No need, they don’t care. Their mindset is more of, “Will you give me the order or not?” Or, “Show me the money.” If you tell them you are a social enterprise, they will even become worried whether you will go bankrupt. China Knowledge@Wharton: Looking at the future, will you continue your efforts?

Chyau: Yes, I think our business model is challenging, but it’s not impos- sible. It should become easier and easier as we go. As we become larger, we will have more bargaining power with the manufacturers. So we are doing two things at the moment: We are growing our market as fast as we can, and we are growing our community [of herders, knitters] as fast as we can. We will need to find a good balance between supply and demand.

China Knowledge@Wharton: Who are your investors?

Chyau: A lot of our capital came from various competitions. We won a lot prizes and gained PR exposure, networks and capital through these competitions. We have met various donors, too. Shokay is a for-profit [venture], but our shareholder is actually a non-profit organization, Ventures in Development (ViD). ViD is a non-profit organization that seeks to incubate and launch social enterprise ventures. We experimented with setting up this hybrid structure. Our original vision was not just Shokay; it was the concept of social enterprise. We are hoping that ViD will eventually become an incubator of social enterprises and Shokay is just the first one. Many people are interested in social enterprises, but very few people have real experience in running a social enterprise in this region. So, by learning from the success and failure of growing Shokay, we will have practical experience, rather than theories from books, to become a better incubator in the future. We had a vision and a blueprint in the beginning to build a house. In the past two and a half years, we have been exploring how to build this house. Lots of the initial designs have been changed, but now we at least 19 Trailblazers Who Are Changing Your World 73 (Some You Know and Some You Don’t—Yet)

know what kind of house we are going to build and what it should look like. So now it’s time to begin the foundation work.

China Knowledge@Wharton: What is the most important element in the foundation work?

Chyau: The most important thing now for us is team building. Originally, [Shokay] was only the idea of two people, but it takes much more effort, time and capability than just two people to achieve our goal. This is essential for any enterprise – to be able to sustain beyond the founders. My partner, Marie So, is mainly responsible for the export market and community development. I am running the operation and retail in China. My team is very motivated and they love the work. We are like a family. Because they have watched the company grow, everyone has a sense of involvement and ownership, but it still takes time and effort to reach the kind of level that we hope.

China Knowledge@Wharton: Are there more women running social enter - prises than men?

Chyau: Yes. Some people have asked me what’s the difference between male and female entrepreneurs. According to some survey results, for men, the driving force to start a business is power and money. Women care more about meaning. Social enterprise fits women well because it has meaning and it’s still good business. More and more well educated women do not prefer traditional philanthropic activities, such as just donating money. They would like to get involved by contributing their professional knowledge. n Published: May 8, 2009, in China Knowledge@Wharton Joss Whedon’s Plan to Monetize Internet Content (Watch Out, Hollywood) Kendall Whitehouse

V and movie writer-director Joss Whedon wants to change the way THollywood does business. While Whedon works inside the studio system on major projects, he also hopes to blaze a trail on the Internet for creating and monetizing independently produced content. In doing so, he is confronting what he terms the “homogenized, globalized, monopolized entertainment system.” One of Whedon’s projects is “Dr. Horrible’s Sing-Along Blog,” an online musical comedy starring Neil Patrick Harris, Nathan Fillion and Felicia Day, written by Whedon, his brothers Zack and Jed, and Jed’s fiancée Maurissa Tancharoen. Conceived during the 100 day Writers Guild of America strike

74 19 Trailblazers Who Are Changing Your World 75 (Some You Know and Some You Don’t—Yet)

in late 2007 and early 2008, “Dr. Horrible” was, in part, intended as an experiment to explore options for creative content. The subject of revenues for online content was a timely one, since a major point of contention that spurred the strike involved payment to writers for content distributed online. “Dr. Horrible” was released on the web in three parts in July 2008, and Whedon’s plan was to remove the free online versions and sell all three episodes as video downloads through Apple’s iTunes Store. A week after the series moved to iTunes, it reappeared online on advertising-based sites such as Hulu, a joint venture of NBC Universal and News Corp. In December 2008, a DVD version became available on Amazon.com. With these various distribution channels (and the lack of a traditional advertising budget), “Dr. Horrible” serves as something of a case study for marketing independently produced content. Joseph Hill (“Joss”) Whedon is a third-generation television writer. His grandfather, John Whedon, wrote episodes of such late 1950s and 1960s staples as “Leave It to Beaver,” “The Donna Read Show” and “The Andy Griffith Show.” His father, Tom Whedon, wrote installments of “Alice,” “Benson” and “The Golden Girls.” As Whedon said to Knowledge@Wharton, “I was raised by a tribe of funny people.” After graduating from Wesleyan University with a degree in film studies, Whedon moved to Los Angeles and found early work writing for television programs such as “Roseanne” and editing scripts for feature films. His screenplay for Buffy the Vampire Slayer achieved modest success and Whedon received an Academy Award nomination for his screenplay work on Toy Story. Whedon’s science fiction series “Firefly,” produced for Fox television, debuted in 2002. But he tussled with Fox over aspects of “Firefly”: The network insisted on a new pilot episode and aired several episodes out of sequence. The show was cancelled after 11 of its 14 episodes aired, and Whedon and Fox parted ways. Whedon told Knowledge@Wharton that he was “heartbroken” by the show’s demise. Driven by his desire to keep the characters alive—and brisk DVD sales of the original series—Whedon wrote and directed Serenity for Universal Studios, a feature film based on Joss Whedon’s Plan to Monetize Internet Content 76 (Watch Out, Hollywood)

the “Firefly” characters and storyline. Despite the contentious issues with Fox over the network’s handling of “Firefly,” Whedon’s next television series, “Dollhouse,” a science-fiction thriller starring Eliza Dushku, debuts on Fox television on February 13, 2009. Knowledge@Wharton spoke with the 45-year-old Whedon about the lessons learned from “Dr. Horrible” and what he believes needs to happen for the Internet to serve as a platform that can sustain original creative content.

An edited transcript of the conversation follows.

Knowledge@Wharton: To what extent was the original impetus behind “Dr. Horrible” to serve as an experiment for how web-based content can generate revenue?

Whedon: It was equal parts that and the love of the silly. The concept originated as an audio podcast that I would do myself because I was hungry to write some songs and I liked the idea of the character. And then the Writer’s Guild went on strike. I tried to make some deals with Silicon Valley companies and song studios to create jobs and put out product. But it took so long trying to make a deal with these companies up north, that I missed my window. So I said, “I’ll just do it myself—if that’s okay with my wife.” And because I could not afford to do a huge, lavish production we did it with a ton of favors. We were, at the time, very much in the spirit of the strike. By the time we finished writing [“Dr. Horrible”] and had everyone lined up, the strike was over and we all had shows to scramble to do. But we found a window to shoot it. It became us goofing around and just having a great time making a piece of art that we all enjoyed. Once we finished … it was equal parts ethos and capricious glee. We said we were going to roll it out for free and then put it on iTunes. We just steamrolled past everybody’s idea of how you market and of how long it takes to do these things. We had people [drawing up] contracts in days that usually take months, because we were tired of people sitting around. 19 Trailblazers Who Are Changing Your World 77 (Some You Know and Some You Don’t—Yet)

Ultimately, though, we were still in the mind of: This is a bit of a lark. The strike was over and so we wanted to do right by everybody, but we weren’t thinking it would be a grand statement. We thought it was going to be cool.

Knowledge@Wharton: Several numbers have been quoted regarding the overall cost of “Dr. Horrible”—“low six-figures”; “around $200,000”—can you set the record straight?

Whedon: We got so much of this done through people doing us favors— department heads and people who have access to things. But you’ve got to pay your day-to-day crew. The actors all did it for nothing. And we all did it for nothing. So, the production costs alone—the basic costs of filming the thing, and getting the locations, props and everything—ran a little over $200,000. We had a secondary budget drawn up in case of a profit, wherein we were trying to find rates for Internet materials. In some cases they didn’t exist. We used models that had been created by the guild for repurposed, or reused, material that we used for original [content], because this had never come up before. We didn’t want to leave a sour taste and say, “Well, we made some money off of you guys being kind.” It was like: No, everybody has to benefit from what they’ve done, obviously not enormously—it’s Internet money we’re talking about—but as soon as we got in the black, we paid every- body off. So that budget was probably about twice what the original budget was.

Knowledge@Wharton: You’ve now earned more than twice the original cost?

Whedon: Yes.

Knowledge@Wharton: Which members of the production shared in the profits on the backend? Joss Whedon’s Plan to Monetize Internet Content 78 (Watch Out, Hollywood)

Whedon: The crew that got paid, got paid. [Those] who didn’t get paid [included people like] department heads who had jobs and could afford to do this as a lark. As we go forward into profit, there are also residual schedules and payment schedules for all of the creative people. We’re trying to figure out how that works. From the start I also laid down a gross participation scheme for my three key actors and the other three writers. While the guild was negotiating for one-tenth of a yen, I said, “How about we just get into some percen - tages.” It was an opportunity to say to the guilds, “Guess how much better we can do”—which, in the case of the Internet, is the only way for the guilds to survive. We can’t accept anything remotely like [our current situation] with the studios. When the studios talk about the difficulty of monetizing the Internet, they’re not lying. There are a lot of paradigms wherein you aren’t making that much money. But it’s all pure money for them because they have these libraries they can just put on. They’re really not interested in putting on original stuff because they can just throw the libraries on and make free money off of that. None of us is in that position. For [the studios] not to offer the creative community a percentage of what they make—they say, “oh, it’s too difficult” and “we’re not going to make any money”—is disingenuous to the point of criminality. What they’re making is pure profit. For them to shut out the people who actually created the content is something that should be looked into by a federal investigatory committee.

Knowledge@Wharton: It sounds like you want what you’ve done with “Dr. Horrible” to serve as a model for similar original content.

Whedon: I do.

Knowledge@Wharton: What do you think the likelihood of that is? 19 Trailblazers Who Are Changing Your World 79 (Some You Know and Some You Don’t—Yet)

Whedon: That largely depends on a number of people—one of whom, sadly, is me. This could just stand out as Camelot and disappear. Or it can be a model that is built on. And I’m one of the people who needs to be building on it. That’s something I’m looking into right now. I’m not a business man. I’m also not a techie. My ideas on how to monetize the Internet for independent productions are ideas that other people have already had. But I am in a position to try to take advantage of them in such a way that we get a toehold in this medium and [establish] a system of creating some original content before the giant companies sweep in and fence it all off. The movies, TV—everything is melding, everything is shifting. If you saw it on a movie screen, it’s going to be on your phone. That territory is moving … now in a destructive way because we’re losing residuals. But eventually it’s just going to be an inevitability that … the studios are going to have to rethink how they monetize [content]. Obviously TiVo makes their relationship with advertisers different. And that’s going to become more and more the case. A lot of it can’t be predicted—at least, not by me. But if somebody isn’t out there creating a system wherein independent production can thrive, it will wither. We are now in such a homogenized, globalized, monopolized enter- tainment system where studios are swallowing all independent producers and productions. And they’re swallowing each other. Eventually there will just be Gap films and McDonald’s films. And that will be it. The worst thing that’s happened in this community is the death of the independent television producer. We have to make sure that that doesn’t happen on what is, right now, a public forum, and not a privately owned forum. Especially with the economic disaster that the last bunch of presidents has left us with, independent film production is shutting down. The film and television industry is finding itself in the position the music industry found itself in [a few years ago]. The difference is they have a chance not to do what the music industry did, which was to ossify and to basically lock themselves in their fortress until they ran out of food. They have an opportunity to try to stop the revolution by making Joss Whedon’s Plan to Monetize Internet Content 80 (Watch Out, Hollywood)

evolutionary deals. They’re not inclined to do that right now. So the trick is to create a venue that becomes attractive to them and [where] there is still an independent voice that can partner with them. Ultimately, they have the power. They have the advertising dollars, they have the distribution systems and they’re a force to be reckoned with. I would like to [sit] at the table as an equal, and not as one of the goddamn serfs who is giving them all my goddamn grain.

Knowledge@Wharton: You’ve made “Dr. Horrible” available through a number of different distribution channels. It was free for a short period. Then it was available for purchase as a video download through iTunes. The soundtrack can also be purchased online. It’s now available once again for free, streamed over the web with advertising. And now there’s a DVD. Can you give us an idea of how successful each of those has been?

Whedon: iTunes has been a great boon for us. And the DVD has done quite well—although I’d love to bump that up more. Streamed [online video] with advertising is probably the smallest revenue. Whether that’s a viable monetization scheme … is the question. In some ways it acts as an advertisement and in some ways it might be pulling people away from bothering to download it or to buy the DVD. In the case of the DVD, we went so ballistic with extra content that it took twice as long to make as the movie [laughs]. It wasn’t just a question of: Here’s another potential revenue stream. It was a question of: Here’s something new, so that you don’t feel like this is something you already have. We were trying to protect the monetization stream there and give people a new experience.

Knowledge@Wharton: You’re a third generation television writer. Was it easy to land your first writing job in Hollywood?

Whedon: Well, it was definitely easier for me in the sense that someone would read my script. My father’s agency said, “Look, we don’t do any favors. 19 Trailblazers Who Are Changing Your World 81 (Some You Know and Some You Don’t—Yet)

We’re not interested in this guy. But because he’s your son, we will read the script.” And that’s a door that doesn’t open for a lot of people. Plus, I’d seen television scripts my whole life. I was raised by a tribe of funny people. Those things help. I understood the rhythms of the thing. Those advantages I never take for granted. But, ultimately, I still had to do the thing. And they read the script and I got an agent, and several spec scripts later—a job. So, it always comes down to: Can you do it? Can you write it? I’ve made my way for a long time. But was I halfway down the track when the starting gun went off? I was.

Knowledge@Wharton: You’ve created content for television, for feature films, for the web. Do you view these as fundamentally different media or as merely different distribution channels for similar content?

Whedon: I see them as different media. They are connected and connecting in ways that I find both fascinating and appalling in the sense that everybody’s trying to make every story work on every platform. Sometimes you’re like, “Can you just make a frickin’ movie! Can it not be a franchise and a comic book and a bobblehead? Can the characters just matter?” Part of it is absolutely respecting that the media are different. That doesn’t mean that you can only make things on the Internet that are two minutes long, like a lot of people believed. But it does mean that a movie and a television show and a limited Internet series are going be positioned differently, responded to differently and experienced differently. Ultimately, it’s always going to boil down to: Did I [care]? Was I having a good time? But the integration of the things can be exciting, if it’s approached the way everything needs to be approached—which is artistically. The problem now is the form that the integration takes. When I’m shooting my TV show I have to shoot it for 4 by 3 television ratio and widescreen—which means I can never compose a true frame. I’m always splitting the difference between frames. And that is destructive. So you do have to make a choice at some point. Joss Whedon’s Plan to Monetize Internet Content 82 (Watch Out, Hollywood)

Like when we did our commentary musical [on the “Dr. Horrible” DVD]. It’s ridiculous. It’s sophomoric, it’s silly, it’s off-topic. But, ultimately, we were striving to make a commentary musical, not just to pile on content for the sake of clocking more hours on the extras DVD. We wanted to use the idea of a commentary musical to at least have fun with the concept. Even if we didn’t really break huge ground there, we were professionally silly.

Knowledge@Wharton: What do you think the media landscape will look like in another five or ten years?

Whedon: [Sarcastically:] I am exactly the kind of visionary who is so brilliant that he doesn’t want to share that with other people. Meaning: I have no idea. I still call my iPod “my Walkman.” OK? I am old. I have gray in my beard—which, by the way, is terribly sexy. I’ve never been a maverick. If you look at “Dr. Horrible,” it’s a very old-fashioned story. And it’s a very old-fashioned presentation. What I was going for was, basically, a television event. It’s going to be on at this time, and this is going to be your opportunity to see it, because it’s not going to be on after that. Tune in this night, this night and this night when it premieres. Obviously, it was slightly different than that. But that’s the ethos I was going for. I’m a very old-fashioned story teller. I am not, in any way, a visionary. I just try and make whatever I do good enough that people let me do it again. That’s pretty much my scheme. So, five years from now, we will all have antennae. I got nothing. The challenge for me now is to create some kind of formula for creation and monetization on a medium that may be completely different. Right now, DVD is a great revenue source for an Internet-based venture. Most people are saying that in five years, DVD will be over. Sales are already way, way down from what they used to be. I don’t understand how I’m going to ride that change. I’m just trying to make as much fun stuff as I can and stay, if not one step ahead of it, then not caught under the swell. 19 Trailblazers Who Are Changing Your World 83 (Some You Know and Some You Don’t—Yet)

Knowledge@Wharton: Can you recall the first piece of popular enter - tainment—a TV show, a movie, a comic book—that really made an impression on you as a child?

Whedon: Umm … all of them? Let’s go with “Help, Help, The Globolinks,” a horror opera that I saw when I was five. It terrified me. They drove a van on stage—which was awesome. And then the van broke down, the Globolinks came, and the only thing that would keep them away was music. A young girl had a violin and she would play the violin at them and they would go away. It just terrified me. But, at the same time, I adored it.

Knowledge@Wharton: Speaking of opera and musical theater, what are the chances that “Dr. Horrible” is going to make it to Broadway as a full- blown Broadway production?

Whedon: We talk all the time about all the possible venues for “Dr. Horrible.” And then we go back to our day jobs that we’re supposed to be doing in the first place. Broadway is something that we’ve talked about. I had a very funny experience talking with a Broadway veteran who basically said, “Oh, yeah, come to Broadway because there you’ll have complete control and be treated with respect, and it will all go really easily.” [Sarcastically:] Right. And I was like, “Hmmm, I think I’ll go back to the Internet, where you just put it on for free!” I would love to do it. Broadway is a dream that we all have. But I’m not terribly interested in repurposing things I’ve already done. Obviously, I made a TV show out of one of my movies and a movie out of one of my TV shows, so it sounds like a crazy thing to say—except that I didn’t tell the same story in either of them. I just took the story I had further. And that’s what I’m concentrating on with “Dr. Horrible.” It’s not so much like: “How can I squeeze another media out of this story” but: “What happened to him after?” Joss Whedon’s Plan to Monetize Internet Content 84 (Watch Out, Hollywood)

Knowledge@Wharton: You felt that Fox didn’t handle your TV series “Firefly” particularly well. I’ve heard that you swore to never go back to Fox, and yet you’re working with them on “Dollhouse.”

Whedon: That is not, in fact, the case. I never swore not to go back to Fox. I left my deal at Fox because I couldn’t think of any TV shows, and I didn’t want to be paid to not do anything. Looking back—I can’t imagine why I didn’t want that [laughs]. It sounds so cool. I was heartbroken, but I never swore not to work at Fox. The production people had not done anything bad. They let me make the show the way I wanted to. And the network—well, they’re constantly changing, aren’t they? If it had been the same people running Fox now as it was then, I would not have come back. But you don’t swear, because the ground is shifting under you constantly. It was doing that even before the new media made everyone cranky.

Knowledge@Wharton: What advice would you give to someone starting out that wants to make an independent film or web content? How can they get their work seen? How can they generate enough revenue to do another one?

Whedon: The fact of the matter is, if somebody has a story to tell there is no reason at all that they should not be telling it. The quality of the material that exists—I’m talking about the physical [equipment] like the cameras— [allows you to do] things that could not be done when I was a kid for almost nothing. People aren’t going to the Internet to look for IMAX [large screen movies]. They’re going to look for things that shock and delight and surprise and upset and all that good stuff. They’re going for the most basic story. A lot of people sit around and go, “How can I get this made?” The only answer is: By making it. By borrowing someone’s camera. By buying a camera. They come cheap and they work well. And if you know where to point them—and the person that you point them at is saying something interesting—that’s it! That’s how it works. 19 Trailblazers Who Are Changing Your World 85 (Some You Know and Some You Don’t—Yet)

I can’t stress enough that I believe the best thing in the world is for everybody who feels like they have a story to tell, to tell it. If they want to sell it, if they want to make a lot of money, they can do that—and they can kiss their story goodbye. Because, in general, that’s the last they’re ever going to see of it, because somebody else will own it and they will either not make it, or make it very differently than that person hoped. So, if you really have a story you think you’re ready to tell, what are you doing talking to me? n Published: February 4, 2009, in Knowledge@Wharton Vivek Ramaswamy: Breaking Down Barriers to Entrepreneurship

s a student at Harvard University Vivek Ramaswamy realized that even Ain Cambridge, Mass., which boasts of two world-class universities— Harvard and the Massachusetts Institute of Technology—students with entrepreneurial aspirations had difficulty connecting with potential partners and investors. He decided to do something about it. In 2007, his final year at Harvard, Ramaswamy partnered with fellow student Travis May and co-founded StudentBusinesses.com, a website to connect students with the entrepreneurial ecosystem. The duo also developed two supporting software products. In 2009, they sold their business to the U.S.-based Kauffman Foundation, which is focused on advancing innovation and training future business leaders (Kauffman later rebranded StudentBusinesses.com as iStart). In a conversation with India Knowledge@Wharton, Ramaswamy, who is a student at the Yale Law School, shared his views on entrepren - eurship and his own business ventures. Ramaswamy describes himself as an “accidental entrepreneur” and says that the experience of starting something new can be a valuable in itself.

An edited transcript of the conversation follows.

India Knowledge@Wharton: What are your views on entrepreneurship in America?

Vivek Ramaswamy: This may sound trite, but I believe it to be true: Entrepreneurship is the fabric of what America is all about. The recent resurgence in entrepreneurship is a resurgence of something quintessen -

86 19 Trailblazers Who Are Changing Your World 87 (Some You Know and Some You Don’t—Yet)

tially American. It has been responsible for driving this country in years past and will drive it forward in the future as well. The shift of the entrepreneurial age towards a younger age bracket indicates a potential uptick going forward as these younger, aspiring entrepreneurs gain more experience.

India Knowledge@Wharton: How do you see the current entrepreneurial resurgence as being different from earlier?

Ramaswamy: I would think the correlation between an era of increased globalization and an increased desire to participate in an entrepreneurial endeavor is not a coincidence. When interconnectedness is at a peak due to technological advances, the ability to spawn something new is slightly easier.

India Knowledge@Wharton: In your view, how are American universities adjusting to this new trend?

Ramaswamy: Today, with the Internet, social networking, and other media, people are [becoming increasingly] interconnected, making the original hotbeds of entrepreneurship not as distant as they once were. The emergence of web-based tools to achieve that interconnectedness is spawning entrepreneurship programs at universities across the country. Our business, StudentBusinesses.com, was focused on the issue of university entrepreneurship. The number of universities in the past five years that have added either business plan competitions or entrepreneurship education programs has dwarfed the same five-year trend in any period before it, at least to the extent that I am aware. Most of these [programs] are actually at universities that are outside of the typical so-called “hotbed” regions. I think a big part of the reason for this is what the Internet and other technology and media have accomplished in connecting those places that are more geographically distant from the traditional hotbeds.

India Knowledge@Wharton: Are you suggesting, for example, that while a place like Silicon Valley would have been geographically or academically Vivek Ramaswamy: Breaking Down 88 Barriers to Entrepreneurship

inaccessible to people one to two decades ago, it is now possible to connect folks in disparate geographies to work collaboratively?

Ramaswamy: Exactly. It is an ability to access what is happening in those places typically known for entrepreneurship and to use that to plant a seed in a wide range of other places.

India Knowledge@Wharton: The objective of StudentBusinesses.com was to connect young students with the entrepreneurial ecosystem and tap into their energy. Some research however shows that the majority of successful entrepreneurs have had years of experience and also industry know-how before they went out on their own. How did you envision bridging that gap?

Ramaswamy: It is a distinction we were acutely cognizant of at the time we started StudentBusinesses.com. Some folks we approached at the initial stages to join us as advisors and consultants told us that they didn’t believe in our concept because they [felt that] a person needed to have substantial industry experience in order to become an entrepreneur. We viewed it a little differently. [We felt that] young people, including those coming out of the university programs, are at a stage in their lives when they are able to take the biggest risks. They [also] have a fresh perspective that’s not colored by industry experience. That inexperience or freshness can be catalyzing. Of course, it could potentially impose limit - ations on the types of things that young students may envision themselves doing. We wanted to tap into that innovative lens [that] younger people at universities possess. Recognizing the value that experience could add, one of our major initial theses was that the experience of starting something new can be a valuable experience in itself.

India Knowledge@Wharton: Even if the venture doesn’t result in anything?

Ramaswamy: Absolutely. That act of trying can be its own experience and that was part of our thesis from the very beginning in terms of the value created for a student by founding his or her own startup company. 19 Trailblazers Who Are Changing Your World 89 (Some You Know and Some You Don’t—Yet)

India Knowledge@Wharton: You launched StudentBusinesses.com in 2007, the semester before you graduated from Harvard. Times were good then [economically]. We didn’t think about the world as we do today. How did you and your co-founder Travis May manage to get ahead of the curve? Did you see this coming?

Ramaswamy: [Actually] it was a very difficult time to start a business. Even though the message of entrepreneurship becoming all the more important was not lost on people, the conditions of fear that existed at that time were somewhat of an adversity that we faced in launching the company.

India Knowledge@Wharton: StudentBusinesses.com paired up entre - pren eurially-minded students with people who were interested in their concepts. Can you tell us more about it?

Ramaswamy: The site—StudentBusinesses.com—had two searchable databases—“Businesses in the Game” and “Students on the Roster.” Aspiring and current entrepreneurs could join either of these for free. While entrepreneurs could post a profile that described their business and what they were looking for on “Businesses in the Game,” those interested in joining a start-up could [sign up on to] “Students on the Roster.” Over time, our site also expanded to include two software-as-a-service products—B Plan Studio and Start-Up Space. B Plan Studio enabled university entrepreneurship programs to conduct a business plan compe - tition in a seamless fashion and in a way that preserved the data and the information that was gained in that competition. Start-Up Space enabled universities, and in particular business schools, to create internal networks of aspiring entrepreneurial students on their campuses.

India Knowledge@Wharton: StudentBusinesses.com built these propri - etary software platforms?

Ramaswamy: Yes, we built that software, which was modeled on some of the same aspects as our website. Vivek Ramaswamy: Breaking Down 90 Barriers to Entrepreneurship

India Knowledge@Wharton: In the StudentBusinesses.com model the students sign up for free, while the external professionals who are interested in tapping into these students pay [for] a subscription. How were you able to convince people to pay for another site subscription?

Ramaswamy: The primary users of the site, from the non-student perspective, were actually professional service providers who were seeking to expand their businesses to include start-ups. [For instance,] law firms that were looking at targeting a new clientele, or web development and IT consulting firms that were generating revenue by serving large corporations but were interested in taking a little bit more risk in working with younger companies. [But] it was never our main objective to market this aspect. We wanted to build a strong database and network of student entrepreneurs. We were acquired within two years of our launch [so] the process of going beyond that first step perhaps lies in the hands of our acquirer, the Kauffman Foundation.

India Knowledge@Wharton: Could you talk a little bit about the acquisition of StudentBusinesses.com by the Kauffman Foundation?

Ramaswamy: One of our objectives from the very start was to not only succeed in our own right as a business, but also from a more social entrepreneurship perspective to enable other businesses to do the same thing. It is that spirit that led the Kauffman Foundation to be the best acquirer. They are the world’s largest foundation devoted to entre - preneurship and one of the largest foundations in the United States. I think one of the [reasons] that Kauffman looked at us was to find a platform around which to organize some of their activities including, but not limited to, their expansion into the university entrepreneurship space. At the end of the day, our consideration was not just a financial one, but the knowledge that our platform would be taken in the direction we had in mind from day one—fostering entrepreneurship among young people across this country. 19 Trailblazers Who Are Changing Your World 91 (Some You Know and Some You Don’t—Yet)

India Knowledge@Wharton: Can you tell us about the experiences that have shaped you as an entrepreneur?

Ramaswamy: From a personal standpoint, I consider myself much more of an accidental entrepreneur. I was involved in the entrepreneurship club at Harvard but I heard of it only because it was new on campus.

India Knowledge@Wharton: But the club obviously didn’t fulfill what you wanted it to.

Ramaswamy: I saw so much potential among the aspirations of the students who were [at Harvard]. I suspected [it would be the same] at universities across the country. These aspirations weren’t being served and harnessed.

India Knowledge@Wharton: Is there an example of something frus - trating that happened or a specific point when you and Travis said, “We can do this better.” What was the spark that made it into something more?

Ramaswamy: We observed, for example, that there were a lot of people at Harvard who were idea-driven but didn’t have technical skills to accomplish what they wanted to accomplish. They were always looking among their own community for people who had technical skills to help them launch a new idea that they had.

India Knowledge@Wharton: The next Facebook?

Ramaswamy: Exactly. And the fact that Facebook was launched during my time at Harvard probably impacted other people’s aspirations. Students had these great ideas. They didn’t have the technical ability to do it themselves, but they knew what they wanted to accomplish and all they needed was to find the right persons, except that Harvard was filled with a bunch of similar people. However, right down the street you have Massachusetts Institute of Vivek Ramaswamy: Breaking Down 92 Barriers to Entrepreneurship

Technology (MIT), which has a higher concentration of people with world- class technical capabilities. Though separated by only two subway stops, this distance was enough of a barrier to limit the type of communication that should have been taking place. If that barrier existed within Cambridge among these two heavyweight institutions, one could only imagine the gulf at a national level. n Published: November 18, 2010, in India Knowledge@Wharton Seth Goldman: Brewing Organic Tea with a Mission-based Business Model Seth Goldman

n 1998, social entrepreneur Seth Goldman founded Honest Tea, the Ination’s best-selling and fastest-growing organic bottled tea company, with a business professor from the Yale School of Management. Honest Tea sources from organic and fair trade tea estates, and has partnered with community development groups ranging from the Crow Reservation in Montana to organizations in South Africa and Guatemala. Goldman talked with Knowledge@Wharton for a podcast about carving out space in the competitive beverage market, helping consumers embrace organics and how tea became the catalyst for following his life’s passion.

93 19 Trailblazers Who Are Changing Your World 94 (Some You Know and Some You Don’t—Yet)

An edited transcript of the conversation follows.

Knowledge@Wharton: Were you entrepreneurial as a teenager?

Seth Goldman: I was. I used to run a lemonade stand near the golf course near my house. And my friends and I would find the golf balls that the golfers had hit out into the woods. We would collect those, and we would sell used golf balls and lemonade.

Knowledge@Wharton: Why tea?

Goldman: Tea is an amazing product. It’s the world’s second most popular drink. Water’s the first. And it is produced by some of the poorest cultures in the world, but enjoyed by some of the wealthiest. So you have this ability to create wealth at a community level without sort of subsidizing or paying anything economically inefficient. But more importantly, tea can taste great if it’s made right. It has wonderful, healthy properties to it, antioxidants and other great benefits for the circulatory system. And so we wanted to make a product that was all natural. And tea turned out to be the perfect ingredient.

Knowledge@Wharton: What’s your philosophy for surviving and even thriving in the fiercely competitive beverage market?

Goldman: The key is to be different. You know, we never came out with just another “me too” product. From the start, our product was less sweet than what everyone else was offering. And that was why we felt it was relevant, because everything out there was much more like soda than it was like tea. And it’s grown. Our differentiation has grown. So now everything we offer is organic. And a great deal of what we offer is also Fair Trade certified. And we’ll continue to raise the bar and find new ways to set ourselves apart. But we’re too small to compete directly with the big companies on their terms. We have to do it on our terms. Seth Goldman: Brewing Organic Tea with 95 a Mission-based Business Model

Knowledge@Wharton: Talk a little bit about Fair Trade. How is Honest Tea socially responsible?

Goldman: You know, the key starts with the product itself. So number one, soft drinks are the single largest source of sugar in the American diet. And we’re offering a product that has a third to a sixth of the calories. So we’re just putting out a healthier product. That alone is a good thing. But the way the product has grown, because it’s organic, there’s no synthetic chemicals or pesticides or any other artificial ingredients going into the bodies of the people who consume the product, going into the ecosystems where the product is cultivated, or going into the bodies of the people who were involved in the processing and picking of the ingredients. So that is also an important thing. But on top of that, we do have Fair Trade certified teas, which means we pay a portion back to the communities where we source the product. And then even the way we conduct our business, we do marketing partner - ships with the Saturn VUE Hybrid. We have a marketing partnership with Jamis Bikes. We give away 1,000 bikes a year to encourage more sustainable transportation. So even the way we communicate and connect with our consumers, we feel, is part of our whole mission-based business approach.

Knowledge@Wharton: Have consumers embraced the concept of organic eating and drinking?

Goldman: They are starting to. It’s really growing very quickly. I think organic has increasingly become about health concerns. If you asked people 15 years ago, “Why do you buy organic?” They’d say, “Well, I don’t want all those chemicals going into the ecosystem.” If you ask them today, they’ll say, “I don’t want all those chemicals going into me or my children.” And that is a much more powerful motivation. And as a result, just a few years ago, the U.S.D.A. started putting their seal, the U.S.D.A. Certified Organic seal, on the bottles. And this really helped set us apart, helped brand organics as a whole. And it’s growing. It 19 Trailblazers Who Are Changing Your World 96 (Some You Know and Some You Don’t—Yet)

is absolutely—I’m convinced. Right now, organics are three to four percent of the whole food business. I believe that within three to five years they’ll be 10%. And some categories, like yogurt, are already10 percent. Bottled tea is less than one percent. So we have a huge opportunity in the next few years to get 10 percent of the bottled tea market to be organic.

Knowledge@Wharton: What about the price differentiation?

Goldman: Honest Tea, in general, costs 20 to 30 cents more than another bottled tea product. So it’s really not that much more. Especially when we can help share the story. What a lot of cultures don’t realize is that tea is one of the few products that’s never rinsed. Tea leaves are picked and dried. And if there are any chemicals on those leaves, they stay on the leaves until hot water’s poured on the leaves. And so they just get washed into the drink. And so I think as consumers become more aware of the value and benefits or organics, I think we’ll continue to grow. And for that matter, as we grow now with Coca Cola, because they’re a partner and distributor of ours, I don’t see our prices going up. And I do see other prices going up. So I think we’re going to be right—we’ll still be a little more expensive, because our leaves are more expensive. But I think we’re going to be within a very affordable set. We’re not talking about twice as expensive, or even 50 percent more. We’re just talking about maybe ten or 20 cents more expensive than the other options.

Knowledge@Wharton: Have you traveled to the communities around the world where your teas are harvested?

Goldman: Yes. I’ve been to Africa, to India, to China. And they’re all amazing communities. One of the great things about tea is that it doesn’t need an industrial agricultural complex. They’re bushes. And so they can grow in wonderfully diverse climates. The diversity of plant and animal life can be very robust in these communities. And so they’re just some of the most beautiful places in the world. Seth Goldman: Brewing Organic Tea with 97 a Mission-based Business Model

Knowledge@Wharton: Have you found the youth market to be loyal to the Honest Tea brand?

Goldman: I think we’re starting. I think, in general, our product is for a slightly older consumer. But it’s striking, even on college campuses, that we’ve seen students react to our product. And just last year, we launched a line called Honest Kids, which isn’t a tea line, it’s a line of lightly sweetened pouch drinks for kids. And it’s been so exciting to see how that line has taken off. And I believe that that will actually fuel, eventually, the growth of Honest-Ade and Honest Tea.

Knowledge@Wharton: Are you planning to pursue the youth market? And if so, what ways would you go about that?

Goldman: You know, I think that’s not our core target market. In general, that market responds better to the highly sweetened drinks, just because of where they are. And obviously, we hope they evolve away from that. But our target consumer’s a little older, a little more discerning. And like I say, as that market becomes more socially conscious, I think they’ll be drawn to our products.

Knowledge@Wharton: What motivates young people today, do you think, to be more socially responsible?

Goldman: Well, the environment clearly is something that is of concern. And a lot of us saw, whether it was Al Gore’s movie, or sort of read about the environmental problems, and then feel, “What can we do to have an impact?” And so then it’s, “Well, you can ride a bike or you can try to change your habits. But you also should be thinking about what you purchase.” And as an example, organics have a much lighter carbon footprint than not organic products, because you don’t have to sort of get engaged to the whole production of the other chemicals. And obviously, they’re better for the ecosystem, as well. So I think environmental concerns can be something. 19 Trailblazers Who Are Changing Your World 98 (Some You Know and Some You Don’t—Yet)

And I’d like to think health concerns will grow among the youth market, but I’m not betting on that one.

Knowledge@Wharton: We’re always directed to follow our passion for our careers. How have you done that?

Goldman: Oh, for me, this is a complete connection between what I care about and what I’m working on. So I care about health issues, I care about environmental issues, I care about issues of economic opportunity in both the developing world and in this country. And this enterprise has allowed me to address all three of those things in a really substantive way. It’s also a wonderfully creative and energizing activity. We just had our company meeting last week, and our employees are so excited about what we’re building. My wife, who works in the non-profit sector, is saying, “People in the non-profit [sector] don’t get excited like this. What’s going on here? They have drunk the Honest Tea.” n Published: December 23, 2008, in Knowledge@Wharton Kareem Abdul-Jabbar: “The Things That You Achieve, You Achieve As a Team”

mmortalized for his “sky hook” shot on the basketball court, Kareem IAbdul-Jabbar is recognized as one of the best players in the history of the National Basketball Association. During his 20-year professional basketball career with the Milwaukee Bucks and the Los Angeles Lakers, Abdul-Jabbar scored more points than any other player in the history of the league and racked up six NBA championships and six MVP awards. He continues as a special assistant coach for the Los Angeles Lakers. Off-court, Abdul-Jabbar has authored several books and appeared in television shows and films, most notably “Game of Death” and “Airplane!” Born Ferdinand Lewis “Lew” Alcindor Jr. in 1947, Abdul-Jabbar changed his name when he converted to Islam. After being diagnosed with a rare form of leukemia in 2008, Abdul- Jabbar said publicly the illness would not prevent him from living a normal life. The former basketball star sat down with Arabic Knowledge@Wharton to talk about being a role model, figuring out one’s work ethic, and leadership.

An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: Kareem, thank you very much for joining us today in Abu Dhabi. A really big theme at the Festival of Thinkers event is role models for young entrepreneurs. Who has been important for you in terms of being a role model as you were growing up?

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Kareem Abdul-Jabbar: Probably the most important role model in my life was Jackie Robinson [the first African-American Major League baseball player and a member of the Brooklyn Dodgers baseball team beginning in 1947], both as an athlete, and then also as a student and scholar. He went to UCLA (University of California, Los Angeles), and he is one of the reasons that I went there.

Arabic Knowledge@Wharton: Tell me more.

Abdul-Jabbar: After he was finished playing professional baseball, he was involved in … a bank in New York called Freedom National Bank, which encouraged people in Harlem to go and patronize this bank. He was also working [as an executive] at Chock Full o’Nuts; they make coffee.

Arabic Knowledge@Wharton: So you had personal contact with him?

Abdul-Jabbar: Not really personal. One of my good friends was his godson. But my own personal contact was just that I’ve been a baseball fan my whole life and I have rooted for the Brooklyn Dodgers and I admired him. So, throughout my lifetime I saw him as someone who really pointed the way in terms of pursuing an education and those types of things.

Arabic Knowledge@Wharton: How does your experience since you retired from basketball help you serve as a role model?

Abdul-Jabbar: I think the whole idea of understanding what to do after you’ve had a professional career as an athlete [is important]; you get such a great opportunity to accumulate some capital, and then if you don’t have an idea of what to do at that point, things can all fall apart. That’s a very unfortunate aspect for many American athletes. They don’t get it in terms of the opportunities that are there until it’s too late and they’ve lost the access, and just the whole chance that they had to make a transition into the world of business. Kareem Abdul-Jabbar: “The Things That 101 You Achieve, You Achieve As a Team”

Arabic Knowledge@Wharton: Keeping the momentum and the transition —that’s interesting.

Abdul-Jabbar: Right, and just having a plan, having an idea. I can think of two gentlemen that I played professional basketball against [who are] doing very well entrepreneurially. One, Junior Bridgeman, owns a number of fast food restaurants, and he used his basketball career to launch that. Another person would be Dave Bing. He has a very successful company in Detroit that produces machine parts, etc. He is presently the mayor of Detroit. There are many aspects to being a professional athlete that the average young man does not understand. When he enters [the world of professional sports] he says, ‘Hey we have an opportunity to make a lot of money, let’s jump on it,’ and beyond that they don’t get it.

Arabic Knowledge@Wharton: I’m sure your height was one of the assets that helped you succeed as a basketball player. But what are some of the other attributes that you think contributed to your success in this area?

Abdul-Jabbar: Well, I think you can’t be a success in anything unless you have some type of work ethic, and that you understand that as a professional person you have to be prepared and know how to consistently deliver on whatever it is you are supposed to deliver, whatever profession that’s in. Whether it’s information, or if you’re a plumber, you have to consistently know what you’re doing.

Arabic Knowledge@Wharton: What sort of work ethic did you have as you were getting into basketball and learning how to become a professional athlete?

Abdul-Jabbar: I learned a lot in terms of understanding my work ethic … from my father. My father had to go to work when he was 9 or 10 years old during the Depression. He delivered ice into people’s homes when they used to have little things called iceboxes. Very few people remember that but that’s 19 Trailblazers Who Are Changing Your World 102 (Some You Know and Some You Don’t—Yet)

what my father did. And he had to help support his family. Then after World War II, he was a musician and he didn’t really get an opportunity to play music for a living, so he became a police officer and supported our family on his salary as a police officer. But he always felt that he had a duty and a responsibility, and he always fulfilled that and I absorbed it. He never sat me down and told me these things in words, but just observing his life and what he did for my family then, that’s how the message got through.

Arabic Knowledge@Wharton: When you think back about your career as a basketball player, what lessons in teamwork and leadership did you learn?

Abdul-Jabbar: I think professional sports teach you a lot about teamwork because you can’t achieve anything just by having talented individuals involved; you have to have people who can work together. The things that you achieve, you achieve as a unit and it’s done as a team. It’s not done because one individual was very extraordinary, had some type of extraordinary talent and that’s why you won. You won because everybody was able to help each other and make the group effort successful.

Arabic Knowledge@Wharton: That’s great. Just one final question: What do you think of role models for the current generation? How pivotal are they, and how might have they changed since you were young and needed role models?

Abdul-Jabbar: I don’t think there’ll ever be any difference in terms of the influence of role models. Leaders are very few and far between, and their contributions to group efforts are always crucial. It doesn’t really matter what context you’re talking about; if it’s a group effort, there’s usually a leader or two in there who enables whatever goals the group is seeking to be attained. It doesn’t really change that much, no matter what you’re talking about—business, sports, or any other effort. n Published: June 1, 2010, in Arabic Knowledge@Wharton Maria Mahdaly: Succeeding as a Female Entrepreneur in Saudi Arabia

ith nearly 40% of Saudi Arabia’s population under the age of 14, Wanalysts have long been warning that the country’s biggest challenge lies in opening up new career paths for its younger generations. Spotting an opportunity, 22-year-old Maria Mahdaly and a group of fellow Saudi Arabian women launched Rumman Company in 2007, a firm that now fosters young entrepreneurs. One of its own businesses is a social media website for Saudi youth, called Fainak.com, which means, “Where are you?” in Arabic. Now boasting roughly 30,000 subscribers in the Kingdom, it has also become an advertising platform and a local events organizer. Rumman’s other business is Destination Jeddah, an events and lifestyle magazine. Coming from a family that embraces female entrepreneurs—her mother was one of the first to open a women’s fashion shop in Jeddah— Mahdaly says she is lucky to have grown up in the household that she did. But she has also relied on her understanding of Saudi culture to ensure Rumman’s social media site and other ventures respect sensitivities and gain local support, something that is critical in a conservative society in which Facebook has been denounced by vocal clerics as misleading youth. In an interview with Arabic Knowledge@Wharton at the 2010 Middle East North Africa ICT Forum in Amman, Jordan, Mahdaly talked about the challenges female entrepreneurs have overcome in Saudi Arabia, the successes and missteps she has learned from while running a business, and being a role model for other young entrepreneurs.

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An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: Tell us about your business projects.

Maria Mahdaly: When I started, I was 19, and one of the things I found was that there was no platform supporting young people in Saudi Arabia. There was nothing that guides them and tells them, “This is what you do with your talents, and this is how you do it.” So we created Rumman Company as the parent company with two ventures. One is Destination Jeddah magazine, which is kind of like the Time Out of Jeddah, and the other is Fainak.com. The youth make up more than half the population in Saudi Arabia, so this is what we can do for them.

Arabic Knowledge@Wharton: How did you figure out the business model? What kind of support did you have?

Mahdaly: When we started the company, we were working from home. We didn’t sleep. We were in the living room working day and night. We talked to a lot of our friends and they helped us understand what the business plan needed. Once our ideas and vision were clear, we approached investors, and right away one accepted. We had an investor for four months, but then we started making our own money and we put it back into the business. Soon enough, we could sustain ourselves.

Arabic Knowledge@Wharton: As a local entrepreneur, did you receive support from the Saudi government?

Mahdaly: There’s definitely been more support for start-ups here. The week of November 21, for example, is [a national] entrepreneurship week. For the first time, even government sectors are [holding] workshops to build skills. Also, two years ago, a fund was established for start-ups. When we started, there was nothing to help us. A lot of individuals recognized the importance of entrepreneurship, and because of that, a lot of government- sponsored initiatives have sprung up. Maria Mahdaly: Succeeding as a Female 105 Entrepreneur in Saudi Arabia

Arabic Knowledge@Wharton: What’s the motivation for young people to do something innovative in Saudi Arabia, where many come from privileged backgrounds?

Mahdaly: Young people in Saudi Arabia are not just well off. They are also open to the world. They travel, they’ve seen a lot. They see a lot of changes happening around the world. They have started thinking that they want to part of the change and do something for their country. That’s why Saudi Arabia is one of the most innovative places in the Middle East. There are young people all over the country starting businesses and being innovative.

Arabic Knowledge@Wharton: Your venture is run entirely by women. Is that easy?

Mahdaly: I always say that being an entrepreneur is not easy for either a man or a woman. But it definitely has its ups and downs if you are female. There are a lot of limitations, a lot of things that you need men to do for you. For example, with legal work, you have to have a man represent you. We did have a couple of obstacles, but now in Saudi Arabia, you feel a huge amount of support for women. That is because a couple of women took the steps to become leaders and put out the challenge: We can do something great, so why aren’t you supporting us? The culture is accepting it; the government is accepting it. King Abdullah bin Abdul-Aziz is a huge supporter of women nowadays. It’s definitely getting better.

Arabic Knowledge@Wharton: How is Saudi Arabia changing its perspec - tive on women being in the workplace?

Mahdaly: The most important change is in accepting women in leadership roles. Women in the past few years in Saudi Arabia have showed they can take leadership roles and be successful. People have accepted that they can have women in the workforce and as leaders. We have men working with us in the office. 19 Trailblazers Who Are Changing Your World 106 (Some You Know and Some You Don’t—Yet)

When we started the company, we felt men wouldn’t accept a female boss: They wouldn’t accept tasks from, or listen to, a woman who has authority. But the culture has changed a lot in the past three years. I don’t think we face that problem now. Since there are a lot of female entre - preneurs and women who are leaders now, men aren’t as intimidated.

Arabic Knowledge@Wharton: What’s been your biggest success, and how are you trying to improve that?

Mahdaly: The biggest success is the impact we are having on our young people. A lot of Saudi youth have joined us, even on a part-time basis. We’ve built up character in these young people. Now, 60% of the youth who joined us have started a company or initiative [of their own]. For example, one started a production house, and another an event management company. Seeing young people using their experience with us to start their own businesses is the main success. When we started to invest in young people, we did it out of passion and goodwill, but now we want to do it in a sustainable way. We want to do it in a way that gives them strong experience before they graduate, which they can take to the professional world.

Arabic Knowledge@Wharton: What’s the biggest misstep so far, and how did you learn from it?

Mahdaly: Our biggest challenge was with Fainak.com. We were very successful in the first six months. We didn’t expect so many people to join us and be part of the company. We weren’t ready for it. We didn’t have enough people working in the office. We didn’t know how to control everything, and it was getting chaotic. We paused to examine the structure of the company and started figuring how to control everything. The organization of the core of the company was key. Now, we are very stable and gradually reaching our goals. Maria Mahdaly: Succeeding as a Female 107 Entrepreneur in Saudi Arabia

Arabic Knowledge@Wharton: How did Fainak.com achieve its growth?

Mahdaly: There is no other platform specifically targeting young people in Saudi Arabia. In our first event, we said, “What we do is we support you guys.” Someone stood up and said, “What kind of things can you do for us?” I asked, “What do you have?” He said he was studying finance but produces movies as a hobby. I said, “Let’s put you in contact with our people.” We guided him and got him training. Now, he owns his own production house, and he hasn’t even graduated from school yet. As soon as we did that, a lot of people started to trust us. We work in a fun and innovative way. It’s not, “Come to the office and we’ll interview you.” It’s very fun and entertaining, but there always is a message behind it.

Arabic Knowledge@Wharton: Fun and entertaining in what way?

Mahdaly: We do a lot of social work. We encourage young people to give back to the community. For example, we started a car wash campaign to help the poor. Usually when you think of a car wash, you think of girls washing cars and guys walking around. We had a lot of volunteers, and a lot of guys came. Within three hours, we had reached double the target we had set.

Arabic Knowledge@Wharton: But your company is not solely philanthropic?

Mahdaly: We call ourselves a for-profit social enterprise. Our impact is not only social; we also have a financial impact. We have the only platform for young people in Saudi Arabia, so a lot of businesses and brands tell us that they want to reach this target audience and be a part of our brand. We connect companies with the target audience in a way that [the brands] can invest in [youth]. For example, most companies are trying to engage young people through something they can benefit from. We get a young person, who has an idea that the company can support and be part of. Or, if an company wants to do an event, we can create a program. We 19 Trailblazers Who Are Changing Your World 108 (Some You Know and Some You Don’t—Yet)

create an event and a social media campaign, which reaches the target audience in a way that benefits them as well.

Arabic Knowledge@Wharton: What effect is social media having on Saudi Arabian society?

Mahdaly: Social media is a whole Internet culture. We are connecting with others in a way that wasn’t possible before. People are just getting into it. They started to notice how important conversation is online. They can express their opinions and thoughts, without the boundaries of a physical meeting. With any new idea, such as social media, there are supporters and opponents. The important thing when starting something is to make sure it’s compatible with your culture. Respect all people, including the religious groups. I’m not promoting or doing anything out of [line with] the culture. That’s why we haven’t had any problems.

Arabic Knowledge@Wharton: You’re now traveling to events to speak about entrepreneurship. Is it overwhelming?

Mahdaly: It is overwhelming. I still don’t get it. I’m like, “I’m getting invited to this conference, wow….” I don’t see the impact I’m making. Sometimes I meet someone who says, “You are my role model. Can I learn from you? Can I be an intern?” These things usually shock me. I would have loved to have met people when I was starting out and been around them while they worked. I always give them a chance and treat them the way I would have wanted to be treated when I was starting out.

Arabic Knowledge@Wharton: Do you have a role model?

Mahdaly: My only role model is my mother. She started being her own boss a long time ago, and I’ve seen her struggle through the experience. When I was young, she started a retail shop, one of the first retail shops in Maria Mahdaly: Succeeding as a Female 109 Entrepreneur in Saudi Arabia

Saudi Arabia. She was selling women’s fashion. It was difficult from a cultural point of view. People didn’t get that a woman could start her own company. They would ask her if her husband was running the store, and she would have to explain that this was her project alone. I’m lucky to be in a family that accepts entrepreneurship.

Arabic Knowledge@Wharton: What would you say to young entre - preneurs looking to start a business?

Mahdaly: Be innovative and never try to create something that already exists. Look at best practices and see if you can do something better. Don’t just create another Facebook or Twitter….Also, getting investments can be difficult. So, try to build your concept and what you want to do. Show your passion. I’ve always believed that doing something you love makes you successful. Once you find that, you’ll be able to reach the goals you set out for yourself. n Published: November 30, 2010, in Arabic Knowledge@Wharton Under Armour’s Kevin Plank: Creating “the Biggest, Baddest Brand on the Planet” K e n d a l l

W h i t e h o u s e

evin Plank admittedly perspired a lot back in the early 1990s when he Kwas a special teams player on the University of Maryland football team. After finishing his football career, Plank decided to find a solution to the problem. He spent the next several months going back and forth between his final classes as an undergraduate and a nearby tailor shop, where Plank tested fabrics for their sturdiness, water repellent qualities and comfort. The result was the first form-fitting, moisture wicking Under Armour shirts—the iconic product of what is now, a little more than a decade later, a billion dollar company. Under Armour still sells those shirts, but it has expanded into many corners of the athletic/casual wear market, from

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compression shorts to sports bras, innovative mouth guards and basketball shoes. During a presentation co-sponsored by Wharton Leadership Lectures and the Jay H. Baker Retailing Initiative, Plank, the company’s founder and CEO, said he was proud of what he and Under Armour have accomplished in such a short span, and predicted significant growth for the company in the future. “Great companies have to manage the cadence of what they do. ‘Chapter One’ [of a business’s growth trajectory] has to relate right to Chapter Two and Chapter Three and Chapter Four,” Plank noted. “Every great brand is like a great story. Every commercial we run, every product we make, is like a chapter in that book. If we don’t manage the cadence, though, we will get too far ahead of ourselves.” Becoming an entrepreneur was not a given for Plank. He acknowledged being a mediocre student during high school in Maryland, and went to a prep school for a fifth year of high school instruction before enrolling at the University of Maryland and making the football team as a walk-on. Plank’s father was a real estate developer and his mother served as mayor of Kensington, Md., for 13 years before working in the Ronald Reagan and George H.W. Bush administrations. But the mission of creating a no-drip T-shirt inspired Plank and, after college, he set up shop at his grandmother’s townhouse in Washington D.C. Thirteen of Plank’s high school teammates and a dozen more of his college buddies had become professional football players, so he started sending them sample shirts. He made the rounds calling on athletic equipment managers at different colleges and relying on $16,000 in savings to tide him over while pursuing his dream. “I was always … naïve enough to not know what I could not accomplish,” Plank said. “If I had been out in the industry instead of being a college kid who had an idea for another T-shirt, I would have been too scared to do anything. I was just looking at how to [make] the best T-shirt, so I almost willed it to happen.” A former teammate, Jim Druckenmiller, became a back-up quarterback for the San Francisco 49ers and talked up Plank’s shirts to teammates. Soon the quarterback across the Bay, Jeff George of the Oakland Raiders, was on Under Armour’s Kevin Plank: Creating 112 “the Biggest, Baddest Brand on the Planet”

the cover of USA Today wearing an Under Armour shirt. Plank thought that was his big break, but he only received three phone calls that day—one from his mother, asking him to come home and clean out his childhood bedroom. Plank said the experience made him realize that every day was a new one—one which required real work. Under Armour started slowly. In 1996, Plank accrued $17,000 in sales, and had to tap into credit cards to get by. The next year, sales increased to $110,000. In 2009, a few years after the company’s initial public offering, sales hit $1 billion, and the brand is now a household name, especially among those consumers Plank covets—the youngest ones. “Organic growth is happening everywhere, no matter what,” Plank noted. “Our object cannot be to try to convince 25-year-olds to change brands, though that is always something good. But now 8-, 9- and 10-year- olds have a relationship with Under Armour [and say] it is their brand. I tell them that their great-great grandfather [bought products from] the guys from Germany [Adidas] and their grandfather grew up with the guys from Oregon [Nike]. But you will grow up with Under Armour.” Accordingly, Plank has gone after young athletes to become the faces of Under Armour because they have great potential for marketing into the future. The athlete he believes best represents the company may be NBA point guard Brandon Jennings, who is in his second year playing for the Milwaukee Bucks. Jennings bypassed college ball and instead played professionally in Italy before being drafted by the Bucks. Though he only averaged 15.5 points per game in his rookie season, Jennings is flashy and personable, Plank noted. He blogs on the Under Armour website and attends a lot of kid-oriented events and special equipment sales in malls. He uses Twitter and Facebook, connecting with young people daily, sometimes hourly, with the Under Armour brand name never far away. “We want to be a legitimate number two [after Nike] in the basketball market, and that may take time,” Plank said. Under Armour did not produce any kind of footwear until introducing football cleats in 2006. Running shoes came in 2009, and only this year did the company start selling basketball shoes. “We need 5% or 6% [of the market] to start attracting the 19 Trailblazers Who Are Changing Your World 113 (Some You Know and Some You Don’t—Yet)

best young talent. It is a $1.3 billion market just in the United States, so that would be big.”

Passion, Vision and People Ubiquitous in Plank’s talk and accompanying Power Points were the words “Passion,” “Vision” and “People,” a set of principles for success in business that he learned from a Chinese businessman whom he met early in his quest to spread Under Armour globally. “My passion is to build the biggest, baddest brand on the planet,” Plank said. “My vision is that I want to stay focused….We want to make sure there is nothing that prevents us from doing what we want to do with our brand. Finally, we want to have the best type of people—team, team, team. I can’t underscore that need [enough].” Plank also abides by what he called “four pillars of greatness”: “Build a great product.” “Tell a great story.” “Service the business.” “Build a great team.” The 38-year-old Plank likes his team young. He said the average age of his more than 3,000 employees, about half of whom work in the company’s Baltimore headquarters and the rest at regional offices around the world, is 32, “and we want to keep [the work environment] young and fresh.” Under Armour’s advertisements, in addition to spotlighting Jennings, tend to include other young athletes in action—competing in extreme sports “X Games” events, snowboarding, soccer, wall-climbing, ultimate fighting and beach volleyball. At least one athlete signed to an endorsement deal, however, falls at the high end of the Under Armour employee age range—33-year-old New England Patriots quarterback Tom Brady. But Plank noted that Brady epitomizes another aspect of Under Armour—the company’s against-the- odds aura. Upon entering the NFL, Brady was a low draft choice—picked in the sixth round and 199th overall—who became a standout quarterback, winning three Super Bowls and marrying Brazilian model Gisele Bündchen. “Unfortunately, we don’t have Gisele,” Plank kidded. “But Tom signed with us not because we had the biggest check, which we didn’t, but because we had the same, right-minded values.” For the moment, Plank is not anxious to move Under Armour into the leisure wear market. Instead, he plans to solidify the company’s growth in Under Armour’s Kevin Plank: Creating 114 “the Biggest, Baddest Brand on the Planet”

the women’s sports apparel market, which he said now accounts for about 30% of sales. He is also looking to create more of a presence for the brand in Europe and Asia—an effort that will take time because the company has to break into the soccer and, to a lesser extent, basketball markets. Under Armour’s advertising makes full use of two of Plank’s favorite slogans—often together: “We must protect this house” and “We will.” According to Plank, both are necessary strategies to build a viable company. “Under Armour begins with a vision that we are making athletes better,” and every product, Plank noted, can’t just be fashionable: It also must enhance the athletic experience. The company’s mouth guards, for instance, have back-bites that level the head and improve posture. “You do something so you can get a quick buck and that may look good on the revenue chart, but only for a little while. What you do must protect your brand or you will ultimately fail. If you slap a logo on it, it might sell right away, but the brands that will endure are the ones that respect the consumer.” The “we will” slogan is important as well, Plank added. “Nothing is really God-given. You have to embrace the things you feel are important and work hard—will it to happen. “What I do know is that we have not yet built our defining product at Under Armour. We are not living in the past. Our larger competitors are 20 times our size. There is running room all over.” n Published: January 5, 2011, in Knowledge@Wharton Tal Dehtiar: Looking for “Profit with a Purpose” from Socially Conscious Footwear Customers

reating an international company that sells shoes made in Africa has Cconfronted Tal Dehtiar with a series of unexpected challenges. Among them: the color blue. “The only colors the factories are used to working with are black and brown,” said Dehtiar, who came to Wharton as the first speaker in the 2009 Levy Social Impact Lecture Series. “They have never had to make shoes that are gray or purple or blue or light blue. It still happens once in a while. They will give us a pair of shoes and one is light blue and one is dark blue, and they will say, ‘What’s wrong? It’s blue.’” Dehtiar, who lives in Ontario, Canada, is founder and president of Oliberté, a start-up that hopes to produce casual footwear in Africa and sell it to socially minded consumers in the U.S., Canada, Europe and beyond. Oliberté—a name Dehtiar made up by combining the “Oh” in “Oh Canada!” with the French word for freedom—is a for-profit company, but Dehtiar believes it is “profit with a purpose.” To Dehtiar, that means building the company using fair trade principles such as guaranteeing factory workers a fair wage, paying farmers above market price for raw materials and keeping environmental impacts in mind. “I personally don’t care about shoes,” said Dehtiar, 29. “I personally care about building jobs in Africa. We just want people to have jobs for the rest of their lives so that they have good pay and they can take care of themselves and their families.” Dehtiar envisions a shoe company that uses natural rubber from Liberia, harvested from hevea trees and processed locally. The company would then

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ship the rubber in sheets to Ethiopia, where workers in factories would cut it into soles and combine it with cow, sheep and goat leather from Ethiopian farmers. Shoes would be sold online and in exclusive shops in cities worldwide. As sales grow, Dehtiar hopes to expand operations to as many as 10 African nations. Dehtiar believes his target market will be affluent adults between 18 and 45 who are part of the so-called LOHAS movement—consumers focused on “Lifestyles of Health and Sustainability.” According to www.lohas.com, the LOHAS market in the U.S. is a $209 billion market of about 41 million Americans—approximately 19% of the U.S. population— who focus on health, the environment, social justice, personal development and sustainable living. “There are about 60 million North American adults who care about and are willing to buy [products] that are fair trade,” Dehtiar says. He anticipates an even bigger buzz about his product in Europe and Japan, where the LOHAS movement is stronger.

A Very Patient Wife It is too early to tell if Oliberté (www.Oliberté.com) can profit from its purpose. After an exhaustive search, Dehtiar has found three factories he likes in Ethiopia, but he is still struggling to set up the rubber processing plant in Liberia, and has been forced to use rubber from Sri Lanka for his first 3,000 pairs of shoes. Oliberté launched officially on October 1, 2009, and hopes to have shoes on store shelves in New York, Philadelphia, Chicago and Seattle by February or March of 2010. Still, he has yet to find an investor willing to provide the $250,000 to $300,000 he needs to keep the company humming. So far he has spent more than $100,000 in personal savings, loans from family and small lines of credit to get the company off the ground. “The bank says, ‘We’re not going to help you out. Africa is too risky,’” Dehtiar noted. “So I’ve been putting a lot of my money—luckily, I have a very patient wife, so it’s ‘our money,’ not ‘my money’—into this. But I love my job. I love my life. Yes, we’re broke but we’ll make our money. I’m not worried about that.” Tal Dehtiar: Looking for “Profit with a Purpose” 117 from Socially Conscious Footwear Customers

If he remains undaunted, it may be because Dehtiar has a history of taking on big challenges. In 2004, he and Michael W. Brown co-founded the charity MBAs Without Borders using seed money from Wyeth Canada, where Dehtiar worked as a medical sales rep, and DeGroote School of Business at McMaster University in Ontario, where he got his MBA. “When I was running MBAs Without Borders, for the first year, I didn’t take a single [penny in] salary. We just didn’t have the money. Then the second year, I brought in about $1,000 a month,” he said. MBAs Without Borders sends young MBA volunteers to the developing world to provide guidance and expertise for business development. Over the past five years, the organization has sent more than 100 MBAs to projects in 25 countries, mostly in Africa. Projects have ranged from a handicraft cooperative for HIV-positive women in Swaziland to a product placement campaign in Nigerian films for mosquito nets. Five years of extensive travel through Africa and conversations with people across the continent sparked Dehtiar’s interest in starting a business there, he said. People told him, “Look, Tal, we don’t need another … charity. We need jobs.” Charity “is not the real way to solve poverty,” Dehtiar said. “You cannot keep giving people things. Over and over again it is a mistake we see, these handouts. You give away T-shirts. You give away money. You give away food. I believe in an emergency, in a crisis, you do need emergency aid … but once a country is stable enough, you don’t need handouts. You need to build jobs. You need to create a middle class. You need to create small businesses.” Although he knew little about the shoe industry itself, Dehtiar knew a lot about working with international companies—and a lot about his target market. “I understood the kind of consumer who wanted something socially responsible. I knew what they wanted both from a charitable point of view as well as from a materialistic point of view.” Dehtiar also wanted to build a company that would endure over time. Shoes have been worn for thousands of years and will continue to be worn in the future, he said. Choosing to make an existing product in a new way appealed to him. Entrepreneurs can be successful if they do their homework and capitalize on what they already know best, Dehtiar stated. “Everybody 19 Trailblazers Who Are Changing Your World 118 (Some You Know and Some You Don’t—Yet)

wants to reinvent the wheel, but there’s nothing wrong with doing what’s available and doing it better.”

Skipping the Bribes He got the chance to pursue the idea after CDC Development Solutions, a Washington D.C.-based nonprofit, acquired MBAs Without Borders in January 2009. At first, he wanted to build a shoe factory in Liberia, which has a large supply of natural rubber but exports most of it unprocessed. An exploratory trip proved that idea would be too expensive. “When I left Liberia, I realized I couldn’t afford to build a shoe factory. And yet, there was this rubber.” Dehtiar decided he would try to set up a small-scale rubber processing plant in Liberia and ship the rubber to Ethiopia, which already had tanneries and a budding shoe industry. He researched the rubber-making process and ordered the equipment: custom stainless steel drums from Portugal and heavy rollers from Thailand. “Talk about challenges,” Dehtiar said. “We shipped that in March. It just cleared customs last week. Why? For the last three months, there have been a couple of officials who wanted a bribe. I refused to pay it. That’s not how we do business, because if you pay one bribe, you’ll have to pay another bribe. I don’t feel right about that.” He remains optimistic that his contact on the ground in Liberia will get the plant running within the next six weeks. “We’re hoping to show others that you can do something with this resource.” Factories in Ethiopia posed different challenges. “A lot of times, they don’t follow the design,” he said. Quality of samples could vary even within the same factory. In one case, Dehtiar severed a relationship with a factory after finding out the owner employed underage workers and didn’t pay as high a wage as he said he would. Dehtiar looked at eight factories and ran competitions between four of them before choosing three. “When we finally launched the company, I think we were on version number 45” of the business plan, he said. Dehtiar has made three trips to Africa so far and plans to make another before the end of the year. In the process of setting up the company, he relied heavily on contacts he had in Africa to interview factory owners and Tal Dehtiar: Looking for “Profit with a Purpose” 119 from Socially Conscious Footwear Customers

workers, including one former intern from MBAs Without Borders who stayed for six months in Ethiopia to help. Dehtiar now has four people on his team: a part-time designer in Canada and three locally-hired contacts in Ethiopia and Liberia who oversee operations full time. He is looking ahead to a positive cash flow sometime between November 2010 and February 2011. The goal: $1.5 million in sales in 2011—or 15,000 pairs of shoes at about $100 per pair. Those numbers are conservative, based on about half of what shoe companies such as Toms and Veja sold in their first three years, Dehtiar said. “Based on those numbers, we can thrive.” Oliberté has kept marketing costs low so far. “We don’t do a lot of trad- itional marketing. We only spend our money on going to trade shows. We don’t do billboards, we don’t do radio ads.” He plans to focus on online sales and ramp up the brand’s exclusivity by selling through small boutiques and select chain stores. “We like to work with [only] one retailer in every city,” Dehtiar said. In the U.S., the company has secured spots on the shelves of Solefood in Seattle, the Bus Stop in Philadelphia, Hanig’s in Chicago, and David Z in New York City. Europe may soon follow: Dehtiar says he receives four to five emails per week from people in Europe who want to distribute the shoes. Still, it’s a hard sell to investors. His costs are three times that of shoes produced in Asia, so margins are tight. He hopes for $2.5 million in revenue in five years, but investors want to see at least $10 million. Dehtiar has approached more than 35 potential benefactors, with little success. “They say, ‘I can’t give you that kind of money because you’re only giving me a 12% return over the long run, and I want 20% to 25%.’” Over time, he has learned to focus on sales, orders and celebrity interest in his product when talking to investors, rather than playing up the African connection. “For us to be an African brand would be a huge marketing mistake. As much as people love the story, they care about the numbers.” His advice to start-ups: Find the capital ahead of time. “You can’t expect somebody to give you a million dollars just because you have a good idea.” n Published: November 24, 2009, in Knowledge@Wharton Seth Berger’s Full Court Press: Building a Company from the Ground Up

eth Berger is founder and former CEO of AND 1, a company special - Sizing in basketball shoes and apparel. Started by Berger and several classmates while they were students at Wharton in the early 1990s, AND 1’s original product line featured t-shirts targeted at young basketball players; the company later expanded to offer a full line of apparel. Under Berger’s leadership, revenues increased from $1 million in 1993 to more than $200 million in 2001. In 2005, Berger sold AND 1 to American Sporting Goods, a private footwear company based in Anaheim, Calif. Berger spoke with Knowledge@Wharton in a video interview about what it takes to build a successful company.

An edited transcript of the conversation follows.

Knowledge@Wharton: To start off, successful entrepreneurship is all about seizing the right opportunity at the right time. Where did you get your idea for the business and how did you know that it was the right time to pursue that opportunity?

Berger: My idea came while I was here at Wharton. When I was in grad school I did an advanced study project for a business plan called The Hoop, a basketball retail store, in a class with Miles Bass, who teaches undergrads. He’s a great teacher. In my second year of grad school I morphed that business plan into a database business targeted at basketball players. I actually left school when I graduated to do the wrong business at the wrong

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time, which was a basketball database business. In about three weeks I realized that I was broke. I was going to stay broke unless I changed my business idea very quickly. In the sports and footwear apparel industry, there are lots of companies that did multi-sport. Nike, Adidas, Reebok at the time would do basketball, football, tennis and soccer, whatever it might be. But no one was focusing just on the basketball player. We thought we could [find a] niche … in basketball. The second part of your question in terms of knowing when it’s the right time: I don’t think we ever knew. I also think we got lucky with a few things that happened: Michael Jordan retiring, Lattrell Sprewell making a great playoff run just after they had signed him….When the ball bounces, you say in hindsight, “Oh; that was the right time.” But when you’re sitting there, you’re crossing your fingers saying, “I really hope this is the right time.”

Knowledge@Wharton: After launching AND 1, what challenges did you and your business face, and how did you overcome these challenges?

Berger: That’s a hard question, because I think everything was a challenge. When we started, we had no experience first and foremost. None of us had experience in clothing or footwear. The biggest challenges for us were figuring out what the right questions to ask were. Once you know what the right questions to ask are, you can always find the answers. But I had two or three partners and they were really smart kids. One was a Wharton undergrad with a 3.96 GPA. The other kid had gone to Stanford. Then you had me. I was looking at these guys for the questions, and then we’d figure out the answers. So, the first hurdle we had was lack of experience. The second hurdle we had was that we were young. We’d walk into a room at 25 years old and say, “We’re here to show you a product that we can produce over in China; we can deliver it to your factory within four months.” They would look at us and say, “No, you can’t do that. You’re kids.” Once you get past the hurdle of, “Hey, we deliver when we say we’re going to deliver,” people trust you. We got past that challenge of being young. Seth Berger’s Full Court Press: Building 122 a Company from the Ground Up

On the flipside of the challenge of being young, I think it’s a huge opportunity. Whenever I speak with [students], I always try to tell them, you should start your business now, before you have a bunch of experience, because what your experience will tell you is what you can’t accomplish. When you graduate at 21 or 25, you have no idea what you can’t do. You think you can do anything. That’s the best time to go start a business. When you’re 40, you’re looking back saying, “Wow. How did we get that done? That was insane.”

Knowledge@Wharton: You mentioned that part of entering at the right time was Michael Jordan’s retirement. Why was that such an opportunity for you and your company?

Berger: It was in the fall of ‘93. I remember we were riding to a friend’s high school to give a talk about what the first couple of months of starting a business had been like. I heard over the radio that Michael Jordan had retired from basketball. Jordan at the time [was] a dominant player in basketball, so immediately retailers had hundreds of millions of dollars of Jordan clothing that they wanted to replace, because they thought no one was going to buy it. Actually, the first time Jordan retired, his sales [dropped]. Since his second retirement, Jordan has continued to grow. But for the first couple of years after Mike stepped out, it created a huge opportunity for us when consumers and retailers wanted something different. If Mike had not decided for whatever reason to retire, you wouldn’t be interviewing me today.

Knowledge@Wharton: How did you seize the industry opportunity and provide products that consumers wanted?

Berger: We knew our consumer extremely well because we were consumers. When we created basketball apparel and footwear, we thought we knew what a ball player wanted. At 25 I was just on the edge of the target consumer—a 16- to 18-year-old ball player... 19 Trailblazers Who Are Changing Your World 123 (Some You Know and Some You Don’t—Yet)

The most important thing for us was knowing our consumer, and then putting out a product that we thought he would want….Our first shipment in November [was] a disaster. We did shirts, and the colors were lime green and purple, so [they] didn’t really sell. They gave us another chance. We came back in the spring and fixed the colors, and our stuff flew off the retailers’ shelves. Within three weeks they were completely sold out. [In 1994], we went from being in 10 Foot Lockers in February [to] 1,500 Foot Lockers in June across the country. We went in four months from being zero in the t-shirt market to being their number two basketball supplier.

Knowledge@Wharton: As you mentioned, AND 1 targets a very specific market, the niche market of 16- to 18-year-old basketball players. How did you cater to this market? What kinds of strategies did your company employ in order to market to this very specific group of consumers?

Berger: Our product was our biggest marketing. As a small company with a limited budget, the [best] way to message to your consumer is actually your product. Our product had to be great to wear and actually say something to the consumer [so that] he could represent himself as a basketball player….Also, we would conduct focus groups. We would take our stuff out to the basketball courts all across the country and ask kids, “Which of these shirts do you like? Which of these shorts do you like? Which of these shoes do you like?” As we grew, we continued to hire young basketball players in our product and marketing area. We hired kids from Penn, from Stanford, from Haverford, [all of whom] played ball. They would be our first filter. If our stuff can’t get by them, it is not getting out the door. [Next] we go to the kids who are going to be buying our products six or nine months down the road. In the end, it doesn’t really matter what I like the best….It matters what that 16-year-old kid likes.

Knowledge@Wharton: Given your company’s success in the competitive retail industry, how did you distinguish AND 1 from other brands? Seth Berger’s Full Court Press: Building 124 a Company from the Ground Up

Berger: The most important thing was that AND 1 was a basketball-only brand. We felt that we couldn’t occupy the consumer’s mind for all of footwear and apparel in athletics. We wanted to make sure that when you thought of basketball, you thought of AND 1 first. If you thought about soccer or tennis, we didn’t want you thinking about our brand. In fact, some folks would say, “I don’t know what AND 1 means. I am not going to buy that.” We would say “great. If you don’t know what AND 1 means, then you shouldn’t be buying our product.” [Targeting that niche customer] started us on the right path, kept us going. Actually, when we veered away from that path later, it really screwed us up as a company.

Knowledge@Wharton: I know that your company developed an enter - tainment division that managed several promotions for the brand. Can you tell us a little bit about that?

Berger: Yes, that is fun. Rafer “Skip to my Lou” Alston is an NBA player. I knew Skip back in the city when he was seven, but everyone started to know him when he was 17. He had been around a bunch of different high schools before he went to Fresno State. He was a great basketball player. We actually had sponsored the Rocker all-star game, which is a great game in New York City for playground ball players. We had these tapes of Skip and some other great ball players. There is one all-star game that had Conrad McRae, Skip, Kareem Reed, a kid named the predator; it was an unbelievable all-star game. We had these tapes, and actually, a kid was working at an ad agency. He said, “Why don’t you make a mix tape of those games, put it to music. You may see this all the time because you are from New York, but folks outside the city have never seen this kind of basketball.” So we made a tape. We gave 50,000 tapes away. It was the most success - ful promotion in a weekend that Foot Action had ever had. Then the ball players actually said, “Why don’t we host some games?” The first game we hosted at Hunter College, and Mos Def did a concert after the game. It was jammed pack in the summertime. Then from there, we approached ESPN 19 Trailblazers Who Are Changing Your World 125 (Some You Know and Some You Don’t—Yet)

and said, “Look, we have this idea for a tour for a TV show.” It was early on in the reality thing. They ran with it. Actually, in its second or third year, street ball was a better performer for ESPN than SportsCenter among teen males.

Knowledge@Wharton: You mentioned that moving away from your core product was actually detrimental to your business. Could you explain that a bit further?

Berger: Sure. When you start to grow as a business, [you want to] keep growing and be as big as you possibly can be. That conflicts with continuing to be true to who you are as a company and servicing the same consumer. As a basketball brand [targeting young males], we started to feel like there was only so big that we could get. So we started to do other products. We did a slip-on shoe. We did a training shoe. We started to do training clothing. I really feel that it diluted our brand. We started to alter our logo so it wasn’t so basketball-only. The idea was, “Hey, we need to enable more consumers to feel that they can buy our product.” I actually think that started our slide down when we really should have said, “Look, you know what? If we can be a $200 million, $300 million, $400 million, $500 million company, and it might take us 10 years to get there, that is as big as we can be.” That is doing the right thing for the consumer versus saying, “I want to be a $500 million company in two years. We need to expand our product line.” You forget why the consumer likes you.

Knowledge@Wharton: Instead of expanding vertically, what did you do to ensure that your business had scalability in your target consumer market?

Berger: When we went vertical, we realized that this business has a limited size. At our height in 2001 with our licensees, we were about $285 million…. [But] we are in an industry where we are competing with $1 billion, $2 billion, $12 billion companies and they can spend so much more in marketing. So we felt like we needed to generate more money so we could spend more money on marketing. Seth Berger’s Full Court Press: Building 126 a Company from the Ground Up

I think the mistake we made was saying, “You know what? If we can be a very profitable $300 million company, that is great. Let’s do that. If we want to grow, what we should be doing is buying other brands that have different meaning to their consumers. So let’s buy a running brand. Let’s buy a fashion brand, as opposed to trying to make AND 1 broader to the consumer.” Nike is probably the only brand in the footwear and apparel industry that has done a really good job of being true to itself as an athletic brand and yet somehow being able to bridge the fashion gap. Adidas tried it; they failed. Reebok did it; they failed. Under Armour is going to try and I hope they succeed, because Kevin is a good friend of mine. But I am not so sure. But Nike has always said, in terms of their marketing, all they will say is athlete, athlete, athlete, athlete, athlete. That enables people my age to wear a swoosh and think, “Ah. I look like an athlete now.” Yet somehow, that has become very fashionable. I think they are the only ones that have been able to do it.

Knowledge@Wharton: What would you say is your best and worst experience while building AND 1?

Berger: Wow. I don’t know that I had a worst experience. I can give you a moment of horror. We had signed Stephon Marbury from Georgia Tech who left as a freshman and played for the Minnesota Timberwolves. He was our first sneaker endorser. He was number four or five, I think, in the NBA Draft. I think Rayon was fourth. So we are invited by the Timberwolves to sit court side to watch Steph play his first regular season game. We had done a massive national TV campaign. We gave away 10,000 t-shirts at the Target Center. The campaign was called, “Breaking Ankles with Stephon Marbury”. He was supposed to break an ankle; someone is supposed to cross you over and they are breaking ankles. So he is having a good first quarter. He is starting. Him and Garnett, they are playing relatively well. About five minutes into the first quarter he comes down on Cadillac Anderson. Now Cadillac Anderson is seven feet tall and he is not a great player. But his foot makes Shaq look small. He comes down on Steph’s foot, rolls his ankle, breaks it….They pick up Steph, 19 Trailblazers Who Are Changing Your World 127 (Some You Know and Some You Don’t—Yet)

carry him over and sit him down right next to us because they had sat us down at the end of the Timberwolves bench. Steph looks at me. I look at him. He is thinking, “These shoes stink.” I am thinking, “What the heck were you doing trying to drive on Cadillac Anderson?” We have $6 million of shoes on order at that time. The shoes are due to hit our warehouse the next week. Then get shipped out to retailers. I literally called my director of marketing back home and I say “Aaron, it has been a great run. Just so you know, there is a really good chance we are going to go bankrupt, because we can’t float these shoes if the retailers ship them back to us; Marbury ain’t going to be on the court for four months.” But it all worked out. He actually was out for four months with a broken ankle. We got ripped in the media for our campaign “Breaking Ankles.” I really don’t know if there is a best moment; there are so many. I mean the whole experience with AND 1 was incredible. Twelve years with great people and way more success than we had ever imagined. If I thought of one moment though, it was the first time I saw a kid wearing our t-shirt. It was actually a 12-year-old girl at a “hoop it up.” I was out that first summer and hadn’t seen anyone really wearing it….It was like “Oh, perfect. Our target consumer is right here; a hard core basketball player wearing AND 1.” She had cut the sleeves off and was trying to look diesel. It was great.

Knowledge@Wharton: Clearly you have experienced a lot of success in a very competitive industry. If you were to start another company today, what would it be?

Berger: [laughs]. I don’t know. I really don’t think I would do that actually. We sold the business in 2005. I’ve got three young kids. I have been coaching high school basketball. I’ve had three or four opportunities to do really cool things; each time I have decided that the time with my kids and the time that I am spending with the kids from my high school, because I coach them six months during the year, are more valuable than starting another business.

Knowledge@Wharton: What do you think is the next big thing in the athletic apparel industry? Seth Berger’s Full Court Press: Building 128 a Company from the Ground Up

Berger: I think it is going to get even more vertical. Towards the end of our run, the dynamics of the industry got very difficult. You had sneaker factories that were squeezing the vendors, the retailers and the consumers; then everyone is squeezing back. So it is very difficult these days to be a successful vendor, meaning a Nike or a Reebok. The margins are too slim. I think [we] have seen a lot of consolidation. At a certain point there is going to be some funky combination of Internet, retail and manufacturer. Nike, Adidas or UA is going to say to Foot Locker, Champs, and JC Penney: “We are going to open up a thousand of our own stores. We no longer need you as a pass through to the consumer.” The Internet, I think, has [increased] the availability of information to the consumer; at this point the consumer must know that for that $100 shoe, they are spending an extra $40 that they don’t need to spend because it is passing through too many hands. [Companies] might even start [looking] over in China because they are beginning to lose some business to other nations. They might say, “Look. You know what? We are going to buy a brand, have the vendor, and we are going to own a retailer so that we can deliver a shoe that a kid would be spending $100 on for $60.” That has to happen. I think that is probably the next stage.

Knowledge@Wharton: Speaking of China, in terms of brand marketing, there has been a lot of hype in the business world around advertising during the Beijing Olympics. What is your take on marketing athletic products through this event? Given that there is so much competition for advertising, do you think that it is a worthwhile pursuit for athletic brands? Berger: I think it is worthwhile for Nike, and I think everyone else is wasting their money.

Knowledge@Wharton: Why is that?

Berger: At the end of the day, athletes are associated with the brands that they wear. Kids don’t really care who put the commercial on. At the end of the day they know LeBron James wears a Nike shoe. So Adidas, Reebok or 19 Trailblazers Who Are Changing Your World 129 (Some You Know and Some You Don’t—Yet)

anyone else can “sponsor” the Olympics. Actually, it happened it Atlanta…. In Atlanta, one of the other brands sponsored the Olympics and Nike just flooded the Olympics. Michael Johnson was wearing a golden shoe when he broke the record running the 400. No one knew that Reebok had sponsored the Olympics. No one cared because the athletes were wearing Nike. So for Nike, and to a lesser extent Adidas, I think it makes sense for them to invest. Everyone else, they should take their money and go put it on number eight on a roulette wheel. It is better spent.

Knowledge@Wharton: As a successful entrepreneur, what advice do you have for students who are interested in starting a business?

Berger: Start a business before you go get a job. Here is the reason. If you go get a job, you are going to succeed….If you come out and work, what are you going to make? 50K to start? You tell me.

Knowledge@Wharton: I don’t know. [laughs]

Berger: If you work for a bank or something like that?

Knowledge@Wharton: 60K.

Berger: OK, great. So let’s say you are 21 and you get out of school making $60,000. You do real well and three years later they say, “I am going to send you back to grad school. I am going to pay for you. Then, come back to work. When you come back you are making $175,000.” Five years after that, you are going to be making a half million bucks. You are going to have a husband or a wife, two kids, nice car, summer home, country club. At what point are you going to say, “I am going to go start my own company”? The answer is never. What you will do is work until you have made enough money, some - where in your 50s, to go do something you really want to do, instead of now, when you are broke….When I got out of graduate school and I drove a Seth Berger’s Full Court Press: Building 130 a Company from the Ground Up

Honda Civic Hatchback. I was broke. I didn’t care. It just didn’t matter. But once you get used to the good life, you won’t go back. So if you are thinking about starting a business, start the day you graduate. You don’t need experience. You don’t need money. You don’t need someone else to tell you that you can do it. Just go start it before you get used to making all that money.

Knowledge@Wharton: Great. Thanks for joining us, Seth. n Published: October 1, 2008, in Knowledge@Wharton About Knowledge@Wharton High School

Knowledge@Wharton High School, or KWHS, is a global initiative of the Wharton School at the University of Pennsylvania that promotes financial literacy, entrepreneurship and leadership among high school students and teachers through articles, lesson plans and an innovative video glossary. KWHS is the newest member of the Knowledge@Wharton network. Knowledge@Wharton is the online business analysis journal of the Wharton School and, with Chinese, Spanish, Portuguese, Indian, Arabic and High School editions, has more than 2 million subscribers worldwide.

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