This is Capitalism: Inspired, Explained, In Focus

It was probably inevitable that as his career as an economics and finance writer evolved, Chris Farrell would be drawn, ever deeper, into matters of age. After all, for the past quarter-century, the dominant theme in personal finance has been about savings, IRAs and 401(k)s, and the fact that most Americans haven't saved enough money to retire on. In economics, there's a parallel strain that centers around the aging of the U.S. population and how an economy with fewer younger workers and more and more retirees living longer could reach a tipping point. Chris Farrell doesn't think it needs to turn out that way. His latest book, Purpose and a Paycheck, is about the too-often-ignored realities and the still largely-unappreciated potential of older people in the workforce. People are living a lot longer.Chris Farrell is the Marketplace Senior Economics Contributor for American Public Media Group, Economic Commentator for Minnesota Public Radio, Columnist for PBS's Next Avenue, Columnist for the Minneapolis StarTribune, and for many years, a colleague of Ray's at Business Week.

[:22] Ray Hoffman introduces Chris Farrell.

[1:34] Chris proposes that people who exercise their education and skills throughout their lives have a greater life expectancy. Chris developed skills during his time on merchant ships. His first job was as a wiper, cleaning the engine room and the bathrooms. He joined the Coast Guard and was a Merchant Seaman.

[2:41] Chris learned from people with incredible knowledge and skills onboard ships. Chris's degree was in History.

[4:02] In 2035, for the first time, the number of people over 65 in America will be greater than the number of people under 18. Employers do not appreciate the knowledgeable and skilled employee. Productivity peaks at around age 65.

[5:15] Management can best use the older worker by creating opportunities for experienced workers to exercise their creativity and be productive on a multi-generational team. Research shows that the most productive teams are multi-generational.

[5:32] One of Chris's motivations for writing the book is that for the past 30 years, there has been this strand of economic commentary that the demographics of aging is a bad thing. The story was that a dependent older generation would be supported by too few young workers, which would lead to stagnation.

[6:04] Steve Jobs gave the Stanford University commencement address in 2005. He talked about how important it is to connect the dots. You don't know how to connect the dots looking forward. You connect the dots looking back.

[6:31] Manufacturing research from Europe shows that the experienced worker makes more mistakes than the younger worker, but they are smaller mistakes. When the unexpected happens, the experienced worker is more calm about it. They draw on their experience and connect the dots and help solve the problem much more quickly.

[7:02] Younger workers have seen less. They run around causing commotion, but not solving the problem. Putting experienced workers with younger workers leads to a more productive team.

[7:33] Germany has an older workforce than the United States. BMW wondered what the older worker meant for their assembly line and productivity as the workforce ages. They created "The Pensioners' Line," to reflect the workforce in Germany in 10 to 15 years. Initially, the productivity of the pensioners' line was way below their other lines.

[8:01] They spent $50,000 on barbershop chairs, bigger computer screens, corkboard and bamboo floors, meditation, and yoga. Now, BMW's pensioners' line is as productive as their other lines.

[8:21] "The Forgotten Man," showed up in the 2016 vote: the mill workers and mine workers from Southwestern Pennsylvania. Chris points out that U.S. businesses do not have a good record of training and retraining. They neglected it because they didn't want to train somebody to go work for someone else.

[9:19] Training is picking up because of the tight labor market. Chris cites a case study from a former program in Danville, Virginia. It was very successful, but it ended when funding stopped. When people work longer and labor force participation goes up, more taxes are paid, and the age to claim Social Security is delayed. Everyone wins.

[10:55] Look at the aging of the population as an incredible opportunity to get this economy to a higher growth path. 27% of new businesses was formed by the 55- to 64-year-old age group in 2017. That's up from 14 to 15% in 1996. These are mostly small businesses.

[11:27] Ray notes there is a lot of risk involved in starting a business. People over 55 are more willing to experiment. They take risks that younger improvisers don't.

[11:58] The risks of starting your own business as an older person are less as you have knowledge and experience to guide you. You draw on contacts you developed over the years. Because of your time in business, you can identify problems that need to be solved.

[12:18] You probably own your home. The home is your office. Technology has lowered the overall cost of doing business and managing your business. A lot of times, starting a business means working on weekends or in the evenings, testing out the business idea before committing to it — this is a good thing to do.

[12:39] It's a good idea to join a co-sharing workspace or an incubator where you can get feedback.

[12:45] Most small businesses are started with $5,000 or less, according to Steve King, a small business consultant in the Bay Area. You can easily test a business in the market. Do not use your home or 401(k) for collateral. Chris wants to be very clear on that point.

[13:11] People have knowledge and skills; they also have a sense that this is what they want to be doing. That is where your purpose comes in.

[13:27] Chris quotes over 100 people in the book. He recalls interviewing Rick Harris, who grew up in segregated Texas. He went to the Bay Area in his 20s and built a commercial interior design business. Later, he moved to Minneapolis and tried to start over, but it was hard to break into the market. Then, his son asked to join him in his business.

[14:10] Bringing his son into the business rejuvenated Rick Harris. There was no inter-generational conflict. They shared the values of working together, doing a good job, and building a successful business.

[14:27] Ray loves the story of Tim Carpenter in Burbank with his various senior art centers that create a wonderful sense of purpose for people. Chris notes that the center in Burbank is low-income affordable housing with arts courses modeled after a college curriculum. People are thriving in that atmosphere.

[15:05] Tim Carpenter was moved to start his centers after visiting nursing homes and observing dim arts and crafts rooms with people gluing wooden sticks together. Tim found that people love the opportunity to learn and create something. Purposeful activity counters age-related depression.

[15:34] In general, working longer makes you healthier.

[16:06] Chris Farrell, who has hit 65, has realized he wants to always be learning. He writes a lot about work, using your skills, and passing your skills along. Whether at a job or doing something else, it is important to learn. The idea that we stop learning at an arbitrary age is wrong.

[16:32] We age, and we can't do certain things. But we can do other things that we didn't know enough about when we were young. Keep learning. Never stop learning. When life becomes the couch and TV, it slows down a lot.

[16:49] Chris Farrell, sharing his purpose in his new book, Purpose and a Paycheck. This is capitalism.

Stephens.com

Chris Farrell

American Public Media Group

Minnesota Public Radio

PBS

Next Avenue

Minneapolis StarTribune

Business Week

Coast Guard

Seafarers International Union

Merchant Seaman/ Merchant Marine

Steve Jobs

Stanford University, 2005 Commencement Address

The Forgotten Man: A New History of the Great Depression, by Amity Shlaes

Steve King

Rick Harris

Tim Carpenter

Ray Hoffman introduces the guest for this episode. John Byrne and Ray Hoffman have known each other for so long that they refer to each other as old friends. John is one of the most significant business journalists of his generation, having written over two dozen cover stories for Business Week, where eventually he became Executive Editor. He also was Editor-in-Chief of Fast Company and the author of some major business biographies of such figures as Jack Welch of GE and the Whiz Kids, including Robert McNamara, who reshaped Ford Motor Company and industrial America after World War II. He's probably best known and most highly regarded as the go-to journalist on all matters relating to MBA programs and graduate business schools. That began at Business Week in 1988 when he compiled the first ever published ranking of graduate business school programs. Today, that continues within his second career as an entrepreneur. He's Chairman and Editor-in-Chief of California-based C-Change Media, which operates five websites, including the number-one source for information about MBA programs, Poets & Quants.Listen in to hear more of John's journey from journalist to journalist-entrepreneur.

[:22] Ray Hoffman introduces John Byrne for this episode of This Is Capitalism.[1:41] Did John imagine he would always be a professional journalist for a major publication? John describes the magazine publishing environment of Business Week twenty years ago and how he loved it. Then came the internet.

[2:43] Business Week went online for the first time in 1994. AOL gave Business Week a $1 million contract for its content. John built out a Business Week community online. It was clear that this was something that was going to be a major change in the way we thought about what we create, how we create it, and how our audience interacts with it.

[3:52] John created the first regularly-published ranking of MBA programs in the world in 1988. John was the Management Editor at Business Week at that time. He created the ranking to entice schools to seek to be included. It began as a biannual feature.

[4:52] Companies had been complaining for years that MBA graduates had 'quant' skills but were challenged in the area of soft, people skills, which were not being taught in schools.

[5:59] John's idea was to hold schools accountable to their two primary audiences: the graduates and the people that hired them.

[7:17] The business school issue was the best-selling cover of the year in 1988. It became immediately controversial and it gathered a lot of attention. John explains how the coverage expanded over the years to an online community in 1994.

[7:51] Guidebooks were published by owner company McGraw-Hill. The guidebooks covered all aspects of MBA education and they became very big sellers.

[8:11] Toward the end of John's career at Business Week, John was the Editor-in-Chief of online operations. The average monthly unique visitor at Business Week looked at 1.8 pages; the average monthly unique visitor to the business school section looked at 58 pages. That was an eye-opener.

[9:24] The first survey was a consumer satisfaction survey looking for opinions of graduates and the companies that hired them. John wanted it to be simple and pure. Business Week did not tell the survey respondents that it was for a ranking.

[10:01] Now, when you survey alumni or companies, there is an inherent bias to the results because they know that the survey will impact how their school fares on the ranking. There is a lot of 'cheerleading.'

[10:40] The survey was a true labor of love. Back in 1988, there was no internet or email. John collected the names of the graduates, printed out surveys from his home Mac and printer, and stuffed, labeled, licked, and sent out the envelopes. His family helped, in front of the TV watching Yankee games. It took a month of nights.

[11:55] Ray notes that the first J.D. Power surveys were also sent from Power's living room with the Power children helping.

[12:17] John tells about the creation of the Poets & Quants website. Quants & Poets was a common term in business schools but unknown outside of the field. A good business school brings together Liberal Arts majors and Science majors, so they can build on each others' strengths and minimize weaknesses.

[13:49] When John thought about starting his company, he remembered this phrase. It is popular lingo to anyone in that world. About nine years ago, Bloomberg bought Business Week. It seemed like the right time for John to go on his own, online.

[14:51] John looked at the importance of engagement with his audience. Online content provides a very different level of engagement. John knew there was a market for his planned business from the business school section of the Business Week website.

[15:08] In John's last few years at Business Week, the management did not understand all that John was doing. The average age of a Business Week reader was in the early fifties. John wanted to convert twenty-somethings who visited the website into readers.

[16:13] John's idea was to do a Huffington Post for business. He talked to the former publisher of Forbes.com and to Andy Serwer, who was then Managing Editor of Fortune. John suggested that the three of them get together to build up this company with 10 microsites around businesses that were under-covered in journalism.

[17:41] The content would connect to a mega site that would cover business and the economy more broadly. They expected to rely heavily on contributions from consultants and professors with an editorial staff to create original content. Due to different individual financial goals of the group, it never happened.

[18:34] Instead, John went to California and started his first website, contracting with a web developer and a designer to create the site, while John created content and enlisted freelancers to help generate more content. John wanted the site to live with a fairly significant amount of journalism in place.

[19:13] In those days, Google might take months to recognize a site, but they were very quick to index social media like Twitter, LinkedIn, and Facebook, so John created channels on Twitter, LinkedIn, and Facebook using the new Poets & Quants logo before launching the site. He curated existing content to build an audience.

[19:51] When the site was launched nine years ago, in August, they already had an audience from social media, with Google helping their SEO.

[20:12] John did it on his own. John's biggest investment was his time spent reporting and writing for several months to launch. John has not borrowed a dollar or taken a dollar of investment. He owns 100% of the company.

[20:35] John has five websites run by 12 full-time employees with benefits and 401(k) plans. The main Poets & Quants site gets 35% of its traffic from outside of the United States. One of the sites is a global conference business.

[21:06] John talks about the feature, The Best and the Brightest, about MBA graduates from various programs. John praises Senior Writer, Jeff Schmitt, who created the feature. John explains how they get nominations and pick the best and brightest.

[22:29] The feature puts a face on the program and the school and shows the graduate's motivation and their journey. It is meant to inspire and motivate others to get more education in a program that is right for them.

[23:12] John brings up student debt and employment out of college. He discusses the value of MBAs and the market for them. John says 60% of MBAs don't borrow for their degree because they get scholarship help but those that borrow can pay it off quickly.

[24:37] People look at the tuition and fees and get sticker shock but, in some schools, 100% of the students are on scholarships; many are on full scholarships.

[25:18] The average class at Harvard Business School is 930 students in a two-year program, so 1,860 are enrolled. 50% get scholarship help. The scholarships are based on need, not merit. Harvard spends $36 million a year on scholarships to 930 students.

[26:17] Stanford gives the same level of support to their students, individually. Many other schools are in an "arms race" to give out scholarship money. The MBA is a flagship program. The higher they can rank, the better it reflects on the entire school. So schools are willing to use the MBA program as a loss leader for their other programs.

[27:15] For MBA students who pay full price, John says they will have no problem paying off the loan quickly, with an employment sign-on bonus and a salary of $140K, depending on the field they choose.

[28:44] In our strong economy with virtually full employment, applications to MBA programs have fallen sharply. Sticker price and a decline in international candidates into the U.S. are other reasons for the dropoff. The documentation to get a visa can be burdensome. Also, good online MBA programs have become very popular.

[31:50] There are also specialized Master's programs such as business analytics, supply chain management, HR management, healthcare administration, and others, that people are choosing right out of college.

[32:21] Young people often choose a one-year specialized Master's or an online MBA.

[33:03] Across all the students, the discount on a Harvard Business School degree is 40%. Other schools vary. John cites major school offerings.

[33:28] Destination websites with a lot of content and advertising support are like gorillas in a cage that need to be fed a lot of bananas every day. Content is very important. John says content is the campfire around which you gather an audience that has a conversation that creates unity.

[34:29] The content has to be new, updated, creative, smart, insightful, valuable, and produced daily. If the content gets old, the traffic starts to fall. It's a big, serious job.

[35:40] In addition to writing every day, editing, and publishing, John also has a company to run with all the money and management concerns running a business involves. John recruits clients from the business school community. Right now, John is considering investing in a customized software platform to do one thing for the site.

[37:03] Most of John's life, he covered management and leadership. Now, he has a real P&L and it is work to get stuff done on a daily basis.

[37:44] Ray and John discuss their years of study of Frank Sinatra the performer. Sinatra recorded commercially in seven decades. John compares the body of Sinatra's music to the work of an entrepreneur. John thinks Sinatra's biggest regret might be the years he didn't record. John sees and contrasts three phases of Sinatra's work.

[40:07] John Byrne's C-Change Media is capitalism — journalistic entrepreneurial capitalism. This is capitalism.

Stephens.com

John Byrne

Business Week

Fast Company

Jack Welch

The Whiz Kids

Robert McNamara

Ford Motor Company

C-Change Media

Poets & Quants

AOL

McGraw-Hill

J.D. Power

Huffington Post

Forbes.com

Fortune

Andy Serwer

Yahoo Finance

Business Insider

Poets & Quants on Facebook

PoetsAndQuants on Twitter

Poets & Quants on LinkedIn

Bloomberg survey on grads from the biggest business schools

Harvard Business School

Stanford Graduate School of Business

Yale School of Management

W.P. Carey School of Business, Arizona State University

Isenberg School of Management, University of Massachusetts Amherst

Jones Graduate School of Business, Rice University

Frank Sinatra

Ray Hoffman introduces the guest for this episode. How did Amazon do it? And how is Amazon going to continue to do it? John Rossman has the answer to both questions. He joined Amazon in 2002, after 23 interviews, and he led the creation of the Amazon Marketplace, with all the third-party sellers that came in, which is what lifted Amazon from being just an online seller of books and videos to a seller of everything. In fact, the operation he created between 2002 and 2005 accounts for over half of all the merchandise units sold on Amazon today. He then went on to lead the Enterprise Services Business at Amazon, and there he helped build brands such as Target.com and NBA.com. So, having had a front-row seat to the ways and strategies of Amazon's creator, Jeff Bezos, John Rossman has gone on to advise a lot of young startup companies on how to think like Amazon, which just happens to be the title of a very readable new book by John Rossman.Listen in to hear more of John Rossman's story of innovation in capitalism.

[:22] Ray Hoffman introduces the guest for this episode of This Is Capitalism.[1:23] John was always interested in efficiency, integration, and how processes and data worked in making commerce more effective. In the early 2000s in Seattle, a former colleague of John's was in the Finance Group at Amazon, and called John as a candidate for "an interesting idea" they had. John interviewed over a few months.

[2:05] John thought it was a great fit because the Marketplace business at Amazon, which was the division John was hired to run, with third parties selling merchandise on Amazon.com, really is about integration at a maximum scale. It required a lot of metrics and procedures that had to be put in place to scale that business.

[2:36] John launched 14 categories. When John started at Amazon, 90% of the business was books, music, and video. The first holiday season John was there, in 2002, was the first $1 billion quarter for Amazon. Today, Amazon is a $260 billion organization.

[2:55] Categories John launched included Apparel, Sporting Goods, and Home. They did it by leveraging partners. They expanded categories and geographies.

[3:19] John had 23 hiring interviews with people from departments all over Amazon. He learned that the Marketplace was the third iteration of a third-party selling program. The first two, Auctions and zShops, had failed. By the time John started, he knew where they were going, what the vision was, and the people who were involved.

[4:09] The slow hiring process led back to Jeff Bezos's desire not to be in too big of a hurry to hire. This is also covered in John's books. The biggest business mistakes John has made have revolved around hiring in a hurry. When you have an urgent need, you are prone to hiring the first person who has the qualifications and is available.

[4:44] At Amazon, they look to hire for the role at hand, plus what the future might hold.

[4:52] Amazon uses a bar-raiser, a person independent from the team who evaluates the candidate on their potential to do other profitable things for Amazon. The bar-raiser has veto power that is not subject to appeal. It really helps Amazon not to hire in a hurry. Hiring in a hurry can lead to very hard situations.

[5:46] John's book is about the tools you can take from Amazon for your own business. One of those tools is a 'flywheel,' which tends to maintain momentum. In business, the concept of a flywheel is systems modeling: understanding the system you are operating in and your various levers for creating change in your business.

[6:32] A flywheel is a really simplified version of your systems model and it's a great way to summarize your strategy.

[6:42] Amazon continues to refer to their flywheel, which is about improving the customer experience by having more selection and more sellers, which lowers cost, all on a fixed-base platform. That flywheel has been a key way to simplify and keep the whole organization on the same vision and mission page.

[7:13] Everyone at Amazon has to demonstrate how their programs, proposals, and investments feed into the flywheel.

[7:34] As Director of Merchant Integration, John brought in third-party sellers with millions of new items to make the flywheel generate more sales in more areas from more customers. The concept was that by bringing in more selection, the customer experience, over time, is that they can search, discover, and buy anything on Amazon.

[8:07] The key design principle for Marketplace was to get the customer to trust a third-party seller as much as they trusted buying from Amazon the retailer. That was a very different model from eBay. From day one, Amazon took full accountability for customer trust. That mandated a special relationship with their sellers.

[9:14] Amazon was constrained by their circumstances in the early 2000s. They wanted to build relationships with sellers who were much more stable than Amazon was at that time.

[9:40] Headcount was flat at Amazon. John had to ask for headcount from other areas of the business to get a team together to help launch the Marketplace business. That constraint forced John to innovate in ways that they wouldn't have done with more employees and a bigger budget.

[10:00] A lot of third-party sellers said "No," to Amazon, but a lot of great brands did sign on to have better e-commerce access to the Amazon customer.

[10:32] The flywheel started to gain momentum. Four or five years after Amazon launched the Marketplace, Prime membership and the Fulfilled By Amazon (FBA) program were created. The triangulation between Marketplace, Prime, and FBA accelerated the growth of the Marketplace business.

[11:04] Amazon's growth and Amazon's stock price growth mirrors the growth of the Marketplace. Jeff Bezos released a shareholder letter this year graphing how the Marketplace has grown by year. Today, the Marketplace accounts for 58% of all units shipped and sold.

[11:32] John believes the opportunity today is bigger than it has ever been. Develop your perspective of how change happens and what your digital e-commerce strategy looks like. The key ingredient is patience. None of this happened overnight.

[12:07] The part of Amazon and Jeff Bezos's story that doesn't get told enough is how he bet everything on himself by walking away from a great job. He stuck with it when everybody was a naysayer about Amazon. He was always optimizing for long-term enterprise growth based on great customer trust.

[12:51] For nine years, the Amazon stock was flat. That includes the four years John was there. As a senior executive, his compensation was tied to the stock growth and he wanted to see better performance. He lost patience and left. He didn't see the future growth coming.

[13:50] Everybody wants good outcomes. What you have control of are the inputs. Think Like Amazon is about the controllable inputs, how to create innovation and how to grow your business. Patience is a required input.

[14:02] Idea 1 is "Your Journey Will Not Be Short by Taking the Long Strategic View." Amazon evaluates many of its programs and investments over an eight-to-ten-year period. They are able to rationalize things that other companies can't.

[14:48] Some of Amazon's current big initiatives include healthcare and logistics. Those are eight-to-fifteen-year investments. Most companies are not willing to be that patient.

[15:14] Jeff Bezos always had it in mind that Books was going to be the first of many categories that Amazon opened. Amazon was always going to be a multi-category retailer. Jeff Bezos was open to finding opportunities.

[16:04] PillPack was a nice acquisition for Amazon. It creates custom packets of your medication. It has 50 state pharmaceutical licenses. PillPack thinks things through from the customer's perspective. That makes it a great alignment with Amazon. Amazon has always been willing to rethink traditions because of the customer perspective.

[16:59] Amazon's innovation approach is called "Start With the Customer and Work Backward." They have a daisy chain of things they do to help build ideas before they go forward with them.

[17:27] You need a big vision for your idea but you need to bring it back to incremental steps with testable hypotheses, minimally viable products, and agile methodology. Don't confuse thinking big with betting big. Amazon has done things that didn't work out, but they daisy-chained some concepts from failures into later successes.

[18:18] Idea 16 is "Make It Easy." Friction is everywhere. John cites Pink Floyd: We have grown "comfortably numb" to so many things. Amazon recently released a great feature in Prime Day. The customer can select the day they want their packages delivered. That shows an understanding of customer friction.

[19:28] That's the backbone of innovation. We're all looking for the big idea, but reducing customer friction and striving for operational excellence are the places where most companies have the opportunity to excel in innovation.

[19:46] That represents 80 to 90% of how Amazon innovates - through operational excellence and reducing small points of customer friction.

[19:56] Rossman Partners is based in Southern California. John helps enable young disruptive companies to move forward. Ray Hoffman gets advice from John on moving his "young disruptive company" forward.

[20:30] John advises companies in a relationship over a long period of time. Often the business concept is successful but the hard part is getting it to scale. You can scale operationally or scale horizontally into new adjacent markets. It's about narrowing down options and proceeding on a small basis.

[21:10] Strategy is about being deliberate. You have to know what to say "Yes" to and what to say "No" to. Many executives forget to say "No." That takes resources away from being able to say "Yes" effectively to the best ideas that you have. John helps teams set practical strategies and see when to say "Yes" or "No," and how to proceed.

[21:48] "Failing fast" is not about failure but about learning in a very disciplined way - setting and testing hypotheses, "failing" and then adjusting to go forward. That is John's typical work with teams.

[22:13] Idea 20 is "The Two-Pizza Team." This is how to create small, cross-functional teams that own and obsess over a core capability over a long period of time. It is a mini-business. It helps grow leaders while they focus on a concept and a market over a long period. Their ability to innovate and operate is greatly accelerated.

[23:30] A two-pizza team has no more than 10 members so they could be fed with two pizzas. Amazon is full of clever names that they constantly use and refer to. They are masters of strategic communication. Another term Bezos has used for years is 'Day 1.' Amazon is a 'Day 1' company where today's business does not define their future.

[24:12] Jeff Bezos recently said a 'Day 2' company optimizes for today's business. They can be very successful today but they're not testing and innovating for tomorrow. They are static in the type of business they are in.

[24:45] To avoid being a 'Day 2' company: 1.) Don't manage by proxy. Stay in touch with your customers by having direct customer contact and direct customer metrics. 2.) Pay attention to the megatrends that you may not feel impact your business today. In five or ten years, they present both big opportunities and big threats to your business.

[25:24] Amazon is paying a lot of attention to the megatrend of machine learning and artificial intelligence. Depending on your industry, there are probably other big trends today that may sound like they are not for mature businesses. Educate yourself and prepare your company for a pilot or a trial so you are ready when the time is right.

[26:10] Amazon wanted to put a second headquarters in New York. Their biggest constraint is being able to attract more world-class talent. They can't do that at scale in the Seattle market. HQ2 was an effort to act in advance of the situation. They don't kick big issues down the road.

[27:19] How much more bureaucratic has Amazon become since John was there? Becoming a bureaucracy was Jeff Bezos's biggest concern in John's day. He doesn't want to slow down decision-making speed. He doesn't want to dilute accountability. Relative to scale, Amazon is significantly less bureaucratic than most other companies.

[28:28] Amazon is about operational excellence but also about working in the future. The Future Press Release is one of the tools they use to envision the future, announce it to a team and get everybody on board with the vision for the project with a very clear articulation of what the customer experience is going to be and the issues to tackle.

[29:14] Amazon gives the accountability for the Future Press Release to one person and everyone in the organization knows that they work for that person to help make that vision happen. It reduces bureaucracy and forces decisions and gives better speed to the organization.

[29:57] John thinks there's more opportunity today than there has ever been, largely thanks to many of the tools, especially Amazon Web Services, that Amazon provides to innovators, inventors, and people who want to try new things. It has never been easier to build a new company or to try a new concept than it is today.

[30:17] On-demand services, cloud computing, and access to logistics and data take less time and capital than before. There are lots of great companies coming along that may disrupt Amazon. John doesn't think it will be one company that will disrupt Amazon. Amazon in all of their businesses has great competition today.

[30:48] John doesn't think Amazon will "fall in love" with their current business to the point where they aren't actively working to expand it or disrupt it themselves.

[31:11] Sears, Roebuck and Co. is an example of an era-based organization that had a tough time adapting to new eras; they stopped reinventing themselves.

[31:44] John is an Advisory Board member to companies like Decisiv, Modjoul, and Terbine. He describes these disruptive companies and what he likes about them.

[33:53] John considers that these companies can take the long, strategic view. The timescales of venture capital funding are expanding out, while they shoot for bigger market disruption. It's not just Amazon that is taking the long perspective.

[34:20] Idea 50½ is "Principles are Not a Poster." The 'half-idea' is the essence of John's book. The book is not about Amazon; it's about real tools and real strategies that you can put to work.

[34:52] John doesn't recommend that you take on 50 ideas. Take two or three. Be patient. Try to make the ideas you choose both a personal habit and a team habit, and see what sort of change they make in how you operate together.

[35:09] Everybody wants the outcomes of innovation and growth. It's about the inputs of hard, everyday, consistent efforts of where you are willing to put in the resources and new habits that you are willing to create. The 'half' idea is the challenger question back to the reader: What are you willing to do to get the types of results that you want?

[35:31] John Rossman, former Director of Merchant Integration at Amazon.com and today, Managing Partner of Rossman Partners. This is capitalism.

Stephens.com

Amazon

John Rossman

Amazon Marketplace

Target.com

NBA.com

Jeff Bezos

Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader, by John Rossman

Oregon State University

Arthur Andersen

Borders.com (Now Barnes & Noble)

eBay

D.E. Shaw

PillPack

Pink Floyd

Future Press Release

Amazon Web Services

Sears, Roebuck and Co.

Decisiv

Modjoul

Terbine

Eric Martinez

AIG

This Is Capitalism

Ray Hoffman introduces the guests for this episode. "Is there such a thing as entrepreneurial love? After visiting Thibault and Lola Manekin, I'm inclined to think there is because in talking to Thibault, Co-Founder of a remarkable property development firm called Seawall, and his wife, Lola, who created a wildly popular space known as Movement Lab, I learned about an entrepreneur's love for the city of Baltimore, an entrepreneur's love for teachers and abandoned buildings from the 19th century, and for clients and residents of all shapes, colors, and sizes. I first met Thibault and Lola outside of R. House, which used to be a car dealership in the North Baltimore neighborhood called Remington. Upstairs is Lola's creation, Movement Lab. Downstairs, on the ground floor, is a kind of food court, Thibault's creation. But, really, it's a concept kitchen for 11 up-and-coming local chefs. It's all quite an entrepreneurial love story."Listen in to hear more of Thibault's and Lola's social entrepreneurism.

[:22] Ray Hoffman introduces the guests for this episode of This Is Capitalism.[1:21] Thibault describes the strong entrepreneurial spirit of his wife, Lola.

[1:50] Lola immigrated to the United States and started working in restaurants, cleaning houses, and babysitting. Following her vision of success was a slow process.

[2:25] Lola's first memory, growing up in Florianopolis, Brazil, was making bracelets with her cousins and selling them door-to-door. Lola was the middle child in her family.

[3:14] Lola came to the U.S. through a program in Florida that brought in immigrant students from around the world for four-month jobs. After her four-month program was over, Lola had finished her college degree in natural therapies, so she decided to stay. She went to massage school in Florida and got licensed to do massages.

[3:50] Lola tells how she met Thibault in Brazil when she was visiting her family. Then, they began a long-distance relationship between Baltimore and Florida. Thibault eventually convinced Lola to move to Baltimore.

[4:36] Thibault's first renovation project was Miller's Court; it is Lola's favorite. Lola describes how it came to be developed from an old building in a dangerous area into a specialized teachers' apartment building. It set the pattern for future renovation projects.

[5:56] Thibault explains how he got involved in teachers' housing and how Miller's Court was created from an abandoned tin-can factory with broken roofs and large rats.

[8:55] After Seawall bought the property, they moved quickly to finance it, design it and build it, all in about two years.

[9:05] Thibault co-founded Seawall Development with his father in 2006. Thibault says he has a vision of uniting the world and bringing people together. Real estate touches everyone. Thibault wants to fight against the division of communities by real estate and reimagine the power of the built environment to unite cities and launch powerful ideas.

[10:56] Thibault's grandfather and his brother started a real estate company in Baltimore at the end of the Second World War. For them, it was never about the transaction; it was 100% about the relationship. People started to really trust them and ask them to do things way outside their comfort zone.

[11:32] Thibault's grandfather and his brother were two of seven children growing up in a two-bedroom apartment above the grocery store their father ran on the first floor. They believed that if they treated people fairly, at the end of the day it would work out.

[11:55] Thibault's father graduated from college with the intention of going into public education. He first took an internship with his dad in the real estate firm and saw that the business was not about earning money at all costs, but about creating deep relationships and helping companies grow.

[12:36] Thibault tells how his father had just retired in 2000 when he was invited to be COO of the Baltimore City School System. After his time in real estate, he realized it was time to pursue his lifelong dream. He committed to working long hours, seven days a week to help kids and education.

[14:00] He brought together a competent team of people from different sectors with different experiences that touched the school system in some fashion. They went to work and turned the budget from red to being in the black. His position was a two-year interim position so he hired his own replacement.

[15:06] Inspired by his father's work with teachers, Thibault went into business with him to create centrally-located, affordable housing set aside for teachers new to the area who didn't know the neighborhoods. They also wanted to find a centralized space for education nonprofits.

[16:44] The goal was a 5,000 square-foot building. They renovated a 100,000 square-foot building that was more than they expected. It provided a great space for both teachers and nonprofits.

[17:03] Teachers were able to design their own apartments and amenities, and choose their own rent. Based on the rent the teachers said they could afford, Thibault and his father reverse-engineered the project to come up with a budget. The budget turned out to be $6 million, which was $14 million short of costs!

[17:48] They figured out how to get the $14 million to be able to provide affordable housing for teachers and nonprofits.

[18:19] They created a movement by building from the inside-out - from the teachers and nonprofits to community associations, to a team of guardian angels made of attorneys, accountants, banks, and lenders. They found creative financing solutions that fit the needs with historic building tax credits and city, state, and Federal assistance.

[19:55] People were helping this project because it wasn't a "real estate deal." Thibault and his father led with their purpose. It wasn't their idea; it was the idea of the teachers and nonprofits. It was such an easy story to tell. Lenders wanted to get involved.

[20:26] Not only did their lenders and team want to bring the first project to life, but they also wanted to be part of so many more of these projects and replicate the model across the country.

[20:56] Thibault shares some background to his story. Thibault had graduated college and was in touch with a friend of his in Northern Ireland, Sean Tuohey, who was working in a program to bring Protestant and Catholic children together through basketball. Sean was invited to bring the program to post-apartheid South Africa.

[21:24] Sean came home to D.C., and he and his brother helped start a nonprofit, at the time called Playing for Peace, and later called PeacePlayers International. Sean went to Africa and Thibault reached out to him by email. Sean replied he was on his way back to D.C., and they had a three-hour lunch discussing the success of the program.

[22:20] Thibault helped raise $3,000 from friends and family and went with Sean to South Africa to help. Thibault worked behind the scenes with Sean to help the idea come to life. Nelson Mandela and his organization were their largest supporters and the floodgates were opened.

[23:14] PeacePlayers International replicated the model in the Middle East with Israeli and Palestinian children and in Cyprus with Greek Cypriot children and Turkish Cypriot children. Thibault and Sean were living out of their suitcases all this time.

[23:34] At 21 years old, Thibault didn't have any confidence in himself as a leader. He worked with PeacePlayers for six years and learned a lot about himself, about life, about inspiring people, and leading. This translated into Thibault's professional life, marriage, and family.

[24:20] Thibault and his father started their development business in 2000. They knew there would be risks. They closed financing on their first project, Miller's Court, three months before Lehman Brothers collapsed. Thibault is confident those three months were the key to succeeding instead of failing to launch their first project.

[25:08] Seawall wasn't interested in leasing space to national credit tenants. They wanted to support small nonprofits and teachers. Thibault compares Seawall's passion for this first project to the passion of a teenager in love for the first time. They were committed to this idea to help the teachers, and so, the children, of the city.

[26:10] Thibault talks about the Union Mill project. Everything Seawall does is driven by the community. After Miller's Court, they had a waiting list of over 300 teachers and 12 nonprofits. They took a larger team of professionals and helpers and started looking for another building. They were armed with all their experience from the first project.

[27:09] They knew instantaneously that the Union Mill building was right, that they could do it, and that it would be the next project.

[27:16] Thoughtful and inclusive real estate should be able to bring people together. Thibault talks about the R. House project, which is more than a food hall; it's a launchpad for Baltimore's most creative chefs. It was renovated with purpose first.

[27:45] The Lexington Market downtown is Seawall's current project. Thibault says it will be the most significant project they will ever do. The challenge is proving a single building that can really unite an incredibly divided city. It's about massive job creation. It's about making the city fall in love with a historic, iconic place that has fallen off the radar.

[29:07] As Seawall has really dug in and listened to the communities that surround it, they believe Lexington Market needs to become a place where everybody in Baltimore feels welcomed into in a beautifully diverse way. Thibault describes the project details.

It will be the main public market in Baltimore with startups and new diverse vendors.

[30:20] Thibault explains the process of deep listening they are doing for Lexington Market. They hold a series of town hall meetings city-wide where they discuss important topics such as crime, safety, the environment, recruiting of vendors, diversity of vendors, support to be given to vendors through implementation, vendor selection, and more.

[31:20] Seawall's vision is to be invisible in the Lexington Market project. It should come together organically, led by the people of Baltimore for the market of Baltimore, in Baltimore's longest-running, most iconic institution.

[31:48] Thibault considers working on Lexington Market to be one of the greatest honors and the most significant project in Baltimore to be brought to the Seawall team to bring to life. Thibault predicts that somewhere else, around the world, they will work on a more significant project in the future.

[32:24] If Seawall stays true to their purpose, there is an opportunity to help other developers understand that when you lead with your purpose and when you are a part of creating movements, and when you build everything from the inside out, that so much more is possible.

[32:42] Movement Lab is Lola's business. Thibault discusses the space, the amazing, eclectic people, and the inspiring exercises they do. It is a unique space.

[33:51] Lola did a TEDx talk, Taking Movement Beyond. She tells about redefining the conversation around fitness. Instead of thinking about a beach body or a weight loss goal, think about fitness being the consequence of moving. Lola describes the various activities available at Movement Lab.

[34:51] Lola is from an island in Brazil and movement has always been important in her life - running, dancing, wakeboarding, and being in nature all the time. When Lola moved to Baltimore, walking a treadmill in a gym was not right for her.

[35:16] Then Lola learned of the NIA movement and signed up for training right away. She felt completely at home in her body from the first exercise. In Baltimore, there were no NIA classes being taught, so she started promoting it to gyms, yoga studios, church basements, and offering free demo classes. NIA is dance, martial arts, and yoga, to music.

[36:18] Fitness is the consequence of all the movement in NIA. Everybody can do it. All the classes in Movement Lab are classes Lola has taken and enjoyed. People of all ages and sizes do it. There's a sense of accomplishment when people realize that they can hang upside down in an Antigravity® Hammock and flip out of the hammock.

[37:17] Thibault tells when he realized there was a business to build out of NIA and movement. Lola taught classes to one, two, a few, or even nobody as if there were 100 people in the room. When she started getting 100 women in a class, Thibault knew she needed a space of her own.

[39:00] They started to find the right space for the studio. Lola was focused on reinventing what movement meant, with alternative forms of movement from around the world. Thibault encouraged her to start with yoga that was familiar and she asked why Thibault didn't start building Walmarts and strip centers. She embraced her differences.

[40:00] Seawall doesn't use the word development. They are social entrepreneurs that happen to use the built environment to empower communities, unite cities and help to launch really important ideas. They will hire people from any field other than development. They are reimagining the industry. They don't want real estate baggage.

[41:41] Thibault Manekin of Seawall; Lola Manekin of Movement Lab, and the world; This is social capitalism.

Stephens.com

Seawall Development

Movement Lab

1. House

City of Baltimore

Florianopolis, Brazil

Miller's Court

Baltimore City Public Schools

Baltimore Urban Debate League

Playworks

SunTrust

USBank

Enterprise

PeacePlayers International

Nelson Mandela Foundation

The Union Mill

Lexington Market

Taking Movement Beyond, Lola Maniken, TEDx

NIA

Walmart

Yoga

Martial arts

This Is Capitalism

Ray Hoffman introduces his guest Veronica Dagher in the form of a note: "I like your work, Veronica Dagher. I like your Wall Street Journal columns on successful women, your Secrets of Wealthy Women podcasts, as well as your new ebook based on the columns and podcasts. It's called Resilience, and it offers a lot of lessons in life. And, take it from me, not just lessons for other women. And you and I would both agree, the timing is perfect for the column, the podcast, and the book."Listen in for fascinating stories of women overcoming challenges.

[:20] Ray Hoffman introduces Veronica Dagher.

[:53] Veronica says there is a current wealth transfer of about $33 trillion from one generation to the next in America. Women will inherit a lot of that money. Veronica shares stories about wealth, success, and entrepreneurship, featuring some very well-known women in her Wall Street Journal columns and podcasts.

[1:10] Maria Sharapova, Josie Natori, and Rebecca Minkoff are a few of the subjects of these stories about how they built their successes and the obstacles they overcame. The book Resilience came after the columns and podcasts.

[1:33] All the women in the book Resilience have overcome obstacles such as bankruptcies, difficult divorces, loss of a child, or business difficulties. Some faced people telling them they would never be successful. They didn't listen to those voices. When they were knocked down, they just got up faster than other folks.

[2:31] Veronica's optimism and faith come from her family background and personal experiences of overcoming the devastating loss of her father and still pushing on. Her mother instilled in her from a young age the desire to be a financially independent woman while relying on people she trusts among family, faith community, and friends.

[3:37] Veronica took leave for four months when her mother grew suddenly very sick. Veronica watched her mother face illness and unanswered medical questions, and come back to good health. This experience helped Veronica to grow tougher and more assertive.

[4:20] When Veronica's father passed, they were able to keep the house and lifestyle, with very careful management of their resources. The constant conflict between how her mother managed the budget and how her father had regarded money more casually informs Veronica's work today in her attention to family dynamics.

[5:41] Veronica studied finance in school, with no thought of journalism as a career. It seemed to be a solid choice, given her family background.

[6:53] The subjects of Resilience range in age from Ayesha Curry, 29 when interviewed, to Mary Higgins Clark, "90-something." Veronica shares her ideas on how their age demographic affected the choices of the women interviewed.

[7:44] The "entrepreneurial gene" is not found just in America. Josie Natori came to America from the Philippines and is very proud to be an American. The Natori Company is known around the world. She has the attitude that as a woman it is okay to be successful. It's okay to believe that anything is possible. Don't limit yourself.

[10:03] The Philippines has a huge matriarchal, entrepreneurial culture. Josie Natori was a working mom from the beginning. Josie and her husband worked together and had an agreement that their marriage and family would take precedence over the company. They've been married for over 50 years. Their son is taking a big role, now.

[11:37] At age 91, Mary Higgins Clark, the Queen of Suspense, is amazing. Veronica taped the podcast with her in the Clark home in New Jersey, and Mary told Veronica she had enjoyed the process immensely.

[12:01] Mary Higgins Clark did not have an easy life. Her father had died when she was young. Her first husband died suddenly when she was in her thirties with five children to raise. Her short stories, a popular form of the day, were rejected "something like 50 times." Editors told her she would never be successful. She didn't give up.

[12:37] Mary Higgins Clark eventually became a best-selling novelist — one of the highest-paid women and highest-paid novelists in U.S. history. She stays very humble.

[12:57] Mary Higgins Clark and Veronica Dagher are both Fordham graduates. They had met at a Fordham event several years ago and Veronica had asked Mary for writing advice. Mary shared that at one point the family was almost on food stamps. She needed to write for money. Obviously, that worked out.

[13:46] When Mary Higgins Clark had first submitted a short story to Cosmopolitan Magazine, an editor called it light and trite. Years later, a Cosmopolitan editor called asking for her to write something for them and Mary told her agent, "Tell them yes but make them pay."

[14:14] When Veronica started the podcast, she wrote names of women to interview. Oprah topped the list, but that one hasn't happened yet. Maria Bartiromo was taped "today." Maria Sharapova was on in the fall. Bobbi Brown was another name on the list.

[14:58] Using a Google Docs spreadsheet, Veronica had put together her list of dream people for the podcast and the people she knew who could connect her to them. She did a lot of pitching people trying to make connections and attended a lot of events to introduce herself to people.

[15:36] Veronica is still going to events, tracking people down and trying to meet them but now she is getting a lot of high-quality incoming pitches from big names.

[16:00] The common thread between the millennial entrepreneurs and the older entrepreneurs is the resilience. The younger entrepreneurs see opportunity everywhere. They are not limiting themselves to one sector or area of business. For example, Ayesha Curry is into cookware, media, and other ventures. She leveraged her network.

[17:49] Ayesha Curry faced the criticism of having opportunities through her husband. Other women Veronica interviewed also faced criticism because of the advantages of their family circumstances. Yes, certain doors were opened, but they had to walk through the doors, to follow up, and to build the companies and brands they have.

[18:41] Loreen Arbus is the daughter of the founder of ABC. She is a philanthropist, a programming executive, and she has her own production company. She does so much, and she didn't have to do any of it for the money. She works for the sake of work.

[19:13] The first daughter of Loreen's father, Leonard Goldenson was born with cerebral palsy. In those days, the family was turned away from hotels and restaurants because of her disability. This was an important influence in Loreen's advocacy for people with disabilities. Loreen helps people with disabilities to become successful in media.

[20:09] Loreen deliberately changed her last name as a young teenager to avoid riding on her father's coattails. Veronica was at a party at Loreen's NYC apartment recently and it is incredible in its decoration and style. Loreen is not afraid to take risks.

[20:55] Barbara Bradley Baekgaard of Vera Bradley told Veronica she wasn't very good at math and didn't have an MBA, but she and her friend had an idea for cute luggage. They borrowed $500 from their husbands, bought some fabric, and hired some people to sew the bags. They knew nothing of marketing or finance.

[21:50] They learned everything they needed from SCORE (Service Corps of Retired Executives), which is a huge resource for entrepreneurs who want to learn.

[22:14] An unexpected lesson for Veronica in her interviewing came from Bonnie St. John, an Olympic athlete with a disability, who had suffered childhood abuse. Bonnie said that, as a child, you have a lot of people around you who push you. Her success, as an adult, has been from seeking out people who helped push her to the next level.

[23:17] Veronica thinks that lesson, to seek out people who are going to challenge you and push you to the next level, is really important for entrepreneurs and for women in business.

[23:31] Many of the interviews in Resilience touch on work-life balance and being a working mother. Katia Beauchamp, co-founder of Birchbox told Veronica the whole idea of work-life balance is a myth. You're never going to feel fully in balance. The best scenario is that you love what you do at work and you love your home life.

[24:11] Katia Beauchamp told Veronica that there are certain times when a mother is going to have to focus on her career more than on her home life. As a mom, you don't have to be perfect all the time. No one is perfect. Just do your best and focus on the good that you are doing and the things you are doing right.

[24:44] Kate White would leave her office at Cosmopolitan at 5:00 p.m. and have the babysitter make dinner while she spent time with her children. After dinner and more time with the children, she went back to her office.

[25:01] Veronica knows a lot of women today who are logging back on after they put the children to bed. It's not the ideal situation, but there are times when the work has to get done. It's a way to work things out. Hopefully, the boss understands that you need to leave sometimes at 5:00 for the soccer game or whatever.

[25:40] Veronica has learned not to be afraid to ask for what you want. The stories in her interviews have reinforced that principle for her. It's not always easy to tell people what your expectations are. There is a way to do it that suits you as a person, even if there is pushback. You're never going to get what you don't ask for.

[26:31] Next for Veronica is a video series, more on Instagram, Twitter, Snapchat, a lot more of the Secrets of Wealthy Women podcasts, and hopefully, branching out into more stories on women in finance and the workplace.

[26:56] You can download Veronica Dagher's ebook, Resilience, at WSJ.com. This is Capitalism.

Stephens.com

Veronica Dagher

The Wall Street Journal

WSJ Secrets of Wealthy Women

Resilience, by Veronica Dagher

Maria Sharapova

Josie Natori

Rebecca Minkoff

Ayesha Curry

Mary Higgins Clark

The Natori Company

Fordham University

Oprah

Maria Bartiromo

Bobbi Brown

Google Docs

Stephen Curry

Loreen Arbus

ABC

Leonard Goldenson

Vera Bradley Handbags

SCORE

Bonnie St. John

Katia Beauchamp

Birchbox

Kate White

Veronica Dagher on Instagram

Veronica Dagher on Twitter

Snapchat

This Is Capitalism

Tom Stewart is Executive Director for the National Center for the Middle Market, which is part of the Fisher College of Business at The Ohio State University. It's the leading source of information and research on the companies whose output accounts for one-third of the private sector in the U.S., the middle third of the U.S. Gross Domestic Product. These are firms that have grown out of being small businesses but with their revenues running between $10 million and $1 billion a year, they're still a long way from being in the Fortune 500. And no one shines a brighter light on the middle market companies than the National Center's Tom Stewart, "Mr. In-Between."

[:20] Ray Hoffman introduces Tom Stewart.

[1:15] Tom Stewart defines the middle market as companies with annual sales between $10 million and $1 billion. These range from the largest of small businesses to companies that start to resemble the Fortune 500. There are some interesting transitions along the way as companies grow.

[2:21] The National Center for the Middle Market considers these companies in three different revenue groups: Between $10 and $50 million, between $50 and $100 million, and between $100 million and $1 billion.

[2:41] Somewhere around $50 million in revenue, companies begin to need to create functions. They can no longer make do with the accountant at the accounting firm that they use; they need a Chief Financial Officer. They need a person to be in charge of HR.

[3:16] At a little over $100 million in revenue, the functions get deeper with more expertise in HR beyond a couple of generalists doing payroll and job descriptions. The same goes for finance and other functions. Along the way, you are likely to get more P&Ls. You get functionalization and divisionalization.

[4:06] They may begin to think about international expansion and what that means in terms of the skills and capabilities they will need to enter those markets.

[4:20] Since the center started in 2011, they started with these three logical revenue differentiations. Over time, it has become evident that the differentiations roughly correspond to major inflection points in a business.

[5:04] Within the group of roughly 200,000 middle market companies, only about 15% are public. 85% of middle-market companies are private. About a third of the 85% are family businesses; about a third have private equity investment; about a third are "other," which may be sole proprietorships, partnerships, or closely-held corporations.

[5:55] 65% of family business owners expect to pass the business to their children; only about 30% pass the business to their children. The next generation is down to about 12%. Family businesses often cease to be family businesses. They may get sold.

[6:34] The median age of middle market companies is 31 years. There are transitions that occur as they grow and age.

[7:03] During the financial crisis, middle market companies were much more likely to survive than small businesses. The vast majority of middle market businesses that survived actually added jobs while big companies were cutting.

[7:30] 60% of net new job growth in the U.S. is in middle market companies. They are the forgotten middle child of job creation. It's a mostly untold story of capitalist success because they are not found making moves in the stock market.

[9:01] Most businesses die within six years of their founding.

[9:30] Every three months, the center sends out a survey to middle-market companies in all industries, in all parts of the country. They get 1,000 responses. The questions are about top-line and bottom line, revenue growth, employment growth, investment plans, investment results, and biggest challenges. The center has eight years of data.

[10:11] The center recently took data from five years (20,000 company surveys) and did a factor analysis and a Bayesian statistical analysis. They were able to identify the key factors that drive growth for these companies. They created a cluster analysis for types of growth coming from various factors.

[10:54] The center created 'portraits' of the styles of growth of these successful middle market companies, based on the decisions the companies make or the paths they follow.

[11:20] The beginning of the National Center for the Middle Market came from GE Capital coming out of the financial crisis with a lot of interest in the middle market. As there are only 500 Fortune 500 customers, many financial services companies wish to work with the potentially lucrative middle market.

[11:44] GE Capital approached a number of business schools, including Fisher College of Business at The Ohio State University to do a study of the middle market. Fisher replied, "We see you, and raise you. Anybody can do a study, but why don't we actually create a research center so that there's an ongoing stream of studies?"

[12:08] GE sold off most of its Capital division, starting about four years ago. Now the center is sponsored by Cisco Systems, GrantThornton, and Chubb Insurance. The center works with outside organizations like Brookings.

[12:27] Middle market companies have 'big-company' problems and 'small-company' resources. Finding the 'stuff' that really helps them address their challenges is one of the most important contributions the center makes.

[12:48] Tom Stewart talks of his background working with large companies. When he moved to the National Center for the Middle Market, he discovered an extraordinary universe with some of the most interesting companies with interesting challenges. Middle market companies generally outperform S&P 500 companies by up to 2%.

[15:00] Some companies move up in the middle market. Tom calls them the 'graduating classes.'

[15:14] Tom Stewart and Ralph Greco reported on a study about if companies are keeping up with digitalization or falling behind. Getting up-to-speed is time-consuming. Tom shares the percentages of digital spending, past and predicted. There are four types of companies: strategic, advanced, defensive, and deniers. Strategic is best.

[17:51] In the 4th Quarter of 2018, 71% of middle market companies were planning to invest, with a large percentage of investments going toward IT. Cybersecurity is the biggest technology priority for many of them. Companies that prioritize cybersecurity for customer data grow faster than those that do not.

[20:08] People are now distinguishing between three things: digitization from legacy data on paper, digitalization of the whole business process, and digital transformation in which you think of the whole business as being digital, first. More companies are moving from one level to the next, connecting the dots to arrive at digital transformation.

[21:48] As executive teams age, they sometimes may also be more interested in harvesting than in planting. That's when private equity investors start coming in to grow them.

[22:46] Middle market companies that are using technology as a cornerstone grew at an average 10% rate in 2018. The 'laggards' who haven't connected the dots grew only at a 6% rate. As the years pass, growth rates and the advantages of the technology will compound for the forward companies. Tom gives examples of high-tech companies.

[24:14] Tom reflects that before he started with the center he was unaware of the landscape of middle market companies that opened before him. He says policymakers don't understand and are not being told the stories of middle market companies.

[25:15] 47% of mid-size companies report that the lack of talent is restraining their growth. Google doesn't have a shortage of job applicants. Everybody knows about Google. There are some extraordinary opportunities in mid-market companies and that story needs to be told so the talent can find the opportunities in these companies.

[25:38] Varidesk furniture, every sports team, craft brewers, and more are all found in the middle market sector.

[26:29] Tom looks forward to more interactions between companies to use tools, create knowledge, and share knowledge. The center can provide academic rigor but also an opportunity for people to share and talk. Tom wants to see more talking about the data while continuing to create a body of knowledge about middle market companies.

[28:01] Tom wants to apply this body of knowledge to help these companies perform even better. Tom's third hope is for more connections with policymakers, on one hand, and the global community of middle market companies, on the other hand.

[28:57] The core work of prosperity in communities and cities is helping the companies that are already there to grow. Part of that is identifying the middle market companies. Public investment is needed there to help everybody living in those communities.

[29:28] This is Capitalism, with "Mr. In-Between," Tom Stewart.

Stephens.com

Thomas A. Stewart

Fisher College of Business at the Ohio State University

Fortune 500

Bayesian Analysis

Cluster Analysis

GE Capital

Cisco Systems

GrantThornton

Chubb Insurance

Brookings

Booz & Company (now Strategy&)

Harvard Business Review

Fortune

S&P 500

How Digital Are You? A conversation with Thomas A. Stewart and Ralph Greco, on YouTube

5G

GPS

Lyft

Uber

US Small Business Administration (SBA)

K Street

Varidesk

Germany's Mittelstand

This Is Capitalism

Darrah Brustein asks a lot of good, pointed questions of herself as well as others. In part because of the questions she has asked herself since graduation from Emory University in 2006, she has gone from the fashion world to building a payment processing system for merchants, to event planner and networking guru, children's book author and advocate for teaching young people about personal finance, and now, co-host of a video series with Deepak Chopra, Diving Deep with Deepak and Darrah.

[:23] Ray Hoffman introduces the guest, Darrah Brustein.

[1:00] Darrah began at about eight years old on her path to become an entrepreneur. It started with crafting jewelry, then selling candy bars, and then partnering with her brother to sell wrapping paper for a school fundraiser. She is in business with her brother still; they work great as partners but they are not great friends!

[3:25] Darrah double-majored in Religion and Italian at Emory University. Darrah believes you can understand people and what makes them tick by learning what they believe. She tells how her own early conversion experience led her to want to learn more. A holistic view of the world's religions has helped her to "get" people.

[4:36] Darrah decided to major in Italian, being one of the three fashion languages after French and English, which she already knew, to launch a career in fashion. She did start in fashion but never needed Italian. In her liberal arts education, she learned to expand her mindset. She studied abroad for one summer in Italy.

[6:12] Now Darrah spends about 60% of her time traveling for pleasure, and she works wherever she is. Her first job out of college was as a sales rep for a Los Angeles-based wholesale jean company while she was in Atlanta. She covered seven Southeast states working with boutiques and department stores in her territory. She beat her sales goals.

[7:23] The company went under about a week before Christmas in 2007 and Darrah lost her job. She had bought a home three months earlier. Darrah next tried different things for work, and got laid off or downsized several more times, in the thick of the economic recession. Her inner voice kept guiding her to owning her own business.

[9:03] Darrah started a credit card processing company with her twin brother, Garrett. Garrett had been researching the merchant services industry and found an unrepresented contingent of brokerage models he could apply to the credit card processing industry. Darrah's first reaction was, "You've got to be kidding me!"

[10:14] Darrah didn't have any other ideas what to do, so she flew to San Diego to work with Garrett. Garrett had already gotten started with a small team. Darrah shadowed them and looked for problems in the business plan. After a week, she flew back to Atlanta and connected with as many of her former clients as she could.

[10:43] Darrah asked her former clients about their current payment systems and what it would take for them to switch. She kept hearing the same story. The merchants had been sold a "bill of goods" with costs that were different from what they had expected. They would switch to a provider with honesty and transparency.

[11:12] Darrah had not been initially enthusiastic about this service of credit card processing but she could get really excited about the way in which she could interact with and help these small business owners. So, she became really excited about the service. Now, Darrah calls herself the Chief Curiosity Officer of her company.

[11:47] Building the business was a lot harder in practice than in theory. Small companies are tied into their merchant services provider by contract. Many of them believe the pitch they were sold by those providers. Darrah almost felt like the Robin Hood of financial services. It took longer than she expected, but over time, it worked.

[13:08] Darrah tells how she started Network Under 40 and then Network Over 40. She just wanted to meet the need of a friend and she was already a success at networking. It snowballed to an event a month, and she expanded it to other cities. In eight years they have served over 30,000 people. It's about building real relationships, not selling.

[16:29] Darrah explains how she established "Friends first and then networking." From the first event, Darrah stacked the room with people she knew would embody that idea. She told them it was not going to be a place where it's just a business card exchange or the first question is "What do you do?" They were prepared to work the room as friends.

[17:03] As it grew, Darrah used ambassadors in a shirt with the event logo and colors and the slogan, "Let's talk." They act as event concierges. They set the tone and help keep the culture alive. People engage on a human level before involving their professional life.

[18:08] About two years ago, Darrah had an enduring, intuitive feeling that there was a new incarnation of her career on the horizon; she had no idea what it was. It was her job to figure it out. For six months she dug deep and reflected on what it could be that was coming next. She realized that people kept asking her how she lives the life she does.

[19:01] Due to the path she had followed, Darrah had the freedom to travel when she liked and work beside high-profile people. Had she followed a traditional "success" path, she would be asking the same questions her friends asked her. She knew her best skill was connecting people to people and to resources. She felt the need to create a blueprint for others.

[20:06] She decided to do a virtual summit so anyone with an internet connection would have access to all her peers and mentors who have helped her along this journey. She broke the summit into three categories: 1) What do I want out of my life? 2) How do I build a career or business to include that? 3) How do I develop a support community?

[21:18] Darrah organized 45 speakers with 20 hours of content. The summit ran live online over three days and now is available online for purchase. Each category took one day. The speakers were assigned according to their unique talents, ideas, and skill sets. Darrah interviewed half of the presenters; the rest went solo with resources for action.

[22:21] Darrah sees her essential self as the exact person she was ten years ago, but some of her characteristics have changed a lot. She went from being reactive and stressed about "résumé virtues" to being more secure and understanding of her intrinsic human value apart from her career and accolades.

[23:22] Darrah explains why she is proudest of her emotional journey and how she can use her vulnerability to help others learn they are not alone, wherever they are in their journey. Close to 10,000 attended the virtual summit.

[24:18] Darrah releases a weekly conversation with Deepak Chopra. Darrah says that Deepak Chopra was not chasing a fortune. It came as a secondary component to utilizing his gifts in service to the world while having fun and feeling joyful. In the same way, Network Under 40 was Darrah doing what she loved. Money was a by-product.

[25:34] Darrah suggests that when you can understand your unique gifts and skills, and with whom you empathize enough to help them on their way from A to B, that is a melding of who you are as a spiritual being with how you can grow something in a capitalistic way.

[26:00] Darrah talks about the shared insights between entrepreneurism and team sports that she observes from her many celebrity interviews. Founders are not lone wolves. The people around you make you a success.

[26:57] Darrah wrote Money-Making Sunny after watching the market collapse and seeing how much debt her high-earning friends had accrued. She saw a global epidemic of financial ignorance. Darrah's parents had taught her very early about money, investing, compound interest, and giving back. She wanted to help others.

[28:33] Darrah saw very little children's literature on financial responsibility. Parents weren't successfully teaching financial literacy to their children on their own. So Darrah used her writing talent to create a story that includes an appendix of resources for parents to use for teaching.

[29:51] There is a downloadable picture to color on the website FinanceWhizKids.com. Parents send her videos and images that show how their children are finding excitement around financial responsibility. They are learning it doesn't just pop out of an ATM. There are consequences with money. Demonstrate them for your children.

[31:37] Darrah's plan is to let life unfold as it should, following her instincts and seeing where doors are opening. In 2018 Darrah had no goal to do a video show with Deepak Chopra. But then it presented itself, and Darrah is so grateful that it has happened.

[32:51] Darrah had assembled a wish list of mentors and people she admired for their expertise that she wanted in the summit. For many of them, she was a student of their work from afar. Deepak Chopra was one of them. Darrah connected with his publicists and shared the vision of the summit but they were on the fence about it.

[33:36] Darrah had a hidden connection. She reached out to a friend, who was also Deepak Chopra's COO. Within hours, she had an invitation to interview Deepak in New York the following week. It was an incredible opportunity and experience.

[34:31] Three months later, Chase Bank had hired Darrah to be an onsite correspondent for their Atlanta conference at which Deepak Chopra and Cam Newton were speaking. So she met Cam Newton and had a delightful second interaction with Deepak Chopra.

[34:48] This led to two additional interviews of Deepak, arranged by his publicists. Darrah later sent him an email thanking him and offering her cheerleading support for whatever he needed in 2019. That led to the video series. Darrah never engineered the circumstance to happen, it just unfolded naturally from her generosity and work.

[36:04] This is Capitalism.

Stephens.com

Darrah Brustein

Emory University

Diving Deep with Deepak and Darrah

Equitable Payments

Network Under 40

Network Over 40

Inc Magazine

Dale Carnegie

Life by Design, Not by Default Virtual Summit

World Economic Forum in Davos

TED

The U.N.

Deepak Chopra

Adam Grant

Robert Herjavec

Shaquille O'Neal

Forbes

Gary Player

Cam Newton

Bobby Brown

Money-Making Sunny: Finance Whiz Kids: Book #1, by Darrah Brustein

FinanceWhizKids.com

This Is Capitalism

Charles Morgan is a lot of fun to be around and to learn from. He learned about business first from working with his father, starting when he was a little boy. As IBM's top systems engineer for the entire state of Arkansas, Charles sold Sam Walton his first IBM System 360 Mainframe, which allowed Walmart to take off. He's a pioneer of big data, having built one of the first companies in the industry, Acxiom Corp. And now, at a time when most of his contemporaries are retired, he's having fun being a very hands-on CEO at First Orion, whose Privacy Star app is blocking literally billions of scam calls. But then, he has also driven the 24-hours at Daytona, and at most of the other major tracks around the U.S., too. He has the X-rays to show for it.

[:25] Ray Hoffman introduces the guest, Charles Morgan, First Orion CEO.

[1:30] What shaped Charles and gave him the confidence to take on the risk that allows the reward in capitalism? Charles credits the DNA he inherited from his father and grandfather. He says a family history of starting businesses helps. He wasn't afraid of entrepreneurism and worked in the family business.

[2:32] Charles doesn't think it was courage that drove him but just the understanding that entrepreneurism is what he ought to do.

[2:39] Charles sees capitalism as the freedom to pursue your own talent and interests in a business sense that allows you to be all you can be for yourself, for your creative side, and for your family. That is also, for Charles, the essence of the joy of life.

[3:09] Charles would not do well in a controlled environment with little or no self-direction.

[3:30] Why is Charles, at age 76, still heavily involved as a CEO? He says his wife is pleased that she is free to do lunch with whomever she wants, as Charles is at work!

[4:18] Charles is a geek at heart and loves problem-solving. His enjoyment in racing comes from the technical problem-solving of getting a car setup right. Charles has designed some race cars.

[4:39] Charles likes people problem-solving and business problem-solving; coming up with a really good organizational strategy can be an exciting thing. Innovation, producing results for the customer, and putting the right person in charge of each area, are important for small companies like First Orion or large companies like Acxiom.

[5:09] Business is and always has been a 'people game.'

[5:12] Charles still loves technical problems. He is still programming prototype software for the solutions First Orion offers. Charles wakes up at 5:00 a.m. and goes to his computer to work on the current problem for an uninterrupted couple of hours. Then he goes to work at 9:00 a.m.

[5:57] Charles says we all decide what to do with our lives. He believes retirement is the freedom to be able to get up every day and do what you love to do. Everybody's job ought to be retirement every day, from the age of 21 on.

[6:32] In Charles's first book, Matters of Life and Data, he said his businessman father understood reward but not risk. His father had the vision for opportunities but did not understand how to make them happen — how to get the right people doing the right things, and where to take the right risks. He didn't achieve the level of focus he needed.

[7:23] In his father's hardware business, he diverged from hardware to wood doors and frames, aluminum windows, and plywood. He tried to be all things to all people. He didn't have the discipline to decide how his business would grow and where he would get the resources to grow it. It was helter-skelter.

[7:59] His father knew the reward he wanted was a successful business but he couldn't organize it very well.

[8:16] At age 17, at the direction of his father, Charles took a truck and drove his 15-year-old brother from Fort Smith to the Andersen Window factory in Philadelphia for Charles to pick up a load of windows and pitch to the Andersen brothers an improvement on their window design. His father had sent a letter to Andersen about it.[9:44] The Andersen brothers had a conference room prepared for them, with the company engineers ready to hear his presentation. Charles explained it to them and they were very interested to see if they could incorporate the idea into their windows.

[10:12] That night, Charles and his brother headed on a train to New York City for two plays their father had bought tickets for them to see. They picked up the tickets at will-call. After two nights in New York, they took the train back to Philadelphia and drove back to Fort Smith with their window order.

[10:52] In 1966, Charles started his first career job at IBM. He was made the top systems engineer for IBM for Arkansas.

[10:59] In Charles's book, What Now?, he recalls a lesson he learned early on from a senior IBM executive. He was told never to burn bridges with someone at work, whether it's a poor employee or a bad boss. Respect them as human beings. Circumstances change and you may work together again. Decades later, that advice still serves.

[12:05] Charles made his first investment in First Orion/ PrivacyStar when a representative presented it to him as a concept of putting software into the switching systems of telecoms' networks to allow individual customers of the telecom to block numbers that they didn't want to call them.

[12:43] The obstacle ahead of them was that the telecoms weren't interested in granting network access to outside software engineers. So that idea didn't work.

[12:56] The idea came at a time when Charles expected he would be leaving Acxiom and he was looking for something "to dabble with." Charles moved to Dallas and invested in First Orion with $1 million with Jeff Stalnaker, the COO. At first, Charles was not expecting to become extremely involved with the investment.

[13:44] Charles talks about how he left Acxiom, as the face of the company. He had been getting tired of the process of running a company of that size and new regulations, such as the Sarbanes-Oxley Act of 2002, added to the burden. A large investor, Jeff Ubben, brought a proxy battle, then joined the board and started trying to oust Charles.

[15:58] Charles was tired of the conflict. He invested in First Orion to get his mind off the struggle on the board at Acxiom.

[16:24] Going into First Orion/ PrivacyStar, Charles didn't keep in his mind how long it took and how difficult it was to build up Acxiom. But he did remember some of the things that didn't work, so he was able to avoid some of the early mistakes.

[17:27] As the most dominant company in the direct marketing industry, Acxiom got a little cocky at the influence they had. As CEO, Charles could call on executives at any level and knew all the senior guys at major corporations. His son tells him, "You were kind of a big deal!"

[17:50] Charles wrote in his first book, "A good entrepreneur knows what he doesn't know." At the beginning of his involvement with First Orion, Charles didn't know the telecom industry, nor did he know how little the man dragging him into it knew about the telecom industry; most of his claimed knowledge was actually stuff he'd made up.

[18:28] Charles asked his friend, Bill Connor, to meet with the man from First Orion. The meeting didn't happen until after Charles had put in the $1 million. Bill told him "Well, I hope you're successful," but didn't say what he thought — that the man was a fraud — until Charles cut off the relationship with the man.

[19:31] Charles wrote in his book that "We had no idea of the vastness, the complicatedness, the downright convolutedness of the systems that we were stepping into." Charles says the networks pre-date IT. There is layer upon layer of technology that all has to work together. Somehow, phone calls get through.

[20:25] First Orion has had to integrate their technology into those networks, thanks only to a bunch of amazing people. The systems, to this day, are very complicated. First Orion interrogates every single phone call to every user of T-Mobile today, to see all its characteristics, to try to figure out if it's a scam call. It's a complicated process.

[21:19] Today, PrivacyStar is able to block or identify about 90% of scam calls. If you used to get 30 scam calls a week, that cuts it down to three scam calls. They're heading to cutting it down to one or fewer a week. They are covering 62 million customers and they see every call that is made to them.

[22:08] There is about 2K of data for each incoming call. This includes where it came from, where it's going, and the routing that gets it there, the equipment that sent it, and other characteristics of the call.

[22:28] PrivacyStar does not get involved in the voice call itself, and they are careful not to transmit outside of the network the call is being made to, to protect personal information. The only data they take outside the network is not identifiable to the person receiving the call.

[22:53] In ten years, First Orion has come a long way. Eighteen months after Charles's initial $1 million investment, the company was out of money. Charles had a big decision to make. His gut told him to put more money into it. His worst-case scenario told him he could lose another few million and it would not impact his lifestyle significantly.

[23:53] Charles doesn't make decisions out of fear, or because he has to. He says people make terrible decisions at times of dissolution of marriage or bankruptcy or another financial nightmare. People should not make decisions at the time of trouble.

[24:25] Charles made the decision that he believed in First Orion for the long-term. The idea was adapted to mobile technology instead of the originally planned wire-line network software.

[24:38] In 2000, Charles started getting excited about mobile technology. In 2009-2010 Charles realized that this little computer you put in your hand was going to change the world. They started with a Blackberry app and realized there would be a lot more mobile devices.

[25:19] A successful entrepreneur or executive needs to be inspired by dealing with multiple difficult issues. If problems worry you to death, you probably ought to be doing something else. When Charles sleeps, he does not want to lay awake worrying.

[25:53] Don't sit and mope about something — do something about it! Sometimes it's better to do something, even if it's wrong. You can't be frozen by indecision. Take action to move toward a solution. Hit problems head-on.

[26:37] A good entrepreneur has got to move quickly — measuredly but quickly.

[26:56] Charles describes how he went from observing to taking over the company. It came down to the decision to either stop putting money into it to lose or to take over with a plan to turn the company around. He planned for First Orion to make a profit by December of 2013, and they did it.

[28:19] You can't direct that kind of change from over the fence.

[28:24] It was a problem for Charles to win over the non-believers at the company. Charles came up with a very specific plan with the detailed changes he was going to make in how they organize and approach things. He declared he would take on the task cut their IT cost in half. He delegated other problems at the company to other staff.

[29:19] Charles cut the IT cost by more than half, trading pay cuts for stock options. He wants everybody to be a partner and not an employee. Putting stock in their hands with options does that.

[29:39] You can't just have good technology. You can't just have good people. You need good products, good service, and other things. For a small company, these are even more important.

[29:51] Charles is audacious, meeting with senior people like he has a right to have a relationship with them. In the early days at Acxiom, Charles took it on himself as a challenge to meet with senior people at Citi. He kept pushing the relationship higher and higher to the head of the credit card department. The relationship is important.

[31:27] Now, First Orion's service is important to the senior-most people at T-Mobile and the carriers. So they are getting the same kind of relationship with them. John Legere, T-Mobile CEO, knows very well who First Orion is and has some dialog with First Orion President, Jeff Stalnaker. There is regular communication with top executives.

[32:00] First Orion first thought they were providing a service. Now they see themselves as a data analytics company, using data analytics to make the phone experience better. Charles compares the services of Acxiom and First Orion. It's all about the data.

[33:26] First Orion uses a massive AWS footprint to do a lot of analytics. They use software in the network that takes the AWS data and builds a knowledge base to compare each phone call against. They do this comparison about 175 million times a day. They send the results of the comparisons back into AWS to update the analytics.

[34:24] They update the analytics every six minutes. It is very challenging to stay ahead of the scammers. The carriers themselves built into the system, for their own reasons, the ability to obscure the source of a call. This was before scam calls were common.

[35:42] First Orion has 50 people continually iterating the software. It can never stop.

[36:02] Scammers today are sending texts and emails with a scam fraud alert phone number for the recipient to call and get scammed. People fall for it in amazing numbers. [36:29] First Orion has blocked or tagged 10 billion calls. The savings to the customers at T-Mobile is now in the billions of dollars.

[37:08] Charles talks about how he recruited some of the early employees to Acxiom, telling them they would have fun and he would do everything he could to make sure they became millionaires.

[37:24] A lot of the reward Charles got between Acxiom and First Orion is being able to help people out. Acxiom made quite a few millionaires. At First Orion, Charles has given out 25% of the company as stock options to the employees. Stockholders will make a lot of money if First Orion is successful.

[38:01] First Orion is looking to monetize. They are generating good cash flow. Charles would like to start buying people's stock back from them and allow them to monetize significant numbers of dollars and not have to wait until the company is sold. Charles does not really want to run a public company again.

[38:38] What is it about Arkansas water or the soil that has nourished a disproportionate number of very successful entrepreneurs, including the Fords, the Waltons, the Stephens, the Tysons, the Dillards, the Murphys, and the Morgans? Charles used the working title "It's in the Water" for his book, Now What? as he was fascinated by that.

[39:12] Charles did research the topic and interviewed some of the big names. There is something about the culture of Arkansas that allows success to happen. Charles doesn't want to preview his next book, but that will be in it!

[39:54] Charles Morgan is capitalism, and This is Capitalism.

Stephens.com

Charles Morgan

IBM

Sam Walton

Walmart

Acxiom

First Orion

PrivacyStar App for iPhone

PrivacyStar App for Android

24 Hours at Daytona

Matters of Life and Data: The Remarkable Journey of a Big Data Visionary Whose Work Impacted Millions (Including You), by Charles D. Morgan

Andersen Windows

Jeff Stalnaker

Sarbanes-Oxley Act of 2002

Jeff Ubben

Bill Dillard

T-Mobile

Citi

John Legere

Amazon

AWS

Companies based in or started in Arkansas

This Is Capitalism

There aren't many 32-year-olds in any profession who have assumed the kind of leadership role that Stacy Lewis has in the world of professional golf. Not only by her 12 LPGA tournament wins so far, including two majors, or the fact that she was the first American woman in more than 20 years to win the LPGA Triple Crown — no, there's more to it. Because a girl who grew up in a back brace, as she did, would not be a prime candidate to turn pro, let alone become number one in the world. She has stepped into controversy — less as a disruptor and more as a leader. She has inspired change and driven change. The companies she represents as a brand ambassador, such as KPMG, Marathon Petroleum, and now, Stephens, Inc., know to turn to her for much more than just club selection and putting tips.

[:19] Ray Hoffman introduces the guest, Stacy Lewis.

[1:15] Stacy has a degree in Finance and Accounting from the University of Arkansas. This is a good qualification for talking about the business of being a professional golfer.

[1:28] Stacy had planned to get a regular job after school and not play professional golf.

[1:40] Ray lists some of Stacy's many college golf awards that pointed her toward success as a professional golfer.

[1:54] Before college, academics was her focus. In the last couple of years of college, she started considering a professional golf path.

[2:13] How does Stacy apply her finance and accounting knowledge? It feels like her own little business. She talks about hiring, firing, and payroll, and accounting. Her classes prepared her for it. She pays another person to do her taxes.

[2:55] Stacy is CEO of Stacy Lewis. She runs her business on an Excel spreadsheet.

[3:19] Professional golfers are independent contractors. Stacy explains what that means. No one else is making decisions for you. A lot of people are not prepared for that. There's a lot of pressure to play well because you have a lot of people to pay before you get the money, especially if you have no sponsorships.

[4:28] In college, Stacy did not know how much of a team she would need to employ as a professional golfer. She keeps her team really small. She wants people she trusts to tell her if she needs to change anything. She has a caddy, a swing coach, a trainer, an agent, a financial adviser, and an accountant. Plus her husband and her parents.

[5:50] Stacy contrasts the PGA and LPGA purse payouts. Stacy does not ever see the purses being equal in the twenty or thirty years she has left in her career. She expects the gap to get smaller. For now, women are making about a third of what men make. Today, women can make a living out of playing professional golf, more than before.

[7:23] Women tennis players have reached parity with men players. Venus Williams was a driver of that. It helped that men and women play at the same courts at the same time. It would take bringing the PGA and LPGA together to the same course to create change like that. The European Tour and the LPGA met at the Vic Open in Australia. It's progress.

[9:15] What would it take to make a joint PGA/LPGA tour? A lot of money is needed to make the two purses equal.

[9:56] A smaller number of golfers from each organization would probably play, for a smaller purse. PGA players and audiences are sometimes surprised by the level of play in the LPGA.

[10:38] LPGA play is more relatable for the average male amateur player who does not drive as far as a PGA player. There is more finesse to the women's game and more feel in the wedges and putter.

[11:10] Stacy would like to see a joint tournament at a Links course in Scotland, but it could be done anywhere. The biggest issue would be the course setup with tees. Links Golf is Stacy's favorite style of golf.

[12:11] Stacy had a drought from 2014 to 2017 where she didn't win a single tournament. In 2017, when she won a $195K purse, she donated the check to Hurricane victims in Houston. The Tuesday before the tournament the thought came to her, and she called her husband to discuss it. He said, "Let's go win the thing!" It gave her a focus.

[13:04] Stacy is a fiery player, but that week she felt calm. She knew the outcome had already been decided and all she had to do was be there for it and enjoy it. It was a surreal week and a surreal experience. It's been so cool for her to see the impact of that money, helping rebuild houses in Houston for eight families.

[13:53] Stacy tells how the donation was made to the St. Bernard Project to distribute the money in Houston for Hurricane Harvey relief.

[14:19] Last year, Stacy worked more on motherhood than on golfing. It has completely changed her world. It forces her to be more focused when she practices, and then get home to be with her daughter. Stay played a tournament in January, and her baby came with her, going to daycare while Stacy played. The LPGA Tour has daycare.

[15:14] There were four or five babies born to LPGA golfers last year. One of them also will come to a summer tournament. After success on the golf course, Stacy was ready for the challenge of motherhood. She still feels she can play some pretty great golf, coming back from this, as well.

[15:43] Stacy Lewis and Phil Mickelson are the principal faces of golf for KPMG. Stacy wears a blue hat, as for every blue hat KPMG sells, they donate five books to children in need as part of their campaign for literacy.

[16:17] Written into each KPMG sponsorship contract are things like wearing the logo, which everyone sees, and service days. Stacy and her instructors spend a full day with about 25 women clients invited by KPMG for instruction, playing nine holes, a scramble for fun, and a time to network. Other sponsors may ask for different services.

[17:04] There are five to six days a year that Stacy spends in service to KPMG and their clients for their sponsorship. There are also other meet-and-greets, social media posts, videos, and other things behind the scenes. Every sponsorship Stacy has requires at least a couple of service days, so they add up to quite a bit.

[17:28] Stacy's agent is concerned about her time. She cannot take on any more sponsors and have time to play 25 tournaments in a year.

[17:50] Logo placement on shirts and hats determines how much they are seen on TV. The front of the hat is the number one location, then right chest, side of the hat, collar, and sleeve. The golf bag is low on the list. Camera angles are important.

[18:29] Stacy's clothing sponsor is Antigua. To start the year, they send her a big box of shirts and update them if needed in the summer. In the fall, they have a new line of colors and designs, so Stacy gets another big box. Antigua does a tremendous amount of work in women's golf. Stacy has worn Antigua for eight years.

[19:16] Stacy recently added Stephens, Inc. as a sponsor! Stephens has a soft spot for Razorback golfers like David Lingmerth and Stacy Lewis. Stacy was excited when Stephens Inc. reached out to her after she had seen the logo on the guys.

[19:41] Over the years, Stacy learned that she represents her sponsors wherever she goes. She chooses sponsors that share her values and make sense for her.

[20:19] Stacy has invited some of her sponsors to sponsor LPGA tournaments. She likes to push the envelope and increase the purses. Stacy pushed the idea both with KPMG and Marathon.

[21:37] Stacy received a phone call from KPMG, her lead sponsor, that her contract would be paid in full during her maternity leave, without playing the full year. Stacy remembers the phone call which she received sitting in the parking lot of Wilshire Country Club in LA. At first, she thought something was wrong. The call left her in tears.

[23:02] Most of Stacy's other sponsors did the same thing, starting a trend. Stacy hopes the trend continues to support women having babies in the future. Lynne Doughtie, CEO of KPMG is passionate about women in the workplace speaking up for causes. She is amazing as one of the first women CEOs in her industry.

[23:42] Stacy's high profile as number one in the world helped create a major precedent in sponsorships. She says she likes to change things! We can always make things better. She even got the maternity policy on the LPGA Tour changed. She wants girls to see that they can have families and play professional golf.

[24:24] The travel for the LPGA is harder than PGA travel, even in the last 10 years, with events in Australia, Asia, and Europe. As Stacy gets older, she won't play as much internationally, with enough events in the U.S. to play a pretty full schedule.

[24:57] Stacy has not played the Evian Championship for two years. She told them she would not return until they made changes. They have made changes to the design of the greens. The big change is putting it in July when it is dryer. Stacy is excited to get back there. She feels like it will be a better championship, this year.

[26:40] Stacy takes leadership roles easily. It's who she is. She's the experienced voice on the tour. KPMG comes to Stacy after their tournament every year for her suggestions on what to do better next time. The LPGA Tour asks her the same questions. She continues to push the envelope. Some things may be out of reach but may work later.

[27:44] What one person does Stacy see as someone she wants to emulate as she moves forward? Stacy looks toward Karrie Webb, who is an unbelievable advocate for women on and off the golf course. She does a lot to support Australian girls coming up in golf.

[29:06] Stacy would love another dozen tour wins. She feels like she has a second start to her career after the baby. She asks, who knows what the second half has in store?

[29:20] Stacy Lewis is a CEO, professional golfer, and leader. This is capitalism.

Stephens.com

Stacy Lewis

KPMG

Marathon Petroleum

University of Arkansas

Arkansas All-American Golfer Stacy Lewis at University of Arkansas

Dinah Shore Trophy Award

Excel

LPGA

PGA

Babe Zaharias

Mickey Wright

Ben Hogan

Jimmy Demaret

Venus Williams

Vic Open

European Tour Golf

Links Golf Course

St. Bernard Project Hurricane Relief

LPGA Tour Daycare

Phil Mickelson

Antigua Clothing

David Lingmerth

Wilshire Country Club

Lynne Doughtie

Evian Championship

Karrie Webb

This Is Capitalism

For Rosina Samadani, New Year's Eve — the fireworks, the ball drop, the champagne — came on December 28, 2018. That's when her company, Oculogica, received FDA approval to market a major tool — a breakthrough algorithmic neurodiagnostic tool for determining whether a person has had a concussion. Oculogica's EyeBOX® does that by a modern variation on what doctors used to do as a matter of course in head injury cases. The EyeBOX® looks into the patient's eyes to see how they move. Only, the EyeBOX® can do that and analyze over 100,000 data points in the space of less than four minutes. That's a breakthrough. And that's what Rosina Samadani's company, Oculogica, has done.

[:18] Ray Hoffman introduces the guest, Rosina Samadani, CEO of Oculogica.

[1:06] There is a dire need for an objective diagnostic. Rosina hopes we are entering a new era in concussion diagnosis. Oculogica sees itself as part of a multi-modal assessment of a concussion. There should be multiple objective assessments that are performed simultaneously to understand your concussion.

[1:45] Rosina tells how the FDA informed Oculogica of authorization to market the EyeBOX®. Oculogica's 950-page submission needed one punctuation change, and then it was officially approved and authorized.

[2:27] Oculogica's EyeBOX® is the only non-invasive, baseline-free aid in diagnosis of concussion. One other test, the ImPACT® Test, is authorized as an aid in diagnosis of concussion but it requires a baseline and is mostly used on sports teams.

[2:59] The EyeBOX® can be used in the clinic and emergency room, and it's a lot faster than the ImPACT® test.

[3:06] Rosina discusses what Oculogica has learned about concussion and physicians. Concussions manifest in many different ways. Not every person's concussion is the same. The symptoms are subjective. Rosina lists symptoms that can mimic other conditions under stressful environments.

[4:26] There has not been an objective diagnostic for concussion until now.

[4:33] The speed of the test is great. Oculogica wants to get to an even faster test. A test where you don't need a baseline means that you can't game the test. Rosina describes how athletes and military personnel have been able to game previous tests to get back into action. EyeBOX®, with no baseline, removes the ability to game the test.

[5:22] The idea was developed by Rosina's sister, Uzma Samadani, M.D., Ph.D., a professor of neurosurgery at the University of Minnesota. Dr. Samadani was looking at cranial nerve palsies, and she correlated eye movements to the cranial nerve palsies of cranial nerve three and cranial nerve six.

[6:01] Dr. Samadani knew that these nerves are implicated in a concussion. She had a hypothesis that eye movements correlate to a concussion diagnosis. She did a study to test the hypothesis and it was shown to be correct by the data.

[6:18] Before an objective test, the main test was to observe eye movements following a finger.

[6:37] Dr. Samadani discovered this connection in 2011 and wrote up patents, did a couple of publications, and licensed the patents into a company that she founded in 2013, Oculogica. Rosina joined the company as CEO in 2015.

[7:04] Rosina had always thought she would like to run something and take something to the FDA through the authorization process. She has been a management consultant for a very long time and wanted to get into the work of it. She did not think she would be doing it for a company based on technology that her sister had developed.

[7:58] Rosina studied mechanical engineering and earned a doctorate in biomedical engineering. Then, she went to McKinsey & Company for six-and-a-half years, where she worked on engagements for a number of larger companies.

[9:42] Rosina talks about the learning experience of spending every single day and weekends working extremely hard for two-and-a-half years on getting the FDA authorization to market EyeBOX®.

[10:34] The execution requires you to go to the FDA with a discussion of what you are going to do, and then, go out and do that by a study, finding four to six medical centers that are willing to do this study. You have to design the study. You have to get IRB approval. You have to get your patients enrolled.

[11:03] You have to make sure the data is collected in a fully FDA-compliant manner. When you are a small company, everybody is engaged in the process. They had just a handful of people and they all had to make sure it was happening.

[11:19] The strategic element came on top of the execution. There is not a definitive diagnosis of concussion, so when you're setting up a clinical trial, what do you compare it to? That is a separate discussion with the FDA. The clinical reference standard is a full-on set of multiple discussions with the FDA.

[11:44] There is an FDA review team for these discussions. Ideally, the team is steady, but people come and go with job changes. Rosina found the FDA to be very reasonable and logical in their requests. Everything they asked for made sense to her. Oculogica was very transparent with the FDA and they saw that and appreciated it.

[12:26] How did Rosina come to be CEO of Oculogica? She explains the history. Rosina was helping them look for a CEO. When Uzma offered the position to her, at first, Rosina resisted because of the family relationship. That made Uzma even more sure Rosina was right for the position. They talked seriously for three days before she accepted.

[13:43] The full company team is six people, working as a virtual company scattered around the country. There is a Minnesota office that serves three of them. There is a New York office for one. Rosina works from home, and another person works from San Francisco.

[14:07] Oculogica found the people where they already were. Three engineers were in Minneapolis and they found other engineers. None of them wanted to move to New York, so they found a clinical operations manager there and an analyst in San Francisco.

[14:36] The tools that are available today to help people work virtually are phenomenal. Zoom and Slack are maybe even more efficient than being in the next room.

[14:49] Every single day, the company has a Zoom video call. Rosina has asked the team to get on Zoom rather than a phone call whenever they can. Everyone has their own Zoom room. They use Zoom with all of their physicians and partners. Looking at somebody is so different than just being on the phone with them.

[15:13] In 2018, Oculogica received the Luis Villalobos Award from the Angel Capital Association for outstanding ingenuity, creativity, and innovation. One of the members of the selection committee said "This is a company that has done everything right. … It is hard not to get excited about Oculogica."

[15:38] Rosina talks about receiving the award, which seems like a lifetime ago. Uzma and Rosina have talked about mistakes they have made. You can make mistakes; they just can't be fatal mistakes. The mistakes were tiny enough that Oculogica could overcome them.

[16:11] Rosina talks about her father, a physician, who told her, when they got the FDA authorization, "The biggest accomplishment is that you have made a difference for patients - that will always be there. This change will not go away." Oculogica can build from here, making a difference to people.

[16:31] Everywhere Rosina goes talking to investors, they know someone who has had a concussion, and this will make a difference.

[16:37] Traumatic brain injury is the leading cause of disability and the leading cause of death for young adults. Undiagnosed and diagnosed incidences may be as high as 10 million a year in the U.S.

[16:55] Almost half of people will incur a brain injury at some point in their life, according to Dr. Uzma Samadani. Every person Rosina talks to knows someone who has had a blow to the head. Rosina and Ray exchange their own stories of blows to the head. It's so easy to happen.

[17:44] 100% of the concussion headlines are about sports. Only 18% of concussions are related to sports.

[17:51] Rosina mentions upcoming uses for the EyeBOX® technology. Oculogica will go after elevated intracranial pressure next, Then, they will go after the various subtypes of concussion they are also exploring, and cranial nerve palsies. There are a number of other areas that are of interest to Oculogica and other companies.

[18:14] Ray and Rosina discuss pricing. They will get to an accessible price solution to benefit more patients, but it will take time.

[18:33] This interview is being held at the Golden Seeds Summit. Golden Seeds had expressed an interest in Oculogica. Rosina recommends that if you are going to pitch to Golden Seeds, be thoroughly prepared and know your market — what you are trying to do, and how you will go to market.

[19:04] You need to understand your technology, how your IP lines up against your competitors, your licensing arrangement, the number of people that are affected, and the unmet need. Golden Seeds wants to know everything. They will talk with you and with regulatory folks, physicians, and patients.

[19:33] In the end, Oculogica had an investor and a network of related people. Half of the benefit from the arrangement has been having access to Golden Seeds' network. On the day of this interview, Rosina was meeting with people because of Golden Seeds. Golden Seeds has been very generous.

[19:57] Oculogica has been in touch with sports teams and leagues even before they received FDA authorization to market EyeBOX®. Since the authorization, they have had some discussions with major sports leagues and also with some of the team doctors.

[20:28] Oculogica did some extensive testing with two high school teams in Beaver Dam, Wisconsin over the course of a season. They did find a false positive rate in kids before the season started. They also found out that concussions get a little worse before they get better.

[21:01] You can be tested on the day of a concussion and be a little fuzzy. Three to seven days after the hit, you will get a little worse, before you get better.

[21:20] What is planned for Oculogica by January 2024? Rosina anticipates they will have two products dealing with concussions; one with therapeutic implications and one as a portable triage device. There may be a version that is more portable than the one they are planning now, depending on how the technology of phones and tablets progresses.

[22:07] The products address a market of over $1 billion. It's a very large market.

[22:16] It's a very large development! This is capitalism.

Stephens.com

This Is Capitalism

Rosina Samadani, Ph.D.

Oculogica/EyeBOX®

FDA

The ImPACT® Test

Uzma Samadani

University of Minnesota

McKinsey & Company

American Public University System (APUS) Institutional Review Board (IRB)

Zoom

Slack

"Oculogica receives Luis Villalobos Award for Innovation", by Marianne Hudson

Golden Seeds

NFL

MLB