This is Capitalism: Inspired, Explained, In Focus

They've only been business partners since January 2017. When they're not on the road, usually in two different cities, their homes are about 1,200 miles apart. Yet, Joe Gilliland and Larry Lemons have a knack for finishing each other's sentences. They share a vision of a somewhat disruptive, more comprehensive approach to sports management. They call their company Anth3m because they and their affiliated firms give voice and management to the longer term of-the-field and off-the-course interests of rising stars such as golfer Austin Cook, and Oakland Raiders tight end, Jared Cook. Too many Cooks? Not in the case of Joe Gilliland, Larry Lemmons, and Anth3m, which is based in Miami Beach.

[:18] Ray Hoffman describes Anth3m sports management company and introduces Joe Gilliland and Larry Lemons.

[1:15] Joe and Larry explain why Anth3m is based in Miami Beach. Athletes love the beach. It's easy to get an athlete to come to visit Miami Beach for a meeting or an event.

[1:25] Joe and Larry are basically on the road all the time, visiting athletes. They have partners spread out across the country to meet any athlete's needs at any given time. Larry is in Miami Beach every other month, while Joe is there as little as he can be.

[1:56] There are two full-time employees in Anth3m headquarters in Miami Beach. Larry and Joe are primarily on the road meeting people.

[2:09] Joe lives in Dallas, Texas. Larry lives in Cleveland, Ohio.

[2:20] Joe and Larry always have something new and exciting happening daily. They think outside the box and they want their company to find new and innovative ways to strategically align with their clients and partners.

[3:08] Larry explains how he was doing business development for about six years with a couple of athletes. His business partner was his first client. As Larry was developing the model of Anth3m, he knew it was important to find someone who had actual management experience.

[3:40] Larry was looking for someone who could bring traditional aspects of management to his athletes in a non-traditional situation. His partners introduced him to Joe. Larry laid out the vision for him and he just got it. They've been going ever since.

[4:08] Larry has an economics background with JP Morgan Private before branching off on his own. Joe started at UBS and moved to UBS Private Wealth. At the same time, he founded a digital media company in the golf space, with two friends from college. It grew into something far bigger than they had anticipated.

[4:43] Joe gives the shortened version of his career. He and his friends created a YouTube video that got 30K views. That led to a second video that got 100K views and it continued. They started getting contracts in the mail to monetize the video and build the platform.

[5:09] Joe looked over the contracts and they filed an LLC, looking to make a little bit of money. Golf Digest wanted to do a full series. Callaway Golf called. That led Joe to full-time management representation as well as business development for athletes and consulting on behalf of digital content marketing strategies.

[5:49] Larry and Joe were both willing to take on mitigated risk. You have to have an entrepreneurial spirit to launch a business. That was what drew Larry to Joe. They had both built a business from the ground up.

[6:08] Larry says you need to understand what it means to go into the trenches and build something that certain people may see as taboo or different. They were taking on an industry that had set ways. You need people who will understand the vision and the struggles you have to go through to get where you want to be.

[6:41] Joe illustrates the biggest difference between sports management today and the past by contrasting Michael Jordan, who was untouchable, with Lebron James, who is fully accessible. You feel like you have a personal relationship with him, day in and day out, from everything he's been putting together.

[7:29] The industry has been focused on sponsoring an athlete and getting them as much money as they can in return for as little value as possible. At the end of the day, the sponsorship doesn't provide value to the company that you work with.

[8:07] There is limited space available during the athlete's performance. You have to find a way to create engagement opportunities for the brand. Today, you need to have a story about the brand's association with the player and you need to tell the story by way of digital content, social media strategy, and public relations for audience engagement.

[8:50] Athletes are not experts on marketing. They don't understand that on Instagram and Twitter, they are shaping how people see them. Anth3m helps athletes make that communication intentional by matching an athlete's message with a brand that aligns with their values and products they legitimately use.

[10:05] Anth3m is telling authentic stories — the athletes don't mind doing it and the brands get more out of it. They're creating lasting, organic partnerships.

[10:29] Joe points out that Anth3m is not an agency. They don't handle player sports contracts or team-related businesses. A lot of times, they align strategically with agencies to help support the players in these other areas. Anth3m is unique in the style of relationship they have within the business development sector.

[10:58] Anth3m is partnered with an actual public relations company, with a digital media and social media company, and a strong content creation company called Ideas United. They are partnered with a franchise and business development company, Apex. That is not common in the sports management industry.

[11:44] Anth3m's goal is to help their clients, the athletes, develop their own personal anthem. A lot of athletes have unknown talents they want to use and passions to pursue. The average NFL career is three years. It's a job, not a career. Anth3m wants athletes, after a long career, to have their sport remembered as a footnote to their lives.

[12:51] Anth3m's goal is not to get athletes to the top but to guide them down into the next phase of their career, as well. It's a full journey. The athlete is their own personal business. They hire Anth3m, to be the 'CEO' of their company. When they retire from their sport, they'll be ready to step into a role in their business.

[13:53] Larry says it's come a little faster than anticipated. The firm was two years old in January. Both Larry and Joe have been working with athletes for a number of years.

[14:25] Joe brings up a client case study, Brice Butler, who has proven himself to be a very capable receiver. What makes him a fit for Anth3m's model is who he is as a business professional. He is into fashion. Last year at Men's Fashion Week in Paris, he was voted as one of the top eight best-dressed athletes at the shows.

[16:12] Joe was heavily focused on golf before he met Larry. Larry loved the model Joe had put together of building brands and platforms for the athletes away from their sport. Larry said, "Let's do it for the NFL." It took Joe time to become fully aware of how the NFL works. Now they are branching into the NBA.

[17:21] Larry had just taken the dive into golf and wanted to learn from Joe. Both Joe and Larry had some learning to do about the NFL space as a whole. Relationships with individuals have helped them pick it up quicker. Bringing on NBA athletes will be different from either golf or the NFL.

[18:30] It was a surprise to Larry what the learning curve for Joe was in the NFL space. It took Joe some time to catch up to Larry. Larry and Joe talk about when you can call an NFL player vs. a golfer. Golfer Austin Cook will pick up the phone every time Joe calls. If Joe called an NFL player four times a day, they wouldn't answer for a month.

[19:57] Ray recently saw a 1960s video of Palmer, Niklaus, and Player on the Perry Como Show, playing an edited round of golf. These were agent Mark McCormack's big three. Joe believes that Arnold Palmer made sports marketing cool. Mark McCormack was revolutionary. He wrote What They Don't Teach You at Harvard Business School.

[21:09] The lessons Mark McCormack learned in the 1960s are still applicable today. Joe talks about the thousands of dollars Arnold Palmer won playing golf in contrast to the millions of dollars athletes make today. Arnold Palmer became a multi-millionaire through marketing his story and brand.

[22:31] Larry talks about how Anth3m works to understand the important parts of an athlete's business off the field and turn that into something that fulfills their hopes and dreams.

[23:03] Ray notes the Barclays Center in Brooklyn was sold out for a couple of days recently for video gamers. Larry and Joe have considered taking on video gamers. Their aligned strategic partners understand sports but don't have active backgrounds in sports. Anth3m didn't want their clients to be put into a box that their sport dictates.

[24:08] There are a number of things Anth3m has on the table, with which they are looking forward to testing their model. E-gaming happens to be one of them. Joe has a couple of friends who have moved into the representation of e-gamers full time.

[24:37] Joe feels that the driving force of Anth3m's success is going to be in creating opportunities for athletes to invest more toward their future career and business after their sport. One way they inspire that opportunity is through their relationship with Apex for business development work.

[25:27] Joe and Larry are in New York the week of this interview to meet with Jared Cook of the Oakland Raiders, and a partner in a high-fashion men's apparel line. Jared came up with the idea of starting his own line. Larry helped him pick the right strategy, designers and partners, took over as CEO of the company and has developed it.

[26:21] Larry thinks that what needs to change in the representation field is the idea that agents, financial advisors, or managers have direct control over an athlete. Athletes should hire the specialists they need to help them for specific jobs. A financial advisor should not give legal advice. Everybody should do their specific job.

[29:14] Joe says they are talking now with a company that has a phenomenal indoor play concept about bringing in a unique ambassador specific to the business and developing a relationship with that group, owning a piece of it, and doing appearances and events that will draw people and grow the business.

[30:33] Jared Cook is a unique individual. That is what Anth3m is looking for. Anth3m can help all athletes build their anthem, unique to the individual athletes.

[31:19] Joe suggests Anth3m should become the first sports management group to step in and own a franchise of some sort — it may be an Ultimate Frisbee franchise!

[31:42] Larry says they are excited and happy that people are starting to take notice and ask questions about how Anth3m is doing what they do. That's the dream.

[32:09] Larry Lemons and Joe Gilliland, of Anth3m. This is capitalism.

Stephens.com

This Is Capitalism

Austin Cook

Jared Cook

Joe Gilliland

Larry Lemons

Anth3m

JP Morgan Private

Golf Digest

Callaway Golf

Michael Jordan

LeBron James

Ideas United

Brice Butler

Arnold Palmer

Jack Nicklaus

Gary Player

Mark McCormack

What They Don't Teach You at Harvard Business School: Notes from a Street-smart Executive, by Mark H. McCormack

The Barclays Center

Apex Business Development

Ultimate Frisbee

The organization known as SIFMA goes back to 1912. It is a trade group which was first known as the Investment Bankers Association of America, then for many years, the Securities Industry Association, and now, the Securities Industry and Financial Markets Association (SIFMA). SIFMA may be best known for a game played by middle school and high school students that represents the only economic education that some of them ever get before going out into the working world — The SIFMA Stock Market Game™. SIFMA's CEO is Ken Bentsen. He's a former member of Congress, who, in a relatively short eight years in the House, compiled a rather lengthy resume of bipartisan financial solutions. Meet Ken Bentsen.

[:19] Ray Hoffman describes the Securities Industry and Financial Markets Association (SIFMA) and gives background on its CEO, Ken Bentsen.

[1:09] Ray introduces Ken Bentsen.

[1:11] Ken comments on SIFMA's mission statement, "SIFMA exists to advocate that America's capital markets operate effectively and efficiently to the benefit of all market participants." Ken describes the maturity of the U.S. capital market system and its correlation with the U.S. economy.

[1:51] Ken notes that the capital market system is one of the most highly-regulated industries in the United States. While regulations ensure a level playing field, it is also important that markets are able to operate efficiently and effectively. If not, credit will not be allocated to the best ideas — the great innovations that create jobs.

[2:33] The U.S. capital market has created an upward sloping chart in terms of the growth of the U.S. economy, going back 200 years. Even coming out of the 2008-2009 Great Recession, the U.S. came back more quickly than other jurisdictions around the world. Ken credits the resiliency of the U.S. capital market system.

[3:34] Ken's covers his career path, from his Master's degree in public administration to working as a Congressional staffer, to following Congressional finance committees, to working in public finance in New York, to the House of Representatives working on financial services legislation, to consulting, to running a trade association, to SIFMA.

[6:06] Ken served for four terms in Congress from Houston. He lists the committees on which he served, all tied to finance and budget.

[6:18] Ken discusses the public's general understanding of finance today vs. 20 years ago when he was in Congress. People feel pressure from the financial issues that impact them personally, whether that's housing, cost of living, healthcare, or the effect of trade on jobs. People can get more for their dollar today, including new technologies.

[8:01] It is most important to grow the economy as much as we can, to be able to solve fiscal issues.

[8:33] Capital markets definitely play a role in growing the economy. Ken says, "We're not the end — we're the means to the end."

[8:42] The Stock Market Game™ is run by the SIFMA Foundation, which has been in place for 40 years. The Stock Market Game™ is the premier program that they do in thousands of schools across the U.S., touching hundreds of thousands of students every year.

[9:27] The SIFMA Foundation built on the game over 40 years with programs like InvestWrite®, and Invest It Forward™. The results are amazing to see. They impact middle school and high school students, their teachers, and parents. Sixth, seventh, and eighth grade students in the programs do research reports.

[10:05] This is important not only from the standpoint of financial literacy, but it also goes toward understanding the structure of the American economy, built in part on our financial system, which makes our economy stronger in contrast to other economies.

[10:26] 12,000 schools in all 50 states participate in the programs every year, involving 600,000 students and 15,000 teachers. In 40 years, 18 million students have gone through the program. The SIFMA Foundation is working harder every year to increase participation.

[10:47] SIFMA works with The SIFMA Foundation every year to do a competition to bring the top 10 schools to Washington D.C. to meet with their Representatives and Senators. This underscores to the students coming from all over how big and diverse this country is.

[11:18] Students from all walks of life come in and talk about portfolios they've put together, the things that worked, and mistakes they made. They talk about looking at price reports every day, and research reports. It's just amazing.

[11:34] The top 10 winners of The Stock Market Game™ 2018 Capitol Hill Challenge came almost equally from areas represented by Democrats and areas represented by Republicans. Ken says it is really refreshing to see what The Stock Market Game™ does with these kids from all walks of life.

[12:11] "To the benefit of all market participants" - Ray quotes the SIFMA mission statement. In the truest sense of the U.S. economy, we are all market participants. This is capitalism.

SIFMA

The Stock Market Game™

Ken Bentsen

Drexel Burnham

The SIFMA Foundation

InvestWrite®

Invest It Forward™

Capitol Hill Challenge

Stephens.com

This Is Capitalism

Ray Hoffman interviews Mike Iiams. The first thing you should know about this particular entrepreneur CEO is that his name isn't what you think it is. If you're looking casually at an article about the important social work being done by a Denver-based company known both as SCRAM Systems and Alcohol Monitoring Systems, you'd probably think the CEO's name was Mike Ilams. Mike Iiams has a long list of credits working for the accounting firm Peat, Marwick, Mitchell & Co. in Alaska, during the building of the TransCanada pipeline; working for an oil and gas company in Colorado; a long senior executive role with the maker of accounting software JD Edwards, which is now part of Oracle; and now is the CEO of SCRAM Systems, whose ankle bracelets are keeping a lot of dangerous, habitual drinkers off the highways. Mike describes the career that led him to SCRAM as a wonderful learning experience — a wonderful ride!

[:22] Ray Hoffman introduces Mike Iiams. Mike says many people mispronounce his name.

[1:38] Mike's career has taught him product development skills, sales and marketing skills, and business process re-engineering skills. When Mike left JD Edwards, he found a unique project that a couple of guys were working on in their basement to measure alcohol as it evaporates through a person's skin.

[2:04] Mike was intrigued by the project for personal reasons. His mother's father was a "Skid Row" drunk for a big part of his life. Through a number of events, he ended up sobering up and he lived to be just short of 100. Sober, he was a wonderful person. Drunk, he was a fight looking for a victim.

[2:34] When Mike found these people who were trying to figure out a way of tracking people for extended periods of time to see whether they were drinking, in the back of his mind, a picture of his grandfather kept tugging on him. Eventually, Mike thought this would be a good project to invest his time and money in, with the money from the software.

[3:09] Fortunately, the company survived to the point where it is a viable entity today.

[3:17] When Mike worked in Alaska, there was risk, but he thought of it as a great opportunity to see and be part of a huge construction project, the Trans-Alaska pipeline.

[3:48] Ray notes that there is risk in putting your money on the line for an opportunity like SCRAM Systems. Mike says for the first four years of SCRAM Systems he paid himself $1 a week, to qualify for healthcare coverage.

[4:23] For the first four years, Mike wrote a check of $100,000 or $200,000, each month, to keep moving the company forward. That felt like risk at that time, but the opportunity to bring something new to the marketplace, to create a new market segment and make a difference in lives always drove his desire to figure out how to make it work.

[4:57] Jeff Hawthorne, the inventor and co-founder who had been working for several years on a monitor to keep track of habitually drunk drivers, filed a patent in 1991 and the company — at first, named Alcohol Monitoring Systems — wasn't founded until 1997.

[5:26] There were two co-founders. Jeff Hawthorne was an electrical engineer and Kirby Phillips was an entrepreneur. Kirby and Jeff had started a company to build small, portable, hand-held alcohol breath testing devices. At an event, one of them walked past someone who had had so much to drink they smelled it just walking past.

[6:04] That spawned the idea to take breath-testing technology, redesign and repackage it, and get it to the point where you could measure the alcohol as it evaporates through a person's skin. That was in 1991 and they filed a patent for the idea. Then they pursued funding sources but did not find people to back the project until 1997.

[6:48] The two people that started backing Jeff and Kirby ultimately found Mike and looked at him as a "new victim" to join the funding cause. Mike started investing in 1999 and then the investment started scaling up in 2001 when they completed a proof-of-concept project and a clinical research study showing the device could work.

[7:30] It was an interesting journey, from the creative idea to exploration in a basement or garage investing their own time, capital, and resources, to finding people to join the cause.

[7:57] When Mike joined them, he brought the skill set of the background of large software systems that could host all the data and provide a meaningful solution to probation and managing the data of the population of people that are being monitored.

[8:24] The stars aligned. Everybody came together and they found enough capital to get the company through the early stages. It took $20 million to fund the company until they got to the point of positive cash flow on customers' money, not investors' money.

[9:07] In the early days, they had a total team of seven employees and a couple of subcontractors. It was clear that they could get the technology to monitor alcohol but they had to find a customer to work with that would start putting the software and hardware products into play and help work to develop a complete solution.

[9:48] They got lucky with the Michigan Department of Corrections Electronic Monitoring Group for people on probation and parole. The group has always been innovative and willing to try new approaches and technology. Alcohol Monitoring Systems (AMS) asked Michigan if they would do a beta test with them.

[10:23] AMS would do the beta test for free if Michigan would help provide the guidance and the response to get the product past proof-of-concept to industrial-ready. They ran the project for about two years before they fine-tuned things to the point they could take the product and make it revenue-ready.

[10:52] Today, Michigan is one of AMS's top five customers. They are a valued partner in helping AMS build the right kinds of products and solutions that effectively work for them and other agencies like them.

[11:16] It's not just the capital or the resources. When you've got disruptive technology, you've got to find that early customer that dreams about what your product could do and holds you accountable to get there.

[11:32] This all came from a patent application in 1991.

[11:38] Mike provides an executive summary of what the SCRAM Systems technology does. It measures a person's blood alcohol content as that alcohol evaporates through the skin. You may have been close to a person who smells like alcohol as it comes through their skin.

[12:08] 1% of all the alcohol you consume leaves your body through that constant perspiration process. About 5% of the alcohol that you consume leaves your body as you exhale. Your lung lining is a thinner tissue, so it's easier for the alcohol to pass through it as you breathe. It takes more effort for the alcohol to evaporate transdermally.

[12:48] As 1% of the alcohol you consume exits through the skin, Alcohol Monitoring Systems developed a sensor mechanism in a device that's securely attached to a person's ankle. It continuously monitors a person's BAC and it wirelessly moves that data to a website that AMS hosts.

[13:12] The website is intended for audiences where a court, for example, would take a repeat drunk driver and order them to abstain and do this kind of monitoring in lieu of incarceration. Once you send somebody to jail, they lose their job, they can't pay rent for the family — everything starts to cycle down very quickly.

[13:43] The intent of AMS is to work with agencies to build alternative programs. If a person isn't drinking, they're not drinking and driving. If they're not drinking and driving, we're meeting that public safety need to make sure these people aren't posing a risk to society.

[14:02] If they're not drinking, then the money the courts spend on treatment and other services has a better chance of helping this person learn to manage this part of their life.

[14:15] Mike says AMS got lucky because a lawyer called them up, and said they had a celebrity who just got out of rehab, and the lawyer wanted their client to be monitored for a host of reasons. That celebrity was Lindsay Lohan. Lindsay Lohan proudly wore the bracelet for weeks, with paparazzi following her all over.

[15:02] In a short period of time, SCRAM Systems had hundreds of television-based news segments all over the world talking about them, their technology and Lindsay. That just propelled them to a level of prospective customers calling them for information about the systems. Lindsay Lohan helped SCRAM Systems more than she knows.

[15:34] Lindsay Lohan, with a surfboard and a bikini, made their bracelet look good.

[15:40] There was a treatment provider in Orange County, California, that looked at the technology, found SCRAM Systems on the web, called out of the blue and said, "You need to help us."

[16:02] Judges all over started having repeat high-risk drunk drivers in front of them and calling AMS for help. Mike tells of one offender arrested in Texas, from Tennessee, who was sent by court order to Denver to get a SCRAM Systems bracelet.

[16:43] AMS got a number of one-off cases like that from individual judges who would call and say something like, "This person worries me. I need to do something. I can't keep them in jail. Let's give this a try." And it worked.

[16:56] SCRAM stands for Secure Continuous Remote Alcohol Monitor. The company's legal name is Alcohol Monitoring Systems, but the marketplace never called them by that. People say, "You're the SCRAM guys!" SCRAM resonated with people, so the whole product line today is SCRAM "something."

[17:52] The products include GPS monitoring, home arrest monitoring, unsupervised breath testing, and the continuous alcohol monitoring with the ankle bracelet. This year, AMS is launching a completely new software experience for the probation officer called Nexis that is focused on what AMS has learned over the last 15 years.

[18:32] Probation officers have very complicated jobs and very complicated caseloads. The requirements for supervising people vary from person to person. There are no software tools that do a good job of helping that probation officer make decisions day by day on how to react to the behavior that they see from their caseload.

[18:59] AMS has worked with leading researchers and behaviorists for the last five years. Nexis, to be launched this year, is an evidence-based practice tool to help probation departments and officers make better decisions on how to incentivize and sanction people who are under their charge.

[19:28] Mike talks about the future. AMS has garnered international interest. They have pilot projects in eight different locations around the world. This is a chance to expand their role in probation and in location monitoring. They have a chance to expand their role internationally and become a global player in this marketplace.

[20:02] AMS is at "a fun stage" right now. They have a lot of risk, executing across all these fronts, but they've built a wonderful team that's very excited about stepping up and managing these risks.

[20:19] AMS has about 300 full-time employees making them a medium-sized entity today. When Mike became CEO 15 years ago, there were 10 employees. That is considerable growth.

[20:42] AMS makes extensive use of blogging. One blog is Sobering Up, Covering drunk driving, alcohol addiction, and criminal justice. When AMS started, they looked for thought leaders to create a discussion around the issues of alcohol and crime. They tried a couple of approaches toward creating awareness and a forum for debate.

[21:25] That blog has resonated for a number of years and it helps AMS stay in touch and get people to share the ownership of moving this journey forward.

[21:42] AMS publishes case studies from areas where the SCRAM CAM (Continuous Alcohol Monitoring) has been heavily adopted, including one from Louisiana, which has the highest incarceration rate in the U.S.

[22:09] We're at a stage in the country where the criminal justice system is re-evaluating the policies that define whether somebody goes to prison or jail, or they don't. It began with the War on Drugs. The unintended consequences of this movement was an explosion of the number of prisons and the number of people incarcerated.

[23:00] The criminal justice system today is moving more to models that say, let's separate the people we're mad at from the people we're afraid of. Violent criminals that harm society need to be in prison. Repeat drunk drivers (that haven't killed anyone), if they are not drinking, do not need to be feared and do not need to be in prison.

[24:00] AMS has projects in virtually every state focused on keeping people out of jail or prison, as long as they can demonstrate that they successfully do not drink, at the time that they're being monitored.

[24:19] The National Institute on Alcohol Abuse and Alcoholism (NIAAA) looked at the project six or seven years ago and looked at data on 1,000 people that had been monitored for more than a year. Almost all 1,000 had drunk every single day on average for 10 years before they were put on SCRAM.

[25:16] The data on this population for the year they were monitored showed that every single day 99.3% of them did not drink. Even if they had a drinking event one, two, or three times during that year, it was a person who had been drinking every day, before being monitored. The monitoring allowed the treatment service to discuss it with them.

[26:25] The hope is that as AMS helps people not drink for extended periods of time, the treatment services that are attached to these people can help them wrestle with 'their demons' and figure out better ways to manage their life stresses. Stress is never going to go away; they just need to find alternative outlets to manage that stress.

[26:55] Keeping in mind that success, Mike estimates AMS is still in the early stages of marketplace adoption. Mike cites Scotland as an example, where the alcohol problem is so bad that the life expectancy of a male in Scotland is 58 years. You have alcohol issues throughout Europe and Asia.

[27:43] The lessons AMS has learned in the States, and the research that has been wrapped around projects using SCRAM technology, clearly show that they need to be knocking on doors around the world and helping other markets come to grips with the drinker that turns into violence, whether with a car or in brawling.

[28:26] There is a lot of correlation between people walking out of bars late at night and knife fights on the streets with guys that have just had too much to drink. The market opportunity for AMS is pretty big, if you think globally.

[28:44] AMS has about 25 patents on these devices, some of which don't expire until after 2030. Is there corporate complacency from all this patent protection? Mike doesn't look at it that way. Their single biggest competition is the environment that says, "I don't need to change." The do-nothing decision is their single biggest competitive factor.

[29:19] Patents don't help with the do-nothing mindset.

[29:24] The only thing that helps with that do-nothing decision is great people at the field level who knock on doors and wrestle with the marketplace over the magnitude of the problem and the options to deal with it. Mike and AMS keep focused on how to compete with that do-nothing decision.

[29:46] AMS has a wonderful, diverse group of people that come from government and research organizations, that are continually carrying their message at the research level, the Federal policy level, state and local policy level, and then, of course, at the judicial level, and in sheriff's offices and probation offices.

[30:20] There's no shortcut to covering all the bases.

[30:27] Mike says AMS has been extremely lucky in their workforce. Mike feels he has been lucky to be able to meet and convince people to come join the cause.

[30:40] A lot of people at AMS have stories like Mike's, with a close family member or friend that struggled with drug or alcohol addiction. They've seen the destructive impact on families. They look at what AMS is doing and say, "Yes! I'd like to join your team! Let's figure out how to make a difference."

[31:06] Mike says, behind every good drunk is his grandfather waiting to be rediscovered.

[31:16] As Mike looks back over his career, would he have imagined the course he took? He recalls his college days at the University of Colorado during the time of race riots and the unsuccessful experience in Vietnam. There was lots of social unrest. Mike's generation wanted to find a way to make a difference.

[32:23] With AMS, Mike lucked out. He found a project that is personal to him, that gives him a chance to make a difference. It challenges him to figure out how to make money and make a difference at the same time, and that's a challenge worthy of his time.

[32:50] Call it SCRAM Systems, or Alcohol Monitoring Systems, either way, what Mike Iiams is building is an important part of modern criminal justice technology.

Mike Iiams

SCRAM Systems

Alcohol Monitoring Systems

Peat, Marwick, Mitchell & Co. (Now KPMG)

TransCanada Pipeline

JD Edwards (Now part of Oracle)

Trans-Alaska Pipeline

The late Jeff Hawthorne

Michigan Department of Corrections Electronic Monitoring Group

NIAAA

HHS

University of Colorado

Stephens.com

This Is Capitalism

Ray Hoffman interviews Dr. Christina Lampe-Önnerud. You might say there's electricity in her blood. Long before her reputation was established as one of the world's foremost experts on power storage, her father, Wolfgang Lampe, was world-renowned for building power stations and power transmission lines. After earning her doctorate in her native Sweden, Christina came to the U.S. and started her first company, Boston-Power, in 2006. In 2012, she and three of her former colleagues, one of whom is her husband, started Cadenza Innovation. It's a Connecticut-based firm, which has developed a fireproof lithium-ion battery. It can be snapped together like LEGO® bricks to store virtually infinite amounts of power and sold cheaply. In 2018, this Cadenza Innovation story turned into a fast-moving one, which is why, after one long interview with Christina Lampe-Önnerud, Ray had to go back for a major update just six months later!

[:21] Ray Hoffman introduces Dr. Christina Lampe-Önnerud.

[1:22] A lot has happened. Cadenza Innovations has gone from being a technical promise, through the demonstration at Fiat Chrysler earlier this year, into having initiated the program with New York State and the New York Power Authority (NYPA), the biggest public utility in the United States coming into New York City.

[1:48] Cadenza Innovation is constructing a public demonstration of what the Cadenza technology can do for the United States, with the specifics of the New York City grid. That's going live in the summer. The stakeholders have all started their work.

[2:12] The Fiat Chrysler demonstration came from the U.S. Department of Energy (DOE), which recognized the Cadenza opportunity as associated with the lowest cost, highest safety, and highest energy density per volume.

[2:26] Fiat Chrysler then signed up to be the champion. The demonstration happened in Q1 2018, which was on the heels of an over-three-year-long program with lots of third-party testing and validation, under the supervision of Fiat Chrysler, then being incorporated into the Fiat 500E. The test was run in Los Angeles.

[2:58] Cadenza Innovation demonstrated the Cadenza cell could go in as a retrofit. They demonstrated blocks that stack like LEGO® bricks. They demonstrated very aggressive goals set out by the U.S. DOE. The battery industry had said they could not do it but Cadenza met the goals, which included targets for range, safety, and cost.

[3:27] The cost is incredibly interesting because Cadenza is using supply chain assets, today.

[3:37] In June, Cadenza was given funding by NY State to do this clean energy storage demonstration project in White Plains, NY. Dr. Lampe-Önnerud tells how this happened. New York State, through NYSERDA, invited Cadenza to be part of an evaluation where they looked at multiple ways to meet energy efficiency.

[4:21] Dr. Lampe-Önnerud explains the old system of centralized power plants, distribution, and deployment. She outlines the future course of power distribution with multiple points of power generation paired with storage, almost like the internet where you trade energy where it's most efficient.

[5:02] The battery and storage are critical for that arbitrage. Batteries significantly also replace climate change threats. New York looked at policy, incentives, and technology. Cadenza scored highly in the technology category so they were invited to give a demonstration.

[5:29] The demonstration will be hooked up to the NYPA's headquarters in White Plains. It will be in a public space next to a bus stop. There is a potential for the demonstration to include generating data to show peak shifting in real-time and peak savings, including the reduction of CO2 and other climate gases.

[6:20] The state has designated a pad outside the building, roughly the size of a storage container with air conditioning and the hand-off between the battery and the grid. The battery takes up a small area. The container is partly to prevent battery theft.

[7:28] The demonstration will be for at least three months. Dr. Lampe-Önnerud is very hopeful that NYPA will pick up more units very quickly and deploy the technology.

[7:51] Cadenza has received funding in Massachusetts, Connecticut, and New York. The team has only 30 people. They have received support from the battery industry ecosystem. Cadenza serves as a demonstration that new technology is not dangerous. It has moved the needle a little bit into acceptance, also thanks to low pricing.

[8:42] Cadenza is interested in playing in multiple states but as engineers, they work hardest on execution, to make sure every demonstration is successful. Cadenza technology is less dangerous than legacy systems.

[9:04] Another success point in the past six months is that Cadenza has engaged with the Department of Defense (DOD), who have done their best to blow up the technology. The standard industry test, thermal runaway, did not happen with the Cadenza cells. That garnered quite a bit of interest and a lot of curiosity. The results are remarkable.

[10:30] The jelly roll cell technology of encased cells prevents thermal cascades as a short will shut down the cell. The DOD warned them "We're going to blow up your cell." The engineers replied "Thank you, ... but we don't think it will." It didn't blow up.

[11:37] In 2012, when Dr. Lampe-Önnerud founded Cadenza Innovation, she was very committed to the tripod of safety, cost, and performance. Nobody thought it was possible. She notes the technical achievement of her team and also points out the business innovation of putting together a very safe and collaborative system to succeed.

[12:28] Dr. Lampe-Önnerud elaborates on the recent news that China's Shenzhen BAK Power Battery and Cadenza Innovation have announced that they will co-manufacture lithium-ion cells and modules based on Cadenza Innovation's supercell architecture. BAK is already one of the biggest suppliers of jelly rolls in China.

[13:48] Dr. Lampe-Önnerud tells how lithium-ion jelly roll technology improves on the earlier lithium-ion technology. The jelly roll is easy to manufacture and you can have it manufactured locally, close to point of use, so your battery factory only needs to do final assembly. Dr. Lampe-Önnerud talks of BAK's success from startup to a major manufacturer.

[15:14] Cadenza was also honored in Tianjin, China, by the World Economic Forum as a 2018 Technology Pioneer. Four of the team had already been acknowledged for the same award in 2010 for a different technology. The four, including Dr. Lampe-Önnerud, have been working together for 20 years.

[16:05] Boston-Power innovated in the portable power arena at a time when the industry had a lot of safety issues. Dr. Lampe-Önnerud had been at Arthur D. Little (ADL) and the Consumer Products Safety Commission (CPSC) had engaged ADL as an independent advisor on how to treat these 20 million recalled batteries.

[16:44] Boston-Power stepped up the game by cleaning up some of the safety idiosyncrasies and pioneered cleaning up some of the greenhouse gases. Boston-Power was a green company before it was cool to be green. They fueled the paradigm where the battery had to last the life of the laptop.

[17:06] Boston-Power also pioneered the paradigm of fast charging. Their battery was capable of the longest run-time and also charged to 80% capacity in 30 minutes, which was unheard of in 2005.

[17:22] Dr. Lampe-Önnerud knew with a little group — 10 people out of her garage — a little bit of confidence, and a lot of friends, they could become a player.

[17:36] The World Economic Forum Technology Pioneer Award is a recognition from global industry leaders, including Fortune 50 companies in the forum, and heads of states. Dr. Lampe-Önnerud had previously been recognized as a pioneer entrepreneur.

[18:08] As a tech pioneer, you get invited to share a story or vision, which can become part of the content for the World Economic Forum agenda. As a two-time winner, Dr. Lampe-Önnerud has also been invited and has accepted to be a co-chair for The Future of Energy Committee to help drive the discussion.

[18:29] Dr. Lampe-Önnerud also was in Nice recently to address the International Energy and Power Supply Conference (Batteries 2018) on The Role of Energy Storage in the New Economy Paradigm. Two macro-trends she covered are the rate of technological change and climate change.

[19:46] Dr. Lampe-Önnerud worked with the Club de Madrid and the United Nations from 2009 to 2011, and with Condoleezza Rice and the President of the European Council to try to facilitate a data-driven global agenda. They developed a model for watching temperatures and predicting problems. The model has been a good estimate.

[20:55] Dr. Lampe-Önnerud sees hesitation around global collaboration. You have to be rather stubborn that you want to keep the door open. It takes a lot of positive force.

[21:47] Since starting Boston-Power in 2004, Dr. Lampe-Önnerud has learned that it was not as hard as she imagined it would be to raise capital. She didn't have time for a process, she just needed investors immediately. Over the years, she raised almost $360 million and the company had a chance to grow.

[22:37] With Cadenza Innovation, Dr. Lampe-Önnerud is more knowledgeable and she invented a new security that aligns investors and the management team for a 'long play.' She is determined to try to stay courageous for global markets. She is trying to stay very true to doing good and doing well, at the same time.

[22:59] With Dr. Lampe-Önnerud's new investment security, there is no artificial driver for the investor to get out. The intent is not to flip the company in two years. If they sold it, it would be for a remarkable opportunity.

[23:13] The strategy is actually to deploy great technology into a vacuum that is huge. And with that, they will do a ton of good, and make a lot of money in it, as well.

[23:26] It is very difficult to make transformations within a year or two. Most policies call for four years or less of effort, which is still too short. Dr. Lampe-Önnerud says it is basic to commit to something that is over 10 years. 10 years is very fast for technology shifts.

[23:49] Dr. Lampe-Önnerud got investors to sign on from the beginning. She went only to 'angels.' She told them they may make 10X or 20X their investment, but it will take 10 years. She told investors liquidity may be available in Year Six, but not in Year One.

[24:32] Dr. Lampe-Önnerud could spend all her time in music because she loves it so much, but she loves equally this exciting game of trying to make a difference. She dedicates her music time to Silk'n Sounds, a Connecticut female a cappella chorus.

[25:47] Dr. Lampe-Önnerud approaches the group with her CEO mindset. She sees it as providing empowerment!

Dr. Christina Lampe-Önnerud

Cadenza Innovation, Inc.

Fiat Chrysler

NYPA

Department of Energy (DOE)

NYSERDA

Department of Defense (DOD)

Consumer Products Safety Commission (CPSC)

Arthur D. Little

Club de Madrid

United Nations

Silk'n Sounds

Stephens.com

This Is Capitalism

Ray Hoffman interviews Jennifer Collins, President and CEO of JDC Events. Jennifer's first events were her own family reunions which she evolved from cookouts to city tours and dine-arounds. She worked on social events while in college, and when she started working at PR firms, she saw how they were handling events and felt that she could make a business of it. She turned to business events, and then to government contracting. Jennifer has taken what she has learned through planning purposeful events over the years and written it in her book, Events Spark Change. She shares the importance of the mission statement for every event and how events bring about change.

[:21] Ray Hoffman welcomes Jennifer Collins and asks about her book, Events Spark Change: A Guide to Designing Powerful and Engaging Events and the journey that brought her to becoming an event planner.

[:34] Jennifer planned reunions for her family and felt she was good at it.

[:43] About 100 people would normally attend the family reunions, held in Boston, Atlanta, Cincinnati, Washington, D.C., Philadelphia, and other locations, first where they had a majority of the family and then where they wanted to go.

[1:05] From that experience, Jennifer saw that she really loved the effect that the reunion had on the family — so joyful and so much of a connection. People felt that they were able to bond deeper on another level. That sparked Jennifer's thought process about planning events, that she enjoyed it and she might be good at it.

[1:38] These thoughts came to Jennifer while she was a college student at American University. After she graduated, she got jobs with public relations firms in Washington, D.C.

[1:56] The first family reunion she planned was when she was around age 19 or 20 as a sophomore. Her grandmother from Atlanta and her siblings had originally organized the reunions as cookouts. The importance of families coming together is the impetus for Jennifer's involvement in the reunions.

[3:17] Later reunions included zip lines, tours, travel to different cities for activities, dine-arounds, and a lot more than cooking out.

[3:37] The first professional event Jennifer planned was a 60th birthday party for a dear friend. She wanted to bring around 30 of her closest friends to Jamaica to celebrate it. That was during a time when Jennifer's company was doing more social events.

[4:10] Then Jennifer started getting away from social events and moved into corporate events.

[4:17] When Jennifer started her company, she was employee #1 and the only employee for a while, in her basement apartment near American University. She enjoyed doing the work and was looking for events to plan for people who really needed the support.

[4:43] From there, she was able to develop it into more, still part-time, in connection with her full-time work in the public relations firms. As the PR firms started doing events, Jennifer realized she could make that into a business. She wanted to develop something even more professional.

[5:13] Jennifer managed her business on her own for four years, part-time. When she found it was too difficult to do part-time, she had to 'fish or cut bait.'

[5:34] She went full-time on her own when she got one of the largest nursing home companies in the U.S. at that time as a client, who wanted to celebrate their sales team and build an incentive program.

[5:48] That helped Jennifer to get out on her own. It was also two weeks before September 11, 2001. At that time, events stopped. Hospitality stopped. People stopped traveling and getting on planes. Jennifer lost the account, although they did pay her. The client felt, given the tone of the country, it wasn't the best time to celebrate.

[6:20] It took about three or four years for the industry to come back. So Jennifer was doing other things, such as substitute teaching, to stay on her own. She built up again, getting referrals from her former co-workers in the public relations firms. She decided to shift into the government contracting market for longer-term, higher-value contracts.

[6:54] You have to 'have a stomach for it' to get into government contracting. Jennifer learned what kinds of certifications would be helpful to compete with other companies. She had to go to industry days to meet with contracting officials and small business representatives and figure out what agencies were buying. It was a lot of footwork.

[7:29] Meanwhile, Jennifer continued in substitute teaching and started working with other companies as an onsite event manager. She got projects from a temp agency for event professionals.

[8:09] Jennifer thought she knew a lot then, but she knows a whole heck of a lot more now. Jennifer has a very curious attitude. She always wants to know more — how to do something different, better, how to build it.

[8:38] Jennifer got involved in industry organizations and became a certified meeting professional. She kept up with professional continuing education to learn how to plan events better.

[9:13] UC Davis was looking for a planner in the D.C. area. They had a campus building in D.C. They wanted a planner for a cocoa symposium in partnership with Mars, Inc. Jennifer answered their ad, met with them, and "the rest is history."

[9:57] That was Jennifer's breakthrough moment. It was the largest event and relationship she was able to develop up to that time, in 2005.

[10:20] In 2005, Jennifer was just learning the extent of running a business with all its parts. She realized she could not do everything by herself. She had to bring in partners. She played many parts in her business to bring people together to build it.

[11:20] She hadn't accounted for the politics of dealing with different organizations and cultures to bridge people together to produce what they needed. Jennifer describes event building as a puzzle and the event planner as a conductor leading an orchestra.

[12:10] Earlier in her business, Jennifer just looked at it as a task. She had a list and she had to check things off the list and get things done. She didn't yet look at it as the picture of how everybody needed to work together.

[12:34] Jennifer wrote in her book that an event without a mission statement is susceptible to failure. She explains the importance of the mission statement. Many organizations decide to have an event, but don't work out what it takes to produce it. There are so many factors that go into it, especially money.

[13:06] If you want an event to do something, you have to really get at the why, what it's going to change, and whom it's going to impact.

[13:15] You have to set measurable goals. It's like looking at a map. If you don't know where you're going, how do you know that you were successful?

[13:30] You have to really use this event as a way to drive your message. Events drive messages. If you're not really able to drive it in a way that people will receive it, or understand what you want to impart to them, then it's not going to be successful.

[14:09] The cocoa symposium was an event where UC Davis and Mars Inc. wanted to be seen as the leaders within the cocoa science field. This symposium helped them position themselves as such. They took the symposium to Ghana where the majority of cocoa is grown.[14:51] From the symposium, the first plan was developed for Africa on how to make the cocoa farms more productive — how to provide the farms with the tools and skills needed and to make more money while all parts of the cocoa product chain could flourish. It was a defining moment for the partnership and for Jennifer to take part in it.

[15:35] There are some who think the big, glitzy, glamorous events are only the most impactful. No matter how many people are involved, what's most impactful is the event purpose — how they bring people together and create certain connections — how they can create engagement that can change lives and organizations.

[16:25] The stakeholders of an event bring sponsorships, money, and credibility. Having a variety of event experts together creates impact.

[17:06] What is the SPARK model? Sensory — engage the five senses to create a much more memorable and engaging experience. Purpose — identify why you are doing this and what you want to achieve. Activations — put everything into motion. Resources — use the time, talent, funding, and venue. Know-how — bring experts and expertise.

[18:49] Jennifer has spent the last 15 years learning the power of connections and that all it takes to create a change in this world is one person or one community at a time. Events help you to think differently and bring that change to help someone else. It doesn't have to be elaborate. It's what you can take away to help another.

Jennifer Collins, JCD Events

American University, Washington, D.C.

Events Spark Change: A Guide to Designing Powerful and Engaging Events, by Jennifer D. Collins

JDC Events

UC Davis

Mars, Inc.

Stephens.com

This Is Capitalism

Ray Hoffman interviews Steve Odland. Steve Odland's career has taken him from oatmeal to auto parts, from Sara Lee to the U.S. Commission on National Transportation Surface Policy. Today, he's CEO of one of the nation's premier business research organizations, The Conference Board - year after year, the source of a lot of great insight into the economy and human behavior.

[:44] Ray Hoffman welcomes Steve Odland to the podcast. Steve reflects on his career path. He views it as a long hallway with some doors open and some doors shut. His career has been made by doors opening occasionally so he could walk through.

[1:19] So many people struggle with closed doors instead of using the doors that are open. Steve says he has been blessed with a great and interesting career mostly by saying yes to things that seemed strange, odd and new.

[1:42] Steve's career started at Quaker Oats. His first CEO position was at Tops Friendly Markets. Steve had worked as a bagger in a supermarket as a youth. His first job was a paper route. Most of what he learned in business started in these early jobs.

[2:37] Everyone has to eat. The supermarket is a great industry for getting close to your customer. Frequent user cards started in the mid-nineties. Supermarkets were using big data 20 years ago.

[3:43] Steve cut his teeth in an industry with really narrow margins. In the supermarket industry, you count your pennies, starting with how you price. A couple of cents difference will change how people buy a can of corn. You have to provide the best value for your customer.

[4:14] The experience at Tops Friendly Markets led Steve to his first major CEO position at AutoZone in January 2001. Then came 9/11 and the economy toppled. Steve says the auto parts industry is surprisingly insulated from recessions. People have to keep their car running.

[5:52] Going through a recession is scary. You don't know when it's going to end, how deep it's going to be, or what's going to happen.

[6:11] Steve also mentions the financial crisis in 2008 and 2009. We didn't know if the banking system would survive or what would happen to the global economy or the dollar. You learn as you go.

[6:35] When Steve joined AutoZone in 2001, it had culture problems and merchandising problems. Steve explains how AutoZone had begun as an offshoot from a supermarket company. Steve says any time someone is brought in from the outside, it is for a turnaround. AutoZone was not happy with where they were.

[7:06] The turnaround starts with people and then goes to processes and how you interface with the customer. Steve says they changed a lot of things and it worked very quickly to bring AutoZone stock from about $20 to over $100 a share in a couple of years, as they expanded margins. Their customers were happier than ever.

[7:29] AutoZone is still a great company. Steve's old team is still running the company with Bill Rhodes as the CEO.

[7:44] The AutoZone share price topped out at $103 while Steve was CEO, and continued to climb. It peaked at over $816 in 2016. Steve credits the current management team for that but Ray notes that Steve laid down a foundation for growth, similar to the turnaround Alan Mulally executed later at Ford.

[8:35] One of the things Steve did was to bring in every senior executive to go over the books, all the time. Steve has always found that people respond well when you bring them in to share the good news as well as the bad news. That served Steve well during the financial crisis.

[9:09] Steve also says Office Depot was an incredible experience when people didn't know if they were going to lose everything. Office Depot was headquartered in Florida, the epicenter of the housing crisis. There were 200 retail bankruptcies in that period.

[9:36] During the crisis, Steve brought all senior executives together every week at first, and then monthly, sharing everything. Steve went to D.C. to meet with the Secretary of the Treasury and people from the Fed to share data and then report it back to his team.

[9:59] This is leadership through communication and involvement.[10:02] Ray revisits the AutoZone share price. Ray asks about ethical changes that Steve brought into the culture and how they affected the share price. Steve mentions that AutoZone is located in Memphis, Tennessee, where there is a background culture of ethics. Steve says the group responded very well to leadership.

[11:06] AutoZone is customer-oriented. The ethics of the highest level of leadership led to empathetic and ethical customer service. Steve doesn't take credit for the ethics but agrees it is critical to a company's success.

[11:32] Steve gives the story of becoming CEO of The Conference Board. Relying on his public policy experience as a CEO for different organizations, Steve had moved to Washington, D.C. to run the 75-year-old Committee for Economic Development. A couple of years later, they merged with The Conference Board and built up from there.

[12:10] When the CEO of The Conference Board retired, Steve moved up into that role.

[12:25] Steve notes that the merger of two not-for-profits is unusual, as no money changes hands, but they thought they would work better together and Steve sees that both organizations have become stronger from the merger.

[12:41] Ray talks about the public policy book, Sustaining Capitalism, that Steve co-authored with Joe Minarik. Ray wanted to read that book in light of his involvement in this podcast. Steve praises capitalism as the greatest economic model, and part and parcel of our form of democracy.

[13:20] Steve cites Adam Smith's The Wealth of Nations as the form of capitalism around which our government was built. Many regulations have been imposed upon capitalism since 1776, and Steve sees us at a new juncture where trust in industry has eroded following the financial crisis and the scandals that preceded it.

[13:58] It is up to the business community to deal with these issues of trust and address issues of inequality and social issues.

[14:14] If we want to sustain capitalism, we need to evolve it and we need to address these issues as business leaders.

[14:21] Ray brings up the crony capitalism that exists between lobbyists and government regulators and influential people in Washington. Crony capitalism is used to skew the system to bring benefit to your company or yourself.

[14:42] Capitalism is about making the system work, in total, as a rising tide. Capitalism has its faults. It's not perfect and we need to address it and make it better, but our form of capitalism has caused global trade to increase and has taken more people out of poverty around the world than any other economic model.

[15:07] Ray calls capitalism "Human endeavor with rule of law."

[15:10] Ray cites the subchapter, "The economic cost of crony capitalism." Steve comments if you skew the system for the benefit of one group, it is a tax on other groups. The same issue applies to short-term value versus long-term value. If you shift value to the short term, it is not present for the long-term benefit.

[15:47] Steve explains that you need long-term thinking, with a view to the benefits for all, to make capitalism sustainable. Steve learned to see his CEO title as representing customers, employees, and owners. Those all were his constituents. He also added in community and environment.

[16:35] If you just took care of customers, you would give it away for free. If you just took care of your shareholders, you don't take care of your customers or your employees. If you're only there for your employees, you pay them whatever they want. It's not one, but it's the balance of the needs of all three groups you need to serve.

[16:59] Ray brings it back to Steve's work with AutoZone and Office Depot. Steve says what every good business leader tries to do is strike that right balance so that it all works for all the constituencies that they serve.

[17:14] Steve makes a distinction between a pro-business government policy and a pro-market policy. The whole point of lobbying is to game the system with laws to the benefit of one company or regulations to the detriment of their competitors.

[17:48] You should want to be governing yourself and influencing the government in a positive way for the benefit of all. At Committee for Economic Development (CED), they talk about reasoned solutions in the nation's interest, not for 'parochial' interests.

[18:07] As CEO of The Conference Board, what surprises Steve about the rip-roaring economy in the U.S. in 2018? Steve reminds us that it will change, and we need to look at when and how it will change. When economic lessons are not learned, and we don't understand why things are so good, they can go bad quickly.

[18:52] It applies to companies, too. We always study what went wrong, but we rarely study what went right, so we can create repeatability of it. A diagnosis of what got us here — it's not a politician, it's policies and regulations and the business environment — and the study of everything involved is really important.

[19:18] Ray remembers the early months of 2008, where a lot of LBOs were still being squeezed in at the eleventh hour. They almost all turned out to be really terrible LBOs. Ray kept quoting people saying the world is awash with liquidity!

[19:40] Steve talks about being at an event in the province of Chengdu, China when he was CEO of AutoZone. The mayor turned to him and asked how Florida real estate was doing. Steve asked why he would ask that, and the answer was that Goldman Sachs had just been in and sold them a lot of Florida real estate mortgage derivatives.

[20:28] Mortgage derivatives had been sold all across the world, and that was the beginning of the financial crisis of 2008 and 2009.

[20:33] The Conference Board periodically takes a survey on job satisfaction in the U.S. It shows a big improvement in 2018 on how we feel about job security. Job confidence is very high and the change in the numbers has been most prominent in the lower earning groups. This shows wage improvement.

[21:07] 'Work' goes to the core of who we are. People want to be productive. We have wage movement and people moving up in jobs now, and this is what we want.

[21:24] Minnesota is the happiest employment state. They have one of the lowest unemployment levels. They have lots of businesses, big and small. The balance is agriculture. It's a great balanced economy, so they surveyed as the happiest.

[21:58] Minneapolis-born Steve Odland, CEO of The Conference Board. This is capitalism.

Steve Odland

The Conference BoardQuaker OatsTops Friendly Markets

AutoZone

William "Bill" Rhodes

Alan Mulally

Ford

Committee for Economic Development

Sustaining Capitalism: Bipartisan Solutions to Restore Trust & Prosperity, by Steve Odland and Joe Minarik

The Wealth of Nations, by Adam Smith

Washington, D.C.

Chengdu, China

Goldman Sachs

Job Satisfaction 2018 — The Conference Board

Minneapolis, Minnesota

Stephens.com

This Is Capitalism

Ray Hoffman introduces Kara Trott. Kara Trott does very well by her clients and very well by her clients' employees. She's the Founder and CEO of Quantum Health, based in Columbus, Ohio. For companies like Hertz, Dillards, and American Honda, and hospital systems like Houston Methodist, Quantum offers a remarkably personalized approach to healthcare cost containment. It is personalized in the sense that when any of Quantum's 700,000+ members encounters a medical problem, Quantum steps in almost immediately to help guide each patient through what it calls the healthcare journey, assisting and often intervening from that point on. While using its care coordinators — known inside the company as healthcare warriors — to simplify and clarify this journey for patients, Quantum delivers markedly lower healthcare costs for clients.

Key Takeaways:

[1:15] Kara notes the savings Quantum clients see in their first year, from 5% lower claim spending. For large companies, this can be hundreds of millions of dollars. Individuals receiving healthcare conserve more of their out-of-pocket costs. It's a win-win.

[1:41] Kara graduated from law school and worked for Bricker & Eckler, a prestigious Ohio law firm. Before law school, her undergraduate study was on politics and philosophy, particularly Marxist theory. She worked for a marketing, design, and research firm before going to law school.

[2:48] Kara had come of age during the Cold War; she thought it would be interesting to study a different way to think and look at macroeconomic matters. It gave her entrepreneur father a fit. She learned a different view but is a firm believer in the free-market system and capitalism.

[3:34] Kara's ex-husband was one of the first Americans to go into Russia to work in 1992 as part of the USAID program after Russia opened up. He and his partners formed a food distribution system in Russia. He and Kara adopted a Russian boy.

[4:17] Kara saw in the demise of the Soviet Union that 'command and control' is not an effective way to govern large groups of people. You're always better off freeing the intellectual capacity of the people and empowering them with the freedom to decide. It may take generations for Russia to find the kind of spirit we have in the U.S.

[5:24] For Kara, marketing research was finding interesting problems to study and identify solutions. Kara ran strategic projects to help companies understand what people actually do, versus what they say they do. This helps companies rethink their marketing.

[6:06] Kara didn't feel that retail marketing was where she could make the kind of difference she wanted to make so she went to Ohio State Law School and then joined Bricker. She was assigned to the healthcare practice, which was growing. They created a consulting subsidiary to advise provider organizations.

[6:43] Kara became one of the leaders of Bricker's consulting practice, in spite of not knowing much about healthcare at the time. She spent a lot of time with physicians and hospital administrators. Kara learned that patients are not often compliant with their doctor's treatment plan.

[7:44] It was clear to Kara that this was a classic consumer pathway problem that she had seen solved in many other industries. She imagined a strategy for healthcare that had worked well in other industries. It started with studying the consumer journey and how things unfold, then figuring out what the critical intercept points are.

[8:25] In Kara's retail experience, this approach had led to a 20-30% bump in market share, or same-store sales, when executed properly. She figured for healthcare, there would be an extraction of as much as 20% of the unnecessary costs. Based on what doctors and hospitals told her, there was a lot of duplication and waste in the system.

[8:59] Kara proposed a two-year research study to track people as they entered the healthcare system for a variety of reasons. Eight healthcare systems were interested in participating. They were able to triangulate the consumer's journey through their interactions with the physicians and compare it to secondary data.

[9:41] Kara's intent was to see how the journey unfolded, what kind of support was needed at what point, and where you would house it. The firm didn't see it leading to legal fees, so they opted out. Kara had to make a decision to put her livelihood at stake, split from the firm, and embark on a two-year study, before starting a company.

[10:43] The survey was a behavioral mapping study. Kara compares it to a study she had done for KMart about which aisles people went through within the store on a visit. Consumers of healthcare reported back to Kara, just as they had about their retail trip.

[11:22] Kara says no other company was looking at the problem from the consumer's standpoint. Even today, she sees no one else studying the consumers' experience. The healthcare industry doesn't understand the consumer. [12:05] Kara says she can't do a single job at Quantum. So, she started with five employees and within a year there were probably 10. She bankrolled that. Quantum now has close to 800 employees and will be adding a couple hundred more between August and November.

[12:38] Quantum manages about $7 billion in claims and serves over 1 million people.

[13:07] For the first year, because of payroll, Quantum was losing about $40,000 a month. That is the element of risk in starting a company with employees.

[13:43] Quantum associates consider themselves as warriors for people going through one of the most difficult times of their life. People on a healthcare journey are seeking a safe place and if you open up that conversation, and you turn it over to them, you have no idea where that call or conversation is going to go.

[14:18] Quantum associates need to be prepared to deliver immediate expertise. They have the expertise to be able to navigate between all the different parties. Normally, when somebody's stuck there are multiple points of failure. Quantum takes those issues on so the person going through the healthcare journey can focus on the journey.

[14:45] The Warrior Creed on the wall is a vital piece of the Quantum culture.

[15:11] It takes intent to hard-wire brand values into a culture. There are three tests to take before interviewing for a job at Quantum: the Wonderlic test, a test of "what feeds and starves you?" (similar to DISC or Myers-Brigg), and an empathy test. Few are hired from call-centers or insurance companies. Most are from service occupations.

[16:18] Quantum has translated the "I care" values into attributes and competencies that form the basis for leadership development and team development. 84% of Quantum managers and above are promoted from within. There is a strong leadership development program at Quantum Health. It's very much a servant leader organization.

[17:13] Quantum has developed their own technology system. The system necessary to see the journey longitudinally, mine the information, see what they needed to do right away and have the expertise available didn't exist when Quantum Health started. It aggregates data from all different sources. It's an open system that can pull in any data.

[17:47] The biggest thing Quantum Health does differently is to mine data directly from the providers in real time when they're seeing those patients. The system uses an expert routing approach that gets a healthcare expert on the phone to join a conversation.

[18:37] Natural Language Processing mines data and creates a consistent record of everything in the person's healthcare journey, providing a 360-degree view, to be able to identify and queue up opportunities and ways to assist them.

[19:14] Quantum Health has been on the Inc. 5000 list of the fastest-growing small companies 11 years in a row. Fewer than 50 companies have been on it for 10 years. They are experiencing 30 to 40% annual growth.

[20:06] Quantum Health has just entered into a relationship with City of Hope to share the expertise of a few facilities with a nationwide network of doctors who don't have access to that kind of front-line research.

[20:36] Kara talks about changes happening in the field of behavioral health for substance abuse challenges and new methodologies for musculoskeletal care. Clients are ever seeking to make their benefits simpler for employees. Quantum makes sure the patient has a comprehensive solution.

[21:42] Quantum Health is the leader in this space. Only a few carriers serve the market, but the market is huge. The clients Quantum Health carries cover over 60% of the people who receive healthcare benefits through employer-sponsored plans.

[22:07] The industry is expected to grow dramatically over the next five years. It's being noticed as a way to create a much better experience and really support people. Not only does it help people through their journeys but it produces a powerful economic result for the client and for the individuals.

[22:36] Just an entrepreneur solving a problem. Kara Trott. This is Capitalism.

Mentioned in This Episode:

Kara Trott

Quantum Health

Hertz

Dillard's

American Honda

Houston Methodist

Bricker & Eckler LLP

Cold War

USAID

Citibank

Ford

Walmart

KMart

Coca-Cola

Wonderlic

DiSC

Myers & Briggs

Inc. 5000

City of Hope

Stephens.com

This Is Capitalism

Ray Hoffman introduces Kathleen Lawson and Marsha Masters. It's amazing how little most of us really know about the economic miracle that supports and nourishes the USA. After all, only 22 states require high school students to take even a single course in Economics. Only 17 states mandate a high school level course in Personal Finance. Bessie Moore of Mountain View Arkansas, whose life spanned the years from 1902 to 1995, would not have been pleased to know that that's the state of the American economic education in the 21st Century. She believed the system built around free markets, allowing for free choice, free expression, underpinned by the rule of law, needs to be nurtured from generation to generation and thanks, in large part, to her efforts, Arkansas has K-12 Personal Finance and Economics education. Her legacy is well-guarded by an organization known as Economics Arkansas. Kathleen Lawson is Executive Director. Marsha Masters is Associate Director. Let's meet them!

Key Takeaways:

[1:38] Kathleen Lawson has calculated the number of children served by Economics Arkansas over the years as 4.5 million.

[2:00] Since 1962, Economics Arkansas has worked with over 100,000 teachers.

[2:20] Marsha Masters was a "third stringer" when it came to teaching economics, until she attended a 10-day workshop.

[3:53] The Arkansas Council on Economic Education, which became Economics Arkansas, began in 1962 when Commissioner of Education, Dr. Arch Ford, felt students should understand the basic concepts of the free enterprise, market economy to better understand the dangers of other economic systems. Bessie Moore was the first leader.

[4::23] Bessie Moore provided a great foundation for Economics Arkansas.

[4:55] Bessie started teaching as a teenager. She had a love for economic education and literacy, in general. She made an impact, and her footprint is all over Arkansas.

[6:16] Bessie saw the opportunity to create the multiplier effect by working with university centers of economic education and reaching out to media and clergy. She wanted everyone to have the opportunity of having an economics education. She produced lectures on the public television network that teachers could watch.

[6:58] Arkansas has standards for teaching Economics in K-12. Economics Arkansas has the goal of teachers not seeing Economics as an additional course they need to teach. Economic education is a part of everything we teach. Marsha gives examples. To graduate high school, a student must take one semester of Economics.

[8:33] Economics Arkansas has the hope that Economics is going to help students be successful.

[9:11] Even a kindergartner can learn of scarcity, decision-making, and opportunity costs.

[10:25] There are great opportunities for teacher training. Sometimes, adding an incentive is useful. The participation level of teachers has been encouraging.

[11:45] Many teachers have no formal background in finance or the study of free enterprise. These training opportunities can help.

[11:50] The teachers have been having their own 'Aha!' moments along with the students. There is a competition each year for teachers to submit their economic projects to be judged by economic education experts. Marsha discusses case studies.

[13:18] A fourth-grade class "created" an amusement park, wrote a business plan, interviewed each other for jobs and even went to a bank to negotiate a $100 loan. [13:50] Economics Arkansas offers an investing simulation called the Stock Market Game. This inspires students to research publicly-traded companies. 13,000 students have played the Stock Market Game. Some have become financial advisors when they were of age; some learned to invest for themselves. They know how to manage a 401K.

[15:20] Itty Bitty Economics is a program for kindergartners. There are songs, play, art, and children's books that give young children an idea about economics and finance.

[16:10] The Lemonade War book has been great for family discussions. There is also a Shark Tank program for students to pitch their ideas to a panel of judges in cities across Arkansas. A third book opportunity is coming into the program.

[17:59] Marsha explains how Economics Arkansas addresses the extreme needs that exist around the state, and especially around the Delta region. 15 educational Co-ops exist around the state to reach teachers.

[18:55] Kathleen brings up the 65 000 students that participate in a structured after-school program. Those settings can be an additional place to teach students. The Stock Market Game is one example.

[19:40] Kathleen offers a vision of the next five years of Economics Arkansas, especially around their partnership with Stephens.

[20:33] Bessie Moore would be pleased. But I don't think she'd be satisfied. Not yet. This is Capitalism.

Mentioned in This Episode:

Bessie B. Moore

Economics Arkansas

National Commission on Libraries

The Stock Market Game

Itty Bitty Economics

The Lemonade War, by Jacqueline Davies

Stephens.com

This Is Capitalism

Ray Hoffman introduces Doug Clark. It's only about a 30-mile drive from where Doug grew up to the Cherry Hill, New Jersey headquarters of Corcentric, the company that he has been building over the last two decades. Corcentric's proprietary technology helps companies optimize their back office transactions, as in the way they purchase, make payments, and get paid. It's also only about a 30-mile drive from where Doug grew up, in a slightly different direction, to center-city Philadelphia, where, as a young man, he went on the board of directors of the company that eventually became Drexel-Burnham. But when you grow up on a farm in Elmer, New Jersey, the way Doug did, in the 1950s, making your way into the worlds of accounting and finance, then truck leasing and later, technology, it isn't as easy as just pointing your car — or your ambitions — straight up New Jersey Route 55. He's been at it now since 1965. 'It' being this business of capitalism.

Key Takeaways:

[1:24] Doug Clark created Ameriquest in 1997 during the dotcom era, having a vision of making companies more efficient. When the dot-coms crashed, Corcentric became available and Doug acquired it in a stock trade.

[2:42] 2,000 customers do business with Corcentric. They have customers as well, so their influence is 'huge!' Doug's risk when he took over was the question of whether the market was ready for their product. Corcentric was a disruptor.

[4:24] Before electronic transactions, all money and finances were handled on paper.

[6:02] Doug credits leadership school within the Boy Scouts and an accounting class at the University of Miami for preparing him to serve on corporate boards.

[8:17] Doug talks about running a small truck leasing company. He worked with a group of operators. In 1997, they all put together $1 million, bought Electronic Trading Solutions, created a financial services company, and called it Ameriquest. Ameriquest was the start of Corcentric.

[10:31] Doug and his team tried to imagine the customers' needs and pain points, and they built solutions on those.

[10:48] Doug helped Daimler Trucking North America get new customers, and re-engage past customers, using Corcentric technologies. Daimler keeps their trucks ahead of the competition. Corcentric helped them bring their back office into this century. They went live in February 2013, and it has only gotten better for them. Listen in for details.

[15:53] Doug Clark — 30 years into his career, he invented a way for companies to get out from under all their back office paperwork so that they can spend more time listening to their customers. This is capitalism.

Mentioned in This Episode:

AmeriQuest

Corcentric

Drexel Burnham

Deloitte, Haskins & Sells

Daimler Trucks North America

Stephens.com

This Is Capitalism

Ray Hoffman introduces Darrin Williams. Darrin Williams practices capitalism in places where capitalism is sorely needed — some of the poorest towns and neighborhoods of Arkansas and Mississippi, particularly in the Mississippi Delta. Darrin Williams left a promising career in law and politics to be the CEO of Little Rock-based Southern Bancorp, a bank on a mission, a mission to create economic opportunity. To learn about Darrin Williams, it may be best to go back about three decades.

Key Takeaways:

[:51] Darrin Williams was student body president at Little Rock Central High School. Governor Bill Clinton named him to a school advisory board. In high school, Darrin never had the intention to become CEO of a bank. His sights were on the law, and initially, he practiced law with an interest in politics.

[1:42] At the age of two weeks, Darrin was adopted. His father was 55 and his mother was in her late 40s, so they were much older than his friends' parents when he was growing up. A lawyer handled the adoption and continued to serve as the family's lawyer through Darrin's teens. He was a role model for Darrin.

[2:11] In 2014, Darrin was President Pro Tempore of the Arkansas House of Representatives. He still had no interest in joining a bank. He had been a securities litigation attorney on the plaintiff's side, suing banks in class action litigation.

[3:10] Now that he is in the CEO position, it has been a wonderful opportunity. Southern Bancorp is a community development financial institution. Their focus is really on serving underserved communities. They lift communities and individuals to build their net worth.

[4:06] Darrin is very focused on service. It is what drew him to law to start with, and now to a financial institution. He credits his minister father and schoolteacher mother with guiding his direction in a life of helping others.

[5:20] Darrin believes he hit the parent lottery. He learned proper manners in a traditional upbringing.

[6:03] As a young attorney, Darrin became chief of staff for Mark Pryor, the Arkansas State Attorney General elected in 1998. Darrin led a group of dedicated public servants who really cared about their clients. He witnessed practicing law from a client-focused perspective.

[6:39] Darrin sees his time on the Attorney General's staff as being significant preparation for becoming a CEO.

[7:17] In 2012, Darrin learned about Southern Bancorp, Inc. when they approached him to discuss becoming CEO. He turned them down at the time in favor of continuing to practice law. However, he wanted to help and he joined the holding company board of directors.

[7:58] As a board member, Darrin helped initiate the search for CEO. He did not know that six months later he would become the CEO.

[8:20] Through his church, Darrin led a financial principles class, where he worked to help people understand how to be good stewards of their money. This experience also led him to see that so many people struggle financially unnecessarily because they don't have the skills and resources, and were never taught how to use money well.

[9:01] Darrin observed people were having significant improvements in their financial lives from taking the class, and Darrin thought he would like to teach about money full-time. When the CEO job was offered to him and Darrin turned it down, his wife reminded him of what he had said he wanted. He decided to take the CEO position.

[9:36] Darrin talks about how a community development financial institution operates. By law, they have to commit to doing 60% of their activity in low-to-moderate income census tracts. Southern Bancorp primarily focuses on rural communities in the mid-south or poor urban areas, where other banks choose not to go.

[11:16] In 16 of their markets, Southern Bancorp is either the only one or one of only two financial institutions offering access to capital in the community.

[11:36] Studies show that the further away a business moves from capital and credit, the more they pay for capital and credit. [11:57] Darrin explains how Southern Bancorp's being one of two financial institutions leads to success for client businesses. He gives an example of their work in one community, and the programs they run and sponsor, even bringing a charter school to augment a failing school system.

[13:39] In spite of the mass consolidation of banks, Southern Bancorp is in growth mode. They note where they are needed and they grow there. At every Southern Bancorp location, they have opportunity centers to meet the customers where they are. They have very skilled credit counselors. This is a free service, even to non-customers.

[15:02] For the last 13 years, Southern Bancorp has provided free tax preparation services for thousands of customers. They make sure low-income people who qualify for the earned income tax credit know about it and apply for it.

[15:53] Now you understand about Southern Bancorp being a bank on a mission? This is capitalism.

Mentioned in This Episode:

Southern Bancorp

Mark Pryor

Stephens.com

This Is Capitalism