I was a member of a team selected to attend the prestigious Milken Institute Global Conference held in Los Angeles from May 1st to 4th, 2016 with the theme: The Future of Humankind. It was a fantastic opportunity provided by a Carey alumnus, Mr. Michael Perkinson of Guggenheim Partners, through the Development and Alumni Relations Office and Student Services Office.
The conference consisted of panel discussions ranging from the macroeconomic and investment trends, the future of wellness and medicine, emerging trends in financial technology, medicine, geopolitical discussions and many others.
Global Capital Markets: Deflation or Stabilization
This panel reflected general negative sentiment in emerging countries as there has been huge “volatility of volatility” in the markets. The emerging market returns have been characterized by extremes as the returns have either been at the bottom or at the top. Mohamed El-Erian, Chief Economic Advisor, Allianz, discussed “tourist investment” in emerging markets where capital takes flight at the first hint of trouble. This is because the credit and equity markets are not well understood and emerging markets lack a stable institutionalized base. That said, the panel recognized that emerging markets have fared better recently as the quality of policy making has improved significantly and there have been more good references for policy makers through the experiences of the past economic crises.
The panel also discussed the challenges faced by China, which is shifting from an export-driven to consumer-driven economy, and it is attempting one of the hardest transitions from a middle income economy to an advanced economy. Very few countries have successfully navigated this transition, and China’s journey is more trying as it is attempting to make that transition at a time when the macroeconomy is challenging.
How New Investors are Influencing Venture Capital
Dave McClure of 500 Startups who also serves as an Advisor to A-Level Capital (a student-run venture capital firm focused on supporting Johns Hopkins startups), shared that it is better to fail at your own startups than to read about other people’s success. The panel discussed the different approaches used in evaluating companies and entrepreneurs depending on their risk appetite. While their approaches may differ, the key questions they look to when evaluating entrepreneurs are similar:
- What drives you?
- What got you here?
- Why are you tackling this problem?
End of an Era: A Conversation with NBA Great Kobe Bryant
The session with Kobe Bryant marked one of the highlights for the conference as it was just two weeks after Kobe had played his last NBA game. Kobe talked about his experiences throughout his career and relationships with former teammate Shaquille O’Neal and former coach Phil Jackson. He also shared his post-NBA plans to focus on telling stories through his new company, Kobe Inc. Kobe was humorous and charming throughout the hour-long session. Here are some fantastic sound bites:
“In this world, you can either be a lion or a gazelle. The world needs both. I rather not be a gazelle.”
“The train is moving. You are either on it, off it, or under it.”
When asked how he felt when he pushed for team roster changes during the season, Kobe replied:
“Maybe it’s not your true calling, so I’m doing you a favor by helping you to find a true calling.”
Jim Gray, Sportscaster, Showtime, Fox: “Do you see yourself as a good judge of talent?”
Kobe: “No, but I can tell who sucks.”
The Road Ahead in Finance: Regulation, Disruption and Human Capital
Steve Schwarzman, Chairman and CEO of Blackstone Group, emphasized that the firm places tremendous importance on the transparency and accountability of every person and that everyone is expected to serve as the Chief Risk Officer. Blackstone created a company culture in which every investment decision is met with criticism in order to ensure that all angles are accounted for. The goal is to demystify decision making for the benefit of protecting the investment.
Transforming a Legacy Company
One of the issues highlighted by the panel was change management in a well-established company. Takeshi-Niinami, President and CEO of Suntory Holdings Limited, responded that the company has used cross-border transactions to drive corporate change in behavior and culture. He added that Japanese companies faced enormous challenges due to a declining and aging population. As such, Suntory decided to go global through an M&A strategy. Suntory acquired Beam, the top U.S. distiller and maker of Jim Beam bourbon for $16 billion in 2014.
Denise Morrison, President and CEO, Campbell Soup Co., identified the need to cope with trends in the market place as consumers increasingly demand transparency on their food sources and want healthier choices. In order to guide a company through transformation, it was critical to give employees the freedom to find and believe in a company’s vision. To this end, constant communication with employees is required.
Global Retail: Adapting to Changing Tastes
Lyndon Lea, Co-Founder, Lion Capital, private equity owner of established fashion and retail brands such as Jimmy Choo and Wagamama, shared that we are facing the most informed consumer to date who has instant access to information through the web and social media. Customers, especially millennials, are looking for authenticity in brands. In the past, brands talked to consumers. Now, the tables have turned. Instead, millennials allow you to talk to them.
One aspect of brand authenticity is linked to price transparency. He highlighted how customers were turned off by retailers’ practice of pricing the same products in different markets with markups of up to 30%. Customers will feel ripped off and it spoils the brand experience. In addition, he viewed discounting practices as one that could dilute the brand and affect gross margins. In line with this, Bloomberg recently covered how the US retail’s pain is self-inflicted as retail offered holiday-like promotions throughout the year to attract customers, which ended up hurting their margins.
To illustrate his points, Lyndon shared the initiatives undertaken by Lion Capital when it acquired All Saints in 2011. All Saints is a British fashion retailer headquartered in London, UK and sells menswear, womenswear apparel, footwear and accessories across 20 countries. To foster greater customer loyalty and preserve the brand’s authenticity, he removed the discounted pricing in the stores and standardized product prices across markets. Lion Capital also planned to double the number of All Saints stores and open in many European Capitals and U.S. cities. He focused on building the brand and doubled down on what the iconic brand stood for. “The kiss of death is to be all things to everyone,” said Lyndon.