Patricia O’Connell interviews returning guest, John Byrne, CEO and Founder of Poets & Quants and CEO of C-Change Media, Inc. They discuss what is happening in business schools and what applicants, students, and graduates can expect in the near future and beyond.

Listen in to learn about the prospects for business school graduates in the pandemic and resulting economic depression.

Key Takeaways:

[:25] Patricia O’Connell welcomes John Byrne back to CEO Stories on This is Capitalism.

[1:05] For the past four to five years, we’ve seen a significant decline in applications to full-time MBA programs. But the better schools are starting to see a boom in applications during the pandemic recession. This year could be one of the most competitive, ever.

[3:00] There has been tremendous growth in online MBA programs. You can still maintain your job and get your MBA. If you don’t have a job, you might be better off going to a full-time program. You’ll have the opportunity to meet a parade of employers who come to campus for interviews. You can do summer internships.
[4:26] In an online MBA, what you sacrifice in in-person learning and networking, may not be as great as a lot of people think. Surveys show that people who go to an online MBA program are pretty happy.

[4:49] Most business schools are trying to go hybrid with a combination of in-person classes and online. Some schools, such as Wharton, Stanford, Georgetown, Michigan State, and others, have already had to cut back on planned in-person classes because the novel coronavirus is not allowing them an alternative to ensure safety and health.

[6:08] These full-time programs will be largely remote instruction, not designed as online classes. John explains some of the differences between a well-designed online course and remote learning in a full-time program.

[7:53] The pandemic is temporary. John discusses choosing between a designed online MBA and a two-year MBA program that is restricted for one year to remote learning classes. Remote instruction has evolved over the summer to be better than the suddenly remote classes with glitches students experienced in the spring of 2020.

[9:37] During the summer, schools have trained their faculty to use the remote technology up-to-speed. Professors have practiced and tested it with volunteer “guinea pig” students. That will make a difference.

[11:42] Wharton planned its return in the fall without consulting its students. There were no students on any committees. They announced their plans with no outreach to the students. This was before Wharton decided to go fully online. Students felt disenfranchised.

[12:28] Stanford organized panels to plan for the return to school in the fall, and students formed the majority of the panel participants. They were actively engaged in all the decisions. The school made many changes that would otherwise not have been done, because of the students’ involvement. That was stakeholder involvement.

[15:02] John doesn’t think schools will return to the way they operated before the pandemic. Remote technology has become easier to use and much more effective. There are things you can do virtually that are more accessible for greater numbers of people than you can do in person, such as small group virtual meetings for applicants.

[16:16] Admit weekends, where you tour the campus and admit students, can be done virtually. Guest speakers are much more accessible through virtual sessions.

[17:36] John explains the concept of flipped classrooms. There has been a lot of talk about them but few teachers put them into practice. John says there will be more use of them as we go forward. John details the benefits of flipped classrooms.

[18:53] The pandemic will inform what is being taught in B-School, including how we manage people and organizations through a crisis. There are long-term impacts of remote work. John would not want to be an investor in commercial real estate right now.

[19:56] As companies return to work, John foresees employees working three-days in the office and two days at home, and staggered schedules. John expects to see changes to urban centers where young people want to be. John thinks people will move away from congested, expensive, and problematic cities. People will work remotely.

[22:07] The business school community is extremely important because you create connections with people you will network with for the rest of your life, based on friendship and encouragement, that are going to help your career. They may be your future employers, co-workers, suppliers, customers, or investors.

[22:51] Community is essential to the value proposition of what an MBA is, particularly at a good school. John does not see that disappearing. It will still be very desirable to attend big-city schools.

[23:52] Everyone is risk-averse. A good business school typically expects you to have gone to a highly selective undergraduate school. Employers look at graduate school as a filter that produces only the most select employees. John talks about how a business school education smoothes the rough edges of their students.

[25:44] Employers look at the business school from which you graduated. Very few people get into a top business school whether attending virtually or in person. Remote learning at a world-class business school is not inferior to attending in person, as far as employers are concerned. A virtual global curriculum may even be better preparation.

[26:53] A lot of the high-value activity at a business school occurs outside of the classroom. Much of that is student-centered, organized, run, and led by the students. Students are going to have to re-imagine all the extracurricular activities so that the virtual models of what happened on campus may be of comparable quality.

[28:21] How will the pandemic affect business recruiting as they move into a fully-virtual environment?

[29:36] A lot of getting a job is about story-telling. Upcoming MBA graduates will have powerful success stories to tell!

[30:58] How the B-School application essay questions may change, related to working through this unprecedented confluence of a recession, a health crisis, racial injustice, and a highly polarized political society.

[32:05] John discusses the current application essay questions. They are open enough to include discussion of crisis navigation.

[33:28] Despite the challenges, this is also a time of great opportunity. Adversity, such as unemployment, inspires people to stand up and do new things that can be wonderful and magical, which benefit many and generate meaningful employment for others.

[34:13] Education is essential to social mobility in our country and to live a more fulfilled and productive life. A graduate degree provides another level of productivity. John shares his thoughts about the importance and value of a business degree.

[37:17] Why is immigration in this country so important? America has been able to attract the world’s best and brightest, decade after decade. They’ve come here, they’ve created businesses, and they’ve sought higher education to make themselves live a better life than they otherwise would have. Immigration is vital.

[38:52] International attendance at B-School is way down. It’s been more difficult to get a student visa. Gaining employment after graduation has become more difficult. Many schools have started a STEM designation program that allows two additional years of employment in the United States on an H-1B visa.

[40:11] Patricia thanks John Byrne for being on the podcast and John shares website information.

Mentioned in This Episode:

Poets & Quants

The Wharton School of the University of Pennsylvania

Stanford Graduate School of Business

Georgetown University McDonough School of Business

Michigan State Eli Broad College of Business

Google

Patricia O’Connell interviews Sara Hurst, CEO of Bella’s Kitchen, on the origin of Bella’s Kitchen, how Sara runs it, and Sara's plans for it. Sara shares more about her family background of successful entrepreneurs in El Salvador. Sara is grateful for her family, friends, and professional resources that help her to succeed in this new venture.

Listen in to this encouraging account of growing a business by meeting a real food need for busy mothers.

Key Takeaways:

[:29] Patricia O’Connell welcomes Sara Hurst to CEO Stories with This is Capitalism and asks about Bella’s Kitchen.

[:53] Bella’s Kitchen offers convenient, healthy meals for kids and families. It is based on baby-led feeding. Babies try different foods with this method. This also avoids overfeeding babies when they don’t want to eat anymore.

[1:35] Sara started the business in April 2020, at the beginning of the pandemic. Sara came up with the idea when she started feeding solid foods to her daughter, Isabella. She started researching how to introduce new foods to her baby and she found the concept of baby-led feeding. She decided to feed Isabella with that method.

[2:35] Sara found out that baby-led feeding takes a lot of cooking and meal preparation for one baby.

[3:18] Sara found canned or frozen choices, mostly pureed foods in the grocery store but she wanted fresh foods for Isabella. She also wanted Isabella to have a variety of foods to develop her palate and not become a picky eater.

[3:57] As she was introducing Isabella to solid foods, Sara was going to the office daily, and Isabella was spending the day in daycare. Sara explains how the business idea of a meal service for busy mothers came out of her food preparation experiences for her baby and her experience serving healthy foods at parties.

[6:16] Sara had seven children, from babies up to age 11, at her first photoshoot for Bella’s Kitchen. It was a scary moment for her; Sara knew that if the children didn’t like the food, it would show on their faces. They all liked it and the photoshoot went well.

[6:55] Sara had her friends and their children try different recipes for taste and serving size. Sara also used her background in marketing to conduct surveys to make sure she was serving the needs of other parents, not just her own needs.

[7:44] The more Sara thought about bringing her recipes into a business, the more ideas came to her for new recipes and products. She was determined to make a business out of her concepts. Her husband and friends also encouraged her.

[8:45] Sara worked the numbers to see what she could afford to lose if the business didn’t work out.

[9:10] Sara decided three months would be the appropriate trial period to test the business model to see if she would start making a profit. She knew the worst that could happen would be losing her startup money and having her pride hurt.

[9:27] Over the last year, Sara worked on branding, the marketing plan, recipes, packaging, and permits. One big step was finding a commercial kitchen. She set a launch date in March, and then COVID-19 hit.

[10:00] Sara explains how she went from hesitation over starting a business during a pandemic to moving ahead with her launch in April.

[10:52] Sara works full-time outside of her role at Bella’s Kitchen. She explains how she fits everything into her schedule. Sara’s mother had raised three children as a single mother, working full-time while running a side business; she was a great role-model for Sara. Sara’s husband takes care of their children while Sara runs meal production.

[13:17] Sara always wanted to be an entrepreneur like her mother. She loved cooking, but having worked in the food industry, she noticed that there’s not a lot of margin in a restaurant, so she knew she didn’t want to have a restaurant.

[13:45] When Sara thought of Bella’s Kitchen, she knew that was the business she wanted.

[14:09] Sara has noticed that sometimes both men and women think the idea of Sara running her business is “cute.” They underestimate her business vision and drive because she is a woman. They think it’s a hobby.

[15:38] Not just for Bella’s Kitchen, but also for different caterers, people think the business is a little thing, run out of a kitchen. Sara works out of a commercial, licensed kitchen. Sara prices her meals just as any business prices their products and services.

[16:29] Sara took business classes to learn about a business plan. She reads a lot and listens to a lot of podcasts. Sara worked with the Arkansas Small Business and Technology Development Center; they helped her with local market research, what license she needed, and how to get licensed.

[17:52] Sara’s advice to people looking to make a business: you need to have more than an idea. There needs to be a problem and your idea needs to solve that problem. Some great ideas don’t necessarily serve a market purpose; you might not be able to find the customers you need. Don’t just think of your idea, but your clientele.

[19:09] Sometimes people with good ideas don’t give enough time for the idea to flourish.

[19:57] This is Sara’s first business. She doesn’t know if it will be her last.

[20:21] Sara is doing the recipes and the cooking, in a commercial kitchen.

[20:34] Sara wants Bella’s Kitchen to get as big as it can get. Sara credits the CEO of First Orion, where she works full-time, with understanding that people have their own passions. If Bella’s Kitchen gets so big she has to devote her attention to it full-time, then so be it. Sara talks about giving her full attention to each career.

[21:52] Sara organizes her vacation schedule on a spreadsheet! Sara took the Birkman personality assessment at work and she is completely a “doer.”

[23:06] Sara’s mom is proud of all her children’s success. She set a great example for them. Sara’s maternal grandfather is also a successful entrepreneur who now owns a coffee plantation. Sara shares his story.

[24:34] Bella is 21 months old, so she has time to develop her entrepreneurial streak. She is already a photo model for Bella’s Kitchen.

[25:10] Sara says you can’t have it all. Each decision is a deliberate choice. WIll she workout or will she work on her friendships? Each day she devotes time to what matters for that moment. You have to make time for yourself. Sara takes at least an hour every week to think just for herself, not for her family and business roles.

[26:55] Sara reviews the support she has received from family and the Arkansas Small Business Center. Sara’s sister and nephew are the best trial customers for Sara. Sara thanks her friends, and her monthly book club where Sara shares ideas for honest feedback.

[28:04] Sara hopes one day to have Bella’s Cookbook.

[26:23] Sara shares Bella’s Kitchen website (bellaskitchenus.com), Facebook (@bellaskitchenus), and Instagram (@bellaskitchenus) links (links below).

[28:31] Patricia thanks Sara Hurst for being on the podcast — This is Capitalism.

Mentioned in This Episode:

Stephens.com

Bella’s Kitchen

Bella’s Kitchen on Facebook

Bella’s Kitchen on Instagram

Sara Hurst on LinkedIn

Arkansas Small Business and Technology Development Center

Arkansas Department of Health

First Orion

Birkman Personality Assessment

Patricia O’Connell interviews Tom Stewart, Executive Director of the National Center for the Middle Market on their latest survey of middle-market businesses during the COVID-19 pandemic. Tom describes the work of the National Center for the Middle Market and then explains how the middle market has changed between the March survey and the June survey. Tom suggests what the recovery will look like and that we should expect a ‘new different,’ not a ‘new normal.’

Listen in to understand what middle-market businesses are experiencing now.

Key Takeaways:

[:34] Patricia O’Connell introduces Tom Stewart and asks him about the work of the National Center for the Middle Market.

[1:10] The National Center for the Middle Market is a research group at the Fisher College of Business at Ohio State University and is the nation’s only academic research center focused on mid-sized companies with annual revenue between 10 million and a billion dollars a year.

[1:34] That group is the middle third of the U.S. GDP. It’s a couple hundred thousand companies, and as the Center has documented over the years, actually the most dynamic part of the U.S. economy in terms of growth, as measured by the middle market indicator, a repeated survey of 1,000 middle-market companies.

[2:20] Middle-market companies are one-third of the private sector and produce 60 percent of new jobs, much faster than small or large businesses. The middle market is more resilient than small businesses.

[3:26] The Center took a survey of 600 companies during the first two weeks of June. Tom describes some of the differences between the same businesses’ responses to the June survey, the March survey, and the December 2019 survey.

[4:10] The pandemic lockdown began in March 2020 and Tom compares it to a terrible accident or falling off a cliff. There was tremendous uncertainty. In March, 25 percent of businesses said the impact could be catastrophic. In June, only 13 percent said it would be catastrophic.

[5:39] In March, 76 percent of businesses said that the single biggest issue for them was uncertainty. In June, that number went down to 66 percent.

[6:38] In June, operational continuity is still a big concern. The second and third concerns were managing employees and managing customers. They wondered how to get customers back and how to work with them either virtually or in person.

[7:51] A new survey question in June was whether companies asked for a PPP loan, a bank loan, or others. 25% of the companies surveyed had received a PPP loan. Others had applied for but not yet received it. 11% each were drawing on an existing line of credit, getting a new bank loan, or getting an SBA loan.

[9:15] Existing financial relationships were very important. 85% of middle-market companies are private, split between family businesses, private equity investment, and sole proprietorships and partnerships and other structures. They can’t raise capital by issuing stock.

[11:04] Some companies have prospered during the pandemic, such as companies that make restaurant take-out clamshells. Most retail businesses were “clobbered,” especially hotels and restaurants. Wholesalers supplying retailers experienced a big impact. Elective healthcare stopped. Many physician offices closed.

[14:41] Manufacturing had less impact. Construction re-opened in the first or second phase of re-opening business.

[15:53] How much are you going to restructure your business and your operations?

[16:30] The three industry sectors impacted the most by COVID-19 are retail, wholesale, and healthcare. The technology sector is projecting stronger growth in the coming months than other industries. Changes are happening in how we sell and buy things and in how we communicate.

[17:41] Going into the June survey, the Center hypothesized that deals would get put on hold. They were right. They surveyed about six transitions: selling the business, merging, bringing in a major investor, making a transformative acquisition, senior leadership transition, and restructuring, whether they would be more or less likely.

[18:39] The Center for the Middle Market routinely asks about plans to make an acquisition or sell a part of their company in the next 12 months. The Center will follow up with the same companies in six or 12 months to see how these plans trend.

[19:30] The Center for the Middle Market started operating in 2011, after the financial crisis, so this pandemic is the first crisis they have surveyed. Things started to change for businesses in March with the beginning of the shutdowns.

[20:47] In June, one out of four businesses said they were less likely to make a transformative acquisition. In March, four out of 10 businesses had said they were less likely to make a transformative acquisition. That showed that businesses in June had more confidence in acquisitions than businesses had had in March.

[21:31] Private equity is sitting on a trillion dollars of “dry powder” they’ve got to put to work. As people start getting ready to sell there is pent up demand. Now might be a good time to sell for an attractive offer.

[22:15] In June, by 10 points, people surveyed said a CEO transition was more likely rather than less likely. Tom describes why this may be, but the Center is still studying the data.

[23:37] By three to one, people said in June that restructuring was more likely rather than less likely. Some restructuring may be in the form of on-shoring previously out-shored processes and supply chains.

[25:06] The way we work will go to a new ‘different.’ Some things we see, like plastic shields at the checkout; some changes will be behind the scenes. Worker safety and productivity will change. Split shifts, school two days a week, remote work, temperature checks, and other changes will come. How do you bring remote workers on board?

[27:33] Changes required in a pandemic are time-consuming and expensive. Who will pay the difference, the customer, or the investors? Will companies pay for wi-fi for remote workers?

[28:45] Universities are still deciding how to handle changes. School starts in August, but classes will be different and professors will spend less time on campus. Lectures will be remote. Labs will be in class. People will have to certify they have no temperature or symptoms before they can come onto the campus.

[30:58] In March, 39 percent of the companies surveyed said they would be back at full capacity within a month. Nineteen percent of the companies said it would take six months or longer to be back at full capacity. In June, only 23 percent said they would be at full capacity within a month and 40 percent said it would take six months or longer.

[32:17] In March, people thought business would come back like turning on a light switch; now it’s more like a cloudy January dawn — slow.

[33:22] The Center asked companies to grade themselves A to F. Companies that were more prepared with ready capital, investment for the long-term, a three-to-five-year strategic plan, ability to keep talent, and strong marketing and communications, were less likely to say the pandemic had a big impact and they projected a faster recovery.

[34:39] Companies with those five strengths have a strong foundation for a well-operating company, even in times of crisis. Other strengths were not as critical. These lesser strengths were operational excellence and efficiency. Marketing and sales capability mattered more than salesforce efficiency. Ants outperform grasshoppers.

[36:28] Patricia looks forward to more reports from the National Center for the Middle Market. You can reach them at Middlemarketcenter.org.

[37:02] Patricia thanks Tom Stewart for being on the podcast — This is Capitalism.

Mentioned in This Episode:

Stephens.com

Thomas A. Stewart on LinkedIn

Fisher College of Business at the Ohio State University

As this is being recorded, on the 11th of April, 2020, what good news we see and hear is almost entirely in the context of people making extraordinarily good things happen in the face of what, for most Americans living today, is the worst crisis we’ve ever faced. So, especially now, it’s good to be reminded of how, at its core, the U.S. economy, in its essential design around the free and voluntary exchange of goods and services — including research, technology, and good ideas — is the perfect and proper vehicle for leading us out of this. And so, it’s extremely valuable to have new research to not only show how the coronavirus is affecting business but also to show how business people already are looking toward the day when this is all behind us.

The National Center for the Middle Market at Ohio State University conducts a quarterly survey to establish a benchmark. It’s worth taking a look back at the surveys it conducted in the summer and fall of 2019.

Listen to Ray Hoffman’s conversation with Tom Stewart, Executive Director of the National Center for the Middle Market.

Key Takeaways:

[1:39] Ray Hoffman asks Tom Stewart about business optimism in late 2019. Every quarter, the National Center for the Middle Market surveys 1,000 companies with revenues between $10 million and $1 billion. In the third quarter, they saw a sudden drop in confidence and projected sales after a long expansion.

[2:18] In the fourth quarter, those numbers came back up but the trendline showed slowing rates of growth. Projected rates of growth were dropping from a pretty high level.

[3:00] Tom contrasts the projected confidence number of 90% in the first quarter of 2017 and 83% in the fourth quarter of 2019. The projected confidence plunged to 60% in the first quarter of 2020 with the pandemic. Growth rates drifted down from before the pandemic and within the pandemic. More companies reduced their workforce.

[4:20] Tom shares his experience as the pandemic started showing up. He saw that planes went from full to empty in March. The National Center for the Middle Market commissioned a “pulse” survey of 260 mid-sized companies from March 23 to 25.

[5:43] These were private companies, not directly impacted by the stock market. That group of companies had said in December that they expected to grow at 5.8% in the coming 12 months. On March 23, 78% of them said growth will decline in the coming 12 months and 64% said employment will shrink, instead of growing.

[6:36] Twenty-five percent of the 260 companies surveyed said they believe the impact of the virus will be catastrophic for their business. Eighty-one percent said there would be an impact on payroll. Eighty-four percent expected an impact on revenue and operations.

[7:02] Ray comments that the S&P 400 Mid-cap Index fell 40% from February 19 to March 23, and the S&P 500 Large-cap Index was down 34% in the same period. Tom discusses the risks to private companies and public companies. How much access to capital they have, in the short run, plays a role.

[8:15] Tom mentions survival rates from the 2007–2009 financial crisis. Small business takes the biggest hit. The survival rate for middle-market companies is comparable to that of large companies. They have pretty strong resilience. In the crisis, surviving private middle-market companies added jobs, looking forward.

[9:35] One of the questions on this pulse-check survey was “How quickly do you think you’ll be able to get back to business at full capacity?” Thirteen percent said, immediately. Twenty-six percent said, within a month. Eighty percent said they would be up and running at full capacity within six months. The measure of full capacity varies.

[10:40] The National Center for the Middle market will ask these same questions in June. Tom will see whether more companies express confidence in their resilience, or whether more people say it will take a little longer than expected. Companies were asked in March how big the impact will be. Some companies said it would be positive!

[11:07] Zoom’s stock has zoomed in the first quarter of this year.

[11:57] The companies’ biggest negative impacts were on operations, revenue, payroll, employment, supply chain, and working capital, in that order. The companies’ biggest struggles were supply chain, cash and working capital, customer experience, and operations, in that order. The supply chain is out of the companies’ direct control.

[13:44] Only 9% reported any new problems with information technology. The great technology available allows us to look optimistically at this entire situation. Before the internet, our ability to communicate was so much less than it is today. The IT industry is taking the strain of capacity pretty well in this pandemic crisis.

[14:42] Of the 260 companies surveyed, their sales expectations collapsed 46% between December and March; demand for their goods and services went down 25%. The owners’ perception of the business climate went down 9%. Companies can’t sell, but demand is still there. When business comes back, there will be residual demand.

[16:23] Some of these data are available on their website at MiddleMarketCenter.org. The following observations on business transformations are not: Significantly fewer companies are considering making a transformative acquisition, bringing in a major investor, merging with another company, or selling the business.

[17:21] About 35% say they are more likely to have a senior leadership transition, which is a higher percentage than normal. Twenty percent said they were less likely to restructure. Forty-four percent said they were more likely to restructure, with remote work, fewer employees, fewer lines of business, more digitalization, or a new start.

[18:45] Tom has heard since the survey that many organizations are planning new ways to navigate financially, from SBA loans to subsidies and how to work with the CARES Act. Companies are starting to get some advice on how to move on.

[20:30] Sixty percent of the companies surveyed expressed any level of confidence for their future. It’s a relatively low number, but Tom had feared it would be worse. Confidence numbers were like that in 2013. Sixty-nine percent of the middle-market had some level of confidence in their local economy.

[21:06] There is an underlying belief that the U.S. economy is flexible and that investment and performance go to places where there is an opportunity for return. Secondly, built into the rich and diverse U.S. economy are a lot of intermediaries and advisors.

[21:38] A study at Harvard Business School looked at obstacles to growth in emerging markets. They found that your ability to get access to intermediaries and business services, such as third-party logistics (3PL), determines your rate of growth. The absence of intermediaries slows down growth.

[22:56] You can take it from Tom Stewart: When at last we’re ready, there will be reason for optimism and plenty of it. This is capitalism.

Mentioned in This Episode:

Stephens.com

Thomas A. Stewart on LinkedIn

Fisher College of Business at Ohio State University

MiddleMarketCenter.org

SBA Loans

CARES Act

Harvard Business School

Rachel Klausner would agree the first thing you need to know about her is that she’s a millennial — a 30-year-old product software designer from Boston, who has found her calling with an app called Millie, as in millennials. In the world of 2020, it’s a vehicle for her fellow millennials to make contributions to charities and other nonprofits. But as it grows, it could well become the dominant platform for givers of all ages. If you can use a dating app, you can use Millie.

Key Takeaways:

[:22] Ray Hoffman introduces Rachel Klausner, Founder and CEO of Millie.

[:57] Rachel doesn’t mind when people compare Millie to a charitable version of Tinder. Rachel has never used a dating app. Millie matches users each week with nonprofits that match their profile. The user swipes right to donate, just like on a dating app.

[1:39] Rachel’s parents had tried to instill into their children a passion for giving. Rachel is grateful for that influence. She refers to her Jewish practice of tithing to set aside a portion of her income to give to charity. Rachel says that for many years she was not thoughtful about where she was giving. She created Millie for thoughtful giving.

[2:33] Millie is short for millennials, the core target market of the app. Rachel wanted an app for the millennial generation to feel good about their contributions.

[3:22] Rachel feels very connected to others in her generation, the first kids with tech before the world knew how to handle technology.

[4:26] Millennials are very different from their parents in how they give. Their baby boomer parents give more traditionally and thoughtfully, Rachel says. The data shows millennials give most of their money through their peers, for run/walk/ride fundraiser events and unvetted campaigns through sites like GoFundMe.

[5:43] Millennials give a big portion of their wealth, but their giving doesn’t necessarily match the causes about which they care. Rachel believes this is because millennials are approached daily for donations through their social media, and it is hard to refuse.

[6:20] Rachel realized when she was doing her taxes that most of the money she was giving was going through her friends. That struck Rachel, who had grown up with her parents being very thoughtful about giving.

[7:13] This realization lit a fire under Rachel to ask how we can get people to be more thoughtful and be more empowered to give to causes that are important to them.

[7:30] Rachel was working on a different startup with a friend. It wasn’t a passion project for her. She was working on a charitable event on the side because she cared about it. As she spent more time on her side event, she realized she had to choose one or the other.

[8:14] Rachel realized she could use her software product-design skill set to scale the work she was doing for her event into an app for other events. She shifted her focus from the startup to developing the Millie app. Rachel explains what it took to develop the app besides designing it — amazing people, advisors, mentors, engineers, and more.

[9:53] Rachel’s first big error was in underestimating the time for the Apple Store to approve the Millie app. They didn’t approve it but demanded changes to the app that were not detailed in the Apple Store guidelines. It took weeks to get approval, which delayed the roll-out. Rachel notes there were other mistakes along the way.

[11:34] Rachel had about 100 nonprofit profiles in the beta version of the app. The nonprofits were excited because they were not engaging millennials through the traditional channels. They knew this app would reach them.

[12:41] Since the app was released, it has grown organically. Millie doesn’t do any more outreach to nonprofits. Every U.S. nonprofit has a base profile Mille has pulled from the nonprofit’s IRS 990 form. The nonprofits come to Millie to clean up their profiles with photos, videos, and content for the web and mobile app.

[13:36] To get the first 100 nonprofits, Rachel set up a Calendly link for people to sign up. Rachel did back-to-back calls all day for the first few months. Rachel loved talking to the nonprofits about their pain points, challenges, and successes. Best Friends Animal Society was one of the first nonprofits on board.

[14:43] Rachel was able to get donor-advised funds on board. It took a lot of long, hard conversations with a lot of funds. There is still a lot to be done to democratize giving.

[15:34] Getting into a donor-advised fund (DAF) on Millie starts at only $20, compared to a $5,000 minimum donation to a traditional DAF. Most DAFs are not looking for everyday donors. They want to service high-net-worth individuals.

[16:21] Millie is launching an employee giving program with employee donation matching from the employer. They are in the pilot stage now.

[16:43] Rachel explains that operating costs are covered by a 5% fee on every donation on the consumer side. On the corporate employee side, the company pays Millie to operate their account, so there is no transaction fee for employee donations. Eventually, Rachel expects to shift the consumer transaction fee as well.

[17:39] Companies of every size are thinking about how to engage with the community, what their social impact is, and how they give back as a company. Rachel is excited to have a platform that can service companies with 10 employees, 1,000 employees, or 10,000 employees. Earlier giving software was focused on Fortune 500 companies.

[18:55] The app has five stars in the App Store. Rachel acknowledges there are pieces to the product that they want to improve. Rachel is excited about building out new features for companies as they come to the Millie platform, such as competitive engagement for employees and teams.

[20:02] Rachel talks about the risks she has taken in going from the employee world to the startup world. She compares the first startup she abandoned to her experience with Millie. You must be passionate about the startup. There is so much risk. If it’s the right path for you, and you have the passion, it’s okay to feel scared sometimes.

[22:15] Rachel has big dreams. She always thinks of Millie as being the future home for giving through your employer or on your own. Millie is a connector for people to understand nonprofits better and find great nonprofits. There is scalable growth for Millie, for which Rachel yearns. She is excited to do good in the world.

[23:12] Millie’s growth means bringing on more dollars for nonprofits and that is what excites Rachel. They want to make a huge impact.

[23:26] Ray Hoffman gives the address of Rachel Klausner’s website, MillieGiving.com. This is capitalism.

Mentioned in This Episode:

Stephens.com

Rachel Klausner on LinkedIn

Millie Giving

Tinder

GoFundMe

Apple App Store

Calendly

Best Friends Animal Society

Donor-Advised Funds

Fidelity Donor-Advised Funds

Vanguard Donor-Advised Funds

Fortune 500

It would be hard to get an accurate count of the number of lives that Dr. Geoff Tabin has either saved or improved, often by his own hands. The figure is in the thousands because he and Dr. Sanduk Ruit are co-founders of the Himalayan Cataract Project. As its website name, cureblindness.org suggests, the project provides high-quality eye care in some of the most remote or under-served parts of the world. And, as Geoff Tabin, Professor of Ophthalmology and Global Medicine at Stanford, will happily tell you, this project, his life’s work, never would have happened had it not been for some serious serendipity.

Key Takeaways:

[:23] Ray Hoffman introduces Dr. Geoff Tabin, Co-Founder of the Himalayan Cataract Project.

[1:05] In the poorest countries, 85% of blindness is preventable or treatable. Of all cases of blindness, 50% are from treatable cataracts.

[1:52] Dr. Tabin was specifically inspired by a Dutch ophthalmologist running a humanitarian program called Eye Care Foundation Himalaya doing lens implants in Nepal. These implants altered lives and the welfare of families.

[2:34] Dr. Tabin talks about his educational path and what inspired him at Yale and Oxford, England. On a mountain-climbing scholarship named for Andrew Irvine, he went to Asia and Africa to climb. He observed first-hand the disparity between the haves and the have-nots, regarding medical care.

[4:24] Dr. Tabin matriculated at Harvard Medical School with the intent of working in global medicine to bridge the gap in care between the wealthy countries and the poor countries.

[4:47] In 1988, Dr. Tabin climbed Mt. Everest while he was working as a general doctor in Nepal. He was searching for a way that an individual doctor could make a difference. He saw the Dutch ophthalmologist team set up and give new hope to cataract patients. He was amazed by how the surgery could change lives.

[5:45] Dr. Tabin immediately found an ophthalmology residency at Brown University in the States and came back to enter the residency.

[6:21] At the same time, Dr. Tabin’s future partner, Dr. Sanduk Ruit, was finishing his training in Australia. Dr. Ruik came from a small village in Nepal with no running water, electricity, or schools, a three-days’ walk from the road. After a house fire, his parents had taken him to a monastery in Nepal where the monks saw he needed an education.

[7:03] As a child, Dr. Ruik’s father walked him 11 days to Darjeeling, India to an English Jesuit school. Dr. Ruik only spoke his native language. He emerged from the education with a full scholarship to one of the best medical schools in India. He got top boards. He trained as an ophthalmologist in Delhi and did a cataract fellowship also in India.

[7:42] Dr. Ruit returned to Nepal and caught the attention of the same Dutch ophthalmology group Dr. Tabin had seen. Dr. Ruit went to the Netherlands for training in microsurgery and to Australia for a two-year fellowship. He came back to Nepal as a world-class ophthalmologist, looking to bring high-quality eye care to Kathmandu.

[9:20] Dr. Tabin spent a couple of weeks during his fellowship working with Dr. Ruit. He told Dr. Ruit he wanted to work with him. When he finished his fellowship, he moved to Nepal to work with Dr. Ruit.

[9:36] This project wouldn’t have come to pass if not for Dr. Tabin’s passion for mountain climbing, and a lot of help from great mentors. Dr. Tabin explores the serendipity involved.

[11:03] Dr. Tabin learned hiking from his father, a nuclear physicist who worked with Enrico Fermi on the Manhattan Project. Dr. Tabin tells how his father hiked with Enrico Fermi and later, with him when he was a teen. Dr. Tabin started studying as a teen about the great mountaineers and explorers.

[12:14] In Dr. Tabin’s later teen years, he focused on tennis and was recruited to play tennis at Yale. At Yale, he started rock climbing with a friend.

[12:56] Dr. Tabin tells how he and Dr. Ruit co-founded the Himalayan Cataract Project. It started with transferring skills to doctors, ophthalmic nurses, ophthalmic technicians, and ophthalmic assistants. They taught primary health care workers a basic understanding of eye diseases. They created a teaching system.

[13:39] Dr. Tabin and Dr. Ruit took the best cataract surgeons and sent them to specialty surgical fellowships for pediatric ophthalmology, glaucoma, retinal surgery; all the sub-specialties. Once they had the full range of specialties, they had a world-class residency program.

[14:07] They were not getting funding from the U.S., so they turned to other countries, but they were also skeptical. To gain credibility, Dr. Tabin took an assistant professorship at the University of Vermont. The doctors decided to incorporate as a 501(c), named the Himalayan Cataract Project, with a website cureblindness.org.

[15:32] They started raising funds to support the work. After two years, they hired their first full-time employee. They started in Nepal, then brought Bhutanese doctors into the program, then doctors from Tibet, then Indonesia.

[16:42] In 2006, Dr. Tabin took a professorship at the University of Utah. By that time, the surgeons in the program were better than Dr. Tabin, so he was confident for them to continue without his presence. One of the doctors in the cataract project, Dr. Alan Crandall, went to Ghana and was one of the highest-volume cataract surgeons there.

[17:26] Dr. Tabin started going on missions to Ghana with Dr. Crandall to see about extending the program to meet the need in Africa.

[17:41] In FY 2014, the organization had $8 million in assets and did 78,000 sight-restoring surgeries. In FY 2016, they did 97,000 surgeries and treated over one million patients. In FY 2018, they performed 123,000 surgeries with assets of $12 million. Besides these procedures, their focus is on training local providers to perform the same procedures.

[18:58] In 1996, when they started with $100,000, Dr. Tabin never expected to grow into the success they have had to this day. In that period, Nepal went from 0.88% blindness down to 0.2% blindness, today. Nepal is the one poor country that has reversed its rate of blindness.

[20:43] Dr. Ruit instilled in Dr. Tabin that they were looking for the next young superstars. In 2007–08, Dr. Tabin started the first global ophthalmology fellowship in American academic ophthalmology. Now there are eight universities that have a global ophthalmology fellowship, following Dr. Tabin’s example.

[21:20] Dr. Tabin is proud of his former fellows who, as early career ophthalmologists, are pushing ophthalmology forward in Asia and Africa.

[21:56] Dr. Tabin reflects on the expansion and success of the program and discusses potential future expansion in Africa. It is estimated that it would take $100 million to completely reverse blindness in Ethiopia and Ghana. Similar changes need to be made in other African countries. Dr. Tabin names some amazing doctors from the program.

[23:58] Based on the progress of the program, Dr. Tabin sees a realistic goal of turning the tide on needless blindness. The program has brought the material cost of a cataract surgery down to under $25. 12 million people could have their life completely changed from a $25 surgery.

[24:42] Dr. Tabin hopes that Melissa Chen or Mark Zuckerberg will listen to this podcast and be inspired to donate to CureBlindness.org. Blindness is a low-hanging fruit to cure, as diseases go. Dr. Tabin tells about his role as a fundraiser. He speaks about donors.

[25:43] Three years ago, Dr. Tabin went from the University of Utah to take an endowed chair for ophthalmology and global medicine at Stanford University. In Silicon Valley, Dr. Tabin has exposure to a lot of people who could potentially make a huge impact on global blindness.

[26:33] Over the last few years, fundraising has been extremely successful. They always spend less than they secure. They have had USAID grants for big capital projects. Dr. Tabin wants it to be a $30 million charity to fully address blindness in Ethiopia and Ghana. Funding is half from grants and half from private philanthropy.

[27:48] Studies have shown that restoring sight gives a direct impact of four-to-one to the local economy. Dr. Tabin would like to see more direct investments from governments and global funds like the World Health Organization.

[28:29] 88% of their funds go directly into programs. Will that efficiency continue whi

Karla Mora fully expects to have a major impact on the apparel industry, the clothes we wear, and where we dispose of those clothes after we wear them. She is a self-described impact investor, and her venture capital fund, Alante Capital, co-led by former JP Morgan executive, Leslie Harwell, and backed enthusiastically by women’s fashion legend Eileen Fisher, is investing in a future in which landfills won’t be overloaded with yesterday’s throwaway polyesters — meaning a future of sustainable apparel. Alante Capital is investing in young companies that are offering a better process for making and re-making apparel. The road that Karla Mora took to this went by way of a United Nations Compound in Kabul, Afghanistan and a neighborhood in Costa Rica, Barrio Escalante. Listen in for her story.

Key Takeaways:

[:23] Ray Hoffman introduces Karla Mora, Founder and Managing Partner of Alante Capital.

[1:14] Karla Mora’s background was in international political economics and improving livelihoods in emerging markets. She worked for a while at the UN, looking at inefficiencies in the coffee sector, then Peace Dividend Trust (Building Markets), to build vibrant ecosystems where people can lift themselves out of poverty.

[2:06] In Kabul for six months, Karla collected data and wrote a report. She returned to California to finish writing the report. She ran into a person running an impact investment fund and she was inspired to start a fund in 2012 to invest with purpose.

[2:44] Karla describes the challenges of living in Kabul. She was not able to exercise outside, but the Afghan people were amazing and resilient.

[3:57] In Karla’s off hours, she kept in touch with an agricultural investor in New York who was helping small farmers reach farmer’s markets in communities without access to fresh food. She worked with him every evening while her days were spent working on the Kabul impact report.

[4:33] Karla enjoyed back-country skiing in the mountains in Bamyan, Afghanistan.

[5:28] Karla came up with the name for Alante Capital while she was living in Barrio Escalante in Costa Rica. Alante is Spanish for moving forward. It took Karla about a year to make the decision to move forward with Alante Capital.

[6:35] Karla started the idea that became Alante Capital with a friend from San Francisco. They both were in impact investing and they talked about starting a fund in fashion. They studied the idea for about eight months but didn’t launch it together as they were in two different geographies and had different ideas.

[7:03] After all her research, Karla had fallen in love with the concept and the industry. She knew she wanted to move forward. She had already been introduced to Leslie Harwell by a graduate advisor. Karla and Leslie had also been at JP Morgan. They became fast friends and thought partners.

[7:32] Karla’s husband noticed how Karla felt when she got off the phone with Leslie and he suggested they partner to achieve their goals. Karla wrote a job description for Leslie and convinced her to leave the bank and work with Karla.

[7:46] Leslie had been at Credit Suisse for years and had moved to JP Morgan because of her passion for impact investing and social finance. Leslie had been observing a trend of industry-specific systems-change funds starting up. She had not seen one in apparel. When Karla showed up with her idea, Leslie was excited to get started.

[8:21] Alante Capital began in Costa Rica. Her husband consulted with her on the ideas and put data in spreadsheets for her. As a new wife starting a new financial venture, it was a scary time for Karla. She made sure not to make decisions based on fear. She kept seeing signals from the industry that she was on the right track.

[9:18] After starting Alante Capital, Karla and her husband moved back to California. About a year ago, Karla became pregnant. Karla came off maternity leave two months before this interview. Then they had their first close for the fund and their first investment. It was a busy and exciting time. Every day is a juggling act for Karla.

[9:53] Karla and Leslie are on opposites sides of the country. They had done so much pre-planning work together that once they joined forces, they had a great rapport. Leslie came to Santa Barbra for a few months at the beginning to work side-by-side with Karla. That’s when they brought on their anchor investor, Eileen Fisher.

[10:20] Karla and Leslie message each other and talk throughout the day, as though they are in the next room from each other. They may exchange hundreds of messages in a day, chatting while they’re working. They feel very engaged with each other.

[10:48] Eileen Fisher is their anchor investor and general partner. She was a critical part of getting the fund launched. Leslie knew someone at JP Morgan who was working with Eileen to help her put her capital into investments for the sustainable apparel industry.

[11:08] When Karla sent out an announcement about Leslie joining the team, it circulated and was shared with Eileen who saw it as the investment she had been seeking. It was humbling and exciting for Karla and Leslie that a major figure in apparel was interested in their startup.

[11:99] Karla and Leslie had been looking for funding for their startup. They had a list of potential general partners and Eileen Fisher was number one on their list.

[12:02] Alante Capital works very closely with large brands. When consumers race to find the cheapest products possible, brands are under a lot of pressure to provide them. Polyester is cheap and it ends up in landfills.

[12:30] Alante Capital just invested in Mango Materials, a company started by two women from Stanford who figured out a way to create a biodegradable polyester fiber that’s not made from plastic. It breaks down in the environment.

[13:00] Tyton Biosciences is another company in which Alante Capital has invested. They break down polyester-cotton blended garments using a clean process. About 80% of clothing is a cotton-poly blend. Brands can use the fibers from this process again in new clothes.

[13:34] Karla sees a good level of scale in each of these companies within three to five years. At that point, there will be a couple of directions to take to accelerate their scale greatly.

[13:51] Karla predicts that in 18 months to two years, we will start seeing collections of clothes made from post-consumer garment waste — old clothes.

[14:09] Alante Capital is looking at about 140 companies that fit squarely into their thesis. As their first two investments are in fibers, next, they are looking at the garment rental and resale industries. Karla likes to talk to companies in the early stages. If it’s not a fit, she wants to let them know as early as she can.

[15:03] Sustainability is the direction the industry is taking. You can see articles in industry and mainstream media every day talking about sustainability in fashion. It’s driving more investment of capital and time into investment practices, new consumption models, and sustainable production.

[15:47] The big brands will be a major part of the solution. Karla goes to them in the spirit of collaboration with an approach of being helpful in achieving their sustainability goals. She seeks to understand the true operational hurdles they face in doing so. Then, she introduces them to startups that will help them achieve their goals and innovate.

[16:30] Conversations with brands often go into what rental or resale can do to decrease waste and dependence on virgin fibers. Brands like working with Alante Capital to help them think outside the box. Alante Capital is up-to-date on the newest innovations. Alante Capital can help drive early interactions between brands and startups.

[16:53] Karla loves working with brands because she gets to learn about the companies in the pipeline, and figure out which ones are viable and solve problems identified by the market.

[17:15] Karla talks about the five-year outlook for Alante Capital. She hopes for a portfolio of 15 companies. In five years, the apparel industry will have made significant improvements in the use of recycled fibers. All brands are looking at recycled fibers. Consumers will see lots of recycled fabric garments in the stores.

[17:52] Karla expects over the next five years to have the security that comes from leaving startup mode, knowing her company is funded, operational, and successful, including having a set salary and the abili

To equate the world of entrepreneurism with football, most of the cheering comes when a quarterback throws a touchdown pass to a wide receiver. In business, those are the billion-dollar IPOs that gain most of the media attention. But entrepreneurism — capitalism – is mostly a ground game. Put your head down, start a business, commit yourself, and pick up maybe three yards or five yards at a time. Much in the way that Natalie Mangrum, a teacher from Baltimore has, after a rough start, been steadily adding parents as customers and fellow teachers as after-hours tutors for her increasingly successful business, Maryland Teacher Tutors. Natalie tells about her struggles in getting the business running, and what its current success feels like to her. Listen in for her story.

Key Takeaways:

[:22] Ray Hoffman introduces Natalie Mangrum, CEO and founder of Maryland Teacher Tutors.

[1:11] Natalie, as a seven-year-old child in Sunday School, naturally took to gathering her peers around her and being in the role of teacher.

[1:34] Natalie’s natural desire to lead and help, motivate, and inspire prompted her to want to teach as her career.

[2:01] Being the oldest child in her family, Natalie modeled behavior for her siblings and told them what to expect in kindergarten when they started to go to school. She credits God for giving her a teaching personality.

[2:33] Natalie talks about a favorite fourth-grade teacher of hers that she wanted to emulate and a favorite high-school English teacher who made literature come alive in new ways for her. Everyone in the class was engaged in and excited about what they learned.

[3:10] Ray and Natalie reminisce about their favorite teachers who influenced them for life. Everyone Natalie talks to has a favorite teacher whose name they remember.

[3:32] Natalie never had a thought of starting a business. She thought of moving up to administration. She was happy to be a teacher. Natalie’s father was a contractor, so she knew a little about entrepreneurship from watching him.

[4:51] Natalie was a reading specialist in Baltimore City Schools. The reading specialist would pull a struggling student out of the classroom for a lesson. Natalie asked the principal if a class of 10 to 12 students could be taught at once, during language arts. That would prevent the stigma of the students being pulled out of class.

[6:10] It would also allow Natalie consistent time to work with the students on their reading skills. A couple of hours a week of being pulled out of class wasn’t enough for students with academic deficits. The principal agreed to support Natalie. She selected small groups of students from the sixth, seventh, and eighth grades for her classes.

[6:46] These students were behind their classes. Natalie worked with them in groups and on average, the students started making academic gains of two-and-a-half to three years in just a few months. The sixth graders started at a fourth-grade level and moved to at or above a sixth-grade level in less than a year.

[7:14] That is when Natalie started to realize the power of having an expert teacher focusing on a small group or a single student. One seventh-grade student was at a fourth- or fifth-grade level when she started, and was “nailing” 11th-grade SAT questions when she left. Students were leaving her class a lot above their grade level.

[7:56] That planted the seed that one-on-one teaching is powerful. Natalie was still not thinking of becoming an entrepreneur at all. Several months later, a parent who was a friend, asked her if she could help her child who was struggling with reading. Natalie started working with that child and got a referral from the parent to other parents.

[8:25] Natalie’s schedule quickly filled up. She had two small children and a husband who was only good at making toast. Her husband needed her at home before 8pm. Natalie didn’t want to turn families away, so she reached out to a colleague for help. When the colleague’s schedule filled up, Natalie reached out to another teacher.

[9:07] That’s how the company came to be — not with a business plan, but as people coming together with a solution to a need in their community. Once Natalie had a fifth teacher, she decided to make a company out of it. She wanted parents to pay a company, not to write checks to her. It needed to feel official and legitimate.

[9:47] Natalie never intended for the company to be large. She named it just what it was, Maryland Teacher Tutors.

[9:58] Ray notes that this company was created only because there were a couple of men who could only make toast!

[10:15] Before Natalie was a reading specialist she was a regular classroom teacher. She had the knowledge of what it looks like to be an effective teacher. Before she started as a reading specialist, she spent a summer researching blogs, articles, and resources on helping kids who struggle with reading.

[10:52] Natalie came across a resource that she decided was the approach for her. It looked like a very consistent way to get kids from point A to point B. The approach was always the same from the beginning but Natalie got more effective in it, over time.

[11:28] Even more than the approach, when you give a student one-on-one attention for their specific problem you have identified, five days a week, over time, the child will improve and learn more.

[12:00] The technique, added to the teacher inspiring the student to do better, combine to a successful outcome for the student. Working hard, the students became smarter. They start with low self-confidence and low skills, and as they learn, they grow confident in their abilities.

[13:33] Around the time that Natalie created the company, the snowball effect had tapered off and she found that she needed to start marketing. So Natalie started learning about entrepreneurship, getting around people who were successful, joining entrepreneurial groups, and calling business owners she knew.

[14:34] Natalie started forming a strategy for growing her business. She is still in that process. It will never end. For the first year of business, Natalie felt she was constantly pushing it uphill. After a couple of years, they seemed to hit the top of the hill and start rolling down the other side. Systems and processes in place are working well.

[15:36] In the first year it was really hard to carry on! There were days Natalie wanted to cry and pull the blanket over her head all day in bed. Entrepreneurship can really be rough.

[15:53] Natalie started the company in 2015. Most of 2016 was not easy for her.

[16:10] There came a time when parents started calling again after being referred on Facebook, LinkedIn, or by a friend and Natalie felt like she could pull back somewhat on the brand exposure and marketing. All of the work was starting to pay off. People were starting to recognize that they were really good at their work.

[17:36] The company was founded with $100. That was the amount needed to open the company bank account. Natalie never sought capital investors or loans. They built the company from the ground up, without debt.

[18:32] On the website there is a statement, “We are 100% confident in our business model.” In terms of the competition that naturally goes with entrepreneurism and capitalism, they maintain that their model of using only certified teachers working in the student’s home, delivers better results than other mentoring business models.

[18:56] Teachers are trained effectively to pass along and deliver information in a way that makes the most sense for the student. Early on, people Natalie trusted told her that her business model would never work. They recommended hiring college students instead of certified teachers to save money. As a teacher, Natalie disagreed.

[20:02] Natalie was never going to change from using certified teachers only. Another huge aspect is one-on-one teaching. Progress happens fastest with an expert teacher identifying exactly what the problem is tripping up one student and addressing those areas with that student individually. That’s what teachers do.

[21:04] Maryland Teacher Tutors contracts with about 45 certified teachers. They all teach in a classroom during the day and are 1099 contractors in the evening. Natalie is the only staff person. She contracts with marketing companies as needed.

[21:42] Natalie has a new book on Amazon, Own

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

Chris Farrell is the Marketplace Senior Economics Contributor for American Public Media Group, Economic Commentator for Minnesota Public Radio, Columnist for PBS’s Next Avenue, Columnist for the Minneapolis StarTribune, and for many years, a colleague of Ray’s at Business Week.

Key Takeaways:

[:22] Ray Hoffman introduces Chris Farrell.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mentioned in This Episode:

Stephens.com

Chris Farrell

American Public Media Group

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

Listen in to hear more of John’s journey from journalist to journalist-entrepreneur.

Key Takeaways:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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