This is Capitalism: Up Close, Inspired, Explained

Ray Hoffman introduces the topic. It was in late 2016 when the Rockefeller Foundation went looking for entrepreneurs — social entrepreneurs to build businesses intended to solve some of the problems of American cities. Within just four months, not only did the foundation identify 10 of these social business builders, but each of them had $100,000 in funding and a whole lot of new connections and mentoring as part of a program called The Future Cities Accelerator. On this episode of This is Capitalism, you’ll hear from Jukay Hsu, the founder of C4Q, Coalition for Queens, the most diverse community in America, Queens County, New York, Jimmy Chen, former Facebook executive and current CEO of Propel, a company that developed a wonderful and much-needed app for food stamp users, and former Rockefeller Foundation Associate Director, Joshua Murphy, who had to work through a lot of applications for this program in a hurry.

Key Takeaways:

[1:14] Joshua Murphy tells Ray Hoffman how the Future Cities Accelerator was designed to engage next-generation entrepreneurs who are creating change on the ground inside U.S. cities. Joshua cites previous Rockefeller efforts such as 100 Resilient Cities, Rebuild by Design, and work in New Orleans after Hurricane Katrina.

[1:39] By 2025, 75% of all people will live in cities. The Future Cities Accelerator is an extension of the Foundation’s work in cities to help solve city challenges like poverty, healthcare, housing access, food waste, and employment. This is an opportunity to engage young people doing amazing work in this space.

[2:19] How do we think about philanthropy in the 21st Century, with all the challenges we face in the world? Joshua called up Teju Ravilochan, Founder and CEO of The Unreasonable Institute (Uncharted) and invited him to help set up this new initiative of an open challenge with 10 winners to be selected for grants. Teju accepted.

[4:25] The target group was poor, vulnerable populations. There was no specific issue. Teju was excited to organize the challenge. They worked up an agreement with ‘legal,’ and with the Foundation program staff. They built the challenge in about four months.

[4:59] They brought in other partners to help put it together. It’s been a very collaborative effort and it came together smoothly.

[5:06] Joshua had hoped for up to 50 applications; over 300 applications came in. They reviewed applications, held multiple application interviews, and did site visits toward the end to select 10 grant recipients. Joshua visited both C4Q and Propel. It was quite inspiring to meet the folks doing amazing work.

[6:16] Narrowing the field was very hard. The team spent eight hours in Denver on the deliberation day, to get to the final 10. What they looked for was the impact the applicants were already having, their goals, scalability, their market, their supporters, their board members and their team dynamics, and overall potential for growth.

[7:03] Joshua and the team wanted to see these organizations continue doing great work over a long period and getting to the next level in their ambitions.

[7:09] C4Q fosters the Queens Tech ecosystem to increase economic activity. Jukay Hsu describes how it began in late 2011 before the first Queens Tech Meetup. The Coalition for Queens started as volunteers who believed in an inclusive technology economy, and how cities can be best positioned for that. Jukay was alone, at first.

[7:57] C4Q started as an advocacy group for the larger impacts of technology on cities. Job training is a great way to tackle the long-term problem, serving the needs of companies while creating opportunities for participation within the local community, to grow with the cities as they transform.

[8:34] Jukay talks about coding and training. There is a 10-month program called Access Code, serving adult learners in poverty, who are learning coding and networking. They also get help with job placement and entrepreneurial opportunities.

[9:08] The program has increased people’s income from $18K at the start to $85K after the program.
[9:18] Jimmy Chen, formerly a product manager at Facebook, is CEO of Propel. Jimmy saw that a disproportionate amount of the benefit of technology goes to people who don’t need it much. Jimmy left Facebook in 2014, looking to build really great consumer software to be used by hundreds of millions of people to solve the problems of poverty.

[9:56] In 2014, Jimmy learned of a nonprofit incubator program, BlueRidge Labs, based in Brooklyn, now run by The Robinhood Foundation, that takes aspiring entrepreneurs and helps them identify challenges faced by people in poverty and to start software companies that solve some of those challenges. That’s when Propel started.

[10:13] Jimmy tells how Propel began. They studied how to apply for food stamps to get a sense of the process, the forms, and the experience of talking with the social workers. Of the hundreds of people waiting to apply for food stamps, most were passing the time with their smartphones in hand. So they had the technology, but no app to help them.

[11:03] Jimmy explains why food stamps became their selected project to address. They had looked at a variety of government safety net services for low-income people. They settled on SNAP (Food Stamps) because it is a large program with 45 million users daily and it’s one of the core basic needs of life.

[11:49] The original intention at Propel was to build software for a number of programs, but SNAP became the program of focus because the opportunity to serve Americans was extremely deep.

[12:04] Propel started marketing with $200 worth of ads on Facebook. Their model was to build the software very quickly and test it as fast as possible on the target market, cutting out mistakes and expanding on successes as quickly as they could. The first version was a website, and ads online attracted attention to try it. They got feedback.

[12:50] Their early experience pointed them overall in the direction in which they’re still headed. There is a massive potential for a great technology to transform the experience of people on these types of programs. $200 worth of ads gave them the information they needed. They just needed feedback from a handful of people.

[13:21] In late 2015, Propel expanded their focus beyond the initial enrollment in the program to managing the benefits. The app, FreshEBT, is like a mobile banking app for SNAP. Propel created the well-made app to be respectful of the SNAP user. Users manage their balance, see their transaction history, and manage their card.

[15:05] FreshEBT helps users identify places they can spend their benefits, on a map of stores that accept SNAP. FreshEBT can also help users save money on financial services and when purchasing groceries. There have been 400,000 downloads of FreshEBT. It’s been in the top 20 free Android finance apps for a few months.

[15:41] With an estimated 21 million American households on SNAP, 400,000 is about 2% coverage.

[15:52] Jukay samples the app. He sees that they are at the Rockefeller Foundation address, and the various stores and food pantries around them that accept SNAP.

[16:18] Ray Hoffman asks how the recipients of these innovation grants will improve their organizations. Jimmy gives three reasons: use the access to the networks of Uncharted and the Rockefeller Foundation, get to meet people like Jukay and others who are building amazing companies, and finally, use the capital from the program.

[17:20] Joshua says the program will stick with these people as long as they need it, and they will get mentors from across sectors with a variety of backgrounds. Each team will go to SOCAP, the huge social entrepreneurship conference in San Francisco. They will get a chance to meet other potential supporters and funders.

[17:42] Joshua wants to see them leverage the grant and the program to get even more support, long-term. The goal is to help build an ecosystem — a network — to see this scale larger to help more organizations and more people.

[18:00] With the Rockefeller Foundation at their backs, you’ll be hearing more from these social tech entrepreneurs. See the links below to learn more about C4Q and Propel.

Mentioned in This Episode:

The Rockefeller Foundation

C4Q

AccessCode

Propel

100 Resilient Cities

Rebuild by Design

The Unreasonable Institute (Uncharted)

FreshEBT

SOCAP

Facebook

Herbert Hoover and Lou Henry Hoover, his wife of nearly 45 years, were two of the most significant, most influential Americans of the entire 20th Century. Unlike any president and first lady who came before and only a handful who came after, they were true partners. Considering how this adventurous couple came of age in the late Victorian years, this indicates something quite extraordinary — almost singular — about each of them. So, if all you know about the Hoovers is the fact that he was president when the stock market crashed in 1929, and nothing about her, you might want to spend a few minutes with their great-granddaughter, author, and CNN contributor, Margaret Hoover.

Key Takeaways:

[1:06] From her earliest memories, Margaret was aware that her great-grandfather, Herbert Hoover, had been somebody special in American history. She has a picture of herself at three, sitting in the back of a golf cart with Barry Goldwater in front of her great-grandparents’ gravesite in West Branch, Iowa.

[2:17] Margaret was also told about her great-grandmother, Lou Henry Hoover, and her accomplishments as a partner of her husband the president, together taking on the world in a time of extraordinary social, industrial, and geopolitical changes.

[3:14] Stanford graduates and world-wide adventurers, Lou Henry and Herbert lived like millennials. They had circled the globe five times before aviation, having lived among people of several nations. They understood the different governments and economic systems around the world, what worked and what didn’t.

[4:01] Herbert knew he was advantaged as an American. An orphan, he was in the first class at Stanford. Lou Henry was the first woman to graduate with a degree in the hard sciences at Stanford. They met in Geology Lab. When Herbert graduated, he had $40 as a self-made product of American economics.

[4:33] As an orphan, Herbert had been separated from his siblings and raised by various relatives. In one cottage, his room was under the stairs. In any other country, it would have been unlikely for him to amount to anything. Living up to his Quaker values, he worked the graveyard shift in a mine at $2 a week after graduating from Stanford.

[5:40] A renowned mining engineer in San Francisco took him on as a stenographer. He later recommended Herbert to go explore properties in the Australian outback for a mining engineering firm out of London, named Bewick, Moreing & Co. He discovered the most profitable vein of gold in the outback, that still produces to this day.

[6:03] Herbert returned and married Lou Henry; the next day, they went to China. They were there at the Boxer Rebellion, in the last camp of foreigners rescued from Tianjin by Marines and escaping on a German mailboat. Before leaving, Herbert was organizing a foreign mining acquisition and Lou was organizing the encampment under daily siege.

[7:23] Their Chinese adventure marked the beginning of their travels exploring the tide of revolutions sweeping the world at the start of the 20th Century. After the Boxer Rebellion, they saw the rise of Bolshevism, Fascism, and other “isms” around the world. Herbert had mining properties on five continents by the outbreak of WWI in 1914.

[8:04] In 1922, with firsthand experience how the old and new governments of the world worked, Herbert wrote American Individualism to crystalize how the American system of government and economics was better than the others. He had seen the rivers of blood of Bolshevism. The world didn’t accept these lessons at the time.

[8:42] The Hoovers were the first international couple of prominence. Later in the White House, they would speak privately together in Mandarin Chinese.

[9:03] In 1914, Herbert, then a mining consultant, and Lou Henry, set up in the Savoy Hotel in London, at the request of U.S. Ambassador Walter Page, to help 150K Americans stranded when no credit was accepted. He lent over $1 million of his money to help them sail home. After the ordeal, he found that all but $40 had been repaid.

[11:28] At that moment, Herbert recognized the inherent goodness in the ordinary American. He realized he could rely on Americans for their voluntary spirit and good-naturedness. The experience also elevated the Hoovers in the eyes of the diplomatic set. Then, a massive food crisis hit 8 million people in occupied Belgium.
[12:15] Ambassador Page asked Herbert to help feed the Belgian people. He organized international food relief to deliver 40 000 tons of food in November and 80 000 tons every month from December 2014 to the end of the war.

[12:54] President Woodrow Wilson named Herbert Hoover as the first and only head of the U.S. Food Administration. Lou Henry was named the head of the Food Administration’s Women’s Committee. She asked a willing nation to ‘Hooverize’ or conserve, for the war, through Meatless Mondays, Wheatless Wednesdays, and drives.

[13:41] Lou Henry had also just become involved in the new movement of the Girl Scouts to get girls hiking and camping, as her father done with her, growing up.

[14:56] Lou Henry became Vice President and then National President of Girl Scouts, and became Chairman of the national board. She asked First Lady Edith Wilson, to serve as Honorary National President of Girls Scouts. The First Lady has since traditionally served the Girl Scouts as Honorary National President.

[15:18] Lou Henry started a Girl Scout Troop in Washington, D.C., which was an integrated troop. As a Quaker, she believed in the ‘individual spark’ of every person. She wanted every girl to have the same outdoors experience she had gotten. She was instrumental in establishing the Girl Scouts as a national organization.

[15:56] In the 1920’s, Lou Henry Hoover was one of the most important white voices for racial equality. As First Lady, she invited, one at a time, the wives of all the members of Congress to tea. This included the African-American wife of Congressman De Priest of Chicago. In response, Herbert invited Congressman De Priest to meet with him.

[17:19] Lou Henry designed the first Presidential Retreat at Camp Rapidan in the Blue Ridge Mountains. Herbert was an avid fisherman of all kinds of fishing, from casting to deep-sea fishing. Camp Rapidan is preserved as part of the National Park Service. The Hoovers also built and funded a school for children of the Blue Ridge Mountains.

[18:36] Lou Henry was an athlete and equestrian. She raised $700K in the late 1920s for an organization that promoted women’s athletics.

[18:47] Margaret would like to have five to ten minutes to chat with Lou Henry if she could get a sense of her charisma and delightful personality. The best parts of learning about Lou Henry have been reading the letters of those who interacted with her.

[19:40] Margaret Hoover was born 33 years after her great-grandmother died, quite suddenly in New York, in 1944. She was born 13 years after her great-grandfather died, in 1964. And she couldn’t be more proud of them.

Mentioned in This Episode:

Margaret Hoover

Herbert Hoover

Lou Henry Hoover

Stanford University

Boxer Rebellion

American Individualism, by Herbert Hoover

The Girl Scouts of the USA

Camp Rapidan

When it comes to turning great businesses into philanthropic legacies, there are two Ford families of note — the one from Detroit, and the one from Little Rock. It was Joe Ford, and later his son, Scott, who built a little telephone company in Sheridan, Arkansas — population 1,338 in the 1940 Census — into a $30-billion player in wireless — Alltel. After selling Alltel to Verizon, Scott Ford started Westrock Coffee and the Rwanda Trading Company as an exercise in capitalism. By paying Rwandan farmers fair value, creating a two-year training program for those farmers in agribusiness, and launching a new U.S. market for that coffee, Westrock already has put over $100 million into the pockets of Rwandan coffee farmers, and Westrock is just getting up to speed.

Key Takeaways:

[1:21] Scott is of ‘the poor Fords, from Arkansas.’ Scott’s grandfather Ford was a school administrator. Scott’s father, Joe, got advice from Jack Stephens. Hugh Willbourn, Scott’s maternal grandfather, bought a telephone company from the Stephens brothers and it became Alltel. Scott sold it in 2009 as the country’s fifth-largest wireless business.

[3:26] The little telephone company that grew into Alltel started when Witt Stephens contracted with the nearest local telephone business to build a line out to Sheridan, to his mother’s home, so she could have a telephone.

[3:43] If Witt and Jack Stephens hadn’t been willing to extend 100% credit without collateral to contractor Hugh Willbourn to buy their phone company, none of the rest of this story would have happened. Hugh was the contractor who set up the poles.

[4:23] When people ask Scott why he’s involved in Rwandan coffee, he tells them that his father was the one survivor of three children in Depression-era rural Arkansas, and he relates to mothers in Rwanda struggling to provide life’s necessities for their children.

[5:14] Scott saw that two Swiss investors were buying Rwandan coffee at as low a price as they could, maintaining poverty. In a moment of rage, Scott committed to start a coffee business and buy the coffee for as much as he could pay the farmer, and still make a profit. This was before he even knew if coffee grew on a tree or on a plant.

[5:47] This was made possible by the sale of Alltel. Scott had succeeded Joe Ford as CEO in 2002. In 2005, he spun off the wireline business to concentrate on wireless. Scott details the history of the changing business and its success, including focusing on wireless growth. Funding was the challenge that ate most of Scott’s time in that period.

[7:27] Scott recalls doing 100 transactions in that first 11 years, just to reposition the business to being a nationally competitive wireless company.

[7:37] Scott comments on the light-touch approach the FCC had toward wireless at that time. If Alltel had had to work under the approach that later administrations brought to bear on wireless companies, or even at that time on the wired part of the industry, they might never have started their growth plan, which was to supply service to rural areas.

[8:57] If Scott had not built up Alltel into a major wireless provider, he would not have been free later to buy an abandoned coffee mill in Kigali, Rwanda.

[9:12] In 2004 or 2005, while CEO of Alltel, Scott, his wife, and another couple visited an orphanage they had been supporting. The President of Rwanda, looking for wireless networks for his country, invited the Fords and their children to dinner.

[10:10] The Rwandan president and the Fords talked about the three freedoms of Western civilization that allow people to get out of poverty — religious, political, and economic freedoms. The President had aspirations of guiding his people out of poverty and even sharing these advances with other East African nations. He told of his vision.

[11:19] The Rwandan president told Scott if he ever had the chance to help people learn how to make money, that’s what he would ask of Scott. Not charity, but education how to manage capital and make a profit. With that knowledge, the poorest of the poor would taste the benefits of capitalism and they would change that part of the world.

[11:50] Scott kept that vision. Five years later, with capital from the sale of Alltel, Scott went to Rwanda to find someone to teach the principles of capitalism. On that trip, Scott created the coffee business.

[12:13] Westrock has a mission of going beyond Fair Trade. Scott comments on Fair Trade and Rainforest Alliance. When Westrock Coffee started, they weren’t thinking of those principles. They were trying to get the most money for the farmers, meaning they had to get the most for the coffee in the commercial marketplace. Scott tells how he did that.

[13:46] Westrock Coffee is on every farm with every farmer annually, educating and training in agronomy, bookkeeping, pruning, and fertilization. This has given the Rwandan farmers the fastest growing income stream at a farmgate price, of any agricultural commodity anywhere. Sustainability equals profitability.

[15:11] Without profit in the core trading business, all the benefits wash away. Farmers take the benefit of their profit and invest it in the infrastructure of their community. Scott talks about how running a wireless business applied to helping him run a coffee business.

[17:04] After nine years, Scott looks to double the business again in the next five years. He sees that as getting up to fighting weight.

Mentioned in This Episode:

Joe T. Ford

Scott Ford

Jack Stephens

Alltel

Verizon

Westrock Coffee Company

The Rwandan Trading Company

It was Ally Svenson’s desire to find a good cup of coffee in London that made an entrepreneur of Scott Svenson, her husband. Each of their three companies has been genuinely successful, but their most recent one may turn out to be legendary — maybe as big as the fast casual restaurants it was modeled after, Chipotle and Panera — only in the pizza category; a fresh, on-demand, artisan-style, six-minute pizza. But there’s more to the story of the fastest-growing restaurant company in the U.S. in 2016, Mod Pizza, as they named it. Ask the many employees with special needs, including the former felons, who’ve been given a second chance as members of the Mod Squad. As Ally Svensen said when they were planning it, the world doesn’t need another soulless pizza chain.

Key Takeaways:

[1:16] Ally and Scott started three companies. In each case, the company they started was something they ultimately felt called to do. They almost felt like they couldn’t not do it. They weren’t looking for a business opportunity, but they saw a need.

[1:35] Their first venture was a coffee shop. Ally had longed for a Starbucks-style experience in London, where they lived. There was nothing comparable at the time.

[1:51] Starbucks was in the U.S. and had just expanded to Japan. Scott and Ally saw a need that they felt had to be filled by someone. After talking about it for four years, they started Seattle Coffee Company.

[2:08] Scott had been Deputy Chief Executive of a public healthcare company, CrestaCare. When he told the Chairman what he was going to do, an intervention was arranged, because Scott was thought to be having a breakdown. He went off anyway and started the coffee shop, which he says was a fabulous experience.

[2:55] That was the first step: jumping from a traditional career to starting a business as husband and wife and as best friends. It was scary, exhilarating, and exciting. They had some smart people helping them but it took five months to come up with a name. They defaulted to Seattle Coffee Company, and that was one of their best decisions.

[4:11] Scott suspected that Starbucks was looking at the UK, so after their three proof-of-concept stores were successful, Scott and Ally opened 65 locations in 22 months in the UK. Before Seattle Coffee Company went public, Starbucks asked for a meeting. They met with Starbucks president, Orin Smith, and others and made a deal.

[6:15] Scott and Ally had been inspired by Starbucks. They were prepared to compete with them, but they loved the idea of collaborating with them instead. Starbucks had made them the offer they couldn’t refuse.

[6:32] Seattle Coffee Company lasted for about three years in the UK. When Starbucks bought them, they were in the UK, South Africa, SE Asia, and the Middle East. Their partners in SE Asia and the Middle East joined Starbucks. Starbucks allowed the partners in South Africa to keep the name if they stayed only in South Africa.

[7:32] Scott and Ally walked into the transaction assuming Starbucks had it all figured out. When they got inside, they saw Starbucks suffered the same challenges they did, even though Seattle Coffee Company was much smaller. Howard Schultz asked them to keep a UK style to the store, but eventually, the momentum of Starbucks overcame it.

[10:10] When Scott and Ally moved back to Seattle, they wanted to bring the style of London with them. The name of Mod Pizza comes from the British Mod style of ‘60s music, but it can also stand for Made On Demand, modernized, or modify.

[11:20] Their campaign is Spreading Modness, and their 5,800 employees are the Mod Squad. By the end of 2017, they will have just over 290 stores. Spreading Modness is about doing the right thing.

[11:50] Scott and Ally knew they needed to embed within the business a meaning or a purpose for themselves that was more than just opening stores and creating value. They reflected back at moments of happiness in their careers. Those moments came when they had had an opportunity to make a positive impact in someone else’s life.

[12:39] They decided to see if they could fill Mod Pizza with opportunities to impact lives. It’s been a challenge and their most rewarding professional accomplishment. Their older boys have worked there, under people from tougher backgrounds. The impact that those people have had on their boys has been unbelievable, and has changed their views.

[13:27] Scott and Ally set a direction for the company and hired people they trusted and who were as good or better than they were at doing what needed to be done. Their employees have brought the business to life. Strong cultures defend themselves. As people entered the company, and it benefited them, they became its defenders.

[14:09] To repeat, the Mod Pizza definition of spreading modness — the ripple effect of doing the right thing.

Mentioned in This Episode:

Scott Svenson on LinkedIn

Mod Pizza

Seattle Coffee Company (South Africa)

Starbucks

Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company, by Andrew S. Grove

Orbiting the Giant Hairball: A Corporate Fool's Guide to Surviving with Grace,
by Gordon MacKenzie

This is Capitalism CEO Stories is brought to you by Stephens, Inc., Member NYSE, SIPC. For much more information, please visit www.stephens.com or www.thisiscapitalism.com.

This podcast should not be copied, distributed, published, or reproduced, in whole or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.

It’s only about 300 miles from Chesapeake, Virginia, to Charlotte, North Carolina — a six-hour drive — but in the life of Tana Greene, going from an abusive relationship in Virginia to a considerable entrepreneurial, and now, inspirational success, in North Carolina, it represents a much longer journey. She’s the CEO of one of the fastest-growing, woman-led businesses in the U.S., The Greene Group, which has two staffing firms — Strataforce and Road Dog Drivers — and her latest company, Blue Bloodhound, which is a kind of Uber for trucking. Her Blue Bloodhound app links thousands of pre-qualified truck drivers with motor carriers that have shipments to go out.

But first, back to her journey, the subtitle of which, Tana Greene would tell you, is 'never settle.'

Key Takeaways:

[1:11] As a ninth-grader, Tana dated a popular senior and was soon pregnant. In the South, that meant marriage. He started controlling who she saw. She took it as a sign of how much he loved her. Then he took the phone with him to work, and she wasn’t allowed to speak with anybody. No one was allowed in the house when he wasn’t there.

[2:15] Tana kept telling herself she could fix the marriage, and didn’t tell anyone. She was embarrassed about it. One day, her husband hit her so she bled as she went to drop the baby off at her parents. Her dad started looking for him, but didn’t find him. They got her help, a counselor who gave the behavior a name — domestic violence.

[3:21] The counselor told her she could be a victim, or she could decide to do something about it. She wrote down four goals: to own her own home by 25, to own a business by 30, to finish school, and to marry a knight in shining armor! She met each goal early!

[3:53] Tana describes getting ready for work the first day of her first job while still married to her first husband. He had a shotgun aimed at her head when she came out of the bathroom, warning her to behave at work and asking why she had used makeup and done her hair. All the while he was laughing, as though it were a funny joke.

[4:54] It took her two years to leave him, because she had to build up confidence and self-esteem. In domestic violence, a person is constantly being put down and told they are not worth anything. Most women go back four times to their violent, abusive spouse, before they actually leave. They want to make it work.

[5:32] Once Tana left her husband, she was able to make things work for her. She explains how capitalism benefited her. It allowed her an opportunity to build a ladder to get where she wanted to go. We can decide what we want and do anything we want.

[6:13] Tana got an associate’s degree in secretarial work and shorthand, but was soon offered a job selling. She describes how she moved from her hourly position to a commissioned job. She attributes her success to passion and purpose.

[7:17] Tana’s passion and purpose made her a better person, and she wanted to offer that to others. That’s still her purpose for Blue Bloodhound, Strataforce, and Road Dog Drivers.

[7:28] Tana met the right man for her and she bought a staffing franchise. She learned some tough lessons starting a business. They didn’t borrow; they used their own cash. They sold everything they owned and moved to her townhouse. For two years, they funded the business themselves until they got a big contract that provided cash flow.

[7:59] Tana recognized that she should have gotten loans for the business, instead of spending all their cash. When they needed funding, they had no collateral. Banks didn’t want to loan to them. Business and life give you hard lessons every day.

[8:18] Tana’s first contract was 375 people, 24/7, doing shipwatch and labor on board a ship at Norfolk Naval Shipyard. Going from 2 employees to 377 employees taught her tough lessons about Workers Comp, EEOC, and all the financial things that go wrong with a business. Tana says the whole thing is based on turning quickly.

[9:07] Tana and her husband had been the first franchise of the company. Their lawyer had prudently negotiated an agreement without a non-compete clause. When the franchiser changed CEOs, they took away Tana’s best employee and they were trying to put her out of business. Tana let the franchise agreement lapse and changed the name.

[10:08] When 9/11 hit, half of Tana’s business dropped overnight. It was manufacturing, and the first thing companies did was cut the temporaries. They went from $15 million to $8 million, all while they were transferring away from the franchise. There were a lot of decisions to make at that time to survive.

[10:31] The new company, Strataforce, not only survived but made the Inc. 5000 list of the fastest-growing small companies in the U.S. But as late as 2007, something was missing in Tana’s life.

[10:48] Tana talks about maintaining an image. People want others to think of them as happy and perfect. Tana thought if people knew her beginnings, they would think less of her. Her friend’s daughter asked her if she would talk at her school about healthy relationships. She said yes, and then started panicking. But she had a need to share.

[11:58] Tana spoke at the school and it turned her life around. She found joy in giving back to others. The joy of landing a big deal soon passes, but the joy of knowing she is helping others lasts. After a magazine interview, a stranger approached her. The stranger had given the article to a friend, who then left her husband, after 20 years of abuse.

[13:01] On finding her authenticity, Tana started building mission, vision, values, and purpose into the businesses. She teaches everybody, “You can be and do anything you want to be.” She develops great leaders in her organizations. Tana’s personal changes brought changes to the company culture and the workforce.

[13:54] Soon, the results started showing up in better productivity with less turnover. Former employers send her messages of gratitude for her impact on their lives. Tana became CEO, but thinks of it as CLO — Chief Leadership Officer. She leads by example.

[14:25] Tana’s five-year vision is to inspire even more people and lead a $1 billion company in Blue Bloodhound. That’s her goal, and she hasn’t missed a goal, yet.

Mentioned in This Episode:

Tana Greene on LinkedIn

The Greene Group: Strataforce, Road Dog Drivers

Uber

Remedy Staffing

Sam Walton

Ben Franklin (Company)

Inc. 5000 2008

This is Capitalism CEO Stories is brought to you by Stephens, Inc., Member NYSE, SIPC. For much more information, please visit www.stephens.com or www.thisiscapitalism.com.

This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.

David Callis was young rising star in the insurance industry. His specialty was global risk. One day, he realized he was being hit by bills and charges for things that he’d forgotten he’d ever signed up for. That was the genesis of his entrepreneurial idea — a company called Hiatus, which uses big data to see what you and I are being billed for, compared to the average consumer. David explains how Hiatus went from an idea to a finished product in a short time, and how they are improving it daily as more user data is gathered. David had to develop a user persona and a business model, and he had to learn the laws and the language of raising startup cash. Tune in to hear David’s remarkable success story.

Key Takeaways:

[1:10] David Callis studied Economics. His major at Sewanee was Global Studies, with an emphasis on Economic Policy. David always had an appreciation for the free market. [1:54] David interned at Brent Scowcroft’s company, The Scowcroft Group, in 2009. That gave David exposure to how the government approaches foreign policy issues. David describes Brent Scowcroft and his team as humble.

[3:01] Hiatus came about when David realized he was unable to track his personal digital subscriptions. He had forgotten them, until he was billed for them. David thought of building a subscription manager.

[3:16] He talked to Todd Gower, who was building enterprise software. He had the same problem, so they built a minimum viable product that solved the pain point. With a product, they thought it would be a bigger risk to stay at their full-time jobs than to do Hiatus full-time, so they made the jump.

[3:48] David had spent a lot of nights and weekends on Hiatus, while working a day job. The hardest thing about building a startup is going from the idea to a product that’s out in the wild. Todd was building the technology while David was determining the conceptual uses and business model.

[4:30] Hiatus is David’s first experience with a startup. The real education, he says, was actually talking to the users. There was no class he could take to replace customer feedback. That information helped David decide to invest more time into Hiatus.

[5:12] David and Todd worked in a cramped studio apartment in D.C. in early 2016 to develop Hiatus. They had their computers, and built a company. Within a month of starting Hiatus, David and Todd had a survey out. It showed 62% of consumers waste money on uncanceled automatic subscriptions. It was enlightening.

[5:59] They talked to friends and family to see how they were using the app and deriving value, and they reached out to the press and bloggers for exposure. David sent a lot of emails and called a lot of people to see if they would be interested in writing about Hiatus. It was a big pain point, and a lot of people could relate to the problem.

[6:45] Once the product was in use, David and Todd looked for deficiencies and fixed them, to make a better product people would use and talk about. As user behavior data came in, there were tweaks to make everyday. A small difference in user interface can lead to completely different user behavior. Hiatus is iOS. A text chatbot is a possibility.

[8:03] In one year, they raised $1 million in seed funds. This gave them enough for experimentation and growth, and to make the subscription scanning more accurate. Ultimately, they want to serve more areas of finance to save the consumer money.

[8:46] The seed funds were a milestone, and gave David and Todd a sense of responsibility to the consumers to make the best use of the really good technology behind Hiatus, and their understanding of the problem and the market.

[9:38] There were a lot of late nights trying to understand various aspects of fundraising. There is a lot of money going into fintech, so they had to understand where they fit within that market. While learning the capital markets, Hiatus learned where it stood.

[10:20] David was impressed by how investors were oriented around the consumer problem, and in empowering the consumer with technology. There is uneven information between financial services providers and consumers. It impressed David how investors understood Hiatus could bring consumer awareness up to par with vendors.

[10:59] The capital allowed Hiatus to test different approaches. They were prepared for two or three tries to get one right, but the first test was positive. They were fortunate to realize people would accept financial advice generated by a software and take it to a financial service. That opened the door to other uses in consumer financial services.

[11:44] If student debt rate is too high, or insurance rates are too high, the Hiatus software could refer you to providers that can lower those future expenses. Consumers will take that advice, and will act on it, and Hiatus can build a scalable business from it.

[12:01] Hiatus metrics are how much they save consumers. The initial seed funds will allow Hiatus to save an enormous amount of money for their user base. As they build revenue channels, they will hire engineers, and improve the technology. In a year, they have gone from two to eight employees.

[12:37] Hiatus has the potential to be the consumers’ access point to finance. It is delivering contextual financial advice to users. It’s relevant and non-intrusive. It incorporates behavioral economics and consumer psychology into a product that nudges users into making better financial decisions. This is unique.

[13:38] David always wanted to be an entrepreneur. Now, he has an interesting product.

Mentioned in This Episode:

David Callis on LinkedIn

Hiatus

Sewanee, The University of the South

The Great Recession

The Scowcroft Group

Todd Gower on LinkedIn

Apple iOS

Android

This is Capitalism CEO Stories is brought to you by Stephens Inc., Member NYSE, SIPC. For much more information, please visit www.stephens.com or www.thisiscapitalism.com.

This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.

Sandy Hillman has been burnishing her reputation as one of the nation’s top communications professionals for over three decades. Her Baltimore-based firm helps speak for brands such as Under Armour, Caesars Entertainment, and Walmart, but Sandy Hillman is even better known in the world of travel and tourism for her efforts in attracting visitors to major cities that didn’t use to attract many tourists. Time Magazine called her the Impresario of Urban America. As Executive Director of Baltimore’s Office of Promotion and Tourism, she was one of the key players in the dramatic revitalization of Baltimore in the 1970s and early ‘80s. There was Baltimore’s legendary four-term mayor, William Donald Schaefer, who was the most important player, there was A. N. Pritzker, the patriarch of the Hyatt Hotel family, there was James Rouse, whose Rouse Company built the Harborplace development, and there was Sandy Hillman. Tune in for Sandy’s success story.

Key Takeaways:

[1:20] At the time Harborplace was done, most cities had not figured out how to take advantage of their industrial waterfronts. With the success of Baltimore’s Harborplace, other cities called on Sandy for help. She went into private practice in 1984. She worked with builder James Rouse on some of her projects.

[1:56] As Sandy consulted with cities, her best idea was that a public-private partnership structure was needed within city government, to make sure that developments happen, take hold, and are sustained. Most cities had not organized for partnership. They had a convention and visitors bureau, but no organization to promote tourism.

[2:36] You need an organized infrastructure in place in every city, to properly build for tourism. Part of Mayor Schaefer’s genius was in understanding this and creating a marketing organization.

[2:59] Sandy left city employment to join an advertising and PR firm. It grew from 25 to 140 employees, and Sandy became the CEO. Ten years ago, she decided she didn’t want to run a big organization, and she started Sandy Hillman Communications as a 12-person boutique operation. They do only communications for organizations they select.

[3:43] Sandy Hillman Communications has an impressive roster of clients. Sandy explains how they came to represent the Star-Spangled Spectacular Baltimore, what the event was, and what they did for Baltimore and Fort McHenry tourism. Many of Sandy’s clients are museums. She discusses the National WWII Museum.

[5:34] Developments are dependent on leadership understanding of how to access capital, and use it to meet the goals of the particular program.

[5:51] The WWII Museum was one of Sandy’s favorite clients to promote, based on the impact of the exhibits. For commercial work, Sandy cites Under Armour and Zico as admired clients.

[6:49] Sandy talks about hubris at the top of a corporation leading to lack of communication within the organization. She sees it as a lack of understanding of what drives the business. Leadership does not connect with people below the C-suite, so there is a communication problem. Sandy loves internal communications for mergers.

[8:45] Sandy gives Under Armour as an example of a company that gets the importance of culture and internal communication. She discusses Harrah’s acquisition of Caesars and the importance of communication throughout the process.

[9:53] The SEC allowed Harrah’s and Caesars to begin the communication effort in advance of the final signing of the deal. This was really important. Thousands of people had to know that the coming together of these two companies was not going to negatively affect them. The CEO of Harrah’s visited every property to meet with the staff.

[10:41] Sandy talks about representing the airline industry, and the Air Travel Card. All industries are complicated, but they’re all about people at the end of the day.

[11:18] Sandy is the first woman to be labeled a distinguished alumnus of Penn State. Sandy has been a working mother for almost 50 years. She runs her business in a way that recognizes women.

[12:12] Sandy believes that women lead differently. She discusses her thoughts on this, and research on male and female brains of executives.

[12:55] Ray Hoffman gives details from a 2013 Harvard Business Review article on the University of California, Irvine study Sandy cited, on how men’s and women’s brains seem to be configured differently, leading to different styles of information processing.

Mentioned in This Episode:

Sandy Hillman Communications

Harborplace

Star Spangled Spectacular 2014

The National WWII Museum

Under Armour

Zico

Caesars Entertainment

“How Women Decide,” by Cathy Benko and Bill Pelster, Harvard Business Review

This is Capitalism CEO Stories is brought to you by Stephens Inc., Member NYSE, SIPC. For much more information, please visit www.stephens.com or www.thisiscapitalism.com.

This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.

Marc Gorlin is a serial entrepreneur, whose entrepreneur father started him hustling with the advice, right out of college, not to find a job, but to find a deal he could grow and develop. Marc did so, four times to date, with great success in each venture. Marc explains how Roadie, his latest and current venture, came to be, how he secured funding, and where he expects it to grow. Tune in for the moving startup story.

Key Takeaways:

[1:02] Marc Gorlin, Co-Founder of PGP Corporation, VerticalOne, Kabbage, Inc, and Founder of Roadie Inc. was encouraged by his father not to find a job, but to find a deal, and start something on his own that he can build.

[1:32] Marc’s father spent his entire life starting biotech companies, working on everything from childhood diabetes to cancer, putting in the first dollar, organizing a team, and getting the company running. To Marc, that all seemed normal.

[2:23] Marc wouldn’t trade his experience at the Grady College of Journalism in Georgia for anything. To get a startup to work, you have to make people care by telling stories. The ability of a journalist to take facts and create stories that people can get behind is invaluable.

[3:06] Marc lives in Atlanta, with a condo in Florida. There was a construction problem in the condo shower, so Marc was going to replace it with tile. On his way down, he got a call that the tile shipment would be late. Sitting off the highway, he noted all the traffic, North and South, and wondered, why wouldn’t one of them deliver the tile for $20.00?

[4:35] Marc realized that there’s an “unbelievable transportation heat map” that already exists in this country, if he could only tap into it. Over 250 million vehicles, with over 4 billion cubic feet of excess capacity, hit the road every day. Everybody has a tile story, leading to the creation of a community who use technology to help each other out.

[5:41] All the way down to the beach, Marc started calculating capacity in the cars on the road. Marc thought about the standard hub and spoke model of delivery, which requires customer density and utilization to work. Then he thought about the on-demand model of Uber and Lyft. These vehicles go out of their way.

[6:36] Those models are different from “on the way,” meaning someone that is in your vicinity is heading in the same direction that your stuff just happens to be going. That efficiency over time will reduce cost, with the added benefit of bringing people together.

[6:55] Marc tells of meetings and relationships that have come to be through Roadie deliveries, besides the deliveries themselves. You can have something in one place, and just attach it to somebody who's already going somewhere else.

[7:43] The model is the sharing economy. People helping each other out, with ratings and reviews, has its roots in AirBnB, and even eBay. You can see the history and ratings of the drivers. Small or large items, local or national, it all works.

[8:37] The typical driver member is one of several personas: regular visitors to one location, local drivers around town, regional drivers, or long-haul drivers. Roadie data shows patterns, and sends texts to drivers based on needs. They make it as simple as possible for people to get paid for going where they already go, and helping someone.

[9:47] In January 2015 Roadie started with $10 million in Series A funding. Marc explains how he finds and approaches investors. Understand what they’ve done in the past, use your past relationships, and find a way to make people care about and understand how what you’re doing could change something, and believe in you to do it.

[10:26] The business idea is less important than the trust that you will gather the right people, find the best customers, and do the right things, hopping from lily pad to lily pad, to get to the goal. Qualified investors accept that and are willing to take those big bets. Look for people in the industry. UPS is an investor in Roadie; they see its usefulness.

[12:11] Marc, a serial entrepreneur, believes this company will hold his attention. A couple of years in, they are trying to create a system that can involve everybody. It can create technology, it can move faster, it can be more sustainable, and get trucks off the road, using capacity that’s already there. It’s green, and it can bring people together.

[12:43] Marc Borlin’s big idea from that overpass on I-65, Roadie, is now operating in all 50 states, with 40,000 drivers, so far.

Mentioned in This Episode:

Marc Gorlin

Roadie

Kabbage

VerticalOne (Acquired by S1, and subsequently acquired by ACIWorldwide)

PGP (Acquired by Symantec)

EntreMed (Now CASIPharmaceuticals)

MediSYS

Medivation

Theragenics

Grady College of Journalism and Mass Communication, University of Georgia

UPS

FedEx

USPS

Uber

Lyft

PostMates

AirBnB

eBay

This is Capitalism CEO Stories is brought to you by Stephens Inc., Member NYSE, SIPC. For much more information, please visit www.stephens.com or www.thisiscapitalism.com.

This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.

Ray Hoffman interviews Warren Stephens about the history of Stephens Inc., and Northwest Arkansas. The difficult effects of the Great Depression on a rural community sparked the rise of tough entrepreneurs who became the industrialists of the area, and brought prosperity to replace poverty. Many of the great Arkansas companies were helped along the way by the Stephens family. Listen in to learn more.

Key Takeaways:

[:25] Arkansas has produced a disproportionate number of major companies, such as Wal-Mart, and the investment banking firm, Stephens, Inc., that helps companies like Walmart to grow and prosper. Stephens, Inc. has been led by Warren Stephens since 1986. Warren’s father and siblings grew up picking cotton on the farm.

[1:49] There is something in Arkansas that encourages leadership in individuals, such as Sam Walton, Charles Murphy, Bill Dillard, J.B. Hunt, and the Tyson family.
Matt Waller, Dean of the Walton Business School at the University of Arkansas speculates that it’s a toughness and a belief that “We can do this. We can make our lives better.”

[2:42] Albert Stephens, Warren’s grandfather, lived off of selling pieces of the farm, until there wasn’t much left to sell and they had to farm it. Warren’s uncle made it his life’s mission to piece back together all the land that had once been in the family. Today, Warren’s cousins own about 3,000 acres.

[3:40] Warren’s uncle, Witt Stephens was in the belt buckle and Bible business, and was really good at it. His father advised him to go into the bond business, when Arkansas bonds were trading at $.10 on the dollar in 1933.

[4:21] Uncle Witt took a bank loan of either $15,000 or $25,000 — no one remembers which — and started buying bonds at $.10. He sold them to customers, and kept some. By 1940, they were trading at par, which was a great return for him and his clients. As Sir John Templeton once said, “Buy when there’s blood running in the streets.”

[5:06] Witt, and Warren’s father, Jack, started investing in natural gas, and other businesses all around the state. Witt gave credit to one of FDR’s programs, the Rural Electrification Program, that was designed to bring electricity to poor regions.

[5:54] Witt bought the Sheridan telephone exchange to run a phone line to his parent’s home. Witt sold it to the Wilbourn family, who started Allied Telephone, and built enormous numbers of land lines across the state. Allied later became Alltel.

[6:56] In college, Warren worked summers at Stephens, Inc. at the trading desk. With an MBA, Warren started full-time in 1981. Witt and Jack owned the company, and Warren picked their brains a lot.

[7:39] Warren’s dad told him, “I wanted to be in business the next day.” He also said, “You can’t ever take a risk - if you lose it all, you endanger the ability of the firm to survive.” Everything can go wrong at once. When it does, in investments, it’s ugly.

[8:54] In the 1960s, Stephens moved into private equities. In 1968, they started a bank data processing company. They also had a life insurance company, and it loaned money to Sam Walton to build his first stores. In 1970, Stephens, with White Weld, managed the Walmart IPO. It was one of the best things to happen for Stephens.

[10:54] Warren discusses capitalism. After this last crisis, people wonder if the capitalist system is really the right system. Warren suggests the average consumer does not understand the many profitable layers that contribute to their ability to purchase the product they want, when they want it. Young people don’t see the connection.

[12:31] The cell phone wasn’t created by government. Warren noted in a WSJ editorial that young people reject capitalism and the free market, but celebrate entrepreneurism and free enterprise! He doesn’t think they understand what capitalism is. Warren says that the youth didn’t see Eastern Europe collapse under communist socialism.

[13:48] Warren suggests education on capitalism would help eliminate the disconnect between popular views and the facts. The This is Capitalism series is an effort to educate about successful capitalist entrepreneurs, past and present, and to show the impact they have had on communities and employees.

[14:19] Warren talks about the development of Northwest Arkansas through capitalism, from Walmart, to J.B. Hunt, to the University of Arkansas and more. The Waltons have given generously to the University. Alice Walton has built an incredible art museum. Warren compares 1960s Northwest Arkansas with the same area today. It is thriving.

Mentioned in This Episode:

Stephens Inc,

Stephens Viewpoints: Podcasts.com/podcasts

Warren A. Stephens

The Great Depression

Walmart

Dillard

Tyson

Murphy Oil

J.B. Hunt

Alltel

Acxiom

“Why Do the Young Reject Capitalism?,” by Warren A. Stephens for the Wall Street Journal

The Rural Electrification Act

The Great Recession of 2008-2009

Sam M. Walton College of Business at the University of Arkansas

Crystal Bridges Museum of American Art

Northwest Arkansas Regional Airport

This Is Capitalism

This is Capitalism CEO Stories is brought to you by Stephens Inc., Member NYSE, SIPC. For much more information, please visit www.stephens.com or www.thisiscapitalism.com.

This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.