Luncheon with Robert Kapito (BlackRock) and Bruce Richards (Marathon)

I had the honor and pleasure last week of attending the University of Maryland’s Wall Street Speaker Series event as a member of Beta Gamma Sigma International Honor Society.  The event was held at the Harvard Club of New York City with keynote speaker, Robert Kapito (Founder, President, and Director of BlackRock, Inc.), and host, Bruce Richards (Founder, President, and CEO of Marathon Asset Management).

After several introductory remarks, Bruce and Bob sat down for a chat about the economy, elections, and BlackRock.  Bob believes that many companies are using their cash to buy back stocks, so the economy may stay stagnant while stocks continue to rise due to lack of supply.  He also believes that the high yield sectors and municipals are good areas to be in right now.  Bruce then asked for Bob’s thoughts on the central bank’s actions.  He thinks that until housing prices stop going down, people will continue to not spend.  He also thinks that there are too many factors keeping unemployment rates high and that the central bank’s actions can’t be the only cure to unemployment.  For example, healthcare costs went up 20% last year.  This increase has made it difficult for companies to hire more people.  Many companies also have more people on pensions than they have working.  This imbalance is not sustainable.  Also, the housing and construction industry is one that employs thousands of people.  Until we start building again, unemployment rates will be affected.  There are also many regulatory and political issues affecting unemployment along with our deficit problems, and people are scared that the central bank may stop its actions too soon.  All of these factors influence unemployment.

The talk then turned to elections.  He said that most people seem to think that if Romney wins, then our economy will be better, and if Obama wins, then our social system will be better.  In reality, the President of the United States doesn’t make all of the decisions, and there are many factors that affect our economy and our social system.  He feels that one problem is that members of Congress do not spend much time in Washington, DC, so there are no debates or discussions.  From my public policy class last year in DC, we found that this was a complaint of many people.  He also talked about how much business is disliked throughout the country and how all of us need to become vocal about how good business can be.  There are a few bad people in business but not a large amount.

Bruce then asked about BlackRock and how it’s managed.  Bob said that you have to start with good people who are accountable, responsible, and passionate.  As the leader, you have to energize people, manage with your head and your heart, and give employees a mission.  He then related the story of JFK’s visit to NASA during moon mission days.  JFK asked the janitor what he did, and the janitor responded that he was helping put a man on the moon.  Bob used the story as an example of how everyone at NASA during that time knew the mission and felt part of it.  BlackRock also tries to stay ahead of trends and listens to what its customers want.  Every morning at BlackRock, there is a meeting to discuss markets and opportunities.  Anyone in the company can be part of it by attending in person or calling in through their computers.  They also have a learning institute that meets six times per year.

BlackRock created an analytical system for the buy side of the market.  They modeled every security and kept the data proprietary even though the process had been very expensive.  But they were able to use that expertise to then analyze other companies’ funds.

The talk ended with Bob’s recommendation to all of us that we put ourselves in positions to meet people.  He talked about going to college and getting involved in everything that he could.  He talked about how he had interviewed with Romney at Bain but had decided to go to First Boston instead which propelled him to launch BlackRock.

I really enjoyed the talk and how open and approachable Bruce and Bob were.  It was a really great event, and I hope that the University of Maryland will allow me to attending the next Wall Street Speaker Series!

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Why Manufacture in Costa Rica?

Last week, the Medical Devices Group on LinkedIn held an interesting webinar entitled “Why Manufacture in Costa Rica?”  Speakers included George Blank (Chairman of the Board for Vention Medical) and Pilar Madrigal (Director of International Affairs for the Costa Rican Investment Promotion Agency or CINDE) and was moderated by Joe Haag (founder and manager of the Medical Devices LinkedIn group).

George started off the discussion with a long list of why Costa Rica is a great place to manufacture products.

  • The business climate is ethical, honorable, and conducive to growth and success.
  • Costa Ricans are honest, happy, young, loyal, and passionate.  There is a great emphasis on education in Costa Rica, so the populace is very talented and well educated.
  • Costa Rica is a democracy with clear rules of law, and government officials are very accessible.
  • Labor costs are lower than the US.
  • The free trade zone has no local or federal taxes and no tariffs for all products sold outside of Costa Rica.
  • Costa Rica has similar intellectual property protection as the US.
  • Costa Rica is only about 4.5 hours from the US and is on a similar time zone to the US.
  • Costa Rica has a proven track record as many medical device companies have setup operations there.
  • They have high tech facilities, offering the latest in clean room and sterile technologies and manufacturing techniques and equipment.
  • Costa Rica has shipping ports on both sides of the country, good ports and roads to ports, and great airports and harbors.  (If you are a tourist, you may not see this good infrastructure.  The country has been focused on making sure transportation for businesses has been improved before improving infrastructure for other parts of the country.)

George also had great things to say about CINDE.  It is not a government organization but works very closely with the government.  CINDE has been very fast-moving in its help to grow Vention’s facilities in Costa Rica (up to 5 facilities with 190,000 square feet and 550 employees as of today).  CINDE helped Vention through every step of the way and through all rules of law.

Pilar spoke for a few minutes about some of the 40+ international companies that have operations in Costa Rica.  She also talked about the upcoming Life Sciences Forum (March 18-20, 2013) to be held in Costa Rica.  The forum will include discussions, conferences, and panels addressing challenges facing the medical device industry.  There will also be opportunities for site visits to companies who currently manufacture products in Costa Rica and time to learn more about manufacturing there.

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Worldwide Invest Better Day

Tuesday was Worldwide Invest Better Day created by The Motley Fool.  All day, The Motley Fool website had videos and articles about how to invest better.  They even had a presentation that people could click through to help them get started in investing better for their futures.  They also had live events around the country – including here in New York City.  Rich Greifner and Jesse Keyser from The Motley Fool were in town to meet with all of us who are followers of The Motley Fool.  Rich gave a great presentation about Motley Fool principles.  For example, Fools don’t trade stocks; they invest in businesses.  And Fools think long-term, such as a minimum of 3-5 years.  He also gave two stock pick tips and explained his reasoning behind each.  We also had a short talk from Christine Gorman of Pencil who talked about how we could get involved in schools to help develop leaders and prepare students for college and careers.  I had a great time at the event and enjoyed the videos and articles of the day.  I hope that all of you tuned in as well.  If not – and if you are interested in learning more about it – simply click the links in this article to learn more.  Fool on!

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Lessons from the Brooklyn Book Festival

The culmination of the Brooklyn Book Festival last Sunday was better than I expected.  Hundreds of writers, publishers, and organizations had booths setup in Columbus Park, and there were so many interesting presentations that it was difficult to choose which to attend.  I selected three and spent the rest of the day exploring the booths.

The Nation Presents Election 2012

The first presentation that I attended was entitled “The Nation Presents Election 2012”.  Panelists included Katrina vanden Heuvel, Tom Frank, and Eric Alterman, and the moderator was Toure.  The description of the talk was supposed to encompass the foreign and domestic issues surrounding the upcoming presidential election; however, the discussion actually became more about how messed up our political system is.  Toure pointed out that 47% of voters will vote for Romney no matter what, and 47% will vote for Obama no matter what.  Katrina agreed by saying that due to the electoral college, only eight states really matter in this election as the others are already decided.  (In the last election, 19 states were important in the election.)  With the collapse of local news and the rise of blogs, it is possible for everyone to listen only to the information that suits them and not to pay attention to other points of view.  And since media doesn’t dig in to find the truth anymore (and would rather stay on the fence), they aren’t doing any good in helping the American people determine fact and fiction in this election.

Our political parties are also a problem.  Katrina pointed out that the Republicans are being controlled by an extremist right-wing movement.  All panelists seemed to agree that Romney had to become more extreme to get the nomination even though he isn’t that extreme.  Eric stated that the Democrats are also a problem in that many are culturally liberal but not economically liberal.  He believes they are liberal on women’s issues and such but hate unions and love free trade.  Tom said that Democrats in DC aren’t in touch with reality as they see this election as gaining just a few more votes as opposed to harnessing the growing unhappiness and inequality that is forming among the populace.

Eric brought up some interesting information about Jews in America.  He said that only 2% of citizens are Jews (and only 1% are Muslims).  And only 7% Jews in America say that policy on Israel is important to them, but every president seems afraid to put pressure Israel.  He believes there are a few wealthy Jewish people who are instrumental in pushing their agenda, but it is not representative of the entire Jewish population.

The financial crisis was discussed, and Katrina pointed out that the problems in the banking system have not been fixed as the concentration of powers in banks is stronger now than before the bank failures.  Tom pointed out that it is ironic that Romney has been selected as the candidate (due to his business background) when we are still trying to recover from the financial crisis.  Eric also mentioned that “Occupy Wall Street” may have failed in its agenda, but it did accomplish the task of showing the world how the wealthy has bought the political system.

Though the panelists all seemed more supportive of Obama than Romney, two complaints were mentioned about Obama’s actions over the past four years.  Tom felt that Obama could have reduced unemployment by hiring people to do projects just like Franklin Roosevelt did so many years ago.  Katrina feels that Obama should have held the banks accountable for their actions during our latest financial crisis.  They seemed to feel that Obama has been listening to the wrong advisors.

In conclusion, the panelists feel that we should all do something to improve our political system.  Stop whining and do something.  There needs to be a bottom-up campaign for change and only then will we make progress.  Although the discussion was only 50 minutes, it was very interesting, entertaining, and thought-provoking, and I believe that all of us wanted the talk to continue longer.

Sometimes the Best Medicine is a Story Itself

The next presentation was hosted by Granta with Patrick Ryan moderating.  Granta picks a topic every quarter for its publication, and writers submit essays on that topic.  This quarter’s topic was medicine, and three authors read portions of their entries.  James Lasdun read his poem entitled “Blueberries” which was a letter written to himself for 20 years into the future.  He also read an excerpt of his essay about a school principal who found a lump in his neck that needed to be removed.  Gish Jen said that she thought her essay was more about real estate than medicine but was about someone trying to get his/her Chinese parents to move into a retirement home.  Terrence Holt is a doctor who wrote an essay about residency.  He said that in residency things just happen to you.  Residents don’t have much time or control.  You don’t have time to have an identity so he wrote the essay in the 2nd person.  He only read a little bit of his essay, but it really intrigued me.  I sought out the Granta booth and bought a copy to finish the story!

The moderator talked about how depressing and difficult this issue had been.  He had read hundreds of stories about cancer and surgery and death, and he’s still reading them as Granta’s website continues the medical theme for the quarter.  He also asked the authors how it was to write about difficult topics such as those mentioned.  Gish answered that she feels that she can write about a difficult topic when that topic becomes humorous to her in some way.  For example, in her essay, the parents don’t want to move into the retirement home because they would have to eat Western food like lamb and salad.  It is funny sidebars like this that makes writing about difficult topics easier.  Terrence said that the passage of time can help.  For example, he moonlighted at a state psychiatric hospital during this fellowship and couldn’t write his fictional medical stories during that time.  Only as time has passed has it become easier to write.

An Education: Coming of Age in America Today

My last presentation of the day was moderated by Richard Greenwald with a panel discussion by Andrew Delbanco, Andrew Hacker, and Kimberley Phillips and mostly focused on costs.  Delbanco talked about the purpose of college and how it has contracted over the years.  College was supposed to be a time to discover self and learn from professors and other students.  It was also to teach ethical lessons and lessons on democracy.  But education has changed.  Wealthy students go to exclusive schools that lack diversity.  Private institutions are under stress, and public disinvestment has reduced resources to education.  Schools are converting full-time professors into piecework, part-time professors.  Students are encouraged to discover self but are also pressured to choose a major quickly.

Hacker believes that schools are self-serving just like financial institutions.  If a student’s parents are able to write a check for school (which about 50% are), then those students are pushed to the front of the line since most other students get a discount of some sort if they have to take out loans.  He stated that a full professor at a private university makes $182,000 for 9 months of work.  That doesn’t include the $59,000 per year in benefits, subsidized housing, $5,000 per year toward the professor’s children’s education, and the ability to take a sabbatical every 3-5 years.  He also believes that most research done by professors is useless and unnecessary and that professors don’t care that the students are taking out enormous loans to pay for these professors’ high lifestyles.  He then continued to discuss college athletics and how much they cost a school.  A men’s golf team costs $11,000 per year per player to cover travel expenses, equipment, etc.  In looking at basketball, he found that in many schools, most students don’t attend the games, so the costs are not benefitting the students.

Phillips, a dean at Brooklyn College (a public school), said that the school Hacker described was not familiar to her.  She said that most faculty members did not make that kind of money and that they sincerely cared for the students and worked very hard for them.  At her school, 104 languages are spoken and 65% of the students have immigrant parents.  Each student does have to pay over $1,000 toward the athletic department each year, but school costs are much lower at Brooklyn College than Hacker described.  She believes that the focus needs to be on the high schools and has found that professors are spending too much time repairing the deficits that students have from their secondary educations.  She said that we are also asking students to double major so that they are more employable which is taking students 6-8 years to finish school.  This long length of time is costly and puts a great financial burden on students.

Their commentary was all very interesting, but I wish that we had more time to spend on one of the questions that was asked at the end.  A gentleman stood up and asked how online education was affecting schools.  The panelists didn’t really have much to say, but the gentleman said that with 10% of college educations coming from the University of Phoenix, he felt that it was a very important issue.  I agree with him.  Online programs are great disruptors to traditional educational centers, and as Stanford’s president stated, it is a “coming tsunami” where schools must prepare and adapt.

I had a great time at the Brooklyn Book Festival and look forward to next year’s event!

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Battle of the Waistline

As VIVUS (VVUS) launches its new weight-loss drug, Qsymia, and Arena Pharmaceuticals (ARNA) prepares for its 2013 launch of competitor drug, Belviq, I thought I’d do a little compare and contrast on the two companies.

Some Numbers

Prior to the launch of Qsymia, VIVUS has reported no revenue, but with this launch and the approval of its other drug, STENDRA, we should suspect to see revenues soon.  Arena has recorded revenues over the past few years and even reported positive operating income last quarter.

Also, VIVUS has a bounty of current assets that can easily cover its tiny debts, but that makes me wonder if it’s using its assets properly.  I think Arena’s doing a better job managing assets and liabilities as it has enough assets to cover liabilities but is still making investments in longer term assets.

The Products

Though VIVUS launched its product first, Qsymia has some significant safety risks.  Will Belviq have significant risks as well?  Also, how much will doctors prescribe of weight-loss drugs, especially in the wake of fen-phen?  Only time will tell.

Both companies have other drugs in the pipeline, so it will be interesting to see how both companies fare in the future.  I’ll be watching!

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Matunda Water Project

Iana Aranda and Adam Goossen from Engineers Without Borders (EWB) talked about the organization and their experiences with the Matunda Water Project at last night’s IEEE meeting.  EWB has over 250 chapters, and each chapter bids on projects from EWB’s database.  They also raise their own funds for the projects and travel.  Projects last at least five years so that follow-ups and evaluations can be done.

The Matunda Water Project began in May 2008 with an assessment trip to Matunda, Kenya.  The hospital in the town did not have power or clean water, so many people did not use the hospital for its intended purpose.  On the assessment trip, they tested the water, performed a geological survey of the area, develop relationships, and talked with key players about the goals for the hospital.  They also talked to local vendors about parts and equipment that would be needed, and they convinced the government to bring a dedicated power line to the hospital.

Implementation Phase 1 began in January 2009 when a 400-foot deep well was drilled; casing, pump, and tank were installed; and the site was surveyed.  Implementation Phase 2 lasted three weeks and included five engineers.  They built the water tower, dug trenches, setup the drainage system, tested the water, and had a workshop on handwashing.  Every day, they had 8-10 local people help as needed.  They used local vendors whenever possible, buying supplies from them or using their expertise such as plumbing.  Some parts that were common in the US were not available in Kenya, so these local experts taught the engineers other ways to complete a task.  At the end of Phase 2, they had a commissioning ceremony and officially transferred ownership of the water system to the hospital.  All of Phase 2, including travel expenses, cost $23,000.

In November 2011, they returned for an evaluation trip.  Unfortunately, the transformer had been overloaded as local people had tapped into the hospital’s power line.  The evaluation team worked with the government to fix the problem, and the water system was back up and running.  The team also found that the water system had drawn more attention to the hospital and that it had received more funding and was providing more services.  They also saw that the 15 new sinks were being used properly.  It is difficult to tell at this point whether the new water system has reduced the instances of disease, but as more people are choosing to use the hospital, they are hopeful that it has helped.

It was easy to see that Iana and Adam had enjoyed their experiences in Matunda and had learned a lot from the project.  They have kept in touch with many people that they met in Kenya and are still getting updates on how the water system is faring.

EWB mostly consists of engineers, but they also need anthropologists, educators, statisticians, sociologists, health professionals, public health experts, scientists, business people, and artists to help with projects.  If you are interested, check out their website at www.ewbny.org.

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Brain Connectivity through Functional MRI

Last night, IEEE’s Computational Intelligence Society hosted a talk by Dr. Bharat Biswal about his latest imaging research on brain connectivity.  He first explained the difference between a traditional MRI image and a functional MRI (fMRI) image and compared them to information obtained from a digital camera.  A digital picture is one moment in time and has a high resolution – similar to a single MRI image.  A video taken from a digital camera is lower resolution but gives information about what happens over time – similar to fMRI.  An MRI image resolution is 1mm3 and takes about 5-7 minutes to produce while fMRI resolution is 3.75mm3 and takes about 2 seconds.  You can then overlay your findings from the fMRI onto an MRI image to see the regions of activation.

He has run a variety of imaging experiments using fMRI to find areas of activation and connectivity.  Resting state used a black screen to attempt to be a baseline (though it is difficult to baseline subjects’ brains since you can’t control what someone is thinking or feeling while looking at the black screen).  He then imaged subjects while performing various exercises like finger tapping and also exposed subjects to increased CO2 levels to change their hemodynamics.  He was able to find reliable, reproducible areas of connectivity across patients.

Since much work has been done using fMRI to image brains, he also collected data from other researchers to increase sample size.  With over 1,000 subjects, he was able to break subjects into categories for comparisons.  He looked at young and old persons, male and female, those with mental illness and those without.  In every comparison, he found differences and correlations between groups.  Much more research must be done before brain connectivity is fully understood since activations only accounts for 7% of brain activity.

It was a very interesting presentation, and I’m glad that I went!

*The talk was also hosted by Fordham University’s Information Fusion class taught by Dr. Frank Hsu.  A big thank you to Dr. Hsu, his class, Dr. Biswal for his presentation, and Dr. Ravi Rao (chair of IEEE’s New York chapter of CIS) for allowing me to attend.

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My Star Wars Ring

Today I spent six hours in a 3D printing workshop sponsored by MakerBot and The Yard.  We were introduced to the basics of several programs, such as OpenSCAD, ReplicatorG, Tinkercad, Blender, meshmixer, and netfabb.  We also learned about Autodesk’s 123D Catch application for using a series of photos to develop a 3D model.  And, of course, we had two MakerBot Replicators to play with as well.

During the class, we printed our own rings and chose the design for the top.  The rings were printed from MakerBot’s Curriculum section.  Then we either designed our own topper or chose an item from THINGIVERSE to modify.  I chose the Rebel Alliance logo for my ring top!  I used my newly learned skills (with a little guidance) to increase the depth of it and add a notch for the small magnet to go.  (The magnets in the rings and ring tops allow you to change tops easily.)  And then, voila, I had my Star Wars ring!

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“Mining Big Data to Find New Markets”

Want to reduce the time your used car spends at the repair shop?  Buy a used car in an unusual color – like orange.

Want to drastically increase sales on your site?  Change your font color.

These are just two examples given by Manish Goyal and Homayoun Hatami (both from McKinsey) in the latest Harvard Business Review webinar entitled “Mining Big Data to Find New Markets”.  In the first example of the used car, delving into big data discovered that owners of cars with unusual colors take better care of them, so if you buy it, you’ll most likely have less repair costs.  In the second example, Google tried out dozens of shades of blue on 1% of their pages and found one hue that really made a big difference in clicks.  This color change netted them $200 million in revenue.

Got your attention?  Well, it got mine too!  So what is “Big Data”?  It’s the use of large data sets – both internal to the company and external – to take the guesswork out of selling.  It came about in the past few years as companies had limited resources and wanted to use them more effectively.  They found that by using data from multiple sources, they could more effectively target markets (even micromarkets) and use the data in real-time to make real-time decisions.  Companies are now able to use this data to increase growth and cut costs.

Where is Big Data?  It comes from multiple departments and requires a cross-functional team of about 4-5 people to analyze the data and make the findings understandable and usable by sales and marketing.  They must be able to sell the sales reps and marketing department on the findings.  If you can’t make them believe it, then your data analysis has failed.  The process can’t be a black box.

How can small- to medium-sized companies use it?  They must narrow down their choices to 3-4 sources of data to consider (i.e. sales rep coverage, partnerships, competition, etc.), only looking at what’s practical.  You may not be able to get detailed targeting of micromarkets, but you will gain some insight.

How does Big Data affect traditional sales?  Big Data changes conversations from outcomes-based to coaching-based, which improves communication and increases cross-functional cooperation.

There is risk to using Big Data, however, as your internal data may not be completely accurate, and it may not overlay on external data well.  Also, the analytics for this process can be very complex.  This process must be seen as a journey of lessons and discovery.

For more information on this topic, the speakers from the webinar suggest the following book: “Sales Growth: Five Proven Strategies from the World’s Sales Leaders”.

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Fools Ring the Bell

The crew from The Motley Fool launched their Worldwide Invest Better Day campaign by ringing the bell at the New York Stock Exchange yesterday.   The night before the bell ringing, they hosted a Fool Community Meetup in Midtown where fans and supporters could visit with each other and meet some of the people from The Motley Fool.  I had the opportunity to meet Tom Gardner (CEO and Founder), David Gardner (Founder), Andy Cross (Chief Investment Officer), Ron Gross (Lead Advisor of the Million Dollar Portfolio), Greg Robleto (Director of Community and Social Media), Alison Southwick (Media Relations), and several Fool supporters.  We discussed stocks, companies, the latest financial news, and the Invest Better Day that will occur on September 25th.  It was a really fun evening.  And I even got a Fool hat!

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