CORNELL BUSINESS

An independent student publication

Diversity Feature The JOBS Act Investing in Local Farms
Student perspectives on diversity,
from its fundamental meaning to its
value to its impact on the bottom
line...pg 5
Since 2008, the world of fnance has seen
almost nothing but regulation, a nearly 180
degree about-face from the deregulatory era
of the eighties, nineties....pg 3
Students returned to campus to fnd personal
boxes of fruits and vegetables, delivered to
Sage Hall through a new partnership with
Sacred Seed Farm ....pg 7
Vol.LXXIX Samuel Curtis Johnson Graduate School of Management October 25
th
, 2012
By Aritra Bandyopadhyay
MBA 13
Our strategy is to
do a lot of things! So
replied a bemused Eric
Schmidt to a question
critiquing Google`s prac-
tice of releasing the largest possible range
of products -- contrary to the focused fac-
tory theory of relative competitive ability
taught in most MBA strategy courses. But
it isn`t those who take strategy courses
who run Google. Rather, Google is an
engineering-driven frm run by computer
whizzes Larry Page and Sergey Brin,
whom Schmidt affectionately referred to
as the boys until recently.
On Product Development
Citing Google`s self-driven car as an ex-
ample, Schmidt identifed only two ques-
tions as relevant when making product
decisions: is there a need for it? and will
it be used? In the case of the self-driven
car, his answer to both questions was
a resounding, yes -- especially as the
product is complemented by Google`s
prowess in mapping and real-time deci-
sion-making. Schmidt admitted that he
hasn`t a clue how this venture will gener-
ate revenue. However, he also declined to
make monetization a concern. Instead, he
expressed confdence that Google would
be able to serendipitously identify a way
to monetize once the product was adopted
by one million users (remember Gmail?).
On Leadership
Schmidt stated that the key to maintaining
Google`s famed entrepreneurial culture
was to have its founders continue to play
the part of internal disruptors. As startups
grow, employees start looking for career
paths, middle management forms, and
processes that slow down the company
emerge. Google prevents this outcome by
embracing change. For instance, when
Larry took the helm as CEO, he replaced
Eric Schmidt Delivers Guest Lecture at Johnson
By Evan Charles
MBA 13
Johnson students
have the entire Cor-
nell community at their
fngertips. This is one
of the driving forces that
turning Sage Hall break-
out rooms into incubators of entrepreneur-
ial success.
Among the most distinct opportunities
available to Johnson students is leverag-
ing the wider Cornell network and collabo-
rating with students in other departments
and this is precisely what happened
when a company named Flicstart was
founded during a course in the basement
of Sage.
Flicstart is a website where users can
suggest a movie to be screened at a local
theatre. Others can then vote to watch
the same flm and, if a critical mass of
potential viewers signs up, the movie is
then shown at a nearby theatre.
The company describes this process as
"flling empty seats by empowering movie
lovers to demand any content at their
local theater. It appears to be a win-win
for movie theatres and viewers alike with
empty theatres being flled by motivated
moviegoers.
What makes Flicstart unique is that it is
a collaborative effort between a Johnson
student, Jeff Cloetingh, MBA `12, and
students from two other Cornell schools,
recent Arts undergraduate Andrew Schoen
and Master of Engineering student Paul
Yang. The three partners combined their
skills to create a company that has the
potential to alter the media landscape.
It all started in a Johnson course, NBA
5640 - Entrepreneurship and Business
Ownership, where professors David
BenDaniel, Steven Gal, and Rhett Weiss
guide students through the business plan
development process each semester.
"Specifcally, what we do in the class-
room at Johnson is directly applicable
to the real world, says co-founder Jeff
Cloetingh. "The critical questioning by
the professors and [guest] entrepreneurs
forced us to think on our feet about the
viability of the business. That experience
was instrumental in being able to develop
our idea.
The Flicstart business itself is not capital
intensive and there is little fxed cost.
Moreover, the group won the Hemmeter
award which recognizes the Johnson
business plan most likely to succeed and
grants teams initial seed funding.
Friday, September 28 marked the
company`s launch event at Cinemapolis in
Downtown Ithaca, where cult classic The
Room was played. Cornell senior Mayda
Dorak proposed the movie, enlisted others
Johnson Student Startup Leverages Cornell Community
Flicstart website hatched from Johnson NBA 5640 course
the seasoned executive team with a group
of thirty-something executives notable for
their deep technical knowledge and betting
on their ability to manage people. This de-
cision set the entrepreneurial clock ticking
again at Google.
Page and Brin have an inordinately high
appetite for risk, Schmidt recounted. For
instance, in the early days when Google
had no cash, Page wanted to risk every-
thing on the venture by dint of the rationale
that we have nothing to lose. Yet, years
later, when Google had a billion dollars in
cash, Page remained unchanged -- this
time reasoning that we have a lot more
we can risk."
Clearly, said Schmidt, they went to a
different thinking class!" But he also noted
that Google had amassed many of the
brightest people in the world in order to
keep delivering on such risky ideas.
On Culture
Schmidt also provided insights on how
Google`s entrepreneurial spirit and ap-
petite for risk is backed by a collaborative
decision-making culture. He asserts that
the best decisions are those made col-
lectively, and that the worst meetings are
those where consensus is reached without
confict. A good leader will incite confict by
calling forth dissenting voices that lead to
real conversations and stronger decisions.
On Business Models
Although online ads represent a majority
of Google revenues, Schmidt thinks that
mobile ads should be worth much more
than PC ads. Mobile ads have the poten-
tial to be more personal, location-aware,
and interactive. Yet, this promise has
yet to reach fruition. Schmidt cites many
reasons ranging from limitations of the
small screen to the mobile format, while
also noting that Facebook is facing even
greater challenges in monetizing mobile
ads. In fact, the entire Internet industry
is undergoing this transition and Schmidt
believes it is Google that will devise a
solution.
On Mergers and Acquistion
Finally, Schmidt delved into Google`s ac-
quisition of Motorola in May 2012, under-
scoring the ingenuity of the deal structure
(the fnance team had raised $13bn by
leveraging offshore funds that could not be
repatriated to the United States, rendering
the acquisition effectively free). He also
cited smaller deals, including Android and
Urchin (now Google Analytics), as being of
greater interest insofar as they were initi-
ated by Google product teams that then
worked to scale the acquired frms into
proftable business.
Listen to audio excerpts
from the Schmidt lecture at
www.CornellBusinessJournal.com
to vote for the screening via Facebook,
and attended the event in which over 100
tickets had been sold. Dorak described
the event as a success that showed the
potential of this Johnson start-up.
Johnson Dean Dutta has stated that
being embedded within Cornell, one of
the most diverse Ivy League universities,
makes Johnson peerless in its position to
collaborate with other disciplines outside
the business school. Flicstart under-
scores this distinction and may prove a
precedent for the work that will increas-
ingly take place in the breakout rooms of
Sage.
2 October 25
th
, 2012 Samuel Curtis Johnson Graduate School of Management - News Vol.LXXIX
By Sanjeev Goluguri
MBA 13
On August 28, Indian
central bank chief Dr.
Duvvuri Subbarao
addressed Johnson
MBA students and
faculty in Sage Hall.
Subbarao focused his talk on lessons
learned from the global fnancial crisis.
According to Subbarao, there once
existed a popular notion that emerging
nations would be insulated from the
impact of an economic downturn no
matter what happened in developed
nations - due to the improved risk
management, foreign exchange reserves,
and other preparedness measures.
The global fnancial crisis proved this
decoupling theory to be false, as nearly
every country in the global economy,
including India, has been impacted by the
crisis.
No country can be an island, said
Subbarao. The response of emerging
economies should not be to pull away
from the rest of the world, but rather to
maximize the benefts of being part of a
global economy while minimizing costs.
He pointed to India`s 9.3% growth rate
Lessons Learned from the
Global Financial Crisis
Dr. Duvvuri Subbarao, Governor of Reserve Bank of India,
speaks at Johnson abot lnd/a's response to the hnanc/a/ cr/s/s
Ahead Of The Curve
Quick Media Hits
By Natalie Lin
MBA 13
CULTURE
Zeitgeist
The zeitgeist, as
captured by trending
Google search queries, was abuzz from
September through October 2012 with the
following matters of interest:
BUSINESS
Finance
U.S. economic reports showed surges
in retail sales (1.1%) and housing
starts (15%), as well as a decline in the
unemployment rate (7.8%), in September.
China's centraI bank (PBOC) pumped
265 billion yuan, or $42 billion, into money
markets to keep rates low and spur
growth.
Technology
The SEC began probing Facebook's (FB)
IPO amid the stock`s steep decline and
allegations of inadequate risk disclosures
by the online media company.
Google (GOOG) shares fell 9% on
October 18 following the mistaken early
release of its 3Q earnings report, which
showed revenues up 45%, net income
down 20%, and rising operating costs
compared with the same period last year.
Apple has issued invitations to an
October 23 press event. At the time of
CBJ publication, rumors centered on the
launch of iPad Mini, MacBook Pro 13-inch
with retina display, and new iMac and Mac
Mini products.
Marketing
Felix Baumgartner`s space jump photo
generated over 215K likes, 10K comments
and 29K shares on Facebook in 40
minutes. Half of all worldwide trending
Twitter topics were related to the Red Bull
Stratos event.
SustainabiIity
The Toyota Prius hybrid became the
best-selling vehicle in California this year
an indicator that rising fuel costs have
increased demand for fuel-effcient cars.
Songdo, Icheon City in South Korea
has been selected as the future United
Nations Green Climate Fund HQ. The
Fund will oversee $100bn in annual aid to
developing nations by 2020.
UNIVERSITY
Johnson
BIoomberg Businessweek names
Johnson as the leading MBA program
among the top 30 U.S. programs for
internship conversion, with 74% of
students reportedly receiving offers.
To evaluate curriculum effectiveness in
preparing students for the job market,
Dean Dutta has invited Class of 2013
students to complete a Curriculum
Review Survey. Responses are due on
October 28.
Cornell
CornellNYC Tech released new images
of the Roosevelt Island campus with
preliminary renderings of net-zero energy
buildings. Beta classes are scheduled
to begin in January at Google offces in
Chelsea.
Rising Google Searches
Location: United States
Search Term Growth
(keywords appear in bold) Rate (MoM)
1. Canadian teen Amanda Todd's death, under investigation Breakout
for links to bullying online and in school, attracts tips from > 5,000%
online hacker groups.
2. The 2012 presidentiaI debates occurred on October 3, 11, Breakout
and 22, generating criticism of POTUS`s passivity on 10/3 and > 5,000%
an internet meme for Romney` "binders full of women"
comment on 10/11.
3. With Halloween season approaching, consumers are on the > 190%
hunt for HaIIoween costumes online.
4. New York Yankees landed in the media hot seat following the > 190%
injury of team captain Derek Jeter and their early elimination from
the MLB playoffs.
5. Entertainment website WorIdStarHipHop's video of a Cleveland > 130%
bus driver assaulting an unruly passenger ignited a frestorm
of attention for its brutality.
6. Korean pop singer Psy`s hit single Gangnam Style inspires > 130%
ongoing parodies and has reportedly generated $50mn revenue
according to CNET.
in the 3 years leading up to the crisis
and attributed much of that growth to
globalization.
Subbarao also highlighted the danger
of assuming fnancial stability to be an
automatic byproduct of central bank
growth and infation policies. He opined
that fnancial stability should be treated
as an explicit variable in policy decisions,
and pointed to fnancial instability in
Europe and the U.S. subprime mortgage
crisis as examples of how fnancial
instability can arise despite policies to
support growth and restrain infation.
"If you have fnancial stability for too
long you should be uncomfortable, said
Subbarao. "There is a risk you will be
blindsided to some of the cancer building
underneath, as indeed happened in
America during the subprime crisis.
Subbarao acknowledged the real-
time detection of fnancial instability as
a key challenge. Quoting Stan Fisher,
economist and current Governor of the
Bank of Israel, he remarked that "the
fnancial system can go on and on for
much longer than you believe it can, and
when an implosion takes place it can be
much more disastrous and much more
catastrophic than it need be if we took care
of it.
Indicators such as the credit/GDP ratio
may not always point to fnancial instability
- especially in emerging economies like
India, where the growth rate is relatively
high. Special attention would therefore
need to be paid to creating policies that
explicitly support fnancial stability.
Capital fow and exchange rate
management are likewise problematic -
not just for emerging nations, but for all
economies. Prior to the fnancial crisis,
popular conception held that it was
inappropriate for countries to intervene in
capital markets.
Now the world view has changed,
Subbarao observed. To balance risks with
returns, the new orthodoxy post-crisis is
that countries can intervene in foreign
exchange markets for their own good and
for the good of the world.
Subbarao suggested that there could
be new norms for infation, growth, and
employment than what economists
understood before the global fnancial
crisis. For example, if the new norm for
infation in America is lower than what
it was before the crisis, then to target
a higher infation would be costly." The
diffcult task facing many economists
around the world will be to understand
those new norms and shape policy
accordingly.
Subbarao also discussed the need for
fnancial inclusion in India, and pointed
to the success of mobile banking as a
manifestation of government efforts to spur
change. Aided by the rapid proliferation
of mobile phones across India, every
Indian household should ideally have an
operational bank account that enables
families to remit savings as well as gain
access to credit and micro-insurance
facilities.
When asked about the infuence of
corruption on growth in India, Subbarao
identifed corruption as an inhibitor to
growth and inclusion, especially at the
bottom of the social pyramid; but he also
espoused an optimistic view. "Today there
is much greater awareness and demand
for accountability in private institutions and
the government and much more of it
playing out in the media.
The talk was organized by Professor
Melvin Goldman with assistance from
Chris Orimoto, MBA `13.
Vol.LXXIX Law - Samuel Curtis Johnson Graduate School of Management October 25
th
, 2012 3
By DanieI Sternberg
MBA 13, JD 13
In its simplest form, a
share of a person would
entitle the holder to a per-
centage of that person`s
net income. Parts One
and Two of this series ex-
plored the ethics of such a scheme and how
it might interact with corporate governance
laws in the United States. Having estab-
lished that, in theory, a person could legally
securitize themselves (with a few caveats),
the question naturally follows as to whether
once sold a secondary market could be cre-
ated for shares of people.
Assume that once a share of a person`s
stock is sold, it is unrestricted. This makes
sense for a number of reasons. First, major-
ity control never leaves the person being
securitized. This means that the duties
towards the minority holders should be the
same regardless of who the minority holders
are. Second, a freely operating secondary
market would facilitate the sale of additional
shares, should a person wish to raise ad-
ditional capital.
However, to have a functioning secondary
market, it must be possible to value a share
of stock. When dealing with people, this
becomes a sensitive issue. How does one
value a life and, as a corollary, should one?
Society routinely value a person`s life. When
one buys life insurance, actuarial tables are
used to compute a person`s earning poten-
tial and how much would be lost by the fam-
ily should they pass away. In personal injury
cases, juries are routinely asked to put a
dollar amount to a person`s life or limb. The
fnance sector would not be any different in
this respect. Placing a value on a person`s
future earnings are nothing new.
Whereas insurance companies try to
fnd an average value for coverage and a
wrongful death suit relies on either a judge
or jury to determine a fgure, markets can
be more effcient and more customized. Just
as traders in the market value a business,
the same tools may be readily available
to value people. A publiclly traded person
could be required to disclose their assets,
liabilities and earnings for a number of years.
This could provide trends. Similarly, many
businesses pay employees according to
a predetermined scheme, providing some
degree of predictability (some might argue
more than in the business context).
One model potentially well suited to
personal stock valuation is the Gordon
Growth Model. Simply stated, the model is
simply the expected dividend the following
year divided by the required rate of return
minus the growth rate. Although this model
describes a perpetuity and people, by their
nature, will not earn money forever, it may
be a reasonable approximation. Over time,
based on actual performance, the models
could be refned.
An unexpected consequence of adapting
fnancial tools to personal stock valuation
is that a person`s share price could then be
incorporated back into insurance and per-
sonal injury law. For example, in a wrongful
death suit, compensation could simply be
a person`s market cap. Similarly, an injury
could be valued as the market cap before
the incident and the market cap after.
Overall, it appears possible that the idea
Milton Friedman pontifcated of fnancing
education through sale of personal stock
would be possible and could have benefcial
applications to other areas of society. All
that remains is for a brave soul to actually
implement it and see if the practice follows
the theory.
In the March and April 2012 edi-
tions, Sternberg laid out a scheme
in which a person may sell shares
of themselves. Read Part One
of the series at http://bit.ly/Peo-
pleCorp-p1 and Part Two at http://
bit.ly/PeopleCorp-p2.

People Are Corporations Too
The Epic Conclusion, Part 3 in a Series
By Milson Yu
MBA 13, JD 13
Since 2008, the world
of fnance has seen
almost nothing but
regulation, a nearly 180
degree about-face from
the deregulatory era of the eighties, nine-
ties, and early naughts. But as Congress
and regulators preside over the rework-
ing of Wall Street practice, a sliver of
unlikely legislation peeks out from behind
Dodd-Frank: the Jumpstart Our Business
Startups Act (JOBS Act).
President Obama signed the JOBS Act
into law on April 5, 2012. A specimen of
rare bipartisan cooperation, the Act was
designed to boost job creation by permit-
ting smaller startup companies to reach
needed capital without many of the bur-
dens placed by the federal securities laws.
Traditionally, companies hoping to raise
capital by selling securities (such as com-
mon stock) had two main options: (1) sell
their securities publicly after submitting
to a lengthy registration process with the
SEC (e.g., the IPO); or (2) avail them-
selves of one of the SECcreated exemp-
tions to registration and offer securities to
select investors. In response, the JOBS
Act relieves emerging growth companies
(EGCs)-a statutorily defned category of
companies encompassing most start-
upsof certain IPO process restrictions
and helps new public companies comply
with the regulatory landscape. For private
companies not considering the IPO option
(yet), the JOBS Act gives them an easier
time staying private. Finally, the Act ad-
dresses the registration exemptions noted
earlier by relaxing some requirements for
existing exemptions and formally recog-
nizing a popular yet controversial new
exemption: crowdfunding.
In this era of fnancial reregulation, de-
creasing formal compliance requirements
seems questionable, even folly. But many
commentators have indeed lauded the
passage of the Act, noting that easement
of the strict rules regarding capital raising
The JOBS Act
More than Mere Lip Service?
in U.S. markets-in a reductionist sense-
will spur entrepreneurship, one key tenet
for job creation.
Feedback has not been unanimously
positive. In certain regards, the Act`s initia-
tive to stimulate job growth strikes at many
wrong targets. While the EGC defnition
has certainly been wellcrafted to envelop
most entrepreneurial companies, access
to the capital markets is critically a fringe
goal. EGCs who wish to go public would
likely have done so without the provisions
of the JOBS Act, and those who may be
toying with the idea are now at best only
marginally incentivized to walk the IPO
route. In other words, cost is a marginal
issue when it comes to exit options; the
better variable here is opportunity window.
Such an analysis inquires whether the
market will even appreciate new entrants.
As Richard Truesdell of Davis Polk &
Wardwell notes, the issue with demand
for IPOs, not supply. After Facebook`s
disappointing entrance to the NASDAQ
earlier this year, the IPO scene has all but
dried up. For EGCs, this means that timing
and opportunity play an even more critical
role: The IPO for startup companies is
not only a capital raising tool but a signal
to the world of stolid business reputation
and legitimacy-a reach for broad market
approval. It simply is not a short-term
endeavor. Thus, assuming the reduced
hurdles to market actually ignite a moreth-
an-marginal increase in EGC interest for
the IPO, market conditions may imply that
investors do not yet have the appetite for
more offerings.
But not all is lost. Though the JOBS
Act may not immediately begin spurring
capital, and thus job growth, it is certainly
a move in the right direction, especially
given the legitimization of crowdfunding
and the new relaxations for registration
exemptions. Indeed, the SEC has yet to
promulgate new agency rules pursuant to
the Act that will hopefully help streamline
the Act`s blunter provisions and push the
Act`s operative arms closer to its mandate.
By Kirk Sigmon
JD 13
An unconventional intellectual property
business strategy is working remarkably
well for some businesses: not enforcing
intellectual property rights.
Intellectual property rights provide a
limited legal monopoly that is, they provide
rights-holders the legal power to prevent
competitors from using the invention they
invented or creative work they made.
Most modern companies, especially in
the technology sector, rely on these rights
extensively. Accordingly, most companies
are highly aggressive in both pursuing proft
from their intellectual property rights as well
as in suing those who infringe upon those
rights. For example, movie studios seek
to prevent others from stealing the movies
they produce.
But a new strategy has become equally
effective: deliberately not enforcing intel-
lectual property rights. Intentionally relin-
quishing some control over intellectual
property can be proftable, as it can not only
encourage the rapid adoption of technolo-
gies that support companies` more proftable
business ventures but also act as its own
marketing strategy.
The dual-license strategy that Oracle
uses with MySQL is one such example.
MySQL, a database system that is licensed
for free as a community edition and for
an annual fee as an advanced enterprise
edition, employs a dual-license strategy al-
lowing programmers to develop for free with
MySQL while also allowing advanced users
-- companies like Wikipedia, Google, and
Facebook -- to pay for access to advanced
tools and features. Thus, while Oracle and
former owners of MySQL could charge all
users a fee, they focus instead on smaller,
more advanced, and more lucrative seg-
ments of the user base. As a result, MySQL
is now integrated into a large number of
web servers worldwide. By lessening its
grip over rights to MySQL, Oracle and its
predecessors have effectively encouraged
rapid adoption of MySQL while still reaping
substantial profts.
Even artists proft by being relaxed with
intellectual property rights. Where com-
panies and artists earn razor-thin margins
on the sales of their releases, it may make
sense to temporarily forego profts in order
to guarantee greater returns from subse-
quent commercial releases. Some artists
and entertainment companies have found
it proftable to encourage derivation - even
outright piracy - of their works rather than
adopt traditional sales and marketing tech-
niques. Up-and-coming artists like George
Barnett have fostered popularity by putting
their works on illegal downloading websites
and by advertising these works as free, in
essence getting free PR at the expense of
profts from sales. Already popular bands
like Nine Inch Nails have also used this
strategy to great success.
Serious risks to a non-enforcement strat-
egy remain in place. In competitive indus-
tries, especially those with high R&D costs,
failing to enforce IP can be a costly mistake.
Moreover, dual-license models may incur the
ire of paying customers.
Yet, the trend underscores the need for
businesses to know their markets and cus-
tomers. There is a time to sue and there is
time to refrain from litigation. Knowing which
is tactical maneuver to employ when can
create signifcant and sustainable competi-
tive advantages in the marketplace.
The Value of Not Enforcing
Intellectual Property
IP business strategy drives market demand for products
4 October 25
th
, 2012 Samuel Curtis Johnson Graduate School of Management - Finance Vol.LXXIX
Cornell
Business
Editors in Chief
Natalie Lin,
Sandeep Thalapaneni
Managing Editor
Sanjeev Goluguri
VP of Advertising
Karlin Keller
VPs of Marketing
Piya Dey, Maggie Gu
Contributing Editors
Veronika Andreeva,
AB Bandyopadhyay
Anthony Brough, Murat Sen
Daniel Sternberg, Milson C. Yu
Creative Director
Michael Beck
Senior Staff Writers
Evan Charles, Kirk Sigmon
Contributors
Jennie Fung, Abhay Jain,
Venkat Kommineni, J. Shakir Ramsey,
Tom Stokes, Brian Stuckey,
Demetri Typadis, Laura Stewart,
Myria Antony
By Myria Antony
Exchange Student
Facing slow growth,
high infation and
economic paralysis, the
government of India
recently relaxed FDI reg-
ulations to ease the business environment
of foreign MNC`s by allowing 51% FDI in
multi brand retailing. Even though this has
caused huge criticism from opposition par-
ties and the withdrawal of a coalition part-
ner, the government has stuck by its deci-
sion saying that the regulation will provide
a timely boost to an ailing economy. Each
of the country`s 29 state governments has
been given the power to decide whether
they will allow foreign owned outlets or
not. The younger generation of Indians
are open and eager to this move as they
already prefer foreign brands and they
believe that this move will beneft the
country. However the older generation of
Indians are not excited by the change in
dynamics from family owned shops to big
malls and they worry that foreign MNC`s
will siphon profts and drive small busi-
ness owners out. Leaders of most Indian
states have refused to allow entry to these
retail brands. Analysts relate this refusal to
the age of these leaders (65 and above).
The Indian Prime Minister Mr. Manmohan
Singh in a rare address to the country has
outlined the benefts such as job creation,
improved effciency in supply chain and
reduction of the current account defcit
which is burgeoning at the moment.
The introduction of malls and foreign
brands in cities across India has been a
huge boon to the younger generation who
spend most of their income and time in
these places. The retail landscape in India
has changed with changing tastes, in-
creased purchasing power and real estate
development. Retail brands like Benetton
are growing more than 20 percent a year
in India and this provides a huge opportu-
nity for retailers.
I completely agree with the present
government`s decision to allow 51% FDI
in multi retail brands. India, which was
known as the economic super power with
growth rates of 9 percent a few years ago
is now undergoing economic paralysis with
growth rate forecasts of approximately 6
percent. In such times bolder reforms by
the government is very much needed to
get us back on track. The positive infows
since liberalization in the 1990`s have be-
gun to stall and although this is partly due
to the global economic slowdown, there
have been calls to improve the business
sentiment for foreign investors in India.
The government allows 100 percent own-
ership in sectors such as agriculture and
industry hence a further commitment to
open up investment in retail is a necessary
step forward. Not only will this improve
economic sentiment but it will also plug the
current account hole.
Job creation is another beneft of this
reform. In the past, even when corporate
retailers have entered, small time retailers
have still added jobs so there is no reason
to think that jobs will be lost when foreign
frms enter. The present supply chains are
highly ineffcient with food kept rotting in
storage and red tape preventing the food
from reaching the people who need it. Al-
lowing foreign players to enter will create a
more effcient supply chain that will lower
costs and also decrease infation which is
currently extremely high. The farming sec-
tor will get a boost as foreign retailers will
not only source directly from them (getting
rid of the bottlenecks in-between) but they
will also invest in technology that India
currently lacks. Tax collections from these
companies will also provide additional
sources of much needed revenues for the
government. The younger generation is al-
ready accustomed to foreign retail brands
and hence these reforms will continue
beneftting them by giving them the best
deals possible.
Foreign frms however will face hurdles
due to ineffciencies and roadblocks in the
Indian system. With some states refusing
this reform, it will be diffcult for foreign
retailers to roll out nationwide operations.
Additional regulations regarding invest-
ment size, where they must invest and
sourcing limitations (regulation states
that multi-brand retailers must source 30
percent of their goods from local small
and medium sized enterprises) will pose
challenges. It is not easy to replicate an
existing model from abroad and these
companies will need to adapt to the Indian
market and fnd ways to overcome institu-
tional hurdles. However I believe that the
rewards from these will be enormous for
foreign companies as India with its grow-
ing population represents huge revenue
and growth opportunities. The new ruling
is also a positive step in the right direction
for both, the country`s FDI levels as well as
for the retail sector.
Foreign Direct Investment
in India
Allowing Foreign Direct Investment is a positive sign for the
Indian Economy
By Demetri Typadis
MBA 13
Mark Zuckerberg`s
assertion that Face-
book`s poor stock per-
formance arises from a
faulty mobile strategy
is a sign of much larger
issues facing the company.
Facebook has encountered signif-
cant problems in the monetization of its
enormous user base. While the lack of
a credible mobile strategy is a major
concern, eroding investor confdence in
the company`s management team is the
real problem underlying Facebook stock.
A series of missteps made by the man-
agement team, Zuckerberg included, has
caused one of the most hotly anticipated
IPOs in recent history to fall fat on its
face.
As early as the pre-IPO roadshow,
when a hoodie-clad Zuckerberg was
out pitching the company to investors,
Facebook stock was doomed once word
spread that institutional investor demand
was low. Worse still, the management
team responded to low demand by
increasing the size of the IPO and raising
the share price a desperate effort to
drive artifcial demand. Instead, manage-
ment should have recognized the dif-
fculty of having a successful IPO without
institutional support, and it should not have
expanded the equity offering.
The stock took another hit after Face-
book`s frst quarterly conference call, when
management failed to offer guidance on
the company`s fnancials. The stock had
already been beaten up, and it fell further
still when management failed to recognize
the need for greater fnancial transparency.
Zuckerberg and the Facebook manage-
ment team built one of the fastest growing
tech companies in history, but they have
failed to establish the credibility necessary
to run a publicly traded frm of its size.
Despite being the largest-ever tech IPO,
Facebook stock has been crippled by this
problem. It is time for Zuckerberg to step
out of the spotlight and end his role as the
be-all-end-all decision maker for the frm.
Faith in his ability to run the company is
waning and investors are punishing the
stock accordingly.
Yet, it is not unusual for founding a
founding CEO to struggle with running
the companies they helped to grow into
behemoths. Facebook is simply the latest
example of this phenomenon. Zuckerberg
will not be able to accurately identify the
issues underlying poor Facebook stock
performance until he realizes that he is
party to the problem.
Zuckerbergs Faceplant
lnvestor conhdence nder//es Facebook stock performance
Vol.LXXIX Diversity Feature / Opinion - Samuel Curtis Johnson Graduate School of Management October 25
th
, 2012 5
By MichaeI Beck
MBA 13
This week marks the
start of the annual John-
son Means Business
and the Diversity Sym-
posium, taking place on
October 26 and Octo-
ber 27. The Symposium is designed to
showcase the vibrancy of Johnson, drive
awareness for diversity at the school, and
foster a supportive community.
Studies continue to show that diverse
workforces create vibrancy of thought
and innovation (http://bit.ly/DiversityIn-
novation). Too often, the discussion ends
there. This op-ed intends to speak to the
need for inclusion, how we can improve
inclusion at Johnson on a micro level, and
provide examples from my personal story.
While I am a champion for the continued
growth and inclusion amongst all diverse
groups at Johnson, much of my story
centers on the LGBT community as it is
the group I know best.
A survey recently conducted in India
found that 5 to 10% of the workforce iden-
tifed as LGBT (http://bit.ly/LgbtProductiv-
ity). The survey also found that LGBT
workers can lose up to 30% in productivity
from concealing their true identities at the
offce. It is often diffcult to quantify this
effect because of the legal issues around
companies directly asking their employees
if they are LGBT. Keep in mind there are
still 29 states in the U.S. where a worker
can be fred simply for being LGBT (http://
bit.ly/GayCheifExecs).
Before school, I worked for a relatively
conservative fnancial institution in the
Midwest. After identifying a need for
a LGBT employee resource group at
the frm, a colleague and I approached
management and HR to begin talks on
what it would take to create one. I knew it
was time for me to make a career change
when the response was that they didn`t
want us to create a group for people to
Let's discuss how we
dene diversity
As a second-year MBA
student at Johnson, I
have heard time and time
again how diverse our
student body is. Usually, I remark with a
chuckle, while elbowing the person next to
me in the ribcage. Why this reaction?
The Residential MBA class of 2013 has
approximately 34% international students
who supposedly represent 25 countries.
But when you look at the numbers, I think
you will fnd that the majority of those
students come from two regions: India and
East Asia. While I am aware that the popu-
lations of China and India, with over 2.5BN
people, make up over 35% of the Earth`s
population, having an overwhelming major-
ity of international students from these two
countries does not provide Johnson with a
diverse student body; but it does provide
Johnson with a student body that refects
the demographics of the planet.
What I would like to see from Johnson
is a list of countries along with the number
of respective students from that country. I
think you will fnd the number of South and
Central Americans, Europeans, Africans,
and Aussies are underrepresented if the
school`s goal is to provide a forum where
students with diverse perspectives and cul-
tural upbringings come together and learn
from each other.
In an extreme exercise of generaliza-
tion, when I think of whom our interna-
tional students are within the second-year
class, I come up with the following list off
the top of my head. South America: Alice
and Rodrigo. UK: David, Sam, and John
(Boston-Irish). Europe: Lev, Rita, and Giorgi
(Demetri doesn`t count). Africa: Derick
Appia-kubi. Australia: Colin. While I`m sure
that I`m omitting a fair number of students, I
think you get the picture. Let`s think of how
many Indian students you can name. Just
starting off with the A`s - we`ve got Anvar,
Angad, Anshu, Anshuman, Akshay, Abi,
Aditya, all the way through Venkat - need I
continue? (Since I`m Indian, I`m allowed to
meet and "hook-up". Oh wait, this stuff still
happens? Yes, it does.
As such, I`d like to use employment sta-
tistics from that company for an example
on productivity loss as a result of a non-
inclusive environment for LGBT workers.
We are MBA students. We like to quan-
tify everything. Here we go:
40,000 employees
Normal work week = 40 hours
Average annual pay = 50,000
Average hourly pay = 50,000 / 52
weeks per year / 40 hours per week
= ~$24
10% productivity loss due to lack
of inclusion = 40 hrs * .1 = 4 hrs per
week
Productivity loss per year per worker
= 4 hrs / week * 52 weeks = 208 hrs
per year
Given that 5-10% of a workplace
is presumed LGBT, we will use the
more conservative 5% to estimate
the LGBT population at this company:
40,000 *.05 = 2,000 LGBT workers
Total productivity loss (in hours) =
2000 employees * 208 hrs / year /
employee = 416,000 hrs
Total productivity loss (in dollars) =
416,000 hrs * ~$24 per hour = ~$10
million per year
Current and prospective students,
I challenge each of you to meet three
new people from a diverse background,
whether that diversity is a result of their
ethnicity, sexual orientation, or country of
origin, and truly make a concerted effort to
get to know them better.
There are multiple initiatives to increase
inclusion at Johnson, but it begins with an
individual effort. Shaping Johnson into an
increasingly diverse and inclusive environ-
ment is not solely the responsibility of the
Offce of Diversity and Inclusion. We each
have a responsibility to foster an inclusive
environment and expand our understand-
ing of different groups of people so we can
grow into true leaders in business.
crack this joke. Hopefully.)
My point is that I don`t believe the current
breakdown of international students is em-
blematic of the diversity that Johnson seeks
to engender. Let me also mention that I am
only discussing the topic of ethnic diversity,
and I am omitting the many other factors
that contribute to diversity socioeconom-
ics, gender, religion, sexual orientation
due to the fact that Cornell Business Journal
imposes a word count limit.
The Business Case for
Diversity and Inclusion
Point / Counterpoint
Student Perspectives on Diversity
By Venkat Kommineni
MBA 13
By Jennie Fung
MBA 13
Don't Dene Diversity
Diversity has become
a hot buzz word that is
heard every day and
everywhere. Yet it is very
diffcult to pinpoint its def-
nition. In fact, diversity cannot and should
not be defned.
Diversity has historically meant inclu-
sion of disadvantaged groups as based
on race, national or ethnic origin, gender,
and religion. Nowadays, the term refers to
people who are different in any way (e.g.
experiences, preferences, personality traits,
etc.). Some may argue that the broadness
of this defnition has made the term use-
less. However, diversity, at its core nature,
means variety. It is contradictory to further
defne the term by adding parameters, as
it is the willingness to include anything that
makes the term unique. It would be an
injustice to defne it any further.
The goal is not to defne diversity, but to
understand it in concept. Diversity is about
respect. It`s about appreciating differences
along a variety of dimensions. It`s about
creating an environment that nurtures
unique qualities. It`s about going beyond
tolerance and embracing what makes
people individuals. This is worth celebrating
every day. Celebrate by having an open
heart and mind. Celebrate by having at-
titude that is willing to explore. Celebrate by
interacting with people who are different.
Overall, diversity should not be pegged
down to ft in a particular box. It will lose its
charm once it is defned by specifc factors.
Let`s focus on its underlying message -
respect -- and celebrate our differences.
6 October 25
th
, 2012 Samuel Curtis Johnson Graduate School of Management - Diversity Feature / Opinion Vol.LXXIX
By Laura Stewart
MBA 14
Not since Glo-
ria Steinem has the
women`s movement had
a fgurehead, a beacon
to lead us out of the
oppressive darkness of
the kitchen and home, and more recently
the cubicle, and into the light. This is not
for lack of trying or viable candidates. In
the last few weeks the Johnson School of
Management as well as the university at
large have brought a plethora of strong
female leaders to campus to highlight
the adage, "where there`s a will, there`s a
way!
Michelle Bachelet, president of Chile
from 2006 to 2010, and current under-
secretary-general and executive director
of the United Nations Entity for Gender
Equality and the Empowerment of Women
spoke on "Women and the New Develop-
ment Paradigm. Karen Keating, Manag-
ing Director in the Investment Banking
Division of JPMorgan Chase, spoke to
a select group of women on the impor-
tance of fnancial independence. Finally,
Terri Duhon, best known as a member
of the team at JPMorgan that created
credit default swaps, spoke on "The role
of fnancial intermediaries - threats and
consequences.
While it is clear that Johnson and busi-
ness schools at large are making a solid
push for women to step into the spotlight,
it is not apparent that they are clear or
even agree on what that role in the spot-
light should be. The recent controversy
from Anne Marie Slaughter on whether or
not women can have it all highlighted this
conundrum further. Rather than embrace
Slaughter`s opinion that women are still
facing massive barriers in the workforce,
women immediately stepped up to claim
that they had it all and resented Slaugh-
ter`s stance.
Yet whether or not women have found a
successful manner to manage all their life
decisions (and they are life decisions as it
is impossible in this day and age to think
of work and life in two completely sepa-
rate realms), what women and business
schools need to understand is that women
are working towards the same goal: equal-
ity. The question now is how to achieve it.
The female speakers at Cornell spoke
of equality and advancement, but they
gave no solutions. All three speakers did
stress that the road ahead will be tough
for women; All three highlighted that they
had to fght for their position; but what
they didn`t say, and perhaps it is what is
needing to be said most of all, is that they
are here now, and are willing to fght for
the next generation. Gloria Steinem said,
"The future depends entirely on what each
of us does every day; a movement is only
people moving. And the women of Cornell
are ready to move, they`ve seen the way,
but when asked who will lead them out of
the cubicle and into the boardroom, they
are met with silence.
Women and Diversity
Accomplished business women need to lead the way
for the next generation
By Anthony Brough
MBA 13
It was a hot summer
in Kansas City, full of
new experiences. I ar-
rived in May, brimming
with energy and excited
to start my internship as an equity analyst
with American Century Investments. I
knew I would leave as a much better
analyst, but upon refection I`ve learned
far more than I anticipated. What follows
are a few of the unexpected lessons I`ve
picked up along the way.
--
When faced with a ght or ight situ-
ation, my brain chooses the Iatter. On
a hot night in June when I had my window
open because of a faulty air conditioner, I
awoke to the sound of gunshots and yell-
ing, followed by tires squealing, and fnally
police sirens. My frst thought was: wow,
I`ve never heard a shooting before in real
life. My second thought was: how did I
end up under my bed?
--
FunneI cake is awesome, but fnd a
pal to share it with. I fgured that I should
get the full Midwest experience by going
to my frst county fair. I had heard that
funnel cake was a must-try staple, and
it was everything I`d been promised and
more. However, no one told me that you
shouldn`t actually eat more than a third
of one yourself. I tasted that funnel cake
again and again over the next 48 hours.
--
Despite my Canadian roots, I can
adapt to hot climes. It`s been a record-
setting hot summer in the Midwest (it`s
107 as I write this). A few days ago I
was walking along the sidewalk thinking,
Gee, what a pleasant, mild summer day
this is!" Then I saw a sign displaying the
temperature: 95 degrees. As a person
coming from a place where an 85 degree
day prompts warnings for people to stay
indoors lest they melt and disappear into
the sewers, this caught me by surprise.
--
I'm not quite ready to run the Baja
1000 motorcycle desert race. After
watching some dirt track motorcycle races
in central Kansas, I decided to explore
some dirt and gravel back roads on my
dual-sport motorcycle. I got a little too
enthusiastic pretending to be a racer, and
ended up crashing into a ditch. Good
thing I listened to Konstantin Damm and
was wearing proper gear.
--
I miss the sounds of my kids fghting
and screaming. When I climbed aboard
my trust Kawasaki steed to embark on the
1,200 mile ride to KC, I waved good-bye to
my wife and kids saying, "Boy I`m gonna
miss you guys!" while thinking, "Man it`s
going to be a nice break!" Yet here I am,
calling them on Saturday mornings in or-
der to hear my wife yelling at my daughter
to stop beating on her big brother and at
my eldest son to let his little sister have a
turn with her own dollhouse. Ridiculous.
--
Wall Street isn`t 100% evil. I know,
you`re skeptical - but hear me out. I`m
quite proud that my current (and hopefully
future) employer created the Stowers In-
stitute for Medical Research and endowed
it with 40% of American Century`s ongoing
profts. The founder of American Century
donated over $2 billion to create a cutting-
edge facility where top medical research-
ers can focus on their work without wor-
rying about getting funding, trying to get
access to the right equipment, and other
administrative issues. It`s an interesting
twist on the idea of combining investing
and social good.
--
Maybe you can teach an old dog new
tricks after all.
Sketches from my Experience as an Equity Analyst
A Summer Equity Analyst in Kansas City shares his work
By J. Shakir Ramsey
MBA 12
As part of a four-year
Roy H. Park Leadership
Fellows service proj-
ect, J. Shakir Ramsey,
MBA `12, and Abraham
Spence, MBA`12 launched the Fatherhood
Program, a project for mentoring and pro-
viding positive male infuence on teenage
youth locked in the a maximum security
state prison facility in Brooktondale, NY.
Spence and Ramsey attracted lo-
cal media attention and revitalized the
program by restructuring it to include job
training and real-world skills like interview-
ing, goal-setting, fnancial planning, and
resume-building.
As is often the case with projects that
begin with good intentions, good work
is lost without a strong succession plan.
However, the MacCormick-Johnson Fa-
therhood Program continues to fourish as
class of 2013 Park Fellows John Sharkey,
Tony Lesmes, Gerald Smith, and Mike
Weaver have taken up the mantle.
When asked why he decided to become
involved, Smith refected on his own
upbringing without a father fgure. "Em-
powering these individuals could not only
alter the trajectory of the inmate`s life but
also change the life of their children for the
better.
I care about the future of our country
and I want to help inspire these troubled
young men to be productive members of
their communities when they leave prison,
said Sharkey.
Over the past year, the Fatherhood Pro-
gram has not only endured it has thrived
with double the number of volunteers, and
its impact has increased as a result of
greater fexibility in the length and number
of prison visits made.
It is important to mentor incarcerated
young men so that they too can get the
guidance they need to be more successful
at navigating this world, said Weaver.
"Our hope is to replicate what Shakir
and Abe created last year, said Lesmes.
Both were engaging and powerful
speakers who garnered respect from the
students. Respect and authenticity is
crucial for engagement with these young
men. We have had tremendous success
thus far.
As a lasting legacy, the objective of the
Fatherhood Program is to enable mentees
to realize their potential by helping them
to reintegrate into society with more hope
and tangible skills. "Wounds can heal,"
observed the project leaders. Change can
begin.
Park Fellows 13 Carry the
Torch of Fatherhood Program
Vol.LXXIX Life @ Johnson - Samuel Curtis Johnson Graduate School of Management October 25
th
, 2012 7
By Tom Stokes
MBA 13
At the start of the
Fall 2012 semester, a
number of second-year
students returned to
campus to fnd person-
al boxes of fruits and vegetables await-
ing them. The boxes had been delivered
to Sage Hall through a new partnership
with Sacred Seed Farm. For the frst
time, Johnson students had allied with
local farmers to initiate a Community
Supported Agriculture (CSA) program.
A CSA involves a group of consum-
ers coming together and paying a local
farmer prior to the season to cover
the upfront cost (i.e. labor, seeds) and
spread investment risk (i.e. poor weath-
er, insect infestation) in exchange for a
share of the future harvest. Each week
during harvest, CSA members receive a
share, or box, of high quality produce
at lower cost than one would pay at a
grocery store or farmer`s market.
It includes most of the staples my wife
and I would otherwise buy from a gro-
cery store, says Bruce Armstrong. Not
Community Supported Agriculture Program Launches
Students Invest in Local Farmers
only am I getting better food, but I`m also
helping a local small business owner.
The CSA provides a guaranteed
income for the farmer, and a source of
fresh, organic produce for the commu-
nity. Shares are conveniently delivered
directly to Sage Hall, where they are
stored in a closet at cool temperatures
until CSA members are able to pick them
up.
Thirty members of the Johnson com-
munity have become involved in the
program, contributing nearly $5,000 to
support the local economy.
The initiative has also been a fantastic
social experience. The group exchanges
tips, recipes, and meals to get the most
out of its weekly haul of produce.
We love it, say Ufei Chan and Mandy
Chu, who are splitting a share. "The
Johnson CSA is a great way for us to try
new dishes and round up our friends for
potlucks."
With plans to keep the initiative run-
ning for years to come, and dozens more
students and staff members expressing
interest in participating, the program is
now concerned with fnding additional
storage space for next year.
By Abhay Jain
MBA 14
Much like most frst
year students, stepping
through the doors of
Sage Hall in early Au-
gust I was enthusiastic
and full of ambition. Fast forward a month
and it seemed like I barely had enough
time to sleep most days. My friends
informed me that a phenomenon called
'FOMO` was to blame. I realized I needed
to take action quickly and prioritize. I knew
that the most important objective of my
frst year was to earn an internship. So, I
decided to reach out to some second year
students to ask them what had helped
them become successful during their sum-
mer experiences. In order to gain a broad
perspective, I reached out to students
who worked in different industries: Jose
Gaztambide (consulting), Uday Tumuluri
(non-proft), and Paul Rabanal (fnance).
First I called Jose, who had worked
for Deloitte this summer. Upon starting
his internship, Jose had to hit the ground
running. His clients were in healthcare, an
industry that Jose had no prior experience
with. In order to get up to speed, Jose
found himself researching the industry by
reading articles with any free moment he
could fnd. He knew that in order to be suc-
cessful, he had to contribute as if he were
a full-time employee and not just an intern.
His plan worked. As a result of his effort,
Jose was extended a full-time offer. When
I asked him what he would recommend
for students who want to get the most
out of their internship experience, Jose`s
response was simple: Nobody is going
to expect you to be perfect, but they will
expect you to be curious. Talk to everyone
and soak up all the information you can
get.
Feeling much more informed than I did
before, I decided to call Uday next. Uday
The Road to Internships
had worked for Endeavor Global, a not-for-
proft organization that connected high-im-
pact entrepreneurs with clients in emerg-
ing countries. Uday`s summer was spent in
Brazil as part of the EMBA program, which
provided consulting advice to these entre-
preneurs. His role had all the challenges
of most other internships, with the added
hurdle of having to learn a new language.
Luckily, with a positive attitude and the
help of google translate, Uday was able to
make insightful recommendations to his
clients, which are currently in the process
of being implemented. When asked what
advice he would impart upon his class-
mates, Uday recommended, "don`t restrict
yourself to just the on-campus job search.
Figure out what you really want to do, and
do it.
After having gotten two very diverse per-
spectives, I reached out to Paul who had
interned for Apple in their fnance division.
Even though Paul had prior experience in
tech and fnance, his internship was still
challenging. Paul`s team was very lean,
and as a result, he found himself with little
direction. It was upon him to fgure out
his own objectives, take the initiative, and
deliver. His summer culminated with all
the interns presenting their fnal results
live to the CFO of Apple. Paul capital-
ized on this opportunity to impress one
of the highest-ranking leaders within the
organization and thus walked away with a
full-time offer. According to Paul, the key
to his success was to work hard and "treat
the internship like a 3-month interview
process.
Armed with more advice than ever
before, I now felt my anxiety melt away. It
seemed to me that no matter what you do,
you would not be able to anticipate every
possible challenge that you might face
during your internship. What did seem to
be important was learning to take initiative
and following through.
8 October 25
th
, 2012 Samuel Curtis Johnson Graduate School of Management Vol.LXXIX
By Brian Stuckey
MBA 13
MBA Humor
Eric Schmidt Visits Johnson
On September 20, 2012, Eric Schmidt, Executive Chairman at Google, delivered a guest lecture in Professor Daniel BenDaniel`s NBA 5640 course, "Entrepreneurship
and Business Ownership. His impact has been marked.