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Google Zeitgeist October 15, 2012
The World We Design
>>Lorraine Twohill: Last session of today. This is very uplifting session to bring us
home for the day. Before we start, I wanted to quickly mention Jeremy's Icebreaker is
giving everybody a gorgeous Icebreaker T-shirt. You will find a card in your room you need
to bring to the concierge's desk to get your T-shirt. They are very, very cool. Thank you
Jeremy. This final session is called The World We
Design. We have a phenomenal moderator who is going to join us on stage, I want to introduce
Andrew Ross Sorkin, who is a financial columnist with the New York Times. We are thrilled to
have you here, Andrew. Andrew is also the co-anchor Squawk Box on CNBC and has written
a very famous book, Too Big to Fail. So Andrew, please come on stage. Thank you.
[ Applause ] >>Andrew Ross Sorkin: Thank you very much.
We've had a great couple of sessions this morning. And we're going to be talking to
a number of very special and amazing people this afternoon, who are going to be telling
stories and hoping to inspire us about new business models, habits, social and sustainable
mission and new ways to think about stories through photographs and motion pictures. But
before we do that, what I wanted to do, if I could, was to take a moment to speak briefly
about a theme that I imagine we're going to be hearing about a little bit this afternoon
from our presenters, especially those who are starting and creating and running emerging
businesses and emerging enterprises. It has to do a lot with their success and
the success as a result of what I'm going to describe as long-term thinking and patience.
And the reason I wanted to bring up this idea of long-term patience in terms of thinking
is here we are at Google, and at the Google Zeitgeist event, and everybody here has their
-- I was about to say iPhone, I shouldn't. I should say their Nexus device or their Samsung
device or whatever they have, Android device, and we live in this very, very instant world.
We want instant gratification, we want response time, we want to tweet, we want to FaceBook,
we want to do whatever. But when it comes to business, and when you
think about your own enterprises and the decision making that goes into it, one of my greatest
worries these days is that when you think about markets and specifically capital formation,
there's become a remarkable sense of short-termism that has creeped into every facet of business
thinking. I want to give you some stats just to hopefully make everybody think here for
a second. Consider these numbers. The average stock today in the public markets is held
for -- can you guess? 22 seconds. [ Laughter ]
>>Andrew Ross Sorkin: Okay. Now, 70% of the stocks that trade in the market on any given
day, the volume you see on CNBC at the end of the day is being moved by computers, high
frequency trading. The other 30% of stocks, out there in the world, the average hold time
is seven months. That's the number. So take out high frequency trading, seven months is
the long-term holds. Of the world's actively managed mutual funds
in this country, nearly 100% of the portfolios are turned over every single 12 months. Okay?
A survey of more than 400 corporate managers recently found that almost four out of every
five respondents indicated that they would decrease discretionary spending on areas such
as research and development, advertising, maintenance, and hiring in order to meet short-term
earnings targets. And more than half the respondents said they would delay new projects, even if
it meant sacrificing value creation. They say that -- they actually responded and
said that the object for doing so was to smooth out earnings or to actually hit the quarterly
target. Now, I say all of this -- by way of background
in that we live in a time right now where we keep talking about shareholder democracy.
And we claim that we, all of us in this room and the country, wants more shareholder democracy.
We want a bigger seat at the table. We think that if we just had a seat at the table, we
would be the long-term thinkers. But I would argue to you that we are the problem.
That we have become the ultimate ADD nation. And in many ways, when you think about what's
happening in corporate America, we are getting exactly what we are paying for. Now I wrote
this book Too Big to Fail, to quote FDIC chairwoman Sheila Bair, she said the overarching lesson
of the financial crisis was the pervasive short-term thinking that helped bring it about.
I was with a CEO last week, you all know this CEO, a Fortune 50 company. She has made some
serious investments over the last couple of years that have not paid off, not yet. They
may or may not pay off in two years. I will bet you within the next two years she will
lose her job or the company will be broken up. That can't be the right answer. Now some
say we need to incentivize managers differently. We need to give them more skin in the game.
That's what we say. We want everybody to have skin in the game. And every time I think about
skin in the game, I therefore think about *** Fuld, the former CEO of Lehman Brothers.
This is a number worth remembering. *** Fuld had a billion dollars of stock in his company.
He had, quote, unquote, more skin in the game than just about anybody in the business. He
rode his billion dollars of stock all the way down to $56,000.
That's the number. When you really think about what we can do
to incentivize people and motivate people to make the right decisions, it is a very,
Finally, Google, FaceBook and others, have created governance systems to try to push
back on some of this pressure. But in all honesty, my worry is it's only going to really
help at the margins. Ultimately we are going to need a new level of trust and patience,
and that's something that's only going to come from everybody in this room, hopefully
not just today, but when you go back to wherever you came from, to talk about that patience
that's needed. We're going to be hearing from some tremendous people this afternoon. I want
to get some thought about some of these issues. Let me do this. Let me introduce to you two
women who are very special. They are my new friends this afternoon. And they are doing
very big things in the not-for-profit world of sustainable and social businesses in an
effort to create profitable businesses. If you would join me, please, Leila Janah, the
CEO and founder of Samasource Social Business -- please, please, it's a social business
that connects people -- [ Applause ]
>>Andrew Ross Sorkin: -- living in poverty to microwork. And basically what they do is
they take small computer-based tasks and try to build skills in emerging markets in places
that you would not believe. Samasource I should say has partnered with many tech companies,
including Google, Microsoft and LinkedIn and she's going to talk a little bit more about
that in a moment. Then Linda Rottenberg is the CEO of Endeavor,
a not-for-profit that identifies and supports high impact entrepreneurs in emerging markets
-- [ Applause ]
>>Andrew Ross Sorkin: And this is a great fact, Endeavor has helped its entrepreneurs
generate more than 90,000 high-quality jobs. So I welcome both of them.
>>Linda Rottenberg: 200,000. >>Andrew Ross Sorkin: 200,000? Your bio is
wrong, it says 90,000. I apologize. What I'm hoping that you can do, just to start us off,
is just explain a little bit about what these institutions do. Because I'm not sure the
past four years, and both of your enterprises at some level are about -- either making a
profit or -- or using the profit incentive, to make your businesses grow or to make your
enterprises grow, how do you think about that? How do you go to countries that have looked
at our version of capitalism here in the U.S. and say, you know what, we just watched what
happened here and this may not work the way we thought. I am going to start with you,
Linda. >>Linda Rottenberg: Well, your question, also
about patience, really gets to the heart of Endeavor's model. So in the mid 1990s, I was
the law. I was struck by how many young people aspired to government jobs. I didn't understand
this. And how many taxi drivers had Ph.D.'s in engineering. So I kept asking why is no
one starting a business? And it was explained to me that in Latin America and other emerging
markets, if you weren't from one of the top 10 families, there was no way that you could
start a company. No one would give you support, there were
no role models, no venture capitalists, no mentors, and then also they were seen as greedy
and corrupt. Why would you aspire to do that, anyway? I said no, no, no, I'm talking about
issue. What we said was just like you said, if we wanted to be impatient, we would start
a venture fund and invest in three of these companies. But we wanted to build an ecosystem.
We said we are going to do something non-traditional. We're going to set up as a non-profit, of
by and for entrepreneurs. Not just any entrepreneurs, the high impact ones. The ones with the greatest
potential to scale, create job, create revenues. We said if we do our job right, these entrepreneurs
will not only change the way business is done in their societies, but they will give back
and make us self sustaining. Everyone said I was crazy. I was literally the chica loca
in Latin America. And here's where we are today. 15 years later, Endeavor operates in
17 countries, in Latin America, the Middle East, Europe, Asia, and Africa. We have screened
30,000 entrepreneurs. Certified 722 -- 450 companies. Once they become Endeavor entrepreneurs,
we help them build business plans, build advice reports, access capital, in some cases fire
their mother-in-law. Last year they generated $5 billion in revenue and 200,000 jobs, but
here's the more important thing. They are now becoming the mentors. They are now becoming
the angel investors. So in fact one of my favorite days at Endeavor was we were down
in Brazil, the editor of the Portuguese dictionary came to us and said because of our work, they
were going to add the term "empreendedor" into the language. So now there's something
that people can aspire to that has a positive connotation.
>>Andrew Ross Sorkin: And your investment -- one of the things that's so interesting
to me is you are now investing in businesses that you hope will turn a profit.
>>Linda Rottenberg: We are, yeah. >>Andrew Ross Sorkin: You are hoping they
will become an NPO and take that profit turn around and invest in other emerging businesses.
>>Linda Rottenberg: Yes, my colleague Bailey Kempner is here. We started something called
village. And I thought that I was going to go there and save the world. And yet my students
senators, which by the way some of my high school classmates couldn't tell me. And I
thought this was the great untold story of poverty and development. There is a mass of
business model that's only made possible by some of the recent advancements in the last
five years, Internet connectivity and thanks to Moore's law, really cheap computing devices
all over the world. There's one that launched last year, the $25, Raspberry Pie. So we've
taken advantage of this new infrastructure and this new connectivity to take people who
to what we call microwork. We divide up big digital products, which are typically outsourced
like image tagging, like transcription, like captioning, captioning videos, and we send
that work to people living in slums and villages in poor parts of East Africa, South Asia and
Haiti. And today -- we started four years ago, we
paid out 3,000 people, so 3,000 women and youth who had never had formal work experience
before, have actually made this money doing real work for companies like eBay.
with you. The price by the way all of a sudden goes up for you, so Google says, "I don't
franchising thing, but for poor people? Why can't poor people feel beautiful."
and capitalism. I think you are hearing today these two non-profits who are using the tools
and after hours nonprofit work. They want meaning to be central to what they spend the
campaigns were studying voting habits in order to try and entice low propensity voters into
a rat went to sleep. There was a scientist at Duke University a
the scent will essentially disappear. This was a huge deal for Procter & Gamble
your hand if you own cats. A couple of people. You know cats have a certain
as they look, which, of course, there's no reward there, because Febreze destroys scents.
you see. >>> She was a loyal customer of Starbucks,
that is useful to you as you strive to make the world a better place.
big-name investors, some of whom are in this room, who probably don't traditionally invest
increasingly unreal, the value of what is real goes up.