Bobby Turner was another guest speaker in my class on Leadership and Ethics, taught by former Mayor Richard Riordan. Bobby is Chairman of Canyon Capital Realty Advisors
, which manages $21 billion and invests in many types of real estate opportunities. The focus of the class was on Bobby's initiatives to invest in urban neighborhoods in order to improve them and give back.
Bobby led Canyon's initiatives to partner with Magic Johnson and Andre Agassi in developing urban neighborhoods and charter schools. Bobby was trained by Mike Milken at Drexel and graduated from Wharton School of Business.
Bobby explained that there are four ways to create wealth:
- Value investing
At Drexel, he learned value investing, a strategy often overlooked, and mis-assessed. The keys to doing it right are quantifying and mitigating risk.
Bobby said that your first million dollars is the hardest to make, and wealth doesn't make happiness.
He said there are four types of happiness:
- Power (to change the world, have positive impact on people's lives)
It is the last type of happiness that he pursued in partnering with Johnson to raise an urban investing real estate fund. They succeeded in doing this: they raised $275 million in 2.5 years, invested it all, and made an 18% return. Bobby explained that there is a huge demand for housing and retail space in dense urban communities, so not only were their investments sound financially, but they also generated jobs and improved the neighborhoods. They raised a second fund of $600 million in one year to continue their work, and later on they raised a third fund of $1 billion in one week. Overall, their initiatives created 10,000 jobs.
The investment criteria they used were the 6 D's:
- Density of population: 300,000 per 3 miles
- Demand (for housing, retail)
- Developer: real estate is a relationship business, so it matters who you know and work with
- (De)Leadership: getting the Mayor's support is critical
- Do good
After the urban investing work, Bobby partnered with Agassi to fight for charter education. They're raising $250 million to build 50 more charter schools. He thinks he must raise private, for-profit capital in order to be successful, as the only sustainable schools will be those that make money.
Bobby considers a fair return on capital to be 10% unlevered (levered up to 18%); after incentives, they return 12% net to investors.
It was neat to hear a person so successful in real estate and for-profit investing find ways to make money while investing in projects that served a drastic need in the community even though they were unpopular. It was also fun to hear the stories of how he convinced Johnson and Agassi to get on board.
Yesterday, Craig Newmark came to talk to us at UCLA Anderson (Professor Jonathan Greenblatt led the conversation). It was an interesting discussion and went into many areas I wasn't expecting. Below are some of my notes and takeaways.
- Know when to get out of the way and not meddle. Early on, Craig hired a great CEO and let him run the company as he saw appropriate. He stayed engaged but tried not to interfere, focusing his efforts on customer service.
He's managed to keep Craigslist at about a 20 person staff. The bigger an organization, the more it's like Dilbert (he worked at IBM before). He made reference to Dunbar's number, or the theoretical limit of about 150 people that can keep a small-company feeling/culture. Beyond this (and probably within this too), people learn to get ahead by just telling their boss what he or she wants to hear. [I'm learning about this same topic in my Leadership, Motivation, and Power class. Will post about it soon!]
In terms of other leaders, he said he admires Ron Conway and Larry Page.
Craig thinks he's not a real entrepreneur and just got lucky. He repeated this a few times. This was neat to hear.
Speaking to a young audience, he encouraged us to take more risks but to develop a broad social network so we can engage enough people when starting new projects or companies.
- Social media is critical, especially for philanthropy. Many people in the philanthropic sector, such as leaders of grassroots organizations, are turning to Craig for help in advising these new organizations on using social media to get their word out. He says social media is key to allowing leaderless organizations to thrive and get input from the community.
He used a funny analogy to "ye olde times" and "social media technology" back in the day. He spoke about the Gutenberg printing press as the original social media technology; Martin Luther was the first to use it for a social revolution. He spoke about the original bloggers (Thomas Payne, John Locke) and the original online forums (religious talks, meetings). Listening to him talk about this was really funny.
In general, he said he wants to bring a voice to the moderates through charitable means and social media. He's been doing a lot to help veterans through IAVA and the Bob Woodruff Foundation.
In terms of social media and the government, he spoke about the Sunlight Foundation which aims to cast light on government activities and find ways to improve them. He says it would be good to cast light on lobbyists and expose the flows of money to the press.
In terms of Wikileaks, Craig acknowledged that diplomats are those that lie for the sake of their country. He has mixed feelings about this: as a nerd, he wants all info to be open, but he also knows that some stuff in government needs to be secret. Maybe just revealing where money goes is all that we need.
Overall, he's in favor of projects like Jumo that aim to connect causes to people and that use social media to involve the community.
- Trust is the new black. With so much user-generated content (UGC) and so many news sources and information, whom you trust becomes critical to curating your reading and learning experience. He wants to get his news from sources that are accountable and use rigorous fact-checking. He says he gets the best news from The Daily Show (unfortunately).
The Daily Show gets away with using comedy while telling the truth, and this is not something new. Oscar Wilde said, "If you want to tell people the truth, make them laugh, or else they will kill you." The only person in the king's court who could tell the king the truth was the court jester.
Craig predicted that in the future we will receive news on pad-like devices and TVs but from trustworthy curators of news, such as our social network and accountable sources.
- Craigslist secret sauce: KISS. Craig described how the website started out as an email list that he ran on Pine (and still uses Pine for) as a hobby. He wanted to just tell his friends about local events and other stuff that meant something to the people around him. His entire marketing was word of mouth (and lots of launch parties in SF).
Their core innovation, he said, was actually listening to users and not web designers, potential investors, marketers, etc. His users wanted a simple, fast, focused, and free site. They spend a lot of their engineering efforts doing just this (for example, writing their own caching code to keep the site fast).
He claims that speed is the reason why the UI remains simple and old-school. He said they do introduce UI changes slowly but want to keep the site fast (they don't have a mobile app because the site works quickly on any phone already). It seems to me like modern server technology could serve up his site quickly even if it had a more complex UI, so I think the real reason for keeping it old-school is the feeling and tradition behind the site and a focus on keeping it simple. Same reason for no use of social media to promote the site. They get about 50 million views a month already; this is plenty for him. They just want to be a classifieds site. Period.
Many people asked why he doesn't monetize the site more, perhaps in order to generate more money for philanthropy that way. He says he's a libertarian primatist and having lots of money to throw around is not always good, like the situation Gates faces. He'd rather help everyone by giving free advertising on his classifieds site for roommates, furniture, cars, etc. and let others use their money as they see best; he does this because it just makes sense to him to do it that way. This was a really interesting perspective on the website; I had never thought about how giving the service for free was philanthropic in its own way.
Overall, I was impressed by his emphasis on just doing what he thought was right, on pleasing his community, keeping his site simple and focused, and using social media and nontraditional mechanisms to promote philanthropy.
A few weeks ago, I attended quite a unique talk at Anderson called, "East Meets West: What is Moral Capitalism?" It was by Dr. Hiroshi Tasaka, a distinguished business philosopher, prolific author, and founder of SophiaBank, a think tank that supports social entrepreneurs in Japan
. He had flown in from Japan and spoke to a room of about 20 students over sushi (I didn't try the sushi though).
I just found online that he gave a similar talk at TEDxTokyo, which is the video embedded above.The subject of the talk was the invisible or moral values that are absent in a capitalistic culture that only focuses on economic or monetary values. These moral values are things like caring for each other, peace in the community, trust, and happiness of workers. He explained how the verb "to work" in Japanese means "to help my neighbor" (I'll see if that's true next quarter when I hopefully take a Japanese class).He taught these lessons
through a philosophic fable he wrote which poked fun at how modern governments are trying to solve the current financial crises. His thesis was that by refocusing society and capitalism on a notion of invisible values, like culture, peace, and happiness, necessarily without quantifying them, we could achieve more stable and positive long-term results.The way he spoke about the moral values
appealed to me and is a reason for my recent growing interest in social entrepreneurship. It was also neat to hear Tony Hsieh, the CEO of Zappos, talk to us the next day about culture at Zappos and how their core values are many of the invisible values Dr. Tasaka was preaching. I'll blog more about Tony's talk soon (which was riveting), and it was a nice coincidence to hear several speakers give their unique perspectives on a common topic.An economics professor in the audience
of Dr. Tasaka's talk mentioned that there are several research studies in progress aiming to come up with a modified sense of GDP that takes into account society's contentment, peace, etc. Dr. Tasaka thought these efforts were well-intentioned but cautioned that the invisible values by definition cannot be measured or quantified. It sounded like something where you knew it when you saw it.I had also recently come across a proposal to build a social stock exchange
where Social Benefit Enterprises (SBEs), or companies that are for-profit but create social good along the way, could trade and be combined into a diversified portfolio by investors who wanted to support their operations.I think al
l of these speakers and recent research show a growing trend towards socially responsible business, where the social good is not just a side effect but a major driver of value. It will be interesting to see how this develops in the coming years and to hopefully contribute to it as well.