Back in 2016, I was selected to be a member of a team attending the prestigious Milken Institute Global Conference that was held in Los Angeles. This global conference that Milken Institute organised was from 1st to 4th May, with the theme of the year being – The Future of Humankind. This visit was a fantastic opportunity provided by Mr. Michael Perkinson of Guggenheim Partners (a Carey alumnus), through the Development and Alumni Relations Office and Student Services Office.
The global conference organised by the Milken Institute comprised of panel discussions that talked about topics such as macroeconomic and investment trends, the future of wellness and medicine, emerging market trends in financial technology and the impact on global markets, medicine, geopolitical discussions, and many others.
Global Capital Markets: Deflation or Stabilization
This panel of speakers reflected the negative sentiment from emerging countries as there has been a huge “volatility of volatility” in the markets. Emerging market returns have been volatile as evidenced by the characterization of extremes as the returns have either been at the bottom or at the top. Mohamed El-Erian, Chief Economic Advisor, Allianz, discussed “tourist investment” in emerging markets where capital takes flight at the first hint of trouble. This is because the credit and equity markets globally are not well understood, and emerging markets lack a stable institutionalized base. That said, the panel recognized that emerging markets have started to fare better of late as quality of policy making has significantly improved and there have been more good references for policy makers through the experiences of past economic crises.
The panel also discussed the challenges faced by China, which is shifting from an export-driven emerging market to a consumer-driven economy. This attempt to transition is one of the hardest, as China moves from being a middle-income economy to an advanced one. Few countries have successfully navigated this transition, and China’s journey is all the more trying as it comes at a time when the global markets are facing many challenges.
How New Investors are Influencing Venture Capital
Dave McClure of 500 Startups who also serves as an Advisor to A-Level Capital (a student-run venture capital firm focused on supporting Johns Hopkins start-ups), shared that it is better to fail at your own start-up than to read about other people’s success, as trying to start something yourself teaches you more about risk management than just reading about it. The panel discussed the different approaches used in evaluating companies and entrepreneurs depending on their risk management appetite. While their approaches may differ, the key questions they look to when evaluating entrepreneurs are similar:
- What drives you?
- What got you here?
- Why are you tackling this problem?
End of an Era: A Conversation with NBA Great Kobe Bryant
The session with Kobe Bryant was one of the conference’s highlights as it was just two weeks after Kobe played his last NBA game. Kobe talked about his experiences throughout his career and his relationship with former teammate Shaquille O’Neal and former coach Phil Jackson. He also shared his plans post-NBA to focus on telling stories through his new company, Kobe Inc. Kobe was humorous and charming throughout the hour-long session. Here are some of his fantastic sound bites:
“In this world, you can either be a lion or a gazelle. The world needs both. I rather not be a gazelle.”
“The train is moving. You are either on it, off it, or under it.”
When asked how he felt when he pushed for team roster changes during the season, Kobe replied:
“Maybe it’s not your true calling, so I’m doing you a favor by helping you to find a true calling.”
Jim Gray, Sportscaster, Showtime, Fox: “Do you see yourself as a good judge of talent?”
Kobe: “No, but I can tell who sucks.”
The Road Ahead in Finance: Regulation, Disruption, and Human Capital
Steve Schwarzman, Chairman and CEO of Blackstone Group, emphasized that the firm places tremendous importance on the transparency and accountability of every person and that everyone is expected to serve as the Chief Risk Officer when it comes to risk management. Blackstone created a culture in the company in which every investment decision is met with criticism to ensure that all angles are accounted for. The goal is to demystify decision making for the benefit of better risk management when it comes to protecting the investment.
Transforming a Legacy Company
One of the issues highlighted by the panel was change management in a well-established company. Takeshi-Niinami, President and CEO of Suntory Holdings Limited, responded that the company has used cross-border transactions to drive corporate change in behavior and culture. He added that Japanese companies faced enormous challenges due to a declining and aging population. As such, Suntory decided to target global markets through an M&A strategy. Suntory acquired Beam, the top U.S. distiller and maker of Jim Beam bourbon for US$16 billion in 2014.
Denise Morrison, President and CEO, Campbell Soup Co., identified the need to cope with trends in the global market place as consumers increasingly demand transparency of their food sources and want healthier choices. In order to guide a company through transformation, it was critical to give employees the freedom to find and believe in a company’s vision. To this end, constant communication with employees is required.
Global Retail: Adapting to Changing Tastes
Lyndon Lea, Co-Founder, Lion Capital, private equity owner of established fashion and retail brands such as Jimmy Choo and Wagamama, shared that we are facing the most informed generation of consumers to date, as they have instant access to information through the web and social media. Customers, especially millennials, are looking for authenticity in brands. In the past, brands talked to consumers. Now, the tables have turned, with the millennials allowing you to talk to them instead.
One aspect of retail brand authenticity is linked to price transparency. He highlighted how customers were turned off by the retailers’ practice of pricing the same products in different markets with markups of up to 30%. Customers will feel ripped off and it spoils the brand experience. In addition, he viewed discounting practices as one that could dilute the brand and affect gross margins. In line with this, Bloomberg recently covered how the US retail’s pain is self-inflicted as retail brands offered holiday-like promotions throughout the year to attract customers, which ended up hurting their margins.
To illustrate his points, Lyndon shared the initiatives undertaken by Lion Capital when it acquired All Saints in 2011. All Saints is a British fashion retail brand headquartered in London, and sells menswear, womenswear, footwear, and accessories across 20 global markets. To foster greater customer loyalty and preserve the brand’s authenticity, he removed the discounted pricing in the stores and standardized product prices across the markets. Lion Capital also planned to double the number of All Saints stores and open in many European capitals and U.S. cities. He focused on building the brand and doubled down on what the iconic brand stood for. “The kiss of death is to be all things to everyone,” said Lyndon.
