UCLA Anderson School of Management Blog

UCLA Wins 17th Annual NAIOP SoCal Real Estate Challenge

Left to right: Ian O'Neill, Mark Simpson, Reisa E. Bloch, Patrick Devitt, Jack V. Agresta

A multidisciplinary team of UCLA graduate students won the 2014 NAIOP SoCal Real Estate Challenge, held on November 20 at the Covel Commons Grand Horizon Ballroom on the UCLA campus. The UCLA team consisted of second-year UCLA Anderson MBA students Ian O'Neill, Reisa E. Bloch, Patrick Devitt, Jack V. Agresta, and UCLA School of the Arts and Architecture and UCLA Luskin School of Public Affairs, Urban Planning student Mark Simpson. The annual event, presented by the National Association of Industrial and Office Properties (NAIOP), poses a specific real estate case challenge to teams of students at UCLA and USC. In addition to providing a rich learning experience that requires participating students to produce high-quality professional work within a limited timeframe, the competition is designed to showcase the talents and creativity of the next generation of real estate leaders. Read the full story...

Googling Corporate Social Responsibility — and Creating a High Net Impact

By Cheechee Lin

Diane Solinger, Google’s employee social responsibility manager, joined Anderson’s Net Impact group on November 13 to discuss corporate social responsibility (CSR).

Solinger is a seasoned, successful professional, with extensive leadership experience in nonprofits. Prior to joining Google, she worked for the American Cancer Society, the University of Colorado’s College Foundation, the American Heart Association and the Entrepreneurs Foundation.

Solinger highlights the similarities between CSR at a large corporation like Google and at small enterprises. “It’s all about the people,” she says. “Even at Google, where it is chaotic, innovative, fast, and opportunistic, employee engagement is essential, just as in startups. It’s a lot about the culture of sensitivity and caring as well: the people who selflessly give back are the people I would like to be around.”

But people who work full-time-plus might find less and less time to devote to the causes they’re committed to, despite their volunteer spirit. And not everyone’s in a position to write large checks to their favorite charities. Google actively helps Googlers engage in volunteering, incentivizing acts that benefit the community by matching employees’ fundraising efforts and giving them time off. As an example, Solinger described a successful social venture initiated by a Googler who’s also an army veteran: The staffer developed a translation project for military personnel in Iraq and Afghanistan, raising more than $70,000 — which was matched dollar for dollar by Google.

Wharton Research Data Services Award Goes to Anderson Professors Daniel Andrei and Bruce Carlin

UCLA Anderson Professors Daniel Andrei and Bruce Carlin were awarded the WRDS Best Paper Award for Empirical Research on November 6.

By Bijan White

Wharton Research Data Services, one of the world’s leading data research institutions, awarded the Wharton-WRDS Best Paper Award in Empirical Research to two UCLA Anderson professors, Daniel Andrei and Bruce Carlin, assistant and associate professors of finance, along with their co-author Michael Hasler, professor of finance at Rotman School of Management. The trio was recognized for their innovative approach to model disagreements in their paper Model Disagreements and Economic Outlook.

The winning essay examined economic model disagreements and their impact on prices, volatility and business cycles, expanding on previous studies to understand the relationship between disagreement and volatility. The researchers analyzed the relationship between forecast dispersion data and stock volatility, and translated investor disagreement into a model to test. According to their research, more accurate earnings forecasts and increased monthly rather than quarterly indicators could reduce volatility.

This research proved to be a breakthrough amid the uncertainty surrounding financial models and it advocates for greater transparency to reduce disagreement and volatility. Hasler stated that the WRDS Best Paper Award acknowledgement was “terrific” and offers an opportunity for them to further discuss their work with other scholars.

Derek Herrera (EMBA ’15), Champion of Veterans, Awarded the Bronze Star

Derek Herrera (’15), one of three Anderson students to be awarded the 2014 John Wooden Global Leadership fellowship last week, was, until last Friday, an active-duty Marine captain. Over the weekend, Herrera was awarded the Bronze Star, a medal earned through acts of bravery performed while fighting an enemy of the United States. The ceremony took place at Camp Pendleton in San Diego County and marked Herrera’s retirement from the military after eight years of service.

In 2012 in Afghanistan, Herrera was shot in the spine by a sniper and it left him paralyzed from the chest down. Part of Herrera’s rehabilitation included his adoption of the ReWalk robotic exoskeleton, an invention that enables paralyzed people to walk. Herrera was the first person in the U.S. to purchase a ReWalk for personal use outside the offices of a physical therapist — a use only recently approved by the FDA.

Herrera is currently the CEO of RuckPack® Inc., a company that provides healthy caffeine-free alternatives to energy drinks. The drinks were tested on active duty Marines who were tired of swallowing handfuls of vitamin supplements to maintain proper nutrition under physically demanding circumstances. Herrera is championing veterans as he grows the brand, seeking to hire fellow servicemen and women.

NBC news covered the ceremony at Camp Pendleton, where Herrera walked down the tarmac to receive his medal. Brian Williams reported: “He wanted to leave the corps the way he joined the corps: standing up.”

 

UCLA Anderson Student Zubin Davar ('15) To Peter Thiel: "A graduate business degree offers more opportunities to experience new fields than any other graduate program."

UCLA Anderson MBA candidate Zubin Davar (’15) has a message for PayPal co-founder/venture capitalist Peter Thiel: His views on MBA students are “narrow-minded and wrong.”

Davar’s message to Thiel is delivered online at BusinessWeek, in an article that originally appeared in Anderson’s student publication the Anderson Exchange. Davar’s piece is a response to Thiel’s public disdain for MBAs (Davar notes that Thiel characterized MBAs as “sheep” that act with “herd-like thinking and behavior.”)

Writes Davar:

Thiel fails to recognize that business school grads are jumping into traditional sectors such as health care, energy, and government eager for the chance to have an impact in these mature industries. Take Anderson School of Management grad Thomas de Fresart (’14). After he launched SolarWing, a clean tech startup, he decided to pursue an MBA. He wants to “transform the electricity market” by working at an established utility company, EDF Renewable Energy. Such pursuits are not sheep-like.

Thiel’s position on business school graduates is unfortunate, because a graduate business degree offers more opportunities to experience new fields than any other graduate program. MBAs seek access to this wide array of paths in part to do work that has meaning and not get pigeonholed into unfulfilling jobs.

Davar also notes that “the value of an MBA continues to rise, with the percentage of MBAs jumping 30 percent over the past five years,” according to the Graduate Management Admissions Council. He concludes with a message to Thiel:

Mr. Thiel, you have an open invitation to visit Anderson and share more of your perspective with us. We love a lively debate. It expands our world and helps avoid groupthink.

UCLA Anderson Professor Bhagwan Chowdhry Says "Impact Investors" Should Stop Expecting Market Returns.

 

UCLA Anderson Professor of Finance Bhagwan Chowdhry (@bhagwanUCLA), along with his co-author, Assistant Professor Shaun Davies (@LogicalShaun) of the Leeds School of Business at the University of Colorado, published today a piece in the Stanford Social Innovation Review titled “So You Want to Invest to Make Impact?” In their article, the pair distinguish between two types of “impact investors,” defined as investors who seek to achieve both a financial return and a measureable social impact. The authors opine that the two types of impact investors — FLIIs (free lunch impact investors) and PIIs (philanthropic impact investors) — have different agendas and should expect different results.

The article contains a thought experiment:

Suppose an investor has the opportunity to invest in a project that will earn him more than an appropriate return — the opportunity cost of his capital — given the project’s risks. Clearly, the investor will find the project attractive and will invest. If the project also produces a valuable social good, that’s icing on the cake.

These are exactly the types of investment opportunities that FLIIs are looking for—they earn a fair return, and the investment also produces social good. They pat themselves on the back for “doing good,” but there is nothing fundamentally meritorious about their actions. After all, they are not unlike other niche investors, who for example invest only in technology or in companies that start with the letter A. They have a strong affinity for investing in companies that are oriented toward a social goal, but they demand market returns. FLIIs are not willing to make any sacrifice (except perhaps some portfolio diversification) to further a social goal.

Now suppose an investor has the opportunity to invest in a different project, one that will not earn him the opportunity cost of his capital. From solely a profit-motivated perspective, the investment is not particularly attractive. But suppose that this project also produces social good valued by the investor and that the investor’s appreciation of that exceeds the financial losses. What can we say about these types of investments?

These investments are meant for PIIs, who understand and appreciate that furthering a social goal may come at the expense of maximizing profits. As such, PIIs are willing to forsake some financial gain if it means furthering a cause they believe is important.

Chowdhry and Davies conclude that distinguishing investor types serves an educational purpose. They suggest that FLIIs may genuinely desire to make an impact “even if it is costly,” and they require market returns “because they have been told to expect them.” “Consequently,” Chowdhry and Davies say, “the reach of their investments is falling short and preventing meaningful impact.” So, by making them aware of the tradeoff, it is expected that many would modify their investment strategies and move from the FLII category to the PII category. 

Read the entire article here.

Tim Curran, CEO and Founder of Level Sports, Talks about Entrepreneurship

By Cheechee Lin

Tim Curran, CEO and co-founder of Level Sports, spoke to UCLA Anderson students last week about his entrepreneurial journey as part of the Entrepreneur Association’s speaker series.

Curran founded his first company fresh out of college. As a teenager, he had been a recruited high school athlete, but he found the experience frustrating. So Curran set out to change the way college sports recruiting worked. He created Webletes, an online platform for high school and junior college athletes to gain exposure. With the aid of his brother, he also hosted Football Combine Camp to scout potential talent and to help the athletes develop portfolios. Though the road to a successful project was rocky, as he encountered various monetary and operational barriers along the way, Curran built connections with the right people, and the website eventually took off. After a couple of years in the field and extensive research, Curran decided to take this project in a different direction with Level Sports.

Curran identified four main factors to consider when starting a company: the vision, the process, the team and the networking. “[As an entrepreneur], you need passion for your vision,” he said. “Otherwise your startup will fizzle away.”

Professor Sanjog Misra Uses Data Analytics to Improve HR and Sales Plans

By Cheechee Lin

UCLA Anderson Marketing Professor Sanjog Misra has been working on a joint project with Professor Harikesh Nair, of Stanford’s Graduate School of Business, that uses data analytics to develop effective incentives for a large contact lens manufacturer’s sales agents.

Misra and Nair use statistical models to develop improvements to the existing salary and commission model, which is based on guesswork and past performance. By implementing a low quota, no ceiling and monthly commission model at the firm, Misra and Nair have helped the contact lens firm increase revenue by 9% in one year, and an average revenue increase of $79,730 per agent per quarter.

In another study that Misra and Nair conducted, they helped motivate the firm's sales agents more effectively by developing two different compensation plans that satisfy different pay preferences.

Nair encourages other firms to work with academics to gain quantitative insight in improving HR and sales plans.

For more on this research, please read Rachel Emma Silverman's post on the Wall Street Journal's At Work blog.

Lessons from the Past for the California Infrastructure of the Future

By Daniel J. B. Mitchell

Whenever California infrastructure investment is mentioned, there is a tendency to hark back to a Golden Age after World War II. During that period, our current governor’s dad, Pat Brown, was credited with freeways, a major state water project, and the 1960 Master Plan. But there were other political figures involved, and when you look more deeply, you find that these accomplishments had a longer history. Economists have a phrase, “path dependency,” which suggests that events of the past direct and constrain what we do in the present. And that was certainly true of the Golden Age.

One factor that ushered in the Golden Age was World War II and subsequent Cold War, both of which boosted California’s economy and its growth rate with an influx of federal spending on what became the aerospace industry and other related military sectors. The result was notably faster economic and population growth in California relative to the rest of the U.S. and with a focus on technology and high paying jobs. Fast growth with good incomes meant that nasty trade-offs could be avoided. We could have expanding social programs and infrastructure investment without worrying that a dollar more for one meant a dollar less for the other.

Absent some new external accident of history, Cold War-style above-average growth rates are not going to return to California. Despite the temptation to do so, in a period of mere average growth, infrastructure — whether water or transportation projects or college campuses — should not simply be charged off to the future via bond sales, the pattern that has developed in recent years and that was, for example, reflected in the water bond on the November 2014 ballot. Absent rapid growth, we can’t count on the future economy to be so much larger than it is today so that paying off past debt when the future arrives will be painless. If nothing else, there are intergenerational inequities in relying too heavily on bond finance.

So, what is to be done? Key elected officials are going to have to explain to the public what the end of the Cold War has meant for California fiscal affairs and for its infrastructure finance. It may seem odd a quarter century later that our politics are stuck at 1990, but that is the reality. User fees and user taxes for water, roads and other public projects need to become a larger part of the funding mix; it can’t be all bonds. And the credibility of public authorities when it comes to infrastructure implementation needs to be restored.

A more expansive version of this article appears in Dan Mitchell’s “Mitchell’s Musings” blog of the Employment Policy Research Network.

UCLA Anderson Presents Qualcomm’s Dr. Paul E. Jacobs With 2014 John Wooden Global Leadership Award

Left: Dr. Paul Jacobs, executive chairman of Qualcomm Inc. Right: 2014 Wooden fellows Nicole áBeckett, Derek Herrera, Elizabeth Pratt.

By Carolyn Gray Anderson

On Monday night, Dr. Paul E. Jacobs, executive chairman of Qualcomm Inc., was awarded the 2014 John Wooden Global Leadership Award in recognition of his exceptional leadership at the helm of what has become one of the telecommunications industry’s great start-up success stories. The ceremony was held at the Skirball Cultural Center in Los Angeles, where Jacobs was honored by a full house that included Anderson faculty, students, alumni and guests, along with members of Coach John Wooden’s family.

Jacobs is the seventh recipient of the annual John Wooden Leadership Award. Each year, when choosing a new recipient, UCLA Anderson looks for leaders who embody John Wooden’s humility and his capacity to inspire; who focus on process while achieving remarkable results; and who show steadfast commitment to improving the community.

As Dean Judy Olian said in her introduction, “When he was leading the handset division of Qualcomm Dr. Jacobs adopted the slogan, ‘Lead through vision, not division.’ He focused on what brought people together. That’s a play right out of Coach’s playbook. Coach liked to say, ‘Much can be accomplished by teamwork when no one is concerned about who gets credit.’”