Berkeley, Calif. – The Haas School of Business at the University of California, Berkeley, today announced the launch of the Berkeley Haas Sustainable Business Research Prize. The prize encourages serious research with timely, real-world business-practice applications among business school faculty around the world related to responsible business, sustainability, and ESG (environmental, social, and governance) issues.
This new prize seeks to recognize the most significant research papers that hold the greatest potential to catalyze immediate change in business management practices in the face of urgent global environmental crises. Additionally, the prize will motivate thought leadership globally and add to the body of knowledge and intellectual capital in the role of business in society.
Recognizing that the global market is not acting fast enough to address the climate change crisis, the 2023 prize will seek papers that explore economic levers that motivate individuals, corporations, and markets to act with urgency on climate and resource-saving initiatives.
This Haas Sustainable Business Research Prize is supported by Allan Spivack, MBA 80 and former President & CEO of RGI Home. Spivack has long been at the vanguard of sustainable business and serves on the Senior Advisory Board of the Berkeley Haas Center for Responsible Business.
“The University of California, Berkeley has a tradition of cutting-edge innovation across many academic and research disciplines,” Spivack said. “My intention in creating the Sustainable Business Research Prize is to provide a platform in which the urgent conversations around climate change and industry can meet the moment.”
A committee of well-regarded sustainability researchers and practitioners at the Haas School of Business will choose one academic study to win the $20,000 prize. The committee will be chaired by Berkeley Haas Dean Ann E. Harrison and made up of faculty members Reed Walker, Transamerica Chair in Business Strategy; Assistant Professor Sytske Wijnsma,; Assistant Professor Jonathan Weigel; and Associate Professor Panos Patatoukas, the L.H. Penney Chair in Accounting and Distinguished Teaching Fellow.
The prize is part of Dean Harrison’s three strategic priorities for the Haas School: sustainability, entrepreneurship, and diversity, equity, inclusion, justice, and belonging (DEIJB). As the top public business school, Berkeley Haas is committed to addressing sustainability challenges by preparing our students to lead the transition to a sustainable and inclusive economy through designing and implementing new business models, policies, and solutions.
“At the Haas School of Business, we believe that the transition to a sustainable world is being led by business. It is business that is mobilizing the vast amount of capital and innovation needed to create successful environmental solutions at scale,” Harrison said. “The Haas Sustainable Business Research Prize seeks to address this challenge in translating cutting-edge academic research into action in the face of the climate crisis.”
The prize is administered by the Berkeley Haas Center for Responsible Business (CRB). The CRB connects students, businesses, and faculty to mobilize the positive potential of business to create a more responsible, resilient, and sustainable society. Building on more than two decades of research, teaching, and engaging with business, the center encourages sustainability-minded research and its application in the marketplace of commerce and ideas.
In getting a good deal on a loan, numbers matter: Lenders look at companies’ financial statements and payback on past loans. Strong financial statements could mean a lower interest rate or better terms for the borrower.
But in the competitive landscape of loan acquisition, it’s not just about crunching numbers. Loan officers and borrowing managers are people, after all, and those who do repeat business build relationships and trust over time. The soft information accumulated in these relationships can reduce the costs of screening and monitoring, and thus reduce the cost of debt, according to new Berkeley Haas research.
“While two companies with the same credit score may appear similar on paper, our research shows that individual lending relationships can reveal important differences between them,” said Omri Even-Tov, assistant professor of accounting at the Haas School of Business. “These relationships foster trust and reduce information gaps, allowing lenders to gain valuable soft information about a borrower’s sense of responsibility and overall creditworthiness.”
Even-Tov’s forthcoming paper in the Review of Accounting Studies—coauthored by Xinlei Li of the Hong Kong University of Science and Technology, Hui Wang of the Renmin University of China, and Christopher Williams of the University of Michigan—shows that established relationships between a loan officer and a borrowing manager not only increase the likelihood of a loan, but tend to make the conditions of that loan better for the borrower without increasing risk for the lender.
These results, the researchers suggest, are increasingly important as technological innovation means fewer personal relationships in banking—and beyond.
Even-Tov and his colleagues examined a sample of loans from between 1996 and 2016. They manually collected the signatures on these loans to determine the names of two key actors who are typically engaged in contracting negotiations and interact extensively. This laborious process allowed them to create a dataset comprising nearly 4,000 loans with 2,800 unique borrowing managers and 2,100 unique loan offices. The vast majority of these loans were one-off interactions, but some of them were conducted by the same loan officer and borrowing manager two or more times.
Comparing these groups, the researchers found that established relationships between lenders and borrowers proved favorable for both parties. For the borrowers, they led to better interest rates. For the lenders, they allowed for better screening and monitoring as evidenced by fewer rating downgrades.
The cost of turnover
They also found that when a borrowing manager and loan officer left their jobs, the two firms were roughly 70% less likely to engage in business together. These results were especially pronounced among smaller institutions, and with loan officers who manage fewer transactions, as these two groups rely more heavily on soft information accumulated in their relationships.
“This really quantifies a lot of anecdotal evidence about the importance of relationships, and it also sheds light on an underappreciated cost of turnover,” Even-Tov said. When an employee leaves a company, it’s a loss not only of their knowledge and skills, but their relationships, too. If a company loses its CFO, it has not only lost that distinct set of talents, but possibly the chance of getter better deals on loans. “Companies need to factor in these less-tangible assets of their employees.”
Decline in professional relationships
Even-Tov highlighted two related implications raised by this paper: New technological tools are driving a decline in professional relationships, and this is happening in industries beyond banking. He gave the auditing industry as an example. Auditors in previous years would be embedded in clients’ offices. They got to know the companies they were auditing, and the people who worked there. Today, a great deal of auditing is done remotely, or even automatically. The same is true for consulting, real estate, venture capital, and private equity.
“We need to think about what we lose when technologies allow us to bypass the need for interaction between individuals,” Even-Tov said. “There are advantages to doing this work more quickly or from a distance, of course. But these changes also introduce costs, and this work makes some of those costs clear.”
Alexandria Williams had taken economics at Oakland’s Skyline High School, but she didn’t learn much about how to actually budget and manage money. So for eight Saturdays during her senior year, she woke up early to head to class at Berkeley Haas, learning not only about personal finance but also about investing, home ownership, and building intergenerational wealth.
Her efforts paid off. Williams, along with 23 other high school seniors who graduated this month from the Economic Equity and Financial Education Pilot Program, walked away with an $8,000 college scholarship from Pacific Gas and Electric. The students also gained financial knowledge well above the average high school graduate plus a new network of supporters and mentors.
All 24 program graduates are going on to college.
“What I would tell my friends would be to invest as much as you can for however long as you can, because the length of time makes a difference,” said Williams, who is headed to UC Irvine in the fall.
“Investing helps your money grow over time rather than just keeping it somewhere, since the value of money decreases over time,” added Christian Jones, a senior at Oakland Technical High School headed to Cal State East Bay.
The pilot program, created by Pacific Gas and Electric in collaboration with the Haas School of Business, Berkeley Executive Education, and Mills College at Northeastern University, aimed to equip African American high school students from under-resourced Oakland and Bay Area high schools with the financial tools for success. It also has a more ambitious goal: to make a dent in the pervasive wealth gap between white and Black and Latinx U.S. households.
“These kids have demonstrated a tremendous amount of discipline, and they’re investing in themselves, which is the biggest investment they can make,” said Jimi Harris, chief of community relations at PG&E, who created the program. “We wanted to prove that high school students could digest advanced financial education in the hope that it can be replicated by other corporate leaders and institutions.”
Harris came up with the idea for the program in the wake of George Floyd’s murder, to channel his anger and frustration into something positive, and PG&E committed to give $500,000 from its community charitable Better Together Giving Program. Harris reached out to his Morehouse College classmate Jason Miles, founder and managing director of Amenti Capital, who had started an investment club and launched Morehouse’s first student-run investment fund.
The two approached Berkeley Executive Education (BEE) with a request to design and deliver the curriculum after hearing about BEE’s successful Black Venture Capital Program. Miles worked with Associate Professor Panos N. Patatoukas to co-develop the curriculum. Mills College at Northeastern recruited the students through its TRIO college preparation program and assigned two caseworkers who proactively tracked and followed up with the students throughout the course.
Patatoukas said he worked hard to adapt topics such as financial data analysis and corporate valuation, which he teaches to UC Berkeley MBA students and executives, to high school students who were taking the class at the end of busy weeks of school and activities. The program appealed to his passion for equalizing access to financial education and informed decision-making.
“Technology has been transforming education in profound ways, but access to financial education still remains within the reach of only a few,” Patatoukas said. “I was really excited to work with PG&E and Berkeley Executive Education on this important effort to make financial education more accessible. Mitigating the problem of access inequality to financial education has been the driving force of my efforts to foster diverse, equitable, and inclusive learning environments at Cal.”
McClymonds High senior Patrick Botman raises his had during the program graduation lunch.
Skyline High senior Alexandria Williams will attend UC Irvine in the fall.
Jason Miles, founder and managing director of Amenti Capital, co-developed the curriculum with Associate Professor Panos Patatoukas.
Jason Miles chats with financial advisor Lia Wheeler, who taught a session on building wealth and monitoring financial health.
That’s why it’s so important for institutions like PG&E and Berkeley Haas to take an active stand on closing the wealth gap, said Carla Peterman, PG&E executive vice president and chief sustainability officer, in a speech to the graduates.
“When you take a stand and say it will be so, you are so resolved that instead of worrying about whether it might happen, you focus all your attention on making it happen,” Peterman told the students.
Peterman said she became the first African-American woman Rhodes Scholar after graduating from Howard University, earning an MS and MBA from Oxford University and then going on to a PhD from UC Berkeley. After she got the scholarship, another African American woman followed. And another. “Until then, there were people who didn’t think someone who looked like me could get it,” she said.
Marco Lindsey, Berkeley Haas associate director of diversity, equity, inclusion, justice, and belonging, echoed that theme.
“You can’t imagine how different things are going to be 10 years from now, or 20 years from now. But you know what? You are going to be the reason that it’s different,” he said. “Because we’re going to have more people that look like us, who are founders of organizations, who are founders of business, who are creating pathways, and who are making pathways for other folks.”
The graduates also heard from Berkeley Haas Dean Ann Harrison, who assured them that although she went on to become a prominent economist, they already know more about finance than she did at their age. She urged the students to continue to draw on their new network.
“As you leave this program, I ask you to stayconnected to each other. Help each other succeed,” she said. “The people in this room are now a part of your social wealth, which, in my opinion, is just as important as financial wealth.”
Commencement speaker Elena Gomez, BS 91, chief financial officer at Boston-based Toast, told undergrad students to learn “when to take the shot or pass the ball.” Gomez said that some of her observations on teamwork come from coaching a basketball team of 10-year-old girls that had one clear star.
“Part of me was excited about winning a lot of games, but what joy would that bring without getting the rest of the team involved?” she said. “As a player or as a teammate in the workplace, and more importantly as a star, because I see a lot of stars out in the audience, learn when your teammates need you to step up and take that last shot.”
As a leader, she continued, “you will have the opportunity to help others, your team, your colleagues, imagine the impossible. As graduates from Haas, you are ready for all of that. You are ready to be a star and you are ready to pass the ball and you are ready to help others see in themselves what they thought was not possible.”
Dean Ann Harrison noted that:
54% of the undergraduates are women.
47% have earned a dual degree.
20% are the first in their families to attend college
“Look next to you–look in front of you–look behind you,” Harrison said. “You are surrounded by some of the smartest, boldest, coolest people you will meet anywhere in the world.”
Undergraduate Award Winners
Departmental Citation to the student with the most outstanding academic achievement in the field of business: Noah Oppenheimer
Question the Status Quo: Vedika Dayal
Confidence Without Attitude: Charissa Pham
Students Always: Jordan Laredo
Beyond Yourself: Vala Makhfi
Student speaker: Nina Dickens
Cheit Award for Excellence in Teaching:
Lecturer Stephen Etter, BS 83, MBA 89 Graduate Student Instructor (GSI) Khalil Somani, MBA 23
MBA Commencement (FTMBA + EWMBA)
Commencement speaker Frank Cooper III, BS 86, chief marketing officer at Visa, told graduates to embrace risk, reflecting on his transition from working in a law firm to the music industry.
“The fact that life is short is precisely the reason we should take risks rather than fear them,” he said. “It turns out there’s no such thing as a no-risk proposition anyway, even along what feels like the safest and surest path. From economic recession, to industry bubbles, to political surprises—we’ve all seen immovable mountains crumble.”
By taking a risk, Cooper said his varied experiences gave him the opportunity to work with extraordinary people, including Beyonce, Taylor Swift, Lionel Messi, Magic Johnson, Eva Longoria, and Forest Whitaker.
What did they share in common? “They had an idea about their purpose in the world and had the courage to push back against uncertainty,” he said.
Question the Status Quo: Alyssa Kewenvoyouma
Confidence Without Attitude: Via Abolencia
Student Always: Julia Konso Mbakire
Beyond Yourself: Julian M. Ramirez, Jr.
Berkeley Leader: Afraz Khan
Student Speaker: Ricky Ghoshal
Academic Achievement Award: Math Williams (3.992)
Cheit Award for Excellence in Teaching:
Professor Lucas Davis
Graduate Student Instructor (GSI) Zia Mehmood, MS 20, PhD 24
EWMBA 2023 Award Winners
Question the Status Quo: Bob Wang
Confidence Without Attitude: Ana Martinez
Students Always: Krupa Patel
Beyond Yourself: Supriya Golas
Outstanding Academic Performance: Andrew Hurley
Student speaker: Farzad Yousefi
Cheit Award for Excellence in Teaching: Evening MBA Program: Lecturer Maria Carkovic Weekend MBA Program: Assistant Professor Ambar La Forgia Graduate Student Instructor (GSI): Mahek Chheda
Wendy Guild has been named the new assistant dean of MBA programs, overseeing the admissions and program teams of all three Berkeley Haas MBA programs.
Guild, who begins her appointment on May 30, comes to Haas from the University of Washington’s Foster School of Business, where as the assistant dean of MBA programs she led marketing, recruitment, admissions, student services, curriculum, and operations of full-time, evening, and global MBA programs.
In her new role, Guild will engage deeply with students, faculty, and leadership within Haas and across the university to create a vision for the future of the school’s full-time MBA program, evening & weekend MBA program, and executive MBA program. She will champion the student experience; develop strong relationships across the Berkeley campus; and support and advance a culture of diversity, equity, inclusion, justice, and belonging.
“I know Guild will build on her outstanding work at her previous institutions and bring her academic intelligence, administrative gifts, and zeal for education to our students,” Dean Ann Harrison said. “We are very much looking forward to welcoming her and collaborating on the next great era of the Berkeley Haas MBA.”
“I know Guild will build on her outstanding work at her previous institutions and bring her academic intelligence, administrative gifts, and zeal for education to our students.” – Dean Ann Harrison.
Prior to her career at Foster, Guild served as assistant dean of strategic initiatives at UCLA Anderson School of Management, where she strengthened program development, board engagement, and strategic initiatives management. She taught leadership in executive education at the Yale School of Management and served as a program director and faculty member at the University of Colorado Denver’s Business School.
Guild is also an impressive scholar, Harrison said. She earned a PhD in organization studies at the MIT Sloan School of Management, where her research focused on creating engaging experiential learning content. At Foster, she taught numerous courses, with an emphasis on leadership, strategy, field studies, study tours, and sports and entertainment management.
Guild succeeds Jamie Breen, assistant dean of MBA programs, who is retiring.
The Haas School of Business at the University of California, Berkeley has been ranked #1 for finance research among almost 150 business schools worldwide in a new global research ranking.
Theranking is based on publications in the top six finance journals as well as a host of other top-tier economics, finance, and business journals from 2000 to 2023. It was prepared by the Olin Wells Fargo Advisors Center for Finance and Accounting Research at Washington University in St. Louis.
Berkeley Haas finance faculty came out on top for per-capita research output over the 23-year period. On average, they published .71 papers in top journals every year.
“We know that our finance faculty is incredibly strong, and this is quantifiable proof that they are true rock stars,” said Dean Ann Harrison. “We are very proud of the strength and influence of our finance researchers.”
The ranking considers articles published only by finance professors, as well as non-finance professors who have published at least three papers in the top three finance journals.
“Our group provides cutting-edge research in finance, and this ranking is a testament to it,” said Associate Professor David Sraer, chair of the Finance Group. “Given our brilliant junior faculty, I am confident this trend will continue in the future!”
Jayaditya Sethi, BS 24 (double major in business and computer science), along with Sahil Mehta, BS 23, (Business & Electrical Engineering/Computer Science) and Ethan Jagoda, BS 24, (computer science), founded Scribble AI, an AI startup that placed third in the recent UC Berkeley LAUNCH accelerator pitch day. The startup is also part of the Batch 16 startup cohort at the UC Berkeley SkyDeck accelerator. We recently asked Sethi, who will be a software engineering intern at PayPal this summer, five questions about Scribble AI. (Download the app here.)
Tell us what ScribbleAI is and how people use it?
Scribble AI is a simple mobile interface people can download that uses AI to effortlessly create customized written content live on iOS and Android phones. It can be used to generate emails, poems, tweets and everything in between across 12 different languages and 20+ style customizations.
What is your favorite way to use ChatGPT (an artificial intelligence chatbot developed by OpenAI)?
Our favorite use for ChatGPT is for debugging code as this was crucial for us to launch the app within two weeks without any prior mobile development experience.
How did you meet your co-founders Ethan and Sahil?
We have been close friends since starting at UC Berkeley. Sahil and Ethan met through the startup accelerator and consulting club [email protected] Ethan and I met through a class and are now roommates. We have all collaborated on previous projects, such as being part of [email protected] leadership and co-founding a music club together.
What is the most important takeaway from participating in LAUNCH?
Our biggest takeaway from LAUNCH was to constantly challenge our assumptions about our business. During each workshop, the mentors at LAUNCH questioned our hypotheses about our product and its use cases, helping us find a scalable business model. For example, we learned to find the root causes of a customer’s problem, rather than simply take what a user says at face value. These are lessons we will carry for years as we continue our startup journey!
What are your plans for Scribble AI now?
We plan to scale up traction in international markets, particularly among social media creators who need a tool to write content 10 times faster. We are also developing the premium version of our app, which will be tailored to each user’s specific needs
Growing up in Albuquerque, N.M., R. Martin (Marty) Chavez relied on his mother’s wisdom to help him forge his personal and professional identities.
“I remember sitting around the dinner table and by brother said, ‘I want to do something that helps Hispanics,’” Chavez said at an April Haas Dean’s Speaker Series event, co-sponsored by the Berkeley Culture Center. “My mom said, ‘that’s the dumbest thing I’ve ever heard. If you really want to help Hispanics, be really successful and be really visible, and that’s the way you can help Hispanics.’”
Chavez went on to do just that. After serving in a variety of senior roles at the investment banking company Goldman Sachs, he is now vice chairman and partner of Sixth Street, a San Francisco-based global investment firm.
A trailblazer who was among the most senior openly gay Latino Wall Street executives, Chavez helped turn trading into a software business by using data-based modeling.
“One thing that Goldman taught me is we don’t predict the future, because we can’t,” Chavez said. “Anyone who’s predicting the future is a charlatan.” Instead, he said, focus on having a “really deep model of what is going on right now, and then you can inspect that model and maybe you’ll find things that can go wrong in the future.”
A successful professional life, Chavez added, is about striking a work-life balance.
“There is just your life, and your short, sacred list of personal priorities,” he said. “Know those priorities. Make every choice according to the waterfall of your priorities.” Chavez shared his priorities, which start with “peace of mind” (which includes sleep and meditation), family, and then work.
“If (work) is not on your top-three list of priorities, you’re in the wrong company,” Chavez said.
Between high inflation, rising interest rates, and general economic uncertainty, it may not feel like the right time to plunge into the housing market. But if past patterns hold true, people who are living through this time may be more inclined to buy a house in the future.
New research co-authored by Berkeley Haas professor Ulrike Malmendier and forthcoming in the Journal of Finance has shown that people who experience periods of high inflation in their lifetimes are significantly more likely to own a home. This even holds true when people from high-inflation countries immigrate to the U.S.
“In short, people who have lived through a lot of inflation like to hedge themselves by putting money into a real asset,” said Malmendier, who coauthored the paper with UC Berkeley Economics alumna Alex Steiny Wellsjo, PhD 20, BS 10, now an assistant professor at UC San Diego’s Rady School of Management. “If this has been your experience and you’re choosing whether to rent or a buy a home, you might opt to buy.”
Inflation changes behavior
Building on Malmendier’s prior work, the paper is the first to show that personal experience with inflation can drive homeownership both within and across different countries.
The study is the first to show that Malmendier, who has spent much of her career demonstrating the long-lasting effect of economic shocks on people’s attitudes and behaviors, noticed striking differences in homeownership across Europe: 82% of Spanish households own their homes, while in neighboring France, the number is 57%. In Italy, less than half of 30-year-olds own a home, but nearly 80% of 60-year-olds do, while in the Netherlands there’s no difference between 30- and 60-year-olds.
This could be the result of distinct cultural attitudes about homeownership. And it could relate to institutional opportunities such as how the government subsidizes mortgages in one country versus another. But Malmendier, who holds a joint appointment in Berkeley Economics, thought something less obvious might also be at play.
Datasets from two continents
The researchers approached this question in two ways, on two continents. First, they paired homeownership data from Europe with experiences of inflation and looked both across countries and across individuals within countries. They found that countries with more historical inflation had higher rates of homeownership than those with more stable financial histories. Likewise, within a given country, people who had experienced greater inflation over their lifetimes were more likely to own a home than those who had experienced less. Numerically, increasing a typical household’s experience with inflation of 2% to inflation of 5.4% increased their likelihood of homeownership from 65% to 75%.
Next, the researchers collected information on 1.4 million households that had immigrated to the United States from a range of high- and low-income countries. Controlling as much as possible for things like relative income and wealth, they again found that past experiences with inflation were tightly coupled with levels of home ownership.
“When people come from a country with high inflation, it seems that experience really scars them,” Malmendier says. “Even when they’re in a completely different place with different monetary policies, they carry this worry that their money will lose value unless they put it into something like real estate.”
Experience with inflation even overshadowed housing market prices when predicting people’s decisions. While people who have witnessed a growth in value in the housing market are more likely to purchase a house, this experience is not as powerful a predictor of homeownership as living through inflationary periods.
What to do
The precise mechanism driving these results is an open question, but Malmendier suspects it might be related to “availability bias,” the psychological phenomenon in which our brains jump to the knowledge or experiences that are most salient to the issue on hand. If people face the choice of locking the value of their money into a tangible asset, they may be swayed by calling to mind a memory of currency values fluctuating wildly.
What to do about this fact remains a hard nut to crack.
Malmendier, who sits on her native Germany’s Council of Economic Experts, is heavily involved in the world of economic policymaking. While there is no clear prescription from findings like these, what she tries to convey to politicians is that “we need to think more about the long-term effects of crisis experience on people’s behavior,” she says.
To begin with, this means managing crises as quickly as possible to mitigate any lasting damage. At this moment, she noted, much of Europe is fighting very high inflation. This should be addressed as quickly as possible — a delicate challenge, Malmendier admits, as the cure can sometimes be worse than the illness; if interest rates are raised too high that can create economic woes of its own. “It’s complicated,” she said.
Translating psychology into policy
Beyond addressing crises as quickly as possible, though, Malmendier advocates for economic policy that is more deeply attuned to the nuance of human psychology. Current approaches, she said, often look for solutions in the wrong place. She offered the financial crash of 2008 as an example. Once the economy had been righted and again resembled its pre-crash state, consumer optimism remained relatively low. Economists began searching for subtle differences in the circumstances. Maybe people had lost income or savings? Maybe educational outcomes had changed? Politicians opened discussion of another stimulus.
In fact, it was the consumers, not their environment, that had changed.
“If I live through a financial crash, my brain has been reprogrammed, it has been scarred, different neural synapses have formed and been activated,” Malmendier says. “This person you’re talking about is now a different person. The policymaking realm does not put enough thought into this.”
When done right, the gig economy can mutually benefit companies and workers. Companies can tap into deep and vast labor pools. And workers can create their own schedules, enjoying flexibility and working as much—or as little—as they want. But that can also create some headaches. What if workers collectively only want to work during specific times? What incentives can get them to work more hours more often?
A recent study coauthored by Berkeley Haas Assistant Professor Park Sinchaisri set out to answer these questions. The study, published in the journal Manufacturing & Service Operations Management, concludes that financial incentives increase both the frequency and duration that people work. The study also finds workers will work less after reaching a daily or weekly financial goal, but those that start work earlier in the day are more likely to work beyond the time required for their financial goal.
Robust data set includes nearly a year of ride-hailing data
Sinchaisri and his fellow researchers—Gad Allon of the University of Pennsylvania’s Wharton School and Maxime Cohen of McGill University—utilized a comprehensive data set from a U.S.-based on-demand ride-hailing company. The data included 358 days’ worth of driving activities and financial incentives for drivers in New York City between October 2016 and September 2017.
The data included thousands of drivers and millions of work shifts, as well as each driver’s vehicle type, experience with the platform, number of hours driven, and financial incentives offered and earned. “The key advantage of our data is that we observe the incentives that were offered to every driver regardless of the decision to drive. In other words, even for drivers who decided not to drive for a particular time period, we still know their offered wage and promotions for that period,” the authors wrote.
Drivers demonstrate an ‘inertia’ when it comes to working hours
Perhaps not surprisingly, the researchers found that drivers have an ‘income-targeting behavior’ easily tracked in most apps that give real-time earnings reports. That is, drivers will work toward their income goals but are less likely to work once they meet them.
More surprisingly, Sinchaisri and his team found an ‘inertia’ regarding working hours. Workers who have previously worked longer shifts are more likely to start a new shift or work longer than drivers who have worked less. The finding goes against previous research on taxi drivers, who have more of a “time-targeting behavior.”
“This difference could be driven by the unique flexibility of gig work,” the paper says, suggesting that inertia could represent drivers’ strategic behavior.
“Inertia is why it is so hard to bring gig workers back after the pandemic—they currently aren’t used to working day after day, so it’s a matter of attempting a cold start,” Sinchaisri said. “However, there is a flip side. Once these workers go back to working, they are much more likely to continue working.”
Get to know your gig economy workers
Sinchaisri says getting to know your workers better can help create more specific targeted incentives. Companies should ask gig economy workers what specific goals they have to understand their workers more and make adjustments based on that feedback, Sinchaisri advises. “Once you know your workers’ goals, you can think of better ways to incentivize them,” Sinchaisri points out.
Or, as the paper states, “Targeting specific workers with different incentives can be beneficial. We examine how the platform can improve its operational performance by offering personalized incentives based on workers’ attributes.”
Incentives are good, but not everything
While incentives are good, and Sinchaisri says gig companies should pay their workers as much as possible, good pay and incentives alone are not everything. And in today’s climate, where gig workers have plenty of options, companies should do what they can to continually attract and retain workers.
“The recent rise of the gig economy has changed the way people think about employment,” the paper states. “Unlike traditional employees who work under a fixed schedule, gig economy workers are free to choose their own schedule and platform to provide service. Such flexibility poses a great challenge to gig platforms in terms of planning and committing to a service capacity. It also poses a challenge to policymakers who are concerned about protecting workers.”
As this research suggests, that also goes into considering behavioral factors.
“We find that financial incentives have a positive effect on the decision to work and on the work duration, confirming the positive income elasticity from the standard income effect,” the paper concludes. “We also observe the influence of behavioral factors through the accumulated earnings and number of hours previously worked. The dominating effect, inertia, suggests that the longer workers have been working so far, the more likely they will continue working and the longer duration they will work for.”
Sinchaisri noted that these insights are not specific to the particular platform they studied, and could apply to other types of gig-work platforms. “Many gig platforms do offer more certainty in pay,” he said. “This could be one way to improve the retention and the motivation of the workers.
The Win: First place in the NAIOP San Francisco Bay Area (SFBA) Real Estate Challenge, held April 27. The friendly real estate development competition between UC Berkeley and Stanford celebrated its 34th year, with Cal taking home the coveted James W. Brecht Memorial Golden Shovel. The team’s $2,000 prize is donated to the nonprofit Challenge for Charity.
The Team: The Cal team included two Haas MBA students, Marshall Slipp, MBA 23, and Jack Woodruff, MBA 23; and three students in the UC Berkeley Master of Real Estate Development and Design program, including Esmeralda Jardines, MRED+D 23; Jordan Doane, MRED+D 23; and Serena Lousich, MRED+D 23.
The Challenge: Each year, organizers pick a development site that’s within driving distance of Berkeley and Stanford. Students don’t find out where the site is until the night before their first meeting. This year’s site was the San Francisco Wholesale Produce Market. “Typically the site that’s selected has challenges associated with it that make the development associated with it complicated,” says Marshall Slipp, MBA 23. “As a team, you have to work through those challenges.” The team had nine weeks to prepare a 100-page proposal explaining the vision, site design, development phases, and financials for the deal. In this case, the largest challenge was the limited equity available for the redevelopment project.
The Pitch: The UC Berkeley team pitched a plan to unlock as much equity as they could by obtaining permanent financing for some of the buildings that would remain on the site long-term. They also proposed a small capital campaign for the nonprofit owner and bringing in the expertise of a joint venture partner for redevelopment. “Bringing in a joint venture partner to help redevelop the site provides a lot of advantages in terms of raising capital, obtaining better financing terms, understanding the development process, and managing the redevelopment process,” Slipp said.
The Clincher: The UC Berkeley team proposed a multi-story industrial development that would upgrade the San Francisco Produce Market with cold storage facilities and a commercial kitchen hub for local food-based businesses. The design also featured fleet storage space for electrified autonomous vehicles, making the project financially feasible and readying the Produce Market for a new era of logistics and delivery.
The Haas Factor: The team credited Haas’ overall strength in real estate. Competition advisors Abigail Franklin and Bill Falik and the Fisher Center for Real Estate and Urban Economics faculty worked to validate and challenge the team’s assumptions. They also helped connect the team to developers, property managers, prospective tenants, and financiers. Leveraging these networks, the team conducted more than 60 interviews to hone their ideas and complete due diligence. In addition, this year’s team received coaching and moral support from last year’s winners, which helped the team stay inspired, refine the process, and benchmark progress.
Haas Voices is a first-person series that highlights the lived experiences of members of the Berkeley Haas community.
Matt Solowan, MBA 23, embodies the Berkeley Haas Defining Leadership PrincipleQuestion the Status Quo in both work and life. In this Haas Voices column, Solowan discusses their commitment to workplace inclusivity, their work as a marketer at L’Oréal, and a love of all kinds of dance. Solowan will join Bain & Company in New York after graduating this month.
“Dance has always been a passion of mine. Growing up on Long Island, I did tap, jazz, ballet, lyrical, and hip hop lessons from a very young age. In high school, I was on the kickline team and we performed at football and basketball games and competed in local and national competitions. Dance was my entire life. But when I got to USC as an undergrad, I realized that it wasn’t something I wanted to do professionally, so I took it as a minor and then picked up economics, along with Italian, as a major.
As a junior at USC, looking for a summer internship, I remember this one interview I had with a bank. At that time, I presented quite femininely. I had longer hair and wore makeup. I sat down and saw this smug guy looking over my resume. I had a 4.0 as an economics major and he spent the entire time grilling me about my dance minor, correcting me that dance was my “hobby” when I called it a “passion.” That was all he could see. He didn’t care that I had a 4.0 in economics. I could tell he’d written me off the minute that I walked into the room.
I had a 4.0 as an economics major and he spent the entire time grilling me about my dance minor, correcting me that dance was my “hobby” when I called it a “passion.”
I left that interview feeling so dejected and made a point that this was the type of person that I would prove wrong in my career. Luck would have it that within the next week or two, I went to an event that L’Oréal was hosting on my campus.
At that time, I didn’t even know that you could market beauty products as a career. But when I met with the L’Oréal recruiter it was a total 180 from what I had experienced at the bank interview. Without looking back, I accepted an internship, which turned into a career working on the marketing teams across a handful of L’Oréal-owned brands, including IT Cosmetics, Maybelline, and Garnier.
Making a mark at L’Oreal
Here, I learned that having as many diverse voices as possible on work teams is so critical as it impacts everything from the makeup shades a company markets to how the company hires for its advertising campaigns. There is a pervasive culture in large beauty organizations, where beauty is viewed through the eyes of the white male gaze—white, European features, thinner, and younger women. But you have junior talent who are ready to break away from that and the old-school view of beauty.
On one brand launch I worked on I was given was a rainbow-handled makeup brush for Pride Month. I immediately flagged the launch as “rainbow-washing,” —which is when businesses use rainbow colors to suggest support for the LGBTQ community without making any tangible effort to positively impact the lives of LGBTQ people. I reached out to L’Oréal’s employee resource group for LGBTQ employees, who put me in touch with a local charity and I worked with them on a plan to have some of the sales from the brush tie back to a center for LGBTQ youth.
I was devastated when my plan was rejected by a company manager due to budget cuts. But then one of our key retailers put the brush on their website earlier than anticipated and immediate backlash from consumers started flooding in. I could have had a “told you so” moment.
Instead, I reached back out to that charity, and got things back in motion and we officially launched the brush tied to this charity. Doing what’s right isn’t always easy, which I experienced first-hand modeling for some of the brand campaigns. These multimillion, sometimes billion-dollar brands, often have employees shoot videos and images to post on social media. I was featured in quite a few of their marketing materials that went up on our Instagram. As a model, I would get very nasty hate comments from some of our consumers. That was very hard for me to reckon with. I was an employee of this brand putting my face forward and some of the consumers of this brand had a negative reaction to seeing me.
Doing what’s right isn’t always easy, which I experienced first-hand modeling for some of the brand campaigns.
But looking back, it is something I’m very proud of. I helped push a brand forward. My motto has always been, if I can have one person look at that image, and see themselves represented and feel like there is a space for them, that means much more to me than a hundred negative comments from people who really do not matter to me. It’s a trade off I’m willing to make.
Why an MBA?
At L’Oréal, I met a few people I admired for the way they spoke and presented, and the way that they tackled problems. I found out that a lot of them had MBAs and had previously worked in management consulting. It was a formula that I thought might be a good path for me.
When I came into Haas I was determined to land an internship in consulting. One of the most helpful resources to me at Haas was the second year peer advisors who had just gone through the recruiting process. They were the ones who looked at my resume, reviewed my cover letters, and were practicing cases with me during the fall and into winter break. We have a very strong pay-it-forward culture at Haas. I ended up becoming a peer advisor myself, working with both the second-years in my class who were recruiting for full-time roles in consulting and the first-years recruiting for internships. I think that was one of the most rewarding things I did at Haas.
We have a very strong pay-it-forward culture at Haas.
Heading to Bain
I chose Bain over other firms I received offers from because, even though it has a generalist model and I am hoping to specialize in retail and consumer early on, I loved all of the people that I met at Bain during the recruiting process. They were in many ways similar to the people I know at Haas: very down to earth, very kind, very warm, very supportive. I knew that consulting would be a tough job. I knew the hours would be long. It’s a rigorous role to go into post MBA. I wanted to make sure that I was surrounded by a good support system and I felt like I had met people there who would be cheerleaders for me. That carried a lot of weight.”
A student team that imagined a plan for Hyundai Cradle to build an electric-powered mobile medical fleet and market it in North America won the 2023 Haas Purpose-Built Vehicles (PBV) Challenge.
Hyundai Cradle, Hyundai Motor Group’s Mountain View, Calif.-based open innovation and investment arm, sponsored the challenge, which was held April 23 at Berkeley Haas.
Cradle challenged students to develop novel business models for the company’s future PBV market launch in North America. Hyundai Motor Group is in the final stages of building a flexible automobile base, called a skateboard, that can be used to produce many kinds of PVBs—vehicles ranging from ambulances to passenger shuttles to delivery fleets for small businesses.
The first-place team took home $15,000 for its pitch. Winning team members included Srivatsa Chakravarthy, EWMBA 25; Oleksandr Krotenko, EMBA 23; Victoria Marcus, EWMBA 25; and Simeon Ryan, EWMBA 25.
The competing teams, composed of graduate students from across all three Haas MBA programs and the UC Berkeley School of Information, participated in a semester-long series of training sessions, focused on the Lean Startup method and customer discovery training. The top three finalist teams were then tasked with finding and validating novel business models for PBVs that they pitched to judges at the end of the program.
“This was a fantastic way to showcase students from across all three of our MBA programs,” said Rhonda Shrader, executive director of the Berkeley Haas Entrepreneurship Program (BHEP). “The program also provided a perfect opportunity for our MBA students to work with top graduate students from across the campus.”
Solving real problems
The winning group pitched a fix for emergency medical services that they described as “antiquated, expensive, and ripe for technological disruption.” The team suggested that Cradle partner with industry leader AMR (American Medical Response) to capitalize on the company’s market share and need to contract with an outsourced fleet.
Marcus, who works in corporate finance, said she was excited to work on solving a real problem experienced by a company outside of her industry.
“Going through the pitching process with judges was the pinnacle business school experience I’ve always wanted to try since I started my EWMBA,” she said. During Lean Launch, she said her group conducted more than 30 interviews with potential clients. “We had to pivot a couple times from our original idea to make sure we were solving problems for them,” she said. “Ultimately this led us to think hard and adapt so we could develop a detailed business plan that would benefit potential clients.”
During the pitch day, Kia’s vice president of new business planning, Ju yup Kang, a judge for the competition, outlined how KIA is transforming from a car company to a “full mobility solution provider.” Henry Chung, senior vice president and head of Hyundai Cradle, said the students had clearly put in a lot of effort to develop creative solutions to difficult problems.
Chung; Kang; Changwoo Kim, a chief coordinator at Cradle; Tafflyn Toy, an open innovation project manager at Hyundai Cradle; and Nick Triantos, chief architect, automotive system software at Nvidia, served as the final challenge judges.
Team Ingenium took second place ($10,000) with a pitch for all-in-one fleet management. Members included Reggie Draper, EMBA 23; Michael LaFramboise, MBA/MEng 24; Matthew McGoffin, MBA/MEng 23; and Michael Yang, MIMS (master of information management and systems) 23.
Team Mobility Moguls took third place ($5,000) for a strategy that addressed a mobile future for police & security. Team members included Anmol Aggarwal, EWMBA 24; Suveda Dhoot, MBA 24; Hrishikesh Nagaraju, MIMS 24; Nithin Ravindra, EWMBA 23, MIMS 24; and Lutong Yang.
An MBA student team won first-prize funding for a startup that’s helping to make supply chains more efficient for small Brazilian farmers at last Friday’s Invest for Impact Pitch Competition.
The winning team, pitching on behalf of startup Clicampo-Arado, included Arsal Khanani, EWMBA 24, Byungwoo Han, MBA 23, Gui Klingelfus, MBA 23, Mateus Loesch, MBA 23, and Vivian Hare, EWMBA 23.
Clicampo, now rebranded as Arado, secured a $75,000 investment, awarded by a panel of industry judges, including Michelle Kiang, managing partner and co-founder at Impact Science Ventures; Matt Caspari, managing partner at Alumni Ventures, and Joshua Posamentier, managing partner at Congruent Ventures.
Klingelfus said he was thrilled by the team’s first-place win. “What set our team’s pitch apart was the fact that we highlighted both Arado’s social impact and its financial success, demonstrating that they are ready to scale.”
Loesch said pitching during the competition helped prepare him if he chooses to pursue a career in venture capital or entrepreneurship, as he learned about how industry pros analyze a startup’s potential.
“I don’t believe that I would have had the same experience in other classes in the MBA program,” he said.
Reducing food waste
Five MBA student teams pitched during the competition addressing some of the world’s most pressing challenges, including food waste, financial access, health, and renewable energy. The teams included Team Health & Wellbeing representing startup Shezlong; Team Sustainable Supply Chain representing startup Diferente; Team International Development representing Farm to Feed, and Team Climate Tech representing Oceans-Sway.
Arado’s prize comes on the heels of two other funding rounds over the past year for the startup: a $7.5 million seed round and $12 million series A funding round. Founded in 2021, Arado connects small to midsize farmers in Latin America directly with restaurants and food retailers.
“Food waste is one of the main problems in the world now, and Arado came up with an innovative solution that increases the system’s efficiency and that contributed to the success of our pitch,” Loesch said.
The day also included a report from the Sustainable Investment Fund course, the first and largest student-led SRI fund within a leading business school. It offers MBA students real-world experience in delivering both strong financial returns and positive social impact in public markets. Since 2008, the student principals have more than tripled the initial investment to over $4 million.
Freada Kapor Klein, the founder of the Level Playing Field Institute, who gave a keynote at the event, noted the importance of investing in impact startups that help close opportunity gaps for communities of color and low-income communities.
In investing, “we look at one’s lived experience,” she said. “What hurdles do they encounter along the way, and how did those hurdles give them an idea for a startup that might solve the problems?”
The changes in the part-time and full-time MBA outcomes are largely due to drastic changes in the rankings factors.
The Berkeley Haas EWMBA Program, which includes our evening, weekend, and Flex cohorts for working professionals, regained the top spot after four years, thanks to its improved peer assessment and an increased emphasis on the significant work experience of Haas students. Chicago Booth dropped to #2 from #1.
The FTMBA programtied with Columbia and Duke for the #11 spot this year. Columbia and Haas previously tied for #8, while Duke ranked #12 in 2022. U.S. News increased the weight of placement success—compensation and employment within three months of graduation—to 50%, compared to 35% previously. The weighting of quality assessments, including the peer and employer polls, decreased to 25%, compared to 40% previously.
Haas reported significant increases in career outcomes for the FTMBA Class of 2022. Starting salaries were up more than $10,000 from the prior year, and 92.7% of graduates had started jobs three months after graduation. Amazon, Bain Consulting, and McKinsey & Co. were the top three hiring firms, followed closely by Adobe, BCG, Deloitte, and Google. While many Haas graduates benefit from stock options, which do not factor into U.S. News, and some take lower salaries initially to land the jobs of their choice, their lifetime career earnings are among the top three of all business schools, according to Payscale.
“The ROI of the Berkeley Haas MBA remains strong,“ said Jamie Breen, assistant dean of MBA Programs. “According to the Financial Times, our alumni reported earning the fifth highest salaries in the world three years after graduating.”
The Berkeley Haas MBA for Executives Program ranked #9 among EMBA programs, compared to #7 last year. This ranking continues to be based entirely on peer assessment by deans and full-time MBA directors.
In the U.S. News specialty rankings, based on peer assessment, the FTMBA ranked in the top 10 in the following areas:
#4 Real estate
#6 Business analytics
Overall, the five ranked Berkeley Haas degree programs appear in the top five in key rankings:
FTMBA: #4 among U.S. schools in the Financial Times
EWMBA: #1 among part-time MBA programs in U.S. News
MBA for Executives: #1 in the last published Economist EMBA ranking (2020)
New research published in the Journal of Monetary Economics
BERKELEY, Calif.—Inflation is back with a vengeance. Prices of goods and services have risen at rates not seen since the 1980s, slamming households, small businesses, corporations, and governments at all levels.
But new research by Berkeley Haas Associate Professor Yaniv Konchitchki finds that most corporations that face significant risk from inflation have failed to disclose it. Inflation has caused trillions of dollars in shareholder stock price loss damages thus far and is threatening major additional losses for shareholders.
In a paper published in the Journal of Monetary Economics and coauthored with Jin Xie of Peking University’s HSBC Business School, the authors show that when it comes to inflation, companies widely ignore U.S. Securities and Exchange Commission (SEC) legal rules requiring them to disclose important risks to their business. The authors developed a novel approach to extracting the attitudes and beliefs of corporate managers toward inflation risk from SEC reports, by examining over 65,000 10-K annual reports filed by major corporations with the SEC from January 2005 to April 2021. They discovered that, despite SEC legal requirements to disclose risk factors, more than 61% of the companies at high risk when prices rise never mentioned inflation or used inflation-related words in the risk disclosure section of those reports.
The failure of exposed companies to disclose inflation risk is not a trivial matter. Securities laws require public companies to disclose risks to their business in order to protect investors. “Corporate executives do not follow the legal requirement to warn shareholders about inflation risk,” said Konchitchki, an expert on the interface between capital markets, corporate financial reporting, and macroeconomics. “Several trillions of dollars in shareholders’ wealth have been damaged, and more are at stake.”
Consider the losses on stocks over the past one-to-two years of rising inflation. Any individual or institutional investor who holds shares in companies, directly or indirectly—such as through retirement accounts—has suffered losses, Konchitchki said.
“Our textual analysis of corporate reports filed with the SEC reveal that executives in many of these companies never mentioned—even once over the past several years of our sample period—the word inflation, inflation-related phrases, or that the companies are highly exposed to inflation risk,” he added. “Diligent investors, plaintiff attorneys, and regulators should ask, and will probably be asking, ‘Why didn’t you tell us?’”
The paper’s findings and framework enable the identification and evaluation of shareholder damages—especially for firms with inadequate risk disclosures—and could transform corporate disclosure practices, inflation expectations, and monetary policy, Konchitchki said.
The risks of inflation
Inflation can hurt companies in a variety of ways. For example, companies currently hold in total hundreds of billions of dollars in cash on their balance sheets. “Inflation erodes the purchasing power of these cash amounts, generating massive losses that are not shown in their financial statements because the U.S. financial reporting regime is nominal—i.e., it ignores inflation effects,” Konchitchki said.
Furthermore, the authors show that inflation risk exposure is common across almost all industries. Restaurant chains that can’t raise menu prices as fast as the soaring costs of food see their profit margins squeezed—imagine a burrito and the avocados that go into it. Utility companies that need a regulator’s approval to raise prices when costs rise are also highly exposed to inflation shocks. Silicon Valley Bank collapsed recently because it was holding billions of dollars in long-term government bonds that plunged in value as the Federal Reserve raised interest rates to combat inflation.
Given inflation’s increasing prevalence, there are emerging examples across many industries that Konchitchki said he is monitoring to study the macroeconomic effects of inflation.
Damages to shareholders
Konchitchki and Xie identified companies highly vulnerable to inflation by looking for those that had seen their share prices drop following inflation shocks, that is, when inflation data was released showing prices had risen more than had been forecasted. “We developed a measure to determine the extent to which shareholder value was damaged by unexpected inflation,” Konchitchki explained. The authors found that 14-18% of the companies in their sample, calculated across all industries, are exposed to rising prices.
The failure to be warned about inflation risk could be devastating for shareholders. Konchitchki and Xie created a model to simulate stock price losses if inflation shocks occurred in a 2-6% range over three years. The model projected total shareholder damages of $0.9 trillion to $2.8 trillion for shareholders of inflation-exposed companies.
One thing did seem to change the practices of corporate executives: getting sued. Companies exposed to inflation that had been targets of shareholders’ securities class action lawsuits were more likely to begin disclosing inflation risk, the authors discovered. In contrast, companies that were not exposed to inflation risk did not change their reporting practices following such class action lawsuits.
Why would companies not discuss inflation dangers in their annual reports? Konchitchki doesn’t believe that executives are trying to pull the wool over investors’ eyes. After all, a failure to provide adequate disclosure puts executives and their companies in jeopardy of legal action and regulatory sanctions.
The most probable explanation, Konchitchki said, is “rational inattention”—the economic theory that decisionmakers can’t process all available information but can rationally choose which pieces of information to pay attention to. The potential damage from rising prices just isn’t on the corporate radar screen—perhaps especially among Gen X and Millennial managers who have never experienced periods of runaway prices. “Because inflation has been relatively low over the past decades and/or identifying the damages from inflation might have been too costly, executives haven’t been attuned to it,” he suggests. He predicts that in coming years executives will be more liable, and thus will pay more attention to inflation if they wish to reduce their legal liability and excel in their jobs.
This lack of attention is also a problem for Federal Reserve policymakers who have been loudly warning about inflation and its risks in a bid to manage expectations of corporations and other players in the economy. Konchitchki’s and Xie’s research shows that many executives aren’t getting the message.
As a founder of a new research area that he termed macro-accounting, Konchitchki pioneered the examination of linkages between accounting data, capital markets, and the macroeconomy. He believes there’s a larger lesson in the failure to recognize the threat of rising prices in financial reports.
“There is a disconnect between executives and an understanding of the macroeconomy,” he said. “We’ve seen shortcomings in appreciation of how inflation can be disruptive. It’s important that corporate managers become more familiar with macroeconomic and accounting research and take a more holistic approach, considering how economic turbulence will affect the financial performance of their businesses.”
Going forward, given the increase in the level and fluctuations of inflation, the effects analyzed in the paper will be even more critical for executives, shareholders, attorneys, and the macroeconomy, he said. And the methodology developed in the paper can be generalized to other macroeconomic risks. “Executives can improve their companies’ performance and risk management by adopting a macro-accounting, research-based approach, which focuses on assessing the effects of current and forecasted macroeconomic fluctuations—such as inflation, recessions, wars, and other economic uncertainties—on their accounting performance metrics.”
Lisha Bell, BCEMBA 12, who leads the Economic Opportunity Fund at PayPal Ventures, has been chosen as speaker at the Berkeley Haas MBA for Executives commencement, which will be held June 3.
Bell brings over 20 years of demonstrated technology innovation focused on digital money movement. Her career has focused on building and investing in products that serve community needs to bridge the capital divide.
At PayPal Ventures, she leads the Economic Opportunity Fund, the 100M investment into diverse emerging fund managers. Prior to Paypal, she worked at Venmo, Wells Fargo, Kohl’s, and Feedzai in various payment related roles, building the earliest digital financial products including online banking, bill pay, and digital wallets.
Bell is cofounder of BLXVC, an angel syndicate comprised of moms funding Black and Brown founders.
She is also the host of the Sisters with Ventures Podcast, which tells the stories of women in venture capital, and the prior deal flow lead for Pipeline Angels, a group of impact investors focused on women. Bell is also board chair for Black Girl Ventures.
She holds a BS in Business Administration and Information Systems from USC, and an MBA from the (former) joint program between UC Berkeley and Columbia Business School. She was recognized as USC’s Widney Outstanding Alumna and a 2013 Berkeley Columbia Distinguished Service Award recipient.
John Graft, MBA 24, admits that he went “a little overboard” competing in four stock competitions during his first year at Haas. But the hours spent paid off. His team’s stock pitch in front of judges at University of North Carolina Kenan-Flagler led to a coveted summer internship offer at his first-choice firm: Harris Associates in Chicago.
“The person who interviewed me at Harris had listened to me pitch at the UNC competition,” Graft said. For Graft and a group of Berkeley Haas students focused on careers in public markets investing, stock pitch competitions are an integral part of the Haas finance experience, allowing students to synthesize stock research and network with top firms that often judge the competitions.
Public markets investing is on the rise at Haas, said Bill Rindfuss, executive director of strategic programs for finance. Six first-year students seeking positions in public markets investing accepted summer internships at top investment firms including Blackrock, TCW, PIMCO, Clearbridge, Harris Associates, and Neuberger Berman.
“A decade ago we had up to a dozen MBA students going to public markets investing roles in a year,” he said. “Over time, student interest shifted more to tech investment banking and venture capital. While those interests remain strong, it’s great to see public markets investing bouncing back.”
Multiple internship offers
In a particularly difficult year for hiring, Haas exceeded expectations this year, with some students receiving multiple offers, said Ryan Tan, MBA 23, a Double Bear and the Berkeley Haas Investment Club president, who has worked closely with undergraduate and MBA peers to create more finance opportunities. That included bringing an impressive array of top industry speakers to Haas like Christina Ma, MBA 01, a partner and head of Greater China Equities at Goldman Sachs; Ben Meng, MFE 03, executive vice president and chairman of Asia Pacific at Franklin Templeton, and Ben Allen, MBA 05, CEO of Parnassus Investments.
In a particularly difficult year for hiring, Haas exceeded expectations this year, with some students receiving multiple offers. — Ryan Tan, MBA 23
Wearing many hats, Tan is also a graduate student instructor for the undergraduate Financial Economics course and a principal with the pioneering Haas Sustainable Investment Fund. (Since 2008, student principals in the Sustainable Investment Fund have more than tripled the initial investment to over $4 million, learning about SRI and ESG investment strategies and practices.)
Students in the public markets investing track agree that their group is collaborative, helping each other both in class and during job searches. They’re also given the chance to participate in a half-dozen stock pitch competitions that the club enters annually.
At competitions, teams develop a thesis around a stock or bond, build a financial model to value the security, evaluate the risks of the investment, and build a Powerpoint after synthesizing the research. “You put this together and pitch the security to a panel of judges, all of whom work at the top investment management firms,” Graft said.
Navigating pitch competitions
MBA students credit Tan for mentoring teams on how to navigate a pitch competition.
“He helped us to understand what the judges were looking for,” said Austin Schoff, MBA 24, a co-president of the Haas Investment Club, who led an MBA student team at the MIT Sloan School Stock Pitch Competition last November. Haas placed second at MIT Sloan, second at Chicago Booth, and third at the UNC Alpha Challenge.
Schoff, who came to Haas planning to pivot from private wealth management, landed an internship this summer with the equity research team at TCW.
“Ryan has done an enormous amount of work,” said Steve Etter, who teaches finance at Haas and is a founding partner at Greyrock Capital Group. “It’s nice to see when a student goes beyond himself for the benefit of all.”
Xavier Jefferson, MBA 24, competed in a pitch challenge online hosted by Columbia Business School and at the in-person event at Chicago Booth.
“At Haas, we go to as many challenges as we want and that gives you exposure to all the firms and prepares you to pitch a stock or bond,” he said. “That’s a huge part of the interview process, and having the practice of pitching gives you a leg up.” A Toigo Fellow and a Haas Finance Fellow, Jefferson will intern at Clearbridge this summer.
“At Haas, we go to as many challenges as we want and that gives us exposure to all the firms and prepares you to pitch a stock or bond.” —Xavier Jefferson, MBA 24
After participating in multiple pitch competitions—as usually the only woman or one of two women—on the team, Meredith Albion, MBA 24, noted that the competitions would benefit from having more female members.
As a Berkeley Haas Finance Fellow in investment management Albion was assigned a female mentor, who helped prepare her to interview for summer internships. (All 12 of the Finance Fellows named each year are assigned a Haas alumni mentor.) Albion credits her mentor with helping her land an internship at PIMCO in Newport Beach this summer. Like other first-year MBA students in the Investment Club, she plans to work on the Haas Sustainable investment Fund next year and integrate sustainable investing into her career.
With Albion, Schoff, and Graft at the helm as co-presidents of the Haas Investment Club —Tan said he’s confident that Haas will continue its success.
“The message we need to get out is that if you come to Haas for investment management and sustainable investing you will be involved and plugged in, you will be given mentorship,” Tan said. “And people get jobs.”
When Jin Kim and Tarek Mohammad, both MFE 23, met at orientation for the Berkeley Haas Master of Financial Engineering program last year, they instantly connected over a shared passion for blockchain, crypto, financial systems, and entrepreneurship.
Intense discussions, many times lasting until 4 a.m., led Kim and Mohammad to launch hyphen labs, a platform for industry decentralized finance (DeFi) trading. DeFi is a broad term for applications and projects in public blockchain geared toward disrupting traditional finance.
While at Haas, hyphen labs was accepted to the UC Berkeley SkyDeck accelerator cohort, and was the first MFE-founded startup to make it into the Techstars accelerator program. Kim and Mohammad, who launched hyphen in November 2022, are now heading to Miami and Boston to raise a seed round.
In this interview, they discuss what led them to Haas, the experience of launching a fintech startup, and the challenges ahead.
Haas News: Tell us a bit about your background and what led you to Haas?
Tarek Mohammad: I have a unique story because I come from a unique place. I studied economics and actuarial science as an undergraduate in Lebanon. However, starting in 2019, Lebanon experienced huge economic turmoil. The government defaulted on its government bonds, and then the banking system defaulted. I lost all my personal savings. By that time, I was working for KPMG as a consultant. Then Covid hit. During that period, the ammonium nitrate explosion hit the Port of Beirut in August 2020. The KPMG office was five minutes walking distance away from the explosion and one of my managers died.
With all of this change and turmoil, I decided to create a fintech startup. I quit KPMG. By then, I’d decided that the banking system needed to be fixed, and the only way to do it was through blockchain because with blockchain, there are no intermediaries. Then I applied to the Master of Financial Engineering program at Berkeley Haas and arrived in the states in March 2022. During my studies, I won the Franklin Templeton Blockchain contest in Palo Alto. After this, Jin and I decided to partner on a venture together and never looked back.
I’d decided that the banking system needed to be fixed, and the only way to do it was through blockchain. — Tarek Mohammad.
Jin Kim: I am from South Korea and worked in AI research as a machine learning researcher. That got me interested in trading with AI algorithms and a professor at my school. I started and ran a small hedge fund focusing on U.S. equity and crypto investments using AI. Though trading was still my thing, crypto trade got me more into the blockchain itself. So, I went to work as an investment analyst intern at the VC arm of Dunamu, the biggest crypto exchange in Korea. Since I liked finance trading, algorithms, and crypto, I thought I should attend a master in financial engineering program. The best program out there happened to be Berkeley, which is also near Silicon Valley. It fit both of my goals: to get a bit more academic and hands-on experience in the field and exposure to people who like to take risks and try new things.
What does the company do?
Mohammad: What we’re trying to do is build an infrastructure for institutions to be able to get crypto exposure, specifically on DeFi. So, if say, BlackRock wants to access the DeFi infrastructure or trade on crypto on DeFi, they can use us because we provide a solution. We hold custody of their assets and provide them with a DeFi interface and infrastructure that provides some compliance and comfort.
When did you realize that your idea was unique and could work?
Kim: It wasn’t a simple “aha” moment. We interviewed our potential clients every day to hear what they needed and found that every client is different, so their respective needs are also different. It helped us greatly to pause every now and then to review what we learned. With these quick pauses and iterations, we saw a pattern emerging with many people dealing with a problem that was worth looking at. Then we had a feeling about what would work.
We saw a pattern emerging with many people dealing with a problem that was worth looking at. — Jin Kim
What are some of the challenges that you all are facing while building a startup?
Mohammad: It’s a perfect time to be a builder, but it’s a challenging time for fundraising, especially over the last few weeks with the banking meltdown. On the personal side, we also have unique challenges. As international students, it isn’t easy with our visas. Many international classmates immediately go to work after graduating for visa reasons instead of going into entrepreneurship directly. But running a startup, we needed to consider our visas while we figured out the payroll, hiring, and acquiring talent. Moreover, we also needed to figure out the product itself. I’m talking to customers every single day.
What did it mean to get accepted to Techstars, and how has the experience been?
Mohammad: It’s really a great community. It’s a hub for entrepreneurship, one of the biggest hubs in the world, and one of the biggest funds. Of course, the process was challenging, with a low acceptance rate. But it’s an ecosystem. You’re surrounded by people you can relate to, people who are builders and ex-founders. So, it’s more of an ecosystem for us. It’s a lifetime membership.
What are some ways in which the Berkeley Haas community has helped you throughout this process?
Mohammad: We worked within the MFE network and the broader Haas alumni network. We get a lot of answers regarding our product and our company’s direction from talking to these people. So mostly, we think about this from the networking side and how existing students and MBAs with industry experience can help us shape our direction.
What was something that really attracted you to Berkeley Haas and how has being in Berkeley helped you in your pursuits?
Mohammad: Maybe it’s a cliche, but some of the greatest startup companies come from Berkeley—firms like Intel, Tesla, and SanDisk. These companies are considered the north stars in their respective industries. Being in the Berkeley ecosystem pushes you every day to create and innovate. Beside Techstars, we got into SkyDeck, the incubator batch. This allowed us to connect to founders on campus. School for us was not just a place to study, but also a workspace to meet fellow founders and innovators. Finally, the campus location near Silicon Valley in the Bay Area boosted our reach outs and accelerated our product discovery. And I think that the international aspect and diversity here helps. On the mentor side, we are lucky to have Linda Kreitzman, founder of the MFE program and a current lecturer, and Professor Christine Parlour as mentors.
School for us was not just a place to study, but also a workspace to meet fellow founders and innovators.— Tarek Mohammad
Kim: Berkeley was such a great place to connect with people from faculty to alumni. So many people helped us out or referred us to people who could be of help. It was a humbling experience. We often ask whether we deserved all this help. We hope to do the same for other Berkeley founders, peers, or alumni to pay it forward.
When local governments were required to disclose their long-term pension liabilities, they responded by diverting funds away from public welfare, salaries, and hiring, a new study has shown.
The study, in press at the Journal of Accounting and Economics, examined the economic impacts of a 2015 rule known as GASB 68 issued by the Governmental Accounting Standards Board (GASB). While the rule did not directly affect pension plans themselves, it aimed to make governments more accountable by requiring them to disclose their full defined-benefit pension obligations, which are among the most significant liabilities for local governments.
“The disclosure requirements increased awareness and clarity about future funding requirements of pension obligations,” said co-author Omri Even-Tov, an assistant professor of accounting at the Haas School of Business, UC Berkeley. “In other words, the new requirement changed the information set of county managers who did not previously understand the future cash flow requirements of their pension plan.”
Even-Tov collaborated on the paper with Michael Dambra, an associate professor of accounting at the University at Buffalo School of Management and James Naughton, an assistant professor of accounting at the University of Virginia Darden School of Business.
Chronic pension underfunding
About 83% of full-time public sector employees—or more than 25 million people—participated in a defined benefit pension plan as of 2018, with annual payments costing governments more than $300 billion. However, long-term unfunded obligations far exceed these yearly payments: According to a recent study, the national public pension funding shortfall reached $6.5 trillion as of 2021.
Despite those obligations, municipalities tend to rely more heavily on their cash budgets in managing their annual financial cycle, the researchers wrote.
Even-Tov, an authority on the impact of accounting rule changes who has also studied how conflict minerals disclosure requirements reduced violence in Central Africa and how relaxed disclosures enacted to stimulate the IPO market harmed investors, wanted to know whether governments would change their budgeting when required to make their full pension liabilities public.
Public welfare reductions
The researchers analyzed data from census bureau reports and hand-collected GASB financial statements for 432 counties across 45 states from 2013 to 2016. About half of the counties in the sample had already been reporting their pension liabilities, but the other half had been exempt from disclosure rules because their pension liabilities were only reported as part of their states’ pension plans. GASB 68 removed this exemption, requiring them to report their share.
The analysis found that when counties disclosed underfunded pension costs for the first time, they reduced public welfare expenses by 6%, payroll by 2.5%, and employee headcounts by 2%. They generally accomplished this by freezing their budgets relative to the counties that had already been disclosing their pension obligations, rather than by raising taxes or finding other ways to increase revenues.
The findings are important because they demonstrate the real impact of financial regulation on governments.
“Despite the economic importance of the government sector, we know relatively little about how GASB financial statements influence the provision of resources,” Dambra said in a press release from the University at Buffalo. “Our study shows that mandatory disclosure in the public sector can influence local-level managerial decisions.”