“Classified” is an occasional series spotlighting some of the more powerful lessons being taught in classrooms around Haas.
It’s a recent Tuesday evening at Berkeley Haas, and Marissa Maliwanag, MBA 24, has just five minutes to pitch her team’s idea for Tables Together. It’s an online marketplace that big corporations like Google could use to donate surplus food from their employee kitchens to organizations that feed people in need.
“There are matches that need to be made and we want to create a marketplace and solve the problem,” Maliwanag said, ticking off the amount of food that goes to waste in the United States each year.
After a few quick questions for the team, the rapid-fire pitch slam—part of the MBA class called Online Marketplace and Platform Design—continues. Students pitch ideas, among them a private plane rental marketplace to a community for matching skiers and snowboarders with coaches to a marketplace for tailors of bespoke clothing for events like weddings.
All of the pitches serve as practice for the students who are working toward final projects, says Assistant Professor David Holtz, who teaches the class, an elective that enrolls 68 students. The group is a split of mostly full-time and evening & weekend MBA students, on a journey that covers all aspects of online platforms—from A/B testing, network effects, and platform monetization, to reputation systems and discrimination in online marketplaces.
The class aligns with Holtz’s career experience as a former Silicon Valley data scientist. Most recently, Holtz worked for Airbnb, where he first became intrigued by online marketplaces. “I was exposed to a lot of interesting problems including reputation-system design, algorithmic pricing, and experiment design,” Holtz, a member of the Management of Organizations (MORS) and Entrepreneurship & Innovation Group at Haas, says. “To this day, these topics form the backbone of my research, because, in addition to being extremely interesting, they’re also extremely difficult to solve.”
Taking apart the case
During the first half of a recent class session, Holtz asked students to split into groups to discuss one of the week’s assignments: Pick a company on the a16z Marketplace 100 list—Andreessen Horowitz’s ranking of the largest and fastest-growing consumer-facing marketplace startups and private companies—and come up with a new market mechanism that the company might trial using A/B testing.
One MBA student team wrote about the online specialty food marketplace Goldbelly, suggesting that the company might add a feature that prompts site visitors to indicate that they’re trying to buy a gift. Then, Goldbelly could customize searches and provide a more personal message option at checkout.
Holtz then runs students through a business case called “Innovation at Uber: The Launch of Express POOL, a case directly related to some of his marketplace research that examines experiment design in two-sided markets. Set in March 2018, the case follows Uber through the launch of a new product called Express POOL, which offers carpooling riders a cheaper ride if they agree to walk a short distance to and from pick-up and drop-off points and wait a few minutes before being matched to a driver.
In this case, Uber had to decide whether to keep rider wait times at two minutes or change the Express POOL wait time to five minutes mid-experiment. The big dilemma? Uber benefited from a cost-per-ride reduction with a five-minute wait time but didn’t want to make a change that could hurt the user experience. “Even if the company did decide that a longer wait time was preferable, what did that mean for the ongoing experiment the company was running?” Holtz says. “Should they change the product mid-experiment or let the experiment continue running as originally intended?”
In this case, Uber had to decide whether to keep rider wait times at two minutes or change the Express POOL wait time to five minutes mid-experiment.
Holtz then shifts to a whiteboard, where he outlines different types of experiments (also called A/B tests) that marketplace companies like Uber use to test new features.
First is the “bread and butter” user-level test, which Uber could have used to compare the behavior of riders with access to Express POOL to the behavior of those who did not have access to Express POOL. The second kind of test, a switchback experiment, would give all riders and drivers in a given market access to Express POOL for randomly selected 160-minute-long chunks. Over two weeks, Uber would switch Express POOL availability back and forth to compare behaviors.
The third type of experiment Holtz describes, which Uber did use with Express POOL, is a synthetic control experiment. It is the most accurate form of testing, Holtz says, but also the most complicated to run and the “noisiest.” Using the synthetic control experiment, Uber identified two sets of markets that, in aggregate, were as similar to each other as possible. The company then launched Express POOL in one set of cities, but not in the other. By comparing behavior in the two sets of cities, Uber could estimate the impact of both.
Holtz’s knowledge of how to apply A/B tests comes from deep research. He has conducted multiple large-scale experiments analyzing the effects of marketplace design choices on Airbnb. One studyexamined whether coupons would lead more Airbnb bookers to write more reviews—with the eventual aim of facilitating better matches on the platform and increasing revenue. Comparing behaviors of buyers who received coupons to those who didn’t, he found that the coupons led to additional reviews that were more negative, on average, and that the reviews didn’t affect the number of nights sold on the site or total revenue.
In a separate, widely cited study, he and his co-authors examined the effects of remote work on collaboration among information workers at Microsoft. They scoured anonymized, aggregated data describing emails, calendars, instant messages, video/audio calls, and workweek hours of more than 60,000 U.S.-based Microsoft employees during the COVID-19 pandemic, trying to estimate the causal effects of firm-wide remote work on collaboration and communication. Results showed that under firm-wide remote work, collaboration patterns become more static and siloed, with fewer bridges between disparate parts of an organization.
Impressive guest speakers
For Lena Corredor, MBA 25, knowledge gained in Holtz’s class is providing an opportunity to explore the challenges of building a successful entrepreneurship marketplace, which is her startup idea.
“This class is really eye-opening for me because it’s not as straightforward as it seems,” she says. “When you think about the different sides of a marketplace, one would think if you build it, they will come, but it’s not the case. The design elements he talks about are very important to business success.”
During most classes, Holtz opens with a guest speaker, and his roster includes an impressive industry bench of leaders including Sudeep Das, head of Machine Learning/AI at DoorDash; Martin Manley, co-founder of Alibris and former U.S. assistant secretary of labor; Ania Smith, CEO of Taskrabbit; and Briana Vecchione, a technical researcher at Data & Society’s Algorithmic Impacts Methods Lab (AIMLab); among others.
Roberto Pérez, MBA/MEng 24, an entrepreneur in Mexico before coming to Haas, said they were drawn to the class for two reasons. “First, I knew that the professor had a great background and first-hand experience on this topic,” they say. “Second, I knew that the class would have a lot of guest speakers and that was interesting to me as this level of exposure is very valuable.”
Looking toward the future of online marketplaces, Holtz said he’s excited to see where entrepreneurs will take new technologies, such as generative AI, AR/VR, and blockchain-based tech. To that end, he said he expects the students will hear more from a group of investors and VCs who are guest judges at the last class—Raphael Lee, Vickie Peng, and Lindsay Pettingill.
“They weigh business pitches all the time and will have a better sense than anyone of where we are headed,” he said.
Miaad Madeline Bushala, BS 25, likes Taylor Swift’s music but doesn’t consider herself a die-hard “Swiftie.” What’s more intriguing to her is Taylor Swift’s evolution as a business leader who continues to top the music industry.
Bushala is now tapping into how the 14-time Grammy winner built her fortune, co-teaching a DeCal at Berkeley Haas called “Artistry & Entrepreneurship: Taylor’s Version” with Sofia Mei Lendahl, a sophomore Data Science and Statistics double major. The pair were in their fourth week of teaching the 13-week class when Bushala talked to Haas News.
You came to this class with both a musical and a business background.
Indeed, I did. I was a vocalist in the Popular Music Conservatory at the Orange County School of the Arts (OCSA) alongside my brother who is a fantastic drummer and my biggest musical inspiration. I attended Grammy Camp twice for vocal performance, a camp where high school students across the nation learn from and collaborate with music professionals.
My business background comes from watching and helping my parents with their real estate business, and then of course all that I’ve learned since being a student at Haas.
What interested you most about Taylor from a business perspective?
I heard somebody say that “nothing about Taylor Swift is an accident,” and I truly do believe that. Particularly as a business student, Taylor’s story has been so fascinating to me. At the end of the day, her songs, albums, merchandise, tours, etc. are all products, and for a product to have a life of almost 20 years not only says something about Taylor’s brilliance as an artist, but as a businesswoman. With that, I am interested in unraveling all those pieces about her and seeing what made her the success that she’s become.
I heard somebody say that “nothing about Taylor Swift is an accident,” and I truly do believe that.
How did you meet Crystal Haryanto, BA 23 (Economics, Cognitive Science, & Public Policy), who founded this class?
Crystal and I met through Lizzie Coyle, director of Major Gifts at Haas. Lizzie shared the excitement of the Taylor Swift course in the business school and I was encouraged to consider joining the team as the team was also seeking a business perspective. I was supposed to study abroad this semester in Spain, but this was my sign to stay and do something that I’d never done before.
As a business student, how did you help shape the class syllabus?
I asked the hard questions—for every concept in our syllabus, I ensured that there was a viable link to business. We wanted students to view Taylor as an entrepreneur who differentiates herself within a market, manages customer acquisition and sustains customer loyalty, and impacts multiple economies. We wanted them to think about how, as future entrepreneurs and business leaders, to make their customers their biggest fans, like Taylor has done.
Can you give a few examples of how that plays out weekly in the class?
One of my ideas for our marketing unit was a deep dive into Taylor’s style evolution over her self-proclaimed eras, and how that has reinforced her principles of relatability and world building. While style was a more subtle signal that built up over time, I’ve also enjoyed speaking about her direct power moves. Last night, for instance, we discussed how Taylor negotiated her contract with AMC Theatres and took hold of the reins for the Eras Tour film project. She financed the film and received 57% of the movie profits. To me, that was her learning from the mistake she made when she was younger, when she signed over the masters to her music.
In business school, students study the importance of connection in building an authentic brand. How has Taylor become a master at that?
Taylor’s songwriting stands out on two primary levels. The first is that she puts her insecurities and struggles out there, emotionally stripping herself through art. The second is that she vividly weaves those vulnerabilities into stories. Unique structures, sonic devices, and figurative language add layered complexities to these stories that ensure that they are highly talked about among consumers as a hot commodity. These elements of songwriting craft also tailor each product to match the message it is sending, which strengthens its value to consumers. She’s able to create a dynamic, so people continue to feel like they can relate to her. She really knows her audience, and her songs cover every part of her ideal listener’s life.
What does Taylor teach us about how to lead?
Taylor’s grandmother, Marjorie, said it best: “Never be so kind, you forget to be clever / Never be so clever, you forget to be kind.”
Taylor shows us how to balance a good heart with strategic design. We bring it up in class—the bonuses that she gives her team and the ways that she gives back to the community. Philanthropy happens to also be a tax write off for her, but that isn’t a bad thing. I think people know when a brand is doing something that feels inauthentic, and that isn’t the case with Taylor.
I think people know when a brand is doing something that feels inauthentic, and that isn’t the case with Taylor.
Taylor has so much power. How do you see her using it to uplift women’s voices, big and small?
Taylor has spoken extensively on how navigating the industry as a woman is different than as a man, which she writes about in “The Man” and “mad woman.”
She wears clothes from small, women-owned businesses, which have seen huge jumps in customers and traction.
But arguably one of the biggest ways that Taylor has amplified women’s voices is when she was a victim of sexual assault and ended up suing her assaulter for a symbolic one dollar. For many women, especially young fans, hearing a beloved figure speak so openly about that emotional damage not only acknowledges their pain, but also models speaking out against intolerable behavior that has become normalized in our society.
I have to ask about her dating Travis Kelce and what that has done for her brand.
The question should be what dating Taylor Swift has done for Travis Kelce’s brand. We’ll discuss her influence in the NFL in class and perhaps the perceptions that come with being in a high-profile relationship.
How much longer do you think that Taylor will continue reinventing herself as an artist? Do you think she will be like Madonna, touring in her 60s?
A lot of artists, once they feel like they’ve reached a certain point, go off the grid. I don’t quite know, but I know this: Taylor will always be a songwriter. She’s even said that she would consider writing songs for other people at some point. She cites songwriting as her lifeline, passion, and purpose—singing and performing are extensions of that.
Note: Bushala and her team will present at the annual Berkeley Haas Alumni Conference on April 27. Registration is open.
Rising to a critical need for more research and leadership in climate finance, Berkeley Haas has joined a group of top universities worldwide in offering an innovative online PhD course focused on the intersection of climate economics and sustainability.
They join faculty members from more than 10 schools including Stanford, Harvard, Yale, Columbia, and Oxford, who are teaching this course to a global cohort of nearly 1,000 students from 127 schools across 30 different countries.
The goal is to inspire a new generation of climate leaders to embark on new research that leads to innovative ways of thinking about climate finance, Patatoukas said. “Our job as instructors will be to give them the tools and the frameworks and provide ways for them to start asking interesting questions,” he said. “Overall, it’s a really good time to more formally train our students in this space. It’s rapidly evolving, it’s messy, it’s not perfect, but that makes it interesting and exciting and an area of growth that is full of opportunities.”
The course will help create change in two areas. First, it encourages students to work outside of their academic silos and come together to share ideas. “Sometimes, in a business school, we’re thinking about these problems in isolation, but this is definitely a field where everybody has to work with each other to come up with better solutions,” Patatoukas said. Second, the course will encourage students to publish cutting-edge research. “We feel like our students will have an easier time getting published in an area that is so impactful and new where basic questions remain open,” he said.
Each week, professors from different institutions will teach topics including climate, sustainability, and economic theory; corporate carbon disclosure; introduction to climate science; climate and asset pricing; and climate and investment management. All students enrolled in the course for credit will be required to submit an idea for a research project or a plan to review a set of sustainability papers from outside of the course by the last class.
“The timing is perfect for this course,” Patatoukas said. “As consensus has grown worldwide over the climate crisis, a transition to net zero isn’t happening fast enough.”
That’s where mobilizing massive amounts of capital to fight climate change comes into play. An estimated $4 trillion to $5 trillion a year in resources will need to be financed and distributed to address climate global needs, said Terhilda Garrido, interim executive director of SAIF. “Only a fraction will be provided by governments,” she said. “This course addresses our need to mobilize innovative climate finance quickly, train leaders in finance, and learn from each other, globally. Climate is a global issue requiring global collaboration.”
E-waste is the world’s fastest-growing solid waste stream, and companies are struggling with a deluge of waste produced by their manufacturing processes and products. Some have been illegally exporting their e-waste—which may contain hazardous substances that need special treatment—or illegally dumping it in landfills closer to home.
In 2021, for example, Amazon was caught destroying some 130,000 unsold items in a U.K. warehouse over the course of one week. Among the trashed merchandise were smart TVs, laptops, drones, hairdryers, computer drives, and other electronic devices.
The company acted in line with financial incentives: It was cheaper to destroy these goods than store, repurpose, or properly recycle them.
Yet recovering useful materials like precious metals from discarded electronics can reduce mining and forest degradation. It can also allow many jurisdictions to reduce their dependence on raw materials imports from other countries.
These clashing incentives are causing waste processing systems to fall far short of best practices, according to a new paper co-authored by Assistant Professor Sytske Wijnsma and published in the journal Management Science. She and her fellow researchers—Dominique Olié Lauga of University of Cambridge and L. Beril Toktay of the Georgia Institute of Technology—considered the impacts of various policy interventions on waste treatment and disposal, and offered practical recommendations to help regulators better align incentives and improve ineffective laws.
“Research on these systems is important because they are highly complex and not very transparent,” Wijnsma says. “Often, well-intended policy interventions can backfire.”
To simulate the confounding dynamics within waste processing chains, Wijnsma and her colleagues constructed a model. They drew from real-life scenarios shared with Wijnsma by Europol, the European law enforcement agency responsible for recommending and enforcing several waste management policies in the EU. The model was intended to shed more light on where in the waste chain incentives are misaligned and at which stages waste can leak from the system through local dumping or export to developing countries.
The simulated waste chain contains two key actors: a manufacturer producing waste and a treatment operator responsible for undertaking waste treatment within a country.
Within the model, waste producers are either the sort that generate high-quality waste—which can create more revenue for the treatment operators because of the high resale value of its component parts—or low-quality waste, which comes with higher hazard levels and lower revenue post-treatment.
The simulated waste chain ferries waste producers and waste treatment operators through three stages, representing a common real-world progression. First, a treatment operator sets a price a treat a batch of waste from a producer. Importantly, the operator doesn’t necessarily know whether the waste will be of high or low quality—which has significant repercussions. If the quality is likely to be low, the operator can’t count on recouping any resale value and would want to charge a higher price to treat it. On the other hand, if the quality is expected to be high, the operator could charge a lower price to process and treat it because they will recoup some value.
Next, the waste producer considers the quoted price and decides whether to contract with the treatment operator or to export the waste—either legally or legally. Currently, many regulations prohibit the export of low-quality waste, while the export of higher-quality waste often remains legal. As a result, exporting high-quality waste is relatively straightforward and inexpensive, while exporting lower-quality junk requires an expensive and risky circumnavigation of laws. Most of the electronic waste currently leaks from the system through export.
Finally, if a treatment operator has been contracted, it can opt to either treat the waste or dump it illegally. The difficulty in that decision lies in the fact that treatment operators typically have to quote a price while the contents of the batch of waste are still mysterious to them.
“You can imagine that operators get containers full of waste and don’t necessarily know the exact quality,” Wijnsma says. “They could sort the waste, immobilize hazardous substances, and recover as much valuable materials as possible, but this is not a profitable endeavor if the waste turns out to be of low-quality.” The decision thus largely depends on a best guess, based on past experiences and market dynamics, Wijnsma explains: “If an operator thinks there’s a very high probability of only getting bad waste, they could be less inclined to properly treat it.”
Addressing system breakdowns
The model highlights two key reasons the waste treatment chain breaks down.
First, it’s relatively easy for treatment operators to receive payment for treating waste while in fact dumping it—an example of moral hazard, i.e., when an actor faces little or no potential consequence for unwanted behavior.
Second, export policy has focused primarily on only prohibiting the export of low-quality waste. This can create situations in which the more valuable, high-quality waste is sent abroad, where treatment is cheaper. The result is that local recycling programs and treatment operators are left with mostly low-quality waste, which creates cascading effects. Operators have a greater incentive to dump the waste they receive since it’s very likely not profitable to treat.
Wijnsma and her colleagues formulated this second dynamic into one of their key recommendations: Regulations that treat high- and low-quality waste dramatically differently are likely to backfire. She calls this pattern the “waste haven effect,” wherein waste exports tend to flow to the countries where regulations and costs are lowest.
“Because of that, there’s been a large focus on trying to even out regulations between countries,” Wijnsma explains. A similar phenomenon occurs when regulations focus on low-quality waste and leave high-quality waste unregulated. “If you strengthen regulations for one waste category too much compared to another, then you also create perverse incentives.”
Another of the research team’s policy recommendations seeks to address the moral hazard problem by holding waste producers responsible when their downstream waste is disposed of improperly.
Notably, new laws in the EU and some U.S. states are trying to enforce that very shift. Extended Producer Responsibility (EPR) regulations place responsibility for the proper management of post-use products that contain hazardous materials with the producers that made them. In practice, this has required producers to simply contract with treatment operators to deal with their waste. But Wijnsma says that the paper’s findings suggest the laws should go even further.
“A still-nascent practice…is fining the manufacturers when they contract with treatment operators who are found to be engaged in dumping,” Wijnsma says. In other words, producers must be held accountable for not only contracting with a treatment operator, but for contracting with a trustworthy one. “Our results support expanding regulations where the producer can be held (partially) responsible for downstream violations,” she says.
When TOMS Shoes first hit the market in 2006, company founder Blake Mycoskie’s plan forever changed how people think about the for-profit business landscape. TOMS’ One for One business model was simple: Every time you sell an item to a customer, you give one away to someone in need.
Mycoskie said his idea came to him during a trip to Argentina.
Taking note of both the country’s popular alpargata shoes and, more importantly, the youth who could not afford to buy a pair, he was inspired to create a business that could help solve the problem.
“The idea was really simple,” Mycoskie shared at the Feb. 7 Dean’s Speaker Series, co-sponsored by the Center for Social Sector Leadership. “It was just: ‘What if I took these shoes that I see all these people wearing that I’ve never seen before, and sell them back in Venice, California, where I live, and every time I sell a pair, we give a pair to these kids that desperately need them for their school uniforms. The idea is, that if you buy a pair today, we give a pair tomorrow.”
That’s when “Tomorrow’s Shoes” became TOMS. As the brand grew in popularity, the company did not invest much money in traditional marketing strategies. (Watch the video below)
While a lack of marketing may seem antithetical to a for-profit business, it was exactly this alignment between values and practice that brought the company’s early success. “It’s this idea that our giving and our commitment to our impact had a greater influence on the customer than any type of marketing we could ever do,” Mycoskie said. “We were not necessarily going to be focused on the things that a traditional business was, but we really focused on giving and telling our story, and that’s why our model worked so well.”
From shoes, the company expanded its One for One model to include eyewear and safe drinking water. Mycoskie would donate a book for every purchase of his 2011 autobiography, “Start Something that Matters.”
Though he is no longer an owner of TOMS, Mycoskie’s leadership efforts have not stopped. He is currently a co-founder of the wellness program Madefor and is also investing in research into the use of psychedelics for therapeutic purposes.
“I really have this belief that, to found a successful company, it has to come from a passion, from a need, from something that you’ve seen in the world that you’re frustrated with or you don’t agree with or there’s a product you wish you had but you can’t buy,” Mycoskie said. “I believe that that’s where the great businesses come from.”
Read the transcript below:
– [Ann] OK, why don’t you all take your seats. Come and take your seats. Good afternoon, everybody. My name’s Ann Harrison. I’m the dean of the Haas School of Business. Welcome to today’s Dean’s Speaker Series. It is co-sponsored with the Center for Social Sector Leadership, otherwise known as CSSL. Nora here who runs it is sitting right here. I am absolutely thrilled to introduce our guest today, Blake Mycoskie. Blake’s story is a really powerful one.
He was on a trip in Argentina in 2006, and while he was there, he saw many children who had no shoes, and he was deeply affected by how difficult their lives were. And so, he decided to create TOMS Shoes. And in doing so, he created the One for One business model. And that’s a model where a customer, by buying a product, helps someone else in need every time they buy. And that was a complete revolution in the way to do for-profit business. Amazingly, over its lifetime, TOMS has provided over 96 million pairs of shoes for children around the world. Since then, TOMS expanded into other areas of vital needs, for example, eyewear and safe water.
Now, Blake didn’t stop there. He published a book, “Start Something That Matters.” And every time that book sells one copy, he donates a child’s book to a child. So that’s really amazing. His current ventures include co-founding a wellness program Madefor, and his philanthropic endeavors include working in the area of legalizing psychedelics—hopefully we’ll hear a little bit about that today, too. We’re incredibly fortunate today to have such a trailblazer here working in the area of socially responsible business, an area that Haas excels in and that we’re passionate about.
Blake, our students have so much to learn from you, I just want to thank you once again for coming to speak today to give your insights to our community. So just some quick housekeeping. When you sat down, you might have noticed a note card on your seat. If a question occurs to you, write down the question while you’re listening to the Q&A, and then you can hand it to our assistants here, my colleagues, they’ll be collecting them, and then there’ll be time starting about 1:10 for some Q&A. So now, I’m going to turn over the session today to two students who will be doing the Q&A, Eli Bresler and Yvonne Mondragón, and they will moderate today’s discussion. Take it away!
– [Yvonne] Thank you, hello, can you hear me? So Blake, thank you for being here. As we’ve mentioned before here at Haas, we care a lot about social impact and entrepreneurship, so everybody here is very excited to hear from you. To start us off, why don’t you tell us a little bit about your journey starting TOMS, kind of from your perspective, what influenced the One for One model and how that helped drive the success of TOMS?
– [Blake] OK, great, well TOMS started in Argentina, and there’s kind of a funny backstory of how I got there. How many people have seen the reality TV show, “The Amazing Race?” Oh, a lot of people. OK, did anyone see it 20 years ago when I was on it? Two people, yes! So my sister and I were on this TV show, “The Amazing Race,” and for those who haven’t seen it, you’re racing around the world for 30 days, and there’s a $1 million prize at the end. And interestingly enough, the last leg of the race was here in San Francisco. And unfortunately, at a very critical moment, my sister said, “We’re almost there to win the $1 million. Let’s stop and ask for directions to make sure we know where we’re going.” And as it’s such a cliche, as a man, I said, “No, I know exactly where I’m going. We don’t need to stop and ask.” And next thing I know, we were lost, and we lost the $1 million by four minutes. And after we lost $1 million by four minutes, about a month later, I got a text message from my sister, and it was this random string of numbers. And I thought, “That’s weird.” And I thought, “Well, maybe she kind of butt-dialed me or something, and that’s what came through on the text.” So I didn’t respond or anything. And then the next month, I got another text message, and it’s a different random string of numbers. And so I called her, and I said, “Paige, what’s with these text messages?” And she goes, “That’s the interest you owe me on my half million dollars.” And so, that was a great experience, but what, “The Amazing Race,” did was, it really took me to all these countries I had never been to. And Argentina was one of them. And so, I decided I wanted to go back to a lot of the countries. And so, in January of 2006, I took a trip to Argentina. I was there for about a month, and I experienced a bunch of different things. And one of the things that I experienced was, and it was the first time that I’d really seen this, was just really intense poverty. Just outside of Bueno Aires, I saw many kids in the street, and not wearing shoes and sniffing glue and just some really horrible things with these children. And at the same time, I noticed that a lot of the young people were wearing these slip-on shoes called alpargatas. And I grew up wearing Converse and Vans and kind of these thick, bulkier, slip-ons, but these were really different. And so, I asked my friend at the time about the shoes, and he said, “Yeah, the farmers wear them, the polo players wear them.” And I thought they were really interesting. In a very serendipitous way, I met a woman that was running a nonprofit, and they were specifically helping kids get shoes for school. The shoes was part of the uniform, and so many of these kids that I saw in the streets, the reason they were in the streets and not in school was ’cause their families couldn’t afford the uniform, which included a pair of shoes. And so, I had this kind of morning ritual where I drink my coffee and write in my journal about the day and have some of the things I’m thinking about and goals for the day. And when I was sitting on this farm that I was staying at in Argentina, I was writing in my journal, and this idea came to me and the idea was really simple. It was just: “What if I took these shoes that I see all these people wearing that I’ve never seen before and sell them back in Venice, California, where I live? And every time I sell a pair, we give a pair to these kids that desperately need them for their school uniform, and we’ll call it ‘Shoes for Tomorrow.’ The idea is, that if you buy a pair today, we give a pair tomorrow.” And most people think my name is Tom—it’s not. But that’s where the name TOMS came from, was “Tomorrow’s Shoes.” And we wanted to put the whole word, “Tomorrow’s,” on the tag, but it wouldn’t fit, so we shortened it to TOMS, and that’s how we got the name, yeah.
– [Eli] That’s really incredible, and as someone with two sisters in the crowd right now, I can only imagine that costing us all $1 million for four minutes, you’re probably catching grief about that today, so I empathize with that. We are on an MBA campus, and so, I think one of the things that we’re really curious about is the business of TOMS, and the One for One model signals a lot how you can have a profitable, successful enterprise and also have it do good, do well for the world. So I think one of the things we’re curious about is how you layer in social responsibility and what complexity that adds. What challenges have you faced in maintaining TOMS’ commitment to social impact while ensuring the company’s financial responsibility? What sacrifices do you have to make on both sides of that coin to make sure that both can succeed, financially and your social goals?
– [Blake] OK, well, I think maybe start in answering the question, just thinking about the financial aspects of the TOMS business model, there’s really kind of a magic formula that TOMS kind of created and that other businesses have followed. And it’s not necessarily just the One for One model. It’s this idea that our giving and our commitment to our impact had a greater influence on the customer than any type of marketing we could ever do. And so, while many companies might spend 10%, 15%, 20% of their margin on marketing, we spent basically zero. And instead, we took that money and we used it to pay for another pair of shoes, which was oftentimes less expensive than the marketing. And so, that’s why when we became extremely profitable, which was a kind of a surprise to me because when I started the, we didn’t even call it a business, we called it a project, we started the TOMS project, we priced the shoes based on how much it cost for us to make them in a guy’s garage in Argentina. So you can imagine when the business took off and all of a sudden we were working at big factories, the cost went down so much that our profit went up a lot. And so, we really had to focus on, to be successful as a business, we actually need to focus on our giving as much as anything else and telling that story of the giving. And I really learned that lesson in a really kind of funny way. I was in the JFK airport, we had just started TOMS and I was probably two, three months in and the only people we really sold TOMS to was my parents, their friends, my neighbors and I was living in Venice, California. And so, I was in New York trying to get new stores and I decided to go for a run right before I had to get to my flight and so I went to the JFK Airport not wearing TOMS, which was unique for me—at that point, I always wore TOMS. And so, I had my running shoes on, and I go to the American Airlines check-in counter, I’ll never forget this, it was kind of one of the most meaningful things the early days of TOMS for me, and I went to do the electronic check-in. And next to me, there was this woman wearing a red pair of TOMS, and I had never seen a stranger wearing our shoes. I mean, it was so cool! It was such a cool moment, and so, I’m kind of looking at her and I’m thinking, “Gosh, should I say something?” And so, I decide to say, “Hey, I really love these shoes you’re wearing, what are they?” And she says, “TOMS, TOMS Shoes.” And so, I’m doing the check-in. I’m like, “Oh, that’s cool.” And she literally physically put her hand on me and said, “No, you don’t understand! This is the most amazing company in the world!” She goes, “When I bought this pair of shoes, they gave a pair to a child in Argentina and there’s this guy who started, I heard he lives on a boat…” And she just went on and on. So I was feeling bad, and so I was like, I had to stop her. And I’m like, “Excuse me, actually, I’m that guy. I am Blake, I live on a boat, and I started TOMS.” And she goes to me, she looks at me like deer in headlights, she’s so, like, “What?” And she goes, “Why’d you cut your hair?” And I was like, “How did she know I cut my hair?” And I realized that she wasn’t just a customer, she was just totally invested in this, and she’d watched all these videos on YouTube of us giving the shoes away. And so, that’s how she knew I had cut my hair. But then, as I said thanks to her and went to my flight and started thinking about that conversation, I realized that this woman took the time out of her day at an airport to tell a stranger about TOMS. So how many people has she already told about TOMS? I mean, definitely all her friends and family and people on FaceBook, and so, I realized that the effect of just one customer connecting to our giving was going to have such a magnitude effect on how many shoes we would sell and ultimately give away. And so, that’s when we really decided that, as a business model, we were not necessarily going to be focused on the things that a traditional business was, but really focused on giving and telling our story, and that’s why our model works so well.
– [Yvonne] Yeah, that’s awesome to hear, to see that something you believe in, others also believe in, and it grew into what TOMS is today. Going off of that, large-scale innovation is something that is very hard to do. There are some products out there that we see that we think this large scale is inevitable. What are some of the challenges that you experienced with scaling up TOMS, and how did you face those challenges?
– [Blake] Well, the biggest challenge was making the dang shoes. I mean, I had never made shoes before. My Argentine polo playing partner, Alejo, had never made shoes before, and we met this guy who said he could make them in his garage, which he could do somewhat sufficiently. So really scaling the production once the business took off was really, really hard. What I found was, the key to that was finding people who did know how to make shoes and had done it for companies that really scaled. And so, we very early on were able to attract a really senior executive from one of the big shoe companies to come and start working in my apartment with us. I think he was employee number two or three, and the first two were interns off Craigslist. But Sean came to us, and I remember it was really cool. I went on a factory tour with him in Asia, and we were drinking beers one night, and I said to him, I said, “Sean, why did you come to TOMS?” Because, I mean, we’re paying you probably half as much as you as you made at this, I think it was Nike or Converse, I forget where he was at before, and he’s very senior in his role, he’d worked in the industry for I think 30 years. And I said, “‘Cause we’re paying you probably half or two-thirds what you’re paying, and you’re having to do the job of basically five people.” And it was so cool, he’s told me, he said, and this goes back to the giving being our key differentiator is, he said, “Because now my kids think I’m so cool, and my daughter thinks it’s so amazing that I’m helping kids get shoes. And so, that’s a big part of why I’m here.” And that’s also, I realized, just focusing on our giving and staying authentic to that was so important, because without Sean, we never would’ve been able to scale the business.
– [Eli] That’s really interesting. It feels like people are attracted to it because it’s solving two problems. It’s putting stylish shoes on people’s feet—that’s actually a fun problem to solve—it’s also putting shoes on the feet of people in need, and that’s an even more fun problem to solve. I think when we think about the most successful businesses, the most successful products, that’s what they fundamentally do. They solve problems that people can’t solve themselves. Velcro allows me to fasten my shoes, Advil allows me to reduce pain, inflammation, all that kind of stuff. How do you go about figuring out what problems people need to solve and how you can solve that problem? And even one step further, if you know how to solve the problem, how do you turn that into a business that can solve it for a lot of people? What does problem-solving and filling need look like for you?
– [Blake] OK, so I’m going to tell a story from a different company. So I’ve started, I think five or six companies, and most of them were before TOMS, and one of them was an online driver’s education company. Now, how I got into that business is really by listening to someone’s problem. I was at a barbecue for a television network that I’d also helped start, and my head of programming’s son was there, and he was 15 years old. And I asked him, “What are you doing this summer?” And he kind of said, “Uh, I’m learning to drive.” And I was like, huh, I mean, I would think that if you’re learning to drive, that’d be exciting for a 15-year-old. And I said, “Well, why is learning to drive not that exciting?” And he said, “Oh, I’m in this classroom, and it’s stinky, and it’s dark, and it’s in this mall, and I got this old lady teacher, and I can barely understand what she’s saying, and the cars are just crap.” And I mean, he was just super negative. And I was thinking, “Well, this is not good for our safety on our California highways. If this is how engaged or disengaged this kid is, like, we are in a lot of trouble.” And so, I went home that night, and this is right when MySpace was out and there was no Facebook yet, and some of you probably don’t even know what MySpace is, I’m realizing, and it was also when they were just starting to do things online that traditionally had been done in brick and mortar. And so, I thought, “Well, one way to solve this problem of these classrooms that are really not that inspiring, they’re usually in Sears malls or something, is to see if we could take this class online. And so, that could be more engaging, more entertaining, they could do it at their own pace.” And so, that was one idea. And I worked really hard with some legislature to get that changed in California so that we could do that. And so, that was Step One. And Step Two was, we got to get better cars, these cars have got to be more interesting. Now, this was right when Toyota came out with a Prius, and so, they had this huge desire to get people to know what an electric car even was. And starting with young people who might be more environmentally inclined was a big part of their thing. And so, I cold-called Toyota down in Torrance and got a meeting, and they decided to give us four cars at basically, at the cost. But the third thing was the teacher, and that was something that was going to be a little bit harder to do, because people who were kind of driver’s ed teachers were pretty—a very specific type. They’re usually retired, they were usually … I mean, I think everyone can remember the driver’s ed teacher. Unless you went to our school, ’cause I’ll tell you why ours was special, and you’d really remember because what we decided was these teenagers were not paying attention to their teachers at all. And so, we thought about, OK, how can we get them to pay attention? Now, we were lucky, ’cause we lived in Los Angeles, so we had a lot of actors and models. And so, we went and basically and hired a bunch of Abercrombie & Fitch models and actors that had all this free time, and we knew that teenagers pay attention to them. And it worked. And so, we had them as our driver teachers, and they would post pictures on MySpace of them and their teacher. And, so we solved all three problems at once!
– [Eli] That’s beautiful. I distinctly remember my driver’s ed teacher self-branded himself as Tupac Dave, and he was far too old to be trying to educate 15-year-olds about Tupac and not teaching them about driving. So I understand not learning anything and also trying to make sure kids actually learn how to drive so it’s safe. Pivoting a little bit, you’re mentioning a lot of partnerships, you’re talking about Toyota, you’re talking about these Abercrombie & Fitch models, you’ve been talking about this person that you met who was working at Nike came to work for you, and I think partnerships are key, and I know you often talk about collaboration as being key to success. I’m curious, what are the green flags that you look for in individuals, entities, partners of what you think would make them a trustworthy partner, a good faith partner, someone who you want to do business with, whether it’s an individual or an entity, kind of what’s your criteria? What are the green flags?
– [Blake] I mean, I think the most important thing in a partnership is: Is the partnership going to be seen as something that’s authentic, that makes sense? The best partnership we ever had was with AT&T. It was truly one of the biggest turning points in our business, and I would even say in my life. Because what happened was, I was on CNN doing an interview, and I did an interview, and they were asking about how many people worked at our company at this point, there were like 40 of us, and we were selling all over the world. And they were like, “How in the world do you run your business, when you’re in places like Ethiopia giving shoes or Cambodia or Guatemala and there’s only 40 of you and you’re competing against these big shoe companies?” And I pulled out my, it was funny, I had a BlackBerry back then. Do you guys remember BlackBerry? OK, good! I’m not as old as I think! And so I pulled out my BlackBerry on the CNN interview and I said, “This is how I do it.” And basically, I can run the business and do everything from my phone while I’m in Ethiopia. And so, this ad exec was in the back of a taxi in New York, and they saw this interview on CNN, and they thought, “Oh my gosh, if he uses AT&T, this is perfect.” And so, they called me, and luckily they asked me if I used AT&T, and I said, “Yes.” And that was one of the great, lucky moments of my life because they said, “We want to do a commercial about you and TOMS and your story, and we don’t want to create something slick, and we want to actually go with you on a giving trip to Argentina and just film you and then make a commercial.” And so, they made this commercial, and it was like lightning in a bottle. They loved it, they tested it, it tested well, they premiered it on the Masters Golf Tournament, which if you know that tournament, they only allow three different commercials for the entire term. And then they played it at the NBA Final Playoff games, everything. They ended up spending $30 million on a commercial to basically tell the TOMS story. But it was completely authentic because I use AT&T. And so, it worked really well for them. Our business grew 500% that year because of that commercial. And so, literally, I mean it was crazy how much it grew. And that was really the beginning of our mass growth. But that partnership was so important, and the reason it worked, to your question, is because it was completely authentic.
– [Eli] Thank you.
– [Yvonne] Yeah, that’s a great partnership story. Moving a little bit away from the business side and transitioning into leadership, I strongly believe every great venture has a strong leader behind it. You often talk about being a servant leader, one that aims to serve others. You talk openly about your failures and vulnerabilities. How do you think sharing some of those experiences have shaped you into the leader you are today?
– [Blake] Hmm, thank you. Well, I think when you hear the term, “servant leader,” I think it’s a really important term. And it goes back to the fact of, in most businesses, your employees that are on the front line are serving customers, you hear that phrase. And in order for them to really serve your customers, they need to be served from their managers, and I think that’s really the job of a manager or an executive, is not just to lead the vision of the business, but to really serve those that are working for them so that they feel empowered to really serve the customer. I think, also, leaders really set the culture, and I think talking about failures and vulnerabilities, you really, I believe, need to set a culture where it’s OK to fail. I always say “If I’m going to fail, I want to fail fast.” So I don’t waste a lot of time and money failing, but I learn from it, and I move on. And so, I think it’s really important that as a leader, that you show that failures are not going to be reprimanded. If anything, they’re going to be celebrated because what did we learn from that failure? And I think that’s a really important part of leadership.
– [Eli] I love hearing that. And I think one other thing we hear a lot of successful entrepreneurs talk about is luck. So learn quick from your failures, but also, you have to have some luck sometimes. Some say they create their own luck and that they earned it and they built that luck, and if they didn’t work as hard and put themselves in those situations, that luck wouldn’t have happened. Others say, “A beautiful opportunity fell in my lap and I got lucky that my idea worked.” So I’m curious what you think about luck and how much luck has played into your success.
– [Blake] I mean I’m a lucky guy for sure. So I think there is some truth to this idea that the harder you work, the luckier you get. But I also think that, sometimes just an idea, I mean, how do we have an idea? Start there: I’m sitting on a farm in Argentina, and this idea is somewhat downloaded or transmitted to my brain that then goes to my journal that then goes to starting a business that then goes to kind of changing the face of business across the world—I can’t take responsibility for that. I mean, from a spiritual perspective, I don’t really understand how that came about, but I feel really lucky that I was the one that got to do it. And so, I do think that you can make your own luck, and you have to work hard, but I also think that in certain businesses or certain ideas that come and really have a huge effect on culture, that idea was just, its time was to come. And the person that got to bring it to the world is pretty lucky, so I feel lucky.
– [Yvonne] Yeah, that’s great. I think we’re all hoping for some, a little bit of luck, out here to go on to our next endeavor. So your ventures have given us shoes, provided safe drinking water, and restored vision of countless individuals at a global scale. Going forward, where do you think the greatest need will be and what new business models outside of the One for One model have you been excited about or you’ve seen actually work?
– [Blake] Well, I think if I was an entrepreneur starting out today, I would be spending a lot of time looking at green energy. I think that one of the biggest problems facing our species right now is the climate. And I think there’s going to be so many opportunities—there already have been so many opportunities, so many fortunes built—focusing on how we can live in a more sustainable way. But it’s something that I don’t have a lot of experience or expertise in. But I think that’s where I would really be focused ’cause I think that there’s just going to be, I mean, technology and innovation is our only way out. And so, when there’s a necessity, there’s usually great opportunities for entrepreneurship.
– [Eli] I think half of my classmates here who are going into green energy and climate tech just got really excited, so thank you for that. The future is bright, my friends. I do also want to ask about another interest that you have in something that you’ve pledged time and resources towards, which is the legalization of psychedelics. And I just want to know, what inspired you to get involved with that and where do you think the opportunity is for that to succeed? Or just any general thoughts about that space, which is kind of new and upcoming?
– [Blake] Sure, I mean, I’m really excited about this. I feel like this is really at the beginning of a new frontier in how we help address so many mental health challenges. I’ve struggled myself with depression, I know many people that have, and I know many people that have taken the traditional route of pharmaceuticals and talk therapy and have not had success. I had the opportunity, gosh, it was six, seven years ago, a friend of mine, famous podcaster, Tim Ferriss, many of you probably know, called me and had known that I had worked with psychedelics myself and had found them very beneficial, and we had shared that with each other and in private, and he said the John Hopkins is thinking about creating the first-ever center for psychedelic research in the country, and they’re looking for a few philanthropists to kind of step up and help in Dallas. And at that point, most of my giving had been through TOMS, and then also a supporter of some of these nonprofits like Charity: water that I’m a big fan of, and so this was, kind of, giving to a university and helping endow a department for psychedelic research, this was really kind of outside of my scope, but I realized, and Tim really helped me understand and see that there was going to be very few opportunities as a philanthropist to have their dollars be so leveraged because if this worked and John Hopkins could show the effects of psilocybin or MDMA or LSD on different mental health challenges, that this could be the beginning of legalization and really our society accepting that these are not necessarily drugs, but they’re actually medicines. And so, I made that donation, and it was the largest donation that I had made, to date at that time, and then about two years later, there’s an organization called MAPS that’s been working really hard to put MDMA through the FDA, mainly for helping with PTSD. And they were at a critical place in their FDA, kind of path, and they needed to raise, I think, $10 million. And so, interestingly enough, Tim Ferriss called me again. And Tim and a guy named Joe Green were putting together this round and trying to raise this for the nonprofit, and they explained the benefit, especially to many of our veterans. The statistic that haunts me every day when we think about our veteran community is that 17 veterans a day commit suicide. I mean, that’s more people are dying of suicide than dying combat now, and that to me is just inexcusable. And so, seeing how MDMA can have an effect on that, in helping with the PTSD and depression that many of them experience was really an amazing opportunity for me. And so, I made that investment, and then I just kind of sat back and watched these two for about four or five years. And then, a couple years ago, I decided to get more engaged and more involved. I made an investment here in the Berkeley Center for Psychedelic Science. I continued to help John’s Hopkins. I’ve worked with the VA now on some projects there. And what I’m finding is, I like things to happen fast. I think as an entrepreneur, that’s kind of one of our characteristics. This is going to be a long process. I mean, this is something that I probably commit the rest of my life to because that’s how long it’s going to take for things to really become legal, to have regulated access. We’re working on a bill through the legislature in California right now to create regulated access for PTSD, for MDMA and psilocybin, that’ll go to the governor’s desk next year around September. So there’s a chance that it gets passed, which will then really change the landscape across the country. But this, to me, is the most exciting kind of science advancement that we could have that could have the biggest impact on what really is a health epidemic in our country with mental health issues. So I feel really, really lucky. It’s kind of like when TOMS idea came to me and I got to be part of a change in the way that business is done, I feel really lucky that now I get to be a part of a way that hopefully we help millions if not billions of people around the world with mental health issues.
– [Eli] Thank you so much. I do want to thank you for all that. I’m very passionate about this space personally. Do I wish I had my own Tim Ferriss? Absolutely. But otherwise just interfacing with those.
– [Blake] Oh, be careful. Tim Ferriss has been very expensive for me.
– [Eli] OK! That’s true, that’s true, that’s true. But no, it’s a huge need. And I think I could ask about 200 follow-up questions about that, but I want to be conscious of time. We have a lot of questions here from the audience. So the last question we want to ask you is, you’re sitting in front of a room of aspiring leaders, entrepreneurs, people who are going through their MBA or teaching at this program so that they can make a real difference. And so, just for the aspiring leaders in the room, whatever capacity that is, do you have any last words of advice, parting pieces of wisdom just for us aspiring leaders?
– [Blake] Oh man, that’s always the hardest question because, do I really sit here and give you advice? I mean, I’m not that much older than most of you guys in the room. I mean, I think, we were talking about this back there, and so I would say, if you have entrepreneurial desires, then this is advice that I think is particularly for you. And that is, that I really had this belief that, to found a successful company, it really has to come from a passion, from a need, from something that you’ve seen in the world that you’re frustrated with or you don’t agree with or there’s a product you wish you had but you can’t buy. I really believe that that’s where the great businesses come from. I think it’s very dangerous to come get your MBA, learn about entrepreneurship and be like, OK, I want to be an entrepreneur, I’m just going to go start a business, without the passion behind it, just ’cause you think you’re going to make money. I’ve seen most of those businesses fail, to be honest. And so, if you make making money the reason you’re getting into entrepreneurship, I think it’s dangerous. I think if you make the change you want to make or the product you want to create or the service you want to provide because you deeply care about it, the reason you’re becoming entrepreneurship, then the money will follow. And so, that is what I would say is kind of one of the main pieces of advice I have for entrepreneurs. The second piece of advice, I’m going to give two now, I just realized there’s another one, and this is going to be super contrarian to this group, I can tell already. ‘Cause you’re spending so much money to get your MBA here. And so, as soon as you graduate, you’re going to have a ton of pressure, yourself, your student loans, your parents perhaps, to go out and get a job that will pay the most amount of money for a job that you can get. And that makes sense, initially, but the truth is, no matter how much money you make working at a bank or a consulting firm or whatever, it’s not going to actually have that big of impact on how much money you make in your life. And I’m not saying making money is the only reason that we work, but it is one of the reasons. And so, what I tell people is, “Instead of going out and just chasing the biggest paycheck right away, think about what you’re most passionate about and invest your time, at least for a few years, in that without the pressure to pay those loans back right away or to make as much money as possible.” Because what usually happens is, if you follow your passion and you do something that you’re really deeply interested in versus just trying to make money, you become really good at it. And when you become really good at anything, usually you make money at it. And so, that I know is probably falling on some deaf ears, but that’s fine. And you think I’m naive and idealistic, and it’s easy for me to say ‘cause I’ve already made money, but I really have seen, I’ve given that advice to undergrads and MBAs over, probably, 15 years of speaking now, and I’ve had people come up to me or write me emails or letters years later and say, “That really made an impact,” because they ended up getting into something that they deeply cared about, and they got really great at it. And then they made the money, so there you go.
– [Eli] That’s brilliant, thank you so much Blake. Turn it over to Nora!
– [Nora] So first, I want to thank Blake for starting off with a loss, we don’t do that very much in business school, and I want to really acknowledge Eli and Yvonne who came up with the questions and posed them so well, don’t you think?
– [Blake] Yes, absolutely.
– [Nora] So my name’s Nora Silver, I’m a faculty director for the Center for Social Sector Leadership, we call CSSL. And I’m an adjunct professor here, and Ann was kind enough to share this Dean’s Speaker Series with us. Before we open it up for your questions, which I do have here, thank you very much. I have a few for you. How many of you are Berkeley or Haas students? OK, how many of you came here in order to make a difference or create social impact at Berkeley or Haas? How many came here for that? OK, about half. Do we have any alumni here? Welcome back. Do we have any friends and family of Blake or of CSSL? Yay, Ella! OK, so I want to take a minute with the students in particular, whatever you came here for. If you are curious about the kind of innovation that Blake made or the kind of career path that he took, I want you to know, do you know that you can explore it through CSSL? And I want to point out a couple things. Gloria, would you stand up? Gloria is right now teaching a course called Reinventing Capitalism for a Sustainable, Humane and Equitable World. It’s offered this spring, it will be offered next spring as well, stay there. In the fall, Gloria taught and will teach again Business Models for Social Impact. She teaches that with Kristin Groos Richmond. Both of them are serial social entrepreneurs who can introduce you to different models, such as that Blake described and describes in his book. Thank you, Gloria. For those of you who want to found something with social impact, we do have an impact startup disco. It’s an intensive weeklong with Jorge Calderon that will walk you through those initial kind of scary steps. And lastly, I’m going to be teaching in the fall a course on social movements. I’m exploring teaching that if that’s what you’re interested in. We have a lot of experiential programs, and one I want to point out to you, ’cause it’s coming up. If any of you are interested in trying exploring a Social Impact Summer Internship, we have a program that will supplement your salaries if that’s what you’re worried about. So look for the HIIA with net impact, and we’ll let you know about that. And we have career advising, so I and CSSL’s executive director are serial social entrepreneurs. We have faculty—20 plus, would you raise your hands here? I see you, come on!—that teach on things and know about things in the world because they’re professional faculty, so they’re out there working on these issues at the same time that they’re teaching you, things like climate tech and global health and food and education and economic development. So whatever is stirred up in you from hearing about Blake doesn’t need to stop here. There are many more resources at Berkeley and at Haas available to you, depending on your interests, and I just want to make sure you know where you can come to start the journey. So there are people here to help you with your curiosity, with your thinking, with your next adventure, no matter what that will be. But now, we still have some more questions for Blake. So Blake, back to you, ready?
– [Blake] Sure.
– [Nora] Alright, you may not be ready for this one, but we’ll try.
– [Blake] Oh no.
– [Nora] “Have you paid your sister 500,000-plus interest?”
– [Blake] So how many people know this clothing brand called Aviator Nation? Raise your hand. Enough, OK, so my sister started this company, and I think Forbes last said that she’s a billionaire now, so I think she’s doing fine.
– [Nora] Maybe she should pay you back? No, I’m kidding. Alright, alright, so here’s the next question: “TOMS was a pioneering business model, and I think received disproportionate scrutiny and criticism. How did you navigate it, and what would you have done differently in hindsight?”
– [Blake] Hmm, yeah, I mean that was a really hard thing for me because, hey, you hear this adage that the media loves to build you up so then they can kind of tear you down. And we got a lot of flak for what impact were we having on communities by just going out and offering a handout? And that was really hard, because all we were trying to do is do good. I mean, I was in Argentina, saw kids that didn’t have shoes, wanted to give them shoes. I didn’t come with a public health background, and so, we really at first were angry and frustrated and scared by this, and then we decided we had to lean into it. And so, ultimately what we did was, we hired some people who did have that background, who really understood the impact of giving free goods in these communities, how it impacted the local community, and that really led us to doing some local manufacturing. So we did a manufacturing plant in Haiti after the earthquake, which was really successful. We moved manufacturing also to Ethiopia, which created a lot of jobs in Ethiopia. And then the other thing we did is we realized that just giving shoes was not enough, that we had to be part of health programs as well. And so ,there’s a lot of health programs for worms that kids get in Central and South America, and so they want them to come in and take the medicine that would keep them from getting worms. But the incentive, a lot of kids wouldn’t come do it, they started saying, “If you come, you get a free pair of shoes.” And so, that was a big incentive, we worked with the Gates Foundation on that. And so, yeah, so we just had to get smarter and better and more sophisticated in how we did our giving.
– [Nora] Great, thanks. So, “How have your previous ventures, you mentioned four or five before TOMS, allowed you to be successful as an entrepreneur? What did you bring forward from those?”
– I mean, just lots of learning. A couple of them were moderately successful, and a couple of them were huge disasters. One disaster was after what I was on, it was not a disaster, but it was a failed business I guess, is after I was on “The Amazing Race,” I recognized that there was this tremendous amount of interest in reality stars and their 15 minutes of fame, but there wasn’t really a market for really kind of capitalizing on that. And so, I decided to start at, I think at the age of 25, I was very naive, I decided to start a television network, and it was an all-reality cable channel, in which I went around and bought the rerun rights of reality shows because once you kind of knew who won, they really had no interest at the networks. But what I realized is, people cared so much about the reality stars that you could pair the stars with the shows, and they could kind of almost do these shows where they gave commentary about what they were thinking when they did that move on, “Survivor,” or how they got that person outed on, “Big Brother,” or something like that. And so we were able to get the content for basically next to nothing, but we knew that advertisers really wanted to reach this audience, it was mainly an 18-to-34 audience, which was the key audience that advertisers wanted to reach. All these components showed that we were going to have incredible success in this business. The one thing we did not think about, which was the most important and the reason it failed, was there were only about 10 cable operators in our country at that time, and including DirecTV, satellite provider. And so, the cable operators, and then DirecTV, basically had a monopoly as to what content we see. It’s not like today where you can see it on Hulu or you can see it on a number of different streaming networks, obviously YouTube being one of the dominant players. So we basically had an amazing product, people wanted it, and we had advertisers willing to pay for it, but our only way we were going to get anyone to ever see it was through these cable operators. And they had no need for another network. I mean, they had 400 channels already. Getting one more was not going to have anyone all of a sudden decide to pay for cable television. They were paying for cable television for many other reasons already. And so, they basically said, “No, we’re not interested.” And so, we ended up going out of business. It was incredibly painful, I had to lay off like 40 people, it was a really challenging, challenging situation. And what I learned from that was, I never wanted to be in a business again where so few people had the power to make it work or not work. And so when I started TOMS, the great thing was, there’s thousands of stores in America that sell shoes, and so, I didn’t have to go out and get this one big fish customer, I could go and focus on one after another, after another, after another. And so, that was one of the real lessons that I learned from an earlier business that failed, that really helped me as I thought about TOMS.
– [Nora] Great, thank you. So, “The buy-one-give-one model used by TOMS has long-standing been a point of celebration, however, there have been shortcomings and challenges and all of that. Here’s the big question, Is it truly possible to be a business for good? And how should incoming business leaders incorporate,” I’ll read it as it says, “Corporate philanthropy into their company brands?”
– Absolutely, my mic, hello? I can just talk loud, too.
– [Nora] We’re trying to broadcast, though, hold on.
– [Blake] I could juggle.
– Hello, great, I don’t know how to juggle. I would love to learn though. So yeah, I mean I think that there’s a lot of examples of businesses for good out there now, TOMS being one of them. I think the key is to really focus on kind of three things, and you hear this a lot of time in conscious capitalism, the three Ps: people, planet, and the profit. By doing that, you can really build a business where all those stakeholders are equally benefiting. I think, I will say the bad news in all this is, is that, and because of the success of TOMS and other companies like TOMS, it’s not as novel to be a business for good as it was when we started. When we started, there was nothing like this. I mean, there was Ben and Jerry’s that had been giving, there was the Body Shop that had been giving, Anita Roddick, but neither of them built their whole business on it like we did with TOMS. And so, we really kind of pioneered this and several other businesses as well. But now, today, if you were starting a business, I was talking to an entrepreneur the other day and they were saying, “OK, well we’re going to incorporate this giving model, helping people get clean water, et cetera.” And they’re going to invest a lot of money in that. And I said to them, and they thought it was weird coming from me, I said, “I don’t think you should do that.” I was like, “I don’t think there’s going to be enough return on your social investment to make it work,” I talked about from a marketing perspective, “because so many other companies are already doing it.” So I think now what I would say for entrepreneurs that really want to do good in business is: “It’s really important to incorporate it into the business model itself.” So to do it as an add-on, or if you do this, we give this, I think can be more difficult, but if the actual business itself, and that’s why I use the example of green energy, if the business itself is making the planet a more sustainable place, then it is a business that’s doing good. But it’s also not necessarily having to carve out a percentage of its margin to do so.
– [Nora] OK, and the final question from the group is, “You talk a lot about conscious capitalism and for-profit business; and in your book, you also herald or celebrate nonprofits and philanthropists, and many people draw divisions between those, but you don’t. Can you talk a little bit about why you don’t or how you see that?”
– [Blake] Well, what I tried to do when I wrote this book, which is a long time ago now, as I’m thinking about it, and I’m trying to remember some of the things that I said, but I tried to really highlight two different organizations, businesses that were innovative and they’re giving and doing good like TOMS, but then also some of these new nonprofits that were being created that were operating more like businesses. And so, I’ll use Charity: water as a great example. How many people know Charity: water? Raise your hand. Oh wow, OK, you should definitely check out Charity: water. Not a lot of people here know, but they’ve been incredibly innovative. My friend Scott Harrison started it the same year I started TOMS, and his idea was to bring water to as many people in the world that need it as possible. And if you look at the marketing of Charity: water, it’s as innovative and as slick as any new Silicon Valley-backed tech startup. I mean, the branding is unbelievable. The storytelling is unbelievable. It competes with any business in terms of marketing, but it’s a nonprofit. They also do really, really innovative marketing campaigns asking people, especially young people, people who are 15, 16, 17 years old to give up their birthday in order to raise money for wells. And they found this to be incredibly successful, especially with social media, ’cause they can message out to all their friends, “This year instead of having a party or bringing a present, I’m asking you to donate $10 for every year I’ve been born or whatever.” And they’ve raised, I mean literally they’ve raised I think $300 million in the last couple years through these campaigns. So I also try to talk about something like that in the book as well ‘cause I think, at the end of the day, there’s a lot of big problems in the world that we want to solve, and sometimes the right vehicle is a nonprofit, like in the psychedelic space, for instance, and then sometimes it is a for-profit like TOMS. And so, I don’t really see a distinction between either, as long as the organization is being used to address a major problem in the world.
– [Nora] Great, thank you, Blake. We’re hitting our time, and I’m going to take a little editorial freedom and go off script here. Alan Ross, would you come up here? Alan does not know I was calling him up here, so bear with us. Alan is doing something I think is very innovative as a philanthropist, and he sent out an email just yesterday asking us to vote. So Alan, I want to relinquish the final two minutes to you to make a pitch to the group.
– [Allan] Well, thank you so much, that’s very sweet. It’s very surprising. I started something a couple years ago called the Chris Kindness Award, and everyone calls me Chris. I’m Alan. I named it after my kids’ preschool teacher who died, just the sweetest guy I ever met, and I give $1,000 every month to someone in Berkeley who does a kind act, random acts of kindness. We’ve had a gas station attendant, someone who volunteers, Children’s Hospital, a teacher, this month was a 16-year-old at Berkeley High who’s from Afghanistan, just arrived in America a year ago, who helps newcoming kids from all over the world acclimate to Berkeley High, sweet, sweet stories, and we just announced our three finalists for this month on Monday, one of whom is a Haas person, former student of mine of 20 years ago, Olive Davis. Anyone know Olive? Wonderful woman who was with YA for a while, Young Entrepreneurs at Haas, and now she started BBAY [Berkeley Business Academy for Youth] several years ago, giving back to the community, bringing in youngsters from middle school to Haas to educate them about business, to get them interested, so they’ll go on to college and all. Wonderful person, anyone can vote. ChrisKindnessAward.org, voting goes through Friday. If you want to vote for Olive, that would be wonderful. And we need nominations—we’re seeking nominations all the time. Go on our website, nominate anyone who lives, works, or goes to school in Berkeley, and we’re raising money now. We now give second- and third-prize cash prizes, also, and we’re trying to grow throughout the community, and beyond Berkeley as well. So ChrisKindnessAward.org, thank you so much, Nora. Thank you, dean, appreciate it, thank you.
– [Nora] So we know that many of you are doing meaningful and interesting things for your local communities, for your friends, for your family. We want to thank you for all of that, for Blake, Yvonne, Eli, Ann, thank you for coming, thank you for listening. We hope you are inspired to go out and try something really meaningful to you that you’re passionate about in the world, and Haas is here to help you, thank you very much.
When Lizzie Hoerauf, MBA 24, joined Berkeley Haas, she had a vision of what she wanted to do post-graduation.
“My goal was to bring the finance and operations business acumen I gained from an MBA program back to organizations with missions I care deeply about,” said Hoerauf, who has a background in nonprofit management, including working for Yosemite National Park.
At Haas, Hoerauf found her calling in the Impact CFO program, an innovative initiative designed to create a new generation of CFOs equipped to lead foundations, nonprofits, and other social enterprises.
She’s not alone in this journey; Hoerauf is part of the inaugural cohort of 14 MBA students united by a goal to develop strong finance and analytical skills while having an impact on society.
(Hear about Impact CFO from a few students in video below.)
Workshops, speaker series, and networking events complement hands-on projects and industry mentorship, ensuring a comprehensive learning experience. Another key program feature is an internship that bridges impact and finance, helping students gain insights into the evolving role of a CFO in the social sector.
Raising the financial leadership bar
Silver emphasized the program’s unique approach: “Today’s social sector organizations need more than just accountants who can close the books; they need strategic thinkers with an MBA-level understanding.” This sentiment echoes throughout the program, raising the bar for financial leadership in the social impact realm, she said.
“Today’s social sector organizations need more than just accountants who can close the books; they need strategic thinkers with an MBA-level understanding.” — Nora Silver.
Even-Tov highlighted the diverse backgrounds of the program’s candidates: from seasoned finance professionals seeking meaningful impact to experienced nonprofit professionals aiming to amplify their fiscal expertise. “The program challenges its participants to balance the mission of the organization with financial stability,” he said. “Without wise business decisions, these organizations will not be able to achieve their social missions.”
CFOs in demand
Demand for such specialized financial talent is high, especially in California, a hub for the social impact sector, Silver said. “Of the 86,203 U.S.-based foundations, 22,347, or 26%, are located in California and hold assets of more than $722 billion,” she said. The base salary range for a senior finance manager or director in the sector is $120,000-$140,000.
Mentorship is a cornerstone of the Impact CFO program—and mentors in the Impact CFO program hail from industries including education, health care, impact investing, government, humanitarian aid, housing, art & culture, and philanthropy.
Hoerauf’s mentor, David Samuels, MBA 86 and CFO of REDF, exemplifies this. Interning at REDF, Hoerauf uses her MBA skills in a real-world setting, applying her learnings from courses like Strategic Management of Nonprofit Organizations and Social Sector Solutions.
Victor Ringeard, MBA 24, who is transitioning from a healthcare consulting background, anticipates a transformative experience at LifeLong Medical Care under CFO Brent Copen. Ringeard aims to grasp the nuances of nonprofit finance in healthcare and learn how to influence stakeholders who may not have a financial background, all the while making healthcare more accessible in the Bay Area.
A deeper understanding of the role
Yvonne Mondragón, BS 16, MBA 25, is blending her investment banking career with her nonprofit commitments. “Understanding the CFO role deeper will enrich my contributions to both sectors,” Mondragón, who serves on the board of the East LA Community Corporation, said.
Delphine Sherman, CFO of BRIDGE Housing, is mentoring Alex Weinberg MBA 24, who is interested in low-income housing, a field where BRIDGE Housing is a major player.
Sherman, the former CFO of Haas, said she believes that the Impact CFO program is not only shaping future leaders, but “molding a new financial paradigm in the social sector.”
“Impact CFO will fill a huge need for strategic, forward thinking, systematic, efficiency-driven, change agent CFOs in the social sector,” she said.
Looking ahead, Even-Tov and Silver envision building one of the largest networks of finance professionals in the social sector within a decade.
“We want the Impact CFO program to stand as a beacon, illuminating the path for future CFOs committed to making a difference,” Even-Tov said..
A paper published today in the journal Nature finds that online images show stronger gender biases than online texts. Researchers also found that bias is more psychologically potent in visual form than in writing.
A picture is worth a thousand words, as the saying goes, and research has shown that the human brain does indeed better retain information from images than from text.
These days, we are taking in more visual content than ever as we peruse picture-packed news sites and social media platforms. And much of that visual content, according to new Berkeley Haas research, is reinforcing powerful gender stereotypes.
Through a series of experiments, observations, and the help of large language models, professors Douglas Guilbeault and Solène Delecourt found that female and male gender associations are more extreme among images retrieved on Google than within text from Google News. What’s more, while the text is slightly more focused on men than women, this bias is over four times stronger in images.
“Most of the previous research about bias on the internet has been focused on text, but we now have Google Images, TikTok, YouTube, Instagram—all kinds of content based on modalities besides text,” says Delecourt. “Our research suggests that the extent of bias online is much more widespread than previously shown.”
Not only is online gender bias more prevalent in images than in text, the study revealed, but such bias is more psychologically potent in visual form. Strikingly, in one experiment, study participants who looked at gender-biased images—as opposed to those reading gender-biased text—demonstrated significantly stronger biases even three days later.
As online worlds grow more and more visual, it’s important to understand the outsized potency of images, says Guilbeault, the lead author on the paper.
“We realized that this has implications for stereotypes—and no one had demonstrated that connection before,” Guilbeault says. “Images are a particularly sticky way for stereotypes to be communicated.”
The extent of bias–and its effects
To zero in on gender bias in online images, Guilbeault and Delecourt teamed up with co-authors Tasker Hull from Psiphon, Inc., a software company that develops censorship-navigation tools; doctoral researcher Bhargav Srinivasa Desikan of Switzerland’s École Polytechnique Fédérale de Lausanne (now at IPPR in London); Mark Chu from Columbia University; and Ethan Nadler from the University of Southern California. They designed a novel series of techniques to compare bias in images versus text, and to investigate its psychological impact in both mediums.
First, the researchers pulled 3,495 social categories—which included occupations like “doctor” and “carpenter” as well as social roles like “friend” and “neighbor”—from Wordnet, a large database of related words and concepts.
To calculate the gender balance within each category of images, the researchers retrieved the top hundred Google images corresponding to each category and recruited people to classify each human face by gender.
Measuring gender bias in online texts was a trickier proposition—though one perfectly suited for fast-evolving large-language models, which noted the frequency of each social category’s occurrence alongside references to gender in Google News text.
The researchers’ analysis revealed that gender associations were more extreme among the images than within the text. There were also far more images focused on men than women.
Sticky images
The experimental phase of the study sought to illuminate the impacts that biases in online images have on internet users. The researchers asked 450 participants to use Google to search for apt descriptions of occupations relating to science, technology, and the arts. One group used Google News to find and upload textual descriptions; another group used Google Images to find and upload pictures of occupations. (A control group was assigned the same task with neutral categories like “apple” and “guitar.”)
After selecting their text- or image-based descriptions, the participants rated which gender they most associated with each occupation. Then they completed a test that asked them to quickly sort various words into gender categories. The test was administered again after three days.
The participants who worked with the images displayed much stronger gender associations compared to those in the text and control conditions—even three days later.
“This isn’t only about the frequency of gender bias online,” says Guilbeault. “Part of the story here is that there’s something very sticky, very potent about images’ representation of people that text just doesn’t have.”
Interestingly, when the researchers conducted their own online survey of public opinion—and when they looked at data on occupational gender distributions reported by the U.S. Bureau of Labor Statistics—they found that gender disparities were much less pronounced than in those reflected in Google images.
Opening doors to new research
Delecourt and Guilbeault say they hope their findings lead to a more serious grappling with the challenges posed by embedded bias in online images. After all, it’s relatively easy to tweak text to be as neutral as possible, whereas images of people inherently convey racial, gender, and other demographic information.
Guilbeault notes that other research has shown that gender biases in online text have decreased, but those findings may not reveal the whole story. “In images we actually still see very prevalent widespread gender bias,” he says. “That may be because we haven’t really focused on images in terms of this movement towards gender equality. But it could also be because it’s just harder to do that in images.”
Guilbeault and Delecourt are already at work on another project in this vein to examine gender-age bias online using many of the same techniques. “Part of the reason this paper is so exciting is that it opens the door to many, many other types of research—into age or race, or into other modalities, like video,” Delecourt says.
At a time when the world—and especially the job market—is full of uncertainties, it can often seem impossible to rise above the challenges many women face, from the workplace to their personal lives.
The 28th annual Women in Leadership conference aims to shed light on these challenges—and more specifically, the resilience that women exhibit. This year’s theme, “Leading with Resilience,” features speakers who will discuss their experiences in maintaining strength and overcoming adversity as women, from the personal to the professional to the physical. The conference will be held Saturday, Feb. 24, at the Haas School of Business, with an additional optional event the preceding evening at Ivy Room in Albany.
“Thinking about the theme for this year, we wanted to focus on what was happening in the broader world and physical environment,” said conference co-organizer Jillian Geary, MBA 24. “And this topic of resilience kept coming up for a lot of us in the room.”
Organized by the Women in Leadership club, the conference is one of the longest-running and highly attended events at Haas.
The conference will feature speakers such as Yasi Baiani, co-founder and chief product officer at Raya; Shripriya Mahesh, founding partner at Spero Ventures; and more.
Geary, who worked for a diagnostics startup amid the pandemic, discussed how her background in health care helped inspire the conference themes of leadership and resilience. She noted that, especially during such a time of uncertainty, she discovered the importance of collaboration.“I think of this conference in a similar manner—that we are smarter when we come together and create an atmosphere for people to share the challenges they’ve been through, rather than solely share their biggest successes.”
Co-organizer Alyssa D’Cunha, MBA 24, likewise noted that she hopes that the conference will help normalize difficult conversations surrounding hardship through a mixture of keynotes, a fireside chat, and panels on topics ranging from navigating male-dominated fields to living a balanced life.
She added that their ultimate goal is for attendees to leave the conference with a toolkit, having discovered their own resilience.
D’Cunha, who has a background in mechanical and materials engineering, highlighted the significance of addressing how women can navigate and succeed in male-dominated industries. Kellie McElhaney, Haas lecturer and founding director of the Center for Equity, Gender, and Leadership, will lead a conference workshop on the topic.
“I remember having a less than ideal conversation about having reached parity already, and how there is no longer this equality or equity problem that we need to address going forward,” she said. “We want to talk about how you navigate conversations like that with your superiors and what it means to be equity fluent.”
On Friday, Feb. 23, there will be a pre-conference “Story Slam,” inspired by Haas tradition of Story Salon, where students share their lived experiences with storytelling.
From leadership lessons learned while serving in the U.S. Army to creating iconic brand campaigns for big companies, former Levi’s CEO Chip Bergh shared many career stories at last week’s Dean’s Speaker Series, co-sponsored by the Center for Responsible Business.
Bergh, who recently retired, is known as a “brand guy,” starting his career as a brand assistant at Procter & Gamble.
“My career kind of took off from there,” he said.
Bergh discussed his work on brands—including Folgers Coffee’s “Best part is waking up is Folgers in your cup” campaign and JIF Peanut Butter’s “Choosy moms and dads choose JIF” campaign.
“The challenge of marketing is: How do you get a consumer to fall in love with your brand?” he said.
After becoming president & CEO at Levi’s in 2011, Bergh led the company’s dramatic turnaround, returning the brand to the center of the culture.
Bergh said his plan to revive Levi’s was simple. “I’m a brand guy. I knew nothing about apparel. I didn’t know much about retail either. But I grew up in Levi’s. I can remember my first date or first kiss, I was wearing Levi’s. My whole thesis was (to make) the brand the way it was when I was a kid. I had to have Levi’s to go to seventh grade. I was not gonna be that kid to show up in middle school not wearing Levi’s.”
Watch the video here:
Read the full transcript:
– Good afternoon, everybody. I’m Ann Harrison. I’m the dean at the Haas School of Business. Welcome to today’s Dean’s Speaker Series. We are so lucky today to have Chip Bergh joining us. So exciting. When we think of Chip, I think personally of brands, big brands: Levi, Swiffer, Gillette, Old Spice. Chip spent his whole career in brand leadership from his first job out of the Army, as a brand assistant at Procter & Gamble, all the way to president and CEO of Levi Strauss & Company. And with a few stops in between, Chip took on the challenge of reinvigorating the Levi’s brand in 2011. Now, Levi’s has a global footprint of 3,200 stores and net revenues way over $6 billion. Chip has consistently questioned the status quo, one of our defining leadership principles, with his values-based leadership, and one of those values is to walk the walk on sustainability. It’s so important for us tonight to be able to learn from someone whose everyday work has focused on sustainability goals, goals related to issues of climate, issues of consumption, and community. Now, we actually have a very special connection to Levi Strauss & Company that many of you in the room may not know about. In 1897, Levi Strauss helped establish UC Berkeley’s very first scholarships. One hundred and twenty-seven years later, the Levi Strauss Scholars Program continues to operate at UC Berkeley, and it provides financial security for students with limited resources and big dreams. But actually, Haas and Levi Strauss have even closer ties than that. Our namesake, the namesake for the Haas School, Walter A. Haas, he started working at the small dry goods firm in 1919, marketed to teens after realizing blue jeans were the ultimate in cool, and he retired as chairman of the company in 1970. So I’m sure that Chip has a lot to say about this history and how it connects to the company’s DNA and the amazing denim legacy that he carried forward and has built on so incredibly successfully. I also should note that Chip just retired this week, and we’re already working hard to recruit him here to becoming a professor at Haas, and that is no joke. Congratulations on a truly meaningful career and all the successes still to come. Thank you, Chip, for joining us today to teach us everything that you have learned along the way. Now, some quick housekeeping. You should all have a note card on your seat. If you have a question right now or anytime during the event, please write it on the card, and be sure to include your name and which program that you’re in. My colleagues over here will be collecting them throughout the event for the Q&A portion after the fireside chat. And since Chip has recently retired, we’re asking that you focus your questions on his career and not the future of Levi’s and now. And now I’m going to—
– About the future is great.
– OK, and now, I’m going to turn it over to Manu Singh and Chris Burke, and they are students, are MBA students and they will moderate today’s discussion. Thank you.
– Thank you, Dean, for the introduction and welcome, Chip to the Dean’s Speaker Series. All of us are really, really excited. Who we have in the audience are MBA folks. We have evening and weekend program folks, also MBA. We have students from the wider UC Berkeley community. We have alumni of Haas as well. And then everybody has their notebooks out, and they’re here to learn from your inspiring journey, so thank you for being here. My first question is to you: You’ve just retired, and how are you feeling?
– Well, first of all, let me say, thank you very much for the warm welcome and for the very, very kind introduction. Yeah, my last official day as president and CEO was on Sunday, and so the 49ers gave me the best gift possible. We’re going to the Super Bowl, right? So yeah, Monday morning was a really weird feeling, waking up and not going into work, and I’m still adjusting to it. Nobody’s sending me emails anymore. But I’ve got a lot of options of different and interesting things that I might do as I go forward. I feel too young. I’m 66, but I feel too young to just hang it up completely. I want to do something where I’m going to have an impact. And as the dean knows, teaching is actually something that is pretty high on my list. So, who knows? Maybe you’ll see me around campus.
– Yes, woo!
– But from the week after I graduated from undergraduate school, I have gone to work every day. And to wake up that first morning knowing I don’t have to go into the office, it was weird. And it’s going to take some time to adjust to it. I’ve had somebody tell me, you need to give yourself a couple of months to really decompress and detox. The CEO job, it is a high octane 24/7, always on. You never know when you’re going to get the call in the middle of the night or something. And it’s going to take a while, I think, to decompress. And then, with a clearer mind, I will decide where I’m going to go and what I’m going to do next. But it will be something.
– So, as a Lions fan, I can’t express the same amount of optimism you have right now. But just to get us started—
– Sorry about what happened there.
– I don’t want to talk about it. Taking us all the way back, you served in the military, for what? A little over four years? Can you just talk about how that shaped both who you are and your views on leadership moving forward into your career?
– Sure. Yeah, so I’ll take you back to when I went to college. I graduated from high school in 1975, little history lesson. So I graduated in June of 1975. In April of 1975, the Vietnam War ended. So the furthest thing from my mind when I went to college was enrolling in ROTC. But somebody dangled a smart rising sophomore, who was in ROTC, dangled this idea that, if you sign up for ROTC and you stay for a week, you get to keep the boots. So I signed up for ROTC, and it turns out, I loved it. And then, six months in, the commander of the ROTC unit said, “Why don’t you apply for a scholarship?” And I was doing three jobs and trying to bailing wax and string trying to get my way through college. And I was like, he said, “It’ll pay for all your tuition, room and board, plus a monthly stipend of 100 bucks a month,” which back then, was a lot of money. I was like, “I’m in, I’ll apply.” And three months later, I got it. So then, all of a sudden, the military, Uncle Sam was paying for college, and I had this opportunity to go into the Army, and it was life changing for me. One of the life-changing moves, that I looked back on my life and said, “My life would be totally different if I had not done that.” Many people have accused me, it’s still looking like I’m in the Army, but it made me who I am as a leader. So, after I graduated from college, my unit was in West Germany, OK? Outside of Frankfurt, West Germany. When there was still an East Germany. My unit’s mission was to be kind of the first line of defense. I was in an air defense unit, first line of defense. When the Russian hoards came across to fold the gap in World War III, we were going to be the first line of defense. I had a platoon, my first assignment, I was a platoon leader, a second lieutenant, 22 years old, right out of college. My platoon sergeant, 18-year-Army veteran. My four squad leaders who had been in the military anywhere from about four to eight years, all had to salute me and call me sir. And it grew me up really, really fast. I learned everything about leadership in the military, and leadership has changed over the years, but it really made me who I am as a leader. And I learned never to ask a soldier to do anything that you yourself wouldn’t do. I’ve learned really the essence of what now is called servant leadership, taking care of your people. You take care of your people, they’re going to take care of you. But I learned so much. And it all applied to business too, later on. But I had the opportunity to make the military my career. I had a “regular Army commission,” which is the same commission that West Point graduates graduate with, even though I went to a “real school.” Sorry about that if there are any West Pointers in here. But I decided I really wanted to go to a place where it was a meritocracy, where if you performed really well, you moved ahead quicker. And that was not really the military until after about 18 years. And then maybe the better performers start to separate, so. But it was life-changing. Very big.
– Yeah, thank you. Thank you for sharing that. And you then joined P&G after your military experience, right? And then you rose in the rank there from a brand manager?
– Brand assistant.
– Brand assistant. All the way to the group president, right? And so, I’m curious, and then after that, you made the decision to move to Levi’s. As I see, these two sectors are very different. One is consumer goods, the other is apparel, different demand, different supply chain, different everything. So I’m curious, why did you make that kind of move?
– OK, well, so a couple of things. There were probably several questions in that question, but yeah, when I left the military, I graduated undergrad. I went to Lafayette College, relatively small liberal arts school in Easton, Pennsylvania. Any Lafayette grads here? Didn’t think so. Bummed me out. I was an international affairs major, so I didn’t really have any practical business experience or anything like that. But one of the things that four plus years in the military taught me was it taught me a lot about myself. I learned a lot about myself and what kind of environment I would thrive in, what kind of environment where I could be really successful. I knew myself as a leader and how I could make things happen through other people. And so, when I decided to leave the military, I looked at a wide range of different types of career opportunities and different companies. And at the end of the day, I felt that brand management at P&G really felt like the best fit for me. Back in the day, they used to describe brand management as like, mini general manager. I still remember the picture on the recruiting brochure where the brand manager was in the center and then all of the other functions were around it. And it was like a mini general manager role. And that’s the way they pitched it to young aspiring people like me and some of you. And that felt like a really, really good thing. And then, when I interviewed there, I just really liked the people, and I felt like it was an environment where I could be really successful. And it turned out, that’s how it played out. I mean, I spent 28 years at P&G. I actually technically retired from P&G. I went to work the next week when I joined Levi’s, but I had been there long enough that I technically retired. And I had an amazing career. I started as a brand assistant, and over the course of 28 years, I rose through the ranks of brand management. So brand assistant, it was a very linear career path, but brand assistant, assistant brand manager, brand manager. I started in a very obscure division called food service and lodging products, which was kind of the institutional division, if you will, of P&G where we sold big things of oil to restaurants, to deep fry food. We had big things of Tide laundry detergent that we sold actually to laundries and also to clean floors and restaurants. So, our customers were institutional customers. And then, after about six years, I moved over to the consumer side of the business to the retail food business. And my career kind of took off from there. I worked in the food and beverage business. I worked on brands like Folgers. “Best part is waking up is Folgers in your cup.” I worked on JIF Peanut Butter, “Choosy moms and dads choose JIF.” So, I worked at Duncan Hines. I was brand manager on Duncan Hines Baking Mix. And working in the food and beverage business as a marketer was a great place to spend my career. Because, if you think about it, the challenge of marketing is: “How do you get a consumer to fall in love with your brand?” And when you’re selling coffee, for example, the end benefit of coffee, it’s a drug, right? It’s caffeine; it wakes you up in the morning. What’s the difference between Folgers and Maxwell House? Back in the day, it’s “the best part of waking up is Folgers in your cup.” And that emotional advertising that kind of sucked the consumer in and created this attachment to the brand. And so, kind of growing up in food and beverage, I really learned the importance of understanding the consumer and kind of unarticulated needs and how to really emotionally connect with the consumer. And I will tell you how that played forward even on Levi’s. OK? Anyway, my career kind of continued. I was marketing director on Folgers, and I was general manager on this tiny crummy little business that we had called Hard Surface Cleaners. That sounds like fun, huh? Brands like Comet, Spic and Span, Mr. Clean, Luster Oil. Have you heard of any of these brands? OK. It was a business in the U.S. It was a $200 million business. It was breakeven, it was declining. Not fun, not strategic at all. And I had just come off of Folgers, which was like a $1.5 billion dollar business. Our marketing budget was bigger than the total size of our hard surface cleaners business. I was doing 30 pieces of advertising a year as a marketing guy. That was great fun. Come to Hard Surface Cleaners, and we’re barely making any money, and it’s not strategic to the company. And turns out, it was probably the best assignment in my career at P&G, or one of the best. The business was really challenged. And when I got there, I said to my team, “The best definition of insanity is to keep doing the same thing and expect different results. We need to go back to the drawing board and figure out how to turn this business around.” And if you think about it, all of those businesses, Comet, which is sand in a can, right? Mr. Clean, Luster Oil, these were all designed for the 1950s when mom stayed at home and cleaned the house and baked the cake, and dad went to work and came home. Honest to goodness, that was the business. And cleaning had completely changed. This was now in the 1990s, to working families. We didn’t even have hard surfaces in most of our houses. We had carpets for crying out loud, right? So, we went back and went deep on the consumer and discovered that consumers hated to clean. They wanted cleaning to be simple, quick, and fun. Like an impossible dream, right? And out of that came Swiffer.
– Yes!
– Thank you. I knew somebody would say that. And that is today a $2 billion global business. And it was all based on this consumer insight that people don’t want to clean like the 1950s. They have different surfaces, they have different needs in their life. And we built a new business around those needs, and it turned into a $2 billion business. Anyway, I’m taking too much time here. I haven’t even answered your question. OK, then I went, I kind of carried on in my career. I went to Asia for six years. I ran P&G’s business in Southeast Asia, which was amazing. I was based in Singapore. Interestingly enough, my youngest son and his wife are soon moving to Singapore, and he’s going to get to go back there. But it was a small business when I got out there. It was about a billion-dollar business across all these great markets from India, across to the Philippines, everything in between, and then down all the way to Australia, New Zealand. So I had some really high GDP per capita markets like Singapore. I had some really, really low GDP per capita markets like Indonesia and India and a little bit of everything in between. Incredible diversity, incredible young organization, amazing experience. And in six and a half, almost seven years, we went from a billion dollars in sales to $3 billion in sales. We were the fastest-growing business in P&G for three or four years in a row. Phenomenal experience. And then, P&G acquired Gillette. The CEO was telling me I need to go back to Cincinnati. I was like, “Nah, not so much. I’m not sure I want to go back to Cincinnati.” He called me up one day and he said, “We just acquired Gillette, how would Boston be?” And I was like, “Boston? Cincinnati, Boston be great.” And so, I was the first P&Ger dropped into Gillette when we made that acquisition. It was a $57-billion deal, biggest acquisition, still to this day in consumer packaged goods. That was an amazing experience as well, running this big. It was about a $7.5-billion business. I also had responsibility for all the other male grooming brands in the portfolio, the biggest one of which was Old Spice, which was also the troubled business that we managed to turn around the last couple of years that I was there. We used to jokingly say, “Old Spice is that fragrance your grandpa wears. Unfortunately, your grandpa is dying.” And so was the business. And so, we repositioned Old Spice. We went after Axe, and we did a really cool piece of advertising that aired just after the Super Bowl, not on the Super Bowl. Very famous ad that started with, “Hello, ladies.” And you probably know the ad that I’m talking about. It ends with, “I’m on a horse.” And that took the business to completely new heights overnight. Overnight. Then I got the call for Levi’s. And I was mid-50s at this point in time. Young daughter, two grown boys, and starting to think about what would be next. I’ve been working on the Gillette business for about seven years. And the most likely scenario is, I go back to Cincinnati and run Pampers or something else, which is a big brand, and that would’ve been fun, too, but it was kind of like, “Is that it?” You know, “Is that my career?” And it’s not like I had this burning desire. I had to go be a CEO per se, but I wanted to do something where I was going to have a legacy and make a difference. And I had been getting calls while I was at Gillette for other CEO opportunities, most of which weren’t very, very interesting. But when I got the call for Levi’s my ears perked up. The headhunter said to me on the phone, “You know, I think I’ve got something that might be interesting to you. What do you think about Levi’s?” And the words out of my mouth were, “Oh, wow.” And honestly, at that moment, I was actually in Beijing with my leadership team from Gillette at that exact moment. And if you’d asked me right then, and I had just been in a mall the prior day and had walked past a Levi’s store, and if you’d asked me, “How big is Levi’s?”, I would’ve said it was a $10 billion brand easily. ‘Cause everywhere I traveled around the world, I saw Levi’s. And I grew up on Levi’s, and I like to say everybody’s got a Levi’s story. But as I started doing my due diligence on the company, the brand was broken, the company was lost. It had not performed in well over a decade. I mentioned, I’ve got two, they’re now really grown boys. My oldest son is turning 41 this month and lives in Taiwan. My youngest son is 36 and works at Nike up in Portland. And when they were teenagers, they never wore Levi’s. It was not even in their consideration setting. My guess is, if there are some of you who were kind of early 30s, early-30s to mid-30s, it probably wasn’t in your consideration set either as a teenager. And so, the more I dug into it, the more I was like, “This is one of America’s greatest brands, one of America’s oldest companies.” We just celebrated our 171st birthday. We’re going on 171 years now. “One of America’s oldest companies, one of America’s greatest brands, one of America’s oldest brands, a brand that I loved as a kid.” And that represented the opportunity to really make a difference. And so, I decided to do it, and it’s been amazing—
– Yeah, thank you for sharing that. I think you’ve worked in brands, which you feel inspired about, right? So I guess a quick show of hands in the audience, how many of you have had a pair of Levi’s jeans? OK, OK, wow.
– That’s almost 100%. Or let’s break the other way. Who hasn’t?
– OK, there are a few.
– OK, you’re brave, you’re brave. We’re going to work on you tonight. No, but seriously, I do like to say, “Everybody’s got a Levi’s story,” and I did my due diligence before I took the job. I kind of discovered that people, I asked my friends, “Have you bought Levi’s lately?” And they, “God, I grew up in Levi’s. I can remember like my first date or first kiss, I was wearing Levi’s.” And they would say, this is back before I took the job, “But I can’t even remember the last time I bought a pair of Levi’s.” And so the opportunity to kind of—my going-in thesis was really simple. I’m a brand guy. I knew nothing about apparel. I’m a brand guy. I didn’t know much about retail, either. My whole thesis was if we could make the brand the way it was when I was a kid. I had to have Levi’s to go to seventh grade. I was not going to be that kid to show up in middle school not wearing Levi’s. Those kids got pounded by the cool kids. And so, I asked my mom to drive me about three towns over so that we could buy a pair of Levi’s for when I went to seventh grade, that’s one of my Levi’s stories. First memory. And that was the whole going-in thesis. And that has really been what we’ve done over the last 12 years. We put the brand back at the center of culture, made it cool with the kids again, and have significantly grown the business by about 50% over the last decade or so. I’m freaking these guys out ’cause I’m a storyteller, and they’re like, “Man, we’re so far behind.”
– No, we would never. No, I feel like as a brand guy, being able to hop onto a 170-year-old brand has gotta be an exciting experience. Something you want to just kind of dig your teeth right into. But can you talk a little bit about the listening tour you did about chips and beers? ‘Cause that seems like something that not every CEO is doing these days.
– Yeah, and when I got to the company, I knew there was going to be a ton of skepticism. Did I? It’s blinking. Red and green. OK, when I got to the company, I knew that there was going to be a lot of skepticism. Who is this new CEO? He has never been a CEO before. He doesn’t know anything about apparel. Doesn’t know retail. Who is this bozo? And I also came in with a huge amount of humility because I knew they were right. I didn’t know anything about apparel. I didn’t know anything about retail. And I had to come in with a huge amount of willingness to learn. And so, one of the things I did is, I sent the same six questions to the top 60 people in the company. I’m not going to remember all six off the top of my head, but “What three things do you hope I will do? What three things are you most afraid I might do? What are the three things that you think we have to keep? What three things have to change? What advice do you have for me?” Which was open-ended. And there was one more, and I don’t remember what it was, but I went and I sent it out to the same 60 people and I said I’m going to set up an hour. I’m going to come to your office, sit down, use it as an opportunity to learn a little bit about the person, but then get into a conversation. And I was kind of surprised because after about 15 or 20 of those interviews, there were some really, really clear themes about what was almost sacred about the company. And almost, “Don’t touch these kind of things,” like our values, this notion of profits through principles, this deep sense of pride about the impact that this company has in the world beyond just selling blue jeans. But at the same time, it was also really clear that there was no strategy. The left hand didn’t know what the right hand was doing. The company was very, very siloed. There was a huge amount of pride about the brand and the company but a real lack of understanding of how poorly the company was actually performing and had not really grown or created any shareholder value over more than a decade. And so, that really began the early phases of putting a strategy together is, “What are the things that we absolutely must protect?” And I would say, as I finally got it, it took me about a year or two, but this notion of profits through principles, which is one of the big differentiators of this company. This company punches way above its weight. We’re a $6-plus billion revenue company with a market cap of about $6.5 billion. And we get thrown around because of who we are and how we operate in the world. Our name gets associated with much, much bigger companies. Right? When we stood up to the immigration ban in 2016 that the president enacted unilaterally, the first week he was president in 2016, we immediately took a stand opposing the immigration ban because it was targeting people from Muslim countries, and it was just flat-out wrong. The headline in the newspaper the next day was, “Apple, Google, Facebook, and Levi’s stand up to the immigration policy.” They were all trillion-dollar market cap companies and little old us in the same headline because we have this long-standing tradition and focus as a company of not being afraid to stick our necks out to do the right thing and to make a difference in the world. And that is a big part of who we are. And part of the magic of this turnaround in the last decade is linking this concept of profits through principles to our business results internally with our employees. That the way we make a difference in the world is largely through the Levi Strauss Foundation and the nonprofit organizations that we work with. And we are able to have more impact with those organizations when we are more successful as a company. So the more profit we make, the more money we donate to the foundation, and the more great work that the foundation can do in the world. And that has created this virtual spiral. ‘Cause every employee wants us to make a difference in the world. And that kind of connects delivering strong business results to having an impact.
– Yup. And Chip, I don’t think you need moderators at all. I think you’re amazing at telling stories. So you talk a lot about employees and there, what are they saying? I’m curious in building these multi-generational brands, right? You also need to hear about the customer and what are they saying? So what are some of the strategies you did to listen to the customers more?
– Yeah, I think one of the things that we did pretty early on was, and my successor, Michelle, is doing the same thing, is really making a point of putting the consumer first in everything that we do, in designing our products and thinking about our marketing and how we go to market. Really putting the consumer front and center. And I learned that at P&G, too. I mean, Swiffer came out of great insights from the consumer. And I’ve always believed that you have to really listen and dig deep to understand the consumer. Our selling a great story on this. Actually, in India, it was in Bangalore that this happened. One of the things I love to do when I go to a market is do just real simple qualitative research with consumers. And sometimes, I’ll go shopping with a consumer and just understand how that consumer is shopping, what are they looking at, what do they like, what did they not like? And that’s a lot of fun. But this was early 2013, I think, maybe late 2012. I was in Bangalore, and I did a consumer in-home, and I was with a young woman who was in her 20s. She worked in the IT sector in Bangalore. She came from a wealthy family. They had a big house, air conditioning. And she also went to school in the U.K. So a good family. And she was recruited because she loved denim and she had multiple pairs of jeans. Long story short, did this qualitative research, at the end I said, “Can we see your jeans? Can we take a look at what jeans you’ve got?” And she walked into her bedroom with the moderator and the country manager and she spoke perfect English. So we didn’t need a translator or anything. And she laid out about eight pairs of jeans on her bed. And I said, “Well, tell us about each one of these.” And they weren’t all Levi’s to be clear, right? So the first pair was some premium brand. And she said, “Well these are my date jeans for fancy Saturday night date.” And we kind of went one by one down to the last two pairs of jeans, which were Levi’s, and the second to last pair, “OK, what are these for?” And she said, “These are my go-to jeans. If I’m going to go have coffee with a friend at the mall on Saturday, these are the jeans that I wear to just go out and hang out with my friends.” I was like, “OK, what about this last pair?” Silence. She gets a little wispy, a little tear in the eye and she says, “Well, to be honest with you, those jeans don’t even fit me anymore, but those are the jeans that I wore in college. They have the story of my college, my university years, and I can’t bear it apart with them.” And then she said, “You wear other jeans, but you live in Levi’s.” That is the selling idea in our advertising. If you watch our advertising, it’s live in Levi’s. And remember I said, “Everybody’s got a Levi’s story?” That’s what live in Levi’s is all about. Everybody’s got a Levi’s story. So it’s just a way to bring to life this notion of just really listening to the consumer and being very consumer-focused. And in apparel, you have to do that because trends change so fast. And when I first joined the company, we were missing trends, especially on the women’s business. Now, we’re leading trends, and we have been leading trends on the women’s business for the last five years or so, and we’re big enough that we can really create trends, too.
– So continuing on that listening theme, for someone who led the re-IPO, you talk a lot more about stakeholders than you do shareholders, I feel like. Can you talk a little bit about, A., how Levi’s treats its employees, whether that’s reproductive health care benefits, whether that’s advocating for gun reform in the U.S,, but then also, how you view that as a competitive advantage for hiring, especially being in the Bay Area, which I think a lot of people wouldn’t necessarily assume a company like Levi’s would place their headquarters.
– Well, Levi Strauss himself, the man, was a smart guy to put his company here in San Francisco and in the Bay Area. And I like to say we’re the original Bay Area startup. You know, “Who wants to come join us?” The original Bay Area startup. But no, stakeholder management is something that we’ve taken really, really seriously long before I came along. And I do consider our employees as one of our most important stakeholders. And I was telling you earlier, before we came out here, we got into this, we’ve taken a stand publicly on ending gun violence in this country. And we’ve been on this journey for the last probably seven years now. Seven years, I’m looking at Janna. It started because we have a couple hundred stores here in the United States. And in the United States, there are some states where people can walk around with a gun on their belt. And we have a company policy that employees are not allowed to bring guns to work. And so, we had store managers who were not feeling very safe because people were walking into their stores brandishing a gun, and they don’t know if they’re a good guy or a bad guy. And long story short, we had a customer in our store who went into the dressing room, had a weapon in his pocket, and when he dropped his jeans to try on a new pair of jeans, the weapon discharged, it went off. He literally shot himself in the foot, can’t make that up. And that was it. That was the straw that broke the camel’s back because that bullet, instead of going into his foot, it could have gone into one of my employees, it could have gone into one of the customers in a store. It could have gone into a customer’s child, it could have had a much more tragic ending. And our store managers know that other retailers had asked gun owners to not bring weapons into the store, particularly in open carry states. And so, we went to school and looked at other retailers who had done this. Notably, Target and Starbucks were the two models that we looked at. And we basically did what they did, which was politely, with courtesy, and with respect, to ask gun owners to not bring a weapon into the store. You don’t need a gun to try on a pair of Levi’s. And as you can imagine, there was immediate and massive blowback. And that is what basically got us into this journey. We got in deeper after the Marjory Stoneman Douglas. Is that OK? I get that right? Stoneman Douglas, after the shooting down in Florida in 2018, I think. And that’s when we talked to the board of directors about really going big and being public about trying to put an end to gun violence in this country. And if you talk to young people, which we do, and we quantitatively research young people as well, it is one of the top two or three things on young people’s mind. Most of you grew up in an environment, if you went to school here in the United States where you’d practice lockdown drills. And, oftentimes, in many schools, you don’t know if it’s a drill or the real thing. Many people have been impacted by gun violence in this country. I think the latest number is close to 60% of people know somebody who has been impacted by gun violence in this country. And it’s a top-three issue among young people here. And so, after that particular shooting, the Parkland shooting, we started working with the young people who were activating to really build a voice against ending gun violence in this country. And we supported them. And we’ve been in it now. In fact, our board of directors made it better. It’s like, “Don’t just use your voice, put your money behind it too.” And so, we have activated with our mouth and our money to try to put an end to gun violence in this country. And a year ago, or two years ago maybe now, U.S. Congress just passed the strictest gun violence legislation in over a decade. And we played a part in getting that done. We had over 500 companies’ CEOs join me in a letter to Congress to encourage them to pass that legislation. It’s the first time in over a decade where any gun legislation has been passed, and it’s one small step. We’re not all the way there, but we believe we’re making a big difference. And it all started because of our employees. Same thing, reproductive rights. I’ll try to be a little bit shorter here, but when Roe v. Wade was overturned, actually, before it was even officially overturned, when the leak happened, we immediately weighed in and said we were going to continue to support our employees with reproductive health care. And we were very public, and that really became the model that many companies followed, and we are still there for our employees even in states where it’s gotten egregious and very, very difficult for a woman to take care of her body as she wishes.
– Yeah, I think we have a lot of questions, but no time.
– I’m sticking around though. I’ll stick around.
– Yeah, I think it’s probably the last question is, I know you mentioned you’re going to teaching, and you’re probably coming to us to be a professor.
– I don’t know, I may not get a job after being so long-winded today.
– Yeah, no pressure though.
– You can make that check out to Manu’s, by the way.
– Yeah, but otherwise, what’s next for you? Apart from teaching that you’re thinking about?
– Well, I don’t know yet. It’s only been a couple of days. I still need to kind of get over the shock and awe of not going into the office and not being a CEO anymore. But I will say one thing. Yes, I was president and CEO of Levi Strauss for 12.5 years, and I’m really proud of everything that the company has accomplished over that period of time. But I think, unlike a lot of CEOs, I never made it who I am. I am first and foremost, a husband, a father, a brother, a friend. And that is still my identity. I also think of myself as an athlete. I’m a terrible athlete by the way, but I do try to take care of myself. I work out almost every day. That’s an important part of who I am, too. And so a lot of CEOs, the day they retire, they have this massive identity crisis. And there’s the funny story where the CEO goes out the front door and sits in the backseat of the car and then wonders why the car isn’t going anywhere. ‘Cause there’s no driver. And that’s not me. It’s not my identity. It never was completely my identity. It was what I had on my business card and what my job was. And I took those responsibilities really, really seriously. But I’m just a regular guy and I’m like a lot of you, and I’ve got hopes and dreams just like all of you. And I’ve got my blind spots and my weak spots as well. And there’s stuff that I’m still working on, too. So I put my pants on—my Levi’s on—one leg at a time just like everybody else. And I know that there’s a future still. So my biggest thing is, I do have a 15-year-old daughter who is a freshman in high school. She goes away, she’s at a boarding school actually on the East Coast. And my biggest thing is, I want to live a long, healthy life. And so that’s why I am really focused on fitness, nutrition, and I have been for a long, long time. You can probably tell it by looking at me, but part of what I want to do next is I want to stay very deeply engaged and do something where I have an impact. And that’s why teaching and being around young people like all of you is something that is really very high on my list.
– Thank you. Thank you for your time. Thank you.
– Thank you. And I’m Robert Strand. I have the privilege to be the executive director of the Center for Responsible Business and the executive director of the Nordic Center here at UC Berkeley. And I will say, first, and Chip, congratulations on your 49ers victory. Chris, you’re a Lions fan. I’m a Packers fan, so I say that congratulations with a little bit of a wince, but I do hope the 49ers win that Super Bowl. Dean Harrison remarked on the long-standing ties with the University of California, Berkeley and Levi Strauss going back to 1897. And of course, in our name here, Haas School of Business, those ties with Levi’s are so strong, and we are so proud at the Center for Responsible Business that Levi Strauss is our longest-standing partner. And Anna Walker here was a longtime board member for the Center for Responsible Business. And we want to say on behalf of the Center for Responsible Business also, thank you so very much. Our partnership means so much. The dean also emphasized that, Chip, you’re known for successful brands, and has come out here as well, as you’re known for purpose and deep-seated purpose. And you exemplify beyond yourself and question the status quo in spades. And I think that there’s such a lesson for our MBAs here in that business leaders can and should be champions of strong public policy that’s in the interest of society. To use your role, your platform, your power to be lobbyists for society first and your company second. And you exemplify that so well, and the work in your leadership in gun violence prevention and democracy is so incredible. Now, Chip, you love students, and Liz, I’m going to ask you to come up here in a moment and ask some questions on behalf of students. And we are so fortunate here at Haas that soon, Chip will also be a professor here at Haas. Who would say, yes indeed?
– I’m excited.
– We’re so excited. We are so excited. So you can have the weekend, and then you come on Monday, the semester just started and away we go. All right, well with that then, some of your future students here have some questions. So Liz, Schasel, who’s our Center for Responsible Business, one of our fellows, we’re so proud to have you, Liz, please on behalf of the students. And, Chip, again, thank you so much. Thank you, Robert.
– Thank you, Chip, for being here and sharing such a great part of your story with us today. We have four very thoughtful questions from the audience, and we’ll start with a hardball. What is the hardest decision you made as the CEO of Levi’s? Why was it hard, and what did you do?
– I think probably the hardest thing, we actually had to do this twice, was a pretty serious round of layoffs. And the first time was shortly after I joined the company, 2013, 2014. When I joined the company, we had about $2 billion of debt. Our profit margins were really low, we weren’t generating a lot of cash. Our balance sheet was an issue, and we were bloated, we were fat. And I made the hard decision to lay off about 15% of the management workforce. We did it the right way, if there is such a thing of letting people go, but people got packages, they were taken care of. But that was really, really hard. And we had to do it again during the pandemic. When the pandemic happened, the pandemic was a really scary moment when you’re running a business because one day everything was fine, and the next day, we were all locked down, and our stores were closed, and most of our customers’ stores were closed, too. And so, that very first quarter, we normally do about $1.5 billion or $1.6 billion a quarter. The first quarter of lockdown, we did less than $500 million in revenue. And that was in the first two and a half weeks of the quarter before everything else shut down. And we had no idea how long we were going to be shut down. You want to talk about scary? It was like, “How much cash do we have, and how long can we last?” That was the question we were asking ourselves. So we immediately went out and got cash. So we got as much cash as we could get our hands on, but we also had to rightsize the organization because we knew that we were not going to be a $6 billion business that year or probably the following year. So we had to do it again in the middle of a pandemic. And that was pretty tough. So that’s the hardest thing about running a business is, when your costs get out of line, you have to go do something about it. And I inherited the first one. The second one was a pandemic, and it was hard. But that by far is the toughest thing. Needing to look somebody that you’re working—these are all good, talented people, and needing to look them in the eye and tell them that they don’t have a job is really brutal.
– Thanks for sharing that. I know many of the future business leaders in this room may face tough decisions, so it’s nice to hear from your experience. Our second question is about mentorship. Who were the biggest contributors or mentors in your career, and what was the most important lesson that they taught you?
– Yeah, I’ve been really lucky. I’m a big believer that mentorship is not something that can be assigned. P&G used to do that. They would assign you a mentee or a mentor. It never works. I think it happens naturally. There has to be that human connection. But I would encourage all of you to work hard to develop a mentor relationship with somebody. It can be your boss or your boss’s boss, or it could be somebody higher up but not in your direct line of command. I was blessed. I mean, I had a number of great mentors and still do. Probably my strongest mentor through the years was, he was my boss for a period of time at P&G. And he’s older than me, he retired ahead of me. But when I was thinking about taking the job at Levi’s, I actually flew to Cincinnati where he lived and took him out to dinner. He was already retired, took him out to dinner, and I laid it out on him. And I actually thought he was going to try to talk me out of it because he was a P&G retiree, worked for P&G his entire career, owned a lot of P&G stock, and I thought he was going to say, “You’d be crazy to leave P&G.” And he actually said the biggest thing I look back on and ask myself is, “Would I have been a good CEO?” And he said, “If you want to really test yourself, you want to set yourself up to do something that makes a big difference, you need to go do this.” And he made a huge difference in my life without one single piece of advice ’cause I was really wrestling with it. When you spend your whole career at one company, you’ve got your own personal brand, and your career is really, really well-established. It’s a huge risk at that stage to go do something completely outside of your industry and everything else. And he was like, “You got this, you can do this.” And it made a huge difference.
– Wow. Well please send our gratitude on behalf of the Levi’s fans in the rooms to your mentor. I would be remiss if we did not talk about sustainability. Sustainability is a big passion of a lot of the folks at Haas. Dean Ann Harrison has done a great job incorporating this into the curriculum. How did your perspective on sustainability in the consumer business change over the course of your career, especially as climate change has become a more urgent topic?
– Yeah, I would say when I was at Procter, sustainability was code language for cost savings, lightweight the package, take water out of the package, lightweight the product, figure out how to do round things in squares so that it ships more efficiently. It was all code language for cost savings really. And a lot of the sustainability things that we did really did generate real cost savings. They were still good to do for the planet, but they generated good cost savings. When I came over to Levi’s though, and I began to really understand the impact that the apparel industry has on planet Earth, it became much more of a wake-up call. And very, very early on, I was introduced to the lifecycle study that we had done on a pair of blue jeans, which was first done back in 2007 by the company to really understand the carbon impact of a pair of jeans from growing the cotton all the way through to consumer use and post-use. And that was an eye-opener. Then, early in my first year, I did a supply chain trip and really began to understand, from a supply chain standpoint, the impact that we have as an industry. Chemicals and water and water use, water reuse. And that had a big impact. And then, when we started doing a little bit of back the envelope math on the amount of garments that go into landfills and the impact that that has on planet Earth, as these things decompose, all began to really paint a pretty bleak picture about the apparel industry. And we’re one of the leading apparel brands in the world. And the good news is, the company was already marching forward on a very big sustainability agenda. And what I did was, I just basically deemed that all of our innovation was going to be through the lens of sustainability. And very early on, we created the Eureka! Innovation Center, which you see the patch, that’s the patch. They made this jean jacket for me, this trucker jacket for me is a going away gift, but it’s right down the street from our headquarters, and we’ve put an enormous amount of energy in sustainability. Eliminating bad chemicals from our supply chain. We’ve led the industry there, we open source all of that, figuring out how to reduce water use in the industry. We’ve open-sourced all of that, so anything that we find that is really good for planet Earth from a sustainability standpoint, we’re all in for sharing it. It doesn’t need to be a secret. And so it is our commitment. From a commercial standpoint, we’ve been working secondhand. I like to say, I have no data to back this up, but I like to say we’re the No. 1 brand in secondhand stores, right? Anybody disagree with that? I think we are. And we know that people love buying vintage jeans, vintage Levi’s, right? So we have now kind of curated our own secondhand website. So we have levissecondhand.com, which we actually operate with a partner and we encourage and incent consumers to bring in their old jeans, and we work with a third party to patch them up and clean them and then post them on the website, and we sell them at a nice discount. So we’re kind of all in on this and trying to figure out. And sustainability, actually, it’s a huge important thing for young consumers. So we’ve got to be doing it from that standpoint. It’s a consumer need today, but it plays right to our sweet spot as a company, right? A great pair of Levi’s is going to last you for a long, long time. We are all about quality that never goes out of style. And invest in a good pair of jeans, invest in a great trucker jacket, you’re going to be passing it on to your children or your grandchildren. And that is the ultimate of sustainability. Buying fewer things, buying less things, buying higher quality things, buying things that are going to last, and buying things that are versatile. That’s Levi’s. And so, we should be able to win on a sustainability platform, and we think we are.
– That’s fantastic to hear—and I’m sure a big reason why the collaboration between Haas and Levi’s has lasted for so long. Our last question from the audience is, “What are three things that any growing leader should keep in mind while leading a team and helping manage a business?”
– Ooh, OK. Alright, I’m going to give you a couple of the things that I like to say. Number one is: Do the harder right over the easier wrong, OK? And when you lead teams, you need to be aware that they’re looking for how you make your decisions. The harder right over the easier wrong, you will always go right. So that’s one important thing. Second, I’m a big believer in just complete transparency and being straight. And I think a lot of mistakes, or one of the mistakes, that many people make when they begin leading people and leading teams is they want to be liked. It’s OK to be liked. I’m not saying being liked is a bad thing, but I would suggest, don’t strive to be liked, strive to be respected, OK? You won’t be as straight with somebody if you want to be liked. But if you want to be respected, you will give people direct and clear feedback. You will help them grow. You will come from a place where you want them to continue to grow and develop and build and improve. And so, if that’s where you really come from, you can be straight with them. But if you want to be liked, you’re going to be nice to them. And they may not even hear the feedback that they need to hear because you’re going to couch it in a way that it sounds like you’re being nice to them. So strive to be respected, OK? That doesn’t mean you can be a jerk, but just be respected, be honest, be straight, be transparent. Be thoughtful and real with your people. And then, the third thing that I’ve been saying a lot as I’ve been exiting kind of stage right from Levi’s is, nobody’s ever going to remember you for the business results. They’re going to remember you for what you did for them. It’s a paraphrase of a Maya Angelou quote, but they’re going to remember how you made them feel. They’re going to remember how you made them grow. They’re going to remember you for how you made them better. They’re going to remember you for how you picked them up when they were down, or how you saw that they were struggling with something and you helped them out. That’s what they’re going to remember you for. And if you get people to follow you because of that, you will have lots of people wanting to follow you.
– Thank you, Chip, on behalf of the student body and everybody in the room, thank you so much for spending your time with us.
– Thank you very much.
– And that brings our evening to a conclusion. So Chip, thank you so much on behalf of Dean Harrison. This was a Dean’s Speaker Series and a Center for Responsible Business, Peterson Speaker Series. Everyone have a nice evening.
Special Purpose Acquisition Companies, known as SPACs, were a hot new investing trend over the past couple of years.
In this short video, accounting professor Omri Even-Tov explains how Special Purpose Acquisition Companies (SPACs) work, how his concerns that they harming individual investors drove his research, and how that research influenced the U.S. Securities and Exchange Commission to tighten up rules.
Hi everyone, my name is Omri Even-Tov and I’m an accounting professor at the Haas School of Business. You might have heard about SPACs, which was a pretty hot trend until recently. So my colleagues and I actually wrote a paper about SPACs because we had a feeling that they might harm investors.
But before we begin I want to describe to you a bit what a SPAC is and how it works. Let me go to my slides here for some help.
So SPACs are, first, Special Purpose Acquisition Companies. Those are blank-check companies that raise money via an IPO for the sole purpose of acquiring a private company. This transaction is also known as a de-SPAC. Now those SPACs are usually managed by a sponsor. The sponsor can be a private equity firm, a venture capital firm, a hedge fund, or in some cases it can also be an individual—like in the case of Chamath from Social Capital that you all know from the “All-In” a podcast.
So let’s assume in our case there’s a SPAC and this SPAC is called “Just another SPAC.” So this SPAC goes public via an IPO and they raise money. In our case they raise $500 million. Now the SPAC has between 18 to 24 months to try and identify a suitable target to acquire. So let’s assume that they managed to find this target. This target is called, “Some Private Company.” Now once they found the target, the shareholders of the SPAC need to vote on this transaction. If they vote yes, then we have an acquisition and this process is called a de-SPAC transaction and then good luck to all of us.
In the case that the shareholders vote no, or in the case that the SPAC wasn’t able to identify a suitable target, then there is no transaction and all of the money that was initially raised by the SPAC is returned to investors.
Now why is why are SPACs so interesting? They’re very interesting because in the last few years they actually outpaced the number of traditional IPOs. So if we look at this figure you can see that this line counts the number of SPAC IPOs and this line is actually higher than the line of the traditional IPOs—and not just in terms of numbers but also in terms of volume and proceeds raised using the SPAC process. We can see that those bars that reflect SPAC IPO proceeds are actually higher than those of the traditional IPO proceeds.
So why are SPACs so unique that we decided to explore them and examine what’s happening with them? So a main difference between traditional IPOs and SPACs is that traditional IPOs do not have any protection from liability if they provide future-looking statements. So if they provide projections that are misleading or inaccurate, they’re going to be liable for them. In the case of SPACs, those are basically mergers as you saw in the in the in the slide, so they are entitled to a protection under the Safe Harbor rule that came out in 1995. And because of that many SPAC sponsor thought, ‘we basically have a shield from liability if we provide future projections of the companies.
So in our case, what we felt is that because of this theoretical shield, sponsors are going to take advantage of that and they’re going to issue very optimistic projections in order to entice retail investors and investors in general to invest in those companies. And this is exactly what our research finds. We find that SPAC companies, on average, provide very optimistic projections, and in most cases, they underperform. And unfortunately those projections lead to the attraction of a lot of retail investors—not so much institutional investors that are likely are able to steer away from those very optimistic projections. And because retail investors are attracted to those companies, they invest and in the long term they suffer from under performance. We also find that those companies are actually more likely to be sued in a class action lawsuit because this shield doesn’t shield you from everything. If you provide misleading information that is inaccurate then you’re going to be liable for that.
And so our paper was actually very instrumental in a new rule that the SEC issued just a few days ago about amendments being made to the rule about SPACs. And the SEC sites both a common letter that we wrote and our paper by stating that some of the amendments are directly related to that. The first change is to level the playing field between SPAC IPOs and traditional IPOs, and remove this protection from SPAC IPOs from providing future projections. The second thing is basically adding much more disclosure to the projections. How are they being made, who’s making those assumptions, what assumption are being made.
And this is in the hope of helping investors have better information about the companies they invest in. So hopefully this really helps protect retail investors. We believe it does. Thank you for listening.
It’s easier to see what our friends, family, and neighbors buy than what they save. Research co-authored by Berkeley Haas finance professor Johan Walden shows how this “visibility bias” can lead us to undersave for retirement.
Americans are not saving enough for retirement, and new research co-authored by Berkeley Haas Professor Johan Walden shows one reason why: They’re misled by conspicuous consumption in their social networks.
“Our neighbors don’t put out a sign showing how much they’ve set aside for retirement, but it’s easy to see the new car sitting in their driveway,” Walden says. “The fact is, observations of someone consuming are more salient than observations of someone saving, and so we observe more of those signals, and we give them more weight in our own decision-making.”
In an article published in The Journal of Finance and coauthored with Bing Han from the University of Toronto and David Hirshleifer from the University of Southern California, Walden shows how the consumption we see among our friends and family pushes us to consume more—and fall short on retirement goals.
Modeling the effect of visibility bias
A recent estimate in the U.S. suggests that the gap between what consumers are saving and what they’ll need to retire is almost $3.7 trillion. For some, this is not a choice: They don’t have the income they need to set money aside. But that’s not the whole explanation.
Walden and his co-authors show that the psychological phenomenon they call “visibility bias” contributes to this chronic undersaving. People don’t tend to publicly share their savings habits, so consumers’ social networks provide inaccurate signals about peers’ consumption and savings. People tend to think their peers are spending more than they are. This, in essence, makes people believe that it’s safe to consume more.
Unlike the phenomenon of competitive consumption—often known as “keeping up with the Joneses”—visibility bias is driven less by comparing oneself to others by incomplete information about others’ spending habits.
In modeling this dynamic, the researchers find that one important implication is the way this effect feeds back on itself. As people see their neighbors and friends buy more, they may raise their rate of consumption; in turn, their neighbors see this increase and bump up their own levels of consumption, continuously squeezing savings out of the picture.
The researchers also show how denser and more extensive networks are likely to intensify visibility bias. Given this, residents of cities are more likely to undersave for retirement. Our growing connectedness through social media, as well as the window it gives into other people’s purchases, is likely to exacerbate the problem as well. (Walden and his coauthors don’t run any experiments of their own, but they propose several empirical approaches to probing the nature and magnitude of visibility bias.)
Finally, the demographic contours of a person’s social network could naturally reduce the strength of this bias. People who are more financially sophisticated tend to consume less, as do people who are older. If someone’s social network contains more of these types of people, “then we find a dampening effect, as you’re receiving signals of low consumption from these groups,” says Walden, the Mitsubishi Bank Chair in International Business and Finance. “But this doesn’t completely offset overconsumption among younger generations.”
More disclosure could increase savings
The effects of undersaving ripple across society, pushing people to work into older age than they otherwise would. People take on more debt, which, in turn, drives up interest rates. Fortunately, to the degree social networks and visibility bias influence the amount we consume, policy interventions may be relatively straightforward.
The researchers suggest two approaches focused on disclosure. First, policymakers could better publicize information on the risk of economic shocks—the frequency of layoffs, for instance, or the costs attached to illness and hospitalization. However, Walden notes that people generally have a difficult time interpreting and internalizing probability, so this may not be the most effective approach.
More productive could be efforts to reveal information about savings and consumption within social networks. On the one hand, policymakers or marketers could build campaigns designed to publicize how and how much people save, thereby making the unseen seen and reducing the influence of visibility bias. Campaigns could also clarify how much people actually consume. One study from 2020 shows that giving people who consume more than they can afford information about average consumption figures reduced their spending by 3%.
But given people’s propensity to believe that others consume more than they do, it’s important to provide appropriate information, Walden says. Simply publishing aggregate saving and consumption data may not be very helpful, since these are already affected by visibility bias. Policymakers should take social networks and demographics into account—for example, by emphasizing consumption habits of older adults. “The more specific, the better,” Walden says.
Before Will McKelvey arrived to enroll in the full-time MBA program at Berkeley Haas in 2021, he and his college roommate drove cross-country to California. Along the way, McKelvey, who was planning a career in venture capital, met with as many startups as possible—a whopping 43 founders in five days. McKelvey, an Ohio native, even launched a blog sharing his impressions of venture opportunities from Dayton to Detroit to Chicago.
“You can’t dabble in VC,” McKelvey, MBA 23, who became interested in the economic power of startups while working for Democratic Congressman Ro Khanna for four years, said. “If you decide it’s your thing, go all in. It’s not a space for tourists.”
At Haas, McKelvey didn’t let up, interning at multiple venture firms and serving as co-president of the Haas VC Club. Now an investor at early-stage VC fund Lerer Hippeau, McKelvey is among a record number of 2023 Berkeley Haas MBA graduates working in the field of venture capital.
“VC is the second-biggest sector for finance jobs among our MBAs,” said William Rindfuss, a member of the Haas Professional Faculty who leads strategic programs for the finance faculty group and manages financial services recruiting at Haas. “Only investment banking drew more recent grads.”
Fourteen of the 2023 FTMBA graduates accepted employment in venture capital, a record high. Of that group, half work for venture funds, and half have joined venture arms of tech, health care, and financial services companies, Rindfuss said.
Rindfuss attributes the growth to the support of the Berkeley Haas alumni network, comprehensive courses in venture capital, including New Venture Finance, an increase in campus resources for VC, and the school’s Bay Area location.
Proximity to venture firms gives students the ability to explore VC through both in-semester internships and summer internships over the course of the two-year MBA program. Such a portfolio of experiences can lead to full-time offers. But as Rindfuss notes, landing a job in venture capital differs widely from investment banking.
Proximity to venture firms gives students the ability to explore VC through both in-semester internships and summer internships over the course of the two-year MBA program.
That’s where the students’ hard work comes in with landing internships and jobs. While big banks recruit on campus through a structured process, VC firms expect students to get their attention and come to them, which might mean writing whitepapers on emerging subsectors or reaching out to firms with project ideas in order to build their networks.
Just as the Haas Finance Club has long been a major source of support for Haas students pursuing investment banking, the VC Club has grown into a similar resource, Rindfuss said. The club leads an annual VC Speaker Series course, drawing senior partners and associates from Bay Area VC funds, who offer both big picture and tactical advice.
A pivot from tech to VC
For Aparna Chaganty, MBA 23, breaking into venture capital meant landing an internship with Bessemer Venture Partners. An engineer from India with a master’s in information systems (MIS) degree from Carnegie Mellon, Chaganty was a data scientist and product manager at Salesforce when she started exploring a career pivot.
“I really enjoyed building new technology, but I also wanted to know what other paths there were out there,” she said.
Venture capital piqued her interest as a perfect way to combine her tech background with entrepreneurship. “I have always found the growth story of startups extremely inspiring,” she said. “In VC, you can be really close to bringing about change and creating new value in the economy.”
Chaganty ended up accepting a full-time role as an investor at Bessemer Venture Partners in India, an opportunity to return to her home country. Though it hadn’t been her plan at the start, she said she was thrilled by the opportunity to join after Bessemer raised its first India fund. “There is so much entrepreneurship coming out of India,” she said. “Being part of that zero-to-one story is a once-in-a-generation opportunity and being a VC at Bessemer gives me a front-row seat to witness and contribute to that change.”
Crafting your own opportunities
Alex Rohrbach, MBA 23, came to Haas after several years working as a consultant at McKinsey and at an on-demand staffing startup.
He discovered that both experiences were applicable in VC. “Very quickly, I could add value to busy VCs who needed extra help,” he said. By doing projects with multiple VC firms during the school year in his free time, Rohrbach got exposure to various funds and VCs, helping him learn how they think and structure deals.
“Many MBAs don’t realize that they have a lot of skills they can apply on day one with a VC firm,” Rohrbach said. “Aspiring VCs can develop a thesis about an industry, source companies on campus, and help organize events. If you figure out what you’re good at, you can craft your own opportunities.”
Rohrbach graduated with a job at Thomvest Ventures, a 25-year-old San Francisco fund. He spent his summer internship with Thomvest but says it was never a direct path to full-time employment.
“Each fellowship and internship was a stepping stone, but I didn’t know exactly where I would end up,” he said. In his first year at Haas, he got a fellowship at Pear VC, an early-stage venture firm. He also received a Haas Entrepreneurial Finance Fellowship, providing a $5,000 cash award and mentorship with a Haas alum. “Even more valuable than the money was the access to a mentor – in my case, Andrew Krowne at Dolby Family Ventures,” Rohrbach said.
Rohrbach also consulted during his first year with Union Labs, a VC firm that past Haasies worked for.
“I started to build a portfolio of work so that by the time I was interviewing for summer internships, I had a lot I could talk about,” he said.
Rindfuss and others at Haas hope the number of students pursuing venture capital will only continue to grow as Haasies find homes at more VC firms and bring their experience and advice to future students.
“As more of our graduates succeed in venture capital, we are developing a stronger pool of alumni that will support our students,” Rindfuss said. “It’s an exciting time.”
In writing a good online dating profile, the average love-seeker is likely to fill it up with all the appealing qualities and interests that make them special. They paraglide and do hot yoga on the weekends; enjoy Riesling on the beach or seeing indie bands in basements; are a Libra with Scorpio rising; or have a dog or three kids or an iguana. There’s one thing they routinely leave out, however: what they want to know about their potential partner.
Yet, that detail might be the most important thing to include, according to research by Haas Associate Professor Juliana Schroeder.
“People want to be known, so they’re looking for partners who will know them and support them,” she says. “But because other people also want to be known, they end up writing these not-super-appealing profiles when trying to attract partners.”
In her recent paper “Feeling Known Predicts Relationship Satisfaction,” Schroeder argues the phenomenon occurs not only with romantic couples, but in all manner of interpersonal relationships, including friends, neighbors, family members, work colleagues, and casual acquaintances. In each case, people were more satisfied when they felt like they were known, rather than when they felt like they knew the other person, according to a series of experiments Schroeder carried out with co-author Ayelet Fishbach of the University of Chicago Booth School of Business.
“Of course, people say they want to know their relationship partner and support their partner,” says Schroeder,Harold Furst Chair in Management Philosophy & Values at Berkeley Haas. “But that’s not actually the thing that makes them happiest in their relationships. People feel happier in relationships where they feel like they are being supported—and for that, they have to be known.”
Hear Schroeder talk about her paper in this short video (full transcript at end of article):
Relationship satisfaction
Fishbach noted that the research project started a decade ago after she and Schroeder discovered that patients want their physicians to not have emotions of their own so that they can fully attend to them and feel their pain—a phenomenon they called the empty vessel effect. “We wondered whether this is a more general phenomenon whereby people are attuned to what others know about them more than what they know about others,” Fishbach says.
In an initial set of experiments, published in the Journal of Experimental Social Psychology, the researchers asked participants to rate how well they believed they knew a family member, partner, or friend, compared to how well they believed they were known—and then to rate their relationship satisfaction on a scale of 1 to 7. Interestingly, people routinely thought they knew the other person better than the other person knew them. This effect has been called the illusion of asymmetric insight. “People think they are unique and special and have a lot of complexity to them, so other people just don’t know their true self,” Schroeder says. “Whereas once they know one thing about the other person, they’re like ‘I know you. Done.’”
Perhaps because it’s so rare to feel that anyone really knows us, people value it more highly in their relationships. In fact, the degree to which they knew the other person mattered less in how they felt about the relationship compared to the degree to which they felt they were known, regardless of how they felt about the overall quality of the relationship.
In another study, the researchers presented participants with one of two scenarios in which they ran into an acquaintance at a party who either forgot their name or whose name they forgot. Participants had different reactions to the two scenarios – as Schroeder summarizes: “If you forget their name, it’s not great for the relationship, but if they forget your name, it’s much worse — the relationship is over,” Schroeder says.
What’s missing from online dating profiles
Carrying these concepts over to dating profiles, Schroeder and Fishbach enlisted a team of research assistants to examine profiles from dating sites Match.com and Coffee Meets Bagel. Based on statements in the profiles, they rated more than 50% of the writers as wanting to be known by a potential partner, while only about 20% expressed a desire to know their potential partner.
They then asked several dozen online participants to write their own profiles, either emphasizing being known or getting to know the other person. Finally, they asked more than 250 other people to rate these profiles on a scale of 1 to 7, according to how much they found them appealing and how much they would potentially want to contact them. In keeping with the rest of their findings, Schroeder and Fishbach found that the raters preferred those profile-writers who emphasized wanting to know the other person.
Those findings could be instructive for someone trying to make themselves as appealing as possible on a dating site. “What they want to be doing is saying, ‘I really care about you, and I’m going to get to know you and be there for you and listen to you and be a great partner,” Schroeder says.
In all of the studies, there was only one type of relationship in which people did not care about being known: a parent’s relationship with their child. “In fact, we found an effect going in the opposite direction,” Schroeder says. “The thing that predicts relationship satisfaction is not how well they think their child knows them, it’s how well they know their child.” That makes sense, she adds, lending credence to the idea that the phenomenon is essentially about support. “It’s the one relationship where it’s very clear the parent needs to be supporting the child.”
The next step for Schroeder and Fishbach is to consider how people might shift their focus towards using their knowledge of other people to make them feel known in a genuine way. In a workplace context, for example, it’s possible that feeling known might not only improve relationship satisfaction with colleagues, but overall job satisfaction as well. “To develop relationships with work colleagues, you might think not just about personal knowledge, but also what are people’s habits and how they like to work,” Schoeder says. “While this was beyond the scope of our study, it’s possible that stronger workplace relationships could ultimately make a difference in terms of people’s satisfaction with their jobs.”
I am a professor in the Haas School of Business in the Management of Organizations Group. And I study social psychology and social connection and how people are most effective in being able to form relationships with others.
[Question on screen] What makes people feel satisfied in their relationships?
I recently wrote a paper that investigates what are the components of what makes people satisfied in their relationships.
And in particular, we were looking at relationship knowledge, subjective relationship knowledge, how well I think the other person knows me and how well I think I know the other person. Both of those things have been found in prior research to be good for your relationship: The more I feel like the other person knows me and the more that I think I know the other person, the greater is my satisfaction in the relationship, the better I feel about the relationship.
But it turns out that one of those things matters a lot more for my relationship satisfaction.
And the thing that matters more is how well I feel that the other person knows me. That matters on average across all the different relationships that we look at about twice as much as compared to how well I think I know the other person.
[Question on screen] How did you test that?
So here is one example that we tested in one of our experiments. We had people imagine knowing or not knowing different things about someone that they had recently met.
And so to give you one of the scenarios we used, we asked people to imagine that they forgot an acquaintance’s name. So they didn’t know that about the person or they forgot a detail of their childhood—that was another scenario we examined in a different experimental condition. We told them what if the other person forgot your name or forgot a detail about your childhood? How bad would that be for the relationship?
And what we found was that if they imagine the other person forgetting something about them, they think of it as being much worse for the relationship then if they imagine forgetting something about the other person.
[Question on screen] How does this apply to dating?
It may seem obvious that feeling known is good for your relationship and your relationship satisfaction. But we have some preliminary evidence that suggests that people don’t necessarily realize this or don’t take it into account enough in their relationships.
In one study, we looked at online dating as a context and we went to common online dating websites like match.com, we went to Coffee Meets Bagel and we looked at the profiles that people wrote on those different websites.
And what we found is that in almost every profile, people would say something that is relevant to their wanting to be known. So they might say, like I’m looking for someone who will listen to me or support me and they’ll write something that relates to that.
But very rarely would people signal the opposite—hat I am looking for someone that I can listen to and that I can support and that I can get to know.
And that was interesting because in fact, when we ran an experiment on this, the people that signal that they are looking for partners who they want to know and support and care about—that, of course, is much more appealing to potential partners than the opposite.
And so, people are maybe using the wrong strategy in writing their dating profiles if they really want to be optimally attractive to as many partners as possible.
At a time of life when many of his peers are well into retirement, Peter C. Fung is having “the time of his life” as a student in the Berkeley Haas Executive MBA Program.
But for Fung, 76, a retired neurologist and self-proclaimed lifelong learner, retirement was never an option. It’s the reason he wanted to earn an MBA and why he connected immediately to Students Always, one of the four Haas Defining Leadership Principles (DLP).
“Age is not important,” said Fung, EMBA 24, who sits on the El Camino Health District Board of Directors and for a decade led the hospital’s stroke program, which is named after him. “When we’re using our brains in thinking or learning new information, neuronal pathways from neuron to neuron are formed. This is the best anti-aging therapy. Just like an old car, you have to keep it running to keep it from rusting.”
Developing leadership skills
As a physician, Fung, an advocate for health, wellness, and disease prevention, has spent more than 35 years improving health care quality and access. Now, he’s running for an open seat on the Santa Clara Board of Supervisors, where he hopes to tap what he’s learned at Haas on the journey.
In the EMBA program, Fung said he’s developed leadership skills that he believes will help him stand out as a political candidate. He’s also gained new expertise in economics and data analysis—and a deeper understanding of organizational finance that he hopes to apply to overseeing the county’s budget and tackling the deficit.
He said he is impressed that his classmates—busy with careers and young families—are all committed to learning new skills, pivoting to new jobs, starting companies, and helping each other.
“The cohort has been treating me as one of their own,” he said. “I was terrible with the computer, especially with Excel, when I started the program. But I was finally able to master this very powerful tool. I actually did quite well on my finals. I have enjoyed the challenge. It was a thrill.”
Fung believes he brings something unique to the program. His classmates agree.
Abdus Sattar, EMBA 24, collaborated with Fung during a recent business policy immersion trip the cohort took to Washington D.C. Their paper on “Medicare Drug Price Negotiation, “offered me an opportunity to delve into crucial healthcare topics,” said Sattar, who holds a PhD in electrical engineering.
Saya Honda, EMBA 24, said that Fung “pushes us and encourages us to challenge ourselves.” She said Fung embodies all four of the Haas Defining Leadership Principles: He questions the status quo by being unafraid to ask questions; he shows confidence without attitude by using humor in public speaking; he’s a student always as the oldest person in the cohort and as someone who believes in the importance of education; and he’s questioning the status quo by running for county supervisor.
A passion for learning
Originally from China and having grown up in Hong Kong, Fung came to the United States to study at the University of Michigan Medical School, where he became board-certified in internal medicine and neurology and also earned a master’s degree in neurochemistry and neuropharmacology.
“His passion for learning is not only impressive but also infectious,” said Elizabeth Stanners, executive director of the Haas Executive MBA program.
When a professor recommended a PhD program, Fung’s wife, who missed living in Asia and warmer weather, balked. “She said, ‘We’re going to move to California.’ he said. “That pretty much was an ultimatum. So we came to San Jose, where I was the only neurologist in my area of the city.”
For Fung, 1996 proved a turning point in life after his mother had a devastating stroke that left her paralyzed on one side and unable to speak. Fung managed to consult with the chief of the stroke program at Stanford about a new drug called tPA, which his mother received. “The next day, she asked, ‘Why am I here?’ Her arm was no longer paralyzed, and she was speaking fluently,” Fung recalled.
Running for supervisor
After that experience, Fung decided to study strokes, immersing himself in articles and at conferences for a decade. Along the way, he became the first physician in the Bay Area to be board-certified in stroke neurology. “I thought I would work as a stroke and vascular neurologist for the rest of my life,” he said. “But then, I started thinking about what else I could do.”
Running for office was part of that plan, to expand his commitment to improving access to care for everyone. Earlier in his career, Fung served as co-director of the El Camino Health Chinese Health Initiative, to provide education and access to the Asian community. The initiative is now the largest nonprofit organization catering to Chinese patients in California.
In 2014, he ran for the El Camino Healthcare District, which manages the budget for the district’s hospitals. The Santa Clara Board of Supervisors is the next step, where his work would have impact on a larger population.
If elected, he said he’d tap into the DLPs to help with decision making in critical areas that are top of mind for constituents: crime, safety, healthcare, inflation, education, and housing. “After thorough research and analysis, I would delve deeply into the issues at hand, engaging with fellow political leaders to gain diverse perspectives, and to develop well-informed and practical solutions,” he said.
Meanwhile, Fung is looking forward to adding an MBA to a long list of accomplishments.
“If I’m the oldest student to graduate successfully from Haas, and I go on to make a meaningful life after graduation, that will be something to write about,” he said. “That’s my goal.”
Berkeley — A team of researchers who developed tools for investors, academics, and businesses to measure economic risks from the loss of the planet’s biodiversity has won the inaugural Berkeley Haas Sustainable Business Research Prize.
The new $20,000 prize, which recognizes research with the greatest potential to spur immediate change in the face of environmental crises, has been awarded to the paper “Biodiversity Risk” by Stefano Giglio of the Yale School of Management, and Theresa Kuchler, Johannes Stroebel, and Xuran Zeng of New York University’s Stern School of Business. (Read paper summary.)
Giglio says he and his co-authors are honored to receive the inaugural prize and hope it will encourage further research and practical change.
“While research in the field of climate finance has been expanding dramatically over the last few years, a lot more work needs to occur to ensure that the ideas developed in academic research find practical applications in the business and policymaking world,” Giglio says. “This is even more important for topics like biodiversity risks and its financial implications, where much less work has been done so far.”
Actionable research
The prize is administered by the Berkeley Haas Center for Responsible Business (CRB) and was launched with the support of Allan Spivack, MBA 79, to encourage serious scholarship with real-world business applications related to responsible business, sustainability, and ESG (environmental, social, and governance) issues.
The judging panel’s focus for the prize’s inaugural year was on papers that investigate economic levers to motivate individuals, corporations, and markets to act with urgency on climate and resource-saving initiatives. The winner was selected from a competitive field of 63 papers submitted by academic researchers around the world.
Berkeley Haas Dean Ann Harrison, a noted economist, served on the judging panel. “Thank you to our winning researchers for calling attention to the emerging area of biodiversity risk. All too often, groundbreaking academic research fails to gain traction or get put into practice in the ‘real world,’” Harrison said of the prize winners. “Rewarding research with direct implications for business and policy is another way that Berkeley Haas can help stem the multiple environmental crises we are facing.”
Defining biodiversity risk
The winning paper noted that humans rely on biodiversity to thrive. For example, diverse ecosystems are key to food production, while medicines are derived from natural compounds found in plants, animals, and microorganisms. Yet damages caused by the loss of ecosystem services alone—such as the supply of raw materials like food and fuel—have been estimated as high as $20 trillion per year, according to the paper.
Using surveys, news coverage, and analysis of 10-K statements, the researchers developed multiple measures of biodiversity risk. They determined that it is a separate phenomenon from climate risk and concluded that the energy, utilities, and real estate sectors are most exposed. They also concluded that biodiversity risks are partially reflected in stock prices over the past decade.
The researchers recommend that businesses regularly monitor and report how their activities affect the biodiversity of the areas where they operate, both directly and indirectly. It is also important that these data are aligned with emerging standards and regulations.
The paper has immediate applications: Investors can now use the scholars’ findings to better understand how biodiversity risk affects current and future business performance and take better-informed positions on industries and specific equities. At the same time, researchers can use the new measures to delve more deeply into impacts in economics, business, and human welfare, the co-authors say.
Three finalists
In addition to the winning paper, the judging panel—comprising sustainability researchers and practitioners affiliated with Haas—chose three finalists:
“Cost-Efficient Pathways to Decarbonizing Portland Cement Production,” by Gunther Glenk, Harvard University and University of Mannheim; Anton Kelnhofer, Technical University of Munich; Rebecca Meier, University of Mannheim; and Stefan Reichelstein, Stanford University and University of Mannheim.
The researchers developed an economic model for identifying cost-efficient pathways for decarbonization. Read full summary.
“CRISK: Measuring the Climate Risk Exposure,” by Hyeyoon Jung, Federal Reserve Bank of New York; Robert Engle, NYU Stern School of Business; and Richard Berner, New York University’s Stern School of Business.
Figuring out how much risk financial institutions face from climate change poses challenges. To address these challenges, the authors suggest using market-based metrics. Read full summary.
Corporate America needs to decarbonize due to its massive contribution to climate change, but how? This paper seeks to understand the most effective way of closing the emissions gap by exploring if corporations can be left alone to govern themselves or if subnational (city and state) government policies should contribute to this fight.Read full summary.
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 its students to lead the transition to a sustainable and inclusive economy through designing and implementing new business models, policies, and solutions.
Professor Nancy Wallace, a national expert on real estate finance and strategy, mortgage-related securities, and pricing models, has received the 2024 John M. Quigley Award—the highest honor of the American Real Estate and Urban Economics Association (AREUEA).
The award, named for the late Berkeley Haas professor emeritus and leading urban economics scholar John M. Quigley, recognizes scholars who best represent the ways in which Quigley advanced the academic fields of real estate, urban economics, public finance, and regional science.
“The medalist must have produced a record of scholarship that opens up new avenues of inquiry, have a demonstrated record of mentorship of young scholars, have supported institutional advances within these fields, or have been particularly effective at dissemination of these fields to public and professional practices,” said Stijn Van Neiuwerburgh, outgoing president of AREUEA. “Nancy embodies all of the ideal traits of the Quigley Medal winner.”
Wallace has been at Berkeley Haas since 1986, where she is the Lisle and Roslyn Payne Chair in Real Estate Capital Markets, chair of the Haas Real Estate Group, and co-chair of the Fisher Center for Real Estate and Urban Economics, and directs the Real Estate and Financial Markets Laboratory.She is a national leader in her field, having served as an advisor to the Federal Reserve and the U.S. Treasury on financial crises and reform. Her research focus includes residential house price dynamics, mortgage contract design and pricing, securitization and asset backed security pricing and hedging, lease contract design and pricing, methods to underwrite energy efficiency in commercial mortgages, and valuation models for executive stock options.
On campus, Wallace received the 2021 Williamson Award, the top faculty honor at Berkeley Haas, and earned the Berkeley Faculty Service Award in 2019 for work helping the campus navigate complex financial and real estate issues.
Wallace will receive the award and discuss her scholarship as the keynote speaker for the 2024 Midyear National AREUEA conference in May.
More than 250 business leaders and academic researchers gathered at Berkeley Haas from Jan. 9-10 for the sold-out Culture Connect Conference, sharing challenges and insights on creating high-performing, inclusive cultures in the age of generative AI and hybrid work.
The sixth annual conference, organized by the Berkeley Haas Center for Workplace Culture and Innovation (BCC), featured talks by top leaders from IBM, Lyft, Pixar, LinkedIn, Hubspot, and other leading companies, along with hands-on workshops and discussions. It was led by the center’s Co-Founding Directors Jennifer Chatman and Sameer Srivastava, and organized by Program Director Audrey Jones.
Chatman, the Paul J. Cortese Distinguished Professor of Management at Haas, said she was struck by the stories leaders shared of trying, failing, and trying again as they have experimented in real time with AI and hybrid work.
“My biggest takeaway is that an experimental mindset is critical as organizations approach these very significant changes that everyone is facing today,” Chatman said. “Organizations are going through seismic shifts in how they are thinking about and conducting work. The conference was fascinating because leaders shared their stories—the good and the bad—as they navigate these changes.”
This was the first year the conference was open to the broader public beyond invited presenters and BCC partners. Attendees included about 100 academics and 150 industry leaders from a diverse range of industries, including health care, biopharmaceuticals, media, tech, financial services, film, government, and nonprofits. Seventy companies represented.
“The combination of research-backed evidence from academics and practical advice from seasoned industry leaders is difficult to bring together but when it happens, it yields a level of insight that could not be achieved by either perspective alone,” added Srivastava, the Ewald T. Grether Professor of Business Administration and Public Policy. “We’re immensely grateful to every speaker, workshop leader, facilitator, and participant who contributed to making this a meaningful event of learning and connecting.”
Day 1: Diverse perspectives on organizational culture academic research
The first day of the conference emphasized research, with presentations from 34 scholars from around the world who examine culture through the lens of sociology, social psychology, and economics. Keynote talks included Paul Ingram of Columbia on how people tend to conceal social class identities; Doug Guilbeault of Berkeley Haas on how gender biases tend to be stronger and more persistent in online images than in text; Anita Williams Woolley of Carnegie Mellon on how the drivers of collective intelligence in teams differ from individual intelligence; and Leo Bursztyn of the University of Chicago on how to create social change by correcting misperceptions about prevailing norms.
Former Haas Dean Rich Lyons, Associate Vice Chancellor and Chief Innovation & Entrepreneurship Officer at UC Berkeley, and Laura Hassner, executive director at UC Berkeley Innovation & Entrepreneurship, reported on the success of the UC Berkeley Changemaker program, a campus-wide certificate program including about 30 courses addressing critical thinking, communication, and collaboration—and enrolling about 20% of undergraduates.
Doctoral student Yingjian Liang of Indiana University Bloomington won the Edgar Schein Best Student Paper Prize. Second place went to Danyang Li of Berkeley Haas.
Day 2: Deep dives into three key themes
Future of work and hybrid workspaces
The second day of the conference was attended by about 200 industry leaders and academics. HubSpot CEO Yamini Rangan, MBA 03 (left), sat down with Chatman (right) for a fireside chat. Rangan said companies should treat culture as a product that management consistently refine. “You have to evolve your culture every day, every week, like a product,” Rangan said. She also emphasized the importance of building a team of leaders, rather than building a leadership team to make culture inclusive. “Culture is how people behave when leadership is absent,” she said. Nicholas Bloom, an economics professor at Stanford, shared data on how firms are adapting to remote and hybrid work across different sectors of the economy. Bloom noted that the effect of remote work on productivity has been neutral, while the impact on productivity has been typically positive. “Organized hybrid has won,” he said.
Kristen Sverchek, president of Lyft, detailed the company’s journey with hybrid work, and Martine Haas, a management professor at the Wharton School, offered a framework for thinking about a firm’s hybrid culture.
In a fireside chat with Srivastava (above right), Laszlo Bock, CEO and co-founder of Humu & Gretel.ai (above left), discussed how to help employees find meaning and connection while using hybrid work models. Bock, who formerly worked in People Operations at Google, shared an impactful exercise used at Google: Find three or four interesting stories about people within the company, and brief execs on these stories again and again so that they retell the stories. These stories aren’t PR, he said—they will resonate to help give a sense of a strong, cohesive culture.
DEIB focus
Shifting focus, Co-founder, Coach, and Consultant Kia Afcari (above left) moderated a roundtable on diversity, equity, inclusion, and belonging.
During the discussion, Reema Batnagar, vice president of people at Pixar (2nd from left), emphasized the importance of using personal stories as a way to foster inclusion and belonging at work. David W. Kim, chief DEI officer at NetApp (2nd from right), discussed why corporate leaders must maintain the momentum of their DEI efforts despite recent pushbacks. David Pedulla, a sociology professor at Harvard (right), highlighted the extent to which various forms of discrimination still persist in the labor market.
Sa-kiera Hudson, an assistant professor at Haas (middle), shared recent research findings that emphasize the importance of understanding intersectionality, specifically how gender and race can work together to amplify or dampen various forms of bias. Hudson emphasized that people are complex and we should never assume that their experience within a group is aligned with their perceived identity.
CreativityPartners Chief Associate Chris Bell (above left) and Co-founder and CEO Jamie Woolf (above right) led a workshop on how to create a sense of belonging through mutual storytelling.
Generative AI’s transformative role
In a fireside chat with Chatman (above right), Nickle LaMoreaux, chief human resources officer at IBM (above left), described how she and her colleagues have been harnessing AI to transform the role of HR in the organization.
MIT Professor Kate Kellogg (above middle) and Warwick Business School Professor Hila Lifschitz-Assaf (aboove left) discussed a generative AI field experiment conducted at Boston Consulting Group. Hatim Rahman (above right), an assistant professor at the Kellogg School of Management, shared research on the importance of technological certification in the labor market.
Teuila Hanson (above left), chief people officer at LinkedIn, emphasized the need to take a people-centric approach when adopting AI tools and technologies, since human skills—including human intuition that AIs lack—are critical. “The future of work is still human,” she said.
Institutional ownership of U.S. corporations has increased ten-fold since 1950. New research from Haas shows this trend has political implications.
The finance world has witnessed extensive consolidation over the past several decades. Institutional investors owned just 6% of publicly traded U.S. companies in 1950; in 2017, they owned 65%. The “big three” of BlackRock, Vanguard, and State Street Global Investors held 5% of S&P 500 shares in 1998 and more than 20% by 2017.
For Matilde Bombardini, an associate professor at Berkeley Haas who has spent her career studying political influence, this trend raised a novel question. “If this is a phenomenon in the financial markets, where institutional investors are controlling increasingly large shares of the landscape, maybe there are also political implications,” she says. “Does this concentration in ownership translate into concentration in the so-called political market?”
The answer, she shows in a recent co-authored National Bureau of Economic Research working paper, appears to be yes. The researchers, who include Francesco Trebbi of Berkeley Haas, Marianne Bertrand of the University of Chicago, Raymond Fisman of Boston University, and Eyüb Yegen of the Hong Kong University of Science and Technology, looked at the connection between institutional ownership and political contributions. They found that political giving shifts following a large acquisition: For newly acquired firms, the correlation in giving to politicians favored by the investor increases by up to 70%.
“Following this one event, campaign contributions start moving closer together, in a sense,” Bombardini says. “These acquired firms start giving to politicians that the institutional investor gives to.”
Acquisitions and influence
The researchers collected data on investors that manage over $100 million in assets and on portfolio firms in which these investors have holdings. (The dataset covers the years 1980 to 2018.) They looked specifically at moments when an investor acquired 1% or more of the outstanding shares of a given portfolio firm.
In tandem, they matched names of investors and portfolio firms to their political action committees (PACs) using data from the Federal Election Commission. These PACs—574 connected with investors, 2,456 with portfolio firms—could in turn be connected to campaign contributions to specific candidates.
They found that large acquisitions were accompanied with a significant movement in giving toward the investors’ favored PACs, with the correlation between investor and portfolio firm increasing by 30% to 70%. The researchers noted that this realignment in donations comes at a time when giving, in general, is on the rise: Investment firms increased political expenditures by nearly a factor of six between 1980 and 2018. This trend implies that more money is coming from a smaller number of voices.
“Of course, one interpretation could be that investors acquire companies that are already like them, so the causation goes the other way,” Bombardini says. To test this interpretation, the researchers looked specifically at index funds, which make their acquisitions in order to replicate an index, like the S&P 500. That means these purchases were required at a specific and unplanned moment, so they are unlikely to be the result of political strategy or like-mindedness.
“We zero in on these kinds of acquisitions that are more random and still find the effect,” Bombardini says. “That helps alleviate the concern over causality.” They also found that the change in giving was driven primarily by portfolio firms moving toward investors and not the other way around.
Tough to regulate
Alongside the political implications, Bombardini and her colleagues describe potential trouble that these results raise for the realm of corporate governance. If portfolio firms are subtly nudged by their investors to contribute to politicians or political issues that are not directly tied to their business, that could derail profit maximization.
“These firms might just keep adding politicians to their roster that are not germane to their business,” Bombardini says. “So, you have a case of misaligned incentives.”
She emphasized that these types political donations would not be the result of explicit pressure from investors. Rather, they would be the result of an implicit understanding that by giving to preferred political candidates a firm could receive favorable treatment down the road.
But for Bombardini, the concerns over democracy are graver. For one, she wonders, does this soft influence show up in other domains? Are these same trends visible in lobbying dollars, or charitable giving, based on the concentrated heft of institutional investors? Perhaps more urgently, how might this subtle avenue of influence be reined in?
“Federal law is very clear on the fact that you cannot make political donations on behalf of someone else, but it’s not likely that the investor is asking the portfolio firm to donate,” Bombardini sayd. “This kind of quieter influence is hard to regulate, but we should at least be aware that this concentration of influence is happening. It should bring us back to the general questions that surround regulating campaign contributions.”
The new program, enrolling for fall 2024, will allow full-time MBA students to earn both a Master of Business Administration and a Master of Climate Solutions degree in five semesters, or two-and-a-half years. The application deadlines for the first MBA/MCS cohorts are January 4, 2024, and March 28, 2024.
The MBA/MCS degree is designed for early-career professionals who plan to take their careers to a higher level of business leadership, grounded in understanding of sustainability and climate change challenges and opportunities.
Berkeley Haas Dean Ann Harrison said the new program will draw from the strength of both schools, allowing students to learn from some of the world’s top minds in climate change,sustainability, and business.
“Future business leaders will require a depth of training in both business and climate change to work across disciplines and execute competitive strategies,” Harrison said. “This new program will provide a breadth of skill sets, equipping our grads to lead in building a sustainable, low-carbon future.”
“Future business leaders will require a depth of training in both business and climate change to work across disciplines and execute competitive strategies.” — Haas Dean Ann Harrison.
The program aims to develop critical skills and knowledge in climate data science, carbon accounting, and lifecycle analysis, as well as technological and nature-based solutions.
Students in the MBA/MCS cohort will spend the first year completing MBA core coursework at Haas before moving to classes at Rausser. The rigorous MBA curriculum includes courses in leadership, marketing, management, finance, data analysis, ethics, and macroeconomics, along with sustainability courses.
Doubling down on sustainability
Under Harrison’s leadership, Haas has doubled down on sustainability through the creation of the Office of Sustainability and Climate Change and by revamping all of the MBA core courses to incorporate thinking about climate change and other sustainability challenges.
The new MBA/MCS degree program follows Rausser’s launch of its new Master of Climate Solutionsdegree. MCS courses will translate the fundamental science and groundbreaking discoveries of UC Berkeley experts, enabling professionals to learn how to evaluate technologies, develop just climate strategies, and remove barriers to implementing practical climate solutions. The MCS core curriculum includes teaching in the climate and environmental sciences, climate economics and policies, technological, business and nature-based solutions, training in analytical and quantitative skills, and applied exercises and engagements that emphasize adaptive thinking and problem-solving.
“The Master of Climate Solutions represents a critical step forward in expanding the interdisciplinary and highly interconnected community of practitioners needed to solve the climate crisis,” said David Ackerly, dean of UC Berkeley’s Rausser College of Natural Resources. “Students in the concurrent program will be able to leverage the critical climate knowledge and tools taught in the MCS, as well as the leadership and business skills that are core to Haas.”
“Haas and Rausser both have such impressive track records in climate research,” added Michele de Nevers, managing director of the Office of Sustainability and Climate Change at Haas. “This program combines our offerings at the master’s level, with a keen focus on professional students, who are clearly positioned to make an immediate impact, and who serve a critical role as translators of academic insights and enacting these insights in the world.”
Addressing the Climate Challenge
All MBA/MCS students will participate in a semester-long capstone program that gives students the opportunity to partner with organizations operating across the business, government, and non-profit sectors. A unique leadership course on organizational, political, and societal change for climate solutions will prepare students to be change agents and leaders in businesses, nonprofits, and government agencies.
“New research on climate solutions is still critical, but we already know many of the things we need to do to address the climate challenge,” said James Sallee, a professor in the Department of Agricultural and Resource Economics and faculty director of the MCS program. “What we really need are people spread throughout society and the economy who are in a position to take action on climate, and who are equipped with the tools to make the right choices. Educating those students is the vision of the MCS program.”
Summer internships are also crucial to the MBA/MCS program. Students will complete two summer internships, which will allow for deep immersion in different disciplines and more time to build relationships.
Haas now has four dual degree programs, including the MBA/MPH (public health), the MBA/MEng (engineering), and the MBA/JD (law).