Spring 2024|By Gail Allyn Short| PHOTO: NICK ONKEN
Growing up in New York City, Jesse Brackenbury loved visiting the parks nestled between the city’s skyscrapers.
“I had urban parks in my blood. I grew up taking gym classes in Central Park, and I’ve always been interested in environmental issues,” says Brackenbury, who ended up working for the city’s Department of Parks & Recreation after college.
That experience eventually landed him an executive director role at Boston’s Rose Kennedy Greenway Conservancy. The Greenway is an outgrowth of the Central Artery Tunnel Project, known as the “Big Dig,” which replaced an elevated highway with a tunnel system.
“People didn’t like the park when it opened,” Brackenbury says. “The Big Dig was controversial, expensive, and it took a long time.”
To boost its image, Brackenbury and his team ramped up the park’s offerings by adding 450 free events annually, including fitness classes, food trucks, rotating art installations, and a carousel.
Consequently, The Boston Globe, which once called the park “The Empty Way,” redubbed it “The People’s Park.”
In 2021, Brackenbury returned to New York City and is now president and CEO of the Statue of Liberty–Ellis Island Foundation. He’s leading a multimillion-dollar fundraising campaign to reimagine the National Museum of Immigration. It will include new exhibits and interactive media to tell the stories of the 12 million immigrants who came through Ellis Island and the broader, more inclusive history of American immigration.
“I thought there weren’t many park jobs better than the one I had in Boston,” Brackenbury says. “Joining the Statue of Liberty–Ellis Island Foundation and working on these monuments proved otherwise.”
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.”
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..
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.
It’s lunchtime on a recent Saturday and Melissa Little and a group of fellow Berkeley Haas Evening & Weekend MBA students are scooping gluten-free noodles, free-range chicken, and organic salad into large pans after lunch.
“We only have a few minutes to load the last of the bowls before class starts,” said Little, EWMBA 24, an energy consultant who most recently worked as a strategic energy partnerships manager at Google. She and her classmates rush carts of food down the Chou Hall elevators and load up a hatchback whose driver is waiting at the curb.
The group has completed this mad dash since October 2022, when Little kicked off a program to donate hundreds of pounds of the cohort’s uneaten lunch food to the Dorothy Day House in downtown Berkeley, which shelters and services homeless and low-income people in the area.
For Little, the program is a long-awaited feat.
During her first few Saturdays in the EWMBA program, she discovered that most of the leftover lunch food for her Saturday cohort was thrown out— from boxed lunches to trays of turkey meatballs to chocolate chip cookies.
“It drove me crazy for the rest of the school year,” Little said. “I live in Berkeley and ride my bike here past unhoused people who could be eating this.”
Little worked with Kelly McCartney, a coordinator with campus’s Bancroft Catering, to figure out how she could donate the extra food. While McCartney was eager to help, Little didn’t yet have a partner to pick up the food and make her plan work—until she started a class called Design Thinking, taught by Lecturer Dave Rochlin.
In the class, her breakout group focused on the social sector and chose to address the needs of the unhoused. Little, a member of the Haas Sustainability Task Force, was on a mission to figure out how to donate the cohort’s food to a nonprofit in Berkeley.
Rochlin’s class recommends starting with user-centered research, including on-site visits, which led Little to Dorothy Day, where she met with Executive Director Robbi Montoya.
They talked for an hour straight, discussing the complex needs of the unhoused community and, eventually, how to make a food rescue plan work. Montoya agreed to transport the extra lunches to Dorothy Day every week if Little could meet a driver to get the food to the curb, and help load it.
Andrea Carroll, a cook at Dorothy Day, now transports the food from Haas and helps figure out how to best use it to build between 100-200 dinners that night. “The fact that we don’t have to dip into our storeroom to put out delicious meals is a huge boon to our residents and the folks we provide meals to out of our back door,” she said. “It’s such a good variety of lovely, fresh food that’s really healthy.”
Little recruited classmates, including Kevin Cheng, also EWMBA 24, to help her collect and load the food each week. To stay organized, she designed a logistics system to log communication with the Dorothy Day House volunteers and map out routes from Chou Hall to downtown, even on Cal football days.
A year later, Little and Cheng continue to volunteer together every Saturday. Cheng, who had volunteered with the Berkeley Food and Housing Project as a Cal undergraduate, said he enjoys serving hot meals to the community. So when he learned about Little’s project, he wanted to help give back, as well as use what he’s learned about problem-solving at Haas. “It’s a way to create opportunities for reducing waste and redirect food for good,” he said.
Rochlin said he was thrilled to learn about the successful outcome of an enterprise that had launched in his class. “This is what we hope to see,” he said. “Haas is at its best when the students take what they learn in the classroom and apply it outside in the world —and it’s even better when they create impact for populations in need. It’s a perfect example of Beyond Yourself.”
Haas is at its best when the students take what they learn in the classroom and apply it outside in the world. —Lecturer Dave Rochlin
Little is now working with Danner Doud-Martin, director of Haas Campus Sustainability, to make food rescuing a permanent student role within the Haas Sustainability Task Force. Their goal is to ensure that Little’s work with Dorothy Day will continue after she graduates.
Doud-Martin and Little are also looking to grow the program so that food in other Haas programs won’t go to waste. “The work that Melissa has done this past year on behalf of Haas and the EWMBA program with the Dorothy Day House is nothing less than extraordinary,” Doud-Martin said.
“This is a fantastic partnership,” Carroll said. “We’re saving this food by providing it to people.”
Summer 2023|By Amy Marcott| Illustrations by Martin Leon Barreto
Moments showcasing Haas’ pioneering impact on the business world
From its outset, business at Berkeley has proved trailblazing. Launched by a gift from Cora Jane Flood in 1898, Berkeley Haas—previously called the College of Commerce and the School of Business—is the only leading business school founded by a woman, the first founded at a public university, and the second-oldest in the U.S. It was launched, in part, to help California expand economically, with the forward-looking goal of enriching trade and cultural exchange in the Pacific Rim. Throughout the twentieth century, business schools—and Berkeley Haas in particular—took on evermore prominent roles in shaping the world economy and the character of business itself. In this, our 125th year, we celebrate some of Haas’ pivotal moments reimagining business and business education.
Pioneering the study of social impact…
Professor Earl Cheit ushered in the study of corporate social responsibility via his research and teaching starting in the late 1950s. The future dean also organized the first national CSR symposium in 1964. New coursework, with support from Professors Dow Votaw and Edwin Epstein, became the model for leading business schools. Today, Haas prepares students to become ethical, socially focused leaders via myriad courses, experiential learning opportunities, and co-curricular activities.
…helped pandemic-ravaged small businesses.
Professors Adair Morse and Laura Tyson worked with the State of California and the nonprofit and banking sectors to create a public-private partnership as a small business loan fund for vulnerable companies. They then launched the California Rebuilding Fund for small businesses in under-resourced communities.
…created a competitive advantage.
The Center for Responsible Business, founded by faculty member Kellie McElhaney in 2002, brought Haas to the forefront of the corporate social responsibility and business sustainability movements. The Wall Street Journal ranked Haas the No. 2 b-school for CSR in 2006 and 2007. The Financial Times rated Haas No. 1 worldwide in 2008.
…launched the first and largest student-led SRI fund.
Debuting in 2008 and featured in the Wall Street Journal, the Socially Responsible Investment Fund (now called the Sustainable Investment Fund) offers MBA students real-world experience in delivering strong financial returns and positive social impact.Student fund managers have grown the $1 million investment to over $4 million.
The Global Social Venture Competition, launched in 1999 by five Haas MBA students, turned the nascent idea of creating viable companies with social impact into a global triumph. In its 20 years of existence, the GSVC distributed more than $1 million in prize money and helped more than 7,000 teams better the world.
Codifying our culture…
Our Defining Leadership Principles Question the Status Quo, Confidence Without Attitude, Students Always, and Beyond Yourself had been latently capturing Haas’ essence for generations. In 2010, spearheaded by then-Dean Rich Lyons, BS 82, and anchored by the organizational culture research of Professor Jennifer Chatman, we took them public.
…distinguishes us from other prestigious business schools.
Our DLPs are a source of competitive advantage as well as pride and engagement. They are also our leadership brand, defining our graduates as Berkeley Leaders who practice responsible business. In 2018, Poets&Quants deemed us “the archetype for a values-driven MBA program.”
…positions Haas as the powerhouse for culture research.
Our new Berkeley Culture Center, founded and led by Professors Chatman, PhD 88, and Sameer Srivastava, helps business leaders create and nurture healthy and effective workplace cultures and is a hub for connections between academic research and corporate best practices. An annual conference convenes leaders from industry and academia to discuss new research and explore how to help organizations function more effectively. Chatman and Srivastava will soon launch the Culture Fix podcast to offer solutions to work dilemmas.
…cultivates community.
Since 1994, the alumni relations program at Haas has flourished in its mission to connect alumni to the school and to one another by adding traditions and signature events, expanding regional chapters and affinity/identity groups, developing career resources, creating a volunteer pipeline, providing mentorship opportunities for students and alumni, and much more.
Catalyzing the study of innovation…
The groundbreaking theories of dynamic capabilities, created by Professor David Teece in 1997, and open innovation, created by Adjunct Professor Henry Chesbrough, PhD 97, in 2003, led Haas to become one of the top business schools for innovation management and strategy.
…changed business education.
Previously, common belief held that established corporate structures were poorly suited for innovation, but Teece’s dynamic capabilities framework explains how large organizations can be entrepreneurial too. He also launched interdisciplinary programs with Berkeley’s engineering and law schools to help infuse innovation deep into research and teaching at Haas and to apply innovation management principlesin private and public settings, including in the management of universities.
…facilitates global companies sharing innovative solutions.
Haas’ Garwood Center for Corporate Innovation helps companies expand markets, manage innovation, and facilitate strategic alliances via the membership-based Berkeley Innovation Forum. The World Open Innovation Conference, founded by Chesbrough and now hosted by a university in the Netherlands, allowed Haas to play a key role in bringing novel ideas to market.
…commercializes cleantech advancements.
The Cleantech to Market accelerator program pairs students with entrepreneurs to help bring promising climate tech innovations to market—more than 120 since its launch 15 years ago.
…helps students make innovation a competitive advantage.
The semester-long Haas@Work course acts as a faculty-run/student-staffed innovation agency—with teams of MBAs using a variety of innovation methodologies to assist corporate partners in developing and testing novel solutions to key challenges.
…inspires changemakers.
The Berkeley Changemaker initiative, established in 2020 and inspired by Lecturer Alex Budak’s Becoming a Changemaker course (later a book), has helped thousands of incoming students identify their passions and use their leadership traits to transform Berkeley and the world. Offered through the College of Letters and Science and Haas, the class is part of the campuswide initiative led by Laura Hassner, EMBA 18, and supported by former Dean Rich Lyons, BS 82, Berkeley’s chief innovation and entrepreneurship officer.
Early teaching of entrepreneurship…
Begun in 1970 (six years before Apple Computer was founded), Dean Richard Holton initiated one of the nation’s first courses in entrepreneurship, which he team-taught with Leo Helzel, MBA 68, for many years. It was likely the only such class that provided students direct contact with entrepreneurs. When the Lester Center for Entrepreneurship & Innovation opened in 1991, Executive Director Jerome Engel continued building Haas’ renowned entrepreneurship curriculum by partnering with the venture capital community, creating career opportunities for students, and training faculty worldwide.
…allowed Haas to pioneer the Lean LaunchPad method.
Created in 2011 by Lecturer Steve Blank and now taught worldwide, Lean LaunchPad was an entirely new way to teach entrepreneurship. Inspired by a Haas MBA course, it challenges students to develop business models rather than business plans and to iterate their models frequently based on customer feedback.
…inspires unlikely entrepreneurs.
Professor Toby Stuart changed entrepreneurship teaching at Haas by restructuring the full-time MBA entrepreneurship course, gearing it not only to students with startup ideas but to students investigating entrepreneurship as a career as well. He also created a star-studded, career-changing Silicon Valley Immersion Week for the Berkeley MBA for Executives Program.
…positions Haas as the campus entrepreneurship hub.
A new entrepreneurship and innovation initiative, spearheaded by Dean Ann Harrison, is enhancing Haas’ efforts on three fronts: endowing thought leadership through faculty chairs, expanding programming, and creating a three-floor Entrepreneurship Hub for all of campus. Renovation has begun on the Hub, which is adjacent to Haas and features spaces for students to gather and work.
Dominating in finance…
In the late 1960s, when students were requesting courses providing creative approaches to financial markets and investment theory (thanks to new technologies), Berkeley embraced an innovative and highly quantitative approach to finance, becoming a national leader with its analytical quantitative curriculum.
…prompted insights into financial markets.
In the 1970s, Professor Emeritus Mark Garman pioneered early stock exchange simulations and studied market microstructures, minute trading activity in asset markets that today play a role in algorithmic and electronic trading.
…changed how financial assets are created and priced.
In 1979, the late Professor Emeritus Mark Rubinstein developed the binomial options pricing model (aka the Cox-Ross-Rubinstein model), which can be used to price a range of complex options. It remains one of Wall Street’s most important valuation tools and no doubt contributed to the subsequent growth of derivatives. In the early 1990s, Rubinstein, Professor Hayne Leland, and Adjunct Professor John O’Brien launched the SuperTrust, an S&P 500-based fund that traded as a single security, essentially the first exchange-traded fund.
…allowed us to take the lead in the crowdfunding revolution.
In 2008, Danae Ringelmann and Eric Schell, both MBA 08, co-founded Indiegogo, one of the world’s first crowdfunding sites, democratizing access to capital and entrepreneurship while navigating unchartered regulatory waters. In 2015, Haas, the Fung Institute for Engineering Leadership, and the Kauffman Foundation partnered to establish CrowdBerkeley, a premier hub of education and research on crowdfunding.
Championing new teaching modalities…
As business evolved, Haas adapted its teaching to respond to challenges and opportunities taking shape worldwide, often blazing new academic trails. In 1959, when the famous Ford Foundation and Carnegie Corporation reports criticized most of American business education for its overall low standards and overly strong vocational bent, both cited Berkeley’s program, which was broader and more rigorous, as an excellent model.
…led to the first MFE Program at a business school.
The Master of Financial Engineering Program was launched in 2001 to prepare students to use skills in math, theoretical finance, and computer programming to make technically complex financial decisions. Today, it consistently ranks first among programs nationwide. The program recently added a data science curriculum that’s supported by a high-tech lab offering students and faculty access to real-time financial data and leading analytical software.
…created one of the few international management consulting programs.
Our International Business Development course debuted in 1992, assigning teams of MBA students to real-world consulting projects that include several weeks overseas, mostly in developing economies. IBD has since dispatched more than 1,800 students to work in 89 countries, helping organizations worldwide redefine how they do business.
…made Haas the first Top 10 b-school to offer a remote MBA.
In 2021, Haas announced its Flex cohort for the evening & weekend program. Students take live, virtual core courses from Haas professors teaching in new state-of-the-art video classrooms and can choose to take their electives virtually or on campus. (See sidebar, Linking Up.)
…offers unprecedented education of cross-sector leaders.
The Center for Social Sector Leadership, founded by Nora Silver, who serves as faculty director, pioneered three unique experiential b-school programs to prepare students for the nonprofit and public sectors. Social Sector Solutions, a professional management consulting partnership between Haas and McKinsey, launched in 2006 and has involved over 900 students who have served 170 nonprofits and public/social enterprises. Philanthropy Fellows, begun in 2008, is a partnership with the David and Lucile Packard Foundation that places recent MBAs with program officers at the foundation for two years—allowing new grads to enter a foundation at a professional (rather than administrative) level. Impact CFO, created with Assistant Professor Omri Even-Tov, will launch this fall with 15–20 alumni to help meet the market demand for chief financial officers in social impact organizations.
…integrated problem framing and solving approaches into a business curriculum.
Teaching Professor Sara Beckman developed three pioneering b-school courses: Managing the New Product Development Process and Design as a Strategic Business Issue (both in 1993), and Problem Finding, Problem Solving, which was part of the MBA core starting in 2012. PFPS, which included everything from systems thinking to human-centered design approaches, taught students how to think about complex business problems. Since 2017, undergrads can pursue the Berkeley Certificate in Design Innovation, a first-ever collaboration among Haas, the College of Engineering, the College of Environmental Design, and the College of Letters and Science’s Arts & Humanities Division.
Embracing behavioral economics…
Behavioral economics was born at UC Berkeley in 1987 with an interdisciplinary PhD course taught by two future Nobelists: economist George Akerlof and psychologist Daniel Kahneman. Professor Terrance Odean, MS 92, PhD 97, was encouraged by Kahneman to be the first at Haas to research behavioral finance, an area that was fertile ground for psychological analysis in an era of asset bubbles and market crises.
…established the vanguard of a new generation of behavioral economics researchers.
Haas faculty have since propelled the discipline into the mainstream while taking it into the future. Associate Professor David Sraer has investigated investor behavior and speculative bubbles. The late Professor John Morgan, who founded Haas’ Experimental Social Science Laboratory (XLab) for conducting experiment-based research, focused some of his work on inattention to shipping costs in eBay auctions and on behavioral biases in voting. Professor Ulrike Malmendier, the only woman ever to have won the prestigious Fischer Black Prize, has researched how individual biases affect corporate decisions, stock prices, and markets in general. She and Professor Stefano DellaVigna will lead the new O’Donnell Center for Behavioral Economics, which launches this fall, and will continue to make Berkeley the epicenter of behavioral economics research and a beacon for the brightest intellectual talent in the field.
Committing to diversity, equity, inclusion, justice, and belonging…
Socioeconomic mobility is core to both the UC Berkeley and Haas missions. The 2018 DEI strategic plan—the first such action plan at a major business school—translated aspirations for inclusion into intentional and comprehensive action at all levels of Haas. As a result, Haas has made substantive changes over the past six years to increase diversity and representation, engender lifelong learning around equity and inclusion, and cultivate belonging. Haas was also the first leading b-school to publicly share its DEI demographic data.
…created a unique and robust DEIJB team.
Dean Ann Harrison quickly made DEIJB a priority when she began her tenure in 2019. She met with student leaders; significantly increased scholarship funding for the incoming class; diversified the demographics of the Haas School Board, faculty, and senior leadership teams; modified the core MBA curriculum to require a course on leadership communications in diverse work environments; and appointed one of the first chief diversity, equity, and inclusion officers at a leading business school. Today, CDEIO Élida Bautista oversees a team of four focusing on admissions, student experience, staff community and capacity-building, and, uniquely, faculty support (see sidebar, Teaching Aid).
…advances gender and diversity in policy and business.
Research by Professor Laura Kray, a leading expert on the social-psychological barriers influencing women’s career attainment, has debunked popular gender stereotypes. Kray’s work has shown that the popular perception that men outperfom women as negotiators is false and hurts pay equity efforts. The Center for Equity, Gender & Leadership, founded in 2017 by faculty member Kellie McElhaney, develops “equity fluent” leaders to drive positive change and build an inclusive and equitable world. EGAL does this via hands-on education and learning opportunities, resources (like playbooks), and support for academic research. Kray is EGAL’s faculty director.
…improves access to Haas.
During the pandemic, Haas launched two programs to expand, diversify, and strengthen access to the school. Accelerated Access allows students who wish to pre-commit to business school while acquiring important work experience to apply to Haas in their senior year of college and gain conditional acceptance. Cal Advantage offers talented University of California undergraduates a streamlined application process.
…enriches the diversity of the venture community.
The Black Venture Institute, created by Berkeley Executive Education in collaboration with BLCK VC and Salesforce Ventures, teaches Black executives the foundational elements to become angel, scout, and venture investors.
…provides social mobility opportunities for local youths.
In 1989, Dean Raymond Miles started the Boost@BerkeleyHaas program—formerly known as the East Bay Outreach Program then Young Entrepreneurs at Haas (YEAH)—to teach business and academic skills to under-resourced high school students. It is one of the only university-based youth entrepreneur programs to support teens from disadvantaged communities throughout their entire high school career. Since its founding, the program has helped more than 1,200 students (many first-generation) go to college.
…supports alumni professional development.
Alumni may enroll in a three-part, self-paced online DEI workshop featuring CDEIO Bautista that focuses on best practices for creating and promoting a diverse and inclusive workplace culture. Since 2021, alumni committed to DEIJB have gleaned insights from top industry leaders at the annual virtual Alumni Diversity Symposium.
…expands partnerships with HBCUs.
Haas recently launched an HBCU MBA Fellowship with founding gifts from five alumni. The first-of-its-kind endowment will provide tuition support to MBA students who have attended a Historically Black College or University.
Pioneering the study of urban economics…
The Center for Real Estate and Urban Economics was founded in 1950, one of the first such university centers nationwide. It allowed Professors Sherman Maisel and Albert Schaaf to author the first major study of the structure of the California real estate industry, looking at the role of race and gender and finding a rising trend of women employed in the field. Later, Maisel would help create the current national U.S. mortgage market that relies on bond financing rather than on the strength and liquidity of local banks.
…advanced an unprecedented analysis of real estate markets and risk management.
Professor Nancy Wallace and researchers at the Fisher Center for Real Estate and Urban Economics mapped the massive mortgage market and built groundbreakingly accurate housing price indices that monitor the characteristic dynamics of the housing stock. Wallace and Professor Richard Stanton, along with Paulo Issler, MBA 98, PhD 13, and Carles Vergara-Alert, MFE 04, PhD 08, recently combined these comprehensive databases with wildfire prediction models to estimate residential real estate value-at-risk in California.
…led to a renowned gathering of experts and a legendary forecast.
The Fisher Center hosts an annual Real Estate and Economics Symposium, a high-powered event known for the reputation of the speakers—and for Professor Emeritus Ken Rosen’s revered economic and real estate forecasts for California.
Our commitment to sustainability…
No other business school matches the breadth of Haas’ work in sustainability. The new Office of Sustainability and Climate Change, led by climate finance expert Michele de Nevers, coordinates curriculum and activities in five key areas: energy, food and agriculture, the built environment, sustainable and impact finance, and corporate responsibility.
…launched the preeminent university research center on energy economics.
Ever since Professor Severin Borenstein began leading the Energy Institute at Haas in 1994, it has been a place where serious academic researchers influence public policy at the state and federal levels, where the curriculum in energy and cleantech evolves to meet student and marketplace needs, and where collaboration flourishes. No other business school has as much depth, breadth, or influence in the energy field as Haas. Borenstein also co-developed the unique—and indispensable—Energy and Environmental Markets course and the energy market simulations used in the class. The course was the first of its kind at a top b-school and has been emulated at many peer institutions.
…allows Haas to pioneer green architecture and operations.
Chou Hall, which opened in 2017, is the nation’s greenest academic building, having earned LEED Platinum certification for its energy efficient design and operation, TRUE Zero Waste certification at the highest level after more than a year of efforts to divert over 90% of landfill waste, and WELL Gold, which is given to buildings that promote user health and well-being. Haas recently appointed its first full-time director of campus sustainability to oversee numerous initiatives—such as the campus renewable energy transition and elimination of single use plastic—to move Haas to carbon neutrality by 2025.
…inspired an unrivaled array of sustainability courses.
In 2021, Professor Nancy Wallace shifted the focus of the real estate program to consider high-efficiency, mixed-use development and financing strategies to fund real estate sustainability. Haas faculty members are now retooling all core MBA courses to address climate change and other sustainability challenges in various business disciplines. The revamped Sustainable and Impact Finance program keeps pace with rapid changes in climate finance and impact investing to best prepare students for careers. One focus for the Center for Responsible Business is reimagining capitalism and Executive Director Robert Strand, who teaches a course called Sustainable Capitalism in the Nordics?, is now the executive director of the new UC Berkeley Nordic Center.
…led to new degrees and certificates.
With Berkeley’s Rausser College of Natural Resources, Haas offers an undergraduate minor in sustainability and is developing a dual MBA/master’s in climate solutions. Haas also offers the Michaels Graduate Certificate in Sustainable Business.
Our faculty’s public service work…
Since its earliest days, Haas faculty have applied their insights to issues advancing the public good. Our first dean, Carl Copping Plehn, is credited as one of the fathers of the California tax system. Professor Lincoln Hutchinson, an expert in South America and Russia, left Berkeley in 1922 to become one of the State Department’s earliest commercial attachés. In the 1930s, Dean E.T. Grether lent his expertise of markets and pricing structures to the Great Depression’s wave of business regulations—among many others.
…guides national economic policy in groundbreaking ways.
Professor Emeritus Janet Yellen is the first person to have served in the nation’s three top economic roles: treasury secretary, head of the Federal Reserve, and chair of the President’s Council of Economic Advisers (during the Clinton administration). Her four years as Fed chair were considered near perfect, marked by job and wage growth amid low interest rates. Former dean Laura Tyson was the first woman to chair the Council of Economic Advisers (1993–95) and to direct the National Economic Council (1995–96), among other roles.
…helped navigate e-commerce, communications, and horizontal mergers.
As the chief economist for the Federal Communications Commission in the mid-1990’s, Professor Emeritus Michael Katz informed an important revision of cable television price regulations. He later addressed Congress about how to allow consumers to safely make payments via phones. Professor Emeritus Carl Shapiro played a central role in the first big update in almost 20 years of the guidelines on horizontal mergers as the chief economist in the Antitrust Division of the U.S. Department of Justice (2009–11). Both men continue to serve as expert witnesses in the country’s most high-profile antitrust cases.
…advances global gender parity.
As a longtime co-author of the World Economic Forum’s Global Gender Gap Report, Tyson helped quantify the magnitude of gender-based disparities and develop initiatives for change. She also served as lead author in 2016 for two reports for the UN Secretary-General’s High-Level Panel on Women’s Economic Empowerment that included action-oriented recommendations to hasten improved economic outcomes for women.
…gives voice to the voiceless.
A former World Bank director, Dean Ann Harrison has earned international acclaim for her research on foreign direct investment and multinational firms. In proving that job losses in U.S. manufacturing are driven primarily by labor-saving technology such as investments by U.S. multinationals in automation, she has shown that free-trade economists miscalculated the costs of globalization and failed to ensure that policies were in place to compensate the losers, including many workers in rural communities.
Summer 2023|By Amy Marcott & Laura counts| Illustrations: Martin Leon Barreto
Revolutionary findings by Haas faculty that have advanced business
All established wisdom had to start somewhere, often in the form of fresh insights that went on to become common knowledge. Here are some of those big ideas that started at Haas and became deeply embedded in business thinking.
Social Responsibility
Business firms and their leaders should govern with accountability and be socially responsible in their relationships with diverse sectors of society affected by their operations. Leaders failing to do so may eventually lose their leadership roles and see their own organizations collapse.
The late Professor Emeritus Dow Votaw was a pioneer in the field of corporate social responsibility and looked at how corporations evolved amid a society growing increasingly complex.
Wages
Paying workers more than the market wage boosts productivity and morale and reduces turnover.
Professor Emeritus Janet Yellen’s scholarship has focused on a range of issues related to wages, unemployment, and economic cycles. Her most-cited work on “efficiency wages,” written with her husband, George Akerlof, found that businesses offering better pay and better working conditions are often making a wise decision and are rewarded with more productive workers.
Employees
Human assets are as important as the financial and physical assets of a company and need to be managed in a strategic way.
As a scholar, the late Professor Emeritus and former Dean Raymond Miles positioned human resources as a strategic function, defining HR management styles commonly taught today.
NOBEL PRIZE WINNERS
Even in games where players don’t know what their opponents know or what the parameters are, it’s still possible to develop a framework to analyze strategic decision-making.
In 1994, the late Professor John Harsanyi (along with John Nash from Princeton University and Reinhard Selten from Bonn, Germany) won the Nobel Memorial Prize in Economic Sciences for his work in game theory that used probabilities to model how rational people will interact strategically when they have imperfect information. The spark for Harsanyi’s research came from his inability to advise the U.S. Arms Control and Disarmament Agency in 1964 on negotiations with the Soviet Union, because neither side knew much about the other; it was a game of incomplete information. Game theory is now a significant tool for analyzing myriad conflicts, including global political clashes, labor negotiations, and price wars.
Analyzing the boundaries between firms and the markets they operate in is critical to understanding how to best design productive activities.
In 2009, the late Professor Oliver Williamson won a Nobel (along with Elinor Ostrom of Indiana University) for his insights into what’s known as the “make or buy” decision, a way of analyzing whether an organization should contract out for parts or make them in-house. Williamson brought together multiple disciplines to invent the field of transaction cost economics, which sheds light on optimal contracting, the boundaries of the firm, the design of bureaucracies, and more. His work was path-breaking because economic research at the time was focused on market transactions and not what happened inside organizations. Williamson’s insights have influenced everything from electricity deregulation in California to human resource management in the technology industry.
ORGANIZATIONS & INNOVATION
Natural selection processes akin to those in bioecology drive the emergence, growth, evolution, and decline in groups of related organizations.
This vibrant field of research, called organizational ecology, was co-developed by the late Professor John Freeman and former Professor Glenn Carroll.
Reliable performance by an organization may require a well-developed collective mind in the form of a complex, attentive system tied together by trust.
Professor Emeritus Karlene Roberts pioneered a new way to understand human-made disasters, looking beyond human error and technical glitches to the organizational causes of catastrophes in industries requiring nearly error-free operations, like commercial aviation and nuclear power plants. The quality of interactions among team members, she found, was a critical part of highly reliable organizations.
Knowledge gives companies competitive advantage and is contained within a company’s people.
Ikujiro Nonaka, MBA 68, PhD 72, pioneered theories about knowledge management and transformed how people drive innovation together. Along with Hirotaka Takeuchi, MBA 71, PhD 77, Nonaka co-authored the business best-seller The Knowledge-Creating Company. In 1997, Nonaka became the Haas School’s Xerox Distinguished Professor in Knowledge, the first professorship in the world dedicated to the study of knowledge management.
It isn’t enough for companies to innovate—they also must be able to profit from those ideas. This requires good strategic management and access to manufacturing, marketing, distribution, and other complementary assets and technologies on favorable terms—which is just as important to financial success as great R&D.
Professor David Teece is known for this theory of dynamic capabilities, which puts the management team front and center in the innovation process. Gary Pisano, PhD 88, co-authored the first article on the topic, in 1997.
Companies used to rely on their internal labs for their innovations, but they can retain their competitive edge by partnering with other companies—even competitors—to create useful and lucrative products and services.
This concept, known as open innovation, was created by longtime Adjunct Professor Henry Chesbrough, PhD 97.
Branding
A brand is an asset involving relevance and image (functional and emotional) and having a loyal customer core. The implication is that a brand is the responsibility of the whole organization including the executive suite.
Professor Emeritus David Aaker is widely considered the father of modern branding. His pioneering work defined brand equity and detailed ways to build and manage brands and portfolios that are used by organizations worldwide.
Open Science
Widely accepted research practices in the social sciences leave too much room for bias and manipulation and need to be reformed.
Professor Leif Nelson’s 2011 paper, “False Positive Psychology” (co-authored with Joseph Simmons and Uri Simonsohn), helped launch the open science movement, which has upended the field of psychology, toppled famous studies, and sent waves throughout the social sciences. Open science focuses on rooting out biases, replicating important studies, and—on rare occasions—exposing fraud. Many researchers have since adopted more rigorous practices, and reforms are ongoing.
Culture
Person-culture fit is a useful predictor of organizational commitment and extra-role behavior, which in turn affect firm performance.
Professor Jennifer Chatman, PhD 88, co-created the Organizational Culture Profile in the early 1990s with Charles O’Reilly, MBA 71, PhD 75, and Dave Caldwell. It illustrates how organizational culture can be quantified, has defined the agenda for the scientific study of culture for decades, and remains the most robust and reliable measure of organizational culture to date.
Finance
The balance sheet approach should be used to analyze accounting issues as opposed to the income statement approach.
Articles by the late Professor Maurice Moonitz, BS 33, MS 36, PhD 41, played an important role in the gradual switch to the balance sheet approach by the bodies that establish the generally accepted accounting principles followed by publicly held American corporations. He also influenced the conceptual frameworks eventually adapted by accounting standard setters both in America and abroad.
Securities with various risks and returns can be combined into a mutual fund that mimics the S&P 500.
The concept of a “SuperFund” index, a radical innovation in security markets that paved the way for exchange-traded funds, was developed by Professor Emeritus Nils Hakansson in 1976.
Prior to the Global Financial Crisis that started in 2007, banks were selecting the riskiest pools of home mortgages—the lemons that were more likely to contain mortgages in which borrowers prepaid or defaulted on their loans—to sell into the securitized bond market.
The late Professor Dwight Jaffee, along with Professor Nancy Wallace and Christopher Downing, were the first to document loan cherry-picking by banks and Freddie Mac. Their research drew intense scrutiny from Freddie Mac and helped to pressure the quasi-governmental entity into disclosing more information about underlying mortgages. Jaffee made seminal contributions aimed at influencing the public policy debate on questions related to the causes of the Global Financial Crisis, which he anticipated years before its onset.
Behavioral Economics
Humans tend to remain committed to a losing course of action (think bad investments or relationships) rather than pull the plug and try something different.
Professor Emeritus Barry Staw coined this phenomenon “escalation of commitment,” a discovery that is one of the most highly cited in organizational behavior. He helped pioneer the field of behavioral decision theory, a sub-area of behavioral economics.
Individual experiences of macroeconomic shocks affect financial risk-taking, as often suggested for the generation that experienced the Great Depression.
Professor Ulrike Malmendier proved econometrically what had been observed only anecdotally and has continued her groundbreaking research into how the economic conditions that prevail during a person’s life so far strongly influence their views on money for years and decades to come.
Homeownership
Lending discrimination has not disappeared with the shift online, since algorithms incorporate human biases.
Professors Adair Morse, Richard Stanton, and Nancy Wallace were the first to merge large datasets with details on interest rates, loan terms and performance, property location, and borrower’s credit with race and ethnicity. Their 2021 research found that both online and face-to-face lenders charge higher interest rates to African American and Latino borrowers, and these differentials lead to over $450 million in extra interest payments per year.
Energy
Californians have been paying a “mystery gasoline surcharge”—which has ranged from 28 to 65 cents a gallon in any given year—since 2015.
Professor Severin Borenstein discovered this surcharge, finding that between 2015 and 2022, it cost Californians $48 billion—over $4,000 for a family of four. He’s been fighting to get government officials to understand it ever since. Earlier this year, the state legislature and governor passed a bill that will establish a special state office to investigate the cause of the surcharge and possible remedies.
TECHNOLOGY & ENTREPRENEURSHIP
Lack of total transparency limits the liquidity that firm owners can obtain through an IPO.
Professors Emeriti Hayne Leland and David Pyle’s 1976 paper was a seminal contribution in the field of corporate finance, investigating what happens when entrepreneurs cannot be expected to be entirely straightforward about their projects to lenders, since there may be substantial rewards for exaggerating positive qualities.
“Smart markets,” defined as a turbulent, information-intensive environment with constantly changing products, consumers, and competitors, will require a shift in performance goals from profitability per product to profitability per customer.
Professor Rashi Glazer’s trailblazing theory about smart markets—which he first introduced in 1991, years before the Internet boom—positioned Haas as a thought leader in the data-driven marketing movement.
Durable economic principles can guide you in understanding today’s frenetic business environment in information-based products and the technology sector.
Haas Professors Emeriti Carl Shapiro and Hal R. Varian co-authored Information Rules: A Strategic Guide to the Network Economy (1999), a widely acclaimed book that deconstructs the economic factors affecting information technology markets. Though the book pre-dated Facebook, the iPad, and big data, it continues to guide leaders through the information age.
Perception is reality in entrepreneurship.
Professor Toby Stuart has investigated the nuances of how startups build momentum by establishing the right set of affiliations. In building a company, entrepreneurs proactively architect exchange relationships that enhance the legitimacy of their endeavors. His work finds that the more uncertain the prospects of a new venture, the more essential it is to enlist the support of those already held in high esteem in the space.
Despite it seeming easy to shop around online, information gatekeepers design markets so that prices vary widely and are hard to compare.
The late Professor John Morgan was a prolific researcher, with notable contributions to the area of pricing and competition in online markets. His most-cited work sheds light on the reasons that prices can vary so widely on the internet when it’s easy to shop around: So-called “information gatekeepers” have an incentive to design markets in ways that prices across sellers vary.