Martin Sumichrast |Milken Institute Global Conference, 2013

Optimism and Electricity

Despite the historic gridlock and continued failures in Washington DC, (aka. the Obama Administration and Congress), the overall sentiment at the 2013 MilkenConference held in Los Angeles last week was very upbeat. This tells me two things: 1) we truly live in a great country and 2) American business and American capitalism remains one of the greatest human accomplishments in world history. Despite the fiscal mess at the Federal Government level is unprecedented and solutions to fix the problem are nowhere in site, American business remains optimistic.

Break Down of Panel Discussions I attended.

Crowd Funding:

crowdfundingWhat may turn out to be one of the most dramatic pieces of legislation to enhance the ability of small businesses to raise capital is the Obama’s Job’s Act and its Crowd funding legislation. A recent article by Alvaris Falcon at http://www.hongkiat.com/blog/crowdfunding-sites gives an excellent detail on how crowd funding will work. It also goes to list 10 sites that are already available to use. Final rules and regulations on the details have yet to be signed by the SEC and some of the panelist where critical of the Commission for the long delay. However, the ability of small entrepreneurs to side-step expensive and cumbersome regulations and raise capital directly and more efficiently is vital to the growth for small American businesses. Remember, most job creation is done by small business, so on this one, I give Obama a big thumbs up.

Forbes on April 17th regarding crowd funding.  The main points  are as follows:

1.       There are people who are successfully raising funds via this method today, but they are doing so in violation of the current securities laws; and

2.       Pursuant to Title 3 of the JOBS Act;

(i)                  The on-line crowd funding portals will be registered with and regulated by the SEC and FINRA;

(ii)                The SEC has written, but has not yet published for comment, the proposed rules regarding crowd funding; and

(iii)               There will be a $ 1 Million cap on each security offering.

Rupert Murdoch and News Corp:

milken2013-rupertI was present at an invitation only close door panel discussion with Rupert Murdoch. With him was Robert Thompson, his new head of News Corporation and former editor of the Wall Street Journal. Also in attendance was Robert Kraft of Kraft Foods, also owner of the New England Patriots and Leon Black, founder of Apollo Global Management.

Clearly, Mr. Murdoch is everything you would imagine he would be. Charismatic and holding court, he explained why in his view the break-up of his News Corporation will be beneficial to all shareholders and will “unlock value”. I must admit I’m not fully versed in the details of the plan, but after hearing the hour long question and answer session, his points make complete business sense. Digital media was a big theme, specifically the role of main stream media versus internet media and how that affects his global media empire.

He said his global brands have three very important goals :1) create great content, 2) deliver the content and 3) price the content right. He stressed that, the content of the news and its reliability is worth much more to the consumer than just its speed to the market. And that comment from a journalist point-of-view, his editors must become more “commercially minded” meaning they must take into account the value of the story as it pertains to the consumer as much as the content itself. In other words, if they break  a story about a currency move, for the few minutes the value of the story is worth, perhaps millions of dollars to a consumer, whereas a story that doesn’t have that much potential financial value would not. This may drive a conflict of interest at the news desks as the content may be more driven by its implied value.

He also said that New Corp was going to launch a competing product against Bloomberg. His rational is that Bloomberg is very expensive and provides too many tools to users that many users ultimately never use. He plans on providing a more “basic” package with a “add-on” features that users can buy.

Murdoch also blasted regulators world-wide for too much regulation on almost every front. Nothing I wouldn’t myself disagree with.

All-in-all, I was very impressed with Mr. Murdoch and Thompson. I do believe that they can generate tremendous synergies between the lines of businesses and their operations are an excellent investment for decades to come.

Frank Luntz – “What to Say  and How to Say It”

milken2013-FrankLuntzAnybody who has watched Frank Luntz knows he is a bull-in-a-china-shop. A non-conformist, he refuses to take the stage and instead, paces around the packed audience in jeans and tennis shoes. He says ” how can I connect to the ordinary people (you) if I am on the stage above you”. Frank is a dynamo and it’s no reason why he has been invited back to Milken’s conferences for 6 years straight. Here are some great take-away’s from his presentation:

1. If you want to make a point in any meeting say the following “if you remember only one thing”….then say what you want them to remember….it always works.

2. Stop using “brand” use “trust”

3. Stop calling yourself a CEO, call yourself a “business-builder”

4. Use the terms “hard work” not “entitled”

5. Tell your customers/shareholders “that you will not give-up”

6. Refer to the economy as “healthy”

7. Use the following words in shareholder letters:

  • Accountability
  • Integrity
  • Experience
  • Reliable

8. Mission statements should refer to:

  • Continuous improvement
  • Total Commitment
  • No excuses
  • Problem solvers

9. Capitalism should be referred to ” economic freedom”

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