Oct 20, 2014
The happy faces of some of our World Knowledge Forum 2014 writers, editors, and staff.
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The happy faces of some of our World Knowledge Forum 2014 writers, editors, and staff.
Our press writers working on the final articles of the World Knowledge Forum 2014!
Our writers working on their articles.
Exterior Garden at the World Knowledge Forum 2014.
Startup: IPO and Exit
by Jeffrey Barg
October 16, 2014
Imagine you’ve sunk the entirety of your life savings into a company you’ve helped build from the ground up. Through hard work and determination, you’ve built your company into a premium service provider, identified as one of the leading companies in your industry. Then another richer, more powerful company comes along and asks to buy yours for hundreds of millions of dollars, making everyone at your company instantly rich, with plenty of leisure time. Do you say yes?
“I was inclined to say yes,” said Avishai Abrahami, co-founder and CEO of Wix.com. “Everyone would get rich, but everyone also felt it was too early.”
In the end, the answer was no. It was not an easy response to make, though.
“For me personally, I love the beach in Brazil,” he said.
At the 15th Annual World Knowledge Forum in Seoul, Mr. Abrahami gave a speech on the creation and development of Wix, and offered words of wisdom for any prospective entrepreneurs in the audience.
Mr. Abrahami shared his insights about how to find investors.
“The most important message to venture capitalists when you first want to raise money is that you have a big dream,” stated Mr. Abrahami. After all, when the investors devote their finances, they are not purchasing a product, they are buying into your dream, he explained.
“You raise money with your dream,” he said.
On the subject of how to best raise funds, Mr. Abrahami was kind enough to offer some advice.
“The best way to raise money is when you want it but you don’t need it,” he said. After Wix’s initial success, the company found it easier and easier to draw investors into its circle.
Wix is now the fastest growing website builder in the world. Their business model is unique among modern commercial websites, with no salespeople and no commissions among its staff, and it is free to use in its most basic form. Revenue is generated through website upgrades such as increases in data usage and the elimination of ads.
Mr. Abrahami believes that the success of his company is derived from its capacity to deliver customers exactly what they need.
“What we sell now is designing something, the ability to create what you want,” Mr. Abrahami explained.
Wix’s success led to several other companies attempting to purchase it, but Mr. Abrahami, along with his associates, decided to stay the course. Eventually the company went public, offering an IPO to overwhelming success.
“The best part is you still have the same chair, in the same office, at the same company, working with the same people,” said Mr. Abrahami. In the end, the company saw the IPO not as an endgame, but as another part of a successful journey.
“An IPO is just a step in the road, unlike a sale, which is the end of the road,” Mr. Abrahami said.
Speaking on what it takes to succeed, Mr. Abrahami added, “Never build a product to solve someone else’s problem. Build a product to solve your own problems, because those are the problems you understand.”
A Tale of Two Finances: Finance 2.0 in China
by Adam George
October 16, 2014
Dr. Liu Qiao started off his discussion on the financial history of China by changing the title of his lecture at the 15th Annual World Knowledge Forum to “A Tale of Two Finances: Finance 2.0 in China.” Dr. Qiao explored the nature of China’s past economical depression, and then shifted focus to the positive future in China’s grasp.
“Right now, there are more than 50 million companies in China, but only about 10 percent can get financial support from the current financial system,” Dr. Qiao explained.
A lack of efficiency and a focus on fame in the form of the Forbes 500 list has propelled the Chinese companies into a downward spiral as of late. Companies only looked at achieving a certain number in sales rather than taking into account the importance of investments and the return on invested capital (ROIC).
“Greater China has 100 companies entering this 500 list, accounting for 20 percent of this total list…Of the 100 companies, 16 of them are losing money; they don’t have any profit, but they’re so big and so huge that they can’t fail….The financial system supports this kind of mentality, so it boosts lots of credits to their size,” Dr. Qiao said.
While this method for finance seemed to work initially, the economy currently grapples with the repercussions of poor investing and returning. Banking systems normally provide financial loans for starting companies, but banking unfortunately accounts for a large part of China’s debt in the GDP. Because of poor investment decisions, banks can no longer fund startups as much.
“Finance 1.0 is a trouble maker, so we need a new financial reform and system in China,” Dr. Qiao said. He then looked to ways Chinese companies have begun to put an end to this and embrace a new China 2.0.
Dr. Qiao assured the audience that a new surge of finance has been detected in China. Peer-to-peer startups, or P2Ps, are small loaning companies that advise customers on where and how to invest their money efficiently.
“[The] cost is very high, as high as 30 percent, but it’s efficient; [it] takes a couple of days to process an application and then receive the loan,” he explained.
Because of this efficiency, other companies have caught on and have taken it one step further. Alibaba, for example, advises customers on how to efficiently invest any extra money they have in their account and generate a relatively higher yield in return. The achievement can also be viewed online, giving the customer a stronger sense of autonomy and success at their own fingertips.
“This whole process takes 3-4 minutes; a very pleasant experience,” Dr. Qiao said of Alibaba, which sets the company apart from its competitors.
Dr. Qiao’s appreciation of Alibaba and the P2Ps in China demonstrated his optimism for the 2.0 finance plan and encouraged more support for innovations within the country. Multiple municipalities compose the nation of China and each can have a large influence on the economy. By finding a way to support innovations in this area, more ventures like Alibaba can lead China to its coveted 2.0 finance.
By focusing on the issue and efficacy of money efficiency, Dr. Qiao hopes that the Chinese economist will recognize the importance of investment and promising returns to ensure a more stable and fruitful China in the years to come.
Emerald Room at the World Knowledge Forum 2014.
The Opportunities of ASEAN Economic Integration
by Thomas Kwon
October 16, 2014
Speakers:
Eric John, President, Boeing Korea, Vice President, Boeing International
Siow Yue Chia, Senior Research Fellow, Singapore Institute of International Affairs
The Association of Southeast Asian Nations has a tight deadline to fully establish its ASEAN Economic Community: December 31, 2015. In a presentation at the 2014 World Economic Forum, Eric John, president of Boeing Korea, vice president of Boeing International, and former U.S. ambassador to Thailand, and Siow Yue Chia, senior research fellow at the Singapore Institute of International Affairs, discussed the ten-nation cooperative’s progress thus far.
“You don’t have any conversation about regional institutions in East Asia that don’t begin with ASEAN,” said Mr. John.
Dr. Chia began by highlighting the strengths of ASEAN. She named robust economic growth, a young growing population with 60 percent under the age of 35, and an abundance of natural resources, among other things.
“ASEAN as a region has been very dynamic in economic growth, so the growth has been on average 5.3 percent since 2009,” she said.
Another boon, Mr. John added, is the fact of outside parties negotiating solely with ASEAN. He gave the example of open skies agreements liberalizing strict rules in the aviation industry, which have resulted in projections that over the next twenty years, of the 36,000 airplanes sold globally, 14,000 will be sold in the Asia-Pacific region, driven by ASEAN carriers.
“With ten separate countries, it becomes very complex…the freedoms of open skies agreements have led to an incredibly robust market,” Mr. John said.
Of course, ASEAN also has its shortcomings. Dr. Chia outlined the widening development gap amongst member countries, limited governmental harmonization, and vulnerability to external shocks. She believes that this can lead to increased fracturing and intra-regional competition.
To support her point, Mr. John cited Indonesia’s step back in governance in removing local Parliamentary elections, Thailand’s history of military coups, and allegations of widespread corruption in many ASEAN nations.
“You’ve got a plethora of religions. You have ten countries, but dozens of languages. You’ve got ten countries with separate economies, but that have a lot of overlapping competitive interests,” he acknowledged.
Overall, however, the two remain optimistic.
Dr. Chia singled out the ASEAN+1 free trade agreements with China, South Korea, and Japan as indicators of progress toward the four objectives of a single market and production base, a competitive economic region, equitable economic development, and integration into the global economy.
“There is some trepidation that we will not be able to achieve, or set up to achieve, but the general conclusion is we are moving in the direction,” she said.
There has also been encouragement from other sources. Dr. Chia admitted, “We have been beating ourselves in the last few years ever since the ASEAN scorecard was published…but outsiders tell us, ‘don’t be so hard on yourselves.’”
Mr. John took a moment to recognize the value of even having such a cooperative in place, without which agreements and dialogue might not occur at all.
“I would say actually one great strength that ASEAN has is simply that it exists. A lot of times that’s taken for granted,” he said.
In evaluating the accomplishments of ASEAN, Mr. John considered the alternative.
“Look at it in the negative. What would it be like if there were no ASEAN? Right now we argue about if the glass is half-full or half-empty with regard to ASEAN…but just think about if there weren’t even a glass?”