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MBN: Smart Energy Revolution

by Jeffrey Barg

October 16, 2014

Human invention has depended on fossil fuels for its energy needs for well over 150 years. When the train became the primary mode of shipment, coal was used in massive quantities. Eventually, with the invention of the combustible engine, oil became the energy source for the masses. But now even a schoolchild knows that eventually, those energy sources will be depleted. So the world is left with the problem of finding the next effective, efficient, and long-lasting energy source.

The Smart Energy Revolution panel discussion at the 15th Annual World Knowledge Forum in Seoul provided solid evidence that this new energy source may already have been found.

Among the speakers were Doctor Gunter Pauli, CEO and founder of Zero Emissions Research and Initiatives (ZERI), Doctor San Yup Lee, dean at KAIST, Seong Hoon Kim, a senior vice president of smart energy business for KT, Jaehong Jeong, director of GE Oil & Gas, and Martin Hauske, CEO of Accenture’s Smart Grid business in the Asia-Pacific. The panel of experts presented their ideas on the current direction of energy resources, creation, and application.

“I, of course, always owe an apology to the orangutan,” Dr. Pauli began. “In 1991, I saw that my biodegradable product was destroying their habitat. I realized it was biodegradable but not sustainable, and that forced me to change my model of business.”

Dr. Pauli has since spearheaded innovations across all disciplines of energy utilization, and went on to outline the myriad projects his companies have been a part of.

“Other industries pride themselves on eliminating jobs, but I don’t,” added Dr. Pauli.

His companies have focused on innovation and revenue creation. He went on to illustrate the various endeavors his company ZERI has undertaken in an effort to create renewable, sustainable resources. One such endeavor includes a water filtration system that works by extracting moisture from the air.

Dr. Pauli seems intent on changing the way the energy industry does business.

“In our organization, it is forbidden to write a business plan. You have to focus on doing things,” he said.

The sector of the energy industry that Mr. Hauske focused on was utilities. Certainly, with more people and more devices that use energy than ever before, the utilities industry is in need of its own share of resources.

“Our focus is on energy conservation, efficiency, substitution, and distribution,” he said. He added that fairly soon, there will be an app for everything, and that everyone’s devices will have to talk to each other. This unprecedented era of interconnectivity will result in more energy consumption through utilities, which his company is focused on providing in new and innovative ways.

General Electric has long been at the forefront of energy utilization and distribution, and Mr. Jeong spoke on GE’s place in the current energy revolution.

“We are trying to connect the Internet of Things, intelligent machines, big data, analytics, and people at work,” explained Mr. Jeong. By combining these five components into one fluid system, GE plans on minimizing unplanned down time and increasing result-oriented contractual services, thereby increasing overall productivity.

Mr. Kim brought the presentation back to the basics, rather than focusing on the creation and distribution of energy. KT is concentrating reducing energy consumption by analyzing customers’ lifestyles.

“Analyzing customer data allows us to use energy more effectively,” explained Mr. Kim. “The data allows us to compare energy consumption with your neighbors, and advise people on how to lower their costs. The difficult part is getting people to heed your advice and reduce their energy footprint.”

The discussion then turned to the newest form of energy creation: biofuels. Dr. Lee elaborated on several new forms of energy creation, including butanol, which is created through the fermentation processes of microorganisms.

Dr. Lee left no doubt about the importance of these biofuels as a cornerstone of future energy consumption.

“It’s not about us. It’s about our children’s children’s children,” said Dr. Lee. He then went on to explain the immense applications of the chemicals, plastics, and fuels produced through the employment of microorganisms.

With all the changes the energy industry will undergo in the near future, it appears that the majority of the panel believes we will adjust to such change, whether we are ready or not.

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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.”

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China Economic Outlook: Hard or Soft Landing

by Jeffrey Barg

October 16, 2014

Modern day China bears a resemblance to the United States in the late 1800s, or 1950s Japan, with a massively expanding economy with a large labor force, and constant changes in fiscal and government policy to deal with the rapidly changing interests among the population. The question posed today at the 15th Annual World Knowledge Forum was whether or not China can maintain its unprecedented period of economic growth in the face of policy reform.

Scholars from around the world discussed this issue. Among them were Doctor Chenggang Xu, Quoin professor of economic development at the University of Hong Kong, Doctor Daniel Altman, NYU Stern professor, Doctor Gang Fan, Director of the National Economic Research Institute of China, and Doctor Yoon Je Cho, dean of graduate studies at Sogang University.

“The potential for China’s growth is still high. You have the potential, it’s better to achieve it than to repress it,” said Dr. Fan, expressing optimism for China’s economic future. Among the panelists, however, he appeared to be the only one with such a positive view.

“The slowdown [of China’s economic growth] is actually an institutional problem. This slowing down can be attributed to structural problems which have accumulated during the past decade,” said Dr. Xu. He went on to explain the major necessity of Chinese economic policy reform would be to transfer more control of capital to the private sector.

Dr. Xu expressed pessimism towards the materialization of economic reforms under the current Chinese administrative structure.

 “Currently, the Chinese government has a reform plan. Supposedly if everything in the plan is implemented, then there is hope. The problem is that within the current reform plan, there is a big element missing. The element missing is how the plan is going to be implemented,” he said. 

Dr. Cho supported this viewpoint.

“Economic liberalization means shifting the power of governance and resource allocation from the government to the market,” he said. Dr. Cho also spoke on the requirement that China reform its economic policies.

Dr. Altman supported the idea that China has the potential to change, but added it may take longer than the majority expects.

“These things can come into phase gradually, whether it’s a centrally planned economy or a market economy,” he said.

Perhaps the most massive reform that China seems willing to undergo is a revision of its landholding policies. Until now, land, while not directly owned by the government, was not legally allowed to be traded. According to the panelists, the monetization of land stock in China would have a profound impact upon the economy and the populace as a whole.

“Think of how much time land reform needed, it’s a historical process,” said Dr. Fan. “If you look at the history of Europe from 1800 to 1900, in France, in England, every one or two years there are new laws regarding [the trading and ownership of] land.”

Dr. Fan expressed his hope that China would gradually change its institutions to allow the development of this sector of the economy.

Dr. Xu did not, however, share in Dr. Fan’s positivity toward the possibility such economic reforms.

“Because China does not have traditional independence, if any entrepreneur has a legal issue, such as a contract dispute, against a state enterprise, the contract is not going to be enforced in a usual way,” said Dr. Xu.

Dr. Cho offered his philosophy on the source of such conduct.

“Corruption comes from land-seeking behavior, and land-seeking behavior comes from land, and land comes from regulation,” he said.

Apparently, in present-day China, it just helps to be on the right side of the regulation.

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The Return of History and Geopolitics

by Jeffrey Barg

October 15, 2014

Philosopher George Santayana once wrote, “Those who cannot learn from history are condemned to repeat it.”

When considering the repercussions of historical actions, including two world wars, and a longer, intense Cold War, learning from those who came before us is absolutely necessary.

History itself may be silent, but its voice was heard Wednesday morning at the 15th Annual World Knowledge forum in Seoul. A panel of experts including Ian Morris, history professor at Stanford University, His Serene Highness Prince Michael of Lichtenstein, Walter Russell Mead, professor of foreign affairs and humanities at Bard College, and Sung-hwan Kim, visiting professor at Seoul National University and former Korean minister of foreign affairs, discussed the current geopolitical climate and possible courses of action in a rapidly changing world.

“In one sense we have a world more integrated, largely because of IT,” said Dr. Morris. “But, in another sense, it’s more fragmented than ever before.”

While globalization has resulted in the interdependence of economies, sovereign nations are also experiencing more nationalism, largely in an effort to retain their own cultural identity and place on the world stage.

“Nationalism is a solution for distress,” added Mr. Kim. Rising nationalism could very well result in an increase in violent conflicts, the panelists agreed, although the United States serves an important purpose in this regard.

“What you have is the United States, and a weaker version with the British Empire in the past, acting as the overseer of international global order and making sure that free markets work around the world,” said Dr. Morris.

The issue of international order is especially prevalent in three areas, according to Mr. Mead.

“Russia is in a tough spot, with a unified Europe on one side and a rising China on the other. The sectarian and ethnic rivalry we see in the Middle East is very serious and will take a long time to sort out. And in Asia you have a rising power, China, surrounded by other rising powers,” he said.

However, the prospect of conflict could be undermined by the possibility of coexistence towards a mutual goal.

“Before 9/11, Bush thought of China as a competitor, but China has become a partner in the war on terror,” said Mr. Kim.

While each country may serve its role on the platform of world affairs, some countries, such as Switzerland, have their own unique ideology that they follow.

“Switzerland managed to stay out of two world wars not because they were nice people or they had cheese. If you want to be neutral, you have to have good defense, good foreign policy, and your counterparts have to know you’re ready to take action,” Prince Michael added.

If there is an answer to solving the various clashes that occur in a regular basis throughout the interconnected world, the system of governance may offer some solution for disruption, the panelists agreed.

“Capitalism is a stabilizing engine for rapid change, and for capitalism to work there has to be democracy. Democracy is, then, a necessary but not sufficient condition for the stabilization of the world,” said Mr. Mead.

With the various problems countries encounter throughout daily interactions with other nations, a simple solution to a tumultuous geopolitical climate will certainly be hard to come by. History may not provide a model for which course to take, but perhaps it will provide a model for which course not to take, and thus countries may continue their prosperity uninterrupted by the threat of violence or economic isolation.

“Knowing history doesn’t give you the answers,” Dr. Morris said. “Knowing nothing about history never gives you the answers.”

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Principles of Entrepreneurship: Start Up Your Company

by Jeffrey Barg

October 15, 2014

There was a time when the first company a young person worked for was their employer for life. This company would invest numerous hours into the training of this new employee, who would then reciprocate with a lifetime of loyalty and dutiful service.

That business model has come and gone, according to best-selling author and tech entrepreneur Ben Casnocha.

“We have seen a shift to the opposite extreme of the family business model,” he said. “They’ve minimized the employer/employee relationship, and they are increasingly treating employees like free agents.”

Mr. Casnocha feels that neither system is optimal.

“A company should treat its employees as allies,” he said, adding that this alliance would be beneficial for both sides, and forego any misconception about either side’s devotion to the work at hand.

“In an alliance, a company treats an employee as a fully autonomous individual talent. An employee treats a company as a place where they can do great, innovative work in a reasonable amount of time,” he added.

The change from other business models to an alliance represents a paradigm shift in the face of managerial innovation.

“The most innovative companies in the world are able to recruit, effectively manage, and retain amazingly innovative people,” he said.

The responsibility for success, however, lies with the company, not on the individual.

“It’s up to the company to choreograph the progressive levels of commitment between the company and the employee,” Mr. Casnocha said.

Companies unable to adjust will find themselves without the necessary human resources for success. Mr. Casnocha related an anecdote about The Walt Disney Company firing Jon Lasseter, who went on to great success as the founder of Pixar, which was in turn bought by Disney.

Mr.Casnocha reiterated the importance of human capital.

“To discuss the future of the knowledge economy and not analyze the people that make up the ecosystem is like taking a bus trip around the country but then forgetting to hire a driver,” he said.

Globalization has resulted in shorter obligations between companies and employees, he suggested, but the goal of companies has not changed. They wish to make a profit, and Mr. Casnocha believes it is up to the employee to invest in and educate themselves to acquire the skills they need to succeed.

For those of us that may be uncertain how to make those investments, Mr. Casnocha added a little advice.

“The fastest way to become the person you want to be is to surround yourself with people who are already 

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Big Debate 1% vs 99% Part II: Future of Capitalism

by Jeffrey Barg

October 14, 2014

Income inequality took center stage at the 15th Annual World Knowledge Forum in Seoul, South Korea.  Experts from around the globe debated the effectiveness of a capitalist system and what is to blame for the current income disparity among today’s workers. The recent protests in Hong Kong shed light on the fact that the United States is not the only nation where the 1 percent and the 99 percent are at odds.

The panel for this debate included Jeremy Rifkin, president of the Foundation on Economic Trends, James Galbraith, professor at the University of Texas at Austin, Tyler Cowen, professor of Economics at George Mason University, and Doctor Choong Young Ahn, Chairman of the National Commission for Corporate Partnership.

In a talk given last month, economist Thomas Piketty postulated that in developed countries, an increase in overall wealth results in an increase in disparity between the upper class and the lower class. This income disparity often goes by a different name: the 99 percent.

Is rising inequality a necessary property of capitalism? Mr. Galbraith doesn’t think so.

“I believe that we are in control of our own futures and that we can, if we choose, design a system in which equality does not rise, in fact, it declines,” he said.

Mr. Rifkin added, “Let’s give credit to the young people who went to the streets all over the world and they came up with the 99 percent. Piketty’s book gave us the proof, but we didn’t need the proof, we already had it.”

Mr. Cowen disputed the idea of a 99 percent.

“I see the future as being about something like the top 15 percent, not just the 1 percent,” he said. 

Supporting the idea that this inequality is a modern phenomenon and not a direct result of capitalism, Mr. Galbraith added, “The major rise in inequality begins around 1980, peaking around 2000. It is therefore implausible to argue that this is a phenomenon intrinsic to capitalism.”

The panelists discussed the possibility that the real issue may be job satisfaction disparity, rather than income inequality.

“What we really care about is happiness, not income,” said Mr. Cowen. “I would say that in the long run we have seen the inequalities in happiness go down, and for this we should credit capitalism, not blame it.”

Dr. Ahn also supported capitalism, adding, “Capitalism should not be blamed for ongoing inequality. The East Asian [capitalist] economic model is still in very good shape for its momentum to grow.”

Mr. Rifkin did not see capitalism as the endgame for the current economic situation, suggesting that the internet and renewable energy are coming together to offer a unique and wholly separate form of commerce.

“I think we can create a new economic system side by side with capitalism, which by its nature, reduces inequality and promotes democratization of everyday life,” he said.

Sadly, Mr. Galbraith was not as hopeful.

“I do not believe our problems will be solved on their own,” he said.

Despite the obvious disagreements about the causes of economic inequality and how to go about fixing it, Mr. Cowen held to the idea that it is hard work that leads to success, not necessarily access to an imperfect economic system.

“I think, overall, the trend will be a lot of opportunity for everyone, but only some number of people will have the means, and indeed, the desire and the discipline to seize that opportunity,” he said.

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Jeremy Rifkin: The Zero Marginal Cost Society

by Jeffrey Barg

October 14, 2014

Picture yourself sitting in your home 20 years from now. Your television is powered by the solar panel on your roof. You’re hungry, so you decide to go to the store. You step inside your 3D-printed car, which runs not on gasoline, but on its own electrical energy, which is constantly renewed throughout the drive. You sit in the passenger seat playing on your smartphone, because the car is doing the driving for you.

This isn’t something out of a science fiction novel. This is just a normal day in the world that Jeremy Rifkin sees materializing in the near future. Mr. Rifkin, President of the Foundation on Economic Trends and senior lecturer at the Wharton School’s Executive Education Program at the University of Pennsylvania, spoke on this idealized future at the 15th Annual World Knowledge Forum in Seoul, South Korea,

“We are now moving toward a third Industrial Revolution,” said Mr. Rifkin. “We can see this in our forms of communication, energy, and transport.”

Mr. Rifkin characterized the first industrial revolution by the telegraph, coal energy, and trains. The second was characterized by the telephone, oil, and the automobile. “What we see now is a convergence of communication, energy, and transport,” he said. “It’s three internets in one system, what we call the Internet of Things.”

This super connectivity “connects everything with everyone across the planet.” Mr. Rifkin went on to elaborate this connection, illustrating that solar energy can charge the electric car, which will be driverless, and be guided by GPS, which will be automated and connected through the Internet of Things.

The economy is moving toward what he branded a Zero Marginal Cost structure, where goods are shared rather than owned, and produced for next to nothing. “It started with Napster in 2000,” said Mr. Rifkin. “Now we have YouTube, open online courses. All produced for near-zero marginal costs.”

All of this data sharing has occurred on what Mr. Rifkin labeled “the collaborative commons.” While the prevalent economic system of the past century has been a capitalist exchange economy, he argues that a new system is developing as a result of a massive exchange of data, ideas, and goods.

The sharing economy was further illustrated with the example of a toy website, where toys are loaned for the duration of childhood, but then are returned and shared again.

“We are beginning to glimpse the outline of the sharing economy on the collaborative commons,” he said. Mr. Rifkin surmised that the future economy will move toward a hybrid of the exchange economy and the sharing one.

Climate change, according to Mr. Rifkin, is the single biggest issue facing our society, and one that he believes can also be improved by moving towards a Zero Marginal Cost structure. He did offer hope for change, saying, “Zero marginal cost is the single biggest metric for reducing our ecological footprint.”

Through minimizing the use of Earth’s resources and reducing our own costs, we can build towards “the democratization of economic life,” said Mr. Rifkin. Therein lies the singular best reason to change to more renewable, environmentally-friendly resources and reduce personal production costs.

Mr. Rifkin put it simply: “The Sun does not send a bill.”