Stories about corrupt CEOs raiding the corporate piggy bank would appear to be the best argument for shareholder protection laws known as “anti-self-dealing laws.” But there’s another bonus. A new study finds in countries with strong legislation to prevent fraudulent corporate behavior, banking crises have a less severe impact on firms and the economy in general.

The study, “How the stock market can play this critical role is the subject of “Spare Tire? Stock Markets, Banking Crises, and Economic Recoveries,” forthcoming in the Journal of Financial Economics, is the first assessment of the role of shareholder protection laws in shaping firms’ response to a banking crisis.

Co-authored by Prof. Ross Levine, the Willis H. Booth Chair in Banking and Finance at UC Berkeley’s Haas School of Business; Chen Lin, the Stelux Professor of Finance at the University of Hong Kong; and Wensi Xie, Assistant Professor at the Chinese University of Hong Kong; the paper is forthcoming in the Journal of Financial Economics. 

During a similarly sized banking crisis, firms in countries with strong shareholder protection laws raised more money through stock sales, performed better in terms of profits and investment efficiency, and terminated fewer employees than similar firms in countries with weaker shareholder protection laws.

Banking crises make it harder for firms to obtain loans, threatening their profitability and survival. That’s when the stock market can act like a “spare tire” —by allowing firms to issue equity to keep capital moving so firms can remain solvent and avert further damage to the economy. But strong shareholder protection laws must already be in place, according to Prof. Levine who studies the effects of regulation on the finance industry and how they impact ordinary people.

“This isn’t just about trading and profits,” says Levine. “Much of the population may not know anything about the stock market, but an economic crisis could cause people to lose their homes or jobs.”

The study builds upon a conjecture by Alan Greenspan, former chairman of the Federal Reserve. In 1999, Greenspan argued that the banking crisis in Japan and East Asia would have been less severe had those countries built a legal infrastructure to allow stock markets to provide corporate financing when the banks could not.

“A spare tire is an alternative source of external financing during a crisis. If everything is ok, we wouldn’t put the spare tire on. But if you get a flat, you’re glad that you have a spare,” says Levine.

The researchers compiled data on over 3,600 firms across 36 countries that experienced at least one systemic banking crisis from1990 through 2011. They also factored in shareholder protections in the sample countries, firm profitability, and the duration of the banking crises. By examining what happened to many firms over two decades, the researchers were able to rule out many other potential explanations for why firms in different countries respond differently to crises, such as differences in the size of the crisis; the level of economic development; the sophistication of financial markets; the potential role of other laws; and accounting protocols.

No matter how they cut the data, the evidence indicated that the ability to access stock markets when the banks go flat has a big effect on businesses and, more important, on the lives of ordinary workers.

“The mechanisms are clear,” says Levine. “When a country has stronger shareholder protection laws, people are more enthusiastic about buying shares in firms because corporate insiders are less able to take advantage of small investors and this enthusiasm translates into more money for firms, allowing them to weather banking crises more effectively.”

See full paper.

The 2018 class of Evening & Weekend MBA students arrived on campus July 31 for a whirlwind weekend of work sessions, an introduction to the Haas Defining Principles, cohort skits, and team-building exercises. 

A total of 254 students split into four cohorts during the class orientation, which was renamed WE LAUNCH this year.

All events were held on the Haas campus, serving as a first opportunity for students to get to know their cohort members and other first-years, professors, and second- and third-year students. 

On average, students in the Class of 2018 have eight years work experience in 35 industries at companies including Google, Apple, Disney, Wells Fargo, Target, Oracle, Chevron, Salesforce, and Genentech. The average age is 31; 29 percent of the class is women.

The weekend kicked off Friday with a welcome from Dean Rich Lyons and concluded Sunday with Lecturer Mark Rittenberg’s preview of his spring Leadership Communications course.

“The transformation among the class between Friday arrival to Sunday was phenomenal,” said Courtney Chandler, assistant dean of the EWMBA program. “So many students arrived as strangers and left as friends, who are now an integral part of the Haas community and feeling confident about starting the three-year program.”

Each day focused on a different Haas Defining Principle: Question the Status Quo, Confidence without Attitude, Students Always and Beyond Yourself, with sessions relating the principles to the curriculum. Breakout sessions addressed everything from financial aid to career management to the key resources required to succeed at Haas.

The 2018 class is diverse and multilingual; students represent 23 countries and speak 42 languages. Half the class is married; 43 students have children.

About 63 of the students work in technology/electronics, followed by 30 students in financial services/banking, and 25 class members in biotech/health services/pharma. About 56 students are engineers, while 33 students work in marketing or sales, and 25 students are in consulting.

Check out the winning Axe Cohort skit from orientation.

Finance Prof. Ben Hermalin has been named the new chairman of UC Berkeley’s Academic Senate.

Hermalin, the Thomas & Alison Schneider Distinguished Professor of Finance at Haas and a UC Berkeley economics professor, replaces Prof. Panos Papadopoulos as chairman. The appointment is effective on the first day of the fall semester.

Through the academic senate, the faculty determines academic policy; sets admissions conditions and the granting of degrees; authorizes and supervises courses and curricula; and advises the administration on faculty appointments, promotions, and budgets.

“I’m excited to be working with my senate colleagues and the administration during this crucial period in the university’s history,” says Hermalin, the former chairman of the UC Berkeley economics department. “The senate will be pursuing initiatives necessary to maintain our leadership during a time of budget cuts and policy changes.”

Hermalin, who joined UC Berkeley in 1988, served as the economics department chairman from 2005-2008, and as interim dean at Haas in 2002. His current research focuses on corporate governance, leadership, and Internet pricing.

“Ben brings a wealth of experience at Berkeley-Haas to his new role as chairman,” says Prof. Andrew Rose, who is Haas associate dean and chairman of the faculty. “We welcome his guidance and insights as the university tackles new challenges in the coming year.”

UC Berkeley’s Haas School of Business has inaugurated a new center to promote the school’s thought leadership in the vibrant, complex field of intellectual capital management.

The new Tusher Center for Management of Intellectual Capital was announced at Innovation and Competition: The Role of Patents and Copyrights, a conference held July 14 at UC Berkeley. The event was organized by Prof. David J. Teece, the Thomas T. Tusher Professor of Global Business, (pictured) who will also serve as the faculty director of the Tusher Center.

Thomas Tusher, BA 63, former Levi Strauss & Co. President and COO, and the Haas School’s Business Leader of the Year in 1996, established the center.

The center will address research, funding, and outreach related to intangible assets and long-run enterprise-level competitiveness. It will be housed at the Haas’s School’s Institute for Business Innovation.

In his opening conference remarks, Teece said that in today’s global economy, intellectual property, know-how, relational capital, brands, and corporate culture are often more important than tangible assets and financial capital.

“Tangible assets matter, but even in resource-rich places like Australia and North Dakota, the path to riches involves building and leveraging intangible assets,” he said. “These assets can anchor the long-run advantage of both firms and nation states.”

A primary concern of the Tusher Center is to transcend the complex fields of intellectual capital, including antitrust legislation, international trade, business strategy and organization, science and technology policy, and communications policy, Teece said.

The conference drew high-level experts from around the world. David Kappos, former under secretary of commerce for intellectual property and director of the United States Patent and Trademark Office, highlighted the conflicts between patents and antitrust laws in his keynote. Haas Adjunct Professor Henry Chesbrough, PhD 97, faculty director of the Garwood Center for Corporate Innovation, addressed the opportunities granted by open innovation. Chief policy officer and director for international affairs at the United States Patent and Trademark Office (USPTO) Shira Perlmutter also spoke.

For more information on the Tusher Center for the Management of Intellectual Capital, visit http://businessinnovation.berkeley.edu/intellectual-capital/tusher-center.

Joe Inkenbrandt was on a routine run with his jogging buddy in 2013 when he was struck by a great idea for a tech company.

The idea “was more of a pipe dream,” he says. “Neither of us had any experience starting companies.”

It wasn’t until Inkenbrandt, EMBA 14, (back row, second from right), began the new Berkeley MBA for Executives Program, that his idea shifted from pipe dream to possibility. Silicon Valley Immersion Week, organized and directed by entrepreneurship Prof. Toby Stuart, put Inkenbrandt in front of dozens of startups and CEOs, where he slowly realized that he might be able to do what they were doing.

Three months later, Inkenbrandt took the plunge, quitting his job as an engineer at a technology licensing company, to start Identify3D, building products that protect intellectual property during the digital manufacturing process. Former Ernst & Young Partner Stephan Thomas, whom Inkenbrandt met as a guest speaker in one of his entrepreneurship courses, joined him as co-founder, and is helping him build the company out — from the prototyping phase to fundraising.

He's not alone in his jump from EMBA to entrepreneurship. Sixteen of the program’s 68 Class of 2014 graduates are pursuing startup ventures. Some are in stealth mode, not ready to discuss ideas publicly, but other recent graduates are moving forward—from Inkenbrandt to Orion Parrott, founder and CEO of LendSnap, which simplifies the process of getting a mortgage; to Guochun Liao, CEO of IDbyDNA Inc., which aims to enable DNA-based identification of any life form on Earth and has built a demo DNA search engine.

Within the EMBA 2015 class, the trend continues. Five students are already working on new ventures and many more are in the planning stages. During a recent New Venture Finance class, Lecturer Maura O’Neill said 21 EMBA students raised their hands when asked who was working on an idea for a new company.

“It’s been an amazing journey to watch this group transition from “they do that” when visiting startups to “I do that” as they move through the program, says Mike Rielly, assistant dean of the MBA for Executives program. “These graduates have tapped everything from class work to field immersions to the resources at Berkeley-Haas to the deep networks they’ve developed to become founders themselves.”

Aside from teaching students essential skills, providing access to entrepreneurs, and helping refine their ventures, the EMBA program challenges students to test the mettle of their startup ideas.

LendSnap was among a cohort of companies admitted this year to the Berkeley SkyDeck startup accelerator, which immersed Parrott in the San Francisco Bay Area startup culture. “I know that the relationships I’m making here will continue to shape my own journey,” he says. Parrott also met several of the people working with him on Lendsnap through the Haas Alumni Network. One of his classmates is now both an advisor and an investor.

And the startups continue to roll out within the EMBA 2015 class. Stewart Wells’ new company, Alpine Artesian, plans to tap pure spring water from the Sierras to consumers. Wells says that Silicon Valley Immersion Week trips to Facebook, Google, and Airbnb for coursework enabled him to meet  company founders, which was inspiring. “The founders were very candid, sharing stories about how they put their money on the line,” he says. “Sometimes they’re failing and trying again, sometimes succeeding. It was a priceless experience.”

For Inkenbrandt, the emerging 3D market created a new opportunity to protect 3D printing and technology from licensing issues, and to help prevent the theft of IP and designs. He says that he could have never started Identify3D without the executive skills he gained at Berkeley-Haas in finance, accounting, marketing, and operations, as well as the entrepreneurship coursework.

But he also graduated with something equally critical.

“Berkeley-Haas gave me the confidence to do something I never thought was possible — and now I hope to inspire others,” he said.

- By Gabrielle Lu

By Kim Girard

The 246 students in the Full-time Berkeley MBA Class of 2017 were immersed in Haas culture this week with interactive games, leadership and diversity sessions, volunteer work, and alumni entrepreneur speakers.

Students welcomed three surprise visitors during orientation week, including Virgin America CEO David Cush, and Revolution Foods Co-founders Kristin Groos Richmond and Kirsten Saenz Tobey, both MBA 06.

Revolution Foods Co-Founders Tobey and Richmond

“Orientation has been overwhelming, refreshing, inspirational — and fun,” said Valerie Li, MBA 17, who is pursuing a career in investment management. Li said she chose Haas for its Bay Area location and for the program’s size. “This is a small community, which means it’s really close-knit, and I hope to form close relationships over the next two years.”

Second-year students and program staff put together a packed week for the Class of 2017, a diverse group that includes 41 percent women and 40 percent international students. The average student is 28 years old with five year’s work experience and an average GMAT score of 715.

The class includes a student awarded the Archbishop Desmond Tutu Leadership Fellowship as one of Africa’s 20 most promising young leaders; a student who led Special Forces team through Nepal and trained with Nepalese Army Rangers to improve country's stability and internal security; and a class member who led a team that developed a patented portable ventilation device that improves acute circulation in trauma patients.

"We Co-Own This School"

Each day of Week Zero focused on one of the Haas Defining Principles: Question the Status Quo, Confidence Without Attitude, Students Always, and Beyond Yourself. After an introduction to their two-year journey from the Program Office, Haas Career Management Group and the MBA Association on Monday, Haas Dean Rich Lyons greeted the students, urging them to embrace everything the school has to offer.

“From here on out, we co-own this school,” he told the students. “It’s this sense of co-owning and leaning in to one another that makes us stronger.”

Virgin America CEO David Cush Surprises Students

Students spent the morning working on their first case study on Virgin America, only to be surprised when Cush walked into Andersen Auditorium.

Cush discussed Virgin’s decision to enter the airline market in 2007, a move made by Virgin Group founder Richard Branson, who believed the airlines were poorly run and charged too much for flights. Despite intense competition and financial struggles early on, Virgin America has fought to add new destination cities and taken on the big airlines.

“What’s most gratifying right now is that we’ve moved from the bottom quartile to the top half of the pack and we’re going to keep pushing that forward,” said Cush, who answered many student questions about Virgin’s culture, hiring practices, innovation strategy, and competitive challenges.

Revolution Foods’ Tobey and Richmond shared how they started their company by building a network of supporters at Haas, including Lecturer William Rosenzweig—who remains an investor in their company—Adjunct Prof. Kellie McElhaney, and angel investor Dick Beers, who invested $50,000 after Revolution Foods placed first in the Berkeley-​​Haas Global Social 

“Every single piece of the equation we built here at Haas,” says Richmond, who serves as CEO of the Oakland-based company.

Early on, investors told them that their cost model was crazy and that they’d never be able to build a business around feeding healthy meals to low-income kids.

But having confidence without attitude and listening to the communities they serve helped them to stay true to their vision, Richmond said. Revolution Foods now serves more than a million healthy meals a week to public school students across the US and has raised more the $100 million.

Creating a Strong Foundation

In keeping with Haas’ hands-on and experiential approach, every Week Zero lesson was followed by action to bring the school’s values to life.  The activities, such as Game of Teams and the Cohort Olympics, focused on collaboration and building a sense of community that is such a critical part of the Berkeley-Haas experience.

Students also spent a morning fixing up a children's playground and gardens at the Alameda Point Collective, a housing organization that serves homeless and at-risk families. “Week Zero created such a strong foundation for my success during my first year,” said Isabelle Schuhmann, MBA 16 and Week Zero co-chair.  “”I feel honored to have played a role in creating a strong introduction for the incoming class and helping to set them up for success.”

Students working at the Alameda Point Collective

By Laura Counts

When classes start next week, the women who make up 41 percent of the incoming Full-time Berkeley MBA Class of 2017 will join last year's record-breaking class, bringing the total number of women in the program to a new high.

The full-time MBA program is now just under 43 percent female—which puts it at or near the highest among elite schools and represents a significant shift for a student body that was less than one-third female just two years ago.

School and student leaders say the shift both reflects and builds on their push for gender equity.

"We're thrilled that our Haas culture and climate is a place where women see themselves, and we're happy to welcome this new class of talented young women to our school," says Jo Mackness, senior assistant dean and chief strategy & operating officer.  "We can't wait to see what kind of leaders they'll become over their two years with us."

Mackness was at a meeting of 47 B-schools at the White House earlier this month, sharing the work Haas has been doing to increase the number of female MBA students and help them to succeed. At the meeting, which topped a year of work, the schools committed to a slate of best practices to close the B-school gender gap and cultivate leaders who can manage increasingly diverse workplaces.

Student-led Haas Gender Equity Initiative

Incoming students bond over tug-of-war at the orientation week Cohort Olympics.

At Haas, students have become a driving force in changing the composition of the school. Two years ago, after the proportion of incoming women in the full-time program dropped to 29 percent, a group of female and male students in the Class of 2015 embarked on an enhanced outreach campaign to new admits, working with admissions to boost the number of women in the class behind them.

"…We thought there would be no better place to lead change than the most progressive university in the country, at a business school that was founded by a woman over 110 years ago," said Katie Benintende, MBA 15, at the time.

Their efforts, which have grown into the Haas Gender Equity Initiative (GEI), contributed to a 50 percent year-over-year leap in the female composition of the class: 43 percent of the students who began the full-time program last fall were women.

This year, women also make up 43 percent of overall full-time student body—which includes 16 students (11 women) who are completing the final term of their joint MBA/MPH program or have returned from a leave.

FTMBA Class of 2017 students during a Week Zero coffee break

Rachel Park, who began the MBA/MPH program last fall and has become one of the leaders of the GEI, noticed subtle differences in her classes with fewer women.

"I chose Haas because the program so crisply articulated my personal values of diversity and inclusion, and I've met so many students here who embody our defining principles," she says. "Yet in my elective courses last spring that had fewer women, I noticed that I was more aware of how often I was speaking in class. Having a second class with a higher proportion of women will definitely impact classroom culture."

Student and school leaders have set their sights on deeper institutional change. Under the guidance of Adj. Asst. Professor Kellie McElhaney—who has long been a driver gender equity efforts at Haas—the student group has zeroed in on aspects of student culture, academic culture, and admissions that can be changed to better serve and support women.

Most of the changes require longer-term effort, but students also found some low-hanging fruit: after noticing that many of the traditional MBA fundraisers—such as No-Shave November—were male-centric, they asked the design club to give the events a makeover. They piloted Lean-In Circles and engaged "manbassadors" to encourage more men to attend Women in Leadership club programming, and they incorporated some of their insights—such as encouraging clubs to bring in more female speakers—into orientation materials for the Class of 2017.

“We’re developing leaders who are empathetic and inclusive, and who can create the space to allow diverse perspectives to flourish,” says Stephanie Fujii, assistant dean for the FTMBA Program and Admissions. “What’s been really powerful for me is to see how raising awareness around gender dynamics has led to changed behaviors, in particular our students' willingness and courage to have difficult, uncomfortable conversations.”

Prof. Patricia Dechow has won the 2015 Distinguished Contribution to Accounting Literature Award, for research that developed a measure to determine the quality of earnings.

Dechow co-authored the paper, The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors, with Emory University Prof. Ilia D. Dichev.

The American Accounting Association (AAA) award recognizes high quality accounting research that has significantly impacted the discipline for at least five years. Dechow and Dichev’s earnings-quality measure has been used by researchers, practitioners, and regulators to identify poor quality earnings.

Their article, published in The Accounting Review in 2002, has received more than 2,500 citations, according to Google Scholar.

Both Dechow, the Donald H. and Ruth F. Seiler Chair in Public Accounting at Haas, and Dichev, who teaches at Emory’s Goizueta Business School, were honored with unique glass-art pieces (pictured, above) and $2,500 at an AAA ceremony in Chicago earlier this month.

Their research focused on the relationship between accrual adjustments, such as accounts receivable and accounts payable, and earnings. These adjustments help make earnings a better measure of performance, but they are also subject to management manipulation and forecast errors.

“What our paper does is look at these accruals and how they map into past, present, and future cash flows,” Dechow explains. Those that map well represent high quality earnings. Those that don’t—due either to the nature of the firm’s business or deliberate manipulation—signal less reliable earnings numbers, she says.

The award is Dechow’s second from the AAA for exceptional research in six years. In 2010, she received one of two inaugural Distinguished Contributions to Accounting Literature awards for a 1996 paper on earnings manipulation and corporate governance.

A new class of undergraduate students—ranging in age from 18 to 58—arrived at Haas Monday for orientation, where they were immersed in school culture, absorbed career advice, and met their new cohorts.

Erika Walker, assistant dean of the undergraduate program, Dean Rich Lyons (below), Professor Todd Fitch, and staff welcomed the incoming class.  “We're really bringing the students into our community today, having a bit of fun, introducing them to their vast network and resources, and beginning their lifelong connection with Berkeley-Haas,” Walker said.

An introduction to the undergraduate cohort leaders and the president of the Haas Business School Association followed. After a Top Dog lunch and student organization poster sessions, the students were greeted by Haas alumni and introduced to the UC Berkeley Career Center, learning the "do's and don'ts of the job search."

The incoming class includes 297 continuing UC Berkeley students and 88 students—selected from 1,831 applicants—who are transferring into the program from other local colleges.

The continuing UC Berkeley students were selected from 689 applicants, making the program among the most competitive on campus. The continuing Berkeley students have an average GPA of 3.7, while the transfer students earned an average 3.87 GPA at their previous schools. In addition to their stellar academic records, the students were selected for a good fit with Haas culture.

The class is comprised of 51 percent women among UC Berkeley students and 40 percent among transfer students. Minorities represent 68 percent of the class. Read the full class profile here.

The day ended with a backpack distribution to all new students, who started classes yesterday, and an alumni networking ice cream social.

A diverse group of nine new assistant professors is joining the Haas School of Business this fall.

New faculty members, whose research spans from studying cardiac surgeons' performance reports to researching the long-term effects of affirmative action on companies’ hiring policies, will help enrich the school’s thought leadership in a wide range of disciplines.

Having earned their PhDs at the some of the world’s most prestigious institutions, they say they chose to join the Haas faculty for both the school’s rich research ecosystem and its teaching excellence.

“I wanted the opportunity to teach at a smaller business school where students want to understand complex industries and improve the way they work, both for profit and to do good, “ says Asst. Prof. Jonathan Kolstad, who comes to Haas from Wharton and teaches economic analysis and policy. “I am also here because of the caliber of applied economics research at Haas.”

“Our new assistant professors are fabulous,” says Associate Dean for Academic Affairs and Chair of the Faculty Andrew Rose. “We are simply delighted to welcome such a promising group of young talent.”

Pictured clockwise from left:

Conrad Miller: Economic Analysis and Policy
PhD: MIT, Economics
Areas of expertise: labor markets; hiring; job networks; spatial frictions
Fall semester class: Data and Decisions

Yiangos Papanastasiou: Operations and Information Technology Management
PhD: London Business School
Areas of expertise: social learning; crowdsourcing; strategic information transmission

Hoai-Luu Nguyen: Fisher Center for Real Estate and Urban Economics
(*Currently a postdoctoral fellow; will teach in 2016-2017)
PhD: MIT, Economics
Areas of expertise: banking; local credit markets; small business lending

Raul Sanchez de la Sierra: Business and Public Policy (will teach in spring)
PhD: Columbia Business School
Areas of expertise: political economy of development, economies in weak states, private sector and violent groups

Juliana Schroeder: Management of Organizations
PhD: The University of Chicago Booth School of Business
Areas of expertise: social cognition; judgment; decision-making
Fall semester class: Introduction to Organizational Behavior.

Jonathan Kolstad: Economic Analysis and Policy
PhD: Harvard University
Assistant Professor, The Wharton School of the University of Pennsylvania
Areas of expertise: cconomics (health, public and industrial organization); incentives and motivation (particularly of physicians); consumer decision making in complex markets (e.g. insurance); methods to use large-scale data. 

Ellen Evers: Marketing
PhD: Tilburg University
Postdoctoral Fellow, The Wharton School of the University of Pennsylvania
Areas of expertise: how the human tendency to group and categorize affects judgment and decision making.
Fall semester class: Customer Insights.

Omri Even Tov: Accounting
PhD: University of California, Los Angeles
Areas of expertise: corporate bond market; sell-side analysts; mergers and acquisitions
Fall semester class: Financial Accounting

Mathijs de Vaan: Management of Organizations
PhD: Columbia University, Sociology
Areas of expertise: networks analysis; economic sociology; health economics.
Fall semester class: Leading People
 

This is part of an occasional series of articles spotlighting students and recent graduates who are working with Berkeley-Haas to start a new business or social enterprise.

Seniorly

Co-founders: Arthur Bretschneider and Sushanth Ramakrishna, EWMBA 16

When Berkeley-Haas Evening & Weekend MBA students Arthur Bretschneider and Sushanth Ramakrishna got to talking during their carpool from San Francisco two years ago, they were already applying the Haas defining principle Question the Status Quo.

Bretschneider, MBA 16, whose family had worked in the senior housing business, saw firsthand how hard it can be to find and evaluate senior facilities for aging loved ones. He and Ramakrishna, MBA 16 and a former lead engineer at Salesforce, took advantage of their commute to put their heads together and come up with a solution.

In January, the two formally launched Seniorly, a website that streamlines the search for senior communities.

“Senior housing is a highly fragmented industry with a lot of small- and medium-sized businesses that are not yet online,” Bretschneider said, adding that 70 percent of the businesses lack websites. “Families spend hours and hours searching for the right community—it’s a painful process.”

Using Seniorly’s search filters, family members quickly narrow down options based on preferences. The website includes photos and videos of facilities—visited in person by a Seniorly staff member—as well as a Resource Center that provides an overview of options, links to the Department of Social Services Community Licensing Division, and connection to a staff gerontologist.

The website is free to users but charges a referral fee to housing providers.

Bretschneider reports that more than 10 percent of Bay Area non-medical senior housing facilities are now on the Seniorly website. The startup, now with seven staff members, has expanded its services to Sacramento, secured a round of angel financing, and is actively involved in its seed round.

Bretschneider and Ramakrishna found much at Haas to help them launch their company. Lecturer Clark Kellogg’s Problem Finding Problem Solving (PFPS) class was especially influential with refining the company's messaging and positioning, according to Ramakrishna.

But the co-founders’ peers at Haas were perhaps their most valuable resource. “Berkeley-Haas is filled with smart people who are generous with their time and thoughts,” Ramakrishna says. “Our peers in the EWMBA program have helped us many times.”

—Karen Sorensen

Realiteer

Co-founder Shuo Zhang, EWMBA 16

Product testing: Realiteer Co-founder Fangwei Lee's son tries out the company's first game, GermBuster.

Virtual reality promises consumers mind-blowing visual experiences. Trouble is, it’s really expensive to invest in a headset and all the different controllers needed to create hyper-realistic experiences.

Shuo Zhang, EWMBA 16, and Fangwei Lee, a Carnegie Mellon graduate who formerly led a visual effects team at DreamWorks, wanted to change that—and bring virtual reality to the masses by building an inexpensive system. They’ve managed to do it with two humble materials: cardboard and recycled plastic.

The idea for Realiteer started when Lee’s little boy grew fascinated with bubble guns and Lee became fed up with cleaning them and replacing broken ones. So he set out to create a virtual reality bubble-blowing toy. His raw materials? A recycled diaper box and a mobile phone—running a virtual reality software he coded from the ground up.

When Lee shared his prototype with Zhang in early May, Zhang immediately realized its potential. The friends teamed up to develop and launch the company’s first product: RealTrigger.

RealTrigger is a hand-tracking device made from renewable plastic or cardboard that—when used with a mobile phone and the company’s RealViewer software—is transformed into a virtual reality system. Real Trigger, available on the company’s website, costs just $5. Customers can also buy both the RealTrigger and RealViewer Starter Kit for $10.

Here’s how it works: Users can mount a mobile device into the cardboard RealViewer and secure it to their face to play Realiteer’s first downloadable game, GermBuster VR. The goal is to shoot and kill germs with the virtual bubble gun. (Germbuster VR is free on both Android and iOS.)

Although it's designed for kids, the game is fun for adults too, says Zhang.

Zhang, who leads funding efforts and builds the company’s partnerships while also helping with product design, said Haas provided him with the skills, confidence, and courage to quit his full-time job at Genentech to grow the start-up.

The risk has already started to pay off. Realiteer is now a portfolio company of the early-stage seed fund and accelerator program 500 Startups, founded by PayPal and Google alumni. The company won the “Best in Class” award at the 2015 Bay Area Maker Faire.

But Zhang says what's been most gratifying is the positive reaction to their product. “When I see smiles from everyone who tries it, I know that we have something truly special," he says.

More on Realiteer on YouTube.

—Gabrielle Lu & Kim Girard

Crayon Crunch

Co-founder and head of print operations: Kai Schmittat, BS 15
Co-founder and CEO: Tim Osterbuhr, BS 15

(Pictured with Co-founder Friederike Geiken, lead engineer and creative director)

When Kai Schmittat and Tim Osterburhr, BS 15, co-founded Crayon Crunch at Haas last year, both were intrigued by the idea of creating the most technologically advanced children’s books ever printed—but with a twist.

They imagined books that portrayed kids of all ethnicities, shapes, and sizes; kisa who used wheelchairs or wore prosthetics or thick eye glasses.

“We realized that the children who would benefit the most from our books are really these children who don’t have the opportunity to see themselves in a book, or see themselves as normal because the media focuses on the majority,” says Schmittat, the company’s head of print operations and the father of 2-year-old Levi, who was born during Schmittat’s first semester at Haas.

On the Crayon Crunch website, customers use drop-down menus to create a lead character, customizing hair color and style, eye color, skin tone, facial features, clothing, and special needs.

In Crayon Crunch’s first book, My Magical Adventure, the main character takes a journey to find a key to open a magical box in an imaginary world—and learns along the way about the value of giving to other people and believing in oneself. The child can read a special letter written by a parent or loved one at the end of the book.

Schmittat, Osterbuhr, who is CEO, and San Francisco State University graduate Friederike Geiken, lead engineer and creative director, have all left their full-time jobs to focus their energy full-time on Crayon Crunch. Since graduating, the founders have launched a Kickstarter campaign that raised almost $12,000—surpassing their $10,000 goal.

Schmittat says the company’s social mission evolved at Haas, and particularly in a course on corporate responsibility. The startup is already giving back by hiring three Berkeley-Haas interns to work with them.For Schmittat, Crayon Crunch will continue to question the status quo. “The publishing industry has been doing the same thing for years,” he says. “We asked: What are they missing? We dared to ask questions and came up with an answer by developing something new.”

The company will begin printing My Magical Adventure for the public in mid-September, and ship worldwide.

—Gabrielle Lu & Kim Girard

The fall Dean’s Speaker Series kicks off next week with a high-profile lineup of seven leaders with ties to Berkeley-Haas and the Bay Area—including the former U.S. Secretary of Energy, a top Golden State Warriors executive, and a Silicon Valley software pioneer.

The series starts on Tuesday, Sept. 8, with a talk from branding and advertising trailblazer Kevin Roberts, executive chairman of New York advertising agency Saatchi & Saatchi. Roberts (pictured, top left) will discuss creative leadership, “a supercharged approach to success in today's turbulent environment.” He speaks at 12:30 p.m. in the Wells Fargo Room.

The rest of the fall lineup (clockwise from Roberts):

Stephen Chu, PhD 76, Nobel Laureate, former U.S. Secretary of Energy, and UC Berkeley physics professor

Friday, Sept. 11, 12 p.m., Andersen Auditorium
Chu will speak on the challenges and opportunities climate change presents, a topic former Vice President Al Gore addressed during the Dean’s Speaker Series last spring. Chu is the former director of the Lawrence Berkeley National Laboratory.

Peter Flint, co-founder of real estate website Trulia and board member of the Zillow Group

Thursday, Sept. 24, 12:30 p.m., Wells Fargo Room
Flint will share his story of starting and scaling an online real estate business in the Bay Area, by questioning the status quo within a traditional and heavily regulated industry.

Mitch Kapor, founder of Lotus Development Corp.

Monday, Oct. 5, 12:30 p.m., Wells Fargo Room
Following his talk, Kapor will meet one-on–one with Haas students involved in social innovation.

Rick Welts, president and chief operating officer of the Golden State Warriors, the 2015 NBA champions

Tuesday, Oct. 13, 12:30 p.m., Wells Fargo Room.

Joy Chen, BS 87, H20 Plus chairman and CEO

Wednesday, Nov. 4, 12:30 p.m., Wells Fargo Room.

All events are free and open to the public, although advance registration is required and priority is given to Haas students, staff, and faculty. Registration typically opens seven to ten days before the event.

Every spring and fall, the Dean’s Speaker Series brings to Haas distinguished leaders from around the world in various business, government, and social sectors to share their experience and views on innovative leadership. The talks are made possible in part by the Mary Josephine Hicks Distinguished Speaker Series Fund.

Learn more and register here.

UC Berkeley’s Haas School of Business has announced its entry into a cooperative arrangement with Philanthropy U, which provides free online training to thousands of people and organizations working to achieve social good.

Photo: (L-R) Dean Rich Lyons; His Excellency Amr Al-Dabbagh, chairman and CEO of Al-Dabbagh Group and Philanthropy U founder; Prof. Laura Tyson, director of the Institute for Business & Social Impact; and UC Berkeley Chancellor Nicholas Dirks, at last week's signing ceremony for the Philanthropy U/Berkeley-Haas collaboration.

Philanthropy U is a new, nonprofit entity that is the concept developer and sponsor of Philanthropy University.  More than 100,000 people globally have enrolled in less than three weeks for the initial seven courses.

According to the agreement with Philanthropy U, Berkeley-Haas will incubate Philanthropy University, a free educational non-degree granting initiative, with the first of seven non-credit/degree courses covering key skills such as fundraising, strategic planning, and scaling for impact will be offered, beginning at the end of the month.

More than 100,000 people have already registered for Philanthropy University’s inaugural courses.

Berkeley-Haas is playing a crucial role in the creation of Philanthropy University, which focuses on how to perform social sector work for measurable impact. Berkeley-Haas will also certify that students have met course requirements by awarding a statement of accomplishment and a certificate of completion in social sector leadership to those who complete all seven classes.

The Institute for Business & Social Impact (IBSI) and the Center for Social Sector Leadership (CSSL) at Berkeley-Haas will lead these efforts.

The Philanthropy University initiative was envisioned by His Excellency Amr Al-Dabbagh, chairman and CEO of Al-Dabbagh Group, a global business based in Saudi Arabia. He founded  Philanthropy U as part of the company’s giving activities.


In addition to Philanthropy University, three other strategic philanthropic efforts comprise the giving of the Al-Dabbagh Group, including Stars Foundation, a UK-registered charity supporting disadvantaged children around the world; the Philanthropreneurship Forum, an annual multi-sector gathering focused on the next generation of best practices in philanthropy; and Game Changing Initiatives, programs that align the Group’s companies’ community engagement activities with its philanthropic vision in a scalable, impactful, sustainable and game-changing nature.

“Imagine a workforce of social-change professionals who are primed, positioned, and skilled to impact the lives of millions of people and effectively change the world with their work. This is the vision of the Philanthropy University initiative,” Al-Dabbagh says.

Teaching will be team-based and focused on experiential learning, enabled by the social learning platform NovoEd, which is designed to promote vibrant online learning communities.

The goal is to reach and teach hundreds of thousands of NGO leaders, whose work will benefit 100 million people globally by 2020.

“The Philanthropy University initiative offers leaders in the social sector opportunities to strengthen their skills and grow their network of peers and mentors, ultimately increasing collaboration and efficiency and leading to a greater impact in the world,” says Professor Laura Tyson, IBSI director and chair of the Philanthropy University Advisory Committee. “Berkeley-Haas is proud to spearhead this new effort to achieve new levels of success in social impact.”

“The cooperation between Berkeley-Haas and Philanthropy U is a powerful, game-changing alliance for social impact,” says Ben Mangan, CSSL's executive director. “We’re testing new ways to scale learning and collaboration and removing so many of the barriers that have kept people  worldwide from getting the tools they need to solve some of the world’s biggest problems”.

Berkeley-Haas will provide faculty to teach some courses, as well as source faculty from other top universities, and integrate the program with IBSI's Global Social Venture Competition (GSVC).  Instructors include Shashi Buluswar, lecturer at Berkeley-Haas; Jessica Jackley, co-founder of kiva.org; Erik Simanis of Cornell University and Paul Brest, dean emeritus, Stanford University and chair of Philanthropy University’s Curriculum Committee.

Starting in late 2016, all participants will have access to share their work online, using an open innovation platform, based on the concept of Berkeley-Haas professor Henry Chesbrough, PhD 97, named one of the Top 50 Thinkers in the world by global rankers at Thinkers 50.

Initial class offerings and start dates are:

Starting Sept 29:

Global Social Entrepreneurship

Essentials of Nonprofit Strategy

Organizational Capacity: Assessment to Action

Starting Oct 6:

How to Scale Social Impact

Leadership: 10 Rules for Impact and Meaning

Starting Oct 13:

Financial Modeling for the Social Sector

Fundraising: How to Connect with Donors

Learn more and register today at www.philanthropyu.org.

Education pioneer Patrick Awuah, MBA 99, founder of Ghana’s Ashesi University, has been named a fellow of the John D. and Catherine T. MacArthur Foundation.

Awuah, 50,  is one of 24 fellows to receive the so-called “genius grant,” awarded to people “who have shown extraordinary originality and dedication in their creative pursuits and a marked capacity for self-direction.”

Awuah overcame many obstacles to launch Ashesi University in 2002 as the first Ivy League-style school in his native country. He had arrived at Berkeley-Haas after nearly a decade at Microsoft, and was looking to do something more. He developed the idea for Ashesi in the International Business Development (IBD) program.

The nonprofit university’s mission is to educate ethical, entrepreneurial leaders who will help transform Africa.

The MacArthur Fellows Program awards “no strings attached” grants to extraordinary people. The fellowships come with $625,000 stipends paid out over five years. This year’s “genius award” winners also include University of California, Berkeley, Prof. Peidong Yang, a chemist who is trying to capture carbon dioxide from the air and turn it into a sustainable transportation fuel.

“These 24 delightfully diverse MacArthur Fellows are shedding light and making progress on critical issues, pushing the boundaries of their fields, and improving our world in imaginative, unexpected ways,” said MacArthur President Julia Stasch. “Their work, their commitment, and their creativity inspire us all.”

Awuah certainly personifies commitment and inspiration. He left Ghana in 1985 with $50 in his pocket and a full scholarship at Swarthmore College. He rose through the ranks at Microsoft to become a program manager, but after the birth of his first child he decided to turn his focus to making a difference in Africa.

"Being a father of someone who was a member of a new generation of Africans I felt I needed to return and be a contributor to Africa's rise for the sake of my children and for the sake of my children's children," Awuah said in his MacArthur announcement video (below). Most problems Africa faces are related to leadership, he said, noting that some of the leadership is corrupt. "I felt if we could change the way that that group is educated then we would change the continent," he said.

Above: Evening & weekend Berkeley MBA students, pictured with Awuah, on a consulting trip at Ashesi in 2014. They were the 10th Haas team to consult at the university.

It took extraordinary persistence to found Ashesi, which required Awuah to question Ghana’s status quo—dominated by large public universities and rote learning. Ashesi’s graduates are continuing to buck the status quo: while an estimated one-third of African professionals leave Africa, nearly all of Ashesi’s grads have stayed.

In 2012, as Awuah celebrated Ashesi’s 10th anniversary, Haas awarded him the school’s Leading Through Innovation Award. “Patrick Awuah has gone beyond himself, questioning the status quo with a bold mission to develop a generation of ethical, entrepreneurial leaders with the courage to transform a continent,” says Dean Rich Lyons. “We couldn’t be more proud of his vision and tenacity.”

Awuah was named to Fortune's list of the world's 50 greatest leaders in March 2015—joining Pope Francis, Bill and Melinda Gates, and Mark Zuckerberg. The list honors "extraordinary men and women who are transforming business, government, philanthropy, and so much more."

Three other new MacArthur Fellows have UC Berkeley connections. William Dichtel, professor of chemistry and chemical biology at Cornell University, received a Ph.D. from the College of Chemistry in 2005. John Novembre, a computational biologist and associate professor of human genetics at the University of Chicago, received a Ph.D. in 2006 while working with Montgomery Slatkin in the Department of Integrative Biology. Gary Cohen, a cofounder and president of Health Care Without Harm in Reston, Virginia, studied at UC Berkeley between 1983 and 1984.

"I hope that being a MacArthur Fellow helps me to connect with other people who are moving the needle in the world and this will help further the work I'm doing," Awuah said.

Watch Awuah's announcement video here:

JC Penney implemented a “best price” strategy in 2012, assuming consumers prefer fair, everyday prices as opposed to sale prices that are discounted from original, inflated prices. It was wrong. Longtime customers—loyal fans of sales and coupons—rejected the new pricing policy, and JC Penney reinstated its old pricing model that included frequent discounts.

In contrast, retailers like Zara, which sells women’s and men’s clothing, relies on a low rate of discounting and low stock replenishment or high product turnover. If customers don’t buy a new product right away, it may disappear before they commit to buy.

But there is a third pricing strategy that incorporates the benefits of both approaches and allows the retailer to better match supply with demand. The “discount-frequently” pricing strategy allows retailers to charge high prices when demand is high and is flexible unlike an “every day low price” strategy or “static pricing.”

“A firm that cares about attracting customers to the store as well as maintaining the flexibility to match supply with demand would benefit from the discounting frequently policy,” says Pnina Feldman, assistant professor at UC Berkeley’s Haas School of Business, Haas Operations and Technology Management Group.

In the paper, “Price Commitments with Strategic Consumers: Why it can be Optimal to Discount More Frequently … Than Optimal” (Manufacturing and Service Operations Management, July 2015), Feldman and co-author Gérard P. Cachon, The Wharton School, University of Pennsylvania, found the discount-frequently strategy proved to be the most optimal.

The findings are based on game theoretic models that compared expected revenue and profits within different pricing strategies. All of the models assumed that customers incur a purchase “cost”—time and effort—to physically shop at a store and will only go shopping when they think it will be worth their while.

Typically a retailer may increase prices when demand is high, or lower prices when demand is low. This is called “dynamic pricing.”

When a retailer discounts prices frequently—even in cases where they would rather charge a high price—Feldman says customers are more likely to visit the store because they value the discounts. At the same time, by not committing to an “every day low price,” it can still raise prices if demand turns out to be very high, and their customers will not abandon them. In this scenario, customers understand that demand may be high so they may not get a big discount; but given the store’s history, they believe they are not being taken advantage of so it’s worth it to continue to shop that store more.

The researchers also contend that customers are equally as strategic as merchants. The discount-frequently strategy is good, says Feldman, if the merchant wants to get more customers to visit the store. Customers may also delay their shopping in anticipation of future discounts. If the latter behavior is more important to the retailer, discounting frequently may not the optimal strategy.

“Committing to discount frequently maximizes revenues by balancing the trade off between dynamic and static pricing,” says Feldman.

 “The discount-frequently strategy is about making commitments without sacrificing flexibility. Retailers think of dynamic pricing as charging the best prices to match supply and demand, “ says Feldman. “But by implementing a dynamic pricing strategy that makes no price commitments, retailers do not take into account today’s smart and savvy customers who will visit the store less frequently if they can’t depend on good prices and product availability.”

Berkeley-Haas will strengthen entrepreneurship support for its students, including providing $100,000 in seed funding for Haas student startups this year, Dean Rich Lyons announced today.

In addition to seed funding, Berkeley-Haas plans to enhance its offerings for both MBA and undergraduate students who wish to learn more about entrepreneurship, or are already working at startups or founding their own companies.

“Our student entrepreneurs are already thriving within the Berkeley-Haas and Bay Area startup ecosystem,” says Lyons (pictured). “This new effort will continue to build on and expand that success, creating a new generation of leaders who will be mixing with alumni and giving back to the entrepreneurial ecosystem.”

Berkeley-Haas will pool a variety of resources from across the Haas School to integrate entrepreneurial thinking throughout the Haas student experience under a new umbrella organization, called the Berkeley-Haas Entrepreneurship Program (BHEP).

Those resources include:

• The Dean’s Startup Seed Fund, which will provide $5,000 grants to early-stage startups that include Haas students. The grant money will be used for prototype development and customer discovery activities.
• A new industry specialist in the Career Management Group who will advise students interested in working at startups.
• Competitions for both later-stage startups through LAUNCH: the Berkeley Startup Competition and for early-stage, social impact ventures through the Global Social Venture Competition (GSVC). LAUNCH will add also a later-stage social impact track.
• Greater interconnection between the UC Berkeley and UCSF science programs to encourage cross-disciplinary innovation. (A pilot project pairs UCSF faculty with selected Berkeley-Haas MBA students for short projects designed to assess, validate, or generate business ideas.)
• Exceptional educators who teach entrepreneurship at the Haas School across programs.
• Lean Launchpad, a training platform for innovators, developed by Berkeley-Haas Lecturer Steve Blank.
• Collaborative projects such as SkyDeck, a multidisciplinary startup accelerator located at UC Berkeley.

• Mentorship programs and mixers that draw heavily on the Haas Alumni Network and broader Berkeley community to connect current students with entrepreneurs and those working in related industries.

Students will continue to access events and services through the Lester Center, which was founded in 1992 with a $1 million gift from the late Howard Lester, past CEO and chairman of Williams-Sonoma, Inc.

The Lester Center will now be part of the Berkeley-Haas Entrepreneurship Program, and will focus entirely on student-facing activities and events. Those include the startup competition LAUNCH, which offers $50,000 in prize money; hackathons and other experiential learning opportunities such as the Venture Capital Investment Competition (VCIC); and Big Ideas@Cal.

The Lester Center will also manage the Dean’s Startup Seed Fund. To be eligible for grants from the new fund, teams must include at least one current Berkeley-Haas MBA or undergraduate student.

Applications are due online on December 4, 2015.  Half of the seed grants will be distributed in December, and the other half in May.

Grant winners will be selected by a committee comprised of faculty and Institute for Business Innovation leadership, along with investors and leaders from the Berkeley entrepreneurship ecosystem. Details on how to apply at entrepreneurship.berkeley.edu.

“We’re improving and redefining how we engage with the entrepreneurial needs of our students,” said Rhonda Shrader, MBA 96, who will oversee all student-related services within BHEP. “Through BHEP, we will continue to support students who are interested in entrepreneurial goals that range from participating in their first hackathon to accelerating a startup to seed funding.”

Professor Toby Stuart will remain as faculty director of the entrepreneurship program.

Andre Marquis, MBA 96, current executive director of the Lester Center, will take on a greater role (soon to be announced) that engages large enterprises interested in lean venturing methods.

More at entrepreneurship.berkeley.edu.

A few members of the new wave of Berkeley-Haas entrepreneurs, clockwise from top left:

• Smartbod Co-founder James Wang, FTMBA 15 (at work with Co-founder Arlene Hadi)
• WeTravel Founder & CEO Johannes Koeppel and Co-founder Zaky Prabowo, both FTMBA 15
• Lendsnap Founder & CEO Orion Parrott, EMBA 14
• Realiteer Co-founder Shuo Zhang, EWMBA 16
• Xendit Founder & CEO Moses Lo (right), and Co-founder & COO Vivek Ahuja (2nd from right), both FTMBA 15
• Crayon Crunch Co-founders Kai Schmittat & Tim Osterbuhr, both BS 15
• Localwise Co-founder Maya Tobias and Co-founder & CEO Ben Hamlin, both FTMBA 15

What if technology could help doctors forecast spikes in particular illnesses—say, the flu—and prepare them to provide better care? There could be an app for that, which is why a team of students have shaped this year's Berkeley-Haas Healthcare Conference around the themes of technology and innovation.

More than 400 students and industy professionals are expected for the 9th annual conference at UCSF's Mission Bay Conference Center on Nov. 6.

"This year, we're focusing on how technology innovation and design can change the future of healthcare—for example, using data analysis to predict when patients will require care over the course of their lives," says Ramya Babu, MBA 16, and marketing co-chair for the Haas Healthcare Association, which organized the conference. "Our goal is to highlight the connection between industry research and healthcare practice through the use of digital technology."

Along those lines, the conference will feature a digital design challenge focused on Type 2 diabetes. The contest is unfolding in three stages: a hackathon on Oct. 24, where teams developed concepts to help healthcare providers and patients prevent and manage the disease; a best-pitch competition at the conference itself; and a final judging of design prototypes next spring. The first-place teams at each stage will be rewarded with $1,000, $2,000, and $5,000 prizes.

Babu says organizers worked hard to bring in a wide range of speakers and panel topics. "The conference is much more diversified this year than in previous years," she says. "We also want to emphasize entrepreneurship, and give attendees opportunities to meet people in the healthcare field."

Dr. Bob Wachter, interim chair of medicine at UCSF and author of the new book Digital Doctor: Hope, Hype and Harm at the Dawn of Medicine Computer Age, will give the opening keynote. Throughout the day, six panels will address topics from the growing pains involved in starting a digital health venture to the role of technology in serving vulnerable populations. In between, hackathon participants will present their pitches and current healthcare startups will showcase their ideas.

Jennie Chin Hansen, an elder care expert and former CEO of the American Geriatrics Society, will give the closing keynote before the conference wraps up with a reception and career expo.

Early bird ticket discounts are available here through Oct. 26.

—Kate Madden Yee

By Charles Cooper

Researchers recently gathered in the basement lab of the Li Ka-Shing Center for Biomedical and Health Sciences at UC Berkeley to catch a glimpse into the future of marketing. 

From all signs, the future points to brain scans, which promise to one day take some of the guesswork out of the field.

“We are trying to put numbers on some of the most difficult and intangible features of business: people’s thoughts and feelings,” says Ming Hsu, assistant professor in the Berkeley-Haas Marketing Group, (pictured below), who runs the Neuroeconomics Laboratory at UC Berkeley. “We’re using technology to quantify and measure what used to be thought of as qualitative or ephemeral.”

Hsu is on the bleeding edge of a relatively new research field, combining techniques borrowed from neuroscience, psychology, and economics into a single approach to learn how people make personal choices.  

“Understanding how consumers think is fundamental to marketing and business,” he said. “If we can advance the current state by even a little bit, it would have a big impact.”

While Hsu’s recent research spans from the link between honesty and the prefrontal region of the brain to how altering brain chemistry can make us more sensitive to inequality, the focus of this particular study is on how people think about brands.

Overall, Hsu’s research has a broader goal - to understand how consumers actually think and act.

“Even with the incredible changes in brain-scanning technology, neuroscientists have been restricted to offering marketing insights that are either too clumsy or too indirect,” says Leif Nelson, the Ewald T. Grether Professor in Business Administration & Marketing at Haas. “What Ming does is, for the first time I think, catch neuroscience up to the desires of marketing professionals."

Searching for truth

Participants in Hsu’s studies have their brains scanned by a functional magnetic resonance imaging machine (fMRI). The idea is to study how dynamic changes in brain activity (thus, the the term fMRI) reflect and produce human thoughts, memories, and feelings.

Changes in neural activity results in vascular changes that have tiny effects on the magnetic properties of the brain, which are then picked up by the scanner. In this study, the goal is to address a fundamental and almost existential issue facing marketing, whether what people say matches what they actually think about well-known brands such as Apple, Disney, Ikea, BMW, and Nestle.

Once the test begins, Hsu’s team projects different brand logos on a screen and the volunteers are asked to think about what they see. All the while, the scanner is working in the background scanning their brain.

Then the real work begins as Hsu and his team pore through the data. Each brain scan involves tens of gigabytes of data and some of the bigger experiments even measure in the terrabyte range. The researchers search for links between the brain activity and what the volunteers saw on screen. They watch to see whether the scans captured something about the way the brain processed responses to the different brands mentioned during the experiment and whether they triggered a particular pattern of brain activity.

“People say a lot of things, a lot of which are true but some are not,” according to Hsu. “We want to develop ways to separate these.”

The road to Haas

Hsu, who was born in Shanghai, moved to Arizona when he was 10 with his family. Hsu later matriculated, where he studied political science as an undergraduate at University of Arizona. But his academic future took a decisive turn when he attended a presentation by economics researchers explaining the use of fMRI to advance the understanding of game theory.  

“There was this presentation about scanning people’s brains while they played economic games,” he says. “That’s when a light bulb went off in my head. I had never heard of anything like this and was pretty sure that not much was being done with it. The idea made so much sense. It sounded like such a neat way to ask questions and I would love to know what the answers were.”

He immersed himself in neuroscience and cognitive neuroscience. The deeper Hsu got into the subject, the more he saw the possibilities for using brain imaging techniques to gain a more coherent understanding of human economic behavior.

“By the mid-2000s, people realized that it’s not just a dream. But that we can actually do it,” he said.

After getting his PhD in Economics from the California Institute of Technology, Hsu arrived at the Haas School in 2009, where he began to put his ideas into practice.

“I didn’t have much of a marketing background but Haas was willing to take the risk,” Hsu recalled.

Peering over the horizon

Neuromarketing is a relatively new discipline that only began gaining traction in academia in the middle of the last decade. And as with any new field offering bold claims, it’s engendered skepticism and some controversy.

Some critics question whether the field can deliver on its promises. In a widely-read 2005 article, Princeton economists, Faruk Gul and Wolfgang Pesendorfer, dismissed the value of brain scans and attacked neuroeconomics as offering “no challenge to standard economic methodology.”

The other criticism centers on the ethics of peering into consumers’ brains and sharing insights with corporations.

Hsu said much of the negative reaction is based on an assumption that if you hand companies this technology, they will exploit it.

“I don’t know whether it’s because some people have a fondness for dystopian science fiction,” he said. “But with new technology, the first reaction is often, `This will result in something terrible.’ But that tends to ignore the possibilities improving our lives as consumers.”

He said neuromarketing techniques can help companies to better understand and serve their customers with improved products and service that are more closely attuned to consumer desires. Instead of taking a participant's response at face value, Hsu's team can actually check whether what someone says actually corresponds with what they're thinking.

That could prove to be a boon for marketers, who now must sift through reams of often contradictory information compiled from focus groups, surveys, social media, and dozens of other data sources, and figure out what consumers really want and need.

To be sure, marketers have been seeking neuroscience insights long before that was ever possible. While market researchers frequently describe themselves as trying to get inside the mind of consumers, that was only in the realm of metaphor. But as Hsu’s work brings researchers to a closer understanding of patterns of brain activation and how people think and feel about a brand, a new future is coming into focus.

“That’s where neuroscience – or any technology that can validate what people say, versus how they think – can help,” Hsu said. “Obviously this will be a long journey, but I’m very excited.”

Influential financial leaders — including the chief economist of the IMF, one of President Clinton’s key former economic advisers, and the president of the SF Federal Reserve Bank — will gather Nov. 21 to discuss the future of US and global finance at the Clausen Center’s inaugural Conference on Global Economic issues.

The UC Berkeley Clausen Center for International Business and Policy’s conference will be held at Banatao Auditorium in Sutardja Dai Hall on the UC Berkeley campus from 9 a.m. to 4:30 p.m.

The one-day event, which opens with remarks from Haas Dean Rich Lyons, UC Berkeley Dean (Division of Social Sciences) Carla Hesse, and conference host/Clausen Center Director and UC Berkeley Prof. Pierre-Olivier Gourinchas, (pictured, left) includes three moderated sessions and one lecture:

Session 1: U.S. Monetary Policy Developments. John Williams, BA 84, president of the Federal Reserve Bank of San Francisco, Prof. Annette Vissing-Jorgensen, the Arno A. Rayner Chair in Finance and Management at Haas, and Michael Melvin, managing director at BlackRock, will speak on the topic.

Yuriy Gorodnichenko, UC Berkeley associate professor of economics, will moderate.

Lecture: from Benoit Coeuré, a member of the Executive Board of the European Central Bank.

Session 2: Financial Crises, with UC Berkeley Economics Prof. Maurice Obstfeld, who is also chief economist of the International Monetary Fund; Christina Romer, (pictured, right) former chair of the White House Council of Economic Advisers and the Garff B. Wilson Professor of Economics at UC Berkeley; David Romer, the Herman Royer Professor of Political Economy at UC Berkeley; and  Joachim Fels, managing director and global economic advisor at Pimco. Economics Prof. Linda Tesar of the University of Michigan will moderate.

Session 3: The Evolution of the International Finance System. Prof. Andrew Rose, (pictured, below), Associate Dean for Academic Affairs and chair of the faculty at Haas, will moderate. Speakers include Barry Eichengreen, the George C. Pardee and Helen N. Pardee Professor of Economics at UC Berkeley; Hélène Rey, a French economist and economics professor at the London Business School; and Woon Gyu Choi, the deputy governor of the Bank of Korea.

The Clausen Center is named for former Bank of America and World Bank chief A.W. "Tom" Clausen, a longtime Berkeley-Haas benefactor, who passed away in 2013.

The Center’s mission is to promote path-breaking scholarly research, enhance teaching in the area of international economics and finance, and contribute to the policy dialogue on these issues.

For more information about the conference and registration information, visit the Clausen Center website.

There's a new startup competition underway on campus: entrepreneurs pursuing environmentally friendly technologies are vying for the $100K Berkeley Cleantech University Prize (CUP).

Seven teams—which include four Haas MBAs—have been accepted into the competition, which includes 15 weeks of entrepreneurial training, mentoring, and access to UC Berkeley expertise and facilities. The winner will be announced at the Berkeley Energy & Resources Collaborative (BERC) Energy Summit on Feb. 19.

The competition is the result of a winning proposal to the Department of Energy by MBAs and other students in BERC—a multidisciplinary, cross-campus network started by Haas students—along with the Berkeley Energy & Climate Institute (BECI), which is managing the new program.

“We expect that the competition will highlight UC Berkeley's tremendous capacity to promote and stimulate innovation,” says BECI Analyst Sean Wihera, the competition program director.

UC Berkeley is one of eight schools around the country chosen by the DOE to host competitions for aspiring clean energy entrepreneurs. The regional winners will go on to the national University Prize competition, which carries another $100,000 award.

Berkeley and Lawrence Berkeley National Laboratory have long been at the forefront of clean technology development, and Haas is a key part of efforts to promote innovation and commercialization of new technologies. In addition to BERC, which is co-led by MBAs, the Cleantech to Market Program (C2M) assigns teams of student consultants to help nascent technologies break out of the lab.

“There's nothing like the UC Berkeley ecosystem and the people within it to launch cleantech initiatives,” says Brian Steel, co-director of C2M, which is housed at the Energy Institute at Haas. “Increasingly, they are doing this by leveraging an array of commercialization resources, from programs like C2M and Cyclotron Road to organizations like BERC and BECI.”

BERC co-president Katie Pickrell, MBA 2016, says one of the seven finalist teams includes three Haas MBAs; one other Haas MBA is on another team.

The teams will make their final pitches at the BERC Innovation Expo on Feb. 18; winners will be announced at the BERC Energy Summit the next day. The events also coincide with the BECI Philomathia Forum.

Photos: campus cleantech leaders, clockwise from top left: BECI Analyst Sean Wihera; BERC Co-president Katie Pickrell, MBA 2016; and Brian Steel, co-director of the Cleantech to Market Program