What are B Corporations?

Something I learned today: so-called B corporations from this New Yorker piece by James Surowiecki.

B corporations are for-profit companies that pledge to achieve social goals as well as business ones. Their social and environmental performance must be regularly certified by a nonprofit called B Lab, much the way LEED buildings have to be certified by the U.S. Green Building Council. Many B corps are also committed to a specific social mission.

There are now more than a thousand B corps in the U.S., including Patagonia, Etsy, and Seventh Generation. And in the past four years twenty-seven states have passed laws allowing companies to incorporate themselves as “benefit corporations”—which are similar to B corps but not identical. The commitments that these companies are making aren’t just rhetorical. Whereas a regular business can abandon altruistic policies when times get tough, a benefit corporation can’t. Shareholders can sue its directors for not carrying out the company’s social mission, just as they can sue directors of traditional companies for violating their fiduciary duty.

Examples of B corps in America include Patagonia, Etsy, Seventh Generation, and Warby Parker.

A very nice conclusion to the piece:

The rise of B corps is a reminder that the idea that corporations should be only lean, mean, profit-maximizing machines isn’t dictated by the inherent nature of capitalism, let alone by human nature. As individuals, we try to make our work not just profitable but also meaningful. It may be time for more companies to do the same.

Why Are Americans So Bad at Math?

The New York Times has a noteworthy piece on why math education is so poor in the United States. Borrowing examples from how math is taught in Japan, the article outlines how different initiatives to reform math education in America have failed (and why they are likely to continue to fail). Worth the read.

It wasn’t the first time that Americans had dreamed up a better way to teach math and then failed to implement it. The same pattern played out in the 1960s, when schools gripped by a post-Sputnik inferiority complex unveiled an ambitious “new math,” only to find, a few years later, that nothing actually changed. In fact, efforts to introduce a better way of teaching math stretch back to the 1800s. The story is the same every time: a big, excited push, followed by mass confusion and then a return to conventional practices.

The new math of the ‘60s, the new new math of the ‘80s and today’s Common Core math all stem from the idea that the traditional way of teaching math simply does not work. As a nation, we suffer from an ailment that John Allen Paulos, a Temple University math professor and an author, calls innumeracy — the mathematical equivalent of not being able to read. On national tests, nearly two-thirds of fourth graders and eighth graders are not proficient in math. More than half of fourth graders taking the 2013 National Assessment of Educational Progress could not accurately read the temperature on a neatly drawn thermometer.

I hadn’t heard of this parable/story before, but it is quite the embarrassment:

One of the most vivid arithmetic failings displayed by Americans occurred in the early 1980s, when the A&W restaurant chain released a new hamburger to rival the McDonald’s Quarter Pounder. With a third-pound of beef, the A&W burger had more meat than the Quarter Pounder; in taste tests, customers preferred A&W’s burger. And it was less expensive. A lavish A&W television and radio marketing campaign cited these benefits. Yet instead of leaping at the great value, customers snubbed it.

Only when the company held customer focus groups did it become clear why. The Third Pounder presented the American public with a test in fractions. And we failed. Misunderstanding the value of one-third, customers believed they were being overcharged. Why, they asked the researchers, should they pay the same amount for a third of a pound of meat as they did for a quarter-pound of meat at McDonald’s. The “4” in “¼,” larger than the “3” in “⅓,” led them astray.

Maybe we need to develop more system-wide efforts to showcase teaching styles to observers, like they do in Japan:

In Japan, teachers had always depended on jugyokenkyu, which translates literally as “lesson study,” a set of practices that Japanese teachers use to hone their craft. A teacher first plans lessons, then teaches in front of an audience of students and other teachers along with at least one university observer. Then the observers talk with the teacher about what has just taken place. Each public lesson poses a hypothesis, a new idea about how to help children learn. And each discussion offers a chance to determine whether it worked. Without jugyokenkyu, it was no wonder the American teachers’ work fell short of the model set by their best thinkers.

What else matters? That teachers embrace new teaching styles, and persevere:

Most policies aimed at improving teaching conceive of the job not as a craft that needs to be taught but as a natural-born talent that teachers either decide to muster or don’t possess. Instead of acknowledging that changes like the new math are something teachers must learn over time, we mandate them as “standards” that teachers are expected to simply “adopt.” We shouldn’t be surprised, then, that their students don’t improve.

Here, too, the Japanese experience is telling. The teachers I met in Tokyo had changed not just their ideas about math; they also changed their whole conception of what it means to be a teacher. “The term ‘teaching’ came to mean something totally different to me,” a teacher named Hideto Hirayama told me through a translator. It was more sophisticated, more challenging — and more rewarding. “The moment that a child changes, the moment that he understands something, is amazing, and this transition happens right before your eyes,” he said. “It seems like my heart stops every day.”

Worth reading in entirety here.

On Happiness and its Opposite

This is a fascinating, must-read piece in The New York Times in which the author, Arthur C. Brooks, posits that the opposite of happiness is not unhappiness, and the things we can do to elevate our levels of happiness:

So when people say, “I am an unhappy person,” they are really doing sums, whether they realize it or not. They are saying, “My unhappiness is x, my happiness is y, and x > y.” The real questions are why, and what you can do to make y > x.

If you ask an unhappy person why he is unhappy, he’ll almost always blame circumstance. In many cases, of course, this is justified. Some people are oppressed or poor or have physical ailments that make life a chore. Research unsurprisingly suggests that racism causes unhappiness in children, and many academic studies trace a clear link between unhappiness and poverty. Another common source of unhappiness is loneliness, from which about 20 percent of Americans suffer enough to make it a major source of unhappiness in their lives.

The tangible advice comes near the end:

More philosophically, the problem stems from dissatisfaction — the sense that nothing has full flavor, and we want more. We can’t quite pin down what it is that we seek. Without a great deal of reflection and spiritual hard work, the likely candidates seem to be material things, physical pleasures or favor among friends and strangers.

We look for these things to fill an inner emptiness. They may bring a brief satisfaction, but it never lasts, and it is never enough. And so we crave more. This paradox has a word in Sanskrit: upadana, which refers to the cycle of craving and grasping. As the Dhammapada (the Buddha’s path of wisdom) puts it: “The craving of one given to heedless living grows like a creeper. Like the monkey seeking fruits in the forest, he leaps from life to life… Whoever is overcome by this wretched and sticky craving, his sorrows grow like grass after the rains.”

This search for fame, the lust for material things and the objectification of others — that is, the cycle of grasping and craving — follows a formula that is elegant, simple and deadly:

Love things, use people.

This was Abd al-Rahman’s formula as he sleepwalked through life. It is the worldly snake oil peddled by the culture makers from Hollywood to Madison Avenue. But you know in your heart that it is morally disordered and a likely road to misery. You want to be free of the sticky cravings of unhappiness and find a formula for happiness instead. How? Simply invert the deadly formula and render it virtuous:

Love people, use things.

On France and Independent Bookstores

Pamela Druckerman, who lives in Paris, provides some insight on how the French people still value books and independent bookstore in France. The secret? Fixed prices on books across the entire country.

France, meanwhile, has just unanimously passed a so-called anti-Amazon law, which says online sellers can’t offer free shipping on discounted books. (“It will be either cheese or dessert, not both at once,” a French commentator explained.) The new measure is part of France’s effort to promote “biblio-diversity” and help independent bookstores compete. Here, there’s no big bookseller with the power to suddenly turn off the spigot. People in the industry estimate that Amazon has a 10 or 12 percent share of new book sales in France. Amazon reportedly handles 70 percent of the country’s online book sales, but just 18 percent of books are sold online.

The French secret is deeply un-American: fixed book prices. Its 1981 “Lang law,” named after former Culture Minister Jack Lang, says that no seller can offer more than 5 percent off the cover price of new books. That means a book costs more or less the same wherever you buy it in France, even online. The Lang law was designed to make sure France continues to have lots of different books, publishers and booksellers.

And this point, beyond the economics of book pricing, is very important:

What underlies France’s book laws isn’t just an economic position — it’s also a worldview. Quite simply, the French treat books as special. Some 70 percent of French people said they read at least one book last year; the average among French readers was 15 books. Readers say they trust books far more than any other medium, including newspapers and TV. The French government classifies books as an “essential good,” along with electricity, bread and water. (A French friend of mine runs a charity, Libraries Without Borders, which brings books to survivors of natural disasters.) “We don’t force French people to go to bookstores,” explains Vincent Montagne, head of the French Publishers Association. “They go to bookstores because they read.”

What Kind of Motivation Works Best?

Amy Wrzesniewski, associate professor of organizational behavior at the Yale School of Management, and Barry Schwartz, a professor of psychology at Swarthmore College, pen a brief, but fascinating piece in The New York Times that highlights a study of intrinsic vs. extrinsic motivation (dubbed “internal” vs “instrumental” motivation):

We found, unsurprisingly, that the stronger their internal reasons were to attend West Point, the more likely cadets were to graduate and become commissioned officers. Also unsurprisingly, cadets with internal motives did better in the military (as evidenced by early promotion recommendations) than did those without internal motives and were also more likely to stay in the military after their five years of mandatory service — unless (and this is the surprising part) they also had strong instrumental motives.

Remarkably, cadets with strong internal and strong instrumental motives for attending West Point performed worse on every measure than did those with strong internal motives but weak instrumental ones. They were less likely to graduate, less outstanding as military officers and less committed to staying in the military.

The takeaway:

The implications of this finding are significant. Whenever a person performs a task well, there are typically both internal and instrumental consequences. A conscientious student learns (internal) and gets good grades (instrumental). A skilled doctor cures patients (internal) and makes a good living (instrumental). But just because activities can have both internal and instrumental consequences does not mean that the people who thrive in these activities have both internal and instrumental motives.

Our study suggests that efforts should be made to structure activities so that instrumental consequences do not become motives. Helping people focus on the meaning and impact of their work, rather than on, say, the financial returns it will bring, may be the best way to improve not only the quality of their work but also — counterintuitive though it may seem — their financial success.

Read the rest here.

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For more on motivation, watch this great TED talk by Daniel Pink.

On How the Wealthy Hide Money in New York City Real Estate

An excellent piece in New York Magazine on the booming real estate market with ultra high net worth individuals. Buildings such as 432 Park Avenue and 111 W. 57th are not yet completed but are selling out quickly.

The piece does a great job explaining how difficult it is to police the flow of money into real estate

The first rule of selling property to the ultrarich is that you can’t try to sell them property—you offer them status, or a lifestyle, or a unique place in the sky. A marketing video for 432 Park Avenue, scored to “Dream a Little Dream,” features a private jet, Modigliani statuary, and Harry Macklowe himself costumed as King Kong. One recent morning, at the development’s sales office in the GM Building, Wallgren led me down a hallway lined with vintage New York photographs, through a ten-by-ten-foot frame meant to illustrate the building’s enormous window size, to a scale model of Manhattan.

Extreme wealth demands extremely elaborate wealth management, and anyone who has a few million in spare cash will probably already have an entrée to the cloistered world of private banking. An anonymous high-net-worth client of Credit Suisse, who spoke to U.S. Senate investigators after taking advantage of an amnesty for tax cheats, described the process by which he would manage his funds when visiting Zurich. A remote-controlled elevator would take him to a bare meeting room where he and his private banker would discuss his money; all printed account statements would be destroyed after the visit.

The ways these ultra-rich go to to conceal their holdings is extreme:

Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker. “It will be in some file, but not necessarily a computer file,” says Markus Meinzer, a senior analyst at the nonprofit Tax Justice Network. “It could be a black book.” If an investor wants to sell the property, he doesn’t have to transfer the deed—an act that would create a public paper trail. He can just shift ownership of the holding company.

The theatrical secrecy is designed to build personal trust between such bankers and their clients, which is especially vital when the goal of the transactions is to conceal assets from the prying eyes of rivals, vengeful spouses, or tax collectors. Moving the money itself is a relatively simple matter: A wire or a suitcase can convey cash from China to Singapore, or from Russia to an EU member state like Latvia, and once the funds have made it to a “white list” country, they can usually move onward without triggering alarms. Concealing the true ownership of a property or a bank account is trickier. That’s where the private bankers, wealth advisers, and lawyers earn their exorbitant fees.

Worth the read.

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Bonus: see this Vanity Fair piece from May 2014 which highlights the major high rise condos being built in New York City.

The Stanford Commencement Address by Bill and Melinda Gates

Bill and Melinda Gates jointly gave a commencement address at Stanford University earlier this month on June 15, 2014. The full transcript is here, but I wanted to highlight a few notable passages:

Melinda and I have described some devastating scenes. But we want to make the strongest case we can for the power of optimism. Even in dire situations, optimism can fuel innovation and lead to new tools to eliminate suffering. But if you never really see the people who are suffering, your optimism can’t help them. You will never change their world.

And that brings me to what I see as a paradox.

The world of science and technology is driving phenomenal innovations – and Stanford stands at the center of that, creating new companies, prize-winning professors, ingenious software, miracle drugs, and amazing graduates. We’re on the verge of mind-blowing breakthroughs in what human beings can do for each other. And people here are really excited about the future.

At the same time, if you ask people across the United States, “Is the future going to be better than the past?” most people will say: “No. My kids will be worse off than I am.” They think innovation won’t make the world better for them or for their children.

So who’s right?

The people who say innovation will create new possibilities and make the world better?

…or…

The people who see a trend toward inequality and a decline in opportunity and don’t think innovation will change that?

The pessimists are wrong in my view, but they’re not crazy. If technology is purely market-driven and we don’t focus innovation on the big inequities, then we could have amazing inventions that leave the world even more divided.

The key driver to make notable change is building empathy:

If our optimism doesn’t address the problems that affect so many of our fellow human beings, then our optimism needs more empathy. If empathy channeled our optimism, we would see the poverty and the disease and the poor schools, we would answer with our innovations, and we would surprise the pessimists.

The question is: how do we build and develop empathy in others?

I like how Melinda closes the address, saying that young graduates shouldn’t be in a rush to change the world:

You don’t have to rush. You have careers to launch, debts to pay, spouses to meet and marry. That’s enough for now.

But in the course of your lives, without any plan on your part, you’ll come to see suffering that will break your heart.

When it happens, and it will, don’t turn away from it; turn toward it.

That is the moment when change is born.

Student Debt and The Boomerang Kids

The New York Times paints a bleak image on the student debt crisis in the United States of America in this magazine piece:

One in five people in their 20s and early 30s is currently living with his or her parents. And 60 percent of all young adults receive financial support from them. That’s a significant increase from a generation ago, when only one in 10 young adults moved back home and few received financial support. The common explanation for the shift is that people born in the late 1980s and early 1990s came of age amid several unfortunate and overlapping economic trends. Those who graduated college as the housing market and financial system were imploding faced the highest debt burden of any graduating class in history. Nearly 45 percent of 25-year-olds, for instance, have outstanding loans, with an average debt above $20,000. (Kasinecz still has about $60,000 to go.) And more than half of recent college graduates are unemployed or underemployed, meaning they make substandard wages in jobs that don’t require a college degree. According to Lisa B. Kahn, an economist at Yale University, the negative impact of graduating into a recession never fully disappears. Even 20 years later, the people who graduated into the recession of the early ’80s were making substantially less money than people lucky enough to have graduated a few years afterward, when the economy was booming.

Worth the click for the slide show alone.

A Brief History of Announcers Pronouncing “GOOOOOAL”

I love watching the football highlights on Univision because of the spirit of its announcers. They call a goal with passion and personality. The jubilance that expands a commentator’s call of “goal” to fill five, six, or perhaps 10 seconds of time seems universal, but there is regional variation. Different languages play a part, but so do regional sensibilities and the spirit of individual announcers. The New York Times provides a sample in this interactive.

The related article, “A Chorus of ‘Gooooool’, The Siren Song of Soccer” is also great:

Fans scream goal; announcers swear that they sing it. Galvão Bueno, one of the best-known working sportscasters in Brazil, compared it to “a tenor’s high C,” one of the most challenging notes the tenor’s voice can carry.

“It’s your crowning achievement,” said Bueno, who is working his 10th World Cup narrating the games, mostly for Rede Globo, Brazil’s largest television network. “Or your moment of defeat.”

This is very interesting and surprising for the uninitiated:

Once an anomaly, the skill [of goooooal calling] has since become a requirement. Among sportscasters, the verdict is unanimous: There is no future in sports radio for announcers who do not know how to bellow an impressive, long and loud cry of “gol.” So they work at it daily, in much the same way that classical singers do before a big performance.

The Pivot, or the Luck Factor in Silicon Valley

A thoughtful take on the concept of the “pivot” in Silicon Valley, from Scott Adams (the creator of the Dilbert comic):

Smart observers in the valley look for the “tell” that an early stage start-up will be a winner, but none can be found. Oh, sure, the team needs to be smart, talented, and willing to work long hours. But nearly every start-up has that going for it. Most have great ideas as well. None of it predicts success. 

So imagine if you will, some of the smartest, most rational humans the world has ever created, wallowing around in the absurdity of Silicon Valley, where success is mostly based on luck. How does one feel good about that? And what is the solution?

Answer: You institutionalize the pivot.

I’ve been watching the TV show Silicon Valley, and the episode where Pied Piper tried to pivot comes to mind.

Adams argues that the pivot is basically a way to optimize one’s luck:

Here’s the system:

1.      Form a team
2.      Slap together an idea and put it on the Internet.
3.      Collect data on user behavior.
4.      Adjust, pivot, and try again.

Thanks to Google Analytics, Optimizely, Bitly, and other tools for measuring customer behavior in real time, a smart team can try different approaches and different products until something works out. A start-up in 2014 is a guess- testing machine.

Read the rest here.