Inside Enterprise: Age of Entrepreneurs

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EDITOR'S MESSAGE
Welcome to the March issue of Inside Enterprise, which
celebrates the beginning of another exciting year for
discussing and sharing ideas at the forefront of contemporary
business.
A major theme for this issue is entrepreneurship – an area
which attracts more curiosity, hype and misunderstanding
than perhaps any other in business. In entrepreneurship, we
find mottos such as "you never fail until you stop trying",
"failure is a sexy word", and the freedom that comes with knowing that there are no
rigid rules defining the path to success. We are often beguiled by the glamorised careers
of successful entrepreneurs while still remaining in the dark as to how buzzwords like
'innovation' actually translate into strategic advantages in a real world setting. Above all,
entrepreneurship retains lasting importance because it is the world's best avenue towards
continued economic prosperity.
The articles in this issue seek to provide a holistic and balanced view of
entrepreneurship in the global economy, combining informative explorations of various
aspects of entrepreneurship with practical anecdotes from successful business-makers.
Our interviews illustrate the successes and struggles of enterprising students and veterans
who have directed businesses firsthand. We speak to Deloitte CEO Giam Swiegers
on how innovation is cultivated in one of the 'big four' accounting firms, and Google
employee Shane Treeves about the perks and demands of working for the world's
internet giant. We also explore the journey of Rhodes Scholar Nathaniel Ware, whose
work in social entrepreneurship attests to how business thinking can be used to make the
world a better place.
It is inspiring to see so many writers apply a social lens to their chosen topics. The
New Ideas section looks at how social impact bonds and innovations inspired by
plastic are solving great societal challenges. The feature articles ask the big questions
of how female entrepreneurs are transcending gender prejudices in the tech start-up
scene and how social entrepreneurs can stay competitive in a capitalistic market that
rewards profiteering without compromising their social mandate. Beyond the glamour
of entrepreneurship, these articles highlight the potential of using startups and creative
innovation to drive economic and social betterment.
I would like to sincerely thank our corporate sponsors and Board of Advisors for
continuing to recognise the value that this publication brings to students across New
South Wales. I cannot give enough thanks to our writers, editorial team and executive
committee – it is your hard work and incredible passion for this publication that makes
each issue possible.
To our readers, thank you for continuing to read and offer your thoughts in writing.
As we expand in 2015 into online media and talk events, we seek to engage fresh talents
and welcome all writers to apply. Information on how to get involved is available on our
website.
Jenny Huang
Founder & Editor-in-Chief
Editor-in-chief
Jenny Huang
Deputy Editor-in-chief
Howell Sze
General Editor
Marina Yang
Branch President
Sun-Yong Kim
Editors
Aaren Cristini
Ann Yee Lim
Clara Wong
Kevin Gatdula
Peter Kwag
Vanessa Cartwright
Designers
Erica Liu
Jenny Huang
Marina Yang
Communications Director
Nicholas Fahy
Publisher
Matthew Green
Campus Directors
James Pyo
Levi Romanov
Manpreet Singh
Richard Guan
Board of Advisors
Beau Chase
Heather Robson
Hugh Simpson
Mark Chan
Max Soyref
Michael Allan
COPYRIGHT AND DISCLAIMER
© 2015 Inside Enterprise. All rights reserved.
The views expressed in Inside Enterprise are those of its contributors alone. Neither Inside Enterprise nor its Board of Advisors take responsibility for any material
published. All pictures remain the properties of their respective copyright owners.
For advertising and sponsorship opportunities,
please contact editor@insideenterprise.org
Launch your career today, visit
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REGULARS
Around the World
Laura Armenian
New Ideas
Plastic innovations, Social impact bonds, Investment banking
kiosks, The B team, Brain science education
Sun-Yong Kim
Student Story
Nat Ware on the business of social entrepreneurs
Jenny Huang
CONTENTS
FEATURES
Mobile Africa
How the mobile phone is driving growth in Africa
Manna Mostaghim
The Earnings Game
Picking the winners
Ehren Heilman
Social Bang for your Buck
The challenges facing social enterprises
Ashley Anderson
Equity Crowdfunding
From Wall Street to Main Street
Peter Kwag
06
INTERVIEWS
Inside Google
An interview with Google employee Shane Treeves
Annie Handmer
Innovation in the Big Four
An interview with Deloitte Australia's CEO Giam Swiegers
Andrew Huynh
Andrey Tyshchenko
An interview with the CEO of e-commerce site MyShopping
Levi Romanov
08
12
18
22
26
46
48
STUDENT ROOM
INTERESTS
#Feminext
Female entrepreneurs in fashion and technology
Aaren Cristini
What motivates employees?
The contradiction between business practices and proven
science
Alvin Sharma
Debunking the Myths of Entrepreneurship
Major myths that deter young entrepreneurs
Sarah Elsmore
Pay What you Want
A business model that relies on honesty
Sophia Cyna
Student Entrepreneur: Madpaws
Kevin Gatdula
Event: The Millennial Series
Matthew Green
40K Foundation
Adam James Page
Enactus: BusinessONE
Richard Guan
Sydney Genesis: Breathe Well
Megan Engard
36
40
42
38
50
52
51
For many more articles and to contribute your own, visit
www.insideenterprise.org
Stay connected
www.facebook.com/insideenterprisejournal
Tweet @IE_online
ONLINE
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54

Around the World
COMMODITY PRICES AND THE AUSTRALIAN DOLLAR
Since June 2014, Brent oil prices have fallen by 45% to just USD $60/barrel.
The catalyst for this fall has been an increased supply from shale oil and gas
producers, together with the refusal of OPEC’s core member, Saudi Arabia to
reduce its own production for geo-political reasons. Conversely, net imports
have experienced a potential slowdown in energy demand from a key market
as economies such as China mature. For net importers, the drop in oil prices
act as a tax concession, buoying real wages and leaving households with more
disposable income. This has caused three main problems for Australia. First,
Australia invested billions of dollars into liquefied natural gas (LNG). Lower
oil prices threaten to flow through to LNG prices and derail this investment,
making these projects less profitable. Secondly, the RBA recently stated
that further depreciation in the AUD may be required to restore economic
competitiveness and achieve balanced growth in 2015. The decrease in com-
modity prices has also filtered through to lower terms of trade, decreasing in
the September quarter by 3.1%. However, the weak iron ore and coal spot
prices have been offset by falling petroleum prices, which reduces the cost
of business operations. The market has responded, with commodity-related
firms tanking in share price. This could potentially pave the way for private
equity firms to acquire distressed assets or passive shares (15-20%) in listed
ASX companies, plugging the investment gap left by the retreat of Chinese
state-owned enterprises and sovereign wealth funds.
TAx TIME
A US Senate inquiry into several large multinational companies
including Apple, Microsoft and Google has revealed transfer pricing
schemes – an internal sale from one subsidiary to another to evade
tax by shifting profits between jurisdictions. Consequently, there
has been an international consensus towards an information sharing
deal between countries to uncover this opportunistic behaviour. The
Financial Services Council has lobbied the Treasury to abandon this
commitment based on the likely significant costs to members and
subsequent increased consumer costs. The effect of such a policy is
two-fold: first, it reduces the attraction of overseas firms doing busi-
ness in Australia; second, it increases the number of domestic firms
shifting revenue offshore. The latter is most notably evident in PwC
engaging their Luxembourg office to cut favourable tax agreements
with Australian companies. Tax - once considered a stable revenue
generator - has been turned into a volatile area subject to political
discourse.
Laura Armenian
ARGENTINA GOES TO COURT
Argentina is seeking to sue the US in
the International Court of Justice over
domestic US court rulings that forced
Argentina into default, allegedly violating
their state sovereignty. The US court held
orders that Argentina has to pay in full a
group of creditors led by NML Capital
Ltd, whereas Argentina wishes to pay the
restructured bondholders ensuing from
the country’s default in 2001. Argentina is
arguing that they cannot pay the creditors
before the bondholders due to a restric-
tive clause in the bond contract which
essentially triggers a repayment of the
bondholders’ principal, worth up to $120
billion dollars, sending the South Ameri-
can region into financial chaos.
CRACKING THE SHELLS
Over the past decade, Europe has seen the resurgence of shell corporations
for money laundering and tax evasion schemes. Shell companies serve as
vehicles for business transactions, existing only on paper and without any
real employees or offices. Mid-December 2014, the EU unanimously passed
legislation that aimed to reduce the prevalence of such activity. The new rules
mandate that member States are to establish central registries of companies’
'beneficial owners' that set out the ownership structures. This information
will be accessible to law enforcement and relevant government agencies in-
cluding tax authorities, journalists and NGOs that have a ‘legitimate interest.’
This principle threatens to shatter the underlying purpose of the legislation:
to increase transparency. The limited access could translate into being an
expensive endeavour which increases bureaucracy and red tape and denies
meaningful public access.
WALL STREET TOLD TO TRY AGAIN
In the wake of the financial recovery, Wall Street’s biggest
banks have submitted contingency plans to the Federal Re-
serve in the event of another financial crisis. Major banks in-
cluding Goldman Sachs, Morgan Stanley and JP Morgan have
all failed to provide a credible, clear path through bankruptcy
without relying on direct or indirect public support. Conse-
quently, the US bank regulators have rejected their bankrupt-
cy plans, seeking a rewrite of the ‘living will’ provisions that
were first inserted into the Dodd-Frank Act to protect the
financial system. This continues the trend of financial institu-
tions circumventing legislative requirements. Earlier this
year, the institutions leveraged the Omnibus spending bill
to repeal the Dodd Frank Act’s restriction on the volume
of traded financial derivatives that have sourced major profits
for these banks.
THE LINKING OF TWO MODERN POWERHOUSES: GERMANY AND
CHINA
China’s foreign direct investment into Germany has continued to increase over the past
decade, culminating to EUR €1.4 billion as of 2014. However, the relation contin-
ues to strengthen with Germany being the EU’s largest investor into China with over
EUR €45 billion of investment as of late 2014. Combined with Chinese relaxation of
outbound investment project regulation, this is likely to shape the expanding bilateral
exchange between the two countries. Relations are likely to culminate in a restructured
EU-China investment treaty, which launched in late 2013 and is about to enter its
fourth round of negotiations. With an improvement in the legal framework, inves-
tor protection and more reliable market access, investors from both sides are likely to
become more active.
NSW GOES PRIVATE
If NSW Premier Mike Baird’s government is elected in
March 2015, it will continue its plan of converting the
State’s assets into privately run ventures. In 2014, the
government sold the Newcastle, Botany and Kembla ports
along with the Sydney Desalination Plant. The assets are
all being sold to reallocate capital to fund long-needed
infrastructure that the state is otherwise unable to pay for.
The state’s major asset, the $13bn poles and wires electricity
infrastructure, is set to be one of the key assets sold in 2015-
2016. Primary players for the asset are trade buyers such as
Chinese giant State Grid Corporation and Southern Power
Grid, and yield chasers such as AustralianSuper and the
Canadian Pension Plan Investment Board. To contextualise
the sale, this would be the largest utility privatisation in
recent history, dwarfing the power station sales by the
Victorian government in the late 90s.
ADS THAT DON’T JUST STAY AT HOME
Out of home advertising is forecast to be the
fastest growing medium after the internet in the
foreseeable future. Not only is it a $30 billion
market, its audience continues to grow as opposed
to the other communication formats that continue
to contract and fragment. This form of advertising
has already been a huge feature of Asian markets,
where train stations, airports and TV screens on
taxi seats are some of the most prominent locations
for companies to invest their marketing budget
into. Outdoor advertising’s share of global adspend
has increased from 4%-6% over the past 25 years,
with JCDecaux, the largest global operator, best
positioned to capitalise on this trend. As digital
technology continues to improve, this medium is
likely to become more visually exciting and engag-
ing and will be a permanent part of the modern
city landscape.
TECH DISRUPTION AWAKENS
After months spent collating passwords and mapping IT networks,
hackers set off a virus that wiped out Sony’s data, crashed the system
and subsequently revealed over 40GB of the company’s salacious
emails between executives, employee salaries and health records. It
is presumed that the purpose of the hack was to prevent the release
of a politically controversial film, The Interview, concerning the
assassination of North Korea’s leader, Kim Jong Un. Sony has since
scrapped the release, costing them approximately USD $210 million
in potential revenue and USD $110 million in sunk costs. Other
major unassessed costs to the firm include the investigation into what
happened, computer repair or replacements, steps to mitigate a future
attack as well as a loss of goodwill and productivity while operations
were disrupted. The Sony hacks are an example of the threats that
technological disruption pose to the privacy of governments, large
corporations and small businesses. Some financial institutions have
taken advantage of this digital age by employing ‘ethical hackers’ to
break their own system and find the faults. Businesses are becoming
mindful of the sacrosanctity of confidentiality.
HISTORY REPEATS ITSELF AS TECH BUBBLE IS SET TO BURST
Investors have been eyeing the technology sector as the next emerging area. However, there are concerns that the upcoming
‘tech bubble’ is set to replicate the mistakes of its predecessor, the dotcom bubble, a decade and a half after it wiped $5 trillion
off the market value of companies and dragged the US into recession in 2000. The evidence supporting this conclusion
manifests in the $6 billion invested into software firms, a similar figure to that of the 2000 dot com crash and the fact that the
number of 2014 venture capital funding deals for technology companies has eclipsed its 1999 peak, albeit falling marginally
short of the 2000 crash figure. Janet Yellen, Chair of the Board of Governors of the Federal Reserve, has expressed the senti-
ment that analysts are making similar buoyant projections now as they did with the dotcom bubble. Valuation exuberance in
the market is catalysed by the huge premiums paid by established players and the cheap cost of capital flowing into early-stage
companies, resulting in under-priced risk. For example, in August 2014, Snapchat was valued at $10 billion without declaring
its business model or growth strategy and no real cash flow projections. However, for every analyst predicting and betting on
the technology bubble bursting, there are others who assert that this time it will be different. More than ever, investors are
cynical and demand to see true revenue growth and business model growth. It is hard to share this view when the percentage
of technology companies that have negative earnings filing IPOs with NASDAQ has increased.

Sun-Yong Kim
Plastic Innovations
NEW Ideas
SOME OF SOCIETY'S GREATEST CHALLENGES ARE TODAY BEING SOLVED BY INNOVATIONS INSPIRED BY
PLASTIC
Plastics Roads
After being troubled by the inadequate
road and infrastructure quality currently
inflicting his native homeland, Ahmed
Khan, an Indian entrepreneur, devised
a plan to build superior quality roads by
mixing bitumen with asphalt. With cor-
ruption currently afflicting the domestic
infrastructure bidding process in India,
Ahmed felt he could not rely on public
support to deliver the critical infrastruc-
ture that his people needed in the face
of rising urbanisation. The idea behind
‘Plastics Roads’ is simple. Mixing plastic
with asphalt forms a compound called
polymerised bitumen which is capable
of withstanding India's prolific monsoon
rains far better than the pavements cur-
rently in use, owing to plastic's tendency
to act as a binding agent and its water re-
sistant quality. Plastics Roads are also cost
effective. While a road built with plastic
will cost about three per cent more than a
conventional road in the short term, in the
long run, it will require much less repair
and hence compensate for the higher up-
front cost.
Additionally, Plastics Roads are more
durable than a standard road. By con-
servative estimates, plastic roads made
by Khan's company last at least two
years longer. So far, the company has
laid more than 1,200 km of roads using
3,500 tonnes of plastic waste, primarily in
Bangalore.
The 3D Plastics Car
American graphical designer Jim Kor
has constructed a 3D printed plastic car
known as Urbee 2 that conserves half the
energy costs of a conventional car and con-
stantly reuses natural resources consumed
in the process. The idea behind Urbee 2
is relatively simple to comprehend. Using
the Fused Deposition Modelling (FDM)
method, thin layers of plastic are com-
pressed continuously over an indefinite
period until an entire car exterior is simu-
lated. Thanks to the product adaptability
that is enabled by this production strategy,
different thicknesses and textures can be
used to strengthen the structure, ensuring
that the Urbee 2 is as strong as traditional
cars but only a fraction of the weight.
The social value of the Urbee 2 lies in
its ability to conserve energy usage in the
current Western car culture. The Urbee 2
runs on electricity stored in its batteries
which is largely recovered by a regenerative
braking system within the cell structure
that allows the battery life to be constantly
replenished over an indefinite period of
time. The Urbee 2 also weighs 553kgs –
far lighter than the average car weight of
1500kgs – reducing the stress it places on
natural resources.
The introduction of social impact
bonds have facilitated the growth of
the social co-investment model of social
entrepreneurship. Specifically, social
impact bonds are financial instruments
that constitute a contract between the in-
vestor and the public sector that promises
payouts to the investors when desirable
social outcomes are achieved. Returns are
themselves dependent on the scale of social
impact witnessed, ensuring that the social
impact bonds have many of the economic
characteristics of a floating rate bond.
These social impact bonds have become
the preferable tool of finance for many
social welfare services where the observa-
tions of improved restoration rates for
foster children families has been used
as the social metric to base investment
returns. One specific example of this is the
Uniting Care Social Impact Bond which
raised $7 million to support the Uniting
Care Burnside Foster Care Facility aiming
to restore children in foster care to their
families. Over the first 6 months of the
program, the United Care facility wit-
nessed a 60% restoration of foster children
back to their original parents, yielding a
7.5% initial coupon rate to investors ac-
cording to the terms of the bond issue.
From a public sector perspective, the
social impact bond represents an innova-
tive way to limit public funds to socially
impactful investments, as investor returns
are provided only when desirable social
outcomes are achieved with public sector
funds. This reduces the fiscal strain on
public venture organisations such as the
Social Ventures Australia (SVA) Social
Impact Fund, which now possesses the
flexibility to expand investment allocation
based on observed social outcomes, in-
creasing support for up-and-coming social
investments.
From a social perspective, the social
impact bond represents a wave of opportu-
nity to attract funding for high risk social
ventures that have previously experienced
difficulty attracting capital, due to issues
with the venture's scalability. Issues such
as finding a cure for Alzheimers Disease,
Behavioural Disorders and Brain Science
research have long been neglected areas of
science as a result of the capital gap that
was manifest in the pre-social impact bond
environment. The South Australian Gov-
ernment has recently flagged the concept
of a pilot social impact bond where inves-
tor returns are tied specifically to increases
in bowel or colorectal cancer screening
rates. Similarly, Research Australia has
also considered the potential viability of
a social impact bond funding emergency
waiting room services with returns tied to
reduced emergency waiting room rates.
As the socially impactful opportunities
provided by social impact bonds continue
to be explored, it remains very possible
that many social ills will begin a gradual
descent towards irrelevance.
A NEW TOOL OF FINANCE FOR SOCIAL ENTREPRENEURS
Social Impact Bonds
In an era where the provision of institu-
tional financial services worldwide has
become centred around large investment
banks such as Goldman Sachs, JP Morgan
and Deutsche Bank, it is hard to imag-
ine how financial markets would operate
without the investment banking industry.
After all, investment banks play a critical
role as a market maker and a vital provider
of structured financial products that com-
mercial banks and other financial institu-
tions do not provide.
However this investment banking cen-
tric financial model may become subject
to considerable challenge over the coming
future with the recent emergence of invest-
ment banking ‘kiosks’ which bring new
competition to the industry. Motivated by
an overall declining mergers and acquisi-
tion (M&A) deal market and increased
regulatory scrutiny since the GFC, senior
deal makers such as Simon Robey of
Morgan Stanley and Yoel Zaoui of Gold-
man Sachs are leaving their lucrative roles
to start independent advisory ventures
which analysts coin ‘kiosks’.
While many question whether or not
these ventures are likely to succeed, the ex-
plosive success of former Morgan Stanley
executive Paul Taubman’s kiosk, PJT capi-
tal, indicates that they may very well take
the industry by storm. PJT Capital now
occupies 11th spot in the global M&A
league table for 2013 with his firm wrest-
ing control of major public deals such as
the Verizon-Vodafone and Comcast-Time
Warner Cable deals from the traditional
investment banks. Overall, Taubman
himself accounted for $175 billion worth
of deals for the past 3 years, a fact which
has fascinated Wall Street bankers. But
Taubman isn’t alone.
Two brothers, Michael and Yoël Zaoui,
are advising the French cement maker,
Lafarge, in its $60 billion merger with
another giant cement maker, Holcim, of
Switzerland. Robertson Robey Associates,
an advisory venture managed by Simon
Robey, Simon Warshaw and Simon Rob-
ertson advised Grupo Corporativo Ono
of Spain in its $10 billion acquisition by
Investment Banking Kiosks
A DISRUPTOR TO THE INVESTMENT BANKING INDUSTRY

Vodafone in March 2014. Another advisory
venture, Moelis & Company, has taken the
audacious step of listing on the New York
Stock Exchange earlier this year.
Assisting the rapid development of these
kiosks is the regulatory environment. Kiosks
have little or no overhead but are still paid
in terms of a percentage of the total cost of
a successful deal as clients receive the benefit
of the undiluted attention of a top M&A
strategist. Taubman’s growth as a significant
M&A player has been built upon just two
deals – the Vodafone-Verizon deal alone
netted him more than $10 million. These
lucrative opportunities simply do not exist
to the same extent for traditional invest-
ment banks, as they are burdened with over-
head and bureaucratic processes that limit
the deal payout.
However, investment banking kiosks are
limited by the resource constraints associ-
ated with running a small advisory venture.
Lacking the economies of scale afforded to
large investment banks, small kiosks such
as PJT capital have to adopt a selective pro-
cedure with respect to prospective deals – a
limitation which ensures that they cannot
meet the sheer scale of the M&A deals con-
ducted by institutional investment banks.
Nonetheless, they have the potential to
reshape the investment banking landscape
away from the dominant control of large
institutional players. Given the increasing
regulatory strains and dampening M&A
markets, there is a good possibility that the
Taubman experience will grow to become
the rule as opposed to the exception.
The B Team
LEADERS COMMITTED TO SOCIAL BETTERMENT
An often neglected stakeholder in
the discussion of social improve-
ment is the one stakeholder that has the
means to make a real difference: Business
leaders. It is this reality that forms the
philosophical basis of ‘The B Team’, a
not-for-profit initiative led by Sir Richard
Branson, founder of Virgin Group, aimed
at engaging the entrepreneurial minds of
perennial business leaders towards devel-
oping a socially conscious business model
worldwide. Specifically, the ‘B Team’ is
a coalition of renowned business leaders
led by Sir Richard Branson and Jochin
Zeitz, who are setting out to fulfil a set
of three ‘challenges’ that will be actioned
and implemented by B Team Leaders in
their own organisations, and who will also
empower businesses around the world to
join them in implementing these reforms.
One perfect example of this process is
the ‘The Future Bottom Line’ challenge
which encourages B Team Leaders to
adopt socially inclusive business models
by recognising the social and environ-
mental costs of industrial action. As part
of this challenge, B Team Leaders such as
Blake Mycoskie of TOMS Shoes, Guil-
herme Leal of Natura and François-Henri
Pinault of Kering formed a coalition of
companies known as the ‘We Mean Busi-
ness Climate Coalition’ – a group willing
to commit to environmental accountabil-
ity practices recognizing environmental
degradation on the company balance
sheets. At present, over 100 companies
have instituted environmental profit and
loss accounts with B Team Leaders taking
initiative through host companies such as
Virgin, Kering and Natura.
B Team Leaders have also made it a
personal priority to address rampant cor-
ruption within the developing goal as part
of its ‘The Future of Incentives’ challenge
which aims to reverse perverse incentives
by corporations to act unethically and
inequitably. As part of this challenge,
Celtel founder Mo Ibrahim - who set up
the Mo Ibrahim Foundation to encourage
better governance in Africa - led a project
aimed at tackling corruption in business.
Specific to this task was the creation of a
more balanced corruption index known
as the Ibrahim Index of African Govern-
ance (IIAG), which incorporates country
specific factors in an attempt to universal-
ise corruption indexes.
Finally, B Team Leaders are dedicated
to raising socially conscious business lead-
ers as part of their ‘Future in Leadership’
Challenge. In particular, B team leader
Mary Robinson is working with partners
such as Celtel and Kerin to drive greater
participation from future business leaders
in critical global negotiations around
climate and the sustainable development
goals. The creation of social leadership
licenses as a metric of career progression
has been adopted by a coalition of busi-
nesses worldwide as a means to institute a
leadership culture of social sustainability.
Through the fulfilment of various
‘challenges’, the ‘B Team’ has successfully
built a bridge between business and social
sustainability, adding new perspectives to
the social discussion.
It is indisputable that the technological
revolution has come to dominate most
aspects of modern life. In recent times, it
has filtered towards the education sector in
ways that have the potential to fundamen-
tally transform the way we teach children.
The development of the new field of Con-
nectomics, which uses neurological imag-
ing and histological techniques to create
a neurological map of the human brain,
bring the possibility of modifying and
adapting teaching strategies in line with
new understandings of how the student
brain operates.
The basic logic is that creating a map
of the brain through neural imaging and
histological techniques will allow educa-
tors to craft educational strategies directly
aimed at increasing the speed, efficiency,
and resolution of neural connections in
the nervous system, in a way that will
maximise learning speed. If one under-
stands the way individual neurons in a
human being interact with each other, one
would be able to anticipate neurological
movements with precision. As the educa-
tional process is in effect an exercise of the
neurological patterns in our brain, con-
nectomics allows us to devise educational
strategies that maximise learning speed
by anticipating predicted neurological re-
sponses to educational exercises. Consider
the case of Scientific Learning, a com-
pany run by brain scientists in Berkley,
Florida. It developed educational strategies
through its Fast ForWord program which
uses connectomics-informed brain science
technology to maximise cognitive skills
that enhance critical language and reading
skills including vocabulary, comprehen-
sion, decoding, working memory, syntax,
grammar, and other skills necessary to
become a better reader. Astounding
results in case studies in Thailand showed
that students achieved 1 year's’ worth of
academic achievement in the space of 4
months. Students in Bermuda signifi-
cantly improved their early reading skills,
improving their expressive language skills
from the 13th percentile to the 33th
percentile.
At present, the scientific infancy of con-
nectomics unfortunately means that wide-
spread educational application remains
a pipedream for the foreseeable future.
However, increased awareness and research
funding – including $40 million recently
handed out by the National Institutes of
Health – provide optimism that realisation
of these potential educational benefits lies
just around the corner.
Brain Science Education
SCIENCE FOCUSED ON MAxIMISING LEARNING SPEED
Paul Taubman | Source: Bloomberg, Getty Images

Nathaniel Ware
Student Story
On the business of social entrepreneurs |
A University of Sydney graduate currently completing his PhD at Oxford, Nathaniel
(Nat) Ware is one of the brightest young minds championing innovative business
solutions to pressing social problems such as world poverty and hunger. His inspiring
story, which has taken him across the world, is a testament to the possibility of
combining a successful career with a lifelong passion of making the world a better
place.
By Jenny Huang

"If you knew that you could
do anything and you wouldn't
fail, what would you do? If you
forget expectations, what would
you choose? A lot of the time
people make decisions based on
expectations of what others think
they should do."
started I was never intending it to grow
into an international organisation. The idea
caught on in other parts of the world when
in 2008, I attended the Goldman Sachs
Global leaders Conference in New York and
met students from Mexico and Sweden who
took to the idea and wanted to replicate it.
We've never really done marketing to try to
establish branches. Almost always it's people
approaching us and applying."
180 Degrees Consulting is only one prod-
uct of an entrepreneurial mind that constant-
ly questions accepting the status quo. "I want
to do things in a smart way, improve the way
we solve problems, get people to challenge
the way that things are done. Everyone seems
to assume we have to have a seven day week,
but that’s very much a human invention.
People seem to assume we need four walls to
a room, when we don't. By questioning some
of these very fundamental things, it forces
us to think of alternatives." He adds that
another way to arrive at ideas is by “innovat-
ing on the verge” – combining existing ideas
to form something new. "Recently I’ve been
thinking about using roller-shutter doors
on trains – you could produce trains where
the entire side of the train rolls up to enable
passengers to alight more quickly than small
doors…I have a lot of ideas. I keep a journal
on my bedside table that I record them in – I
think I'm currently up to 170 ideas. I try to
add a new idea each day."
With this mindset, Nat has since travelled
to some of the most remote parts of the
world including Mongolia, Central Russia,
Gaza and Myanmar. “I'm onto my third
or fourth passport,” Nat says. “I run out of
pages too quickly."
When he is not busy acting as CEO of
180 Degrees Consulting, Nat is completing a
PhD and training for a full ironman triath-
lon. One of the most immediate questions
that come to mind is how he manages to
accomplish so much in so little time. "People
waste a lot of time – you need to be con-
scious of how you're using your time and
use it in a more productive way,” Nat says.
“Even when I'm on the bus, I'll be replying
to emails, or if I'm training for cycling on my
bike, I'll watch the news.” There is no need
to forfeit sleep either- Nat gets a good seven
hours a day.
However, for the many students who aspire
to a similar whole-hearted pursuit of a career
doing something they are passionate about,
finding this passion is more often a dream
than a reality. Nat advises, “Just ask yourself –
if you knew that you could do anything and
you wouldn't fail, what would you do? If you
forget expectations, what would you choose?
A lot of the time people make decisions based
"I want to do things in a smart way, improve the way we solve problems, get people to challenge the
way that things are done. By questioning some of these very fundamental things, it forces us to think
of alternatives."
CEO, entrepreneur, development
economist, social impact consult-
ant. There are few LinkedIn profiles that
confront the reader with such an impres-
sive list of achievements as that of Nat
Ware. By the age of 26, Nat has ticked off
an enviable amount of bucket-list items:
he has delivered two TEDx Talks, studied
at Oxford as a Rhodes Scholar behind the
likes of Malcolm Turnbull and Bob Hawke,
swum the English Channel to raise money
for mental health, and founded an inter-
national non-profit organisation that exists
in 22 countries. Among other things, he is
a Goldman Sachs Global Leader, a World
University Public Speaking Grand Finalist
and the recipient of a host of scholarships
for his academic achievements – which
include placing first in twelve subjects in
his Economics degree at the University of
Sydney. But these awards only signal the
beginning for Nat, who is committed to
improving the way we solve bigger world
problems.
In 2013, in the earthquake-frequented
town of Celje, Slovenia, Nat gave a TEDx
talk on a topic he is passionate about: social
entrepreneurship. He had been attending
a conference in Slovenia when an audience
member who was friends with the organiser
of the TEDx event referred him to speak.
An impressed audience member of the
TEDx talk then flew Nat out to Florida to
speak at another conference. "One thing
leads to the next," Nat says. And that is cer-
tainly true in describing how this economics
student quickly became a respected spokes-
person in the field of social innovation.
Nat's interest in social entrepreneur-
ship found its roots in his early childhood.
Growing up in the Wahroonga/Waitara
suburbs of Sydney, Nat recalls that his
parents always encouraged him to help
others by saving money and giving what he
could. "My parents never had much money.
I didn't have my first proper haircut untill
I was fourteen. We never went on big holi-
days and I had never really left New South
Wales." But when he was selected as the
World Vision Youth Ambassador at the age
of sixteen, he suddenly found himself being
flown to rural Mozambique visiting village
schools and hospitals. This was an eye-
opening experience for Nat, who went on
to raise over $50,000 to rebuild a school in
Mozambique and an orphanage in Thailand
following the Boxing Day Tsunami.
He describes that at the end of high
school, he felt torn. "On the one hand I
wanted to do good, but on the other hand I
wanted to be intellectually challenged - and
I thought the two was mutually exclusive."
This assumption was dispelled when he was
introduced to the concept of social innova-
tion and social entrepreneurship. "I realised
that by improving the way things work,
you can make an ever bigger difference than
raising money, and you do so in a way that
is intellectually challenging, diverse and
interesting." Shortly thereafter in 2007, just
after he turned nineteen, Nat started 180
Degrees Consulting, now the world's largest
university-based consultancy service, which
helps non-profit organisations overcome
challenges they face. Nat realised that uni-
versity students had more to offer than col-
lecting money and raising awareness – they
could offer their skills to the non-profits
who were in need of thoughtful advice. "I
wanted to connect the skills of uni students
with the needs of non-profits in a way that
was mutually beneficial," he says.
Thanks to 180 Degrees Consulting,
students across the world can now receive
training by top-tier consulting firms and
apply their skills to solving real-world prob-
lems. In the seven years since its launch,
the organisation has evolved from a small
student group run out of library rooms and
coffee shops to operating 43 branches in 22
countries, with negotiations now underway
over the opening of a new headquarters
in New York. Nat explains, "When I first

"Something I've realised in going
to Oxford is that the world is much
smaller and more malleable than
what most people think. I quite
like that idea - that a lot can be
changed and we can challenge the
way a lot is done."
on expectations of what others think they
should do. Artificially removing this from
the decision-making process can help you
may make decisions which are more accu-
rate and which you may be more thankful
for in the long term."
Nat also adds that university students
often shy from taking risks due to a fear
of failure. However, an equally important
and often neglected is that of regretting
not having tried. "If you consider both of
those risks and not just the former, it can
change your approach and motivate you
to start something you might not other-
wise start."
In his journey, Nat owes much to his
belief in not judging others based on first
impressions. "I was in Mombasa going to
Mtwapa and I was waiting for a matatu
– a minibus. I had been waiting for half
an hour and no matatu had come, so I
decided to get a taxi. I noticed there was
a guy sitting in the dirt on the side of the
road who looked kind of homeless and
like he had also been waiting. I offered
him a free lift. I thought I was just helping
out a homeless person. It turns out he
was actually the head of one of the largest
microfinance firms in Kenya – and this is
the area where I do my work. For the fol-
lowing three days he showed me around
and introduced me to the right people so
I could understand how things worked on
the ground. I guess that taught me you
shouldn’t judge people based on first im-
pressions. You want to treat everyone with
respect and kindness, and by assuming the
best in people, it may come to benefit you
in the future."
As for the future, Nat is considering
beginning a for-profit venture in micro-
insurance, to prove that it is possible do
a lot of good while still having a financial
return. "Something I've realised in going
to Oxford is that the world is much
smaller and more malleable than what
most people think. It’s not even a case of
six degrees of separation – it's closer to
two. In Sydney the world seems quite big,
but when I'm in London or New York or
Oxford, it seems quite small. I quite like
that idea - that a lot can be changed and
we can challenge the way a lot is done." ■
AD page

Mobile Africa
The IMF has coined the term ‘Africa Rising’ to describe the
story of the continent’s new economic growth. However,
many parts of Africa remain stricken with endemic social
and political corruption. Urban centres of economy lie
far from rural outposts isolated by poor infrastructure.
Impoverished communities exist detached from growing
international markets. For Africa’s new middle class, it is
the mobile phone that is the answer to these issues.
Manna Mostaghim
There is no singular African experi-
ence. Rather, Africa is a continent of
contradictions, blessed with unimaginable
mineral wealth but beholden to disruptive
and crippling forces. The continent has
become synonymous with never-ending
cycles of poverty, corruption, conflict and
illness. Traditionally, Africa’s economic
growth was said to be reliant upon external
aid and assistance. But the growth of a
burgeoning middle class in South Africa,
Tanzania, Nigeria, and Kenya has
started to redefine the overall
African experience. External
benefactors no longer satisfy the
continent’s economic growth.
Instead, Africa has begun to
cultivate a new elite class, with
the requisite skills and wealth to
support indigenous investment.
Ringing out resource waste
The inadequate state of public infra-
structure is proportionate to Africa’s
poor investment. Reliance by entrepre-
neurs upon public transport and commu-
nication technology has led to inconsistent
and inefficient results in business. As a
result, the experience of the mobile phone
in African economies continues to manifest
different realities. The mobile phone has
generated new sources of wealth in Kenya
and Nigeria. But the impact of the mobile
phone has also demonstrated the capacity
of new technologies to change or entrench
endemic problems for a new generation of
entrepreneurs.
Grace Wachira, a small business owner
in Kenya, told Bloomberg Businessweek
that her mobile phone cultivated efficiency
in her interactions with the market. Prior
to her use of the mobile phone, Wachira
was unable to make long-term plans in her
immediately local market. She wanted to
expand into other local markets but found
it impractical. Instead she was forced to
physically interact with her clients in actual
marketplaces. Products were made on
Wachira’s predictions, with the weak hope
that they would be purchased.
Wachira, like many other African entre-
preneurs, realised that mobile phones elim-
inate resource waste by enabling immediate
clarification of market needs before the
production of goods. They encourage
businesses to more effectively expand
into other markets and to form business
meetings with new clients. The supply and
demand of the market is more defined for
the entrepreneur, allowing them to gather
information about market interests that
can furnish potential investors with greater
data. Supply and demand of the market is
no longer founded on baseless speculation
and hope. Instead, the simple experience
of being able to communicate with a client
base prior to production enables entre-
preneurs to seize greater opportunities for
wealth creation with both hands.
Dialling back on tradition and
political hierarchies
Economist Jeffrey Sachs believes that the
mobile is a revolutionary tool that will
eliminate the isolation and endemic cor-
ruption hampering economic growth in
Africa’s economies. But isolation and cor-
ruption do not remain the only problems
for Africa’s rising economies. An unfair dis-
tribution of wealth and an unequal access
to opportunities remain problematic for
cultivating and supporting entrepreneurs.
Although the mobile phone allows new op-
portunities, it does not fully surmount the
obstacles faced by many potential business
owners.
Nonetheless, the mobile phone has less-
ened the dependency of African entrepre-
neurs upon local and social relationships
and informal recommendations. Receiv-
ing the mobile phone number of a new
business contact has become an alternative
and sufficient source for business network-
ing and future investment opportunities.
Business owners can now more easily
diversify their market output and widen
their market reach, simply by calling other
mobile phone users in other markets. This
has enabled a divestment from traditional
sources of finance that unevenly distrib-
uted wealth in local communities. Mobile
phones are thus facilitating the emergence
of a newer and younger generation of
entrepreneurs.
The blocked number: the lack of
investment in telecommunications
infrastructure
Tools like the mobile phone are often laud-
ed for the growth they create, without suffi-
cient examination of the systems that con-
tain them. The mobile phone might have
allowed greater access and connectivity, but
business people are still beholden to the
corruption and poor infrastructure of their
states. Businesspeople in Africa who use the
mobile phone still depend largely upon the
same infrastructure that heretofore defined

akin to a debit card. Although Mobile
Money creates a less formal and less tradi-
tional relationship than a bank account,
it has still signalled to global investors
the rising willingness of Africa’s popula-
tion to engage with financial institutions.
The success of Mobile Money has led to
a proliferation of similar services. Mod-
elled on Kenya’s M-Pesa Mobile Money
services, other banks, financial services and
telecommunication providers in Africa
have begun to emulate M-Pesa’s incredible
profits.
The use of Mobile Money has made the
continent’s wealth and prosperity more
measurable, and thereby facilitated greater
support for entrepreneurs from banks and
foreign investors. But the cultivation of
mobile phone technology still intersects
with recurrent problems in African invest-
ment, namely pre-existing disadvantage,
the corruption and inefficiency of the
state, as well as the failure of private-public
partnerships. The Mobile Money system
launched by the state-run Nigerian Bank
was supposed to ease online transaction
and banking for Nigeria’s 510 million
people without a banking account. How-
ever, the lack of financial literacy within
Nigeria’s population and the inefficiency
of the state in promoting private services
resulted in the service failing to become a
source of growth.
Two years after the government
launched Mobile Money, only 0.01% of
Nigerians have a Mobile Money account,
whilst 37% are unaware of the system’s
existence. The Nigerian population’s lack
of endorsement of the system characterises
the lack of engagement and support of
the population with the state. Unlike in
Kenya, private and public partnerships
were also overlooked in favour of the Nige-
rian government monopolising the state’s
Mobile Money services. For Airtel Nige-
ria’s Director of Regulatory Affairs and
Special Projects, Osondu Nwokoro, this
was the defining difference between Kenya
and Nigeria’s Mobile Money services.
Mobile Money’s lack of success in
Nigeria has compounded the hesitancy of
global investors to participate in Nigeria’s
growing economy. Mobile Money can thus
be seen as a double-edged sword. On one
hand, it can help to confirm Africa’s new
middle class, as it has done in Kenya. On
the other hand, its lack of endorsement
reflects poorly upon pre-existing systems,
as it has done in Nigeria.
Africa’s mobile phone future
The unprecedented penetration of the mo-
bile phone in Africa has surprised global
investors and market analysts. The popula-
tion’s acceptance of the mobile phone has
led international commentators to laud the
new technology’s incredible potential for
further social and economic development.
However, while the mobile phone looks
like a ‘miracle’ that can solve development
problems within the African market, it is a
tool, not a solution. The distinct experi-
ences of the mobile phone in Kenya and
Nigeria demonstrate that a tool is only as
good as the people who use it. Ultimately,
the mobile phone’s use and successes do
not circumvent problems on the African
continent. Africa’s future stability cannot
be predicated on a single tool like the
mobile phone. Instead, it will always re-
quire further cultivation of social, political
and economic stability. ■
THE MOBILE PHONE MIGHT
HAVE ALLOWED GREATER
ACCESS AND CONNECTIVITY,
BUT BUSINESS PEOPLE ARE
STILL BEHOLDEN TO THE
CORRUPTION AND POOR
INFRASTRUCTURE OF THEIR
STATES
the continent’s business culture. This is
because telecommunication companies are
still reliant on the public infrastructure that
previously inhibited growth. According to
a report by the African Economic Outlook,
poorer African nations might have a high
rate of mobile phone penetration, but
the investment in infrastructure has been
limited or stayed. The lack of investment
inhibits wider connectivity to international
markets. Consequently, African nations are
being outpaced by rapid advancements in
the global community’s telecommunica-
tions arms race.
As a result, the experience of Grace
Wachira in Kenya might not be similarly
emulated in other rapidly growing African
economies like Nigeria. Indeed, Foreign
Policy analyst Aly-Khan Satchu describes
Nigeria as being one of Africa’s ‘orphans’ –
nations where growth is stalled or unsus-
tainable. While the IMF’s Africa Rising
narrative lauds the rapid economic growth
of a group of the continent’s nations, less
emphasis is placed on orphan nations.
Although the mobile phone has aided
growth in sectors of the Nigerian economy,
that wealth continues to be confined to
the upper echelons of society. Unlike in
Kenya, Nigeria has a less open democratic
system and is currently grappling with
religious and political extremism in regions
throughout the country. Wealth, as a result,
is confined to urban centres where stable
markets continue to exist.
Africa’s blank cheque
World Bank predictions speculate that Af-
rica Rising will contribute to overall global
economic growth by five percent. Johan-
nesburg’s Ernst & Young office claims that
Africa’s middle class and its demand for
luxury goods have expanded the notion of
the African experience for global investors.
But a persistent aggravation against foreign
investment derives from the continued
hesitation of certain sectors of the African
population to engage with banking institu-
tions.
Only a quarter of Africa’s population
has a bank account. This results in an
ignorance of per capita wealth, frustrating
conditions for foreign investment. Instead,
foreign investors remain cautiously opti-
mistic about Africa’s growth, investing very
little in the continent’s markets for luxury
goods and services. Consequently, much
industry is confined within Africa, limiting
the expansion and growth aims of indig-
enous entrepreneurs.
Mobile Money
Mobile phones have also been used by Af-
rican banks to encourage a greater engage-
ment with financial institutions by Africa’s
population. While only 25% of Africans
have a bank account, 80% have access to
a mobile phone. Banks in Africa recog-
nise the market penetration of the newly
established mobile phone industry and
have attempted to use this new technology
to entice populations traditionally sceptical
about having bank accounts by launching
Mobile Money initiatives.
Mobile Money acts as a money-to-money
transfer through an individual’s mobile
phone. Although the accounts can be
attached to bank accounts, they often act
instead as a form of mobile phone credit,
THE MOBILE PHONE HAS ALSO DEMONSTRATED THE CAPACITY
OF NEW TECHNOLOGIES TO CHANGE OR ENTRENCH ENDEMIC
PROBLEMS FOR A NEW GENERATION OF ENTREPRENEURS
WHILE ONLY 25% OF AFRICANS
HAVE A BANK ACCOUNT, 80%
HAVE ACCESS TO A MOBILE
PHONE

What matters most when looking
for suitable stocks?
The current equities landscape is flooded
with opportunities within a broader
macroeconomic scene characterised by
a soaring property market, depreciat-
ing Australian dollar and low interest
rates. Most recently, blue-chip energy
stocks have decreased from previous high
levels as investors respond to declin-
ing commodity prices, while there have
been upward moves in transport-related
stocks such as Qantas and Toll, which
may benefit from lower future fuel costs
and higher profit margins. But before
examining market opportunities present
against this backdrop, certain qualitative
and quantitative criteria must be consid-
ered for investable businesses. As future
stock prices are correlated heavily with
future earnings, a company must be in a
satisfactory financial condition at the time
of purchase to be able to execute reinvest-
ment opportunities that will improve the
company’s future earnings.
The ideal financial condition is
evidenced by large sums of cash on the
balance sheet, since cash can quickly
be deployed into expansion strategies,
acquisitions, or cost-efficiency manoeuvr-
ers. Moreover, the company should have
manageable debt levels, given debt stifles
the ability of the company to generate
free cash flows. Although many invest-
ment checklists recommend basic criteria
like, "long-term debt less than 2x working
capital, or debt-EBITDA ratio less than 5
or only look for companies with a debt/
equity ratio below X%," ultimately, each
company’s historic debt levels must be
compared to their previous operating
performance. If a company has generated
meaningful operating results despite not
satisfying any of these criteria, would this
fact alone render the investment a poor
one? Certainly not.
Of equal importance to the company’s
ability to pursue earnings growth is
whether it has a proven plan to expand
earnings. In this inquiry, intentions of
management for growth must be consid-
ered with caution, as promising intentions
do not always yield the desired results.
Earnings may grow through more com-
petitive cost structuring, debt refinanc-
ing, new product and service offerings,
exploiting untapped pricing power and
improving sales. A company must not
only have demonstrated such strategies,
but any earnings growth must be sustain-
able for at least the period of time the
investor holds the stock.
Why is this important? The growth
profile of any business cannot last forever.
Eventually, sales from expansion into new
markets slow and there are little room
for further cost improvements, or the
company cannot fund earnings growth
without causing strain to its balance
sheet. An example of this is M2 Telecom-
munications, whose acquisitive growth
model over the last decade has shifted
Ehren Heilman
Regardless of which investment philosophy is adopted, an investor ought to concern
themselves primarily with the search for companies whose earnings will be significantly higher
in the future.
The Earnings
Game:
Picking the winners

the withdrawal of mining exploration and
Greenfield development, it has produced
excellent operating results, doubling
earnings per share to 70.2 cents from the
previous period, attributed mainly to the
heightened demand for processing ore. Its
2014 half-year revenues of $928.4 million
have almost matched their total revenues
of $1.09 billion from fiscal year 2013.
Notwithstanding the lower iron ore prices,
many mining companies have boosted
production to grow earnings through
higher volumes and Mining Resources
Limited is positioned well to benefit from
this. At the moment, it trades at an attrac-
tive P/E ratio of 6.12 and is maintaining a
solid 21.38% return on equity.
Elsewhere in the market, Flight Centre
currently trades at a P/E ratio of 19.77
and on many fronts may appear to be
an attractive proposition. Since topping
at $55.57 a share in March of this year,
Flight Centre’s stock price now hovers
around the $40 dollar mark, representing
a drop of 27% in nine months. When-
ever there is such a significant drop in the
market value of a company, the question
for the investor is whether this devaluation
can be justified by the company’s funda-
mentals. On the one hand, the Ebola crisis
and the depreciation of the AUD have
diminished investor confidence in Flight
Centre’s longer-term prospects. However,
as of June this year, Flight Centre has
no debt and over $400 million in cash,
generally adding around $200 million
of free cash flow every year to be either
reinvested, paid as dividends, or used for
share repurchases. Examining Flight Cen-
tre’s cost structure relative to competitors
like WebJet and Wotif, the company has
generated returns on equity of 20% over
many years, indicating it enjoys at least
some competitive protection of its earning
power and market position.
In the years following the GFC, Lend
Lease was an undervalued company hover-
ing around a share price of $6.50-$7.50
for most of 2010-2012. In the most recent
financial year ending June 2014, Lend
Lease achieved earnings growth of 50%,
having a robust, diversified earnings base
including construction, settlements in
residential operations, and the Investment
Management business in Asia. The nature
of the property development business and
Lend Lease’s large development pipeline
is that capital investments today do not
generate earnings for the income state-
ment until many years down the track.
This means that the injection of almost
$1 billion of production capital into their
pipeline in 2014, into such projects as the
Barangaroo South development and the
Batman’s Hill redevelopment site in Mel-
bourne – with expected end development
value of $1.5 billion – will not generate
significant earnings for the company until
they are completed.
Until this time of completion, the
prudent investor has an opportunity to
purchase Lend Lease stock knowing these
investments will have a pay-off in the
short-medium term. Although it may be
suggested these future earnings have al-
ready been discounted into the share price,
this is countered by Lend Lease's conserva-
tive P/E ratio of 10 and 0.6 price-sales
ratio. Lend Lease also has a strong balance
sheet, holding cash and equivalents of $1.7
billion and an undrawn capacity of $1.3
billion, thereby conserving enough finan-
cial flexibility to fund growth opportuni-
ties as they arise. From a qualitative and
quantitative perspective, Lend Lease is a
company ripe for future share price growth
possessing many of the aforementioned
characteristics – a strong balance sheet,
large investment in income-producing
assets, and competent management. ■
THE LESSON TO BE LEARNED
FROM TELSTRA IS ONE THAT
CAUTIONS AGAINST INVESTING
SOLELY ON A DIVIDEND BASIS.
towards a more organic growth model as
management directs its focus now to the
integration of acquired businesses. The
market’s adjustment to this new strategy
saw the stock price drop 6% in the six
months to February 2014. Clearly, the
stock price of a company can be affected
when the market realises it cannot sustain
its earnings growth. Similarly, this may be
the case where a company has generated
higher revenues over the last two years
from investment into brand building and
marketing. Because this investment in
company advertising will yield diminish-
ing returns over time, if an investor was to
rely solely on this investment as a reason
for buying the stock, it may turn out to
be a poor decision if the benefits of the
investment are already built into the stock
price. Hence, it is necessary to always con-
sider not only what the company is doing
to increase earnings, but how sustainable
the likely earnings growth will be.
How important is the dividend
policy?
As a shareholder in a company, returns
derive from both dividends paid and capi-
tal gains in the stock price, both of which
depend on what happens to earnings over
time. Although high dividends may appear
alluring, companies paying high dividends
out of earnings will cripple their ability
to reinvest retained profits into profitable
ventures. This has been highlighted by Tel-
stra Corporation, which on a capital-gains
basis has been a poor investment given the
share price has only risen to $5.69 today
from its $5.02 close in 2004 – certainly in-
sufficient to protect an investor’s purchas-
ing power against inflation. The unsatisfac-
tory result has largely been explained by
Telstra’s stagnant profits, which has been
virtually unchanged at $4.3 billion from
the 2004 to 2014 fiscal years. It ought
to be queried whether a company that
continues to divest non-core assets and
increase debt to fund little earnings growth
can be considered a sound performer in
light of the fact it has generated over $23
billion in free cash flows over the last dec-
ade. The lesson to be learned from Telstra
is one that cautions against investing solely
on a dividend basis.
Compare Telstra to the growing tel-
ecommunications leader, M2 Telecommu-
nications. Over the same 10-year window,
M2’s dividend yield has been noticeably
lower than Telstra’s since it has had to
retain profits to fund approximately $500
million of acquisitions, including Eftel,
Dodo and Primus telecom. This earnings
growth has resulted in the share price
moving from $0.26 to over $8 in the last
decade, a compounded annual return of
over 35%.
The current equities market
How do these qualitative factors apply to
the current equities market? In the min-
ing sector, Mining Resources Limited is
a mining services company which has a
core business in assisting companies with
crushing and processing ore. Despite other
companies in the sector suffering from
A COMPANY MUST BE IN A
SATISFACTORY FINANCIAL
CONDITION AT THE TIME OF
PURCHASE TO BE ABLE TO
ExECUTE REINVESTMENT
OPPORTUNITIES THAT WILL
IMPROVE THE COMPANY'S
FUTURE EARNINGS
ALWAYS CONSIDER NOT ONLY
WHAT THE COMPANY IS DOING
TO INCREASE EARNINGS, BUT
HOW SUSTAINABLE THE LIKELY
EARNINGS GROWTH WILL BE

Ash Anderson
These 'miracle' companies
are using the power of the
market place to solve the
most pressing societal
problems
There are a staggering 600,000 registered charities in
Australia. This equates to one charity for every 40
people in the country. In this highly saturated market,
competition for finite donations and government funding
is intense. Every dollar of donation received by one charity
effectively takes away from competing charities and causes,
and the charities that receive the largest slice of the funding
pie are ultimately those with the most effective marketing
campaigns, rather than those representing causes where
money is most needed. While charities like World Vision
receive over $100 million annually, smaller charities may
collect only $5,000-$10,000.
The rate of charity start-ups is also startling: 10,000 new
charities have been established since 2007, representing in-
credible spending on operational costs, when much greater
efficiency could be achieved through pooling together
resources to reduce administrative and technology costs,
and less overall competition.
These deep flaws with the charity model have sparked
the emergence of 'hybrid' social enterprises: commercially
viable businesses dedicated to generating social impact.
These 'miracle' companies are using the power of the
market place to solve the most pressing societal problems,
and are lead by social entrepreneurs: individuals who seek
to circumvent the problems faced by charities by apply-
ing a business mindset to develop sustainable models for
promoting widespread social change.
In the competitive market of not-for-profits, competition for finite donations and government funding
is intense. But the increasing prominence of the social enterprise model may prove to be the
ultimate solution to driving lasting social change.
Ashley Anderson
Deep flaws with the charity
model have sparked the
emergence of 'hybrid' social
enterprises: commercially
viable businesses dedicated
to generating social impact
There are a staggering 600,000 registered charities in
Australia. This equates to one charity for every 40
people in the country. In this highly saturated market,
competition for finite donations and government
funding is intense. Every dollar of donation received
by one charity effectively takes away from competing
charities and causes, and the charities that receive the
largest slice of the funding pie are ultimately those with
the most effective marketing campaigns, rather than
those representing causes where money is most needed.
While charities like World Vision receive over $100
million annually, smaller charities may collect only
$5,000-$10,000.
The rate of charity start-ups is also startling: 10,000
new charities have been established since 2007,
representing incredible spending on operational costs,
when much greater efficiency could be achieved through
pooling together resources to reduce administrative and
technology costs, and less overall competition.
These deep flaws with the charity model have
sparked the emergence of 'hybrid' social enterprises:
commercially viable businesses dedicated to generating
social impact, lead by social entrepreneurs who seek to
circumvent the problems faced by charities by applying
a business mindset to develop sustainable models for
promoting widespread social change.

Compartamos Banco providing financial education to children in Mexico
concept, it is not without its challenges.
Like any other business, a social enterprise
faces, foremost, the risk of failing to make
profit. A survey published in the Harvard
Business Review found that 71% of social
enterprises do not make profit. Only 5%
manage to break even. Often, decisions
that need to be made in order to keep a
business afloat – such as reducing staff or
salaries – challenge a social enterprise's
priorities and values.
Additionally, social enterprises struggle
to achieve their social goals. By operat-
ing with a business mindset, the social
business is susceptible to tunnel vision. It
might focus on achieving a goal without
a comprehensive understanding of its
social impact. Social endeavours run by
businesses can often cause more harm
than good. American online retailer
TOMS Shoes donates shoes to developing
countries around the world for every shoe
sale it makes. Ostensibly, the shoe dona-
tions are to assist in protecting the feet of
the disadvantaged and to help them avoid
soil-transmitted diseases. Critics have,
however, pointed out that dumping large
amounts of product into developing mar-
kets creates competition that forces local
businesses out. According to a 2008 study,
used clothing donations to Africa between
1981 and 2000 caused a 50% decrease in
employment in relevant clothing indus-
tries. Subsequently, the greatest challenge
is to meet their double bottom line of
both social and financial targets.
Simply measuring social impact is also a
challenge. A social enterprise must be able
to justify their social value if they seek to
leverage thteir contributions to socially-
conscious investors and consumers. While
profit and other economic effects are more
easily measured, measuring social value
is no easy task. How does one quantita-
tively measure the value of a child’s access
education, or provide an indication as
to the value of the employment of an
otherwise homeless and jobless individual?
While measures such as the Social Return
on Investment (SROI) have attempted to
monetise the social impact of projects, the
lack of available information makes the
process tremendously difficult.
Compartamos Banco: Profit at
what cost?
Further complexities arise when socially-
driven organisations decide to fully
embrace the profit-motive and subject
themselves to the whims of the market.
Compartamos Banco, a Mexican microfi-
nance bank founded in 1990 to alleviate
poverty, offers an interesting insight into
the ability of social enterprises to balance
competing social and economic goals. In
2007, the bank's management believed
that they could help people more effec-
tively by commercialising the bank. Com-
partamos Banco was floated with a USD
$467 million IPO that listed them on the
Bolsa Mexicana de Valores, the Mexican
stock exchange. Following the IPO, Com-
partamos Banco delivered annual average
returns on equity of 53%. These returns
were outstanding when considering that
in the same year, Mexico’s largest bank
BBVA Bancomer achieved a return on
equity of only 30.2%. The question posed
is, did this transformation overly compro-
mise the bank’s social mandate?
The profits were a direct result of money
paid by Mexico’s poorest individuals. The
bank was heavily criticised for charging
its customers interest rates that exceeded
100% on an annualised basis – rates
Social entrepreneurs struggle to stay
competitive in a capitalistic market that
rewards proﬁteering, without compromising
their social mandate
A Hybrid Model
The economy's 'third sector' of non-
profits is often a fascinating topic because
of the diversity of organisations that
comprise it. Yet little is known about
the scope, dimension and impact of this
sector on Australian society. Rapidly and
prominently emerging on this scene are
the social entrepreneurs: individuals who
possess the potential to circumvent the
problems faced by charities by applying a
business mindset to develop sustainable
and scalable models for promoting wide-
spread social change. Social enterprises
are organisations that operate as for-profit
businesses with a social goal at their core.
They may, for example, provide employ-
ment for marginalised people, such as
the elderly, disabled or mentally ill, as
exhibited by The Big Issue which hires
disadvantaged women and the homeless
to sell its magazines and offers them half
the sale price as profit. Every sale of the $6
magazine provides another $3 to a person
in need. Change.org supports petition
initiatives by deriving advertising revenue
through online social platforms. What
these social enterprises have in common is
the ability to create economic and social
value simultaneously – social value is
incorporated into their value chains.
Successful social enterprises maximise
their revenue by cutting out the cost of
fundraising. Compared to charities, fewer
resources need to be allocated by social
enterprises towards expensive fundrais-
ing or donation campaigns. They are able
to exist independent of the charity of
the citizenry by focusing on generating
revenue internally. Although social enter-
prises often seek donations, the donations
are supplementary to other dominant
revenue streams.
Additionally, revenue-generating social
enterprises can take advantage of an infi-
nitely more vast world of financial capital.
Australian charity donations amounted to
$2.2 billion in 2011, compared to $500
billion of foreign direct investment in the
same year. A successful social enterprise
allocated with capital funding can attract
high-performing staff and invest in the
infrastructure needed to expand into
alternative markets. On the contrary, if
the idea is unsustainable and the business
model ineffective, the social enterprise
would not be allocated capital funding by
the market and a more efficient business
will survive in its place.
Such businesses tend to fall within three
common social enterprise models. The
'profit generator model' involves engaging
in a trading activity which itself seeks only
a financial return, but the profits cre-
ated are effectively used to tachieve social
impact. Examples of this include Oxfam
shops and 'ethical' bottled water com-
panies which give a share of their profits
to charitable projects. Second, under the
'trade-off model', the business activity
itself has direct social impact, but the
business' social impact is reduced when
its financial payoff increases. Fair trade
businesses and microfinance institutions
fall into this model. The third, 'lock-step'
model involves the same activity which
produces the financial return also creating
social impact in direct correlation - such
as wind farms and organic food produc-
ers.
Challenges facing Social
Enterprises
Despite the seemingly 'win-win' situa-
tions promised by the social enterprise
Only 5% manage to break even. Often,
decisions that need to be made in order to
keep a business aﬂoat - such as reducing
staff or salaries – challenge a social
enterprise's priorities

Corporations and financial markets operate
within legal constraints, while statutory
provisions and judicial gloss are often
expressed with commercial realities in mind.
Due to regulations around the world, startup
companies have historically offered equity
predominantly to accredited or sophisticated
investors. However, the growing demand for
ordinary participants has led to significant
legislative reform. In essence, equity
crowdfunding allows individuals to purchase
fractional ownership stakes in startups with
minimal capital. With the introduction of a
new class of investors in what has traditionally
been the domain of Wall Street and Silicon
Valley, a significant rise in venture capital
investment is more than conceivable.
Equity Crowdfunding
From Wall Street to main Street
Peter KWag
which could easily be interpreted to be
exploitative. Muhhamad Yunus, the man
generally attributed with the creation of
social entrepreneurship and microfinance,
stated that the bank’s “priorities were
screwed up.” By charging such high in-
terest rates, Compartamos Banco seemed
to be privileging the economic goals of its
shareholders above its social goals. Being
accountable to private shareholders placed
the bank at risk of losing sight of its goals
to help reduce poverty in Mexico.
However, Compartamos Banco was
able to use the funds acquired from
the private sector to rapidly expand its
operations. In 2006 the bank had only
616,000 borrowers. It now provides
microfinance opportunities to over 2.5
million people. By channelling the funds
into developing and improving Mexico’s
level of financial inclusivity, the bank can
now justify its high interest rates. Only
by converting its financial model was
Compartamos Banco able to place itself
in a position from which it could unlock
access to international capital markets
and expand its service provision to a
greater number of people.
Commercialisation also has a notable
impact on competition in the market-
place. If microfinance banks like Com-
partamos Banco are able to prove their
profitability, they are likely to attract
further competition. In turn, this would
drive down prices, forcing banks to com-
pete with each other by lowering inter-
est rates. In the long term, there is the
potential to dramatically reduce financing
costs and lift access to microfinance for
everyone.
Survival of the Fittest
The lessons learnt from Compartamos
Banco pose difficult questions. How can
social entrepreneurs stay competitive in a
capitalistic market that rewards profiteer-
ing, without compromising their social
mandate? How do microfinance banks
avoid embodying the very loan sharks
they had sought to replace? The im-
minent transition from predominantly
charity models to social enterprise models
doubtlessly promises both incredible ben-
efits and new challenges. In embracing
many tenets of the private sector, social
endeavours can operate with efficiency
and an unprecedented access to resources.
What emerges as the key challenge now
is ensuring that social enterprises remain
focused on delivering the social value at
the forefront of their operations. ■
Simply measuring social impact is also a challenge. A social enterprise must be able to justify their social
value if they seek to leverage their contributions to socially-conscious investors and consumers. While proﬁt
and other economic effects are more easily measured, measuring social value is no easy task. How does one
quantitatively measure the value of a child’s access education, or provide an indication as to the value of the
employment of an otherwise homeless and jobless individual?

Disruption in Traditional Funding
Models
Primary and secondary capital markets
facilitate the voluntary reallocation of
resources based on marginal utility, thereby
promoting efficiency within a given econo-
my. Entrepreneurs seeking to launch or ex-
pand their businesses rely on these channels
for funding and support. These enterprises,
in turn, lead to technological and scientific
innovation, employment opportunities and
economic growth.
Based on composite indicators derived
from studies of corporations and sole
proprietorships, the United States, United
Kingdom, Canada, Australia and New
Zealand are among the countries with the
lowest regulatory burdens imposed on
new businesses. Aggregate venture capital
investment in the United States in 2012
and 2013 were USD $27.4 billion and
$29.7 billion, respectively, according to
the National Venture Capital Association.
There were 4,016 transactions in 2013
alone, with much of the funding allocated
to the software and biotechnology sectors.
Despite comprising more than half of the
world’s total population and economic
output, the Asia-Pacific region is responsi-
ble for a relatively minor portion of invest-
ment activity in the venture capital space
both nominally and as a percentage of gross
domestic product.
Venture capital is considered to be a
subset of private equity, with a primary
focus on companies in the early stages of
the corporate life cycle. Venture capital and
private equity firms rely on banks, pension
funds, wealthy university endowments
and other limited partners for their capital
base. General partners also contribute to
funds under management. Crowdfunding
forgoes these traditional sources of capital,
relying directly on members of the public
for support. This funding model is becom-
ing increasingly popular within the global
startup community.
Currently, there are a number of suc-
cessful crowdfunding platforms that are
based on donations or alternative rewards.
Debt crowdfunding, also referred to as
peer-to-peer lending, is of limited relevance
to startup companies due to its reliance
on creditworthiness and the strain placed
on cash flow. Equity crowdfunding, in
contrast to the other variants, gives partial
ownership of the enterprise to groups of
investors. Due to this primary distinction,
equity crowdfunding continues to attract
significant debate and controversy.
Legal and Regulatory Challenges
The underlying instrument in equity
crowdfunding falls under the definition
of an ‘investment contract’ based on the
‘Howey test’ established by the Supreme
Court of the United States in 1946. Due
to this classification and applicable federal
laws, equity investment in startup com-
panies has traditionally been limited to
accredited investors. Under the United
States Securities Act of 1933, individuals
and other entities are accredited pursuant
to the provisions in rule 501 of regulation
D. Accredited investors include, among
others, banks, insurance companies, regis-
tered investment companies and business
development companies.
For an individual to be classified as an
accredited investor, a personal or joint net
worth of USD $1 million is required at the
time of the investment, excluding primary
AS A RESULT OF THEIR
INTEGRATED RELATIONSHIP,
LEGAL FRAMEWORKS AND THE
COMMERCIAL TRANSACTIONS
WITHIN FREqUENTLY SHIFT
OVER TIME TO ACCOMMODATE
DEVELOPMENTS IN ONE
ANOTHER
residence value. Alternatively, personal
or joint gross income in each of the two
preceding years must have exceeded USD
$200,000 or $300,000, respectively, with a
reasonable expectation of a similar figure in
the current year.
In Australia, a financial product is broad-
ly defined by section 763A of the Corpora-
tions Act 2001 as a ‘facility’ used to make
a financial investment, manage financial
risk or make non-cash payments. The
financial instrument required for equity
crowdfunding would clearly fall within the
scope of this provision, which relies largely
on function rather than form. Therefore,
equity crowdfunding would face similar
regulatory obstacles within Australia.
Startup companies in Australia have, to
date, only been permitted to solicit equity
investments from sophisticated investors
within the public, facing a host of regula-
tory hurdles otherwise. Under section
708 of the Corporations Act 2001 and
regulation 6D.2.03 of the Corporations
Regulations 2001, an investor would need
at least AUD $2.5 million in net assets or
a gross income of at least AUD $250,000
in each of the two preceding years. Further
constraining entrepreneurs, the section 113
provision restricting proprietary compa-
nies to 50 non-employee shareholders has
also precluded broad crowdfunding as an
option.
Reforms around the World
As a result of their integrated relation-
ship, legal frameworks and the commercial
transactions within frequently shift over
time to accommodate developments in
one another. There are legitimate reasons
non-accredited investors may seek equity
rather than alternative rewards in ex-
change for their investment, and startup
companies may similarly benefit from this
additional source of capital. Responding to
this demand within the market, title III of
the Jumpstart Our Business Startups Act
of 2012, augmented by the correspond-
ing rules put forth by the Securities and
Exchange Commission, addresses equity
crowdfunding for non-accredited inves-
tors in the United States. In Australia, a
similar sentiment was first expressed by the
Corporations and Markets Advisory Com-
mittee in its June 2014 report.
Equity crowdfunding is becoming
increasingly prevalent around the world,
with varying degrees of reception with
regard to ordinary, non-accredited inves-
tors. In the United Kingdom, the Financial
Conduct Authority permits non-accredited
investors to participate in equity crowd-
funding, provided that they limit their
investment to 10% of net assets in any
particular year. In Canada, securities
regulation is subject to regional provisions
due to its strongly decentralised system.
The respective legislative and regulatory
bodies of several provinces have expressed
support for equity crowdfunding involving
non-accredited investors, with a number of
proposals or enactments to that end.
In any jurisdiction mulling over whether
to allow ordinary investors to participate,
there will invariably be certain limitations
imposed on a transactional or annual basis
to reduce exposure. There are also con-
straints on the aggregate amount of capital
an individual startup may raise through
this avenue. While investment caps and
disclosure requirements are laced with
strong political overtones, with free market
advocates favouring higher investment
allowances and less stringent standards, the
NOTWITHSTANDING THE
IMPERATIVE OF PROTECTING
ORDINARY INVESTORS,
ExCESSIVE REGULATION
INHIBITS MARKET DYNAMICS
AND SHOULD BE AVOIDED AS A
MATTER OF POLICY

overarching goal of stimulating innova-
tion and economic progress remains at the
forefront.
Commercial Implications
A legislative emphasis on value creation
and free market principles would best
promote the transfer of funds from those
with excess resources to entrepreneurs in
need. Enabling the participation of non-
accredited investors in equity crowdfund-
ing provides access to potentially lucrative
returns, while greatly expanding the pool
of available capital. This must be tempered
by a number of other considerations, how-
ever, not the least of which is the vulner-
ability of individuals lacking the business
acumen necessary to accurately evaluate
investment opportunities. Notwithstand-
ing the imperative of protecting ordinary
investors, excessive regulation inhibits
market dynamics and should be avoided as
a matter of policy.
The stark contrast between accredited
and non-accredited investors has several
key implications. As a matter of course,
accredited investors conduct extensive due
diligence on investment candidates and
ensure that only the most viable startups
receive funding. They generally spend a
significant amount of time scrutinising
financial statements, industry trends and
the competitive landscape prior to putting
their capital at risk. Non-accredited inves-
tors may be more vulnerable to manipula-
tion, incapable of properly discounting
the often wildly optimistic valuations of
budding entrepreneurs.
Furthermore, the considerable resources
and strategic guidance offered by accred-
ited investors maximise the likelihood
of the success of portfolio companies.
Venture capital firms and angel inves-
tors provide support with a specific exit
strategy in mind, often in the form of an
acquisition or an initial public offering.
This type of oversight can be invaluable in
circumstances where an entrepreneur has
only a limited grasp of market and busi-
ness concepts. In equity crowdfunding,
the ordinary members contributing funds
will be minority shareholders without the
capacity to influence the strategic trajec-
tory of the startup.
Another anticipated pitfall of equity
crowdfunding for non-accredited inves-
tors involves the potentially lower quality
of businesses incapable of attracting the
‘smart money’ described above. Those
unable to secure the required capital
through this option may view non-
accredited investors as the only available
recourse. This could ultimately raise the
risk level of companies requesting contri-
butions from the ordinary investor com-
munity, the members of which may have a
risk tolerance significantly lower than that
of accredited investors with other means of
diversification.
Erosion of Market Boundaries
As the world becomes increasingly glo-
balised, traditional barriers between capital
and labour markets, geographic or other-
wise, are becoming less relevant. How-
ever, economic, political and regulatory
structures within the international com-
munity fall across a wide spectrum. While
common law countries have a shared
history stemming from English precedent
and preserved by way of reception statutes
upon independence or self-governance,
there has been substantial divergence in
the various jurisdictions’ approaches to
securities regulation.
These barriers present a challenge to nas-
cent enterprises appealing for funds from
residents in a jurisdiction outside their
own. International microfinance organisa-
tions like Kiva Mictrofunds, Hope Inter-
national and Opportunity International
circumvent such obstacles by precluding
the possibility of the ultimate bearers of
risk making any profit. The flow of funds
from industrialised to developing nations
fosters economic expansion, providing
entrepreneurs with access to otherwise
unavailable capital.
In contrast, the inherently profit-driven
character of equity crowdfunding leads
to more stringent regulatory provisions.
Therefore, additional cooperation and
reform would best facilitate the efficient
movement of capital across the inter-
national community of non-accredited
investors and prospective entrepreneurs.
This would be a welcome development for
businesses operating in countries associ-
ated with lower levels of venture capital
investment relative to economic output,
as well as a step forward in global market
integration. ■
AS THE WORLD BECOMES INCREASINGLY GLOBALISED,
TRADITIONAL BARRIERS BETWEEN CAPITAL AND LABOUR
MARKETS, GEOGRAPHIC OR OTHERWISE, ARE BECOMING LESS
RELEVANT

Aaren Cristini
#FemiNExT:
Female entrepreneurs in fashion and
technology
Women spend 30%-50% more time
online than men. The majority
of online purchases are completed by
women- in the United States, they account
for 80% of online consumer spending.
However, their online astuteness has not
transferred evenly throughout the private
sector. Recent statistics indicate that
women only hold 10%-20% of technol-
ogy positions in global technology firms
including Google, Facebook and Twit-
ter, despite the fact that they constitute
60-70% of active users on these platforms.
The underrepresentation of women in
technology professions suggests a possible
gap between the corporate understand-
ing of women and their preferences as
consumers. However, fashion and beauty
start-ups founded by female entrepreneurs
are transcending enduring prejudices, by
leveraging their intuitive vision toward the
most enthusiastic online users.
The significant Other: Paying
money but not raising money
Women are typically mentioned in the
same breath as the family unit, population
growth and other socio-cultural variables,
but their importance to the economy is
often overlooked.
Though the United States is home to the
largest venture capital market in the world,
a mere 11% of venture capital investors
are women. Angel investors, known to
provide capital to start-ups during earlier
stages, are inclined to select projects run
by entrepreneurs harnessing attributes they
identify within themselves. As the major-
ity of angel investors are men, there is an
immediate obstacle to female entrepre-
neurs when it comes to finding common
ground. This is not suggesting all male
investors deliberately discriminate against
women, but venture capital is a field that
prefers familiarity when building relation-
ships. The minority status of women in
venture capital may arouse an unconscious
prejudice as a result. Certainly women
receive only 16% of loans – constitut-
ing 4% of the total value of debt granted
to start-ups, despite the fact that 30%
are founded by women. Unsurprisingly,
the funding gap has led to a diminishing
trend for the number of women becoming
entrepreneurs.
Faced with this predicament, some
singularly important implications arise.
Babson University extrapolates that if
female entrepreneurs received equal seed
funding to their male counterparts, in five
years there would be six million new jobs.
Empowering women in the workforce,
especially in the superseding, rapidly grow-
ing technology industry, would undoubt-
edly drive economic growth- after all, they
make up half the population. As such,
barriers that deprive women of the same
opportunities to contribute and maximise
their potential through the creation of
jobs or access to capital also deprive the
economy itself from realising its potential.
Exceptions to the rule: when being
cliché is being different
While numerous female entrepreneurs
have overcome the funding disadvantage,
many have had to persevere through the
stereotypes and gender biases in order to
receive the respect that they deserve. One
of them is Jennifer Hyman, co-founder of
e-commerce start-up, Rent The Runway,
an online rental service for high-end,
designer outfits. Hyman mentions in an
interview with Forbes that one of the first
venture capital investors she approached
interrupted and rejected her proposal with
the comment, “You are just too cute. You
get this big closet and get to play with all
these dresses and can wear whatever you
want. This must be so much fun!” Five
years later, her firm enjoys a forecasted
valuation of over US$750 million. This
demonstrates the aforementioned gap in
understanding between women and the
mentality of some male investors and
employers, who perceive women pursuing
feminine concepts as pet projects rather
than serious businesses.
Poshly is a market insights firm that
offers the opportunity to win beauty
products in return for responses to unique,
‘hyper-personal’ survey questions about
“FASHION HAS TO DO WITH IDEAS, THE WAY WE LIVE, WHAT IS HAPPENING.”
– CoCo Chanel
their beauty habits. The aggregation of its
user-provided data has proven to provide
valuable and reliable market research for
sale to other businesses, generating the
start-up’s main revenue stream. Since
being established, Poshly has raised over
US$2 million and formed major partner-
ships with brands that include L’Oreal
and Unilever. Its success derives from
recognising the worth of extracting data
from women for brands focused on female
consumers. Co-founder Doreen Bloch
acknowledges that the technology industry
can be alienating for women, but adds,
“Honestly, there isn’t time to focus on
gender when you’re running a company –
I just focus on doing the best job I can.”
Prior to founding the business, Bloch had
interned at Yahoo! and other startups.
She credits the exposure these opportuni-
ties provided her within the technology
industry with enabling her to realise her
ambitions and cultivate her passions.
Bridging the gap between Mars
and Venus: the marriage of
technology and fashion
As Karl Lagerfeld recognised, “fashion
is not only about clothes – it’s about all
kinds of change.” With firms like Rent
the Runway and Poshly seeking alterna-
tive perspectives in their pursuit of market
leadership, these words ring true. Both
exemplify how the development of a
symbiotic relationship between technology
and fashion is successfully breaking down
gender biases, stereotypes and other barri-
ers to women’s participation. Their start-
ups illustrate the success of women who
target other women by using their mutual
needs as a way to identify lucrative, un-
tapped market segments. This foregrounds
not only the benefits of diversity and
equal opportunity through encouraging
fresh perspectives, but also underlines the
potential of women to bring unique ap-
proaches and intellectual capital that can
later be adapted for application to other
business concepts, especially within the
rapidly expanding e-commerce sector.
A welcome influx of female involvement
in the technology industry has been char-
acterised by the continued coalescence of
fashion and technology. Former Burberry
CEO Angela Ahrendts and Yves Saint
Laurent European President Catherine
Monier were both recently poached by
Apple for high-level executive positions.
Products such as the Apple Watch and
Intel’s MICA signal the advent of wearable
technology as an everyday reality.
Ralph Lauren famously said, “I don’t
design clothes. I design dreams.” With
technology firms seeking fashion advice,
hopefully it will soon become stylish for
technology firms and venture capital-
ists alike to fulfil the dreams that women
design themselves too – because fashion
is what you’re offered, style is what you
choose.■

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