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8 | FORBES APRIL 14, 2014
CONTENTS APRIL 14, 2014
STRATEGIES
40 | BIOTECHS NEXT BIG THING
After decades of experimentation and failure
is gene therapy nally ready for prime time?
Investors certainly think so.
BY MATTHEW HERPER
44 | THE GREEN MONSTER
Winning the World Series was nice, but John
Henry and his Fenway Sports Group have
plans to build a global sports juggernaut.
BY KURT BADENHAUSEN
TECHNOLOGY
46 | HOW MUCH DID YOU PAY FOR
THAT LIPSTICK?
Big data is helping customers price goods
according to a customers willingness to pay.
BY ADAM TANNER
INVESTING
50 | MERGER MIRAGE
Acquisitions are on the rise and winning
investors favor. But loose accounting rules
can make even a bad deal look good.
BY DANIEL FISHER
54 | BETTING ON BILLIONAIRES,
NOT BUBBLES
Kinetics Internet Fund crashed when the
dot-com bubble burst. Now its killing it by
avoiding future dot-bombs.
BY BRIAN SOLOMON
57 | GET YOUR MONEY MANAGED
FOR FREE
Some ETFs have negative expenses.
The trick: securities lending.
BY WILLIAM BALDWIN
40 | GENE THERAPY GURUS
Firms like Nick Leschlys Bluebird Bio
are tackling rare diseases with next-gen
treatmentsand attracting big
investor interest.
44 | TODAY BOSTON,
TOMORROW THE
WORLD
Major League
Baseball was just the
start of the
Fenway Sports
Groups ambitions.
50 | M&A MISCHIEF
How to dress up a loser as a winner.
66 | BOBAMACARE
Pet insurance:
marginal product,
great business.
46 | PERSONAL
PRICING
FreshPlums
diferential-
pricing
algorithm
turns reluctant
shoppers into
eager buyers.

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CONTENTS APRIL 14, 2014
62 | PORTFOLIO STRATEGY
BY KEN FISHER
Only two things can stop the bull market.
64 | INVESTOR CHECKUP
BY WILLIAM BALDWIN
Is your fund trading too much?
65 | SMALL STOCKS
BY JIM OBERWEIS
The case for stocks with crazy P/Es.
ENTREPRENEURS
66 | PET PROJECT
How a British couple turned the shock of
a $5,000 vet bill into a $53-million-a-year
business.
BY KARSTEN STRAUSS
FEATURES
70 | THE INNOVATION FACTORY
Sequoia Capital is Silicon Valleys search engine
for disruptionand billionaires.
BY GEORGE ANDERS WITH ALEX KONRAD
Plus: The Midas List
82 | MONSTER MOVE
Vince McMahon sucker punched his traditional
TV partners when he launched the WWE
Network earlier this year. The unorthodox
maneuver could transform his businessor he
could fall at on his face.
BY MICHAEL SOLOMON AND DANIEL FISHER
90 | HIGH TIMES!
Meet the shady band of ex-cons, ganja-preneurs
and multilevel marketers behind
the great pot penny stock boom of 2014.
Dont say we didnt warn you.
BY NATHAN VARDI
96 | CAN THIS MAN FEED
THE WORLD?
Harry Stine built an obscure $3 billion empire
by breeding a better soybean seed. Now the
richest man in Iowa thinks he has revolution-
ized corn, the Earths most popular crop.
BY ALEX MORRELL
82 | CABLE
CUTTER
Pro wrestlings
billionaire is
streaming his act
directly to his fans.
106 | THE WHISKEY FROM WACO
The nest brown liquor comes not
from a glen in Scotland but from an
underpass in Texas.
90 | MARIJUANA MADNESS
Michael Monas high-ying
investors could see everything
go up in smoke.
LIFE
106 | THE BALLAD OF BALCONES
Want to nd the best single malt whiskey in the
world? Look under a bridge in Waco.
BY ABRAM BROWN
112 | THOUGHTS
On taxes.
BrandVoice
BY SAMSUNG
Launching Students Into Science:
How a Middle School
Touched Outer Space 99
96 | THE SEED IS STRONG
Harry Stine has revolutionized
American agriculture. Twice. His
corn could do it again.

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APRIL 14, 2014 VOLUME 193 NUMBER 5
Native Advertising
Catches On
BY LEWIS DVORKIN
My rst sales trip for FORBES was a stop in Detroit in Au-
gust 2010, memorable for the heat, the humidity and a chilly
reception. I was pitching BrandVoice, then called AdVoice.
The ad agencies and clients we visited didnt get it. Still, we
pressed on with a product for advertisers that few other pub-
lishers ofered. Soon came the buzzwordnative advertising.
Fast-forward to 2014. Marketers are rushing to native
ads. For the most part, journalists abhor them. Weve had
38 digital BrandVoice partners, 18 in print (see p. 99). Each
is publishing content, always transparently labeled, to
engage with consumers in a new way. Heres a look at the
state of play.
1) Competition: Its getting crowded, though the intent
of many publishers often remains unclear: a strategy
betting the world of social media or a gambit to grab
buzzy ad dollars?
2) Transparency: A year or so ago it referred to the clear
identication of marketer content. Today it also means vis-
ibility into success metrics for the marketers themselves.
3) Content Creation: FORBES has a brand newsroom
reporting to sales that acts as an editorial resource. Others are
assembling in-house studios to produce native content.
4) Presentation: Digital platforms, such as FORBES, ofer
seamless integration within the consumer experience. Tradi-
tional websites prefer stand-alone treatments.
5) Ad Networks: Their goal is scale. The rub: For publishers,
it turns a premium buy into something far less. For market-
ers and consumers, whats native about the same content
everywhere?
6) Evaluation: Its all over the mapunique visitors, page
views, likes, shares, tweets, retweets, etc. The endgame is to
drive business, which leads to proxies that try to get at sales.
7) The Players: Ad agencies are building newsrooms to
service clients, who are building newsrooms to run around
p.r. rms, who are building newsrooms to compete with
agencies.
Detroit seems a long way of. In a report released in Janu-
ary the Interactive Advertising Bureau said 66% of agencies
and 64% of marketers intend to spend money on native ads
in the next six months. Advertising will continue to evolve in
the world of social media. Native ads are clearly a big piece of
the march forward. F

APRIL 14, 2014 FORBES | 15
FACT & COMMENT STEVE FORBES
FORBES
A CRY TO CONGRESS:
SAVE THE INTERNET!
BY STEVE FORBES, EDITOR-IN-CHIEF
With all thy getting, get understanding
Senate candidates. Knowing how
vulnerable his majority is, Reid
would capitulate.
So, ultimately, would the White
House, just as it did several years
ago when a move was afoot to pass
legislation that was ostensibly
meant to ght piracy but would
have actually damaged the Internet.
Let Congress and the President
know that we will not allow anti-
freedom hacks and dictators to
pollute and destroy the Net.
CONGRESS IS HOLDING hearings
on the most outrageous decision
among all too manyof the Obama
Administration: having the U.S. give
up control of the Internet to some
as yet undened international body.
Good God, even this hard-left crowd
should see the malignant folly in
this. As Gordon Crovitz put it in the
Wall Street Journal, The alterna-
tive to continued U.S. authority is
control by an international body
dominated by authoritarian regimes.
From the get-go the U.S. has been meticulous
in keeping politics out of the functioning of the
most extraordinary creation of modern times.
Authoritarian regimes have been hungering
for years to nd ways to get their mitts on this
powerful and power-to-the-people instrument.
China spends countless billions of dollars and
employs hundreds of thousands of bureaucrats
in trying to censure what is said on the Internet.
The current White House deeply believes
that this country should have virtually no foot-
print beyond its shores, that everything that
happens anywhere else should be left to the UN,
the IMF and other dysfunctional multinational
bodies. The decision to turn the Internet over to
the tender mercies of the Putins of the world is
part and parcel of this America-is-bad mentality.
Even if counter-Internets were set up to rep-
licate the freedom of the original, they would be
too small to have similar scope and impact.
Congress should dispense with these hearings
and pass legislation declaring any such disastrous
Commerce Department decision null and void.
If Senate boss Harry Reid were to try to
block such a bill, Silicon Valley Democrats
should publicly open their checkbooks to GOP
Great Leap Forward
This month a new way to measure the economy
will be released, which, as time passes, will
have a profound and manifestly positive impact
on economic policy and politics.
The statistic is called Gross Output and will
be issued by the Bureau of Economic Analysis
(housed within the Commerce Department),
which also issues GDP numbers. Both will be
released on a quarterly basis.
Why is GO such a big deal? Because it mea-
sures the economy in a far more comprehensive
and accurate manner. GDP represents the value
of all nal products and services. It ignores all the
steps that go into the making of these things. Its
sort of like looking at a carton of milk and paying
no heed to everything that goes into creating that
milk and getting the carton onto the store shelf.
GDP thus gives a distorted picture of the
economy. How many times do we read that
consumption represents 70% of the economy
and therefore its important to stimulate
demand by increasing government spending?
In guring GDP, government spending is said to

FORBES
FACT & COMMENT STEVE FORBES
F
hold the power of the purse over the
Fed. The agency gets its operating
money not from congressional ap-
propriation but from the interest it
gets on its bonds, which it buys with
money it creates out of thin air.
The time has come for two sen-
sible moves.
Audit the Fed. No government or
government-created agency should
be exempt from outside examina-
tion, because they are run by people,
which, by denition, means theyre
not perfect. In a democracy its par-
ticularly outrageous that a powerful
government institution should be
exempt from accountability. For-
mer Representative and presidential
candidate Ron Paul has been so right
regarding this issue.
Pass the Brady-Cornyn bill. This
legislation would create a commis-
sion to examine monetary policy
where it is currently and where it
should go. We need to take a thor-
ough, thoughtful look at the record,
from the time the Fed was created
just over a century ago to today. We
also need to consider basic reforms
including implementing a new gold
standardeven if they violate the
reigning orthodoxy. Congressman
Kevin Brady (RTex.) and Senator
John Cornyn (RTex.) have taken
great care that such a study be carried
out by key members of Congress and
knowledgeable individuals repre-
senting various schools of thought.
Were in a dangerous rut. These
two moves would be critical in get-
ting us out of it.
Time to Tackle
The Fed
Why is the Federal Reserve the sa-
cred cow of American politics?
Its not because it has done a stellar
job. Its fundamental, serial errors in
the 1970s, after the U.S. blew up the
gold-based Bretton Woods interna-
tional monetary system, gave us and
the world the Great Ination and
a discouraging, debilitating decade
of stagnation. The Feds pursuit of a
weak dollar, which started in the early
2000s, has been an unmitigated di-
saster. It created the horric housing
bubble. Ben Bernankes destructive
experiment known as quantitative
easing distorted the credit markets,
thereby unfairly helping Washington
pile on debt (decits without tears)
while making it harder for small and
new businessesthe job creators
to get loans.
In no small part because of the
Fed, the recovery from the terrible
downturn of 200809 has been the
worst in American history.
The Federal Reserve is the most
powerful agency in Washington, yet
it has a fraction of the oversight that
our intelligence agencies, including
the NSA, have. Congress doesnt even
Restaurants: Go, Consider, Stop
Edible enlightenment from our eatery experts and colleagues Richard Nalley, Monie Begley, Randall Lane and Chef Jef Lamperti,
as well as brothers Bob, Kip and Tim.
z Clement
The Peninsula Hotel, 700 Fifth Ave., at
55th St. (Tel.: 212-903-3918)
An oasis of superb dining. Favorites: sashimi-style
uke, tangy carrot soup and heirloom beets with
yogurt and lemon vinaigrette, followed by beef
tenderloin or the crispy pork special. Finish with
Clement chocolate banana cake with rum butter
ice cream or the sea salt caramel chocolate with
passion fruit crmeux and thyme ice cream.
z RedFarm
2170 Broadway, between 76th & 77th
streets (Tel.: 212-724-9700)
This may be the best Chinese restaurant north
of Chinatown. Such appetizers as pastrami (from
Katzs!) egg rolls and its sophisticated dim sum
redene the genre. Main course oferings also
dazzle, whether charred pork chops painted with
lemongrass marinade or a chicken, skin crackling
Peking-style, stufed with shrimp paste.
z Spigolo
1471 Second Ave., between 76th & 77th streets
(Tel.: 212-744-1100)
Innovative, delicious fare at this Italian trattoria with
American air. Among the many dishes to warm
the stomach and soul on cold nights: succulent
eggplant meatballs; pappardelle tossed in
duck cont, preserved lemon, fennel and parmi-
giano; chicken scarpariello surrounded by fennel
sausage, cherry peppers and creamy polenta.
represent 20% of the economy, invest-
ment a measly 13%. (Incredibly,
imports are counted as a negative for
the economy and subtract 3% from
GDP. Protectionists love this absurdity.)
GO counts all the intermediate
steps in the making of products and
services. The results are stunning:
Consumption is 40% of the economy,
not 70%; government outlays are
down to 9%; and business spending
soars to 50%.
This new statistic will also better
reect the volatility in the ups and
downs of economic activity. The
200709 recession was deeper than
GDP gures reected, the recovery
somewhat better.
Noted economist Mark Skousen has
long been pushing for a more accurate
way to measure the economy and thus
deserves a Nobel for his work on this
(and wont get it, given the politics of
the economics profession these days).
Skousen is well aware of what GO
means. As he wrote on Forbes.com,
Consumer spending is largely the
efect, not the cause, of prosperity.
GO rightly puts investment and
business in their rightfully large places.
GO has aws. It leaves out some
sales at the wholesale and retail lev-
elsfor reasons that only theologians
immersed in how-many-angels-can-
dance-on-the-head-of-a-pin kinds of
discussions could love. It still counts
government spending as a plus in-
stead of a negative. Nevertheless, GO
is a huge step forward for the world.
Economic debate will now have
a better focus. Keynesians will be
squirming and screaming, as their
demand focus will look ridiculous
and wrong. Ultimately, more sensible
tax policies will result.
Kudos to the BEA. Civilization will
be in its debt.

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LEADERBOARD
KEEPING SCORE ON WEALTH & POWER
1. Jerry Yang
Yahoo
A venture
capitalist now
and vice chair of Stanfords board of
trustees. Built a $2.1 billion fortune
as founder of Yahoo.
2. Chad Hurley
YouTube
Sold YouTube in 2006,
and praises Google for
its growth since. Launched video
editing company MixBit in 2013.
3. Julia Hartz
Eventbrite
Ticket-selling champ: Some 2.9
million bands, theaters and Webinar
performers use her technology to
get patrons business.
4. Jan Koum
WhatsApp
Pending sale to
Facebook will net him
$6.8 billion. Still uses frequent-ier
miles; that might change.
5. Max Levchin
Paypal
An active advisor to Sequoia. Was
feted last year with a garish plaid
jacket (like the Masters) to salute
all hed done for the rm.
Take 13 tech legends
who were all part
of Sequoia Capitals
investment roster
over the last quarter-
century. Bring them
together on Tesla
Motors factory foor.
What do you get? An
epic blend of talent,
plus one selfe.
IN CROWD
SEQUOIA
GIANTS
3 1
2 5
4
6
7

9. Brian Chesky
Airbnb
Disrupting the hotel
industry. His newest
nancing will value Airbnb at
$10 billion, ahead of both Hyatt
and Wyndham.
6. Reid Hofman
LinkedIn
Stanford philosophy
major and active VC
at Greylock, worth $3.6 billion.
Suggested motto: I link, therefore
I am.
10. Elon Musk
Tesla
The electric car pioneer
briefed Jerry Yang on
aluminum vs. steel compression
ratios during a break in the photo
shoot.
7. Arash Ferdowsi
Dropbox
MIT dropout, built rst computer at
age 10. Agreed to set up Dropbox
just hours after meeting cofounder
Drew Houston.
11. Adi Tatarko
Houzz
Sequoia loves businesses built on
their founders needs. She wanted
better home decorating ideas;
Houzz delivers them to millions.
8. John Chambers
Cisco
In his 19th year running
Cisco. Sequoia founder
Don Valentine told him: Make lots
of acquisitions; just dont mess up
the rst few.
12. Kevin Systrom
Instagram
Turned down a job
at Facebook in 2005.
Wise call: Made far more in 2012
selling Instagram to Facebook for
$1 billion.
13. Fred Luddy
ServiceNow
An engineer who loves to build
things: He shed the CEO role at
ServiceNow because I didnt want
to be in meetings all day.
11
12
8 10
9 13
See cover story on Sequoia,
page 70.

LEADERBOARD
Warren
Bufett
+$4.6 BILLION
NET WORTH:
$62.9 BILLION
Berkshire Hathaway posts
record earnings of
$19.5 billion in 2013,
boosting its shares enough
to bump up Bufett one
spot to worlds third richest.
Elon
Musk
+$1.2 BILLION
NET WORTH:
$9.6 BILLION
Teslas CEO revs up
production of the
$70,000 Model S after
announcing that it outsold
all similarly priced cars in
America last year.
Mark
Vadon
+$770 MILLION

NET WORTH:
$2.1 BILLION
Vadons zulily, an online
retailer for moms, reports
that it doubled its sales and
customers last year, and
cofounder Darrell Cavens
becomes a billionaire.
Carl
Icahn
-$860 MILLION
NET WORTH:
$23.3 BILLION
His bet on Herbalifeand
against rival hedge fund
manager Bill Ackman
stumbles as the FTC opens
an investigation into the
nutrition company.
Eric
Lefofsky
-$240 MILLION
NET WORTH:
$1.6 BILLION
The honeymoon is over:
Groupons stock rose
steadily after he took over
as CEO in August but has
now dropped 20% after a
quarterly loss.
Daniel
Och
-$240 MILLION
NET WORTH:
$3.9 BILLION
His hedge funds shares
sink with the news that
some of its investments in
Africa are part of a Justice
Department corruption
investigation.
WINNERS
SCORECARD
S
C
O
R
E
C
A
R
D

B
Y

D
A
N

A
L
E
X
A
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;

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A
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D
Y

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H

B
Y

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A
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R
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B
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B
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;

V
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M
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M
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Y

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S
;

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R
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A
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S
/
A
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;

L
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F
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:

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;

R
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L
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:

C
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S

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D
/
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R
A

P
R
E
S
S
/
R
E
D
U
X
;

H
O
M
M
E
L
S
:

J
O
H
A
N
N
E
S

S
I
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O
N
/
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E
T
T
Y

I
M
A
G
E
S
FIGURES REFLECT THE CHANGE IN NET WORTH FROM FEB. 12, 2014 TO MAR. 19, 2014.
SOURCES: INTERACTIVE DATA VIA FACTSET RESEARCH SYSTEMS; FORBES.
10,000%
IPO gains expected to be realized by
Apax Partners and Index Ventures, both of which
invested in King Digital Entertainment in 2005.
MISSED OPPORTUNITIES
BITTERSWEET
NOT EVERYONE INVOLVED in the
development of the wildly popular game
app Candy Crush Saga will be cashing in
on its makers sweet initial public ofer-
ing. At least two people who had a role
with King Digital Entertainment will
miss out on potential billions. Cofounder
and former co-CEO Toby Rowland and
early investor Klaus Hommels each sold
more than 40 million shares back to the
company for about $3 million in 2011, just
before the game launched. Had they held
on, they would likely be worth nearly $1
billion each, at an expected IPO price of
$24 a share.
Rowland told PrivCo, a private-com-
pany research rm, Id probably have
blown it on wine, women and a vanity
space program. He had thought King
Digital couldnt make him enough money
and left it in June 2008 to start Manga-
High.com, which teaches children math
with online games. My equity was quite
diluted down. The company was going to
have to be very, very big if I was to have
my boat, he commented. Those who
stayed, including cofounder and current
Chief Executive Riccardo Zacconi and
Chairman Melvyn Morris, with 31 million
and 36 million shares worth perhaps $744
and $864 million, respectively, will cer-
tainly have their boats.
LOSERS
Rowland Hommels

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50%
Relative size of Ukraines shadow economy
relative to its GDP, according to the
International Monetary Fund.
OLIGARCHY
CRIMEAN PUNISHMENT
With Crimeas seizure by Putins Russia, business in the embattled peninsula is
rocked by uncertainty, and the 6 million tourists a year it depends on may vanish.
The ten billionaire oligarchs who dominate much of the economy have together
lost almost $4 billion, with Russians faring even worse than Ukrainians.
LEADERBOARD
OIL AND GAS
UKRAINESSTATE-OWNEDCHERNOMORNEFTEGAZISCRIMEASMOST
LUCRATIVEASSET,WORTHUPTO$2BILLIONANDPRODUCING1.2BIL-
LIONCUBICMETERSOFOILANDNATURALGASAYEAR.ITSRESERVES
WILLLIKELYBESEIZEDBYRUSSIASGAZPROMORNATIONALIZED.
CRIMEA
Moscow
Ukrai ne
VAGIT ALEKPEROV
NET WORTH: $12.6 BIL ($1 BIL)
LEONID FEDUN
NET WORTH: $6 BIL ($0.5 BIL)
The head of Lukoil and his right-hand man are
investors in a $61 million Radisson resort in the
Crimean beach town of Alushta.
ANDREI KLYAMKO
NET WORTH: $1.4 BIL ($0.5 BIL)
VADIM NOVINSKY
The two own Smart-Holding, which has
mining and construction interests in
Crimea. Five years ago they started a
$2 billion development for tourists to
the region.
YURIY KOSIUK
NET WORTH AS OF MAR. 20: $1.4 BIL
CHANGE SINCE FEB. 12: ($0.1 BIL)
Kosiuk heads Ukraines largest agricultural holding company.
His poultry products have been hurt by import restrictions
and inspections in the Russia-Ukraine economic war.
KONSTANTIN GRIGORISHIN
NET WORTH: $1.3 BIL (NO CHANGE)
He controls power plants across the peninsula
and has built a seaside spa resort and luxury
apartments worth $300 million.
KOSTYANTIN ZHEVAGO
The founder and CEO of Ferrexpo,
a mining business, also owns a
large naval shipbuilder, Zaliv, on
the eastern edge of Crimea.
RINAT AKHMETOV
NET WORTH: $11.4 BIL
($1.1 BIL)
Ukraines richest man owns the
new port Avlita in Sevastopol
and has banking, oil-and-
gas-exploration and electric-
transmission interests on the
peninsula.
IHOR KOLOMOYSKYY
NET WORTH: $1.8 BIL
($0.3 BIL)
HENADIY BOHOLYUBOV
NET WORTH: $2.1 BIL
($0.2 BIL)
The two own PrivatBank,
Ukraines largest bank,
which has suspended
operations in Crimea since
the Russian takeover.
KRASNOHVARDEISKOYE
ALUSHTA
YALTA
SEVASTOPOL
SAKY
YEVPATORIYA
FEODOSIYA
KERCH
POPULATION
2 MILLION
(4% OF UKRAINES POPULATION)
2012GDP
$4.3 BILLION
(2% OF UKRAINES ECONOMY)
AREA
10,077 SQUARE MILES
(SLIGHTLY SMALLER THAN
MASSACHUSETTS)
ETHNIC BREAKDOWN
RUSSIAN
58%
UKRAINIAN
24%
TATAR
13%
OTHER
5%
SIMFEROPOL
RUSSIAN UKRAINIAN MILITARY FACILITIES

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PROMOTION | TECHNOLOGY
T
he next generation of data centers
must improve the efciency of the
facilities, hardware, software and
operations to deliver performance
and cost savings that capture the atten-
tion of savvy business customers. A holistic
approach that orchestrates all the elements
of a data center and its operation improves
reliability and reduces errors and costs.
Capacity Guessing
The biggest challenge facing data cen-
ter operators is the ability to understand
and plan for growth. Facility construction
requires long lead times and is depreciated
over 10 to 15 years. IT infrastructure and
software can be rapidly deployed and typi-
cally have a useful lifespan of 3 to 5 years.
Many companies are taking steps to better
align construction with IT infrastructure
demands: for example, phased build-outs
and deployment of standardized modular
components with minimal customization
to reduce delivery times.
In addition to seeing improvements in
power supply and IT hardware performance,
todays data centers are more efcient than
ever before. Yet even with all these improve-
ments, eventually the efficiency curve
begins to flattenand thats when data
center operators begin to look for opera-
tional efciencies.
Isolating facility managment from the
operation and man-
agement of the I T
i nf r as t r uc t ur e i s
no l onger a val i d
approach to building
and running a data
center. Factors like
environmental sus-
tainability and energy
costs must be contin-
uously managed and
are greatly affected
by the utilization, per-
formance and power
consumpti on of I T
infrastructure and software applications.
Software performance and fault toler-
anceor lack thereofare having a much
greater impact on data center efficiency
and, ultimately, costs. As a result, data center
infrastructure management (DCIM) solutions
must become more comprehensive.
Centralizing DCIM
With StruxureWare Data Center Operation,
Schneider Electric is delivering a DCIM
solution that balances the demands of
availability and efciency across the entire
data center. StruxureWare Data Center
Operations communicates with building,
IT and network management systems to
optimize energy and cost efciencies while
improving capacity planning and provi-
sioning of data center resources.
Jason Schafer, Schnei der El ectri cs
Director of Technol ogy & Operati ons
Management, Mission-Critical Services, IT
Business, explains, This is not just a tool
for energy efciency; its about process and
operational efciencies that can be gained
by consolidating management solutions
and data to a single platform. Integrating
management of software assets with facil-
ity and infrastructure
management opti-
mi zes data center
per f or mance and
reduces costs.
T o t h a t e n d ,
Schnei der El ectri c
has defned an opera-
tional maturity model
for data centers and
a n i ns t r uc t i ona l
f r a me wo r k t h a t
enables data center
owner and operators
to i denti f y cri ti cal
performance metrics and objectively eval-
uate the way data centers are built and
maintained.
As data centers mature and custom-
er s expect more, capaci t y pl anni ng
and operations management become
much more critical to cost-ef fectively
meeting service level and performance
demands. Rather than resorting to the
current reacti ve approaches to meet
demand, data center operators would be
better served by capturing and analyz-
ing operational data and performance
before construction begins. Q
Classifying data centers as mature technology might surprise some, but many data centers have
been in operation long enough that owners, operators and customers are looking for ways to
dramatically improve performance, and that means updating more than just servers.
From Energy to Operations
For more information, visit
www.schneider-electric.com.
BY NANCEE RUZI CKA
Building a Better Data Center
Integrating management
of software assets with
facility and infrastructure
management optimizes
data center performance
and reduces costs.
JASON SCHAFER
SCHNEIDER ELECTRIC

We drive data center efficiency.
Rack-to-row-to-room-to-building architecture lowers cost.
Improving both efficiency and system uptime requires a second look at
todays data centers! Featuring innovative and industry-leading physical
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data centers uniquely span

traditional IT white space and facilities to improve interoperability, deliver
true data center agility, and achieve cost-saving energy and operational
efficiency. Our integrated architecture also lowers total cost of ownership,
enables fast and easy design and deployment, and promises the
highest availability.
It comprises best-of-breed components available from a single source and
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cooling unitsto our innovative EcoBreeze
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for Data Centers, Schneider Electric products can

be found literally in every data center domain.
We offer the most energy-efficient components all uniquely engineered
as a system. In the long run, the Schneider Electric rack-to-row-to-room-to-
building approach reduces total data center life cycle cost up to 13 percent
and 30 percent of data center physical infrastructure cost over 10 years!
In fact, its the foundation of our Business-wise, Future-driven
data centers.
2014 Schneider Electric. All Rights Reserved. Schneider Electric, APC, Square D, InRow, EcoBreeze, StruxureWare, and Business-wise, Future-driven are trademarks owned by
Schneider Electric Industries SAS or its affiliated companies. All other trademarks are property of their respective owners.
www.schneider-electric.com t 998-1158241_GMA-US_Note3
Our innovative data center physical infrastructure
with full-visibility management lowers operating costs.
> EcoBreeze with Two Economizer Modes
Only the scalable EcoBreeze automatically
switches between air-to-air heat exchange
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> Data Center Facility Power Module
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facility power lets you expand capacity in 500 kW
increments as needed, cutting OpEx by up to 35
percent and CapEx from 10 to 20 percent.
> StruxureWare for Data Centers
With building-to-server visibility, StruxureWare
for Data Centers enables you to make informed
decisions about your physical infrastructure.
> Reference Designs
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reduce time, cost, complexity, and system risk.
> Data Center Life Cycle Services
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and operations help ensure highest system
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LEADERBOARD
$108 MILLION
Average Major League Baseball team
payroll for 2014$4.3 million for each of
the 25 players on an active roster.
S
P
O
R
T
S
M
O
N
E
Y

B
Y

K
U
R
T

B
A
D
E
N
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A
U
S
E
N

T
O
P
:

G
E
T
T
Y

I
M
A
G
E
S
;

H
O
W
A
R
D
:

L
I
S
A

B
L
U
M
E
N
F
E
L
D
/
G
E
T
T
Y

I
M
A
G
E
S
SPORTSMONEY
DIAMOND JUBILEE
Sky-high local cable deals and the lack of a salary cap have fueled massive contracts for
baseballs top-earning players; 22 of them are set to earn least $20 million this year even
before endorsements. Only 4 made that much ve years ago.
1. Ryan Howard PHILADELPHIA PHILLIES
APNINC5 NIL 5ALAPY NIL NDDP5NN75
The slugger has a ve-year, $125 million contract through 2016, which the
team can extend to 2017.
2. Cliff Lee PHILADELPHIA PHILLIES
The lefty pitcher is in his fourth year plugging waste management rm
J.P. Mascaro & Sons.
3. Joe Mauer MINNESOTA TWINS
APNINC5 NIL 5ALAPY NILLIDN NDDP5NN75 NIL
Deals with Nike, Rawlings, Kemps and Steiner Sports pad the six-time
All Stars earnings.
4. Albert Pujols LOS ANGELES ANGELS
APNINC5 NIL 5ALAPY NIL NDDP5NN75 NIL
His Angels contract climbs annually and peaks at $30 million in its nal
year, 2021, when hell be 41.
5. Robinson Cano SEATTLE MARINERS
The second baseman scored this winter with a ten-year, $240 million
free agent deal.
6. Prince Fielder TEXAS RANGERS
The Tigers agreed to eat $30 million remaining on his contract when they
traded him in November.
7. Zack Greinke LOS ANGELES DODGERS
His six-year, $147 million Dodgers deal was the largest ever for a right-
handed pitcher when he signed it in 2012.
8. Miguel Cabrera DETROIT TIGERS
The two-time Most Valuable Player award winners partners include New
Balance, Sony and Chrysler.
9. Masahiro Tanaka NEW YORK YANKEES
His of-eld earnings are expected to soar now that he has joined the
Yankees from Japan with a $155 million contract.
10. CC Sabathia NEW YORK YANKEES
The 2007 Cy Young winner is tied for the most career wins among
active pitchers.
Williams College

LEADERBOARD
40
Number of months it took Citadels
agship funds to gain back all their losses after
the September 2008 nancial crisis.
THE HEAD OF $18 billion hedge fund Citadel began trading from
his dorm room as a Harvard undergrad. Now recovered from a bru-
tal credit-crisis thrashing, he just donated $150 million to his alma
mater, the biggest gift in its history.
B
Y

H
A
L
A
H

T
O
U
R
Y
A
L
A
I

T
O
P
:

B
L
O
O
M
B
E
R
G
;

C
I
T
A
D
E
L
:

B
L
O
O
M
B
E
R
G
ALL IN THE FAMILY
Born in 1968 in Daytona
Beach, Fla. His grandfather
had died ve years prior,
leaving behind a small oil
company. Bankers descended
with bids, but Grifns grand-
mother took over, learned
the trade and years later sold
out for several times those
initial ofers.
ROOKIE OF THE YEAR
Catches the eye of hedge fund
manager Frank Meyer, who in
1989 persuades him to move
to Glenwood Capital Invest-
ments in Chicago. Returns
70% in his rst year there.
POWER PLAYS
Enrons implosion sparks an inter-
est in energy trading; Grifn picks
up distressed energy holdings
from struggling Amaranth Advi-
sors in 2006: Time and again, we
have entered into businesses just
as others were retreating.
RAISING FUNDS,
TRADING BONDS
While majoring in economics
at Harvard, pulls in $265,000
for his rst fund from investors
including his grandmother.
Trades bonds via a computer
program he wrote himself.
CITADEL ARISES
Just 22, launches Citadel in 1990 with
$4.6 million, one computer and two
employees. His aim: to create a rm
that harnesses technology and quan-
titative methods to tease out hidden
market opportunities. Unorthodox
for the era, and efective: Citadel av-
erages a 42% return its rst two years.
HARVARDS
HELPING HAND
In February 2014, with his net
worth at $5.2 billion, Grifn
donates $150 million to his col-
lege, to be used primarily for
nancial aid.
GREATER ASSETS,
HIGHER PROFILE
Citadels assets under manage-
ment hit $1 billion in 1998. Five
years later Grifn debuts on
The Forbes 400 with a fortune
of $650 million.
CRUSHED BY THE CRASH
Such forward-march tactics
backre in late 2008 amid global
nancial panic; Citadel halts inves-
tor redemptions after its agship
funds take a 50% hitone of
the most difcult decisions I ever
made. The next year he shifts to
more straightforward investments
and returns 62%. We were overly
condent, he admits.
PATH TO SUCCESS
KEN GRIFFINS MOSTLY HAPPY RETURNS
2010 2011 2012 2013
11%
20%
26%
20%
CITADEL
FLAGSHIP
FUNDS'
NET RETURN
J
J
J
J
$12.3
$10.5
$11.1
$18.0
YEAR-END
ASSETS UNDER
MANAGEMENT ($BIL)
IF THE SHORT FITS
Earns money repairing comput-
ers for IBM while a student at
Boca Raton Community High.
At age 18 protably shorts the
Home Shopping Network after
reading a FORBES article about
the televised-retail operation.
Meyer

See how we can help
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LEADERBOARD
KING KOUM
FORBES, MARCH 24, 2014
860,789 VIEWS ON
FORBES.COM
Senior writer Parmy Olson
broke the story of Jan
Koums amazing journey
from penniless teenage
Ukrainian to 38-year-old
American entrepreneur
who sold his business to
Facebook for $19 billion.
Commenter Rob Rosen-
berg appreciated Koums
nice touch to sign the
[Facebook] papers where
he had collected his food
stamps. The Telegraph
noted that Mark Zuck-
erbergs pursuit of the
deal was similar to [his]
courtship of Kevin Sys-
trom, who owned Insta-
gram before he sold it to
Facebook for $1 billion last
year. Matt Silk added, FB
needed to nd the fastest
path to get the next billion
users connected.... Is it
plausible that WhatsApp
becomes the gateway drug
for FB in every country?
... [Then] $19 billion spent
doesnt seem all that crazy
anymore.
BILLIONAIRES WHO FELL
OFF THE LIST
@ZAKYS911
Thats the proof that even the
most successful businessmen
can make spectacularly
bad bets.
@APESUGAR
Now theyre just pathetic
millionaires? Losers.
BILL GATES BACK ON TOP
@GOODNEWSGODDESS
Funny how the more Gates
gives, the richer he gets.
@MAC5WEBDESIGN
Oh good. Ill bet he was
worried for a sec there.
CALIFORNIA HAS THE MOST
BILLIONAIRES
@COPPERBITE
Two words: Silicon Valley.
@HANDSOME_HANLEY
Thought they were all leaving
because of the taxes there and
the economic mess.
@NVGHOST005
And yet California cannot
manage its tax base well
enough to keep its utilities
stable. Go gure!
AMAZONS WAR ON THE
HOUSE OF OTTO
@PETER_S_BECKS1
I guess we the consumers are
the trophy in this battle for
supremacy.
THE WORLDS RICHEST PEOPLE
FORBES, MARCH 24, 2014
9,710,101 VIEWS ON FORBES.COM
FORBES annual billionaires issue listed a record 1,645 people
around the globe with a net worth in ten or more gures, and
The Guardian observed that 2013 will be remembered as
a good year for the worlds super rich, as they now are all
together worth $6.4 trillion, up from $5.4 trillion in 2012. The
richest of all: Bill Gates, at $76 billion, despite seemingly
doing his best to drop down the list by giving away lots of
his lucre via his charitable foundation, as Digital Trends
put it. The growing number of women on the list got particu-
lar attention. The Daily Mail wrote, The old boys club bet-
ter learn how to talk to girls, as there now are more female
billionaires than ever. A record 172 women made this years
FORBES magazine billionaires list, up 25% from last year.
Maria Caspani of the Thomson Reuters Foundation observed
that a sixth of all newcomers on the list are women
possibly indicating that climbing the ladder is getting a
bit easier, but added, Its interesting to note that only 32
of the 172 billionaire women are self-made. Online com-
menter Will Ganness thought at least one of them had consid-
erable help along the way: Not sure I would include Sheryl
Sandberg. Working for the president of the U.S. and then
meeting Zuckerberg at a Xmas party who then frames up a
major position in his company just for her is not exactly
the same. Many readers were fascinated by the youngest
billionaire of all, a Hong Kong heiress named Perenna Kei.
The Sydney Morning Herald wrote, Little is known about
24-year-old Perenna Kei, other than that it clearly pays to
be loyal to her fatherhes a Chinese real estate king who
made her an 85% shareholder of his Logan Properties. The
South China Morning Post added, Perenna Kei is described
as secretive, which is probably a very sensible thing for a
young person in her position.
FAVORITE
TWEET
@ConanOBrien
Forbes released the list of
the richest billionaires.
Kinda makes you feel bad
for the poorest billionaires. T
O
P
:

G
A
B
R
I
E
L
A

H
A
S
B
U
N
ACTIVE CONVERSATION
$6.8 BILLION
Net worth of Jan Koum, the wealthiest
newcomer to the FORBES billionaires list.

THOUGHT LEADERS
LEE KUAN YEW CURRENT EVENTS
A RISING CHINA is seeking to
assert its sea-boundary claims. It is
naive to believe that a strong China
will accept the conventional deni-
tion of what parts of the sea around
it are under its jurisdiction. This
should come as no surprise, but it
has been uncomfortable for some of
Chinas neighbors and other stake-
holders, including the U.S.
China, Brunei, Malaysia, the Phil-
ippines and Vietnam are engaged in
long-standing territorial and mari-
time disputes in the South China
Sea. The Philippines, under the UN
Convention on the Law of the Sea
(UNCLOS), has initiated internation-
al arbitration. The arbitral tribunal is
proceeding, even though China has de-
cided not to participate in the hearings.
If a negotiated agreement cant be
reached, the ideal solution would be to
resolve the dispute based on interna-
tional law and legal principles, includ-
ing UNCLOS, that have been estab-
lished in many other such cases. Can
this be done through a juridical plat-
form, such as the International Court
of Justice (ICJ)? Keep in mind that
major powers, including China and
the U.S., dont generally submit to the
jurisdiction of the ICJ or other such fo-
rums. A resurgent China isnt going to
allow its sea boundaries to once again
be decided by external parties. There-
fore, I dont believe the Chinese will
submit their claims, which are based
primarily on Chinas historical pres-
ence in these waters, to be decided by
rules that were dened at a time when
China was weak. And China has judged
that the U.S. wont risk its present good
relations with China over a dispute
Americas and Vasco da Gama arrived
in India. More than six centuries ago
Emperor Zhu Di of the Ming Dynasty
sent out a large eet of trading ships
to explore and trade with the rest of
the world. His choice to command
the expedition was Grand Eunuch
Zheng He (13711433). Zheng He was
born and raised a Muslim in what is
now Kunming City in Yunnan Prov-
ince. He was captured by Ming Dy-
nasty forces around 1381 and taken
to Nanjing, where he was castrated
and subsequently sent to serve in the
palace of Zhu Di, who was then the
Prince of Yan and would later be-
come Yongle Emperor.
Over the course of nearly three
decades (140533) Zheng He led
seven westward expeditions, which
were unprecedented in size and
range. They spanned the South
China Sea, the Indian Ocean and the
Persian Gulf, and reached as far as
the east coast of Africa. The ships
used for these expeditionsmore
than 400 feet in length, based on
archaeological evidencewere many
times the size of those Columbus
used to sail across the Atlantic.
These expeditions amply demon-
strated the power and wealth of the
Ming Dynasty. More important, they
left a lasting impact on the countries
visited: Numerous masjids (mosques)
in the region are named after Zheng
He, commemorating his contribu-
tions to the local communities.
If historical claims can dene
jurisdiction over waters and oceans,
the Chinese can point to the fact
that 600 years ago they sailed these
waters unchallenged.
between the Philippines and China.
Why this sudden interest in some
outcroppings in the South China
Sea? What gas or oil can be drilled
or sh caught around these rocks?
Much more is at stake than rocks
and resources. China sees the South
China Sea as one of its key interests.
A rising China is asserting its position
by claiming historical rights to these
waters. And the disputes, which arise
from claims based on diferent prin-
ciples, are unlikely to be resolved.
One-third of the worlds trade
passes through the South China Sea,
a vital sea line of communications.
Many other countries also have im-
portant interests there. These include
the freedom of navigation and over-
ight, as well as the peaceful manage-
ment of disputes. Quite apart from
preventing mishaps and incidents, a
framework to manage the diferent
interests should be established.
LOOKING TO THE PAST
Chinas reliance on historical claims
necessitates considering what its
eets did in the past, way before
Christopher Columbus landed in the
CHINA UNFETTERED
OLD RULES NO LONGER BIND
LEE KUAN YEW, FORMER PRIME MINISTER OF SINGAPORE; DAVID MALPASS, GLOBAL ECONOMIST, PRESIDENT OF ENCIMA GLOBAL LLC;
AMITY SHLAES, DIRECTOR, THE 4% GROWTH PROJECT; AND PAUL JOHNSON, EMINENT BRITISH HISTORIAN AND AUTHOR,
ROTATE IN WRITING THIS COLUMN. TO SEE PAST CURRENT EVENTS COLUMNS, VISIT OUR WEBSITE AT WWW.FORBES.COM/CURRENTEVENTS.
F

Passi on cannot be bought,
B U T I T C A N B E K I N D L E D.
There is nothing quite as evocative
as trading routine for spur-of-the
moment. Thats what being able
to take off to 5,000 destinations,
on a whim, can do for you.
N
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J
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.

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.

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S E E A L L T H E P L A C E S W E C A N T A K E Y O U / 8 7 7 J E T 2 8 0 6 / N E T J E T S . C O M
f or bus i nes s , f or f ami l y, f or l i f e

THOUGHT LEADERS
AMITY SHLAES CURRENT EVENTS
HARVARD DEGREES PRICE
FOUR YEARS OF DEPENDENCE
AMITY SHLAES, DIRECTOR, THE 4% GROWTH PROJECT, GEORGE W. BUSH INSTITUTE; PAUL JOHNSON, EMINENT BRITISH HISTORIAN AND AUTHOR; LEE KUAN YEW, FORMER PRIME MINISTER
OF SING APORE; AND DAVID MALPASS, GLOBAL ECONOMIST, PRESIDENT OF ENCIMA GLOBAL LLC, ROTATE IN WRITING THIS COLUMN. TO SEE PAST CURRENT EVENTS COLUMNS, VISIT OUR
WEBSITE AT WWW.FORBES.COM/CURRENTEVENTS.
F
TAKE A RISK, take a chance, make
a change and break away.
Its been a decade since Kelly Clark-
son rst belted out Breakaway, yet the
song lives on. Finalists competing on
the TV show where Clarkson rst made
her name, American Idol, still sing it.
No wonder Breakaway is popular.
The lyrics capture a stage of life perfect-
ly. That unmistakably brutal breakup
with Mom and Dad: So I prayed I
could break away. That rash rst move:
Get on board a fast train. That pride
in proving independence: Ill spread
my wings, and Ill learn how to y.
This disconcerting chain of events
can achieve some impressive results,
whether in TV competitions or in lon-
ger-term contests. And it can set a pat-
tern of independence. Unfortunately, a
force every bit as powerful as American
Idol blocks the great breakaway. That
force is our own social policy. Our poli-
cies lure and sometimes even push the
young right back into someones care
the governments or their parents.
One such policy is college nance.
The Department of Educations nan-
cial aid form, the Free Application for
Federal Student Aid, is often the rst
form young Americans confront, well
before the taxmans 1040. The FAFSA
asks young people to make what is, in
efect, a Declaration of Dependence.
To complete the FAFSA the applicants
must demonstrate not what they can
do but what they and their parents
need. In exchange the FAFSA ofers a
veritable smorgasbord of breaks.
Youd think families who cant af-
ford college would love this deal, as the
money enables their sons and daugh-
ters, by going to college, to indeed break
awayfrom their parents. Some do,
but millions of others resent the pro-
cess. This may be because they sense
a racket. Our vast ows of nancial
aid permit universities to raise tuition
generally, which yields a perverse re-
sult: The more subsidy families get, the
more school costs overall. In any case,
such resistance is what drove President
Obama into the imperative mode, or-
dering high schoolers in Miami to ll
out the form. The resistance testies to
the premium parents place on autono-
my. Many working-class high schoolers
also resent awards that focus on need.
Children of higher earners nd
themselves shoved not into govern-
ments arms but rather their parents.
They are forced to make a choice: col-
lege or freedom from family. The high-
er the university tuition or the more
prestigious the school, the more likely
young people will need nancial sup-
port. But the FAFSA denies them the
cash. Instead, the form insists they hit
their parents up. You cant be consid-
ered independent of your parents just
because they refuse to help you with
this process, the Federal Student Aid
website informs. If you do not pro-
vide their information the applica-
tion will be considered rejected.
What might allow the younger
generation to break away naturally?
The military. Active-duty 19-year-
olds get the pleasure of informing
their parents that they can no longer
be claimed as tax dependents.
Cheaper colleges. This would help
lighten another burden, college debt.
More programs that reward
youthful boldness. One such pro-
gram is funded by billionaire Peter
Thiel. Every year the Thiel Fellow-
ship gives $100,000 each to 20 teens
(19 or younger) who focus on their
work, their research and their self-
education instead of entering college.
Merit aid. This could bring the big-
gest change and also provides an Idol-
level rush. Need-based nancial aid
will never have the same positive psy-
chological efect as a merit scholarship,
wrote an undergraduate at the Univer-
sity of Virginia in The Cavalier Daily.
Students have the right to be recog-
nized for the quality of their work. Yet
our colleges, which collude with the
Department of Education, trash merit
aid as impossibly retrograde.
Disrupting the great breakaway
dulls the spirits. This disruption can
set a pattern for the rest of a persons
lifeif not of dependence, then cer-
tainly of cynicism. It all matters be-
cause one sluggish graduating class
after another doesnt produce the
kind of innovative growth rebels do.
Stronger growth lightens entitlement
burdens for all. The truth about the
younger crowd? If they cant break
away, we cant either.

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THOUGHT LEADERS
AVIK ROY CAPITAL FLOWS
In 2012 the European Union was
awarded the Nobel Peace Prize. What
was once the European Coal & Steel
Community, the committee wrote, had
evolved into a successful struggle for
peace, reconciliation and for democ-
racy and human rights. Theres much
to be said for the thought that Europes
economic integration has led to lasting
peace. But the crisis in Ukraine shows
that global interdependence can be a
source of weakness as well as strength.
After the Crimean invasion a Brit-
ish ofcial was photographed hold-
ing a document recommending that
the U.K. oppose trade sanctions
against Russia or any measure that
would close Londons nancial cen-
tre to Russians. Germany gets 35%
of its gas supply from Russia. Europe,
by and large, has been even more
reluctant than America to challenge
Vladimir Putins land grab.
For a time it was the U.S. Republican
Party that most vociferously opposed
military adventures. Robert Taft, the
Senate majority leader known as Mr.
Republican, inveighed often against
FDRs involvement in World War II.
War, said Taft, would result in the prac-
tical establishment of a dictatorship in
this country through arbitrary powers
granted to the President, and nancial
and economic collapse. Nor do I think
that our intervention in Europe can per-
manently solve the European problems
any more than it did in 1919.
Taft was certainly right about that
last part. The European problem has
not been permanently solved.
The challenge is that people dont
sort themselves neatly into the ethno-
centric nation-states that Woodrow
Wilson longed for. From Quebec to
Scotland to Catalonia to Crimea to
Kashmir, one mans country is another
mans landlord. Putin has reportedly
called the breakup of the Soviet Union
the greatest geopolitical catastrophe
of the 20th century, not least because it
left 25 million ethnic Russians outside
of Russian borders.
We Americans have tried valiantly to
see these as issues for others to address.
But if Russia continues to annex Russo-
phone enclaves in eastern Europe,
these problems will avoid us no longer.
Will Putin test the borders of NATO?
What happens when China annexes the
South China Sea or, worse, Taiwan?
Over the mid to long term the
U.S. can do much to blunt Russias
leverage over Europe, principally by
exporting oil and gas to the continent.
But China, with its $1.3 trillion in U.S.
Treasurys and $562 billion in annual
bilateral trade, is trickier.
Despite Republicans criticism of
President Obama, there are no easy alter-
natives. In an incoherent op-ed for Time
Republican Senator Rand Paul counseled
suspending U.S. aid to Ukraine and getting
Europe to pay for costly American missile-
defense systems, while also saluting Ron-
ald Reagans program of peace through
strength, a success that Reagan achieved
thanks to a deficit-financed military build-
up that Paul would today oppose.
President Obama famously declared
in 2009 there would be a reset in U.S.-
Russian relations, one whose central
plank was the forgiveness of Russias
2008 invasion of Georgia. In 2001 Putin
told George W. Bush a moving story about
a cross Putins mother had gotten blessed
in Jerusalem; Bush subsequently said
that he had obtained a sense
of [Putins] soul. Failure to
address Russias growing bel-
ligerence has been bipartisan
and multinational.
This is how wars begin.
Democratic economies fear
the material downside of
confronting aggression, even if it would
prevent a wider conict. We often talk
about learning the lessons of history.
But G.W.F. Hegel once observed that
what experience and history teach is
thisthat people and governments have
never learned anything from history.
The end of history is not yet
upon us. Free trade and the expan-
sion of democracy have done much
to reduce conict around the world.
But so has American hegemony. The
U.S. will nd relinquishing its lead-
ership is far more expensive than
maintaining it.
WILL WE LEARN
THE LESSONS OF HISTORY?
AVIK ROY IS FORBES OPINION EDITOR, A SENIOR FELLOW AT THE MANHATTAN INSTITUTE FOR POLICY RESEARCH
AND THE AUTHOR OF HOW MEDICAID FAILS THE POOR.
F
INTERDEPENDENCE
CAN BE A SOURCE OF
WEAKNESS AS WELL AS
STRENGTH

THOUGHT LEADERS
RICH KARLGAARD INNOVATION RULES
quest for signicance.
Buford listened to Drucker. During
the next 12 years his cable company
grew more than 20% a year and ex-
panded beyond Texas. By his mid-50s
Buford was more nancially success-
ful than hed ever dreamed hed be.
SEEKING SIGNIFICANCE
Buford began feeling a call to enter
the world of nonprots. The older
Drucker had felt the same calling.
Drucker, who was born in Vienna,
Austria in 1909, had watched Europe
disintegrate under despotic leaders
and two wars that claimed more than
100 million people. Drucker devel-
oped a theory. He believed that a vig-
orous nonprot sector of churches,
libraries and organizations such as
the Salvation Army could do more
than lift up human beings. They
could also be bufers between private
interests and public governance.
So Drucker and Buford continued
to meet. Druckers Socratic questions
helped Buford dene his quest for sig-
nicance. Buford, a Christian, created
an organization called the Leadership
Network, under the auspices of which
PETER DRUCKER
AND ME
RICH KARLGAARD IS THE PUBLISHER AT FORBES. HIS NEXT BOOK, THE SOFT EDGE: WHERE GREAT COMPANIES FIND LASTING
SUCCESS, WILL BE OUT IN APRIL. FOR HIS PAST COLUMNS AND BLOGS VISIT OUR WEBSITE AT WWW.FORBES.COM/KARLGAARD.
I WAS LUCKY enough to meet the
great thinker Peter Drucker in 1996
and again in 2004, about a year be-
fore his death. Both visits were to his
modest home in Claremont, Calif. All
who visited Drucker have brought
up the house. One would walk up
and down Wellesley Drive in a state
of confusion, wondering if the small
house at 636, with the two Toyotas
in the driveway, could really belong
to Drucker. This couldnt be where
Drucker advised the leaders of Proc-
ter & Gamble, GE and IBM, among
others; wrote his books; crafted his
speeches; and strengthened the pil-
lars of Western civilization. Could it?
But it was, and the meetings with
Drucker always took place in a back
addition, which had once been a
patio, past the hallway with its olive-
colored pile carpeting and tan walls.
This is where Drucker would sit you
down and ask in his deep Austrian ac-
cent, Now, how may I assist you?
These Druckerian memories have
surfaced, thanks to the delightful
Drucker and Me (Worthy Publish-
ing, 2014), a book by Bob Buford, a
cable-TV magnate turned philan-
thropist. Buford inherited his small
family business in Tyler, Tex. after
his mother died in a re. By his early
40s Buford felt overwhelmed. He
reached out to Drucker for help.
Drucker granted it.
Before the initial visit Drucker
told Buford to write a long letter
about what he wanted to accomplish.
Buford soon learned that Drucker
had no interest in talking about -
nance or operations. He wanted to
hear all about Buford, his life, his
dreams, his hopes. Drucker patiently
drew from Buford what he called his
builders of new churches could learn
about entrepreneurship and manage-
ment. Drucker agreed to help. Thus
did Drucker play a role in the mega-
church boom of the 1980s and beyond.
One early member in the Leader-
ship Network was Bill Hybels, who
had started Willow Creek Commu-
nity Church in suburban Chicago by
going door to door and asking people
what they liked and didnt like in a
church. Because so many had an-
swered with Always being pressed
for money, Hybels started his church
with no ofering plate. For the rst
six months he nanced it by buying
vegetables wholesale from his fathers
produce business and using high
school volunteers to sell them at re-
tail. Hybels was a born entrepreneur.
With the aid of Buford and Druckers
counsel he built Willow Creek to
more than 20,000 parishioners.
Rick Warren, founder of the
20,000-plus-member Saddleback
Church in Lake Forest, Calif., had
also sought out Buford and Drucker.
In 2004 Warren invited me to visit
Drucker with him. Drucker, who
would die 14 months later at age 95,
wasnt well when we saw him. But
he lit up at the word purpose and
talked nonstop for 20 minutes about
why divine purpose was the foun-
dation of a healthy society. Then he
stopped talking and quickly faded.
Warren held his hand and said a
prayer. Drucker bowed his head and
squeezed Warrens hand. It was my
last memory of Drucker.
Thanks to Bob Bufords wonder-
ful book, Peter Drucker comes to life
again. F

was an obvious idea. If defective genes cause
disease, why not replace them? Genetically
modied viruses do just that, inserting their
DNA into our cells. (This is normally how
viruses reproduce.)
After Francis Collins, now head of the
National Institutes of Health, found the gene
for the lung disease cystic brosis, a decade of
work by many groups found the engineered
viruses just couldnt get into the lung.
A lack of efcacy in gene therapy wasnt
the worst problem. In 1999 Jesse Gelsinger,
a teenager with a genetic liver disease, died
when the adenovirus carrying a corrective
gene made him very, very sick. Investor money
dried up.
But a small group of scientists kept the
eld alive. One of them was Kathy High of
the Childrens Hospital of Philadelphia. She
thought gene therapy researchers had been
making two mistakes: using a virus that might
make the patient very sick (the adenovirus)
and not carefully picking the diseases they
would treat. People were choosing targets
based on high unmet medical need and the
size of the market, not based on the scientic
evidence that gene therapy would impact the
disease, she says.
High decided to use not adenovirus but
another, apparently harmless virus, called
adeno-associated virus (AAV), which seems
to piggyback on adenovirus infections in the
wild. The gene therapists modied AAV
sneaks little pieces of DNA into patients
cells. That piece of DNA can contain a gene
that makes a healthy version of a defective
protein in a particular patient.
To further boost her odds, High focused
her early work on eye disease. The inside
of the eye, and also, amazingly, the brain, is
walled of from the immune system, unlike
E
lliott Sigal earned a reputation
at Bristol-Myers Squibb as one
of the drug industrys best re-
search chiefs. His bets on risky
technologies like cancer immu-
notherapy and new types of diabetes drugs
helped Bristol turn from a laggard into a
growth stock. But there was one technology
he wouldnt touch: gene therapy, which tries
to use engineered viruses to defeat disease at
the DNA level. I was burned on it myself 20
years ago, he says. When they told me gene
therapy was back, I couldnt believe it.
So whats Sigal doing now? As a venture
partner at New Enterprise Associates, he
just took his rst board seatat a gene thera-
py company, Philadelphias Spark Therapeu-
tics, which raised $50 million last October
from the Childrens Hospital of Philadelphia
and hopes to launch a treatment for a genetic
form of blindness in as little as two years.
Spark is far from alone. The once aban-
doned gene therapy eld has become a hot-
bed, with 11 diferent companies raising at
least $618 million from venture capitalists
and the public markets since the beginning of
2013, and one more, AGTC, plans a $50 mil-
lion initial public ofering soon. Top venture
capital rms are among their backers, and
some of the industrys top talent is being at-
tracted to what was once seen as a lost cause.
The iShares Nasdaq Biotechnology Index is
up 65% in 12 months.
Its no longer a theory. Theres data show-
ing the real impact on patients that this kind
of therapy can have, says Nick Lesch ly, the
chief executive of Bluebird Bio, a rm in Cam-
bridge, Mass. thats backed by Third Rock
Ventures and ran a $116 million IPO in June.
Even a few years ago Leschlys statement
would have drawn gufaws. Gene therapy
HEALTH CARE INNOVATION
Biotechs Next Big Thing
BY MATTHEW HERPER
After decades of experimentation and failure is gene therapy
fnally ready for prime time? Investors certainly think so.
Gene therapy is no
longer a theory, says
Nick Leschly, CEO of
Bluebird Bio, which
ran a successful $116
million IPO in June.
STRATEGIES

the lungs or skin. That makes a gene therapy
far more likely to work, because existing an-
tibodies wont treat it as an invader.
In adults and children who had gone blind
because of a bad version of a gene called
RPE65, Highs approach yielded amazing re-
sults. In one trial 12 patients, 5 of them kids,
had dramatic improvements in their sight.
The children were able to move from Braille
classrooms to sighted ones. A late-stage
study that could result in the treatments
approval is ongoing.
Bluebird has another rare disease in its
near-term sights: adrenoleukodystrophy, bet-
ter known as the disease featured in the movie
Lorenzos Oil. In the disorder a malfunction
of the gates that transport fats into and out of
cells causes buildups of fatty acids through-
out the body, including in the brain. Instead of
injecting the virus into the body, in Bluebirds
approach cells (in this case, bone marrow stem
cells) are removed and treated with another
virus, lentivirus. Unlike AAV, lentivirus inserts
the genes permanently into the cells DNA-
containing chromosomes. These stem cells are
reinjected; Bluebird is running a phase III trial
in 15 patients and aims to get its treatment on
the market in the next several years.
These treatments wont be cheap. The rst
gene therapy ever to clear a regulator was ap-
proved in Europe in 2012 by the Nasdaq-list-
ed rm uniQure. Reports pegged the price
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self to produce more dopamine.
It is really exciting to see how rapidly sci-
ence and medicine are changing to make a
big diference for patients, Levin says.
The viruses used in gene therapy have
also joined the war on cancer. Novartis, Blue-
bird and Juno Therapeutics, which raised
$120 million in venture capital last year, are
all working on cells genetically engineered
to hunt down tumors. Early results in blood
cancer show dramatic reductions in the
number of cancer cells in patients who had
few other options.
And biotech researchers are dreaming of
doing far more. Even viruses like lentivirus,
which write DNA directly into a cells chromo-
some, can make only limited additions to the
patients genes. Theyre like
adding an ingredient to lifes
recipe book. But what if you
need to change the recipe?
Recently, researchers have
been working with a series of
proteins, originally found in
the immune systems of bac-
teria, that allow them to cut
DNA in specic places and
splice it back together. This
technology, called CRISPR/
Cas9, might be deliverable to
cells using gene therapy. Edi-
tas Medicine was launched
in November with $43 mil-
lion in capital by Flagship
Ventures, Polaris Partners
and Third Rock to turn that
dream into a reality.
Still, laboratory success
doesnt ensure nancial suc-
cess. We may be taking a re-
ally simplistic view that if
youre able to come close to
treating grievous illness, the
pricing and getting paid and
developing a valid business
model will take care of itself,
says Kevin Bitterman of Po-
laris, who is serving as Editas
interim president. The goal
very simply is to leverage this
technology to develop a new
class of therapeutics against
genetic disorders. Eager in-
vestors, take note.
at $1 million; CEO Joern Aldag disputes that
any price has yet been set. The treatment is
not yet on the market. But that kind of pricing
powerbeyond even the norm of $300,000
per patient per year and up for rare-disease
drugsis enticing more and more companies
to enter the eld.
One of the hottest areas is already one of
the biggest markets for expensive biotech
drugs: hemophilia A and B, the genetic dis-
eases that cause the blood not to clot properly,
potentially leading patients to bleed to death.
Gene therapy for hemophilia A possi-
bly could be our biggest product, says Jean-
Jacques Bienaim, chief executive of rare-
disease specialist Biomarin, which forecasts
revenue of at least $650 million this year.
Bienaim says his compa-
ny estimates there are 50,000
type A hemophiliacs in terri-
tories where it markets drugs
and who are receiving hemo-
philia medicine; that would
be his addressable market. A
company called Dimension
Therapeutics is competing
with Biomarin; Spark, Dimen-
sion and hemophilia expert
Baxter International are chas-
ing hemophilia B.
The promise of the tech-
nology has some venture cap-
italists pushing far beyond
rare genetic diseases. San Di-
egos Celladon, which raised
$51 million in an IPO earli-
er this year, is aiming to treat
heart diseases like advanced
heart failure, in which the
heart muscle becomes too
weak to function.
Mark Levin, the former
chief executive of Millennium
Pharmaceuticals and found-
er of Third Rock Ventures,
is now serving as interim
chief executive of a compa-
ny named Voyager Therapeu-
tics, which aims to treat Par-
kinsons disease. Patients now
get a drug to raise dopamine
levels, but it eventually stops
working; Voyagers gene ther-
apy would cause the brain it-
HEALTH CARE INNOVATION STRATEGIES
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What the 60 million
Forbes.com users are talking
about. For a deeper dive go
to FORBES.COM/BUSINESS
TRENDING
COMPANY
BOEING
The Malaysia Airlines disaster
puts the company back in the
headlines for all the wrong
reasons.
PERSON
VLADIMIR PUTIN
With Crimea seizure Worlds
Most Powerful Man proves
a triumph of ego over
economics. Bad plan. Hell see.
IDEA
BAKKEN CRUDE
VOLATILITY
Railroads scramble for
new tank cars as vapor-
pressure studies indicate
North Dakota oil is potentially
as combustible as gasoline.
GOING VIRAL
COMPANIES THAT USE VIRUSES
TO REPLACE DISEASE GENES
HAVE BEEN BOOMINGAT LEAST
WHEN IT COMES TO FUND-
RAISING. LOOK HOW MUCH
THESE FIRMS HAVE RAISED
SINCE THE BEGINNING OF 2013.
COMPANY RAISED
AIMS TO TREAT ($MIL)
GENSIGHT BIOLOGICS
GENETIC BLINDNESS $41
BLUEBIRD BIO
LORENZOS OIL DISEASE $116
AUDENTES THERAPEUTICS
X-LINKED MYOTUBULAR
MYOPATHY $30
SPARK THERAPEUTICS
GENETIC BLINDNESS $50
DIMENSION
THERAPEUTICS
HEMOPHILIA >$10
EDITAS MEDICINE
YET TO BE DETERMINED $43
JUNO THERAPEUTICS
CANCER $120
CELLADON
ADVANCED HEART
FAILURE $51
UNIQURE
LIPOPROTEIN LIPASE
DEFICIENCY $92
VOYAGER THERAPEUTICS
PARKINSONS DISEASE $45
NIGHTSTARX
RETINAL DYSTROPHIES $20
VENTURE CAPITAL INITIAL PUBLIC OFFERING

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for cancer care, seven years in a row,
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We have the largest cancer clinical research program in the nation. And many of todays most innovative
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were making every day, call toll free 1-855-894-0145 or visit MakingCancerHistory.com.
At MD Anderson Cancer Center, we are focused on Making Cancer History.

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JAY Z IS LOOKING for a place to play in Bos-
ton, and pal LeBron James sells him on Fenway
Park. British soccer team Liverpool is looking
for a jersey sponsorat the last minute Boston-
based New Balance sweeps past rivals to do the
deal. Best Buy decides to stop sponsoring the
Boston Red Soxit moves that money to Nas-
car, backing Roush Fenway Racing instead.
None of this is happenstance, and none of
this is what youd expect from a company with
its roots in one of the most tradition-laden
franchises in the most tradition-laden sport.
As corporations go, the Boston Red Sox are no
morethey are but a cog (with Liverpool and
the Nascar team as the other cornerstone as-
sets) in the Fenway Sports Group, the most so-
phisticated, synergistic player in the coming
age of international sports conglomerates.
FSG is attempting to marry the clubby
world of team ownership and the slick eld
of sports management. A sport conglomer-
ate thats integrated vertically, horizontally
and globallyFenway Sports Management
handles all sponsorships for its three teams,
as well as players and squads it doesnt own,
including James, Heisman winner Johnny
Manziel, Boston College, MLB Advanced Me-
dia and the PGAs Deutsche Bank Champi-
onship. Sponsors face a bewildering array of
possibilities across teams, events and athletes.
We wake up every day and think about how
to increase revenues because we think that is
the best way to fuel a winning product, says
co-owner Tom Werner, who originally made
his bones in Hollywood, producing the likes of
The Cosby Show and Roseanne.
They have been able to go deep and wide,
which is why they have so much clout, says
David Carter, executive director of the Uni-
versity of Southern California Sports Busi-
ness Institute. Everything they are doing
SPORTSMONEY
The Green Monster
BY KURT BADENHAUSEN
Winning the World Series was nice, but John Henry and his Fenway
Sports Group have plans to build a global sports juggernaut.
Way beyond baseball:
From LeBron James
to Liverpool at
Fenway, John Henrys
international sports
conglomerate is nding
new ways to win.
STRATEGIES
NESN (80% STAKE)
$800 MIL
LIVERPOOL
$750 MIL
FENWAY SPORTS
MANAGEMENT
$150 MIL
ROUSH FENWAY (50% STAKE)
$78 MIL
RED SOX
$1.5 BIL
46%
24%
23%
5%
2%
FSG TOTAL VALUE:
$3.3 BIL

around the world is more unique and aggres-
sive than others.
The genesis has been incremental. Com-
modities trader John Henry was drawn to
sports the way most rich guys are: as a trophy
investment that tends to appreciate whether
or not it makes money. His rst major foray
into pro sports was as owner of the Florida
Marlins. Henry then upgraded when he, to-
gether with partners Werner and Larry Luc-
chino, bought those legendary losers, the Red
Soxalong with historic Fenway Park and its
famous Green Monster wall, and 80% of re-
gional sports network NESNfor $700 mil-
lion in 2002. The Sox were a middling club
nancially back then, ranking tenth or low-
er among MLBs 30 teams in suite revenue,
sponsorships and concessions.
Soon, however, a pretty good business
emerged from this hobby. After a ten-year,
$285 million renovation, stadium revenues hit
$280 million last year, second highest in base-
ball, as the Sox won their third World Series
since 2004. NESN, which airs the games, is
now worth an estimated $1 billion. The Red
Sox? $1.5 billion by our count.
In FSGs purchase of Liverpool for $476
million, it saw a similar value play. The Reds
stadium, Aneld, which opened in 1884, is
even older than Fenway. A remodel, expected
by 2018, should add 10,000 additional seats
and $50 million annually to Liverpools rev-
enues. (The team is worth $750 million.)
These were remarkably rare opportunities
and would be difcult to replicate, says Hen-
ry via e-mail.
Now that FSG has the assets, the trick is
making them work together. Early deals give
some sense of the blueprint. Examples: Liv-
erpool was talking to Nike, Adidas and Under
Armour in 2011 about a kit sponsorship to
make and sell the teams jerseys when New
Balance suddenly emerged with the biggest
ofer, worth $40 million annually. Thank the
Red Sox: New Balance has a relationship with
the Red Sox Foundation. Dunkin Donuts was
a longtime Red Sox sponsor before it added
deals with LeBron James in Asia in 2012 and
Liverpool this year. Dunkin will be one of the
sponsors of Liverpools U.S. summer exhibi-
tion tour, which of course includes a stop at
Fenway in July against AS Roma.
Adding players and marketing partners is
the next frontier. We want to represent blue-
chip athletes, says Werner. In addition to
greasing the wheels for Jay Zs shows at Fen-
way, James helped recruit Johnny Manziel to
FSM, and the 2012 Heisman Trophy winners
rst two marketing deals were multiyear pacts
with James partners Nike and McDonalds.
But as any conglomerate CEO will tell you,
success depends on integration, making the
whole operate as more than the sum of the
parts. Winning is the most important goal,
says Werner. And they plan to do a lot more of
it, on and of the eld.
WIRED FOR MONEY
MLB team prots are down, but values keep rising thanks to cable television deals.
VALUE OPERATING
CURRENT
1
1-YEAR REVENUE INCOME
2
RANK TEAM ($MIL) CHANGE ($MIL) ($MIL)
1 NEW YORK YANKEES $2,500 9% $461 $9.1
2 LOS ANGELES DODGERS 2,000 24 293 80.9
3 BOSTON RED SOX 1,500 14 357 25.3
4 CHICAGO CUBS 1,200 20 266 27.3
5 SAN FRANCISCO GIANTS 1,000 27 316 53.3
6 PHILADELPHIA PHILLIES 975 9 265 20.9
7 TEXAS RANGERS 825 8 257 4.9
8 ST LOUIS CARDINALS 820 15 283 65.2
9 NEW YORK METS 800 1 238 1.6
10 LA ANGELS OF ANAHEIM 775 8 253 5.8
11 ATLANTA BRAVES 730 16 253 38.4
12 SEATTLE MARINERS 710 10 210 5.3
13 WASHINGTON NATIONALS 700 11 244 22.4
14 CHICAGO WHITE SOX 695 0 210 2.7
15 DETROIT TIGERS 680 6 262 7.5
16 BALTIMORE ORIOLES 620 0 198 1.6
17 SAN DIEGO PADRES 615 2 207 33.0
18 TORONTO BLUE JAYS 610 7 218 14.9
19 MINNESOTA TWINS 605 5 221 30.2
20 CINCINNATI REDS 600 10 209 11.6
21 ARIZONA DIAMONDBACKS 585 0 192 5.8
22 COLORADO ROCKIES 575 7 197 13.7
23 PITTSBURGH PIRATES 572 19 204 21.8
24 CLEVELAND INDIANS 570 2 196 1.9
25 MILWAUKEE BREWERS 565 1 197 6.8
26 HOUSTON ASTROS 530 15 186 55.9
27 MIAMI MARLINS 500 4 159 8.0
28 OAKLAND ATHLETICS 495 6 187 27.4
29 KANSAS CITY ROYALS 490 7 178 6.5
30 TAMPA BAY RAYS 485 8 181 15.3
MLB AVERAGE 811 8 237 9.7
1
EQUITY PLUS NONSTADIUM DEBT.
2
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR 2013 SEASON NET OF REVENUE
SHARING. STATISTICS: KURT BADENHAUSEN, MICHAEL K. OZANIAN AND CHRISTINA SETTIMI.
F

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RIC KOSTICK, THE COFOUNDER of
cosmetics company 100% Pure, was clicking
through his e-mail one day when a message
from a San Francisco startup caught his eye.
Weve developed a machine learning al-
gorithm that is able to predict which custom-
ers will leave your site without purchasing
any of your products (with 99%-plus accura-
cy) and the capability to ofer only this group
a steeper discount than normal to entice
them to purchase before leaving, said the e-
mail from Freshplum. The pitch guaranteed a
5% revenue lift.
Kostick signed up. He knew some people
inch at paying $18 for an 8-ounce tube
of shampoo. Perhaps occasional discounts
would help. After three months using Fresh-
plums selective promotions, online sales
increased as much as 13.52%, Kostick said.
In a traditional bazaar a seller might
charge a well-dressed buyer twice as much as
another based on visual clues or accents. Big
data allows for a far more scientic approach
to selling at diferent prices, depending on an
individuals willingness to pay.
Historically, rst-degree price discrimi-
nation has been very difcult to implement,
mostly for logistical reasons, said Harvard
Business School professor John Gourville.
With advances in technology and collecting
of big data, then it may be that it will become
easier to do. However, very quickly you start
eliciting complaints about fairness.
Founded by Sam Odio, the former product
manager of photos for Facebook, Freshplum
does not charge anyone extra but promotes
discounts to narrow categories such as spe-
cic geographic areas, repeat customers or
TECHNOLOGY
ONLINE RETAIL
How Much Did You
Pay for That Lipstick?
BY ADAM TANNER
Big data is helping companies price goods according to a
customers willingness to pay. Firms, seeing green but fearing
a public backlash, are treading carefully.
Freshplum cofounder
Sam Odio (left), Chief
Science Ofcer Sid Patil
and Ronin in their San
Francisco ofce.

IMPORTANT SAFETY INFORMATION:
Do not stop taking ELIQUIS without talking to the doctor
who prescribed it for you. Stopping ELIQUIS increases your
risk of having a stroke. ELIQUIS may need to be stopped,
prior to surgery or a medical or dental procedure. Your
doctor will tell you when you should stop taking ELIQUIS
and when you may start taking it again. If you have to
stop taking ELIQUIS, your doctor may prescribe another
medicine to help prevent a blood clot from forming.
ELIQUIS can cause bleeding which can be serious, and
rarely may lead to death.
You may have a higher risk of bleeding if you take ELIQUIS
and take other medicines that increase your risk of bleeding,
such as aspirin, NSAIDs, warfarin (COUMADIN
), heparin,
SSRIs or SNRIs, and other blood thinners. Tell your doctor
about all medicines, vitamins and supplements you take.
While taking ELIQUIS, you may bruise more easily and it
may take longer than usual for any bleeding to stop.
Get medical help right away if you have any of these signs or
symptoms of bleeding:
- unexpected bleeding, or bleeding that lasts a long
time, such as unusual bleeding from the gums;
nosebleeds that happen often, or menstrual or
vaginal bleeding that is heavier than normal
- bleeding that is severe or you cannot control
- red, pink, or brown urine; red or black stools (looks like tar)
- coughing up or vomiting blood or vomit that looks like
coffee grounds
- unexpected pain, swelling, or joint pain; headaches,
feeling dizzy or weak
ELIQUIS is not for patients with articial heart valves.
Before you take ELIQUIS, tell your doctor if you have:
kidney or liver problems, any other medical
condition, or ever had bleeding
problems.
Tell your doctor if you are pregnant or breastfeeding, or
plan to become pregnant or breastfeed.
Do not take ELIQUIS if you currently have certain types
of abnormal bleeding or have had a serious allergic
reaction to ELIQUIS. A reaction to ELIQUIS can cause hives,
rash, itching, and possibly trouble breathing. Get medical
help right away if you have sudden chest pain or chest
tightness, have sudden swelling of your face or tongue,
have trouble breathing, wheezing, or feeling dizzy or faint.
You are encouraged to report negative side effects of
prescription drugs to the FDA. Visit www.fda.gov/medwatch,
or call 1-800-FDA-1088.
Please see additional Important Product Information on the
adjacent page.
Individual results may vary.
Visit ELIQUIS.COM
or call 1-855-ELIQUIS
ELIQUIS is a prescription medicine used to reduce the risk of stroke and blood clots in people who have atrial
brillation, a type of irregular heartbeat, not caused by a heart valve problem.
Ask your doctor if ELIQUIS is right for you.
I focused on finding something better
than warfarin.
NOW I TAKE ELIQUIS

(apixaban) FOR 3 GOOD REASONS:
1 ELIQUIS reduced the risk of stroke better than warfarin.
2 ELIQUIS had less major bleeding than warfarin.
3 Unlike warfarin, theres no routine blood testing.

ELIQUIS and other blood thinners increase the risk of bleeding which can be serious,
and rarely may lead to death.
2014 Bristol-Myers Squibb Company
432US14BR00220-01-01 02/14
For people with a higher risk of stroke due to
Atrial Fibrillation (AFib) not caused by
a heart valve problem

What is the most important information
I should know about ELIQUIS (apixaban)?
Do not stop taking ELIQUIS without talking
to the doctor who prescribed it for you.
Stopping ELIQUIS increases your risk of having
a stroke. ELIQUIS may need to be stopped, prior
to surgery or a medical or dental procedure.
Your doctor will tell you when you should stop
taking ELIQUIS and when you may start taking
it again. If you have to stop taking ELIQUIS, your
doctor may prescribe another medicine to help
prevent a blood clot from forming.
ELIQUIS can cause bleeding which can be
serious, and rarely may lead to death. This is
because ELIQUIS is a blood thinner medicine
that reduces blood clotting.
You may have a higher risk of bleeding if you
take ELIQUIS and take other medicines that
increase your risk of bleeding, such as aspirin,
nonsteroidal anti-inammatory drugs (called
NSAIDs), warfarin (COUMADIN
), heparin,
selective serotonin reuptake inhibitors (SSRIs) or
serotonin norepinephrine reuptake inhibitors
(SNRIs), and other medicines to help prevent
or treat blood clots.
Tell your doctor if you take any of these
medicines. Ask your doctor or pharmacist if you
are not sure if your medicine is one listed above.
While taking ELIQUIS:
you may bruise more easily
it may take longer than usual for any bleeding
to stop
Call your doctor or get medical help right
away if you have any of these signs or
symptoms of bleeding when taking ELIQUIS:
unexpected bleeding, or bleeding that lasts
a long time, such as:
unusual bleeding from the gums
nosebleeds that happen often
menstrual bleeding or vaginal bleeding
that is heavier than normal
bleeding that is severe or you cannot control
red, pink, or brown urine
red or black stools (looks like tar)
cough up blood or blood clots
vomit blood or your vomit looks like coffee
grounds
unexpected pain, swelling, or joint pain
headaches, feeling dizzy or weak
ELIQUIS (apixaban) is not for patients with
articial heart valves.
What is ELIQUIS?
ELIQUIS is a prescription medicine used to reduce
the risk of stroke and blood clots in people who
have atrial brillation.
It is not known if ELIQUIS is safe and effective
in children.
Who should not take ELIQUIS?
Do not take ELIQUIS if you:
currently have certain types of abnormal
bleeding
have had a serious allergic reaction to ELIQUIS.
Ask your doctor if you are not sure
What should I tell my doctor before taking
ELIQUIS?
Before you take ELIQUIS, tell your doctor if
you:
have kidney or liver problems
have any other medical condition
have ever had bleeding problems
are pregnant or plan to become pregnant. It
is not known if ELIQUIS will harm your
unborn baby
are breastfeeding or plan to breastfeed. It is
not known if ELIQUIS passes into your breast
milk. You and your doctor should decide if
you will take ELIQUIS or breastfeed. You
should not do both
Tell all of your doctors and dentists that you are
taking ELIQUIS. They should talk to the doctor
who prescribed ELIQUIS for you, before you have
any surgery, medical or dental procedure.
Tell your doctor about all the medicines you
take, including prescription and over-the-
counter medicines, vitamins, and herbal
supplements. Some of your other medicines
may affect the way ELIQUIS works. Certain
medicines may increase your risk of bleeding
or stroke when taken with ELIQUIS.
How should I take ELIQUIS (apixaban)?
Take ELIQUIS exactly as prescribed by your
doctor. Take ELIQUIS twice every day with or
without food, and do not change your dose or
stop taking it unless your doctor tells you to.
If you miss a dose of ELIQUIS, take it as soon
as you remember, and do not take more than
one dose at the same time. Do not run out of
ELIQUIS. Rell your prescription before you
run out. Stopping ELIQUIS may increase your
risk of having a stroke.
What are the possible side effects of
ELIQUIS?
See What is the most important infor-
mation I should know about ELIQUIS?
ELIQUIS can cause a skin rash or severe
allergic reaction. Call your doctor or get
medical help right away if you have any of
the following symptoms:
chest pain or tightness
swelling of your face or tongue
trouble breathing or wheezing
feeling dizzy or faint
Tell your doctor if you have any side effect that
bothers you or that does not go away.
These are not all of the possible side effects of
ELIQUIS. For more information, ask your doctor
or pharmacist.
Call your doctor for medical advice about side
effects. You may report side effects to FDA at
1-800-FDA-1088.
This is a brief summary of the most important
information about ELIQUIS. For more infor-
mation, talk with your doctor or pharmacist,
call 1-855-ELIQUIS (1-855-354-7847), or go to
www.ELIQUIS.com.
Manufactured by:
Bristol-Myers Squibb Company
Princeton, New Jersey 08543 USA
Marketed by:
Bristol-Myers Squibb Company
Princeton, New Jersey 08543 USA
and
Pzer Inc
New York, New York 10017 USA
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opaque markets such as insurance. Prices that
uctuate sharply can anger people, sentiments
that car service Uber often experiences, al-
though its prices change for all users according
to supply and demand at any given moment.
Jeremy Howard is a pioneer in using
big data to help insurers sell at a price that
produces the maximum lifetime prot per
customer. When Howard founded the Opti-
mal Decisions Group in 1999 he worked with
insurers to deliver every customer a random-
ized price, with rates varying 10% to 15%
from where they would have otherwise been
set. After studying how millions responded,
his company built pricing models for new
customers based on perceived willingness of
similar customers to pay.
Insurers using these techniques have since
made hundreds of millions of extra dollars,
said Howard, who recently started a new
rm, Strategic Data Science. In 2008 he sold
the Optimal Decisions Group to ChoicePoint.
It is now part of LexisNexis.
Some companies sufer negative public-
ity when diferential pricing is documented,
such as in a 2012 academic study on 200 on-
line stores, later picked up in a larger investi-
gation by the Wall Street Journal.
The study, performed by researchers in
Spain, found that if Internet visitors came
from a discount site such as Nextag.com, they
would at times receive prices as much as 23%
lower than others. Their study of 200 stores
found Amazon, Staples and videogame store
Steam among those varying price by geo-
graphic location by as much as 166%. Such
practices are legal, but companies are reluc-
tant to talk about them. We do not discuss
details of our e-commerce practices, said
Staples spokesman Mark Cautela. Amazon
did not respond to requests for comment.
Many rms consider targeted coupons to
be the most efective way to implement dif-
ferential pricing, rather than risk stirring up
resentment by using surcharges. As long as
things are presented in the form of a discount
for your special behavior, people accept it,
said Tim Smith, founder of pricing consulting
rm Wiglaf Pricing in Chicago.
Kostick of 100% Pure acknowledges it is a
tricky dance: We dont want to cross the line
where we upset our customers, but we still
want to capture the customers that are not
going to buy.
those seen as unlikely to buy. What made it
interesting to me is that they use gures like
weather from where visitors arrive at the
website, said Kostick. Where are they in
the city? Are they in the outskirts? Are they
in the inner city? This ner-grained analysis
sharpens the insight into purchase intent.
Odio, an entrepreneur who sold his
group-photo-sharing service, Divvyshot,
to Facebook, says visitors targeted with a
Freshplum promotion are 36% more likely
to buy, leading to an average margin lift for
his clients of 6.4%. The company, founded in
2011, has raised $2.4 million from investors
that include Google Ventures and Greylock
Partners. It now has 34 customers, including
Chrome Industries, a maker of messenger
bags and apparel.
The entrepreneur declines to describe the
secret sauce used to target promotions but
says he does not use information from data
brokers. Another intriguing fact: The chief
scientist behind Freshplums algorithm was
a member of the card-counting team that
outsmarted casinos portrayed in the Kevin
Spacey movie 21.
Given the ability nowadays to crunch
mountains of data, its hard to believe that
more rms arent using exible pricing. In
January Benjamin Shiller, an assistant pro-
fessor of economics at Brandeis University,
published the latest results of a study of how
diferential prices could help Netix.
Using 2006 Web behavior data, he calcu-
lated that Netix could have boosted prot
by $8 million in 2006 and $23 million in 2012
by selling the same service to diferent people
at diferent prices. In his model some people
would pay as much
as 61% more than the
standard rate, oth-
ers as much as 22%
less for a subscrip-
tion. Netix has not
considered targeting.
We like our simple
pricing, said spokes-
man Joris Evers.
Diferential pric-
ing does take place in
markets where prices
vary a lot, such as with
airlines and hotels,
and in somewhat
ONLINE RETAIL STRATEGIES TECHNOLOGY
We dont
want to cross
the line where
we upset our
customers,
but we still
want to
capture the
customers
that are not
going to buy.
F
TRENDING
What the 60 million
Forbes.com users
are talking about.
For a deeper dive go to
FORBES.COM/TECHNOLOGY
COMPANY
AIRBNB
The days of couch surng
are over for founders
Nathan Blecharczyk,
Brian Chesky and Joe
Gebbia; their room-renting
platform pursues funding
that could value it at
$10 billion, making them
the rst share economy
billionaires.
IDEA
MESSAGING
LAND GRAB
Talk is no longer cheap:
Alibaba bets $215 million on
chat app Tango at a
$1.1 billion valuation. The
deal follows Rakutens
$900 million purchase
of Viber and Facebooks
$19 billion scoop-up of
WhatsApp.
PERSON
JACK MA
The visionary head of
Alibaba (see above) is
prepping for a massive
IPO that could value the
Chinese e-commerce rm
at $200 billion, making
it the fourth-largest tech
company in the world.
Watch your back, Apple.

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have jumped or held rm after multi-
billion-dollar merger announcements.
The turnabout is noteworthy, since
it comes as major companies, ush
with cash and aiming to exploit their
high stock prices and low borrowing
costs, are ramping up acquisitions. In
the rst 11 weeks of 2014, $755 billion
worth of mergers were announced, up
from $578 billion in the full rst quar-
ter of 2013, according to Bloomberg.
Rather than sit back and cheer
the next big deal, however, investors
would do better to dust of their green
eyeshades. Thats because in addition
to the operational risks of mergers
(management distraction, turnover,
poor t) loosey-goosey acquisition ac-
counting rules allow acquirers to make
their purchases look like winners (at
least for a time) even if theyre not.
In all the areas of accounting this is
the one that gives management teams
the most discretion, declares Matt
Van Winkle, who spent two years at
PricewaterhouseCoopers, became dis-
illusioned with the info public auditors
provide investors and went of to earn
a Ph.D. at the University of Michigan,
studying under accounting-manipula-
tion guru Russell Lundholm.
Not that Van Winkle, 36, is

complaining about the merger mush, since it
provides fodder for him at his current gig as re-
search director of Voyant Advisors, a San Diego
rm that identies overvalued companies for
short-sellers.
Incredibly, postacquisition adjustments
allowed by generally accepted accounting prin-
ciples enable acquirers to rebook revenue the
acquired company has already reported. Such
tricks lead Wall Street sell-side analysts to con-
sider some big acquirers cheap, when, if you
look at the actual cash ow theyre generating,
they look very expensive, Van Winkle says.
Moreover, non-GAAP metrics (additional
presentations in earnings reports) can lull inves-
A
funny thing happened after
Facebook announced on Feb. 19
that it was spending $19 billion
to buy WhatsApp, an instant-
messaging service with only
56 employees and $20 million in revenue: Its
stock went up 6% over the next two weeks.
Traditionally investors have punished the
stocks of big acquirers. Not this year. Shares in
Verizon, Activis and Anheuser-Busch InBev
NUMBERS GAMES
Follow the cash ow: Voyant Advisors
accounting sleuth Matt Van Winkle.
INVESTING
Merger
Mirage
BY DANIEL FISHER
Acquisitions are on the rise and winning
investors favor. But loose accounting rules
can make even a bad deal look good.

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HAVE YOU HEARD THE ONE about the In-
ternet fund thats afraid of dot-coms?
It sounds like a bad money manager joke,
but thats actually the best way to describe
the Kinetics Internet Fund. Truthfully, if we
changed the name, wed probably get more
money, says cofounder and portfolio manager
Peter Doyle, jacket slung over a chair in a confer-
ence room at his midtown Manhattan ofce.
Doyles quip has two meanings: His Internet
Fund was once the darling of Wall Streetone
of the top-performing mutual funds of 1998 and
1999. But it crashed and burned a lot of investors,
falling from $1.4 billion in assets in early 2000 to
as low as $188 million by 2002.
But Doyle is not just referring to his funds
lingering tech-bubble tainthes also speaking
about his alternative approach.
Despite its seemingly self-evident name and
legacy as the rst ever Internet-focused mutual
fund, there arent many websites left in Doyles
56-company portfolio today. Instead Doyle is
proving that in the current bubbly environment
for stocks of social networks and mobile apps,
the best way to make money from the Net is old-
fashioned: value stocks with long product life
cycles, deep content libraries, ample cash ow
and ideally a billionaire behind the wheel.
Kinetics Internet has a mere $180 million in
assets and is one of eight mutual funds, including
the much larger Paradigm Fund, run by $9.7 bil-
lion Horizon Kinetics. In 2013 it ranked among
the top-performing equity mutual funds, logging
a 44% gain. Since its inception in 1996 the funds
16% average annual return has more than dou-
bled that of the S&P 500. Its 1.8% expense ratio
is steep, but that has more to do with its size than
costs. Turnover at the no-load fund is a mere 8%.
Kinetics Internet doesnt own any Facebook
stock because Doyle, 51, says he doesnt feel
comfortable investing in a site so exposed to the
whims of popular opinionlet alone one that is
spending $19 billion on WhatsApp, a messaging
service with only $20 million in revenues.
Maybe WhatsApp is a great investment,
he says. But Ive got my doubts, and certainly
handing over $15 billion in stock tells you what
they think about their company. Theyre not
interested in buying back their shares; theyre
giving them away.
Beyond the lofty valuations, Doyle is wary of
any company that has too much tied up in the
MUTUAL FUNDS
Peter Doyles Internet
Fund would rather back
John Malone than Mark
Zuckerberg.
INVESTING
Betting on Billionaires, Not Bubbles
BY BRIAN SOLOMON
Fourteen years ago Kinetics Internet Fund crashed when the dot-com bubble
burst. Now its killing it by deftly avoiding looming dot-bombs.

All investments involve risk, and successful results are not guaranteed. Offer valid through 4/30/14. Funding/rollover of $25,000$99,999
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the right to restrict or revoke this offer. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business.
TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and
The Toronto-Dominion Bank. 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
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MUTUAL FUNDS INVESTING
F
current technological paradigm. Microsoft and
Intel ruled the computing world a decade ago
but missed out on the transition to tablets and
smartphones. Doyle believes Apple is a declining
star in the same vein. All these great companies
have very short product life cycles, he says.
People in a garage can displace your entire
business, and now its global.
Instead Doyle belongs to the content is
king camp of Internet investing. Rather than
value the likes of Time Warner, Starz and Dis-
ney on the strength of current revenues, Doyle
focuses on the media libraries theyve amassed.
The product life cycle hes so concerned with
in technology is comparatively endless in the
world of content. A hit movie like Disneys 1937
classic Snow White has already been reissued
in theaters, repurposed for videogames and
amusement park rides, rereleased on VHS and
DVD, Blu-ray and iTunesand it should contin-
ue to generate more money on new distribution
platforms for decades to come. A year ago Doyle
bought into movie studio DreamWorks Anima-
tion at less than what he valued its media library
was already worth. Its Shrek franchise, for ex-
ample, including its last theatrical release, Puss
in Boots, has brought in $3.5 billion in box of-
ce revenues since 2001. But when one consid-
ers ancillary products, Shrek will be a cash cow
for years. The stock is up over 60% since Doyle
bought it.
Media studios and cable networks are not
as sexy as apps that seem to attract hundreds of
millions of users overnight, but they do produce
more restful sleep.
Sleeping well is a top priority for Doyle given
his funds history. Kinetics Internet Fund was
born in 1996 in a Long Island kitchen with a
$100,000 investment from Doyles sister, Maura.
It was the rst mutual fund for Doyle, a St. Johns
graduate and former Bankers Trust portfolio
manager, who formed the rm in 1994 with four
other ex-Bankers Trust employees, including
cofounder and CIO Murray Stahl. They started
publishing stock research but seized on the tech
IPO boom by launching the Internet Fund, which
came under the direction of one of their junior
analysts, Ryan Jacob. The twentysomething ana-
lyst got caught up in tech stock fever, investing in
IPOs like TheGlobe.com and iVillage. In 1998 the
Internet Fund had a return of 196%, and in 1999 it
gained 216%. Assets swelled to $1.4 billion.
Suddenly we were managing a lot of money
for people, and the names in there were making
me a little uneasy. After trying and failing to sell
the Internet Fund, Doyle and hotshot fund man-
ager Jacob parted ways, with the latter leaving
to start his own Internet fund. Doyle was stuck
holding the bag when the tech bubble collapsed.
Instead of throwing in the towel on the fund,
Doyle was quietly buying stocks like Liberty
Media and the Washington Post Co. Meanwhile,
the rest of Horizon Kinetics, including a separate-
ly managed accounts business and several other
mutual funds, was thriving. Doyles Internet Fund
is still a small piece, but its stellar performance
and fresh ve-star rating look promising.
Avoiding bubbly tech stocks is just one of
Doyles rules. Central to his strategy is follow-
ing big moneystocks owned and operated by
billionaires. Indeed, nine of the funds top ten
stocks are billionaire-controlled, including John
Malones Liberty Media, Sumner Redstones Vi-
acom, and Larry Page and Sergey Brins Google.
Doyles billionaire theory rests on three
pillars. The rst grew from the nancial crisis,
when most companies hunkered down and
hoarded cash. Doyle believes this is a basic agen-
cy problemexecutives are more interested
in keeping their high-paying jobs than in tak-
ing risks for the long-term good of sharehold-
ers. Driven by opposite incentives, many own-
er-operators proted from the crisis by doubling
down. Doyle cites John Malones $530 million
loan to Sirius XM in 2009, which turned into a
stake thats worth over $12 billion today.
Of course, not many had the resources to
make that bold move, which reveals another rea-
son to invest with billionaires: They have access
that other managers dont. Their positioning,
intellectual capital, ability to inuence policy is
unrivaled, says Doyle. If John Malone wants
to meet with the head of the FCC, chances are
hell get on his calendar. When a major oppor-
tunity presents itself, the titans of industry are
frequently in the right place, and they rarely
have to pass on a good investment.
The third pillar of Doyles billionaire bet is
valuation. He says many owner-operator stocks
are cheap today as a result of money owing
away from active management and into passive
ETFs. Most ETFs weight their portfolio by
market capitalization and free oat, which inher-
ently penalizes stocks like Viacom, where Sum-
ner Redstone controls nearly 80%. Says Doyle,
Youre basically putting on sale the people who
are best at allocating capital, have the best access
to information and lowest cost of capital.
BEST IDEA
CHINA PLAY
Baidu.com and Tencent are
Chinas biggest Internet
businesses, but among the
others, NetEase (NTES, 63)
has a lucrative niche in online
games. Growth is strong,
valuations lean. Revenue
should rise 15.2% this year to
$1.75 billion, with earnings
up 4.4% to $5.89 per share.
Analysts expect ve-year EPS
growth of 12.6% annually,
giving NTES a svelte price/
earnings growth (PEG) ratio
of 0.86. (Benjamin Graham
liked PEG ratios of less than
one.) NetEase just started
paying dividends, kicking
out $1 per share in 2013 and
$1.41 this year, a payout of
just 22% of $6.42 in cash
from operations over the
past 12 months. Based on
multiples of earnings and
sales, NTES looks cheap.
Over the past ve years it has
traded for an average of 17.05
times earnings, which would
produce a $100 stock with
this years expected EPS of
$5.89. Since 2010 the average
price/sales ratio is 7.35. That
works out to a stock price of
$78 based on sales per share
of $10.57.
John Dobosz

recently collecting premiums of 7% a year. Twit-
ter lenders were pocketing an annualized 9%.
Accelerate Diagnostics is another contro-
versial stock. The bulls dont mind a price that
comes to 14,900 times revenues. Bears have
racked up a short position equal to 46 days of
trading volume. Loans of the share certicates
were recently quoted at 37% a year.
Securities lending is a curious business. In a
rational world all premiums would be very close
to zero. Thats because lenders recoup the value
of the shares, plus any dividends paid while the
loan is outstanding, plus whatever interest is
earned on the cash put up by the short-sellers
as collateral. A tiny fee should sufce to pry the
shares loose.
Not all investors are rational. Quite a few
have an emotional aversion to lending securi-
ties out, says Richard Prager, who is in charge
of BlackRocks trading operations. The con-
sequence is that shareowners with no qualms
about lending can get enhanced returns.
If your way of buying growth stocks is to se-
lect a few like Twitter and 3D, then you might
have an aversion to lending the shares. Arent
those same short-sellers trying to run your
stocks down? If you dont like that, move shares
from your margin account (which in most cases
allows the broker to put them in the lending
pool) to a cash account (where they stay put).
But if you want to own the whole Russell
2000, lay emotions aside. Go for efciency and
be thankful that Wall Street will pay you for the
privilege of handling your portfolio.
D
o you need more small companies
in your stock portfolio? Check
out the latest from the fund in-
dustry: money management so
cheap that your expense ratio is,
efectively, a negative number.
BlackRock has an exchange-traded fund that
works like this. So do Vanguard, Schwab and
State Street. The secret to these negative-cost
products: securities lending.
Funds lend out shares in their portfolios to
short-sellers for a fee, which ofsets, and in some
cases more than ofsets, the overhead cost and
management fee for the fund. The best bargains
tend to be in funds that invest in smallish com-
panies, where lending premiums are high.
Investors in BlackRocks iShares Russell
2000 Growth ETF picked up $15.5 million in
securities lending revenue in the funds most
recent scal year. That was 0.35% of average
assets, more than covering BlackRocks 0.25%
fee for operating the index fund. The prize
for fund efciency goes to State Streets SPDR
S&P Biotech ETF (see table).
With any of these funds you wind up with a
better return than you could get on your own
buying the individual stocks they hold. Reason:
You cant easily get in on the sec-lending gravy
train unless you have a full-time securities lend-
ing department and a large pile of securities to
lend out.
BlackRock oversees $4 trillion of assets, not
quite half of them available for lending and
roughly $160 billion worth out on loan at any
given moment. Its 100-person securities loan
department hauls in upwards of $1 billion a year
and hands over most of the loot to BlackRocks
clients, among them the iShares funds.
Theres little money to be made lending bonds
or blue-chip stocks, where the supply is plenti-
ful and the demand modest. But holders lending
shares of 3D Systems and Sears Holdings were
EXCHANGE-TRADED FUNDS
Get Your Money Managed for Free
BY WILLIAM BALDWIN
Some ETFs have negative expenses. The trick: securities lending.
INVESTING
LENDING EXPENSE EFFECTIVE
FUND REVENUE
1
RATIO
1
COST
1
ISHARES RUSSELL 2000 GROWTH 0.35% 0.25% 0.10%
SCHWAB U.S. SMALL CAP 0.11 0.09 0.02
SPDR S&P BIOTECH 0.49 0.35 0.14
VANGUARD SMALL-CAP GROWTH 0.20 0.10 0.10
1
ANNUALIZED, AS A FRACTION OF AVERAGE ASSETS.
F

PROMOTION | TECHNOLOGY
T
he key to efectively managing cor-
porate security in this new era lies
in fully integrating safety proce-
dures and processes with a broad
technology platform designed to detect risks
and intervene at an early stage to ensure a
corporations resilience. A large part of that
approach is credentialing, access control and
enhanced situational awareness.
Deployment of standardized and inte-
grated security systems is now possible on a
global scale, says Renae Leary, Vice-President,
Global Accounts, Tyco. This has been enabled
with IP-based technology and global integra-
tors. Embarking on a global security program
delivers higher levels of security in a more
cost-efective way. As a result, we are seeing
more global companies centralizing their
security programs.
Managing Credentialing
and Access
As more industries look to outsource key ser-
vices as a way to save money, they face the
new challenge of how to manage the third
parties that come into their facilities. The
challenge facing corporate security is how
to adequately vet these visitors and ensure
they meet the security requirements to enter
certain areas of the facility. IntelliCentrics is
uniquely suited for that challenge, due to its
in-depth knowledge of best practices from
the security industry. As the name suggests,
its approach is based on the concept of intelli-
gent concentric circles of securityone of the
oldest principles of security. Whether youre
focused on vendors, visitors or employees, its
system allows you to customize the require-
ments based on the individuals role.
In the past, security has been defned by
who must be kept out. Today, our intelligent
approach helps organizations determine who
is allowed to proceed, for what purpose and
to which destination, explains Mike Sheehan,
CEO of IntelliCentrics, Inc., a leader in opera-
tional security and compliance management
services. The Dallas-based company built its
reputation in healthcare, one of the most
complex and highly regulated industries, and
has an installed base of 6,000 facilities and
nearly 500,000 users.
Hospitals have countless streams of people
walking in and out of their facilities every day.
To improve security and protect their patients,
hospitals need to know who these visitors are
and why they are there. Additionally, hospitals
carry large inventories of valuable medications
and equipment, raising the risk of theft. Con-
trolling access to hospital supplies through
criminal background checks and drug tests is
critical to reducing these costs.
IntelliCentrics helps organizations in
industries such as healthcare, transportation,
and oil and gas ensure that visitors meet the
security requirements, explains Sheehan.
These requirements may include proof of
liability insurance, competency, training and
background checks, among others. We help
organizations convey policies, obtain and
manage credentials, and extend privileges to
these individuals.
Realizing it is not always convenient for
people to go to a central location to check
In todays world, a multidimensional corporate security strategy has never been more essential for protecting
physical assets, intellectual property and human life. The globalization of business means that companies
often have ofces in far-fung locations where local laws, public safety and political unrest create risk. Even
on home soil, the threats of workplace violence, active shooters and terrorism call for more-sophisticated and
coordinated vigilance, while the growing threat of cybercrime adds another layer of vulnerability to critical
organizational assets.
Corporate Security Requires
an Integrated Approach
BY MI CHAEL RONEY

Gotta love talking to people on Monday who are already on Tuesday
Thailand ofce goes live Thursday
Really hope IT got all the software integrated
Tough to get things done in real-time across time zones
How many countries is that now? Seventeen or eighteen?
On how many systems?
When youre in the business of providing technology, its vital that your security software systems are as cutting-
edge as your offerings are. At Tyco Integrated Security, we design, engineer and implement customized security
solutions at the enterprise level that integrate seamlessly with your key business applications and existing IT
infrastructure. We offer our clients a single point of contact, global accessibility and consistent implementation
across their enterprises. Which is why we help advance the security of Fortune 500 companies. Were more than
a security company. Were your Tyco team.
Thinking about how to standardize your security systems?
Were thinking about your global solution.
1.800.2.TYCO.IS / Safer. Smarter. Tyco.
To learn more about security for your enterprise,

visit TycoIS.com/Global
2014 Tyco. All rights reserved. Tyco is a registered trademark.
Unauthorized use is strictly prohibited.
Wish all our security
systems spoke the
same language
Steve Young
Football Legend

3 PROMOTION | TECHNOLOGY
into a facility, IntelliCentrics offers a mobile
app that allows smaller clinics and doctors
offices to quickly and cost-effectively utilize
the IntelliCentrics vendor credentialing system
without requiring a kiosk or badge printer.
Improving Situational
Awareness With Integration
Situational awarenessthe ability to see,
understand and respond in a coordinated
manner to i ntrusi ons at any f aci l i t y
depends on the seamless integration of
multipl e securi t y sys-
tems. For example, the
Proximex unit of Tyco
Secur i t y Product s, a
group of world-leading
access control, video,
location-based security
and intrusi on brands,
ofers Surveillint, which
can be integrated with
the Control Room Man-
agement Sui te (CMS)
from Barco, a leader in
enterprise visualization
and collaboration.
In this scenario, security personnel can eas-
ily select particular camera sources to display
in predefined areas on Barco CMS-powered
video walls and displays, enhancing the deci-
sion-making process and shortening reaction
times. Tycos Elpas Triple Technology Active
Radio Frequency Identifcation (RFID) system
integrates fully with Impinj Speedway RFID
readers and can alert users when assets leave
their designated areas or when supply inven-
tory levels deviate from user-defined levels.
Similarly, Tycos Kantech Intevo Compact
security platforms unify access control, IP video
and intrusion detection for small- to medium-
size enterprises.
Products such as these not only pro-
vide a single, centralized environment to
help mitigate risk, ensure compliance and
ofer a quick ROI, but also can be tailored to
individual users and industriesincluding
those that require the most comprehen-
sive of command and control platforms for
total system management. Our custom-
ers range from aviation and government,
to healthcare, education,
manufacturing, retail and
resi denti al f rom the
smallest of businesses and
residences to large corpo-
rate or industrial customers
requiring the highest levels
of protection, says Mike
Ryan, President of Tyco
Security Products.With
our expanded portfolio of
purpose-built solutions,
we can of fer customers
a diverse array of options
to meet their very specifc
security objectives, instead of the typical
one-size-fts-all approach.
Enhancing
Security Metrics
Metrics that integrated security systems gen-
erate and track are also part of the security
equation for hospitals and other industries.
Organizations need analytics in order to
track the ROI these solutions provide, Shee-
han notes. As security and risk management
converge, these same resources provide a
way to quantify the lower risk levels, which
traditionally has been a time-consuming
manual process.
Technol ogy- gener ated metr i cs wi l l
continue to evolve. The emergence of cloud-
based technology, along with sensors such
as cameras, facial recognition and biometric
scanners, increasingly will allow operators to
remotely and intelligently monitor the data
required to make proactive determinations
for security metrics.
The Human Element
Balancing physical security, including access
control, video surveillance and intrusion sys-
tems, with credentialing and best practices
provides complete visibility of all people
that come and go in a facility, whether it is
a hospital, an office building or an indus-
trial facility. Yet there is one more element
requi red: an educated and commi t ted
organizational culture.
Many leaders dont realize that secu-
rity is an issue that requires commitment
from everyone, says Sheehan. Ultimately,
it requires a culture of inclusion and vigi-
lance that permeates the organization, as
well as the tools to operationalize a watch-
ful attitude. Everyone in the organization is
responsible for helping keep the workplace
safe and secure, and that is the way to cre-
ate a lasting safety net of security around
your operations.
The key to efectively
managing corporate
security lies in fully
integrating safety
procedures and processes
with a broad technology
platform designed to
detect risks and intervene
at an early stage.
www.intellicentrics.com
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WEB DIRECTORY

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to make your business safer.
Its our business

INVESTING
KEN FISHER PORTFOLIO STRATEGY
WHILE FEW EVER believe it, only
two things end any bull market. Like
that simple straight vector you learned
about in high school physicsexcept
that bull markets wiggle wildlyits
either by losing steam or by running up
against a newly emergent wall. Keep a
lookout for both.
Running out of steam is best seen
via legendary investor John Temple-
tons four-phase quote: Bull mar-
kets are born on pessimism, grow
on skepticism, mature on optimism
and die on euphoria. Upon reaching
euphoria bull markets lack energy to
propel them further. Bulls climb the
legendary Wall of Worry, and when
all worries wane to well-worn white-
washing, youre out of steam.
The wall? Any unexpected, immov-
able bad force. Markets formally digest
and discount all known phenomena.
What we know about, despite all varied
views, is already priced in. Exhibit A:
2008s mark-to-market accounting!
You should watch for surprises, but not
many do. Exhibit B: the inverted yield
curve in 2000when worries van-
ishedthat choked bank lending.
But, no, the wall isnt, by denition,
excess debt, congressional action (or
inaction), ObamaCare, Iraq, Iran, valu-
ations, on and on. And it isnt Crimea
(though it might be if Russia truly goes
on an unexpected global rampage).
Its a perpetual problem: Either we
cant observe the situation in advance
or we just dont pay attention.
Solution: Always expect the un-
expected! The key and tricky thing
is staying on your toes and endlessly
looking for it. Youre still unlikely
to see it. (Few do, and youre quite
skilled if youre one of them.) I cer-
tainly dont right now.
So I wait, watch and remain bull-
ish, noting were still, in Templetons
parlance, straddling skepticism and
optimism, and, hence, abundant force
propels this bull on. Without a wall
were maybe halfway through. Here are
ve great stocks for that big back half:
A bit cheaper and better run than
peers, but larger, UNION PACIFIC (UNP, 187)
is one of Americas oldest publicly
traded rail lineslinking 23 states in
the West and Midwest via the best
routes. Invest in the West. This ones
the best. It wont go of track at 15
times my 2015 earnings estimate with
a 1.9% dividend yield.
As retailing evolves into macro-
oligopolies, one dominator is CVS
CAREMARK (CVS, 74), in drug delivery. It
will advance from both the inevita-
bility of insurance-revenue growth
and aging baby boomers propensity
for endless, self-obsessed medical
spending. It sells at 14 times my 2015
earnings estimate with a 1.5% divi-
dend yield.
It isnt so much that I love Swiss-
based UBS (UBS, 20), arguably the worlds
largest wealth management rm, but
that I see most competitors hurting
themselves in various ways, helping
UBS gain share. And, as the bull mar-
ket endures, UBS revenues naturally
benettting like a glovedriving the
stock. It sells at ten times estimated 2015
earnings, with a 1.4% dividend yield.
Within Australias banking oligopoly,
NATIONAL AUSTRALIA BANK (NABZY, 16) is the
fourth-largest retail but largest busi-
ness bank. Widening global yield curve
spreads (long-term interest rates minus
short-term) should boost lending and
protability. Its also Down Unders
cheapest bank at only 11 times my 2014
earnings estimate with a fat 5.5% yield.
This columns smallest, most-specu-
lative and lowest-quality pick is TEXTRON
(TXT, 38). Its below what it was 15 years
ago but is now a better rm. Called a
conglomerate, its grown ever more
strategic while analysts sour on it. For
example, Textron last month completed
its acquisition of Beechcrafts parent
company; that and its Cessna line (both
based in Wichita) make Textron the
clear small-plane leader in America
just as this market is bottomingwith
huge cost-cutting opportunities.
Todays Textron is an aerospace rm
with a tail of other businesses. It sells
at 90% of annual revenue and 14 times
my 2015 earnings estimate. But I bet its
at four times 2020 earningsunless we
hit that unseen wall.
ONLY TWO THINGS
CAN STOP THE BULL MARKET
MONEY MANAGER KEN FISHERS LATEST BOOK IS MARKETS NEVER FORGET (BUT PEOPLE DO) (JOHN WILEY, 2011). VISIT HIS HOME PAGE AT WWW.FORBES.COM/FISHER.
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THE KEY IS TO STAY ON YOUR TOESAND
ALWAYS EXPECT THE UNEXPECTED

INVESTING
WILLIAM BALDWIN INVESTOR CHECKUP
LORD ABBETT DEVELOPING
GROWTH, a big fund that buys small
stocks, is dazzling. Its rapid-re trading
has it magically buying into hot stocks
and then getting out before they cool.
Its up 48% in the past year. It gets ve
out of ve stars from Morningstar.
Its a tempting product, but theres a
problem with it. Its expensive.
Developing Growth, like all funds
that quickly turn over their portfolios, is
costly in a way that is not obvious when
you look at the prospectus. The pro-
spectus tells you about the 1.1% annual
expense burden (low, at least compared
with other actively managed funds) and
the 5.75% sales load. But it doesnt spell
out another item that in the long run
matters much more: the cost of trading.
How much is that? You cant put a
precise number on the damage from
getting into and out of positions. But
statistical evidence says that trading is a
big hidden cost at funds that specialize
in the stocks of small companies.
Trading will cost you brokerage
commissions and bid/ask spreads. A
third item is at once the biggest and
the hardest to measure: the tendency
for trades to push a stocks price away.
You wont feel this efect when you sell
1,000 shares of IBM. You denitely
would feel it if you tried to unload
500,000 shares of a little company.
Developing Growths problem is
its very success. It has attracted $4 bil-
lion of customers money, and since it
invests in small companies it winds up
with large percentages of them. Among
its 124 holdings is $69 million worth of
LifeLock, a fast-growing rm that sells
an ID theft alert service. Thats 6.7% of
the oat (shares available for trading).
Whats going to happen when the
fund unwinds this unwieldy stake?
That will depend on a lot of things, like
how quickly the portfolio managers
make their exit and whether there hap-
pen to be bulls at that moment on the
sidelines, ready to buy on a price dip.
For any one buy or sell order, then,
the push-away efect is unknowable. But
it is quite possible to look at hundreds
of funds doing thousands of trades and
come to some conclusions.
Gregory Kadlec, a nance professor
at Virginia Tech, has been studying mu-
tual fund costs for 16 years. In a study
published last year in the Financial Ana-
lysts Journal he and two other academ-
ics derived trading cost estimates by
analyzing returns for 1,758 funds over a
12-year period ending in 2006.
Some skillful (or just lucky) funds
beat the market and some fall behind.
Collectively they do worse than the
market, Kadlec says, the shortfall re-
ecting both the expense ratios and the
invisible loss from trading.
On average, the analysis showed,
small-company funds lose 1.5% when
they go into or out of something and re-
coup a bit more than half the loss with
portfolio improvement. A fund with
100% turnover in its portfolio stands to
lose 1.2% a year to trading. Turnover at
the Lord Abbett fund has been running
200% and higher, suggesting a trading-
cost headwind of 2.4%.
Thomas OHalloran, the funds lead
manager, points out that trading costs
have come down a lot since the period
covered by the academics. On the other
hand, Developing Growths position
sizes are larger than its peers, and the
professors established that large rela-
tive position sizes accentuate the dam-
age from turnover.
You might say about costs, So what?
What matters is the bottom line, and on
that score this fund is a winner.
Alas, thats no guarantee it will
continue to be a winner. The sad truth
about Wall Street is that past results are
only a feeble indicator of future results.
But costs drag on.
Investors should pay less attention
to performance and more to costs. If
you want small growth stocks, buy
a low-turnover, low-expense index
fund. The exchange-traded ones from
BlackRock and Vanguard have the
tickers, respectively, IWO and VBK.
IS YOUR FUND
TRADING TOO MUCH?
GO TO FORBES.COM/SITES/BALDWIN FOR MORE ON TAX-WISE INVESTING STRATEGIES.
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FURIOUS BUYING AND SELLING CAN MAKE
YOU POORER
GO TO FORBES.COM/INVESTORCHECKUP FOR MORE YEAR-END TAX ADVICE.

INVESTING
JIM OBERWEIS SMALL STOCKS
MANY INVESTORS who keep an
eye on valuation metrics worry that
were in a bubble. But is it possible
that structural shifts could cause a
long-term change in normal valu-
ations? Its happened in the past. In
the 1970s research by Roger Ibbotson
transformed small caps from the Wild
West to an acceptable institutional
asset class. Demand for small caps
soared, and the asset class delivered
stellar returnsboth in absolute
terms and relative to large caps. Insti-
tutions that had previously shunned
small caps now embraced them, and
the increased demand took normal
small-cap P/Es to a whole new level.
Today valuations are above average,
and I think another structural change
could be in play. Post nancial crisis,
institutional investors are now desper-
ate to achieve their actuarial funding
requirements. Consider underfunded
municipal pension funds. Many funds
are still assuming returns of 8% an-
nually. Traditionally, pension plans
allocate 40% to xed income, implying
that an 11% return is required on the
rest of the portfolio to hit their targets.
Unfortunately, the market averages only
8% annually. Other than raising taxes
to increase contributions, the most
realistic scenario is for the funds to bet
it all on blackincreasing allocations to
higher-returning asset classes, such as
small caps and international equities.
A shift like this could support higher
valuations for growth stocks. Its plau-
sible investors will pay top dollar for
stocks with megagrowth potential until
ination returns to bail out unrealistic
actuarial estimates.
I think its worth it to take a chance
on a few riskier names with home-run
potential, even if the valuations look
scary in the near term. Here are three:
INTERACTIVE INTELLIGENCE (ININ, 79) is a
leading developer of call-center soft-
ware. Interactive is increasing orders at
a 20% clip, and it gets high grades from
market research rms like Gartner
Group and Frost & Sullivan. While its
forward P/E of 176 looks crazy, dont be
fooled. Transitioning to the cloud will
magnify near-term expenses while also
spreading revenue over multiyear peri-
ods, implying predictable reoccurring
revenue and increasing protability
over the next few years.
LIGAND PHARMACEUTICALS (LGND, 74) is a
biopharmaceutical company focused
on drug discovery. It partners with big
pharma companies at an early-devel-
opment stage, handing of late-stage
development and regulatory matters
to partners in return for license fees
and royalties. In 2011 Ligand bought a
formulation technology called Captisol
that improves the function of molecules
in drugs that might otherwise be sub-
optimal. Ligand stands to earn royalties
on any approved drugs that incorporate
this technology. The company already
has an ample royalty stream from three
drugs, with four more likely by 2014. I
expect Ligand to double earnings per
share to $1.40. Its forward P/E is 49.
CARDIOVASCULAR SYSTEMS (CSII, 33) is a
medical device company focused on
minimally invasive treatment for pe-
ripheral and coronary artery disease. Its
Diamondback 360 OAS system treats
calcied plaque in arterial vessels in the
leg and, following a late-2013 decision
by the FDA, also has approval for use
in the heart. The FDAs nod presents
a $1.5 billion market opportunity, and
although Cardiovascular isnt yet prot-
able, revenues will grow 30% for the
next couple of years as the coronary
product gains traction. I think the com-
pany may become a takeover target.
Like other FORBES columnists Im
obligated to report how I did in 2013.
If you had bought all 27 of my picks
in 2013 you would have been up 26%
after commissions. Thats better than
similarly timed investments in the S&P
500, up 19% by contrast. My worst call
was Francescas, which fell 26%. My
best picks were MEDIDATA SOLUTIONS (MDSO,
63), which gained 211%, ENVESTNET (ENV,
45), which gained 116%, and DEALERTRACK
TECHNOLOGIES (TRAK, 53), which gained
71%. For 2014 hold on to these three
winners plus RIGNET (RNET, 55), METHODE
ELECTRONICS (MEI, 33) and INVENSENSE (INVN,
24). Sell the rest.
THE CASE FOR
STOCKS WITH CRAZY P/ES
F
JIM OBERWEIS IS PRESIDENT OF OBERWEIS ASSET MANAGEMENT AND EDITOR OF THE OBERWEIS
REPORT. FOR MORE INFORMATION VISIT WWW.FORBES.COM/OBERWEIS.
MEGAGROWTH SMALL STOCKS THAT LOOK
EXPENSIVE TODAY MAY BE BARGAINS
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brace, Trupanion and Healthy Paws, has
eliminated such exclusions and ofered con-
sumers more choice, forcing older players to
shape up, says Tennessee vet Doug Kenney,
author of Your Guide to Understanding Pet
Health Insurance.
Even now, however, insurance generally
makes sense only for cash-ow-challenged
owners who fear they wont have the money
to cover their best friends vet bill. (In 2011
Consumer Reports described pet insurance
as rarely worth the price.)
With Petplan you pick an overall level
of annual coverage (from $10,000 for a
bronze plan to $22,000 for gold), a de-
ductible (from $50 to $200) and the share
E
very pet owner has a horror
story about shelling out for a
sick animal. In 2001 British ex-
pats Chris and Natasha Ashton
had barely settled into student
life in the M.B.A. program at the Wharton
School when their cat Bodey came down
with a mysterious case of anorexiaand rang
up a $5,000 vet bill. But instead of getting
mad, they got entrepreneurial, hatching a
plan to sell pet insurance. Last year the hus-
band-and-wife team sold $53 million worth
of Petplan policies for cats and dogs.
Its a business with lots of room to grow.
Americans spend more than $14 billion on
vet bills annually, but pet insurance premi-
ums total at most a half-billion. The largest
player, Veterinary Pet Insurance, had sales of
$239 million in 2013.
The marketing challenge for the Ashtons
and competitors is signing up customers
from a population that either hasnt heard
of pet insurance or views it, justiably, with
some suspicion.
While pet insurance has been around in
some form since 1890, when Claes Virgin,
the founder of Lnsfrskrings (now Agria
Animal Insurance) wrote the rst policies in
Sweden, it didnt come to the U.S. until 1982,
and then it got a bad rep. Some U.S. insur-
ers dropped sick pets or excluded certain
chronic or hereditary conditions.
Over the past decade, however, a wave of
new competitors, including Petplan, Em-
INSURANCE
Pet Project
BY KARSTEN STRAUSS
How a British couple turned the
shock of a $5,000 vet bill into a
$53-million-a-year business.
Chris and Natasha
Ashton built Petplan
through alliances
and making nice to
potential clients.
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g
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S OU N D A N Y ONE
YOU KNOW?
FPO

AB OVE
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INSURANCE
while Chris was still in the Royal Marines,
and they decided to attend Wharton together
after his discharge. When cat Bodey got sick,
they spotted their openingin their native
U.K. 30% of pets have some sort of insurance
coverage. The U.S.? Roughly 2%.
The couple rst worked on a pilot, Fetch
Inc., at Whartons business incubator. We
were completely on our own and had to build
everything from scratch, recalls Chris, 40.
So in 2003 they took a smart shortcut, ap-
proaching Petplan U.K., a 35-year-old animal
insurer owned by the German nancial giant
Allianz, and buying the franchise rights to
develop a new North American division.
They pay a small but fair percentage of
sales to the home ofce, Chris says, and in
exchange have gotten decades of actuarial
numbers on dogs and cats and the many ail-
ments they fall prey to.
Financing the venture took partners, too.
After maxing out $100,000 on credit cards
and tapping friends and family for $200,000,
the Ashtons, through some British chums,
found a backer in Godfried van Lanschot,
whose namesake bank in the Netherlands
has been around since 1737. Hes invested
an amount the Ashtons wont disclose but
is one of Petplans four board members. (In
all theyve raised a total of $5.5 million but
retain majority control.)
In July 2006 Petplan wrote its rst policy,
that October it started selling online at
gopetplan.com, and by December the Ash-
tons had struck their rst marketing alli-
of costs you want picked up (80% to 100%).
Routine visits and prior conditions arent
covered. Once youve bought the insurance,
however, you wont get dropped if your ani-
mal develops an ailment. Premiums increase
up to 15% a year as your pet ages but not be-
cause youve made a claim. For a 2-year-old
Labrador retriever living in Johnsburg, Ill., a
bronze plan with a $200 deductible and 80%
reimbursement runs $26 a month.
Some of Petplans numbers would make
human insurers drool. Only a third of poli-
cyholders le a claim in any given year, and
just 60% of the companys revenues go to pay
medical expenses, compared with the 80%
to 85% that ObamaCare requires insurers to
devote to medical claims. The Ashtons wont
say, but we estimate Petplans gross margins
are north of 10%.
With claims capped and predictable, the
key to prot is signing up more pets and
keeping their owners loyal. Petplan says an
impressive 90% of policyholders re-up
each year.
Since launching in 2006, the Ashtons have
sold 120,000 policies by forming alliances
with animal agencies and shelters, among
others, and working old-boy and new social
networks alike. Partnerships have been
instrumental, giving us access to a much
broader range of people than wed have been
able to target, says Natasha, 39.
Like many entrepreneurs, the Ashtons
came to their business by chance but have
left little to chance since. They met at Oxford
ENTREPRENEURS
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MOST COMMON DOG DISEASES
HIP DYSPLASIA
COST TO TREAT:
$5,000 to $7,500 (opera-
tion), $500 to 1,000
annually (medication)
VULNERABLE BREEDS
1
:
German shepherd (19%),
beagle (18%), bulldog (71%)
ACL TEAR
COST TO TREAT:
$2,000 to $5,000
VULNERABLE BREEDS:
Labrador retriever (21%)
CANCER
COST TO TREAT:
$2,000 to $10,000
VULNERABLE BREEDS:
Golden retriever (50%),
boxer (37%)
ELBOW DYSPLASIA
COST TO TREAT:
$1,730 (surgery), $5,000
annually (medication)
VULNERABLE BREEDS :
Rottweiler (39%),
German shepherd (19%)
INTERVERTEBRAL
DISC DISEASE
COST TO TREAT:
$5,000 to $7,500
VULNERABLE BREEDS :
Dachshund (25%)
1
PERCENT LIKELY TO SUFFER. SOURCES: ANIMAL MEDICAL CENTER (NEW YORK CITY); ORTHOPEDIC FOUNDATION FOR ANIMALS; PETMD; CANADIAN VETERINARY JOURNAL.

ancewith the U.S. Humane Society. Petplan
ofers society members a discount and do-
nates $30 to the group for every new policy
signed through its supporter pool. That has
brought about 5,000 customersand curb
cred. The Ashtons later reached out to ani-
mal shelters around the country, ofering a
free month of insurance to anyone adopting a
new animal (another few thousand policies).
The Ashtons have tapped the Wharton
network, too, approaching alum Vernon Hill,
who built Commerce Bank of Cherry Hill,
N.J. from nothing to a 470-branch nancial
powerhouse, which he sold to TD Financial
Group for $8.5 billion in 2007. Hill has in-
vested in Petplan and helped add the service
to the list of elective benets for bank em-
ployees. He now chairs its board.
Last year, thanks in part to the help of
an Oxford acquaintance, Petplan convinced
Marsh & McLennan Cos. Mercer unit, the
giant benets consultant, to ofer Petplan
policies to the thousands of employers it
advises.
The pound. The workplace. Where else
to reach pet owners? Since 2011 the Ashtons
have persuaded BlueCross plans in eight
states to ofer their product. Pets are part of
the family, so people naturally think about
pet health care when theyre thinking about
their own, reasons Chris.
As for social networks, the Ashtons swear
by their links to Pinterest, where snapshots
of kittens and puppies draw lots of eyeballs.
Most of the $5 million theyll spend on mar-
keting and advertising this year will go to
paid search on Google.
That means that consumers should have
no problem nding a policy for their pet.
Whether they should pay for one is an en-
tirely diferent matter. Some owners will save
thousands on unexpected vet bills, but many
others will simply kiss their premiums good-
bye. Caveat emptor.
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TRENDING
What the 60 million
Forbes.com users
are talking about.
For a deeper dive go to
FORBES.COM/ENTREPRENEURS
IDEA
CROWDFUNDING-PLUS
Kickstarter and Indiegogo are
great. But you can get even
more bang for your project
using targeted promos,
sending samples to inuential
bloggers and staging launch
events.
PERSON
BLAKE MYCOSKIE
The TOMS founder went
through four not-so-great
startups before hitting the big
time with his socially conscious
shoe phenom. His worst op:
a reality-TV channel that raised
$25 million before it failed.
COMPANY
ELECTRO-HARMONIX
Mike Matthews chucked his tie
and IBM job in 1968 to design
special devices for electric
guitars. Along the way hes
grappled with angry unions,
bankruptcy and Russian
racketeers.
EVERY DOG HAS HIS SPA DAY
Its not only vet bills that can run into the thousands. Some owners routinely
pamper their pets in exotic, even outrageous, ways.
PHYSICAL THERAPY. Water4Dogs, a New York City animal physical rehabili-
tation facility, focuses on bringing canines back from injury through a series
of services not unfamiliar to elite human athletes. For $165 an hour pets enjoy
underwater treadmills, low-level laser and neuromuscular electrical stimula-
tion, acupuncture, herbal and nutritional therapy, and deep-tissue ultrasonic
healing.
YOGA. Florida-based yoga instructor Suzi Teitelman has developed a way of
including pets in her exercises, called Doga. Teitelman ofers deluxe Doga
Yogi training kits for $535 and will visit a clients home for a private session
for $100.
PARTIES. For about $700 New York Dog Spa on Manhattans Upper East
Side will organize a Saturday-night red-carpet champagne party for up to 20
guests and their canines. A deejay may be hired for a few hundred more.
FURNITURE. A custom doggy mansion from Bitch New York runs $10,000,
and a paisley bedroom set carries a $12,000 price tag. The kitty furniture
shop A Hidden Hollow charges $2,000 for its 10-foot-tall cat tree, which
features four lounging platforms and a fabric exterior. It charges an extra $35
for the installation of an enchanted fairy door.
DEATH. The Old Pine Box in Edgewood, N.M. builds simple but classy wood-
en caskets for deceased pets, charging $500 for a large, black walnut cof n
($30 extra will get you a pillow). The Hartsdale Pet Cemetery & Crematory in
upstate New Yorkone of the oldest facilities of its kind in the U.S.will bury
a full-size dog for $2,000, excluding annual fees for plot upkeep. For those
on the thrifty side the company will cremate an expired pet for $341 (urn not
included).
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THE INNO
WELCOME TO THE BOOM: BIGGER DEALS AND
HIGHER VALUES FOR HOT STARTUPS AND IPOS
HAVE MADE THE 13TH RANKING OF THE WORLDS
BEST TECH INVESTORS THE TOUGHEST TO CRACK EVER. THE TOP TEN ALONE YIELDED
$46 BILLION IN REALIZED VALUE FROM FLIPPING COMPANIES OR TAKING THEM PUBLIC.
THE MIDAS LIST
DOUG LEONE
ALFRED LIN
PATRICK GRADY
MICHAEL GOGUEN

VATION FACTORY
Apple, Google, Oracle. Cisco, Yahoo, LinkedIn. WhatsApp, Airbnb, Dropbox.
Sequoia Capital is Silicon Valleys search engine for disruptionand
billionaires. Thats why the rm dominates FORBES 2014 Midas Listand
has made its principals as wealthy as the entrepreneurs they nurture.
BY GEORGE ANDERS WITH ALEX KONRAD
ETHAN PINES FOR FORBES
A rare look inside elite
frm Sequoia Capital
70
The Midas List:
Top 100 tech investors
74
How Sequoia
succeeds in China
79
SCOTT CARTER MICHAEL MORITZ
BRYAN SCHREIER
JIM GOETZ
ROELOF BOTHA

W
hen Doug Leone arrived
in Mount Vernon, N.Y. in
1968, the 11-year-old Ital-
ian immigrant didnt have
a clue. He unked a math
quiz in school because the
terms true and false
bewildered him. He wore unsightly slacks from Sears that
invited classmates teasing. After school he watched
McHales Navy alone on a black-and-white television, hop-
ing to learn colloquial phrases that would help him t in.
A few years later Leone began to get his bearings. I
was working on boats as a teenager, sweating like a pig
during a summer job, Leone recalls. I could look across
and see all the kids at the country clubs swimming pool.
The young guys were talking to the girls. And I was say-
ing to myself: I cant wait until I meet you in the business
world. You just made your big mistake, letting me in.
Ambition. Vulnerability. Vindication. Lots of suc-
cessful immigrants bottle up those feelings as they rise
to prominence. They hide old slights and do their best
to blend into Americas aristocracy. Not Leone. Even in
his perch as a managing partner at venture rm Sequoia
Capital, Leone still carries himself like a hard-luck striv-
er, scrambling for his rst decent break. A lot of what
keeps me going is fear, he condes.
Step inside Sequoias spartan ofces at Silicon Valleys
capital of capital, Sand Hill Road, and see what happens
when a handful of hungry perfectionists like Leone band
together. Start at the entryway, packed with framed cop-
ies of nancing documents for 98 companies. The hit pa-
rade begins with Apples initial public ofering in 1980;
it includes the likes of Oracle, Cisco, Yahoo, Google and
LinkedIn. These are Sequoias children. Since its found-
ing in 1972 Sequoia has backed startups that now com-
mand a staggering $1.4 trillion of combined stock market
value, equivalent to 22% of Nasdaq.
Yet Sequoia doesnt dis-
play its heritage with the
well-heeled pride you might
nd at other top-tier ven-
ture rms, let alone the likes
of JPMorgan or KKR. At Se-
quoia the historic IPO l-
ings are crammed into drab,

drugstore-quality frames.
Sequoia partners dont
enjoy luxurious private of-
ces; instead they toil at
stand-up desks in a big open
hall. Conference rooms are
adorned with cheap plas-
tic wastebaskets. Its as if
Sequoias partners havent
fully realized that they might
be rich.
The past year Sequoias
scrappy methods have pro-
duced the rms biggest
gains ever. A record nine Se-
quoia partners appear on
the FORBES Midas List of
the most successful ven-
ture capitalists, thanks to
the rms lucrative invest-
ment in companies such as
Airbnb, Dropbox, FireEye,
Palo Alto Networks, Stripe,
Square and WhatsApp. At the
No. 1 spot is Sequoia part-
ner Jim Goetz, who backed
WhatsApp in 2011, well before
Facebook agreed to buy the
mobile-messaging compa-
ny for $19 billion. Leone
ranks No. 6, followed by
colleagues Michael Moritz,
Alfred Lin, Roelof Botha, Neil
Shen, Michael Goguen, Bryan
Schreier and Kui Zhou.
Base pay at Sequoia isnt
meant to be dazzling. While
the salaries of the rms nine
general partners can top $1
million, Sequoia doesnt both-
er with Wall Street-style guaranteed bonuses, and some
of Sequoias more junior partners have taken pay cuts to
join. Thats an easy sacrice to make. The capital gains
vastly exceed base pay.
Consider Sequoia Venture XI Fund, which in 2003
THE MIDAS LIST
THEINVESTMENTCLUBYOUWANTTOBEIN
SEQUOIASRETURNSNETOFFEESHAVEBLOWNAWAYTHE
STOCKMARKET,EVENITSLATER-STAGEGROWTHFUNDS.
SIZE NET S&P
VENTURE ($MIL) IRR 500 DIFFERENCE
US XI
1
(2003) $387 40.9% 6.0% V 34.9
US XII
2
(2006) 421 34.6 5.5 V 29.1
US XIII
3
(2010) 434 88.4 12.1 V 76.3
GROWTH
US GF III (2005) 862 14.3 5.1 V 9.2
US GF IV (2008) 903 32.1 14.6 V 17.5
GF V (2011) 951 58.5 23.7 V 34.8
1
FIREEYE, KAYAK, LINKEDIN, PALO ALTO NETWORKS, YOUTUBE.DOES NOT INCLUDE EVENTUAL EXIT VALUATION OF
3 PRIVATE COMPANIES.
2
AIRBNB, DROPBOX, JAWBONE, MERAKI, NIMBLE STORAGE. DOES NOT INCLUDE EVENTUAL
EXIT VALUATION OF 22 PRIVATE COMPANIES.
3
MONGODB, SQUARE, STRIPE, TUMBLR, WHATSAPP DOES NOT INCLUDE
EVENTUAL EXIT. VALUATION OF 27 PRIVATE COMPANIES. SOURCE: SEQUOIA CAPITAL. NOTE: A 2012 VENTURE FUND IS
STILL INVESTING (INCLUDES WHATSAPP, A 700% IRR SCORE). A 2014 GROWTH FUND STARTS APR. 14
Sequoia managing
partner Doug
Leone: A lot of
what keeps me
going is fear.

raised $387 million from about 40 limited partners,
chiey universities and foundations. Eleven years later
Venture XI has booked $3.6 billion in gains, or 41% a
year, net of fees. Sequoias partners stand to collect 30%,
or $1.1 billion, while limited partners get 70%, or anoth-
er $2.5 billion. Look for even more outsize returns from
Venture XIII (2010), which is up 88% a year so far, and
Venture XIV (2012). The latter two will split the $3 bil-
lion or so Sequoia takes home from the WhatsApp deal.
Add it up and Sequoia is turning its own partners into
billionaires while keeping outside investors purring.
Weve hired more than 200 outside money managers
since I came here in 1989, says Notre Dames investment
chief, Scott Malpass. Sequoia has been our number one
performer by far.
SEQUOIA OPENED FOR BUSINESS IN 1972, when
Don Valentine, a gruf sales and marketing executive in
Silicon Valleys chip industry, decided to try his hand at
venture capital. The son of a Yonkers, N.Y. truck driver
(a few miles from where Leone grew up), Valentine was
blessed with an eye for mavericks who could launch great
companies. Youll nd him in the history books as the fel-
low who bankrolled Steve Jobs in 1978, even though the
22-year-old Apple founder, by Valentines later account,
smelled odd and looked like Ho Chi Minh.
When Valentine ceded managerial control of Sequoia
in the mid-1990s, Moritz and Leone jointly took over. Su-
percially they are nothing alike. Moritz started out as
a staf writer for Time magazine; he is an Oxford gradu-
ate who coins clever phrases all the time. Leone earned
a mechanical engineering degree from Cornell and then
sold computers for Hewlett-Packard, Prime Computer
and Sun Microsystems; he curses to get his point across.
Moritz won a full partnership at Sequoia after barely two
years; Leone needed ve.
Yet both t the Sequoia mold: feisty, decisiveand
ready to back the dentmakers of the world. Every
time we invest in a little company, its a battle against
the odds, Moritz explains. Were always outgunned by
companies that are far larger than us, who have threat-
ened us and the founders with extinction. Its incredibly
thrilling to prove everyone wrong. You cant get a bigger
rush than that.
These days Leone serves as senior partner. Moritz re-
mains an active investing partner but shed his adminis-
trative duties in 2012 after being diagnosed with an un-
specied illness that, he said, could dim his quality of life
in the next ve to ten years. In a recent interview with
FORBES Moritz said that staying as t as possible is the
key to everything, adding that he had been swimming
for 90 minutes early that morning. Asked if there was
any change in his health outlook, Moritz added: Who
knows what fate will deliver?
Sequoias partners hear 200 or more pitches a month,
while typically funding only 2. Regardless of wheth-
er a meeting ends with yes or no, founders describe
their hour with Sequoia as one of lifes most intense ex-
E
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F
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R
B
E
S

1 JAMES GOETZ (7)
SEQUOIA CAPITAL
WhatsApp, Palo Alto Networks,
Nimble Storage
2 MARC ANDREESSEN (2)
ANDREESSEN HOROWITZ
Facebook, Twitter, Groupon
3 PETER FENTON (6)
BENCHMARK CAPITAL
Twitter, Yelp, New Relic
4 PETER THIEL (3)
FOUNDERS FUND MANAGEMENT
Facebook, Zynga, Palantir Technologies
5 JIM BREYER (1)
ACCEL PARTNERS
Facebook, Spotify, Legendary
Entertainment
6 DOUG LEONE (4)
SEQUOIA CAPITAL
FireEye, ServiceNow, Meraki
7 REID HOFFMAN (5)
GREYLOCK PARTNERS
Facebook, Groupon, Zynga
8 STEVE ANDERSON (22)
BASELINE VENTURES
Twitter, ExactTarget, Tremor Video
9 PAUL MADERA (11)
MERITECH CAPITAL PARTNERS
Facebook, 21Vianet Group, Fusion-io
10 SCOTT SANDELL (8)
NEW ENTERPRISE ASSOCIATES
Workday, Bloom Energy, Data Domain
11 JOSH KOPELMAN (12)
FIRST ROUND CAPITAL
LinkedIn, Square, Five Below
12 CHRIS SACCA (21)
LOWERCASE CAPITAL
Twitter, Uber Technologies, Lookout
13 MICHAEL MORITZ (13)
SEQUOIA CAPITAL
LinkedIn, First Republic Bank, Green Dot
14 MIKE MAPLES (25)
FLOODGATE
Twitter, ExactTarget, Chegg
15 FRED WILSON (16)
UNION SQUARE VENTURES
Twitter, Zynga, LendingClub
16 DAVID SZE (10)
GREYLOCK PARTNERS
Facebook, LinkedIn, Pandora Media
THE MIDAS LIST
2014 RANK NAME (2013 RANK)
FIRM
Big Deals
periences. Moritz is the detective, listening to each de-
tail of a founders story and asking a few eerily percep-
tive questions. Botha, Lin and Schreier are the growth
hackers, looking for ways consumer-oriented start-
ups can rocket ahead even faster. Goguen and Goetz are
the mechanics, drawing on 25 years apiece of experi-
ence with e nterprise technology companies to gauge a
startups chances of prevailing.
Then theres Leone. The boy from Genoa likes to
challenge founders right away to nd out who is tough
enough to succeed. Tony Zingale, a seasoned Silicon Val-
ley executive, recalls a 1990s meeting in which Leone
grabbed Zingales rsum, ipped it across the desk and
snarled: What do you know about running a startup?
They bickered for ten minutes before Leone declared:
Okay, now we know you are a smart m-efer. Now we
can have the meeting.
Today Zingale is CEO of Jive Software, a Sequoia-
backed provider of enterprise/social software. It doesnt
matter that Leone can deal out rejections that feel like a
punch in the mouth, Zingale says. Slights are forgotten
fast; Leone regularly speaks of Zingale as part of the Se-
quoia family. Hes another ery Italian, so we get along
well, says Zingale.
Borge Hald, the CEO and cofounder of Medallia,
encountered Leones sharp tongue in 2012, when the
customer service software company was looking for its
rst outside capital infusion. Most other venture rms
were sucking up to us and saying we were so good
that they wouldnt change a thing, Hald recalls. Doug
challenged us. He said that we needed to build our sales
eforts in a big way. He said that in a world thats full of a
struggle between energy and chaos, all we amounted to
was entropy. In this case Leones harsh critique paid of;
Medallia signed with Leone even though passive com-
petitors ofered richer terms.
Part of Sequoias edge with entrepreneurs comes from
a willingness to move fast on the best prospects. Pitch to
Sequoia partners on Monday morning and, if everything
goes well, you can have a handshake agreement on fund-
ing that afternoon. Ask for a term sheet and youll get the
essentials on a single page, rather than a long lawyers
memo. Among the fans of Sequoias speed is Elon Musk,
the CEO of Tesla Motors. Musk remembers that in 1999,
when he was building what became PayPal, Sequoia
wired him $5 million to get started, even though lawyers
hadnt nished all their paperwork.
Dont complicate our lives, explains Adi Tatarko, the
CEO of Houzz, a home decorating site. She and her hus-
band, Alon Cohen, cofounded the site in 2009 and have
been racing to build it ever since. When Houzz raised
money in 2011, another venture rm might have ofered
a higher valuation. But Sequoia won their loyalty, she
James Goetz Leaps to
No. 1 because of the
WhatsApp sale. He was
the only VC in the deal.
Acknowledgments
DATA PARTNER:
TrueBridge Capital Partners
LEAD REPORTER: Alex Konrad
REPORTING BY: Ryan Mac,
Hollie Slade, Aaron Tilley
EDITOR: Bruce Upbin
DATA: DowJones
Venture Source
DATA POI NT
20
New
DATA POI NT
7
Returnees
SEQUOIA CAPITAL

CHRIS KAMINSKI, A REPUTABLE FINANCIAL ADVISOR.
AZMYTH, A BEAT-BLASTING DJ WITH NO FINANCIAL TRAINING WHATSOEVER.
PART OF AN EXPERIMENT TO MAKE A POINT.
THIS MAN IS:
A.
B.
C.
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says, by being very direct and really fast.
Tatarko and Cohen grew up in Israel, Musk in South
Africa, Hald in Norway. A FORBES analysis shows that
a whopping 59% of the startups underlying Sequoias
Midas List calculations were built by at least one for-
eign-born cofounder. Put ags in a world map and you
will see Sequoia connecting with entrepreneurs born in
Ukraine, Ireland, Finland, Greece, India, Pakistan, Ven-
ezuela and a dozen other countries. (By contrast, Kauf-
man Foundation data show that barely a quarter of all
U.S. startups have at least one immigrant cofounder.)
Sequoias ties to Silicon Valleys brightest immigrants
are hardly an accident. Italian-born Leone rubs shoul-
ders with fellow partners from Wales (Moritz), South
Africa (Botha), Hong Kong (Lin) and old-line parts of
the northeastern U.S. who think of themselves as im-
migrants, too. Native Californians are rare at the rm.
Everyone is an outsider, still trying to win acceptance
and successin a new land.
As a result Sequoias partners dont mind hunting for
great new startups in the ratty cofee shops and low-rent
ofces where such companies often are born. Other ven-
ture capitalists let success draw them into Pebble Beach
golf tournaments or the rareed venues of Davos and
Aspen gabfests. We dont go there, Leone says. Thats
not where the next founders are.
THE VENTURE CAPITAL BUSINESS often seems as
strife-torn as a Kardashian marriage. Ambitious young-
er partners feud with old-timers. Battles rage with-
in rms about who is good versus lucky, who deserves a
bigger share of the prots and who should be booted out.
Throw in some personal feuds or indiscreet conduct and
pretty soon VCs quarrels become a feast for lawyers.
Sequoia is the long-running exception. Thanks to
some unusual quirks in the rms hiring habits, every-
day work practicesand paySequoia has been able to
stay harmonious and rejuvenate its leadership as needed,
without any fuss. Older partners cash out. New ones take
their place. The rm runs in line with Leones idea of a
big Italian family: lots of personalities, plenty of back-
and-forth but a determination to stick together no mat-
ter what. Women? Sequoia has none in top U.S. invest-
ment roles but says it hopes to hire one someday.
We want people who come from humble backgrounds
and have a need to win, Leone says. And we want a cul-
ture where people continuously share credit. Sequoia
does hire some recent business school graduates to serve
as nonvoting junior partners. But the rms bigger part-
nership slots go to seasoned tech executives like Alfred
Lin (Zappos), Bryan Schreier (Google) or Omar Ham-
oui (AdMob). These men are known quantities; they have
worked for years at one of Sequoias portfolio companies.
17 ANEEL BHUSRI (14)
GREYLOCK PARTNERS
Workday, ServiceNow, Data Domain
18 TODD CHAFFEE (23)
INSTITUTIONAL VENTURE PARTNERS
Twitter, Pandora Media, HomeAway
19 JEREMY LEVINE (9)
BESSEMER VENTURE PARTNERS
LinkedIn, Pinterest, Box
20 BENJAMIN HOROWITZ (17)
ANDREESSEN HOROWITZ
Twitter, Skype Technologies, Jawbone
21 MARY MEEKER (47)
KLEINER PERKINS CAUFIELD
& BYERS
Square, Spotify, LendingClub
22 DEVEN PAREKH (NEW)
INSIGHT VENTURE PARTNERS
Twitter, Fanatics, Chegg
23 JOHN DOERR (26)
& BYERS
Twitter, Square, Bloom Energy
24 RICHARD WONG (86)
ACCEL PARTNERS
Atlassian, Airwatch, Rovio Mobile
25 KEVIN EFRUSY (18)
ACCEL PARTNERS
Facebook, Groupon, SpringSource
26 ALFRED LIN (90)
SEQUOIA CAPITAL
Uber Technologies, Airbnb, Jawbone
27 PROMOD HAQUE (RETURNEE)
NORWEST VENTURE PARTNERS
FireEye, PCH International, Cyan
28 BENJAMIN NYE (24)
BAIN CAPITAL VENTURES
BMC Software, LinkedIn, SolarWinds
29 ROELOF BOTHA (19)
SEQUOIA CAPITAL
Square, Jawbone, MongoDB
30 NAVIN CHADDHA (52)
MAYFIELD FUND
Qunar Cayman Islands, Fab, SolarCity
31 ROBERT WARD (31)
Tableau Software, Fortinet, Acclarent
32 BIJAN SABET (51)
SPARK CAPITAL
Twitter, Tumblr, FourSquare Labs
33 NEIL SHEN (15)
SEQUOIA CAPITAL
Qihoo 360 Technology, JD.com, Renhe
34 HARRY WELLER (28)
Groupon, MongoDB, Opower
THE MIDAS LIST
DATA POI NT
4
Women
FIRM
Big Deals
Mary Meeker The
former Wall Street tech
sage is the top-ranked
woman on the list.
SEQUOIA CAPITAL

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BUT I PREFER AN
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Schreier, for example, pitched three of his own
startup ideas to Sequoia in 2008. Moritz didnt like any
of themparticularly a hastily conceived idea about
making phones with big buttons so that elderly peo-
ple could use them. But, as Moritz now recalls, the best
thing about Bryan was Bryan. The big-button phones
could wait. Sequoia regarded Schreiers earnest, self-ef-
facing personality as just right for the rm itself.
Sequoias partners gather each Monday at 8 a.m. to
debate investment prospects and review existing port-
folio companies. Unwritten house rules reward the
humble. Its about getting to the right decision, rather
than being right yourself, says Jim Goetz. If you talk
for more than 90 seconds at a time, adds Aaref Hila-
ly, a new partner (ex-Clearwell), youve probably gone
on too long.
Unlike Wall Streets activist investorswho agitate
for big shakeups that might rocket stock prices upward
in a single daySequoias partners help companies re-
lentlessly with the little stuf that will never warrant a
press release. When WhatsApp was having trouble hir-
ing engineers, Goetz met at least half a dozen candidates
and their spouses for dinner, where he reassured them
that this low-key startup really did have a bright future.
When Stripes 23-year-old cofounder, John Collison,
wanted help pitching his companys payment services
to a big East Coast nancial company, Sequoias Moritz
walked him through two rehearsals, sharing ideas about
how to sharpen up the story.
When Sequoia partners sweat the details with start-
up founders, much of the conversation involves tidbits of
tribal knowledge picked up during the 42 years of rm
history. Dropbox, for example, regularly invites Sequoia
partner Bill Coughrana former head of engineering at
Googleto share thoughts about how to keep expanding
without creating hair balls of complexity.
On a recent visit Coughran leaned back in a plas-
tic chair and reminisced about the four big engineering
needs of Googles search division, at a time when rank-
ing seemed thrilling and indexing seemed dreary.
Didnt anyone want to index? Yes, Coughran said: The
moment he talked about Googles desire to crank up its
indexing capabilities 30-fold over the next several years,
indexing suddenly became exciting, too. Dropboxs
head of engineering, Aditya Agarwal, smiled. Now he
had a new tactic to get people excited about Dropboxs
quests, too.
Founders push back if Sequoia tries to ofer too much
advice. Nir Zuk, the founder of Palo Alto Networks, a
computer security company, says hes told Goetz: If
you want to work for me as a product manager, Id hire
you in a heartbeat. But you cant come to board meet-
ings every six weeks and tell me you know more than
35 YURI MILNER (35)
DIGITAL SKY TECHNOLOGIES
Facebook, Groupon, Zynga
36 BYRON DEETER (29)
Box, Criteo SA, Cornerstone OnDemand
37 NEERAJ AGRAWAL (27)
BATTERY VENTURES
Wayfair, Nutanix, Bazaarvoice
38 SANDY MILLER (42)
INSTITUTIONAL VENTURE PARTNERS
Zynga, Data Domain, Supercell
39 GEORGE BISCHOF (43)
Isilon, Box, Fusion-io
40 GEORGE ZACHARY (40)
CHARLES RIVER VENTURES
Twitter, Yammer, Millennial Media
41 SAMEER GANDHI (44)
ACCEL PARTNERS
Dropbox, Spotify, Sourcere
42 RANDY GLEIN (91)
DRAPER FISHER JURVETSON
Twitter, Space Exploration
Technologies, Box
43 KEVIN COMOLLI (NEW)
ACCEL PARTNERS
Atlassian Pty, Supercell,
Varonis Systems
44 MICHAEL GOGUEN (RETURNEE)
SEQUOIA CAPITAL
FireEye, Infoblox, Virident Systems
45 RYAN SWEENEY (NEW)
ACCEL PARTNERS
Groupon, Atlassian, Airwatch
46 ANN LAMONT (RETURNEE)
OAK INVESTMENT PARTNERS
Castlight Health, Benetfocus,
NetSpend
47 JOEL CUTLER (38)
GENERAL CATALYST PARTNERS
Airbnb, Kayak Software, ITA Software
48 JEFFREY JORDAN (74)
ANDREESSEN HOROWITZ
Pinterest, zulily, Airbnb
49 PING LI (RETURNEE)
ACCEL PARTNERS
Fusion-io, Nimble Storage, Cloudera
50 AYDIN SENKUT (NEW)
FELICIS VENTURES
Meraki, Rovio Mobile, The Climate
51 KLAUS HOMMELS (66)
LAKESTAR
Facebook, Spotify, Airbnb
52 JENNY HONG LEE (36)
GGV CAPITAL
21Vianet Group, Pactera, YY
53 PETER WAGNER (78)
WING VENTURES
Fusion-io, Nimble Storage, Opower
THE MIDAS LIST
FIRMS WITH THE MOST
PARTNERS ON LIST
SEQUOIA CAPITAL 9
ACCEL PARTNERS 8
5
KLEINER PERKINS

CAUFIELD & BYERS
4 GREYLOCK PARTNERS
4 BENCHMARK CAPITAL
4
NEW ENTERPRISE
ASSOCIATES
4
MERITECH CAPITAL
PARTNERS
3 ANDREESSEN HOROWITZ
3 GGV CAPITAL
3
BESSEMER VENTURE
PARTNERS
3
DRAPER FISHER
JURVETSON
FIRM
Big Deals
Yuri Milner He moved his
head ofce to Hong Kong to
be closer to his China deals.
FIRMS WITH THE MOST
RECENT EXITS >$200M
KLEINER PERKINS CAUFIELD & BYERS 15
SEQUOIA CAPITAL 15
ACCEL PARTNERS 12
NEW ENTERPRISE ASSOCIATES 12
9
8
7
7
6
MERITECH
CAPITAL
PARTNERS
NORTHWEST
VENTURE
PARTNERS
BESSEMER VENTURE
PARTNERS
ORBIMED
ADVISORS
BATTERY VENTURES
SEQUOIA CAPITAL

HOW SEQUOIA SOLVED CHINA
American venture rms have a mixed record starting Chi-
nese franchise funds. New Enterprise Associates has kept
only a modest footprint since entering the market in 2003.
Kleiner Perkins has seen a wave of partner turnover since
2007. Not Sequoia. Since 2005 its China hands, Neil Shen
and Kui Zhou (on the list at 33 and 81, respectively), have
guided each of the rst three funds to better returns than
the last (its 2007 fund is up 33% a year; the 2010 fund is up
37%), while racking up wins such as Qihoo 360, Vipshop
and IPO-bound JD.com. The secret? Diversity of bets (LED
makers, wealth management, fast food) and Shen himself.
One of Chinas early Web moguls as cofounder of travel
site Ctrip.com, Shen is aggressive and well connected. He
recruits cold-call pros to snif out potential portfolio com-
panies and nurtures a formidable network of founders. Says
Jenny Lee, a managing partner at rival rm GGV Capital:
Among the franchise funds its only Sequoia. Many havent
worked out very well, and this is the one that actually has.
My view is its because of Neil Shen.
54 HURST LIN (NEW)
DCM
58.com, Shanghai Luxin Packing
Materials Science, Tuniu
55 ASHEEM CHANDNA (20)
GREYLOCK PARTNERS
Palo Alto Networks, AppDynamics,
Imperva
56 DAN LEVITAN (NEW)
MAVERON
Zulily, Potbelly, The Motley Fool
57 VENKY GANESAN (32)
MENLO VENTURES
Palo Alto Networks, Virident Systems,
oDesk
58 LEE FIXEL (30)
TIGER GLOBAL MANAGEMENT
Facebook, Palantir Technologies, LinkedIn
59 STEPHEN JURVETSON (57)
Space Exploration Technologies,
Tesla Motors, Synthetic Genomics
60 BING GORDON (80)
& BYERS
Zynga, Spotify, Jawbone
61 BRYAN ROBERTS (75)
VENROCK
Castlight Health, Ironwood
Pharmaceuticals, Zeltiq Aesthetics
62 TED SCHLEIN (37)
& BYERS
Chegg, Mandiant, Jive Software
63 VINOD KHOSLA (68)
KHOSLA VENTURES
Square, Beceem
Communications, Xsigo Systems
THE MIDAS LIST
our full-time product managers do. It just doesnt work
that way. Overall, though, Zuk says that what he likes
most about Sequoia is that its partners are fellow en-
trepreneurs who have gone through what were going
through. They understand us.

SEQUOIA DOESNT ALWAYS GET IT RIGHT. In the
dot-com bust of 2000 the rm sufered big losses from
duds such as eToys and Webvan, an online grocer. More
recently it sank $25 million into failed photo app Color,
which ended up selling at a loss to Apple. Even in Ven-
ture XI, the fabulously successful 2003 fund, Sequoia
rang up more than $100 million of losses on startups that
turned out to be, um, shutdowns.
Periodic losing investments come with the territory.
What vexes Sequoia much more are the meetings with
tomorrows legendary founders, when, at the end of
the pitch, the rm somehow ends up saying no instead
of yes. Pinterest slipped awayand so did Twitter. In
2007 Sequoia had a chance to take a 10% stake in Twit-
ter when the edgling site was valued at just $20 mil-
lion. (Twitters market cap today is more than 1,000-
fold higher.)
Live and learn. Sequoia investors put on their hair
shirts in 2011 and tried to identify a xable mistake in
their Twitter analysis. Their conclusion: They had been
too stubborn about seeking their ideal target of a 20%
to 30% stake in startups. Twitter CEO Jack Dorsey had
wanted to sell only a smaller amount. In hindsight, says
Botha, Sequoia should have agreed. Going forward,
partners now are willing to take smaller stakesat
higher than usual priceswhen an extraordinary start-
up is in play.
The worst misstep happened in 2006, when Facebook
FIRM
Big Deals
WHERE LISTERS LIVE
NEW YORK
MASSACHUSETTS
BEIJING
SHANGHAI
OTHER
1
7%
6%
3%
2% 9%
CALIFORNIA
73%
1
PENNSYLVANIA, MOSCOW, ZURICH, LONDON, HONG
KONG, CONNECTICUT, COLORADO, WASHINGTON (D.C.),
WASHINGTON.
J
A
S
O
N

A
L
D
E
N
/
B
L
O
O
M
B
E
R
G

founder Mark Zuckerberg taunted Sequoia by showing
up late at a meeting, wearing pajama bottoms, to discuss
an eccentric side business called Wirehog. The farcical
presentation was a way of sticking it to Sequoia, author
David Kirkpatrick later reported. (Zuckerberg at the
time was taking advice from fellow entrepreneur Sean
Parker, who had his own gripes with Sequoia.) Snub ac-
complished, Zuckerberg won funding from Accel Part-
ners instead, in a deal that eventually produced about a
300-to-1 payof for that venture rm.
Today relations with Facebook have been mended;
since 2012 the big social network has paid top dollar for
two Sequoia-funded companies, Instagram and Whats-
App. Even Moritz, who sufered through the pajama pre-
sentation, insists that it only deepened his appreciation
of Zuckerbergs pluck. At the end of his slide show,
Moritz recalls, he had this slide saying: A Mark Zuck-
erberg Production. I remember privately admiring the
bravado and self-condence to insert that line. I would
never have had the courage to do that at his age.
Other venture capitalists salute Sequoias results,
though they cant resist the temptation to quibble a bit
with its style. Theres a ton of respect, says David Sze
of Greylock Partners. We are both completely dedicat-
ed to creating huge successful outcomes to change the
world. They are a little more acerbic; we are a little more
collaborative.
Years ago, when Kayak cofounders Steve Hafner and
Paul English were pitching their travel search engine,
Hafner asked Sequoias partners to help him test the ser-
vice by ofering up airport codes (such as JFK or SFO).
When Leone hesitated, some wag interjected: Doug
doesnt know any. He ies private. The comment was
a sly dig at superthrifty Leone, who did most of his y-
ing on United at the time and had just agreed, with some
trepidation, to rent a few hours of private jet service an-
nually, via NetJets. But Hafner didnt know this. He was
put of his game, and the presentation sputtered. The
two were initially turned down before English returned
uninvited a day later and convinced the rm to give
Kayak a second look.
Theres a stereotype in Silicon Valley that venture
capitalists become unhelpfully harsh when compa-
nies are stumbling and are in too much of a hurry to
cash out when things are going well. Sequoia, however,
turns those tenets upside down. CEOs such as Brad Pe-
ters of Birst, a business-intelligence software company,
say Sequoia gives them time and guidance to sort out
snags. But Sequoia becomes insatiable when it sees a
com pany doing well and believes that it could be doing
even better.
At a recent San Francisco dinner with a dozen CEOs
of portfolio companies, for example, Sequoias Lin
64 CARL GORDON (NEW)
ORBIMED ADVISORS
Inhibitex, Aragon Pharmaceuticals, Adimab
65 RON CONWAY (41)
SV ANGEL
Twitter, Zynga, Snapchat
66 CHRISTOPHER SCHAEPE (55)
LIGHTSPEED VENTURE PARTNERS
Fusion-io, Solazyme, Aerohive Networks
67 SALIL DESHPANDE (71)
BAIN CAPITAL VENTURES
LendingClub, MuleSoft, Buddy Media
68 DAVID WEIDEN (39)
KHOSLA VENTURES
Jawbone, Yammer, Lookout
69 HANS TUNG (100)
GGV CAPITAL
Beijing Xiaomi Technology, VANCL,
Forgame Holdings
70 BILL GURLEY (33)
BENCHMARK CAPITAL
Uber Technologies, Zillow, Nextdoor
71 CRAIG SHERMAN (NEW)
Zulily, SurveyMonkey.com, Evernote
72 BRYAN SCHREIER (NEW)
SEQUOIA CAPITAL
Dropbox, Qualtrics, Trulia
73 ROGER LEE (54)
BATTERY VENTURES
Groupon, Angies List, BlueKai
74 CHRISTOPHER GABRIELI (RETURNEE)
Bright Horizons Family Solutions,
Stromedix, Acceleron Pharma
75 ROB HAYES (97)
FIRST ROUND CAPITAL
Square, Uber Technologies, Rearden
Commerce
76 PETER BARRIS (49)
Groupon, Boingo Wireless, Echo Global
Logistics
77 JEFF CROWE (NEW)
NORWEST VENTURE PARTNERS
LendingClub, RetailMeNot, Turn
78 GORDON RITTER (RETURNEE)
EMERGENCE CAPITAL PARTNERS
Veeva Systems, Lithium Technologies
79 IZHAR ARMONY (NEW)
CHARLES RIVER VENTURES
Yammer, RPX, TerraPower
80 MAMOON HAMID (NEW)
THE SOCIAL+CAPITAL PARTNERSHIP
Castlight Health, Box, Yammer
81 KUI ZHOU (NEW)
SEQUOIA CAPITAL
Xiamen Changelight, Beijing Shouhang
Resources Saving, Sinnet
THE MIDAS LIST SEQUOIA CAPITAL
HALL OF FAME: MOST
APPEARANCES ON LIST
JOHN DOERR 13
MICHAEL MORITZ 13
JIM BREYER 12
VINOD KHOSLA 10
DOUGLAS LEONE 9
JOHN WALECKA 9
PETER WAGNER 9
FIRM
Big Deals
Hans Tung Two-time
Midas lister splits his
time between Beijing
and San Francisco.
HALL OF FAMERS NOT ON 2014
LIST (APPEARANCES): JAY HOAG
(12), DAVID COWAN (11), WILLIAM
FORD (9), KEVIN HARVEY (9).

SEQUOIA CAPITAL THE MIDAS LIST
82 DAVID LEE (NEW)
SV ANGEL
Twitter, Dropbox, Square
83 PETER NIEH (NEW)
LIGHTSPEED VENTURE PARTNERS
Nest Labs, QuantumScape, 99Bill
84 RICHARD LIU (60)
MORNINGSIDE GROUP
Beijing Xiaomi Technology, Phoenix New
Media, YY
85 DANIEL RIMER (34)
INDEX VENTURES
Facebook, Dropbox, Flipboard
86 GAURAV GARG (NEW)
WING VENTURES
FireEye, Jawbone, Ruckus Wireless
87 GLENN SOLOMON (76)
GGV CAPITAL
Square, Pandora Media, QuinStreet
88 JERRY MURDOCK (NEW)
INSIGHT VENTURE PARTNERS
Twitter, Flipboard
89 JONATHAN SILVERSTEIN (96)
ORBIMED ADVISORS
Enobia Pharma, Relypsa, superDimension
90 SHERVIN PISHEVAR (NEW)
SHERPA VENTURES
Uber Technologies, Tumblr, Fab
91 TERRANCE MCGUIRE (RETURNEE)
POLARIS PARTNERS
Ironwood Pharmaceuticals, Adimab,
Acceleron Pharma
92 PETER CHUNG (67)
SUMMIT PARTNERS
Ubiquiti Networks, M/A-COM Technology
Solutions Holdings, A10 Networks
93 BRUCE DUNLEVIE (65)
BENCHMARK CAPITAL
WeWork Companies , ServiceSource Inter-
national, Pure Digital Technologies
94 JOHN WALECKA (59)
REDPOINT VENTURES
Intermolecular, Qihoo 360 Technology,
BCD Semiconductor Manufacturing
95 FOREST BASKETT (58)
Fusion-io, Tableau Software, Audience
96 DAVID YUAN (NEW)
REDPOINT VENTURES
Qihoo 360 Technology, Focused Photonics
(Hangzhou), iDreamsky
97 JOSH STEIN (70)
Box, Yammer, Glam Media
98 THERESIA GOUW RANZETTA (82)
ACCEL PARTNERS
Glam Media, Imperva, Trulia
99 MATT COHLER (46)
BENCHMARK CAPITAL
Dropbox, Domo, Peixe Urbano
100 RANDY KOMISAR (NEW)
KLEINER PERKINS CAUFIELD & BYERS
Nest Labs, RPX
asked how many attendees used a technique called net
promoter scores to gauge customer enthusiasm. Just
about everyones hands shot up.
Now, how many of you look at why your ratings
come in the way they do? he asked.
Only if the numbers are bad, one CEO replied.
Why dont you look at them when something goes
right? Lin shot back. That was a key part of the win-
ning formula at Zappos during his time there as chief
operating ofcer. Do more of what dazzles your happi-
est customers, and CEOs can turn strong expansion into
hellacious growth.
Sequoia is equally stubborn about maximizing gains
from its top-performing companies. (Back in 1979
Sequoia sold its Apple stock after holding it for just
18 months, and Sequoia partners arent about to make
that mistake again.) Unlike other venture rms, which
run their limited partners investment funds for 10
years, Sequoia often looks for ways to extend its part-
nerships lives for as much as 16 or 17 years. Sequoia
held its Google stock for nearly 2 years after that com-
pany went public; it held onto Yahoo even longer in
the 1990s.
An especially intense test of Sequoias willingness to
buy and hold involves ServiceNow, a software company
providing help-desk services to corporate customers. In
July 2011 an unexpected suitor ofered to buy the com-
pany for $2.5 billion. Sequoia had become a signicant
investor in late 2009, leading a $41 million investment
round, with Leone joining the board. Cashing out at that
point would have brought Sequoia about a 10-to-1 return
on its investment.
Most of ServiceNows directors thought the ofer was
intriguing. Only Leone regarded it as insulting. Rally-
ing some of his colleagues, he worked up a 12-page anal-
ysis arguing that directors would be giving away the
company, even at a $4 billion valuation. To his eye, even
though ServiceNow was early in its growth curve, its
participation in the fast-growing software-as-a-service
sector made it a company with vastly better potential
than outsiders could see.
After some debate ServiceNows directors turned
down the ofer. A year later ServiceNow went public and
attracted a $2 billion valuation. Leones disdain looked a
bit of, until ServiceNow shares took of post-IPO. Cur-
rent market value: $8.3 billion.
Simple math says that Leones stubbornness made
nearly $6 billion more for ServiceNows shareholders,
including company founder Fred Luddy. But its more
primal than that: People like Leone still remember those
rich kids at the swimming pool, enjoying the easy life.
Theres no reason to slow down until old rivals are left
far in the dust.
DATA POI NT
48
Average Age
Peter Nieh Debuts on
the list thanks to a bet
on Nest Labs. And hes
48, the Midas average.
FIRM
Big Deals
F

C
R
E
D
I
T

T
K
PHOTOGRAPHS BY DAVID YELLEN FOR FORBES
CORPORATE MUSCLE: WWE
Chairman and CEO Vince McMahon
with his daughter, Stephanie,
the chief brand ofcer, and her
husband, Paul Levesque (a.k.a.
Triple H), the executive in charge
of live events and talent.

MONSTER
MOVE
PRO WRESTLING
BILLIONAIRE
VINCE MCMAHON
SUCKER PUNCHED HIS
TRADITIONAL TELEVISION
PARTNERS WHEN HE
LAUNCHED HIS
DIRECT-TO-THE-FANS
WWE NETWORK
EARLIER THIS YEAR.
THE UNORTHODOX
MANEUVER COULD
TRANSFORM HIS
BUSINESSOR
HE COULD FALL
FLAT ON HIS FACE.
BY MICHAEL SOLOMON AND DANIEL FISHER

FORBES
VINCE MCMAHON WWE NETWORK
viewers on the Internet or whats
known in the entertainment indus-
try as going over the top. Its a move
that directly endangers both WWEs
PPV revenues ($82.5 million) and its
potential new TV deals, a huge gam-
ble that according to some estimates
could double the size of the WWEs
business in two yearsor fall at on
its face, enriching skeptical investors
who have sold 4 million shares of
the company short. Its risky, excit-
ing and deeply unconventional.
Of course it is. Why would Vince
McMahon do it any other way?
n his black-and-red ofce at
WWE headquarters in Stam-
ford, Conn. McMahon stares at
a stark reminder of what mo-
tivates him. To the left of his
desk, mounted on square panels of
what looks like scarlet fur, is an enor-
mous dinosaur skull. The fearsome
open jaw was a gift from his son-in-
law, Paul Levesque, better known to
wrestling fans by his nom de guerre,
Triple H. And the metaphor isnt lost
on McMahon.
I look at it like its a really nice
monster, he says in a low, gravelly
voice familiar to millions of wrestling
viewers who know him as Mr. Mc-
Mahon, the megalomaniacal lord of
the ring. When you feed the monster,
the monster is happy. The problem
with that is, the monster grows. And
as the monster grows, then the mon-
ster wants more to eat. And as long as
you do that, everythings great. And if
you dont provide the food, then bad
things start to happen.
Is the monster the audience?
You can look at it that way, abso-
lutely, McMahon says with a smile.
Or it could be the competition
whether its mixed martial arts, the
NFL or Marvel superhero movies
that are vying for his younger view-
ers, 21% of whom are under 18. And
in part, the beast represents his own
insatiable desire to win.
Over the past two years WWE has
sion contract, at more than twice its
current rate of $160.9 million, and
because of persistent speculation
that McMahon, who has never artic-
ulated a clear succession plan, might
sell the company outright (both
Comcast and the Madison Square
Garden Co. have been rumored as
suitors). Another bright spot: Emerg-
ing market revenue has been grow-
ing at a 7% annual rate for a decade
in countries such as India, Mexico,
and even South Korea, to $116 mil-
lion last year.
But the world
and a ten-gure
fortuneis not
enough for McMa-
hon. Which is why
he roostered onto
the stage at Las
Vegas Consumer
Electronics Show
in January to an-
nounce a bold new
venture: the WWE
Network. McMahon
told the cheering
audience that the WWE Network
would not be broadcast on cable
television, where Monday Night
RAW has consistently been a top-
rated program each week, nor would
it be another pay-per-view (PPV)
play. Rather, the WWE network
will stream content 24/7 directly to
ubtlety has no place in
professional wrestling.
Nuance is for losers. Ei-
ther you play bigto the
smallest fan in the last
row of a sold-out arena, to the mil-
lions tuning in each week on televi-
sionor you go home. And no one
has understood that concept, what
Roland Barthes once described as
wrestlings spectacle of excess,
better than Vince McMahon.
In the four decades he has ruled
World Wrestling
Entertainment, the
68-year-old chair-
man and CEO has
built the company
from a solid regional
operation to a pow-
erful international
brand thats valued
at $2.3 billion. Today,
in addition to week-
ly television shows,
which reach 15 mil-
lion viewers in the
United States, WWE
has programming in more than 150
countries and 30 diferent lan guages.
There are WWE movies, books,
videogames, as well as the requisite
T-shirts, hats and action gures.
Despite the breadth of its business-
es, revenues have barely budged over
the last few years, hovering at around
$500 million since 2008, and prots
have been similarly stagnant. Exclud-
ing a one-time writedown of $11.7 mil-
lion, the company made $14.5 million
last year, compared with $31.4 mil-
lion in 2012 and $24.8 million in 2011.
Despite these accid fundamentals,
WWEs stock price has more than tri-
pled in the past six months, zooming
from $9.70 in September 2013 to a re-
cent all-time high of $31.98, enough to
make McMahon, who owns 52% of the
thinly traded shares, a billionaire once
again (he was briey a paper billion-
aire in 2000).
The shares are ying both be-
cause WWE is seeking a new televi-
I DONT
CONSIDER
MYSELF A RICH
PERSON.
NORMALLY
I DONT
LIKE RICH
PEOPLE.
NO RISK, NO REWARD
HALF OF WWES REVENUES COULD SUF-
FER A BLOW FROM THE NEW NETWORK.
32%
22%
20%
16%
8%
2%
TV RIGHTS
LIVE EVENTS
CONSUMER
PRODUCTS
PAY-PER-
VIEW
DIGITAL
WWE
STUDIOS
TOTAL REVENUE: $508 MIL

First Republic Securities Company is creative,
responsive and very customer-oriented.
G. CRAI G S UL L I VAN
Former Chairman and Chief Executive Officer
The Clorox Company
(800) 392-1400 or visit www.frstrepublic.com New York Stock Exchange Symbol: FRC
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Investment and Advisory Products and Services are Not FDIC Insured, Not Guaranteed and May Lose Value.

FORBES
company needs 1 mil-
lion subscribers to
break even. At 2 mil-
lion subscribers WWE
projects adding
$50 million to its
EBITDA. At 3 million
that number jumps to
a robust $150 million.
Naturally some
of WWEs television
partners felt sucker
punched by the over-
the-top strategy. In ad-
vance of the launch
DISH Network announced that it was
dropping all WWEs pay-per-views
including WrestleMania XXX on
Apr. 6. And DirecTV issued a less-
than-thrilled statement about the new
venture: Clearly we need to quickly
reevaluate the economics and viability
of their business with us, as it now ap-
pears the WWE feels they do not need
their PPV distributors. McMahon, for
his part, thinks that it would be fool-
ish for distributors not to carry his
events, calling it found money for
them. Like The Godfathers Hyman
Roth, Vince McMahon has always
made money for his partners.
And, of course, himself.
ot that McMahon is
keeping score. I dont
consider myself a rich
person, he says in a
rare moment of mod-
esty. I know that I am, but its not
like I belong to any country clubs.
He and his wife, Linda, live in near-
by Greenwich, Conn., but he doesnt
exactly treat himself to expensive
toys. Years ago he owned a cigarette
boat called Sexy Bitch, but McMa-
hons indulgences are limited these
days. I have a car that goes very fast
and a motorcycle that goes extraor-
dinarily fast, he says of his Bentley
and a Boss Hoss 502. I love speed.
Beyond that, he adds, I dont really
have anything in common with any-
one in Greenwich except zeros. Nor-
spent $75 million preparing for the
launch of the WWE Network, which
went live on Feb. 24. The initial
demand was enough to crash the
servers of WWEs technology pro-
vider, Major League Baseballs MLB
Advanced Media, but success is no
sure thing. Still McMahon lives for
these kind of risks, especially when
it comes to technology. He embraced
closed-circuit television early in his
career, and though boxing beat wres-
tling to the televised punch when it
came to pay-per-view events, McMa-
hon is considered a pioneer of PPV
programming.
He has been promising fans and in-
vestors a WWE Network since 2011,
and in that time the vision for it has
changed dramatically. It was rst con-
ceived as WWEs version of the MLB
or NFL Network. In theory a chan-
nel devoted to wrestling makes even
more sense than a professional sports
league, since, unlike baseball or foot-
ball, WWE doesnt have an of-season.
(It puts on more than 300 live shows,
52 weeks a year.) But McMahon claims
that model was only going to generate
an anemic 20 cents per month per sub-
scriber, roughly on par with third-tier
networks like MSNBC and Bravo, $0.21
and $0.24 a month, respectively (al-
mighty ESPN commands an astronom-
ical $5.54 a month). So he walked away.
The next plan for
the network followed
a pay-channel model
(like HBO), but again
McMahon didnt like
deals he had in place.
So in true wrestling
fashion, WWE kicked
out of them in 2012
and began exploring
the over-the-top strat-
egy. The phenome-
nal success of Netix,
which now has more
than 44 million sub-
scribers, inspired WWE to seek a
model that went directly to its big-
gest asset: its passionate fan base.
If WWE Network takes of and
doesnt destroy the companys pay-
per-view and cable TV business-
es in the process, it will dramatical-
ly change the corporations econom-
ics. It could also change the way sim-
ilar companies do business. UFC and
the boxing PPV divisions of HBO and
Showtime are surely waiting to see if
McMahon has bet right. And yet for
such a risky venture, the math to suc-
cess is relatively simple.
For $9.99 per month (and a six-
month commitment) subscribers will
have access to more than 130,000
hours of WWE programming, match-
es that date back to the 1950s. There
are also original programming and a
second screen experience on the
WWE app that allows viewers to in-
teract with one another and watch
live content during commercials.
But the real draw of the sub-
scription is that WWE Network will
broadcast all 12 of its pay-per-view
events. When you consider that the
average WWE pay-per-view costs
about $55, a customer who was pre-
viously purchasing two PPVs will feel
like hes getting the better of Vince
McMahon.
Allowing for the cannibalization
of its existing pay-per-view custom-
ers (which WWE estimates could be
as much as $60 million a year), the
IM NOT
GOOD AT
PATTING
MYSELF ON
THE BACK.
IM NOT
GOOD AT
LOOKING
BACK.
TOTAL TV
HOUSEHOLDS
(MIL)
WWE TV
HOUSEHOLDS
(MIL)
S. KOREA U.K. INDIA CANADA MEXICO
9.5
7.0
9.4
6.2
8.2
15.1
14.4
11.4
10.7
10.4
ON THE TELLY IN DELHI
WWES TOP SIX NON-U.S. TELEVISION
MARKETS

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No matter how great the talent or eforts,
some things just take time. You cant
produce a baby in one month by getting
nine women pregnant.

FORBES
es were scripted, calling his product
sports entertainment. To old-school
wrestling promoters and talent, it
was tantamount to a magician reveal-
ing how he saws the lady in half. As
McMahon would later say of his strat-
egy, Had my father known what I
was going to do, he never would have
sold his stock to me.
From there McMahon began an
all-out television assaultlargely on
the suntanned shoulders of his big-
gest star, Hulk Hoganto expand his
brand, now called the World Wres-
tling Federation. He used broadcast
TV and pay-per-view, and moved into
cable. Within a few years his pop-
culture-savvy programming was ev-
erywhereHulkamania and the
WWF were running wild.
Over the ensuing three decades
McMahon has been knocked around,
even counted out, in the business. In
the summer of 1994 the federal gov-
ernment put him on trial for illegally
distributing steroids to his perform-
ers. Prosecutors vowed to expose the
mally I do not like rich people.
Its easy to understand why. If
Horatio Alger had written novels
about characters that wore spandex,
feather boas and spangled capes,
McMahons story would have t in
perfectly with his rough and ready
formula.
A third-generation wrestling
promoter, McMahon didnt meet his
biological father, Vincent James Mc-
Mahon, until he was 12 years old.
Instead, he was raised in a trailer
park in rural North Carolina by his
mother and several physically abu-
sive stepfathers. (At one point young
Vince actually lived in a town whose
name sounds like it was made up by
WWEs writers: Manly,
N.C.) A thuggish teen
who was always getting
into ghts, McMahon
was shipped of to Fish-
burne Military School in
Virginia, where he was a
star wrestler.
During those high
school years McMahon began spend-
ing summers with Vince Sr. in New
York and other cities in the North-
east. To a kid who grew up without
indoor plumbing, the life of a profes-
sional wrestling promoter seemed
glamorous. When people would say,
Do you think can you follow in your
old mans footsteps? I would imme-
diately say, No, and I dont want to,
and I cant ll my dads shoes. I have
to do things my own way.
After Fishburne McMahon en-
rolled at East Carolina University
and graduated with a degree in mar-
keting. But he had never lost his pas-
sion for the squared circle. Vince Sr.
tried to push him away from the fam-
ily business, but in the early 1970s
he eventually agreed to let his son
promote matches at a small arena in
Bangor, Me.not exactly a glamour
territory. There, McMahon learned
what it took to be small-time promot-
er, but he felt that wrestling could be
so much bigger. And he believed he
saw its future: television.
Professional wrestling had been
broadcast on national TV since the
late 1940s, but by the 1960s the doz-
ens of small-time wrestling organiza-
tions in the U.S., and their respective
TV shows, were local. For the most
part these regional companies played
nicely with one another. They didnt
invade other territories or steal talent.
Vince McMahon saw things dif-
ferently. If the business was going
to be called World Wide, he rea-
soned, it ought to at least be nation-
al. In 1982 McMahon took his rst
big risk: He purchased the company
from his father and his partners. It
was a balloon payment situation,
he says, so if I didnt make the last
payment they took the business
back and kept the cash.
Once the nal payment was made
McMahon set of a battle royal in the
industry. Territories no longer exist-
ed as far as he was concerned, and
anyones talent was fair game. He
also eventually admitted that match-
I HAVE A VORACIOUS
APPETITE,
FOR LIFE AND EVERYTHING IN IT.
TEAM WWE: CFO George
Barrios; chief of revenue and
marketing Michelle D. Wilson;
Vince McMahon; Stephanie
McMahon; Paul Levesque.

C
R
E
D
I
T

T
K
HIGH TIMES!
Meet the shady band of ex-cons, ganja-preneurs and
multilevel marketers behind the great pot penny
stock boom of 2014. Dont say we didnt warn you.
BY NATHAN VARDI
ILLUSTRATIONS BY LARA TOMLIN
FORBES
W
hen Michael Mona Jr. went before the Nevada Gaming
Control Board seeking a license for his Mediterranean-style
Sunrise Suites hotel and casino in Las Vegas, it didnt go
well. The board, reportedly wary of his ties to shady tele-
marketers, including one who spent time in jail, told Mona
his application would be rejected. He in turn withdrew his application and subse-
quently led for personal bankruptcy when the casino could not open.
Mona might not be t for the gambling business, but 16 years later he has
found a lucrative eld thats not as choosy: the pot penny stock business. Mona
now runs CannaVest, the highest-ying stock in one of the years biggest market
frenzies. With Colorado and Washington now permitting the sale of marijuana
for recreational use, and 20 states allowing it medically, some 60 publicly traded
outts, many snarled in a tangled, dif cult-to-track web of interconnections, have
popped up, claiming to be pot and hemp stocks. Almost none, mind you, emerged
via an IPO and all the pesky disclosure and scrutiny that come with that path. In-
stead, real estate, marketing and oil outts have miraculously morphed into med-
ical marijuana and hemp companies, either through reverse mergers or simply
changing their declared line of business. And just about every single one is thin-
Green wave: CannaVests CEO, Michael Mona Jr., is riding shares that jumped 140% this year.

FORBES
HIGH TIMES INSIDE THE MARIJUANA STOCK BOOM
FORBES. But he did respond with an
e-mail: We have not promoted our
stock and have no investor relations
rm. Our sole focus is to source and
supply the highest-quality industrial
hemp available on the market.
Perhaps. But CannaVest also serves
another purpose. The perfect window
on a huge, emerging red ag for mom-
and-pop investors looking for a way to
cash in on the legalization of marijua-
na. A multibillion-dollar industry run
for decades by criminals and now trad-
ed on the vehicle of choice for nancial-
ly savvy swindlers and hucksters! What
could possibly go wrong?
T
he genesis of CannaVestand
the pot-stock frenzy overall
can be traced to Bruce Perlowin.
He knows the business well: He spent
nine years in prison for drug smuggling.
With another ex-con, Don Steinberg
(who also went to jail for drug smug-
gling), Perlowin started the rst public-
ly traded medical marijuana company in
2009. He got the idea after a CNBC doc-
umentary called Marijuana Inc. featured
Perlowins drug-smuggling past. After
it aired Perlowin was bombarded with
calls and investment proposals.
Perlowin and Steinberg already
controlled a company that sold debit
cards and traded on the Pink Sheets,
Club Vivanet. Is there any sizzle in
debit cards? Perlowin asks FORBES
rhetorically. There was so much siz-
zle in medical marijuana. To remove
any nuance he renamed his company
Medical Marijuana and was issued 40
million shares by the board.
What followed has been a textbook
example of how to create buzz through
wheeling and dealing with related ve-
hicles. When Perlowin oversaw it,
Medical Marijuana didnt actually do
much, ofering educational seminars
and consulting services. Then, in 2011,
Medical Marijuana sold a huge stake
by issuing 260 million shares to a pri-
vately held investment vehicle, Hemp
Deposit & Distribution Corp., run by
Michael Llamas, then 26.
take it to the bank: Hes been quietly
working to sell on behalf of the com-
pany a private placement of 10 mil-
lion shares that cant trade publicly
for six months, according to an in-
ternal e-mail from Mona obtained by
FORBES. The price: $1.50 a share, or
between 2 cents and 3 cents on the
dollar of the public value.
That should tell you everything you
need to know about CannaVests pros-
pects. Who needs the heavily regulated
casino industry when theres far more
cash on the table in the penny stock
market, with nary a protection for in-
vestors, save a warning from the Finan-
cial Industry Regulatory Authority last
August to be on guard for con artists
behind marijuana stock scams? Plus,
some of the people Mona still gets to do
business with have a criminal record or
are under federal indictment.
Mona refused to be interviewed by
ly traded on the over-the-counter bul-
letin board, or Pink Sheets, where pro-
moters can push them with the enthu-
siasm of a campus dealer.
In terms of a bonanza, all of them
trail Monas CannaVest, which has
surged 1,260% since the start of 2013.
Its nancials arent pretty: $28.4 mil-
lion of losses for the rst nine months of
2013, on revenues of just $1.35 million,
or about what a single McDonalds fran-
chise might gross. But its thinly traded
stock? In February, when it was trading
at $160 a share, CannaVest hit a market
capitalization of more than $3 billion.
At a recent $68 a share, its still high
enough to make its largest shareholder,
a Las Vegas lawyer named Bart Mack-
ay, the rst pot stock billionaire. Osten-
sibly. In my view its a paper valuation
and certainly not something I can take
to the bank, Mackay tells FORBES.
But Mona, the CEO, is trying to
Las Vegas lawyer Bart Mackay is the rst pot stock billionaire. On paper, at least.

to Mona last year in an e-mail obtained
by FORBES. I request you not say it
again.
Shell game. Three-card monte. Or
just a urry of dealmaking between
related companies that happen to be
publicly traded. Whatever you call it,
CannaVests shares were poised to take
ofand the architects stood ready for
a great windfall.
P
erhaps the most incredible part
of the pot stock boom: Even
though the Obama Administra-
tion says it will not enforce the Con-
trolled Substances Act in states with a
robust regulatory regime, marijuana
remains illegal under federal law. You
cant have an industry where they say,
We can put you in jail for the rest of
your life, but we probably wont today,
says Sam Kamin, a University of Den-
ver law professor. Who would invest
in that? Who would put their money in
that in terms of raising capital?
In Colorado, for example, recre-
ational and medical marijuana busi-
nesses have to grow and sell their
product in the state. That is why Med-
ical Marijuana carefully structured
its joint venture with Dixie so that it
does not actually do anything connect-
ed with marijuana. It is also a big rea-
son that hempa variety of pot plants
that has only trace amounts of THC,
marijuanas psychoactive ingredient
has become the buzzword with the pot
stock crowd.
become CEO of CannaVest, a new com-
pany that Mackay, the paper billionaire,
created by using companies he owned
to buy control of a penny stock com-
pany in the foreclosure business. New
name, same game. Mackays share pur-
chases were nanced by a Florida phys-
iotherapist named Stuart Titus, who
surprise!had helped Perlowin raise
capital for Medical Marijuana. Titus
also backs a hemp multilevel marketing
company.
Titus put $375,000 behind Mac kays
CannaVest play and also got millions
of CannaVests shares. CannaVest
then agreed to buy the assets of Phyto-
Sphere from Medical Marijuana and
Llamas Hemp Deposit for $35 million
in cash or stock. Follow all this? Few
people cana fact that Mona himself
apparently alluded to. Your reference
to this being a shell game is ofen-
sive, a Dixie Elixirs executive wrote
Llamas became Medical Marijua-
nas president. Assets began moving
back and forth between the companies
he ran, creating at least the appearance
of progress. For instance, in April 2012
Medical Marijuana acquired 80% of a
Hemp Deposit business called Phyto-
Sphere, which was billed by Llamas in
a press release as a biotech outt that
produces hemp-based products for
pharmaceutical markets.
Llamas also created a joint ven-
ture for Medical Marijuana with Dixie
Elixirs & Edibles, a Colorado-regulat-
ed manufacturer of medical-marijua-
na-infused products. Vincent Tripp
Keber, the man behind Dixie Elixirs,
hopped on Medical Marijuanas board
and soon appeared on 60 Minutes as
the darling poster boy of the green
rush going on in Colorado. (Keber
would be arrested for marijuana pos-
session in Alabama in 2013.) Frustrated
casino developer Mona quickly joined
the gang at Medical Marijuana, taking
a stake in the company and sitting on
the management committee oversee-
ing the Dixie joint venture.
Medical Marijuanas stock price shot
from 3 cents to 20 cents. But the party
stalled in September 2012 after a feder-
al grand jury indicted Llamas as part of
an alleged $10 million mortgage fraud.
Llamas pleaded not guilty but resigned
from Medical Marijuanajust as the
SEC started investigating it.
Time to start fresh. Within a few
weeks Mona left Medical Marijuana to
YOU CANT HAVE
AN INDUSTRY
WHERE THEY SAY,
WE CAN PUT YOU
IN JAIL FOR THE
REST OF YOUR LIFE,
BUT WE PROBABLY
WONT TODAY.
WE WANT TO TAKE YOU HIGHER
THE HYPE AROUND LEGALIZED DOPE DEALING HAS MARIJUANA-RELATED SHARES ON A TEAR OVER THE LAST YEAR.
1/4/13 3/20/14
MEDICAL MARIJUANA
1/4/13 3/20/14
4
10
100
$200
CANNAVEST
WEEKLY CLOSE
1/4/13 3/20/14
0.004
0.01
20 0.02
30 0.03
40 0.04
0.1
$0.2
HEMP
1/4/13 3/20/14
0.1
0.2
0.3
0.4
0.02
0.03
0.04
$1.0
0.1
0.2
0.3
0.4
0.02
0.03
0.04
$1.0
GROWLIFE
SOURCE: INTERACTIVE DATA VIA FACTSET RESEARCH SYSTEMS.

FORBES
HIGH TIMES INSIDE THE MARIJUANA STOCK BOOM
THE SHADINESS
OF THE OPERATION
SUGGESTS THAT
THEY SEE A WAY
TO MAKE A FAST
BUCK OUT OF A
POPULATION THAT
IS DESPERATE.
CannaVest says it specializes in
producing and marketing industri-
al hemp-based compounds, focusing
on cannabidiol. Some, including CNN
correspondent Dr. Sanjay Gupta, be-
lieve the compound has medical ef-
fects that can reduce epileptic sei-
zures. Its still a no-no under feder-
al law, but in 2004 a federal appeals
court allowed a California hemp-
soap company to import hemp that
does not include concentrated THC.
David Bronner, who runs the soap
company, says the ruling did not con-
template cannabidiol extraction for
medical purposes. It was never con-
sidered, says Bronner. Its denitely
a gray area in the law that was not ad-
dressed. CannaVests Mona says in a
statement that the company imports
through Europe in accordance with
state and federal laws and that the
2004 ruling makes legal the importa-
tion of nonpsychoactive hemp.
Some proponents of cannabidiol
worry that imported versions extract-
ed from industrial hemp for medicinal
purposes can be dangerous. That fear
has been fueled by the former science
chief at Dixie Elixirs, which has had a
joint venture that is part of the daisy
chain of companies related to Can-
naVest and still uses products made by
PhytoSphere. She posted on her Face-
book page in November that the can-
nabidiol-based products she was using
before leaving Dixie were made from
crude and dirty hemp paste. In addi-
tion, Charles Smith, Dixie Elixirs chief
operating ofcer, sent an e-mail to
Mona that has surfaced in a court doc-
ument, saying, We have questioned
the quality of the product, in writ-
ing, especially in the most recent ship-
ment. Smith says in an interview that
he was not referring to product safety.
We have great customer satisfaction
and great reviews, he says, adding that
Dixie Elixirs tests cannabidiol to make
sure it is safe.
In a statement, Mona pointed to
Dixies testing and said Dixie has
never rejected our product, and in
fact its independent testing has ver-
ied the quality. But Martin Lee, di-
rector of a nonprot that promotes the
medical utility of cannabidiol, says he
is concerned about CannaVest. They
are trying to get around the law that
says [cannabidiol] is a Schedule 1 sub-
stance, says Lee. The history of the
people running the show, the shad-
iness of the operation, suggests that
they see a way to make a fast buck out
of a population that is desperate for
miracles, when you see the kids with
epilepsy, for people who are sick.
T
he one thing that isnt murky
here: the fortunes being made
by those at CannaVest.
Of course, theres Mackay. Even
with the stock at $68, hes recently
been able to convert loans into 10 mil-
lion sharesat 60 cents each. That
100-fold arbitrage is the large driver of
his billionaire status. His pals Mona,
the CannaVest CEO, and Llamas, the
kid who ran its forerunner before he
was indicted, helped him pull it of.
Heres how: Last year an entity
called Roen Ventures agreed to lend
$6 million to CannaVest. According to
a recent lawsuit against Mona in Ne-
vada, led as part of a $17.8 million
judgment related to a land transaction,
Mona and Llamas had formed Roen.
According to the lawsuit, Mona had
personally put up half that loanand
then sold his interest in Roen to Mac-
kay for $500,000. Mac kay acknowl-
edges buying out Llamas. And then he
converted Roen Ventures loans to 10
million shares of CannaVest stock at
60 cents a share. Voil! More than $1
billion at the recent share price, when
you include all the shares he owns.
Another winner: Titus, the phys-
iotherapist down in Florida, who had
bankrolled Mackay at CannaVestand
worked to nance Medical Marijuana
before that. This year hes been turning
his paper prots into actual cash, tak-
ing CannaVest shares he had bought
for a nickel each and selling them for
as much as $150 a share, and pocketing
$7 million, an SEC ling shows. I have
to say that, you know, this has turned
out quite nicely, Titus tells FORBES
in an interview. Meantime, Monas son
owns 1.25 million shares.
As for Perlowin, who went from
felonious drug smuggler to pot stock
godfather, he says he sold of his Med-
ical Marijuana stake before certain
people and assets morphed into Can-
naVest, taking out a cool $5 million.
Today he works down the street from
CannaVests Las Vegas ofces, running
another hot penny stock, Hemp Inc.
But hes still wheeling and dealing
with his old pals. Perlowin also says
he and his family just bought 300,000
shares in a recent CannaVest private
placement for $1 each, a discounted
price that Mona says in a statement is
appropriate given the lack of liquid-
ity in the stock and the determination
of a third-party valuation rm.
Perlowin also claims hes slat-
ed to buy a large chunk of the Can-
naVest shares that Mona is peddling
for the company at $1.50 each. You
want some? he asked a FORBES re-
porter, who declined. Apparently, we
are missing the gold rush. Would
you say Microsoft, Google, Oracle,
Applewere they overvalued when
they started? Of course they were. It
was the dot-com explosion, says Per-
lowin. Dont you wish you would
have bought all those I just men-
tioned? How dare anyone tell the
American investor that any of these
companies are not a good deal? F


CAN
THIS
MAN
FEED
THE
WORLD?
Harry Stine built an
obscure $3 billion
empire by breeding a
better soybean seed.
Now the richest man
in Iowa thinks he
has revolutionized
corn, the Earths most
popular crop.
BY ALEX MORRELL
PHOTOGRAPH BY JAMIE KRIPKE FOR FORBES
On one of the
windiest days in recent memory
Harry Stine, the richest man in Iowa,
cranes his neck to examine the eleva-
tor shaft inside the 110-foot steel ob-
servation tower next to his garage.
The cables look awfully frayed.
Who knows if it will last one more
time? he chuckles. Nonetheless, we
hop into the elevator cab, he ips the
switch to get it moving, and up we go
as the wind rips into us at 40mph.
Stine, the 72-year-old founder and
owner of Stine Seed, the largest pri-
vate seed company in the world, built

FORBES
REINVENTING AMERICA STINE SEED
The basic technology may be ancient,
but an innovative, data-savvy strategy,
married with shrewd leadership and
a classic midwestern work ethic, has
made Stines operation best in class.
He isnt bashful about what his small-
town company has accomplished.
Our germplasmour genetic base
hereis the best in the world, says Stine.
We dominate genetics in the industry.
Today 60% of all U.S. soybean acre-
age is planted using genetics developed
by Stines companies, which also have a
strong presence in South America and
other international markets. FORBES
estimates that Stines companywhich,
among other things, also breeds corn
genetics, creates plant traits in its bio-
tech lab and has a small but growing
commercial seed sales operationis
worth nearly $3 billion.
While rivals scof, he now thinks he
can double the worlds output of corn,
the most popular crop on Earth. By
breeding corn seeds genetically predis-
posed to thrive when planted in high
densities, he thinks he can supercharge
the engine generating animal feed,
biofuels and food for the whole planet.
Were going to be able to double corn
yields very easily, says Stine. And ap-
parently a lot of people working in the
as crops fortied with more resilient
genetics improve yield and efciency.
Thats good news since the worlds
population continues to grow by about
85 million every year, while arable land
remains scarce.
With a combined market value
of $320 billion, ve publicly traded
conglomerates own most of the action:
Monsanto, DuPont, Syngenta, Dow
and Bayer. Then theres Stine. Based in
Adel, Iowa (pop. 4,000), the dozen or
so companies under Stines umbrella
form an unlikely titan at the heart of the
market, directly or indirectly generating
revenues from almost 50 million acres
of crops in the U.S. each year.
Stine Seed does business with all
of the heavyweights and has for more
than three decades, primarily because
it has something everybody else
needs: the best-performing soybean
seeds in the business. Through plant
breeding, a roughly 10,000-year-old
technique thats not unlike creating
Thoroughbred horses or show dogs,
Stine has been perfecting the genetic
makeup of soybean
seedsprimarily used
in animal feed and
to produce vegetable
oilssince the 1960s.
this tower back in 1987 so he could get
a good view of his empire, some 15,000
acres of frozen Iowa farmland. Aside
from a small, glass-walled house, its
his only visible indulgence. Once home
to his fathers hardscrabble cattle-and-
crop farm, Stine has, without attracting
any widespread notice, developed some
of the most valuable agricultural prod-
ucts on Earth here. With more than 900
patents, Stine sells his coveted soybean
and corn seed genetics to agri-giants
like Monsanto and Syngenta, nabbing
estimated annual sales of more than
$1 billion with margins in excess of
10%. Along with his four children, Stine
owns almost 100%.
It is a good reminder to those
tempted to conne innovation solely
to the world of Silicon Valley that some
of the most impressive and fundamen-
tally important advances on Earth are
occurring today in agriculture, and the
global epicenter is Americas heart-
land. The seed marketa $44 billion
worldwide industry that supplies crop
growers with the essential element they
use to plant, har-
vest and sustain the
worlds food supply
is expected to double
in the next ve years
OUR GERMPLASM
OUR GENETIC BASE
HEREIS THE BEST
IN THE WORLD. WE
DOMINATE GENETICS.

same industry cant see that. They
think, How can this be? And further-
more, how can this little farm kid out
here be doing this?
After seven years of genetic tinker-
ing hes won plenty of converts. Its an
insight that will revolutionize the corn
industry, says Dermot Hayes, a profes-
sor of agribusiness at Iowa State Univer-
sity. If it works out, it wont be the rst
time this farm kid, unknown outside his
industry, has changed the world.
A
tall man partial to Levis and
blue button-downs with pens
in the pocket, Stine stands on
the burnt-orange carpet in his ofce
a little-changed artifact of the Reagan
era littered with the nuts, berries and,
especially, mushrooms he likes to forage
for (he has a handwritten log detailing
when and where hes found each of the
32,000 morel mushrooms hes nabbed
in recent years). Hes waving several
reams of paper, lled with three years
of yield results that drive Stines corn
euphoria. At almost every location they
plant them, he says, his seeds outper-
form any other variety.
The secret to Stines golden corn? Ef-
ciency. In the early 1930s, prior to the
Dust Bowl, 7,000 corn plants per acre
were grown in the U.S., yielding about
27 bushels per acre. Seeds were planted
in rows 42 inches apart so horses could
traverse the elds. Now 35,000 plants
and 150 bushels per acre is common
nearly ve times the yieldthanks to
modern tractors, fertilizers, pesticides
and seeds genetically modied to resist
insects and herbicides. But while ge-
netic modicationusing biotechnol-
ogy to insert a genetic trait into a seed
grabs headlines (and stokes health
fears, despite overwhelming scientic
evidence of safety), traditional breeding
programs by seed developers have done
just as much to raise yields.
Stine noticed that corn plants hadnt
changed much in generations. Tall has
always been sexy for corn, even though
less than half of the plant is actually
harvested. That means most of the
FORBES
Launching Students Into Science:
How a Middle School
Touched Outer Space
CORY OLSON AND JIM REED
TEACHERS
FORESTVIEW MIDDLE SCHOOL, BAXTER, MINNESOTA
CAD design to print payload pieces
cleanly and elegantly, and conguring
the payload for stability as it encoun-
tered jet stream winds of 140 miles
per hour.
On the day of the balloon launch,
students and teachers hopped in chase
vehicles, and a dozen local ham radio
operators relayed coordinates to the
club, which was in quick pursuit. That
was where you saw the kids take com-
plete ownership of the project, recalls
Reed. Eventually, the balloon popped
and fell back to earth. Thenjust as
planneda parachute dropped the
payload safely onto a farmers eld.
The judges selected Forestview
Middle Schools balloon project from
thousands of entrants as one of ve
national winners of the Samsung
Solve for Tomorrow competition.
You could see the earths curvature
and the blackness of space on video
taken at 85,000 feet, says contest
judge and Samsung Executive Vice
President David Steel.
Reed and Olson point to their class-
rooms as the real scene of victory:
Dozens of students, energized by their
experience, are preparing to send up
two more balloonsone to study the
efects of solar radiation on plants
and bacteria, another to try to break
the 100,000-foot barrier. Its all been
an absolutely huge step forward for
us, says Reed.
J
im Reed, a multimedia teacher, and Cory
Olson, who teaches technology and engi-
neering, were looking to push the envelope
for their 500 seventh graders at Forestview Middle
School, in rural Baxter, Minnesota, about two hours
north of St. Paul.
We wanted something that was hard to accom-
plish, says Olson. We wanted our kids to think
outside the box. The teachers formed
a high-altitude balloon club and spent
their rst year watching helium-lled
weather balloons with crude instrument
packages vanish into the stratosphere.
That rst year, all we really cared about
was getting our gear back, Reed jokes.
Then they learned of the Samsung Solve
for Tomorrow competition, which encourages
middle and high school students to come up with
solutions for local problems using skills in science,
technology, engineering and math (STEM).
We wanted to give the kids as much as exposure
to STEM as we possibly could, says Reed, and get
them thinking about careers in STEM-related elds.
The competition provided the perfect incentive to
take the project to the next level. The teachers and
students decided to send a sophisticated instru-
ment package right to the edge of outer space.
Soon enough, the students had all sorts of engi-
neering puzzles to solve: shaving every extra gram
they could to send their balloon higher, learning
BrandVoice
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We wanted to give the kids
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STEM as we possibly could.
JIM REED
TEACHER, FORESTVIEW MIDDLE SCHOOL,
BAXTER, MINNESOTA
FROM LEFT TO RIGHT: CORY OLSON; AL DOREE, HAM RADIO
VOLUNTEER; AND JIM REED

FORBES
biomass is using valuable resources that
dont necessarily improve a farmers
yield. The conventional spacing of corn
rows has also largely persisted at 30
inches or more in modern agriculture,
with narrower rows in use on less than
5% of corn acres in North America as of
2012, according to rival DuPont Pioneer.
Stine ipped the conventional wis-
dom on its head. He began breeding
corn to thrive at higher planting density:
shorter plants with smaller tassels and
more upright leaves that attract more
sunlight. A leaner, more ef cient plant.
After breeding many descendants of
the seeds with that genetic makeup, the
company has developed corn that can
be planted in much narrower rows12
inches or even pairs of rows 8 inches
apartincreasing the number of plants
per acre to as much as 80,000. And, of ul-
timate importance, substantially increas-
ing a farmers harvest.
Harrys breeding for it, says Van
Wiebe, an agronomist with Hefty Seed in
Buhl, Idaho, who has seen a 30% difer-
ence between Stines seed and those of
his rivals in his experimental elds. Its
going to be the way of the future.
Not everyone buys what Stine is sell-
ing. A DuPont Pioneer study from 2012
concluded that for most of the Corn Belt
narrow rows do little to increase yields.
Future changes in production practices
could favor narrow rows at some point,
says Mark Jeschke, DuPont Pioneers
agronomy research manager. But no re-
search thus far has shown that ultrahigh
populations combined with narrow rows
signicantly increased corn yield.
It is an interesting story and a great
conversation piece, adds Tony Vyn, pro-
fessor of agronomy at Purdue University,
but a sideline to the real drivers of corn
yield and economic ef ciency gains that
are needed most for this decade.
For farmers theres a sizable capital
risk in switching. Buying more seeds per
acre is expensive. It also requires more
fertilizer and new planting and harvest-
ing machinery specially tted for the
narrower rows. To pay for the change,
youd need at least an immediate 10%
THE EVOLUTION OF CORN
Harry Stine revolutionizedand came to dominatethe soybean seed business.
Now he thinks he can do the same with corn, the worlds biggest crop, by turning
traditional farming models on their head.
PRESENT
Now 35,000 plants and 150 bushels per acre is commonmore than ve times the
yieldthanks to modern tractors, fertilizers, better seed breeding, pesticides and seeds
genetically modied to resist insects and herbicides.
STINE SEED PLAN
By breeding corn plants with genetics primed for less spaceshorter plants with more upright
leavesStine Seed can plant tens of thousands more seeds per acre. It plans to go to even
narrower 10-inch rows and expects yields to exceed 300 bushels per acre in the near future.
PAST
Prior to the 1940s corn was planted in a checkerboard pattern in
rows 42 inches apart both lengthwise and crosswise so horses could
traverse the elds.
150
BUSHELS
PER ACRE
35,000
PLANTS
PER ACRE
230260
BUSHELS
PER ACRE
60,000
PLANTS
PER ACRE
27 BUSHELS
PER ACRE
7,000 PLANTS
PER ACRE

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Samsung Solve for
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Finalists pose with
Bill Rancic at SXSWedu

FORBES
each year, Fraley says
corn seed still needs
more innovation, and
he buys into Stines
vision: We absolutely
think its possible to
double yields.
W
ere willing to give Stine
the benet of the doubt for
a simple reason. Hes al-
ready revolutionized agriculture. Twice.
In 1994 the U.S. government granted its
rst patents on the full genetic makeup
of a soybean. Previously only asexual
plants like rosebushes or apple trees
could be patented, not self-pollinating
crops like corn and soybeans. Stine
Seed was rst in line to get its top-per-
forming varieties patented. It wasnt a
coincidence: As early as the 1970s Stine,
who had taken one business law class
at McPherson College, a small liberal
arts school in Kansas, was stipulating in
contracts the royalties companies had
to pay for using his seed and prohibiting
yield improvementand
20% to 30% to really
benet a farms bottom
line, estimates Bruce
Rastetter, CEO of Sum-
mit Group, which grows
corn and soybeans on 20,000 acres of
land in Iowa and Nebraska. Its going
to take some time, says Rastetter, who
is experimenting with Stines model.
I dont see extremely quick adoption,
but I do think theres an early-mover
advantage to doing it and learning to do
it well.
Stine is hardly alone in his beliefs.
Monsanto is doing similar work, and
hell have to battle with it for market
share should crop growers ock en
masse to high-density planting. Weve
worked a lot in that space but also in the
design of the plants and equipment,
says Robert Fraley, Monsantos chief
technology ofcer, who has been doing
business with Stine since the early 1980s.
With the world adding 800 million to
900 million bushels of corn demand
them from using the seeds their harvest
produced to plant for next season. Cru-
cially, it also forbade them from using
his seeds to breed their own.
His was the rst company in the
industry with soybeans to structure
licensing agreements so that when com-
panies took a contract with him they
could not breed, says Philippe Dumont,
a lawyer and seed industry veteran who
has spent the past decade working for
Bayer. It shows a superior foresight.
It also helped secure Stine, in 1997,
one of the most pivotal and lucrative
deals in agricultural history. At the time
Monsantowith Fraley, then presi-
dent of the companys genomics group,
leading the chargehad developed
the biotechnology to insert genes into
crop seeds, making them resistant to
glyphosate, the plant-killing herbicide
in the companys dominant weed killer,
Roundup. For farmers the Roundup
Ready soybean seed would be an
industry-changing innovation that
reduced time and labor battling weeds.
But a fancy biotech trait ofered limited
value if the genetic base of the seed
was inferior and overall yields sufered.
Roundup Ready technology combined
with Stines industry-leading soybean
genetics was a natural t.
When a battalion of Monsanto
lawyers and dealmakers descended
on Stine Seed to nalize the deal, they
found Stine alone in the companys
conference room at a Ping-Pong table
(Stine still rarely loses). If you really
want to be fair here, you need to go get
two more [lawyers], he smirked.
Neither party will disclose the
agreements terms, but that deal
contributed to the phenomenal suc-
cess of the Roundup Ready soybean
seed, a technology thats now used
in 96% of the soybean acreage in the
U.S., likely generating in excess of
$10 billion for Monsanto since 1997.
Stine will only say he receives a cut
from his companys contributions
to Roundup Ready soybeans, and its
relationship with Monsanto extends
well into the future.
IF YOU REALLY
WANT TO BE FAIR
HERE, YOU NEED
TO GO GET TWO
MORE [LAWYERS],
HE SMIRKED.

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.
Siemens technology
helped this brewery
double production. siemens.com/answers
Somewhere in America, a new era of manufacturing has
dawned. An era where manufacturers in every industry
are relying on a highly skilled workforce and innovative,
new technologies to produce more complex products,
more efciently than ever before. And theyre turning
to Siemens to get it done.
In St. Louis, Siemens has helped Schlay Bottleworks
brewery double production without sacricing the quality,
craft brews that built the company.
By combining intelligent hardware and software,
the Siemens system also enables the brewery to easily
transition production between beer styles and make better
use of working hours. Today, it has a distribution area the
owners never thought possible.
Siemens is working with some of the most forward-
thinking companies to improve efciency and productivity,
to make more with less and to grow the economy. Because
its not just about making things right, its about making
things right for people, for business and for America.
American manufacturing
is brewing something big.
Siemens answers are redening manufacturing for companies like Schlay Bottleworks brewery.

FORBES
thenand wouldnt for several more
decadesbut he sufered from dys-
lexia and also mild, high-functioning
autism. Knowledge of those diagnoses
was all but nonexistent at the time.
Back then, he says, he just thought he
was retarded.
Im a data and information and
facts person; Im not a people person. I
dont understand how peoples brains
work and why they do what they do,
says Stine. But, as a consequence of
his learning disabilities, Stine always
worked slowly and carefully. He also
possessed a canny, uid mental aptitude
for data and math. His disabilities
were actually advantages that let him
see things in ways others did not.
Those qualities he has have en-
abled him to do in business what he
has done. He has the right combina-
tion of everything, says son Myron,
who has worked alongside his fa-
ther at the company
for 20 years. When
you put him in the
room with a bunch
of people, hes going
to outpace everybody
intellectually.
Stine founded the
rst private soybean
research and devel-
opment rm in the
U.S. in 1968. By the
mid-1970s, under a new company
called Midwest Oilseeds, Stine was
operating the most widely used soy-
bean genetics company in the U.S.,
licensing the robust seeds it bred for
royalties. Though the company also
began breeding corn seed genetics,
soybeans remained its most prot-
able niche.
It was around this time that Stine
recognized the necessity of protecting
his valuable genetics. If a farmer could
buy your seed one year and then simply
use the ofspring or seeds from the
plants it grew the next year, he could
cut the seed developer out of the loop
while retaining the powerful genetics.
Moreover, he could start his own breed-
That lead was solidied in 2013,
when the protections of patented seeds
like Roundup Ready withstood a chal-
lenge in the U.S. Supreme Court. The
casewhich held portentous implica-
tions for all seed developers, including
Stinewent in Monsantos favor, af-
rming intellectual property rights for
plant genetics. Stines business model
had been blessed by the highest court in
the land.
S
tines savvy is homegrown. After
graduating from McPherson
in 1963, he did two quarters of
graduate work at Iowa State, then
went home to work on his fathers
modest farm. The family was poor
and the work both long and hardris-
ing at 6 a.m. and nishing at 6 p.m.
was the norm, except in summer,
when the hours were even longer.
After learning about some anomalous
soybean plants with
extra seeds in a nearby
eld, Stine became
obsessed with breed-
ing higher-yielding
seeds to boost prots.
Even if the process has
grown more involved
and advanced, the
strategy behind breed-
ing has changed little
in ten millennia. Its
very simple. You take good parents, and
you make lots of ofspring, says Stine,
who learned the basics in under an hour
from an Iowa State technician. It takes
a minute and a half to learn what there is
to learn about plant breeding.
At the time public universities dom-
inated breeding, and for good reason:
Prots were limited, since intellectual
property rights for soybean plants
didnt existand wouldnt for another
30 years. Additionally, it was a labor-
intensive, painstaking endeavor, un-
suitable to most businessmen or dawn-
to-dusk farmers but perfect for Stine,
innately curious and capable of intense
focus, despite a childhood lled with
academic struggles. He didnt know it
ing program using the seeds. The con-
tracts Stine drew up prohibited this.
Some still infringed and faced legal
confrontation if caught, but largely
the strategy worked. The company
expanded throughout the 1980s, gob-
bling up smaller seed companies and
conducting soybean research in other
climates around the country. The
breeding process grew more advanced
and automated, and by the early 1990s
the company was testing 150,000 soy-
bean varieties annually and producing
the highest-yielding seed on the market.
The Stine network of 1,700 dealers was
selling Stine soybean products in 15
states under 160 brands. By the time it
got its 1994 patent Stine had become
the largest private seed company in the
country, the bulk of its revenues still
coming from royalties from licensing its
award-winning soybean genetics.
Theres always wrinkles in his sci-
ence and negotiations that catch you of
guard, says Monsantos Fraley. Hes
not afraid to speak his mind. But at the
very bottom of it all, he has made a huge
diference in the industry and hes done
it in his very unique and special way.
As we stand high atop his tower, the
wind streaking into us, unique and
special seems a vast understatement.
Now heres whats going to happen. Ill
sit here, he says, perched on the top bar
of the guardrail, unfazed by the steep
plummet behind him or the violent
gusts. And you sit next to me. And then
well negotiate.
Hes kidding, of course. Its a long-
running gag hes played on acquain-
tances, business competitors and even
his wife, Molly, who had sufered the
misfortune of the elevator actually
breaking and had to climb down the
ladderin heels.
But the joke, conducted amid full
view of his empire, serves as a playful
reminder: Harry Stine, the dyslexic
farm boy turned cunning negotiator,
data savant and agriculture visionary,
is on top of the world. And hes got
plans to stay there. Says Stine: Im
having too much fun.
ITS VERY SIMPLE.
YOU TAKE GOOD
PARENTS, AND
YOU MAKE LOTS OF
OFFSPRING. IT TAKES
A MINUTE AND A
HALF TO LEARN.
F

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liance) and then by the single malts rst-
place nish in the 2012 Best in Glass compe-
tition, a British contest that names the best
whiskey released each year. Balcones was the
rst American distiller to capture the high-
est honor, defeating such venerable brands as
Johnnie Walker, Macallan and Balvenie.
So how did a small distillery in Waco rise to
the top of the whiskey world in only six years?
In part Balcones success is the result of Amer-
icas love afair with all things artisanal. Only
68 craft distillers existed a decade ago. Today
there are 623 across the country, at least one in
every state.
Its a crowded space, but Balcones has al-
ready been able to stand out. Partly it is due
to Tates story as a Texas pioneer. He has long
been fascinated by mixing diferent ingredi-
ents. As a child in rural Virginia he made ex-
plosives: bottle rockets and tennis ball can-
nons. After college, when he wasnt debating
The Big Questions as a Union Presbyterian
A
quarter-mile from downtown
Waco, Tex., in a neighborhood
of long abandoned storefronts,
is a small, rusted-metal shed
hidden beneath the 17th Street
Bridge. The onetime welding shop sits in be-
tween the overpass enormous support pillars,
next to a white trailer. Its a safe bet none of the
drivers know theyre speeding over the world-
wide headquarters of Balcones Distilling, the
maker of the nest new whiskey in America.
Founder Chip Tate stands inside across
from two handmade copper stills. He is a small
man who takes pride in his whiskey and in his
thick black beard, which he combs often. Tate
dips a glass pipette into a vat and pours the
liquid into tasting glasses. It is the unmatured
form of his Texas Single Malt Whiskythe
drink that put Balcones on the map.
Balcones arrival was rst heralded by its
distiller-of-the-year awards in 2012 (from
Whisky Magazine and the Craft Distillers Al-
SPIRITS
The Ballad of Balcones
Want to fnd the best single malt whiskey in the world? Look under a bridge in Waco.
BY ABRAM BROWN
FORBES LIFE
Best in Glass: In just
six years Chip Tates
Balcones Texas Single
Malt has already earned
many accolades,
including World Whisky
of the Year for 2013.

SPIRITS
Last year the company produced rough-
ly 5,000 cases (with capacity now at 12,500),
hand-bottled down to the wax seal, and took
in a little more than $1 million in revenue. (Bal-
cones whiskeys typically run $60 to $70 a bot-
tle.) Tate knows he must think biggera larger
distillery, greater distribution and more prod-
uctsto fulll his ambitions for the company.
Its a great problem to have, but it is a real
problem, Tate admits as he throws open the
door to a six-story building a short drive from
his current distillery. The future home of Bal-
cones is only in slightly better condition than
the one under the bridge. It has sat empty
since belonging to a storage company whose
vaults once housed the valuables of Wacos
wealthiest citizens. In the next year Balcones
will add two new stills that will boost produc-
tion to 100,000 cases. Assuming sales contin-
ue apace with greater production, that would
mean estimated revenue of about $20 million.
As Tate trudges through a set of dimly lit
hallways he reiterates his desire for Balcones to
stay relatively small and independent. Some-
thing thats the magnitude of a Macallan or a
Balvenie, he adds. Were not trying to make
the Hamburger Helper of the whiskey world.
If Balcones wants to stay independent it
will need to grow closer with its distributors.
A little over a year ago the company hired its
rst brand ambassador, whose job is to talk up
the various whiskeys with distributors. And
while it shouldnt be too hard to persuade
a room of salesmen that a scarce whiskey is
truly popularjust ask the marketing team
behind Pappy Van WinkleBalcones rapid
growth has already caused it to lose at least
one distributor who couldnt grow with it in
Texas. Today it is in roughly 20 states, as well
as in the U.K., Norway, Sweden, Japan and
Australia. Tate would soon like to add Canada,
France and Korea .
Inside his of cethe white trailer next to
the shedTate rummages for a new treasure:
one of only three bottles left of a rum he ex-
perimented with. He isnt blind to the neces-
sity of continued innovation, and once he has
bigger stills the rum is at the top of the list of
the new products he wants to make. Theres
an American brandy tradition that hasnt been
explored fully. And I think ryes a very inter-
esting grain. Ive got plans, man. He thought-
fully sips the rum. No one wants to be the
troll under the bridge forever.
Seminary student in Richmond, he brewed
beer or baked: I was basically a monk.
In 2007 Tate was a Baylor enrollment ad-
ministrator dreaming of leaving the ivory tower
for the copper still. With a wink and a nudge he
will admit some initial experimentspresum-
ably moonshine made at his Waco homeled
him to believe he could make it as a legitimate
distiller. A rudimentary handbook called Whis-
ky: Technology, Production and Marketing be-
came his bible; instruction at the Bruichladdich
Distillery on whiskeymaking fundamentals,
one meant for prospective brand ambassadors,
was newfound gospel.
To launch Balconesnamed after the
fault that bisects Texas and provides the area
with a source of drinking waterTate raised
$100,000 in startup capital, and a real estate
buddy found him the shack under the bridge.
For Balcones rst release, Tate drew in-
spiration from a dessert sauce of raw sugar,
honey and gs he had served at a dinner party.
And thats exactly what he fermented to cre-
ate Rumble. Early customers appreciated its
rum- and brandylike qualities. Rumble was
released along with Baby Blue, an unusual
whiskey made with heirloom blue corn that
tastes of apricot, sweet tea, smoked chilis and,
most oddly, cotton candy. Balcones has devel-
oped another blue-corn-based whiskey called
Brimstone made with Texas scrub oak to add
smoke the way Islay whiskys use peat.
Tate had always been a Scotch man,
though, and longed to bring a single malt to
market. For what would become Balcones
signature whiskey, Tate selected a main in-
gredient with a fortuitous-sounding name:
Golden Promise, a Scotch-malted barley that
hadnt been used regularly in four decades.
His single malt ages in custom American-
and-French wood barrels (made by a cooper
in rural Missouri). The end result has hints of
vanilla, plum and pear.
It has helped Balcones win one award
after another. Last year Balcones received
Whisky Magazines Craft Distiller of the Year
award (again) and then cleaned up at the Wiz-
ards of Whisky competition in London, where
the single malt claimed World Whisky of the
Year, World Single Malt of the Year and Amer-
ican Single Malt of the Year. (Baby Blue also
took home a gold medal; Brimstone received
a silver.) As a result, demand for Balcones now
greatly exceeds its supply.
FORBES LIFE
F
What the 60 million
Forbes.com users are talking
about. For a deeper dive go to
FORBES.COM/LIFESTYLE
TRENDING
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THOUGHTS
I talk to a new client interested in expatriating every week.
Many people cant pay the federal tax rate and live in the style
they want. So said Francis Mirabello, the head of the personal
law department at the Philadelphia ofce of Morgan, Lewis
& Bockius, speaking at a Bermuda conference on ofshore
money. Expatriating? Give up U.S. citizenship? Who in his right
mind would give up his U.S. citizenship? Lots of people. You
could practically fll a Boeing 747 with well-heeled U.S. citizens
who have taken on foreign citizenship rather than submit to
what Learned Hand called enforced exactions at a level that
amounts to virtual confscation.
FROM THE NOV. 21, 1994 ISSUE OF FORBES
A taxpaying
public that doesnt
understand the
law is a taxpaying
public that cant
comply with
the law.
LAWRENCE GIBBS
The wages of sin are death, but by the time
taxes are taken out, its just sort of a tired feeling.
PAULA POUNDSTONE
Im proud to be paying taxes
in the United States.
The only thing isI could be just
as proud for half the money.
ARTHUR GODFREY
The wisdom of man never yet
contrived a system of taxation that
would operate with perfect equality.
ANDREW JACKSON
Income tax returns are the
most imaginative fction
being written today.
HERMAN WOUK
Governments last as long as the undertaxed
can defend them against the overtaxed.
BERNARD BERENSON
No taxation without
misrepresentation.
SAMUEL HOFFENSTEIN
Always
overpay
your income
taxes. That
way, youll
get a refund.
MEYER LANSKY
FINAL THOUGHT
It is easier to start taxes than to stop them.
A tax an inch long can easily become a yard long.
That has been the history of the income tax.
B.C. FORBES
SOURCES: A TREASURY OF JEWISH QUOTATIONS; SIMPSONS CONTEMPORARY QUOTATIONS;
THE LAST WORD ON MAKING MONEY; THE 2,548 BEST THINGS THAT ANYBODY EVER SAID.
ON TAXES
AMERICAN GOTHIC You know its going to be an unusual interview
when the chief executive of the company youre visiting demandswithout
promptingthat you independently conrm that he isnt a suspect in the
murder of his sister-in-law.
THE BIG BLACK HOLE In a recent national survey, young adult
Americans indicated they had more faith in UFOs than in Social Security.
OTHER THOUGHTS FROM THAT ISSUE:

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Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value 2013 Bank of America Corporation. All rights reserved. ARVPPYY7
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