MIT professor: Syndicates are best approach for equity crowdfunding investors — Christian Catalini

MIT Sloan Professor Christian Catalini

MIT Sloan Professor Christian Catalini

From Crowdfund Insider

MIT Sloan Assistant Professor Christian Catalini has targeted his research on the economics of innovation, entrepreneurial finance and crowdfunding.  Catalini is part of an elite few academicians who are analyzing the emergent investment crowdfunding space, so when he shares his findings, and associated perspective, it is worth paying attention.

Catalini, along with his co-authors, Ajay Agrawal and Avi Goldfarb at the University of Toronto, have labeled syndicates the “killer app of equity crowdfunding”.

There has been much discussion and debate if it is the wisdom of the crowd or herd mentality that reigns in investment crowdfunding, but according to Catalini a hybrid mix of professional insight, alongside the crowd, is easily the best.

In their working paper entitled, “Are Syndicates the Killer App of Equity Crowdfunding?”, the trio affirms that lead investors, be they angels or VCs, can inform potential crowdfunding investors about deals they might not otherwise be aware. Equity crowdfunding syndicates fill a major gap in online investing, at least in part the need for investors to be able to actually meet issuers instead of just communicating virtuatlly.

Read More »

Rethinking the business of biases — Stephanie Liu

MIT Sloan MBA Candidate Stephanie Liu

MIT Sloan MBA Candidate Stephanie Liu

When I first started working as a consultant in Asia, I was often frustrated with very innocent questions from coworkers and clients. I cannot count the number of times I had to explain that, “No, I am not the secretary, I am indeed the presenter and team leader,” when I would show up for important board meetings. After a long workday, coworkers would joke, “Why don’t you just get married, then you can just chill at home.” Although I felt my work was appreciated, I spent a lot of effort explaining myself rather than just doing the work due to these unconscious biases.

Naturally, I became highly supportive for the need for diversity-related initiatives in the company. We had monthly women’s initiative dinners to discuss trends and set up new recruiting strategies to ensure that we had female talent. We also started ‘champion’ programs that included men in the conversation. Although it was helpful to have a support network, I still had lingering doubts about the effectiveness of these programs. I enjoyed talking about the issues a lot and raising awareness, but still, it was only talking—devising concrete action plans and making impactful changes continue to be a challenge.

Now that I am at MIT Sloan, I have learned some of the different challenges other classmates have faced and how that has impacted their career choices. One classmate with an engineering background shared, “I was an engineering TA in one of the top programs in undergrad, but even now I am not pursuing a career in engineering…I decided to transition to a management role where an engineering background was appreciated instead of trying to stay in the culture where I constantly needed to be the minority.”

An undergrad studying computer science was also disappointed by her experience when she was doing her internship search. “Overall, I think no one doubts that I am capable of being an engineer, but it is still a very male dominated sector…When I got an offer for a very competitive engineering internship, even my grandmother joked that maybe it’s because they need to fill the women quotas.”

Read More »

Why banks fear Bitcoin — Trond Undheim

MIT Sloan Sr. Lecturer Trond Undheim

From Fortune

Bitcoin heralds a new age more disruptive than that of today’s Internet. Disruption can be a good thing, especially when it affects banking, a failing set of business models which, for all the tweaks, have been virtually unchanged for millennia. Paradoxically, some banks are afraid of Bitcoin because it would force them to innovate.

Bitcoin is but the most famous example of an emerging technology network with the potential to improve banking. It belongs to the new type of financial animal called crypto currencies, i.e. decentralized, secure money storage and money transfer enabled by the Internet. What Bitcoin, and the even more promising Ripple network do, is not to poke a hole in banking’s basic business models—lending, deposits, trading, and money exchange—but to create the embryos for entirely new markets typically referred to as the Internet of Value. That is, a way for regular folks, as well as specialists, to potentially monetize everything, regardless of location, traditional market access and jurisdiction.

Cryptocurrencies have been with us for over five years, an eternity by Internet time. Using the elegance of mathematics they enable almost instant transfer of value at almost no cost between two parties without the need for a trusted third party. The disruption lies exactly there: in disrupting the intermediaries.

For a few years already, we have been talking about the sharing economy. Companies like AirBnb and Uber have enabled previously untapped, idle assets such as your empty bedroom or your second car to be mobilized for financial gain. Liquidizing such stale assets has added convenience in the utterly inefficient markets of room rentals and transportation services.

Read the full post at Fortune.

Trond Undheim is a Senior Lecturer at the MIT Sloan School of Management.

The challenges of using social media for marketing purposes — Catherine Tucker

MIT Sloan Professor Catherine Tucker

MIT Sloan Professor Catherine Tucker

In an era when marketers spend billions on managing social media, is that investment worthwhile? Should firms actively guide, promote and shape online conversations, or leave them to grow organically?

To investigate this, my colleague Amalia Miller from the University of Virginia and I recently studied what happens when hospitals started to actively manage their profiles on Facebook. We focused on Facebook because it’s the most visited media site in the U.S., accounting for 20% of all time spent on the Internet. We also chose it because the Facebook Places initiative created a page for every single hospital in the U.S., allowing organizations to choose whether to actively manage their pages or not.

Read More »

Make it OK for employees to challenge your ideas — Hal Gregersen

Hal Gregersen, Executive Director of the MIT Leadership Center

Hal Gregersen, Executive Director of the MIT Leadership Center

From Harvard Business Review

Kodak. Sears. Borders. The mere mention of any of these companies brings to mind the struggle to stay relevant amid today’s technology and boundless alternatives. But behind each of them lies a deeper story of at least one leader who is or was “sheltered” from the reality of their business.

This dangerous “white space” where leaders don’t know what they don’t know is a critical one. But often, leaders — especially senior ones — fail to seek information that makes them uncomfortable or fail to engage with individuals who challenge them. As a result, they miss the opportunity to transform insights at the edge of a company into valuable actions at the core.

Nandan Nilekani, an Indian entrepreneur, bureaucrat, and politician who co-founded Infosys and was appointed by the Indian prime minister to serve as Chairman of the Unique Identification Authority of India (UIDAI), believes it’s vital to keep this channel of communication open in any leadership position.

“If you’re a leader, you can put yourself in a cocoon … a good news cocoon” said Nilekani during our recent discussion. “Everyone says, ‘It’s alright, there’s no problem,’ and the next day everything’s wrong.”

So how do leaders keep themselves from being isolated at the top? For Nilekani, it comes down to one vital factor: asking and being asked uncomfortable questions.

The question “Why are we the way we are?” inspired him to write his book, Imagining India: The Idea of a Renewed Nation, which discusses the education, demographics, and infrastructure of his native country. Following his work with the UIDAI to help create a government database of the entire population of India (named “the biggest social project on the planet”) and his recent campaign for Indian National Congress, the question “How do you get kids to read and how do you get kids to learn arithmetic?” drove Nilekani to create a scaleable solution to bridge the education gap for younger generations in India and other parts of the world. And the umbrella question that defines Nilekani’s leadership journey is, perhaps not surprisingly, “What is it that I can do to have the best possible impact on the most possible people?”

Read the full post at the Harvard Business Review.

Hal Gregersen is Executive Director of the MIT Leadership Center and a Senior Lecturer in Leadership and Innovation at the MIT Sloan School of Management