Forbes - January 20 2014 USA

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2 | FORBES JANUARY 20, 2014
CONTENTS — JANUARY 20, 2014 VOLUME 193 NUMBER 1
88 | NEXT-GENERATION
ENTREPRENEURS
Four hundred and fifty
faces of the future.
11 | FACT & COMMENT
BY STEVE FORBES
The lies continue.
LEADERBOARD
14 | SCORECARD
2013: a very good year.
16 | BEING REED HASTINGS
The man running the show at Netflix has a story
that any screenwriter would be proud of.
18 | THE YEAR’S HOTTEST STARTUPS
A panel of VCs and entrepreneurs selected these
businesses from more than 300 contenders.
Plus: FORBES makeover.
20 | THE MOST OVERPAID ACTORS
Adam Sandler tops the list.
Plus: Up-And-Comers.
22 | ACTIVE CONVERSATION
A CEO eggs on the haters.
THOUGHT LEADERS
24 | CURRENT EVENTS
BY PAUL JOHNSON
Dealing with Iran: impossible?
26 | CAPITAL FLOWS
BY GEORGE LEEF
More college does not beget more
economic prosperity.
COVER PHOTOGRAPH BY MICHAEL GRECCO FOR FORBES
78 | THE YOUNG AND THE RECKLESS
Is Snapchat more than Silicon Valley’s
next vanishing act?
FORBES
UNDER
30
30

IBM Cloud supports 24 of the
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ibm.com/trademark. ©International Business Machines Corp. 2013.

4 | FORBES JANUARY 20, 2014
CONTENTS — JANUARY 20, 2014
28 | INNOVATION RULES
BY RICH KARLGAARD
Enduring success: soft-edge excellence.
STRATEGIES
30 | THE BIGGEST BET EVER
George Soros, John Paulson and Leon
Cooperman are facing of against Sheldon Adelson
over the future of gambling in America.
BY NATHAN VARDI
34 | THE BIG EASY’S
MOVIE MONEY PIT
Louisiana politicians decided handouts
would turn the state into a Tinseltown rival.
Now they’re stuck with them.
BY DOROTHY POMERANTZ
TECHNOLOGY
38 | INSIDE A BEATING
SILICON HEART
Designers have used computers for years to build
elaborate machines. But what about model-
ing complex experiences? Dassault Systèmes is
leading the charge.
BY JOANN MULLER
43 | CHINA BITES INTO BITCOIN
A speculative frenzy turned BTC China
into the world’s biggest Bitcoin exchange.
Then Beijing dropped the boom.
BY KASHMIR HILL
ENTREPRENEURS
46 | SECOND LIFE
Reggie Aggarwal almost lost his event
platform to bad luck and overspending.
Here’s how he clawed his way past $1 billion.
BY KARSTEN STRAUSS
50 | READY, FIRE, AIM
TrackingPoint makes a $27,500 rifle
so smart that it can’t miss.
So why has the company been misfiring?
BY ABRAM BROWN
INVESTING
54 | TURN DOCTOR BILLS INTO
RETIREMENT INCOME
Creating super-IRAs out of health
savings accounts.
BY WILLIAM BALDWIN
56 | MONEY FROM NOTHING
Looking for high yields? Consider buying the
funds that sell the call options on your stocks.
BY JOHN DOBOSZ
57 | PORTFOLIO STRATEGY
BY KEN FISHER
A big (bull) surprise for 2014.
58 | INVESTOR CHECKUP
BY JOHN BUCKINGHAM
Beating back the bubble babble.
34 | IT’S A FLOP
Louisiana’s Hollywood
tax-break horror show.
30 | HIGH ROLLERS,
HIGH STAKES
A bevy of billionaires battle
over online gambling.
43 | THE
FORBIDDEN
COIN
China’s Bitcoin
crackdown is
dashing the
dreams of a
cryptocurrency
entrepreneur.
50 | UNDER THE GUN
Profiting from a futuristic
firearm is a tricky shot.
46 | SAVING CVENT
In the event of emergency,
reinvent.

©
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6 | FORBES JANUARY 20, 2014
CONTENTS — JANUARY 20, 2014
60 | INTRINSIC VALUE
BY DAVID PEARL
Cap ex comes out of the closet.
FEATURES
72 | REINVENTING WALL STREET
Troubled UBS has been transformed into a wealth
management juggernaut.
BY HALAH TOURYALAI
30 UNDER 30
78 | NOW YOU SEE THEM...
Will Snapchat cofounders Evan Spiegel and Bobby
Murphy become the youngest self-made
billionaires ever—or will Snapchat fade
into business infamy?
BY J.J. COLAO
88 | 30 UNDER 30 LIST
Introducing the brightest stars under the
age of 30 in 15 diferent fields.
EDITED BY CAROLINE HOWARD AND MICHAEL NOER
LIFE
104 | PARADISE 2.0
Can Larry Ellison model the future on the
Hawaiian Island of Lana’i?
BY LAURIE WERNER
112 | THOUGHTS
On New Year’s diets.
EXCLUSIVE!
BRUNO MARS’
30 UNDER 30 PLAYLIST
If you really do want to be a billionaire, start with
these 22 songs, handpicked by our guest DJ,
Grammy-winner (and 30 Under 30 nominee)
Bruno Mars, to enjoy while reading this issue.
To listen along, go to forbes.com/under30.
“Move On Up” - Curtis Mayfield
“Mirror in The Bathroom” - The English Beat
“More Than a Woman” - Bee Gees
“Devil’s Pie” - D’Angelo
“Waters of Nazareth” - Justice
“God Only Knows” - The Beach Boys
“Shake a Lil’ Somethin’ ” - 2 Live Crew
“Little Red Rooster” - Luther Allison
“Am I High” - N.E.R.D
“Butter” - A Tribe Called Quest
“Da’ Dip” - Freak Nasty
“Me Name Jr. Gong” - Damian Marley
“Kung Fu Fighting” - Carl Douglas
“All Me” - (feat. 2 Chainz & Big Sean)
“Get On the Floor” - Michael Jackson
“Animal” - Miike Snow
“Somebody to Love Me” - Mark Ronson & The
Business Intl.
“Won’t Fade Away” - Lewis Taylor
“Salute To Kareem” - Red Hot Chili Peppers
“Midnight Rider” - The Allman Brothers Band
“Sweat (A La La La La Long)” - Inner Circle
“Young Girls” - Bruno Mars
72 | THE NEW UBS
Winning the war for the
wallets of the world’s
wealthiest.
54 | IT’S WHAT THE
DOCTOR DIDN’T ORDER
How to use an HSA to
play the stock market
triple tax free.
104 | ELLISON’S EDEN
Is economic viability a
forbidden fruit for the tech
honcho’s Hawaiian hideaway?
95 | SUPER BOWL MVP
Bruno Mars’ halftime
performance could be
an even bigger hit than
his latest album—if the
weather cooperates.

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8 | FORBES JANUARY 20, 2014
FORBES
IN BRIEF EDITOR-IN-CHIEF
Steve Forbes
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JANUARY 20, 2014 — VOLUME 193 NUMBER 1
The Social Network
On Our New App
BY LEWIS D’VORKIN
What’s a magazine? At FORBES we think it’s an experi-
ence, not sheets of paper. Increasingly, consumers do, too.
It’s about turning, clicking, tapping or flipping to discover,
read, learn or be entertained. These actions seem natural.
The magazine we’ve produced for 96 years has nearly
1 million subscribers. On Flipboard, only a few years old,
our stories attracted 1.8 million readers in October and
racked up 44.5 million flips. Still, magazine experiences
must evolve for new behaviors. In the age of social media
they need to be far more social.
Most magazines remain solitary experiences. A reader’s
relationship is with the brand, the editors who pick the
stories and the authors who write them. There’s never
been a way for readers to easily share, connect or be part of
a community.
We’re changing all that. Last January we launched an
iPad app that made it easy to clip and share text, photos,
charts or whatever. Pinch the screen with two fingers.
Select and frame the content. Tap a Twitter or LinkedIn
or Facebook button to share. With this issue we’re taking
a big leap forward. Now FORBES enthusiasts can be part
of a first-of-its-kind mini social network. Clippings are
included in an image stream for all app subscribers to see.
Tap any clip in the stream and go directly to the content—
or share it again. Editors select stories for each issue. The
community curates them for others.
“Stream,” as it’s called, was developed by MAZ, our app
partner. A startup founded by ex-Apple and ex-Adobe de-
signers and engineers, MAZ understands the challenges of
building new experiences with economic efciency. Most
media companies hire large, expensive stafs to re-create
their magazines for tablets and smartphones. The MAZ
solution repurposes PDFs used in print magazine produc-
tion by layering on actionable buttons. Last March our
Billionaires issue contained 2,000 links to Forbes.com posts.
“If you think about it,” says MAZ founder Paul Canetti,
“we’ve been sharing content the same way for 20 years.
Copy text, paste text, get text—words or links. ‘Stream’ is
part of the online world’s massive shift from text-based
media to visual-based media.”
For this 30 Under 30 issue on iPads and iPhones, there’s
audio, too. Bruno Mars has curated a 22-song playlist to
accompany this special issue. Clip, share, join the stream—
and listen in. It’s a special experience. F



If you had told any financial observ-
er in 2008 that the Federal Reserve
would expand its balance sheet five-
fold in five years, you’d have encoun-
tered astonished disbelief, followed
by the assertion that if ever such a
thing unfolded a Weimar Republic-like hyper-
inflation would ensue. After all, in the inflation-
beset 1970s and early 1980s, when the Consumer
Price Index was roaring ahead at a 13% annual
clip and interest rates were headed for the moon—
short-term rates peaked at 21.5% and long-term
Treasurys at 15.75%—the monetary base (currency
plus bank reserves on deposit at the Fed) had in-
creased 225% from 1970 to 1981, a 12-year period.
Contrast that to the 400% surge in the mon-
etary base since 2008. While there are valid
arguments that Washington has been chang-
ing the CPI to understate the rise in the cost of
everyday products and services, there’s no gain-
saying the fact that we are, thankfully, nowhere
near the horrors of the 1970s.
What gives?
What gives is that we focused too much on
the bloat of the monetary base and not nearly
enough on the unprecedented suppression of
both short- and long-term interest rates. Never
before had our central bank knocked down the
overnight cost of money to near 0%. And never
before had it attempted to beat the longer-term
cost of money to a fraction of its real price. (In
the early 1960s the original Operation Twist—
named after the dance made famous by Chubby
JANUARY 20, 2014 FORBES | 11
FACT & COMMENT — STEVE FORBES
FORBES
THE LIES
CONTINUE
BY STEVE FORBES, EDITOR-IN-CHIEF
“With all thy getting, get understanding”
changes that would have
changed the plans dramatically
and led to large price increases.
Fighting Last War?
THIS YEAR Democrats will soon
be wondering if ObamaCare covers
political shellackings.
Nothing is more personal than
health—for us, our children, parents,
grandchildren, friends. Messing
with people’s medical care arouses
worries and anger as no other
subject can. And this is where the
Obama Administration made a fate-
ful miscalculation. We’ll tolerate
some spin on taxes, spending, regu-
lation and scandals, but we have zero tolerance
for lying or cynically twisting the truth regard-
ing issues that afect our access to health care
and the doctors we trust.
It’s the White House’s brazen abuse of the
truth regarding ObamaCare that will lead to a
Democrat debacle in November. We’re all too
familiar with the President’s lies about our
being able to keep our policies and doctors.
But the contempt for the public continues.
Remember when millions of people and small
businesses received cancellation notices from
their insurers and the President declared that,
okay, you could keep your insurance in 2014?
Another lie.
Here’s an astonishing excerpt from a letter
sent to individual policyholders of Horizon
Blue Cross Blue Shield of New Jersey:
Horizon BCBSNJ wanted to let cus-
tomers keep their policies in 2014, based
upon President Obama’s declaration that
he would allow cancelled plans to be re-
newed. The federal government, however,
notified the New Jersey Department of
Banking and Insurance that current poli-
cies cannot be renewed without major

12 | FORBES JANUARY 20, 2014
FORBES
FACT & COMMENT — STEVE FORBES
F
Checker—was mercifully short-lived.
It had been undertaken in a misbegot-
ten efort to strengthen the dollar.)
Only a handful of economists,
most notably FORBES columnist
David Malpass, have pointed out
that this monetary version of price
controls is a form of credit allocation.
The federal government easily got
all the cash it wanted at ultracheap
rates, i.e., deficits without tears. Big
companies had no trouble access-
ing credit and putting their balance
sheets in pristine order. But credit to
small and new businesses dried up,
a drought magnified enormously by
bank regulators who told their charges
to reduce risk and to document six
ways to Sunday any loans to a nonbig
borrower. Remember, small and new
businesses are the source of most
new jobs. Through its quantitative
easings the Fed efectively sucked up
much of the financial market’s short-
term credit that normally would have
gone to these businesses.
Malpass observes: “The U.S. pri-
vate sector has been facing one of the
tightest money/regulatory policies in
history.”
The fact that the Fed has started
to taper, albeit at a tepid pace, is good
news. It will mean the beginning of
rebuilding our warped credit markets.
There are two other, very obvious
factors that explain why there has
been no explosion in higher consum-
er prices. One is higher taxes and an
ever more convoluted and corrupt tax
code; the other is the chaotic uncer-
tainty that Obama Care has visited on
business and the American people.
The suppression of interest rates
has been mimicked by other coun-
tries, with equally distressing results.
These have been magnified by even
stupider regulations and higher levels
of taxation than those we sufer.
(Make no mistake, the Fed’s un-
dermining of the dollar since the early
part of the last decade has wrought
immense havoc. For instance, with-
out a weak dollar there would never
have been a housing bubble.)
Of course, since virtually no cen-
tral banker today—not to mention
political leaders or economists—un-
derstands monetary policy, an inflation
disaster could still eventually unfold.
For now, though, credit suppression
of a kind we’ve never seen before and
growth-crushing levels of taxation
and regulation will keep us from en-
joying vigorous, sustainable growth.
So don’t get too giddy over our
“improving” economy. We’re not
sufering pneumonia, but we’re still
being worn down by a persistent flu.
HitlerCare
the practice in 2002, it was suspected
that doctors and hospital administra-
tors were occasionally killing patients
to free up hospital beds. Procedures
have (supposedly) been tightened. Bel-
gium also passed a euthanasia law in
2002, and Quebec is about to enact one.
Of course, advocates claim they only
want to end the misery of those writh-
ing in unspeakable pain. But this raises
the question: Why don’t we do more
medically to relieve such sufering?
The number of adults euthanized
in Belgium soared 25% between 2011
and 2012; the annual toll is now seven
times what it was when the law was
enacted and accounts for 2% of all
deaths. A similar percentage in the
U.S. would result in more than 50,000
killings. To put this in perspective, the
total number of people murdered each
year in the U.S. is about 16,000. In
Holland euthanasia ofcially accounts
for 3% of deaths (proportionately that
would be 75,000 in the U.S.), but in
practice, the percentage is far higher.
And now we’re on the way to killing
children in the name of compassion.
As euthanasia becomes more ac-
cepted—and we become more numb
to the horror of murdering people
like this—we’ll descend to the next
abomination: pressuring the sick to
discontinue treatment for a likely fatal
illness in the name of “saving scarce
resources” for people who have more
years ahead of them. After all, an
enormous percentage of medical costs
are wracked up by people who have
less than six months to live. Britain
already has its own version of a death
panel, which has a formula for deter-
mining who gets expensive treatment
and who doesn’t.
Let’s be clear. We’re not talking about
adults deciding they don’t want “heroic”
methods applied when they’re sufer-
ing a fatal illness; we’re talking about
the conscious taking of a life by people
who are trained to cure us of illness.
The true mark of a civilization
is in how it treats its most vulnerable
members.
Belgium is on its way to allowing
doctors, with parental consent, to kill
children deemed to be aficted with
“constant and unbearable physical
sufering.” The kids must also sign of
on this, as if a child has the capacity
to reason like an adult.
We are on the malignantly slippery
slope to becoming a society like that
envisioned by Nazi Germany, one in
which “undesirables” are disposed of
like used tissue. While the Nazis carried
this ideology of death to its ghastly logi-
cal conclusion, the belief that it would
be good for the human race to improve
itself—as breeders do with horses, dogs,
cows and other animals and plants—
was also widespread in numerous other
countries, including the U.S., before
WWII. It was called eugenics, and
under its banner countless hundreds of
thousands of people, particularly those
deemed mentally handicapped, were
forcibly sterilized to prevent them from
fathering or birthing children. Before
the war Nazi Germany killed upwards
of 8,000 children judged to be “men-
tally deficient” or incurably ill.
The Holocaust and other Nazi
atrocities sidetracked the eugenics
movement. But now it’s making a
comeback in new garb—we want to
kill only to reduce sufering.
Several countries already allow adult
euthanasia. In Holland, which legalized

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7/2013 8/2013 9/2013 10/2013 11/2013 12/2013
ROBERT PERA
RICHARD SCHULZE
ELON MUSK
WILLIAM ERBEY
MARK ZUCKERBERG
SHELDON ADELSON
JEFF BEZOS
JANUARY 20, 2014 FORBES | 15
June 28
Jon Oringer becomes
a billionaire eight
months after
Shutterstock’s IPO.
August 3
Red Sox owner
John Henry buys
the Boston Globe
for $70 million;
two days later Jef
Bezos pays $250
million for the
Washington Post.
August 15
Private equity billionaire
Josh Harris and a partner
buy the New Jersey Devils
for $320 million.
September 2
Eike Batista, the world’s seventh-richest
person in 2012, then worth $30 billion,
ceases to be a billionaire as stock in his
oil and gas company, OGX, plummets.
October 29
Michael Dell takes his
namesake computer
company private in a
$25 billion deal.
November 4
Hedge fund billionaire Steven
A. Cohen’s SAC Capital agrees
to pay $1.8 billion in fines and
penalties after pleading guilty
to securities fraud.
November 7
Twitter’s IPO confirms that Evan Williams is a
billionaire and boosts Jack Dorsey’s fortune by
$450 million in one day.
November 12
Francis Bacon’s Three Studies of Lucian Freud
sells for $142 million, the most ever for an
artwork at auction. The next night Steven A.
Cohen sells art for more than $80 million,
including an Andy Warhol for $20.3 million.
November 15
E-tailer Zulily goes public,
propelling founder Mark Vadon
into the billionaire ranks.
WILLIAM ERBEY
+$1.8 BILLION
YEAR-END NET WORTH:
$3.1 BILLION
OCWEN FINANCIAL HAS
A BIG YEAR CATERING
TO UNDERWATER
HOMEOWNERS.
ELON MUSK
+$4 BILLION
YEAR-END NET WORTH:
$6.6 BILLION
TESLA MOTORS TAKES
OFF IN 2013, DESPITE
A FEW SPEED BUMPS
ALONG THE WAY.
MARK ZUCKERBERG
+$11.3 BILLION
YEAR-END NET WORTH:
$23.5 BILLION
FACEBOOK SHOOTS PAST
ITS IPO PRICE IN JULY AND
JOINS THE S&P 500 IN
DECEMBER.
JEFF BEZOS
+$12 BILLION
YEAR-END NET WORTH:
$35.6 BILLION
AMAZON CEO’S
FORTUNE HAS MORE
THAN DOUBLED IN THE
PAST TWO YEARS.
+200%
+166%
+160%
+148%
+93%
+67%
+51%
SOURCES: INTERACTIVE DATA VIA FACTSET RESEARCH SYSTEMS; FORBES. NET WORTH DATA THROUGH DEC. 10, 2013.

LEADERBOARD
655
Netflix’s highest-ever price/earnings ratio, in
March 2013, when its stock was at $192.  
16 | FORBES JANUARY 20, 2014
Netfix’s subscriber base has doubled to 40 million since 2010,
and its stock price quadrupled to $375 last year, making it the
best-performing stock on the S&P 500. Its CEO’s long journey to
that triumph has been a tale any screenwriter would be proud of.
B
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INTO AFRICA
Graduates from Bowdoin Col-
lege in 1983. Joins the Peace
Corps and teaches math in
Swaziland for two years.
IPO
Netflix goes public in
2002—revealing how prof-
itable the business can be.
Blockbuster starts mailing
DVDs two years later.
Netflix gains its millionth
subscriber in 2003.
BEATING BLOCKBUSTER
In 2006 Netflix ships its more
than 42 million DVDs to
6.3 million subscribers. Block-
buster falters and announces
in 2013 that it’s closing its last
stores and shutting down its
mail-order service.
FROM APOLLO 13 TO
NETFLIX
Cofounds Netflix in 1997 to mail
out DVD rentals for a monthly
fee after getting hit with
$40 in late charges on an
Apollo 13 rental.
BOOBY PRIZE
Creates the Netflix Prize for a
better system to predict what
people want to watch. Pays
out $1 million to the winner in
2009 but decides implement-
ing the solution wouldn’t be
profitable enough.
CATASTROPHE
Hastings tries to split Netflix
into two companies in 2011:
Qwikster for DVDs and Netflix
for streaming. Loses 800,000
subscribers, share price plum-
mets, and three weeks later
he gives up the plan. Rumors
spread that he will be fired.
INTERNET TV
Launches an original series,
House of Cards, in February
2013—a huge hit. It wins three
Emmys. Now Netflix plans to
spend $3 billion on new content.
CEO IN TRAINING
Obtains a master’s in computer
science at Stanford in 1988
and starts Pure Software to
make debugging tools. Loses
confidence as CEO; tries to fire
himself. Company sells for
$750 million in 1997, giving him
the cash to start Netflix.
GROWING PAINS
Netflix settles a class-
action lawsuit in 2006 over
delayed mailings to expen-
sive heavy users. Faces a
tech crisis in 2008 when
a software glitch keeps it
from sending out DVDs.
STREAMING
Unveils streaming service in 2007,
and within three years is sending
movies to Xbox, Apple TV and
other devices. Joins the S&P 500
in 2010. Profits from domestic
streaming surpass DVDs in 2013.
PATH TO SUCCESS
BEING REED HASTINGS
12/31/12 6/21/13 12/18/13
90
100
150
200
250
300
350
$400
STOCK PRICE
SOURCE: INTERACTIVE DATA VIA
FACTSET RESEARCH SYSTEMS.

What could power tomorrow’s
GLOBAL STOCK GROWTH?
FSCPX
FIDELITY
®
SELECT CONSUMER
DISCRETIONARY PORTFOLIO
FSRPX
FIDELITY
®
SELECT RETAILING PORTFOLIO
FDFAX
FIDELITY
®
SELECT CONSUMER STAPLES PORTFOLIO
U.S. household net worth is
at its all-time high
U.S. consumer spending — over 70% of GDP
2
— is likely to
increase as rising employment and real estate prices further
strengthen household finances.
3
At Fidelity, we use our global reach and research
expertise to bring you smart investing ideas.
Get our full perspective and fund details now.
Fidelity.com/stockgrowth | 800.FIDELITY
More than 2 billion people
will soon have disposable income for the first time.
By 2025, 53% of the world’s population will have entered the middle class.
The majority will be in the developing world, notably Asia.
1
Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a
prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities
are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets.
1
McKinsey Institute as of June 2012.
2
The World Bank.
3
Haver Analytics as of June 2013.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2013 FMR LLC. All rights reserved. 666521.4.1
These funds are looking for
the companies poised to thrive.

LEADERBOARD
18 | FORBES JANUARY 20, 2014
44% 
Amount by which T-Mobile’s net subscriber
growth in the third quarter of 2013 exceeded
both AT&T’s and Sprint’s. 
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FORBES MAKEOVER
T-MOBILE’S JOHN LEGERE
Our fashion pros call up a new look for the telecom CEO.
JOSEPH ABBOUD: The award-winning designer and
entrepreneur got his start at Louis Boston before serving
as director of menswear design for Ralph Lauren.
He launched his namesake brand in 1987 and is currently
the chief creative director for Men’s Wearhouse.
KATHY IRELAND: The supermodel turned supermogul
is the chief executive and chief designer of kathy ireland
Worldwide, a design and marketing firm she launched
in 1993. Women’s Wear Daily has named her one of the
50 most influential people in fashion.
THE VERDICT
JA: He’s so much more put
together. He’s kind of casually
cool, not trying too hard.
KI: He keeps his youthful attitude
while enhancing his strong pres-
ence as a passionate CEO.
Before After
SHOES
KI: His shoelaces are too long—a
safety problem and a style deterrent.
JA: Matching his laces to his shirt is
trying too hard. I’m not buying that
for a guy his age anyway.
THE “AFTER” IMAGE IS A SIMULATED IMAGE OF WHAT JOHN LEGERE WOULD LOOK LIKE IF HE HAD ACTUALLY PARTICIPATED IN THE FORBES MAKEOVER, WHICH HE DID NOT. NOR DOES HE ENDORSE ANY PRODUCTS PICTURED HERE.
ENTREPRENEURS
A FORBES panel of venture capitalists and
entrepreneurs picked these new U.S. businesses
from more than 300 contenders, judging them
on breakthrough ideas, fast growth, solid funding
and promise for the future. For more, go to forbes
.com/hotteststartups.
THE YEAR’S
HOTTEST STARTUPS
SHIRT
JA: I’m not sure when it happened
that if you’re a CEO and you want to
be cool you wear a T-shirt. That was
a black date in fashion history.
JACKET
KI: Accenting the blazer with a
windowpane plaid shirt gives an
exciting pop of pattern.
JA: It just feels like a more expensive
jacket with a little more shape, and
he’s obviously a guy who can wear
a leaner cut.
SHOES
JA: The suede shoe with a sneaker
bottom is a cool way to do some-
thing a little casual but not feel like
he should be playing basketball.
KI: Combining the crisp trousers
with the taupe suede shoes helps
him stay fresh and hip.
BLUE APRON
Former venture capitalist Matt
Salzberg and two partners began
delivering unusual ingredients
and easy recipes to your door
for $9.99 in August 2012. With
$8 million from investors they’ve
now reached 300,000 meals a month and
can serve 80% of the U.S. population.
COINBASE
It’s the easiest way to buy and transfer
Bitcoin. With $31 million in backing, it helps
17,000 merchants, including
OkCupid and Reddit, use the
virtual money and has more than
600,000 users. It takes a 1% cut
per transaction on the hyper-
volatile currency.
ESTIMIZE
Crowdsourcing comes to
stock picking. Estimize’s users
estimate companies’ future
earnings, and its 18,000
forecasters have beaten Wall
Street’s seers 69% of the time. It has won
a deal to get its data onto Bloomberg’s
300,000 terminals.
HOMEJOY
Mopping your home for $20 an hour may
not sound lucrative, but brother and sister
Adora and Aaron Cheung already have their
cleaning service operating in 31
cities after raising $40 million
in funding. They pay their
cleaners a fair $15 an hour and
plan to scale up big in 2014.

F I N D O U T W H A T C O R N E R S W E D O N O T C U T , E V E R / 8 7 7 J E T 2 8 0 6 / N E T J E T S . C O M
Tr us t cannot be bought ,
B U T I T C A N B E E A R N E D.
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Relying on the integrity of
another is something that evolves
over time – when there’s a good
reason to in the first place. That’s
what only the highest investment
in safety and the reputable
backing of Berkshire Hathaway
can do for you.
f or bus i nes s , f or f ami l y, f or l i f e

LEADERBOARD
20 | FORBES JANUARY 20, 2014
14
Number of Adam Sandler’s films
that have grossed more
than $100 million domestically. 
U
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A
P
Jef Hyman RETROFIT
A visit to a weight-loss resort inspired Hyman, 45, to start
a service that gives its users personalized programs to
lose 10% to 15% of their weight in 12 months, interacting
with coaches through Skype. He says more than 90% of
his clients have shed an average of 20 pounds within a
year, and half of them are men. Retrofit has raised $15.7 million, and it nearly
tripled its customer base in the past year.
Eric Carreel and Cédric Hutchings
WITHINGS
Five years ago the two Frenchmen launched a Wi-Fi-
enabled scale that sent weight, fat-to-lean ratio and
other data to your smartphone and coached you on
improving your results. Now 54 and 37, they’ve added
other devices, including blood pressure monitors, and they raised
$30 million in a funding round this past summer.
Michael Horvath and
Mark Gainey STRAVA
Horvath, 48, and Gainey, 45, created their app in
2009 to let you track a run or a bike ride with your
smartphone; its biggest draw is that paying mem-
bers get to compete with other local users, as well
as set training goals. In 2013 they doubled their worldwide user base
and tripled their revenue. They’ve raised $25 million in funding.
TO YOUR HEALTH
UP-AND-COMERS
Struggling to get ft after your
holiday binges? These entrepreneurs
want to help you.
How many days do you exercise each week?
ASK 50 BILLIONAIRES HOLLYWOOD
THIN CATS THE MOST OVERPAID ACTORS
Adam Sandler is one of the
few movie stars who can
still demand a paycheck
north of $15 million per
film. But is he worth it? Not
according to our calcula-
tions, based on how much
an actor’s last three movies

earned at the box ofce per
dollar of pay. Jack and Jill,
in which he played twins,
grossed $150 million but
cost so much to make that
it lost Sony money, and
That’s My Boy was a major
bomb. A consolation: 2012’s
animated Hotel Transylva-
nia was the biggest hit of his
career.
28.9%
2 or 3
20.0%
AROUND 5
8.9%
11.1%
31.1%
NEARLY
EVERY DAY
RESPONSES TO AN ANONYMOUS POLL OF
50 MEMBERS OF THE FORBES WORLD’S BILLIONAIRES LIST.
1. ADAM SANDLER
RETURNS
1
$3.40 FOR EVERY
$1 PAID
2. KATHERINE HEIGL $3.50 FOR EVERY $1 PAID
27 Dresses in 2008 made her the new queen of
romantic comedies … until flops like Killers and One
for the Money.
3. REESE WITHERSPOON $3.90 FOR EVERY $1 PAID
She’s in the middle of reinventing her career to
produce her own movies. Expect her to give herself a
big pay cut.
4. NICOLAS CAGE $6.00 FOR EVERY $1 PAID
We didn’t include animated movies; if we did, his
DreamWorks hit, The Croods, would make him
look better.
5. KEVIN JAMES $6.10 FOR EVERY $1 PAID
He was one of the film industry’s most bankable
actors until he flopped in 2012 with Here Comes
the Boom.
6. DENZEL WASHINGTON $8.30 FOR EVERY $1 PAID
As one of Hollywood’s most respected actors he can
demand a huge paycheck, but he doesn’t always win
at the box ofce.
7. STEVE CARELL $10.00 FOR EVERY $1 PAID
He had a major misfire with The Incredible
Burt Wonderstone. It grossed just $22 million
worldwide.
1
AVERAGE PROFIT TO THE STUDIO BASED ON THE COSTS AND REVENUES OF EACH OF THE ACTOR’S
LAST THREE MOVIES IN THE THREE YEARS ENDING JUNE 2013.
1
0

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Stories of Innovation

22 | FORBES JANUARY 20, 2014
LEADERBOARD
MAKING THE EGG OBSOLETE
FORBES, DECEMBER 16, 2013
37,172 VIEWS ON FORBES.COM
Josh Tetrick sees the future in mayonnaise, staf reporter
Ryan Mac reported. The CEO of the San Francisco startup
Hampton Creek is pushing an eggless version that he says is
far healthier and cheaper than the usual slop and is a first step
to a new sustainable food industry. Investors, including Bill
Gates and Peter Thiel, have agreed to the tune of $6 million.
When commenters started weighing in on the article online,
Tetrick jumped right in. “Nothing against San Francisco
or its food, but with everybody dieting, who eats mayon-
naise anymore?” asked Bodo. Tetrick shot back, “Over $11B
in sales last year—and growing.” Gear Mentation wrote, “An
egg substitute is great, as long as it has at least as much bal-
anced protein.” Tetrick’s response: “Plants contribute over
60% of the per capita supply of protein around the world.
Closer to the Hampton Creek HQ (in North America),
animals contribute about 70% of our protein. The plants
we use have it.” Joseph Brunner: “News flash to liberals and
tree huggers: God created eggs over billions of years. It’s
the perfect protein and lutein source. We don’t want your
do-gooder plant goo substitute.” Tetrick: “God also created
plants, I think :).” Zan Shin commented, “Since the energy
input to food energy output is so much lower, and billion-
aires like Gates are helping subsidize startup costs, the
price should also be dramatically lower than real eggs. And
yet nowhere in the article is this mentioned.” Tetrick didn’t
respond to that one. Meanwhile, the Washington Post drew
an almost 400-word article out of a single sentence in the
story. Under the headline AL GORE GOES VEGAN, WITH
LITTLE FANFARE it reported, “Gore’s recent decision to
forgo animal products surfaced as an ofand reference in
a FORBES magazine piece,” and added, “Gore’s ofce did
not immediately respond to a request for comment.”
HOW SMART IS INVESTING
IN ART?
@TODDNEV
Buy art that makes you
happy. That’s the return.
@WINZONLINE
Art has yielded me the high-
est return of all investment
classes. Own over 70 pieces
from three continents … lack
of liquidity, though.
@AMOURCOLETTE
It’s about the art, not invest-
ment. Whatever it may yield
is simply a bonus.
365 WAYS TO GET RICH
ZA-ZAAM FLAH
The problem is where do
you get the little money
that is required to get more
money?
KELVIN LASWAI
366: Shut down your
Facebook and get a job!
PEDRO SOUSA
Plenty of entrepreneurs use
Facebook (and other social
media) to make money. Just
saying.
LUCIEN HOOPER TURNED
$1,000 INTO $42 MILLION
@BILL_SPUR
As soon as I finish my time-
travel machine, I’ll go back
and make this investment.
NHL WOES
FORBES, DECEMBER 16, 2013
11,796 VIEWS ON FORBES.COM
Pro hockey is a great busi-
ness—in Canada. In the
U.S., it’s mostly a money-
loser, staf writer Tom Van
Riper revealed. When a
reader suggested that the
U.S. is a growth market to
be carefully tended, fel-
low commenter K. Webb
pounced: “For the U.S. to
be considered [that] you
would expect there to be
a number of cities capable
of profitably sustaining an
NHL team that currently
don’t have one … . There
aren’t any.” Ronald Pudzs
added, “What I don’t un-
derstand is why the NHL
would expand … in the
southern states before
fully developing hockey
in the north. Teams in
Seattle or Portland would
create so much more ex-
citement.” Susie Crawfish
knew just who to blame:
“NHL Commissioner
Bett man keeps blocking
NHL expansion in Can-
ada. Could you forward
him this article, please?”
FAVORITE
TWEET
@RosabethKanter (on new
GM CEO Mary Barra):
It’s official. Girls
like cars. And car
companies like women
driving them.
ACTIVE CONVERSATION
$349 MILLION
Total amount of venture capital
invested in food tech companies like Hampton Creek
in 2012, up 37% from the year before. 


24 | FORBES JANUARY 20, 2014
THOUGHT LEADERS
PAUL JOHNSON — CURRENT EVENTS
WHETHER OR NOT the agreement
reached with Iran in Geneva last
November prevents Iran from creat-
ing a nuclear weapon, the question
still remains—why did Iran want to
make one in the first place?
Possessing a nuclear bomb isn’t the
same thing as having a nuclear capabil-
ity. Pakistan has had nuclear weapons
for nearly 20 years but has failed to
create an efective means of delivering
them to anything beyond small local
targets. Yet a quarter of the nation’s
armed forces are permanently occu-
pied in protecting these weapons from
theft by domestic and foreign terrorists.
The chief consequence of Pakistan’s
possessing nuclear weapons is that it
has intensified hostile relations with
India. Pakistan has the means to deliv-
er one or two horrific blows to India—
at the cost of its own existence. Having
an A-bomb is a kind of suicide pill for
a second-rate power like Pakistan.
Germany and Japan, two of the
world’s largest and most efcient
economies, have never sought to cre-
ate nuclear weapons. Indeed, both
have made a point of not doing so,
saving them a great deal of money
and simplifying their foreign and
defense policies enormously without
significantly weakening their posi-
tions as major powers. The universal
political consensus in both countries
is that the veto on nuclear weapons
should remain fixed indefinitely.
Other than such active superpowers
as the U.S. and China, it’s hard to think
of any country that could be shown to
benefit from having a nuclear capabil-
ity. A possible exception would be Rus-
sia. Its 8,500 or so atomic warheads and
delivery systems serve to enforce Vladi-
mir Putin’s bullying and muscle-man
displays. Other than its wealth in natu-
ral energy Russia’s economic power is
unimpressive. The country would be
better served by investing its resources
in its defective infrastructure instead
of in the pretense of being a military
superpower. Sadly, such a revolution
in global thinking is inconceivable to
the blinkered men currently in control.
They prefer to retain the means of
destroying any country on the planet
than to create a truly modern econo-
my that would benefit their people.
WISHFUL THINKING
Iran wants nuclear weapons for reasons
that are closer to metaphysics or theol-
ogy than strict military policy. Yet there’s
one flaw in this argument: If Iran stands
to benefit so little from these weapons,
why are its two chief enemies, Israel and
Saudi Arabia, so opposed to and horri-
fied by the pact reached in Geneva?
The obvious answer is that because
of the geographic concentration of
their military, economic and demo-
graphic resources both powers (as
well as others in the region, notably
Qatar) are particularly vulnerable to
a single, devastating blow. In terms
of practical realities it’s doubtful
that Iran could manage to explode a
single nuclear weapon in Israeli or
Saudi airspace any time in the near
future. But Israeli and Saudi mili-
tary planners can’t aford to make a
mistake that could jeopardize their
nations’ survival. Iran’s going nuclear
is as much a psychological problem
as it is a military problem.
What would it take for the Israelis
and the Saudis to feel secure? Iran
would have to formally renounce
its basic foreign policy aims, which
include the destruction of the Jewish
state and the Sunni kingdom, and de-
molish all of its nuclear installations,
including those relating to purely
peaceful energy. That’s a tall order—
and one not likely to ever be met.
However, both the Israelis and the
Saudis are realists and will likely settle
for something less than 100% security.
A major issue is the Geneva agreement,
which is riddled with loopholes that
work in Iran’s favor and depends—to
an unusual degree in international
protocols—on the good faith and per-
sonal word of the signatories.
Since the mullahs took over a
generation ago, Iran has had a long
record of wild threats and bloodthirsty
menacings. It is in roughly the same
position Hitler’s Germany was in at the
end of the 1930s. Nobody trusts Iran,
and striking a deal with its leaders
depends entirely on what you have at
risk. If you are jeopardizing your entire
nation and people—as the Israelis and
the Saudis are—then, short of a mira-
cle, a deal is not going to happen.
DEALING WITH IRAN
IMPOSSIBLE?
PAUL JOHNSON, EMINENT BRITISH HISTORIAN AND AUTHOR; DAVID MALPASS, GLOBAL ECONOMIST, PRESIDENT OF ENCIMA GLOBAL LLC; AMITY SHLAES, DIRECTOR, THE 4% GROWTH
PROJECT, GEORGE W. BUSH INSTITUTE; AND LEE KUAN YEW, FORMER PRIME MINISTER OF SING APORE, ROTATE IN WRITING THIS COLUMN. TO SEE PAST CURRENT EVENTS COLUMNS,
VISIT OUR WEBSITE AT WWW.FORBES.COM/CURRENTEVENTS.
F

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26 | FORBES JANUARY 20, 2014
THOUGHT LEADERS
GEORGE LEEF — CAPITAL FLOWS
IN HIS FIRST ADDRESS to Congress
President Obama argued that the U.S.
needs to put far more people through
college so that our economy will remain
competitive with those of other nations.
He set forth a goal of again having “the
highest proportion of college graduates
in the world.”
Failure to raise our educational at-
tainment level, on the other hand, “is a
prescription for economic decline.”
The President’s thinking is shared
by many others. Economic success,
both individually and at the national
level, tends to correlate with educa-
tion. People (and countries) with little
education are mostly poor, while people
(and countries) with very advanced ed-
ucation are mostly wealthy. Therefore,
it’s tempting to jump to the conclusion
that partaking of more education will
boost an individual’s income and that
a country can increase prosperity by
“investing” more in education.
Resist that temptation, which is
based on fallacious reasoning.
True, education correlates with
prosperity and economic growth, but
one of the crucial lessons of logic is that
correlation does not necessarily imply
causation. We must apply it here.
People who have high intelligence
and ambition often earn college and
advanced degrees. Sometimes that
formal education is important in their
later success, but many say that their
education had very little to do with it.
Conversely, some extremely successful
people dropped out of college or never
attended at all. And as those ridiculous
Occupy Wall Street protests taught us,
huge numbers of college graduates are
unemployed or employed only in jobs
that don’t call for anything more than
basic trainability.
Conclusion: Having a college educa-
tion is neither a necessary nor a suf-
ficient condition for personal success.
Many people prosper without college,
and many who have B.A. degrees or
higher nevertheless struggle in low-
paying jobs, often saddled with high
student loan debts.
What that means for nations is that
it isn’t possible to generate economic
progress just by “investing” in educa-
tion. More seat time, credits and de-
grees don’t automatically translate into
more productive people.
Don’t take my word for it. I rec-
ommend reading the book by British
education professor Alison Wolf, Does
Education Matter? (Penguin Books,
2002). The American education estab-
lishment ignores that book because it
exposes (and this is its subtitle) myths
about education and economic growth.
Wolf shows that when governments
attempt to speed up economic progress
by spending more on formal education,
they mostly squander resources.
One example Wolf gives is Egypt,
which “invested” heavily in higher edu-
cation. That did not lead to rising eco-
nomic output, however, because little of
the students’ learning at their univer-
sities coordinated with the skills and
knowledge needed for entrepreneur-
ship and improving efciency in the
Egyptian economy. Instead, it created a
mass of people with university degrees
who expected high-paying jobs that did
not and could not exist.
The key point is that formal educa-
tion doesn’t necessarily lead to knowl-
edge and skills the individual can use
productively.
That was true in Egypt and is equally
true with many American college grad-
uates. Hordes of academically
weak and disengaged kids have
been lured into college with the
idea that getting a degree—any
degree, from anywhere—means
they’ll enjoy a hefty gain in
earnings. Unfortunately, many
of them coast through without
adding anything to their human
capital. They may have a degree, but
that and $3 will get them a cofee at
Starbucks, where they’re apt to work.
People are good at figuring out
how to maximize their human capital,
but government inducements to take
certain kinds of approved education
leads many to waste time and money.
Instead of boosting the nation’s pro-
ductivity, that depresses it, just as
make-work jobs and needless govern-
ment projects like the famous “bridge
to nowhere” do.
The best education policy: Leave it
to individual choice in a free market.
MORE COLLEGE DOES NOT BEGET
MORE ECONOMIC PROSPERITY
GEORGE LEEF, A FORBES CONTRIBUTOR, IS THE DIRECTOR
OF RESEARCH AT THE JOHN W. POPE CENTER FOR HIGHER
EDUCATION POLICY. F
MORE SEAT TIME,
CREDITS AND DEGREES
DON’T AUTOMATICALLY
TRANSLATE INTO MORE
PRODUCTIVE PEOPLE

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28 | FORBES JANUARY 20, 2014
THOUGHT LEADERS
RICH KARLGAARD — INNOVATION RULES
profit margins, higher stock market
multiples, more loyal customers and
more committed employees. Soft-
edge excellence is the ticket out of
Commodityville.
ƀ Comµanies sliong in lhe soíl edge aie
better prepared to survive a big strate-
gic mistake or cataclysmic disruption
that would sink companies without it.
Loyalty, passion and commitment are
the dividends of a strong soft edge.
ƀ HaidƐedge slienglh is absoIuleIy
necessary to stay alive and compete,
but it provides a fleeting advantage.
The hard edge is easier to clone
than soft-edge strength, especially
as technology and software become
cheaper and more accessible. Apple’s
great design and loyal fan base—soft-
edge advantages—are the essence of
Apple’s enduring appeal more than
its supply chain and capital ef-
ciency, great as those are. What gives
Starbucks its ultimate edge? The
best cofee? No, say people who love
cofee. Cheaper locations? Quite the
opposite. It’s Starbucks’ soft-edge ex-
cellence, which includes trust, brand
and cheerful employees, that creates
a consistently satisfying experience.
ENDURING SUCCESS
SOFT-EDGE EXCELLENCE
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.
A COMMON existential debate exists
within most companies and among
most managers. It’s between the hard
(financial rigor) and soft (sustaining
cultural values) edges. Which side—
hard or soft—should command the
CEO’s attention? There’s a right answer
for every company, and it will vary
from year to year. But from my obser-
vational perch, it’s apparent that far
too many CEOs invest too little time
in their soft edge. In the long run their
companies will pay for this mistake.
There are three main reasons for
this error.
ƀ 1he haid edge is easiei lo quanliíyź
The metrics around hard-edge advan-
tages, such as speed, cost, supply chains,
logistics and capital efciency, are well
understood. The data are relatively easy
to gather, search, analyze and manage.
ƀ SuccessíuI haidƐedge inveslmenl
yields a faster return. Spending
money on technology that trims costs
or cuts time in a supply chain seems
like a no-brainer.
ƀ CEOsŻ C¡OsŻ chieí oµeialing oŬceisŻ
boards of directors and shareholders
speak the language of finance. These
people, the company’s hard-edgers,
are experienced and comfortable with
numbers. To these left-brain busi-
ness titans, the soft edge looks like
the realm of artists, idealists, hippies,
poets, shrinks and do-gooders. This
sets up a Mars versus Venus dynamic.
Does the hard edge, therefore,
have the more convincing case in the
fight for time and money? No, just
the easier case. Let me make the case
for investing some time and money in
your company’s soft edge.
ƀ SoílƐedge alliibulesŻ such as liuslŻ
teamwork, taste and story, lead to
greater brand recognition, higher
F
Dell Computer (now just Dell) was
the fastest-growing American stock in
the 1990s. An investment of $1,000 on
Jan. 1, 1990 was worth nearly $1 mil-
lion by decade’s end. During the 1990s
Dell blew past its competitors Gate-
vayŻ Comµaq and HevIellƐ¡acLaidź
Dell’s hard-edge excellence was an
extension of founder Michael Dell’s
operational and supply-chain focus.
Dell was legendary for its tight con-
trol of costs, mastery of logistics and
speed of delivery, among other flaw-
lessly executed skills. No personal
computer vendor could match Dell’s
oferings of choice, cheap prices, good
enough quaIily and íasl deIiveiyź
Dell’s spotless execution was per-
fect for an era in which IT departments
boughl ¡Cs and Iaµloµs íoi emµIoyeesź
But Dell’s advantages were trumped
by a sudden shift toward smartphones
and tablets and by employees bring-
ing their own technology to work.
Now Dell is a private company. As
such, it has a second shot at greatness,
without shareholders second-guessing
its every wiggle. The early signs are
encouraging. Dell is paying of its loans
ahead of schedule, and employee mo-
rale is on the upswing. That’s a start.
But Dell also needs to rediscover its
soft edge. It needs to enchant us with
new products and services. It needs to
make us care about the company and
its mission and to cheer for its success,
as we once did. Steve Jobs recaptured
Apple’s soft edge. Michael Eisner
made Disney exciting again. Dell can
do the same, and I hope it does.
Dell’s Comeback

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30 | FORBES JANUARY 20, 2014
general to sign a petition against online gam-
bling. He’s hired former New York governor
George Pataki, together with former Arkansas
senator Blanche Lincoln and former Denver
mayor Wellington Webb to lead the lobbying
efort. “There is no reason to put a casino on
everybody’s kitchen table, in the bed of every
young person, whether they are underage or
of age, or on mobile phones,” says Adelson. “I
don’t want people to get addicted.”
So far the markets are betting he’ll lose.
I
n November George Soros, John
Paulson and Leon Cooperman, three
of the most successful hedge fund
managers ever, quietly participated
in a rights ofering and became major
shareholders in Caesars Acquisition Co., a
spinof from casino company Caesars En-
tertainment that has ownership in Caesars’
online gambling assets.
Their stakes—previously unreported—are
all part of an unprecedented bet on the future
of the $60 billion casino business in America,
as states from New Jersey to Delaware and
Nevada legalize a practice that the Depart-
ment of Justice said was illegal just two years
ago. They were joined by billionaire private
equity managers Leon Black, David Bonder-
man, Marc Rowan and Joshua Harris, whose
two respective buyout firms are the biggest
shareholders in Caesars Entertainment and
doubled down by investing a combined $484
million in Caesars’ online gambling vehicle.
Already a roster of billionaires, from
brothers Lorenzo and Frank Fertitta, who
control the Ultimate Fighting Champion-
ship, to MGM Resorts’ biggest shareholder,
billionaire Kirk Kerkorian, are betting big
on online gambling’s comeback.
There’s just one problem with all of this:
Sheldon Adelson. The very week that Cae-
sars’ online gambling play started trading
on the Nasdaq, Adelson, the nation’s fifth-
richest man—and one of the country’s biggest
political donors—thanks to his vast casino
holdings, unleashed an army of lawyers and
lobbyists on Washington and state capitals,
telling FORBES he will “spend whatever it
takes” to stop online gambling in America.
His advocacy group—the Coalition to Stop
Internet Gambling—is already up and run-
ning, and is working to get state attorneys
GAMBLING
The Biggest Bet Ever
BY NATHAN VARDI
George Soros, John Paulson and Leon Cooperman have secretly moved into battle
mode against Sheldon Adelson. The stakes: the future of gambling in America.
STRATEGIES
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JANUARY 20, 2014 FORBES | 31
operations, leaving the then $1.4 billion U.S.
online poker market dominated by two of-
shore companies, PokerStars and Full Tilt
Poker, which profited immensely because of
the high-margin nature of the business. But
federal prosecutors and agents kept inves-
tigating the companies, seizing their funds
and eventually in 2011 shutting down the
websites of the major online poker compa-
nies that cater to the U.S. and indicting their
founders. In the weeks that followed Full Tilt
collapsed amid accusations made by the U.S.
Attorney in Manhattan that it was operat-
ing a Ponzi scheme. PokerStars settled the
civil charges the government filed against it
by paying $731 million, but its founder, Isai
Scheinberg, who is not a U.S. citizen (he’s
Israeli-Canadian), has not come to the U.S. to
face the criminal charges filed against him.
The government also indicted Ayre, a Cana-
dian who has also not returned to the U.S.
Not long after shutting down the ofshore
operators, the Department of Justice re-
versed its long-held opinion that all forms of
online gambling are illegal, unleashing states
that wanted to regulate and tax online gam-
bling except sports betting. Sensing profits,
the billionaires followed.
Why the turnaround? Expensive lobbyists
and lawyers are a big part of the answer. Since
2007, for instance, former New York senator
Alfonse D’Amato has been paid to be chair-
man of the Poker Players Alliance. That Wash-
ington lobby group received funding from
the Interactive Gaming Council, a Vancouver
group backed by firms including Full Tilt
Poker. The American Gaming Association, the
casino industry’s powerful lobby, is now back-
ing online gambling with everything it’s got.
The stakes are huge: Private equity firms
Apollo Global Management and TPG are
still trying to salvage their 2006 LBO of the
company that left it saddled with $28 billion
in debt. They see online gambling as a way to
make up for Caesars’ missing out on Macau,
the biggest casino revolution in decades.
So while Adelson’s limitless money—and
his willingness to spend it—may slow the
momentum for online gambling by blocking
its spread into big states like California and
Florida, the odds of him stopping it or bully-
ing his rivals out of the game are slim. He’s
got lots of chips, but all the other players at
the table do, too.
Shares of Caesars’ online gambling spinof
are up more than 30% from their rights of-
fering price. But while Adelson’s moralistic
stance may be laughable to opponents, given
the potential long-term threat a shift to on-
line gambling poses to his industry, they still
take it seriously. His Las Vegas Sands, with a
recent stock market valuation of $60 billion,
is worth more than all the other U.S. casino
companies combined. Adelson spent some
$100 million unsuccessfully trying to get a
Republican into the White House in 2012.
“What I have heard Adelson say is, ‘I am
very rich, and I don’t like Internet gaming,’
and those things are true,” says Mitch Garber,
CEO of Caesars Acquisition Co. But “Shel-
don’s eyes are closed to the fact that all goods
and services are ultimately going to be pur-
chased on the Internet.”
For years online
gambling in America
belonged to ofshore
companies willing to
take on the federal
government, which
declared all online
gambling to be il-
legal. In 2003 online
poker took of when
Christopher Money-
maker, an unknown
accountant from
Tennessee, qualified
in an online tournament for the main event
at the World Series of Poker and won poker’s
top prize, together with $2.5 million. Online
poker companies became big sponsors of
poker programming on cable outlets like the
Travel Channel and ESPN. By 2005 the com-
pany that ruled the U.S. online poker market,
Gibraltar-based PartyGaming, conducted
an IPO on the London Stock Exchange that
made its American founder, Ruth Parasol,
the nation’s richest self-made woman. A year
later then billionaire Calvin Ayre, who ran a
sports-betting website from Costa Rica, was
featured on FORBES magazine’s cover with
the headline “Catch Me If You Can.”
But in the fall of 2006 Congress passed the
Unlawful Internet Gambling Enforcement
Act (UIGEA), strengthening the Justice De-
partment’s tools to go after online gambling
firms operating in the U.S. Some companies,
like PartyGaming, quickly ceased their U.S.
“Sheldon’s
eyes are
closed to the
fact that all
goods and
services are
going to be
purchased on
the Internet.”
EXECUTIVE
SUMMARY
NET LOSSES
The New Jersey Nets’
move to Brooklyn was a
brilliant financial maneuver,
boosting the team’s value
48% to $530 million, ninth
highest in the NBA. In
Jake Appleman’s Brooklyn
Bounce: The Highs and Lows
of Nets Basketball’s Historic
First Season in the Borough
(Scribner) we see how the
Nets hoped to move away
from “the idea of New
Jersey” and toward making
“Brooklyn” more a state of
mind than a mere spot on
a map. Unfortunately, the
book doesn’t dig very deep.
Instead, Appleman ofers a
game-by-game rehash of
the season. It’s more than
just box scores; the author
weaves in quotes and stories
from his time reporting
on the team—but it adds
little to the up-and-down
narrative fans already know.
Still, for Nets faithful dealing
with the current dif cult
season, it’s at least a return
to a more optimistic time.
—Chris Smith 
F

he explosion of online and cloud-based services
has propelled the data center from a back-offce
data storage and retrieval facility to always-on
critical infrastructure generating corporate revenue.
Today, data centers are massive facilities that require up
to 100 megawatts to operate on a 24/7 basis. Building
a greener data center is good for the planet, but when
done right, it’s also good for business.
Footprints in Carbon
Data centers are facing a number crunch. The industry
uses 2% of all electricity generated worldwide and data
centers inject 259 million metric tons of carbon into the
atmosphere. The cost of power is unpredictably rising,
accounting for 20% to 60% of operating expenses over
the life of a data center. Operators have recently been
challenged by the C-suite to get their arms around the cost
of power. To do this, many have implemented energy-effcient
servers and have started to measure power consumption.
These efforts have not gone unnoticed, but are they suffciently
reducing the cost and carbon footprint of the data center?
According to a study conducted by Nature Climate
Change, in an article entitled “Characteristics of Low-Carbon
Data Centers,” the optimal solution is a data center operating
at low energy, in a low-carbon region.
Location, Location, Location
Deciding where to establish a data center around low
energy consumption and using renewable power sounds
challenging. Verne Global has built a data center campus—
on a decommissioned NATO base in Iceland—that is
powered entirely by hydro, geothermal and onshore wind
renewable sources and is 100% cooled by outside air.
Companies across Europe and North America are start-
ing to fnd this to be an optimal location. Verne Global
CEO Jeff Monroe reports that since opening its first
data center facility module in January 2012, “capacity
doubled by September 2013, and we expect to see this
same exponential growth in 2014, with no slowdown in
sight.” Verne Global provides the facility with the mechanical
and physical security and network connectivity required
for businesses of any size that want to locate data center
servers and infrastructure on its campus.
Yet cost is perhaps the most compelling reason to look
to the North. Because of its renewable sources and unique
location, Landsvirkjun, the National Power Company of
Iceland, and Verne Global can offer 15-year visibility into
energy pricing, something that is unheard of in today’s
global energy markets. BMW recently relocated some of
its high-performance computing applications to Verne’s
campus, reducing the cost of running those applications
by 82% and eliminating 3,570 metric tons from its carbon
emissions.
The electric grid in Iceland is optimized for power-intensive
industries, and Landsvirkjun delivers around 1,400 mega-
watts on a constant basis to international industries located
there. According to Bjorgvin Sigurdsson, EVP of Marketing
and Business Development at Landsvirkjun, “As the size and
complexity of data centers increase, the long-term security
of the power supply offered in Iceland becomes even more
compelling than the environmental qualities of the renewable
power production.”
Verne Global is poised to become a central location
for hosting, disaster recovery and optimized data center
operations. With plenty of power to spare, a geologically
and physically secure location, natural outside cooling
and up to 30 terabytes in fber connectivity to Europe and
North America, the data center industry may eclipse the
Northern Lights as Iceland’s brightest star.
PROMOTION // ENERGY
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Powering
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34 | FORBES JANUARY 20, 2014
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says producer Ram Bergman, who is work-
ing on his fourth movie in Louisiana in eight
years. “The only advantage of L.A. is housing.”
Intended as a way to draw industry to Loui-
siana’s floundering economy, the result is a give-
away program that’s created a gold rush for
producers and sharp locals, but probably won’t
create permanent jobs like a real tax cut might.
Just outside New Orleans producer Herbert
Gains turned part of a sprawling NASA com-
plex once used to build space shuttle fuel tanks
into a 250,000-square-foot shooting facility
where Summit Entertainment recently filmed
I
t’s 86 degrees out in Garyville, La.,
and the crew of the new movie Self-
less is a sweaty mess. While star
Ryan Reynolds and director Tarsem
Singh perfect a shot inside an air-
conditioned set, a small army of technicians
dawdles outside, bitching about the humidity.
Not that anyone is listening. Producers are
more than willing to trade crew discomfort
for buckets of money, and the lucrative 35%
tax credit Louisiana ofers on film budgets is
catnip to them. “If we had filmed it in L.A., we
would have had to film it in way fewer days,”
REINVENTING AMERICA
The Big Easy’s Movie Money Pit
BY DOROTHY POMERANTZ
Louisiana politicians decided handouts would turn the state
into a Tinseltown rival. Now they’re stuck with them.
Trailer king: Andre
Champagne worries
about the fate of the
taxpayer-fed movie
boom in his home state.
STRATEGIES


36 | FORBES JANUARY 20, 2014
long line of Mardi Gras kings and queens,
built a business buying credits from filmmak-
ers and selling them to locals. “The tax incen-
tive program is like a gill net,” says French.
“California is losing jobs. The industry is
moving away because it’s better elsewhere.”
When Louisiana simplified the credit in
2009, making it still easier for producers,
Hollywood arrived en masse. Here’s the way
the credits work now. A producer brings a
$35 million budget, for example, to someone
like French and shows what portion will be
spent in the state. French then buys the tax
credit for roughly 85% of the value the pro-
ducer will eventually earn when his money
is spent. French then resells the tax credit
to someone with a liability, and the produc-
er gets his money up front. Louisiana has no
cap on its tax credits, so if you’re paying Will
Smith $20 million to ap-
pear in your film, you get
a tax credit on that ex-
pense. (Smith then has a
Louisiana tax liability.)
It’s a juicy setup, and
locals know it. Andre
Champagne, owner of
Hollywood Trucks, is
one of the biggest boost-
ers. A local boy who
moved back to Louisi-
ana from Los Angeles in
2007 to help the produc-
ers of a small horror film
navigate the state, he
now has 400 trucks (in-
cluding air-conditioned
“eco-friendly” trailers for Hollywood head-
liners). It’s no surprise he has formed a trade
group that lobbied the legislature to keep the
credits in place. “This fiscal session was the
hardest,” says Champagne. “Like any cou-
pon, you have to determine at what point do
you tighten it. But not now. It would have a
catastrophic efect.” Earlier this year Cham-
pagne convinced Governor Bobby Jindal and
the legislature to retreat from proposed cuts
to the break. Jindal declined to comment to
FORBES.
No matter. He probably knows what Berg-
man, the Selfless producer, will tell you about
the likely fate of Hollywood on the bayou.
“Movie people are nomads,” Bergman says.
“We go where the best deal is.”
the sci-fi flick Ender’s Game. Producers who
once would have needed to bring hundreds of
crew members out from Los Angeles can now
bring just department heads and hire the
rest of the crew locally. In 2012 film and TV
companies spent $717 million in the state, up
85% since 2010. Movies like Twilight: Break-
ing Dawn, Green Lantern and 21 Jump Street
have been filmed there, as were TV shows
American Horror Story and Ravenswood.
Louisiana has been a stand-in for New York,
Texas and Pennsylvania.
According to the Louisiana Department of
Economic Development, putting on this bufet
cost the strapped state treasury $168 million
in 2012. It’s not a break-the-bank number, but
it is the kind of price tag that has led a num-
ber of states, including Arizona, Wisconsin
and Connecticut, to slice programs amid ques-
tions of whether they were
jump-starting an industry
or just fattening filmmak-
ers, with little long-term
gain. In November a new
study called on New York
to rethink its program
after finding that Albany
gave away $374 million in
film tax credits in 2013—
21.5% of all tax credits of-
fered by the state.
“In order for this to
make sense, you have to
be building an industry
that will eventually stand
on its own,” says Susan
Christopherson, a pro-
fessor of city planning at Cornell University,
who has been studying what the folks in Los
Angeles call “runaway production” since the
1980s. “Otherwise you’re just creating anoth-
er division of the public sector.”
That’s exactly what’s happening in Loui-
siana. The state’s plan to bribe moviemak-
ers dates back to 2002. The initial program
ofered up to a 35% tax credit but was rid-
dled with caveats. Ray producer Stuart Ben-
jamin whined about the program in the press
in 2003, saying he was lured to the state with
promises he could easily sell his credits to lo-
cals, which proved dif cult under the system
(though he was eventually able to sell them).
Clever money men like Will French saw
an opportunity. French, who comes from a
REINVENTING AMERICA STRATEGIES
WHERE THE JOBS ARE
THERE’S LITTLE CORRELATION BETWEEN 
TAX BREAKS AND LONG-TERM ENTERTAIN-
MENT-INDUSTRY EMPLOYMENT.
ENTERTAINMENT TAX
STATE JOBS INCENTIVES
CALIFORNIA  191,100  SMALL
NEW YORK  91,600  LARGE
TEXAS  39,100  MEDIUM
FLORIDA  27,500  MEDIUM
GEORGIA  22,800  LARGE
ILLINOIS  21,000  LARGE
PENNSYLVANIA  16,400  LARGE
MICHIGAN  14,300  LARGE
VIRGINIA  13,700  SMALL
OHIO  12,900  LARGE
F
TRENDING
What the 53 million
Forbes.com users are talking
about. For a deeper dive go
to FORBES.COM/BUSINESS
PERSON
MARY BARRA
The Detroit auto show
should be a memorable
coming-out party for GM’s
first female CEO, who will
have a slew of innovative
new products to showcase.
COMPANY
BEST BUY
Left for dead not long ago,
the electronics retailer got
up of the mat in surprising
fashion last year, becoming
one of the best-performing
stocks of 2013. Now to keep
the rally going.
FLASHPOINT
ADIZ
China’s new East China Sea
Air Defense Identification
Zone is turning into the
world’s most combustible
hot spot, with repercussions
for economies across Asia. 
SOURCE: MPAA.

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bmoharris.com/leadership

38 | FORBES JANUARY 20, 2014
D
r. Julius Guccione, a 50-year-
old cardiac researcher at the
University of California, San
Francisco, was mesmerized
the first time he saw a virtual
image of a beating heart. He’d been using
math models to research the heart his entire
career, but now Dassault Systèmes, a French
design and simulation software company, had
created a complete, three-dimensional view
of the electrical impulses and muscle-fiber
contractions that enable the human heart to
perform its magic.
If it were a model of his own heart, Guc-
cione would have seen it racing. “This is
something doctors have been trying to get to
since before the 1900s,” he said. The advent
of technologies like magnetic resonance
imaging and echocardiography, he said, have
been a “dream come true” for measuring
abnormal motion in a patient’s heart. But by
modeling a beating heart in 3-D, the hope is
that one day doctors will be able to diag-
nose and treat patients based on the unique
forces at work within each patient and even
rehearse open-heart surgery on an individual
before opening up his chest.
“The heart isn’t just made of tissue; it also
has an electrical current. I compare it to a
machine,” says Dassault Systèmes Chief Ex-
ecutive Bernard Charlès, whose company has
been creating digital mock-ups of machines
like airplanes and automobiles for more than
30 years. With $2.8 billion in revenue and
11,000 employees (3,000 in North America),
it’s the leader in the $16 billion market for
TECHNOLOGY
SOFTWARE
Inside a Beating
Silicon Heart
BY JOANN MULLER
Designers have used computers for years
to build elaborate machines. But what
about modeling complex experiences?
Dassault Systèmes is leading the charge.

JANUARY 20, 2014 FORBES | 39
product life-cycle management (PLM) soft-
ware, which engineers at companies such as
Boeing and Gap use to manage the develop-
ment of everything from jumbo jets to jeans,
saving both time and money.
As the Living Heart project suggests,
Charlès, 56, is steering the company in new
directions as part of a plan to double its rev-
enue in five years. Instead of just peddling
software for designers and manufacturers,
Dassault Systèmes is recasting itself as a
“3D experience company” whose simula-
tion technology can be applied to just about
anything.
Last year it combined its nine software
brands, including Catia, Simulia and Eno-
via, into one 3D Experience Platform, which
clients can use to model and simulate not
only the way a product is designed or manu-
factured but even how it is bought, feels or
is used. Charlès’ favorite example: a woman
with an armful of groceries who swings her
leg under the bumper of her Ford SUV, caus-
ing the liftgate to open automatically. Catia
software helped realize that “experience.”
Dassault Systèmes has already branched
out beyond aerospace and automotive design
to a total of 12 sectors, including life sciences,
architecture and construction, energy and
consumer packaged goods. Even some fash-
ion designers are using Dassault Systèmes’
3-D tools to design their collections (though
they don’t like to admit it, Charlès says).
SHoP Architects and its virtual con-
struction arm, SHoP Construction, are
known for pushing the limits of technology
on projects like the new Barclays Center
in Brooklyn, which features an undulat-
ing latticework “wrapper” made of 12,000
unique prefabricated, preweathered steel
panels.
SHoP used Dassault Systèmes’ 3D Ex-
perience software to transform the way
designers and engineers worked together
on the project, streamlining the process by
creating a single model that all teams could
work from, including plumbers, electri-
cians and carpenters. The 3-D model logged
changes made by any of the construction
teams in real time, so every team, regardless
of trade, was always working from the most
current information. That helped reduce
material costs by 25%.
SHoP is now testing a cloud-based ver-
Dassault Systèmes
and UCSF
collaborated on this
3-D simulation of
a beating human
heart. One day they
hope to model each
individual patient’s
heart before surgery.

40 | FORBES JANUARY 20, 2014
patient’s own heart as detected by an MRI
or echocardiogram. If a portion of the heart
was damaged after a heart attack, for in-
stance, they would observe how the physics
had changed and simulate various treatment
options to ensure proper blood flow.
Dassault Systèmes was established in 1981
as a spinof from France’s Dassault Aviation,
the privately held manufacturer of Falcon
jets founded in 1929 by Marcel Dassault.
At the time it was working on software for
wind-tunnel testing, which naturally led to
similar work for the auto industry. It sold its
software under the Catia brand, through a
distribution agreement with IBM.
Over the years Dassault Systèmes added
to its PLM software portfolio through a
series of acquisitions, including Enovia and
SolidWorks. The company went public in
1996, though 41.5% is still privately held by
Dassault Group. In 2010 it acquired IBM’s
PLM sales force, taking responsibility for its
own growth. Revenue has been growing 10%
a year, outpacing competitors like Siemens
PLM, Autodesk and PTC. And Dassault
Systèmes’ stock, like its rivals’, has been on
a tear, up 175% since 2009, as investors look
to jump on the 3-D printing bandwagon.
Dassault Systèmes is ideally positioned. As
Charlès says, “If you want to print a letter,
you have to write it first.”
Today almost 70% of Dassault Systèmes’
$2.8 billion in revenue is recurring from soft-
ware licenses and maintenance, providing
a cushion to explore new markets. Despite
a third-quarter slowdown attributed to a
weak economy, Charlès is expecting sales
to bounce back in the fourth quarter and in
2014. The launch of its cloud-based software,
Lighthouse, early next year should open new
markets and spur companies to speed up
their 3-D modeling eforts, he believes.
Years ago manufacturers and their ven-
dors were all located in the same village
because they needed to be, says Charlès. But
in an age of virtual design and cloud collabo-
ration, “the world of the making” is changing
rapidly, he says. “Innovation will still come
from scientific breakthroughs, yes, but also
from social trends and virtualization, which
have opened us to ideas we never thought
were possible before. The frontiers of indus-
try are changing because the nature of col-
laboration is changing.”
sion of Dassault Systèmes’ technology to
manage its next project—modular, prefabri-
cated houses to replace homes lost in Hur-
ricane Sandy. By sharing 3-D design data
directly with the Long Island factory that
will build the housing modules, SHoP says it
will be able to erect a finished home in just
48 hours, instead of the customary four to
six months.
At the Museum of Fine Arts in Boston,
Harvard professor Peter Der Manuelian is
converting its impressive collection of pho-
tos, diaries, drawings and documents from
Egypt’s Giza pyramids into 3-D models so he
can take students inside the tombs for a real-
istic view of the Fourth Dynasty. Armed with
that rich data and a 3-D printer, he’s even re-
creating ancient Egyptian artifacts that had
long since vanished.
“If you can imagine it, you can simulate
it,” says Steve Levine, chief strategy of cer
of Dassault Systèmes’ Simulia, who heads up
the Living Heart project. He admits there’s
a chicken-and-egg problem: You need to
start with good data in order to produce an
accurate simulation. In the case of the Liv-
ing Heart project, Dassault Systèmes lifted
geometric data about the electrical and
mechanical properties of the heart from
about a dozen diferent sources—academic
researchers, cardiologists, medical device
companies and regulators—then combined it
into one massive database. “People had been
working on diferent pieces of this in great
detail, but no one has attempted to work it
together,” Levine said.
Matching up data about the heart’s
electrical impulses with its mechanical
ones—called coupled multiphysics—was a
meticulous job. Using a standard 48-pro-
cessor workstation, Dassault Systèmes’
scientists needed about four hours to
calculate the precise biomechanical forces of
a single heartbeat, tracking how electricity
is conducted through every strand of muscle
fiber to replicate the true motion of a human
heart. Once they accurately described the
physics, the model operated on its own.
“We do nothing more than pulse it the way
nature does,” said Levine.
The next step is personalized 3-D heart
models. Doctors would start with the Das-
sault Systèmes model of a normal heartbeat,
then modify it to reflect the behavior of the
SOFTWARE TECHNOLOGY
J
E
R
O
M
E

F
A
V
R
E

/

B
L
O
O
M
B
E
R
G
TRENDING
What the 53 million
Forbes.com users
are talking about.
For a deeper dive go to
FORBES.COM/TECHNOLOGY
PERSON
ANDY RUBIN
The co-inventor of Android
has just been put in charge
of Google’s new robotics
division. If we’re all enslaved
by Skynet in 20 years,
blame him.
COMPANY
FACEBOOK
Big tweaks to your feed:
Video ads are now showing
up, and a new algorithm is
supposed to chase away junk
stories. Doth Zuck tweak
too much?
IDEA
WEARABLES
The gadget hype cycle is
peaking for smart watches,
bracelets and glasses.
Gartner sees the market
tripling to $7 billion by 2018;
we don’t buy the buzz. 
F

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 artificial 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
fibrillation, a type of irregular heartbeat, not caused by a heart valve problem.
Ask your doctor if ELIQUIS is right for you.


©2013 Bristol-Myers Squibb Company
432US13BR01723-02-01 09/13
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-inflammatory 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
artificial 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 fibrillation.
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. Refill 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
Pfizer Inc
New York, New York 10017 USA
COUMADIN
®
is a trademark of Bristol-Myers Squibb
Pharma Company.
/
IMPORTANT
FACTS
The information below does not take the place of talking with your healthcare professional. Only your healthcare professional knows
the specifics of your condition and how ELIQUIS
®
may fit into your overall therapy. Talk to your healthcare professional if you have any
questions about ELIQUIS (pronounced ELL eh kwiss).
© 2013 Bristol-Myers Squibb Company
ELIQUIS and the ELIQUIS logo are trademarks of Bristol-Myers Squibb Company.
Based on 1289808 / 1298500 / 1289807 / 1295958
December 2012
432US13CBS03602
This independent, non-profit organization provides assistance to qualifying patients with financial hardship who
generally have no prescription insurance. Contact 1-800-736-0003 or visit www.bmspaf.org for more information.

JANUARY 20, 2014 FORBES | 43
Q
I
L
A
I

S
H
E
N

F
O
R

F
O
R
B
E
S
TECHNOLOGY
CRYPTOCURRENCY
China Bites
Into Bitcoin
BY KASHMIR HILL
A speculative frenzy turned
Bobby Lee’s BTC China into
the world’s biggest Bitcoin
exchange. Then Beijing dropped
the boom. Easy come, easy go.
His investors hope BTC
China CEO Bobby Lee
has the gravitas to make
the case for Bitcoin to
Beijing regulators.
a global, peer-to-peer network of computers.
Transactions are trackable, but the parties to
each transaction are not. Bitcoin has attracted
entrepreneurs and investors excited about its
legitimate use: cutting out the middlemen in
online payments. In December venture capital
firm Andreessen Horowitz placed the biggest
Bitcoin bet so far with a $25 million invest-
ment in San Francisco’s Coinbase, a platform
for buying, selling and storing Bitcoins in the
U.S. “As the world becomes more digital, pay-
ing physically with bills, gold or credit cards
will seem archaic. Everyone will have Bit-
coins,” says BTC China CEO Bobby Lee.
But China’s actions over the past weeks
have put BTC China’s future in doubt. After
Chinese regulators held a closed-door meet-
ing to warn financial companies against
working with exchanges, BTC China was
swiftly abandoned by two payment proces-
sors. “There are 300 payment processors in
China. We’re going to go down the list and
find one that will work with us,” says an opti-
mistic Lee. He doesn’t think the government
is trying to put him out of business but rather
put the screws on Bitcoin to cut down on the
rampant speculation. “They haven’t declared
exchanges illegal. That gives us room to ma-
B
itcoins were worth nothing in
2009, when the digital crypto-
currency was first minted on the
computer of its mysterious cre-
ator, Satoshi Nakamoto, who
claimed to live in Japan.
Four years later the value of one Bitcoin
surpassed $1,100, thanks in large part to a
surge in speculative interest from China. A
little-known Shanghai company called BTC
China met the demand and quickly became
the world’s largest Bitcoin exchange, with
more than 100,000 of the virtual coins, or
$100 million, traded on a single day, near-
ly double the market share of its closest com-
petitor, Japan’s Mt. Gox.
BTC China attracted headlines and a
$5 million investment in the fall from Silicon
Valley’s Lightspeed Venture Partners as well
as its China arm. But its rapid growth, and
that of Bitcoin, also attracted the attention of
the Chinese government.
Unwanted attention, as it turned out. In
December the People’s Bank of China de-
creed that merchants may not accept Bitcoin
and forbade banks and payment processors
from converting Bitcoin into yuan. The price
of Bitcoin fell below $500 in response.
Bitcoin is still widely embraced by tech-
nophiles and libertarians (and porn and
pot-dealing websites) because the curren-
cy is all digital, easily transported across bor-
ders and resistant to state controls. A Bitcoin
is “mined” on privately owned, specialized
computing equipment and passed around by

44 | FORBES JANUARY 20, 2014
landed the round from Lightspeed in Septem-
ber, they eliminated their fee. That kicked of
a bidding frenzy fueled also by the free Bit-
coin p.r. that came when the FBI took down
Bitcoin-only drug site Silk Road and Baidu an-
nounced it would accept Bitcoin for securi-
ty services, plus the positive buzz around U.S.
Senate hearings on the digital currency.
But then the People’s Bank of China, re-
sponding to what it says was a wave of con-
sumer concerns, declared in December that
Bitcoin wasn’t a recognized currency and
shouldn’t be used in the market, prompting
Baidu and other Chinese firms to stop tak-
ing it as payment. As the extent of the real-
world ban became clear, the price of a Bitcoin
dropped to $345 on BTC China.
Lee initially saw the declaration as just a
speed bump. Chinese citizens were still free to
trade Bitcoin. BTC China stayed on the good
side of the government’s concerns about mon-
ey-laundering by asking customers for of -
cial identification. BTC also reinstated trading
fees to cut down on the frenzy. But days later
the government crushed hopes of a thriving
trading business when it unof cially barred
payment processors from working with Bit-
coin exchanges. Suddenly BTC China and
others would no longer be able to move their
customers’ funds from yuan to Bitcoin and
back—which is what exchanges exist to do.
“We’re reading the tea leaves,” says Shanghai
Bitcoin entrepreneur Jack Wang. “But it looks
like they’re going to squeeze the exchanges
until they’re not able to operate.”
China’s move is not without precedent.
Eleven years ago Chinese Web service Tencent
created a virtual currency called Q Coin for
use in games. It became increasingly valuable
of ine and started trading on exchanges along
with renminbi and gold. The government de-
clared such use illegal in 2007, sending its real
world value crashing to nothing.
China is still letting people play with Bit-
coin in its country, but by cutting of ways to
convert it to real money, it is turning it into
the digital Monopoly money that skeptics
have always dismissed it as being. “If neces-
sary, we’ll go into other Bitcoin services,” says
Lee. The company plans to launch a secure
online Bitcoin wallet called Picasso at the
end of December. “This is not the end. It may
be the end of a chapter, but it’s not the end of
our company.”
neuver, so there’s still hope.”
Lightspeed’s Jeremy Liew is keeping a dis-
tant focus. “Anyone investing in Bitcoin com-
panies and Bitcoin specifically should be
doing so with the expectation that there will
be a lot of volatility driven by regulatory an-
nouncements. We invest over 5- to 10-year
horizons, not over two-week horizons,” says
Liew. “For Bitcoin to be credible, we need ex-
ecutives who have the gravitas to make its
case to regulators. That’s Bobby.”
Lee, 38, was born in the Ivory Coast to
parents who had moved there from China to
set up a flip-flop factory. He was sent to an
elite boarding school in the States, graduat-
ed from Stanford and spent eight years as an
engineer at Yahoo in California. He moved
to China in 2006 to work as an engineer at
EMC. In 2011 he became Wal-Mart’s chief
technology of cer in China, charged with
helping to build its commerce site.
Lee first heard about Bitcoin in the spring
of 2011 while visiting his family in Califor-
nia. Lee’s brother, Charles, was using some
of his computer equipment to mine Bitcoin
at home. Lee thought he would do the same
back in China and bought a bunch of graph-
ics cards from his brother. He started mining
in July, the same month he started at Wal-
Mart. Neither lasted long.
“It was a hot summer, and the computers
created a lot of heat,” says Lee. “My wife said
it was too noisy and hot, and so I turned it of
in October.” He mined 25 coins, which struck
him as a “waste” because they were worth
just $300 total at the time and he had spent
$1,000 on mining gear.
When Wal-Mart decided to partner with
an existing e-commerce site in 2012 rather
than build its own, Lee found himself jobless.
His mind returned to those Bitcoins gather-
ing digital dust on his computer. His broth-
er had founded a competing cryptocurren-
cy called Litecoin, but Lee wanted to focus
on bringing Bitcoin to China. BTC China had
popped up two years earlier as the country’s
first site for Bitcoin trading. “It was just two
guys working part-time on it,” says Lee. They
were charging a 0.3% trading fee, but seeing
just a few hundred trades per day. Lee sought
out its cofounders to convince them it could
be bigger. Lee became CEO in April.
They relaunched the site in June and went
out looking for venture capital. When they
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ROAMING EMPIRE

F

EDUCATION FOR LIFE

46 | FORBES JANUARY 20, 2014
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sending hundreds of individual e-mails, manag-
ing replies and organizing food preferences for
meals—while trying to practice law at Coopers
& Lybrand.
Aggarwal raised $700,000-plus in seed fund-
ing from angels and friends, his own pocket
and multiple credit cards. Linking up with
Chuck Ghoorah, David Quattrone and Dwayne
Sye—Cvent’s executive vice president of sales
and marketing, CTO and CIO, a team still in
place—he launched a simple event-registration
company to help businesses send digital invites
to conferences and meetings.
It was late 1999, and the tech boom was near-
ing its peak. Competitors like Evite.com and
Mambo.com were getting funded big-time. “We
decided to jump in,” says Aggarwal, now 44.
Cvent raised $17 million within a year, mostly
from Aggarwal’s Indian CEO contacts. He
thought he’d take the industry by storm.
Within eight months Cvent grew from 5 em-
ployees to 125. “We blew through that $17 million
and were down to $400,000 in the bank—and
H
is 15th high school reunion
should have been a boastfest.
Reggie Aggarwal had been
class president and had gone
on to become a lawyer and a
hotshot entrepreneur. Instead, he had to admit
to old acquaintances that his company was a
joke in the industry—and that he was broke,
owed money to investors and had moved back
in with his parents. “I was kind of the Indian
George Costanza,” he says.
Eleven years on it’s a diferent story. Cvent,
the McLean, Va. event registration and manage-
ment company Aggarwal launched in 1999, has
roared back from the dead. Last August it went
public on the NYSE, raising $117 million; its
recent market cap was nearly $1.6 billion. Over
the most recent four quarters the company lost
$1.3 million on $104 million in revenue. Custom-
ers like Wal-Mart, Siemens and WellPoint use
the cloud-based platform to search, field bids,
book reservations and register attendees for
more than 200,000 venues in 90 countries. The
platform is free; registration costs a small fee.
Cvent’s mobile app for managing and navigating
conferences runs from $6,000 to $10,000. It also
charges venues to advertise on the platform’s
search pages.
Second chances are the stuf of Steve Jobs and
Michael Dell. But Rajeev K. Aggarwal? As an en-
trepreneur, he says, “you just don’t know how to
give up.” By all rights he probably should have.
Born in Kansas and raised in northern Vir-
ginia by parents who’d emigrated from India,
Aggarwal majored in finance at the University
of Virginia and got a law degree from George-
town. Cvent grew out of his frustration trying
to organize gatherings for the Indian CEO High
Tech Council, his networking group. He was
DIGITAL PLATFORMS
Second Life
BY KARSTEN STRAUSS
Reggie Aggarwal almost lost his
event platform to bad luck and
overspending. Here’s how he
clawed his way past $1 billion.
“I was kind of the Indian
George Costanza”:
Pride—and shame at
disappointing investors
—drove Aggarwal.
ENTREPRENEURS

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DIGITAL PLATFORMS
48 | FORBES JANUARY 20, 2014
sees sales, client services and product devel-
opment. An exchange program lets American
employees spend six weeks in Delhi and Indian
workers hang out in McLean.
Another comeback lesson was learning to
focus more on its hires. After Cvent started
turning a corner in 2003, it began recruit-
ing new college grads—kids who are hungry,
energetic, tech-savvy, cheap and relative blank
slates. “What you tell them they’ll believe and
think that’s the only way to do it,” Aggarwal ex-
plains. New employees—like the 100 brought on
last year from the likes of the University of Vir-
ginia, Virginia Tech, James Madison University,
Penn State and Duke—attend an eight-week
boot camp at Cvent University.
With the business stabilized, Aggarwal start-
ed thinking big again. He bulked up the sales
and marketing team—600 of his current 1,400
employees—and pivoted beyond the middle
market, nabbing clients like Yahoo, Marriott,
Visa and AARP. Between 2008 and 2012, Cvent
claims, its revenue compounded at an annual
rate of 34%; $5 billion in transactions took place
via its system last year. Its closest (and larger)
competitor? Active Network of San Diego,
which lost $39 million on $450 million in rev-
enue over the latest four quarters—and recently
agreed to be acquired by a private equity firm.
In 2011 Aggarwal went to investors again,
raising $136 million mostly to pay of his long-
sufering original backers. Insight Venture Part-
ners provided half the capital in the round and
declined to cash out in last summer’s IPO. “You
had a big category, it was early in the category,
and they were the dominant player,” says Jef
Lieberman, a managing director at Insight. “It’s
like a sales and marketing machine.”
With a lot of elbow room. “We estimate that
$103 billion is spent at hotels from meetings
and events,” says analyst Debbie Wong at Frost
& Sullivan. Cvent hopes to scoop up more busi-
ness by acquiring mobile app developers Seed
Labs and CrowdCompass, as well as ticketing
company TicketMob. It opened a London of ce
last July; a Frankfurt location is on the way.
Expansion is certainly squeezing margins.
“This is the first time in a very long time that
we’re taking our profitability down to go after
market share,” says Aggarwal. That’s okay; his
investors expect bigger things. First investor
Sanju Bansal has put in a total $2.3 million over
the years and estimates he has seen a 30 times
return. He’s letting his money ride.
then that perfect storm hit: Sept. 11, the dot-com
meltdown and reality,” says Aggarwal. “We’d
only built a $1.5 million revenue company.”
Business stalled. Clients began canceling
events, and new prospects felt solicitation in
the wake of such a tragedy was in poor taste.
The company was burning through $1.1 million
a month. Cutting 100 stafers, along with all
nonessential spending, served as a makeshift
tourniquet. Sanju Bansal, the company’s first in-
vestor and a director, says the board wondered
whether Aggarwal was fit to lead. His passion
helped him keep his job. “The people that were
left, they weren’t loyal to just the idea—they
were loyal to Reggie,” Bansal recalls.
Ghoorah was constantly cold-calling, while
CFO Thomas Kramer chased down invoices.
Aggarwal took no salary and personally signed
for Cvent’s of ce lease for a lower rent—shack-
ling his own credit rating to the survival of the
company. “It was the toughest time in my life
because I’d never been knocked of my horse
like that,” says Aggarwal, a prolific hand-talker.
He was ashamed of
letting down his inves-
tors, most of whom
were friends and close
associates.
Worse, he says, was
having to jettison his
dream of fast growth
and market domi-
nance. Cvent had to
refocus on scoring cli-
ents in the midmarket
range, while remain-
ing cash-flow-positive.
“We knew we had
something here; we
just went about it the
wrong way,” says Ghoorah.
Cheap became the new religion—still widely
practiced today. All employees fly coach and
share hotel rooms. The IT staf is skeletal. Ag-
garwal finally got around to hiring an assistant
two years ago—about when he took on a com-
pany lawyer. The on-site cofee barista came
aboard only after a test run in Cvent’s New Delhi
of ce reduced employees’ going out for java by
over 80%. “It’s in our culture,” says Aggarwal.
Cvent planted a flag in India back in 2002,
largely to cut costs and handle support services.
It’s done much more than that, growing from
fewer than 10 employees to 800; it now over-
ENTREPRENEURS
H
A
L

M
A
Y
F
O
R
T
H
He took no
salary and
personally
signed for the
rent. “It was
the toughest
time in my
life. I’d never
been knocked
of my horse
like that.”
FOUNDERS’
TOOLBOX
EXIT SIGNS
On the heels of a sizzling IPO
market, there’s more hope for
entrepreneurial paydays: a robust
M&A market for U.S. deals under
$1 billion. As of Dec. 17 there
were 2,410 deals, valued at $287
billion—flat compared with
the same period a year earlier
but higher prices for 9% fewer
acquisitions and a larger portion
of activity worldwide. Winners:
energy and real estate. Next year
looks even better, says Thomson
Reuters analyst Matthew Toole,
who compiled the numbers.
Based on a recent survey, he
adds, “Corporate dealmakers
see an increase of 17% for M&A,
driven by financials/real estate,
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50 | FORBES JANUARY 20, 2014
M
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the target, pull the trigger and … nothing. I’ve
fumbled and moved the weapon of-target.
One more try and the rifle fires itself with-
out warning the precise moment it has calcu-
lated perfect alignment. A loud metallic clang
registers a hit. “Once you get these guns into
someone’s hands,” says Sutton, smiling wide-
ly, “they really sell themselves.”
Not always. In its first year of operation
TrackingPoint was hit with quality snafus
that set it back—and caused a ruckus in the
C-suite. The Pflugerville, Tex. company says
it’s fixed all the problems. “Reliability and ac-
curacy are what this company stands for,”
says acting CEO John Lupher, 50, who had
to step into that role in November. As the guy
who designed the gun, it was his game to win
or lose.
Backed by $35 million in funding from
founder John McHale, his buddies and Aus-
tin Ventures, TrackingPoint started 2013 with
a bang. When it released its three versions of
the gun, priced from $22,500 to $27,500, vid-
eos went viral online—four YouTube clips
have a million or so views—pushed by rich
fanboys who wanted one (Governor Rick
Perry is a big fan) and an angry outburst from
the antigun crowd.
C
ustomers who want to test-drive
TrackingPoint’s Precision Guid-
ed Firearm often come to an out-
door firing range in Texas Hill
Country with Chase Sutton. A
bearded, 300-pound wildlife biologist and
safari guide turned luxury-gun salesman, Sut-
ton helps average Joes become G.I. Joes with
just a 20-minute lecture and a demo. Peer
through the scope and line up a small white
dot (the center of the crosshairs) onto an or-
ange disc 1,000 yards away. Then push a red
button to lock the gun’s guidance system on
WEAPONS
Ready, Fire, Aim
BY ABRAM BROWN
TrackingPoint makes a $27,500 rife so smart that it
can’t miss. So why has the company been misfring?
Call of duty: Tech chief
John Lupher had to step
in as acting CEO.
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WEAPONS
52 | FORBES JANUARY 20, 2014
Pentagon procurement, TrackingPoint decid-
ed to look elsewhere—mainly to a population
of 13.7 million hunters.
Many discovered the gun through the videos,
gun blogs and the mainstream press. To show
of the line, TrackingPoint’s three salesmen
toured gun and safari clubs throughout Texas
(half of whose 10 million households have fire-
arms), as well as Las Vegas for the SHOT Show
and a charity gun event at the vineyard of Nas-
car tycoon Richard Childress. Other advertising
venues weren’t an option: Google, for example,
won’t put firearms on its AdWords program.
An interested customer starts by filling
out an online form. More than 2,000 have ap-
plied, the tiniest fraction of the $4 billion
commercial gun and ammo industry in the
U.S. Roughly half of all applicants get con-
sidered, once the sales guys do Google and
Trulia searches on prospective customers
and track them through public records. “If
someone has a $600,000 house and a BMW,
they’re a good bet,” says Sutton. Less af uent
buyers get entered into a database for later
consideration, when TrackingPoint ofers
cheaper models. Once a buyer sends payment
the company runs a background check and
ships the gun to a licensed dealer for pickup.
Problems with the rifles surfaced last fall,
as customers sent in videos documenting
their complaints. Most had to do with a fail-
ure of accuracy in extreme hot and cold tem-
peratures. After just six months as CEO, Jason
Schauble, a Remington vice president hand-
picked by McHale, was out of a job, replaced
by Lupher. He revamped the clean room and
instructed designers to tweak the optical sys-
tem by adding a diferent prism that allows
greater temperature stability. That seems to
have solved it. Now one in 20 products is test-
ed before shipping, up from one in 100.
What’s next? Vann Hasty, who oversees
product development, is debuting a smart
semiautomatic rifle at a lower price point in
the first quarter. The ideal customer: deer
and varmint hunters. But Hasty, plucked from
Amazon’s top-secret design labs, has anoth-
er pie-in-the-sky notion. A multiblade drone
sits in his of ce, the basis, perhaps, of an air-
borne tool that can relay video of game on the
ground below to a hunter’s iPad.
All that futuristic stuf sounds cool. First,
though, TrackingPoint needs to get past all
those misfires.
But the launch was anything but smooth.
TrackingPoint had a tough time deciding its
target customer—the military or the af uent
enthusiast? That, coupled with the product
flaws, caused undisclosed losses last year on
estimated revenue of $7 million.
TrackingPoint was created from a missed
opportunity—a missed shot, actually. McHale,
58, was spending time hunting, having sold
four high-speed network and cybersecuri-
ty companies to the likes of Cisco and the old
Compaq. On a trip five years ago to Tanzania
he had stalked a Thomson’s gazelle and got
within 350 yards of it, close enough to shoot.
“My central nervous system just couldn’t
hold the gun steady enough,” he says. He
missed and spent the rest of the safari stew-
ing about it. When he got home he looked up
a tech guy in Austin.
Lupher’s electronics-design firm had de-
signed software for early versions of Siemens’
cordless handsets and Motorola’s DVR box.
Assuming McHale wanted a supergun just for
his own use, Lupher designed a prototype (a
Remington hunting rifle hooked into a lap-
top). But it came together so well that the two
agreed there might be a business in it. Lupher
left his shop, took 11 employees with him and
threw in with McHale, figuring it would pay
of: “John’s sold over a billion dollars’ worth
of companies he has personally founded.”
What distinguishes the gun is its scope
and trigger mechanism. TrackingPoint
doesn’t make the actual .300 Winchester
Magnum rifle; it comes from Surgeon Rifles
of Prague, Okla. The scope has a laser range-
finder that gauges distances; gyroscopes, an
accelerometer and a magnetometer measure
how much you’re moving the gun. Zoom in
through a 14.6-megapixel camera, and once
you select a target, fixed or otherwise (there’s
a stationary mode and a mover mode), a
digital- signal processor calculates an equa-
tion 54 times a second to find the best time to
fire. Built-in, Linux-based Wi-Fi means you
can livestream a hunt onto your iPad.
But who would buy such a sophisticat-
ed and expensive toy? “We didn’t know
exactly where the market for this technolo-
gy was,” says Lupher. A demo for troops at
Fort Benning brought some interest. The U.S.
Army has an outstanding order for a few ri-
fles. (The military declined to comment.) But
given the endless stretch of time required for
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54 | FORBES JANUARY 20, 2014
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both individuals and big employers, claims to
have seen one balance just shy of $1 million.
To get the most out of this tax shelter you
have to run up medical bills over the next sev-
eral decades that, cumulatively, exceed your
account balance. You also have to be aware of
a peculiar rule that says you can make retro-
active claims, explains Eric Remjeske, whose
Minneapolis firm, Devenir, helps HSA provid-
ers design investment menus.
Let’s say you get a $1,000 doctor bill
you owe because you haven’t met the steep
deductible in your insurance plan. Keep
your HSA debit card in your wallet, advis-
es Remjeske. Whip out another credit card,
maybe one with reward points, whose bal-
ance you scrupulously pay in full every
month, for the doctor.
Now what? Put the doctor bill in a shoe
box until you’re retired. The $1,000 you
didn’t withdraw from the HSA has grown to,
say, $3,000. Now you take the money out, and
match it against the ancient bill plus $2,000
WOULD YOU LIKE A TRIPLE-TAX-FREE
form of retirement saving? By that we mean:
(1) You get a deduction when you put the
money in.
(2) It compounds tax free.
(3) It comes out tax free.
The powerful tax-saving vehicle is a
health savings account. An HSA is a kitty,
funded by you and/or your employer, that
you are supposed to use to cover deductibles
and copays in a high-deductible health insur-
ance policy.
Supposed to use, but don’t have to use.
That’s the starting point for this investment
scheme. Amounts you don’t draw down carry
over from one year to the next, and balances
can build up. You can use the account to play
the stock market.
Most HSA users find themselves with
plenty of medical bills to pay and spend the
money almost as fast as it comes in.
But a sliver of the 9 million Americans
with HSAs stuf their accounts and make no
withdrawals. Even though HSAs have been
around for only a decade and the ceiling on
contributions has been in the neighborhood
of $7,000 a year, some accounts have gotten
quite plump.
HSA Administrators, an account custodian
in Richmond, Va. that caters to compulsive
savers, says it has many with more than
$100,000. HSA Bank, a Wisconsin-based unit
of Connecticut’s Webster Bank that works with
TAXES
Turn Doctor
Bills Into
Retirement
Income
BY WILLIAM BALDWIN
Some clever customers are
creating super-IRAs out of their
health savings accounts.
INVESTING

JANUARY 20, 2014 FORBES | 55
$1,250 for an individual policy and $2,500 for
a family policy. HSA-compatible policies are
widely available on ObamaCare’s exchanges,
according to HSA Consulting Services.
Advice from Remjeske of Devenir and Pat-
rick Jarrett of HSA Administrators:
MAXIMIZE THE MATCH. If you can’t af-
ford to top out both your HSA and your
401(k), arrange your dollars so that you don’t
miss an employer contribution in either place.
CONSIDER THE HSA AN EMERGENCY
FUND. If your shoe box is as big as the HSA,
the entire amount can be tapped without tax
or penalty. Once withdrawn, the money can’t
be put back in, however.
CONTRIBUTE AT WORK. This way both
you and your employer save on payroll taxes.
(Self-employed participants lose this benefit.)
If you don’t like the investment choices in the
employer plan, you can move the money later.
SHOP FOR INVESTMENT OPTIONS. Your
employer plan may ofer only expensive mu-
tual funds, aimed at recouping the overhead
on the $2,000 typical account balance. If you
have graduated to a higher level, consider
doing a trustee-to-trustee transfer of most of
your money.
For $36 a year you can have an account at
HSA Bank that gives you access in turn to a
zero-fee account at TD Ameritrade. TD’s $10
trading commission goes to $0 for a long list
of exchange-traded funds, including many
that rate as best buys on the FORBES ETF
scorecard. If you have a six-figure sum you
want to put into a single open-end Vanguard
fund, HSA Administrators is not a bad choice.
Its fee ($109 a year, in this case) gets you into
Vanguard’s cheapo Admiral share class.
MAYBE OPEN TWO HSA’S. For 2014 the
maximum contribution for a couple with a
family policy is $6,550, plus $1,000 for each
of them over 55. To land the second $1,000
catch-up allowance, the couple must have
two accounts.
DON’T WAIT TOO LONG TO CASH IN.
Amounts left behind in an HSA become tax-
able income on either the decedent’s final re-
turn or the tax return of nonspouse heirs.
But note that a surviving spouse can treat an
inherited HSA as his or her own, and that
HSAs can cover the expenses of spouses. If
you are married, you can go to your grave
clutching that shoe box, provided that your
widow(er) knows to use it quickly.
of other medical costs incurred in the mean-
time. In efect, you have created $3,000 of re-
tirement income with no tax on it.
That’s as good as a Roth IRA account—
no, better, because the money was deducted
on the way in, a benefit not available on your
Roth savings. HSA contributions from your
employer, and your own, if deducted from
your paycheck, never appear in your income.
If you are self-employed, the HSA contribu-
tion reduces your adjusted gross income, a
powerful form of tax deduction.
In justifying your HSA withdrawals you
can’t claim any medical expense you have al-
ready used as an itemized deduction on your
tax return. But for most people the itemized
deduction is unobtainable anyway, because
medical expenses count only to the extent
they exceed 10% of income.
What if you are so healthy, or do so well
with your investments, that your HSA tops
your lifetime medical costs? That would be
a nice problem to have. If it af icts you, the
triple tax shelter turns into a mere double.
HSA money withdrawn after age 65 and not
matched against medical costs is taxed like a
401(k) payout, as ordinary income.
But there are a lot of unreimbursed medi-
cal bills that can go into that shoe box after
being paid with funds from outside your
HSA. The main one that can’t is the premium
to buy the high-deductible plan. Almost any-
thing else goes in, provided that the patient
was covered at the time by a high-deductible
health insurance policy: copays, deductibles,
doctor bills that you owe because the doctor
is not in your network, braces for your kids,
nursing home insurance, eyeglasses.
Once you are in Medicare, you can no lon-
ger contribute to the HSA, but you can use
the money on insurance premiums, including
Medicare and Medigap policies.
Is the look-back feature a loophole? Con-
sider it a feature, not a bug. Legislators set up
the system to reward patients for selecting
insurance that makes them cost-conscious.
If they also persuade people to save for their
old age, they will defer the day when nursing
home costs send Medicaid into bankruptcy.
To open an HSA, you have to be covered by
a high-deductible plan. That’s one that inflicts
a certain minimum level of pain on patients:
The deductible (the amount you shell out
before insurance kicks in) has to be at least
B
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S
TRENDING
What the 53 million
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are talking about.
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COMPANY
JPMORGAN CHASE 
Bank takes FDIC to
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Mutual liabilities. 
PERSON
BEN BERNANKE
In the departing
chairman’s last big
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IDEA
COMEBACK KIDS
Stocks that were left out
of 2013’s rally—Rio Tinto,
Philip Morris, Cirrus
Logic—may emerge as
2014 winners.
F

56 | FORBES JANUARY 20, 2014
calls gets you $400 (500 shares x $0.80) minus
transaction costs of about $10. If Intel is trading
below $25 on the third Friday in February, the
calls expire worthless; you keep the $400 plus
your shares. Intel has a 3.7% dividend yield,
with the 500 shares producing income of about
$450 a year. The $400 from selling calls boosts
your yield to 6.8%. Of course if Intel rises above
$25 before expiration, you have to sell at $25—
but you keep the $400 and any dividends al-
ready paid. A similar “expire worthless” strat-
egy can be employed selling puts, but you need
to have enough cash to make good on your
promise to buy stock at a certain price.
Too complicated? A low-hassle alternative
is to invest in “buy-write” closed-end funds,
which employ covered-call strategies on in-
dividual stocks or indexes or sectors. Ex-
penses run about 1% a year, and payouts are
typically 7% to 10% a year. Monthly cash dis-
tributions come in the form of ordinary in-
come, capital gains and return of capital, so
these funds are best kept in an IRA.
In the sort of bull market we’ve had since
2009, broad market buy-write funds will un-
derperform, since selling call options caps up-
side potential. But most of the funds sell for 9%
to 13% below their net asset value, making them
a good buy, says Alex Reiss, closed-end fund
analyst at Stifel Nicolaus. One fund he likes is
Nuveen Equity Premium Opportunity, which
trades at a 9.7% discount to NAV. It is tilted to-
ward technology, with 75% of stocks from the
S&P 500 and 25% from the Nasdaq 100. It sells
calls on those indexes that are about 2% out of
the money, giving stocks room to appreciate.
Michael Jabara, an analyst at Morgan Stanley,
likes AllianzGI NFJ Dividend Interest & Premi-
um Strategy. Its portfolio is 75% value stocks and
25% convertible bonds,
which “contribute ad-
ditional yield and ofer
upside in a rising mar-
ket while providing
downside support in
a falling market,” he
says, noting that the
fund sells at a 3.6% dis-
count to its NAV. Dis-
counts tend to get nar-
rower when market
sentiment improves,
and widen as investors
become more bearish.
IMAGINE SOMEONE handing you money
for something you own in exchange for the
right to buy it at a certain price for a limited pe-
riod of time. It would be unusual to strike this
kind of deal for your car or watch, but in the
case of stocks it happens all the time. You can
sell call options on stocks you already own and
simply pocket the option premium if the option
is never called. Indeed, your goal is for the op-
tions to expire worthless and never be called.
A growing number of investors are find-
ing conservative options selling (or “writing”) a
great way to wring extra income out of portfolios.
“We’re boosting our returns by more than three
percentage points per year. ... Who wouldn’t want
to do that?” asks Alan Salzbank, 58, of Gargoyle
Asset Management. The RiverPark/Gargoyle
Hedged Value Fund is up 25.7% in 12 months.
To sell a “covered” call on a stock (covered,
because you already own the shares you’re
promising to deliver) you must have at least 100
shares. Say you have 500 shares of Intel trad-
ing at $25 and a February 2014 call to buy at
$25 (the strike price) is going for $0.80. Selling
FUNDS
Money From Nothing
BY JOHN DOBOSZ
Looking for high yields? Consider buying funds that
sell the call options on your stocks.
INVESTING
OPTIONS INCOME AT A DISCOUNT
THESE BUY-WRITE FUNDS BOAST IMPRESSIVE PERFORMANCE AND TRADE BELOW THE VALUE OF WHAT THEY OWN.
TOTAL
NAV 12-MONTH RETURN
2
RETURN
2
FUND / TICKER DISCOUNT YIELD
1
1-YEAR 5-YEAR
3
FIRST TRUST ENHANCED EQUITY INCOME / FFA  –12.7%  6.9%  17.8%  14.2%
BLACKROCK GLOBAL OPPORTUNITIES EQUITY TRUST / BOE  –12.5  8.7  17.9  12.1
BLACKROCK ENHANCED CAPITAL & INCOME / CII  –12.1  8.8  18.5  15.8
ING GLOBAL ADVANTAGE & PREMIUM OPP / IGA  –10.9  9.7  13.3  12.1
EATON VANCE TAX-MANAGED DIVERSIFIED EQUITY INCOME / ETY  –10.6  9.5  18.1  12.0
EATON VANCE ENHANCED EQUITY INCOME / EOI  –10.3  8.2  22.5  12.4
NUVEEN EQUITY PREMIUM OPPORTUNITY / JSN  –9.7  9.2  12.4  11.9
EATON VANCE TAX-MANAGED BUY-WRITE OPP / ETV  –6.8  9.8  15.5  16.2
DOW 30 ENHANCED PREMIUM & INCOME / DPO  –5.6  7.0  24.1  18.7
ALLIANZGI NFJ DIVIDEND INTEREST & PREMIUM STRATEGY / NFJ  –3.6  10.1  16.1  12.7
DATA AS OF DEC. 13.
1
AT MARKET PRICE.
2
AT NAV.
3
ANNUALIZED. SOURCES: BLOOMBERG; LIPPER.
F

JANUARY 20, 2014 FORBES | 57
INVESTING
KEN FISHER — PORTFOLIO STRATEGY
CONSENSUS SENTIMENT, par-
ticularly among professionals (who
as a group are almost always wrong),
tightly clusters around a 6% S&P 500
return for this year. When sentiment
clusters like that my research shows
stocks almost always do much better
or much worse. Expect better!
Yes, this bull market has moved
well past pessimism. But residual
skeptics still temper the euphoria
that classically death-knells stocks.
More standard measures of optimism
tend to hit halfway through a bull—
and that should be sometime in 2014.
Happy times, indeed! Can things go
wrong? Of course. But don’t bet on it.
My biggest 2014 positive sur-
prise? How well the world will work
when quantitative easing finally dies.
As I’ve detailed multiple times, virtu-
ally everyone gets this wrong and
backward. QE isn’t expansive or bull-
ish—just the reverse. When it ends
the party finally gets going good, as
yield spreads widen and bank lend-
ing, money supply and economic
growth finally take of—the exact
U.K. experience after they ended
their dismal version of this idiocy.
America’s broad money supply has
grown slower in this expansion than
any you’ve lived through. That loos-
ens soon. Enjoy the ride.
Among my lousier 2013 picks:
CHINA MOBILE (CHL, 52) (from Jan. 21 at
$58), which missed earnings esti-
mates. Expectations are lower now. I
like that. As China’s 8% growth keeps
rippling inland, so will mobile de-
mand. Expect moderate growth and
a stock that performs almost exactly
the same because it didn’t in 2013. It
sells at 11 times my 2014 earnings es-
timate with a 3.8% dividend yield.
Glad I didn’t pick Brazil’s EMBRAER
(ERJ, 31), the world’s fourth-largest
aircraftmaker. It also lagged in 2013.
That should reverse in 2014. Inves-
tors hate it—I love that. Second, I like
Brazil. Third, it’s got a stellar CEO in
Frederico Curado. And in emerging
markets, airlines (Embraer’s custom-
ers) grow (unlike developed nations).
Fourth, Embraer is superstrong in
the corporate market and in smaller
planes. Fifth: In the long term im-
proving extractive technologies make
fossil fuels ever cheaper, lending up-
side leverage to jet usage. Finally, fact:
FORBES’ publisher, Rich Karlgaard,
would give a lot to pilot a Phenom
300, which tells me something.
Embraer sells at 90% of revenue and
17 times my 2014 earnings estimate.
Regular readers know I like drug
stocks as this bull market matures.
I prescribe PFIZER (PFE, 31). From big
brand names like Advil and Viagra to
post-patent-protected blockbusters
like Lipitor, Diflucan and Zoloft, to
its new leukemia drug, Bosulif, Pfiz-
er’s A-to-Z product line will generate
moderate growth from aging baby
boomers (and emerging markets). It
sells at 12 times my 2014 EPS esti-
mate with a 3.1% dividend yield.
U.K.-based GLAXOSMITHKLINE (GSK, 52)
is a similar A-to-Z druggie, which
should have a similarly good 2014
but with shorter average patent lives
and more nondrug consumer items
(like Aquafresh and Sensodyne). It’s
trading at 16 times my 2014 earnings
estimate with a 5% dividend yield.
AFFILIATED MANAGERS GROUP (AMG, 208), a
capable owner of asset-management
firms (my industry), is grossly over-
valued with overly positive investor
sentiment and a history exceeding its
future. But selling short a strong stock
in a bull market is a fool’s game—un-
less you buy equal amounts of an
even stronger one as a single stock
package. Expect LEGG MASON (LM, 43), a
slightly larger asset-manager-owner,
to best AMG. Why? It’s cheap. Inves-
tors really hate it. It’s got a new, very
focused and success-oriented CEO
(Joe Sullivan). And it owns legendary
names (like Battery march, Brandy-
wine, Permal and Royce). Amazingly,
85% of analysts have a hold or sell
rating on it—a rare display of extreme
negative consensus.
Buck that with these two, a buy
and a short sale together, giving your
2014 portfolio a parlay that should
help keep the bulls running.
A BIG (BULL) SURPRISE
FOR 2014
MONEY MANAGER KEN FISHER’S LATEST BOOK IS MARKETS NEVER FORGET (BUT PEOPLE DO) (JOHN WILEY, 2011). VISIT HIS HOME PAGE AT WWW.FORBES.COM/FISHER.
T
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M
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S

K
U
H
L
E
N
B
E
C
K

F
O
R

F
O
R
B
E
S
F
THE WORLD WILL WORK BETTER THAN YOU
THINK AFTER MONETARY EASING ENDS

58 | FORBES JANUARY 20, 2014
INVESTING
JOHN BUCKINGHAM — INVESTOR CHECKUP
WITH STOCKS AT or near alltime
highs, financial publications and
market pundits are providing plenty
of hot air as they inflate a bubble by
talking about a stock market bubble.
All of that chatter is a plus from
a contrarian perspective, even as
valuations on the major U.S. equity
market averages are near the high
end of their historical ranges. The
trailing-12-month P/E ratio of 25.5 on
the S&P 600 Index (small caps) and
23.3 on the S&P 400 Index (midcaps)
are well above median end-of-year
P/E ratios dating back to 1995 of 21.9
and 20.9. Compared with the relative
richness of smaller stocks’ valua-
tions, large caps still look cheap. The
S&P 500 now trades at 16.9 times
earnings, which is actually below the
19-year median of 18.3, while the cur-
rent dividend yield of 1.93% is higher
than the 1.80% median.
Even at current prices, I’m still
finding attractive stocks. There are
certainly many growth stocks trading
for rich valuations, but the beauty
of active portfolio management is
that you don’t need to own them. For
instance, if you look at the S&P 500
you see that one of its most popular
components is Netflix, the video sub-
scription service, which trades for
more than 300 times earnings.
Sometimes stocks do grow into
their multiples, but I find Netflix
hard to justify at these levels. Some-
thing much easier to digest is the
modest valuation of a world-class
franchise like APPLE (AAPL, 545), which
trades for 14 times earnings and
also rewards shareholders with a
healthy 2.1% dividend yield. Believe
it or not, if Apple were awarded the
same earnings multiple as Netflix,
the consumer electronics super-
star would change hands at nearly
$12,000 per share.
Plump multiples also abound
among the various S&P 500 travel-
booking websites. Expedia, Priceline
and TripAdvisor all trade for more
than 30 times earnings. Unlike many
tech startups that have recently gone
public, each of these companies ac-
tually makes a profit, but there are
much less expensive stocks in the
technology sector, especially among
its largest members. For example,
networking equipment company
CISCO SYSTEMS (CSCO, 21), software
king MICROSOFT (MSFT, 36), microchip
titan INTEL (INTC, 25) and IT solutions
provider IBM (IBM, 180) all trade for
about 4 times earnings while also
providing dividend payouts well
above that of the S&P 500. In the
case of Intel, you’re looking at a gen-
erous 3.6% yield.
The list of inexpensive large-cap
companies in the S&P 500 is not only
limited to the tech sector. I’m a fan of
stocks in the capital goods sector like
agricultural equipment maker DEERE
& CO. (DE, 89) and construction equip-
ment concern CATERPILLAR (CAT, 88), two
names that also ofer low earnings
multiples and rich dividend payouts.
And the commodities space has
bargain stocks, including oil driller
ENSCO (ESV, 56), which trades for less
than 11 times earnings and yields 4%,
and mining and energy conglomer-
ate FREEPORT-MCMORAN COPPER & GOLD (FCX,
35), which sports a P/E of 12 and a
dividend payout of 3.6%. Rounding
out my baker’s dozen of undervalued
stocks are retailer KOHL’S (KSS, 55), util-
ity operator ENTERGY (ETR, 62), medical
device maker BAXTER INTERNATIONAL
(BAX, 67) and banking giant WELLS FARGO
(WFC, 45), nearly all of which boast
below-average P/E ratios and above-
average dividend yields.
Keep in mind that even as the
Federal Reserve tapers its bond-
buying program, interest rates are
still near historic lows, with
money market funds yielding 0.01%
on average today, compared with
4.5% at prior market peaks in 2000
and 2007.
This fact, along with the inex-
pensive valuations of my holdings,
abates any worries that I may have
about a bubble in stocks. Don’t be
dissuaded by the strong performance
of the past year. Cheap stocks are
still out there.
BEATING BACK
THE BUBBLE BABBLE
JOHN BUCKINGHAMISCHIEFINVESTMENTOFFICERATALFRANKINVESTMENTMANAGEMENTANDEDITOROFTHEPRUDENTSPECULATOR. FORMOREINFORMATIONVISITWWW.ALFRANK.COM.
GO TO FORBES.COM/INVESTORCHECKUP FOR MORE YEAR-END TAX ADVICE.
IF APPLE WERE AWARDED THE SAME P/E AS
NETFLIX, IT WOULD SELL FOR NEARLY $12,000
F

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transfers from IRAs, Loans (HELOC, LOC, Mortgage) and accounts held in the military bank. Merrill Edge is available through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), and consists of
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60 | FORBES JANUARY 20, 2014
INVESTING
DAVID PEARL — INTRINSIC VALUE
HERE’S A TREND for 2014: Capital
expenditures, otherwise known as cap
ex, will come back with a vengeance.
It’s been in hibernation since the
financial crisis as skittish companies
either hoarded cash or paid it out in
dividends. In fact the change is already
happening but not publicized. Accord-
ing to Ned Davis Research a record
$642 billion was spent on cap ex in the
12 months ended June 30.
But don’t expect cap ex companies
to make a big deal of it just yet. Inves-
tors continue to adore dividends,
and capital-spender stocks tend to
sag. For example, from March 2011
through November 2013 the top de-
cile of S&P 500 companies ranked by
cap-ex-to-sales underperformed the
bottom decile by 15%.
Holding back on cap ex makes
sense in the short term when the
outlook for economic growth is poor.
Even if the cost of capital is low,
why build a new plant if there’s no
demand? But that’s changing, and the
purse strings are loosening. Already
we are seeing more mergers because
the market is starting to recognize
value in other uses of cash. In a slow
growth environment, if you can’t
grow organically, a well-planned
acquisition makes a ton of sense. So
does investing in your business. In
the long run most successful compa-
nies have to reinvest—spend to grow.
The market’s recent run-up has
been fueled by expanding multiples.
That game is over, especially with
interest rates poised to rise. In 2014
companies that reinvest in an efort
to increase free cash flow will thrive.
The key, of course, is finding compa-
nies where the ROI from incremental
cap ex exceeds the cost of capital.
Here are three low-profile cap ex
companies, all based in New England
towns, that I believe will produce
double-digit growth in free cash flow
and outpace the broad market.
TERADYNE (TER, 17) of North Reading,
Mass. manufactures test equipment
for the semiconductor, wireless and
hard-disk-drive industries. With
$1.7 billion in revenues it has used
its cash flow primarily for capital
expenditures and acquisitions. Cap
ex has nearly tripled from the lows of
2009 to $111 million per year, and the
company has gained market share
in most areas while the number of
players in the semiconductor test
industry has shrunk to three.
Teradyne’s acquisitions have also
been successful. The most recent
one, LitePoint, generated an ROI of
more than 16% in the first year of
ownership. Today the stock sells for
11 times forward earnings.
Similar in size, HEXCEL (HXL, 43),
in Stamford, Conn., is one of a few
global suppliers of aerospace-grade
composite materials. It has spent
significant capital to support the
production ramp-up of the Boeing
787, the Airbus A350 and the Airbus
A380. These aircraft use far more
composite materials and are lighter
and more fuel-efcient than the air-
craft they replace. Boeing and Airbus
have multiyear backlogs for the new
aircraft, and Hexcel operates under
long-term supply contracts with no
risk of substitution. The stock ran
up nearly 60% in 2013, but it’s still a
good investment—even at 20 times
forward earnings.
Just up the road from Hexcel, in
Danbury, is PRAXAIR (PX, 127), one of four
global industrial gas suppliers. The
$37 billion (market cap) company
spent significant capital on growth
projects worldwide, like building air
separation units for coal gasification
projects in China. These projects
are generally supported by favor-
able 15-year contracts that protect
Praxair from swings in raw material
prices and other input costs. If priced
correctly, these projects should real-
ize long-term returns on capital at a
healthy spread over Praxair’s cost of
capital. The expected double-digit
growth in free cash flow will come
from a combination of these invest-
ments and a cyclical recovery in
Praxair’s core businesses. Hedgies
have bid up the stock, but it’s still a
great long-term buy.
CAP EX COMES
OUT OF THE CLOSET
DAVID PEARL IS CO-CHIEF INVESTMENT OFFICER AT NEW YORK’S EPOCH INVESTMENT PARTNERS.
THE MARKET’S RUN HAS BEEN FUELED BY
EXPANDING MULTIPLES. THAT GAME IS OVER
F

JAPAN 2014
The Sky Is the Limit
J
apan’s economy has faced serious economic challenges in recent years, but the
emergence of “Abenomics”—the expansionist economic policies of Japanese
Prime Minister Shinzo Abe—has put Japan back in the global spotlight. Our
report on Japan highlights several leading CEOs who are eager to seize the day
and capitalize on opportunities that enable them to gain ground both at home
and abroad. These CEOs are actively engaged in growing their businesses across various
sectors around the world. Whether they are running longstanding family businesses or
conglomerates with diverse interests, they are looking for new avenues of expansion.
They are evaluating the potential of markets in both developed and emerging regions
and adapting their strategies to operate effciently and invest wisely. Most of all, they are
keeping an eye on meeting the needs of customers. From manufacturing high-quality,
innovative goods such as cameras, printers, components for industrial machinery and
food, to providing transportation services and conducting global marketing, investing and
trading activities, the sky appears to be the limit. In spite of global economic uncertainties
and ferce market competition, these companies exude a sense of confdence that they
will continue to thrive in business in Japan and beyond.
JAPAN SPECIAL ADVERTISING SECTION

Index
03 Tetsuro Tomita
East Japan Railway
Company
www.jreast.co.jp/e
04 Fujio Mitarai
Canon Inc.
www.canon.com
07 Yuzaburo Mogi
Kikkoman Corporation
www.kikkoman.com
08 Masahiro Okafuji
ITOCHU Corporation
www.itochu.co.jp/en/
10 Akihiro Teramachi
THK CO., LTD.
www.thk.com
Throughout this special section,
yen figures have been converted
to U.S. dollars at a rate of Y102/$1.
36th Annual Special
Japan Section
Writers
John Ashburne
Julian Ryall
Cecilia Ma Zecha
Photography
Takashi Mochizuki
Design
David Tan
2 // JAPAN SPECIAL ADVERTISING SECTION
Please visit the Japan Special
Advertising Section online
at www.forbescustom.com/
japan2014

JAPAN SPECIAL ADVERTISING SECTION // 3
On the Express to
Success
JR East Combines Homegrown
Expertise With Global Ambition
O
n a clear day, from the top foor of the JR East Head
Offce in Tokyo, you can see Mount Fuji, a World
Heritage Site. However, as company President
and CEO Tetsuro Tomita enthusiastically explains,
the company’s vision for the future stretches far
beyond the legendary peak.
The East Japan Railway Company—or JR East, as it is
commonly known—was founded 27 years ago when the
nationally owned Japan National Railways (JNR) was privatized.
From its original offce in the eastern part of Japan’s main island,
Honshu, the company has expanded to offces in New York,
Paris, Brussels, Singapore and will do so in London.
JR East’s primary business is developing and operating
spectacularly fast, safe trains, and its maintenance record is
unimpeachable. Outside the realm of transportation, the com-
pany also is involved in a wide range of business enterprises,
including travel agency services, shopping centers and offce
buildings, hotels and restaurants management, and more.
“We have contributed to the entire region we serve,” refects
Tomita. “Yet we believe our view must be globalized, not only out
of business necessity with the decreasing domestic population,
but also for the needs of our employees. They must learn to adopt
more open, wider views for their own personal development.”
Under the slogan “Nobiru”—the Japanese phrase for growth—
the company is tackling new business domains.
For example, it is actively participating in overseas railway
projects and developing an overseas railway consulting busi-
ness, Japan International Consultants for Transportation Co.
Ltd. (JIC). It is largely focusing on the Asia-Pacifc region, whose
railway-related market is estimated to reach around ¥6.3 trillion
in 2020. In this growing market, JR East already has signed an
agreement with Thailand to provide equipment and know-how
for Bangkok’s new “Purple Line.”
“We have far more to offer than just merely selling trains. We
have massive expertise in running railway network systems too,”
explains Tomita, whose company conveys more than 6 billion pas-
sengers per year, safely and amazingly on time. “Asian population
centers will grow, and so
will the need for intercity
and urban train systems.
We are willing to serve
those needs.”
JR East also is expand-
ing railcar manufactur-
ing. It acquired the Tokyu
Car Corporation to form the subsidiary Japan Transport Engi-
neering Company, or J-TREC, as it is commonly known. J-TREC
works in tandem with the Niitsu Rolling Stock Plant in Niigata
Prefecture to manufacture stainless-steel commuter railcars
and the state-of-the-art E7 Shinkansen high-speed trains. By
early 2015, the E7 series are scheduled to run between Tokyo
and Kanazawa in two and a half hours.
JR East is aggressively adopting new technologies from
abroad. “Our global outlook is anything but a one-way street,”
says Tomita. “We grow as a company when we bring in advanced
external technologies and expertise.” For example, he cites the
implementation of a proven European communication-based
train control (CBTC)—a wireless car-control system—on the com-
pany’s Joban Local Line, in Northeast Tokyo, and the German
high-technology brakes on the latest Shinkansen trains, including
the 320-kph (198-mph) E5 Hayabusa. “Because it is sometimes
more important to slow down than speed up,” Tomita adds.
Furthermore, JR East is determined to create attractive urban
centers by concentrating useful services and functions in and
around its stations. “Based on our current infrastructure, we will
develop one-stop Smart Stations that will go beyond transport
and retail functions,” says Tomita. “Our future stations will have
everything from kindergartens to clinics and local government
offces. It is our social mission.”
Though JR East has come a long way, for Tomita, there’s no end
of the line in sight. “We Japanese have been building and operat-
ing railroads for 140 years,” he says. “We love them. But we can’t
stand still. Innovation is essential. Globalization is essential.”
At home and abroad, JR East is on the fast track to the future.
Tetsuro Tomita
President and CEO,
East Japan Railway Company
After graduating from the University of Tokyo, Tetsuro Tomita joined the Japan National Railways (JNR) in 1974.
When JNR was privatized in 1987, he joined the largest of the new offshoots, East Japan Railway Company. He
rose to the position of Executive Vice President, successively heading two of the company’s major divisions.
In April 2012 he was named President and CEO.
www.jreast.co.jp/e

4 // JAPAN SPECIAL ADVERTISING SECTION
From Hollywood to
the End of the Universe
Thriving New Business Domains
Drive Canon Toward 2016
W
hen we catch up with Fujio Mitarai, Chairman &
CEO of Canon Inc., one beautiful late autumn
afternoon at Canon’s Tokyo headquarters,
the CEO is in a bullish mood. “Ask me any
questions you like,” he says with a smile.
“There’s nothing to hide here.”
Mitarai has just come from chairing a meeting of the small
camera maker turned corporate giant’s “global summit.”
At this annual event, Canon welcomes members from its
global marketing and manufacturing companies. Executives
convene in Tokyo to exchange information and opinions,
see new products on display and learn the details of the
company’s midterm plan, which sets 2016 goals. Mitarai is
more than willing to give Forbes an exclusive preview.
“Looking at the three years ahead for Canon, I believe
the global economy has bottomed out,” says the CEO with
conviction. “And having hit rock bottom, the economy is now
headed toward recovery. With that expectation in mind, I
have prepared Canon’s new growth strategy.”
The thrust of Mitarai’s approach is based on developing the
company’s core strengths. “I have laid emphasis on looking at
our current business—for example, our cameras—and based
on what we currently have, we need to create new domains
using that existing technology. Then we develop those areas
into full-fedged business operations.
“To give you an example, we launched our all-new
cinematography product lineup two years ago, and in
the three years to come, we hope to achieve a very large
expansion of this business. We aim to be one of the top
players in the flmmaking industry globally.”
Movie Mecca’s Seal of Approval
Canon is off to a good start with the frm’s Cinema EOS
System, a lineup of professional cinematography products
that includes lenses and cameras, which has been wowing
the theatrical motion picture, television programming and
television commercial production industries. Several high-
profle Hollywood directors are enthusiastically embracing
these new products.
Within a year of entering the industry, Canon won major Hol-
lywood plaudits when the National Academy of Television Arts &
Sciences honored the company with a Technology & Engineer-
ing Emmy
®
Award, prais-
ing “Canon’s Work on
Improvements to Large
Format CMOS Imagers
for Use in High-Defnition
Broadcast Video Cam-
eras.” But Canon’s suc-
cess in this segment is
not limited to the movie
industry. In Japan, in
August of last year, a 4K
capable high-resolution
Canon digital cinema camera was used by JAXA, the Japan
Aerospace Exploration Agency, for a mission to record the
Comet ISON aboard the H-IIB Launch Vehicle No.4 with the
H-II Transfer Vehicle “KOUNOTORI4” (HTV4) bound for the
International Space Station.
Pushing the Boundaries of Knowledge
Through Astronomy
“We are very proud of how we have applied innovative
optics technology to the feld of astronomy,” says Mitarai.
The Subaru Telescope, located 4,200m (13,780 feet)
above sea level at the summit of Mauna Kea in Hawaii, is
capable of capturing light emitted from a galaxy located 13
billion light years from Earth. It couldn’t do that without
Canon technology.
Fujio Mitarai
Chairman and CEO, Canon Inc.
The Cinema EOS System is fast becoming a Hollywood directors’ favorite.

JAPAN SPECIAL ADVERTISING SECTION // 5
At the heart of the fagship telescope operated by the
National Astronomical Observatory of Japan (NAOJ) is the
Hyper Suprime-Cam, which sets a new standard for wide-
angle optical devices. Using a custom-designed Canon lens
system seven times wider than any built before, it can now
capture in just a year images that once would have taken
seven years. It captured the entire Andromeda galaxy in a
single shot.
Canon’s lucrative camera-based business is not all
Hollywood and astronomical observation. Some of it has a
particularly earthbound application.
“We are also developing high-image-quality, high-
performance network cameras that transmit full HD images,”
says Mitarai. “I believe there is great future potential growth
in the network camera market as it meets the recent needs of
security management, and as options for visual transmission
become more multifaceted.”
Innovation Across Multiple Fields and Markets
The world at large thinks of cameras and offce equipment
when it thinks of Canon, but in reality the global corporation
is developing hitherto unexplored technologies and business
domains in other areas, most notably in the fields of
commercial printing, medical diagnostics and mixed reality.
“Thanks to our integration with the blue-ribbon Dutch
company Océ [acquired by Canon in 2010], we are beginning
to see exciting developments in the commercial high-speed
printing domain and with wide-format printing systems,”
says Mitarai. “In the coming three years, we hope to tap
into a large potential market in packaging, outdoor banners
and billboards.
“In the retail photo printing market, our innovative
DreamLabo commercial photo printer has allowed users to
create photo albums with high-speed, high-quality photos
and detailed text offerings via the Internet.
“In the medical diagnostics industry, Canon U.S. Life Sci-
ences has developed a genetic analysis system and equip-
ment providing a variety of new diagnostic technologies. Once
CLS products become viable, we will initiate production at
Canon in Virginia,” adds the CEO.
“Another highlight of our medical systems is near-painless,
stress-free photo-acoustic mammography that we are jointly
developing with Kyoto University. This technology visualizes the
state of angiogenesis associated with cancer using ultrasound
and light, and we hope to launch it within a few years.”
MR (mixed reality) is another cutting-edge technology,
one that seamlessly merges the real and virtual worlds in
real time, allowing users to interact with full-scale, realistic
images from any point of view.
“The potential applications for MR in the felds of design,
manufacturing, education, exhibition, entertainment and
medical care are boundless,” says Mitarai. “Some automotive
manufacturers have already adopted and installed our MR
systems, which we launched in July 2012. During the product
design phase, our head-mounted and hand-held displays
allow users to view full-scale CG images that are responsive
to their position and orientation, enabling speedy evaluation
of design and usability. Also, MR systems can contribute to
reducing development times and minimizing costs.
“Based on the very foundation of our existing business and
adding on top of that our new business growth, I hope to attain
an annual growth rate of around 7% or 8%, though of course
that depends upon the global economic situation.”
Three Regional Headquarters System
Mitarai’s enthusiasm and confidence is infectious, and
his pride in Canon’s panoply of technological excellence is
evident. Yet the CEO is only too aware that the company, with
assets measured at US$4,546 billion in 2012, must match its
technical skills with organizational innovation.
His response is the Three Regional Headquarters
management system, a vision that he developed while
president of Canon U.S.A. (1979 to 1989), in which the Japan,
U.S. and Europe HQs are given autonomous control.
“Each region has its own unique qualities and strengths,
and will naturally conduct its own research and design,” he
explains. “Océ and CLS are good examples. In this manner,
our regional headquarters will create unique products, which
they will market worldwide.”
For Canon and Fujio Mitarai, the sky’s not even the limit.
The MR system enables industrial designers to rapidly develop and
share virtual prototypes.
A native of Kyushu, Japan, Mitarai decided not to follow his father and brothers into medical school, but
instead joined Canon, where his uncle served as the frst president. Five years later he was posted to the
U.S., where he stayed for 23 years, eventually becoming President of Canon U.S.A. Back in Japan, he was
later appointed President, CEO and then Chairman of Canon.
www.canon.com


JAPAN SPECIAL ADVERTISING SECTION // 7
A Taste for Success
The Story of Kikkoman Corporation’s
Rise to Global Eminence
Y
uzaburo Mogi stri des i nto the boardroom
with a spring in his step and a sparkle in his
eye. At 78 years of age, the Honorary CEO
and Chai rman of the Board of Ki kkoman
Corporation cuts a debonair figure. Mogi is
a revered el der statesman of Japan’s business worl d,
and i t i s hi s personal vi si on that has seen Ki kkoman
Corporation blossom from a rural soy sauce manufacturer
into a global corporate group of 64 separate companies,
capi tal i zed at ¥11.6 bi l l i on ( US$118.5 mi l l i on), wi th a
presence in more than 100 nations.
Ki kkoman’s hi stor y of manuf act ur i ng soy sauce
began i n the Edo Peri od (1603-1867). Then, i n 1917,
ei ght fami l i es merged to create Noda Shoyu Co. Ltd.,
the forerunner to Ki kkoman Corporati on.
“I n t he mi d-1950s, Japan was enter i ng a per i od
of hi gh economi c growth and many i ndustri es were
forecasti ng doubl e-di gi t annual growth. However, our
i ndustr y coul dn’t grow at a comparabl e rate, si nce the
consumpti on of soy sauce, a dai l y necessi t y, coul d
onl y be expected to i ncrease rel ati ve to popul ati on
growth,” Mogi expl ai ns.
“So, we adapted t wo key strategi es. The f i r st was
di versi fi cati on to acqui re new product categori es and
i ncrease busi ness. We star ted our venture wi th Del
Monte, produci ng tomato ketchup and jui ce, and began
Manns Wi ne, our domesti c wi ne busi ness. Our second
strategy was i nternati onal i zati on, and we turned our
at tenti on to the U.S., reachi ng out to general Ameri ca,
not j ust the Japanese Ameri can communi t y.”
Then came Mogi’s masterstroke. “We cannot achi eve
any real gl obal i zati on of our busi ness,” the young
executi ve tol d a col l eague one day i n 1965, “unl ess we
bui l d a factor y i n the U.S. to i ni ti ate l ocal producti on.”
Mogi made hi s proposal to the company board and
the presi dent, Kei zaburo Mogi , hi s father. Af ter l ong
del i berati on, they agreed. The di e was cast.
Mogi was 38 when Kikkoman Foods, Inc.’s Wi sconsin
plant opened on June
16, 1973, on the west-
er n shor e of Lake
Geneva in the American
Mi dwest. The dol l ar
was pegged at ¥360,
so building an overseas
plant was a colossal
investment. To build a
production factory in
the U.S., they had to
invest more money than
Kikkoman’s capital at
the time.
Wi thin months, di s-
aster struck. “The Oil
Cri si s that took hol d in October of 1973 was a severe
chal l enge,” Mogi expl ai ns. “Thi s wreaked havoc al l
over the world, and the U.S. was no exception. Our U.S.
factory was affected by an increase in production and
transportation costs.” As a result, Kikkoman Foods, Inc.
plunged into the red. Yet Mogi never wavered. “I was
young, you see, brave,” he laughs. “I knew prices would
eventually stabilize. By the end of the third year, we were
in the black. By August 1977, we had balanced out our
cumulative loss, a feat achieved within just four years
of start-up.”
The rest, as they say, is history. Last year the Wisconsin
pl ant cel ebrated i ts 40th anni versar y. Wi th growi ng
market s i n Europe, Asi a and Oceani a, Ki kkoman
Corporation is a 21st-century global success story. Yet
for Yuzaburo Mogi, it is far more than just a business
triumph. “I really believe that taking Japan’s food culture
to the world and bringing other nations’ foods to Japan
creates understanding,” he says. “When we eat the same
things, we become friends.” And with that the legendary
businessman takes his leave and strides off into the sunlit
Tokyo morning.
Yuzaburo Mogi
Honorary CEO and Chairman of
the Board, Kikkoman Corporation
Yuzaburo Mogi is a descendant of one of the founding families of Kikkoman, which is one of the oldest
continually running businesses in Japan. He became company President in 1995, was named Chairman in
2004 and assumed the title of Honorary CEO and Chairman of the Board of Directors in 2011. Mogi holds an
MBA from Columbia University.
www.kikkoman.com

8 // JAPAN SPECIAL ADVERTISING SECTION
Ambitious, Profitable
ITOCHU Corporation Sets the Bar
Ever Higher
“W
e have turned our words into
accomplishments,” says Masahiro
Okafuji, President and CEO of
ITOCHU Corporation.
When he took up the position of
CEO in 2010, Okafuji set about rebalancing ITOCHU’s profle
to emphasize the non-resource sector, which consists of
businesses that are not dependent on natural resources. In a
move that evokes the company’s roots in the textile business,
he aggressively set about focusing on the consumer-related
arena—business lines such as textiles, food and ICT—making
it the corporation’s basic earnings platform. It was a savvy
move. ITOCHU has posted record-high net income for two
consecutive years, and CEO Okafuji is still pushing ahead,
pedal to the metal, to boost proftability.
Going back to basics also applies to ITOCHU’s new
approach to working hours.
As 2013 neared its close, Okafuji issued a company-wide
directive severely limiting late-night overtime work, a common
practice at Japanese corporations. The new system was
dubbed asagata kinmu, or “early work hours.” The aim is to
fnally end the habit of excessive overtime, allowing employees
to concentrate on self-improvement and family life. Given
ITOCHU’s size and status, Japan’s news media and business
community soon took notice. For this workaholic nation, it
was a radical move.
ITOCHU is clearly not afraid of change. “Trading companies
only exist where there are customers,” explains Okafuji,
“and we operate across so many felds. We are like water;
we change our shape according to the container. Just as it
would be fundamentally wrong for us to narrow ourselves
down to one single kind of product, our sales organization
and strategies and even our corporate personality must also
be fexible. This new system was prompted primarily by a
consideration of our customers’ needs. Early-morning calls
will no longer go unanswered.”
ITOCHU’s customer-based, worker-friendly stance should
only help strengthen the global corporation’s competitive
edge. “We have set the goal to become the number-one
trading company in non-
resource businesses,”
Okafuji boldly says. “I
believe all companies
must continually set
goals and strive toward
them in deed as well as in
word.” Coming from the
CEO who unabashedly
talks about standing
shoul der-to-shoul der
with the two top-ranking trading companies in Japan, it almost
sounds like a call to arms.
How does Okafuji plan to achieve his ambitious goals?
“The non-resource sectors include machinery, chemical
products, construction and real estate and information, in addi-
tion to lifestyle and consumer arenas,” he explains. “Now we
especially want to focus on the machinery area, and then on
information, construction and real estate, and chemical products.”
Nor is ITOCHU hesitant to take on the challenge of entering
new arenas. Automobiles and shipbuilding are among the many
areas being targeted. “The current depreciation of the yen
seems to be bringing about a huge growth of the market in areas
where we have long been cultivating technology,” he explains.
“ITOCHU’s share in many areas will dramatically increase on
the back of a weaker yen. It’s actually happening now.”
The emphasis ITOCHU puts on fully leveraging its diverse
human resources may well become key to the company’s
further growth. ITOCHU was the frst of Japan’s general
trading companies to appoint a female executive offcer, and
its current medium-term management plan clearly mandates
further development of female role models. This is yet another
example of how ITOCHU dares to challenge the conventional
Japanese corporate mind-set.
Okafuji admits that, historically, the amorphous nature of Japan’s
general trading companies has deterred investors, who fnd it
hard to grasp the workings of the so-called invisible giants. This
may soon change, given ITOCHU’s widely noted management
innovations and its forecast for dynamic growth in 2014.
Masahiro Okafuji
President and CEO,
ITOCHU Corporation
Masahiro Okafuji joined ITOCHU in 1974 after graduating from the University of Tokyo. He was appointed
Executive Offcer in 2002, Managing Executive Offcer in 2004, Director and Executive Vice President in April
2009, and President and CEO in April 2010.
www.itochu.co.jp/en/


10 // JAPAN SPECIAL ADVERTISING SECTION
A Linear Path to
Success
THK Focuses on Forward Motion
A
s President and CEO of THK CO., LTD., Akihiro
Teramachi knows that Japan has faced serious
economic challenges in recent years, but he
frmly believes that trying times can bring out the
best in a company. He is confdent his frm will
continue to provide the technology, know-how and support
that will keep its customers moving forward.
“THK is a company that’s focused on creation, on making
new advances, and we will never ease off in our efforts to forge
ahead with new research and development,” says Teramachi in
an interview at the company’s Tokyo headquarters, the hub of a
global organization that spans four major territories around the
world. “We will continue to aggressively develop new felds in
order to contribute to our clients’ progress and growth.”
For all its expertise, THK is something of a behind-the-scenes
player, producing vital technology for the industrial machinery
used to manufacture a wide range of products, including
vehicles and electronics and appliances.
THK developed the world’s frst Linear Motion Guide, an
essential component that enables industrial machines to
execute smooth and highly precise movements. LM Guides
help ensure rapid, high-precision manufacturing processes,
and they also help conserve energy. In its feld, THK is the
undisputed market leader.
As Japan’s economy picks up the pace—along with
interconnected economies throughout the rest of the world—
Teramachi is confdent that THK will be able to both develop
new markets and expand operations in areas where it already
has a presence.
“We will continue to help our clients all over the world by
steadily and reliably meeting their needs, in every industrial feld
that uses linear motion,” he says. “Not only in advanced markets,
but also in developing markets, thanks to our globalization
efforts and forays into new business areas.”
China has become a vitally important market for THK, which
has 34 sales offces and fve production bases located all over
the country. Although some observers are voicing caution
about China’s future, Teramachi remains optimistic.
“The Chinese econ-
omy may have come to
the end of its period of
high growth and may
be moving into a period
of more stable, regular
growth,” he says. “There
have been predictions that China will surpass the U.S. as the
world’s preeminent economy. That may not happen, but when
you take into consideration China’s massive population and the
anticipated growth in per-capita GDP, it’s clearly reasonable to
expect more growth.
“I’m confdent that China will remain a promising and growing
market, although it may undergo short-term fuctuations,” he adds.
Teramachi emphasizes the importance of situating THK’s
manufacturing facilities in the same markets where the products
are consumed. But THK’s most important challenge is to continue
to develop high-quality, innovative but affordable products.
“We have to keep striving to provide our products at reasonable
prices,” he says. To do that, the company says it is necessary
to scrutinize its activities from the perspective of its customers.
“There are many factors that affect businesses in every market in
the world—differences in laws, cultures, customs, language and
many other areas—but these are all issues from the standpoint
of the businesses supplying the products.
“The other perspective is that of customers seeking high-
quality, reasonably priced products that are available when and
where they need them. That’s a universal need,” Teramachi
emphasizes. “THK has set out to become the number-one
company in the world at identifying with the client’s point of view
and providing products and services that meet the customer’s
needs and desires.”
The advent of “Abenomics”—the aggressively expansionist
economic policies of Japanese Prime Minister Shinzo Abe—has
put Japan back in the global economic spotlight, Teramachi
says, adding that THK intends to preserve its forward momentum
and use its pioneering spirit and commitment to excellence to
solidify and enhance its vital role in the global economy.
Akihiro Teramachi
President and CEO, THK CO., LTD.
Akihiro Teramachi attended Keio University and joined THK CO.,LTD., a company founded by his father,
in 1971. He became a Director in 1982, was made Vice President in 1994 and took over as CEO in 1997.
www.thk.com


72 | FORBES JANUARY 20, 2014
THERE IS AN ADAGE ON WALL STREET: “IT’S BETTER TO BE LUCKY THAN GOOD.”
And if ever there was a banker with luck on his side it’s Sergio Ermotti, the suave, im-
peccably dressed global chief executive of Switzerland’s UBS.
Less than six months after he joined the bank to run its European, Middle East and
African businesses in April 2011, a rogue trader in UBS’ London ofce lost $2.3 billion
on a series of derivatives trades. The scandal forced the bank’s 67-year-old chief exec-
utive, Oswald Grübel, to resign. Suddenly, Ermotti was next in line to run the 152-year-
old Zurich-based bank. By November he was CEO, and by 2012 he was the highest-paid
member of the bank’s executive board. Good timing; great luck.
But Ermotti, 53, is also good—very good. Born in the Italian-speaking canton of Tici-
no in southern Switzerland, he has had a singular focus on banking since age 15 when he
took an apprenticeship at Switzerland’s Corner Banca, where young Ermotti learned to
sell stocks and trade them. Eventually he got a certificate in Swiss banking and earned
a master’s degree in management from Oxford. In 1987 Merrill Lynch hired him, and
he spent the next 16 years climbing Merrill’s ladder in Europe and New York, eventual-
ly becoming global equities boss. Charming and likable, with movie star looks, Ermotti
parlayed the Merrill experience into the role of deputy group chief executive at Italy’s
largest private bank, UniCredit. After being passed over for chief executive he took the
job running Europe, Middle East and Africa at UBS.
Given the state of global financial services in 2011, one might think that landing atop
a European bank was as much a curse as a blessing. The financial crisis left Europe’s
banks crippled, and most of them are still busy untangling and deleveraging their bal-
ance sheets. But once again Ermotti got lucky.
As chance would have it Robert McCann, Ermotti’s former boss and mentor at Mer-
rill Lynch, was already busy revamping the Swiss bank’s U.S. operations. McCann, 55,
had spent 26 years at Merrill, first in trading and finally running its 18,000-advisor
REINVENTING
WALL STREET
Thanks to some fortuitous timing Sergio Ermotti ended up
with the top job at UBS, but he really hit the jackpot when
he found that his former boss was already transforming
the troubled bank into a wealth-management juggernaut.
BY HALAH TOURYALAI

GIANLUCA COLLA / BLOOMBERG
JANUARY 20, 2014 FORBES | 73

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74 | FORBES JANUARY 20, 2014
FORBES
WALL STREET
ranking third among global banks in
terms of balance sheet assets, with
$850 billion. Citigroup and Japan’s
Mizuho ranked first and second,
with about $1 trillion in assets each.
Today UBS’ $1.2 trillion in bank assets
doesn’t even put it in the top 20. In-
dustrial & Commercial Bank of China
ranks first with $3 trillion in assets,
and Deutsche Bank ranks eighth with
$2.4 trillion.
But in banking today, sheer size is
largely irrelevant: The real battle is
to control the world’s $135 trillion in
private wealth—a number that is set
to take of as China and other devel-
oping economies grow rich.
Of course, the former Union Bank
of Switzerland has long been a major
sure to capital-intensive and regu-
latory-heavy businesses like trading
and investment banking, and moving
quickly into less risky businesses that
provide smaller but steadier streams
of income.
The math is fairly simple: Shares
of BlackRock, the world’s larg-
est asset manager, sell at a trailing
price/earnings multiple of 20 while
the world’s preeminent investment
bank, Goldman Sachs, has a P/E of
11. BlackRock’s shares are up near-
ly 500% in the last decade, Goldman’s
are up 79%, but large, diversified
banks like UBS and Bank of America
have seen their shares fall about 50%.
A decade ago UBS was neck and
neck with Germany’s Deutsche Bank,
brokerage arm. The two men knew
each other well. Back in 1996 it had
been McCann who plucked the
36-year-old Ermotti out of the ob-
scurity of Merrill’s European opera-
tions, brought him to New York and
promoted him to head global deriv-
atives trading. Ermotti would work
for McCann for the next six years.
“He was a good mentor to me,” re-
calls Ermotti.
By the time Ermotti took the top
job at UBS, McCann had been build-
ing up the bank’s brokerage force
for two full years. This stroke of
luck meant UBS’ American wealth
management business was turning
around, giving Ermotti an engine of
growth as his team furiously shed
risky investment-banking assets.
In the last three years UBS’ en-
tire wealth management operation
brought in $137 billion in net new cli-
ent money. It is now the largest pri-
vate banker in the world, with $1.7
trillion in assets. In 2013 the bank is
expected to earn $3.8 billion on reve-
nues of $31.6 billion. And it’s a strong
bank: In terms of Basel III’s strin-
gent capital requirements UBS has
already surpassed its target and now
has a common equity tier one ratio
of 11.9%.
At the same time McCann and
his non-U.S. counterpart Jurg Zelt-
ner were expanding the wealth man-
agement business, the bank was going
through a massive downsizing. In
2012 UBS announced it would fire
10,000 employees in investment bank-
ing, and it has already culled more
than $300 billion in risky assets from
its balance sheet.
“Many said it was impossible to
shrink the bank to greatness, but now
we have silenced our critics,” says Er-
motti, describing the bank’s strategy as
centered on wealth management, yet
“complemented by a focused and less
capital intensive investment bank.”
Ermotti the trader is executing
perhaps the smartest trade in finan-
cial services today, reducing expo-
Robert McCann gave up golf to rescue
Swiss bankers on U.S. soil.

JANUARY 20, 2014 FORBES | 75
U.S., it was a lifeline for the worka-
holic banker.
McCann’s first move was to re-
assemble his A-team of old Merrill
Lynch buddies, including Merrill’s
key private-client execs, Robert Mul-
holland and Brian Hull; marketing
head Paula Polito; its general counsel,
Rosemary Berkery; and the former
global securities lending chief, John
Brown. To get the rank and file to buy
in and thereby avoid “mini-Merrill”
criticism, he elevated several UBS ex-
ecutives, and retained Tom Naratil,
who was CFO of the Americas.
“All of us had nothing more to
prove in our careers and had already
accomplished a lot,” says Polito. “It
was more about reuniting as a team
under Bob one more time and doing
something that could be extraordi-
nary if we could pull it of.”
When the team arrived broker mo-
rale was terrible, partly because of the
bad press but also because the advi-
sors felt the home ofce in Switzer-
land was both ignoring them and bur-
dening them with crappy products.
One example: a UBS credit card
that was foisted on brokers and their
clients in 2005. The Visa card sport-
ed such stringent antifraud restric-
tions that it declined payment as
much as 50% of the time, according
to Berkery, who now heads up UBS
Bank USA. One of UBS’ own advisors
warned Berkery not to use the card.
“That’s a bad sign,” she says. The
credit card was so jittery that Mc-
Cann’s own wife was declined when
she used it.
Within a month of McCann’s ar-
rival he decided to fly in UBS’ top
270 advisors for a lavish dinner at
New York City’s Gotham Hall. In his
postprandial speech he pledged to
spend his first 100 days at the bank
listening to their problems, fixing
them as quickly as possible and fig-
uring out a new strategy. And, in-
deed, for the next three months Mc-
Cann and his pals from Merrill—
known internally as the “renewal”
player in private
banking, also known
as wealth manage-
ment. In fact, today
most of the firm’s cli-
ent assets outside of
the U.S. still come
from its stronghold
in Europe, current-
ly run by Zeltner, 46.
McCann’s wealth
management unit
was acquired by UBS
when it purchased
PaineWebber in 2000.
One of Ermot-
ti’s smartest moves
after taking over in
2011 was refusing to
sell UBS’ U.S. busi-
ness—despite persis-
tent Wall Street chat-
ter that it would be
wiser for the bank to
focus on its home turf.
In fact, far from jetti-
soning it, Ermotti fur-
ther empowered Mc-
Cann to rally his as-
set-gathering troops.
Says Ermotti, “If we
call ourselves the pre-
eminent wealth man-
agement firm globally,
then it would be impossible not to be
a strong player in the biggest market
in the world, the Americas.”
When McCann arrived at UBS in
2009 as CEO of Wealth Management
Americas, UBS was bleeding advi-
sors and assets. In a three-year span
the broker head count dropped from
8,248 to 6,796, and $32 billion in cli-
ent assets fled. The division mounted
losses of nearly $900 million.
Even worse than the losses were
the constant blows to the bank’s rep-
utation, which scared away poten-
tial customers and honest employees.
In 2008 UBS had a run-in with the
feds for a tax-evasion scheme. The
bank was forced to pay $780 million
and essentially admit that its finan-
cial advisors committed tax fraud by
helping their American clients hide
money overseas.
Like Merrill, UBS was waist-deep
in toxic subprime debt and was ul-
timately required to repurchase $22
billion in auction-rate securities
that had blown up during the cred-
it crunch. Then came the rogue-trad-
er incident that cost Grübel his job,
and in 2012 the bank was nabbed in a
global conspiracy to rig interest rates.
For that bit of malfeasance UBS paid
a record $1.5 billion fine for a single
count of wire fraud. Most recently,
UBS is facing a slew of lawsuits after
its brokers were revealed to be some
of the biggest peddlers of overlever-
aged Puerto Rican municipal bond
funds.
Former Merrill lifer McCann
knows all too well how important
reputation is in the money business.
His stellar 26-year career at Merrill
Lynch was capped by a shotgun mar-
riage to Bank of America in 2009. It
was heartbreaking for McCann, who
rose from a trainee in 1982 to star
trader to vice chairman of the com-
pany. “I had been committed to Mer-
rill Lynch, and Merrill Lynch didn’t
exist anymore,” he says, seated on an
olive microfiber sofa in his corner of-
fice on the 14th floor of UBS’ mid-
town Manhattan building.
McCann took eight months of. He
did some soul searching, played golf
and took a film class with his wife
at New York University. When Grü-
bel came calling from Switzerland to
ask him to fix UBS’ operations in the
“ADVISORS COULDN’T
BELIEVE IT WHEN
I RESPONDED TO
THEIR CALLS. SOME
HUNG UP ON ME,
THINKING IT WAS
A GOOF.”

76 | FORBES JANUARY 20, 2014
FORBES
WALL STREET
gues that scale can be overcome by
quality.”
It’s working. In just the U.S. net in-
flows amounted to $36 billion in the
last two years, and in 2012 McCann’s
division posted a record pretax prof-
it of $873 million, up 40%. Results
should be even better in 2013. At-
trition has been stanched, dropping
from 15.3% in 2009 to 2.2% in 2013.
McCann’s success has been re-
warded. He’s on UBS’ global exec-
utive board and is the second-high-
est-paid executive at the bank, earn-
ing $9.4 million last year, just behind
Ermotti.
He doesn’t just run UBS’ broker-
age force in the Americas anymore;
Ermotti put him in charge of its U.S.
investment-banking and asset-man-
agement business. Still, no one thinks
a Pittsburgh native like McCann,
who is two years older than Ermotti,
has any chance of nabbing the top job
at the giant Swiss bank. And given
how much UBS has riding on wealth
management and keeping its Ameri-
can growth engine chugging, Ermot-
ti needs to keep finding new ways to
keep his lucky charm happy.
team—spent their days on the phone
with their brokers, hearing out their
problems and immediately fixing the
ones they could easily address, so-
called “Quick Wins.”
Some 400 changes were made
under Quick Wins. The paranoid
credit card was terminated, approv-
al of marketing material was moved
down the ranks and the limit for fast
credit line approvals for high-net-
worth clients was lifted from $4 mil-
lion to $5 million.
The renewal team also created
a financial-advisor council that re-
layed advisor’s gripes directly to Mc-
Cann. Martin Halbfinger, an advi-
sor with $3 billion in assets, was one
of the first to head the council. The
rule was that complaints would be
responded to within one day. “There
used to be a black hole to which we’d
funnel our complaints, but suddenly
we were all amazed how that turned
around,” Halbfinger says.
“People couldn’t believe it when
I responded to their e-mails or calls
about problems. Some of them hung
up on me, thinking it was a goof,”
McCann recalls.
Ninety-nine days after that crucial
Gotham Hall meeting McCann’s re-
newal team presented its grand strat-
egy: a strict focus on high- and ultra-
high-net-worth clients in the 25 largest
American cities. They would be client-
oriented and focused on financial ad-
vice. “It was incredibly important that
the message was clear,” says McCann.
Another thing would become clear.
McCann wouldn’t tolerate slackers.
Anyone generating less than $250,000
in fees and commission annually saw
his or her pay reduced. McCann recent-
ly upped the threshold to $325,000.
He also went after institutional
bloat. McCann began shutting down
some branches, consolidating oth-
ers and eliminating layers of manage-
ment, including 25 managing direc-
tors. Nonfinancial advisor employ-
ees have been reduced from 11,200 in
early 2009 to 9,191 in 2013. The unit’s
cost-to-income ratio has dropped to
87% from nearly 100% in 2009.
In an efort to jump-start asset in-
flows, McCann aggressively recruited
top advisors with big sign-on bonuses.
In 2012 alone UBS spent $679 million
bringing in new brokers. “That’s 10%
of the annual net income of McCann’s
unit. It shows you how much empha-
sis McCann is putting on the right
producers,” says Alois Pirker, an ana-
lyst at Boston-based Aite Group.
It is also starkly diferent from
the industry’s usual “amass the big-
gest army” approach. McCann em-
ploys 7,000 financial advisors. Bank
of America Merrill Lynch, Morgan
Stanley and Wells Fargo have be-
tween 15,000 and 18,000 each. But
McCann’s troops are higher-quality,
with the average broker generating
$1 million in annual revenue, versus
$848,000 for Morgan Stanley and
$865,000 for Wells Fargo. Only Bank
of America Merrill Lynch, McCann’s
old employer, has an average bro-
ker production rivaling that of UBS.
Says Brad Hintz, an analyst at San-
ford C. Bernstein: “UBS goes after
the best of the best advisors and ar-
RISK OFF, WEALTH ON
RISK-WEIGHTED ASSETS DETERMINE HOW MUCH CAPITAL BANKS MUST HOLD.
ERMOTTI’S STRATEGY HAS SHRUNK RISKY ASSETS BY ABOUT 45%.
2011 3Q 2012 3Q 2013 3Q
0
50
100
150
200
250
300
350
400
$450 BIL
$245
$89
$88
$172
$52
$96
$65
$76
$100
INVESTMENT BANK
NONCORE &
LEGACY PORTFOLIO
WEALTH MANAGEMENT,
BANKING, CORPORATE,
ASSET MANAGEMENT
RISK-WEIGHTED ASSETS
F

Tory Burch, Tory Burch LLC
Moira Forbes, ForbesWoman
Donna Karan, Urban Zen, DKNY
Kathryn Minshew, The Muse
Gayle King, CBS News, The Oprah Magazine
Kristen Soltis Anderson, The Winston Group
Janet Napolitano, Former Secretary, U.S. Department
of Homeland Security
THE ENTREPRENEURSHIP OF
MAY 14-15, 2014 NEW YORK CITY
EVERYTHING
Power does not come in a one-size-fits-all package, and at Forbes
we are redefining what power means. Today, in order to effect
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Hosted by Moira Forbes, this multi-generational gathering of
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78 | FORBES JANUARY 20, 2014
FORBES
UNDER
30
30
NOW YOU
SEE THEM...

JANUARY 20, 2014 FORBES | 79
Evan Spiegel, 23, and Bobby Murphy, 25, have
turned Snapchat and its disappearing photos into the
hottest app in America for teenagers. Hot enough, in
fact, to spurn a $3 billion ofer from Facebook. Will
they become two of the youngest billionaires ever—
or fade quickly into business infamy?
BY J.J. COLAO
PHOTOGRAPHS BY MICHAEL GRECCO FOR FORBES

80 | FORBES JANUARY 20, 2014
he enjoyed it. Spiegel, who had deactivated his Facebook
account, frantically called Murphy for his review. It was,
Murphy responded glumly, a near-exact copy.
But a funny thing happened on the way to obsolescence.
The day after its launch Poke hit number one on the iPhone
app store. But within three days, on Dec. 25, Snapchat had
pulled ahead, boosted by the publicity, as the Facebook app
disappeared from the top 30. Laughs Spiegel: “It was like,
‘Merry Christmas, Snapchat!’ ”
Which helps explain what happened in the fall when
Zuckerberg reengaged Spiegel, basically ready to surrender
on terms so generous, on paper, they seemed preposterous:
$3 billion in cash, according to people familiar with the ofer,
for a two-year-old app with no revenue and no timetable for
revenue. (Facebook refused to comment for this article.)
Even more preposterous, of course: Spiegel turned Zuck
down. It was the most scrutinized business decision of the
past year, complete with head-spinning
math. FORBES estimates that Spiegel and
Murphy each still owned about 25% of
Snapchat at the time, which means they
were both forgoing a $750 million windfall.
“I can see why it’s strategically valuable,”
one leading venture capitalist tells FORBES.
“But is it worth $3 billion? Not in any uni-
verse I’m aware of.”
The roots of that decision, however, were
obvious to anyone who knew about the primer that Spiegel
and Murphy had bought for their team. Chapter 6 in the Art
of War specifically addresses the need to attack an enemy
where and when he displays weakness. Spiegel and Murphy
sense an opening and insist that rather than selling, they’re
aiming to upend the social media hierarchy, armed with a
$50 million war chest raised in December at a lower (but
still heady) valuation of just under $2 billion. “There are very
few people in the world who get to build a business like this,”
says Spiegel. “I think trading that for some short-term gain
isn’t very interesting.”
For those keeping score, a “short-term gain” for a 23-year-
old who still lives in his dad’s house now apparently equals
three-quarters of a billion dollars. In going for the long gain,
Spiegel will either become the next great billionaire prodigy
or the ultimate cautionary tale of youthful hubris.
A LANKY 6-FOOT-1, dressed in a button-down shirt,
designer jeans and plain white sneakers, Evan Spiegel hasn’t
molted the carapace of an awkward teen. Sitting at Snap-
chat’s new Venice Beach headquarters for his first-ever
in-depth media interview, he shifts abruptly from raucous
laughter to icy glares, constantly grabbing fistfuls of gummy
bears and Goldfish crackers. His conversation is pocked with
THIRTEEN MONTHS AGO Facebook’s Mark Zuckerberg,
the richest twentysomething in history, reached out to Snap-
chat’s Evan Spiegel, who oversees a revenue-less app that
makes photos disappear, with an invitation, delivered to his
personal e-mail account: Come to Menlo Park and let’s get
to know each other. Spiegel, now 23 and the brashest tech
wunderkind since, well, Zuckerberg, complete with his own
legal battle against a college buddy who helped him start his
company, responded to his role model thusly: I’m happy to
meet you … if you come to me.
And so, armed with the premise of meeting with archi-
tect Frank Gehry about designs for Facebook’s headquar-
ters, Zuckerberg flew to Spiegel’s hometown, Los Angeles,
arranging for a private apartment to host the secret sit-
down. When Spiegel showed up with his cofounder Bobby
Murphy, who serves as Snapchat’s chief technology ofcer,
Zuckerberg had a specific agenda ready. He tried to draw out
the partners’ vision for Snapchat—and he described Face-
book’s new product, Poke, a mobile app for sharing photos
and making them disappear. It would debut in a matter of
days. And in case there was any nuance missed, Zuckerberg
would soon change the large sign outside its Silicon Valley
campus from its iconic thumbs-up “like” symbol to the Poke
icon. Remembers Spiegel: “It was basically like, ‘We’re going
to crush you.’ ”
Spiegel and Murphy immediately returned to their ofce
and ordered a book for each of their six employees: Sun
Tzu’s The Art of War.
Snapchat represents the greatest existential threat yet to
the Facebook juggernaut. Today’s teens have finally learned
the lesson their older siblings failed to grasp: What you post
on social media—the good, the bad, the inappropriate—stays
there forever. And so they’ve been signing up for Snapchat,
with its Mission: Impossible-style detonation technology, in
droves. FORBES estimates that 50 million people currently
use Snapchat. Median age: 18. Facebook, meanwhile, has
admittedly has seen a decline among teenagers. Its average
user is closer to 40.
Zuckerberg understood this, which might explain the
gamesmanship. When Poke debuted, on Dec. 21, 2012,
Zuckerberg e-mailed Spiegel, telling him that he hoped
WHEN SPIEGEL MET ZUCKERBERG,
“IT WAS BASICALLY LIKE,
‘WE’RE GOING TO CRUSH YOU.’ ”
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JANUARY 20, 2014 FORBES | 81
response,” says Cook. “And Professor Wendell said, ‘Well, you
will be surprised to know he isn’t an M.B.A. student. He is an
undergraduate who is auditing this class.’ ” Cook quickly hired
Spiegel to work on an Intuit project that broadcasts Web-
based information via SMS texts in India.
Spiegel, however, was in too much of a rush to remain
content as an apprentice. In the summer of 2010 he and Mur-
phy developed Future Freshman, a suite of online software to
help parents, high schoolers and guidance counselors man-
age college admissions. “It ended up being this unbelievably
full-featured website,” Murphy recalls. One problem: “We
got, like, maybe five people on the service,” says Spiegel.
That’s when fate, in the form of another fraternity broth-
er, Reggie Brown, stepped into Spiegel’s room to discuss a
photo he wished he hadn’t sent someone. The ensuing set of
events makes The Social Network look like C-Span2.
WHILE OWNERSHIP of Snapchat remains hotly disputed,
all sides seem to agree on the genesis: Brown said something
to the efect of “I wish there was an app to send disappear-
ing photos.” Brown refused to speak to FORBES, citing the
pending litigation, but his side of the story comes through via
numerous court documents, including a leaked deposition.
According to Brown, Spiegel became “physically animated”
and repeatedly called Brown’s remark “a million dollar idea.”
(Spiegel acknowledges he was excited, but won’t comment
about the “million dollar idea” line.) That night they set out
to find a developer. Brown claims two candidates declined;
regardless, they settled on Murphy, who had just graduated.
The original roles were fairly defined: Murphy as CTO,
Brown as chief marketing ofcer, Spiegel as CEO, honing the
idea as part of a design class he was taking. The first iteration
was a clunky website that required users to upload a photo
and set a timer before sending. The eureka moment only
came when the idea migrated to mobile. “At some point it
was like, ‘Hey, there’s a camera on your phone,’ ” Spiegel says.
“ ‘Wouldn’t that be easier?’ ”
The class culminated in a presentation to a panel of
venture capitalists. Brown came up with a name for the app,
Picaboo, and Murphy put in 18-hour days to get a working
prototype. “The feedback was basically, ‘Hmmmm. Well,
thank you for showing us your project,’ ” recalls Spiegel. One
investor suggested he partner with Best Buy. Many won-
dered why anyone would want to send a disappearing photo.
The first version debuted in the iOS App Store on July
13, 2011 … to yawns. “The Instagram fairy tale”—the app had
25,000 downloads on the first day—“that was not us unfor-
tunately,” Murphy laments. The team had worked around
a potentially fatal flaw—the fact that recipients can take a
screenshot, rendering a disappearing image permanent—by
building in a notification if your picture has been captured, a
plenty of examples of “like” and “whatever.” And while Spie-
gel proves extremely opinionated on subjects like politics,
music and other techies, he’s reluctant to discuss even the
most basic CEO topics, like his ideal management team or
his long-term vision for Snapchat.
If you’re patient enough, however—one of my conversa-
tions with him lasted two and a half hours—you’ll get the full
backstory, one that shares an uncanny similarity to that of his
frenemy, Zuckerberg.
Like Zuck he was a child of relative privilege, the first-
born child of two successful lawyers (mom Melissa went
to Harvard Law and practiced tax law before Spiegel was
born, while litigator dad John, a Yale Law grad, has repre-
sented the likes of Sergey Brin and Warner Bros.), living in
tony Pacific Palisades, just east of Malibu. And like Zuck he
was a middle school nerd who found refuge in technology,
building his first computer in sixth grade, experimenting
with Photoshop in his school’s computer lab and spending
weekends at a local high school’s art lab. “My best friend was
the computer teacher, Dan,” Spiegel laughs.
In high school he began to display the moxie that Zuck-
erberg would later exhibit, promoting Red Bull at clubs and
bars and using his parents’ divorce as a leverage tactic. He
first moved in with his dad when he gave him a free hand in
outfitting his room and who could come over. “I had some
notorious parties,” he smirks. But when Pop reportedly
refused to shell out for the lease on a BMW 550i, he moved in
with Mom. Days later the BMW was his. Except for college,
he’s been based in his dad’s home, a stone-faced mansion a
half-mile north of the ocean, ever since. “A lot of things have
changed very quickly, so it’s nice to have that one constant,”
he says by way of justification. “It’s also pretty grounding.”
He entered Stanford’s product-design program and in
2010, during his sophomore year, moved into the Kappa
Sigma fraternity house. Bobby Murphy, a senior major in
mathematics and computational science, lived across the
hall. “We weren’t cool,” Murphy says of the fraternity. “So we
tried to build things to be cool.”
While Spiegel speaks animatedly, albeit measuring what
he’s saying, Murphy, the Berkeley son of state employees
(his mother emigrated from the Philippines), sits placidly,
one leg tucked under the other. “I’d describe him almost like
a monk,” says David Kravitz, Snapchat’s first hire. “I don’t
think I’ve ever seen him upset.” At Stanford it was Murphy
who first hired Spiegel, recruiting him to design an online
social network inspired by Google Circles. It went nowhere.
Still, Spiegel was getting noticed. Intuit’s Scott Cook was
impressed by an answer he gave while guest lecturing at Peter
Wendell’s popular graduate level class, “Entrepreneurship
and Venture Capital.” “After class concluded, I commented
on the intelligence and reasoning in this particular student’s

82 | FORBES JANUARY 20, 2014
Murphy added photo caption capabilities, they seemed
destined to replicate their Future Freshman experience: a
technically competent product that virtually no one wanted.
Spiegel returned to Stanford for his senior year; Murphy
took a coding job at Revel Systems, an iPad point-of-sale
company in San Francisco.
But that fall Snapchat began to exhibit a pulse. As user
numbers approached 1,000, an odd pattern emerged: App
usage peaked between 9 a.m. and 3 p.m.—school hours.
Spiegel’s mother had told her niece about the app, and the
niece’s Orange County high school had quickly embraced
Snapchat on their school-distributed iPads, since Facebook
was banned. It gave them all the ability to pass visual notes
during class—except, even better, the evidence vanished.
Usage doubled over the holidays as those students received
new, faster iPhones, and users surged that December to
2,241. By January it was at 20,000; by April, 100,000.
But with growth came server bills. While Spiegel helped
cover some of it with money from his grandfather, Murphy
had to fork over half his paycheck. As monthly expenses ap-
proached $5,000, the guys needed a bailout.
Lightspeed Venture Partners’ Jeremy Liew came to the
rescue. His partner’s daughter relayed how Snapchat had
become as popular as Instagram and Angry Birds at her Sili-
con Valley high school. But Spiegel and Murphy proved dif-
cult to track down; their website had no contact information,
and no one was listed on the company’s LinkedIn page. Liew
finally did a “whois” lookup to find the owner of the Web
potent social deterrent. Still, by the end of the summer Pica-
boo had only 127 users. Pathetic. Brown toyed with position-
ing the app as a sexting tool. (“Picaboo lets you and your boy-
friend send photos for peeks and not keeps!” reads a draft of
a press release he wrote.) Murphy’s parents implored him to
get a real job. And Spiegel apparently began pushing to shake
up the team. According to Brown’s deposition, he overheard
Spiegel and Murphy plotting to replace him.
The breaking point came when equity was being final-
ized. On Aug. 16 Brown, back home in South Carolina, called
his two partners and laid out his case. He wanted around
30%, according to Murphy’s deposition, and listed his contri-
butions: the initial idea, the Picaboo name and the now-
famous ghost logo. Spiegel and Murphy countered that he
didn’t deserve anywhere close to that. When Brown claimed
that he had “directed [the] talents” of Spiegel and Murphy,
Murphy remembers, an enraged Spiegel hung up. Spiegel
and Murphy changed administrative passwords for the app
and cut of contact except for a few tense e-mails about a
pending patent. Brown was out, relegated to Snapchat’s ver-
sion of a cross between the Winklevoss twins and Eduardo
Saverin. (Ironically, in their battle with Brown, Snapchat
has hired the legal team that pursued the Winklevoss claim
against Facebook.)
Now a two-man operation, Picaboo changed its name
to Snapchat after receiving a cease-and-desist letter from a
photo-book company with the same name. “That was like
the biggest blessing ever,” says Spiegel. But even as he and
’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13
1
10
100
1,000
10,000
$100,000
FACEBOOK
TWITTER
SNAPCHAT
INSTAGRAM
VALUATIONS ($MIL)
SOCIAL METRICS
How does Snapchat stack up against the established darlings of social media? Let us count the ways.
FORBES
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JANUARY 20, 2014 FORBES | 83
domain, linked the obscure LLC that it was registered under
to Spiegel and eventually tracked him down via Face-
book. “His profile picture was with Obama,” shrugs
Spiegel. “So I thought he seemed legit.”
In April 2012 Lightspeed put in $485,000
at a valuation of $4.25 million. “That was
the greatest feeling of all time,” says Spie-
gel. “There is nothing that will replace
that.” On the day the money went
through, he sat in a machine-shop
class busily refreshing the Wells
Fargo app on his iPhone. In a final
homage to Zuckerberg, when the
money appeared he walked up
to the professor and dropped out
of the class and Stanford, a few
weeks from graduation.
SNAPCHAT HAS MOVED
THREE TIMES since the initial in-
vestment, as the company has grown
to a still-lean 35 employees. The latest
ofces, in a former art studio a block
from the Venice boardwalk, are appro-
priately anonymous, with just a small ghost
logo to identify it. Most of the development that
has made it a viral sensation, however, took place in
2012, when the company was headquartered at Spiegel’s
NUMBER OF USERS
OCTOBER 2013
1.2 BIL
NUMBER OF USERS
OCTOBER 2013
230 MIL
NUMBER OF USERS
DECEMBER 2013 (EST.)
50 MIL
NUMBER OF USERS
SEPTEMBER 2013
150 MIL
NUMBER OF USERS
DECEMBER 2004
1 MIL
NUMBER OF USERS
AUGUST 2006
1,800
NUMBER OF USERS
SEPTEMBER 2011
127
NUMBER OF USERS
OCTOBER 2010
25,000
FACEBOOK
TWITTER
SNAPCHAT
INSTAGRAM
FACEBOOK
$6.87 BIL
TWITTER
$534.5 MIL
SNAPCHAT
0
REVENUE
LAST FOUR QUARTERS
THROUGH SEPTEMBER 2013

84 | FORBES JANUARY 20, 2014
Murphy, who have evolved Snapchat into something fun
and easy. To view a snap users hold a finger on their phone
screens, a feature designed to make it still more difcult
for people to photograph the image with another camera.
Disappearing video is now an option. And while teens have
embraced a medium unreachable by prying parents or fu-
ture employers, grownups are catching on. All told, Snapchat
users send 400 million photos and videos each day, match-
ing the daily uploads to Facebook and Instagram combined.
“We certainly didn’t invest in this to flip it,” says Mitch
Lasky, a Snapchat board member and partner at venture
capital firm Benchmark Capital, which led Snapchat’s $13.5
million fundraising round a year ago (they also raised $60
million in June from Institutional Venture Partners)—and
invested in Twitter way back in 2009.
ALL THE ASTOUNDING GROWTH, valuations and
talk of an independent future misses one key ingredient:
revenue. Asia ofers a possible blueprint (see box, oppo-
site). There, a handful of wildly popular mobile messaging
services that upsell users with “in-app purchases.” Spie-
gel’s party line, when discussing revenue, feels as if it’s read
from a script: “In-app transactions followed by advertising,
that’s the plan we’re sticking to.”
Drilling down through some of the companies that
Spiegel cites raises more questions than answers. China’s
WeChat, a massive messaging app owned by the Chinese
Internet behemoth Tencent, encourages
users to subscribe to celebrity greetings
and purchase physical goods. But it’s
mostly a texting app, and the messages
don’t disappear. Korea’s KakaoTalk and
Japan’s Line make most of their money
via mobile games, which don’t seem a
natural fit with Snapchat. And, of course,
digital goods, like premium sticker pack-
ages, emoticons and animations, are also
moneymakers in Asia, though Spiegel seems to disapprove.
“It’ll make sense in a Snapchat way,” he says. “But it will not
be stickers.”
Advertising is similarly tricky. Snapchat’s core strengths
in gaining users (your privacy is protected and your images
disappear!) cripple the targeted advertising that most social
media companies rely on (Snapchat knows little more than
e-mail, age, phone number—plus your ads disappear!).
But it has one advantage that virtually no other digital
advertiser can claim: guaranteed engagement. Users must
keep their fingers on a photo or video to view it—and that
applies to any ads thrown their way. Snapchat can tell ad-
vertisers with absolute certainty whether their ads were
viewed, a rare data point in the metric-driven world of
dad’s house. “He convinced us to drop out of Stanford and
move down to L.A. over the course of a single conversation,”
says Daniel Smith, who was hired along with Kravitz.
The team worked around the clock, sleeping where they
worked. (Smith lived in Spiegel’s sister’s room, with enough
girlish orange and pink polka dots, Spiegel remembers, “to
give you an anxiety attack.”) “Bobby had a habit of pushing
code changes and then going to sleep,” says Spiegel, who
then found himself on debugging duty. “I’d wake up in the
morning and go, ‘Oh my God!’ ” Adds Murphy: “I still have
nightmares about him stomping down the stairs.”
The arrangement proved oddly efective. Says Light-
speed’s Liew: “They can call ‘bulls--t’ on each other, which
makes their ideas better.” What emerged was an app that,
rather than a tool for the likes of Facebook, can potentially
challenge it. By both luck and design, Snapchat addresses
three red flags for Facebook. First, it’s more intimate and ex-
clusive. Just as Facebook took the anonymous Internet and
boiled it down to real people you knew, Snapchat narrows
your world from Facebook “friends,” which range from long-
forgotten schoolmates to nagging aunts, to your network of
phone contacts. People, in other words, you actually talk to.
Second, it’s perceived as young and cool. Most teens
can probably find a grandparent on Facebook. Snapchat’s
mobile-first roots give it credibility with the app generation,
which increasingly view PCs the way their parents viewed
black-and-white televisions.
And in the age of Snowden, parental Facebook moni-
toring and “revenge porn” (exes who publicly post nude
pictures of former lovers), the self-destruction feature has
become increasingly resonant. “This isn’t a silly little mes-
saging app,” insists Liew. “It allows people to revert back to a
time when they never had to worry about self-censorship.”
An entire subindustry—so-called ephemeral, or tem-
porary, social media—has emerged behind it. Besides Poke
(which has largely faded), there’s Clipchat (a Snapchat-Twit-
ter hybrid), Wickr (disappearing texts) and dozens of other
apps pushing the boundaries of digital communication back
toward what a telephone call used to be—a way to communi-
cate with little risk it will come back to bite you.
All of them, however, are stuck chasing Spiegel and
WHEN THE MONEY APPEARED,
SPIEGEL WALKED UP TO HIS
PROFESSOR—AND DROPPED OUT.
FORBES
UNDER
30
30

JANUARY 20, 2014 FORBES | 85
emerging platforms, also seem keen to not make that mistake
again. In September, for example, Snapchat debuted on the
Samsung Galaxy Gear smartwatch. “People haven’t thought
about use cases on new computing platforms,” says Thom-
as Lafont, managing director of Coatue, the hedge fund that
provided the latest $50 million infusion. “In one tap you take
a photo, one more and you can share it. Imagine [the difcul-
ty] trying to post on Instagram from a Google Glass device.”
Ah, Instagram. Zuckerberg’s Poke might be languish-
ing, but he still has the last billion-dollar app to come out
of Stanford. Kevin Systrom’s $1 billion sale last year, in fact,
is often held up as the reason Snapchat was right to turn
down Facebook’s preemptive billions. (Instagram would
digital advertising.
Like Facebook the company can also charge busi nesses
for setting up branded accounts. Acura, Taco Bell and the
New Orleans Saints already use the app to debut new prod-
ucts and show behind-the-scenes footage. The compa-
ny’s Stories feature, which lets users display a compilation
of snaps taken over the last 24 hours, is useful for brands
looking to tell a longer story. Example: Online retailer Kar-
maloop uses the feature to show clips of posing models
sprinkled with discount codes and new items. Others, like
frozen yogurt chain 16 Handles, have experimented with
“exploding coupons.”
Spiegel and Murphy, slow in their college days to adapt to
LINE. Social messaging platform is big on letting users share games and cute digital stickers, which to-
gether made up 80% of its $154 million revenue in the third quarter. Created in 2011 by engineers at the
Japanese arm of South Korea’s Naver Corp., it now claims 300 million registered users. Monthly actives
are a mystery, but one investor in a rival app suspects 27%. LINE is reportedly planning an IPO in 2014
at a valuation of $8 billion and recently set up ofces in the U.S. to court celebrity ambassadors.

WECHAT. China’s mega holding company Tencent denied reports that it blocked some of its 270
million active WeChat users, a third of whom were said to be outside China, from sending words like
“Falun Gong” earlier this year. It’s now targeting Italy, Mexico and Brazil for expansion and has experi-
mented with deposits and payments, setting up 300 WeChat vending machines in Beijing’s subway,
where users could buy discounted snacks through the app.

KAKAOTALK. Seven-year-old, game-focused messaging platform booked $65 million in sales in first
half of 2013 after splitting proceeds with game developers, Apple and Google. Ofers 250 games and
free group calls and is said to be on nearly every phone in South Korea, one of the most wired coun-
tries on Earth. Claims to have 110 million registered users.

KIK MESSENGER. Founded after former BlackBerry intern became frustrated that the devicemaker
wouldn’t make its BBM messenger work with other phones, then left to create Waterloo, Ont.-based Kik,
which did. Now has more than 100 million registered users, half of whom are in the U.S. and many of whom
are teens. Unique in being a Web-based messenger with 30 “Cards,” or interactive mobile sites, like You-
Tube and games; 26-year-old founder says it’s evolving into a mobile browser with messaging as its core.
With $27.5 million in VC funding, it plans to make money through ads and premium services.
WHATSAPP. World’s most popular messaging app has 400 million monthly active users and was the
first messaging service to synch with the phone’s address book; is on almost all smartphones in Spain
but largely unknown in the U.S. The profitable, subscription-based service—it costs $1 annually after
the first free year—took $8 million from Sequoia Capital in 2011 and has since shunned funding, media
and advertising. No immediate plans to expand to games and stickers, but simply send messages,
photos and video to any mobile phone. —Parmy Olson
ASIA CALLING
Evan Spiegel points to mobile-messaging apps popular in the Far East as potential business models
for Snapchat. Here are the leaders.

Amit Avner | 28
Cofounder | Taykey
Michael Buckwald, David Holz
| 25, 25
Cofounders | Leap Motion
Eric Butler | 26
Security expert
Tracy Chou | 26
Software engineer | Pinterest
Patrick Collison, John Collison
| 25, 23
Cofounders | Stripe
Adam D’Angelo | 29
Cofounder | Quora
Greg Dufy | 27
Cofounder | Dropcam
Steven Eidelman, Ben Jacobs
| 28, 26
Cofounders | Whistle
Kelsey Falter | 23
Founder | Poptip
Lisa Falzone | 28
Cofounder | Revel Systems
Ryan Farris | 29
Engineering manager | Parker
Hannifin
AJ Forsythe | 25
Cofounder | iCracked
Adam Ghetti | 27
Founder | Ionic Security
Meron Gribetz | 28
Founder | Meta
Michael Heyward | 26
Cofounder | Whisper
Alexa Hirschfeld, James
Hirschfeld | 29, 27
Cofounders | Paperless Post
Morgan Knutson | 29
Designer | Dropbox
Sahil Lavingia | 21
Founder | Gumroad
Ted Livingston | 26
Founder | Kik Messenger
Erie Meyer, Aminatou Sow | 29, 28
Cofounders | Tech LadyMafia
Eric Migicovsky | 27
Founder | Pebble
Sean Rad | 27
Cofounder | Tinder
Christian Reber | 27
Founder | Wunderlist
David Moinina Sengeh | 26
Biomechatronics researcher | MIT
Media Lab
Evan Spiegel, Bobby Murphy
| 23, 25
Cofounders | Snapchat
Robby Stein | 28
Director of product | Yahoo
Ilya Sukhar | 28
Cofounder | Parse
Amir Taaki | 25
Cofounder | Dark Wallet
David Wang | 28
Hacker | Evad3rs
John Zimmer | 29
Cofounder | Lyft
30 UNDER 30:
TECH
JUDGES:
MIKE ABBOTT General partner
| Kleiner Perkins Caufield &
Byers
STEVE CASE CEO | Revolution
CATERINA FAKE Founder
| Findery 86 | FORBES JANUARY 20, 2014
be worth as much as ten times more
now.) Zuck is going after Snapchat
again with a tweak to Instagram—
Instagram Direct, a Snapchat knock-
of with a key diference: The imag-
es don’t vanish unless users go in and
delete them.
Spiegel and Murphy have an-
other headache. Brown’s lawsuit,
which asks for one-third of the com-
pany plus punitive damages, might
go to trial this year. “It’s definite-
ly over a billion dollars we’re seek-
ing,” says Luan Tran, one of Brown’s
three lawyers. Insiders say Snapchat
is eager to try the case, but videos
of depositions, presumably leaked
by Brown’s team, show Spiegel and
Murphy far more equivocal and for-
getful than their opponent. “I’m just
hoping it gets resolved so it doesn’t
prove to be a distraction,” says
Benchmark’s Lasky.
The proverbial “adults” have
been brought in, including Philippe
Browning, the vice president of
monetization, nabbed from CBS, and
COO Emily White, poached from
the business division of, yes, Insta-
gram. But, tellingly, the company
prevented FORBES from interview-
ing either of them.
So for now the doubters carry the
day. “There’s an almost ritual incan-
tation when these things reach 50
million daily active users and people
say, ‘Well they’re not making any rev-
enue,’ ” says Lasky. “It’s unfair to ex-
pect these things to generate reve-
nue while growing so quickly.” To his
point, the same was said about Twit-
ter and Facebook. But it was also in-
toned by the dot-com oracles on the
eve of catastrophe 15 years ago. Will
Snapchat wilt like MySpace, get out
at a peak valuation the way Mark
Cuban sold Broadcast.com or prove
the next great social media IPO? We
should get our answer within two
years, just in time for Spiegel to turn
the ripe old age of 25.
FORBES
UNDER
30
30
F

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88 | FORBES JANUARY 20, 2014
3O UND
Introducing the brightest young stars in 15 diferent felds. These
energy and innovations of the moment, much as Atari joysticks and
PHOTOGRAPHER: Jamel Toppin CREATIVE STYLE DIRECTOR: Joseph DeAcetis PRODUCER: Robyn Selman
PRODUCTION ASSISTANT: Mehrunnisa Wani HAIR AND GROOMING: Mary Reid FASHION ASSISTANT: Alexa Rizk
FROM LEFT:
Trip Adler, Nic Borg,
Jamail Larkins, Meg Gill,
Lucas Duplan, Shiza Shahid,
Nate Levine, Palmer Luckey,
Brian Wong, Divya Nag.
EDITED BY CAROLINE HOWARD AND MICHAEL NOER

ER 3O
unders, brand-builders and do-gooders embody the
e the decade that almost all of them were born in.
REPORTERS: ART & STYLE: Susan Adams, Hannah Elliott EDUCATION: Caroline Howard ENERGY & INDUSTRY: Christopher Helman, Joann Muller, Aaron Tilley FINANCE: Nathan Vardi, Agustino Fontevecchia,
Halah Touryalai FOOD & DRINK: Randall Lane, Vanna Le GAMES: David M. Ewalt HOLLYWOOD & ENTERTAINMENT: Dorothy Pomerantz, Kate Pierce LAW & POLICY: Daniel Fisher, Miguel Morales MARKETING &
ADVERTISING: Jennifer Rooney MEDIA: Jef Bercovici, Emily Inverso MUSIC: Zack O’Malley Greenburg SCIENCE & HEALTH CARE: Matthew Herper, Andrea Navarro SOCIAL ENTREPRENEURS: Erin Carlyle, Prerna
Sinha SPORTS: Tom Van Riper, Alex Morrell TECH: Steven Bertoni, Andy Greenberg, Connie Guglielmo, Kashmir Hill, Alex Knapp, Alex Konrad, Ryan Mac, Parmy Olson, Bruce Upbin

Megan Amram | 26
Writer-comedian
Oliver Bogner | 20
Executive producer | Bogner
Entertainment, Relativity
Television
Bing Chen | 27
Global creator development &
management lead | YouTube
Ryan Coogler | 27
Director-writer
Lena Dunham | 27
Actress-writer-producer
Megan Ellison | 27
Founder | Annapurna Pictures
Dave Franco | 28
Actor-writer-producer
Todrick Hall | 27
Actor-writer-director-singer
Ian Hecox, Anthony Padilla
| 26, 26
Founders | Smosh
Grace Helbig | 28
Actress-comedian
Stephanie Herman | 29
VP, casting | Twentieth Century
Fox Television
Michael B. Jordan | 26
Actor
Anna Kendrick | 28
Actress
Jennifer Lawrence | 23
Actress
Tom Leach | 28
VP, development & current
programming | One Three Media
Deborah McIntosh | 29
Agent | WME Global
Mickey Meyer | 29
Cofounder | JASH
Kelly Osbourne | 29
TV host
Tiler Peck | 24
Ballerina | New York City Ballet
Aubrey Plaza | 29
Actress
Issa Rae | 28
Writer-producer-director
Heather Regnier | 28
Writer-comedian
Simon Rich | 29
Writer
Jason Ruiz | 28
Animator
Taylor Schilling | 29
Actress
Nev Schulman | 29
Filmmaker-producer
Quvenzhané Wallis | 10
Actress
Andy Weil | 29
VP, comedy development
| Universal Television
Rebel Wilson | 27
Actress-writer-producer
HOLLYWOOD &
ENTERTAINMENT
JUDGES:
MICHAEL EISNER Founder
| The Tornante Company
TODD LIEBERMAN Partner
| Mandeville Films
DANA WALDEN CEO | Twentieth
Century Fox Television
OLIVIA WILDE
ACTRESS-
SOCIAL ENTREPRENEUR
29
Fundraising is the bane of every do-
gooder’s existence, often requiring
going back to the same rich donors
over and over again to convince
them to keep giving. Actress
Olivia Wilde thinks there’s a better
way. That’s why she cofounded
Conscious Commerce. The company
pairs brands with causes to help
corporations become better global
citizens. So profits from a bestselling
dress at Anthropologie might go to a
girls’ school in India, while a limited-
edition bag at Alternative Apparel
could fund a hospital in Haiti. “I’ve
always been a huge proponent of
voting with your dollars,” says Wilde.
“I’m inspired by the movement of
entrepreneurs from my generation
who are encouraging people to think
about where their dollars are going.”
This year Conscious Commerce
raised $100,000 for New Light, a
community-development project
serving the women and children
of a red-light district in Kolkata,
India. Conscious Commerce now
shares time with Wilde’s acting, but
she’s getting raves for her recent
performance in Drinking Buddies.
OLIVIA WILDE WEARS: SKIRT BY TOCCA; TOP BY RODARTE;
JEWELS BY JENNIFER MEYER; BOOTS BY JIMMY CHOO.
FORBES
UNDER
30
30
Wilde (b. 1984) gets all wrapped
up in VHS tape, the central player
of the video-coming-of-age indie
classic Sex, Lies, and Videotape.
JANUARY 20, 2014 FORBES | 91

Muthu Alagappan | 23
Consultant | Ayasdi
Jonathan Amoona | 29
Associate | Winston & Strawn
Alana Blanchard | 23
Surfer
Michael Bradley | 26
Midfielder | AS Roma
Drew Cannon | 23
Basketball operations analyst
| Boston Celtics
Sidney Crosby | 26
Center | Pittsburgh Penguins
Andrew Daines | 27
Cofounder | Preplay Sports
Mike Disner | 28
Director of football administration
| Arizona Cardinals
Kevin Durant | 25
Forward | Oklahoma City Thunder
Brittney Griner | 23
Center | Phoenix Mercury
Rob Gronkowski | 24
Tight end | New England Patriots
Bryce Harper | 21
Outfielder | Washington Nationals
LeBron James | 29
Forward | Miami Heat
Alex Kline | 19
Founder | The Recruit Scoop, Rivals
Shane Kupperman | 28
Director of basketball operations
| New Orleans Pelicans
Rory McIlroy | 24
Golfer
Lionel Messi | 26
Forward | FC Barcelona
Andy Murray | 26
Tennis player
Kei Nishikori | 24
Tennis player
Megha Parekh | 28
Vice president | Jacksonville
Jaguars
Derrick Rose | 25
Point guard | Chicago Bulls
Ronda Rousey | 26
MMA fighter
Maish Simon | 27
Cofounder | Pogoseat
Jonathan Toews | 25
Center | Chicago Blackhawks
Mike Trout | 22
Outfielder | Los Angeles Angels of
Anaheim
Lindsey Vonn | 29
Skier
Darrell Wallace Jr. | 20
Nascar driver
Shaun White | 27
Snowboarder
Caroline Wozniacki | 23
Tennis player
SPORTS
JUDGES:
PETER GUBER Co-owner | Golden
State Warriors
JOSEPH A. BAILEY III Managing
director | RSR Partners
SHAWN MCBRIDE SVP | Ketchum
Sports & Entertainment
MARIA SHARAPOVA
TENNIS PLAYER
26
This winter the world’s fourth-
ranked tennis player heads back
to her hometown, the resort of
Sochi, Russia, to serve as an NBC
correspondent for the 2014 Winter
Olympics. There’s a reason the
network wants her face on the
games: Sharapova sells. She was
the world’s highest-paid female
athlete last year, earning $29 million,
of which $23 million came from
deals of the court. A four-time
grand-slam winner, she’s piled up
endorsements over the years from,
among others, Porsche, Motorola,
Tifany and Nike, which created
a Maria Sharapova apparel line.
Last year she launched her first
independent business, a candy line
called Sugarpova, with 12 flavors of
premium candies (not to mention
jewelry and accessories featuring
the Sugarpova lips logo) and
estimated revenues of $6 million.
“Business has always been a passion
of mine,” she says. “And I have
always had a sweet tooth. … A tennis
career is such a small part of life.”
MARIA SHARAPOVA WEARS: ALEXANDER MCQUEEN,
PALE BLUE PIQUET TOP, SAKS FIFTH AVENUE;
DOLCE & GABBANA, BLACK SKIRT, SAKS FIFTH AVENUE;
JENNIFER MEYER, JEWELRY.
FORBES
UNDER
30
30
Sharapova (b. 1987) swings a vintage
racket from the era when female
champs Martina Navratilova and
Tracy Austin held court.
92 | FORBES JANUARY 20, 2014

Luis Alvarado | 29
Investment research analyst
| Wells Fargo Private Bank
George Bachiashvili | 28
Founder | Georgian Co-Investment Fund
Lucy Baldwin | 29
Managing director | Goldman Sachs
Sam Barnett | 24
Founder | SBB Research Group
Ganesh Betanabhatla | 28
Managing director | Talara Capital
Tracy Britt Cool | 29
Financial assistant to the chairman
| Berkshire Hathaway
Rushabh Doshi | 29
Trader | DW Investment Management
Leigh Drogen | 27
Founder | Estimize
Fred Ehrsam | 25
Cofounder | Coinbase
Eric Eisner | 29
Vice president | Bank of America Merrill
Lynch Global Banking & Markets
Stephen Ensley | 29
Principal | Hellman & Friedman
Brian Feinstein | 28
Partner | Bessemer Venture Partners
Eugene Gokhvat | 28
Portfolio manager
| BlueCrest Capital Management
Cameron Horwitz | 29
Research director | U.S. Capital Advisors
Kevin Kaiser | 26
Managing director | Hedgeye Risk
Management
Katie Keenan | 29
Associate | Blackstone Group
Eric Khrom | 28
Founder | Khrom Capital Management
Maximilian Kuss | 27
Founder | European Media Holding AG
John Locke | 29
Principal | Accel Partners
Carryn McLaughlin | 29
Vice president | JPMorgan Chase
Chaitanya Mehra | 28
Portfolio manager | Och-Zif Capital
Management
Neil Mehta | 29
Founder | Greenoaks Capital
Vivek Ramaswamy | 28
Investment analyst | QVT Financial
Adam Rodman | 29
Founder | Segra Capital Management
Matthew Schoenfeld | 26
Associate | Morgan Stanley
Sam Shikiar | 28
Vice president | Goldman Sachs
Jefrey Sun | 29
Executive director | Morgan Stanley
Andrew Silverman | 28
Vice president | Goldman Sachs
Chris Yetter | 29
Head of Latin American Investments
| Falcon Edge Capital
FINANCE
LUCAS DUPLAN
FOUNDER, CLINKLE
22
Just over a year after receiving his
undergrad computer science degree
from Stanford, Duplan is running one
of the most hyped and controversial
startups in the nation, Clinkle, which
seeks to disrupt the way financial
transactions are done—with a digital
wallet used on mobile phones. He has
shocked Silicon Valley with his ability to
raise $30 million from the likes of Richard
Branson, Peter Thiel and Andreessen
Horowitz for an unreleased secret
product and attract talent like former
Netflix CFO Barry McCarthy, who is now
Clinkle’s COO. At the same time Duplan
has been slammed by tech bloggers,
who have pointed to the large number
of departing employees—one of whom
anonymously posted a harsh criticism
of Duplan—and made fun of some of his
decisions, like the over-the-top video ad
Clinkle produced. “At the end of the day
only one thing will matter: Do people
like and use our product?” says Duplan.
“Our focus is not on the press or who is
backing it. Our focus is on product.”
JUDGES:
JIM BREYER Partner | Accel Partners
ANTHONY SCARAMUCCI Founder
| SkyBridge Capital
ADAM ZOIA CEO | Glocap
LUCAS DUPLAN WEARS: SWEATER ($556), SHIRT ($280)
AND PANTS ($327) BY PAUL AND SHARK; PAULSHARK.IT.
SHOES: HIS OWN.
JANUARY 20, 2014 FORBES | 93
FORBES
UNDER
30
30
“Greed is good” and outsize mobile
phones are shorthand for 1980s-era
Wall Street for young financiers like
Duplan (b. 1991).

MEDIA
JUDGES:
ARIANNA HUFFINGTON Cofounder
| Hufngton Post Media Group
BEN SHERWOOD President | ABC
News
SHANE SMITH Cofounder | Vice
Media
TRIP ADLER
COFOUNDER, SCRIBD
29
An avid surfer and sometime street-
busking saxophonist with a Harvard
degee in biophysics, Adler is a man
of many interests. He thinks readers
ought to be able to indulge their own
diverse curiosities as well—and be
able to “think about what to read,
not what to buy,” as he says. Scribd,
the digital content-sharing platform
he cofounded in 2007, is betting big
on subscriptions: $8.99 a month for
unlimited e-book downloads. It has
already partnered with more than
100 publishers for a catalog of more
than 100,000 titles and has ambitions
that extend well beyond books. “We
want to be the world’s digital library,”
he says. Profitable, with revenues in
the “tens of millions” and a user base
of 80 million, Scribd no longer has to
rely on VC funding. “Our challenge
now is how to take our profits and
reinvest them to continue to grow our
revenue,” he says.
TRIP ADLER WEARS: JACKET ($595), SHIRT ($295) AND SLACKS
($450) BY CALVIN KLEIN COLLECTION; AVAILABLE AT CALVIN
KLEIN MADISON AVENUE STORE. BELT ($40) BY NAUTICA;
NAUTICA.COM. SHOES ($780) BY PRADA; PRADA.COM.
FORBES
UNDER
30
30
Tom Wolfe’s hardcover The Bonfire
of the Vanities was fly in 1987. Now
Adler (b. 1984) is busy disrupting
the book business.
94 | FORBES JANUARY 20, 2014
Pete Cashmore | 28
Founder | Mashable
Kelly Evans | 28
Anchor | CNBC
Dan Fletcher | 26
Cofounder | Beacon
Matt Galligan | 29
Cofounder | Circa
Tavi Gevinson | 17
Cofounder | Rookie
Axel Hansen, Jonah Varon | 22, 22
Cofounders | Newsle
Jake Horowitz, Chris Altchek | 26, 26
Cofounders | PolicyMic
David Karp | 27
Founder | Tumblr
Ezra Klein | 29
Columnist | Washington Post
Dan Koh | 28
General manager | HufPost Live
Chris Lavergne, Alex Magnin | 25, 29
Founder, COO | Thought Catalog
Libby Lefer | 28
Strategic partnerships manager | Facebook
Uzoamaka Maduka | 26
Cofounder | The American Reader
Claire Mazur | 29
Cofounder | Of a Kind
Brit Morin | 28
Founder | Brit + Co.
Matt Mullenweg | 29
Founder | Automattic
Carolyn Penner | 28
VP of communications | Twitter
Tifany Pham | 27
Director of business development, strategic
initiatives and partnerships | CBS
Olenka Polak | 20
Cofounder | MyLingo
Sterling Profer | 27
Director of platform | Vice
Rachel Rosenfelt | 28
Cofounder | The New Inquiry
Melissa Rosenthal | 25
Director of creative services | Buzzfeed
Callie Schweitzer | 25
Director of digital innovation | Time
Nikhil Sethi, Garrett Ullom | 25, 24
Cofounders | Adapt.ly
Shane Snow | 29
Cofounder | Contently
Jason Stein | 29
Founder | Laundry Service
Brian Stelter | 28
Host, Reliable Sources | CNN
Eric Stromberg | 25
Cofounder | Oyster
Fernando Vila | 28
VP of programming | Fusion

Peter Asbill, Elliott Breece | 29, 29
Cofounders | Songza
Avicii | 24
Musician
Justin Bieber | 19
Musician
J. Cole | 28
Musician
Miley Cyrus | 21
Musician
Donnie Dinch | 29
Founder | WillCall
Drake | 27
Musician
Derrick Fung | 26
Founder | Tunezy
Calvin Harris | 29
Musician
Hunter Hayes | 22
Musician
Kim Kaupe | 28
Cofounder | ‘ZinePak
Lady Gaga | 27
Musician
Kendrick Lamar | 26
Musician
Ryan Lewis | 25
Producer
Lorde | 17
Musician
Miguel | 28
Musician
Janelle Monáe | 28
Musician
One Direction | 19, 20, 20, 20, 22
Musicians
Wilson Owens | 28
Cofounder | Royalty Exchange
Jordan Passman | 27
Founder | ScoreAScore
Katy Perry | 29
Musician
Rihanna | 25
Musician
James Sider | 29
Founder | BandPage
Allen Stone | 26
Musician
Taylor Swift | 24
Musician
Sam Tarantino, Josh Greenberg
| 27, 26
Cofounders | Grooveshark
Alex White | 27
Cofounder | Next Big Sound
Wiz Khalifa | 26
Musician
Zedd | 24
Musician
MUSIC
JUDGES:
KEVIN LILES Founder | KWL Enterprises
JOHN OATES Musician | Hall & Oates
MICHAEL RAPINO CEO | Live Nation
Entertainment
BRUNO MARS
MUSICIAN
28
When halftime rolls around at Super Bowl XLVIII,
it’s safe to say Bruno Mars won’t be worried
about the score. “Hawaii doesn’t have a team, so
I bounce around,” says the Honolulu native. “I go
for the underdog.” That term hardly describes
Mars, who will play the halftime show in the
tradition of Paul McCartney, U2, Michael Jackson
and other music legends. Mars is the first artist
in ten years to headline before turning 30, but
he’s already got two platinum albums and 14
past Grammy nominations (including one win),
with 4 new ones this year. His best preparation
for the upcoming performance at MetLife
Stadium may have been hosting Saturday Night
Live in 2012, despite having about as much
experience with sketch comedy as Hawaii has
with snow. Says Mars: “You gotta be fearless,
man. … If I’m ever gonna sing in a blizzard, it may
as well be at the Super Bowl.” To listen to Mars’
curated playlist, created exclusively for FORBES’
30 Under 30, go to forbes.com/under30.
P
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JANUARY 20, 2014 FORBES | 95
FORBES
UNDER
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30
Mars (b. 1985) sports a post-Saturday NIght
Fever meets Prince look.

Elizabeth Alpern, Jefrey Yoskowitz | 29, 29
Co-owners | The Gefilteria
Adam Altnether | 27
Co-owner | Craft Restaurants
Matt Brockman, Ross Brockman, Tyler Mosher
| 27, 25, 25
Founders | Downeast Cider House
Borahm Cho | 29
Cofounder | Kitchensurfing
Emily Doubilet, Jessica Holsey | 29, 29
Cofounders | Susty Party
Shore Gregory | 29
President | Island Creek Oysters
Eden Grinshpan | 27
Host, Eden Eats | Cooking Channel
Luke Holden | 29
Founder | Luke’s Lobster
Yuki Ieto | 29
Chef | Pubbelly Sushi
Jesse Katz | 29
Head winemaker
| Lancaster Estate and Roth Winery
Joseph “JJ” Johnson | 29
Chef de cuisine | The Cecil
Vincent Kitirattragarn | 29
Founder | Dang Foods
Oliver Kremer | 27
Cofounder | Dos Toros Taqueria
Adam Lowy | 28
Founder | Move for Hunger
Aditi Malhotra | 28
Founder | Tache Artisan Chocolate
Carlton McCoy | 29
Wine Director | The Little Nell Hotel
Jack McGarry | 24
Co-owner | The Dead Rabbit
Leslie Pariseau | 28
Deputy editor | Punch
Thomas Pastuszak | 29
Wine director | The NoMad Restaurant
Alex Pemoulie | 28
Founder | Thirty Acres
Jason Pfeifer | 29
Chef de cuisine | Maialino
Eric Railsback | 28
Cofounder | Les Marchands Wine Bar & Merchant,
Lieu Dit Winery
Ali Rosen | 28
Founder | Potluck Video
Erica Shea, Stephen Valand | 29, 28
Cofounders | Brooklyn Brew Shop
Rob Spiro | 29
Cofounder | Good Eggs
Ben Towill, Philip Winser | 29, 29
Cofounders | Silkstone Group
Christina Turley | 29
Director of sales and marketing
| Turley Wine Cellars
Jason Wang | 25
CEO | Xi’an Famous Foods
Catherine Zamoiski | 29
Director of marketing | Pret A Manger
FOOD &
DRINK
JUDGES:
DANNY MEYER CEO | Union
Square Hospitality Group
LEE SCHRAGER Founder | South
Beach and New York Wine &
Food festivals
ALICE WATERS Founder | Chez
Panisse
MEG GILL
COFOUNDER,
GOLDEN ROAD BREWING
28
Beer, it’s clear, isn’t just for dudes.
Women are drinking more of it. And
as Meg Gill proves, they’re making
more of it, too. Amid America’s craft
beer explosion—more than 2,000 at
last count—FORBES reckons that Gill,
28, is the youngest female brewery
owner in the country. And her Los
Angeles-based Golden Road Brewing
is one of the fastest-growing; it
produced 15,000 barrels last year
and expects to double that output
this year. “It’s all about finding those
relationships to help support the
story behind the beer, the beer itself
and all the love that goes into getting
the beer into the right vessel,” says
Gill, who spent her time at Yale in the
decidedly beer-unfriendly realms of
classics study and varsity swimming.
Yet she credits the former with her
unique outlook on suds: “Latin is
about putting pieces of the puzzle
together, and the same thing is true
of getting beer on the shelf.” Gill,
who sold beer from an R.V. before
cofounding Golden Road with an
industry veteran, Mohawk Bend
owner Tony Yanow, reaches those
shelves by putting her high-end
brews—$7.99 for a 16 oz. four-pack—
inside aluminum cans. Revenues
exceeded $10 million in 2013, and
Gill plans to expand her dozen-
plus oferings outside her southern
California base in 2014.
MEG GILL WEARS: JACKET ($950) BY STRENESSE SS;
STRENESSE.COM. SKIRT ($371) BY EKATERINA KUKHAREVA;
KUKHAREVA.COM. PUMPS ($148) BY COLE HAAN;
AVAILABLE AT DILLARD’S; DILLARDS.COM.
96 | FORBES JANUARY 20, 2014
FORBES
UNDER
30
30
Two decades before Gill (b. 1985)
was legal to drink, Cheers made
suds safe for prime-time TV.

Maria Alegre | 28
Cofounder | Chartboost
Alexander Bruce | 27
Owner | Demruth
Anthony Burch | 25
Lead writer | Gearbox Software
Terry Cavanagh | 29
Director | Distractionware Limited
Brian Cho | 28
Partner | Andreessen Horowitz
Jessie Coombs | 28
Senior producer | Microsoft Game Studios
Matthew Davis | 28
Cofounder | Subset Games
Zach Gage | 28
Game designer
Alexander Garfield | 28
CEO | Evil Geniuses
John Graham | 27
Cofounder | Humble Bundle
Keith Guerrette | 28
Lead FX artist | Naughty Dog
Stephanie Harvey | 27
Game designer | Ubisoft Montreal
Justin Ignacio | 23
Broadcast production manager | Twitch
Tom Jubert | 29
Narrative designer
Ludwig Kietzmann | 29
Editor-in-chief | Joystiq
Andrew Kim | 22
Industrial designer | Microsoft
Jaedong Lee | 23
Professional gamer
David Louche | 19
Game designer
Justin Ma | 28
Cofounder | Subset Games
Matthew Malone | 29
Designer | Branch
Alexander Martin | 22
Founder | Droqen
Matt Nava | 27
Creative director | Giant Squid
John Nesky | 28
Feel engineer | thatgamecompany
Sean Plott | 27
CEO | Day[9]TV
Amir Rao | 29
Studio director | Supergiant Games
Matt Thorson | 25
Game developer | Matt Makes Games
Greg Wohlwend | 29
Founder | aeiowu
Justin Wong | 28
Director of partnerships | Twitch
Davey Wreden | 25
Creative mistress | Galactic Cafe
GAMES
JUDGES:
MARTIN RAE President | Academy
of Interactive Arts & Sciences
JOHN ROMERO Cofounder
| Loot Drop
JULIE UHRMAN Founder | OUYA
PALMER LUCKEY
CEO, OCULUS VR
21
Virtual reality for the masses is no
longer just science fiction, thanks to this
21-year-old videogame fan. Engineering
prodigy Palmer Luckey started
developing his own head-mounted
virtual-reality displays when he was
still in high school and was in college
when he created the first prototype of a
consumer-priced VR headset called the
Oculus Rift. “You put it on,” says Luckey,
“and you feel like you’re inside of the
game, rather than looking at it
on a screen.” Endorsements from
game industry legends such as Valve’s
Gabe Newell and id Software’s
John Carmack helped Luckey raise
$2.4 million in a 2012 Kickstarter
campaign. (Carmack was so impressed
he even left id to work for Luckey as
his CTO.) The year-old company has
raised over $91 million from venture
capitalists, employs 50 people and has
released an early version of the device
to software developers, who are already
showing of some innovative VR games
and applications. Consumers will be
able to buy their own headsets—which
will initially work only with PC and
mobile games—for a goal price of $300
sometime later this year.
PALMER LUCKEY WEARS: JACKET ($800) BY STONE
ISLAND; STONEISLAND.COM. SWEATER ($450) BY STONE
ISLAND SHADOW; STONEISLAND.COM. JEANS ($165) BY
JACK OF SPADES; JACKOFSPADES.COM.
FORBES
UNDER
30
30
Luckey (b. 1992) blasts this Atari
2600 joystick, the only way to
play Space Invaders, the runaway
hit of gaming’s “golden age.”
JANUARY 20, 2014 FORBES | 97

Eren Bali | 29
Cofounder | Udemy
Katie Beck | 27
COO | 4.0 Schools
Catharine Bellinger, Alexis Morin | 23, 23
Cofounders | Students for Education Reform
Dan Berkowitz | 28
Manager | Youth Orchestra LA
Tyler Bosmeny, Dan Carroll, Rafael Garcia
| 27, 26, 26
Cofounders | Clever
Andrew Buher | 28
COO | NYC Department of Education
Sam Chaudhary, Liam Don | 27, 27
Cofounders | ClassDojo
Jennifer Chen, Joyce Meng | 27, 27
Cofounders | Givology
Sayamindu Dasgupta | 29
Ph.D. | MIT Media Lab
Katelyn Donnelly, Saad Rizvi | 27, 28
SVPs | Pearson
Aaron Feuer, Xan Tanner, David Carel
| 22, 22, 23
Cofounders | Panorama Education
Alejandro Gac-Artigas | 25
Founder | Springboard Collaborative
Brad Hargreaves, Matt Brimer | 27, 27
Cofounders | General Assembly
Jeremy Johnson | 29
Cofounder | 2U
Jeremiah Kittredge | 27
Founder | Families for Excellent Schools
Garrett Neiman | 25
Cofounder | CollegeSpring
Greg Rosenbaum | 25
Producer | SXSWedu
Alison Johnston Rue | 26
Cofounder | InstaEDU
Elliot Sanchez | 27
Founder | mSchool
Kane Sarhan | 26
Cofounder | Enstitute
Beth Schmidt | 29
Founder | Wishbone
Mandela Schumacher-Hodge | 28
Director | Startup Weekend Education
Elizabeth Ratner Slavitt | 27
Content scaling lead | Khan Academy
Zakiya Smith | 28
Strategy director | Lumina Foundation
Evan Stone, Sydney Morris | 29, 28
Cofounders | Educators 4 Excellence
Andrew Sutherland | 24
Founder | Quizlet
David Tjaden | 26
Chair, student program | National Education
Association
Caryn Voskuil | 27
Manager, school model innovation
| Rocketship Education
Tony Wan | 28
Managing editor | EdSurge News
EDUCATION
JUDGES:
MICHAEL HORN Cofounder
and executive director,
education program | The
Clayton Christensen
Institute
M. NIGHT SHYAMALAN
Oscar-nominated director
and screenwriter | author of
I Got Schooled
LUYEN CHOU SVP, global
product strategy | Pearson
NIC BORG
COFOUNDER,
EDMODO
27
In the white-hot world of
online educational startups,
Nic Borg’s Edmodo is among
the hottest, raising $25 million
in 2012 to total $57 million
since it was founded in 2008.
Edmodo, a.k.a. “Facebook for
the classroom,” targets K-12
kids, parents and teachers
and has nearly 30 million
users—over a million of
them teachers—in more than
210,000 schools, including
public schools in Chicago
and Denver. Edmodo doesn’t
create “content” but rather
is a free, privacy-protected
platform where teachers,
students and administrators
can compare and share lesson
plans, homework and tests.
It is also a showcase for app
developers, and Edmodo
currently ofers over 600 apps,
from which it takes a revenue
share. Says Borg, “While the
ed tech industry has evolved
rapidly over the past few
years, we have only seen
the tip of the iceberg. We’ll
start to better understand
how technology can be used
to improve student learning
outcomes at scale.”
NIC BORG WEARS: JACKET ($795) AND SHIRT
($225) BY TODD SNYDER; PANTS ($260)
BY J BRAND; ALL AVAILABLE AT WILKES
BASHFORD; WILKESBASHFORD.COM.
FORBES
UNDER
30
30
Borg (b. 1986) puzzles over a
Rubik’s Cube, which became
a worldwide craze in the
1980s.
98 | FORBES JANUARY 20, 2014

Christina Agapakis | 29
Postdoctoral researcher | UCLA
Ludmil Alexandrov | 27
Ph.D. candidate | University of Cambridge
Genevera Allen | 28
Assistant professor of statistics
| Rice University
Greg Alushin | 29
Early independent scientist | National Heart,
Lung, and Blood Institute
Jocelyn Brown | 25
Senior program associate | Rice 360°:
Institute for Global Health Technologies
Raghu Chivukula | 29
Resident physician | Massachusetts
General Hospital
Paige Cramer | 29
Associate principal scientist | Merck
Sharp & Dohme
Adam de la Zerda | 29
Assistant professor of structural biology
| Stanford University School of Medicine
Nicholas Downing | 28
Medical student | Yale University
School of Medicine
Richard Gaster | 29
CEO | Gaster Hall Technologies
Mitchell Guttman | 29
Assistant professor of biology
| California Institute of Technology
Daniel Paul Hashim | 27
Founder | Carbon Sponge Solutions
Rachel Haurwitz | 28
Cofounder | Caribou Biosciences
Elaine Hsiao | 28
Senior research fellow
| California Institute of
Technology
Cigall Kadoch | 28
Assistant professor of pediatric oncology
| Dana-Farber Cancer Institute
Aleksandar Kostic | 29
Postdoctoral fellow | Broad Institute
of MIT & Harvard
Anna F. Lau | 29
Clinical microbiology fellow
| National Institutes of Health
Allison Lewko | 29
Assistant professor of computer science
| Columbia University
Joshua Liu | 25
Cofounder | Seamless Mobile Health
Jonathan Ostrem | 29
Consultant | Wellspring Biosciences
Michael Pesko | 29
Assistant professor | Weill Cornell
Medical College
Surbhi Sarna | 28
Founder | nVision Medical
Josh Sommer | 26
Executive director | Chordoma Foundation
Zirui Song | 29
Medical student | Harvard Medical School
Marc Succi | 25
Cofounder | AugMI Labs
Livio Valenti | 28
Cofounder | Vaxess
David Weinberg | 28
Faculty fellow | UCSF
Daniela Witten | 29
Assistant professor of biostatistics
| University of Washington
Luhan Yang | 28
Cofounder | Egenesis
SCIENCE &
HEALTH CARE
JUDGES:
GEORGE M. CHURCH
Professor of genetics | Harvard
Medical School
MIKAEL DOLSTEN President
of worldwide research and
development | Pfizer
DANIEL KRAFT Executive
director | FutureMed
DIVYA NAG
COFOUNDER, STEM CELL
THERANOSTICS AND STARTX MED
22
Divya Nag is attacking one of medicine’s biggest problems:
the fact that most types of human cells—like those in the
heart or liver—die when you keep them in a petri dish. This
makes testing new drugs a risky, costly and time-consuming
business: 90% of medicines that start clinical trials turn
out to be too unsafe or inefective to market. But a new
technology, the induced pluripotent stem cell, may help.
Nag’s company, Stem Cell Theranostics, was created
from technology funded by a $20 million grant from
the California Institute of Regenerative Medicine
and is closing a venture round. It turns cells—
usually from a piece of skin—into embryonic-
like stem cells, then uses them to create heart
cells. These cells can live in petri dishes and be
used to test new drugs. Someday they might
even replace heart tissue that dies during
a heart attack. Three large pharmaceutical
companies are customers, though revenues
are small. Nag, who was already publishing
in prestigious scientific journals when she
was an undergraduate, dropped
out of Stanford to pursue her
dream. No regrets: “Our
technology was so
promising and I was
so passionate about
it that nothing else
made sense to
me,” she says. “It
was very clear this
was what I wanted
to do.”
DIVYA NAG WEARS: JACKET ($909) BY EKATERINA
KUKHAREVA; KUKHAREVA.COM. TANK TOP ($340) BY
DIESEL; DIESELBLACKGOLD.COM. PANTS ($240) BY
NAKED AND FAMOUS; BARNEYS.COM. PUMPS ($148) BY
COLE HAAN; AVAILABLE AT DILLARD’S; DILLARDS.COM.
JANUARY 20, 2014 FORBES | 99
FORBES
UNDER
30
30
Nag (b. 1991) looks Back to the
Future, the hit mid-’80s flick that
separated science from fiction and
put it into pop culture consciousness.

Chase Adam | 27
Founder | Watsi
Kamel Al-Asmar | 29
Founder | Nakhweh
Esra’a Al Shafei | 27
Founder | MidEast Youth
Mark Arnoldy | 27
Cofounder | Nyaya Health
Christopher Ategeka | 29
Founder | CA Bikes
Seth Bannon, Ben Lamothe
| 29, 29
Cofounders | Amicus
Bryan Baum | 24
Cofounder | Prizeo
Clara Brenner | 28
Cofounder | Tumml
Khalida Brohi | 25
Founder | Sughar
Julie Carney | 27
Cofounder | Gardens for Health
Karan Chopra | 29
Cofounder | Gadco
Dan Friedman | 22
Cofounder | Thinkful
Khalil Fuller | 21
CEO | Learn Fresh
Eric Glustrom, Boris Bulayev,
Angelica Towne | 29, 28, 27
Cofounders | Educate!
Isaac Holman, Josh Nesbit, Nadim
Mahmud | 27, 26, 28
Cofounders | Medic Mobile
Tevis Howard | 29
Founder | Komaza
Joel Jackson | 28
Founder | Mobius Motors
Lauren Bush Lauren | 29
Founder | Feed
Talia Leman | 18
Founder | RandomKid
Daniel Maree | 26
Founder | Million Hoodies
Seth Maxwell | 25
Founder | Thirst Project
Kennedy Odede | 29
Founder | Shining Hope for
Communities
Krishna Ramkumar | 28
Cofounder | Avanti
David Schwartz | 27
Cofounder | The Real Food
Challenge
Ajaita Shah | 29
Founder | Frontier Markets
Kavita Shukla | 29
Founder | Fenugreen
Yannick Sonnenberg | 25
Cofounder | elefunds
Malala Yousafzai | 16
Cofounder | Malala Fund
Mohamed Zaazoue | 26
Founder | Healthy Egyptians
SOCIAL
ENTREPRENEURS
JUDGES:
RANDALL LANE Editor
| FORBES magazine
CHERYL DORSEY President
| Echoing Green
JEFF SKOLL Founder | Skoll
Foundation
SHIZA SHAHID
COFOUNDER,
MALALA FUND
24
When Malala Yousafzai, the young
Pakistani daring to advocate for
girls’ education, was shot by the
Taliban in 2012, Shahid, who had
met Malala in 2009, got on a plane.
She helped oversee Malala’s medical
care in London. “While I was there
by her side,” says Shahid, “she woke
up and said, ‘I want to continue my
campaign.’ ” The Stanford grad and
McKinsey consultant became the
16-year-old’s chief strategist on the
spot. “How do we leverage her voice
in a way that drives all this energy
around Malala into meaningful
action?” Her answer is the Malala
Fund, founded to turn her vision for
girls’ education into reality. Grants to
date: $400,000, half from the World
Bank and half from Angelina Jolie
and Brad Pitt. A documentary on
Malala’s work by Davis Guggenheim
is expected for release in 2014.
SHIZA SHAHID WEARS: DRESS ($1,466) BY
EKATERINA KUKHAREVA; KUKHAREVA.COM.
JACKET ($1,235) BY MONCLER; MONCLER.COM.
100 | FORBES JANUARY 20, 2014
Shahid (b. 1989) carries on the
spirit of 1985’s all-star Live Aid
concert to aid the hungry and
homeless in Africa.
FORBES
UNDER
30
30

Josh Blackman | 29
Assistant professor of law | South Texas College of Law
Amanda Brown | 28
National political director | Rock the Vote
Adam Chandler | 29
Attorney | Department of Justice
Leif Dautch | 28
Deputy attorney general | California Department of Justice
David Demirbilek | 28
Minority counsel | Senate Homeland Security &
Governmental Afairs Committee
Audrey Gelman | 26
Vice president | SKDKnickerbocker
Jake Heller | 29
Cofounder | Casetext
Solomon Hsiang | 29
Assistant professor of public policy
| University of California, Berkeley
Tim Hwang | 27
Partner | Robot Robot & Hwang
Cristina Jimenez | 29
Managing director | United We Dream
Noorain Khan | 29
Associate | Wachtell, Lipton, Rosen & Katz
Derek Khanna | 25
Tech-policy scholar, activist
Eric King | 24
Head of research | Privacy International
Aaron Letzeiser | 24
Founder | Medical Amnesty Initiative
Yihong “Julie” Mao | 27
Attorney | New Orleans Workers’ Center for Racial Justice
Blake Masters | 27
Cofounder | Judicata
Jonathan Mayer | 26
Cybersecurity fellow | Center for International
Security & Cooperation
Teryn Norris | 25
Commercialization and manufacturing specialist
| Department of Energy
Corey Owens | 29
Head of public policy | Uber
Jonathan Fantini Porter | 29
Chief of staf | Department of Homeland Security
Jessica Schumer | 29
Chief of staf | Council of Economic Advisers,
Executive Ofce of the President
Amie Stepanovich | 28
Director, domestic surveillance project
| Electronic Privacy Information Center
Nabiha Syed | 28
Attorney | Levine Sullivan Koch & Schulz
Trevor Timm | 29
Executive director | Freedom of the Press Foundation
Rebecca Vallas | 29
Deputy director of government afairs | National
Organization of Social Security Claimants’ Representatives
Heather West | 29
Policy analyst | Google
Cody R. Wilson | 25
Founder | Defense Distributed
Lauren Wilson | 26
Policy counsel | Free Press
Daniel Zolnikov | 26
State representative | Montana House District 47
LAW & POLICY
JUDGES:
RONAN FARROW 30 Under 30
alum and news anchor | MSNBC
GRETA VAN SUSTEREN Host, On
the Record | Fox News Channel
WILLIAM ESKRIDGE JR. John A.
Garver Professor of Jurisprudence
| Yale Law School
NATE LEVINE
FOUNDER, OPENGOV
22
As a Stanford sophomore Nate
Levine saw opportunity where
governments have historically been
flat-footed. “Governments struggle
to access [their own] data, because
there aren’t good tools out there,”
Levine says. With that in mind
he cofounded OpenGov in 2012
at age 20. OpenGov’s software
platform helps governments make
intelligent, data-driven decisions
and exchange financial information
with their constituents. The
startup has raised over $7 million—
$4 million in 2013 alone—and works
with more than 50 municipalities,
school districts and other local
government organizations,
involving over 7 million people
nationwide. As OpenGov expands—
possibly into the for-profit sector—
Levine is focused on building new
tools to revolutionize how cities
share data with one another and
how they approach the budgeting
process. Says Levine, “Better access
to information allows ofcials to
focus on the hard problems of
governing. It’s especially important
now that governments are being
asked to do more with less.”
NATE LEVINE WEARS: JACKET ($129) BY TOMMY HILFIGER;
AVAILABLE AT TOMMY HILFIGER FIFTH AVENUE STORE.
SWEATER ($395), SHIRT ($295) AND PANTS ($295)
BY BURBERRY; BURBERRY.COM. LOAFERS ($130) BY CALVIN KLEIN;
CALVINKLEIN.COM.
JANUARY 20, 2014 FORBES | 101
FORBES
UNDER
30
30
The Internet has transformed
old-school campaigning: This 1984
Reagan-Bush pin predates Levine
(b. 1991) by nearly two elections.

102 | FORBES JANUARY 20, 2014
Ahmed Abdelrahman | 29
Fashion designer | Thamanyah
Jensen Adoni | 24
Shoemaker | Modern Vice
Rosie Assoulin | 28
Fashion designer
Michelle Campbell | 28
Jewelry designer
Ian Collings | 28
Industrial designer | Fort Standard
Asher Dunn | 27
Furniture designer | Studio Dunn
Alan Eckstein | 28
Design director | Timo Weiland
Crystal Ellis, Stephanie Beamer
| 29, 29
Furniture designers | Egg Collective
Sarah Flint | 25
Shoe designer
Alex Gartenfeld | 27
Interim director | MOCA North
Miami
Wes Gordon | 27
Fashion designer
Nikolai “Niki” Haas, Simon Haas
| 29, 29
Furniture designers | Haas Brothers
Colin P. Kelly | 29
Industrial designer | Redscout
Aimee Kestenberg | 27
Handbag designer
Jemima Kirke | 28
Painter-actress
Becca McCharen | 29
Fashion designer | Chromat
Leandra Medine | 25
Fashion blogger | The Man Repeller
Shauna Miller | 27
Fashion blogger | Penny Chic
Oscar Murillo | 27
Artist
Victo Ngai | 25
Illustrator
Lotta Nieminen | 27
Graphic designer
Aaron Poritz | 29
Furniture designer
Eric Singer | 27
Eyewear designer | Shwood
Travess Smalley | 27
Digital artist
Lucien Smith | 24
Artist
Danielle Snyder | 28
Jewelry designer | Dannijo
Tanya Taylor | 28
Fashion designer
Torey Thornton | 23
Artist
Jacob Willis | 27
Fashion designer | Second/Layer
ART &
STYLE
JUDGES:
JEFFREY DEITCH Art advisor
PETER BRANT Art collector
ISAAC MIZRAHI Fashion
designer
CARTER
CLEVELAND
FOUNDER, ARTSY
27
When Carter Cleveland was a
Princeton computer science
student back in 2008, he
went online searching for
a picture to decorate his
dorm room. “I assumed there
would be a website with
all the world’s art on it,” he
recalls. There wasn’t. So he
set out to build one, with
a Pandora-like feature that
recommends artists to users.
His company, Artsy, displays
more than 85,000 pieces of
art from 400 foundations
and museums (including
the National Gallery of Art
and the Getty) and 1,400
galleries. Though his first
impulse was simply to create
a repository of images, he
quickly realized the site could
make a lot of money from
commissions (60% of the
art on the site is for sale).
Investors such as Twitter’s
Jack Dorsey, Google’s Eric
Schmidt and mega-art
dealer Larry Gagosian have
pumped $14.5 million into
the company. Cleveland says
Jef Bezos is his inspiration:
“We’re going to become
Amazon for the art world.”
CARTER CLEVELAND WEARS: SUIT ($2,150) BY
DUNHILL; DUNHILL.COM. SHIRT ($195)
BY THOMAS PINK; US.THOMASPINK.COM. BELT
($130) BY TORINO LEATHER; TORINOLEATHER.
COM. SHOES ($350) BY PAUL EVANS;
PAULEVANS.COM.
PRODUCTION ASSISTANT: ANASTASIIA MISHYNA
GROOMING: SUZANA HALLILI FOR MAKE UP
FOR EVER
FORBES
UNDER
30
30
Cleveland (b. 1986) hearts
Keith Haring, the iconic 1980s
grafti artist and social activist
who died of AIDS in 1990.

Katrina Bekessy | 29
Director of technology & design | R/GA
Mallory Blair | 25
Cofounder | Small Girls PR
Derek Blais | 29
Senior art director | BBDO Canada
Raymond Braun | 23
LGBT marketing lead | Google/YouTube
Victor Cheng, Roger Lee | 27, 27
Cofounders | PaperG
Katrina Craigwell | 28
Global manager of digital marketing | GE
David Dinetz, Dylan Trussell, Colt Seman
| 26, 26, 28
Founders | Culprit Creative
Andrew Dumont | 26
Director of business development | Moz
Whitney Fishman | 29
Tech and consumer insights director | MEC
Teddy Gof | 28
Cofounder | Precision Strategies
Rich Greco | 28
Head of design | Droga5
Jack Hanlon | 29
Cofounder | Kinetic Social
Amy Karr | 26
Experience designer | Starcom MediaVest
Group
Joanna Kennedy | 24
Senior social media specialist | RPA
Greg Kimball | 26
Manager of digital strategy and
communications | L’Oréal
Jack Krawczyk | 29
Director of product management | Pandora
Media
Michael Kuzmich | 28
Associate director of motion graphics
| Firstborn
Douglas Lusted | 21
Cofounder | WestonExpressions
Jef MacDonald | 26
Creative technologist | The Martin Agency
Charles Merritt | 28
Partner | 80amps
Mitch Orkis | 27
Director of client development | Vizeum US
Khoa Phan | 23
Freelance Vine animator
Matthew Rubinger | 25
Director of luxury accessories | Heritage
Auctions
Maude Standish | 29
Cofounder | Tarot
Rachel Tipograph | 26
Global director of digital and social media
| Gap
Elliott Wiener | 28
Director of consumer insights | Razorfish
Farryn Weiner | 28
Global director of digital and social
communications | Michael Kors Worldwide
Elyse Winer | 28
Marketing and communications manager
| MC10 Inc.
Pranav Yadav | 28
CEO | Neuro-Insight
MARKETING &
ADVERTISING
JUDGES:
ADAM BAIN President of
global revenue | Twitter
JAMES D. FARLEY JR.
Executive VP of global
marketing, sales and service
| Lincoln, Ford Motor Co.
HELAYNE SPIVAK
Director | VCU Brandcenter
BRIAN WONG
COFOUNDER, KIIP
22
Imagine you just posted a 5-mile run
to the RunKeeper app when an ad on
your iPhone pops up ofering you a
free liter of Propel Water. Or you just
finished a particularly fiendish level
of Candy Crush and you are ofered
free Sour Patch Kids as a reward.
These “moments of achievement” and
“serendipitous rewards” are a big part
of the future of advertising, at least
according to Wong, who cofounded
Kiip in 2010, a year after graduating
from the University of British Columbia
at age 17. “We track almost half a
billion of these achievement moments
every month,” he says. “These are
moments that brands can be a part
of and own.” In three years Kiip has
raised $15.4 million and is now used by
more than 500 major brands to reach
70 million users through 1,500 games
and apps. Procter & Gamble, Pepsi and
Disney are clients. He expects to be
profitable next year.
BRIAN WONG WEARS: JACKET ($295) BY MICHAEL
KORS; AVAILABLE AT DILLARD’S; DILLARDS.COM.
SWEATER ($75) BY PV PATRICK ASSARAF; AVAILABLE
AT WILKES BASHFORD; WILKESBASHFORD.COM.
SHIRT ($79) BY VINCE CAMUTO; VINCECAMUTO.
COM. TROUSERS ($348) BY BROOKS BROTHERS;
BROOKSBROTHERS.COM.
JANUARY 20, 2014 FORBES | 103
FORBES
UNDER
30
30
Wong (b. 1991)
sees the light
behind Apple’s
1984 Super Bowl
commercial,
advertising’s first
full-on cultural
phenom.

104 | FORBES JANUARY 20, 2014
Bay and The Lodge at Koele, with a third
luxury hotel under consideration.
And that’s just the beginning. Also on the
to-do list: Expand compact, 1930s-era Lana’i
City with its brightly colored, plantation-
style cottages and develop a university cam-
pus. Following Ellison’s purchase of Lana’i’s
main air carrier, Island Air, a new runway
and airport facilities are in the works to allow
the first direct flights from the mainland. Oh,
yes—and plans call for developing industrial
areas, expanding solar power facilities, intro-
ducing electric cars and ultimately doubling
the population to around 6,000.
Not surprisingly, residents regard the
planned rollouts warily. Many worry about
preserving the character of the island. Says
one resident, “A friend recently told me that
whenever she goes to the sacred places her
family showed her, she wonders how will
she feel when there are signs pointing them
out. The branding people have already been
here asking how they should ‘sell’ the island.
That’s a very uncomfortable feeling for us.”
Still, the islanders knew something had to
change. In the last few years of the Murdock
regime the island’s economy was crumbling.
In the early 1990s Murdock had moved the
pineapple plantations overseas and shifted
W
hen Oracle CEO Larry
Ellison bought 98% of
the Hawaiian island
of Lana’i in June 2012
(for a price estimated at
$300 million to $500 million), shock waves
rippled through the sleepy, picturesque
backwater. The island’s 3,100 residents were
long inured to the semifeudal ownership
structure—since the 1860s there had been a
succession of lords of the manor, including
pineapple king James Dole and, in 1985, after
taking over Dole’s then floundering parent
company, billionaire David Murdock. But El-
lison came in with even deeper pockets and
bigger plans, guaranteed to change the face
of the island, a place that proudly has no traf-
fic lights, very few paved roads in 141 square
miles and, as one resident describes it, “not
just a slow pace—no pace at all.”
What a visitor will see now on Lana’i,
8 miles of the coast of Maui, is an old Hawaii
that exists today only in patches on the larger
islands. Locals still gather in the small, unas-
suming cafes such as Blue Ginger that ring
Dole Park in the main town, Lana’i City, to
gossip or “talk story” in the mornings. The
scenery is so lush that golfers often take
breaks between shots to simply soak in the
views. The powdery beaches, bordering wa-
ters dotted with sea turtles, are often com-
pletely deserted.
That will undoubtedly change if the proj-
ects now in discussion go forward. Ellison
has researchers working on a desalination
plant intended to increase the pumping ca-
pacity of fresh water to 10 million gallons a
day from its present 2.5 million, and there are
ongoing renovations at the two Four Seasons-
managed hotels, the Resort Lana’i at Manele
TRAVEL
Paradise 2.0
BY LAURIE WERNER
Can Larry Ellison model
the future on the Hawaiian
Island of Lana’i?
FORBES LIFE

JANUARY 20, 2014 FORBES | 105
the economic focus to tourism, opening
the beachfront Manele Bay and the English
hunting-style The Lodge at Koele in the cool-
er, higher elevations of the island. A modest
third hotel, the 11-room Hotel Lana’i, had
been built for Dole managers in 1923. But all
of the properties were foundering and with
them the livelihood of the island.
“In the beginning Murdock had incredible
vision,” says Mary Charles, who leases the
Hotel Lana’i. “But in 2008 the world blew
up; he was losing tons of money [reportedly
$20 million to $30 million a year], and he lost
interest. The population was dwindling, busi-
nesses were closing, maintenance in the hotels
and the community was deferred. Many of
us were ready to throw in the towel.”
Murdock, who declined to be in-
terviewed for this article, had a plan
to generate income for the island:
a windmill farm that could sell power to the
main island of Oahu. The resistance from
many in the community was thunderous, evi-
dent in the “No Windmills on Lana’i” signs
still lingering in some front yards. But the
resistance wasn’t unanimous, and the clash
between the pro- and anti-windmill factions
tore apart the once close-knit community.
“We had the signs, protesters—it got very
ugly,” explains Alberta de Jetley, publisher of
the monthly newspaper Lana’i Today. “The
argument was no longer rational. People
couldn’t get their minds around the fact that
the power was going to Oahu but that we
would still have benefited.”
With that economic path blocked, Mur-
dock decided to sell. Rumors swirled about
possible buyers. Bill Gates, who had rented
out all of Lana’i’s hotel rooms and booked all
of its airline seats for his wedding in 1994,
Sea change: clifs at
Lana’i’s Sweetheart
Rock; the island’s new
landlord, Larry Ellison;
the swimming pool at
Manele Bay.
C
L
O
C
K
W
I
S
E

F
R
O
M

T
O
P
:

J
E
N
N
A

S
Z
E
R
L
A
G

/

N
E
W
S
C
O
M
;

N
E
W
S
C
O
M
;

R
O
N

D
A
H
L
Q
U
I
S
T

/

G
E
T
T
Y

I
M
A
G
E
S

TRAVEL
106 | FORBES JANUARY 20, 2014
neutral colors and more open architecture,
giving on to views of the bay and its spinner
dolphins and whales. The restaurants were
also upgraded, as Ellison lured a branch of
Nobu to the island, which opened in Decem-
ber 2012 in time for his Christmas visit.
Those renovations at Manele Bay were the
focus of a recent community meeting, one of
the regular gatherings with company represen-
tatives instigated by Pulama Lana’i’s Matsumo-
to. In this one, with chairs grouped in a circle
and the afable Lynn McCrory, Matsumoto’s
senior vice president of government afairs,
leading the discussion, hugging community
members and imploring them to eat or take
home the prodigious supply of baked goods,
the questions from the 40 attendees ranged
from where the construction workers would be
living to which new retailers would come into
Manele Bay (among the names being bandied
about were Burberry and Jimmy Choo).
Most residents I talked with heartily ap-
prove of the meetings and the selection of Mat-
sumoto to head the Ellison efort. “Kurt knows
how to communicate, how the local people
solve problems,” says Butch Gima, president of
community advocacy group Lana’ians for Sen-
sible Growth. “It was refreshing to know that a
multinational corporation had the foresight to
choose someone local.”
But not everyone is mollified by the back-
and-forth. Joelle Aoki, executive director of
the Coalition for a Drug Free Lana’i, says that
she’s grateful for the positive changes. “But
every time I come out of those meetings, I
feel anxious,” she says. “I’m very concerned
about the ability of the Lana’i community to
keep their way of life. Then what if midway
through he decides to sell it?”
Kurt Matsumoto insists that Ellison’s
interest is long term, that the population
growth would be an organic, gradual progres-
sion, explaining that just because they have
access to significant funding doesn’t mean
they would or could make all of these proj-
ects instantly appear.
So it will be years before it’s clear whether
Lana’i will become the Pacific Eden that El-
lison envisions. What is clear is that the com-
munity will be watching every step. “I would
say that the mood right now is cautious op-
timism,” states Robin Kaye. “And that is 180
degrees from where it was. Previously it was
despair.”
was often mentioned. So were groups of
Chinese and Russian developers. Given the
jitters over the prospect of foreign develop-
ers, the announcement of Ellison as buyer
was met with euphoria. “Larry Ellison was
a godsend,” says De Jetley. “He has enough
money to take us to another level and help us
become sustainable.”
The island’s introduction to Ellison has
had some rocky moments, however. The first
news of his plans came from an interview
on CNBC. “He was quoted as saying that he
would use the island as a laboratory,” explains
Robin Kaye of the community advocacy group
Friends of Lana’i. “Many people were ofend-
ed by that. We live here. We’re not animals in
a study. I understand what he meant. But still.
… There was some sensitivity.”
What Ellison meant, apparently, was that
he wanted to create a world-class model of
sustainability on the island. “He saw Lana’i
as an opportunity to engage in conversations
that are happening around the world—food
security, sustainable energy—rather than sit
on the sidelines and create a fund,” explains
Kurt Matsumoto, a Lana’i native who man-
aged the hotels here for Murdock and was
brought in as COO for Ellison’s management
company, called Pulama (meaning “cher-
ish”) Lana’i, a canny message to locals that he
hopes to enhance the island and not destroy it.
“He appreciates the natural beauty of the
island,” says Matsumoto. “But I think his
main motivation is the opportunity to come
in and make a diference.” (The notoriously
press-shy Ellison declined to comment for
this article, but in the past he has described
his attachment to Lana’i, dating back to his
20s: He flew a Cessna over Lana’i’s pineapple
fields, admiring the area’s beauty, and even
then expressed a desire to buy the island.)
After the purchase Ellison immediately
made goodwill gestures to the community:
reopening and improving the community
pool that Murdock had closed to save money,
introducing youth recreational and educa-
tional programs, refurbishing buildings in
town and expanding one of the few grocery
stores, Richard’s Market.
Renovation work also began immediately
on the hotels. Murdock’s Chinese furniture
and antiques in the Resort Lana’i at Manele
Bay’s public areas were jettisoned in favor
of a sleeker, more cosmopolitan style with A
M
A
Z
O
N

/

A
P
FORBES LIFE
F
What the 53 million
Forbes.com users are talking
about. For a deeper dive go to
FORBES.COM/LIFESTYLE
TRENDING
IDEA
DELIVERY DRONES
Home-delivery copters
pique fantasies of Amazon
shoppers, generate fresh
nightmares for post of ce
and law enforcement.
EXPENDITURE
GREEN FOR GREEN
Conservation and wildlife
advocates dodge major
proposed cuts in budget
battle, but will the final
version halt decades of
funding reductions?
APP
APPLE’S IBEACON
Your phone as tracking
device: Stores know when
you walk in, stadiums
electronically usher you to
your seat. Sound appealing?
Turn on iBeacon—it’s already
installed in some 200 million
iOS devices. 

FORBES // MARKETPLACE
JANUARY 20, 2014 FOR MARKETPLACE ADVERTISING, CALL 212-206-5563
TECHNOLOGY
HEALTH & FITNESS
Total Fitness In Only
Four Minutes a Day?
Preposterous, Right?
BY BRAD ANTIN
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I
f you believe time is money, or
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HIIT (High Intensity Interval Training) program.
Studies by Professor Izumi Tabata of Ritsumeikan Uni-
versity (creator of the world-renowned Tabata Protocol),
Professor Martin Gibala of McMaster University, and Jamie
Timmons, professor of ageing biology at the University of
Birmingham all proved that short bursts of high intensi-
ty training were actually much more efective than the long
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Te best news is that certain HIIT programs beat con-
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FORBES // MARKETPLACE
JANUARY 20, 2014 FOR MARKETPLACE ADVERTISING, CALL 212-206-5563
What Your Annuity Salesman
Doesn’t Want You To Know
If you own an annuity or if
someone is trying to sell you
one, I urge you to call for
your free report. Annuities
can lock you into low returns,
complicate your tax situation,
tie up your wealth and hit you
with high fees. If you have an
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decide if it is right for you and
if it isn’t, we might be able to
help you get out of it and even
help you offset some of the
surrender fees.*
This free report could save
you from making one of the
biggest investment mistakes
of your life. And for owners
of annuities, the free analysis
could be a life saver.

Ken Fisher
– CEO and Co-Chief Investment
Officer, Fisher Investments
– Forbes “Portfolio Strategy”
columnist for 29 years
– Author of 10 financial
books, including four
New York Times bestsellers
Please hurry! This offer contains time-sensitive information.
Call today for your FREE report!
1-800-695-5929 Ext. A194
©2013 Fisher Investments. 5525 NW Fisher Creek Drive, Camas, WA 98607.
Investments in securities involve the risk of loss. *Subject to Terms and
Conditions. See www.AnnuityAssist.com/Terms-and-Conditions for further
information. **As of 6/30/2013.
®
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please call 1-800-695-5929 for a special report, Annuity Insights: Your Guide to Better
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And be not drunk with wine, wherein is
excess; but be flled with the Spirit.
—EPHESIANS 5:18
Think of weight gain as merely
a rounding error.
—RICHARD HYFLER
112 | FORBES JANUARY 20, 2014
THOUGHTS
“The gap between what we would like to be and
what we are is widening. American advertising and
the mass media portray a relentless urge for ftness.
But the truth is that we are not a nation of joggers,
iron-pumpers and whisper-thin fashion models.
Rather, we are, increasingly, a nation of broad
bottoms and bulging middles.”
—FROM THE NOV. 17, 1986 ISSUE OF FORBES
The one way to get thin is to
reestablish a purpose in life.
—CYRIL CONNOLLY
Seeing is deceiving.
It’s eating that’s believing.
—JAMES THURBER
The diet book is one of those
fool-and-money separation devices
that seems, like roulette or slot
machines, never to lose its power.
—CHRISTOPHER HITCHENS
Gluttony is
an emotional
escape, a sign
that something
is eating us.
—PETER DE VRIES
Before long it will
be the animals who
do the dieting so
that the ultimate
consumer does
not have to.
—MIMI SHERATON
FINAL THOUGHT
Wanna waste money? Buy diet books.
Wanna make money? Write one.
Wanna waist away? Eat less.
—MALCOLM FORBES
SOURCES: THE COLUMBIA DICTIONARY OF QUOTATIONS; THE INTERNATIONAL THESAURUS OF QUOTATIONS; THE 2,548 BEST
THINGS ANYBODY EVER SAID; THE QUOTABLE HITCHENS: FROM ALCOHOL TO ZIONISM; SIMPSON’S CONTEMPORARY QUOTATIONS.
The two biggest sellers in any bookstore
are the cookbooks and the diet books.
The cookbooks tell you how to prepare
the food and the diet books tell you how
not to eat any of it.
—ANDY ROONEY
ON NEW YEAR’S DIETS
BOONE BLASTS “Boone Pickens is mad. After forcing Phillips Petro-
leum and Unocal to load up on debilitating debt, the self-proclaimed
champion of shareholder rights is now blasting Enron Corp., the natural
gas pipeline company, for buying back 16% of its shares from Irwin
Jacobs and Leucadia National, the greenmail specialists.”
THE FRIENDLY SKIES OF USAIR? “Rumor is going around that deal-
ster Carl Icahn has made merger overtures to USAir on behalf of his
TWA. Yet another rumor has it that Icahn wouldn’t mind in the least if
USAir were to make a counterofer to take TWA of his hands.”
OTHER THOUGHTS FROM THAT ISSUE: