Tag Archives: George Washington University

When Life Gives You Lemons…Teach Children

One of the major programs that is integral to the George Washington University School of Business is Lemonade Day.  The program is designed to immerse first year business students (myself) in an environment with elementary school children where we literally teach them the proper tools necessary to make a lemonade stand.  The idea is that by learning about budgeting, accounting, profit and marketing, these fourth through eight graders will acquire the necessary tools to create and run a successful stand for the official Lemonade Day D.C.  This program, which was actually introduced to the metropolitan area by a current School of Business student, is exactly the type of development I was referring to in my Dare to Dream post where I stressed the importance of programs that foster out nation’s young entrepreneurial minds.  This past month, I was fortunate enough to try my hand at teaching these very principles.

I traveled to Roots Public Charter School, which educates first through eighth graders. The trek was about thirty to forty-five minutes in which I recognized absolutely nothing; this is either a testament to how insular GW is or to how little I get out. I expected to have children anxiously waiting for our arrival. I can remember how enamored I was with older kids at that age, so I was sure these children would be similar. I thought the students would be eager to learn about the primary business principles necessary to run a successful lemonade stand, and I certainly believed they would be willing to let me teach them.  I was wrong, no doubt.

For starters, Roots is a tiny little school off the corner of a busy street. As I walked in, my immediate thought was how little funding the school must have. Not to say the school could not provide for its students, but the classroom seemed to double as a cafeteria/ recreational space and it was cramped.  Furthermore, the primarily African American students appeared to have no real interests in the fact that several college students were standing before them.  They continued to giggle and play around like any elementary school kids would do, and realistically, I should have expected this.  Knowing myself, a reserved and shy character, I knew handling these kids and keeping them on task would be a bit difficult.

When we were introduced to the array of students, it was not clear whether they had known we were coming or had prepared for our arrival. About six tables were set up throughout the room.  We helped the students grab chairs from the closet and we proceeded to form small groups so each of us could teach the lessons to a more intimate audience.  Fortunately, I sat down with two students, Jalaw and Nikai, both fourth graders who were very much interested in the project.

Jalaw and Nikai were great. Like any fourth grader, when I mentioned the idea of a lemonade stand, their imaginations went one thousand miles per hour thinking of creative themes and designs for their storefront (Nikai wanted to make the lemon on their poster look like a diamond). Their eagerness and excitement definitely helped me because it made my job of asking them questions a lot easier. It was not hard to get them thinking about logistics, supplies, budgeting, etc. because I made the ideas tangible and relevant.

For example, when talking about logistics, Nikai wanted to know how much their lemonade should cost. I didn’t answer, I asked the question right back.  He said, “Well, last time I had a lemonade stand we charged people three dollars and I made a lot of money.” While I tried to remain encouraging and positive, I attempted to steer him away from that price, as it was clearly too high given the amount of cups they were trying to sell. Instead, because they had been talking about playing music at their lemonade stand, I told them this, “Let’s put it like this: Who do you plan to sell to? Probably every day people like you and me, right? Especially if you’re going to be selling lemonade outside of a library, do you think normal people are going to pay such a high price for lemonade? If Jay Z came walking down the street, then I’d be with you guys…we could probably charge him $100,000 for lemonade!” By relating a business principle to something they could easily grasp and easily resonate with, they were able to laugh and understand that their price would most likely be too high. This made my time maneuvering in and out of topics much easier and a lot more entertaining.

The best part about Lemonade Day, though, was how I could see the light bulbs turning on in their heads. This was evident with Jalaw. As I continued to teach the two, the way Jalaw was picking up on things that I was saying and then responding back with relevant questions of his own suggested that the wheels in his head were turning. When we reached the point to talk about profit, I did not have to go through it with them step-by-step because Jalaw was working through it by himself with the information we created together. This was reward enough for my Lemonade Day experience. I realized (A) that any person can grasp these principles given the right opportunities, and (B) my skill of being a developer is real. As I taught Jalaw and Nikai, I realized that I do enjoy bringing out the potential in others. I created a stimulating and challenging environment for someone and I saw him improve because of it. If I received nothing else from Lemonade Day, at least I know I want to have more gratifying feelings similar to that.

I cannot stress enough the importance of this program.  While it was definitely a foreign experience for me and the rest of the students, I believe it had a greater, more lasting effect on the children.  I can remember back to my middle school days in which I attended a private school.  We didn’t have any programs that gave us a hands-on experience with any real-life scenarios, like business.  Honestly, I had no idea what budgeting was, but clearly, how hard could it have been to learn?  Jalaw and Nikai now have a head start on thousands of kids across the United States.  They had the opportunity to practice these important aspects of the business world early on and now their wildest aspirations of making a soda company and t-shirt line are more real than when I was ten years old and dreaming of creating a newspaper.  Imagination is a powerful tool that should always be accessible no matter what age, but when it is paired with knowledge the combination is creatively destructive.  Kids like Jalaw and Nikai, who can dream while remaining pragmatic, are the future of our nation’s innovation and financial prosperity.

By the way, the two surpassed their financial goal by making $149.

Maxwell

 

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The College Budget: Tips to a Healthy Wallet

High school seniors (I, too, came down with the self-diagnosed ‘senioritis’) and you college freshmen who think you’ve got a grip on the whole college experience after several months of your new found freedom, keep reading.  This is the Young Economics guide to making sure you don’t break the bank (or mommy and daddy’s) buying booze for the lovely sorority ladies down the hall from your dorm room.

I go to The George Washington University, a city school, so its no secret that the temptations for me to spend money everyday on shopping at the local Nike store, eating at delicious restaurants, and traveling by cab  are all too real.  When I first arrived on campus, I gave in to these temptations.  I had a new found freedom, a fat wallet due to my summer job, and an irresistible impulse to walk just a few short blocks to one of America’s most luxurious shopping centers, Georgetown.  I controlled myself, a little bit, but if I knew what I know now, my urges would have definitely been tamed.  Trust me, I know how you college students in New York City feel, although I’m sure your wallet might be hurting a bit more than mine considering how expensive the costs of living are in the Concrete Jungle.  Like me, I bet you could’ve used some tips to help combat the lust of the city.

1. At the beginning of the year, suffer through it, ACCOUNT for all of your SPENDING BIG and SMALL.  After a couple of months, you’ll be able to know exactly how much you spend per month.  Also, depending on this and your level of discretionary income, you’ll be able to craft a budget and refine it as necessary.

2. If you feel as though you want/need more money, GET A JOB!  Other than making that one and only call home to mom and dad, this is honestly the fastest and most reliable way to acquire the cream.  I feel like people dread the process of actually finding a job, but in actuality colleges are creating much easier ways to help you find one.  Check your college’s career website, they most likely have a job postings tab.  If you received a Federal Work Study grant, all the less stressful and time consuming.  If both of these options are a no-go, ask around.  I’m sure the local coffee shops, restaurants or retail stores are hiring…they usually do at the beginning of the school year.

3. SIDE HUSTLING is a thing!  Find a way to make your childhood hobby into a money-maker.  I’ve seen people take their love of graphic design to designing posters for certain events and organizations around campus, I’ve heard of students offering to take other students’ trash out after late Friday and Saturday nights (you’ll know what I’m talking about), and I personally cut hair.  This was easily one of the best decisions I’ve made my first year here.  I charge $5 a cut (I’m not a professional, why charge like one?), I’m 50+ haircuts into the venture and it funded my Christmas purchases.

4. GET A CREDIT CARD.  This tip may seem unrealistic for folks, but its really not and it can help your prosperity ten-fold in the future.  Plenty of credit card companies offer special deals to new prospective students (if you received financial aid, you’re probably receiving mail from these companies now) and since you don’t have a credit score, it is quite easy to apply for one.  You may pay the bill each month or your lovely parents may take care of it, but discretion is a must.  You do not want to get carried away with your spending right off the bat.  Having a credit card and paying the bills ON TIME establishes a good credit score, so when you graduate and its time to buy a car or maybe even a house, your bank will be able to see you have a long standing history of paying off your debt in a timely fashion.

5. SAVE.  Maybe you don’t go out to eat tonight or maybe you choose to go shopping when your parents come to visit in the spring, decisions like these could be the difference between having $500 in your bank account or $1000.  Which would you rather have?

I understand, college is a time where you have all the freedom in the world and no responsibilities, but if you become disciplined with your finances now, you’ll be rewarded in the long-run.

Maxwell

Dare to Dream

Unemployment fell to 6.7% in December from 7% in November, according to the Bureau of Labor Statistics.  This was an unexpected drop since the current model anticipated unemployment to remain steady around 7%.  This major (I’m considering .3% to be major when you think about the thousands of people who are now employed) reduction created roughly 74,000 new jobs; however, it is still below the 200,000 mark which economists had forecasted for this period.

On the other hand, Gallup Inc. has measured the current employment rate at 42.9% with their simplified Payroll-to-Population statistic, which measures the unemployment rate as a percent of adults in full-time jobs as a percentage of the total U.S. adult population.   This number dropped from November’s percentage of 43.7%, making it the lowest number Gallup has measured since March of 2011.

Is this cause for concern?  According to the Bureau, the improvement is good, but I feel as though our nation is lacking something, some je ne sais quoi, to propel our industries and businesses further.  We owe it to the millions of people who have stopped searching for jobs, to keep pushing for economic development.  Do you know what people all across the United States are concerned about?  According to Jim Clifton, CEO of Gallup Inc., its having a good job.

About three weeks ago, the freshmen in The George Washington University School of Business’s First Year Development Program had the opportunity to listen to Mr. Clifton speak about the importance of entrepreneurship.  According to his blog post, which he posted the following day, 400,000 small businesses and start-ups are being created annually, while 470,000 are failing annually.  Up until 2008, start-ups outpaced business failures by about 100,000 per year, but within the past six years that number has turned negative.  Due to the volatile market and foggy future of businesses, I think entrepreneurs are wary and more reluctant than ever to try their hand at owning their own businesses.  This is unfortunate because 50% of all jobs are in the small business sector, and according to the Small Business Administration, 65% of all new good jobs are created by them.

Despite these disappointing statistics, I would agree with Mr. Clifton in that now is the time to be taking chances on small businesses.  President Obama in his State of the Union address said, “We know that the nation that goes all-in on innovation today will own the global economy tomorrow.”  While I agree with this sentiment, what’s innovation without a sound business plan and business leader?

This is where entrepreneurs and business students come in to play; we need you.  The United States needs not only the Steve Wozniaks, but the Steve Jobs of the world to take innovative ideas and sculpt strong strategies and team members around them, so that they can be successfully integrated into our households.  And moreover, this will push our bounds as a society and also serve as a catalyst for our economic activity to spark employment growth.  Business is no longer purely about the bottom-line, this is how entrepreneurs and students can directly affect the wellbeing of others.

My message to you young and talented business hopefuls: do not be afraid to imagine.  Think about how many silly ideas you had as a child.  I remember one specific, crazy invention that I had when I was little, it was called the Triple Tasker.  What was made out of cardboard was a contraption (really just three square openings) that would allow the user to carry three different items in one awkward, compartmentalized big box.  While this was clearly not a practical idea, I wasn’t afraid to let my mind wander and think of obscure things.  Dream big.  If you want to create the next Nike, set out and do it.  Create a strategy, go to school, gather the proper people to help you and keep fighting for your goals.  It is you people who are creative and have a strong passion for turning products and services into money machines that will propel our economy to a $17 trillion GDP to a $30 trillion GDP.

To the policy makers and current business leaders: help our young entrepreneurs and business leaders accomplish their goals.  Target these young hopefuls early and develop their strengths and skills at an early age so that their potential can be maximized.  I implore you, for our future and economic health is dependent on the youth who dream and learn the biggest.

Maxwell

Jay Z: Start-Up

Welcome back to another installment of Young Economics.  First, I would like to apologize to my readers for not completing my ‘Jay Z Week’ as scheduled.  I actually had a significant amount of schoolwork that had to be done leading up to the Jay Z concert, so I was a little side tracked.  However, it’s never too late to talk about one of hip-hop’s most prolific rappers, plus with the Grammy Awards coming up this Sunday, what better time than to finish the discussion this week.

As I mentioned in my initial post to kick this week off, businesses generally undergo four phases of life during their development.  Today, I would like to discuss the start-up stage, as it pertains to Shawn “Jay Z” Carter.

Businesses don’t just spring up out of thin air (not the good one’s at least), no, every firm has an infancy period where a tremendous amount of effort, time, energy, and practice is needed to jump-start the growth and development of an entrepreneur’s ‘once in a holy shit idea’.  Most people who are familiar with Jay Z know about his story.  We know that he was a highly successful drug dealer out of the Marcy projects in Brooklyn, New York, and we understand how dangerous and how life threatening that life style was to young African Americans during the late 1980s and early 1990s.  For those of you who haven’t heard Jay Z’s story, I strongly encourage you to check out his first albums, and some of his most successful, Reasonable Doubt and In My Lifetime Vol. 1.  I look at this time in Jay Z’s life a little bit differently, though.  I believe the days spent dealing drugs to the addicts and casual users and the days evading rival dealers were integral parts to the development of Jay Z’s business acumen, which made him somewhat of an anomaly in the music industry.

Jay Z and drug dealing partner, DeHaven, understood that to make more money they would have to expand into undeveloped markets in Maryland and Virginia because the clientele and competition was less sophisticated (Greenburg, 37).  Not only does this demonstrates the foresight Jay Z would need in the music industry, but perhaps these characteristics led to certain ventures, like Rocawear Clothing, a topic to be discussed later.  This could also be considered a period during the “ten thousand hours” phase of development.  Day in and day out, Jay Z was on the streets thinking of ways to increase his revenue stream and stay on top of the game.  In a way, this is practice for a bigger, much more lucrative music industry in which Jay Z exemplifies shrewdness and a clear innovative vision.

Further application of Jay Z’s street smarts can be seen as he was just starting to get involved with the hip-hop genre.  Artists like, The Sugar Hill Gang, Run DMC, and Big Daddy Kane were not as savvy as Jay Z with their lyrics and delivery, so the public was not familiar with Jay Z’s style.  This problem is similar to how Jay Z would have to stay out of trouble with rival or enemy dealers while still trying to make a profit.  Jay Z kept a low profile, says his old business partner, DeHaven.  “He was doing the little things, like, you know, a little Lexus here… when all these guys in the street were buying Benzes and BMW’s.  To be smart enough to play yourself down just to keep the paper means you’re doing business properly,” (Greenburg, 40).  Jay Z gained critical acclaim by applying this same principle to his lyrics, “I dumbed down for my audience, doubled my dollars,” (“Moment of Clarity,” Jay Z).  By being experienced in drug dealing code and knowing when to be subtle about his accumulation of wealth, rather than ostentatiously boasting it, Jay Z was able to maximize his profits and become a better-known artist.  Had he not done so or understood this concept, a quick splash in the industry only to never be heard of again may have been in his future.  Moreover, by allowing his audience the opportunity to comprehend his message first, he could then begin to grow and develop as an entertainer trying different rhymes and flows in his later albums.  For any company or entrepreneur, growth is necessary, but not until a substantial recognition and income has been achieved.  This is why many critics and rap aficionados like, Marc Lynch, consider The Black Album and The Blueprint as some of Jay Z’s best work, for he established a relationship with his listeners, which could progress into greater, more complex creations (Lynch, “Jay Z vs. The Game: Lessons for the American Primacy Debate”).

A benefit of Jay Z’s increased popularity was his leverage inside of the boardrooms of record label companies.  Normally, when up and coming artists seek out record labels for album distribution and development, they are given low level deals.  In some situations they receive twenty-five percent of the profit while the record label retains the rest.  At times, they also do not have the ability to re-release their work barring any separation from the company, as their masters are property of the label.  Jay Z was different.  With a lack of support from any record label companies after the debut of his first album, Reasonable Doubt, Jay Z and business partner, Damon Dash, co-founded Roc-A-Fella records.  With the hopes of selling the manufacturing and sales rights of Jay Z’s upcoming second album to a bigger record company, Jay Z and Dash sought out Freeze Records and Priority Records.  Jay Z, a relatively new artist with an infant label was low-balled by the two companies, but ultimately was able to retain his masters and acquire a fifty percent split of the profits coming off of his highly anticipated 1997 album, In My Lifetime Vol. I (Greenburg, 58).  DJ Clark Kent credits this unheard of deal to Jay Z’s experiences in the streets.  He says, “If you did it in the streets, and you made good money in the streets, when you walk into a boardroom you look at everybody in the boardroom like they’re suckers,” (Greenburg, 59).  On a daily basis Jay Z had to confront people in the streets that wanted him dead, for he was a threat to their own business and livelihood.  He conquered the streets and flourished, which is why he persisted and remained steadfast in his entitlement to increased earnings when powerful executive, Will Socolov, tried to exploit Jay Z’s worth.  Jay Z gained the confidence to stand up for his own music and intellectual property because of those life threatening days spent hustling on the streets of Brooklyn.

I think people often look at Jay Z’s stint as a drug dealer as a point in his life where he was lost trying to find his way in the world.  There is no doubt that he was sucked into this lifestyle due to his unfortunate upbringing, and it’s quite a story considering how differently it may have turned out.  However, from a business aspect, these years dealing crack cocaine were anything but unfortunate.  They proved to be beneficial in the development of Jay Z’s entrepreneurial mind and ability.

*I would like to recommend the book Empire State of Mind: How Jay Z Went From Street Corner to Corner Office by Zack O’Malley Greenburg where much of my research for this post came from.

Maxwell

Jay Z Week

I wouldn’t say that rapper and entrepreneur Shawn, “Jay Z,” Carter and I are similar.  I have never dealt drugs, I did not grow up in an outdated, public housing project and I have had a very stable home and family.  However, I look up to him.  It was not Jay Z’s music that originally sparked my interest, but rather something about his personality, some aura of coolness that radiates from his being, which I find to be so compelling.  I remember watching him walk into Barack Obama’s Presidential Inauguration with his beautiful wife on his arm and such swagger, like it was his own event, like he knew he played a vital role in the election of our President.  Jay Z is different from other rappers.  I was watching a documentary on the preparation for his opening concerts for Brooklyn’s new Barclay’s Center.  For one of his concerts he decided to take the subway instead of the usual entourage and convoy of vehicles.  He allowed people to take his picture, he dapped people up, and more specifically, he sat next to an elderly woman, who clearly had no idea who he was, just to chat.  Jay Z doesn’t change his persona, unlike Clark Kent in the famous Superman comic books; he is who he is on and off the stage, a Brooklyn native who still tries to enjoy the regularities of life.  He is truly relatable to people of many different backgrounds, for he has experienced a variety of situations in life, as he has gone from poverty to extreme wealth, and that is something that I admire.

Yes, on Thursday, January 16th I will finally cross out ‘see Jay Z live’ on my bucket list, as Jigga Man is coming to town.  Thanks to a wonderful Christmas present, I will be accomplishing absolutely nothing over the next several days, since every waking moment will be used to prepare for what is sure to be a momentous night.  However, I can’t forget about my blog, something that I am thoroughly enjoying thus far.  What better way to incorporate the two then to have, what I’m calling, Jay Z week?  In honor of Hova’s concert, I will be blogging not just about the businessman, but the business, man! (Get it? Check out Kanye West’s “Sierra Leone” if you don’t) for the entire week.

According to Forbes , Jay Z is the hip-hop industry’s second wealthiest entertainer with an estimated net worth of $475 million.  The mogul owns an entertainment/ record label company called Roc Nation, 40/40 Club, a stake in the recently constructed Barclay’s Center in Brooklyn, New York, and a sports management company named Roc Nation Sports.  Beyond the music industry, Jay Z has built a reputable brand that has become marketable in many different areas of commerce.

On a basic level, businesses undergo four stages of life: start-up, growth, maturity, and decline.  Start-ups are businesses that are fairly new.  They require a large investment, effort, time and energy to make it a stable and profiting enterprise.  Often times, the executive of the start-up uses his own funds to keep the business afloat.  During the growth stage, the business is stable and their market is increasing.  It can also use its own resources to function instead of seeking out investors for support.  Since it is still an infant enterprise, though, support may be needed in terms of manufacturing and distribution.  At the point of maturity, a stable influx of profits is attained, the firm is well known and respected, and an increased effort in marketing or rebranding is needed to increase profits.  And lastly, decline occurs when the firm sees shrinkage in their market and costs are cut to preserve profits.  Although it is fair to say that there has not been a decline in the popularity of Jay Z, as a financial entity, I believe his entrepreneurial career has followed this path.  Stay tuned this week as I talk about each of these stages.  I leave you with my favorite song off of his latest album, Magna Carta Holy Grail, “Holy Grail”:

Maxwell

Y.E.S.S. #1

Welcome to the first ever Solution Session where I intend to show you the intuition behind some of my blog posts.  This first episode is regarding my three posts about the secret behind Nike’s limited releases.  Check out my YouTube Channel: Young Economics and be sure to subscribe! Let me know what you think.

Maxwell

The Secret Behind Nike: Part III

With my question still percolating within my mind, I decided to look through Nike’s 2012 Annual Report for more information.  Two years ago, Nike brought in over $13 billion in revenue from their footwear sector of the company, a 15% increase from 2011’s fiscal year end.  In fact, over the past three years Nike has seen a steady increase in their revenue from the footwear department.  According to the report, Nike credits this increase to a low single digit percentage increase in average selling price per pair of shoes; a double digit percentage growth in unit sales; an increase in demand for performance products, such as the Nike Free and Lunar technologies, which can be found in a lot of their running shoes; and an increase in sales of the Nike Running, Basketball, and Sportswear lines of the company.  Raise your hand if you own a pair of Nikes…I thought so.

In economics there is this principle called elasticity where changing an economic variable, such as price, quantity or income, affects other variables on a scale from inelastic to elastic.  I want to focus on inelastic goods, regarding footwear, because Nike’s annual report indicates inelasticity of demand.  With inelastic goods price and revenue move in the same direction, which means if the price of the good increases so will total revenue, and vice versa.  In Nike’s report, they stated that they saw an increase in revenue for footwear because of a low single digit percentage increase in average selling price.  This suggests that Nike knew their product and consumers (the sneakerheads) well enough to understand that their footwear is inelastic and that a slight spike in prices would not hurt revenue.  As forecasted, Nike yielded increased sales, which is exactly why they later revealed a double-digit percentage growth in unit sales for the year.

Furthermore, Nike also claimed that there was a revenue increase in footwear due to a spike in demand for their new running technologies and specific shoe lines within the company.  What type of shoes do you see released in limited quantities?  Well, its certainly not Nike’s football or soccer cleats, no, that would be impractical!  Instead, we see limited pairs of shoes from the Nike Running, Nike Basketball, and Nike Sportswear lines, which also utilize Nike’s latest footwear technologies (Nike FREE and Nike Lunar).  This is because these are the styles that are popular beyond the sports world.  Kids and young adults are wearing these products for everyday use; no longer are the days where sneakers are solely used for athletic purposes, it’s a fashion statement to rock Nike’s Flyknit Trainers (my personal favorite) to school or on errands.  Nike has taken note and exploited these trends in their releases, which is why they’ve seen augmented revenue margins.  Making sense a little bit?

My collection of Nike Flyknits
My collection of Nike Flyknits

At the end of the day though, I think Nike, and other sportswear companies, utilize this limited release tool for reasons that go beyond economic or financial principles.  Since Nike doesn’t produce at an efficient level where marginal cost equals marginal benefit, there must be some outlying factor that reaffirms this action.  I believe it is marketing.  Nike remains a part of our cultural fabric because of their ability to stay relevant, creating a buzz and reputation around their brand.  With their athletes (e.g. Michael Jordan, Lebron James, and Serena Williams), commercials, and slogans people are consistently talking about Nike and their iconic status.  Limited releases are Nike’s newest tool to combat the ever-wandering mouths of public consumption.  The people who are able to buy the limited edition shoes feel special because of the rarity of their purchase and the little company they share.  Those who are unable to purchase the shoes, on the other hand, either obsess over upcoming Nike releases or end up buying another sneaker with their allocated money that was originally designated for those special kicks.  It’s a win-win situation for Nike, as they not only increase their revenue stream, but the buzz around the company is perpetuated by those obsessive followers of The Swoosh who just want to feel unique too!

You saw in the video (found in Part I) what kind of shoe collecting people are doing nowadays, now multiply that by the millions of teenagers and adults who are also trying to create their own sneaker collection…pure genius by the gentleman behind The Swoosh.

This completes the Nike chapter of Young Economics.  Thank you for taking the time to read my material.  Be sure to check out all three parts and let me know what you think!

Maxwell