Milken Global Conference 2017: Creating a meaningful life

Author: Sharon M. Szmolyan


Publish Date: Tuesday, June 27, 2017


“When we are no longer able to change a situation, we are challenged to change ourselves.” 
Viktor E. FranklMan’s Search for Meaning


BEVERLY HILLS, LOS ANGELES COUNTY – Human beings seek to make meaning of existence.

Chronicling the experience inside Auschwitz as an inmate psychiatrist and neurologist, Viktor E. Frankl in his book, Man’s Search for Meaning, brought to life the psychotherapeutic method he pioneered as a result. Meaning, he says, is created individually with the identification of a purpose in life and then, through action, immersively imagining the outcome.

This may have been the spark for the theme of the 20th annual 2017 Milken Institute Global Conference, held April 30-May 3 at The Beverly Hilton. Financier and philanthropist Michael Milken shared, in one of the conference’s most compelling presentations, what brought him to where he is today.

Milken (photo at left), a student at the University of Berkeley in 1965 when the Watts riots ravaged paradise, has since committed to creating prosperity through innovating “financial technology,” or FinTech. Today’s FinTech hubs – California, New York, Germany, the U.K., Singapore, Hong Kong and Australia – are places where the future is being forged. Each hub has committed to developing its talent and capital pools and its policy and demand functions to ensure successful FinTech ecosystems.

FinTech, according to Wikipedia, is an industry comprised of companies that use new technology and innovation with available resources in order to compete in the marketplace of traditional financial institutions and intermediaries in delivering financial services. CNBC reported that in 2015, financing for FinTech startups hit more than $20 billion, a 66-per-cent increase on the $12 billion recorded in 2014, according to KPMG. FinTech forces are disrupting the role, structure and competitive environment for financial institutions and the markets and societies in which they operate (see this report by PwC).


FinTech’s disruptive power examined

Milken addressed the transformative power of FinTech systems. Policy makers had almost a priority position; attendees included: Steve Mnuchin, secretary of the U.S. treasury department;  Wilbur Ross Jr., secretary of the U.S. commerce department; Betsy DeVos, secretary of the U.S. education department, George W. Bush, 43rd president of the U.S.; and his brother Jeb. But it was Joe Biden (photo at left), 47th vice-president of the U.S., who had the audience in the International Ballroom on its feet as he shared how being appointed to launch the “Cancer Moonshot” while in the White House brought his experience in public service full circle (see video).

Milken began with a story of experiencing racism, recognizing at a personally pivotal moment that the world he lived was not one shared by fellow Americans. The color of another’s skin defined the world they would reside in. He talked about Wall Street in the 1960s; it was, he said, a lot more interested in financing the past. Entrepreneurial enterprises, having been the engine of job creation for 200-plus years, lacked access to capital. Milken then brought his insights current: can alternative finance tackle the reality of famine existing beside tremendous privilege, despotic power and corruption, drought and rising sea levels, the need to feed the projected population of 9.7 billion across the globe – and, once they are fed, generate solutions to deal with all the waste?

Alternative finance has likely changed the world of medicine. Milken’s commitment to curing cancer through the Milken Institute’s FasterCures initiative came about as a result of being diagnosed with aggressive prostate cancer, and from his analysis that one of the greatest returns on investment in social capital would be produced by funding expanded medical research. “The main benefit would be an incalculable, but magnificent, reduction in human suffering,” he wrote in a June 23, 1999 column published in The Wall Street Journal. “And the economic benefit of lives saved would be in the tens of trillions of dollars – all for an annual investment that is the equivalent of what Americans spend on beauty products in the U.S.”

Alternative finance has also changed the world of money and the U.S. economy. Today, eight of the top U.S. employers are private equity firms, each a progeny of Drexel Burnham Lambert. It was a major Wall Street investment banking firm, which was forced into bankruptcy in February 1990, due to its involvement in illegal activities in the junk bond market, driven by then-Drexel employee Michael Milken. According to Wikipedia, Milken was indicted for racketeering and securities fraud in 1989 in an insider trading investigation. As the result of a plea bargain, he pleaded guilty to securities and reporting violations, but not to racketeering or insider trading. Milken was sentenced to 10 years in prison, fined $600 million, and permanently barred from the securities industry by the Securities and Exchange Commission. His sentence was later reduced to two years for cooperating with testimony against his former colleagues and for good behaviour.

Since 1989, when Milken was banned for life from working in the financial markets, he has mindfully articulated and stood for our future’s potential. Ideas rigorously analyzed are brought to life via market solutions, and thus we have international agreements such as the Paris Agreement achieved at the COP21 international climate conference. The Milken Global Conference (photo at left) is where those with a mission to change the world gather, and where those who aspire to changing the world need to be.  Alternative capital has proven its capability to bring ideas and companies to life that are important to economies and society.

Alternative finance makes possible a symphony of disruption, assuaging all traditional frameworks. Because it can and does come out of nowhere, it is able instantly to be everywhere and once launched is very difficult to fight, and – being the new normal – it requires all of us to be engaged with what alternative finance is making possible, ideally with new reference frames. 

In that spirit, here’s how the disrupted future looked through the Milken Global Conference lens 2017.


More sustainable meat and other proteins

The panel session, “Disrupting Food: Alternative Proteins Leading to a More Sustainable Future,” brought together Ethan Brown, CEO and founder of Beyond Meat, Uma Valeti, CEO and co-founder of Memphis Meats, Jeremy Coller, chief investment officer of Coller Capital and founder of the Jeremy Coller Foundation, and Cristina Alesci, New York bureau correspondent with CNN and CNNMoney, to address a new food paradigm.

Consumers are clamoring for food choices that are healthy, environmentally friendly and sensitive to animal welfare. Investors are responding to this new demand by finding opportunities in alternative proteins. The panel addressed: challenges posed by traditional protein sources and their supply chains; benefits alternative proteins provide to the consumer, the environment and public health; how companies are using technology to disrupt traditional protein sources; how plant-based proteins and cultivated proteins differ; some of the most promising technologies; what investment opportunities protein alternatives present; strength of global demand; and how producers can meet the expected increases.

“Meat production has not changed in 10,000 years . . . until now,” said a Memphis Meats’ slide on the wall behind the panelists. Consumers spend $750 billion every year on meat, with demand expected to double in the coming decades. Cultured meat could very well be the solution to the challenges of the industrial model of livestock operations and confined animal feeding operations housing tens or even hundreds of thousands of animals. These challenges include millions of gallons of antibiotic-burdened liquid waste stored in massive lagoons that leach into groundwater, or that is spread or sprayed on available land.

Cultured meat is produced from animal cells without the need to feed, breed and slaughter actual animals. Memphis Meats guarantees their products to be better for the environment and better for people. Up to 90 per cent less land and water is required for production than for conventionally produced meat, and greenhouse gas emissions are also 90 per cent less. The most important element for a majority of consumers, though, is that the products are delicious. 

Backed by almost $3 million in venture funding and based in San Francisco, home of the rich food traditions of Alice Waters and the farm-to-table movement, Memphis Meats’ Valeti is proud to be combining the rich food traditions of the region with Silicon Valley’s innovative spirit. Those traditions and that spirit were born at a time of conversations during meals with friends about politics, movies, art and food, he noted.

The U.S. Environmental Protection Agency estimates that every cow produces almost 44,000 pounds of manure per year. Thirty-three miles from San Francisco is the San Joaquin Valley, home of more than 1.5 million dairy cows. Dealing with manure and related pollution problems is a daily struggle for that region’s population. Air pollution from confined animal feeding operations is poorly regulated under the federal Clean Air Act. The harm to residents living near the facilities from air pollution goes largely unaddressed. 

But on the other side of the world, at the Cannes film festival, South Korean director Bong Joon-ho has brought to light the barbarity of the slaughterhouse in his 2017 movie Okja, a movie for children. It includes hundreds of laboratory-engineered super pigs, bred for their super delicate taste, which “. . . are penned in a yard that looks like a German concentration camp,”  film critic Peter Debruge wrote in a review in Variety. “A century from now, the citizens of the future will look back and judge the current era for our eating habits. Oddly enough, even though many in the filmmaking community have strong feelings about respecting animals’ rights not to become dinner, the cause seldom finds its way on screen . . ..”


Using stem cells to make ‘environmentally friendly’ meat

Memphis Meats’ Valeti (photo at left) just happens to be a cardiologist. He just happened to ask himself, as he was working on a potential therapy using stem cells to regenerate heart muscle post-heart attack, can we use this technique to make meat? Well, why not? Company co-founders Nicholas Genovese is a stem cell biologist, and Will Clem in biomedical engineering is a tissue engineer. Clem also happens to be from a family that owns a chain of 43 barbecue restaurants based in Memphis, Tennessee. A barbecue pit master as well, he has a trove of recipes to bring to bear to achieve ‘delicious.’

Memphis Meats’ mission – to feed the world’s growing population with delicious, affordable and sustainable meats, chicken, duck and beef – is a near trillion-dollar market opportunity. “Better meat, better world” is an engaging slogan. The reduced calories (23 calories of feed to produce one calorie of beef the conventional way, versus only three calories with Memphis Meats’ process) is brilliant. Also, the tenfold reduction in greenhouse gases, water and land use, compared with conventional beef production, could truly change the world.

Intent on being to market by 2021, Memphis Meats is still in the research and development stage. They’re growing harvested stem cells supplying the requisite nutrients: vitamins, minerals, proteins, sugars. Valeti noted it takes between four to six weeks for harvested cells to grow into a fleshed-out chicken tender – comparable to the time a chick takes to reach adulthood in modern day poultry operations.

Ethan Brown (photo at left), CEO and founder of Beyond Meat, believes in a better way to feed the planet. His vision is to create mass-market solutions that perfectly replace animal protein with plant protein. The commitment is a dedication to improving human health, positively impacting climate change, conserving natural resources and standing for animal welfare. One delicious meal at a time is the company’s commitment on how it will make the world a better place.

Brown, who has a background in fuel cell engineering, launched his Los Angeles-based company in 2009, with the belief that how we as a species produce protein is the most important environmental question facing us today. While he was growing up, Brown spent weekends on a dairy farm his father bought. He speaks persuasively about how raising livestock is an inefficient way of producing protein. We eat only 30 per cent of the animal; the rest is not used. Also, it requires a lot of land, energy and water to produce just one pound of meat. Manufacturing it instead solves several problems at the same time.

A vegetarian since he was 18, Brown is also able to substantiate the claim that many people are uncomfortable with how animals subsist in industrial operations, and how they’re slaughtered. He has first-hand experience with the reality that, as a result of the agricultural revolution in grain production, humans keep an unnatural number of animals living today that massively contribute to greenhouse gas emissions. Methane from livestock, especially ruminants such as cattle, is responsible for almost one-third of the GHGs from the U.S. agriculture economic sector, which accounted for nine per cent of total GHG emissions in the U.S. in 2015, according to a report by the U.S. Environmental Protection Agency. Greenhouse gas emissions from agriculture have increased by approximately eight percent since 1990. One driver for this increase has been the 64 per cent growth in combined methane and nitric oxide emissions from livestock manure management systems, reflecting the increased use of emission-intensive liquid systems over this time period.

Beyond Meat, funded in 2011 by Kleiner Perkins (KP), was KP’s first investment in a food startup. Twitter cofounders Evan Williams and Chistopher Isaac “Biz” Stone joined in a separate round, alongside Microsoft co-founder Bill Gates, Morgan Creek Capital, DNS Capital and the Tsai family of Taiwan. Beyond Meat’s ‘Beast Burger,’ made primarily from a non-GMO protein, is one of the brand’s most popular products. The technology of realigning plant proteins was born at the University of Missouri. Brown worked with professors Hung Hsieh and Harold Huff who, supported by several grants to further develop their technology, created the process that Beyond Meat uses in manufacturing their product line. The company’s chicken and beef products are carried in more than 4,000 stores across the U.S., from Whole Foods to Target to more conventional grocery chains.

At a trillion-dollar market opportunity, the investment paradigm is fertile. Tyson Foods Inc., with a market cap of $20.72 billion and having launched a $150-million venture capital fund, has a five-per-cent stake in Beyond Meat. On its website, Tyson Foods specifies its venture fund’s three-prong goal: pioneering research to commercialize alternative proteins; tackling food insecurity and waste; and using the ‘internet of food’ to promote sustainability.

Many other big name investors are interested in this space, given that 90 per cent of human diets include some kind of meat. With externalities beginning to be factored into cost equations, such as the amount of land being cleared for animals to graze – a major contributor to deforestation – it may only be a matter of time before ‘Big Ag’ becomes significantly burdened with stranded assets. Now imagine Valeti’s team tweaking a burger so it is heavy in omega-3 fatty acids instead of saturated fat. Li Ka-shing’s Hong Kong-based Horizon Ventures Limited is in the game; so is legendary tech investor Peter Thiel, who founded PayPal.

Valeti says the real competition is the existing meat market. For there to be real disruption, there will need to be about 1,000 cultured meat companies in the world. And why not? Cultured meat defies traditional religious and dietary frameworks – and that is a whole new market paradigm yet to be engaged.


Aligning investment with philanthropy

I began the Milken Global Conference 2017 in conversation with Dave Mullen (photo at left), managing director of Highland West Capital and chair of the Canadian Venture Capital and Private Equity Association. We got into a discussion regarding bottom lines. I asked the question: “Are investors interested in double- and triple-bottom-line investment opportunities?” Dave replied: “They’re looking for the financial ROI.”

We discussed factoring the cost of negative externalities in energy pricing equations, the reality of the resource curse, the state of Alberta’s oil sands, and the current level of unemployment across the province. Then I mentioned that the Ford Foundation, America’s second largest philanthropy, is breaking with generations of investment orthodoxy. The New York Times reported the move makes fossil fuel divestment look tame by comparison. In April 2017, the Ford Foundation announced it would commit $1 billion to investments that “earn not only attractive financial returns but concrete social returns as well.” Darren Walker (photo at left), president of Ford Foundation, and Peter A. Nadosy, chair of the Ford Foundation’s investment committee and a pillar of the Wall Street establishment, are taking on this initiative.

Walker, chair of the U.S. Impact Investing Alliance, was previously vice-president at the Rockefeller Foundation. He managed the Rebuild New Orleans initiative after Hurricane Katrina. Earlier, as chief operating officer of the Abyssinian Development Corporation, he oversaw a comprehensive revitalization program of central Harlem in New York City. In 2016, Time Magazine named him among the “100 Most Influential People in the World.” Walker was raised by a single mother and was one of the first children to benefit from the Lyndon Johnson Administration’s Head Start Program, developed to help meet the emotional, social, health, nutritional and psychological needs or pre-school aged children from low-income families. Walker has been very frank in saying his experience has given him an understanding of the need for investment in human capital, and how the centrality of private philanthropy makes a difference in human lives.

At the Milken Global Conference, at the panel session on “Aligning Endowment Investments with Philanthropic Mission,” Walker said it was time to bring fresh eyes to endowment management and not just consider financial returns. Given the Ford Foundation’s prominence in the investment universe – an endowment of more than $12 billion – it is likely the organization will be generating the next wave in mission-related investment. For Darren Walker, helping capital markets become accelerators of justice is personal.

However, the Ford Foundation is however not the first to embrace impact investing. In 2014, they were one of 28 investors and organizations committing more than $2.5 billion to impact investing, according to a report by the Brookings Institution. The biggest, most disruptive investment was $100 million on the Carbon Efficiency Strategy (CES), a joint venture between the McKnight Foundation and Mellon Capital Management that offers carbon-conscious investors ways to invest in companies whose practices could reduce carbon emissions. The McKnight Foundation also used its investor position in CES to ask 170 companies in energy-intensive industries to report their greenhouse gas emissions. The organization’s website provides details on their impact investment framework and capital allocations.

Dave Mullen and I concurred: investor’s focus will always be on earning a decent return. But the meaning of both ‘decent’ and ‘return’ in 2017 may also be under semantic reconceptualization. In a disrupted and more geopolitically competitive world, where the intentions and ambitions of other countries are particularly important, with the Middle East regional order collapsing, and with many citizens in the U.S. and overseas questioning whether an open global economy can deliver on its promise, the words ‘decent return’ may have to deliver more than a return on equity ratio.


Searching for implementable solutions

The youngest participant I met at the Milken Global Conference was Henry Elkus (photo at left) of the Helena Group (which in Greek means “bright, shining light”), a network that “acts for world progress” and convenes leaders to address meaningful problems. Elkus asked: “What does a pension matter if you don’t have a planet?” A 22-year-old Yale University dropout, he told me he started Helena to establish dialogue and to make possible the birth of innovative ideas and implementable solutions to the world’s very real challenges. Launched 15 months ago and working with the Boston Consulting Group, Helena’s cohort members are chosen by being the best in the world at what they do. Intellectual curiosity is the most important driver, and then: are they first-principle thinkers; are they people who are driven to help the world and help each other; and do they fit each other personality-wise?

My undergraduate degree is in comparative literature and comparative religion. Inspired to a career in politics – because my hero, former Canadian Prime Minister Pierre Elliot Trudeau, and I share a birthdate – I argued at a younger age the value of religion, unaware of the significance of the ideas behind the separation of church and state, and not cognizant then of the significance of intention or the value of immersive imagination. But I was even less cognizant then of what the world of money is able to make possible.

I came to the Milken Global Conference seeking difference makers. I came inspired by a quote, from John F. Kennedy’s inaugural address, that I read while walking into the Kennedy School of Government: “Ask not what your country can do for you – ask what you can do for your country.” Novelist F. Scott Fitzgerald’s description of the heedless Tom and Daisy Buchanan, desensitized by a bubble of privilege, does not live amongst those who gathered at the Milken Global Conference. Attendees and presenters are all in the game of creating the future; it’s good game.

Viktor E. Franklin, in Man’s Search for Meaning, pointed out that freedom “is but the negative aspect of the whole phenomenon whose positive aspect is responsibleness. In fact, freedom is in danger of degenerating into mere arbitrariness unless it is lived in terms of responsibleness. That is why I recommend that the Statue of Liberty on the East Coast be supplemented by a Statue of Responsibility on the West Coast.”

This is where responsibility is living today.

Sharon M. Szmolyan, MBA is a regulator contributor to EnviroLine. She is a catalyst, founder and managing partner of the Alberta Media Investment Fund. Her focus is risk management in the entertainment and energy industries, and she divides her time between Los Angeles and Calgary.



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