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Moderator:
Lewis Feldman, Partner, Goodwin Procter LLP

The overall economic slump has hit the commercial real estate market hard, but with the help of government programs and investors abroad, opportunities exist for growth in the sector.

While much of the commercial real estate market has avoided a downturn as steep as that in other sectors, there is cause for concern. Sam Zell said too much leveraging between the booms of 2003 and 2007 is largely to blame for today's slump.

"We all drank too much Kool-Aid," Zell said. Between 2003 and 2007, 50 percent of institutional real estate was traded but was overly leveraged, he observed. The result is that today there are few of those financings that are above water.

Randy Mundt of Principal Real Estate Investors said the overall economic downturn has led to a severe decline in demand for office space. "Layoffs mean a lot of office properties are unoccupied; these properties may end up losing about 40 to 45 percent of their value," he said.

Despite the downturn, the panel discussed the possibility of investments in commercial real estate coming from abroad. "We will see more money coming from outside the U.S. to buy real estate here," Frits van Paasschen predicted. "As prices continue to come down over time, we will continue to see more of that."

All the news is not bad. "The good news is the government is extremely focused on commercial real estate; they realize it could be the next shoe to drop if something isn′t done," David Simon said. But the help of the government — especially the Federal Reserve and the Treasury Department — in shoring up the commercial real estate market may not be a long-term boost. "With all of this government intervention, we will have to see if it is a short-term fix or a long-term shift in ideology that will help the commercial real estate market down the road," Mundt said.

Van Paasschen views the intervention as a not-so-perfect solution that is having at least some effect. "As flawed as the programs may be, they have taken the panic out of the market," he said.

In the end, the panelists seemed to agree that times are tough for the commercial real estate market but possibilities for a rebound exist. "We′ve got losses as an industry that we need to take, and we′re going to have to deal with it," Simon said. With the help of the federal government and overseas investors, the outlook is not completely dire. But the need for investors of commercial real estate within the U.S. remains.

"There was something elegant about President Bush′s 'go out and shop' statement to American consumers in response to 9/11," Simon said. "If we could just get people to do that now, things could get better much sooner."

Moderator:
Gordon Crovitz, Columnist and former Publisher, The Wall Street Journal

Will Google still be relevant in 10 years? What lies ahead for technology? Is Wiki the new wave for education?

Moderator Gordon Crovitz launched a discussion on Computing′s Next Playground by asking a panel of technologists to identify areas where technology drives opportunities for growth and progress.

Greg Papadopoulos predicted that the connection between the physical world of atoms and the digital world of patterns is the direction of the new digital age. He described the current shift in technology as a "network revolution — a time we connected everything." Stephen Pawlowski said the changing computing paradigm means more connectivity in your house and benefits to the smart grid but greater challenges to information security. Shane Robinson agreed that innovation is now focused on communication and collaboration, such as YouTube, while past innovations targeted productivity.

"Facebook and YouTube are just the beginning," Yair Landau said. Facebook has empowered people because services are simple and communicating is easy. YouTube allows for mass customized consumption. It is the beginning of a global migration from text to video, Landau said, and it will transform how the world communicates.

Search technology is another opportunity for innovation, some panelists said. "Today you search a sea of information, but tomorrow search will be done for you," Robinson said. He thinks future technology will know user preferences and navigate the sea of information for users. Papadopoulos agreed, saying the next wave of search technology would even interpret the meaning of your question in the context of your location.

Innovative technologies that use crowdsourcing, such as Wikipedia, were also discussed. Crowdsourcing relies on many experts, and Robinson said the predictive crowdsourcing models created by HP are more accurate than normal models. Crovitz demonstrated the ease of using Wikipedia, arranging for the IT staff to create a Wiki entry for the Milken Institute during the panel discussion.

Papadopoulos predicted a dramatic shift to storing data in technological clouds, which may be safer than at home. Pawlowski said digital information can be vulnerable, so one obstacle will be establishing trust that information will be protected in clouds.

The economic downturn presents tremendous opportunities for more innovation, panelists said. As Papadopoulos noted, "Innovation loves a crisis."

Moderator:
Betsy Zeidman, Research Fellow and Director of the Center for Emerging Domestic Markets, Milken Institute

A staggering 15 percent of housing units in America are vacant, and that number will likely grow as the recession deepens and housing markets remain frozen. Moderator Betsy Zeidman of the Milken Institute stated her belief that financial innovations can solve the problem — but only if used responsibly. She argued that we need to "acquire and dispose of foreclosed properties in a responsible manner that also benefits the community."

Special emphasis was placed on REOs (real estate-owned properties), which tend to be concentrated in blighted neighborhoods where housing markets are stagnant and local residents are increasingly unable to afford moving into refurbished homes. "We have a unique opportunity to control both the [property] assets and the funding at the same time. We need to approach this strategically…there is a whole lot of money flowing out there. Let's not waste it," Zeidman urged.

Mary Tingerthal of the Housing Market Network discussed the Housing and Economic Recovery Act (2008), which is delivering $3.92 billion to all 50 states and 259 communities to acquire, rehabilitate, demolish and dispose of foreclosed and vacant residential properties. This money, administered by the Department of Housing and Urban Development, is allocated on a formula-basis according to need. The stimulus package adds $2 billion that will be available to both local governments and nonprofits based on program effectiveness. Tingerthal noted the need to structure community development agencies to ensure that the money is well spent.

Nearly all speakers concurred that the best way to solve this problem is to keep homeowners in their homes. Because there is no "velocity" in the market, as Debra Schwartz of the MacArthur Foundation put it, any REO homes that get rehabilitated with government money will remain vacant. Her foundation has a program that focuses on providing financing for 2,000 of Chicago's 25,000 REO properties. To her, the problem with velocity is largely due to the complicated mechanism for delivering the federal money to where is needed.

George McCarthy of the Ford Foundation noted that the situation is made worse because it's very difficult to accurately appraise the values of homes in the current market. We can't fix the problem until the pricing structure is resolved, so we find ourselves in a peculiar chicken-egg conundrum. Furthermore, McCarthy believes that the federal money dedicated to this issue will only handle less than 10 percent of the problem. He argues for an upstream fix that will solve the broader problem of home loans rather than simply focusing on REOs.

Thomas Humphreys of Morrison & Foerster believes that the solution will require a public and regulated vehicle that will raise capital and redevelop communities rather than just homes. Otherwise, we will continue to be beset by "vulture-type" funders who are looking for ways to make money rather than to redevelop communities. Rick Jacobus of NCB Capital Impact's Shared Equity Homeownership Initiative called for a system of shared equity homeownership between the homeowner and some sort of "stewardship entity. McCarthy reinforced this idea: "We need a backstop for these homeowners." Shant Hovnanian of iHopeUSA discussed his new firm, an initiative for the preservation of homeownership, which would do just that.

Joe Kanter of the Kanter Family Foundation argued that our perception of the problem and its solution is upside down. This is fundamentally an issue about homeowners and the local governments who benefit need property tax revenue. Kanter says that we have to work with the homeowners and keep them in their homes through a system of "sweat equity." If we waste time and money rehabilitating REO homes in frozen real estate markets, then we are throwing money away. By solving this from the bottom rather than from the top, he feels the REO problem will solve itself.

Moderator:
Todd Boehly, Managing Partner, Guggenheim Partners LLC

What are some of the world's most successful retailers doing to weather the economic storm and come out on top?

Max Azria of BCBG Max Azria Group took the first shot at answering the million dollar question. He acknowledged that U.S. sales fell about 10 percent from 2007 to 2008, but noted that his company's global business division was up by a comparable number. "So I don't think it's as bad as we may think. At least not for me," he said with a smile. "But it is because we concentrate our energy on designing, creating and marketing." He pointed in particular to the cutting-edge technology used in the company's marketing, including social media initiatives and grassroots efforts on college campuses.

Joe Fortunato of GNC also felt confident and optimistic about the current state of affairs. He chalks GNC's success up to product differentiation, vertical brand integration, private labeling of products, quality assurance and placement in all the best malls in the country. "We set the tone over four years ago by investing in our core competencies and always sticking to our goals," he said. Fortunato pointed to a strategy of doing detailed market research, creating line extensions geared specifically to a specific market segment and creating private-label branding for most products.

Michael Miles of Staples has implemented initiatives such as value contracts with fixed price lists of more than 150 items, and special promotions and deals for new customers, including discounts on private-label store brands. "Our store brand is just as good as the best brands out there," he insisted. There are two driving trends for retailers right now, according to Goldman Sachs analyst Adrianna Shapira: cutting inventory and cutting expenses. "Lean and mean is the name of the game," she said. She went on to explain the benefits of "newness" and the importance of maintaining a compelling price-to-value equation.

All panelists agreed on a few key points. First, stores must align occupancy costs with store performance and drop underperforming locations. Second, retailers must strive to make an emotional connection with their consumers. Third, retailers must leverage the Internet for marketing. (Miles boasted that Staples.com is second only second to Amazon.com in online sales in the nation.) Fourth, retailers must look for ways to become more relevant in today's challenging marketplace by employing creative marketing strategies.

Shapira emphasized that consumers are saving more and spending more time at home. They are redefining how they spend their time and money. "Until consumer confidence makes a comeback, we will wait to see a revitalization of spending," she said. She advised retailers to focus on their niches and unique selling propositions, and warned that simply copying successful discounters such as Wal-Mart is a formula for failure. "Look at Apple with the iPod, and True Religion jeans. They are both experiencing increased revenues due to their niche market focus."

David Simon of Simon Property Group explained that his tenants want to trade for smaller spaces with better locations. "It is survival of the thriftiest," he said. "Right now, the market is directing the game. Vendor relationships are more important than ever. Sustaining brand equity is so crucial now. The strong will get stronger, and the weak will falter."

Moderator:
Daniel Casse, President, G100

High-skills workers are those who labor in the back room to develop infrastructure and technology. They hold bachelor′s degree at minimum and often have invested in a master′s degree and doctorate. And historically, "whether they came on the Mayflower or on Air India, it′s a one-way ticket. They don′t go back," Vivek Wadhwa said.

Entrepreneurial opportunity and improved quality of life have attracted many well-to-do, high-skills immigrants to venture to the United States. However, current political and social sentiments on immigration have unfolded in policies that deter high-skills immigrants from building a permanent niche here and enable other countries to recruit high-skills workers to their work forces.

John Lechleiter said the research cycle plan at Eli Lilly typically takes 10 to 15 years, and Lilly′s talent largely is made up of high-skills immigrants such as graduates on student visas. However, U.S. immigration policy deters many high-skills immigrant workers from committing to the company, Lechleiter said. This causes employees to leave after about five years and undermines Lilly′s research and development, he said.

One solution is to expand the numbers of temporary residents and speed up the green card process for high-skills immigrants.

Richard LeFrak refers to the success of Canada′s 1997 immigration policy in response to the surge of Hong Kong immigrants during the island′s transition from British to Chinese governance. Canada offered these well-to-do, high-skills Hong Kong immigrants "access visas" that permitted them to live in Canada in return for their investment. This innovative foresight in immigration policy helped build Canadian cities such as Vancouver into booming metropolises.

High-skilled immigrants are educated and risk-takers, making them prime candidates for successful, job-creating entrepreneurs. Both LeFrak and Gary Shilling recognize an opportunity for high-skills immigrants to help the United States in economic recovery not just by creating jobs but also by occupying homes and taking units off the market.

Panelists agree that the subject of immigration should shy away from its current perception to the idea of value creation, with high-skills immigrants contributing to the population of homeowners, entrepreneurs and job creators. While current entrepreneurship visas permit high-skills immigrants to obtain permanent residence after three years of investment and contribution, it is not enough to retain about 1 million people who are stuck in immigration limbo. A member of the audience said that, as a high-skills immigrant who pays Social Security taxes and health-care premiums, he and immigrants like him have the resources to help repair the housing market. Panelists agreed that the United States should frame immigration differently and promote itself as a magnet for skilled immigrants.

In closing, Lechleiter loosely suggested that if he cannot retain high-skills immigrants in Lilly domestically, he would have to outsource. Wadhwa said that if the United States continues its current immigration policy, it would in effect hand other countries the human capital to innovate.

Moderator:
Peter Passell, Senior Fellow, Milken Institute; Editor, The Milken Institute Review

In the aftermath of the nuclear disasters at Three Mile Island and Chernobyl, nuclear energy development largely hit a moratorium in the United States. More recently, the dual threats of climate change and growing energy demand has reopened the debate regarding the nuclear option. In fact, the NRC has received 17 license applications for 26 new nuclear power plants in the United States. But both sides in the debate remain passionate and committed, and Monday′s panel was no different.

Potential energy resources can′t be taken off the table in any bid to achieve energy security and energy independence and to fight climate change, Lady Barbara Thomas Judge said. Although many issues need to be addressed including improved communication, planning, economics and resources, she firmly believes nuclear energy should be an option.

David Scott agreed that nuclear energy should be an option and said it is among the United Arab Emirates' goals of energy diversification, widespread electricity accessibility and domestic development. Although the UAE is aggressively developing solar generation capabilities, it doesn′t provide the required baseload while nuclear energy does. Nuclear energy also complements the UAE's overall decision to move forward with renewable energy options.

These views contrasted sharply with the beliefs of Amory Lovins. Lovins said the efficient use of electricity, cogeneration of heat and electricity, and distributed renewables were three options that already are cheaper than nuclear energy without safety, proliferation or waste disposal issues. He also argued that "global capital markets put $90 billion into distributed renewables and zero dollars into nuclear" for a reason. "If we take market behavior seriously," he said, we should understand that nuclear energy isn′t cost competitive with existing options that are only getting cheaper.

Judge countered that the debate over nuclear energy "is not a zero sum game." She said the world needs a multitude of resources to address the growing global demand for energy. Nuclear is one of many options that need to be considered but is by no means the only option.

Scott emphasized the UAE's aspirations to diversify power generation methods and said each planning authority must look at its requirements and decide what will fulfill them.

He also discussed the UAE civil nuclear program as the first that is working in lock-step with the West to limit the risks of nuclear proliferation. The UAE program won't centralize activities that create weapons grade materials and will insist on explicit transparency.

Lovins reiterated his skepticism that the UAE's model will stop people from using civil nuclear materials to make weapons — even without enriching materials or recovering fuel themselves.

Moderator:
Kevin Klowden, Managing Economist, Milken Institute

The federal stimulus package will fund infrastructure and create an estimated 378,000 jobs, but it doesn't go far enough to meet the needs of modernization, panelists agreed. A significant gap exists between the number of projects needed and the amount of money available.

Infrastructure spending has a multiplier effect of $1.80 for every $1 the government spends, Doug Elmendorf said. A recent Congressional Budget Office report determined that, while additional spending of tens of billions of dollars could be justified, the returns on project investment varied widely. For that reason, Elmendorf said it is important to pick projects carefully and apply cost-benefit analysis.

The panel focused on several areas where the current infrastructure funding will not keep up with demand. There are infrastructure needs that are highly visible, such as highways and railways, and needs that emerge from catastrophe, such as Minnesota′s bridge collapse and New Orleans′ failed levees. Nancy Kopp argued for prioritizing sewers, clean water systems and other water infrastructure. Over the next 30 years, 50 percent of water infrastructure will need replacing, she said.

Norman Mineta pointed to the underfunding of the highway trust fund through a gas tax that hasn′t increased since 1993. He predicts alternative fuels and electric vehicles will further decrease money for federal highways.

Too often funding of infrastructure is uncertain. Martin Koffel said it is important to develop infrastructure spending for a boom or bust economy. He favored developing effective public-private partnerships in which private organizations aren′t just buying outmoded infrastructure but are able to invest in infrastructure projects that can be improved.

Some panelists suggested ways to improve the allocation of funding. Mineta said discretionary programs are laden with earmarks, prohibiting progress. Kinton said it is important to get creative in securing money through user fees and the congressional process.

Elmendorf agreed that user fees are a logical solution. Water fees and congestion pricing would effectively reduce consumption, increase efficiency and generate revenue, he said.

Thomas Kinton cited the passenger facility fees that Boston′s Logan International Airport charges passengers who travel through that airport. The $4.50 fee has no impact on budgets but generates significant revenue for airport improvement projects.

Introduction By:
Richard Byrne, CEO, Deutsche Bank Securities Inc.

Speaker:
Steve Wynn, Chairman and CEO, Wynn Resorts

It′s no surprise that the man who reshaped Las Vegas sees the economic downturn as an opportunity for "Glitter Gulch" to reinvent itself in ways that ensure Las Vegas keeps its promise as "The Party Town of the World."

Steve Wynn spoke to a packed ballroom about Las Vegas, the economy and simple truths like these: Humans possess a wonderful capacity to adjust to negative events and quickly return to normal behavior, and businesses must keep their promises to their customers.

"I′m in the business of human aspirations," Wynn said, and ensuring the customer′s hopes are realized or exceeded. "I place great trust in simple truths with a sense of history, asking, 'What do I know for sure?' I start with the simple before moving to the complex aspects of any issue.

"I know that Las Vegas is a flower in America's garden. If the garden is healthy, Las Vegas is healthy. The present economic downturn is part of the natural business cycles that Las Vegas is familiar with. Just as Las Vegas blossomed over the last decade, she weathered the 1974 oil crisis and the early 1990′s recession," Wynn said.

Las Vegas weathers the downturns by keeping its promise as a premier party destination. Maybe that isn't the loftiest notion, he said, but the economy won′t change human behavior, and Las Vegas does it better than anywhere else. Fierce competition causes casinos to learn from each other and try to outdo each other. As long as that competition exists, Las Vegas will keep its promise and evolve to meet customer demands with the convenience of a safe, easy-to-reach travel destination, Wynn said.

To evolve requires the right capital structure. It is a company's main form of marketing and ensures that the staff feels safe to focus on the guest. The guest experience is what matters; it suffers without attention to capital structure.

Consider the example of cost cutting. Everyone wants to cut costs, but there is a difference between cutting waste and cutting cost, Wynn said. In economic downturns it is more important than ever to keep promises to customers. It means avoiding illogical actions like cutting costs that come at the expense of the customer unless you are also cutting price, Wynn said.

In responding to audience questions, Wynn noted that local gaming and places like Wynn Macau still benefit Las Vegas. Las Vegas is far more than gambling; it is an experience, he said.

He also looks forward to President Obama's focusing on job creation as his top priority. He wants the administration to target small-business growth through tax incentives.

It is also important to send the right message, Wynn said. People should be encouraged to attend meetings and conferences in places like Las Vegas because the exchange of ideas is more important than ever in tough times. It not only helps the hospitality industry — a huge part of the economy — but it also is vital to the innovation that will fuel prosperity.

Moderator:
George Blumenthal, President and CEO, Park Avenue Medical Data Systems

Creation and implementation of a health information technology superhighway can increase quality, decrease costs, enable research and accelerate cures, according to panelists.

Despite these incentives, just 20 percent of hospitals and fewer physician practices use electronic health records, according to Stephen Leiber.

The Recovery and Reinvestment Act of 2009 allocates $35 billion to increase the use of electronic health records. The four major components include funding incentives; setting standards for health information technology, or HIT; linking incentives to HIT certification; and demonstrated use and establishing minimum requirements for functionality and interoperability. Leiber predicts that outcomes of HIT implementation will be eliminating unnecessary medical procedures, reducing errors and increasing efficiency.

David Levy said health-care costs are rising faster than economic growth, and global leaders in health-care delivery are concerned about sustainability. Integrated systems can lower cost and improve care, Yitzhak Peterburg said. Take-away messages from Peterburg′s experience implementing HIT in the world's second-largest HMO were increased patient satisfaction, improved quality indicators and an improved budget.

"Health IT is a stepping-stone for expense control and better medicine," Peterburg said, but to be successful it needs to be integrated; you need to do the research and get the right system; you need to get user buy-in; and you need to recognize that it's a culture shift that will take time and likely be met with some resistance.

"HIT is not only a stepping-stone for increased quality and decreased cost but also for clinical research," Margaret Anderson said. Anderson strongly encouraged HIT adoptees to integrate clinical research components prospectively rather than trying to build in post-implementation. A research-inclusive HIT will allow for quicker identification of patients eligible for clinical trials, enhanced monitoring of adverse drug reactions, and access to a broader, more diverse patient population, Anderson said.

Another means for faster cures and improved care via technology was proposed by Frank Moss. "Ordinary people, empowered by technology, are transforming every facet of society" and will affect health-care delivery and decision making as well, he said. For example, he said, orphan disease studies have found that electronic social networks provide a means of connecting patients and empowering them to track their disease, pose research questions and attract researchers. Moss highlighted the role of low-cost technology in distance medicine both for developing nations with limited access to providers and for developed nations as a means of addressing staggering health-care costs.

Recommendations and projections from the diverse group of panelists all spoke to the same theme: Technology provides solutions to many dilemmas health care is facing by improving outcomes, accelerating cures, increasing access and lowering costs.

Moderator:
Kara Swisher, Co-Executive Editor, All Things Digital

Electricity storage, alternative energy sources and efficient adaptations to existing processes are all areas attracting notice from this panel of venture capitalists. With bond financing still sluggish and the IPO market currently producing few deals, the best source of financing for new enterprises is the Department of Energy and other government sources — but that doesn't mean VCs have stopped looking for opportunities.

The trouble in the capital markets has not deterred Eric McAfee of McAfee Capital. He highlighted a $4.5 billion solar energy project that includes bond financing and funding from McAfee Capital of just under $50 million.

Solar, he says, is where the majority of VC money is going. This is reflected elsewhere in the world — especially in the Middle East, where according to McAfee, sovereign wealth funds are investing in the infrastructure because of limited remaining oil resources.

As other forms of generation advance, electricity has the potential to be the new basis of the world's transportation network. McAfee stressed, however, that investors need to be wary of what part of the value chain they choose to invest in. Specifically, there are many manufacturers of solar cells, and McAfee predicts that there will be a "bloodbath" as competition forces most of the 80 or so participants out of the market. The power in the value chain has moved to the utility customers. Ford Tamer of Khosla Ventures cautions that the "Google of solar" has not yet been invented and that there is not enough efficiency in the overall cost structure.

Shifting gears to the larger electrical network, the panel agreed that the U.S. government is in a unique position to spur investments in the historically neglected electrical infrastructure. Specifically, if national policy dictated a goal of building out a "smart grid" for electricity distribution, venture funding would flow toward producing energy-efficient retail goods.

Tamer stated that while some venture participants are looking to batteries as improvements that can meet electrical infrastructure needs, his firm is looking at other forms of electricity storage that can meet demand for 100 MW of storage.

Compatibility with a "smart grid" is also on Tamer's mind; he pointed out that Khosla is still looking at consumer-based devices like advanced adaptations of cell phones that include projector functions as well as uses that will replace traditional credit cards.

The panel also agreed that other forms of alternative energy are providing opportunities right now. Alec Ellison of Jefferies & Company proposed a move toward compressed natural gas as a clean technology with one-third of the emissions of traditional car fuels, cautioning that the costs of producing biofuels may be too high at the moment due to the costs of food for algae and other microbes. Tamer suggested that the technology exists for zero net emissions through the use of advanced geo-thermal techniques and bio crude oil production.

McAfee supported that effort, adding that McAfee Capital was looking at a biotech approach to creating fuels using only the cheap inputs of sunlight, carbon dioxide and seawater. Steve Jurvetson, of Draper Fisher Jurvetson, also echoed the drive toward biofuels through the use of advanced genomics in algae capable of constantly excreting oils.

The overall industry tone was reflected by Ellison, who said that although it is experiencing difficulty, the IPO market will return later this year, but not with very high volumes.

Jurvetson added that difficulties in the capital markets have dried up financing for ventures at a time when good ideas need funding. The result, he says, is that 2009 and 2010 will be fantastic vintage years, meaning that in a few years' time investors will look back and wish they had taken part.

Moderator:
Brian Sullivan, Anchor, Fox Business Network

Everyone agrees that the U.S. housing market is troubled, but when it comes to solutions, there′s a raging debate.

Recounting the challenges facing the housing market, panel members agreed that the causes are numerous. Donald Brownstein said the downturn was the result of easy money for homebuyers in the form of mortgages that were too high for people′s income. Steven Mnuchin agreed: "The industry began making loans based on the value of the property instead of on the home-buyer′s income. The problem is lending gone wild."

Other panelists noted a complete breakdown in the mortgage system observing that no one, from homebuyer to mortgage lender, understood the risks associated with high housing prices and mortgages based on home value instead of income.

The panel said the troubled housing market a large contributor to the economic downturn. "What we have now is a depression in the housing market, and it is why we have an overall economic slump," Ross DeVol said. Housing's decline has taken approximately two years' growth from the nation's gross domestic product.

The bottom is still ahead, Brownstein said, and the essential question is when will the economy turn around and how. While forecasts predict an uptick in the housing market in the next few years, there is a lot of room for government and free market solutions.

Richard Smith said, "The administration has failed so far in addressing the housing crisis. The focus of the administration has been on the foreclosure issue, but the solution to the problem is on the demand side." But Mnuchin said stabilizing housing prices is part of the solution.

The panel addressed some misconceptions about the housing market, especially the idea that there is a national housing market with challenges that can be addressed on a one-size-fits-all basis. Devol said that misconception leads policymakers to miss the fact that 50 percent of foreclosures are in California, Las Vegas, Phoenix and southern Florida. "The plan from the federal government addresses the housing problem as on a national problem but doesn′t tackle it locally," he said.

Moderator:
Terence Smith, Journalist; Former Correspondent, "The NewsHour with Jim Lehrer"

"It will be necessary to produce as much food in the next four decades as the world produced in the last 10,000 years."

Terrence Smith opened the panel with that daunting fact.

Three things happen when people don′t have food: people migrate, people revolt, and people die. The United States must "figure out how to stabilize the global food supply if we are going to have a stable world," Josette Sheeran said.

The answer is simple yet complex: use the public sector, which has the capacity to impact change, while partnering with the private sector; align incentives; create transparency; and invest in technology, she said.

The panelists agreed that it is critical for the U.S. to take a leading role in fighting world hunger. "America should own the brand of feeding the world," Sheeran said. However, Dan Glickman said government hurdles exist. One hurdle discussed was the Bumpers Amendment, which stipulates that no aid received through the U.S. Foreign Assistance Act can be provided to anyone in a foreign country for an export that may compete with a similar U.S. product in world markets.

Whatever solutions are created must be sustainable. Rajiv Shah stressed that there is no one right answer. The solution is not transplanting a model but allowing for a customer-driven solution in each area. He also stressed that this solution must be sustainable, and smart investing must be encouraged.

Volatility in food prices and freight prices over the past year caused a hunger crisis, William Meaney said; from June 2007 to January 2008, food prices skyrocketed. The effects of changing prices are difficult to measure and include such things as farmers going in and out of business. The hunger crisis must be answered with a sustainable solution, he said, whether it′s making markets work as regions relying upon each other or teaching each country to be self-sufficient.

In the private sector, investing in appropriate technology, addressing the water crisis, and giving farmers the direct opportunities may have an immediate impact on hunger, Jerry Steiner said. Meaney noted that by working together companies such as the Zuellig Group and Monsanto could discover how to meet their risk profiles and invest in an environment where the economics make sense and instability is addressed.

Moderator:
Andrew Miller, Co-Founder and President, Internet Real Estate Group LLC, InternetRealEstate.com

Internet innovation is only in the second or third inning, Michael Soenen said, and there is much more to come.

The Internet and mobile applications are alive and well despite the state of the economy, moderator Andrew Miller said. He characterized the crisis as "mostly a bank and financial crisis and not a direct hit on the Internet."

Mike Zapolin agreed, saying Internet advertising revenue will grow by $50 billion, narrowing the gap between the 21 percent of media consumed online and the 7 percent of advertising revenue spent on the Web. Jim Safka said innovation is so hot that now is a best time ever for companies who have capital to invest in the Internet.

Peter Neupert was not as effusive. Although Neupert is willing to concede that the Internet is in the second or third inning of innovation, he wondered how long the innings really are. To illustrate his point, he referenced the evolution of convergence. Neupert said convergence was in its nascency 13 years ago and still isn′t a reality.

Andrew Miller conceded that some innings are longer than others, adding that some industries such as commercial insurance haven't fully harnessed the Internet to expand their business. However, the panelists agreed that the Internet has been an amazing tool to allow individuals to put their businesses on a global platform and to build large-scale Internet businesses with smaller capital outlays.

The role of video was another hot topic. Zapolin discussed the importance of video and the growing role it will play in conveying media, and he praised Google's integration of video into its search results. Safka acknowledged that videos have a higher click rate than text links but cautioned that media distributors have not figured out the user experience in video.

Neupert provided a unique perspective of the role of the Internet in health care. Unlike other industries, health care has been markedly slow to adopt Internet technologies because it's a "cottage industry." He said there is more health information online now — a lot of it good content —but medical professionals complain the content is often on the fringes of reputable medical research.

The panel also turned its attention to the limitations of the Internet. Soenen said the biggest limitation to innovation is the speed of the Internet itself. He attributes the slow development of convergence to the lagging speeds and thinks improvements "will radically alter the rate at which internet innovation occurs." Another limitation is fear, Soenen said, but older people eventually will grow more comfortable with the technology.

The panel was enthusiastic about the opportunities but said companies have to let go of their old ways to succeed. The Internet will displace some traditional business models, but has the potential to help entrepreneurs maximize their potential, the speakers said.

Speaker:
Stephen Cloobeck, Chairman and CEO, Diamond Resorts International

What's the secret to success? According to Steve Cloobeck of Diamond Resorts International, it's "never say no." And when you say yes, "say it with a smile."

Cloobeck came out of retirement two years ago and purchased Sunterra, a public company specializing in hotel timeshares. But the company was in terrible shape. "They were a hospitality brand in thought, but nobody was taking care of it day to day," said Cloobeck.

More importantly, however, the Sunterra management team was missing the point. "Timeshare is not about real estate — it's about taking care of your guests." Sunterra received 60-70 complaints a day — complaints so loud that Cloobeck said they qualified as hate mail. But no one from Sunterra ever responded. The guests were completely ignored. The entire operation was crying out to be re-engineered to focus on customer service.

Cloobeck decided immediately that the company needed to be rebranded. Instead of hiring "a fancy ad agency," they did it themselves. The first strategy was to send customer surveys to their guests in the United States, Canada and Europe and ask them why they were so unhappy. Next Cloobeck and his team took to the blogs. They went to chat rooms to talk directly to the customers. "Nobody had talked to the customers for years and years and years," said Cloobeck.

Based on the results of this customer research, Sunterra was transformed into Diamond Resorts International (now a private company). The new brand has three main tenets: simplicity, choice and comfort. But most importantly, Cloobeck maintains that "we never say no."

According to Cloobeck, no request is too small. If a guest prefers the floral soap that was used during their last visit, a hotel staffer will go find it. If a guest is celebrating a birthday or an anniversary during their stay, they'll find flowers in their room on arrival.

Diamond has 23,000 beds in 21 countries, with more than 400,000 timeshare members. Cloobeck himself has sampled 25 pillows to find the most comfortable one to distribute throughout the properties. He also travels to all of the properties and drops in unannounced to test the quality of service for himself.

When asked about how he is coping with the tough economy, Cloobeck acknowledged that Diamond had been forced to make some adjustments. In October 2008 approximately 500 personnel were let go, most from corporate offices. Cloobeck was also forced to raise maintenance fees by 27 precent.

But Cloobeck believes that for a healthy company, "this is the time to expand," so Diamond is looking to acquire additional properties. The company is currently working to open a location in Greece, and European guests have also requested a location in the Middle East. Diamond Dubai may not be far behind.

Moderator:
Bill Marcus, Head of Sales, Americas, Newedge

In 2008, the world watched as commodity prices soared to new highs — causing an oil shock in the United States and food riots in the developing world — then abruptly plummeted. Deflating prices and decreased demand caused its own set of woes in supplier nations. But whether prices are high or low, the competition for resources never stops. The demand for metals, oil and agricultural products will only increase as emerging markets continue to grow. Some of these much-needed resources are found and produced in politically unstable regions, adding to the unpredictability of the global battle over commodities. How should countries prepare themselves for scarcity? What are the implications of this global competition for resources on multilateral relationships and geopolitics? Where are commodity prices headed over the next decade, as the global economy recovers from the current slowdown? The panelists engaged in a lively discussion on policies and investment strategies.

Introduction By:
Gordon Crovitz, Columnist and former Publisher, The Wall Street Journal

Speaker:
Lynda Resnick, Co-Chairman, Roll International Corp.

POM Wonderful. FIJI Water. Teleflora. The Franklin Mint. What do these iconic brands have in common? They were all built by one remarkable woman: Lynda Resnick. One of the best marketing minds in American business shared the secrets of her success, which are also described in detail in her new book, Rubies in the Orchard: How to Uncover the Hidden Gems in Your Business. Resnick believes that every company can find elements of intrinsic value that consumers will desire. She emphasized that every successful marketing campaign begins with uncovering these hidden gems and communicating their value honestly and transparently. Resnick's approach can help any company — large or small — break through marketplace clutter and consumer cynicism, creating blockbuster brands with true staying power.

Moderator:
Joel Kurtzman, Senior Fellow, Milken Institute; Executive Director, SAVE

There is an acute need for leadership talent around the world. Many developing nations are experiencing a shortage of well-trained managers for their rapidly growing business needs, while the West is seeing the beginning of a huge wave of baby boomer retirements. What are the implications of this growing leadership gap? What makes a good leader? How can organizations develop talent and promote the right people?

Each of the panelists shared theories on the qualities shared by good leaders. As Robert Damon of Korn/Ferry International said, "Talent makes a difference." He identified good leaders as those who are self-aware, realistic optimists and are never satisfied with the status quo. Jeffrey Cohn of Spencer Stuart, who does succession planning for large organizations, suggested that effective leaders demonstrate practical intelligence, social savvy and the emotional intelligence to question their own assumptions.

John Haley from Watson Wyatt boldly suggested that sometimes the best leaders are those who take risks — and those individuals may not have succeeded in their previous position. All agreed being a good team player is integral to being a successful and effective leader.

Ilene Lang of Catalyst observed that the CEO leadership shortage around the world may be in part due to women being held back from high-level positions. She questioned why women — who represent more than 50 percent of college degree-holders and more than 50 percent of middle management — hold only 15 percent of business leadership positions in the United States. She suggested that CEOs hire those people who are like them, resulting in more white men at the top levels of a company.

Damon offered an opposing point of view, hypothesizing that women will break through the barriers that exist as the Title IX generation matures in the workplace. His firm is researching the notion that equality in college athletics will result in significant differences in the leadership style of women. As competition, leadership and team skills are reinforced through team sports, more women will advance to leadership roles over the next 10 years.

The securing good leadership for any given company lies in the hiring and development process. Lang suggested it is important to bring more people into the hiring process that have different perspectives in order to advance leaders who will branch out from traditionally held stereotypes of what a CEO should be. She argues that diversity improves an organization. Lang also suggests that accountability through metrics and goals will encourage an organization's leaders to take employee development seriously. Haley suggested companies need to set up a process for two-way communication so employees will know what they need to do to succeed.

Damon contended that leadership development only advance when leadership values are incorporated into the company culture. Cohn suggests that companies identify employees with a high potential for leadership early in their careers and groom those individuals through mentoring and development programs. When these high-potential leaders are promoted, it results in better succession planning for key positions across all levels.

Speaker:
Vinod Khosla, Founder, Khosla Ventures

Interviewer:
Elizabeth Corcoran, Silicon Valley Bureau Chief, Forbes

"I turn every problem into an opportunity," Vinod Khosla says.

In his portfolio are 50 clean tech companies that he hopes will develop technological innovations that will revolutionize energy. Khosla said the energy problem is so massive that it can′t be solved by government funding. It must be addressed by the private sector through the proliferation of technologies that achieve unsubsidized market sustainability.

Khosla expects a carbon-constrained world, with so many legislative and political initiatives being sought to reduce the amount of carbon emissions. As a result, developing sustainable alternative fuels is critical, he said.

He expressed interest in the development of cellulosic ethanol, a biofuel made from wood, grasses or the non-edible parts of plants. Although ethanol made from corn and soybeans is a useful stepping-stone, Khosla sees ethanol made from non-food sources as a more important and useful resource to replace fossil fuels.

Khosla stressed the importance of addressing climate change through a cap-and-trade system. "We have to have cap and trade; we don′t have a choice," he said. Khosla said developing countries with smaller per capita gross domestic product shouldn′t have absolute carbon caps but could participate in relative terms.

He compared climate change to homeowners insurance. While insurance is common, climate change is a far greater risk than fires or floods and should be handled as such. In fact, Khosla argued, climate change poses a greater challenge than terrorism or nuclear proliferation.

As an investor, Khosla has been interested in improving the efficiency of lighting, batteries, motors, pumps and air conditioners because of the profit margin. He recognizes that hybrid electric cars are a step in the right direction to reduce some emissions and improve mileage, but their cost makes them a less feasible option to solve the energy problem.

He advised investors to identify the most promising trends in technology by looking at what doctoral students are studying at the top science and engineering programs.

Khosla referred to the importance of "black swans," extraordinarily rare events that completely change the paradigm. The financial downturn would be classified as a negative black swan, while technological innovations to redefine energy would be a positive black swan. "I′m a technology optimist," he said, predicting that by 2030 fossil fuels would struggle to compete with newly developed renewable energies.

Moderator:
Keith Ferrazzi, CEO, Ferrazzi Greenlight

Consumers are consuming a little less conspicuously these days, requiring a change of approach to marketing, according to a panel of experts.

The landscape of doing business has fundamentally changed with recent economic developments, said Keith Ferrazzi of Ferrazza Greenlight and Starbucks′ Michelle Gass. Gass in particular noted a move away from "conspicuous consumption" to the purchase of products based on their value and affordability.

Gass said this requires new approaches from businesses. "You′ve got to be in a position to be nimble and adjust your marketing strategy," she said. As an example of an innovative strategy, Gass and Ferrazzi both cited Starbucks' use of digital channels to advertise free coffee for voters on Election Day.

Frank Luntz of The Word Doctors.com said businesses need to know precisely what customers want and use that information to customize advertising and marketing. He said his consumer research found that, in a difficult economy, "Men want more money, and women want more time." A successful marketing campaign will capitalize on these concepts, he said.

Stephen Cloobeck of Diamond Resorts stressed the importance of combining awareness and use of new media with "old-fashioned" approaches to enhancing a brand. "It′s about customer service," Cloobeck said in describing his company's view of marketing.

Cloobeck said aggressively serving customers redefined the flagging reputation of the company he acquired. His resort managers are instructed to constantly attend to guests' needs, call frequent customers personally to thank them for their loyalty, and acknowledge and remedy customer complaints.

"It′s our mandate worldwide to say we apologize and then fix it as soon as possible," Cloobeck said.

Julie Woods-Moss of BT also discussed the value of human interaction. She described BT′s efforts to use social networking to increase communication within an organization, saying the tactic increased productivity. She said customers also value personal interaction. "We′re actually overlooking the good, old-fashioned contact center," she said.

"At the end of the day, it's really the relationships in your lives that are going to power your growth," Ferrazzi said.

Moderator:
Paul Kedrosky, Senior Fellow, Ewing Marion Kauffman Foundation

Social networks have become the hottest innovation on the Internet. Almost daily, new headlines discuss their impact on everything from teenage relationships to political campaigns. At the same time, they have also evolved into a powerful tool for creating and establishing the ties that are essential to developing a solid business. This panel examined exactly how business-based social networks work to deliver value by marketing products, building brands, facilitating customer support, finding new employees and informing investors — all while developing successful models as businesses unto themselves.

Moderator:
Steve Ellis, Worldwide Managing Director, Bain & Company

Increased personalization and perfecting the user experience will be key to increasing the reach of the mobile Web, panelists said.

Mobile media devices are becoming intrinsically linked to one's sense of self, said Len Lauer of Qualcomm, because you "don′t leave home without the mobile device." The devices are a way to bring connectivity to those in rural areas in both the U.S. and abroad. However, as the devices increasingly permeate the market, mobile Internet companies face challenges in privacy and user acquisition and retention.

Manufacturers such as Nokia and Qualcomm are exploring using the mobile Web to expand Internet into developing countries that lack the infrastructure for wired service, including more of the 2.6 billion people who live without a phone.

Mary McDowell discussed Nokia′s Life Tools program that provides Internet access using 35-year-old technology and slower Internet speeds. Life Tools lets individuals in rural India who have GSM coverage access the Internet for educational and agricultural purposes via an easy-to-use graphical user interface. Lauer said similar initiatives can serve more people in developing countries via handsets with a $17 entry price or bring browsing to any home that has a television via a modem and an applications processor.

Qualcomm also is working with the federal government on a broadband initiative to increase access for rural Americans. Greg Skibiski of Sense Networks is excited about bringing people on the grid because it allows companies to track the physical locations of mobile customers and use the information to predict outbreaks of disease, challenges to public safety and other purposes that could improve the quality of life for people in developing countries.

For those with ready access to the wired Internet, what will lure them to the mobile Web and keep them there? In five to 10 years, Lauer said, all devices will be connected to each other via local area networks or even wider networks. Lauer is confident mobile devices will be developed that will allow the convergence of consumer electronics, wireless and computing in one device but cautions against companies developing a cheap notebook computers as the answer.

McDowell agreed that convergence is coming but said the mobile Web is "about the transformation of the Internet, not rendering pages on a tiny screen." She said the mobile Web also should be harnessed to deliver custom content. While the panelists agreed that applications on systems like the iPhone are exciting, some wished for portability between devices.

Privacy is a key issue, given that user information is a major source of data about users and their habits. Skibiski said that individuals should have possession, use and disposal rights to their information and that companies should diligently dispose of an individual′s information after it has been analyzed.

Moderator:
Rick Newman, Chief Business Correspondent, U.S. News & World Report

"It's premature to talk about green shoots and financial healing," said Barry Eichengreen of the University of California, Berkley, noting that global demand for American exports does not point to a economic turnaround and that recapitalization of the banks is being done more slowly than is optimal for recovery.

James Barth of the Milken Institute outlined the major factors that led to the crisis in the mortgage and credit markets in the United States, drawing on the extensive research and data contained in his new book, The Rise and Fall of the U.S. Mortgage and Credit Markets. These included issues that are commonly cited, such as lax monetary policy, the ability of lenders to pass along risk and the failure of rating agencies, but also some factors that are often overlooked, such as the procyclicality of regulation (the tendency for regulation to be loose during good times but much more stringent in financial downturns). Barth pointed out that regulation of the financial system is overly complicated, causing inadequate enforcement and a lack of accountability.

When comparing the economic situation in the United States to the situation in other developed countries, Eichengreen forecast that many European and Asian countries are likely to have more severe and lengthier recessions. Although investors around the world bought up securitized U.S. mortgages, he doesn't believe the American financial system was entirely to blame for the world's financial crisis. Poor financial decisions were made at various financial and government institutions in Europe; panelists noted excesses in the financial industry in Iceland and Germany. "How could the Icelanders allow their banking and financial system to grow to eleven times their economy?" asked Eichengreen.

Alan Boyce of Absalon proposed that an alternate system of mortgage lending, similar to the one in Denmark, would reduce the number of foreclosures in times of declining real estate prices. The system would distribute risk among the loan originator and the ultimate owner of the mortgage while giving upside potential and downside protection to homeowners; it would structure mortgage-backed securities in the same transparent manner that has long been used successfully for corporate bonds. He noted that Denmark had a substantial run-up in home prices, but is weathering the aftermath of the bubble without the turmoil experienced elsewhere. Boyce is currently working to encourage the implementation of the system in the United States.

When asked to predict when the housing market will bottom, the panel of experts suggested that until economic growth resumes, real estate prices are likely to continue to decline. Although only 10 to 15 percent of mortgages are currently in delinquency or foreclosure, the situation can become much more grave by the end of the year if we do not take bold action, warned Boyce.

Moderator:
Rafael Pastor, Chairman and CEO, Vistage International

"CEO" has become a dirty word these days. Top corporate executives have been vilified as greedy, incompetent, careless, uncaring — and just plain out of touch with what they need to know. In some cases, the opprobrium is justified; in many more, it is not. But in all cases, the challenges that lie ahead for the individuals running companies will be different than they were before. How will CEOs and their companies balance calls for transparency, rectitude and regulations with the business imperatives of risk-reward, competitive advantage and free enterprise? How should business leaders exemplify and inspire creativity, confidence, calm and courage in the midst of the turmoil that surrounds them today? What must CEOs do today to prepare their companies and people to compete when recovery is at hand? What traits and skills will be needed to operate and grow companies in the evolving new world of commerce? This panel, featuring some of the foremost experts on business leadership, focused on what the ideal 21st-century CEO will have to know, do and be.

Speaker:
Sumner Redstone, Executive Chairman, Viacom Inc.

Interviewer:
Larry King, Host, CNN's "Larry King Live"

What's life like after 80? Don′t ask Sumner Redstone. He says he′s 65.

Redstone — who′s really 85 — shared his views on health, business management, success and romance in an expansive conversation with Larry King.

King began the session by asking Redstone about his health regimen. "I eat and drink every antioxidant known to man," Redstone said, describing an approach to health that he credits for surviving prostate cancer. "My doctor says I have the health of a 20-year-old," Redstone said. "I feel better than I did when I was 20, honestly." He also extolled the virtues of moderate consumption of liquor, saying he enjoys vodka in the evenings. "Vodka is an antioxidant."

The conversation then turned to his management of CBS and Viacom. He attributes the success of his companies to his hiring excellent leadership, noting the talents of Les Moonves and Philippe Dauman.

"I don′t tell Les or Philippe what to do. … But when they ask for my advice, I give it to them," Redstone said.

King pressed Redstone on his management style, noting, "Your business reputation is hard-nosed." Redstone was quick to dismiss such claims, arguing that he creates a sense of family in his companies. "Talk to the people who work for me; they love me,' Redstone said. "It pays off to have people feel that they′re part of a family and not an employee."

At the same time, Redstone proudly acknowledged his competitive nature. "I have been competitive all my life. … I am fiercely, obsessively competitive," Redstone said, adding that the characteristic has served him well in business and in crisis. Redstone described his brush with death in a hotel fire, which he survived by hanging from a third-story window by his right hand. He detailed his painful recovery from the injuries, including burns on his legs so severe that medical staff feared he might not live. But after six surgeries that included extensive skin grafts, he survived and defied doctors′ expectations that he would never walk again. "The reason you′re alive is you," Redstone said the doctors told him. "The will to live saves many people from death."

Redstone said his love of life extends into the realm of romance. "Like most men, I find attractive women attractive," Redstone said. The bachelor added: "The most attractive women are married."

He characterized himself as a man intent on enjoying life to the fullest. When asked by King whether he feared dying, Redstone responded: "Why should I be afraid? I′m not gonna!"

Moderator:
Peter Bart, Vice President, Editor-in-Chief, Variety

America's leading export industry is facing up to the realities of the recession and taking action to ensure its continuing efficacy at providing consumers with the high quality content they demand. Peter Chernin, President and CEO of News Corporation, sees consumers as "staggeringly smart and often way ahead of the studios in adapting and adopting new approaches to consuming content." They will not be legislated or slow their migration to digital content.

In many ways, industry challenges remain the same: create good content, develop new opportunities for consumption and maximize monetization. The new media and mobile applications complement existing capabilities, though the industry is still in the process of sorting out the monetization. A self-proclaimed "old television guy," Leslie Moonves of CBS sees broadcast remaining an integral part of the media portfolio, but without the huge margins it once enjoyed. Television is well-suited for "American Idol" and the Super Bowl, whereas Internet services like Hulu can draw audiences with reruns.

The executives' largest concern is with market structure. Moonves concurred with News Corporation's Jon Miller that major productions are bigger than ever and small start-up productions are doing well, since they are so inexpensive to produce and can afford to appeal to niche audiences. The challenge is the middle-market segment, where studios were accustomed to good, steady returns over the years.

While digital migration offers great promise to new talent and big-name superstars, the middle-market segment is filled with established actors and writers who have long been able to make a good living but are now bearing the brunt of changing market conditions. This market segment was at the center of the recent labor strife with no readily apparent solution at hand. While Chernin admits that management perhaps got off on the wrong foot and didn't act quick enough to dispel the us-vs.-them rhetoric in recent labor negotiations, the industry's future depends on bringing all parties together to solve this middle-segment issue.

The panel pointed to Hulu's success as an excellent example of studio work in this area. Miller relayed how Hulu reflects viewer preference for high-quality products and their acceptance of long-form works with advertising over the Internet. Well-suited for television reruns, the Hulu advertising approach is one that agencies know how to do well and offers targeted marketing opportunities. While Moonves noted that targeted marketing efforts can miss portions of the audience, it points to a need within the industry for more insightful means to measure digital media consumption.

Producer Brian Grazer is confident the theater experience will remain strong, while noting revenue streams matter. As Moonves remarked, everyone is trying to keep their heads above water with revenue while figuring out how to monetize the new digital content and outlets, especially mobile applications. "It is about creating quality content that tells a story, whether it is a two-minute clip or a two-hour movie. The challenge is getting enough revenue to continue high quality content."

Miller sees the enterprise-level strategy as a major challenge, while Grazer is concerned about fear within the business that drives management to prognosticate what people like. "As long as it doesn't compromise artistic integrity, the media should be flexible." As this panel revealed, Hollywood is focused on attaining the flexibility to succeed at providing quality content for whatever media the consumer desires.