Tag: WashU at Brookings

Boston University’s Amisha Miller examined 2,000 decisions by a real-world venture capital firm weighing the prospects of startups. Wharton Business School’s Valentina Assenova analyzed thousands of episodes of “The Startup Game,” a simulation played globally that casts students as startup funders or founders as they navigate investment decisions.

And the University of Southern California’s Melody Chang contrasted hundreds of cases of conventional equity funding against cases of the relatively new option of equity crowdfunding. At WashU Olin’s invitation, those three scholars and seven others presented research affirming the woeful inequity in startup funding funneled toward women and underrepresented minorities—and exploring the possible causes and likely effects.

The researchers presented their work at the Brookings Institution in Washington, DC, November 10 to an audience of funders and founders who make up the 2022-2023 Olin Brookings Commission, which is working toward a slate of public policy recommendations to address the inequity.

“I appreciate having my experience validated in the work you all are doing,” said Lori Coulter, MBA 1999, a member of the Olin Brookings Commission. She’s the founder and CEO of Summersalt, a tech-enabled women’s apparel company.

Identifying root causes toward finding solutions

Widely reported statistics—reinforced by the stark data shared last week—show that women and underrepresented minorities bring down about 2% of the startup funding provided to founders in the United States. The commission, funded by a grant from The Bellwether Foundation, began its work on this project in September. The seven-member commission, supported by student workers and academics from WashU and Olin, is exploring root causes for the inequity before crafting policy recommendations that could address it. The commission expects to issue its recommendations in April.

As part of that process, the commission organized last week’s academic conference at Brookings. Researchers globally submitted more than 40 papers for consideration. Ultimately, 10 were invited to present their work, sharing early-stage research work focused on the issue.

“This event wasn’t about finding solutions. It’s about examining root causes, and it was very valuable,” said Christine Aylward, founder and managing partner at Magnetic Ventures and a member of the commission. “I have ideas about solutions, and I’m looking forward to getting to those.”

Causes examined in some of the scholars’ research included unconscious bias or other beliefs that lead to different evaluation standards for startups founded by men versus women—or by white individuals versus individuals of color. For example, presenters at the conference shared research showing male founders were asked “promotion” questions—looking for information about startup progress and prospects. Meanwhile, women were asked “prevention” questions—seeking information about staving off problems or avoiding pitfalls.

Unlocking exclusive networks

Another common theme was the power of “homophily”—the idea that “birds of a feather flock together.” Networks tend to develop among people with common interests and backgrounds, which often leads to people outside those networks being excluded from opportunities. Such attitudes, researchers found repeatedly, often lead to the assumption that minorities and women don’t secure as much funding because there just isn’t a robust pipeline of minority and women founders.

“It is lazy to say it is a pipeline issue. It is lazy to say it’s a talent issue,” Nasir Qadree, founder and managing partner of Zeal Capital Partners, told conference attendees. “If you choose to stay where 80% of capital flows or stay within your own social network, then you are going to continue to see the same types of entrepreneurs. That has yielded a bias in terms of this idea that there’s a pipeline issue.”

One research team from Boston University shared early data from a novel research project begun in early 2021—soon after the May 2020 launch of a newly formed venture capital firm that provides pre-seed investments and mentorship for new startups. “We embedded ourselves in the whole process,” said Siobhan O’Mahony, a professor of strategy and innovation at Boston University. The VC firm, established with the expressed purpose of supporting otherwise marginalized communities, allowed researchers to interview participants throughout the process as the firm whittled down 911 funding applicants to 45.

While their work and data analysis is still ongoing, O’Mahony told conference attendees it was already affirming many of the same observations around investor bias.

Leaving money—and ideas—on the table

Their work also provided affirming data for another oft-observed phenomenon affecting the flow of dollars to URMs and women. Projects conceived in these communities often address needs found in these communities—for example, people living in transit-scarce regions or healthcare for targeting minority populations.

Yet while those needs are identified, conventional investment channels historically and systematically dismiss or undervalue them because the incentives to invest are considered too weak.

“We keep dancing around it, but if you want change, it has to come from the funders,” said Andre Perry, a Brookings senior fellow, professor of practice of economics at Olin and commission member.

The work presented left commission members energized and determined, if in some cases also a little stunned.

“What I heard in this room can make a tremendous difference,” said Martin Hunt, CEO of Swanlaab USA Ventures and a commission member. But, he added, the themes raised by the research also smack of Jim Crow economics. “This work repeatedly speaks to the idea that money is being left on the table by not investing in a broader range of founders. We have to start talking about that. If I’m giving money to my retirement fund and you’re not investing in women, that’s not working. You’re costing me money.”

Pictured at top: Emmanuel Yimfor, a researcher from the University of Michigan, presents work on “What explains the venture capital funding gap for black entrepreneurs?” conducted jointly with colleagues from the Federal Reserve Board and Cornell University at the Olin Brookings Commission’s academic conference November 10, 2022.

The global immersion is back and in full swing! Olin’s MBA Class of ’24 kicked off their six-week global immersion program in Washington, DC, last week. 

They met with policymakers and industry professionals at the Brookings Institution while completing their Global Institutions and Values class, taught by Professors Trish Gorman and Sharon James. The course is designed to give students unique access to experts on global issues through Olin’s partnership with the Brookings Institution, one of the world’s leading think tanks and policy centers. 

At WashU at Brookings, students were treated to guest lectures by leaders from the Center for European Policy Analysis, American Enterprise Institute, Refugees International and more. 

Students made the most of their trip, visiting the National Mall for a monument tour, browsing through museums to gain relevant knowledge for their team projects and walking through historic Georgetown. The week culminated in the presentation of individual assignments — specifically, access and identify components of an effective COVID-19 policy that incorporates public health as well as business interests.

The global immersion is now truly global: Students landed in Barcelona, Spain, on Sunday, July 17, and will travel to Paris and Santiago, Chile, before heading back to St. Louis to begin the fall semester. 

Bon voyage, MBAs!

The return to a sense of normalcy and traditional in-person events continued in late April as more than 90 PMBA students arrived in Washington, DC, for their two-day residency at the Brookings Institution.

Students arrived for the trip in time for dinner on April 27 and spent the next two days in conversation with noted political insiders, media experts and policy wonks—all in service of connecting the dots between business, government and policy.

“We spend so much of our time optimizing our market strategy, but there are so many other factors at play,” said Archie Karanwal, PMBA class 48, a product owner at Edward Jones. He said the Brookings residency was a great opportunity to gain an understanding of some of those other factors.

Indeed, the trip is a manifestation of Dean Mark P. Taylor’s oft-stated desire that every WashU Olin student have a Brookings experience during their time. The April residency included students from four different PMBA cohorts: classes 46, 48, 49 and 50. The two-day visit even included an evening tour of DC monuments among the activities on April 28 and 29.

Ian Dubin, associate dean and managing director for WashU at Brookings, exhorted the students to bring their own experiences and professional work with them as they listened to and engaged with the speakers, who covered topics including cyber-security, the government regulatory process and Congress.

“It’s not all like cable news here in Washington, where people are yelling at each other all the time, believe it or not,” Dubin said.

Speakers included Ron Christie, CEO of Christie Strategies and former deputy assistant to the vice president for domestic policy under Dick Cheney, who shed light on the more subtle interactions that occur among policy makers and elected officials—and who reinforced the importance for business leaders of understanding that process.

Those connections were not lost on Kelsey Wortmann, PMBA 49, a product planner at Emerson. “I hadn’t realized how actual work gets done in Washington. I never really thought before about how easy it is to make connections.”

Other speakers included:

• Michael Fitzpatrick, director of global strategy and innovation, Google; former associate administrator, Office of Information and Regulatory Affairs, Office of Management and Budget
• Jim Papa, senior vice president and managing director, Global Strategy Group; host of Staffer podcast; former special assistant to the president for legislative affairs; former House and Senate senior staffer 
• Susan Page, author and Washington bureau chief, USA Today 
• Steven Chabinsky, former deputy assistant director, cyber division, FBI 
• Hon. Albert Wynn (D-MD), senior director, Greenberg Traurig LLP; former member, energy and commerce committee, US House of Representatives 
• An assortment of foreign policy experts.

Pictured at top: Kelsey Wortmann, PMBA 49 (with book), asked a question of Ron Christie (on screen, left) during the 90 students’ visit to DC for a two-day residency at the Brookings Institution.

Data scientists from WashU Olin have developed a process for flagging suspicious transactions across 100 pharmaceuticals—a process with a stunningly high level of precision and one that can immediately take aim at curbing the country’s decades-long opioid epidemic.

Working with a US Drug Enforcement Administration database that tracked six years’ worth of pharmaceutical transactions, the five researchers developed an “anomaly detection” system that could flag future suspicious shipments with 100% precision.

In other words, as the researchers noted, when their process says a transaction is suspicious, it is. Basically, their anomaly detection system doesn’t flag a transaction unless it’s sure—which does mean some bad buys could sneak under the radar if they don’t meet the system’s criteria.

“The signals of anomaly detection are very strong for these egregiously suspicious buyers,” the study’s authors wrote. “This renders our algorithm very valuable for practical use.”

Built to guide the fight

The system was conceived as a tool to help deploy limited resources as authorities tackle illicit trafficking in narcotics.

“Having 100% precision is a very important feature of our (process),” the research team wrote in its paper, under review with the Journal of Marketing. “We are willing to sacrifice some recall (and increase false negative errors) in order to enable the practical adoption of our proposed algorithm.”

The research team—all associated with Olin’s Center for Analytics and Business Insights—includes Annie L. Shi, a doctoral student in marketing; Seethu Seetharaman, co-director of CABI and Olin’s W. Patrick McGinnis Professor of Marketing; Anthony Sardella, CABI senior research advisor; Michael Wall, co-director of CABI and a professor of practice in marketing; and Chenthuran Abeyakaran, BS ’21/SI ’23.

Their work comes under the auspices of the Olin Brookings Commission, a project operated by WashU Olin and the Brookings Institution to address critical policy issues affecting communities. The project is funded through a grant from The Bellwether Foundation.

Organizers of the first commission under the Bellwether grant focused on the opioid epidemic that’s killed half a million individuals in the US in the past two decades, according to the Centers for Disease Control. In July, the federal government reached a $26 billion settlement with the country’s three major drug distributors and pharmaceutical giant Johnson & Johnson for their roles in the epidemic.

“Addressing this issue and enabling distributors to have a predictive system that can be used to flag and halt suspicious orders of opioid drugs, is the central focus of this study,” the research team wrote in its paper, “Nip it in the Bud! Managing the Opioid Crisis: Supply Chain Response to Anomalous Buyer Behavior.”

Training the anomaly detector

The team “trained” its anomaly detection system by using a recently released DEA database called Automated Reports and Consolidated Ordering System—or ARCOS.

That database tracked millions of prescription drug transactions—their manufacture and distribution—spanning 2006 to 2012. By zeroing in on opioid transactions, with the guidance of a smaller database of known illicit transactions, the research team identified patterns of behavior across 40 different criteria. The scholars also developed a standard they called “morphine milligram equivalents”—or “MME”—to create reliable comparisons among various opioid transactions.

Ultimately, they found that seven criteria were enough to create an extraordinarily precise tool to flag suspicious transactions. For example, when looking at “average MME purchased per transaction,” suspicious buyers purchased almost 10 times as much as legitimate buyers. When they looked at “median MME purchased per transaction,” suspicious buyers purchased almost 20 times as much.

In the context of the research team’s detection and alert system, members of the Olin Brookings Commission will likely investigate proposals that affect public policy affecting the trafficking of illicit narcotics. Some of those policy areas could include:

• data sharing and cross-agency communication;
• revised and modernized data reporting;
• funding sources and spending needs for system maintenance;
• response guidance when transactions are flagged.

Pictured at top: top row, Seethu Seetharaman, Michael Wall, Anthony Sardella; bottom row, Annie L. Shi, Chenthuran Abeyakaran.

“Sixty-five years after Emmett Till’s death, we’re in the middle of this long summer of Black death. How did we get here?”

Vice Provost Adrienne Davis

On a Zoom webinar attended by more than 200 individuals, moderator Adrienne Davis, vice provost and director of the Center for the Study of Race, Ethnicity & Equity at Washington University, set the tone for an evening of frank and honest discussion on race. Davis reminded attendees of the upcoming 65-year anniversary of the murder of Emmett Till at the hands of white supremacists.

Moments earlier, Dean Mark Taylor had introduced the evening with a nod to Jacob Blake, a Black man shot several times by police officers in Kenosha, Wisconsin, and who lay in a hospital as the panelists spoke—one of countless recent victims of state-sanctioned racial violence.

So began the WashU at Brookings-hosted event, “From Ferguson to Minneapolis: Where do we go from here?” a conversation on race, values and equity in light of current events. Moderated by Davis, the event featured Missouri State Sen. Brian Williams and Brookings Institution fellow Andre Perry.

Williams represents Missouri district 14, part of St. Louis County. He is a member of multiple committees and serves as a board director for People’s Health Center, where he helped develop a behavioral healthcare center for children in underserved communities.

Perry is a fellow in the Metropolitan Policy Program at Brookings. A nationally known commentator on race, structural inequality and education, he is the author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.” Perry is a regular contributor to MSNBC and has been published by The New York Times, The Nation, The Washington Post, TheRoot.com and CNN.com.

‘It’s personal to me’

The conversation was far from theoretical; Perry and Williams both shared their own experiences with racial profiling. “If I take off this pin,” Williams said, gesturing to the lapel pin indicating his status as a state senator, “I’m no different than George Floyd, or Michael Brown.”

Perry agreed, sharing, “This is an ongoing conversation I have with my child, with myself. This is something that’s become a 400-year long epidemic, plaguing our communities.”

The theme of an epidemic echoed throughout the evening; Williams asserted that “racism, like COVID-19, is a virus that has yet to eradicate itself.”

Rooted in data

In addition to sharing historical information that contextualized the state of racial tension in the United States, Perry and Williams looked to concrete examples of the present-day roots of racism, and how those roots expand beyond racist attitudes or policing.

“This issue is bigger than police,” said Perry. “There’s nothing that says a Black person doesn’t belong in the economy more than a police officer snuffing his life out. That’s a values statement—and I’m glad we’re having this conversation in a business school. You can’t separate social and economic issues of racism: these attitudes are shared throughout all of society. They just look different.”

Perry cited statistics from his new book—including a study that controlled for education, crime and walkability—and found that homes in Black neighborhoods are undervalued by about 23% in the United States.

Looking to the future

When Davis asked what disparities each panelist would solve if they were given a magic wand, their answers were immediate. For Perry, it would be economic justice—which includes reparations, “not just because of the wealth it would create, but because it’s morally the right thing to do. We’re owed that money.”

Williams focused on education: “I would fully invest our public education system to ensure that everyone has a fair opportunity for a quality education.”

Though the topic was tough, the evening inspired hope for a brighter future. “I’m feeling hope in a way I haven’t before,” said Perry. “What’s new right now, is I’m seeing young people of different races and people from around the world demanding change.”

William shared his plans for a comprehensive police reform bill, introduced as Senate bill 16 in the Missouri legislature—and reminded viewers of their civic duty. “It’s time to turn that energy into action—and we do that at the ballot box. This isn’t about you or me. It’s about the future we want for our families and communities.”

Perry encouraged participants to get involved with an organization focused on racial justice—and make realistic steps toward making a difference. “Being remarkable isn’t about you—it’s about joining a remarkable movement.”