Wednesday, March 21, 2001

The Milken Conference and the REAL Economy ~ by Tery Spataro

I attended the Milken Institute 2001 Global Conference (March 19-21) held at the famous Beverly Hilton (Merv Griffin's Beverly Hilton for those of you who remember). The conference theme was the ECONOMY. Michael Milken drew an impressive crowd of 1000 attendees from business and academic backgrounds. The speaker roster was even more impressive with Nobel Laureates and leading business executives. It was truly a heady conference with a focus on speculations about the economy. The R word was used on several occasions. Yes, Dorothy we are in a recession. Mr. Milken opened the Tuesday's lunch with a talk about the real economy. "Hmm the real economy versus the flake economy...What's that about?" I thought. This discussion focused on the stock market and if it bottomed out yet. Not yet--but very close, though I believe when it does all of us who have been holding our cash will be spending it like crazy. Wednesday's breakfast offered up a slide show, one of which was quite interesting. The panel was The US: Economics, Markets and Policy. The slide graphed all the recessions from the depression. It seems to me as though recession should be an expected part of our delicate and intricate US economy. Meaning it's natural. Is this recession different because of the new industries? Or are the new industries affected the most because they are still in infancy?

Alvin Toffler, Future Shock author, romanced the technological advance of Internet and biotech industries, as a significant historical point with influences that affect all global aspects. He sees the next evolutionary phase as a fusion of technology and biology. Mr. Toffler was inspiring, and I asked him if he saw the fusion of technology and biology as the elimination of humanity. He looked at me with a bit of a twinkle in his eye and said "I would take deep offense in that" and so would I. Barry Sternlicht, Chairman and CEO, Starwood Hotels and Resorts, brought us all back from the future to the reality we are facing today. It was also the common sense business practices of Leonard Riggio, Chairman and CEO of Barnes and Noble, who said it best: "Spending drives a healthy economy." Here in the US we are consumers and when we don't buy we don't survive! Steven Milunovich, Managing Director and Global Technology Strategist, Merrill Lynch, talked about buying trends in technology, the influence of Y2K spending on a panel regarding US: Economics, Markets and Policy. I wanted to ask Mr. Milunovich if his opinions regarding tech spending reached the ML brokers who were buying stocks for clients like myself? Byron Wien, Chief US Investment Strategist, Morgan Stanley Dean Witter, spoke about the paper he recently published on "Issues of Integrity". The paper discusses the street analysts's integrity and conflict faced between too much enthusiasm and reality. I approached Mr. Wien after the discussion and asked him if we should remain conservative? He said yes. I'm going to email him and get a copy of his paper for anyone interested in reading it I'll post it on my web site.

At the basis of every conference was the Internet industry. Us "early true believers" can feel confident that we were successful in creating a real industry. I was frustrated with conference perception that the Internet was only content-based. Yes, it is content-based but it truly is a tool. How you use the tool will determine how your business will make money. Keep in mind the Internet industry is only 7 years old. We're just at the beginning! In a panel discussion on Venture Capital and Entrepreneurs: Financing Ideas, Yossi Vardi, President, International Technologies and founder of ICQ, displayed a slide, which pictured a roller coaster and the Internet. He asked us where on the roller we are. The majority of us raised our hands to panic. Hmm panic, is it real panic or panic induced by group hysteria?

All and all I enjoyed the conference, Mr. Milken is doing a great service. I met many interesting people including Mr. Mike Lefkowitz, executive director the Samueli Foundation; Mr. Robert Widener, The Cyberspace Group, war room design firm; Mr. Edward Tuck of the Falcon Fund; Mr. James Sproule; Dr. Aleksandr Surikov, senior counselor economic affairs, Embassy of the Russian Federation; and Auste N. Viesulas. The attendee demographic mix consisted of 75% white male business executive, 23% minority business executive, 2% young aspiring entrepreneur. It is the young entrepreneur who would have truly benefited in attending finding both money and mentor.

I felt like I was the only Internet executive on hand, but much to my surprise I ran into a couple of West Coast peers: John Bates of HotWax, Tony Greenberg and I heard Brad Nye was around. I also met outside of the conference with Peter Hirshberg, Mark Jeffrey, Michael Young (CEO and President of Alton Entertainment), who all gave me insight into lay of Internet economy for LA. New York we're not alone.