Forbes USA 10 February 2014 (e-magazine full)

2 | FORBES FEBRUARY 10, 2014

contents — FeBRUARY 10, 2014 VoLUMe 193 nUMBeR 2

100 | not as advertised

Google’s future is less self￾driving cars than Mad Men.

11 | FAcT & cOmmEnT

by steve Forbes

China is dependent on our f scal health.

LEADERBOARD

14 | ARE YOU A STARTUp?

Have a genius idea? Follow the path to your future.

16 | HOnG kOnG’S RicHEST

Bets on Macau casinos pay of .

18 | HOT HOmES

The most expensive residences in your state.

Plus: A follow-up to our Isabel dos Santos

investigation.

20 | FRED SmiTH FLiES HiGH

The FedEx founder may be worth $2.3 billion,

but he wasn’t an overnight success.

22 | HiGHEST-pAiD nBA ATHLETES

The elite earn most of their dollars

from endorsements.

24 | SpEED DEmOn

The Ferrari 458 Speciale will change your idea

of what a supercar should be.

Plus: Up-and-Comers.

26 | AcTivE cOnvERSATiOn

Snapchat’s Evan Spiegel tries to have

the f nal word.

cover photograph by matt Furman For Forbes

66 | steinhardt’s second act

From hedgie legend to ETF wise man.

4 | FORBES FEBRUARY 10, 2014

contents — FeBRUARY 10, 2014

THOUGHT LEADERS

28 | cURREnT EvEnTS

by david malpass

Five big steps toward faster global growth.

30 | cApiTAL FLOwS

by rob arnott

Thank heavens for those patent trolls.

32 | innOvATiOn RULES

by rich karlgaard

A story of transformation: the conviction key.

STRATEGiES

34 | cAn A TEAm

REinvEnT A ciTY?

We’ve seen time and again that it can’t.

That isn’t stopping the new owner of

the Sacramento Kings.

Plus: The latest NBA team valuations.

by tom van riper

TEcHnOLOGY

40 | cROwDSOURcinG cApiTALiSTS

Duolingo provides English lessons to millions

for free, as the nonproft Khan Academy does

with math. But its founders want to make real

money so the service lasts.

by parmy olson

44 | TRickinG THE HAckERS

Backed with $26 million, a startup is using

hackers’ own tricks against them.

by andy greenberg

46 | nOw STREAminG AT GATE 22B

Travelers are demanding free airport Wi-Fi.

But who is going to foot the bill?

by alex konrad

EnTREpREnEURS

50 | GiRLFRiEnD pOwER

Why is Silicon Valley backing a small beauty

brand? Hint: Julep knows how to exploit

social media.

by carol tice

invESTinG

54 | SwinGinG AT STRikES

Most money managers live by the motto of go

big or go home. Beck, Mack & Oliver takes a

more civilized approach.

by steve schaeFer

58 | pORTFOLiO STRATEGY

by ken Fisher

All or nothing in 2014.

60 | invESTOR cHEckUp

by william baldwin

Bet against the government.

34 | caliFornia king

Vivek Ranadivé thinks his

basketball team can save

Sacramento.

54 | obvious proFits,

less obvious prospects

Value investor Zachary

Wydra plays directly from

the Ben Graham handbook.

50 | beauty secrets

Makeup maven Jane Park knows

how to proft from girl talk.

40 | proFiteering proFessors

Duolingo teaches its students English for

free, provided they also translate for free.

6 | FORBES FEBRUARY 10, 2014

contents — FeBRUARY 10, 2014

62 | ScREEn TEST

by marc gerstein

Quiet bargains.

AmERicA’S mOST

pROmiSinG cOmpAniES

74 | TOTALLY jUicED

At Suja two young entrepreneurs teamed with

some adult supervision and created one of the

fastest-growing beverage companies ever.

by j.j. colao

82 | SEcRET LivES

AnchorFree lets you access the Web

anonymously—anywhere, anytime. It’s great

for privacy. But, oh, those relentless ads.

by karsten strauss

FEATURES

66 | THE OncE & FUTURE kinG

Michael Steinhardt forged the model for making

hedge fund billions before exiting the game.

With WisdomTree, he’s back to upend Wall

Street again—this time, with the little-guy

investor at his side.

by michael noer

86 | BROOkLYn’S

BiLLiOnAiRE

Cash crisies, political grudge matches, suicide.

None of it has stopped David Walentas from

forging a ten-digit fortune by creating an entire

neighborhood in New York’s underdog borough.

And he’s about to do it all again.

by caleb melby

92 | AmERicA’S SEcOnD

RAiL BOOm

The relic of the 19th century will become

the most important logistics system of the

21st century—and it’s making billions for

Warren Bufett and others. All aboard!

by zack o’malley greenburg,

joann muller and christopher helman

100 | GOOGLE wAnTS iT ALL

Forget wearable computers and self- driving

cars. The search giant’s dominance will

continue by sticking with its roots—taking

$20 billion out of the hides of some very

familiar companies.

by robert hoF

LiFE

106 | STALin’S BEDTimE

niGHTmARE

A onetime Soviet showpiece, the Ukraina is now

Europe’s poshest business hotel.

by kenneth rapoza

112 | THOUGHTS

On the Olympics.

92 | america’s new

train set

Ultra-fuel-efcient

locomotives are

making a killing by

hauling ... fuel.

86 | dumbo dreamer

Billionaire David Walentas reimagined a

grimy stretch of Brooklyn’s waterfront into one

of New York’s hippest areas.

74 | the right ingredients

Suja has carefully blended youthful passion

and seasoned management into one of

America’s Most Promising Companies.

Give your employees

the duck.

Anything else is just

chicken.

Call your local agent and visit

afl ac.com/business

The question is, who will you choose?

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You can bet the farm on it.

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CHIEF PRODUCT OFFICER

Lewis D’Vorkin

FORbEs MagazInE

EDITOR

Randall Lane

ExECUTIvE EDITOR

Michael Noer

aRT & DEsIgn DIRECTOR

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FORbEs DIgITal

vP, InvEsTIng EDITOR

Matt Schifrin

ManagIng EDITORs

Dan Bigman – Business, Tom Post – Entrepreneurs, Bruce Upbin – Technology

sEnIOR vP, PRODUCT DEvElOPMEnT anD vIDEO

Andrea Spiegel

ExECUTIvE DIRECTOR, DIgITal PROgRaMMIng sTRaTEgy

Coates Bateman

ExECUTIvE PRODUCER

Frederick E. Allen – Leadership

Tim W. Ferguson FORbEs asIa

Kerry A. Dolan, Connie Guglielmo, Kashmir Hill sIlICOn vallEy

Janet Novack WasHIngTOn

Michael K. Ozanian sPORTsMOnEy

Mark Decker, John Dobosz, Luisa Kroll, Deborah Markson-Katz DEPaRTMEnT HEaDs

John Tamny OPInIOns

Kai Falkenberg EDITORIal COUnsEl

bUsInEss

Mark Howard CHIEF REvEnUE OFFICER

Tom Davis CHIEF MaRkETIng OFFICER

Charles Yardley PUblIsHER & ManagIng DIRECTOR FORbEs EUROPE

Nina La France sEnIOR vP, COnsUMER MaRkETIng & bUsInEss DEvElOPMEnT

Miguel Forbes PREsIDEnT, WORlDWIDE DEvElOPMEnT

Jack Laschever PREsIDEnT, FORbEs COnFEREnCEs

Michael Dugan CHIEF TECHnOlOgy OFFICER

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FORbEs MEDIa

Michael S. Perlis PREsIDEnT & CEO

Michael Federle CHIEF OPERaTIng OFFICER

Tom Callahan CHIEF FInanCIal OFFICER

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FOUnDED In 1917

B.C. Forbes, Editor-in-Chief (1917-54)

Malcolm S. Forbes, Editor-in-Chief (1954-90)

James W. Michaels, Editor (1961-99)

William Baldwin, Editor (1999-2010)

8 | FORBES FEBRUARY 10, 2014

FORBES

EDITOR-In-CHIEF IN BRIEF

Steve Forbes

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FEBRUARY 10, 2014 — volUmE 193 NUmBER 2

Our Move

In Mobile

by lEWIs D’vORkIn

Like a hangman’s noose, mobile focuses the mind. I

often say the $2 to $3 CPMs publishers frequently get

for smartphone ads will crush all traditional newsrooms

built for the era of $50 print CPMs—and most of them

still are, whether they admit it or not. The FORBES

contributor network was conceived, in part, as a new

content-creation model to ofset such upheavals in the

marketplace. Next in line for disruption—and tied pixel￾to-pixel with mobile—is the article page. Spawned by a

print mentality, it must cope with both smaller device

sizes and a strong push by marketers for more compel￾ling ad positions.

That’s where content streams come into play. They are

today’s consumer experience of choice. You see them on

Facebook, Twitter and LinkedIn. Marketers—and by exten￾sion their ad agencies and p.r. frms—are focused on them,

too. Forbes.com has experimented with streams for the last

three years—on the home page, the channel pages and a

real-time page for 300 to 400 daily posts. Now the time is

here to re-architect Forbes.com for the era of streams.

Our new mobile site, launched two weeks ago, fea￾tures both vertical and horizontal navigation. Beneath

every post is a stream of headlines. The headlines in your

feed are diferent from those in mine or another person’s.

All streams include related or editor-selected headlines,

special features and stories that match an individual’s

consumption patterns. Tap the headline to reveal the en￾tire post. Tap the bio to reveal the author’s background.

Tap the sharing icon to push it to a social network. When

reading a post you’ll notice the ability to swipe horizon￾tally. Swiping takes you to the next item in the stream,

with slightly more information than simply a headline.

We call it the Info Card. Tap the headline to expose the

entire post or continue swiping through Info Cards.

This new navigational construct, with natural breaks

between headlines and Info Cards, opens up new ways to

monetize a small screen. BrandVoice, our industry-lead￾ing native advertising program, fts as neatly within the

streams as current and new types of display advertising.

Every move we make addresses the media industry’s

changing economics and technology. In doing so, we’ve

left nostalgia to others, preferring to create the systems,

processes and products that work for journalists, con￾sumers and marketers in a new era. F