David Schulte’s Cultural convergence panel with CEOs of JetBlue, CBS, Starbucks, LeapFrog and DirectTV.

David Shulte’s Cultural Convergence Panel was perhaps the best moderated and most animated of the event to date.

What follows are my notes.

DISLAIMER: THESE ARE MY NOTES. THIS IS NOT A TRANSCRIPTION. IF YOU ARE FROM THE PRESS DO NOT QUOTE THIS AS SPOKEN

QUOTES. I’M SHARING MY NOTES WITH EVERYONE TO GIVE SOME COLOR TO THE EVENT. THERE ARE TONS OF LITTLE ERRORS IN HERE,

BUT I’M GIVING UP PERFECTION FOR SPEED.

Speakers:

Chase Carey, President and CEO, DIRECTV

Thomas Kalinske, CEO, LeapFrog Enterprises, Inc.

Leslie Moonves, Chairman and Chief Executive Officer, CBS

Moderator: David Schulte, Vice Chairman, American Vantage Media

David Neeleman, Founder, Chairman and CEO, JetBlue Airways

Orin Smith, President and CEO, Starbucks Corporation

milken schulte panel

Orin Smith said that they are not following culture as much as making culture. There is a need for that opportunity

that people find in coffee houses to connect and communicate. It involves entertainment, music. Our stores have been,

from the onset, a theater. He mentioned that the barrister is on a stage, and that it was an innovation and deliberate.

We have changed the way people have lived their lives. We’ve changed how they reward themselves. We’ve changed where

they meet for business. We affect the way they feel about themselves, and their entire day. He mentioned this

translates very well to other cultures around the world.

milken schulte panel jetblue and starbucks ceosDavid Neeleman (on left across from Starbucks’ CEO Orin Smith): We’ve been around a

short period of time in terms of brand years. We just reached a billion dollars in sales in our third year of business,

and it’s been during a bad period of time in our industry. We started out with a basic concept that we wanted to bring

humanity back to air travel. He talked about how flying went from glamour to drudgery over the decades. He mentioned

that they have no passengers, but only customers. I was kind of a dumb kid from Salt Lake City when I came to New York.

My feeling was that our brand would be created with every single interaction with every single customer on every single

flight. Some companies get it all backwards. They think they can repaint their airplanes and put TVs in their

seatbacks… I don’t believe that is sustainable. He mentioned it is more about culture and stock options. He says

nothing has changed in 40 years except the seat in front of you got closer. He said when he saw the ability to have

control of a TV that it was something he immediately grabbed onto. It’s an important part of what we do, but it’s not

all we do. I have a saying that “Too much overkill is never enough.” He says all the little things they do let them

“Levitate above a commodity business.”

Les Moonves; Are brands and artists not in synch with Cultural convergence… what does that mean? Yes we reflect the

culture, and we are also the culture. And that proves to be a challenge.

I want to be as edgy as possible, I want to reflect the culture as much as possible.

There was a saying when I got here “Television networks are not a brand, shows are a brand. ” I don’t buy

that. One of the challenges is the PVR. How product place is integrated into our shows… that’s the future of our

business. Over the air broadcasting is still the best game in town. The old model is not working so well (a 30 second

spot,) but it is still the best way to reach the audience. If you want something out there, you want it immediate you

want it broad, we’re the people.

Chase Carey: what we really find is that people want choice and quality. Direct TV has led the way in that. It has

been a key component of new services like the Fox news channel. Chase mention when kids networks were pulled off

another dish network (echo I believe) mothers went nuts. PVRs will continue to give more choices.

DISLAIMER: THESE ARE MY NOTES. THIS IS NOT A TRANSCRIPTION. IF YOU ARE FROM THE PRESS DO NOT QUOTE THIS AS SPOKEN

QUOTES. I’M SHARING MY NOTES WITH EVERYONE TO GIVE SOME COLOR TO THE EVENT. THERE ARE TONS OF LITTLE ERRORS IN HERE,

BUT I’M GIVING UP PERFECTION FOR SPEED.

Shulte: this issue of indecency and the FCC. Do you find yourself at an advantage?

Chase: We have a responsibility, we are a brand to the home, we have to be responsible. Yet we want choice. He says

the four networks are being attacked in a disproportionate way.

Thomas Kalinske: Even when we started leap frogging retail, buyers and analysts said education doesn’t sell. Last

year we did almost 700M in revenue. The fundamental change is that in culture and society moms and dads have said my

God my schools aren’t getting any better”if not worse” but I’m working 12 hours a day, how am I going to do this? He

said that is where Leap Frog came in. I don’t think we changed culture, I think culture came around.

Shulte: is a Snoop Dog Frappucino on the way?

That’s a great idea. No, we really haven’t used celebrity marketing very much. We have put an emphasis on

authenticity, and like the Jetblue brand our stores are our billboards. They announce our presence in the market. Once

they are in that environment we try to create an uplifting and memorable experience. If we try to buy celebrity status,

to buy the integrity then we will fail. It is too much in conflict with that authentic coffee experience we try to

create.

Our marketing budget is only 1.5% of our top line. We do very little of the traditional kind of marketing and

promotion. We could drive our top line with it, but we are too fearful that it will impact our brand in a

negative way.

DISLAIMER: THESE ARE MY NOTES. THIS IS NOT A TRANSCRIPTION. IF YOU ARE FROM THE PRESS DO NOT QUOTE THIS AS SPOKEN

QUOTES. I’M SHARING MY NOTES WITH EVERYONE TO GIVE SOME COLOR TO THE EVENT. THERE ARE TONS OF LITTLE ERRORS IN HERE,

BUT I’M GIVING UP PERFECTION FOR SPEED.

Neeleman: It is important that we continue to develop our entertainment side. We have 24 channels and we are going to

36. He mentioned they are adding XM Radio and two Fox channels that will play movies and Simpsons episodes. He

mentioned that if they charged people $2-3 a minute it wouldn’t work.

We spend 3% of our revenue on marketing, and it has come down from 10% in our first year. 60% of our revenue comes

from word of mouth. He added how kids were driving their parents to take JetBlue because of the TV, and parents wanting

to take JetBlue.

He mentioned that they want to increase what people get for what they pay. He said people are smart and they like to

feel like they got a great deal. He mentioned there are no plans for a Snoop Dog endorsement.

Moonves talked about product placement being the future of his business. Not to sound like too much of a

prostitute, if the deal right we’ll make it work. He referenced Spielberg doing product placement in AI “every 12

seconds” as the reason why other creative types are willing to do product placement and work with advertisers.

Orin said that WiFi has been great because they have people coming to the counter two or three times. And he joked

that he didn’t have to pay for the infrastructure. He said now people who want WiFi customers are building out the

networks. He said it is easier for him to sell space in his stores, but that eventually it would marginalize the brand

in a major way.

Orin joked about how they were reluctant in going into Europe because European coffee culture is great and that the

people in Europe are very proud. He said he is not sure how well they can compete. He said that he was having 30 minute

wait times in Paris, and that they are making the store more “French.”

Schulte asked if one of the changes to make it more French was to have less good service. Huge laugh from the

audience.

Neeleman said that the security delays have not been a major issue and that people were patient and understanding.

We’re starting to realize that we are living in a different world. Like the Israelis. These things are going to happen

and we can’t stop living.

Schulte: asked about people clustering at various news sources based on point of view, preference, etc.

Moonves: There is no question about it. Fox news has a done a brilliant job. Forget about fair and balanced, it’s a

misnomer, but they decided to put a different team on the field. I admire what they did. They took a point of view and

went with it. I am disturbed by the lack of discourse. There is a tendency to not be open to different ideas. It is

defiantly hurting our culture. I’m very disturbed by America’s image around the world right now.

Schulte: Asked about reality TV.

Mooves: Ironically reality TV was one of the few things we’ve imported. It was a welcome thing that we learned we

we’re not the only ones that could come up with good ideas.

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