NOVEMBER 2006
Newsmakers
Buy Small, Returns Big
Search funds, a mechanism developed by Professor H. Irving Grousbeck
for buying small businesses, produce an average annualized rate of return of
37.3 percent, according to a study by the School’s Center for
Entrepreneurial Studies that was featured in BusinessWeek SmallBiz.
Used by MBAs at Stanford and a few other elite schools, search funds usually
involve two partners raising funds from investors to spend on months or
years of searching for a company with growth potential. After finding one
with a willing seller, they go back to the investors for a second round of
funding. Kevin Taweel, MBA ’92, and Jim Ellis, MBA ’93, for
example, bought a dispatch services company in Houston they renamed Asurion.
Joshua Greenberg and John Fowler, both MBA ’00, bought Aero
Logistics, a trucking company in South San Francisco. “We wanted to rebuild
the sales force, rebrand the company, and standardize accounting
procedures,” Greenberg said.
Not all search funds succeed. “The mechanics of doing the deal are tricky,
and there’s a lot of competition,” said Rich Kelley, MBA ’89, of
Search Fund Partners in Menlo Park. Karen Moriarty, MBA ’89, says
women may face extra hurdles. “You are dealing with older men who are sole
proprietors. … I faced an extra layer of questioning on financing.”
Her experience paid off because Moriarty was able to raise cash from some of
the same investors to found Carillon Assisted Living, a $12 million company
in Raleigh, N.C.
Meeting Streamliner
If your meetings are long and disorganized, consider talking with Luis
Solis, JD/MBA ’85, the CEO of GroupSystems Corp., a Colorado company
that makes ThinkTank, collaboration software that is said to cut the costs
of group sessions by 50 percent. The software allows participants to make
contributions anonymously and group leaders to prioritize the
information—features that apparently cut to the chase.
Solis, who also runs a consulting firm to the home-building industry, told
the Denver Business Journal that his software customers include some
pretty big outfits: Procter & Gamble, leaders of Latin American countries,
and the Central Intelligence Agency.
Mexican Newspaper Chain Expands North
In partnership with the Hearst Corp., Grupo Reforma, Mexico’s largest newspaper company, recently launched a twice-weekly, free, Spanish-language newspaper in San Antonio, Texas. Inspired by Univision’s move north in television, “we hope San Antonio is just the first step” into North America, said Jorge Meléndez, MBA ’88, vice president of new media at Grupo Reforma. The new paper, which pegged ad rates to small retailers, emphasizes sports coverage and is called Cancha—Spanish for playing field.
Thinking Outside the Wheaties Box
One strategy for getting ahead in executive suites these days is to live
outside your comfort zone in another country. Take, for example, General
Mills’ new president, Ken Powell, MBA ’79. He is one of the few top
managers at the 25,000-employee company who has lived abroad, according to
the Minneapolis Star Tribune, and the company is looking abroad for
growth opportunities.
Living in England and France, Powell said he and his family challenged their
assumptions about what people eat for breakfast, finding out, for instance,
that Germans like muesli, Eastern Europeans prefer corn flakes, the English
choose shredded wheat, and the French swoon for chocolate. “In the end,
tastes are local, food is culture, and there is room for commonality, but
you have to be flexible,” he said.
Hollywood Dealmakers
Hollywood’s “newest hotseat,” according to Fortune magazine,
belongs to Kevin Tsujihara, MBA ’92, head of the many competing home
entertainment businesses under the roof of Warner Brothers. Declaring that
Tsujihara has the “ability to step back and see the bigger picture,” CEO
Barry Meyer named him overseer of home video, digital distribution, video
games, technical operations, and anti-piracy efforts.
Short on ego by Hollywood standards, the magazine said, Tsujihara admits he
has “no idea what the digital home will look like in 10 years,” so he is
trying many types of deals. Said Fortune: “Given the insane job
description, it probably doesn’t hurt that Tsujihara is a Buddhist who
meditates on the treadmill.”
Meanwhile, Television Week reported that Gary Marenzi, MBA
’82, the former president of Paramount International Television, has moved
on to Ensequence, the British purveyor of interactive television, which
hopes to capture U.S. market share.
Gore-Mann Scores Top Sports Job at USF
People often say athletics is good training for business, but the University of San Francisco has decided business is good training for athletics. In July, the university named a new athletic director, Debi Gore-Mann, MBA ’87, partly because of her business experience. The former Stanford basketball player has worked at Raychem, Morgan Stanley, and Bechtel, besides her most recent post as senior associate athletic director for finance and operations at Stanford. “She has experience outside of sports, and her management of financial resources is critical,” said USF vice president David Macmillan.
Pricing Strategies for Relationship Retailers
“The mathematics of Froot Loops can get pretty hairy,” says Forbes
magazine. That’s why a grocery chain might turn to a bunch of
Stanford-connected engineers and scientists for help figuring out what price
to charge.
DemandTec, a company founded in 1999 by Business School Professor Hau Lee
and a former consultant, Michael Neal, is helping retailers enhance their
price structure, the magazine says. Its software uses complex algorithms to
track the relationships between sales and prices to suggest strategies for
better profits. An example suggestion: Place whitening chewing gum with
whitening toothpaste instead of in the gum aisle. Another tried by a New
York City pharmacy chain: Charge more for newborn-size diapers because
parents of newborns aren’t as price conscious as parents of older babies.
Buffalo to Get Home On the Range
Your next safari may be to Montana if Gib Meyers, MBA ’66, has his
way. The latest venture for the founder of the Entrepreneurs Foundation and
Mayfield Fund partner is the American Prairie Foundation, a nonprofit that
hopes to create the largest wildlife preserve in the lower 48 states as a
home for herds of bison.
“We now have 30,000 acres and are about to add another 30,000,” Myers told
Silicon Valley Home. The foundation placed 16 bison from South Dakota
on the land in October 2005 and works with Montana residents and the federal
government to restore natural habitat while building tourism. It already
offers two-night group and private safaris with poets and other artists who
love the prairie.
Finance in Auckland
In the wake of two recent finance industry failures in New Zealand,
industry leaders are starting to understand the “stewardship responsibility
they have for all stakeholders,” says Andrew Walker, MBA ’03, the
chief executive of Dorchester Pacific, who is lobbying for more mandatory
disclosure to protect investors.
Dorchester needs to be a diversified “financial solutions company, not a
finance company,” he told the Wellington Dominion Post, because
pushing more debt on customers just because the company has funds is not
always in the customers’ best interest.
Walker added that attending Stanford Business School was “the best decision
I have ever made careerwise, and the two best years of my life.”
