Mum’s the Word

"THERE'S NO FASTER WAY TO get turned down by a venture capitalist than to ask her to sign a nondisclosure agreement,” wrote second-year student Jamie Earle in a column for C/Net News.com. “Considering that a VC can review a dozen business plans in a day, taking the time to review an NDA for each one isn’t productive,” says the former equity research associate for CS First Boston Technology Group. She tells the story of an unnamed entrepreneurial firm that was pressured to partner with one of its competitors as a result of disclosing information to a venture capitalist. Earle’s advice to would-be entrepreneurs is to first deal with “established VC firms with long-standing reputations.”

The Soprano‘s Godfather

THERE WAS a twinge of irony in the decision of the Directors Guild of America to give an award this year to the chairman and CEO of HBO, Jeff Bewkes, noted the Hollywood Reporter. Bewkes’ only directing attempt was a documentary on a veal slaughterhouse that led to his finishing last in film class at Yale.

But Bewkes, MBA ’77, is known for taking a chance on creative directors and writers. When David Chase pitched a watered-down version of The Sopranos, Bewkes told him to forget about commercial appeal and go back to his original, more authentic idea. The serial drama about a mobster has been a major ratings and critical success.

Analysts Bombed in 2000

ADDING FUEL TO THE DEBATE over the value of stock market research emanating from Wall Street are research results from Business School professors Maureen McNichols and Ezra Zuckerman.

CBS MarketWatch reported on work by McNichols and her University of California colleagues that showed stocks that Wall Street analysts recommended buying or holding in 2000 plunged in value while their “sell” and other negative recommendations gained.

Business Week reported on work by Zuckerman and a University of Chicago colleague in which they concluded that social conformity influenced many analysts in the mid-1990s. Specifically, the researchers found that fewer than 5 percent of the forecasts issued involved explicit “sell” recommendations—usually issued by top analysts, who feel secure in their jobs, or by low-status analysts, who have little reputation to lose, but not by the vast majority in the middle.

Battle at Sea Over Black Gold

“ONE OF THE PLANET'S smallest seas has spawned one of the world’s most spirited land grabs,” the Wall Street Journal said this summer after an Iranian patrol boat armed with machine guns forced a British Petroleum PLC research vessel to turn around in the Caspian Sea. Stan Polovets, MBA ’89, is in the thick of the battle among oil companies and five nations that border the sea, which sits over promising oil fields.

Polovets told the Journal that Turkmenistan, the nation he works for as an adviser, would “soon take decisive actions of its own” unless neighboring Azerbaijan halted work on disputed blocks of the seabed and adopted “a more conciliatory position in negotiations.” Azerbaijan alarmed its neighbors by signing a deal with a BP-led consortium to develop three known oil fields off its shores.

Polovets, who was born in Russia and recently moved to Moscow, is founder of RPI Inc., a consulting firm that has assisted international energy companies with investing in Russia, other Caspian states, and the Baltic nations since 1992. Clients include BP Amoco, Shell, Mobil, Japan National Oil Corp., and FT Energy.

Yogi CEO

WHEN A DOCTOR first suggested he try yoga after injuring his foot in a Paris marathon, John Abbott, SEP ’78, thought “yoga was for the older ladies who wanted to lie on the mat and contemplate life.” But the Citicorp banker quickly became hooked, and after moving to California found himself consulting for and eventually buying the Yoga Journal from the California Yoga Teachers Association. Now a slick bimonthly, the journal’s circulation has more than doubled to 220,000 and ad pages are up 60 percent since Abbott took over in 1998, notes the San Francisco Chronicle. It doesn’t hurt that 15 million Americans participate in yoga, according to Time estimates.

Not Bad for Bad Timing

INVESTOR Richard Rainwater, MBA ’68, has made a fortune for himself and others several times, but he has the same pangs of doubt that amateur investors do, according to Fortune. “I’m never right on my timing. It’s pitiful. Macro it’s wonderful; micro it stinks,” says Rainwater, who read a 1992 book, Beyond the Limits, and decided as a result to invest in energy stocks when most folks were investing in dot-coms. His net worth fell $400 million. At the time of the article, however, Rainwater was up $400 million on energy and $200 million on energy-related real estate, according to the magazine.

He Should Have Played Baseball

CEOS IN MOST INDUSTRIES made substantially more in 2000 than their counterparts a decade earlier, according to Fortune. In telecommunications, for example, the nearly $21 million compensation of AT&T’s Michael Armstrong outstripped that of 1990 industry leader Robert Allen, Sloan ’72, by 539 percent. Not so in the software industry, where the 2000 leader, Microsoft’s Steve Ballmer, Class of ’81, made $633,514—64 percent less than the 1990 leader, Josh Weston of ADP, and substantially less than the average 2000 major league baseball player.

Customer Comeback

WILL THE ABILITY to build and analyze massive databases of customer information lead to the return of the diversified company? the Financial Times of London recently asked. “If customer information is a strategic asset, you can see that there may be an argument for managing a wider range of businesses within the same entity,” Business School professor James Lattin told the paper.

Customer relations management, which involves making managers responsible for a set of customers, rather than a set of products, has become popular, said Lattin and professor emeritus David Montgomery. Customer value has replaced cost control, Montgomery said, “as the guiding principle of management.”

Loyalty Begets Loyalty

ATTRACTING GOOD management talent may be partly accomplished by treating well those who leave, according to a number of companies who have set up alumni associations and services. Alumni workshops and social events have paid off for Bain & Co. with second-year MBA student Katie Friedman, who told the New York Journal News that she is an “ambassador” at Stanford for her former employer. When GSB students were deciding between job offers from Bain and others, Friedman said, “I was absolutely plugging Bain because, most important, I had a great experience there, but also they have impressed me with the support and loyalty shown even to their alums.”

Mixing Cement and Technology

IN A SERIES on e-strategy leaders, the Economist extolled Mexico’s Cemex as “a rarity— a company in the industrializing world that has used e-business to steal a march on its rich-world rivals.” CEO Lorenzo Zambrano, MBA ’68, started the company on its current path by automating its cement plants and becoming an early adaptor of email and networked computing. Information technology upset the companies’ hierarchical traditions because it “frees up everyone’s imagination,” he says. Cemex is more profitable now than its international competitors, and 55 percent of its holdings are outside of Mexico. The company has spun off its IT arm into a consultancy to other companies. It also runs an online construction industry marketplace and an e-procurement site and is installing computers with Internet access in employees’ homes.

Oklahoma’s OK

BUSINESS STRATEGIES NEED to incorporate space and place considerations, says Stephen Roulac, PHD’75, the founder and CEO of Roulac Group Inc., a consulting firm in San Rafael, Calif., that specializes in real estate. “People used to go where the jobs were, but now priorities have capsized,” Roulac said in Fast Company. “People are choosing more purposefully where they want to live, and then they are looking for a job.” They want a sense of community, good public transportation, and outdoor-recreation amenities, he added. A counter-intuitive location that meets those standards: Tulsa, Oklahoma.

Don’t Bury E-Commerce

FM RADIO WAS THE LATEST, greatest technology in the late 1940s, but it took 40 years for it to overtake AM, GSB professor Haim Mendelson observed in a San Jose Mercury News opinion piece on the current state of e-commerce. “Just as the meteoric rise of e-commerce was grossly exaggerated, so is the news of its death,” he said. “As with the adoption of any new technology, this is a slow and error-prone process.” New technology usually augments, rather than replaces, existing technology, partly because consumers are slow to change their habits, he said.

www.class of ’03

INCOMING MBA STUDENTS are the leaders in “extreme networking,” according to a Fast Company article on Web-based communities sprouting at business schools. Once admitted to the GSB, they gain access to a password-protected class Web site, hosted on a Yahoo server. The conversation is animated, the magazine reports, “with students planning happy hours from Hong Kong to Buenos Aires, debating laptops versus desktops, and sharing truck rentals for the trek from the Midwest to Palo Alto.”

Hometown Hero

NOW A BUSINESS CONSULTANT with McKinsey & Co. in Dallas, Michael Cruz, MBA ’00, became a hero in his hometown, Amarillo, Texas, after CBS anchor Dan Rather included Cruz’s life story in his book The American Dream.

Cruz’s business education began in the fifth grade, when he moonlighted alongside his parents in a cleaning business. Later, as a Yale student facing a financial emergency, he started a laundry and dry-cleaning service that eventually was used by a quarter of the university’s students. The success led him to see that opportunity was not limited to the well-to-do, so he papered Wall Street with his resume and landed an internship at Merrill Lynch.

“Perspective is a balancing act,” Rather quoted Cruz. “My first week in New York was the same kind of thing as when I first got to Yale. There was this homesickness, that kind of queasy feeling in your stomach.” Cruz found relief by establishing an SAT prep program for inner-city students through his church.