"Listen to a venture capitalist talk about investing in 'knowledge industries' and promoting 'idea-driven growth,' and you hear Paul Romer's work speaking," said Time, naming Romer, a professor of economics at the Business School, one of "the 25 most influential Americans" of 1997. "Powerful people twist your arm. Influentials sway your thinking," said Time. Calling Romer "a sage for the silicon age," the magazine suggests that "his ideas may just revolutionize the study of economics."
Romer's new-growth theory, which posits that "the emerging economy is based more on ideas than objects," has certainly revolutionized the way people think about new technologies. The old economic model said that labor and capital alone increase output. Romer added technology (read that "ideas") to the ingredients.
The same day Time's list appeared, Newsweek named Romer to its Century Club: "100 people to watch as America prepares to pass through the gate to the next millennium." People have indeed been watching Romer, and Time notes that the professor has picked up an unlikely mix of followers, with both conservatives and liberals using Romer's arguments to promote their causes. Romer pooh-poohs affiliation with either side, preferring as always to think for himself.

Merging for Mergers

In today's corporate world, some of the most successful investment bankers are not flying solo in putting together megadeals, says Fortune, but instead are doing deals set in motion by corporate executives. The magazine's list of 10 successful bankers in this new era included three GSB graduates: Jack Levy, MBA '78; Paul Taubman, MBA '86; and Mike Urfirer, MBA '83.
Levy, a managing director, took over Merrill Lynch's mergers and acquisitions department in 1989. "Merrill climbed from No. 7 to No. 1 last year in announced domestic deals," Fortune reported. Taubman, managing director of the media and telecommunications department of Morgan Stanley, was in the thick of things last year, "advising NYNEX on its $23.7 billion union with Bell Atlantic and working with British Telecommunications on its similarly priced purchase of MCI." Urfirer is senior managing director for merger and acquisition defense business at Bear Stearns. "Of the six largest defense mergers and acquisitions in the past two years, Urfirer has been involved in five, including 1994's $10 billion merger of Lockheed and Martin Marietta," said the magazine.

Strike!

What is a top-tier investment bank doing in a bowling alley? Betting that this traditional all-American recreation is going to be an increasingly popular type of family fun.
Last year, Goldman Sachs paid $1.325 billion for a two-thirds stake in AMF, the largest U.S. manufacturer of bowling equipment and owner of 390 bowling centers. "If you look at bowling centers over time, they're going to have stable cash flow year to year, as opposed to a movie studio that's dependent on big hits," Terence O'Toole, MBA '83 and a Goldman Sachs managing director, told Fortune.

The Essential Entrepreneur

Business Week placed H. Irving Grousbeck, the Class of 1980 Consulting Professor of Management, on its list of the nation's best teachers of entrepreneurship based on student comments to the magazine. The San Jose Mercury News also profiled Grousbeck as a teacher who can demystify entrepreneurial success. "The entrepreneur was thought of as impulsive, fast-talking, slick, and entirely unemployable anywhere else," Grousbeck told the newspaper. He disagrees with that description. "We tell them they don't need money and they don't need a great idea. Look in the right places. Position yourself." Success comes from being able to spot an opportunity, he said.

ParkAvenue.com

Having the right address can be a big success factor for certain types of business. Today the address in question may be on the Internet, not Park Avenue. Take the example of Steve Aldrich, MBA '95. Last year Aldrich created Interactive Financial Services, an interactive Web site that allows customers to shop for insurance. According to Forbes, financial software maker Intuit thought so much of Aldrich's idea that it paid $9 million to add insuremarket.com to the Intuit online library.

Beyond Beijing

China's desire to generate economic growth and attract foreign business dollars is pushing industrial development out of Shanghai and Beijing and into provinces that offer space and access to workers, says Forbes. "I'm starting to see a shift in foreign investment to provinces like Shandong (population 90 million) and Sichuan (population 110 million)," Julie Reinganum, MBA '84, president of the China consulting practice Pacific Rim Resources, told the magazine.

Wake up, Earthlings!

Astronaut Steve Smith, MBA '87, was back in the news in February as he and fellow astronaut Mark Lee floated through space to do some minor refurbishing of the Hubble space telescope. In a bylined article in the San Jose Mercury News, Smith described how the Hubble had produced previously unseen images of 1,500 galaxies. He said he was disappointed that the findings didn't cause more of a stir. "The public must be so overwhelmed with all the other things going on around the world that it hasn't fully grasped the significance of the Hubble findings---or to be more general, the significance of many space, science, and engineering discoveries and achievements in recent years," wrote the astronaut.

WYSIWYG

Forbes gives Salomon Brothers chairman and CEO Deryck Maughan, Sloan '78, credit for an impressive rise in the perception of employee talent at the firm's investment banking unit. In its annual survey of company reputations, Salomon rose 44 percent in the workforce talent category.

PHOTOGRAPH BY DEBRA MCCLINTON

Maybe They Should Try McGreetings

Greet Street, an interactive greeting card company created by classmates Fred Campbell and Tony Levitan, MBA '93, produces what it has trademarked as E-greetings, animated musical versions of greeting cards that can be e-mailed. Hallmark Cards also offers a product called E-greetings and asked the U.S. Patent & Trademark Office to yank Greet Street's trademark, arguing that e-greeting is a generic term. Business Week reported a pending decision, but the latest word from Greet Street is that David has triumphed over the giant---Hallmark has agreed to pull its patent office claim. You can purchase a congratulatory E-greeting at www.greetst.com.

$8B in Loose Change

Taking recycling to its ultimate, Jens Molbak, MBA '90, created Coinstar, a firm supplying machines to supermarkets that let you get rid of those jars of loose change you intended to take to the bank. The machines exchange coins for vouchers redeemable for cash or store purchases at the checkout stand. Molbak estimates there is about $8 billion in change sitting around U.S. households at any given time, according to Forbes. At present Coinstar has its heavy-duty machines in supermarkets in more than 1,800 locations; each recycles an average of $5,000 worth of pennies and nickels per week. "Anything that gets people in the store is good," a supermarket executive told the magazine.

Practical Returns

Finance professor William F. Sharpe's portfolio theory remains a prime example of how theoretical research can be applied in the business world. In a study of software programs that help investors analyze mutual funds, the New York Times cited the program Mutual Max with Style, made by Advisor Software of Orinda, Calif. The program compares the returns of a fund with those of selected market indexes using a system derived from a theory for earnings (based on the risk an investment represents), created by Sharpe, the Stanco 25 Professor of Finance. In a separate article analyzing the effectiveness of investment newsletters, Forbes used a ratio based on Sharpe's work as one of its standards for comparison. It compared the success of newsletter editors in making recommendations that would earn an investor more than would be earned by a passively managed stock fund index.