Home-Grown Ventures
IN SILICON VALLEY'S HOT climate for startups, the search for the next blockbuster idea increasingly sees venture capitalists competing for the right to invest. So firms like Benchmark Capital have begun to grow their own, reports Fortune, courting seasoned entrepreneurs with proven track records to join their firms as "entrepreneurs in residence," or EIRs.
       The magazine tracks how Bob Kagle, MBA '80, a Benchmark partner, attracted Keith Krach, who had just sold a firm for $10 million and hadn't yet decided what to do next. When Krach eventually devised a plan to automate the purchase of office supplies and services for large companies, Benchmark invested $3 million.
       Kagle and Benchmark partners Bruce Dunlevie and Andrew Rachleff, both MBA '84, say about half the companies their firm buys equity in each year began with their own EIRs. "These companies generate our greatest returns, there's much less risk," Rachleff told Fortune. "EIRs are a way to go in earlier in the food chain," agreed Michael Levinthal, MBA '81, of Mayfield Partners. John Mumford, MBA '69, a partner in Crosspoint Venture Partners, concurred that grow-your-own entrepreneurs are a good investment. One recent EIR company has already produced a fourfold increase for Crosspoint, he said.

He's on a Roll
FOR HIS NINTH YEAR in a row, Van Brady, MBA '54, of Presidio Management in San Francisco, continued his winning streak in Forbes' annual survey of money managers. Each January the magazine asks 17 professional money managers ("Why 17? No good reason. It just happened that way.") for their single favorite buy or short sale for the coming year. More than usual, the market beat the panelists, but Brady bucked the trend. For 1997 Brady's favorite was Advanced Paradigm, which provides pharmacy management services.

Dialing for Yen
CONDUCTING BUSINESS through toll-free calling services is growing in popularity with financial institutions in Japan. Masayoshi Yamashita, MBA '90, is delighted with the trend. Yamashita is marketing manager for Nippon Telephone and Telegraph's FreeDial toll-free telephone service and other telecommunications services. Increasing competition and deregulation in the Japanese financial industry is causing "more and more companies to use telecommunications strategically for marketing. The telephone is low cost, efficient, and provides direct response from customers," he told Nikkei Business.

Nobel Laureates Enjoy Their Day in the Sun
FINANCE PROFESSOR William F. Sharpe joined 22 other Nobel laureates plus a few children, grandchildren, and dogs on Super Bowl Sunday for a photo session on a beach in San Francisco (Sharpe supplied one grandchild and one dog). The event was immortalized in March when the New Yorker published the group portrait of this exclusive club. Myron Scholes, the Business School's other laureate, wasn't available for the photo session.
       Nearly all of those pictured had done their work decades before being honored with the prize. "That dozens of Nobels have been won by Californians over the years is an impressive fact," said the New Yorker. "It tells us that in the fifties, sixties, and seventies, science was practiced as well in the State of California as anywhere else in the world."
       Sharpe also appeared in Fortune, discussing a Web-based program he and two partners have designed to give forecasting tools similar to those used by managers of billion-dollar pension funds to individuals. The service--Financial Engines--will be sold to employers who will then make it available to participants in company retirement plans. A demonstration is available online at www.financialengines.com.

He's Still Bullish on California
THREE GENERATIONS AGO, the grandfather of Henry Segerstrom, MBA '48, began growing crops on 20 leased acres in what is now Orange County in Southern California. In 1967, Segerstrom's family opened South Coast Plaza, one of the original enclosed shopping malls, on the former lima bean farm. In the next year or two, Segerstrom expects the mall tenants, including high-end stores like Barneys and Hermès, to tally up one billion dollars in annual sales at the site. "I'm bullish on California," he told the New Yorker in an article profiling California's burgeoning economy. "California is probably the most creative place in the world today."

An Optional Approach to Charitable Giving
THE ENTREPRENEURS' Foundation, founded by Mayfield Fund partner Gib Myers, MBA '66, is dedicated to getting entrepreneurs accustomed at an early stage of their careers to supporting their communities. "Like much that's new here, this foundation will take stock certificates and options, the monopoly money of Silicon Valley, instead of cash," noted the San Jose Mercury News. "When these companies are bought or go public, the foundation intends to exercise its options, take the cash, and add to its endowment."
       Across the country in Williamsburg, Va., Arthur W. Schmidt Jr., MBA '78, has created Philanthropic Research Inc., a nonprofit firm with a searchable Internet site offering information about most of the 600,000 nonprofit organizations in the United States. According to the Richmond Times-Dispatch, Schmidt's organization will post a database that allows potential donors to search for organizations by category or keywords as well as by name and location. The Web address is www.guidestar.org.

Slow Road to Recovery in Asia
OPPORTUNITIES FOR successful investment in Asia are still a long way off, Alexander Muromcew, MBA '93 and fund manager for Nicholas-Applegate's International and Emerging Markets Fund, told Nikkei Financial Daily. His pessimism includes Korean, Southeast Asian, and Japanese markets. Internal company inertia is one thing holding back a recovery. "Except for a handful of global Japanese companies, most are afraid of changing their corporate structures, which are the same as they were in the '70s," said Muromcew. "If companies let loose of their conventional systems and undertake radical restructuring, the equity market will be revitalized."

When a Stomach Ache Is Really Bad News
IT WAS EVERY PARENT'S worst fear. While Laurie Girand, MBA '87, and her husband, Scott McGregor, were away on vacation, their 3-year-old daughter, Anna, who was staying with Girand's mother, became ill. Her grandmother was sure the tummy ache would pass but took her to a doctor and was reassured that it was probably just a bug.
       Unknown to the family, Anna was one of dozens of people, many of them children, sickened in 1996 by E. coli bacteria apparently spread through unpasteurized Odwalla apple juice. Anna's frightening illness was complicated by delays in diagnosing it as something worse than stomach flu.
       Today, Girand belongs to an organization called Safe Tables Our Priority (STOP), a grass-roots food safety program urging changes in laws governing unpasteurized juice, among other products. "If I could keep one parent from having this happen to them, I've done my job," she told the San Jose Mercury News. "If I don't get involved and one more child dies, I have to live with that knowledge. We're talking about kids, and kids dying."

The King of M&As
FIVE YEARS AGO, Merrill Lynch was seen as a good corporate finance company but not in a league to do high-flying mergers and acquisitions. That was the year that Herb Allison, MBA '71, took over the firm's mergers and acquisitions department with the goal of making it one of the top three in the nation by 1996.
       Allison (who today is the firm's chief operating officer) had one invaluable asset: Jack Levy, MBA '78, reported Fortune magazine. Levy is managing director in charge of the M&A department, which Fortune estimates realized a $400 million profit last year. "Levy has accomplished one of the most remarkable metamorphoses on Wall Street."