May 2004

Who's in the News

Contract to Expand

Down to a few months' cash in November 2000, the 1996 classmates who founded NexTag Inc. bit the bullet. Purnendu Ojha and Rafael Ortiz cut their staff of 55 to 16, abandoned their idea of creating an online marketplace where buyers and sellers could negotiate the price of virtually anything, and turned their attention to the part of their business that was working—a comparison shopping engine for technology products. Since then, continuous expansion of product offerings has fueled the company's growth, which allowed it to reach the top of the San Francisco Business Times' list of "fastest growing privately held companies" in 2003. Asked about the keys to their survival, Ojha attributed some of it to luck but also said it included funding from Morgenthaler Ventures. "Having one investor gave us flexibility. It would have been much more difficult for us to change our business if we had more investors or more people on our board."

Corner Office Parity Not Likely Soon

Americans work more hours than people in other industrialized countries, and American men work longer hours than women in every industry, according to the Bureau of Labor Statistics. That may be why women who have a solid education and plenty of business experience are far less likely than men to occupy the corner office suite, according to Fast Company. The magazine sought expertise from organizational behavior professors Charles O'Reilly and Edward Lazear, as well as GSB alumnae Diane Brandt, MBA '78; Ann Livermore, MBA '82; and Beth Johnston, MBA '88.

Livermore, who is an executive vice president of Hewlett-Packard, said, "I don't seek balance. I want to work, work, work."

Brandt and Johnston are ambitious but reached a point in their careers where they wanted a family life that required them to scale back career goals.

"I have not pursued promotions in the same way I might have had I not been trying to balance other things in my life," said Brandt, who left Comdisco to launch a small company, Captio Corp.

Johnston, a Chicago banker, recalled that when her son was a baby she calculated the percentage of waking hours she would spend with him. "I doubt that his father was doing the same." She later took time out to be with her son but said her brief attempt to be a "golf lady" didn't pan out.

O'Reilly's studies of UC-Berkeley MBAs led him to conclude that hard work and long hours are rewarded with promotions, and men compete harder with longer hours. Lazear predicted that 20 percent of CEOs at top companies will be women in 15 to 20 years because labor shortages will force the redesign of jobs for talented workers. As for parity with men, he said, "I don't expect it ever to be equal—ever."

Wells Fargo Nixes Frequent Trades

As some mutual funds made headlines late last year for allowing favored investors to violate share-trading rules, Wells Fargo & Co. launched an internal investigation of its money management fund back to its start in 2001. Chairman Richard Kovacevich, MBA '67, reported to Bloomberg News that the review found 1,600 attempts by customers to frequently trade mutual fund shares in violation of the fund rules.

"We wrote 1,600 letters to people saying, 'We don't do these things, and don't ask us again,'" he said. According to the bank, when clients' attempts to trade frequently were detected, the bank blocked new money from going into the accounts.

Making the Grade

Jeffrey Scott, MBA '98, was named to the latest "best and brightest under 40" list of Black Enterprise magazine. Scott, 33, is managing director of Black Enterprise/Greenwich Street Corporate Growth Partners, a private equity firm with $91 million in assets invested in minority-owned or managed companies. The former vice president of private equity at Citigroup and analyst at Goldman Sachs is responsible for the origination, structuring, execution, and monitoring of investments in companies.

Product Born of Nonprofit Experience

Among the many "sector hoppers" to emerge from the Business School is Susan Packard Orr, MBA '70, who joined the board of her family's Packard Foundation when she turned 21 and is now chair. Orr also founded Telosa Software, an 8-year-old for-profit company with a current staff of 20 that makes software expressly for nonprofit organizations.

"Buying technology is a hard decision for nonprofits," Orr told the San Francisco Chronicle. "They all say, 'We need tech,' but are not necessarily focused on it. Understanding how nonprofits work helps us."

Orr enjoys writing code and says, "Software is kind of like having a baby. You work very hard for nine months, then you hear feedback from your clients. It's not ever really finished."

Savings Makeovers

For decades, women's magazines have been offering their readers stories about makeup, hair, and wardrobe makeovers. Fortune recently borrowed the concept and offered three families 401(k) makeovers. The retirement accounts were analyzed by Financial Engines, the company founded by Nobel laureate and Business School professor emeritus Bill Sharpe. Analyses by Financial Engines are available to 3.2 million employees in some 900 companies that contract for the service. Based on the retirement accounts analyzed for the magazine, Fortune offered its readers three tips: diversify; pay attention to fees, which can be an enormous drag; and realize that boosting your contribution by $1,000 annually will add $31,000 to your portfolio over 20 years.

Philanthropy Pub Cites School Program

If the advantages of the School's Public Management Program were kept secret from philanthropists, the word is out now. PMP alumni/ae and students were featured in a special report of the Chronicle of Philanthropy about why some people with a strong sense of social responsibility seek a business education. Citing his interest in a "double bottom line," Daniel Grossman, MBA '91, said he learned how to be effective on nonprofit boards by participating in the Board Fellows program for PMP students. After graduation, Grossman founded Wild Planet Toys, a for-profit San Francisco company, and he also sits on the boards of several children's and Jewish charities.

His classmate Jacqueline Novogratz chose to found the New York-based Acumen Fund, a nonprofit grantmaker that supports efforts to end global poverty. Among the advantages of her GSB education: "a group of peers who were focused, thoughtful, accomplished individuals, regardless of whether they went into the private sector or the public sector, who supported me then and continue to support me now."

The article points out that a quarter of GSB students earned the public management certificate last year and more than half of the School's MBA students participate in the program's courses, clubs, workshops, and study trips.

Alumni to Know

Faculty

Newsmakers

Home-based businesses are becoming more popular for women like Liz Chavez Lynch, MBA '92.

Technology Brings Business Home

Inexpensive personal computers, fax machines, and color printers are making it easier for women to leave behind commuting and start more sophisticated home businesses, says USA Today. At the same time, technology is eliminating female entrepreneurship in the retail sector as small stores find it more difficult to compete against retail giants employing pricey mainframes. Among those featured as moving home is Liz Chavez Lynch, MBA '92. Formerly an employee of Goldman Sachs, Disney, and Time Warner, Lynch now advises client businesses on increasing revenues and profits through her New York-based firm, Consult Ad Hoc.

Secret Life of a Poet

Dana Gioia, chair of the National Endowment for the Arts, has long said he came to Stanford Business School to become a writer after he decided that a career as an English professor was not a good way for a poet to support himself. National Public Radio's Terry Gross asked the MBA '77 if it was true that for years Gioia hid the fact that he wrote poetry from his business colleagues at General Foods.

"Well, I didn't think it would do me any good in a very competitive, old-fashioned company to be known as the corporate poet," he said. "I really felt that I had to succeed in business as a businessman and to succeed in writing as a poet."

After a number of years, however, word of his dual lives reached Esquire magazine, where editors wanted to include him in a piece on men and women under 40 who were changing America. "I tried to convince Esquire not to run the article, but they said it wasn't my choice. And so at that point, I was outed."

Gioia recently was outed in another way—his opera Tony Caruso's Final Broadcast, written with Lehigh University music professor Paul Salerni, was performed at Lehigh's Zoellner Arts Center. Gioia told the Allentown, Pa., Morning Call that the story of a failed tenor turned radio DJ was an exaggerated biography of himself and Salerni, who share working-class backgrounds.

Analyst's Approach to Selling Diamonds

Mark Vadon, MBA '97 and CEO of Blue Nile, says his online company's sales growth is due to heresy. "Everything we do is heresy. Instead of marketing [jewelry] to women, we market to men. Instead of trying to push our gross margins as high as possible, we sell as cheap as we possibly can. Instead of hiding information, we're all about educating the consumer and making him feel comfortable."

At a time when Internet companies were failing right and left, Blue Nile became profitable and has stayed that way, according to E-Commerce Times, with annual revenues well over $100 million.

A former Bain consultant, Vadon told the publication he got into the jewelry business in 1999 because a jeweler tried to get him to buy a $12,000 diamond engagement ring by selecting the one that "spoke" to him. He went home, switched on his computer, and scoured the Internet for help. That led to a partnership with a Seattle diamond wholesaler who understood diamonds but was "blown away" by Vadon's intricate matrices for comparing diamond characteristics and even more so by his ability to raise $57 million from venture capitalists.