August 2004

Who's in the News

Unfulfilled Promises Irk Frequent Fliers

Does it make sense for US Airways to hire famed chef Wolfgang Puck to make testimonials for its food or for Virgin Air to promise first-class customers massages? Seth Godin, MBA '84, gave an emphatic no in a New York Times column describing his frequent-flier experiences. Airlines need to do a better job of managing their customers' expectations, argued Godin, whose latest book, Purple Cow, has spent nearly a year on BusinessWeek's bestseller list for hardcover business books. When airlines improve their on-time record, they exceed customer expectations and win points that help their business, he says. But given the history of airline food, no passenger is likely to believe the food will be good just because a famous chef promotes it. Never promise what you can't deliver, says Godin, who was once seventh in line for a massage on a Virgin flight. Time ran out and he got a wallet card promising him first place next time. "

I didn't need a massage, but once they promised one, it bummed me out not to get it," he wrote. "When people ask me about flying to England, I just show them my card and say, 'I was seventh.' That card's been in my wallet for about four and a half years."

Citigroup Taps Banamex Leader

After increasing Citigroup's profits in Mexico, Manuel Medina-Mora, MBA '76, was chosen in March to lead all of the Latin American banking operations of the world's largest financial services company. Analysts and Mexican corporate executives interviewed by Bloomberg News attributed Medina-Mora's success in banking to his strong organizational, administrative, and political skills, plus his "serenity and cool head."

Medina-Mora joined the Mexican-government-owned bank Banamex in 1971, led its privatization in 1990, and added new products in the 1990s. He was appointed CEO after Citigroup bought Banamex in 2001. In the following 12 months, Mexican operations generated more than 7 percent of Citigroup's earnings while its earnings in Latin America as a whole lagged other regions.

Course on the Course

You can't take basket weaving at the Graduate School of Business, but students can sign up for nighttime golf, thanks to a donation to Stanford from Tiger Woods. Woods, who majored in economics as a Stanford undergraduate before his golfing success lured him away, donated $180,000 to the University to expand its golf offerings, the San Jose Mercury News reported. Among the beneficiaries were Business School students. The newspaper quoted MBA students who saw golf as part of their business training. Rumor has it, they said, that deals are cut on the links. "

As a woman, I don't ever want it to be a disadvantage to me to not be able to participate in a deal-making event," said first-year student Alyssa Rapp.

But the course isn't a cakewalk, she said. "Consistency is obviously the most challenging" aspect of the game.

Love of Baseball Inspires Art

Sarah Gopher-Stevens, MBA '80, was raised in Israel outside the pull of towering homerun balls, but she fell in love with America's pastime anyway—on a date with her future husband at Yankee Stadium. "I didn't understand all of it right away, but I thought it was a game of contradictions. It was complex, yet beautifully simple. A team game, yet very individual," she told the Contra Costa Times.

Gopher-Stevens creates oil paintings depicting the relationships in the game, often using her little-league son as a model. A Lafayette, Calif., coffee shop displayed her work last spring to celebrate the opening of the town's Buckeye Field.

Mike Wranovics, MBA '94, also loves baseball, not to mention film. He put his passions together to make Up for Grabs, a documentary about the skirmish between two San Francisco Giants fans for Barry Bonds' 73rd homerun ball of the 2002 season. In June 2003, a judge ordered the fans to auction the ball and split the proceeds—$450,000, or less than one of the lawyers involved in the lawsuit contended he was owed in fees.

Wranovics, who taught himself filmmaking with the project, told the Associated Press that investors were hard to find until he had a short demonstration reel to pique their interest. With his Crooked Hook Productions, Wranovics said he hopes to make another documentary on the Stanford men's basketball team. "I'm enjoying this more than anything I've done in my life," he said.

Lo-Carb, Hi Finance

Living off the fat of the land, the diet food sector did well last year in the wake of a tidal wave of interest in low-carb diets. That has led some on Wall Street to anticipate an initial public offering soon by Atkins Nutritionals, the company founded by the late diet doctor Richard Atkins. His widow sold the company to a partnership of Goldman Sachs and Parthenon Capital, a Boston private equity firm cofounded by Ernest Jacquet, MBA '85. An IPO is "not imminent, but it's one of the alternatives that we are evaluating to raise growth capital for the company," Jacquet told Fortune. Atkins doesn't talk about its profits, but according to a company that tracks retail sales, it sold $148 million in food products last year, up 225 percent from 2002. It also sells cookbooks and licenses low-carb menu items with TGI Friday's and Subway.

He's on the Line for Wireless

Intel CEO Craig Barrett is banking on Sean Maloney, SEP '00, to build the chip manufacturers' hoped-for markets in communications, especially through WiMax, its new wireless technology for providing high-speed Internet access to users anywhere within the 30-mile range of an antenna. Maloney, executive vice president of the communications group, is third in command at Intel, according to Fortune magazine.

WiMax reportedly can serve a metro area for as little as $100,000; however, it still faces a battle for market share with copper wire and fiber-optic cable networks because some of the major broadband providers already have sunk costs into those technologies, the magazine said.

Alumni to Know

Faculty

Newsmakers

Restructured Strategy at Capital One

Not every investigation by regulators leads companies into financial trouble, but it might make them more bureaucratic. Take the case of Capital One Financial Corp., where Richard Fairbank, MBA '81, today is in charge of a somewhat more bureaucratic hierarchy, according to BusinessWeek. An investigation by banking regulators led the company to sign an informal memorandum of understanding in July 2002. Since then, the company has restructured its decision-making processes to increase accountability and made some changes in its core business model.

Cofounder Nigel Morris, who has left the company, told the magazine Capital One had outgrown its informal decision-making processes. He and Fairbank used to hash out company strategy "driving up I-95 in a black Ford. … It just doesn't work anymore," he said.

The company still encourages innovation bubbling up from the ranks, but Fairbank now shares responsibility with eight heads of major business units who closely track who makes decisions and why, the magazine said. Meanwhile, the company's business model of customizing consumer products based on data testing has proven valuable as Cap One's bad-loan and charge-off rates remained in check during the recession while those of many other lenders ballooned.

Cell Phone Mechanics

New technology changes companies in ways their founders can't predict. Take the case of Kevin Taweel, MBA '92, and Jim Ellis, MBA '93, who bought a small company in 1995 that provided roadside assistance to motorists with new-fangled cell phones. Today their company, Asurion, earns $400 million annually, most of it by insuring, repairing, and replacing cell phones that go haywire, not cars. The company repairs about 50,000 cell phones and ships about 140,000 phone replacements a month, CEO Bret Comolli, MBA '89, told the Nashville Tennessean. With partners in Asia, the Nashville-based company recently added 300,000 Korean subscribers in seven months.

Hospital Facelift

If you think design is about the shape of a car fender or a dress bodice, consider Fast Company's selection of Bob Porter, MBA '82, to its first "master of design" list. Under the subcategory of "collaborator," Porter is recognized for reacting to the chaos of a St. Louis hospital by forging an alliance with the San Francisco design firm IDEO to remake wards from a patient's perspective. Together they created central kiosks at SSM DePaul Health Center for family members to find hospital information, streamlined staff communication processes, and redecorated patient rooms to make them less clinical. The effort is believed to have contributed to the bottom line of that city's fastest growing hospital. "We're only beginning to fundamentally reexamine how to create a humancentric approach to delivering health care," said Porter, the hospital's executive vice president.

Hi-Tech Détente

After years of publicly bashing each other, executives of Microsoft and Sun Microsystems announced détente in April. Sun's CEO Scott McNealy, MBA '80, and Microsoft's CEO Steve Ballmer, Class of '81, both the sons of Detroit auto executives, exchanged autographed Detroit Red Wings jerseys at the start of a San Francisco news conference in which Microsoft announced it would pay Sun nearly $2 billion to settle their legal feud. McNealy, meanwhile, promised Sun would cooperate with Microsoft to make Sun servers and Microsoft operating systems compatible. After three years of losses, Sun also announced that layoffs loomed for 3,300 of its workers.

San Francisco and San Jose newspaper analysts speculated that the hatchet was buried not just because of Sun's financial difficulties. Other threats are a European Union ruling against Microsoft on antitrust issues, and the threat to both firms from the spread of cheap open-source software.