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Stanford Business magazine

 

Newsmakers

Who's in the News: A Round-up of Media Mentions

Mortgage Innovator

Promising mortgage applications have not traditionally contained a short credit history, lots of past employers, and a reliance on government meal vouchers to make ends meet. But to Leo Simpser, MBA ’01, lending to people who don’t fit into the conventional credit guidelines is “a huge business opportunity,” he told the Los Angeles Times.

Simpser is managing director of the Hispanic National Mortgage Association, a privately held for-profit company whose goal is to increase home ownership among Hispanics and other minority groups in the United States. The company has not only created a culturally sensitive mortgage underwriting system, it has automated it in hopes that financial institutions can efficiently make loans at more affordable prime rates, instead of the so-called sub-prime rates that recently have led to many foreclosures.

It’s too early to tell whether this model will work; the company has been in the market for less than a year. But Simpser, who was born in Mexico, hopes the company will be able to extend homeownership to many borrowers who “fall out of the typical box.”

Before Silicon Infested the Valley

Alan Henricks, MBA ’74, arrived in California in “ancient times,” when today’s Silicon Valley was full of “cherry trees, prune yards, empty lots.” The president and CEO of Cenzic Inc., a software security and risk management company, served as chief financial officer for a number of technical companies but reminisced recently in the Silicon Valley/San Jose Business Journal about his early days as a consultant.

His first client was a company called Intel, whose parking lot he entered from a dirt road. Intel had “this thing called a microprocessor and nobody really knew what to do with it, including Intel,” Henricks said.

Another consulting assignment was to help Atari, the video game maker, determine if it needed its first computer.

Computer, Silver Screen Need to Do Lunch

The phrase “digital convergence” is too mild to describe the “collision” of the tech and entertainment industries, says Philip Meza, a research associate at the Business School and the author of the book Coming Attractions?: Hollywood, High Tech, and the Future of Entertainment. “Much value will be destroyed” by the collision, “but much value also can be created,” he wrote in the San Francisco Chronicle.

To create that value, though, the two industries need to confront the challenges to their old business models head-on. “When consumers can watch TV shows on an iPod, Hollywood and Silicon Valley need to understand each other far better than they do,” he wrote, “or face being disrupted by some upstart.”

Snips ’n Snips for Guys

How do you convince a man to spend more than $15 on a haircut? Offer him a beer as part of the experience. Getting their hair cut is “something most men are pretty underwhelmed with,” Sean Heywood, MBA ’06, told the San Francisco Chronicle. He and Kumi Walker, MBA ’06, hope to change that with MR, an upscale bar/barbershop they opened in San Francisco.

MR sells memberships rather than just haircuts—$65 a month for a haircut and a follow-up trim. It has a bar and lounge, which Heywood and Walker hope will entice patrons to stay and socialize.

The venture faces challenges beyond the fact that men spend less money on grooming than women do. “Historically, this is a very segregated business, with African American barbershops serving a 100 percent African American clientele,” Heywood told the newspaper. Still, the two founders have big plans and envision this as the first shop in a nationwide chain.

Betting Big on China

Edgar Masri, MBA ’89, studied Latin, French, English, and Arabic while growing up. Later he took lessons in German, Spanish, Japanese, and Finnish. Now he’s taking on Mandarin, which he told the Boston Business Journal is the toughest language he’s ever studied.

The stakes are high: Masri is CEO of 3Com Corp., which has been losing money in recent years and seen its stock price tumble. Last year, it decided to spend half its net worth—$882 million—to buy out its partner in a Chinese joint venture called Huawei-3Com Co. Ltd. Some Wall Street analysts called the move risky, but Masri told the journal, “If you’re going to be a global player, you have to be there.”

The joint venture that 3Com is taking over is based in Hangzhou, about 24 hours by plane from Boston. This means a lot of travel; some business connections just can’t be made by videoconference, Masri said. “Spending time there is very, very critical.”

Fill ’er Up with Pond Scum

Could the answer to U.S. dependence on foreign oil lie in an algae-filled catfish pond? David Jones, MBA ’85, thinks it might. Theoretically, algae could eventually produce as much as 20,000 gallons of fuel per year per acre.

Jones and his wife, Lissa Morgenthaler-Jones, first investigated renewable energy options as investors, according to the New York Times. Then last year, they started LiveFuels Inc., a “Mini-Manhattan Project” to try to turn algae into usable fuel. Jones is the company’s chief financial officer; his wife is the CEO.

Venture capital investments in clean energy more than doubled from 2005 to $2.4 billion in 2006, the Times reported.

Staying On Her Toes

The pull of the performing arts proved too strong to resist for Lissy Garrison, MBA ’85. Garrison began her career as a pianist and violinist before attending business school and heading to the corporate world, the Denver Post reported. But the downturn of the early 1990s and the experience of having her house burn down caused her to re-evaluate her goals. She joined Ballet Nouveau Colorado, first as a consultant and board member and then, in 1999, as executive director.

Since then, Garrison has guided Ballet Nouveau Colorado through its transition from a dance school to the second largest ballet company in the state, and one with a growing national reputation. It performs premieres of works by well-known choreographers and has seen a surge in the number of dancers asking for auditions. “We want to change the way the world feels about ballet and keep it alive in the 21st century,” she told the newspaper.

Cashing Chips for Barack

U.S. Sen. Barack Obama’s campaign to be nominated as the Democratic Party’s candidate for president got a boost in April when it reported a $25 million fundraising haul, rivaling that of the more established campaign of Sen. Hillary Rodham Clinton. The response from donors was “overwhelming,” said Penny Pritzker, JD/MBA ’84 and Obama’s national finance chairman, to the Associated Press.

The Chicago Sun-Times reported that Pritzker, who is founder, chairman, and CEO of Classic Residence by Hyatt, was on the finance committee when Obama ran for the Senate in 2004 and has “a golden Rolodex” to tap. She also donated $2,000 to President Bush’s re-election campaign in 2003.

Tough Business Advice in the Big Easy

Volunteers descended on New Orleans after Hurricane Katrina to gut buildings, fix roofs, and even help businesses replace lost inventory. But surviving small businesses faced a more long-term problem: lost customers. So Daryn Dodson, MBA ’07, led 15 GSB students to meet with New Orleans entrepreneurs and give them tips on rebuilding their businesses, according to the Los Angeles Times.

Dodson, Shara Tortora, Eugene Baah, and Sarah Chandler Mallari, all MBA ’07, suggested to bookstore owner Vera Warren-Williams to erect a sign that could be seen from a neighboring thoroughfare, recruit neighborhood youth to distribute fliers at an upcoming festival, and perhaps add a coffee shop and photocopying center that someone could lease from her.

Dodson and second-year students Jeff Landau and Sarah Garrett also made suggestions to the owners of an antiques shop, reported the New Orleans Times-Picayune. Their tips included promoting the history of the shops in their neighborhood and driving more customers to an online side business. The students’ involvement with the New Orleans businesses resulted from the Business School’s “service learning” program for MBA students.

New Girls Network

Melissa McJannet, MBA ’00, is part of what Janice Roberts, a managing director at the Mayfield Fund, described in Forbes magazine as “the New Girls Network”: an “informal but thriving group of competitive and talented women.”

McJannet, a native of Canada, joined the Mayfield group after graduating from the Business School and helped with the firm’s first Canadian investment, Convedia, which makes IP media servers. Today she is a principal at TD Capital, a Toronto firm that manages $2 billion on behalf of pension plan sponsors and other financial institutions. TD Capital invested in Mayfield’s first fund in China on her recommendation.

Nonprofit Makes IPO Conversion

Financial services firms generally follow the money, targeting the wealthy as the best potential customers. But Compartamos, a Mexican bank, where Fausto Miranda, MBA ’94, was chairman of the board for five years, has found a business opportunity in offering financial services to Mexicans who aren’t well off.

Started as a nongovernmental organization, the bank has increased its client base tenfold since 2001, according to the Financial Times, and is now one of the biggest microfinance institutions in Latin America. Its IPO in April raised $407 million.