COLUMBIA BUSINESS SCHOOL HERMES

THE NEW YORK CITY INVESTMENT FUND: A NEW MODEL FOR DOING GOOD Eleanor Foa Dienstag Henry R. Kravis ’69 and his fund put a new spin on philanthropy.

AN AMERICAN DREAM:ENTREPRENEURSHIP IN THE MAKING Marsha Doeblin Entrepreneurship classes are hot, and they’re no longer just for entrepreneurs.

VIEWPOINTS: SOCIAL SECURITY FIRST? Frank R. Lautenberg, BS ’49, and economist Stephen P. Zeldes join in the current debate.

SPRING 1998 HERMES

Spring 1998

Features

14 THE NEW YORK CITY INVESTMENT FUND: A NEW MODEL FOR DOING GOOD by Eleanor Foa Dienstag The brainchild of Henry R. Kravis ’69, the fund combines philanthropy and canny investment strategies to create jobs and promote economic growth in New York City.

AN AMERICAN DREAM:

Jerome A. Chazen ’50 is one of a new breed 20 ENTREPRENEURSHIP IN THE MAKING of philanthropist in New York City, page 14. by Marsha Doeblin A look at the School’s burgeoning Entrepreneurship Program and its effect on students and curriculum.

NURTURING A GREEN COMPANY 27 by Marguerite Holloway Guillermo Suéscum ’95 is busy transforming the Panamanian landscape into teak plantations. It is good for the country, good for the environment and promises Departments a tidy profit as well.

Dean’s Message 2 VIEWPOINTS: SOCIAL SECURITY FIRST? 30 Frank R. Lautenberg, BS ’49, U.S. Senator from New Newsmakers 3 Jersey, and Professor Stephen P. Zeldes discuss securing Social Security. Media 32 ENDPAPER Alumni Clubs 34 52 by David J. Sainsbury ’71 Social responsibility and business profitability are not Class Notes 37 mutually exclusive—at least not at Sainsbury’s, a chain of U.K. supermarkets dating from 1869. HERMES DEAN’S MESSAGE

Director of Publications and Editor Dear Friends: Nancy L. Freireich am extremely happy to report that this spring Columbia Business School Senior Writer reached a milestone—U.S. News & World Report cited it as the No. 3 Marsha Doeblin Ibusiness school in the nation, up from No. 7 last year (see story, page 3). Contributing Writers The climb in the rankings reflects the dynamic momentum of the School. Nikki Bruno, Melanie Conty, This progress is the result of enormous dedication and energy—a collabora- Eleanor Foa Dienstag, Andrew A. Green, Marguerite tive effort by faculty members, students, alumni, administrators Holloway, Edward L. Moore, and staff continually to refine all aspects of academic life. Kenneth J. Selvester One area of ever-expanding interest at the School is entrepreneurship—a focus of this issue of Hermes. Production Coordinator Nicola M. Fabens A unique venture designed to foster both entrepreneurship and economic development in New York City is examined in Contributing Photographer “The New York City Investment Fund: A New Model for Doing Lynn Saville Good.” The fund is spearheaded by a cadre of some of the Design School’s most distinguished alumni. Design Partners, inc. “Realizing the American Dream” reports on the meteoric

Cover Art growth of the Entrepreneurship Program and the integration of Craig Frazier entrepreneurial thinking throughout the curriculum. ◆ Our in-depth profile for this issue, “Nurturing a Green Company,” features an alumnus who is partnering entrepreneurship with environmentalism in Dean his native Panama. Several more stories of entrepreneurial ventures can be Meyer Feldberg found among the profiles in the Class Notes section. Associate Dean Hearing these—and the myriad other—success stories of our alumni is for Special Projects one of the most gratifying aspects of my job as dean. I invite all of our grad- Janet L. Schinderman uates to share their stories, especially by participating in our alumni reunion Associate Dean for External events. Plans are well under way for 5-, 10- and 25-year reunions for the Relations and Development classes of ’92/’93, ’87/’88 and ’72/’73, respectively, to be held on campus on Marilyn F. Kohn November 13, and for the Fourth Pan-European Reunion, to be held in ◆ Venice, Italy, on October 16–18 (see pages 49 and 51 for details). Again, thanks to all alumni, faculty members, students and friends who Editorial Office Columbia University have helped boost the School to new heights. Graduate School of Business Uris Hall Sincerely, 3022 Broadway, Room 833 New York, New York 10027-6902 (212) 854-8567 Fax: (212) 961-9613 [email protected]

HERMES, Columbia Business School’s alumni magazine, is published twice a year by Columbia Business School, Professor Meyer Feldberg ’65 Columbia University. ©1998, The Trustees of Columbia University Dean

Opinions expressed are those of the authors and editors and do not reflect official positions of Columbia Business School or Columbia University. Hermes welcomes letters to the editor and Class Notes updates, sent by mail or electronically to the addresses at left.

SPRING 1998 HERMES 2 NEWSMAKERS

A STAR SHINES EVEN MORE BRIGHTLY

ccording to U.S. News & selectivity. The Executive became dean. By 1997, the AWorld Report’s 1998 MBA program ranks No. 5. School had moved all the America’s Best Business For this survey, U.S. News way to No. 7, at which Schools, Columbia Business determines rank based on a point the dean publicly School now ranks No. 3. school’s reputation (worth 40 set a goal of having it In the annual study of the percent), placement success rank among the top country’s leading business (worth 35 percent) and stu- five business schools schools, Columbia soared dent selectivity (worth 25 by the year 2000. He credits from the No. 7 slot it held percent). Corporate the School’s steady rise to last year. The School shares recruiters, deans and direc- the ongoing, collaborative as we moved up in the the No. 3 ranking with the tors help score reputations, effort of the faculty, adminis- rankings, I kept saying, ‘We University of Pennsylvania while statistics, grade-point tration and staff, as well as to are just getting started,’” he and Massachusetts Institute averages and graduate the phenomenal successes of wrote in a congratulatory of Technology. Harvard and admissions test scores help alumni. letter to the School commu- Stanford are tied for first. determine placement success Despite this advancement, nity after receiving the good In the 1998 survey, U.S. and student selectivity. the dean always cautions his news. “This time I do not News rates the School No. 1 Columbia Business School team about the dangers of say that we are just getting in placement success and has climbed in the U.S. News complacency. started, but I will say that we starting salaries for gradu- ranking from No. 11 in 1989, “In my first few years at are not yet done.” ates and No. 3 in student the year Meyer Feldberg Columbia Business School,

ANNUAL DINNER REACHES NEW HEIGHTS

his year’s annual din- According to Marilyn memoration. “This is the first Warburg, Pincus & Co., Tner, once again held in Kohn, the School’s associate time Lionel has agreed to LLC, a member of the the Waldorf-Astoria’s grand dean for external relations, accept an honor of this School’s board of over- ballroom, was not only sold “the evening was an extraor- kind,” said Speyer, who is seers and chair emeritus of out by April 1, but hopeful dinary success, due in large also a member of the the University’s Trustees, diners were requesting seats part to Lionel Pincus ’56,” School’s board of overseers, said in his acceptance speech: “To be or not to right up until six o’clock on this year’s Distinguished a University Chair Emeritus be, that is question. May 4. Leadership in Business Trustee and president of Whether tis nobler in the Award recipi- Tishman Speyer Properties, mind to suffer the slings ent. Jerry I. “and it made this year’s and arrows of outrageous Speyer ’64, annual dinner very special fortune or by taking arms who chaired for alumni and friends.” In against a sea of.” the 1998 addition to the TK alumni The other award tradition- Annual Dinner who attended, a few of the ally presented at the dinner, Campaign, more prominent corporate the Distinguished Leader- noted that he donors were Goldman, ship in Government, went to accepted the Sachs & Co., Merrill Lynch William J. McDonough, chairmanship and Lehman Brothers. president and CEO of the because of Pincus, who is chairman Federal Reserve Bank of and CEO of E. M. photo cutline Pincus’s com- New York. McDonough

SPRING 1998 HERMES 3 NEWSMAKERS

WOMEN WHO ct like a leader in all Yeshiva. Panelists included careers. But Miller, senior MAKE IT HAPPEN Athings that you do,” the Grace Shafir, founding vice president and CFO of keynote speaker, Heidi G. president of the Dare to Travelers Group, asserted Miller, told an audience Dream Foundation, Sherry S. that there is no single right made up almost entirely of Handel, founder, publisher way to do it all. “The course women during Columbia’s and editor in chief of blue is open, and there are Fifth Annual Women in jean magazine, and Leila many ways to be a good Business Conference. The Heckman, managing employee, a good mother, a conference, held on campus director at Salomon Smith good worker,” she said. on February 13, was co- Barney. “You women have the sponsored by the Com- Shafir, an entrepreneur and ability to shape your own mittee of 200 (C200) C200 member, says: “I like to course, and I hope you all and Columbia Women do things my way. I might do it with great success.” Keynote speaker in Business (CWIB). be working at midnight, but Regardless of the industry, Heidi G. Miller, senior vice “Don’t let a career at four o’clock in the after- Miller added, whether a president and just happen to you. noon I may have been corporate employee or an CFO of Travelers Proactively select it,” watching a tennis match.” entrepreneur, success comes Group. advised Anne M. Bus- Dare to Dream is a nonprofit from owning one’s work. quet ’78, president of corporation that creates “Do what you like, and I American Express videos of interviews with don’t care what that is,” she LYNN SAVILLE Relationship Services prominent female role mod- said. “You will find opportu- Nina McLemore ’95, and winner of the 1998 els, such as Sandra Day nities because you make president of Regent Capital Distinguished Alumna O’Connor, Hillary Rodham them for yourself.” Management Corp., Award. “Go after what Clinton and Diane Sawyer, The conference cochairs at the CWIB you want.” and then plays them at for CWIB were Aimee Bickel luncheon. school assemblies. ’98 and Lisa Greenberg ’99. ROAD TO CEO Panelists at other sessions The C200 event cochairs Members of C200, a net- explored nuances leading were Irene Cohen, CEO of work of some of the to success. Connie K. Duck- Corporate Staffing Alterna- nation’s top business- worth, a managing director tives Inc., and Doris Meister, women, inspired the at Goldman Sachs, told the executive vice president and audience with accounts of audience to “keep learning. managing director of the unity, strength and leader- A career is a long time.” Private Clients Group for ship. Titled “Reaching New Ronna G. Lichtenberg, Fleet Bank. Heights: The Road to CEO,” author, lecturer and CWIB works with the the event offered speeches president of Clear Peak School and the greater busi- and sessions on strategic Communications, noted that ness community to further planning, global business, when it comes to office the role of women in busi- entrepreneurship, Wall politics, “Even nice people ness. The organization is one Street—and women. About have their own agendas,” of the most active and suc- 370 people attended, and women should “accept cessful on campus. And with including current students, that you won’t always know women making up more alumnae, School admin- the score.” than 37 percent of the istrators and faculty School’s class of ’99, CWIB’s members, prospective JUGGLING IT ALL future looks bright. students and members of Many speakers conceded the business community. that personal demands such Other participating schools as spouses and children included Fordham, NYU and burden working women with guilt about their

4 HERMES SPRING 1998 NEWSMAKERS

SEIZING THE OPPORTUNITY TO GET TO THE TOP

believe there is a great Ideal of opportunity in corporate America today for African Americans, even in light of the recent attacks on affirmative action,” Joyce M. Roché ’72, presi- dent and COO of Carson Products, told the Black Business Students Associa- BBSA executive board with award recipients. From left, M. Nancy Brutus ’98, Portia Fultz ’98, Erika Irish ’98, Craig Livingston ’98, tion at its 16th Annual MBA Joyce Roché ’72 (award recipient), E. Stanley O’Neal (award Conference in November. recipient), Carmen Johnson ’98, Candice Carnage ’98 and “Corporate America is in Nicole Pullen ’99. need of us, and we have Smith Barney Asset Man- Manhattan who notes that proved we can succeed.” agement and vice chairman diversity is a huge issue at “While that glass THE CONFERENCE of Travelers Group. her company, was recruit- ceiling may continue Panelists included Oliver R. ing first-year students. “It’s The three-day event was to be a presence, titled “Beyond the Glass Sockwell ’72, executive-in- great marketing for our Ceiling: The Ascension of residence at the School and corporation,” she says. “We we know how to move it, Blacks in Business.” About former president and CEO get a good feel of our first- we are beginning to 300 people from Columbia of Connie Lee; Meredith E. year MBAs and the different put some cracks in it and other business schools, Marshall, founding member types of areas that they’re including Wharton, Kellogg and principal of Musa interested in.” Nicole McIn- and we are learning Capital Advisors, Ltd.; tosh, a prospective student, and Stern, attended, says how to find paths Erika M. Irish ’98, confer- Lawrence C. Manson, Jr., ’85, says she liked the exposure around it.” ence cochair. More than 75 cofounder and general to various companies: “You alumni also attended, as did partner of PENMAN Part- get a chance to meet a lot ners and PENMAN Asset of people and to prepare.” other professionals from —Joyce M. Roché ’72 companies that sponsored Management, LP; and Those who’ve made it President and COO the event. Warren Shaw ’73, consul- confirm that preparation Carson Products Held on campus, the tant and senior adviser to leads to success. In describ- conference included team- Chancellor LGT Asset ing her journey, Roché building workshops, a Management, Inc. praised the merits of a strong foundation. “It is career fair, an open forum THE CAREER FAIR absolutely essential that with students, a book sign- At the career fair, students African Americans receive ing with author George C. filled Low Rotunda to meet top-notch educational train- Fraser and an awards ban- with recruiters from about ing while at the same time quet to honor Roché, the 30 companies, including maintaining our strong George A. Owens ’50 Goldman Sachs, Fitch values and sense of self- Award recipient, and Investors Service, Coopers worth,” she said. “While E. Stanley O’Neal, recipient & Lybrand, McGraw-Hill that glass ceiling may con- of the Pioneer Award and and Kraft. About 450 peo- tinue to be a presence, we recently named CFO of ple attended. The career fair know how to move it, we Merrill Lynch & Co. Speak- was open to all minority are beginning to put some ers also included H. Carl students, Irish said, not just cracks in it and we are McCall, New York State conference participants. learning how to find paths comptroller, and Thomas W. Arshia F. Tala, a repre- around it.” Jones, chairman and CEO of sentative from Chase

SPRING 1998 HERMES 5 NEWSMAKERS

A NEW TEAM AT CHAZEN

ean Feldberg has opportunity to coordinate appointed new Business D nal o the School’s azennternati leadership to take on the Ch I me A. Institute of challenges of expanding the efforts to inter- Jero global reach of the Jerome A. nationalize Chazen Institute of Inter- research and the national Business, the aca- curriculum. “These demic center of the School’s are issues that I care international focus. The about deeply,” he new team—a new Faculty says. “I think we’re The Chazen doing an excellent job e Advisory Committee, a new renc onfe nt C Institute here, and we’re more eme academic director and new Plac nal natio operational leadership— international than other Inter has helped to MBA will guide the institute into business schools. But we

secure the School’s Cosponsored with Columbia University’s Center for International Business Education (CIBE) the next century. can always improve, and reputation as a we should make sure that FACULTY LEADERS we stay on the cutting FACULTY RESEARCH top educator of Nomura Professor of Inter- edge.” The new faculty committee business leaders national Finance Robert J. Harris’s appointment as also includes Nelson Hodrick is the new Chazen who have an Chazen professor reflects Fraiman, professor of oper- academic director and fac- his distinguished career ations management and international ulty committee chairman. both at Columbia and in the codirector of the W. Edwards Professor of accounting perspective. greater business commu- Deming Center for Quality, Trevor S. Harris, who previ- nity. Among his many Productivity and Com- ously served as codirector accomplishments, Harris petitiveness; Kathryn R. of the Accounting Research has received a Chazen Harrigan, Henry R. Kravis Center and academic direc- International Prize for inno- Professor of Business Lead- tor of the Chazen Institute, vation in teaching, a Singhvi ership and an expert on in December was named Prize for excellence in international strategic man- Jerome A. Chazen Professor teaching and a Robert W. agement; Ann Harrison, of International Business Lear Award for service to assistant professor of and now serves on the MBA students. He has con- finance and coordinator of new committee. Thomas E. ducted groundbreaking the International Business Fernandez will lead the international research and Program; and Bernd institute operationally as last year was nominated by Schmitt, associate professor assistant dean for the his students for the Presi- of marketing and an expert Chazen Institute and MBA dential Teaching Award—a on international marketing. Career Services. nomination his accounting Led by Hodrick, the group Hodrick joined the and finance colleagues is planning a conference on Columbia Business School endorsed, notes the dean. international valuation for faculty in 1996. A winner of Harris has consulted for winter 1999 that will draw the Chazen International Daimler-Benz and the U.S. on disciplines across the Prize for innovation in Post Office and is on leave School. The committee teaching, he has conducted this year conducting also oversees the Chazen international finance research at Morgan Stanley, Institute’s academic devel- research for the past Dean Witter, Discover & Co. opment and integration 22 years and values the with the international

6 HERMES SPRING 1998 NEWSMAKERS

business community. It will RECRUITER RESOURCE companies why they come 1991 with Feldberg to inter- further international inno- On the administrative side, to Columbia, they come nationalize the School and vation in the classroom, Fernandez is committed because Columbia students its students and to promote provide the School with to broadening Chazen’s are the most sophisticated innovative thinking on academic leadership in reach and reputation as a globally. Our students tend global issues. international business and resource for recruiters and to be individuals who have The Center for Interna- spearhead conferences. other schools. “There will traveled, who have lived tional Business Education Support of faculty research be more international and worked in countries (CIBE), funded by the will be directed to issues recruiters and companies other than their home Department of Education, such as the appropriate cost with an international focus country, who see the world will continue to play a of capital for an interna- that want to come to the in global terms and are critical role in the School’s tional project, the effect of Chazen Institute—not only comfortable in different internationalization strat- international marketing because they want to hire countries.” The School now egy. “With the combined strategy on sales and the people but because of the holds admissions forums in resources of Jerome Chazen accuracy with which stock research and the work that almost 20 countries, and and the Department of prices reflect international Hodrick’s committee is about one-third of its Education, Columbia Busi- accounting information. doing,” Fernandez says. students are international. ness School can contribute The Chazen Institute Businesses today need Jerome A. Chazen ’50 will to the nation’s international has helped to secure the employees with global remain active with the insti- competitiveness and pro- School’s reputation as a backgrounds—“I don’t tute as its work progresses. vide a solid educational top educator of business think there is a company Former chairman of Liz foundation for future inter- leaders who have an that does not want that,” Claiborne, Inc., Chazen national business leaders,” international perspective. he adds. “When I ask founded the institute in Fernandez says.

JAPAN CENTER FORUM: ASIA’S BUMPY ECONOMIC ROAD

ome of the most promi- head of the Developing Snent business, political Economies Study Depart- and academic leaders from ment, Institute of World the United States and Asia Economy, Vietnam; and came to the Columbia cam- Joseph Kim, president and pus on March 6 to discuss CEO of Equinox Capital Pte Southeast Asia’s financial Ltd., Singapore. Discussions crisis. About 180 people focused on international from some 80 organizations trade and finance, foreign attended the event. investment and the chang- Hugh T. Patrick, R. D. ing political economy of LYNN SAVILLE Calkins Professor of Interna- From left, Merit E. Janow, codirector of the Columbia University Southeast Asia. Dinh noted tional Business and director APEC Study Center; Hugh T. Patrick; Supachai Panitchpakdi; that a balance of money of the School’s Center on Noboru Hatakeyama; and Chia Siow Yue, director of the Institute supply and demand with of Southeast Asia Studies and of the Singapore APEC Study Center. Japanese Economy and local currency depreciation Business, led the one-day minister and minister of speaker. He cautioned that could help a recovery at the conference, titled “Chal- commerce, traveled from global action is crucial to end of 1998. lenges and Opportunities of Thailand to attend. Asia’s rebound. Patrick said attendees the Southeast Asia Crisis: The Asia crisis occurred Panelists and other speak- were confident: “There was Implications for American “mainly because of the ers included Noboru a general consensus that, and Japanese Business.” overenthusiasm of the pri- Hatakeyama, president of once they get through these Supachai Panitchpakdi, vate sector to expand,” said the Japan External Trade difficulties, rapid growth Thailand’s deputy prime Supachai, the keynote Organization; Do Duc Dinh, would be restored.”

SPRING 1998 HERMES 7 NEWSMAKERS

OLIVER SOCKWELL, NEW EXECUTIVE-IN-RESIDENCE

liver R. Sockwell ’72, Over the years, Sockwell Dean Feldberg says of Oformer president and has maintained close ties Sockwell’s appointment: CEO of the Construction with the School, first as “Oliver will be a tremen- Loan Insurance Corporation alumnus, then as board dous resource to students (Connie Lee) and continu- member and now as profes- who use his insights on ing member of the School’s sor. “I am very excited to career strategy and to board (which he joined in be involved with the School faculty members and 1993), accepted the position in a new role—that of administrators who use his teaching and counseling extensive experience in of executive-in-residence LYNN SAVILLE this spring. students,” he says. both the private and public Oliver R. Sockwell ’72 (center) sectors.” at the Media Management Sockwell founded Connie Career Day. CERIA RECEIVES CAREER AWARD Lee in 1987, ultimately raising $130 million through low-income students who This prestigious award a private placement led by could afford a college edu- (offered to promising young First Boston. As part of the cation and also helping scientists in the first five funding strategy, he per- stabilize the financial condi- years after the PhD degree) suaded the U.S. government tion of some historically will be in the amount of to become an investor and black colleges. Before join- $200,000. In addition, the to purchase $19 million of ing Sallie Mae, Sockwell National Science Foundation common stock in Connie earned an MBA and became will match industrial gifts up Lee. Under his leadership, an investment banker with to $25,000 per year, allow- the company—now an Smith Barney. After receiv- ing the School potentially to AAA-rated, shareholder- ing a BA in physics from double the grant amount. owned, for-profit municipal Howard University, he was Awi Federgruen, senior bond insurance company— a communications engineer Professor Sebastián Ceria vice dean and Charles E. guaranteed more than for what is now Bell Exley Professor of Manage- ebastián Ceria, $13 billion of principal and Atlantic. ment Science, states: “In Sassociate management interest without defaults in Sockwell offers expertise 1997, only 18 percent of science professor, has been its primary insurance in areas as diverse as nominees received NSF selected by the National portfolio. entrepreneurship and awards, and only 13 percent Science Foundation for a Prior to Connie Lee investment banking. He in engineering-related fields. four-year CAREER award. (which enabled schools, draws on his background to The NSF has no business Ceria’s research will focus hospitals and municipal offer the School’s students studies category, making it on “solutions to several governments to build new “an array of experiences all the more difficult for types of decision problems facilities), Sockwell was both positive and negative business faculty eligibility.” arising from real-world appli- executive vice president for that could prepare them for Ceria’s CAREER award is cations. These problems,” finance, administration and various career challenges.” the third extended to man- Ceria says, “are frequently planning of the Student He continues: “I would like agement science faculty. used to provide managers Loan Marketing Association to offer real-world experi- Professors Julien Bramel and decision makers in (Sallie Mae). He forged ence as well as insight into and Fangruo Chen were business, industry and gov- links between banks and the political and social previously honored. ernment with sophisticated minority communities dur- components that come into decision support systems.” ing his Sallie Mae tenure, play over the course of a The resulting case studies thereby significantly successful career.” will ultimately be incorpo- expanding the number of rated into the School’s curriculum.

8 HERMES SPRING 1998 NEWSMAKERS

A TRIBUTE TO LEAR AND HIS LEGACY

ob Lear’s having fun— his course (Executive Lead- Blots of it. In fact, during “Bob Lear has a ership, which focuses on the past two decades that corporate governance and one-track mind he’s devoted to the School the CEO’s role) who have pro bono, Lear has enjoyed for doing good questions on assignments, his work here more than for the School.” readings and so on, and any other full-time job. Lear is offering wisdom and During his tenure, Robert expertise to most of the W. Lear, board of overseers —Ehud Houminer student body in any Executive-in-Residence member and executive-in- LYNN SAVILLE semester. Says Michael residence at the School, Robert W. Lear Zampardi ’98, this year’s author, teacher, adviser, and Dorothy Lear and her Graduate Business Associa- our benefit,” says Streeter, consultant and former CEO, sons. Streeter, a cochair tion (GBA) president and a who is also a fellow execu- has received numerous of the committee raising student with whom Lear tive-in-residence and tokens of esteem and affec- funds for the room and a works closely, “Bob Lear is member of the School’s tion from students and former managing director an invaluable asset. He board, “that Lear did come colleagues, in the academy at Donaldson, Lufkin & offers an unusual combina- here and wound up staying as well as the business Jenrette Securities Corpora- tion of dedication, for 20 years.” world. tion, says: “Bob’s made a enthusiasm and energy, In discussing his contribu- difference in the lives of both inside the class and HONORED BY FRIENDS tions to the School and its so many, and there’s an with career counseling. It The latest recognition of students, Lear is extremely extraordinarily deep roster makes him irreplaceable.” Lear’s ongoing contribu- modest. “I have seen my of them. That’s why cam- Lear has also had two tions to the School is the job here as one that serves paigning for this room is so awards created by students Robert W. Lear Classroom, a students,” he says, “teach- much fun.” in his name: the Robert Lear state-of-the-art room in the ing and counseling them After a life of corporate Korean Scholarship Fund, soon-to-be-completed joint about the business world governance and being CEO founded by students from Business and Law School and their careers.” of F & M Schaefer, “he Korea, and the Robert W. building. “This honor grew It is his “selfless devotion decided to do something Lear Award, created by the as a groundswell of support to the School,” says Ehud completely different,” says GBA to acknowledge a from Bob’s admirers,” says Houminer, executive-in- Carson, a member of the faculty member, administra- Dean Feldberg. “He has residence and member of School’s board and general tor or staff member touched thousands of lives the School’s board, “that partner at Welsh, Carson, committed to assisting the at Columbia Business makes him so unique.” Anderson & Stowe. “After a School’s students. School. The classroom Houminer, who has worked very successful business named for him is a way to closely with Lear as a mem- career, Bob turned to recognize his enormous ber of Lear, Yavitz & academia. It was a great contribution to the School.” Associates, LLC, a consult- choice for him—because he Private and corporate ing group specializing in loves young people—and a donations have been pour- corporate governance, says, boon for the School.” ing in as testament to Lear’s “Lear has a one-track mind contribution in the busi- SELFLESS DEVOTION for doing good for the ness, academic and social Lear arrived at the School in School.” spheres. Leading the list 1977 at the invitation of In any given week of the are Russell L. Carson ’67, then dean Boris Yavitz academic year, Lear on James L. Dowd ’81, Robert S. as the first executive-in- average counsels 15 to 20 Evans ’68, Daniel S. Jones residence. “It’s forever to students on careers. Add to ’66, Sabin C. Streeter ’67 that the 60-odd students in

SPRING 1998 HERMES 9 NEWSMAKERS

STUDENTS TUNE IN TO THE MEDIA AT CAREER DAY

he School’s first Media attended and had an oppor- Ehmer ’98, developed the TManagement Career tunity to speak with media idea with her cochairs. Day, held in March, drew recruiters about their com- They were actively sup- 19 high-profile companies panies, pass along résumés ported by Gina Resnick, from across the and interview. Companies associate director of MBA media spectrum, were invited to provide Career Services, Amy including the information or to interview Kanarios, manager of Out- New York Times, students for full-time and reach Services, the rest of NBC, New Line summer positions. the MBA Career Services Cinema, EMI The Media Management team and Associate Dean Music and Alley- Association, among the for Special Projects Jace Cat, a print and most active of the School’s Schinderman. online publica- 80 student organizations, “Our students are such LYNN SAVILLE tion focusing on planned the event, which self-starters,” Schinderman A student focuses on NBC. Silicon Alley’s investment will take place annually. says. “People are still talk- opportunities. The association’s past vice ing about the alumni who Well over 100 students president of finance, Ashley participated from their companies, coming back to Uris Hall and being remark- Q: WHAT’S IT WORTH? A: $5,000 ably impressed by student talent.” Ehmer and her team put together the event as part of the School’s ongoing efforts to further strengthen recruiting opportunities for MBA students with media organizations. “It was an incredibly suc- cessful event, especially as measured by the number LYNN SAVILLE and caliber of attendees,” Students in Cluster F come up with the answers for their faculty says Associate Professor leader, Professor Nelson Fraiman. Safwan Masri, vice dean of students and the MBA pro- n the evening of April 1, mentary gourmet meal, was grams. “This is part of a the first Cluster Chal- described by students as a O comprehensive, long-term lenge competition attracted “blowout” cluster reunion strategy to distinguish just about the entire gradu- for fourth termers. Conversa- Columbia Business School ating class (600 students), tion, laughter, hootin’ and in the area of media and the deans, faculty members hollerin’ were de rigueur entertainment.” and many School administra- as clusters competed in Students, Ehmer notes, tors. Sponsored by the answering trivia and arcane were thrilled with the event dean’s office, the Graduate questions about the School. because “it saved them Business Association and The winning cluster received from some of the pavement The Bottom Line, the event, $5,000 and the runner-up pounding required to get a held in the University’s $2,000, for future reunion job in media.” Faculty House with compli- events.

10 HERMES SPRING 1998 NEWSMAKERS

BUSINESS LEADERS DISCUSS THE FUTURE

our top business leaders The move, he said, has put changes, for better or worse, Fmade their way to SSB in 66 countries and in financial institutions and Columbia Business School created the world’s third- other businesses throughout this year to speak to stu- largest investment bank. the Continent as well as the dents as part of the General Citing the companies’ United States, Europe’s Motors Distinguished Leader shared “high-performance “most important commercial Lecture Series. cultures,” he called the mar- partner in promoting world Douglas “Sandy” Warner III, riage a good one. Maughan markets’ openness,” he said. chairman, president and CEO played down Salomon’s loss “Great leaders have a way of J. P. Morgan; Deryck C. of key managing directors of imposing their will on Maughan, cochairman and and advised students to get other people,” Dave co-CEO of newly created in on SSB’s ground floor. Checketts told students as Salomon Smith Barney Richard Lambert of the he wrapped up the series on (SSB); Richard Lambert, Financial Times spoke on March 25 with a talk on editor in chief of the February 25 about the leadership. Financial Times; and Dave Economic and Monetary In 1984 at the age of 28, Checketts, president and Union (EMU) and its poten- the NBA’s youngest chief CEO of Madison Square tial impact on Europe’s executive became president Garden, spoke at Uris Hall. economy and relations with of the Utah Jazz and Sandy Warner kicked off the United States. While promptly fired over 60 per- the series on January 28 advocates insist the euro, cent of upper management. by warning students that which is the EMU currency, “When you don’t know today’s merger frenzy might will bring Europeans much, it’s good when you cripple tomorrow’s financial together as the dollar does think you do,” he said. institutions unless compa- in the United States, critics Checketts sparred with nies begin planning for new contend that the diverse Mayor Rudolph Giuliani of technology five years in languages and identities of New York City in the sum- advance. On a more opti- Europe’s countries, as well mer of 1995 when the media mistic note, Warner is as individual governments, demanded accountability for confident about Asia’s are only some of many a riot at a Garden boxing ability to rebound with a factors that will impede the match. vengeance: “Economics and euro’s success and poten- markets will stabilize in a tially lead to catastrophic way much stronger and economic and social conse- robust than anything we quences, including rampant have seen to date in Asia,” unemployment. he said. At least one thing is cer-

On February 4, Deryck tain, he noted: the euro will LYNN SAVILLE Maughan discussed the bring about substantial From top: Richard Lambert, merits of Travelers Group’s editor in chief, Financial purchase of the bond pow- Times; Dave Checketts, erhouse Salomon Brothers president and CEO, Madison Square Garden; Sandy late last year and Salomon’s Warner, chairman, president subsequent merger with and CEO, J. P. Morgan; Travelers’s Smith Barney. Deryck Maughan, cochairman and co-CEO, Salomon Smith Barney.

SPRING 1998 HERMES 11 NEWSMAKERS

EXECUTIVE EDUCATION TEAMS WITH SONY

uring a 1996 restruc- end of fiscal 1997, company Dturing of Sony profits had increased by Electronics, the North almost $20 million, sales America–based subsidiary had increased by over of the Japanese power- $50 million and inventory house Sony, Sony management was optimized. MobileComm America But while the School’s became an autonomous faculty was the catalyst for company. But it was also a Sony MobileComm’s new company that was rapidly problem-solving process, losing money because of Columbia and company inventory problems. officials stress that in-house So Columbia Business collaboration made it a School’s Executive Education success. “Our team leaders division teamed with the believed in the process,” company, which markets Homlish notes, adding that and sells automotive OEM, staff members regularly received report cards, mobile electronics and and this was achieved. The that builds on the recent which led to rewards for telecommunications prod- next phase of the partner- accomplishments and help good performance. “Senior ucts, and presented it with ship will be to institute a Sony MobileComm achieve management has to abso- an intensive think tank business-planning process even greater success. approach spearheaded by lutely, positively embrace it Professors Christina L. and believe in it and has to Ahmadjian, Eric Abrahamson be willing to disclose to the and William Klepper. entire organization the state CITIBANK SUPPORTS HIGHER EDUCATION Professors Murray Low, of the business, the good Joel Brockner and Michael L. news and the bad news.” n support of higher cases in El Salvador, the Tushman were also involved. Columbia Business School Ieducation for future former Czechoslovakia and “Executive Education pre- is now writing a case study employees, Citibank is spon- Hungary illustrate different sented a problem-solving about Sony MobileComm soring a course at Columbia settings. process, a way of thinking America, which may be Business School. Students also study legal and looking at things differ- used in the School’s MBA The global financial institu- structure, limited informa- ent from Sony’s traditional program. The partnership tion is backing Emerging tion, inflation and financial methods,” says Martin Hom- has also strengthened fac- Financial Markets, taught crises. lish, Sony MobileComm ulty connections with the by Professors David Beim Citibank is making this America’s driven and affable company, furthering and Charles Calomiris. The commitment because it president. research opportunities course examines founda- needs MBA graduates who It worked. By the end of there. tions of countries’ financial are knowledgeable about fiscal year 1996, the com- One of the fundamental markets and explores what emerging markets. Students pany’s inventory was the objectives throughout the distinguishes emerging from have flocked to the class. healthiest in Sony Electron- project was the continued developed markets. To put The course was originally ics’s portfolio. And by the improvement of the overall developing markets in slated for 60 students; quality of the business— perspective, a historical demand was so high that overview at the beginning the enrollment was capped leads up to modern-day at 80. privatizations. Privatization

12 HERMES SPRING 1998 NEWSMAKERS

BOARD OF OVERSEERS ADDS FIVE

Heinz Dürr, G. G. Michelson, Lionel I. Pincus ’56, Jerry I. Speyer ’64, Sue Brock Toigo, chairman, Dürr former senior chairman & CEO, president, Tishman chairman, Institute Beteiligungs-AG adviser, R. H. Macy E. M. Warburg, Speyer Properties for Fiduciary & Co., Inc. Pincus & Co., LLC Education

ive prominent execu- training squad and went on member of the School SUE BROCK TOIGO Ftives have joined the to serve in a succession of and numerous public and Sue Brock Toigo is chairman School’s board of overseers, management positions, private corporations, of the Institute for Fiduciary from areas as diverse as ultimately becoming senior Pincus currently serves as Education, an organization financial services and not- vice president for external trustee or director of several she cofounded to provide for-profit. affairs. The recipient of civic, educational and educational and informa- several honorary degrees philanthropic institutions. tional data to investors. She HEINZ DÜRR and awards, she maintains is also founder and presi- JERRY I. SPEYER ’64 Heinz Dürr is chairman of posts on many prominent dent of the Robert A. Toigo Jerry Speyer is president of the supervisory board of foundations and boards. Foundation, which works in Tishman Speyer Properties, Dürr Beteiligungs-AG, a Michelson has long been association with top busi- the real estate development German holding company committed to Columbia and ness schools to provide company responsible for in which he and his family served as chairman of the minority MBA fellowships, developing Europe’s tallest have a majority interest. University’s board of internships and mentors. skyscraper and whose Dürr AG is a leading manu- trustees from 1989 to 1992. Long an advocate for chil- Manhattan portfolio includes facturer of car varnishing dren, she has served on LIONEL I. PINCUS ’56 the Credit Lyonnais building. systems, supplying the numerous task forces and Lionel Pincus is chairman A patron of the arts and primary car manufacturers has received a dozen and CEO of E. M. Warburg, supporter of New York City, of the world. A member of awards, including being Pincus & Co., LLC, a finan- Speyer is an active member numerous industry boards, named one of 10 “Outstand- cial services organization of many community, Dürr also serves as the ing California Lobbyists” by principally involved in ven- business and cultural organi- chairman of the supervisory the California Journal. board of Deutsche Bahn ture banking and asset zations. Among other AG, Berlin, and president management. As president positions, he currently of the Community of and CEO of the firm, formed serves as a trustee of the European Railways. by a merger between E. M. Museum of Modern Art and Warburg & Co. and his own is a member of the New G. G. MICHELSON firm in 1966, Pincus has York City Partnership and G. G. Michelson rejoins the emphasized venture bank- the Council on Foreign Rela- board of overseers after a ing and was a founding tions. He is also a chairman five-year hiatus. Michelson director of the National emeritus of the University’s has had a distinguished Venture Capital Association. board of trustees. career with R. H. Macy & A chairman emeritus of the Co., Inc. She joined Macy’s University’s board of New York in 1948 as a trustees and past board member of the executive

SPRING 1998 HERMES 13 FPO

Henry Kravis’s New York City Investment Fund is boosting many aspects of the city’s economy. By investing in Gun For Hire Films, a full-service film production center in Soho and subsidiary of The Shooting Gallery, the fund is helping to create an infrastructure that is essential if New York City is to rival Los Angeles and Toronto as a film town.

14 HERMES SPRING 1998 THE NEW YORK CITY INVESTMENT FUND A NEW MODEL FOR DOING GOOD

by Eleanor Foa Dienstag

ENRY R. KRAVIS ’69, organization, the New York City founding partner of Investment Fund—part philan- HKohlberg Kravis Roberts thropic, part canny investment & Co., is a financial innovator who vehicle—open for business since thinks big. Not just when it comes September 1996, is the answer to to leveraged buyouts but when it an entrepreneur’s prayer. comes to leveraging New York The idea for the fund, recalls City’s assets—talent, money, Kravis, seated in shirtsleeves in a diversity, ideas—to create what KKR conference room with a the city needs most: more jobs and breathtaking view of Central Park, diversified economic growth. had been kicking around in his That is good news for New York head for some time. “I’d often City, which despite being the thought about cities around the financial, cultural and intellectual U.S., such as Minneapolis, where capital of the United States still lags the private-sector leadership behind the rest of the country in job pulled together to make things creation. Indeed, its unemployment happen. New York was not on rate of 9.4 percent last year was that list.” almost twice the national average So when Jerry Speyer ’64, (New York Times, March 5, 1998). president of Tishman Speyer It is particularly good news for Properties, Inc., then chairman of the city’s entrepreneurs, a hardy the New York City Partnership, bunch struggling to succeed in a asked Kravis to come up with new high-cost, high-reward environ- ideas to make the partnership ment. In fact, Kravis’s innovative more effective, Kravis presented

Illustrations by Joan Hall

SPRING 1998 HERMES 15 he first 10 people Kravis and Speyer called— Tbeginning with David Rockefeller—said yes. With the ball rolling, Kravis handpicked Kathryn Wylde of the New York City Housing Partnership to become president and run the fund. Everyone agrees it was an inspired choice. “She’s one of the keys to the fund’s success,” says board mem- ber Jerry Chazen ’50, former chairman of Liz Claiborne, Inc. “It’s poetry the way she does things,” says Van Deward Woods, owner of Sylvia’s, a well-known soul food restaurant in Harlem, founded by his mother. Woods has developed a line of Sylvia’s branded food products, already in local shops, which he hopes to market to supermarkets and specialty stores across the country. The fund has put him in contact Jerry Speyer ’64, president of Tishman Speyer Properties, Inc., says, “It’s easy to write a with a major corporation that is check. It’s much harder to give of yourself.” providing technical training and advice and could become a busi- his concept: to form a $100 million ness partner. “If you don’t have fund, a number that would get the infrastructure or management “I want to show the outside people’s attention, by raising capability to go with an invest- $1 million each from 100 individu- ment,” says Woods, “you can still world and those who live in als, corporations and foundations. get screwed up.” In fact, while all growing organi- New York that we who have our The mission of the fund, a for- profit operation—albeit one that zations need money, as Kravis businesses and headquarters returns investors their principal in well understood, it’s the intellec- 15 years without interest—is to tual capital that is critical to here care about this city and invest in projects that create jobs long-term success. That is why, and promote economic growth in from the beginning, Kravis made want to pull together to make it the five boroughs, especially in his request clear. “I don’t just want disadvantaged neighborhoods. money from people, I want their a better place to live.” Says Kravis, with passion and involvement.” —Henry Kravis ’69, founder, energy, “I want to show the out- Kravis, himself, is a role model New York City Investment Fund side world and those who live in of involvement. “I’ve been very New York that we who have our impressed with his personal dedi- businesses and headquarters here cation,” notes Speyer. “It’s easy to care about this city and want to write a check. It’s much harder to pull together to make it a better give of yourself.” place to live.”

16 HERMES SPRING 1998 Indeed, one of the great suc- Actually, it was Kravis’s idea. cesses of the fund has been its While on campus to talk to a ability to mobilize the business group of Executive MBA students, community’s best and brightest to “It dawned on me we should be “I had a chance to contribute to an apply their business knowledge using Columbia’s students to help and education to up-and-coming us assess what we’re doing.” amazing undertaking and add value entrepreneurs, thereby giving back The fund is a complex organiza- to the city that supported and tion, divided into six sector to New York City; . . . I found looking nurtured them. groups—retail; manufacturing; Executives actively involved health care and sciences; educa- for strategic advantage in the inner in the fund are a Who’s Who of tion and information services; city an interesting challenge.” movers and shakers. The board media and entertainment; and includes, in addition to Speyer finance, insurance and real —Todd Dubner ’99, student, and Chazen, Russell Carson ’67, estate—staffed by volunteer Inner-City Consulting class general partner, Welsh, Carson, experts in each area. These 100 to Anderson & Stowe; Lionel I. 125 volunteers, in turn, work Pincus ’56, chairman and CEO, closely with Wylde’s staff of six E. M. Warburg, Pincus & Co., LLC; professionals, evaluating and and David H. Komansky, chairman developing deals as well as pro- and CEO, Merrill Lynch. viding ongoing advice, contacts and support. bserves Komansky: “The According to Todd Dubner ’99, Investment Fund is a one of the students who presented Otestament to Henry to Kravis and the board, the flow Kravis’s vision and leadership. of communications—given the size He’s created an entirely new and complexity of the information model for uniting and mobilizing a loop—works well. “But there were city’s business community in the cause of economic development. And the true genius of the effort is that the fund is not simply making philanthropic grants—we’re identifying profitable investment opportunities that will also have a positive impact on the economic climate and quality of life in New York City.” Not only does the fund’s board include a cadre of School alumni and members of the board of overseers—Wylde laughingly refers to them as “the Columbia mafia”—but last semester, six business school students in Associate Professor Murray Low’s Inner-City Consulting class, part of the Entrepreneurship Program (see page 20), evaluated the fund’s inner workings and pinpointed Jerry Chazen ’50, former chairman of Liz Claiborne, Inc., encouraged a small, minority-owned areas for improvement. company that makes knitwear for dancers to expand its horizons and potential customer base, then followed up with an introduction to the president of Saks Fifth Avenue.

SPRING 1998 HERMES 17 or Dubner, who hopes to work in New York’s private- Fequity world, it was a unique experience. “First, I had a chance to contribute to an amaz- ing undertaking and add value to New York City; second, I saw the Russ Carsons of the world in action, which is better learning than any class; third, I found looking for strategic advantage in the inner city an interesting challenge.” Dubner also is “impressed that Kravis would take an hour out of his day to see what these Columbia Business School students had to say about his fund.” To date, the fund, with a pool of $62 million, is considerably shy of its $100 million goal. “The reason we aren’t further along,” admits Kravis, “is because I raise money when I have time, and unfortu- nately I haven’t had much time lately.” Russell Carson ’67, general partner at Welsh, Carson, Anderson & Stowe, championed the fund’s first project, an investment of $2 million in Royal Health Care, a managed care organization. However, it’s clear from his enthusiasm for the fund’s proj- some simple steps that could be ects—reflected, among other taken to close the loop and reduce things, in his total recall of names, “The sophistication and power of some demands on the fund’s staff.” dates, places and such minute “They made very good sugges- details as a company’s street the resources being brought to tions, which we’ve implemented,” address—that the fund is a source says Wylde. Kravis and others are of great pride and receiving his bear go way beyond the money eager to maintain an ongoing affectionate attention. “One of the relationship with the class. best rewards in life,” says Kravis, that’s involved. That’s been one “The biggest issue for the fund “is seeing somebody else prosper as it expands and makes more and as a result of your efforts.” of the huge successes of the more investments,” says Carson, Particularly satisfying is the fund, to energize people and “is how do we keep track of all the network that has been pulled different investments and how do together. “Seeing everybody mobilize the business community we try and provide advice and excited about it has been just value to a number of relatively phenomenal,” he admits. “I’m to contribute time and people.” small, relatively unsophisticated amazed at the number of people businesses. That’s a real challenge, who come to the board and exec- —Russell Carson’67, partner, Welsh, Carson, Anderson & Stowe and I think the Business School utive committee meetings and can be a sizable resource in help- who are always available when we ing us meet that challenge, both need them.” through its students and faculty.”

18 HERMES SPRING 1998 In truth, the power of the net- academic medical centers to carry sustaining two nonprofit hospitals work, along with the high-level out clinical trials of new drugs and in Brooklyn and Queens that are intellectual capital being provided medical devices. totally dependent on Medicaid to entrepreneurs—even those “They are a dream investor,” admissions for their survival and is whose projects are not quite ready says Larry Meistrich, president and improving the health of Medicaid to be funded—is a key part of CEO of The Shooting Gallery, an recipients. Also, it’s economically what makes the fund special. It is independent-film production com- healthy and full of promise. especially invaluable to smaller pany in business since 1990, entrepreneurs who sometimes which produces low-budget films, ravis envisions a perpetual need to rethink strategies in order including the Academy Award– life for the fund. “It will to grow. Chazen, for example, winning Sling Blade. Its Kstay in place, in my view, encouraged a small, minority- subsidiary, Gun For Hire Films, a as long as people participate. So owned company that makes film production center in Soho, our job is to make it interesting knitwear for dancers to expand its which provides people, facilities and fun and get enough people horizons and potential customer and equipment to other studios involved who want to give back base, then followed up with an making movies in New York, just to the city. introduction to the president of received $1.5 million to expand its “You know,” he reflected, “when Saks Fifth Avenue. facilities. people think about entrepreneurs, “What I really like about the they think about Silicon Valley, o date, out of 275 projects fund,” says Meistrich, “is that it’s Route 128 in Boston, Oregon, that have come to the not just, ‘Here’s some money, Washington, California, Texas. Yet, Tattention of the fund, only hope you do well, see you the number of people we have 11 have received major financial around.’ What is extraordinary is met who have little businesses in support, although 30 others pooling together all these people the city is staggering.” are under active consideration. who then say, ‘How can we be Clearly, Kravis wants to put New Nevertheless, it is encouraging to helpful as a group to make this York City on the entrepreneurial see the wide range of ventures, work out? Who do you need to map. It may take some time to which cut across key sectors of the know, and how can we get to succeed, but as a new model for city’s economy. They include: them?’” doing good, especially for galva- Partnership Plaza, which is “Basically,” says Carson, “the nizing top business talent, it is building new retail space in sophistication and power of the already a remarkable achievement. six inner-city neighborhoods; resources being brought to bear Opportunity America, helping go way beyond the money that’s Eleanor Foa Dienstag is a New York– employers and government involved. That’s been one of the based author, journalist and award- winning corporate writer. Her work agencies design and implement huge successes of the fund, to new welfare-to-work programs; has appeared in the New York Times energize people and mobilize the and the New York Observer, among Ericsson CyberLab, a collaborative business community to contribute others. Her latest book is In Good Internet facility, sister to a Silicon time and people to make this Company: 125 Years at the Heinz Valley lab; StarMedia Network, thing work.” Table (Warner). Inc., an Internet company target- Carson championed the fund’s ing Latin America, which offers first project, an investment of five information and entertain- $2 million in Royal Health Care, a ment channels in Spanish and managed care organization. It’s a Portuguese; and New York Site model deal in that it expects to Management Organization, a new create between 500 and 850 jobs company launched by four over the next four to five years, is

SPRING 1998 HERMES 19 An American dream ENTREPRENEURSHIP IN THE MAKING

As entrepreneurial activity Owning a business, being alternatives to downsizing, out- self-sufficient, achieving indepen- sourcing and vanishing corporate increases nationwide, dence—these are all part of the careers—paths that had been American dream. Today, 16 mil- inviolate through the late ’70s and the School’s program has lion sole proprietors are engaged early ’80s. Also, today’s start-ups witnessed an influx of in entrepreneurial activity, some of are touted as economic stimula- whom have become household tors—moneymakers for owner talent and funds, and its names and made fortunes. Interest and economy. in owning or starting a small busi- As Low explains, “The School’s MBAs are prepared for ness has never been greater—and, Entrepreneurship Program dis- over the past three years, the num- cusses dimensions of wealth start-ups as well as ber of new enterprises launched creation, not just for the entre- corporate careers. has surpassed all previous records. preneur but for society as well. This burgeoning of entrepre- Creating wealth at the micro level neurs is clearly reflected in translates, at the macro level, graduate business school curricu- into wealth for society at large.” lums today. Murray Low, associate Virtually all new jobs from 1991 to professor of management and 1995 were generated, according to director and initiator of the Dun & Bradstreet, by enterprises School’s Entrepreneurship with fewer than 500 employees. Program, says: “In 1990, I offered And this trend will continue, pro- one entrepreneurship elective. jects the Bureau of Labor Statistics, Now we have a program with with small firms creating about 11 courses, 15 sections and around 60 percent of new employment in 1,000 students. We’ve had an the future. incredible trajectory.” The School’s Entrepreneurship Why are these programs so Program continues to attract more alluring? They offer pragmatic and more students—and as a

BY MARSHA DOEBLIN • ILLUSTRATIONS BY CRAIG FRAZIER

SPRING 1998 HERMES 21 result, faculty and financial sup- ike international business, port. Entrepreneurship is the which runs throughout the third-largest area of interest among Lcurriculum, so should MBA applicants (just three years entrepreneurship, comments ago it was fifth), and according to R. Glenn Hubbard, the Russell L. the Admissions Office, between 60 Carson Professor of Finance and and 70 percent of applicants each Economics. “Students should be term indicate an interest in starting able to apply what they learn in their own companies—either other courses to entrepreneurship, immediately after graduation or as as well as the reverse.” It is from a long-term goal. In the Executive this perspective that Hubbard is MBA Program, about 18 percent of structuring his new entrepre- entrants are sole proprietors of a neurial course slated for spring business. “And the number is 1999. “The class,” he says, “will be growing,” says Dina Consolini, taught from the entrepreneur’s assistant dean and director of the viewpoint and will discuss how Executive MBA and Summer MBA financial and economic tools used Programs. in the corporate environment Elaine Beitler ’98, a vice presi- can be brought to bear on dent at Joseph E. Seagram & Sons entrepreneurship.” and an EMBA student, is applying, Similarly, Rita McGrath, assistant Thinking creatively, within the Seagram corporate management professor, who structure, management techniques received the 1996 Entrepreneur- or thinking like an from classes originally designed ship Theory and Practice Award entrepreneur, is an for entrepreneurs. Launching a for a paper on entrepreneurial new product, she finds, is similar wealth creation, suggests that unexpected benefit to launching a new business. “entrepreneurship will be an Thinking creatively, or thinking increasingly important part of of the School’s like an entrepreneur, is an unex- the School’s curriculum. Our entrepreneurship pected benefit of the School’s graduates should have the kind entrepreneurship classes. of tools they could acquire in classes. It is the opinion of Nina entrepreneurship classes— McLemore ’95 that “the most regardless of career paths.” successful corporations today are As entrepreneurial classes con- the ones encouraging an entre- tinue to have broader application, preneurial spirit and, similarly, the student interest is skyrocketing. most successful entrepreneurs are This academic year, these classes the ones able to build large orga- have been overregistered by nizations with strong management record-breaking numbers. A basic teams.” As a former intrapreneur course like Introduction to for many years within two major Venturing, with a cap of 55, corporations and now president of attracted 120 students last term. her own entrepreneurial venture, A new course, Entrepreneurship Regent Capital Management Corp., and Technology, enrolled McLemore says: “Entrepreneurial 40 students this fall and 30 this studies, especially start-up plans, spring—and 50 percent of the should be an integral part of the total were from Columbia’s Law core MBA.” and Engineering Schools.

22 HERMES SPRING 1998 Entrepreneurship and is unusual because it brings “Supertron’s first product, an Technology unites students and together transfer technology and ultrasensitive MRI using HTS researchers from disparate commercialization of intellectual technology,” says DeVries, “is University disciplines and schools properties to create a successful nearing commercialization with and becomes a prism through venture.” support from a variety of partners, which legal, technical and busi- Jon DeVries ’97 has been work- including Cornell University ness insights can be applied to ing with Kaplan for about one year Medical College, Harvard Medical intellectual property rights. “This trying to refine a business plan School, Duke University Medical class,” says Low, “takes University that capitalizes on scientific Center and GE Medical Systems.” research a little further along to advances made by a University Like DeVries, students who make it a more attractive invest- engineering professor and want to move a technology- ment to outside companies or researcher. The research in high- focused business plan—written financiers.” temperature superconductor during the Managing New When entrepreneur and adjunct (HTS) technology has been Ventures course, for example— professor Jack Kaplan was patented, and DeVries calls the one step closer to start-up take the researching and organizing project Supertron Technologies, Entrepreneurship and Technology Entrepreneurship and Technology LLC. A hairbreadth from financing, course. And conversely, students last year, he found a couple of DeVries has been busy this year with well-researched ideas take peer schools offering something working with venture capitalists Managing New Ventures to refine similar. “But,” he says, “this course and shopping the business solo. their business plans.

COMMUNITY COLLABORATIONS

nner-City Consulting, an elective in which students roll up their sleeves for hands-on, pro bono projects for inner-city businesses, is a “logical extension of the Entrepreneurship Program,” says Murray Low, associate professor and the Iprogram’s director. “The School connects inner-city businesses with the mainstream economy in a way that no other institution can. We’re sort of a node in the network of overcoming what I call informational redlining.” The course is cosponsored by Booz·Allen & Hamilton and cotaught by Greg Fairchild and Bonita LloydNettles ’80. LloydNettles is the conduit for inner-city enterprises and the School’s consulting teams; she also just happens to be a fashion and finance entrepreneur and financial consultant to the Harlem Loan Fund, a division of the Central Harlem Local Development Corp. Committed to improving local business in the Harlem and Washington Heights communities, LloydNettles identifies potential clients and puts them through a fairly rigorous screening. Although the service is free, clients must be willing and able to commit time and resources. With clients this year including Afri Art Works, Dee’s Card Shop, Harlem Renaissance Local Development Corp., Harlem Shoe Manufacturing, La K Fashion, Show Digital and the New York City Investment Fund (see page 14), it is no wonder, as LloydNettles points out, that “students have a real impact within the community.” In addition, the School also sponsors the Milken Young Entrepreneurs Program. That program, now in its eighth year and funded by the Milken Family Foundation, is designed to teach 35 inner-city high school juniors and seniors each summer about owning and operating a small business.

SPRING 1998 HERMES 23 n addition to an ever-expand- plans. It has propelled the School’s ing entrepreneurial curriculum, Entrepreneurship Program from Iawards and competitions con- theory to practice and, in doing so, tinue to be added to the School’s has attracted much attention. program. Most leading business According to Lang, who schools here and abroad offer describes himself as a “dyed-in- various awards for MBAs who the-wool entrepreneur,” his create feasible business plans. But purpose in launching the fund was Columbia is the only business “to add a hands-on, activist com- school to establish an in-house ponent to the program and to $1 million venture capital fund. make it a dynamic part of the In 1996, the Eugene Lang School’s curriculum.” Entrepreneurial Initiative Fund Last year the Lang Fund made its was created with a $1 million gift first investment. Yael Alkalay ’97 from Eugene Lang, MS ’40. The (see page 25) was awarded Lang Fund is a venture capital $250,000 to start up her StudioLika fund, giving seed money in Project Lab. Her concept is to amounts of $50,000 to $250,000 to replicate museum art in three- students with viable business dimensional wax candles that would be sold in museum gift shops. The Lang Fund Board “Entrepreneurship THE EUGENE LANG (which reads like a Who’s Who of ENTREPRENEURIAL the business world) and the Lang and Technology . . . is INITIATIVE FUND BOARD Fund Alumni Advisory Panel (composed of 18 alumni) initially unusual because it RUSSELL L. CARSON ’67, general partner, Welsh, Carson, reviewed 30 business plans, of brings together transfer Anderson & Stowe which 10 were selected; of those 10, three were asked to refine their JEROME A. CHAZEN ’50, technology and commer- plans, but only one was funded. chairman, Chazen Capital The Lang Fund award is cialization of intellectual Partners, LLC structured on debt, equity and properties to create a JOHN W. CHILDS ’70, royalties—and the combinations chairman, J. W. Childs Associates and percentages fluctuate to suit successful venture.” entrepreneur and enterprise. “In EUGENE M. LANG, MS ’40, this particular case,” says Low of chairman and CEO, REFAC —Adjunct Professor Jack Kaplan, StudioLika Project Lab, “the invest- Technology Development Corp. Entrepreneurship and Technology course ment is staggered and repayment FREDERICK S. SCHIFF ’71, is mostly debt and royalties. If it vice president and controller, had been a company with a Bristol-Myers Squibb Company prospect of going public, then we would have taken more equity. SABIN C. STREETER ’67, adjunct Philosophically, it is important for professor and executive-in- us to have equity; after all, we’re residence; former managing not a bank.” And should there be director, Donaldson, Lufkin & profits, as both he and Lang note, Jenrette Securities Corporation they would be reinvested in the MARTIN E. ZIMMERMAN ’61, fund for future recipients. chairman and CEO, LINC Capital, Inc.

SPRING 1992 SPRING 1998 Similar to the Lang Fund but of money, and two student organiza- nother unique aspect of smaller scope are the Business tions, the Columbia Entrepreneurs the School and its Plan Competition and, new Organization and the Venture AEntrepreneurship Program this year, the Real Estate Capital Club, work out the logis- is the number of women teaching Entrepreneurship Competition, tics. Additional funding is supplied courses and the number of women each of which carries a $5,000 by James McCullough ’95, a mem- enrolled in them. In the Entre- award. The Real Estate award is ber of the Lang Fund Alumni preneurship Program alone, funded by the Seevak Family Advisory Panel and president 25 percent of those who teach are Foundation and modeled on the of Renwick Capital. McCullough women. Business Plan Competition. For has a strong interest in promoting As Columbia Business School the third consecutive year, entrepreneurial activities at the continues to enroll the highest entrepreneur A. Lorne Weil ’71, School, since he and fellow alum- percentage of female students— the Business Plan Competition’s nus Raj Bhatia ’95 started Renwick, more than 37 percent—among its initiator and chairman and CEO of an investment boutique, while peer institutions, its entrepre- Autotote, provides the prize students. neurship courses are attracting an

BETTING ON A WINNER s an aside and with a broad smile, Yael Alkalay ’97 queries: “Where are you supposed to go to view art these days?” One answer lies in her new business venture—StudioLika Project Lab—conceived by the Afirst recipient of the School’s Eugene Lang Entrepreneurial Initiative Fund. Alkalay proffers a heady mix of the artistic and the practical, the creative and the businesslike. In fact, this charismatic woman, who speaks four languages, just happens to be a seasoned entrepreneur and retailer. StudioLika is the means by which Alkalay can manufacture aesthetically pleasing objects marketable to a museum gift shop clientele. Her vehicle? Candles that replicate—three dimensionally—museum art and, paradoxically, underscore art’s ethereal nature. The linchpin in Alkalay’s business plan is the development—in wax—of discrete, stand-alone reproduc- tions of a museum’s holdings to be sold in that museum’s gift shop for exclusive distribution. “Experiencing a museum is a visual activity,” she says. “We concentrate on looking. These candle objects feed the tactile senses. They make art accessible and offer a chance to live with and use museum pieces—pieces we would normally be distanced from.” Creating candles for museums satisfies Alkalay’s requirements for a business of her own: It is creative, it assists artists and museums and, because of the tremendous profit margin (around 60 or 70 percent), it tenders a tidy profit. Yet the viability of StudioLika is grounded in solid market research. In 1996, consumers spent $2.5 million on museum-related products, and research reveals they are willing to pay over $30 for items such as StudioLika candles. This entrepreneur is affixing a $15 to $65 retail range, with a 50 percent margin for both her company and the museum. Alkalay is already envisioning expansion: “It’s not just a candle company,” she says, “but a product-development company.” As such, she’s looking for a broader client base and can see herself in time expanding to any organization marketing its identity through aesthetically distinct products. For now, however, she’s targeting one museum and developing “something beautiful and valuable to all.”

SPRING 1998 HERMES 25 enrollment that is also 37 percent unprecedented access to human female. And that number is resources and financing, and steadily increasing. According to greater opportunity to launch a the Census Bureau, women are start-up. becoming entrepreneurs at twice In a parallel NFWBO study, the rate of men. This finding supported by IBM, researchers makes women entrepreneurs one found that technology has an of the fastest-growing segments of increasingly vital role in the the U.S. economy. As of 1996, growth and development of nearly eight million women- women-owned businesses interna- owned businesses in the United tionally. However, the Web’s States employed over 18.5 million impact on entrepreneurs of both people and generated close to genders has been profound, as $2.3 trillion in sales, according to more and more companies seek the National Foundation for foreign-based employees, clients Women Business Owners. and markets. Microbusinesses are What drives women to be becoming macrobusinesses with entrepreneurs? McLemore referred the click of a mouse. to a recent research collaboration All of which makes entrepre- among three leading business- neurship a very attractive option, women’s organizations: The fueling an already heightened National Foundation for Women interest by students, alumni and Business Owners (a Washington, faculty members in entrepre- According to Lang, D.C.–based nonprofit research neurship programs like the organization), the Committee of School’s. who describes himself 200 (a professional organization of as a “dyed-in-the-wool preeminent businesswomen) and Catalyst (a nonprofit research and entrepreneur,” his advisory services organization). McLemore, a member of the Lang purpose in launching Fund Alumni Advisory Panel and the Committee of 200, says that the fund was “to add a (according to the study) the pri- hands-on, activist mary reason women are launching new businesses is because “they component to the recognize opportunities to imple- ment entrepreneurial ideas or do program and to make it for themselves what they were a dynamic part of the doing for their employers.” The number of women who hold School’s curriculum.” management positions prior to venturing has doubled over the past 10 years, which means that today’s female entrepreneur has

26 HERMES SPRING 1998 NURTURING A GREEN COMPANY

THE BUSINESS OF SUSTAINABLY HARVESTING HARDWOOD IN PANAMA

Deforestation has been as relent- Business School, he flew to by Marguerite Holloway less in the Republic of Panama as it Panama, trying to find people to has been in many places the world decade ago or so, a flight collaborate with. After one false over. Most of the country used to leaving Panama City start—and on the day before he be forest; today, only 34 percent would traverse the was going to give up and go A of that cover remains intact. home—Suéscum found partners, cityscape in just a few minutes and During the 1980s, the country lost soon be aloft over a sea of green. including forester Enrique 305 square miles of forest a year— Guillermo Suéscum ’95 recalls Balsevicius. and, consequently, some 2,000 flying from the capital to the coast, CAOBO’s ultimate goal is to buy tons of topsoil—according to the seeing nothing but jungle beneath a total of 5,000 hectares of aban- World Resources Institute in him. On a recent trip, however, doned or unused pastureland and Washington, D.C. In 1992, to Suéscum found the landscape forestall complete deforestation, denuded. The native Panamanian the Panamanian government watched fields and pastures follow passed a Reforestation Law, which one another endlessly and only offered, among other incentives, a glimpsed a patch of tangled forest 25-year tax break to companies during the last few miles of his undertaking sustainable forestry. flight. Suéscum, who also has a degree Suéscum observes this defor- in engineering, was aware of the estation with more than passing legislation when it was enacted, interest. He looks down at aban- but he did not immediately see it doned pastures and fallow fields as a business opportunity. He was with an investor’s eye and a busy with other plans: at various Guillermo Suéscum ’95, here with six-to-nine-month- forester’s imagination. His new old teak saplings, founded CAOBO, Inc., a sustainable times he tried to start a firm to company, CAOBO, Inc., intends to forestry management company. import used medical equipment transform some of this unused and one to supply Panama hats to land into teak plantations. By to plant teak seedlings. The com- J. Crew. Neither of those ventures cultivating a valuable tropical pany chose to focus on teak was successful. In the summer of hardwood, Suéscum hopes to tap because the trees grow extremely 1994, however, he was working as into a growing market for sustain- quickly—as much as 18 feet in a an intern in a bank in Panama City ably harvested wood—and into a year-and-a-half—and because they when he heard about a mahogany less secure emerging market for are not plagued by insect pests in plantation owner seeking to sell carbon dioxide emission credits. It Panama. Although teak is indige- his land. The bank decided to is quite a challenge. As Suéscum nous to Southeast Asia—Myanmar invest in the plantation. Suéscum and his four partners are discover- contains 75 percent of the world’s was intrigued and began to look ing, their young “green” company supply—the tree is well suited to into sustainable forestry manage- requires as much—if not more— the climate of Central America. ment as a new business venture. nurturing as the trees that will Suéscum and his colleagues also While still a student at the sustain it. chose teak because its market

SPRING 1998 HERMES 27 among other things, watersheds and soil are protected. The harvest would then be labeled and pur- chased by companies seeking to buy “eco-friendly” wood. (The other U.S. group that certifies sustainably harvested wood is Scientific Certification Systems in California.) Although the market for such timber remains small, it appears to be growing steadily. Environmental Advantage, a consulting firm based in New York City, estimates that demand is increasing by as much as 25 percent a year. According to the Forest Stewardship Council, foreign markets are largely driving this trend. “U.S. companies are feeling the pressure from the U.K.,” says Stacey Brown of the council. “They are worried that their products are not going to get carried.” The Rainforest Alliance says it has already accredited 80 companies; about 40 of them are American. And several promi- nent companies, including B & Q, the British home furnishings store, Gibson Guitars and Home Depot say they purchase certified wood for certain uses. Having an environmental edge and seeing the importance of these new markets is important, says Suéscum. He believes that most businesses remain unaware of the benefits of investing in the environment or of following environmentally sound practices. Suéscum posed to illustrate just how tall nine-and-a-half-year-old teak trees are. “People think that if you are in business, you can’t be an value rises about 11 percent annu- Rainforest Alliance—one of two environmentalist,” he scoffs. ally. Part of this increase is due American eco-wood certification Envisioning a greener future, to that fact that the forests of organizations—give his teak a Suéscum has ensured that CAOBO Myanmar are rapidly being felled; green stamp of approval. For an has another environmental asset in a 1993 study estimated that the annual fee, the organization’s hand as well: carbon credits. In country’s teak would be gone SmartWood team would certify the future, these would allow within a decade. that CAOBO’s plantations are Suéscum to sell the carbon that he Suéscum plans to have the being managed sustainably: that,

28 HERMES SPRING 1998 has tied up in his trees—that is, developing countries—which carbon that will not be emitted to viewed it as a way to allow the atmosphere and, thereby, not developed countries to continue contribute to global warming—to polluting as long as they helped a country or company that wants developing nations pollute less— to emit more carbon than it is joint implementation was not permitted to. To position CAOBO mentioned in the Kyoto protocol. so that it could participate in such A “clean development” mecha- a carbon market, Suéscum applied nism was described instead. The to the U.S. Initiative on Joint specifics of this approach as well Implementation. Born at the 1992 as the future of joint implementa- Earth Summit in Rio de Janeiro, tion and the trading scheme for the strategy of joint implementa- carbon will be hashed out at a tion encourages developing and U.N. meeting in Buenos Aires in developed countries to reduce November. overall greenhouse gas emissions Nevertheless, it seems likely that by working together to build sequestering carbon dioxide will cleaner factories or to develop reap financial rewards in the Francisco Angulo, a CAOBO forester, with five-to-six-year-old other business ventures. future, as will teak trees and certi- lumber aged and ready for export. fied timber. So Suéscum continues orking with the Center to search for far-sighted investors for Clean Air Policy in who want to make a long-term WWashington, D.C., investment. They are elusive. Suéscum got a 500-hectare refor- According to Suéscum, timberland estation project accredited as a investments are very secure, but USIJI pilot project. The plantation they also take a long time to come is anticipated to sequester an esti- to fruition and, to some investors, The mated 220,000 metric tons or so of have too low a rate of return. “It is plantation is carbon dioxide over 25 years. (For hard to find people who will context, the United States emits invest outside the United States anticipated to sequester 5,229 million tons of carbon diox- and who are interested in trees,” an estimated 220,000 ide a year, or about 19.9 metric he notes. Indeed, to satisfy one metric tons or so of tons per person; France emits investor—and all the partners— 362 million metric tons annually, Suéscum and Balsevicius just cre- carbon dioxide over 6.2 metric tons per person.) The ated a sister company, Tecal 25 years. designation of this plot as a pilot Hardwoods, to manage a 50- project does not ensure CAOBO hectare plot with 38,000 trees. investment funds. It simply means But Suéscum is persevering. that if an international carbon While CAOBO continues to seek trading scheme is established, a investors, he works part-time as country or company could pur- an engineering consultant. And chase CAOBO’s credits—which he continues to envision a may value as much as $600,000, Panamanian countryside more like depending on the market, says the one he knew growing up. Suéscum—in order to have the “CAOBO’s system is highly dupli- legal right to release that same cable,” he notes. “If we make amount of carbon dioxide. more money than the cattle farm- The United Nations meeting in ers do, maybe we will offset the Kyoto, however, left joint imple- demand for deforestation.” mentation somewhat up in the air. Never popular with some Marguerite Holloway is a freelance writer based in New York City.

SPRING 1998 HERMES 29 View

Points

SOCIAL SECURITY FIRST? by Senator Frank R. Lautenberg by Stephen P. Zeldes

magine that after years of hard work, your boss has resident Clinton is making a historic move by just handed you the first bonus you have ever received placing Social Security reform at the top of the Iafter 20 years on the job. You are overjoyed. But you Pnational agenda—a spotlight it well deserves. immediately realize that you have a large home mortgage Even though Social Security is currently running a and in five years your first child will enter college, fol- surplus, the system is facing insolvency. By 2029, according lowed by your second and third shortly thereafter. Would to the best forecast, the Social Security trust fund will be you go out and spend this unexpected bonus on a new depleted, and system revenues will cover only three- Recreational Vehicle or a luxury vacation? Or would you quarters of promised benefits. But declaring that the take advantage of this unique opportunity to reduce debt country should “save Social Security first” is a long way and begin planning for huge expenses down the road? from solving the problem. And before a solution can be This choice is similar to the one we may soon face as a crafted, the country must make a fundamental decision nation. For the first time in 30 years, the federal budget about whether citizens should be given more choice and will be balanced this year. And according to the Office of control over their Social Security portfolios. The policy Management and Budget, we might see $1 trillion in bud- question is whether to move away from a government-run, get surpluses over the next decade. We have tightened defined benefit plan toward a system in which workers our belts and restored fiscal responsibility, and the surplus and retirees have ownership and control over their is our “bonus.” individual retirement accounts. So what should we do with this surplus? On this Many fail to understand what a move toward question, President Clinton has spoken clearly and privatization would entail. Some supporters of individual unequivocally, and I agree: we should not spend a penny accounts argue, for example, that these accounts would of any surplus before we have addressed the long-term pay a much higher rate of return than the current social fiscal challenges confronting the Social Security program. security program. Proponents compare the 9 percent Until then, we should apply any surplus to reducing the historical real rate of return achieved in the U.S. stock $5.5 trillion federal debt. market over the last 50 years, with a projected 1 to 1.5 A decade from now, the Baby Boom generation will percent real return under the current Social Security system begin to retire. In addition, projected increases in life and conclude that a move toward privatization would be expectancy and declines in fertility rates will mean that advantageous for all. But this argument is faulty. Social fewer workers will be contributing to Social Security for Security is a pay-as-you-go system, which means that each beneficiary. These forces will put severe strains on retiree benefits come almost exclusively from workers’ the Social Security system and could have a real impact payroll taxes. If the government simply shut down the on our economy. If we don’t maintain fiscal discipline current system, there would be insufficient money to cover and plan ahead, we could reduce our children’s quality promised benefits. Indeed, benefits accrued but not yet of life and jeopardize the most important safety net for paid are huge: the unfunded value of future benefits comes protecting senior citizens against poverty. to about $9 trillion. If the country switched to a system of private accounts and smoothed this $9 trillion across all current and future generations, the necessary additional taxes needed to cover past promises would wipe out

30 HERMES SPRING 1998 Lautenberg, continued . . . Zeldes, continued . . .

It also is important to remember that Social Security is not higher returns from a private system. Alternatively, if the the only looming federal liability that should encourage us transition costs were paid off faster, returns to current to maintain fiscal discipline. Medicare is in financial trouble. workers would be even lower, although returns to future There are contaminated nuclear waste sites to be cleaned generations would ultimately be higher. up. And the government remains at risk for a burgeoning of Another problem in comparing the return on stocks with insurance commitments, including bank deposit insurance, the current system is that stocks involve both higher expected national flood insurance and private pension insurance. returns and higher risks. For families unable to access the Clearly, we face sobering future costs. Planning for them stock market on their own, the expected extra returns in their won’t be easy. But the longer we wait, the harder that task Social Security accounts could outweigh the expected will be. The opportunity to begin additional risks. For other households, however, the risk- solving the problems is now at hand. adjusted rates of return on stock investments would be no I applaud the president for begin- higher than that on government bonds. ning the important commitment toward Although privatization is not a silver bullet, it does offer long-term solvency for Social Security. important benefits. Individual accounts would afford families He and Vice President Gore will par- more portfolio choice and control over retirement funds, and ticipate in several public forums this such accounts would most likely reduce political risk and year, culminating in a White House labor market distortions. These positives must be balanced Conference on Social Security. And against higher administrative costs of individual accounts and next January, the president will sit some reduction in insurance (against living too long or down with members of Congress to begin ironing out a plan earning too little) provided by the current system. for the long-term security of the program. While the jury is still out on whether the advantages My hope is that the president and members of Congress outweigh the disadvantages, it may also be possible to design will work together on a bipartisan basis to make any needed a new breed of accounts. These accounts could guarantee changes and to prepare for the demographic challenges that ownership but offer limited choice and retain some of the lie ahead. Making sure that Social Security will be there to current system’s advantageous insurance features. Also, the protect young workers, just as it’s there today for their country may be able to use some of the parents and grandparents, is among the most important coming budget surpluses (i.e., general challenges we face in the coming century. government revenues) to make the The anticipated budget surplus will give the American transition occur more quickly and raise people a much-deserved “bonus” for hard work in restoring our low national saving rate. the nation’s fiscal health. But this is not a bonus we can A national debate and education afford to waste. campaign about Social Security is now appropriately under way. Ideally, this will Frank R. Lautenberg, BS ’49, is a U.S. Senator from New Jersey. result in an improved system that will The ranking Democrat on the Senate Budget Committee, he is the carry us forward into the next century. At Democratic Party’s chief budget negotiator in Congress. the very least, it should result in a public that is more informed about the retirement system—and better prepared for retirement.

(For further development of this argument, see “Would a Privatized Social Security System Really Have a Higher Rate of Return?” by John Geanakoplos, Olivia Mitchell and Stephen P. Zeldes, in Framing the Social Security Debate: Values, Politics and Economics, fall 1998.)

Stephen P. Zeldes is the Benjamin Rosen Professor of Finance and Economics at the School. He is a member of the National Academy of Social Insurance, Panel on Privatization of Social Security, and a past member of the Technical Panel on Trends and Issues in Retirement Saving for the 1994 –96 Advisory Council on Social Security.

SPRING 1998 HERMES 31 MEDIA

CNBC-TV FINANCIAL TIMES April 10, 1998 February 9, 1998 CNBC’s show The Squawk Box Looking to explore business edu- took an in-depth look at the bud- cation for women, the Financial get surplus and invited Professor Times headed straight to Columbia R. Glenn Hubbard to participate in Business School for comment. the discussion with other experts Associate Dean Jace Schinderman and viewer calls. Hubbard, a and Professor Kathryn Harrigan specialist in public finance and outlined the School’s integrative financial markets and institutions approach to teaching women. Also as well as a former deputy assis- mentioned in the article was tant secretary for tax policy at the Boston Globe explored the entrepreneur Nina McLemore ’95, U.S. Treasury Department, argued options, including the lure of Wall a Committee of 200 (C200) for careful control of the surplus Street’s big returns. The Globe member. C200, a group of promi- and encouraged policy makers to highlighted Professor Stephen nent women executives and link the surplus to the inevitable Zeldes’s argument that it is inap- entrepreneurs, runs programs at costs associated with Social propriate simply to compare stock business schools. McLemore dis- Security reform. market returns with projected cussed the impact they can have Social Security returns and con- on young, successful women. clude that shifting to a system of CNN FINANCIAL NEWS individual accounts would be a WALL STREET JOURNAL April 6, 1998 painless cure. This comparison As the largest merger in history ignores both adjustments for risk February 2, 1998 unfolded, the media explored all and the approximately 25 percent When telecommunications leaders aspects of the Citicorp/Travelers commission on every Social gathered at the World Economic deal. One obvious angle: joining Security tax dollar that would Forum in Davos, Switzerland, financial fortunes is often easier need to be paid to cover benefits telephone services via the Internet than merging management. already promised under the was a technology many believe Professor Donald Hambrick’s current system. would remake the telephone significant expertise in this area industry. Eli Noam, professor and led CNNfn to ask him whether the FORTUNE director of the Columbia Institute shared power will remain friendly. for Tele-Information, told the Wall March 16, 1998 Hambrick’s view—to achieve Street Journal that consumers will synergies, the CEOs will have to In reporting on what MBA students be seeing a blurring of the division make some tough decisions, and across the country really want in an between Internet and classic tele- “we should expect some of the employer, Fortune turned to the phony in the future, as providers cordiality to start fraying.” School’s assistant dean for MBA cross industry lines. Career Services, Thomas Fernandez, to get some inside information. BOSTON GLOBE NEW YORK TIMES Fernandez confirmed that the Sunday, March 22, 1998 School’s students are enthusiastic January 22, 1998 President Clinton launched a about strategic jobs that make a In a New York Times article about national debate over how to save quick impact, offer broad exposure large companies capitalizing on Social Security from bankruptcy, and affect the big picture. marketing their in-house services and in a Page One story, the rather than their products to

32 HERMES SPRING 1998 MEDIA

customers, John O. Whitney, WALL STREET JOURNAL NEW YORK TIMES professor and codirector of the December 31, 1997 December 9, 1997 W. Edwards Deming Center for When the Wall Street Journal In light of a recent merger Quality, Productivity and needed an expert opinion for a between Union Bank of Competitiveness, cautioned year-in-review real estate article, Switzerland and Swiss Bank, against diluting business focus. they looked to Lynne Sagalyn, finance professor David Beim Whitney stated, “If it can’t be sig- professor and director of the warned against conglomeration nificant or strategically important, School’s Real Estate Program. purely for the sake of size rather it’s probably a diversion for Sagalyn noted that although the than sound business practices. In management.” present real estate market boom is this New York Times article, Beim reminiscent of the 1980s, develop- mentioned complacency and inor- CNBC-TV ment has remained fairly modest. dinate pricing power as possible January 14, 1998 According to Sagalyn, this current dangers of banks merging with the As part of its extensive coverage of restraint may be a positive competition. the Asian financial crisis, CNBC harbinger for the market’s future. consulted with Vice Dean Safwan BUSINESS WEEK Masri to help evaluate the effect of NEWSWEEK December 8, 1997 the crisis on students attending top December 22, 1997 Business Week’s annual “Best and business school programs in the In an article with the headline Worst Boards” cover story United States. In an on-camera “M.D.’s go for MBA’s,” Newsweek included a discussion with Robert interview, the vice dean explained highlighted a trend as the medical Lear, executive-in-residence, that that the entrepreneurial business industry reshapes itself through explored individual commitments ethic of many Asian countries will cost cutting, mergers and managed companies make to improving push the economies in a positive care. Executive MBA student their boards. Lear’s expertise in direction, while continuing to Dr. John Keyser is set to get his corporate governance is also high- stress education. In the short run, degree in May 1998. When lighted when he publishes his own he continued, the School is not Newsweek asked him why he is annual list of the best and worst significantly affected, and it is still back in school, Keyser stated that boards in CEO magazine. too early to see a long-term effect. he feels he has to understand the business of medicine. WALL STREET JOURNAL CNN FINANCIAL NEWS November 24, 1997 January 7, 1998 PBS NATIONAL NEWS The Eugene Lang Entrepreneurial Students de Winter Stewart ’00 and HOUR WITH JIM LEHRER Initiative Fund was in the spotlight Joe Espinal ’00 shared a moment December 17, 1997 when the Wall Street Journal took in the spotlight on CNNfn. The Hugh Patrick, professor and direc- a look at business school venture show focused on the increasing tor of the Center for Japanese capital funds. Yael Alkalay ’97, number of students applying to Economy and Business at the recipient of the fund’s first invest- business schools. Stewart and School, participated in a PBS dis- ment, discussed the rigorous Espinal were interviewed during cussion that focused on Japan’s funding process culminating in preterm Math Camp, which pre- difficult task of stimulating its $250,000 in start-up money for her pared them for their first-term ailing economy. Patrick analyzed business. Murray Low, associate courses. Japan’s tax cut plan and its offer of professor and director of the aid to failing financial institutions Entrepreneurship Program, as it tries to rekindle the economy. explained that the goals of the program and the fund are to attract additional contributions for future recipients.

SPRING 1998 HERMES 33 ALUMNI CLUBS

INTERNATIONAL CLUBS ENGLAND George Budden ’91, 37 Stirling Rd., ARGENTINA London SW9 9EF, England Daniel Hirsch ’84, Morales-Ruas & (h) 44-171-738-7706 Associados, Cerrito 1294, Piso 5, (o) 44-171-931-5010 Buenos Aires 1010, Argentina fax: 44-171-931-4104 (o) 54-1-816-2735 fax: 54-1-816-6127 FINLAND Raimo Morefield ’88, Kyllikintie AUSTRALIA 3A1, SF-04200 Kerava, Finland Paul Rankin ’91, 25/204 Jersey Rd., (h) 358-9-294-2745 Woollahra NSW 2025, Australia (o) 358-9-613-141 (o) 61-2-9363-0718 CANADA fax: 358-9-613-14200 mobile: 61-418-310721 Gerald Segal ’92, Merrill Lynch [email protected] Canada, Inc., 200 King St. W., FRANCE 5th Fl., Toronto, Ont M5H3W3, Jean-Yves Rostoker ’71, OCMI, AUSTRIA/GERMANY/ 10 Rue Chardin, F-75016 Paris, SWITZERLAND Canada (h) 416-789-2046 France Kaspar Speckle ’64, Management (o) 416-586-6047 (h) 33-1-4527-2084 Zentrum St. Gallen, fax: 416-586-6076 (o) 33-1-4224-6262 Rittmeyerstrasse 13, CH-9014 [email protected] fax: 33-1-4520-7006 St. Gallen, Switzerland COLOMBIA GREECE (h) 43-55-74-43943 Fernando E. Suescun ’84, Carrera John Kalafatides ’85, Container & (o) 41-71-774-3400 Cargo Services International, fax: 41-71-274-3493 5 No. 108A-67, Bogotá, Colombia tel./fax: 571 2134553 Kanari 5, P.O. Box 80187, 18537 BRAZIL Piraeus, Greece DENMARK Carlos Vitor Strougo ’79, Kadan (h) 30-1-800-0438 Consultores Associados, Rua Lawrence B. Landman ’90, (o) 30-1-428-4000 Visconde de Inhauma 134, GR Roskilde University, Department fax: 30-1-428-4005 1427, 20091 Rio de Janeiro, Brazil of Social Sciences, P.O. Box 260, DK-4000, Roskilde, Denmark HONG KONG (o) 55-21-263-6151 Wilson Chan ’73, Flat 2C, Blk 1, fax: 55-21-253-8210 (o) 45-46-75-77-11, ext. 2504 fax: 45-46-75-59-86 Joy Garden, 3 Alnwick Rd., [email protected] Kowloon Tong, Hong Kong, www.embratel.net.br/infoserv/ EGYPT/MIDDLE EAST China online/wce/nter/kadan.html Soheil Galal ’95, 20 Park Ave., 852-9083-6210 #16B, New York, NY 10016 João-Pedro Flecha de Lima ’92, INDIA ABN AMRO Bank, Rua Alexandre (h) 212-779-9649 (o) 212-551-6539 Ashok Patel ’70, Gujarat Dumas 1711-2nd, 04717-004 Machinery Manufacture, São Paulo, Brazil fax: 212-551-6791 [email protected] Churchgate House 32-34, (o) 55-11-5188-2645 Veer Nariman Rd., fax: 55-11-5188-2658 98 Moustafa-el-Nahas St., Fort Mumbai 400 001, India joao.pedro.flecha.de.lima@ Nasr City, Cairo, Egypt abnamro.com (h) 202-274-3-120 Columbia University Club of India, Post Bag 11420, Bombay 400 020, India (o) 91-22-204-7470 fax: 91-22-204-9408

34 HERMES SPRING 1998 ALUMNI CLUBS

ISRAEL SINGAPORE VENEZUELA Edward Frank ’84, Acorn, P.O. Richard Stanley ’90, Citibank Joaquin Mir ’94, Av. Mirador Edy Box 474, Ra-anana 43500, Israel Tower, 82 N. Sathorn Rd.-17th Fl., Hadamir PHB, La Campina, (o) 972-9-742-2771 Bangrak, Bangkok, 10500 Caracas, Venezuela fax: 972-9-742-3272 Thailand Andres Lavarte ’97, 7004 Kennedy [email protected] (o) 662-232-2699 Blvd. E., Apt. 23B, Guttenberg, Ron Plotkin ’86, Softcare SPAIN NJ 07093-5023 Interfaces Ltd., 6 Eliyahu Hakim Valentin Perez de Heredia ’70, (h) 201-854-3795 St., #21, Ramat Aviv Gimel, Tel Equipos Nucleares S.A., Velasquez Aviv, Israel 130, B1.1-3rd, Madrid 28006, DOMESTIC CLUBS (o) 972-3-566-5616 Spain fax (o): 972-3-566-5615 (o) 34-1-563-1112 ATLANTA [email protected] fax: 34-1-564-0640 Denise Quinlan ’91, 400 Silverthorne Point, ITALY Carlos Canivell Cretchley ’88, Lawrenceville, GA 30243 CBS Club of Rome, Francesco De Technidor, Torre Dels Pardals 23, (h) 770-339-1559 Paolis ’83, Via del Tempio, 1/A, 08041 Barcelona, Spain 00186 Rome, Italy (h) 34-3-453-6866 BALTIMORE (h) 39-6-689-6434 (o) 34-3-456-0200 John Cammack ’79, T. Rowe Price (o) 39-6-686-1458 fax: 34-3-347-9787 Associates, 100 E. Pratt St., fax: 39-6-686-1592 SWEDEN Baltimore, MD 21202 JAPAN Per H. Borjesson ’80, BOSTON Yuzaburo Mogi ’61, Kikkoman Foretagspartner IBP AB, Todd Randolph ’91, 247 Walnut St., Corporation, 2-1-1, Nishi Nybrogatan 7, 5tr, S-11434 Brookline, MA 02146 Shinbashi, Minato-ku, Tokyo 105, Stockholm, Sweden (h) (617) 232-9183 Japan (o) 46-8-678-0335 (o) (508) 875-5600, ext. 1395 (o) 81-3-5521-5005 fax: 46-8-678-3737 (800) 775-5600, ext. 1395 fax: 81-3-5521-5019 SWITZERLAND fax: (508) 370-9008 [email protected] MEXICO (FRENCH-SPEAKING) Jesus Berumen Cantu ’87, Banco Stephen Richards ’79, Coutts & DALLAS Nacional de Mexico, S.A., Act. Co., SA, 13 Quai de Isle, Carmen DeJesus ’96, American Roberto Medellin No. 800, 1er CH-1211 Geneva, Switzerland Airlines, P.O. Box 69616/MD5635, Piso Norte, Col. Santa Fe, 01210 (h) 41-21-691-4979 Fort Worth, TX 75261 Mexico DF, Mexico (o) 41-22-319-0319 (o) (817) 931-6415 fax: 44-22-310-3857 NORWAY DENVER Rune Thoralfsson ’84, Managing TAIWAN Harold Logan ’70, 1488 Wazee St., Director, Sande Papermill, A.S., Tee-Ming Tsao ’83, Cyanamid Apt. 3D, Denver, CO 80202-1335 3070 Sande, Norway Taiwan Corporation, #96, 13F, (o) (303) 626-8225 (o) 47-3-377-9010 Sec. 1, Chien-Kuo North Rd., fax: (303) 626-8228 (h) 47-6-758-1649 Taipei 104, Taiwan Richard Kennedy ’92 fax: 47-6-758-1929 (o) 886-22-269-7463 (303) 460-8449 fax: 886-22-508-4486 PHILIPPINES Marie Hueston ’92 Benjamin D. Domingo ’70, TURKEY (303) 692-0650 SGV & Co., 6760 Ayala Ave., Tayafun Bayazit ’83, Yapi ve Kredi Metro Manila, Philippines Bankasi, Yapi Kredi Plaza, David Borie ’85 (o) 63-2-819-0307 Buyukdere Caddesi Levent, (303) 486-5998 fax: 63-2-819-0872 80620 Istanbul, Turkey (h) 90-216-332-5179 fax: 90-212-270-4797

SPRING 1998 HERMES 35 ALUMNI CLUBS

HAWAII MIAMI PHILADELPHIA Brad Nichols ’87, Mythic Images, Steve M. Ketover ’73, Steve M. Tansy Foster ’88, George 1051 Kalihiwai Pl., Honolulu, Ketover CPA, PA, 351 S. Cypress Woodward Co., BT., HI 96825-1362 Rd., Ste. 410, Pompano Beach, 8031 Germantown Ave., (h) 808-595-6411 FL 33060 Philadelphia, PA 19118 (954) 283-1919 (h) 215-247-3466 HOUSTON (o) 215-247-5700 Mark J. Ripka ’96, P.O. Box MINNESOTA 460626, Houston, TX 77056 Bruce G. Cornelius ’92, 2716 W. PORTLAND (h) (713) 627-2119 44th St., Apt. 203, Minneapolis, Annette Mulee ’79, Stoel Rives LLP, MN 55410-1943 900 S.W. 5th Ave., Ste. 2300, Hines, 2800 Post Oak Blvd., (h) (612) 938-5224 Portland, OR 97204-1268 49th Fl., Houston, TX 77056 [email protected] (o) (503) 294-9666 (o) (713) 966-7843 fax: (503) 220-2480 fax: (713) 966-2087 NEW YORK David A. Waite ’92, ILX Systems, PUERTO RICO LOS ANGELES 111 Fulton St., New York, James P. Connor-Cerezo ’93, Bill Robbins ’88, 10604 Wilkins NY 10038 651 Fernandez Juncos Ave., Ave., Apt. 302, Los Angeles, (o): (212) 510-3345 Apt. 901L, San Juan, PR 00907 CA 90024 [email protected] (h) (787) 725-4046 (h) (310) 470-6654 (o) (787) 723-7820 [email protected] CBS Club of New York, 822 Uris fax: (787) 754-3135 Hall, New York, NY 10027 [email protected] (o) (212) 854-8821 fax: (212) 678-0825 SAN FRANCISCO BAY AREA (NORTHERN CALIFORNIA) THE SAN FRANCISCO BEAT Rick Rosensweig ’68, Dean Witter Reynolds, Inc., 1010 El Camino During the January interterm break, Dean Real, Ste. 200, Menlo Park, Feldberg, Regina Resnick, associate director CA 94025 of MBA Career Services, and Madge (o) (800) 755-1311 Nimocks, director of Alumni Relations, fax: (415) 324-1920 headed to the Bay Area with more than 60 students and faculty members Rajeev TAMPA Kohli and Kamel Jedidi of the marketing Edward Hackett ’69, Edward V. division and Geoffrey Heal of the finance Hackett, CPA, 3301 Bayshore and economics division. The group was Blvd., Ste. 1007, Tampa, geared to reinforce the School’s connections FL 33629-8843 with the high-technology firms on the West Dean Feldberg and Bill Gaylord ’96 (h) (813) 837-2151 Coast and lend support to the growing (o) (813) 839-8845 Alumni Club of San Francisco. fax: (813) 831-5084 The trip was spearheaded by the student-run High-Technology Club, led by its presi- [email protected] dent, Brad Kirby, working in collaboration with alumni and the administration. Bill WASHINGTON, D.C. Gaylord ’96, a member of the San Francisco club and director of industry strategy for Mark Jacobson ’89 or Michaela the consumer sector worldwide at Oracle, is pictured above with the dean at an Zinty, 6008 Melvern Dr., Bethesda, Oracle reception for Bay Area alumni and current students. With career services, the MD 20817-2512 students also arranged a breakfast meeting for recruiters and students that included (h) (301) 564-5719 such companies as Guidant, Intel and Sun Microsystems. fax: (301) 564-0887 With more than 700 members, the San Francisco club is becoming more active, in part due to the diligence of its president, Rick Rosensweig ’68. The events hosted by the club over the seven days also served to introduce prospective MBAs to current students and faculty members as well as alumni.

36 HERMES SPRING 1998 Fourth

Pan- The Fourth Pan-European Reunion will bring together Columbia Business School alumni from around the world for an enriching forum that includes world- Europea class speakers and festive social events.

Friday, October 16 Evening: Reception in Piazza n San Marco at Ala Napoleonica, Museo Correr. Sponsored by Schroder Italia

Saturday, October 17 Dean’s Breakfast Reunion Symposium and Seminar at Scuola Grande di San Rocco, Dean Meyer Feldberg ’65

Guest Speaker: Mario Draghi, Director General of the Venice Italian Treasury. Sponsored by Benetton Group Evening: Gala black-tie dinner at Palazzo Pisani Moretta SAVE THE DATE BenettonGuest speaker: Group, S.p.A.Umberto Agnelli,’72 President, IFIL OCTOBER 16–18, (Agnelli Group). Sponsored by ManagingIFIL (Agnelli Director, Group) IFIL Daniele D. Bodini ’72 (Agnelli Group) Chairman, American 1998 Sunday, October 18 Optional half- and full-day Continental Properties, Inc. VENICE, ITALY tours of Venice and the surrounding countryside Gabriele Galateri di Genola Leadership Committee

SPRING 1998 HERMES 51 ENDPAPER

avid J. Sainsbury ’71 is chairman of J Sainsbury plc, a 129-year-old family business that owns one of Britain’s most profitable supermarket chains as Dwell as Shaw’s Supermarkets in New England. Sainsbury was awarded the School’s 1997 Botwinick Prize in Business Ethics this past fall. The following excerpt is from his acceptance speech.

IT IS A COMMON PRACTICE today for large compa- being exploited has prompted Sainsbury’s to work nies to set themselves corporate objectives of an with the Fairtrade Foundation to develop a Code of inspirational nature. It is not easy, however, to turn Conduct for socially responsible trading. This code such corporate objectives into practical policies. The will be used to monitor our brand suppliers world- manager in a large corporation today is faced with a wide on social concerns such as employee health mass of conflicting demands from customers, investors and safety, pay and illegal child labor. Our intention and other interested groups. Many decisions are is not to drop suppliers but to work with them posed in simple terms of right and wrong, to achieve improvement. but often they raise difficult questions The question which is always asked is which require technical expertise and whether it is right to adopt such socially judgment. responsible policies if they conflict with Sainsbury’s prides itself on a long the creation of shareholder value. This is record of social responsibility. To illustrate not, I believe, such a major issue as many how we look at such issues, I would like people suppose. The overlap between to discuss three areas: the environment, what is good for business and what is animal welfare and developing countries. good for society is often much greater than We use around 6,500 suppliers, and we people think. For example, we have saved recognize that their environmental performance large amounts of cost by conserving energy. Also, contributes to our environmental impact. We have, over the long term our customers are more likely to therefore, developed with them a system of Integrated shop with us if they feel that we are not polluting the Crop Management Strategies, which reduce the need environment, exploiting people in the developing for pesticides by traditional methods, such as crop world or treating animals badly. Finally, our employees rotation, by using disease-resistant crop varieties and share the same concerns as our customers, and they by special training for growers in the use of the most will only be enthusiastic about selling food to our up-to-date monitoring techniques. customers if they believe we are adopting a socially A second issue of intense public interest in the U.K. responsible approach to producing it. We can recruit is animal welfare, with concerns about safety and high-caliber people, I believe, because we give them health closely linked to the morality of animal treat- high-quality objectives. ment in modern intensive farming systems. Good The match between what is commercially profitable animal husbandry and farming practice is in the best and what is good for society is not, however, perfect, interest of the livestock and the consumer (and makes and there is a huge difference between saying, “I will sound business sense). We have progressively devel- protect the environment because I think it is the right oped our welfare strategy and standards based on the thing to do” and, “I will protect the environment practical application of the principles of the Five because it is in my financial interests to do so.” While Freedoms, originated by our National Farm Animal there is not so often a conflict between ethical behav- Welfare Council: freedom from hunger and thirst, ior and shareholder value as people would suppose, from discomfort, from disease and injury, from fear when there is a conflict I believe that ethical consider- and stress and freedom to express normal behavior. ations have to prevail. I believe passionately in wealth A third area of concern is the Developing World. creation and the importance of creating shareholder Concerns among Western consumers that the prod- value, but they must take second place to ethical ucts they buy may be produced by workers who are considerations in a civilized society.

52 HERMES SPRING 1998