FALL/WINTER 2007

the Alumni Magazine of NYU Stern STERNbusiness ALUMNI GATHER UNDER THE TUSCAN SUN

The Business of Business Education ■ The Alchemy of Private Equity ■ Guidance on Earnings Guidance ■ Global Attitudes on Capitalism ■ Fashioning an Apparel Business ■ Showtime’s Program for Success a letter fro m the dean

The end of summer pro- we’ve seen that sharp insights can bear fruit in unan- vides us with an opportuni- ticipated ways. That’s certainly been the case with the ty to take a breath, to look long-running collaboration of Professors Marty back, and to prepare for the Gruber and Ned Elton (page 52), whose portfolio academic year. As I start my research has yielded countless applications. For sixth year as dean at NYU another example of how the research we conduct does Stern, I realize that I now work in the broader world, I’d direct you to Professor have a great deal to look back on – and a great deal to Robert Engle’s five-part series on volatility (page 22) look forward to. In recent years, one of our goals has that first appeared this summer on the Financial been to build a greater sense of community – among Times’ website – FT.com. It’s a brilliant short course students, faculty, and alumni. And the Global Alumni taught to a massive audience by a Nobel laureate. Conference, which we held in June in Florence (page Research allows Stern to function as an ideas incu- 12), highlighted how far we’ve come. The conference bator, cultivating new insights into the business world. was a microcosm of all that Stern offers: a global net- But Stern also functions as an ideas magnet. Every work of loyal alumni interested in big ideas, eager to semester, we have an exciting slate of seminars, dis- engage in meaningful discussions led by industry cussions, debates, and lectures (page 2) that allow practitioners and faculty members. members of the Stern community to interact with Our faculty’s commitment to groundbreaking leading executives, practitioners, policy makers, research, which is front and center in this issue of authors, and thinkers. This fall, we’ll welcome CEOs STERNbusiness, has pushed Stern to the frontier of such as John Mack of Morgan Stanley and Douglas business knowledge. The research articles in this issue Conant of Campbell Soup, and our new Chat with all have readily apparent applications in today’s mar- Financiers series will bring to campus leading figures ketplace: Augustin Landier looks into the cultural dif- in private equity and hedge funds. ferences surrounding attitudes toward capitalism in Along with this magazine, such events afford us the the US and abroad (page 26); Ingo Walter provides a opportunity to check in, reconnect, and continue the valuable perspective on the private-equity boom process of lifetime learning. Having the privilege to (page 30); and Baruch Lev updates the state-of-the- serve as dean of Stern for the past five years has been art on earnings guidance (page 34). We continue to enormously satisfying and educational. In the coming build on our accomplishments by attracting new fac- year, I look forward to checking in, reconnecting, and ulty members with strong research records (page 20). continuing to learn. But academic research can serve a larger function. Our professors conduct long-term, basic, theoretical research that, at first blush, may have no apparent Thomas F. Cooley application to the world. Time and again, however, Dean STERNbusiness A publication of New York University Stern School of Business contents FALL/WINTER 2007 President, New York University John E. Sexton

Dean, Stern School of Business 2 Public Offerings Thomas F. Cooley GE’s Immelt addresses donors, Abraham George feted for social entrepreneurship, experts demystify derivatives, Nobel Laureate Ed Prescott Vice Dean and Dean of the leads discussion on Japan, branding gurus debate iconic brands, and Undergraduate College Microsoft lawyer testifies re: company’s legal battles Sally Blount-Lyon

7 Stern in the City Chairman, Board of Overseers 7 Leonardo LoCascio’s vintage business plan, By Jenny Owen William R. Berkley 9 Julie Chaiken dresses for success,R By Rika Nazem Chairman Emeritus, Board of Overseers 11 A Life in Turnaround Henry Kaufman 8 questions for Tony Alvarez Associate Dean, Marketing 12 Cover Story – Under the Tuscan Sun and External Relations The Global Alumni Conference in Florence provides a forum to discuss Joanne Hvala globalization, re-connect, and appreciate fine Italian art, food, and wine, By Daniel Gross Editor, STERNbusiness Daniel Gross 16 Leading Indicators Stern’s CEO Series: Sharon Allen of Deloitte & Touche accounts for her Managing Editors, STERNbusiness success, and Matt Blank of Showtime Networks presents the case for cable Rika Nazem and Jenny Owen

20 Prospectus Contributing Writers New faculty appointments, noteworthy papers, awards, and honors Shana Carroll, Lisette Coviello, Lauren Furgione, Jessica Neville, Angela Parks, Carolyn Ritter, and Office Hours – Faculty Research Susan C. Walsh 23 The Business of Business Education Contributing Photographers Stern’s dean makes the case for fundamental research, By Thomas F. Cooley Guido Mannucci and Don Pollard 26 Comparative Capitalism Illustrations What accounts for Europe’s and America’s different attitudes toward the Michael Caswell free market? By Augustin Landier, David Thesmar, and Mathias Thoenig Christophe Vorlet 30 The Alchemy of LBOS and IPOs Gordon Studer How to think about private equity today, By Ingo Walter Design 34 To Guide or Not to Guide Esposite Graphics An investigation shows that investors suffer when firms stop giving quarterly earnings guidance, By Joel F. Houston, Baruch Lev, and Jennifer Tucker Letters to the Editor may be sent to: 38 Peer to Peer NYU Stern School of Business Office of Public Affairs Student Life in Washington Square and Beyond: Tutoring aspiring 44 West Fourth Street, Suite 10-160 businesswomen, preventing homelessness, a Cannes debut, and making New York, NY 10012 luxury industry connections www.stern.nyu.edu 40 Alumni Affairs [email protected] Alumni News and Events: Reports from the Global Alumni Conference and Alumni Reunion Weekend, Alumni Affairs and Annual Giving merge, Stern in India, and online career resources

44 Class Notes

52 Past Performance Edwin Elton and Martin Gruber, Stern’s Dynamic Duo, By Daniel Gross Public Offerings

HASKINS DINNER HONORS GE CEO JEFF IMMELT AND CELEBRATES DONORS

Left: Jeff Immelt was honored with the 2007 Haskins Award for his achievement in business and public service. Above, left: Immelt and Dean Thomas Cooley. Above, right: Overseer William Berkley spoke about the importance of education. to have it. Speaking of the need to balance corporate citi- zenship with shareholder value, he joked, “If at the end of Nearly 300 NYU Stern alumni and friends joined your shareholder meeting, nuns are arguing with people together at the 27th annual Haskins Award Dinner in June from the Cato Institute, you know you’ve done something to honor Jeffrey Immelt, chairman and CEO of General right.” Electric, and to celebrate the tremendous progress of the William R. Berkley (BS ’66), vice chairman of the New Campaign for NYU Stern. Thanks in large part to the York University Board of Trustees, chairman of the NYU Haskins Partners, the School’s most generous group of Board of Overseers, and the recipient of the 2006 Haskins alumni and friends, the campaign has raised $156 million Award, stressed the need to continue educating students in gifts and commitments. for an uncertain, fast-changing world. “Stern is about NYU Stern Dean Thomas F. Cooley presented Immelt thinking and outcome,” he said. with the Charles Waldo Haskins Award, established in 1980 Two NYU Stern students, Ripa Ajmera (BS ’08) and to recognize outstanding individuals, whose careers, like Jorge Fontanez (MBA ’07), shared their experiences as Stern’s founding dean, Charles Waldo Haskins, have been students at Stern. Ajmera said she was attracted to NYU characterized by the highest level of achievement in busi- Stern by the Satter Program in Social Entrepreneurship ness and public service. Dean Cooley spoke of his convic- at the Berkley Center for Entrepreneurial Studies, and tion that business is the most powerful engine of social came to the School with the intention of learning busi- transformation. “The unleashing of economic activity has ness skills to better serve non-profit organizations. Her been, and continues to be, the source of improved well- courses and the Social Impact Stipend from the Stern being across the planet, and it is linked to all measures of Undergraduate College have helped prepare her to fulfill human progress – to education, to the rights of women, to her goal of helping women and children facing deep the rule of law,” he said. Dean Cooley credited Immelt with social problems. Fontanez described how his MBA degree masterminding GE’s Ecomagination campaign, which “is was the perfect tool for him to become an agent of pushing corporations all over the world to think seriously change within the corporate world. As a brand manager about sustainability as a hugely profitable undertaking – for Colgate-Palmolive, he believes his Stern education profitable, that is, in the financial sense and in the broader will help him to market products that are better for our sense of social good.” society and the environment. In his acceptance speech, Immelt said two factors make Dean Cooley also announced the progress of the corporations good citizens: (1) the power of technological Campaign for NYU Stern and how continued donor sup- innovation to solve social problems, such as reducing green- port will enhance the Stern student educational experience. house gases, improving water scarcity, preventing sickness- “Although we have achieved tremendous success, we’re not es, and slowing the onset of diseases; and (2) giving people stopping here,” said Dean Cooley. “Plans are underway for the confidence to compete, which is done by training work- the largest renovation of Tisch Hall since its construction ers and investing effectively. Immelt wants GE to be known in 1971. This renovation will give our students the learn- as a company that plays by the rules, gives back, competes, ing environment that they deserve as they work toward and whose people have self-confidence and can teach others becoming truly global citizens.”

2 Sternbusiness NYU STERN RECOGNIZES SOCIAL ENTREPRENEUR visit to Shanti ALUMNUS ABRAHAM GEORGE Bhavan as the most inspirational Members of the NYU Stern community and prominent part of his trip to leaders in the social entrepreneurship field convened in India last year. April to celebrate Abraham George (MBA ’73, PhD ’75), Satter echoed this the 2007 Stewart Satter Social Entrepreneur of the Year. sentiment, calling The award, made possible through the generous support George’s work of NYU Stern Overseer and alumnus Stewart Satter (MBA truly remarkable. ’82), honors a Stern-affiliated social entrepreneur who has From left to right: Stewart Satter, Abraham George, and Dean George said leveraged his business education to address the most Thomas Cooley. that this honor intractable social problems. As founder of The George gives him the opportunity to tell the children back in India Foundation, a non-profit organization based in Bangalore, that people more than 10,000 miles away truly care about India, George has creatively and imaginatively applied the them. He, in turn, recognized Dean Cooley for having given entrepreneurial skills gained from a successful career in a heart to the academic institution he leads through Stern’s software and financial services to raise scores of people out commitment to social entrepreneurship. George challenged of poverty. (See “Return of the Native Son,” STERNbusiness, the audience to think about how current and future busi- Fall 2006) Among his greatest achievements is the creation ness leaders can solve the problem of poverty. While gov- of Shanti Bhavan, a residential school for children from eco- ernment and non-governmental organizations can help, nomically and socially deprived backgrounds in rural India. they won’t be the ultimate solution to lifting out of poverty Sharing his perspective as a macroeconomist, Dean the 65 percent of India’s population that lives on less than Thomas Cooley characterized business as an engine for $2 a day. George concluded by noting that vibrant econom- social progress, and thanked Satter for his significant per- ic activity – the creation of jobs and opportunities to make sonal and financial investment in shaping the social entre- money in an ethical way – is the only real path to achieving preneurship agenda at Stern. Dean Cooley reflected on his this social goal.

EXPERTS EXAMINE DERIVATIVES MARKET

In May, NYU Stern's Salomon markets to manage Center brought together leading price risk on resi- thinkers in the field of derivatives to dential real estate; discuss derivatives theory advances and Ehud Ronn, of and their practical applications. The the University of conference was sponsored by the Texas, on the highly From left to right: Stephen Figlewski, Frank Hatheway, David Krell, Myron Scholes, and Robert Engle. International Securities Exchange (ISE) sophisticated types and the NASDAQ Stock Market, Inc., of derivatives that have now become price of liquidity. Markets” addressed the challenges of whose Foundation currently supports common in energy markets. In the afternoon, panel discussions creating the financial marketplace for derivatives research at Stern. The luncheon keynote address took stock of the current state and the instruments that will be traded in Stephen Figlewski, NYU Stern pro- was given by Myron Scholes, a pio- direction of derivatives theory and the future. Frank Hatheway, NASDAQ's fessor of finance and director of Stern's neer in modern derivatives theory and practice, and the role of technology in chief economist, emphasized NASDAQ Derivatives Research Project, co-creator of the Black-Scholes this marketplace. Emanuel Derman of NASDAQ's historical track record in opened by describing Stern's long his- options pricing model. Scholes Columbia University underscored that providing high-capacity trading and tory of research contributions in deriva- argued that there are four ways to reap it is much harder to predict the future operating efficiency, which will be tives. returns in the financial markets: by in finance than in physics, so the pri- extended to options with the opening One of the morning sessions, “New taking on systematic risk exposure; by mary purpose of financial models such of NASDAQ's own options market later Instruments,” featured Robert Engle, predicting cash flows and discount as Black-Scholes is to interpolate and this year, subject to regulatory Michael Armellino Professor of Finance rates more accurately than others to extrapolate from market prices in the approval. ISE President and CEO David at NYU Stern, who described his cur- gain a better estimate of current secu- present. Scholes, in his current role Krell described the growth in the over- rent research on fitting ARCH-family rity values; by providing liquidity to running a hedge fund, stressed that all options market, which has jumped models, for which he was awarded the the market; or by facilitating the trans- since there is nothing in a textbook that from 1.7 million trades a day in 1999 2003 Nobel Prize in Economics, to the fer of market risk from risk averse to tells managers how much risk to run, to 2.4 million today, and the shift from behavior of stock option implied volatil- more risk tolerant investors. He cau- traders must understand their own 80 percent retail traders in 1999 to 50 ities; Robert Shiller, of Yale University, tioned, however, that shocks in the threshold for loss. percent institutional investors in 2007. who spoke on developing derivative global markets cause changes in the The final session on “New

Sternbusiness 3 Public Offerings

POLLACK CENTER HOSTS DIRECTORS' INSTITUTE

In May, the NYU Pollack Center for are strong, but there is not a lot of cap- Law & Business, a joint initiative between ital investment and a lot of share repur- NYU Stern and NYU School of Law, host- chasing – which may be due to too ed its fifth annual Directors' Institute, much caution in the boardroom.” entitled, “Corporate Governance: The In the luncheon keynote address, State of the Art.” Created to help directors William Ackman, managing member at stay current on their legal, fiduciary, and Pershing Square Capital Management, ethical responsibilities, the Directors' spoke about governance from a hedge Institute brought together new and expe- fund investor's perspective. He argued rienced directors with experts and practi- that hedge fund activism offers signifi- tioners in the fields of law, business, and cant benefits to shareholders, enhances regulation. transparency, prevents value-destroying Above, from left to right: “As an educational institution, we initiatives, improves capital allocation, Panelists Michael Helfer, general counsel and cor- have a responsibility to debate and and increases management and board porate secretary, Citi; shape, in partnership with the business accountability. Ackman discussed the Martin Lipton; Marsha community, the thinking that will further tools of activism, which range from Johnson Evans, former inform corporate governance reforms and sending a private letter to management president and CEO, help restore investor confidence in the to a proxy battle seeking board repre- American Red Cross; and corporation,” explained William T. Allen, sentation. He detailed Pershing Kenneth Langone. Below, director of the NYU Pollack Center for Square's activism with Wendy's, which from left to right: Keynote speakers William Ackman Law & Business and Nusbaum Professor helped boost the restaurant chain's and Joseph F. Tracy. of Law and Business. share price from $38 to $60. In his morning keynote address, The conference featured panels that Joseph S. Tracy, executive vice president examined current issues in corporate In the panel he chaired on current Associates L.L.C., co-founder of Home and director of research at the Federal governance, financial restatements, and issues in corporate governance, Martin Depot, and vice chairman of the NYU Reserve Bank of New York, provided a the expectations and risks concerning Lipton, senior partner at Wachtell, Stern Board of Overseers and of the generally optimistic outlook on the US director fiduciary duties. It included Lipton, Rosen & Katz and chairman of NYU Board of Trustees, said that boards economy, citing a low unemployment expert panelists from NYU Stern, NYU the NYU Board of Trustees, asked should pay CEOs what the market rate, stable consumption and disposable School of Law, the US Securities and whether there should be legislation on requires to get the best person for the income, a moderate housing market, a Exchange Commission, and the executive compensation. Panelists job: “If you have more skin in the game, softened manufacturing market, and Delaware Court of Chancery, as well as agreed that there should not be legisla- you're more likely to do the right thing. stronger export growth. He described the directors of Citi, Dow, Home Depot, tion. Panelist Kenneth G. Langone (MBA Companies pay for performance.” investment scenario: “Firms' bottom lines and Lehman Brothers Holdings. '60), chairman and CEO of Invemed

NOBEL LAUREATE, ECONOMISTS EXPLORE JAPAN'S FUTURE ered. In fact, total factor productivity in Japan is now growing at 2 percent, which is the average growth rate of advanced In April, the Center for Japan-US Business and Economic industrial countries. Prescott then predicted that the financial Studies at NYU Stern hosted a panel discussion on the future of sector will be the key to Japan’s future. He remains pessimistic, the Japanese economy. Participants included Nobel Laureate however, because the new government is backing down on Edward Prescott, the returning NYU Stern Shinsei Bank bank reforms and its privatization of the postal savings and Visiting Professor in Economics at the Japan-US Center and life insurance systems, and because Japan’s productivity is not senior monetary advisor at the Minneapolis Federal Reserve growing as quickly as in other major economies. Bank; Koichi Hamada, Tuntex Professor of Economics at Yale Harrigan said Prescott’s hypothesis is plausible, but sug- University; and Dr. James Harrigan, senior economist, gested that further research be conducted because empirical International Research Department, New York Federal Reserve support from micro-data is lacking. He also debunked an Bank. often-held assertion that deflation is over in Japan. While the Prescott presented research that he recently conducted with Bank of Japan has tightened its policy, there remains a real Fumio Hayashi, professor of economics at Tokyo University, risk that deflation can continue because Japan lacks buffers for about the past and present status of the Japanese economy, and negative economic shocks. then made predictions about the country’s economic future. He Finally, Hamada argued that Prescott should consider how discussed Japan’s lost decade, which began in 1992 when pro- purely nominal phenomena can influence the economy. For ductivity growth almost stopped because of bank loans granted example, money supply and population growth rate can have to inefficient businesses. Since 2002, he argued, the banking real economic effects, he said. system has been reformed and productivity growth has recov-

4 Sternbusiness CEDER WORKSHOP DISCUSSES GLOBAL SOURCING jobs in emerging markets such as Argentina, Brazil, China, and India. IBM has been a player in global sourcing – referred to as At the Center for Digital Economy Research (CeDER) global resourcing at IBM – for over a decade, and currently has workshop on global sourcing, co-hosted with IBM in January, a presence in 165 countries. Bellatoni-Sammon quoted IBM leading information systems scholars, doctoral students, and CEO Sam Palmisano, who said that the key to success in global IBM researchers gathered to discuss a host of issues surround- sourcing is “the right work, in the right places, at the right ing the globalization of service work, including outsourcing cost.” strategy, relationship management practices, and personnel In a roundtable discussion, workshop organizer and NYU issues. Stern Professor Natalia Levina presented her research on the The workshop featured roundtable discussions with experts impact of organizational and national boundaries on offshore from a number of universities, including NYU Stern, collaboration. She explained how today’s firms are increasingly Massachusetts Institute of Technology, University of California sourcing more complex, less codifiable, and more strategic at Irvine, and University of Texas at Austin, as well as a information technology projects to low-cost, offshore locations. keynote address by Dianne Bellatoni-Sammon, director for Because such projects require close collaboration among all par- global diversity at IBM. ticipants, some critics argue that firms should set up captive Bellatoni-Sammon said that in the past 10 years, global offshore development centers to keep these projects within their sourcing has become an important component of many com- organizations’ boundaries. Levina presented a case study about panies’ business strategy, playing a key role in delivering a large financial services organization that used both captive shareholder value and helping companies remain competitive centers and third-party vendors in multiple global locations. in the global marketplace. Global sourcing provides clients of The case showed that achieving effective collaboration did not companies such as IBM, Infosys, Tata, and Wipro – the leaders depend on whether the project was kept within the firm’s in global sourcing – significant cost savings as well as a truly boundaries or on choosing a specific offshore location. Instead, global presence and anytime/anywhere availability. In addi- her research found that effective collaboration was facilitated by tion, companies believe they are making a positive contribu- specific client-side program managers who engaged in bound- tion to global social and economic development by creating ary-spanning practices across country and firm borders.

SOCIAL JUSTICE ADVOCATE URGES TRUTH

On March 27, Dr. Alex Boraine, a all life almost like a Boraine closed longtime advocate for justice and recon- laser beam and, like a his talk with a pow- ciliation in South Africa, delivered the laser, it can heal and erful quote from 2007 Ashok C. Sani Distinguished it can destroy.” “To Patricio Aylwin, Scholar Lecture at NYU Stern. have power,” he said, whose democratic Boraine, a Methodist minister, was “is almost an intoler- election as president deeply involved in the long campaign able burden, because of Chile brought an against apartheid and then served as with that power end to the reign of deputy chair of the post-apartheid Truth comes incredible Dean Thomas Cooley (second from left), NYU President John Sexton (fourth from left), Augusto Pinochet: and Reconciliation Commission. This responsibility.” and Dr. Alex Boraine (center) at the Ashok C. Sani lecture with Sani's family members. “There is an open year, he is the Sani Distinguished Along with the political corruption Commission found a tremendous sense wound in our national soul that cannot Scholar and Global Visiting Professor of that he witnessed firsthand, Boraine of relief, which he attributes to the heal- be ignored, nor can it be healed through Law at the NYU School of Law's Hauser spoke of the “humanity and vision and ing power of truth. “The antidote to the mere forgetfulness. …Only the disclo- Global Law Program. Both the professor- grace” of people like President Nelson abuse of power is truth, coming clean, sure of truth and the search for justice ship and the lecture are named in memo- Mandela and activists around the world being transparent,” he said. To assist can create the moral climate in which ry of Stern alumnus Ashok C. Sani (BS who struggled against the injustice of other countries in pursuing such efforts, reconciliation and peace will flourish.” '74), a founding member of the NYU apartheid. He shared his experience Boraine founded the International Center A recipient of Italy's President's Stern Alumni Council and a former mem- serving under Chairman Archbishop for Transitional Justice. Medal for Human Rights, Boraine was ber of the Stern Board of Overseers. The Desmond Tutu on South Africa's Truth Moving beyond apartheid to other previously a professor of law at NYU lecture series reflects his dedication to and Reconciliation Commission, which misuses of power, Boraine talked about and the director of the NYU Law ethics, truth, love, peace, non-violence, was predicated on the belief that seek- the dehumanizing history of colonialism School's Justice in Transition program. compassion, and the moral and social ing the truth is often a difficult and and slavery throughout the world. In His most recent book, A Country responsibilities of members of society. demanding process, but one that can Africa, “the seeds of exploitation of cor- Unmasked, was published by Oxford Boraine's lecture, “Power through lead to remorse, repentance, and ruption and the abuse of power were University Press in 2000. Truth and Justice,” addressed power as acknowledgement. Boraine said that the planted by powerful men who drew lines an omnipresent force that “runs through witnesses who came before the on a map in foreign countries.”

Sternbusiness 5 Public Offerings

MICROSOFT COUNSEL ANALYZES COMPANY'S LEGAL BATTLES operating system, the US court ultimately allowed for the integration of the two systems while protecting opportunities for competitors through a series of requirements relating to David A. Heiner, vice president and deputy general counsel at Microsoft Corporation, the design and licensing of Windows. In a similar case, the European Commission required examined the company's history of legal cases on platform integration in America and Microsoft to offer two separate versions of Windows – one with Windows Media Player and Europe at the Networks, Electronic Commerce and Telecommunications (NET) Institute one without. Heiner compared the US court's focus on preserving competitive opportunities Conference this April. The conference, held at NYU Stern and co-sponsored by the NET to Europe's focus on removing capabilities from dominant products. He also noted that the Institute and Stern's Berkley Center for Entrepreneurial Studies, featured cutting-edge aca- US court articulated a “rule of reason” approach to the issue, while the EU's analysis was demic research on electronic commerce, platform competition, and software competition more akin to the US “per se” approach to assessing liability. presented by top academics from NYU Stern, Carnegie-Mellon, Harvard, University of Heiner concluded with insight into what Microsoft might expect vis-à-vis Windows Maryland, University of Texas, and several other universities. principles, the EU court ruling expected in September 2007, and the increasing popularity During his tenure at Microsoft, Heiner has been on the front lines of Microsoft's of Web-based software that runs on any browser and any operating system. response to government antitrust proceedings. After reviewing cases that grappled with the “Having David Heiner of Microsoft on campus demonstrates how the Stern School of legalities of integrating hardware and software, Heiner addressed Microsoft's more recent Business and the NET Institute remain on the cutting edge of research that informs today's legal challenges. Analyzing the application of antitrust law in the US and in Europe, and public policy and affects competition in network industries,” said Professor Nicholas how businesses are regulated accordingly, Heiner pointed to several significant differences Economides, executive director of the NET Institute. “It emphasizes the complexities and between the legal outcomes on each side of the Atlantic. public policy challenges of doing business and competing aggressively in software markets Following allegations that Microsoft unlawfully “tied” Internet Explorer to its Windows and other network industries on a global scale.”

STUDENTS, ALUMNI DEBATE ICONIC BRANDS, DIGITAL MUSIC Capozzi argued. This spring, two events brought He further illus- together NYU Stern students, alumni, and trated the differ- professional experts to discuss hot trends ences between in media: the challenge of maintaining “The Control iconic consumer brands, and the future of Age,” an old the music business in an age of digital industry philoso- The Digitization of the Music Industry panelists Chris Barron, Josh Hubble, Steve Masur, Rob Weitzner, and Adam Zelinka. downloads. phy that focused On April 19, “Death of the Icon primarily on reach and frequency, and a music and its affect on the music industry recording technology have made it easy Brand,” an evening of lively debate with new philosophy he dubbed “The from both a business and legal perspec- for independent artists to record their Lou Capozzi (BS '69), chairman emeritus Conversation,” which emphasizes the tive. Part of the annual NYU Alumni own music. “My first record cost a quar- of Publicis Public Relations and Corporate importance of companies listening and Reunion Weekend, the event featured an ter of a million dollars to record, and it Communications Group, and Joe Gleason, having conversations with consumers. acoustic performance by Chris Barron, the was recorded in a studio that cost mil- professor, consultant, and founder of the According to Capozzi, brands must lead singer of The Spin Doctors, and a lions of dollars to build,” he said. “Now I Gleason Group, drew an audience of adhere to three requirements to win in panel discussion entitled, “Charting the have my own home studio, and it cost alumni and students. Carlo Mantica (MBA this “Conversation Age:” (1) engage Digital Frontier: The Digitization of the me only $5,000.” '01) kicked off the event, the third in a thought leaders so they speak for you Music Industry.” Hubble agreed that the industry is series of new events hosted by the and about you; (2) talk the talk and walk Hosted by the Entertainment, Media, changing quickly. “No one knew what a Marketing Committee of NYU Stern's the walk; and (3) develop strategic con- and Technology Committee of the NYU ring-back tone was two years ago. There Alumni Council, by introducing the two sultancy skills, not just individual tac- Stern Alumni Council, the panel featured are a lot of unknowns for the future.” He speakers and Management tics, to orchestrate integrated marketing Barron and several industry experts: Josh added that with a 20 percent decline in CD Communications Professor Irving communications. Hubble, Universal Records; Steve Masur, sales this year and expectations that they Schenkler, who moderated the night's dis- Gleason believes companies have Esq., managing partner for MasurLaw; will continue to decline, record companies cussion. already been having a conversation with Rob Weitzner, vice president, business are looking for new revenue streams. According to the branding gurus, customers for years, and it's still not development, Independent Online Zelinka conceded: “No one knows the companies must understand customers enough. He attributes a portion of the Distribution Alliance; and Adam Zelinka future frontier of the music business, but and their need to understand a brand. reality television show American Idol's (BMUS '01), founder of boutique enter- consolidation is going to be a massive Capozzi and Gleason also grouped brands success to the fact that executives were tainment consulting agency Fanatical part of it.” He argued that the money is in into four categories – identity, power, willing to completely turn over the Marketing. Catherine Moore, director of music publishing. “They make money with icon, and explorer brands – citing exam- brand to the public. In accordance with the Music Business Graduate Program at very little resources,” he said. ples of each. Icon brands, such as Coke this trend, Gleason believes consumers the NYU Steinhardt School, moderated. Masur argued that the industry has and Disney, create a symbolic world and are demanding ownership and a voice The panelists discussed how techno- been too slow to adapt to technological invite everyone in. in the brands they choose. In order for logical changes such as the mp3 file, changes and that there are many new So how can marketers in this day and the brand to survive, marketers need to iTunes, and myspace.com have propelled ways to make money, but they have to be age build and maintain iconic brands? be comfortable letting customers exert the industry into uncharted territory by built. Weitzner agreed that there is a lot of Today, relationships between companies their influence on the brand. presenting intriguing questions about the opportunity in the market and said, “The and customers are grounded in skepti- On May 12, nearly 150 NYU Stern management of digital rights and the dis- technology has forced us to redefine the cism, and consumers have adopted a alumni and guests gathered for an tribution and marketing of music. Barron music industry. The business model has “Show me; Don't tell me” mentality, insider's look at the digitization of discussed how the advancements in to change.”

6 Sternbusiness sternInTheCity 21st-Century Wine Seller by Jenny Owen other wines. I’m looking for the purity of flavors, for wine- makers who don’t filter out the taste,” he said. At the 2007 Global Alumni Conference in Florence, “We have a big portfolio of wines from lesser known alumnus Leonardo LoCascio participated in a panel producers and from outside the traditional appellations,” discussion on Italian wines. STERNbusiness spoke LoCascio added. “So the idea of having my name on every with this wine connoisseur and distributor. bottle of wine is to give consumers a roadmap or a com- Known for putting mon thread through Italian wines on the Leonardo LoCascio American map, Selections. If they had a Leonardo LoCascio (BS good experience with one ’71) is also considered of my wines, they are more one of the “visionaries in inclined to try another.” America who are not Working with family only changing the way wineries and searching for we think about wine but unique, affordable wines is also determining what another key component of we’ll be drinking in the his strategy. “I like to find 21st century,” as Food wines that over-deliver in and Wine noted when it terms of the relationship awarded the native of between price and quality. Palermo, Italy, its highly We’ve often found these by coveted Golden Grape going to the more obscure Award in 1998. The regions of Italy,” said president and CEO of LoCascio. “And it’s impor- Winebow, Inc., a leading tant to have in my portfo- importer of premium lio wines that come from Italian wines and a major distributor of wines from families as opposed to large conglomerates. I find it impor- around the world, LoCascio has made it his business to tant to get to know the people you’re doing business with.” select high quality wines of good value. In 1980, LoCascio left a successful career in corporate His Winebow portfolio represents more than 70 estates finance to launch Winebow. At the time, he was a vice throughout the major wine regions of Italy and contains president at Citibank, after having worked at Rockwell 3,000-plus wines from around the world. But the Financial and McKinsey & Company. His intentions were Leonardo LoCascio Selections logo most reflects his per- always to own and run a company. Entrepreneurship is in sonal taste and appears only on his prized Italian his DNA – his father and his grandfather owned a citrus imports. For every wine he selects for this collection, he business. LoCascio said he initially came to the States and turns down dozens. “Wine for me is more than just a bev- to NYU intending to get a degree and then to go back and erage in the bottle,” explained the former banker. When take over the family business. “But when I was here, I got selecting wines, he looks for those that “make a state- interested in living in the States, and in gaining some work ment, that get people’s attention, that aren’t like a lot of continued on page 8

Sternbusiness 7 sternInTheCity

continued from page 7 experience here,” he said. By the time he was ready to flex his entrepreneurial muscle, his father had sold the family company and LoCascio had become interested in import- ed foods and beverages. LoCascio was attracted to wine because of its “simplic- ity and sophistication.” He also saw a business opportuni- ty. “Americans were on the cusp of making wine a part of their lifestyle. At the time, they were drinking a lot of beer San Polo, LoCascio's Tuscan winery in Montalcino, Italy. and hard liquor. California wines were hardly on the map,” he said. “But wine was part of life in most Western contact with the consumer (retailer or restaurant), the countries. Americans, when they went to Europe, enjoyed local distributor, and the supplier (winery or importer). it and I could not understand why it was not part of the LoCascio’s model has been to “try, within the regulations lifestyle when they came back. My bet was that it was in which we operate, to shorten this chain and to be both going to become part of the American lifestyle.” an importer and a distributor within six markets: New LoCascio bet correctly. As an Italian, he was uniquely York, New Jersey, Connecticut, Massachusetts, positioned to build a business around Americans’ demand Pennsylvania, and Washington, DC,” he explained. “This for Italian goods. “Americans have had a love story with has given us extra margins, and most important, the abil- Italy. Things made in Italy were well-received here – ity to execute on our own products, as opposed to having fashion, design, food,” he said. to convince a local distributor to buy our wines over Winebow wasn’t an instant success. LoCascio said it another importer’s.” took 10 years before the business looked like it was going New York City is Winebow’s largest market. “It’s a to succeed financially. “Despite my academic and profes- sophisticated city – there are a lot of people who love sional training, I started my business as many entrepre- wine and want to learn more,” LoCascio explained. neurs do, without adequately capitalizing it,” he said. “In “There is also a strong international community with the initial years, the biggest struggle was convincing the tourists and expatriates – which all make for a great banks that it was worthwhile to finance the growth of my place to do business. And new restaurants open every business.” day, which become new customers.” So his advice for aspiring entrepreneurs is to “work What can America expect next from this wine vision- not only on the concept of what you want to do, but also ary? Three years ago,Winebow partnered with Freeman on having funds. It takes patience and discipline to capi- Spogli, a privaty equity firm that specializes in the distri- talize the business properly.” He also advises, “Have bution business. Together the two are negotiating the tenacity. Stay focused on what you’re building – you real- purchase of distributors in additional markets. “We want ly have to believe that it will work out. In my case, I had to be in as many markets as it makes economic sense,” two young children and two mortgages, so failure was not LoCascio said. The company is also expanding its import an option.” footprint. It branched beyond Italy and into Spain and Winebow’s success today is due not only to LoCascio’s South America a few years ago, and is currently looking tenacity and his prudent wine selection process, but also at Portugal. “We are always interested in expanding our to his business model. In the US, the wine business is reg- horizons,” he said. But will Americans be as receptive to ulated by the states, and laws do not allow restaurants, expanding their own wine palates? If Food and Wine retailers, or consumers to buy wine directly from suppli- magazine is right, it’s Leonardo LoCascio who deter- ers – they must buy from local distributors. These regula- mines what we’ll be drinking in the 21st century. ■ tions have generated a three-tier business: the point of

8 Sternbusiness sternInTheCity Passion for Fashion

by Rika Nazem

It can take decades for a fashion company to build brands that are described as sophisticated and classic. But Julie Chaiken (MBA ’93), who founded Chaiken Clothing in July 1994, has needed only a single decade. With clients such as Gwyneth Paltrow and Cameron Diaz, it’s easy to see why this fashion line has continued to gain momen- tum in an industry with a clientele that can be tough to please. Just take a look at the fall collection and you’ll see beautiful, affordable clothes for both work and play that women love to wear. Chaiken views herself as a client of her own line and, as such, designs clothes that fit her lifestyle. Chaiken has always had a passion for fashion. “In Photo credit: Dan Lecca for Chaiken. Chaiken's fall 2007 clothing line. the early 1990s, I remember talking with a group of friends about fashion and what versatile clothes for the professional woman and jumped was available at the time,” she explained. “The clothing into the business by asking questions. “I needed to obtain choices for professional women were remnants of the a business license, find a factory to manufacture the 1980s when women were wearing bad blue suits. My clothes, and negotiate with the factory,” she said. “There friend and I decided to do something about it. I always was a huge learning curve, but I had tenacity and just wanted to run my own business someday and it just kept asking questions until I figured it out.” seemed like the right fit.” Chaiken wanted to design In the beginning, Chaiken thought that she could do it continued on page 10

Sternbusiness 9 sternInTheCity

continued from page 9 all – design and make the clothes, attend trade shows, get that intangible of a face-to-face meeting,” she said. and work directly with customers as her own sales rep- Building on her brand’s success, Chaiken has expand- resentative. “After two weeks, I realized that was a very ed her well-known collection to include maternity wear, bad idea – especially since, in those two weeks, I picked including a new mommy bag just out in stores, as well as up the Barney’s New York and Fred Segal accounts,” an eyewear line that is due out next year. Her recently she said. “I knew I was onto some- launched line, “Profile,” is “a very thing but, at the time, didn’t fashion-forward line that will contin- understand the scope of what we ue to push boundaries. The line were starting. I wrote a business caters to women who are interested plan and within a month it didn’t in fashion but not necessarily inter- mean anything.” Chaiken then ested in the trend of the moment,” hired a person to manage the fac- she said. tory and a sales team to interact Despite spending the majority of with customers. “Within the first her time in San Francisco, Chaiken six months, we went from start-up draws a great deal of her inspiration to management mode, which we from New York City. “Watching the had talked about in business people in the City is inspiring school as being a very tough tran- because there is so much individuali- sition to make.” ty. People mix things differently. I Chaiken’s business acumen got love to go to the night clubs and look her through the tough launch and at what the kids are wearing,” transition phases. “Having an explained Chaiken. Museums and MBA in this industry definitely art exhibits also inspire her. “I’ll see gives me credibility. I have been Julie Chaiken an exhibit and, 12 months later, you able to step back and take a will see some element of that in the breath, and evaluate situations I may have looked at stores. I saw a fabric exhibit at the Neue Galerie and, a differently otherwise,” she said. “And the Stern creden- year later, I saw those prints coming into the market. tial is invaluable when I meet with bankers. They so Sometimes it’s even just looking in the stores and seeing often deal with creative types that have great ideas but what other designers are doing that gets the juices flow- not the business background. For instance, I can look ing,” she said. at a licensing deal, and see the numbers and the busi- Chaiken, who is the mother of two young children, has ness value in it. It’s given me a much broader perspec- found a way to handle both roles. “I don’t work a full tive on the business.” schedule anymore – I scaled back so that I have time to Success in the fashion business also requires “a lot of be a CEO and a mother,” she explained. She notes that a being in the right place at the right time, and a lot of quote – “Nobody ever told me I couldn’t have it all, they offering the customer something she wants,” added just forgot to tell me I couldn’t have it all at once” – real- Chaiken. “You have to be out there. I still go to trade ly resonates with her “because I could do it all but I shows and meet with clients. Coming back from a recent couldn’t do it all well. If I want to do well in my business trip, I remember talking to an investment banker on the and I want to be a good mother, I have to find time to do plane. I asked him what he was doing and he replied both,” Chaiken added. “I really do love the life that I’ve that he came to shake a hand. It’s so true – we can’t for- built. It’s that simple.” ■

10 Sternbusiness Questions TONY ALVAREZ (MBA '76), co-founder, co-CEO, and managing director of Alvarez & Marsal, 8the world's largest turnaround advisory firm

Serving as a conference panelist at the 2007 Global Alumni 4. So you don’t necessarily start restructures with Conference in Florence, Alvarez recently shared his corpo- the finances? rate advisory and crisis management insight with Stern Our belief is that you restructure the balance sheet alumni. The following are excerpts from his remarks. last! You do it after you figure out just how healthy the patient can be. Good turnaround managers don’t just 1. How did you get started in turnaround manage- right-size the cost structure. They have to be aware that they can’t starve the brands. ment? In 1983, when a company got in trouble, it would hire 5. How has your business evolved? an accounting firm to advise creditors and then bring in We’re a catalyst for results and action. Now we’re new managers from the industry, like Lee Iacocca with being asked to come in and work not just with compa- Chrysler. I had been an accountant and had some expe- nies that are sick, but with companies that are under- rience with operations, and it was apparent to me and performing. We’re working with permanent manage- my partner that there was something unique about the ment to help them act a little faster. DNA of managers needed to fix companies, and that those skills could translate to different industries. The 6. What do you make of all this liquidity? management skills needed to manage for growth are dif- ferent from the skills needed to manage a turnaround. The appetite for debt being issued is beyond anything I’ve seen. I think it will actually lead to fewer Chapter 11 filings, since most of those buying debt want to 2. What are the managerial skills needed for a turn- avoid protracted bankruptcies. We’re seeing more and around? more time being bought by more and more money. It’s important to be able to manage with scarce resources and unhappy constituencies while making 7. When did you expand into Europe? changes rapidly. Our firm was based on a belief that we We started in Europe in 2001, and at the time, Europe could institutionalize the business by hiring people who was exactly where the US was in 1983. There was real- are very comfortable with having to act fast. ly no turnaround management firm. Today, we’ve got 100 people in Europe. 3. Why does speed matter so much in your business? In a turnaround situation, you need to make the deci- 8. What’s next? sions in a month that most growth companies make in a We are bringing our business to Brazil and the rest of year. You don’t have time or liquidity. You need people Latin America, and we’ve just opened up offices in who, while the fur is flying, can calmly assess the situa- Shanghai. As they invest in these areas, American tion, buy time, fix the underlying problems, and once bankers and private equity firms are telling their part- you have done that, restructure the balance sheet. ners that this is something that has worked in the US.

Sternbusiness 11 Under the

IN JUNE, STERN ALUMNI GATHERED IN FLORENCE TO DISCUSS THE FINER POINTS OF GLOBALIZATION, PRIVATE EQUITY, AND LUXURY GOODS – AND TO SAMPLE SOME FINE WINES.

By Daniel Gross

ost Tuscan holidays are devoted to a few the world we live in and anticipate change,” he said. “A simple and basic pursuits: relaxation, viewing great education is about creating a framework for con- M fine art, strolling around ancient piazzas, and ceptual thinking by gaining understanding.” feasting on the region’s famous cuisine. But On the agenda put together by the 14-person Host the 300 Stern alumni who gathered in Florence for the Global Committee, led by Co-chairs James and Salvatore Alumni Conference in early June had other things on their Ferragamo (each BS ’93, MBA ’97): high-level discus- minds. “We’re going to learn, discuss, argue, get to know one sion of the large structural issues affecting the Italian another, and see beautiful things,” said Dean Thomas Cooley, economy and the US-Italy relationship; panels on the addressing a crowd in the introductory session at NYU’s Villa way corporate turnarounds and private equity firms are La Pietra estate campus. Welcoming alumni who had come spurring change and growth in Europe’s private sector; from the US, India, Japan, China, Russia, the Middle East, and detailed conversations of the lessons learned from and all parts of Europe, he noted that, together with NYU Italy’s premiere wine and luxury goods manufacturers. Stern faculty members and industry experts, the attendees “And of course, this being Florence,” Dean Cooley would have the opportunity to “look at issues from 30,000- added, “we’re going to spend some time eating and square feet above.” drinking while we think about the issues that are of William R. Berkley (BS ’66), chairman and CEO of W. R. concern to us.” Berkley Corporation, chairman of the NYU Stern Board of In her opening keynote address, Nora Dempsey, Overseers, and vice chairman of the NYU Board of Trustees, Consul General of the United States in Florence, intro- said that convening such a conference is part and parcel of duced several large themes that resonated throughout NYU Stern’s educational mission. “Education is about building the conference. Dempsey appeared in the stead of US a foundation and a framework to allow us to better understand Ambassador Ronald Spogli, who was preparing for the

12 Sternbusiness Tuscan Sun

imminent visit by President Bush to Italy – an event she dent of Bocconi University in Milan, and former European cited as evidence of the continuing deep economic, cultur- Commissioner for Competition, picked up on the theme of al, and diplomatic bonds that unite the US and Italy. the necessity for structural change in Europe. To start, he Dempsey echoed the concerns frequently sounded by posed a rhetorical question: “Is the European Union con- Italian economists and business leaders. Despite some verging or diverging relative to the US?” His answer: yes, recent improvements, “Italy lags behind other EU coun- and no. With its single market, single currency, and tries in almost every indicator of economic success; eco- enlargement to include Eastern European countries, “the nomic growth, foreign investment, and competitiveness are European Union is much more similar to the US than it all surprisingly weak,” she noted. was 10 or 15 years ago.” And yet the two huge trading Sixty years after the introduction of the Marshall Plan, partners still diverge when it comes to growth. Monti noted Dempsey said, the US can once again help Italy modernize that the EU has spent unprecedented energy on structural its economy to promote economic growth. Aside from reform, which he dubbed harmful in the short-term. He boosting bi-lateral trade investment, Dempsey said the US reminded the audience that the EU constitution is still not could assist by revitalizing the Fulbright program, which ratified, although it has been approved by 27 member would both send more Americans to study in Italy and nations. Aside from seeking to emulate US attitudes bring more Italians to the US to learn about American toward growth, Monti said Europe should look to the US business culture. As part of the Fulbright Business in reforming immigration policy. Exchange program, for example, a group of Italian stu- Monti also pointed to powerful cross-currents. Despite a dents will participate in internships to learn about Silicon common currency, and the formulation of a central mone- Valley’s entrepreneurial technology culture. tary policy, “economic nationalism” still exerts a great deal In his afternoon keynote address, Mario Monti, presi- of power in Europe. He noted that despite an official poli- continued on page 14 R Stern business 13 continued from page 13 cy of neutrality toward cross-border tendencies, European Europe, and beyond. Panelists included: Tony Alvarez, II, governments are increasingly resisting acquisitions of (MBA ’76), co-founder, co-CEO, and managing director of important domestic companies by foreign purchasers. Alvarez & Marsal, the largest turnaround company in the Structural changes take place at a macro, economy- world; Fabio Canè (MBA ’90), head of investment banking wide level, and at a micro, company-specific level. A panel for Intesa Sanpaolo; and Luciano La Noce, managing direc- moderated by Edward Altman, Max L. Heine Professor of tor of Omniainvest and Immsi, both investment-holding firms. Finance at Stern, addressed the issue of how corporate La Noce described the turnaround of Piaggio, the ven- turnarounds are helping to remake the economy in Italy, in erable Italian scooter manufacturer. Piaggio’s roots go back

Indulging in Italian Luxury Goods for dressing CEOs and James Bond in all the Bond movies, Brioni “brings the store to the CEO,” Perrone said. The com- Italian companies have long been leaders in the realm of pany also invests in training its frontline people, who provide luxury goods, from fine women’s clothes to wine. Two panels “the emotional linkage” to the Brioni brand. The Ferragamo at the conference highlighted the lessons that can be learned brand, synonymous with luxury leather goods and fashion, is from Italian firms. “Trends in the 21st-Century Global now expanding into the experiential luxury business by Luxury Market” featured Armando Branchini, an economist branching out into the wine and hospitality businesses. and professor of management of luxury goods at Bocconi Wine – a global luxury good in its own right – was the University; James Ferragamo (BS ’93, MBA ’97), women’s subject of a separate panel, “La Dolce Vita: The Business of leather product director, Salvatore Ferragamo Group; Andrea Wine,” led by Marti G. Subrahmanyam, the Charles E. Illy, chairman and CEO, illycaffè S.p.A.; Andrea Perrone, co- Merrill Professor of Finance, Economics, and International CEO of Brioni, S.r.l.; and Massimo Quarra (MBA ’79), Business at Stern and the leader of the School’s Wine Society. regional president (Europe), American Express, which, with Alessia Antinori, oenologist for Antinori Wines, noted that Salvatore Ferragamo Group and Rothschild North America, consumers are trading up to higher quality in Italian wines. was a co-sponsor of the Conference. Salvatore Ferragamo (BS ’93, MBA ’97), manager of Il Borro Branchini cited strong growth in all categories of fashion Wines, stressed the importance of the “terroir” and its oenolo- accessories, the “brandization” of fashion and style categories, gist’s skill in using the inherent attributes of the soil to craft and growth in super-luxury or “uber-lux” products and serv- its new Il Borro brand wine. ices. Russia, China, and India, he noted, are strong growth Italian wines are supplanting French wines in popularity, markets for luxury products. Quarra shared new research according to William Deutsch (BS ’58), chairman of wine dis- that American Express has conducted, which concludes that tributor W.J. Deutsch & Sons, Ltd. He pointed out that many the intangible “experience” of a product is becoming a more French restaurants are closing, just as more Italian restau- important factor in driving sales. Consumers, who are rants are opening. “Restaurants are important ambassadors increasingly more knowledgeable, thanks in part to the for wine,” said Deutsch, who noted that five of the top 10 Internet, more and more seek “the best,” not just the most wines in the US are Italian. Leonardo LoCascio (BS ’71), expensive. Illy underscored the theme of luxury brands as president and CEO of Winebow, Inc., noted that for entry- experiential. The company defines its luxury brand as provid- level consumers, wine is all about the label, and that con- ing happiness and well-being through small pleasures such as sumers “graduate” to wines with more nuance (see page 7, a superb cup of coffee. “21st-Century Wine Seller”). Following the panel, a Tuscan Perrone, whose grandfather’s tailor shop in Rome in 1945 table was spread in the garden and conference attendees had has grown to 40 branded Brioni stores, attributed the compa- a chance to sample the generously donated wines produced ny’s growth to a focus on quality in all dimensions. Known and/or distributed by each of the panelists’ wine portfolios.

14 Sternbusiness to 1884, when Vespa emerged as a symbol of post-war Entrepreneurship and Finance at Stern. Caselli spoke of Italy. But a decline in the 1980s, compounded by poor the prospects for a private equity bubble, and highlighted labor relations, set the stage for the turnaround engi- the global nature of the market for deals. What had been neered by Roberto Colaninno, who took over as chairman a more parochial market is turning into one “where and CEO in October 2003. The new management team investors are moving from one market to the other to take focused on quality, repositioned the brand at the top end opportunities,” he noted. of the market, and introduced global sourcing from China Acknowledging that the debate about private equity and India. To build critical mass, management acquired was “emotional and passionate,” Belloni said he believes Apprevia Group, a family-owned bicycle company. In July the private equity system functions better than the tradi- 2006, Piaggio, now the fourth-largest motorized bicycle tional system by which publicly-held companies are gov- company, was listed on the stock market. Today, the com- erned. He added that private equity firms must create pany is expanding its manufacturing and sales into India value not simply by buying good companies and selling and China, investing in Vietnam, and creating production them for better prices, but “by managing underperforming and distribution networks in Latin America. companies properly, creating the conditions for innovation lvarez outlined two modes of turnaround man- and growth.” Smith noted that 120 students had signed agement. The first, as practiced at Piaggio, is up for a course on private equity that he co-taught with to bring in experienced management from a Caselli at Bocconi – which is far larger than the number of A similar industry. The second is to bring in students for a similar course at Stern. “Private equity is as management that specializes in turnarounds. well-established in Europe as it is in the United States, Alvarez, who established his firm in the early 1980s and and has a long way to go because there are still a number has extended his practice to Europe, Latin America, and of efficiencies surrounding the industrial base of Europe,” Asia, noted that the task isn’t simply to fix the finances of he said. a struggling company, but to revitalize the company and The conference formally concluded with an exclusive put it in a position to grow. “You have to restructure the guided tour of four galleries in the Uffizi Museum that balance sheet last,” he said. (see page 11, “8 Questions house Italian masters of the 13th, 14th, and 15th cen- with Tony Alvarez”) turies, as well as a walk through the Vasari Corridor, Canè, a former partner at Bain and Co., who headed which transverses the Arno River and is normally closed to its Milan office, shared his entrepreneurial experience of the public. After crossing the river, alumni and their guests founding an online retail apparel company, Yoox, that he emerged into the gardens of the Pitti Palace for cocktails had worked with as a member of Bain’s worldwide con- before dinner at tables set in the Palace courtyard. The sultancy practice. When Bain opted not to take an interest conference closed with a dramatic flourish: a demonstra- in the company, Canè became involved as founder and tion of Florentine flag-waving. Accompanied by trumpets CEO. Today, the company, which sells online last season’s and drums, men and women in Renaissance costume clothes and accessories for 300 exclusive brands, is “cash twirled, tossed, and threw enormous flags, a demonstra- positive,” he noted. tion one attendee described as “baton-twirling as an Private equity firms have been playing an increasingly extreme sport.” prominent role in large-scale corporate restructurings. The The locale may have seemed a world away from NYU rapid growth of private equity firms was the topic of a Stern’s Greenwich Village campus. But the high-level of panel moderated by Ingo Walter, Seymour Milstein conversation, the impulse to bring together the worlds of Professor of Finance, Corporate Governance, and Ethics academics and the private sector, and the sense of curiosi- at Stern. Participants included: Antonio Belloni, managing ty and community that pervaded the weekend were easily partner of BC Partners; Stefano Caselli, professor of recognizable to Stern alumni and faculty. “What brings us banking and finance at Bocconi University; Salvatore together is the Stern School of Business,” Dean Cooley Mancuso, chairman and CEO of Equinox Management noted. “It’s our community, a place where we conduct S.A.; and Roy Smith, Kenneth Langone Professor of research, study, and make lifelong friendships.” ■

Sternbusiness 15 LeadingIndicators

Sharon Allen chairman Deloitte & Touche USA, LLP

Paul Maidment: What were the lessons of the partner level. Last year, 35 percent of PM: Does leadership become very different your upbringing that you've carried with you those promoted to partner and director were in this globally connected world? throughout your working life? women, which was certainly a lot better than SA: Yes. You need the ability to work vir- Sharon Allen: I was the youngest of four 10 percent – the proportion 14 years ago. tually, to accept working differently, in a girls, on a farm in Kimberly, Idaho, which had little different style, and must be able to a population of about 1,500 people. I learned PM: What are some of the initiatives you interact with people across language and my core values, and I learned to honor the put in place to try and advance the cause of cultural barriers. commitment that my parents taught me – that women within the company? PM: How do you keep your mind open to Sharon Allen is chairman of you can do anything you want to, but just do SA: We found that there was a lack of men- technological, social, and cultural devel- Deloitte & Touche USA, LLP, it really well. tors and role models. We learned that we opments so that you're able to provide the US member of the global tended to not assign our women to the best flexibility? accounting and consulting firm, PM: How do you think that the role of and most prestigious engagements because SA: I have found that people have learned Deloitte Touche Tohmatsu. The women, both in corporate America, but also they were expected to leave. And then how to deal with the first woman hired as an auditor in leadership, has next generation in the firm's Boise, Idaho, prac- changed during your "Diversity of thought, diversity of background, and when their children tice, Allen in 2003 became the career? experiential diversity are incredibly important to having SA: Thankfully, it's start growing up and first woman elected as chairman the right kind of dynamic discussion within corporations. go to business and the highest-ranking woman changed a lot. When I I also believe that the same extended benefit of diverse views school. Our initial in the organization's history. As joined our organiza- foray into the chairman, she is responsible for tion 34 years ago, is obtained when you have diversity in the workforce." Women's Initiative the governance of Deloitte & only 5 percent of came, in large part, because our then-chair- Touche USA, which has 40,000 those graduating with accounting degrees women left, because they didn't get the best man and CEO had daughters who were employees and annual revenues were women, and very few were in business engagements. While we don't guarantee a graduating from business school, and he of more than $10 billion. Allen school. Today, women are 50 percent of the woman will be assigned to a particular was recognizing the challenges they were earned her bachelor's degree in students in business schools like Stern and engagement, we assure that there's an equal dealing with. accounting and received an hon- 57 percent of accounting programs. We're footing in terms of being evaluated and orary doctorate in administra- also seeing more women moving up through assessed for engagements. It's made a huge PM: There's a lot of talk in the industry tive science from the University the organization. Unfortunately, we're not difference in how women have progressed about the need to reconcile US and interna- of Idaho. She is a member of quite there yet in the top executive suites through the organization. tional accounting standards, as well as the the boards of the Los Angeles around the country, but we're increasing every impact of new regulations like Sarbanes- area Chamber of Commerce, the day. PM: It's obviously a very global, complex, Oxley. What's your take? United Way of Greater Los and more connected world now. What SA: I think there is clearly a concern about Angeles, and the National PM: Why do you think the rate of progress advice would you give the people sitting in the competitiveness of the US, some of YMCA. hasn't been swifter? this room about how they should prepare SA: Organizations have been too slow in themselves to enter that workplace? which is based on the complexity of our accounting and reporting standards. But Sharon Allen was interviewed many cases to understand the environment SA: If students here have opportunities for there are other reasons as well, not the least by Paul Maidment, editor of that needs to be created in order to help global internships, chances to study over- of which is that the other markets are getting Forbes.com and executive women progress appropriately in a career. seas, they should jump on them. Whatever very aggressive about marketing their editor of Forbes. About 14 years ago, we started the Initiative you can do to figure out how to work for the Advancement and Retention of cross-functionally, and whatever you can opportunities and encouraging people to list Women, which has helped reduce the do to become effective in working with on their exchanges. I think we're just start- turnover gap between men and women. We're teams, and leading teams, is going to serve ing to see the results of Sarbanes-Oxley still not at the percentage we'd like to be at you very well. now, and, in many cases, it has been quite

16 Sternbusiness Sharon Allen is interviewed by Paul Maidment at a CEO Series event held in March. positive. The early adopters have actually corporations. I also believe that the same Audience Questions Q: What are some of the efforts Deloitte had a reduction in the number of restate- extended benefit of diverse views is obtained Q: I'm an Executive MBA student and have has in place to promote the diversity of its ments, whereas those who have not “early when you have diversity in the workforce. It's just accepted an offer from Deloitte. With all new hires? adopted” have had something like a 40 per- the right thing to do. But there's also a busi- the changes with technology becoming a big SA: We have to assure that when we do hire cent increase in restatements. ness case. Today, half of those graduating driver these days, and the emergence of people from diverse backgrounds, that we're from business schools are women, and India and China, how is the consulting world moving them through the organization at the PM: Do you think that integrity and ethics about 30 to 40 percent of our new hires are changing? appropriate pace. We're short on role mod- have improved in boardrooms as a result of from diverse backgrounds and under-repre- SA: It has indeed changed. Some people els. And so we have programs within the Sarbanes-Oxley or in spite of Sarbanes- sented populations. We really have to under- worry about how offshoring is going to affect organization that are focused on develop- Oxley? stand how to create the opportunity for their careers now that so much is being mental opportunities for women and for peo- SA: I think it would be easy to say that it's diverse populations to excel within our done in India. Our operations in India allow ple from under-represented populations. us to stay in the game in places that we These programs allow us to accelerate their better because of Sarbanes-Oxley. Many of organization. wouldn't otherwise be able to, like tax prepa- careers to assure that we're giving them spe- those changes might have come anyway, ration. One of the cautions that I have about cific guidance and opportunities to grow and because of the environment in which we all PM: Is there something that you now know consulting is you can't get too dependent to learn within the organization. found ourselves a few years ago. But I think that, when you started out in your career, upon the technology to provide your con- the active oversight that's taking place with- you wish someone had told you? nection across the organization. We're a Q: How do you maintain the work and life in the boardroom is probably at a higher SA: One of the lessons I learned is that you people business. balance? level than I've ever seen it within my 30- have to watch out for your own career. About SA: I will admit, I'm not the perfect role plus years. four years into my career, I was expecting to Q: I'm on my third career, and my question model for work and life balance. Having said get an early promotion. When I didn't get it, I is about experiential diversity. How do firms that, I do have some absolute commitments PM: You've talked a lot in our conversation stomped into my partner's office and told like Deloitte plan to access some of the peo- that I make to keep a balance in my life and about this changing and culturally diverse him all the things that I'd done that I thought ple who have managed people for 25 years? my family, which includes my husband and world. How important is it for your firm, and should have earned me this promotion. He SA: The first step we're taking is focusing on my dogs. You absolutely have to figure out how much do you push your clients toward just sat and looked at me and he said, “I did- it as it relates to our own alumni. We have a those things that make a difference to you having diverse workforces? n't know you'd done all those things!” So, mandatory partner retirement age at 62. And personally and then make sure you pay SA: I'm a strong proponent of diversity in the lesson is that you don't have to be a we have a lot of people who have actually left attention to them. My home is in Pasadena the boardroom, in executive suites, and in braggart, but you can make sure people before that, who frankly may have an interest and my office is here. And I'm neither place the workforce in general. I talk about it con- know what you've done to further your in coming back. As we consider our short- very often, to be honest. But in the process sistently in every venue. Diversity of thought, career. If you just assume everybody knows, ages, in many cases, we really have to look at of that, I really do work at being home every diversity of background, and experiential you're probably going to be wrong. ways to be creative about getting people into Friday in time for date night with my hus- diversity are incredibly important to having the workforce. I think something like 40 per- band. ■ the right kind of dynamic discussion within cent of our hires today are experienced hires.

Sternbusiness 17 LeadingIndicators

Matt Blank chairman and ceo Showtime Networks

Tom Lowry: Each week, fast-evolving tech- a bunch of changes, but I think it is still the movies. We're driven by shows like nology seems to bring new challenges or very, very important. I wouldn't bet against “Dexter,” “Brotherhood,” “Weeds,” “Sleeper opportunities that produce anxiety. How do cable operators. Consumers are still prima- Cell,” “The L Word,” and “The Tudors,” and you not get left behind in this new realm and, rily driven by inertia, although that's chang- by new comedies this summer. And ironical- at the same time, not make some colossally ing for the younger demographics. ly, if we're not dependent on feature films, stupid, knee-jerk decision? which require a commercial-free environ- Matt Blank: We're somewhat fortunate. TL: There's been pressure for years on col- ment, I might suggest that there could be ad We've always been a subscription revenue lapsing the time-honored distribution sys- revenue behind some of this proprietary business that didn't rely on advertising. So tem for movies' so-called windows. Why programming in the future. Matt Blank is the chairman and now the rest of the world is trying to figure shouldn't there be day and date release on CEO of Showtime Networks, out how to sell their product on iTunes, or movies so consumers can see them how TL: With the Internet, iPods, amd other which owns the premium televi- through Microsoft's Vista Platform. And we and when they want? devices, will the cable companies get disin- sion network, Showtime, known don't have ad revenues to be cannibalized by MB: We've lived in a world of sequential termediated? for edgy programming including other technologies, or by somebody fast-for- distribution. A film comes out in the the- MB: I don't think so. Time Warner Cable, “Weeds” and “The L Word,” as warding through a commercial. Last year we aters, and six months later it goes to video which serves New York, has a product called well as The Movie Channel and put “Weeds” and “Sleeper Cell” up on the and pay-per-view, and roughly six months Triple Play, where they offer cost-efficient other properties. At Showtime, iTunes platform, which phone service, Internet which he joined in 1988, Blank gave us access to a cus- access, and video. I "I think now the workplace is looking for people held several senior manage- tomer base beyond the wouldn't mind being ment positions, including chief 14 million plus house- with diverse experiences, and diverse experience Time Warner Cable. One operating officer, before being holds that subscribe to thing nobody wants to suggests that someone will adapt well to change." named chairman and CEO in Showtime. And if some- talk about, however, is 1995. Prior to joining Showtime, body decides to buy the wireless technology. he worked for many years at whole season of “Weeds” on iTunes, maybe, after that, it comes to a protected premium Everybody, including me, would love their HBO. Blank is active in several at some point, they'll think they should get TV window. That premium TV window lasts iPod to be wireless, to not have to crank industry associations, including Showtime. Every time somebody downloads for 18 months. It's probably been outdated into the laptop every time you wanted to the National Cable Television an episode or a season, it's helping the for quite a while. By the time a movie comes download content or do anything else. Association. He earned his brand. to Showtime today, a lot of people have seen Who'd be the best one to provide that? The undergraduate degree from the it on DVD or pay-per-view. At some point cable industry has a marketing relationship Wharton School of Business and TL: More broadly, who fares the best in this we're going to see a major shift in the DVD with 70 million households. And video is a his MBA from Baruch College. new environment – distributors or content window because technology has brought smaller and smaller part of their business players? huge perishability. Last week, Wal-Mart each year. MB: If you look at the history of the media Blank was interviewed by Tom announced that it is going into the video business, there have always been the haves TL: About 14 million homes subscribe to Lowry, a senior writer for download business with the studios. and the have-nots. People who held broadcast Marketing DVDs has become so competitive Showtime. That's about half of what HBO BusinessWeek, who covers licenses and the networks that then served and the marketing costs are huge. So to the has. What's the strategy in terms of winning media and entertainment. them, were the haves. If you were Showtime extent that you can shrink that window share? and you were distributed in every cable sys- between when you spend all the money to MB: A lot of that is institutionalized. When I tem in America, you were a have. If you were open the movie in theaters and when you started out at HBO, right after HBO went on some small network trying to get distribution release it on DVD, it's more efficient. the satellite in 1976, we tried very hard to in this environment, you were a have-not. But keep Showtime out of the home. So HBO in a world where there are no broadcast TL: How does a premium cable channel has always had that first-in-the-home status. licenses, and there's no price of entry, it's avoid becoming obsolete in that Viacom and Showtime had to sue Time Inc., much easier to get access to homes. The net- environment? and HBO in 1990 to gain access to the most work television model may be going through MB: We don't view ourselves as driven by important media market in the world, New

18 Sternbusiness York. (Time Inc., HBO's owner, owned the We had a partner attached in cable system here and refused to carry this case, Peace Arch Showtime.) But today, the greater challenge Entertainment, because this for us is not HBO; it's what everything costs was so expensive. in that household. Say you're a subscriber of Time Warner Manhattan, and you're taking TL: How do you market a all these channels, and it's $70 a month. show like this? Then they offer you high-speed Internet MB: Therein lies one of the access for $54.95. So now the bill is real holes in our sort of $124.95. When you look at the bill, there are business model. We're in 14 only one or two things that are on that bill million plus homes. CBS is that are discretionary, and that's HBO and in 108 million homes. I go a Showtime. little crazy when I sit there and watch the Grammy's, TL: How much has selling your program- and those little bullets keep ming on iTunes helped in terms of subscrip- flying across the screen for tions? “How I Met Your Mother,” MB: We have no real sense of that. We do and I'm thinking, “Boy, think it's helped us in the case of a couple of wouldn't that be great for those programs. My daughter is a senior in ‘The Tudors?’” Matt Blank answers Tom Lowry's questions in a CEO Series interview this past spring. college, and when “Weeds” and “Sleeper Cell” went up on iTunes, she said, “Dad, I'm TL: Are you consuming any TL: Do you think the executive class of the were the dead zone. I don't think that's the hearing from everybody – they're talking media on your cell phone? media business is more or less bifurcated case anymore. There are fewer barriers to about 'Weeds' and 'Sleeper Cell.'" At the end MB: I'm a news freak. I get four or five between the technology guys and the con- entry, so if somebody wants to be out there of the day, I don't think we can measure any newspapers at home in the morning. I actu- tent guys? making more programming for aging baby one of those things, but cumulatively we're ally will use my Blackberry probably half a MB: We had a famous executive who worked boomers, there are going to be a lot more doing very well. dozen times a day to check Yahoo News and at Showtime and refused to use e-mail; he opportunities to get that programming in Yahoo Headlines. A couple of times I've been finally lost his job at Showtime. I think it's front of people. TL: Let's talk a little bit about your manage- in the car at night going home and I click on just harder to hide. It's also harder to trust ment team, and how you've come to green- “CBS Evening News” or “NBC Evening your gut because the business isn't that lin- Q: What are some of the skills and qualities light some of these programs. News” and I see this little six-minute kind of ear. You need to really get information from a of the top executives that work for you, and MB: Let’s take “The Tudors” – a ten-part buffered Brian Williams or Katie Couric com- lot of different sources. I've always been a how important is mentoring to you? drama that's about King Henry VIII. Bob ing down and giving the headlines. So far, I big believer that a lot of this stuff was going MB: We have a really great group of senior Greenblatt, our president of programming, don't find that to be a really satisfying expe- to be happening, but I'm just amazed at people at Showtime, about a half a dozen has been with us for about three and a half rience. some of the things you see happening out people. Virtually all of them have been years. Before joining us, Bob had had his there. Eighteen months ago, I said, “No one's around for a decade or more at Showtime, own production company and produced “Six TL: What advice would you give to some- going to watch shows on their iPod.” And I'll and came up through the ranks, or grew into Feet Under” for HBO. In the summer of 2005, body who's just starting off in the business tell you, I have no problem sitting on an air- their positions. I think our focus is on having he asked me to read a script about young these days? plane and watching a show on my iPod. people who can really perform, perform Henry VIII. And I couldn't put it down, it just MB: The world is not linear anymore. I under pressure, and really believe in the read like a total soap opera. We weren't going would not set out in the media business Audience Questions product. Mentoring can be difficult, particu- to cast the 40-year-old, chubby, short, bald thinking about career paths, per se. I do Q: It would seem like there are going to be a larly in the media today, where the busi- Henry VIII. The idea was that we'd get a 22- think you have to be very, very flexible. I lot of baby boomers retiring and, therefore, nesses are rather mature. When I was at year-old Henry. Bob said we'd only do this if used to be very impressed if someone came having more leisure time and growing in HBO in the early 1980s, if you weren't get- we can cast the right person – Jonathan in and they had gone to Yale or had a importance to your industry. Do you have ting promoted every 18 months, it was like, Rhys Meyers, who played opposite Scarlett Harvard MBA. I now think the workplace is any plans for them? “What's wrong with you? You should go Johansson in “Match Point.” Basically, the looking for people with diverse experiences, MB: I like to say that 60 is the new 50, somewhere else.” ■ series is about the women and him and his and diverse experience suggests that some- because I'm not too far from 60. It used to be distaste for his cousin, the King of France. one will adapt well to change. in the television business that the 50-pluses

Sternbusiness 19 Prospectus

Robinson Garners Aspen Institute's Social Entrepreneurship in fall 2006. In June, Robinson presented a paper, Faculty Pioneer and Rising Star Award “Entrepreneurial Approaches for Non-Profit Organizations,” at the Lieutenant Governor's Social Entrepreneurship Workshop in New Orleans. Jeffrey Robinson, assistant professor In earlier research projects, Robinson has focused on social venturing and of management at NYU Stern, in community economic development. His “Early Stage Social Entrepreneurship September was awarded an Aspen Institute Research Project,” a path-breaking qualitative research of 80 social entrepreneurs, 2007 Faculty Pioneer Award in the catego- was one of five to receive a grant from NYU Stern's Stewart Satter Social ry of Academic Impact and was selected as Entrepreneurship Fund in the 2004-2005 academic year. Robinson is also co-prin- the sole "Rising Star." The annual awards cipal investigator for a project entitled “African-American Women Entrepreneurship celebrate MBA faculty who have demon- (AAWE) Research Project,” which is funded by the Ewing Marion Kauffman strated leadership and risk-taking in inte- Foundation and studies the patterns of entrepreneurship of African-American grating social and environmental issues women who lead ventures with revenues of $1 million or more. into academic research, educational Jeffrey Robinson Robinson's course, Foundations of Entrepreneurship – Social Entrepreneurship programs, and business practice. Section, offers a framework for understanding the entrepreneurial process and exposes Robinson was cited, in part, for his work analyzing the role of entrepreneur- Stern MBA students and students in NYU's Wagner School to issues faced by entre- ship in the rebuilding of New Orleans. In recent trips, he has documented the preneurs who start new social ventures. He recently completed his second co-edited return of inner city businesses to the Lower Ninth Ward, the establishment of a conference volume on social entrepreneurship, International Perspectives on Social statewide business grant program, and the activities of social entrepreneurs who Entrepreneurship, which will be published in 2008, and is a direct result of the 2nd are engaged in rebuilding and restoring communities. He has worked closely with International Social Entrepreneurship Research Conference that he hosted at NYU Louisiana Lieutenant Governor Mitch Landrieu, who created the state’s Office of Stern in April 2006.

Stern Welcomes New Faculty for 2007-2008 Vishal Singh has joined the marketing department as associate professor and will teach marketing research to undergraduate and MBA students. Prior to joining Six new faculty are joining NYU Stern this fall. “We are excited to welcome these Stern, Singh was assistant professor of marketing at Carnegie Mellon's Tepper School faculty members to the Stern community,” said Lee Sproull, vice dean of faculty. of Business, where he won the Bachelor of Science in Business Administration Michael Katz has joined the management department as the Harvey Golub Teaching Award for outstanding teaching. He was also awarded the Carnegie Bosch Professor of Business Leadership and a professor of management from the Chair (2006), Faculty Giving Chair (2005), and the Xerox Junior Chair (2003) there. University of California at Berkeley Haas School, where he spent two decades and Singh's research focuses on retail competition, competitive pricing, store brands, held the Sarin Chair in Strategy and Leadership. His research interests center database marketing, and empirical industrial organization. He earned his PhD in around antitrust and regulatory policy as well as networks and network effects – marketing from Northwestern University's Kellogg School of Management. areas in which he has also had practical experience. Katz held the post of deputy Mary Brooke Billings comes to Stern from PricewaterhouseCoopers. As an assistant attorney general for economic analysis in the US Department of Justice assistant professor of accounting, her research interests include securities litigation Antitrust Division under President George W. Bush and was chief economist of the and insider trading, the degree and nature of investors' sophistication, and volun- Federal Communications Commission in the Clinton administration. At Stern, he tary disclosure and information asymmetries. Her current work considers the con- will teach courses in competitive and corporate strategy. flicting disclosure and trading incentives faced by managers who become aware of The finance department welcomed two new professors: Xavier Gabaix, negative earnings news. associate professor, and Yuliy Sannikov, assistant professor and Charles Joshua Reed, who is joining the information, operations, and management Schaefer Family Fellow. Having earned his PhD in economics from Harvard sciences department as an assistant professor, primarily studies the performance University, Gabaix came to Stern from MIT, where he was an associate professor of analysis and optimal control of stochastic networks arising in manufacturing and economics. His research interests include asset pricing, executive pay, and the service systems. In particular, he is interested in applications related to telephone causes of seemingly irrational behavior. Gabaix is also a fellow of the National call centers. Reed earned his PhD in operations research from the Georgia Institute Bureau of Economic Research. Sannikov, who has a PhD in business administra- of Technology. tion from Stanford University, participated in the Review of Economic Studies tour In addition to these tenured and tenure-track professors, seven clinical professors as one of the top six PhD graduates in the US in 2004, and was an invited panel have joined Stern. They are Anthony Marciano (finance); Sonia Marciano speaker for his work on repeated games at the Econometric Society summer meet- (management); Gerald Rosenfeld (business and law); Anne Laure Sellier ings in 2006. His research focuses on the theory of dynamic incentives and its (marketing); Susan Stehlik and Jeffrey Younger (management communica- applications to corporate finance, macroeconomics, and industrial organizations. tions); and Tunku Varadarejan (business).

20 Sternbusiness Stern Creates New Business Ethics Symposium neural science, sociology, and law; faculty visitors from other universities; and prominent practitioners will be invited to partake in these symposia and help In June, NYU Stern announced the establishment of the Daniel P. Paduano strengthen the business ethics research community in New York City. Faculty Symposium on Business Ethics. The Symposium will build and sustain a “I believe that as the complexity of business increases in the variety of trans- vibrant community of faculty across disciplines who conduct research in business actions and across cultures, today's business professional will need an ethical ethics and related fields. It is made possible through the generous support of framework that integrates law, moral philosophy, economics, cultural studies, and Daniel P. Paduano (MBA '69). other faculties,” said Daniel P. Paduano of his decision to support the creation of “Our aim with this Symposium is to create a vibrant, self-sustaining commu- this Symposium. nity of scholars who are dedicated to unearthing substantive issues in business More than 35 years ago, NYU Stern introduced a required course in profes- ethics and to advancing a research-based interdisciplinary understanding of these sional responsibility for MBA students. Additionally, approximately 60 percent of problems,” said Dean Thomas Cooley. Stern's full-time MBA-level courses integrate aspects of corporate social responsi- Beginning in Fall 2007, the Paduano Fellows will participate in monthly semi- bility into their syllabi. In 2003, NYU Stern established its Citi Leadership and nars taught primarily by leading scholars in the field of business ethics. Paduano Ethics Program to enhance research, case development, and knowledge dissemina- Fellows will be charged with integrating business ethics into their own teaching. tion in the field of business ethics. Faculty from NYU departments, including economics, philosophy, psychology, researchroundup

William Baumol, Harold Price French, Le capitalisme Governance, and Ethics, authored a Professor of Entrepreneurship, aca- d'heritiers: la crise fran- case study on Marsh & McLennan demic director of the caise du travail (The that won first prize in finance in the Berkley Center for Capitalism of Inheritors: 2007 European Foundation for Entrepreneurial Studies, the French Work Crisis), Management Development casewrit- and professor of eco- in which he attributes ing competition, which held its award nomics, co-authored a France's unemploy- ceremony in Brussels in June. The new book, Good ment woes and lag- case study centers on Marsh & Capitalism, Bad ging economy to the McLennan's exposure to reputational Capitalism, and poor labor relations risk when, in 2004, its Putnam sub- the Economics of and low trust between managers and sidiary allowed hedge funds to Growth and workers that prevail in France. This low engage in late trading and market Prosperity. over time and argue trust is a consequence of several fac- timing. Baumol and that entrepreneurial tors: conservative management, Nomura Professors of Finance co-authors capitalism has been schooled in the grands écoles system, Martin Gruber and Edwin Elton, Robert Litan, vice the most effective who tend not to promote dynamic indi- along with Joseph Keating, distin- president for research and policy at system. viduals from within the organization; guished professor of finance at the Kauffman Foundation, and Carl Thomas Philippon, ideologically driven labor unions; and Fordham University, co-authored an Schramm, president and CEO of the assistant professor of finance and excessive state interventions. article, “Participant Reaction and the Kauffman Foundation, assess the dif- Charles Shaefer Family Fellow, Ingo Walter, Seymour Milstein Performance of Funds Offered by ferential performance of economies recently published a book, in Professor of Finance, Corporate continued on page 22

Sternbusiness 21 researchroundup

continued from page 21 react to plan administrator decisions. Kruger, associate professor of market- Motives Fail,” studies the way people 401(k) Plans,” which appeared in the They found that, on average, the funds ing, Jeff Galak, a PhD candidate at pass judgment on their own decisions. April 2007 issue of the Journal of selected by administrators outperform NYU Stern, and Jeremy Burrus of They found that while consumers Financial Intermediation. The article is randomly selected funds of the same Columbia University, will be published occasionally pat themselves on the the first study to examine how well type but don't outperform index funds in a forthcoming issue of the Journal back for making questionable purchase 401(K) plan administrators select funds of the same type. of Consumer Psychology. The article, decisions, at other times they find fault for their plans and how participants A paper co-authored by Justin entitled “When Consumers' Self-image in perfectly reasonable ones. shorttakes

Anindya Ghose and Panagiotis research on vendor strate- models Engle devel- information. However, by being more (Panos) Ipeirotis, both assistant gy, management, and per- oped can be used to forthcoming, the industry could allay professors of information, operations, formance in global out- measure risk, and public concern about systemic risk and and management sciences (IOMS), sourcing. The award will the implications for operational risk.” were chosen for the Microsoft Virtual provide $40,000 to sup- investors of a diver- This summer, Russell S. Winer, Earth Award to support their co- port a year of Levina's gence between short William H. Joyce Professor of authored research. They recently research on global sourc- and long-run risk. Marketing, will begin a two-year received $35,000 as well as a unique, ing in the IT services sec- The lectures can be appointment as executive director of the geographical location-based dataset tor. She will study issues viewed at Marketing Science Institute (MSI), Robert Engle from Microsoft. Their research, “Local pertaining to pricing soft- www.ft.com/busi- which brings together marketing execu- Search for Hotels and Restaurants ware and IT services, vendor strategies nesseducation/stern. tives from approximately 70 sponsoring Using Econometrics, Spatial Data, and and advantages in delivering diverse In March, Stephen J. Brown, corporations with leading marketing Image Classification,” seeks to identify types of IT services, and the role of David S. Loeb Professor of Finance, researchers from more than 100 univer- the economic value of different location managers' background and actions in along with representatives from sities. As executive director, Winer will characteristics for hotels and restau- enabling effective collaboration. Goldman Sachs, the nation's largest be working with the sponsoring compa- rants given the associated local infra- In July, Nobel prize-winning hedge funds and university endowment nies to set the research agenda for the structure. This project builds on their economist Robert Engle, Michael funds, testified before a House next two years on marketing topics of continuing research Armellino Professor of Committee on Financial Services hear- importance to these businesses. “My on economining. Finance, presented the ing on hedge funds' likelihood of sys- goal is to develop MSI's global reach NYU Stern fifth installment of the temic risk to the financial markets. by stimulating research in the two Associate Professor Financial Times “Some [hedge funds] view lack of largest academic markets outside of the of Information Business School series transparency as part of their business US and Europe: China and India,” said Systems Natalia of online executive edu- model. I argue that it is this lack of Winer. “I hope to greatly increase the Levina received the cation courses. His five information, this lack of transparency at number of funded research proposals IBM Shared lectures focused on an industry level that is of greatest con- and conferences in both countries as University Research topics such as global cern,” testified Brown, the only academ- well as to continue MSI's outstanding (SUR) Award this financial volatility, how ic to testify before the hearing. “There is record of thought leadership on topics spring for her Natalia Levina the ARCH and GARCH no need to know proprietary trading of interest to business.”

22 Sternbusiness The Business of Business Education

Some critics charge that business schools are too academic and theoretical. But the research and mindset that they incubate have powerful real-world applications.

By Thomas F. Cooley

raduate schools of busi- was endemic in most economies, and business schools fail to impart useful ness face a tough educa- the personal computer and the skills, don’t prepare students to be tional challenge: we Internet were not even a gleam in leaders, and don’t instill ethical stan- have two years to pre- someone’s eye. The most popular word dards in graduates. A popular view pare young college grad- processing tool was a pencil. One hes- holds that business schools are failing Guates (typically with some meaningful itates to project what sorts of changes because they are too focused on sci- work experience) for a career that is we might see by 2042. entific research, and not enough on likely to last 35 years. Now 35 years To aggravate matters, business the so-called “real world” skills and ago, large parts of the world economy education is under attack. Recent arti- applications needed to succeed in were governed by socialist principles, cles in the business and mainstream today’s complex marketplace. In an trade was highly restricted, inflation press have asserted that even the best impassioned critique in the Harvard

Sternbusiness 23 Business Review, Warren G. Bennis ety. Business schools are entrusted by at five schools: Carnegie-Mellon and James O’Toole argued that the society with the culture of a profes- University, the University of Chicago, model of academic excellence sion, and have a responsibility to rein- and Columbia, Harvard, and embraced by most leading business vigorate it through the education of Stanford Universities. Using the schools, which is based on the theory each new generation. Therefore, their transformation of medicine and engi- that business schools should deliver a goal must be to provide a meaningful neering as a model, these schools long-term educational foundation and serious intellectual experience invested heavily in research and in rather than a set of short-term voca- that prepares students to be leaders in doctoral programs. The investments tional skills, is the major culprit for a complex evolving world. In addition have clearly produced returns. In this failure. Bennis and O’Toole to teaching the current accumulation 1955-1956, graduate business edu- report with breathless amazement of knowledge, business schools must, cation was virtually non-existent. that there are tenured professors of therefore, be actively engaged in cre- Now, well over 100,000 graduate management who have never set foot ating the new knowledge that will business degrees are awarded annual- inside a real business except as cus- drive business in the future. New ly by 650 AACSB programs. Business tomers. In a similar vein, Jeffrey knowledge creation is the key to suc- schools now enjoy greatly improved Garten, former dean of the Yale cess in business, and to the develop- status as professional schools, in large School of Management, told The New ment of tools and analytical approach- measure because the intellectual York Times that business school edu- es that make such success possible. value of the undertaking is recog- cation should be more “clinical” and What’s more, the modern business nized. The widespread adoption of that business school faculty should be corporation is one of the most impor- the MBA degree as a qualification for required to have more practical expe- tant and complex drivers of economic future business leaders has legit- rience in business. And this spring, an and social change in the world. As imized the position the Ford Association to Advance Collegiate such, it demands the serious study Foundation and others took 50 or Schools of Business (AACSB) task that only a research university can more years ago. force issued a draft report on provide. erhaps more important, research. Among its conclusions: that Beyond misunderstanding the cru- business schools have gen- business schools should “demonstrate cial role business education plays erated ideas of depth and the impact of faculty intellectual con- today, many contemporary business daring that have changed tribution to targeted audiences,” and school critics fail to grasp important businessP and financial markets in that AACSB should “develop mecha- lessons from its evolution. During the important ways. Professors Finn nisms to strengthen interaction 1950s, the Ford Foundation became Kydland and Edward Prescott were between academics and practicing interested in enhancing business edu- awarded the 2004 Nobel Prize in managers in the production of knowl- cation, which it perceived as a bul- Economics for work they did in the edge in areas of greatest interest.” wark against the spread of commu- 1970s and 1980s at Carnegie- I’m convinced that the critics of nism. In a series of papers and reports Mellon’s Graduate School of business school education have it the Foundation supported, American Industrial Administration, now exactly backwards: the pressure busi- business education was characterized called the Tepper School of ness schools face to give in to a voca- as a collection of trade schools without Management. Their work on what is tional focus means that students do any strong scientific foundation – “a called “the inconsistency of optimal not acquire the analytical and intel- wasteland of vocationalism,” in the plans” established the foundation for lectual training needed to inform a words of Nobel Laureate Herb an extensive research program on the leadership career, and that enables Simon. The reports suggested that credibility and political feasibility of businesspeople to deal with a range of the backward-looking, practice- economic policy, shifting the practical variables far greater than a purely based approach of educating people discussion of economic policy away vocational “how to” approach can for first jobs rather than for their from isolated policy measures toward address. whole careers would ultimately ham- the institutions of policy-making. Business schools do have a schol- per rather than help students. Kydland and Prescott were also cited arly mission. The mission is to under- for having transformed our under- stand markets, firms, and prices as Idea Factories standing of business cycles by inte- well as to develop new strategies and Between 1954 and 1966 the Ford grating it with the theory of econom- discourses for understanding how Foundation spent $35 million to fos- ic growth. A year earlier, the Nobel they work and how they impact soci- ter business education and research Prize in Economic Science for 2003

24 Sternbusiness was awarded to Robert Engel and giving them a sufficiently clinical edu- More important, it is the story of how Clive Granger. The former is a pro- cation. But the best schools expect stu- baseball has been transformed by a fessor of finance at NYU Stern, the dents to have two or more years of generation of researchers (aka base- latter a professor of economics at the meaningful work experience before ball nerds) whose major contact with University of California, San Diego. admission to their MBA program. the game is through data analyzed by Engel’s work on what is called Most stress the importance of an increasingly complex computer pro- “autoregressive conditional het- internship in the summer between the gramming. Beane understood that eroskedasticity” was originally pub- first and second years of study. And this apparently arcane research had lished with an application to the vari- most business schools I know of the potential to create extraordinary ance of inflation in the UK, but its employ a number of clinical faculty, value for his team. Indeed, under fruits have become indispensable chosen for their expert knowledge of Beane’s leadership, the perennially tools in the analysis and management institutions and practice, who bring an undercapitalized A’s managed to of financial risk. reach the playoffs for four The aforementioned consecutive years. Over that transformative ideas first "It is precisely because we don't yet know the period, their salary cost per appeared in apparently victory was less than half of problems that we will be facing that practice-driven esoteric academic research the next highest spending journals, with no obvious education, focused on current solutions to current team and less than a quarter relevance to business. Just problems, will always fall short." of teams like the New York as has been the case with Yankees. basic research in sciences Beane overturned the such as physics and chemistry, the additional hands-on experience into most basic principles of one of the researchers who developed these the- the classroom. most tradition-bound businesses in ories spent a great deal of time fol- Besides, the research mindset America – professional baseball – by lowing blind alleys, engaging in trial brings a unique and powerful focus to using sophisticated statistical and error, experimenting, meeting business education. It is forward look- research in place of traditional “gut with failure and success. By defini- ing rather than backward looking. It instinct.” Several major league gener- tion, much of this research is imprac- moves education away from teaching al managers who have never played tical. And yet, just as has been the students a collection of facts to teach- the game are now similarly schooled case with basic scientific research, ing them how to think. It moves them in the research tradition of “money- this pioneering research quickly from a stultifying “best practice” ball,” and executives in sports like found unanticipated real-world mentality toward developing analyti- basketball and football are catching applications. And there are dozens of cal ability. Would you rather have on. other examples: agency theory and business school graduates who know Moneyball is a good metaphor for corporate governance, the capital what kinds of contracting structures what happens in academic research. asset pricing model, the Black- businesses now use, or students who You hire a bunch of bright, well- Scholes-Merton model and option understand that contracts exist to trained people with strong technical pricing theory, conjoint analysis, auc- solve moral hazard, asymmetric infor- skills and a passion about what they tion theory, decision theory, game mation, commitment, and agency study and turn them loose. With the theory, pricing strategies and portfo- problems? It is precisely because we right personnel, the right conditions, lio theory, queuing theory, risk man- don’t yet know the problems that we the right insights, and with a for- agement, and behavioral economics will be facing that practice-driven ward-looking rather than a back- and finance. Which is precisely why I education, focused on current solu- ward-looking focus, exciting things find the AACSB’s proposed guideline tions to current problems, will always can happen. And that research, that business school professors focus fall short. applied in the right circumstances, efforts more on targeted research has truly enormous potential for with immediate demonstrable impact Moneyball change. ■ to be somewhat wrongheaded. One of my favorite business books Critics argue that while research of the past few years is Moneyball by itself might be a worthy undertaking, Michael Lewis, the story of the THOMAS F. COOLEY is Richard R. research-driven business schools are Oakland A’s and their extremely suc- West Dean and Paganelli-Bull Professor letting their students down by not cessful general manager, Billy Beane. of Economics at NYU Stern.

Sternbusiness 25 Comparative Capitalism

What accounts for Europe’s and America’s different attitudes toward the free market?

26 Sternbusiness By Augustin Landier, David Thesmar, and Mathias Thoenig

hroughout the Western contained questions on ethnicity, pri- sample and displays mean variables world, a vast region vate property, and attitudes on state for all three waves of the WVS. generally viewed as interference with free competition. In the cross section of countries, dominated by capital- By running regression analysis on preference for redistribution and atti- ism, people’s attitudes this data, we were able to investigate tudes toward free markets showed towardT the virtues of free markets the influence of certain factors in little, if any correlation. But this was vary widely. According to the World accounting for the differential atti- less true at the individual level. Value Survey, only 22 percent of tudes. People that tended to favor income French people believe that owners Our analysis of the WVS focused equality also tended to distrust com- should run their businesses and on the answers given to questions petition, large companies, and share- appoint their managers, while as about (1) the benefits/harms done holder control of firms. In order to much as 58 percent of Americans by competition; (2) whether owners, isolate the pure effect of “pro-free agree with this statement, to cite one employees, or the state should run market” beliefs, we used as control example. the firms; (3) the merits of private variables attitudes such as: trust Academics have focused on a ownership of business and industry; (many existing studies have shown range of issues to explain the disper- and (4) the trustworthiness of large that trust explains well the cross sec- sion of pro-free market attitudes. firms. The data show a large varia- tion of various economic outcomes, Some argue that the uniqueness of tion in cross-country attitudes such as GDP growth); aversion to US history – a large, ethnically het- toward free markets. Two examples inequality (defiance toward free erogeneous society – has endowed are given in Table 1, which focuses markets may stem from a concern for modern American citizens with per- on the 18 richest countries in our equality); pro-trade (in many sistent anti-redistributive beliefs. The political economy view holds Table 1: Attitudes Toward Free Markets for Various Countries that people that gain the least from globalization are less likely to sup- Percent who believe the owner should The belief that competition is good (on a scale of 10; 10 port it (for example, unskilled work- control the firm representing the strongest agreement with this belief) ers in the North, skilled workers in the South, people working in indus- New Zealand 64.1 Iceland 7.2 tries with high trade exposure). Still United States 57.7 Australia 6.8 others argue that differences can be Canada 53.8 Austria 6.8 ascribed to cultural factors such as Australia 50.3 United States 6.7 patriotism, neighborhood attach- Austria 49.8 Switzerland 6.7 ment, or a strong sense of identity. Switzerland 46.9 Sweden 6.7 We set out to understand what United Kingdom 46.0 Norway 6.6 determines attitudes toward free Singapore markets by investigating how beliefs Iceland 45.2 6.6 about the market economy vary Denmark 44.3 Canada 6.6 across individuals, time, and coun- Belgium 44.0 Germany 6.6 tries. We constructed a dataset based Singapore 42.9 New Zealand 6.5 on economic data like pension fund- Japan 40.4 Finland 6.1 ing and stock market participation, Finland 37.8 Denmark 6.0 and on opinion surveys, like the Germany 36.5 United Kingdom 6.0 World Value Survey (WVS), which Norway 34.8 Belgium 5.6 collects data on age, gender, and Japan income, and measures attitudes Netherlands 33.6 5.6 toward economics, marriage, and Sweden 32.5 France 5.5 religion across dozens of countries; France 22.0 Netherlands 5.5 and the Internal Social Survey Program (ISSP), whose 1996 wave Source: World Value Survey

Sternbusiness 27 instances, defiance toward market explanation is that older people, being by 30 percentage points. forces can be defiance toward closer to retirement or more It’s natural to wonder whether the globalization); and religion (aca- entrenched in their jobs, are more institutional determinants that impact demic work has shown, in general, sheltered from the shocks of competi- the support for markets come from that being religious is positively cor- tion.) People with higher levels of very far in the past or are largely driv- related with a positive perception of income also showed strong support for en by recent developments. Several work and thrift). When we ran the market forces and self-interested scholars have argued that in a cross- data, we found that the uncondition- behavior. Our preferred interpretation section of countries, distant legal ori- al correlations were not very high, of this finding is that income is a gins matter. Compared with countries which suggests that individual deter- proxy for the ratio of financial wealth whose systems derive from French minants of opinions are very diverse to human capital. Another possibility civic law, countries whose systems derive from British common law have a stronger propensity to protect “French legal origin was strongly related to competition aversion, debtholders and shareholders, have and British common law was related to a strong preference lower job protection, and facilitate entry by making business creation for owner control. These findings suggest that long-run institutional easier. When we ran the numbers, we determinants rooted in the history and culture of a country found that legal origin has a signifi- cant impact. Notably, French legal dominate more recent developments in the organization of its economy.” origin was strongly related to compe- tition aversion, and British common across attitudes. And yet we found is that income is a proxy for skill. law was related to a strong preference that all four “market” variables are Skilled labor is more protected from for owner control. These findings sug- positively correlated with each other. off-shoring and creative destruction gest that long-run institutional deter- Pro-competitive people also tend to that accompany for-profit manage- minants rooted in the history and cul- support less equality, seem to favor ment and tougher competition. ture of a country dominate more free trade, and tend to be less reli- A more powerful test of the politi- recent developments in the organiza- gious and less confident in other cal economy view consists in combin- tion of its economy. people, for example. ing the individual characteristics with There’s more evidence that culture country-level institutional features. matters. Consider that only about 48 Self-Interest We did so by looking at the cross- percent of American households own Why do attitudes toward free country dispersion in pension funding stocks directly or indirectly. This markets vary so much across indi- and financial development as a meas- makes it unlikely that the median viduals? The political economy view ure of the extent of financial markets voter will support owner control or holds that self-interested individuals institutions and compared how young free competition just because it boosts hold the beliefs that suit them best. and old people answered the ques- the return of its portfolio. And yet, 57 In the developed world, for example, tions. In theory, older people, who percent of US respondents agreed those least supportive of free trade control a greater chunk of financial with the statement that the “owners also tend to have lower levels of edu- wealth, should display more free-mar- should appoint the management,” cation or work in industries where ket support in countries where they and more than 70 percent of US foreign competition is high. To test are the most likely to hold a larger respondents who work for others this hypothesis, we explored fraction of financial wealth. Generally agree with the proposition that “man- responses on two broad and distinct speaking, we found that in countries agement should only care about prof- sets of issues: attitudes toward com- where pensions are funded, in finan- its.” The diffusion of equity owner- petition and attitudes toward the cially developed countries, the old ship in the US cannot alone explain profit-motive. Attitudes toward are much more likely to be support- why American citizens support free ownership and competition shared ers of the free market than the markets more than do citizens of some common determinants that young. The probability that the other countries. proved to be statistically significant. young favor owner control was larger Culture may be a factor in explain- Support for competition and owner by 18 percentage points in the pen- ing such results. Scholars have argued control was also more prevalent sion-funded countries. The probabil- that attitudes are affected by ethnic among older people. (One possible ity that older citizens do so is larger origins because they have a cultural

28 Sternbusiness component, and that culture is younger generations tend to be less dence that indeed, free market atti- transmitted within the family. To test pro-market in general. For people tudes are strongly transmitted within this hypothesis, we constructed two born after 1970, the probability of the family and are weakly dependent indices of cultural proximity to seven supporting owner control or competi- of the economic context. For instance, major western cultures: France, tion was lower by 1 percentage point. respondents of Eastern Europe origin Germany, Russia, Spain, Sweden, The probability of supporting state were 22 percent more likely to sup- the UK, and the US. The first index ownership over private ownership was port redistribution; US residents of measures proximity to economic cul- higher by 5 percent, a much larger such origin were 6 percent less likely ture using as controls an aversion to difference. But the generational divide – not statistically significant – to do inequality and a pro-trade attitude. was significantly larger in post-com- so. In general, the difference in atti- The second index of cultural proxim- munist countries than in other coun- tudes between US citizens of Anglo- ity is related to non-economic values, tries. In former communist countries, Saxon descent and other origins was such as religious proximity. We also the young are 7 percentage points both small and insignificant statisti- looked at whether each country has more likely to support the for-profit cally, while the difference was strong been, at some point in history, a motive, 9 percentage points more like- on the worldwide sample. This sug- colony of one of the seven countries ly to support private ownership over gests that such beliefs are much more we mentioned above. Our tests state ownership, but only 2 percent- conditioned by environmental charac- showed that cultural proximity to age points more likely to support teristics than by transmission of fam- French economic attitudes predicts a competition. These findings suggest ily values. significantly lower support for owner that the forces that shape the prefer- What should we conclude from control, as does proximity to ence for redistribution are not neces- this investigation? First, we find that Germanic and Nordic economic atti- sarily the same as those which shape the traditional political view tudes. Proximity to British attitudes attitudes toward market forces. according to which individuals hold does, however, predict a higher- Clearly, past shocks and shared expe- political opinions that are self-serv- than-average propensity to favor riences shape generation/population- ing is consistent with the data. In owner control. Countries with British wide attitudes. general, individuals that would ben- legal origins and/or who have been, o investigate further how efit more from a pro-market agenda at some point, colonized by the fast beliefs can adapt from exhibit stronger pro-market opin- British tend to display a higher one generation to the next ions. But this tendency alone can’t degree of ownership control. if the economic context explain the sometimes significant Meanwhile, countries that had been changes, we looked at evi- differences between countries. The colonized by Spain and Russia are Tdence from immigrants. For our pur- attitudes of a country toward mar- systematically less supportive of poses, we grouped country/lan- kets are slow-varying and seem, on competition, while former Swedish guage/ethnicity of origin into four aggregate, to be strongly deter- and British colonies are more pro- broad categories: English-speaking mined by historical and cultural competitive. countries, Continental Europe, factors. When it comes to explaining Eastern Europe, and Nordic coun- differences between countries’ views Generational Difference tries. The regressions we ran broadly toward fundamental issues of mar- For country differences in beliefs confirm the results obtained on indi- kets and competition, economic the- about markets to be permanent and vidual and country data. Respondents ory matters. But so, too, do other unexplained by self-serving behav- from English-speaking countries show factors, such as culture, legal sys- ior, divergent beliefs of individuals consistently more support for both tems, ethnicity, and family, matter. need to persist throughout genera- free markets and private property. ■ tions. But we also know that ideas Respondents of Eastern European and attitudes change over time. We origin show the strongest support for AUGUSTIN LANDIER is assistant tried to get at this issue by focusing state ownership and an activist indus- professor of finance at NYU Stern, on former communist countries and trial policy. DAVID THESMAR is professor of eco- comparing attitudes toward free We ran the same regressions focus- nomics at the Ecole Nationale de la markets held by younger generations ing on US residents. The focus on the Statistique et de l’Administration to attitudes of generations that were US is useful because it is the country Economique (ENSAE) in Paris, and already adults when the Berlin Wall where regions of origin are the most MATHIAS THOENIG is professor of fell. We found that in the West, diverse. Here, we found mixed evi- economics at the University of Geneva.

Sternbusiness 29 30 Stern business

ILLUSTRATION BY CHRISTOPHE VORLET The Alchemy of LBOs and IPOs

How to think about private equity today

By Ingo Walter

t must be magic. Take a been around for years in various made to order. small group of highly talent- guises, including LBO firms and With distinctive financial and ed individuals, raise lots of “activist” hedge funds. Classic pri- industry expertise and investors risk capital from yield-hun- vate equity firms are usually organ- locked-in for several years, private gry investment institutions ized around a cluster of special- equity firms hunt for what they con- andI wealthy individuals who can tol- purpose limited partnerships run sider materially undervalued assets – erate possible losses, load-up on by their principals – people with mismanaged public companies, cheap debt to leverage investments, outstanding financial skills, exten- startups in promising industries, and opportunistically pursue control sive business and political contacts, public-sector privatizations, corpo- of an astounding array of new and and substantial industry expertise. rate spin-offs, or corporations com- established businesses around the The principals invest as general ing out of bankruptcy. The plan is to world. If it works, everybody wins. partners in the funds they manage, restructure the business and eventu- Investors receive high, abnormal alongside a limited number of ally exit with a substantial profit. returns for the risk they take. Banks qualified (wealthy) individuals and For startups, that may mean long- book loans at attractive spreads. And institutional investors who will term nurturing of the firm until it is the owners and managers get seri- share in any gains or losses – and, ready to be sold to a trade buyer or to ously rich, with a few taking home in the meantime, pay hefty man- the public in an initial public offer- over $1 billion in a good year. That’s agement fees. In today’s environ- ing. For established businesses, it the general idea behind private equi- ment of low interest rates and lim- usually means focusing intensively ty today. But what is the source of all ited opportunities for high yields, on improving cash-flows and rework- these gains? And how sustainable is many long-term investors are ing the financial structure to increase the business model? searching for total returns (“alpha”). leverage – a task that isn’t too diffi- The private equity business has For such investors, private equity is cult given today’s global liquidity

Sternbusiness 31 and cheap credit – as well as closing obsolete plants, streamlining pro- "The benefits of private equity greatly exceed its costs. duction processes, improving prod- Private ownership traces its roots to the origins of capitalism ucts and services, unloading non- and fuses risks, returns, control, and accountability in ways core businesses, and other related initiatives to make the business more that are sometimes hard to duplicate in public markets." valuable. Most (but not necessarily all) top management and the board es that have underperformed, and process. Private equity firms have will usually be replaced, and in the give new life to industrial wrecks like variously been called “asset strip- absence of scrutiny by the public Chrysler, where other owners have pers” and “locusts” in sometimes markets, the private equity firm will failed miserably. They replace obso- overheated debates. Private equity single-mindedly dominate both lete corporate structures like con- deals have become hot topics from management and governance glomerates with clean, specialist Australia to South Africa, from con- processes using the best talent companies able to leverage expertise tinental Europe to Japan. Indeed, money can buy. and focus. They neutralize age-old effective corporate restructuring f all goes well, an exit will be conflicts of interest between man- often involves large-scale layoffs, the found some time down the agers and shareholders (the source of costs of which are borne by the indi- road that successfully mone- most corporate governance problems) viduals themselves or by society at tizes the value of the enter- by eliminating the distinction large. Employees may be bludgeoned prise and provides signifi- between the two roles. They galvanize into concessions which leave ordi- Icant returns for the principals and public companies into self-improve- nary people worse off even as the their co-investors. Along the way, ment by their very presence and the private equity investors accumulate the principals will often pay them- knowledge that very few listed firms outsize returns with effects on selves large consulting and man- today are immune from private equi- income distribution that could even- agement fees, sometimes financed ty’s attentions, including club-deals tually undermine the political legiti- by the debt the business takes on. that could go after the world’s largest macy of the market-based economy. These are profits that come on top companies. The collective angst Customers too may feel the heat as of the expected capital apprecia- induced by private equity firms private equity owners take advan- tion. But, of course, things may makes private enterprise work better. tage of opportunities to exploit not go as planned and expected And as they take companies private, monopoly power and raise prices. returns on a particular investment they are able to shed some of the bag- And the financial engineering may fail to materialize. In such gage that holds down public compa- applied by private equity firms may instances, private equity investors nies – short-termism, earnings guid- increase bankruptcy risk and busi- hope to offset losses with more ance, analyst scrutiny, and share ness survivorship under adverse con- successful investments elsewhere price volatility – and focus on realiz- ditions even as some of that debt is in the fund’s portfolio. ing significant long-term values. In used to enrich private equity man- short, private equity represents an agers and reduce their exposure to Cleansing Agents economic catalyst that can only possible failure – once again separat- Private equity firms argue that improve capital formation, labor ing the interests of owners and man- they are the cleansing agents of the force allocation, productivity, and agers. private enterprise system, and, as technology as an engine of growth for In their defense, private equity such, that they are doing well by the general good. firms argue that any job losses they doing good. They provide a critical Critics concede some of these impose are far fewer than the losses source of equity capital for startups, points, but argue that there are also that would be suffered if the target streamline and restructure business- important costs and risks to this companies failed, that destroying

32 Sternbusiness viable jobs makes no business sense, in the current financial cycle. while not investing in the funds that and that they have, on balance, cre- Over $800 billion in private equi- the firm manages. There may be ated and not destroyed jobs. They ty transactions have been completed more to come. To some observers, promote the value of private equity worldwide since the beginning of the “greater fool theory” suggests in inhibiting key problems in public 2005. Can it really be that the mar- that opening ownership to outsiders companies that have come to light, ket-driven economy works so badly may signal a turn in the cycle. such as accounting scandals and and that public companies are so For now, at least, it seems to be earnings restatements, options back- badly managed that this volume of smooth sailing, and private equity dating, management compensation deals will end up being highly prof- deal volume continues at a blistering unrelated to corporate performance, itable for the private equity pace. But, of course, the global eco- boardroom failures, and the like. investors? Or that a single firm, nomic environment has been And they argue that they comply Kohlberg, Kravis & Roberts (KKR), extraordinarily benign. A global with public policy constraints on corporate conduct, just like every- "In the end, financial historians may find there was nothing one else. ho is right? No 'magic' in the private equity boom after all. Rather, it may be doubt there are that it was just a product of the times and the free market good arguments performing its function." on both sides. But I would Wargue that the benefits of private can account for 44.1 percent of glob- recession on the order of the early equity greatly exceed its costs. al buyouts so far this year (including 1980s and early 1990s, or a persist- Private ownership traces its roots to leading the $45 billion buyout of ent spike in real interest rates, could the origins of capitalism and fuses Texas energy producer TXU and the easily end in tears for private equity risks, returns, control, and accounta- $20 billion buyout of UK drug store firms, their investors, and some of bility in ways that are sometimes chain Alliance-Boots) and still avoid their debt-holders, as it did after the hard to duplicate in public markets. overpriced transactions, unforeseen last two booms. Bubbles are hard to In any case, private equity usually restructuring bottlenecks, and out- detect in advance. In the end, finan- depends directly or indirectly on running its own capabilities? cial historians may find there was public markets to provide an exit, so The private equity industry is nothing “magic” in the private equi- fears of serious impairment of those changing too. For example, Blackstone, ty boom after all. Rather, it may be markets are overblown. On the other a leading player, launched an IPO in that it was just a product of the times hand, private equity needs persistent June, allowing the general public to and the free market performing its inefficiency to thrive and, therefore, buy a stake in the management com- function. ■ has its own dynamic of “creative pany and giving its principals the destruction.” The more it succeeds, chance to cash out. Along the way it INGO WALTER is Seymour Milstein the narrower its market opportuni- created a somewhat puzzling struc- Professor of Finance, Corporate Governance, and Ethics at NYU Stern. ties and the more it attracts competi- ture of a listed public company that tors from the hedge fund sector, itself thrives on secrecy and oppor- A version of this article was published in the June/July 2007 issue of UBS’ staff investment banks, financial con- tunism. Meanwhile, China recently magazine in Zurich. It represents the announced an investment of $3 bil- glomerates, and even principal- views of Professor Walter, and not of investment units of insurance com- lion of its massive foreign exchange UBS. panies and pension funds. Too much reserves in Blackstone. A unit of the money may already be chasing Chinese government has become a increasingly marginal opportunities non-voting principal of the firm itself,

Sternbusiness 33 To Guide or Not to Guide? ILLUSTRATION BY GORDON STUDER ILLUSTRATION

An investigation shows that investors suffer when firms stop giving quarterly guidance

34 Sternbusiness By Joel F. Houston, Baruch Lev, and Jennifer Tucker

arnings guidance – man- answer relies less on opinion and stoppers in each quarter before they agers’ public forecasts of more on data. We set out to investi- stopped guidance reported losses forthcoming earnings – is gate the countervailing claims about and earnings declines (compared a widespread, yet highly guidance by looking at the financial with the year-before quarter) more controversial practice. A and economic consequences of guid- frequently, while guidance main- Erecent position paper by the CFA ance. To do so, we constructed a tainers met or beat consensus fore- Institute and the Business series of tests that compared the per- casts more frequently. Compared Roundtable emphatically recom- formance of companies that stopped with the overall population of US mended that corporate leaders “end issuing guidance after having done firms, guidance stoppers performed the practice of providing quarterly so, with the performance of those worse in each of these three areas earnings guidance.” Purists argue that continued to offer guidance. while guidance maintainers per- that managers should leave securi- The intriguing results suggest that formed better. More important, we ties valuation and the underlying reducing disclosure by stopping found that as the stoppers forecasts of future performance to guidance benefits neither investors approached the event quarter, they investors and analysts. Lawyers nor companies. increasingly suffered losses, earnings warn that earnings guidance increas- declines, and a failure to meet or es litigation exposure. Regulators Stoppers and Maintainers beat analyst consensus. This pattern and commentators fret that previ- Using the First Call Company was reversed for the maintainers. ously issued forecasts motivate man- Issued Guidelines (CIG) and Factiva Several other metrics pointed to agers to meet forecasts even when news databases, we compiled a sam- greater instability and poor per- doing so requires them to cut adver- ple of 222 firms that stopped giving formance among stoppers. During tising or research, or, worse, to man- guidance between the first quarter the pre-event (stopping) period, rel- age earnings. Others object that of 2002 and the first quarter of ative to maintainers, the stoppers quarterly guidance leads managers to cater unduly to the demands of "Economic theory teaches that credible and relevant information short-term investors. All in all, con- disclosures, such as high-quality earnings guidance, decrease information cludes McKinsey & Co., “earnings guidance is misguided.” asymmetry and improve resource allocation in the capital markets." But managers often claim that guidance is necessary to keep ana- 2005, along with a sample of 676 more often experienced a change of lysts’ earnings forecasts within a rea- guidance maintainers. “Guidance CEO/CFO, had higher earnings sonable range to avoid large earnings stoppers” were firms that issued uncertainty, higher incidences of surprises that increase stock price guidance for at least three out of the losses, larger decreases (or smaller volatility. Some observers note that four pre-event quarters, but gave no increases) in earnings, and poorer successful earnings guidance guidance for any of the four post- records of meeting/beating either enhances investor confidence in event quarters. Those that provided analyst consensus or their own earn- managers’ ability. And economic guidance for at least three out of the ings estimates. The stoppers meet or theory teaches that credible and rel- four quarters in both the pre- and beat analyst expectations only 69.2 evant information disclosures, such post-event periods were termed percent of the time, while the main- as high-quality earnings guidance, “guidance maintainers.” tainers’ did so 83.3 percent of the decrease information asymmetry First we examined the financial time. Reflecting their relatively poor and improve resource allocation in reasons for stopping guidance. performance, the stoppers posted the capital markets. Compared with the guidance main- lower market-adjusted stock returns Who is right? We believe that the tainers, we found that guidance in the pre-event period than did the

Sternbusiness 35 maintainers. A similar dynamic percent of the cases, company guid- team is more willing than an existing could be seen after guidance was ance was more accurate than ana- team to steer the firm’s guidance halted. Relative to the maintainers, lysts’ forecasts. policy away from popular practices the stoppers suffered from signifi- in its industry. We also found that cant decreases in analyst coverage, Changing Direction past and anticipated difficulty of significant increases in analysts’ Given these findings, it’s some- forecasting earnings contributed to forecast dispersion and forecast thing of a mystery why firms would guidance cessation. error, and experienced no changes in stop offering guidance. Most firms Beyond these stated reasons, capital expenditures and R&D did not announce or explain changes however, there may be an unstated spending. in their guidance policies. Among yet important motive for stopping Guidance detractors often argue those that did, frequent reasons for guidance: poor performance. The that guidance isn’t necessary stopping were the redirection of existing academic body of evidence because managers aren’t any better investors’ attention from quarterly on voluntary disclosure strongly at predicting earnings than analysts earnings to the long-term goals of the indicates an increasing tendency to and investors. To test this claim, we company, managers’ difficulties in disclose in good times and, by impli- studied the usefulness of quarterly predicting earnings, and following cation, a decreasing tendency to dis- guidance in two ways. First, we test- peer firms’ guiding practices. When close when performance deterio- ed the extent of analyst revisions of the National Investor Relations rates. And we found strong and con- earnings forecasts following the Institute (NIRI) asked members con- sistent evidence that poor perform- ance – both realized and anticipated "Critics may think that guidance has a pernicious influence on – contributed to firms’ decision to the public capital markets – one that harms investors, doesn't help stop guidance. In our tests, the prob- analysts, and pushes managers into self-defeating, myopic actions. ability of stopping guidance was sig- nificantly and negatively associated The data tell us otherwise." with past earnings performance and issuance of company guidance. templating discontinuing guidance to with anticipated future poor per- Collecting the last forecast issued by list the reasons why they were con- formance. Meanwhile, firms with a an individual analyst before and sidering doing so, the top three were higher litigation risk were more like- immediately after the release of a change in management philosophy ly to cease guidance, suggesting that company guidance allowed us to (47 percent), industry trend (27 per- firms with high litigation exposure chart the direction of analyst fore- cent), and low earnings visibility (25 limit their public disclosures. cast revisions following guidance. percent). Much of the debate about guid- (To avoid confounding news, we There clearly is something to what ance revolves around its effect on excluded guidance issued concur- the respondents said. For example, a the information environment sur- rently with quarterly earnings change in management philosophy rounding firms. We addressed these announcement events.) We found regarding guidance most likely arguments empirically in several that for both negative and positive occurs with a change in the top man- ways. For example, we examined the guidance, over 50 percent of analyst agement. When we ran the numbers, effects of guidance cessation on ana- revisions were made within two days we found that firms are more likely lyst coverage. Analyst coverage of the guidance and that 96 to 98 to cease guidance if they have recent- makes a firm better known to percent of these revisions were in the ly undergone or plan a change in investors and the decreased infor- direction of the guidance. This their senior management. And when mation asymmetry helps generate remarkable correspondence between we looked at the proportion of com- investors’ interest to hold the stock. guidance and analyst revisions panies in the firm’s two-digit SIC It is not surprising that 95 percent of attests to the usefulness of company code that did not provide any quar- the respondents to the NIRI survey guidance. Second, we gauged the terly guidance in the pre-event peri- believe that one of the benefits of accuracy of guidance by comparing od, the data showed that a firm is providing guidance is to improve the company guidance with the subse- more likely to stop guidance if a larg- communication between the firm quent reported earnings, and with er proportion of its industry peers did and its analysts/investors. When we the most recent analyst forecast not provide guidance. Furthermore, compared the average number of issued before the guidance. In 70 we expect that a new management analysts following a company dur-

36 Sternbusiness ing the pre-event period with that in decreased, 29 had no change, and of this issue and examined the stop- the post-event period, we found that 27 increased. We also found that pers that subsequently resumed pro- guidance cessation was associated stoppers curtailed their annual guid- viding guidance. Among our 222 with a significant decrease in analyst ance. guidance stoppers, a full 68 firms following. Finally, we looked into a major (30.6 percent) resumed quarterly Investors’ reactions to earnings argument of guidance detractors: guidance, according to either the announcements are another gauge quarterly guidance focuses man- CIG database or our news search in of the change in the information agers’ attention and decisions on the Factiva. The median length of the environment. Other things being short-term at the expense of long- silent period was six quarters – a rel- equal, the richer a firm’s informa- term growth. Regulators and trade atively short time for a reversal of a tion environment before an earnings associations have similarly significant change in disclosure pol- announcement, the weaker the expressed concerns that quarterly icy. To analyze the determinants of investors’ reaction to reported earn- earnings guidance has contributed guidance resumption, we used a ings should be. So we examined to managers’ myopia. If quarterly sample of 42 firms as our resumer whether the guidance stoppers’ guidance indeed increases man- sample. We found that relative to the earnings-returns relation was differ- agers’ myopia at the expense of the non-resumers, the resumers experi- ent in the post-event period than in firm’s long-run growth, we should enced (weakly) a larger decrease in the pre-event period. The data indi- observe an increase in long-term analyst following, a smaller increase cated that investors responded more investments, such as capital expen- in forecast dispersion, a decreasing strongly to earnings announcements ditures and research and develop- percentage of loss quarters, and after firms stop guidance, which is ment (R&D), once firms stop quar- improved earnings in the silent peri- evidence of a relatively poor infor- terly guidance and managers are od. Thus, firms that resumed quar- mation environment post guidance unshackled by the myopic earnings terly guidance were by and large cessation. game. To test this assertion, we affected more severely by the stop- measured long-term investments by ping decision. Correcting Myopia? both capital expenditures and R&D The debate on guidance is clearly Guidance stoppers and their sup- intensities – i.e., deflating the expen- continuing. In June, a coalition of porters frequently claim that after ditures by the beginning-of-quarter labor unions and CEOs, led by the guidance cessation, firms provide total assets. Because a firm’s long- Aspen Institute, issued a plea for substitute disclosures about strategy term investments are likely to vary companies to cease giving quarterly and long-term objectives to mitigate across industries, we adjusted capi- guidance. But our investigations investor myopia. We examine this tal expenditures and R&D in each show that the concerns surrounding assertion empirically by collecting quarter by the median levels of these guidance aren’t necessarily borne and coding stoppers’ forward-look- investments in a firm’s industry. We out by activity in the marketplace. ing disclosures in quarterly earnings found that guidance stoppers do not Critics may think that guidance has press releases and in the increase their long-term investments a pernicious influence on the public Management, Discussion & Analysis after the guidance cessation. This capital markets – one that harms (MD&A) section of the quarterly finding, however, may not be gener- investors, doesn’t help analysts, and reports. We randomly chose 100 alized to the population of firms not pushes managers into self-defeating, stoppers from our stopper sample, providing guidance. Recall that myopic actions. The data tell us oth- and, for each stopper, we randomly guidance stoppers are characterized erwise. ■ chose a fiscal quarter in the post- by relatively poor earnings perform- event period, which we referred to as ance in the pre-guidance cessation JOEL F. HOUSTON is Bank of America the “post-quarter.” We looked at period and anticipate continuation Professor at the University of Florida's forward-looking, non-earnings dis- of poor performance after stopping Warrington College of Business closures in nine categories and com- guidance. Accordingly, the long- Adminstration, BARUCH LEV is Philip pared the number of disclosures in term investment opportunities and Bardes Professor of Accounting and the pre- vs. post-quarter. The data decisions of these firms may be dif- Finance at NYU Stern, and JENNIFER show that more stoppers decreased ferent from those of the general pop- TUCKER is Luciano Prida Sr. Term forward-looking disclosures than ulation of non-guiders. Professor at the Fisher School of those that increased disclosures: 41 Next, we considered the flipside Accounting, University of Florida.

Sternbusiness 37 Peer to PeerStudent Life in Washington Square and Beyond

Students Gain Hands-on Experience while “Our Shadow a Student Day on campus made the biggest impact on the UASBYW Lending a Hand students,” said Sung. “Students first had the opportunity to talk individually with a Scholar about college life. Then, they attended a business class to actually experience “I've benefited immensely from a college classroom.” Sung also coordinated a tutoring program and professional attending college in New York City, skills workshops on interviewing and résumé writing for the UASBYW students. and it's only fair that I use the skills Throughout the partnership, Sung employed a variety of skills she had developed I acquired and honed at NYU Stern at Stern. “I regularly drew upon my project management skills to plan our events and to give back to the community that track progress against our goals,” she said. She also learned the value of real-world has given me so much,” said recent application of classroom skills. “Using my managerial skills to coordinate our partner- Stern graduate Victoria Sung (BS ship is much different than practicing them in class because the results aren't just '07). Her most rewarding experi- reflected in a grade,” said Sung. “You encounter real responses, good or bad, and you As part of a community outreach effort, Stern ence: participating in the partner- finally see the big picture.” undergraduate students tutored local high school ship between the Stern Sung said the relationships she developed with UASBYW students were highly students and armed them with professional skills. Undergraduate College and the rewarding. “I remember riding the bus back with the students after an event, and they Urban Assembly School of Business for Young Women (UASBYW), an all-girls New were asking me questions about my experiences at NYU, and then asked for my e-mail York City public high school that prepares students for college and the business address so we could stay in touch. That's when you know you've made an impact.” world. Welles underscored the impact that the Scholars made on the UASBYW students. The Stern-UASBYW partnership originated last fall with Gwyn Welles, partnership “Thanks to this partnership, our students received valuable advice and now realize coordinator at UASBYW, and Jennifer Baron, director of student life at the Stern they're leagues ahead of the average high school student,” she said. Undergraduate College, who envisioned an ongoing partnership between UASBYW Because of this success, Baron said she hopes Stern can continue to work with and the Stern Scholars, a student group focused on intellectual exploration and com- UASBYW. “It's our responsibility as educators to engage our community and to teach munity outreach. Baron and Welles worked with Sung, community service chair of her the students to engage the community,” she asserted. “There is a lot to mutually gain Scholars class, to coordinate a host of events to foster interaction between the when you have an involved, ongoing partnership where relationships are cultivated Scholars and UASBYW students. over time. Everybody wins.”

Stern Senior Serves Community York City. While there, she worked on the When Stern senior Anjum Unwala (BS '08) thinks about her plans for the Homelessness Outreach future, her mind quickly wanders to the poverty she witnessed in Pakistan dur- and Prevention Project ing her visits to see extended family over the years. “It's life changing,” she and focused on support- said. “The disparity between the rich and the poor is astounding. And you feel ing advocacy work for A recipient of a Social Impact Stipend, Amjum Unwala (left) helpless because there's no solid infrastructure from which to improve these interned at the Urban Justice Center in New York City. welfare reform and on people's lives.” studying trends in Like Unwala, today's college-age generation, commonly referred to as the immigrant women and poverty. “The work was extremely interesting and really Millennial Generation, is known for its commitment to community service. And gave me new perspective on the role of government and the influence of public each year, Stern students are showing increasing engagement with communi- policy,” she said. ties near and far, seeking ways to make a positive impact on society. To support In addition to majoring in finance and international business at Stern, Unwala their passion for service, Dean Sally Blount-Lyon introduced a series of Social is also studying politics at NYU and hopes to work in international development. Impact Initiatives that transcend both the in-class and out-of-class experiences. “I want to live and work abroad and hope to leverage my studies as well as my One of these initiatives is the Social Impact Stipend, which supports stu- experiences at the Urban Justice Center, at Habitat for Humanity, and in other dents doing volunteer work during school breaks. Thus far, the funds have service projects to make an impact,” she said. Unwala plans to apply to the enabled students to hold unpaid internships at non-profit organizations or to PeaceCorps and aspires to work for the US Agency for International Development travel domestically and abroad to do service work or research. (USAID), a government agency providing economic and humanitarian assistance This past summer, Unwala was a recipient of a Social Impact Stipend and around the world. She hopes that through her future work, she can make an used it to support herself while interning at the Urban Justice Center in New impact in developing nations like Pakistan.

38 Sternbusiness Luxury Club Deepens Industry Ties Ferragamo USA. The group met with Ottomanelli's executives to identify issues and create strategic projects to address them. “We identified three consulting projects, Sandra Singh (MBA ’07), a brand interviewed more than 50 candidates, and, in the end, selected six members for each manager on the Calvin Klein business at project,” said Singh. This experience gave the Club's members exposure to the Coty, has always had a passion for luxury industry, a unique experience to talk about in interviews, and insights and strategies goods marketing. She started her career in that they can build on in their careers. PR and eventually launched her own Consulting Corps participant Josh Feuer's (MBA ’08) team was tasked with pro- designer swimwear line. At Stern, she viding a complete assessment of the men's and women's luxury shoe market. The became immediately involved in the Stern team gathered data on industry trends and the competitive landscape, worked with Luxury & Retail Club, and served as co- senior executives who provided guidance and focused their research, and then gave president last year. “Our goal was to make final presentations to Ottomanelli and his executive team. The two other teams were Stern a go-to brand for recruiters at retail- responsible for surveying the Canadian luxury and retail markets for marketing and Luxury & Retail Club 2006-2007 ers and luxury goods/services compa- branding opportunities and for evaluating the role that physical store design and Co-presidents Sandra Singh (left) and Dayna Dillon-Townes with nies,” explained Singh. The club held its fixtures play in defining the presence of a store and the brand. Salvatore Ferragamo USA President first alumni mixer with NYU alumnus “My involvement in the Consulting Corps put me at a tremendous advantage Vincent Ottomanelli. Vincent Ottomanelli, president of Salvatore while interviewing,” Feuer said. “Retail has its own language, and with my experi- Ferragamo USA, who also sits on the club's advisory board. Building on the ences on the project and with Ferragamo, I was able to demonstrate my passion for success of that event, which drew alumni back to Stern and raised recruiters' the industry and all the knowledge I gained.” His experience in the club, coupled interest in club members, the club pursued other initiatives with top retailers with what he learned in the classroom, landed Feuer a coveted internship at Target such as Tiffany and Grand Marnier. “In an industry as competitive as luxury Corporation. “I was working in the Business Analysis group in Minneapolis, which and retail, it is important that we leverage New York City and tap Stern's exten- was amazing. I was in a class of more than 30 MBA students from top schools sive network to compete in the market,” Singh said. around the country,” he said. “I definitely used the experience I had in the Corps This past year, the Luxury & Retail Club launched the Luxury & Retail everyday at Target. The Corps is a great way for students to build networks in the Consulting Corps to provide members an opportunity to consult with execu- retail industry both with established executives as well as with similarly minded tives from premier luxury goods companies. The first client was Salvatore classmates.”

MBA Students Debut in Cannes

MBA students in Stern's Entertainment, Media, and Technology (EMT) program are getting up front and personal with leading lights and stars in cinema. Designed to provide students with a framework for understanding the dynamics of the film industry by studying the complete process of creating, executing, and distributing a film, the Craft and Commerce of Cinema course culminates in a trip to France for the Cannes Film Festival. Felicia Bono's (MBA '08) interest in the film Felicia Bono (left photo: second row, left) with fellow MBA students of the Craft and Commerce of Film class in Cannes, France. business industry led her to take the course last Students attended the Cannes Film Festival (right). semester. “Stern has one of the best EMT programs of any top business school a classroom,” he said. “Interacting face-to-face with the publisher and editor-in-chief in the country and this course is one that I could only take here,” said Bono. of Variety, the co-president of SONY Picture Classics, or the executive vice president Prior to the trip, the class learns about independent film companies, foreign of film acquisitions at Miramax, and others, some of who are Stern alumni, is an directors, and new technology initiatives. In Cannes, the class meets and hears extraordinary experience,” Lieberman continued. When Ocean's 13 premiered at the from leading professionals in the business. “Producers, entertainment attorneys, Palais theater in Cannes, “the students were right up front with George Clooney and and acquisition executives provided greater insight into the industry,” Bono Brad Pitt.” explained. “And because we had studied technology's role in the business, I was Bono was able to apply her class experience during her summer internship at able to think through how the films screened at Cannes may be affected – for Google. “The class gave me a unique opportunity to experience the creativity of the instance, the impact of TiVo and DVR. It was an amazing experience to be in the film industry both from a business and an artistic perspective, which was useful at middle of such a world-renowned film festival – the energy was palpable.” Google where creativity is respected in itself and as a part of the overall business Al Lieberman, clinical professor of marketing and executive director of the goals,” she said. “Being at the Cannes Film Festival showed me first-hand the bene- Entertainment, Media, and Technology program at Stern, teaches the class. “The fits of creating 'buzz,' which is also useful at Google.” Concluded Bono, “This class exposure that students receive in Cannes is like nothing that can be replicated in is by far the most rewarding thing I have done during my time at Stern.”

Sternbusiness 39 ALUMNI AFFAIRS Alumni News & Events

2007 GLOBAL ALUMNI CONFERENCE The Florence 2007: Global Alumni Conference, held June 8 - 9, 2007, at Villa La Pietra, NYU's 57-acre estate in the Tuscan hillside, was a wonderful celebration of Stern's international alumni commu- nity, bringing together nearly 300 alumni and guests from around the world for a weekend filled with intellectual, cultural, and social opportunities. To re-capture the excitement of this weekend, visit the Florence website at www.stern.nyu.edu/florence2007.

1 1. Dean Thomas Cooley (center) with Florence 2007 hosts (left) Salvatore Ferragamo (BS '93, MBA '97) and (right) James Ferragamo (BS '93, MBA '97). 2. From left to right: Dean Sally Blount-Lyon at the cocktail reception held at the Palazzo Pitti with husband Robert Blount-Lyon, Professor Batia Weisenfeld, Justin Pollack (BS '98), and his guest, Suzanne Reisman. 3. Overseer William R. Berkley (BS '66) and Salvatore Ferragamo (BS '93, MBA '97) at the conference luncheon. 4. Arnaldo Spicacci Minervini (MBA '99), leader of the Stern Alumni in Italy Regional Group, and Dean Thomas Cooley at the closing dinner. 5. Amore! 6. The closing dinner held in the Courtyard of the Palazzo Pitti, the former residence of the grand-dukes of Tuscany and, later, of the King of Italy. 7. Alumni enjoy a cocktail reception in the Grotto Buontalenti in the Boboli Gardens before the closing dinner.

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40 Sternbusiness NYU ALUMNI R EUNION W EEKEND 2007

1. Dean Sally Blount-Lyon with the Undergraduate Class of 2002 Reunion Committee. 2. Dean Thomas Cooley presenting his State of the School Address. 3. Alumni re-connecting at their five-year reunion. 4. Chris Barron, Lead Singer of the Spin Doctors, performing at the EMT event.

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Hundreds of NYU alumni gathered on Washington Alumni Council EMT Committee’s industry panel Square this past May for NYU’s annual Alumni event, “Charting the Digital Frontier: The Digitization Reunion Weekend. NYU Stern graduates from around of the Music Industry,” which featured industry the world came back to campus to take part in expert Chris Barron, lead singer of the Spin Doctors, reunion activities, including five-year reunions for the among others. Save the date for next year’s alumni MBA and Undergraduate Classes of 2002; Stern’s reunion weekend, May 16 - 18, 2008, and check the annual Dean’s Luncheon, at which Dean Thomas Alumni Affairs website in early spring for updated Cooley gave his State of the School address; and the information.

Alumni Affairs and Annual Giving Join Forces alumni or students, volunteering on the various committees of the Alumni Council, and donating to the Stern Fund. It is our greatest hope that through As part of NYU Stern's goal to develop a culture of lifetime engagement this new platform, more alumni will reconnect with the School in a way that and participation for all Stern alumni, we are pleased to announce the merger best suits their needs and lifestyles. of the Office of Alumni Affairs with the Annual Giving team. The newly com- “I am excited to lead this newly integrated office, which is made up of bined office, now known as the Office of Alumni Affairs & Annual Giving, an incredibly committed group of professionals,” stated Bill Kramer. “Fueled embraces a model commonly used by many large universities and top-ranked by the team's great energy and insights, this new structure will enable us to business schools, including the University of Pennsylvania's Wharton School. better analyze alumni engagement activities, and to develop a new genera- The integrated team is led by Bill Kramer, Executive Director of Alumni Affairs tion of volunteer leadership and financial supporters. It is our mission to & Annual Giving, who joined NYU Stern this spring from Viacom's VH1 Save ensure a secure and successful future for Stern.” The Music Foundation. If you have any questions or comments, please contact the Office of Under this new model, alumni engagement and participation can take Alumni Affairs & Annual Giving at (212) 998-4040 or many forms, including attending alumni events, serving as a mentor to fellow [email protected].

Sternbusiness 41 Catching Up With…. global study tours and student-led trips to Mumbai, the NYU Stern in India Regional Group working with the South Asian Business Association at Stern, a newly formed MBA student organization. One of the largest and most prolific of NYU In addition, members of the group consult often Stern’s 70 regional groups worldwide is the School’s with Dean Thomas Cooley as NYU Stern explores group in India. Representing hundreds of alumni and emerging markets from a curricular and organiza- led by Sanjiv Anand (MBA ’85), this Mumbai-based tional perspective. group works closely with the School on a variety of For more information on Stern’s regional programs, initiatives every year. The India group works hand- and to learn more about activities in your area, please in-hand with MBA Admissions to identify, cultivate, contact the Office of Alumni Affairs & Annual Giving and inform top business school applicants from at (212) 998-4040, or visit the website at around the country. The group also supports EMBA www.stern.nyu.edu/alumni.

Finding the Right Match through Stern's Online Career Center

Several months ago, Benoy Thanjan (BS ’97) decided he was ready to explore new career opportunities on the buy-side in private equity or with a hedge fund. With no C ALENDAR OF E VENTS experience in this field, he turned to the NYU Stern alumni network for help. Thanjan logged on to the Stern One of the many benefits of being a Stern graduate online community and searched the Career Advisory is the opportunity to attend exclusive content-driven Program (CAP) for appropriate mentors. programming and social/networking events, “I was looking for senior alumni professionals who either on campus, in the City, or through are currently working on the buy-side,” explained regional groups around the world. Thanjan. “I’ve since met with several Stern graduates Highlights of upcoming events for the fall include: who shed light on this field, provided much needed per- spective, helped confirm that this was the industry I November 15 wanted to transition into, and assisted in my interview preparations.” Author Lecture Series: He found his fellow alumni to be extremely respon- Robert Hormats, Author of sive and willing to talk to him. “A career transition is The Price of Liberty: Paying for America’s Wars, not easy, but with solid advice and insight from my co-hosted with the Museum of American Finance mentors, I was able to craft my professional ‘story’ in a way that most effectively marketed my previous experi- November 16 ences and background,” he said. Lifelong Learning Workshop: In addition to CAP, Thanjan used the career center’s New Directions in Marketing Intelligence, online job postings site in his job search. He secured his featuring Vicki G. Morwitz, Professor of Marketing last position, a corporate development position at Medco and Robert Stansky Faculty Fellow Health Solutions, through the online job postings. Thanjan recently received an offer and started working December 1 as a Senior Analyst at Ridgewood Power, a private equi- Seventh Annual Stern Alumni Ball at ty firm in New Jersey. He highly recommends the online The New York Public Library job postings as a resource. “I always look at the online job postings on the Stern website before going to other online job sites,” he explained. “The listings are posted For a full listing of upcoming alumni events, visit the with Stern alumni in mind, so you know the field is website at www.stern.nyu.edu/alumni. already narrowed to your advantage.”

42 Sternbusiness SEVENTH ANNUAL STERN AlumniBall

S ATURDAY, DECEMBER 1, 2007 8:00 P.M. — MIDNIGHT

T HE N EW Y ORK P UBLIC L IBRARY F IFTH A VENUE AND 42ND S TREET, NEW Y ORK C ITY

Join fellow NYU Stern alumni in celebration of the holiday season at one of New York City's most spectacular landmarks. Mix and mingle with both your former classmates and fellow graduates during a night filled with music, dancing, a buffet, and cocktails. In addition to the festive atmosphere, there will be quiet spots perfect for conversation with your friends new and old.

General Ticket Price: Alumni from the Classes of 2002 and Prior: $150 per person ($200 after 11/16/07) Alumni from the Classes of 2003 - 2007: $100 per person ($200 after 11/16/07) All Guests of Alumni: $150 per person ($200 after 11/16/07)

Visit the Alumni Ball website at www.stern.nyu.edu/alumniball for registration and event information. While you're there, browse through photo galleries from previous Balls and read testimonials from fellow alumni, or call the Office of Alumni Affairs & Annual Giving at (212) 998-4040 for additional information. classnotes

1940s a member of the New York Society of Philip Petronis (MBA '73), of Katonah, Security Analysts. NY, was appointed COO, Global Products Gerald Fisher (BS '40), of New York, NY, 1970s Dr. James W. Angresano (MBA '71), and Services Management, at Marsh, Inc. was appointed Coordinator of the AARP Robert M. Donnelly (BS '65), of of Caldwell, ID, was named “2006 Idaho Previously, he was Executive Vice Money Management Program at the Carter Hackensack, NJ, writes a monthly advice Professor of the Year” by the Carnegie President and CFO of Guy Carpenter, a Burden Center for the Aging. Prior to this column called “The Entrepreneurial CEO” Foundation for the Advancement of member of Marsh & McLennan appointment, he was a counselor at SCORE. for Chief Executive magazine. He is also Teaching. He has been a professor of eco- Companies. the editor of “Entrepreneurial CEO.” logical economics at Alberston College of Curt E. Dejonge (BS '46, MBA '47), of Idaho since 1995. Gerald Rosenfeld (PhD '73), of New Fort Lee, NJ, was elected to serve on the Wade F.B. Thompson (MS '65), of York, NY, has stepped down as CEO of Rabbinic School Advisory Board at the New York, NY, Chairman, President, and Gary D. Bernahrdy (MBA '72), of Rothschild North America to teach full- Jewish Theological Seminary in New York CEO of Thor Industries, received an hon- Darien, CT, was appointed Certified time at NYU Stern. City. He also serves on the Board of orary Doctor of Commerce from his alma Insolvency and Restructuring Advisor Govenors of the Jewish Home & mater, Victoria University, recognizing his (CIRA) by the Association of Insolvency Hendrik G. van Riel (BS '73, MBA Rehabilitation Center in Rockleigh, NJ. “outstanding business acumen and lead- and Restructuring Advisors (AIRA). He is '74), of Paris, France, recently co-found- ership qualities.” Managing Director with Carl Marks ed Lentikia Capital LLP, a London-based 1950s Advisory Group LLC. hedge fund. He has served as a non-exec- Douglas J. George (BS '66, MBA utive director on the board of several pri- Robert E. Baldini (MBA '58) was elect- '71), of New Canaan, CT, joined the Jan Harlan Newman (BS '72), of vate asset management companies. ed to the Board of Directors of Esprit Depository Trust and Clearing Hillsborough, CA, author of Chance Pharma, Inc. His previous positions include Corporation (DTCC) as Managing Meetings that Tied the Knot, was awarded Richard C. Berke (MBA '74), of New President of Key Pharmaceuticals and, most Director and Chief Risk Officer. He was a bronze medal at the 11th Annual York, NY, was appointed to the Board of recently, Vice Chairman of Kos previously the head of Payments Systems Independent Publisher National and Directors at The Hein Celestial Group, Inc. Pharmaceuticals. Risk Management for Citigroup, Inc. Regional Book Awards. She is also a He is currently Vice President, Human member of the San Francisco chapter of Resources, for Broadridge Financial Irwin H. Block (MBA '67), of Norwalk, the Women's National Book Association, Solutions, Inc. 1960s CT, retired from Purdue Pharma LP as and is President of The Newman Group, Allan H. Roberts (BS '61), of Staten Senior Executive Director of Creative Ltd. Manes Martin Merrit (MBA '74), of Island, NY, authored a full-color book enti- Services. He recently held solo photogra- Montclair, NJ, joined Olshan Grundman tled, Trackside Around the Big Apple with phy exhibits at Greenwich Bank of New Thomas F. O'Neill (BS '72), of Frome Rosenzweig & Wolosky LLP as Al Roberts, which features his photography York and Norwalk Art and Framing and Halesite, NY, was named one of the Partner and Chairman of the firm's of 1960s railroading in the five boroughs of appeared in The New York Times and on Member Representative Directors for the Practice Group. The practice concentrates New York City. News Channel 12. first annual election at NASDAQ Stock on employee benefits and executive com- Market LLC. He is also a founding partner pensation matters. Steven A. Kriegsman (BS '64), of Susan T. R. Miller (BS '67), of New of Sandler O'Neill & Partners L.P. Pacific Palisades, CA, currently Director, York, NY, founded a website, Christine A. Kurjanowicz (BS '76, President, and CEO of CytRx Corporation, AstrologyZone.com. She also writes a Martin S. Brown (MBA '73), of MBA '78), of Calabasas, CA, joined was appointed Director of the five-member monthly column for InStyle, W Korea, Eve Convent, NJ, joined Hill International as Natrol, Inc., as Vice President of board of the company's majority-owned (UK), and Vogue Nippon (Japan). Senior Vice President of Business Marketing. Most recently, she was a part- subsidiary, RXi Pharmaceuticals Development in the Americas for the com- ner at OneAccord, a sales and marketing Corporation. He also received the Lou Thomas A. DeLong, II (MBA '69), of pany's Project Management Group. Prior consultancy. She also received a “Top 100 Gehrig Memorial Corporate Award from the Southport, CT, authored the book, to this position, he was Executive Vice Marketer” award from Advertising Age. Muscular Dystrophy Association in Madame Chiang Kai-shek and Miss President of Sales and Marketing at Tetra October 2006. Emma Mills: China's First Lady and Her Tech EC Inc. Mark W. Everson (MBA '77), of American Friend. Arlington, VA, joined the American Red Howard N. Stillman (MBA '64), of San Alvin A. Hirsch (MBA '73), was Cross as its President and CEO. Prior to Marcos, CA, has entered into a partnership Paul C. Slevin (BS '69, MBA '70), of appointed President and CEO of Mile joining the Red Cross, he was with TheBullReport.com, an online financial Denver, CO, was appointed CFO of Tatonka Marker International, Inc., a specialty vehi- Commissioner of the Internal Revenue resource. He previously held the position of Oil and Gaws, Inc. Previously, he served as cle parts manufacturer and distributor. He Service. Director of Research as an approved a contract CFO for Trinity Petroleum has been with the company for nearly 11 Supervisory Analyst by the NYSE, and was Management Company and Quest years, serving as a financial management International Management Company. consultant and as CFO.

44 Sternbusiness Stephen F. Groth (MBA '77), of Partner of the “Partners of '63,” a pro- Ardsley, NY, was appointed Vice bono partnership of nearly 100 Harvard Recipe for Success President and CFO of Pacific Asia Business School classmates and friends Petroleum, Inc. that supports entrepreneurial, change- The ideal menu requires a nicely oriented ventures in education, particu- balanced mix of quality ingredients. Frank C. Ingriselli (MBA '77), of larly those focused on children born into Elissa Meadow, a former investment Scarsdale, NY, was appointed President, unfortunate circumstances. CEO, Secretary, and Director of Pacific banker and CPA, is finding that the Asia Petroleum, Inc. same holds for the ideal career. 1980s Meadow was recently appointed Ernest H. Pomerantz (MBA '77), of Alan W. Arch (MBA '80), of Muscat, Director of Southern California New York, NY, joined the Industry Oman, was appointed Divisional Operations for Vine Solutions, Inc., a Advisory Council organized by Mobile Manager-Commercial at Oman Air, the consulting, finance, and accounting Productivity, Inc (MPi), a provider of national carrier of the Sultanate of firm that caters to the food services profitability tools for auto dealer service Oman. Prior to this appointment, Arch departments. Pomerantz is currently was Area Manager, Pacific Northwest of industry. The position allows Meadow Managing Director with StoneWater Independence Air. to blend her lifelong passion for food, Capital, LLC. Prior to this position, he industry experience in food services was Managing Director with Mesa Joshua E. Chasin (MBA '81), of and finance, and NYU Stern MBA – all Partners, LLC. New York, NY, was appointed Chief while offering a desirable work-life Research Officer at comScore. balance. Barbara Eber-Schmid (MBA '77), of Previously, Chasin was the Principal and Elissa Meadow (MBA '04) Meadow came to Stern seeking a Livingston, NJ, joined New Media founder of Warp Speed Marketing, Inc., Institute as Executive Vice President. She a Manhattan-based media research con- lifestyle change. After hosting a dinner party one night, class- will be initiating the 2007 New Media sultancy. mates encouraged her to enter the food services industry. She awards. spent her second year at Stern developing a business plan for a L. Bruce Glasser (BS '81), of New healthy fast-food restaurant, and opened Solar Harvest in Los Iretiolu Oniyide (BS '78), of Brooklyn, York, NY, was appointed Director of Angeles. “Fulfilling the dream of opening my own restaurant NY, was appointed Managing Director of Corporate Finance and Investment was gratifying, but the quality of life sacrifice was even greater Xechem International's Nigerian sub- Banking for MICG Investment than that of an investment banker,” she explained. Meadow sidiary, based on his experience in phar- Management. maceuticals, banking, and government. closed Solar Harvest in 2006, still interested in the industry, but Jeremy W. Handelman (MBA '81), in search of the right fit. Lisa K. Polsky (BS '78), of New York, of New York, NY, is President of Off the Meadow says her business school experience helped her land NY, was elected to serve on the Board of Leash Productions. He is also her current position. “One of the biggest lessons I learned at Directors of Piper Jaffray Companies. Playwright and Producer of “The Bronx Stern was the power of networking – responding to anyone who Polsky is the President of Polsky Balmers” and “Five By Tenn.” approaches me and not being afraid to reach out to others,” she Partners, a New York-based consulting said. After reading an article in which Vine Solutions was men- firm specializing in hedge fund allocation, Frederick K. Schmidt (MBA '81), of risk management, and valuation policy. Califon, NJ, is President of KS tioned, she sent the firm an e-mail and quickly received an TechPros, which provides consulting for offer. John M. Trani (MBA '78), of Seaford, Yahoo! Research, Sarnoff Corporation, Beyond professional fulfillment, Meadow’s career transition NY, was invited to serve on Allied Waste major universities, and the US has also fed her appetite for philanthropic efforts. She is a loyal Industries Inc's Board of Directors. He is Department of Defense. supporter of her alma maters – Meadow also has a BBA and also Executive Chairman of the Board for Masters in Accounting from the University of Michigan Ross Accretive Commerce. Trani was previous- Vincent J. Terranova (BS '81), of Business School – and serves on the Alumnae Network ly Chairman and CEO of Stanley Works. Huntington, NY, was chosen as the “Young Real Estate Man of the Year” by Committee at Stern. She was introduced to Share Our Strength, Charles D. Ellis (PhD '79), of the Young Men's/Women's Real Estate whose mission is to eradicate childhood hunger, through a for- Greenwich, CT, was named the fourth NYU Association. He is currently Executive mer Stern professor. Meadow believes that what she gives of her Stern Citi Distinguished Fellow in Ethics Vice President and Principal of time and energy to Share Our Strength, she gets back in spades and Leadership. An emeritus member of Bernstein Real Estate, and is a member through industry contacts and networking opportunities. Stern's Board of Overseers, Ellis also of The Real Estate Board of New York. “When you blend your personal passion with your profession, serves as Director of the Vanguard Group your life suddenly becomes more meaningful,” she said. of Mutual Funds, and the Managing

Sternbusiness 45 classnotes

Roy A. Young (MBA '81), of Beverly Zeidman Leads Holocaust Museum Hills, CA, co-authored Marketing Champions: Practical Strategies to Improve Marketing's Power, Influence Fred S. Zeidman is a private investor currently serving as Chairman and Business Impact, published by John of the US Holocaust Memorial Council, which oversees the US Wiley, and built MarketingProfs, an Holocaust Memorial Museum. A prominent Houston-based business, online portal for marketers. political, and civic leader, Zeidman was appointed to the Council by President George W. Bush in 2002, and was recently reappointed to a sec- Errol R. Antzis (MBA '82), of New ond five-year term. York, NY, was named CFO of Metropolitan Talent, Inc. He was previ- When Zeidman arrived at the Museum, he chose to leave the day-to- ously the Co-manager and Principal of day operations in the hands of Sara Bloomfield, the “exceptional” VSS Mezzanine Partners, L.P., a private Executive Director. This allowed Zeidman to concentrate fully on the equity fund investing in media and enter- institution’s fundraising needs, which are formidable. The federal gov- tainment companies. Fred S. Zeidman (MBA '70) ernment provides almost half of the museum’s $68.2 million budget, with the private sector supporting all of the Museum’s educational outreach and programming. John D. Demsey (MBA '82), of New Education is crucial to the Museum’s mission to remember the Holocaust and to prevent geno- York, NY, Group President of Estée Lauder Inc., recently married long-time cide. The Museum works to preserve the legacy of survivors and to teach critical lessons of the girlfriend, Anoushka Izmirlian. Holocaust to future generations, including working to prevent genocide in today’s world. Zeidman is particularly proud that the Museum was among the first to declare genocide in Darfur in 2003. Craig A. Eaton (BS '82), of Brooklyn, A third-generation Texan reared in a farm town 60 miles south of Houston, Zeidman’s parents NY, is the new head of the Republican taught him to understand that he had an obligation both to the Jewish people and to America. “My Party of Brooklyn. parents always told me that I not only could make a difference, but that I needed to make it.” Close to President George W. Bush for more than 30 years, Zeidman is deeply honored to have been given Walter D. Hosp (BS '82, MBA '84), of Scarsdale, NY, was appointed Senior a platform to “serve as a bridge between the White House and the Jewish community, and to speak Vice President and CFO of HMS Holdings on behalf of American Jews.” Corp. He most recently served as Vice After receiving his Stern MBA, Zeidman began his career on Wall Street, working at Dean President and Treasurer of Medco Health Witter in its corporate finance department. Back in Houston, he switched to the buy side, joining Solutions, Inc. a venture capital firm specializing in oil field services. Zeidman is former Chairman of the Board for Houston-based Seitel, Inc., an oil field seismic company. He serves as Chairman of National Yong Jin Park (MBA '82), of Nutrition Inc., and, since 2004, has been Senior Managing Director of Governmental Affairs of Hartsdale, NY, recently formed Littleton Joyce Ughetta & Park LLP with former Greenberg Traurig’s Washington, DC, office. partners of Wilson Elser Moskowitz Zeidman has long been active in Jewish and educational organizations. His numerous leader- Edelman & Dicker LLP. Park focuses on ship roles include Vice Chairman, Republican Jewish Coalition; past Southwest Regional Chairman the defense of products liability lawsuits, of the Anti-Defamation League; Texas State Chairman of Israel Bonds and member of its Board; insurance and reinsurance coverage dis- member of the Executive Committee of the American Israel Public Affairs Committee; member of putes, and commercial litigations. the Board of the Jewish National Fund; and past Vice Chairman of the Board of Regents, Texas Southern University. The recipient of many awards, he has been named by Forward newspaper as Julio Lopez-Brito (MBA '83), of Potomac, MD, was named Chairman of one of its “Forward 50” Jewish leaders three times (2004, 2005, and 2006). NuAmerica Bank, a niche bank he found- Zeidman joined Arizona Senator John McCain’s presidential campaign team in January, serv- ed in Columbia Heights, Washington, DC, ing as the National Vice Chair for Jewish Outreach. He previously helped lead Jewish outreach for to serve Hispanic-owned businesses. Bush-Cheney ’00 and ’04, and served as Vice Chairman of the Dole-Kemp presidential campaign in Harris County. Edward E. Edwards, Jr. (MBA '83), Zeidman’s sense of civic duty extends to his alma mater. He has visited Stern’s campus for of Mobile, AL, opened a glass studio in speaking engagements with MBA students, and funds fellowships for students participating in the Mobile. Prior to launching his business, he spent 16 years as a project manager, Stern Consulting Corps (SCC). “NYU played such a formative role in my career, it certainly designing and implementing computer deserves my support,” Zeidman said. “For a farmboy coming to the city, the level of education was systems for a Napa Valley winery. tremendous, and prepared me for life in the fast lane.”

46 Sternbusiness John W. Geissinger (MBA '83), of served as Senior Vice President and CFO Senior Portfolio Manager at Clinton Group, Jerald E. Pinto (MPhil '87, PhD '92), Darien, CT, was appointed to the Board of of Uniprise, one of the principal operating Inc., an investment advisor. of Charlottesville, VA, recently co-authored Directors of Eagle & Dominion businesses of UnitedHealth Group. Managing Investment Portfolios: A EuroAmerican Growth Fund Limited. Douglas E. Buckminster (MBA '86), of Dynamic Process, 3rd Edition. He also Geissinger is Chief Investment Officer at Maureen Tart-Bezer (MBA '84), of Cave Creek, AZ, was named President of serves as Director in the CFA and CIPM Bear Stearns Asset Management Inc. North Caldwell, NJ, was appointed to the International Consumer Business at Programs Division at CFA Institute. Board of Directors of Playtex Products, American Express. He is responsible for the William A. Houlihan (MBA '83), of Inc. Previously, she served as the international consumer card, lending, insur- Kevin R. Reevey (BS '87), of New Allendale, NJ, joined UBS's Investment Executive Vice President and CFO of ance, and product marketing functions. York, NY, was appointed Vice President at Bank as Managing Director in the Financial Virgin Mobile USA and Executive Vice Financial Stocks, Inc. (FSI), and will be Institutions Group. Most recently, he was President and General Manager of Mary A. Callahan (MBA '86), of New responsible for its expanding private equi- CFO of Sedgwick Claims Management American Express's US Consumer Charge York, NY, was appointed President of The ty division. Prior to this appointment, Services, a provider of claims and produc- Group. Americas' Central Securities Depositories Reevey was First Vice President, Senior tivity management solutions. Association (ACSDA). Callahan is currently Equity Analyst, at Ryan Beck & Co. Gitta Gilyan (MBA '84), of Chestnut Managing Director, International, at The Jong-Kap Kim (MBA '83), of Seoul, Hill, MA, was named Senior Director, Depository Trust & Clearing Corporation Robert H. Warshauer (MBA '87), of Korea, was appointed President and Chief Nursing Finance, at Cambridge Health (DTCC). West Harrison, NY, was appointed Executive Officer of Hynix Semiconductor. Alliance. Prior to this position, she was Managing Director at Kroll Zolfo Cooper. Prior to this appointment, he was Vice Finance Director for Patient Care Services James P. Louderback (MBA '86), of He previously served as the President and Minister of the Ministry of Commerce, at North Shore Medical Center. New York, NY, was named CEO of Revision3, a member of the Board of Directors of Industry and Energy in Korea. an Internet television network. Lighting Science Group Corp., a publicly Francine Lynch (MBA '84), of New traded technology company. J. Peter Marinelli (MBA '83), of York, NY, was appointed Director at the Cathy-Ann Martine (MBA '86), of Far Lebanon, NJ, has joined Citi Capital Institute for Not-for-Profit Management at Hills, NJ, was appointed President and CEO Robert H. Zaugg (MBA '87), of San Strategies as Managing Director and the Columbia Business School. Most recent- for AT&T Midwest. Martine will oversee all Diego, CA, was appointed Vice President, head of the Real Estate Group. Previously, ly, Lynch was Director of the Lincoln local company operations in the five-state Business Development, at the Burnham Marinelli was Senior Managing Director of Center Corporate Fund. AT&T Midwest region. Institute for Medical Research. Before this Horvath Hospitality and Leisure. appointment, he worked as an independent Peter D. Noris (MBA '84), of Rye, NY, Steven J. McGarry (MBA '86), of Great consultant, serving as interim CEO of sev- Dennis W. McConnell (BS '83), of was named Chief Investment Officer by Falls, VA, was promoted to Vice President, eral California biotech companies. Bernardsville, NJ, was appointed Executive Ivy Asset Management Corp. Noris was Investor Relations, of Sallie Mae. Vice President at Jones Lang LaSalle’s New previously Chief Investment Officer at Kathleen Auda (MBA '88), of New Jersey office. McConnell was previously Northstar Financial Services and AXA Vincent E. Nerlino (MBA '86), of Cannan, CT, was elected to the Board of Senior Director with Cushman & Wakefield, Equitable. Franklin Lakes, NJ, was appointed Executive Directors of Getabout, the van-based where he was responsible for the leasing and Vice President and CFO of USI Holdings transportation service for New Cannan's marketing of several high profile properties. Eugene A. Preston (MBA '84), of Corporation. Nerlino has held various posi- seniors and shut-ins. Auda is the Global Chester, NJ, was appointed Senior Vice tions at American Express, most recently Bank Debt Credit Products Executive for Kenneth Miller (MBA '83), of New President and Eastern Region Manager at serving as Senior Vice President and CFO of Bank of America's health care, institutions, York, NY, recently formed the Ken Miller Higgins Development Partners. He will be American Express International and Global not-for-profit, and government banking Group in New York. He was a founder and responsible for major distributions and Corporate Services. businesses. Managing Partner of One80 Design, a port markets from Boston to Miami. product and package innovation and design Previously, he worked at Merrill Lynch, Judy F. Arteche-Carr (MBA '87), of New George S. Barrett (MBA '88), of firm that he sold last year. Hubbard in New York. York, NY, is Co-chairman of the Society for Rydal, PA, was promoted to President and Information Management's (SIM) New York CEO of Teva Pharmaceutial Industries Ltd., John Fordyce Moynahan (MBA '83), Brendan T. Gormley (BS '85), of Metro Chapter. She is also an adjunct pro- North America. He will also assume the of Fairfax, VA, joined Who's Your Daddy, Staten Island, NY, was ordained a Roman fessor of the Fordham University's College additional role of Executive Vice President, Inc., as Senior Vice President and CFO. Catholic Priest at St. Patrick's Cathedral of Business, teaching global information Global Pharmaceutical Markets. The company is focused on production and in New York City on May 12. He was technology. distribution of Who's Your Daddy® “Kin of assigned to St. Paul's Church in Maurice L. Hallivis (BS '88), of Ho Ho Energy” drinks. Congers, NY. Robert F. Feeney (MBA '87), of Summit, Kus, NJ, was appointed Director at Eastern NJ, joined Integro Ltd., an international Consolidated, a full-service real estate Thomas L. Tran (MBA '83), of Conrad L. Bringsjord (MS '86), of insurance broker, as CFO. Prior to this posi- investment services firm headquartered in Weatogue, CT, was appointed President Briarcliff Manor, NY, was appointed to the tion, he was Managing Director and New York. Previously, Hallivis was and CFO for CareGuide, Inc., a health man- Board of Lenox Group Inc. Bringsjord is Business Manager for Global Markets Director of Sales, South Bronx, for Massey agement company. Most recently, Tran currently Senior Managing Director and Americas at HSBC. Knakal Realty Services.

Sternbusiness 47 classnotes

Osbert M. Hood (MBA '88), of Boston, product placement in films and other John Gonsalves (MBA '91), of Edison, Sari J. Mayer (MBA '92), of New York, MA, was appointed CEO of New York Life entertainment vehicles. NJ, was named Partner at Business Edge's NY, joined Boone Capital Management as Investment Management (NYLIM). Prior to Communication Media & Content practice, Director of Marketing. Prior to Boone, joining NYLIM, Hood was with Pioneer Scott R. Singer (MBA '89), of New a business development and thought-lead- Mayer worked at Credit Suisse and Investment Management USA Inc., most York, NY, was appointed Managing ership consulting firm. Salomon Brothers. recently as its CEO. Director of BMO Capital Markets, the investment and corporate banking arm of Jeffrey M. Linderman (MBA '91), of Joyce A. Phillips (MBA '92), of New Daniel K. Kinsbury (MBA '88), of New BMO Financial Group. Prior to this New York, NY, joined TABB Group as York, New York, joined American Life York, NY, was appointed President and appointment, Singer was a partner at Senior Research Analyst in their New York Insurance Company (ALICO), a subsidiary CEO of Pioneer Investment Management Deloitte. office. Prior to joining TABB, Linderman of AIG, as its President and COO. Prior to USA Inc, where he will head the US was Vice President and Equity Derivatives joining ALICO, Phillips was the head of Division of this Milan-based investment Product Controller at KBC Alternative International Retail Banking at Citigroup. company. 1990s Investment Management. David A. Becker (MBA '90), of Steven D. Sheinfield (MBA '92), of Francis J. Maher III (MBA '88), of Brooklyn, NY, was appointed Chief John J. Lucchese (MBA '91), of San Francisco, CA, is co-founder and Chappaqua, NY, joined Morgan Joseph & Marketing Officer at ExpoTV. Previously, Thornwood, NY, co-founded the software COO of Ujogo, a provider of rewards- Co., Inc., as Managing Director and co- he was President and COO of firm Semantic Business Solutions Inc, based poker and free online games. head of the company's Products & Retail Beliefnet.com. where he also serves as President. Previously, he worked at Cisco Systems Group. Previously, he worked at Dresdner Previously, he was an independent con- on VoIP technologies. Kleinwort. Michael J. Du Pont (MBA '90), of sultant at UNISYS Corporation. New York, NY, was named Vice President, Tomas Spurny (BS '92) is stepping Susan M. Mangiero (MBA '88), of Strategic Partnerships, at Oxygen Network. Jonathan William Ragals (MBA '91), down as CEO of VUB, the largest Slovak Trumbull, CT, President and CEO of Prior to joining Oxygen, he worked for of Pleasantville, NY, was named COO of bank, to help restructure the financial Pension Goverance, recently authored Risk AOL and MTV Networks in advertising 360i, a search-focused agency. Prior to group PPF. Management for Pensions, Endowments sales. this appointment, Ragals was Senior Vice and Foundations. President and Group Account Director of Scott M. Weitzman (MBA '92), of J. Kent Masters, Jr. (BS '90), of Beyond Interactive. Davie, FL, joined Ristken Software Boris Onefater (BS '88), of Brooklyn, Summit, NJ, was appointed to Rockwood's Services as Director of Business NY, was named CEO of Dreman Value Board of Directors. Masters is also a Yu-Ming Wang (MBA '91), of Development. He was previoulsy Senior Management. Prior to joining Dreman, member of the Executive Board of Linde Scarsdale, NY, was named Head of Fixed Director of Business Development for Onefater was a partner at Deloitte & AG, an industrial gases and engineering Income, Asia, at Wachovia Securities. Power Information Network, an affiliate of Touche. company, and prior to this, was CEO of Wang previously served as Managing J.D. Power and Associates. BOC Group. Director and the head of Structured Credit Margaret “Peggy” M. Smyth (MS Products for the firm. Catherine M. Bonneau (MBA '93), of '88), of Saint Paul, MN, joined United Parag G. Patel (BS '90), of New York, Zimmerman, MN, was named President of Technologies Corp., as Vice President, NY, recently launched India Performance Lindsey Anderson (MBA '92), of New Primevest Financial Services, one of four Controller. Previously, Smyth served as Master Fund, a venture that invests in York, NY, accepted a position at broker-dealers for ING. Vice President and Chief Accounting undervalued publicly traded mid- and OgilvyAction, a division of Ogilvy & Officer for 3M. small-cap stocks in India. Prior to launch- Mather. In addition, she recently released William P. Bundy (MBA '93), of New ing this venture, Patel was at SEC Capital. her second album, “Chinese Democracy,” York, NY, joined Wachovia Securities as Teri P. Cox (MBA '89), of Lawrenceville, with her band, Kitty & The Kowalskis. Managing Director, supporting the Media NJ, was appointed to chair the new Steven A. Donnarumma (MBA '91), and Communications Investment Banking Communications Committee of the NJ of Brooklyn, NY, was named Chief Credit Robert Jackowitz (ADCRT '92), of Group. Prior to this position, he was Governor's Task Force on Cancer Officer at Assured Guaranty Corp., a sub- Irvington, NY, was named CFO of Pine Managing Director at JPMorgan Chase & Prevention, Early Detection and Treatment. sidiary of Assured Guaranty Ltd. He was Brook Road Partners, a New York-based Co. previously Managing Director of Mortgage private equity firm. Prior to this position, Gary E. Greenwald (MS '89), of and Asset Backed Securities Group for the he was Treasurer and CFO of ESL Kei Hong Chua (BS '93), of New York, Briarcliff Manor, NY, is Managing Director firm. Investments Inc. NY, was appointed Executive Vice and Global Head of Capabilities and President and CFO at ASAT Holdings Information Products at Citi. Jaime A. Fals (BS '91), of Union City, Christopher C. Lockton (MBA '92), of Limited, a provider of semiconductor NJ, joined Morgan Stanley's Private San Mateo, CA, was named Senior Vice package design, assembly, and test servic- Julie A. Mulholland (BS '89), of Wealth Management team in Miami as President of Sales for SignalDemand, Inc. es. Previously, he was the head of New York, NY, is founder, President, Executive Director to serve high net worth Most recently, he served as Vice President Standard Chartered Bank's Alternate and CEO of Mulholland Drive clients in the Latin American market. of Marketing and Alliances at Rapt, Inc. Investment Group in China. Entertainment, which specializes in Previously, he worked at Lehman Brothers.

48 Sternbusiness Daniel M. Rosenberg (MBA '93), of John J. Trizzino (MBA '95), of port, energy, natural resources, and Vice President at JPMorgan, working in New York, NY, recently served as Executive Southborough, MA, was appointed Vice related industries. real estate debt products. Producer on Spike Lee's movie “Inside President, Trade and Distribution, of Man.” He currently serves as President of MedImmune, Inc. Previously, he was Senior Stephen V. Nietupski (MBA '98), of InVenture Entertainment. Vice President, Business Development, at ID Brooklyn, NY, joined Alvarez & Marsal 2000s Biomedical. Transaction Advisory Group (A&M) as Dustin Ball (MBA '00), of Hong Kong, Jeffrey M. Farber (MBA '94), of Managing Director. Prior to joining was appointed Vice President of Strategic Stamford, CT, was appointed Senior Vice Lorenzo Ferroni (MBA '96), of Rome, Italy, A&M, Nietupski worked in the transac- Initiatives for Sun Life Financial, Asia. President, Finance, at Bear Stearns. He also was made a partner at Bain & Co. Prior to tion services practice at Prior to this new role, Ball was Vice serves as Controller and Principal joining Bain, he worked at Merrill Lynch in PricewaterhouseCoopers. President and Merger Integration Officer Accounting Officer for the firm. London. for greater China at AIG. Mark E. Schiff (MBA '98), of Maris A. Jurevics (MBA '94) and Marco M. Habert (MBA '96), of Brooklyn, Middleton, WI, was appointed Vice Kjerstin E. Barley (MBA '00), of San Susan L. Jurevics (MBA '96), of Forest NY, joined Deutsche Bank Securities Inc., as President of Central Marketing at Carlos, CA, was appointed Senior Vice Hills, NY, welcomed son Maksis Alfred Managing Director in the Consumer Thomson Corp. He previously served as President and Industry Leader of Jurevics on April 11, 2007. Investment Banking Group. Habert was previ- General Manager of BizFilings, a divi- Technology and Electronics at GE ously Managing Director in the Consumer sion of Wolters Kluwer. Commercial Finance Corporate Lending. Kenneth B. Stratton (MBA '94), of San Investment Banking Group at Citigroup. Most recently, she was Senior Vice Carlos, CA, joined StemCells Inc., as its Gretchen M. Tibbits (MBA '98), of President with GE Commercial Finance- General Counsel. Previously, he was Justin E. Mirro (MBA '96), of Great Neck, New York, NY, was recently appointed Media, Communications, and Deputy General Counsel at Threshold NY, is the head of the Automotive Group at Vice President, Group Administration, at Entertainment. Pharmaceuticals Inc. Jefferies & Co. Prior to his career in banking, Hearst Business Media. Prior to this he worked as an engineer for General Motors appointment, Tibbits served as Senior Dany M. Bouchedid (MBA '00), of Vincent M. Cali, III (MBA '95), of and Toyota. Director at ESPN Outdoors Group. Morristown, NJ, and his wife, Avianca, Baltimore, MD, was appointed Vice welcomed their first child, Skyler Hayden, President of the investment banking group Bernhard H. Fischer (MBA '97), of Garden Glenn B. Turell (MBA '98), of on February 12, 2007. at Signal Hill, a Baltimore-based specialty City, NY, has joined Six Degrees Capital Montclair, NJ, was promoted to Senior investment banking firm. Prior to joining Management as Managing Director. Prior to Vice President and CFO at Elias Arts, a William C. Graham (MBA '00), of Signal Hill, Cali was Vice President at Six Degrees, Fischer served as Managing commercial music company. Chappaqua, NY, was appointed Vice Stifel, Nicolaus & Company, Inc., in Director with Partner Re's. President of Sales at Beiersdorf Inc., the Baltimore. Allison R. Carpe (Coburn) (MBA US subsidiary of Beiersdorf AG. Prior to Arjun Jayaraman (MPhil '97, PhD '98), '99), of Needham, MA, and her hus- this position, Graham was Vice President, Alan M. Herbst (MBA '95), of New of San Diego, CA, joined Causeway Capital band, David, welcomed the birth of their Customer Development, for Novartis OTC. York, NY, co-authored Nuclear Energy Now: Management LLC as the head of Quantitative daughter, Marisa, in December 2006. Why the Time Has Come for the World's Research and Co-portfolio Manager of Scott Anthony Hill (MBA '00), of Most Misunderstood Energy Source. Herbst Causeway Emerging Markets Fund. Adrian Frankum (MBA '99), of New Newton, CT, was named Senior Vice is currently General Partner of Utilis Energy, York, NY, was promoted to Senior President and CFO of Intercontinental LLC. Timothy Oliver (MBA '97), of Mequon, WI, Managing Director at FTI Consulting, Exchange. Previously, Hill served as Vice joined Metavante Corporation, the financial Inc. President and Controller of IBM Japan's Thomas C. Hilboldt (MBA '95), of technology subsidiary of Marshall & Ilsley business operation. Hong Kong, China, has joined SCB Corporation, as Senior Executive Vice Michael J. Litvak (MBA '99), of Securities as the head of Research. President and CFO. Previously, Oliver was New York, NY, was promoted to Director James J. Hines, IV (MBA '00), of Previously he was the head of Regional Oil Vice President and Treasurer of Rockwell at Gartner, an IT consulting company. Boise, ID, was appointed Director of and Gas Research at Citigroup in Hong Automation, Inc. His second child, Joshua Benjamin, was Finance and a Member of the Board at Kong. born in January of 2007. Environmental Energy Services, Inc. Prior Matthew T. Smith (MBA '97), of Tenafly, to this appointment, Hines was an invest- Riyadh Lai (MBA '95), of Hong Kong, NJ, was promoted to Senior Vice President at Christopher Nikolich (MBA '99), of ment advisor and financial consultant. was recently named CFO of Silicon Motion Archstone-Smith, a leader in apartment invest- Emerson, NJ, is Senior Vice President Technology Corporation, a fabless semi- ment and operations. and Lead Portfolio Manager of Michael Critchley, Jr., Esq. (MBA conductor company. Prior to this appoint- AllianceBerstein L.P. '01), of West Orange, NJ, was appointed ment, Lai was the head of Technology Jason P. Glazer (MBA '98), of New York, to serve as a trustee by the University of Group at ING Corporate Finance, Asia. NY, was recently named Managing Director Jeffrey A. Wiseman (MBA '99), of Medicine and Dentistry of New Jersey. and the head of Institutional Equity Sales at Short Hills, NJ, was hired as co-head of Dahlman Rose & Company, LLC, a boutique Mezzanine Lending for JER Investors investment bank specializing in marine trans- Trust, Inc. Previously, Wiseman was

Sternbusiness 49 classnotes

President, Acquisition and Retention Banking on a Return to India Marketing, at Borders Group, Inc. Harley was previously Director of Promotions at Mihir Doshi’s career makes for an excellent case study in globaliza- Barnes & Noble, Inc. tion. Last year, he joined Credit Suisse (CS) as Managing Director and Kelly Kennedy Mack (MBA '02), of Country Head for India after spending 22 years with Morgan Stanley New York, NY, was appointed President of in New York, Tokyo, and India. Corcoran Sunshine Marketing Group. In his current position, Doshi is responsible for leading the devel- Prior to this appointment, she was Vice opment of CS’s India franchise, whose image was diminished in part President of New Business Management at by a two-year securities trading suspension in 2001. “Our challenge is the Sunshine Group. to join India’s competitive landscape after missing out on several criti- cal years,” he explained. Matthew C. Newton (MBA '02), of New York, NY, was appointed the At-Large Doshi has considerable experience building foreign franchises from Mihir Doshi (BS '81) Director on the National Stock Exchange. scratch, and sees himself as “an entrepreneur within a well-established Currently, he is Managing Director and the company.” His time with Morgan Stanley didn’t “feel” like 22 years, Doshi said, but rather a series head of Single Stock Trading of US of distinct jobs that began with a year in the New York accounting department. In 1985, he made Equities at Citigroup. the rare transition from back office to front office when he was sent to Tokyo to help set up Morgan Stanley’s foreign exchange business. Hal M. Cohen (MBA '03), of Jericho, Doshi’s work took him from Tokyo to New York and back again before sending him to Bombay. NY, was promoted to Publisher of the His last position was Managing Director and CEO of JM Morgan Stanley Securities Pvt. Ltd., Pennsylvania Newspaper Group by American Lawyer Media (ALM). Prior to where he spent 11 years building the company’s equity business in India. “We were arguably this promotion, he served as Senior among the best equity broking franchise with almost no turnover within our team,” he explained. Financial Analyst for Scholastic Corp. He “Now, with CS, I’m reminded of how hard you must work for a piece of this business.” is also a CPA. Doshi spent the first 12 of his 15 months with CS working on infrastructure and assembling his team, which now numbers 60. “If my epitaph reads, ‘he built a good place for people to work,’ Saba I. Haq (BS '03), of Brooklyn, NY, I’ll be glad,” he said. “The service industry is all about people, and I’m proud that my team is was appointed an AP Peace Fellow for the happy to come to work.” summer of 2007. She worked in Pakistan In addition to his Stern degree, Doshi earned a CPA during his first year after graduation while with the Afghan Women's Network. working at Deloitte Haskins and Sells. Attending NYU as a commuter student at the young age of Katherine Kim (MBA '03), of Flushing, 16, he was singularly focused on academics. He recently took his daughter to New York to visit NY, joined Banc of America Securities as colleges, and marveled at the “full experience” the NYU Stern Undergraduate College offers. Principal and Senior Equity Research Having literally seen the world, Doshi advised everyone to seize the opportunity to study Analyst, covering biotechnology stocks. and/or work overseas. He recalled his father’s journey to attend college at the University of Illinois Previously, Kim was a senior analyst at in the 1950s. “It took my father two weeks to get from Bombay to London by ship, and another ThinkEquity Partners and C.E. Unterberg week from London to New York before he boarded a train to Chicago,” Doshi said. Today, with a Towbin. 16-hour direct flight from Mumbai to New York, there’s little excuse to disregard his advice. Darryl B. Ng (MBA '03), of Jersey City, NJ, owns Canis Minor, a specialty dog boutique with locations in Jersey City and Justin Evans (MBA '01), of New York, investment firm. He is also Treasurer for Angelique Dab (MBA '02), of New York, Tribeca. NY, recently published his debut novel, A the W.P. Carey Foundation. NY, placed fourth in The Wall Street Good and Happy Child. Evans is a strategy Journal's “Best on the Street” Analyst Saurin P. Shah (MBA '03), of executive at The Pluck Corporation. David Wish (MBA '01), of New York, Survey for the Clothing and Accessories Williamsville, NY, recently launched NY, was named Client Partner at Avenue A sector. She is currently Senior Analyst at VirCierge.com. Jeffrey S. LeFleur (MBA '01), of New Razorfish, an interactive marketing and Nollenberger Capital Partners, Inc. York, NY, was appointed Executive Director technology services agency. Aziz I. Ansari (BS '04), of at W.P. Carey & Co., LLC, a real estate Jessica J. Harley (MBA '02), of Bennettsville, SC, is a producer of Sunnyside, NY, was appointed Vice

50 Sternbusiness “Human Giant,” a TV comedy series on Anjela Kniazeva (MPhil '05, PhD Cheyenne S. Morgan (BS '05), of Erik D. Ralston (MBA '05), of San MTV. '07) and Diana Kniazeva (MPhil '05, New York, NY, was appointed Analyst in Francisco, CA, and wife, Kathleen, wel- PhD '07), of New York, NY, were appoint- the securities and markets practice at the comed a son, Ronan Patrick, on April 9, Andrew Ip (MBA '05) of New York, NY, ed Assistant Professors of Finance at the Tabb Group. Previously, she worked in 2007. was promoted to Senior Consultant at Mars University of Rochester at the ages of 19 Markit Group, Ltd as an analyst in the & Co., a management consulting firm spe- and 21. The sisters also hold Masters in syndicated loan business. Spencer Schwartz (MBA '07), of cializing in business strategy. International Policy degrees from Stanford Ridgefield, CT, was featured in Treasury University. & Risk Management magazine's “100 Most Influential People in Finance.”

William Zvirin (BS '16) Frank O. Leasendale (BS '50, MBA '55)

Paul Levine (BS '31) Cecil M. Andrews (MBA '51)

Morton I. Epstein (MS '39) George T. Sgouros (BS '52, MBA '58)

Lois Hartsock Whitted (MS '39) William J. Morrison (MBA '55) In Memoriam Kathleen Allan-Meyer (BS '40) Ruth B. H. McKenzie (MBA '57) Helen P. R. Brown (BS '40) Daniel Sharon (MBA '57)

Mural Rodnon Charles (BS '42) Richard Lomas (BS '71)

Emil H. Mark (BS '42) Salvador P. Guevara (MBA '84)

Robert W. Bergold (BS '48) Francisco J. Guardiola Medina (BS '92)

Alfred Gottschalk (BS '48) Harish K. Reddy (BS '96)

Richard F. Kerr (MS '49) Daniel J. Wilson (BS '02)

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Sternbusiness 51 PastPerformance

Dynamic Duo one another in Ridgewood, New Jersey, where Elton converted the By Daniel Gross second floor of a barn in the back of his house into an office where they both work. In 1965, Larry Ritter, then the A great deal has changed chairman of NYU Stern’s at NYU Stern since the finance department, hired a mid-1960s, when Gruber group of young academics taught future Federal and tasked them with Reserve Chairman Alan designing a curriculum. Greenspan (BS ’48, MS After courses ended, the ’50, PhD ’77) in a doc- young professors would toral course. Among the hang out at McCann’s Bar, most significant changes: around the corner from the the understanding that School’s building at 100 students had to be versed in Trinity Place. “All the new quantitative economics faculty members did things before they could understand together,” said Edwin (Ned) finance, and a shift from the Elton, who was finishing his thesis basic corporate finance course to at Carnegie-Mellon when he joined one that stressed the underlying the faculty. One night, Elton and disciplines of instruments and Martin (Marty) Gruber, a chemical markets. engineer out of MIT who received To a large degree, the success his PhD from Columbia, got into a of their continued collaboration friendly argument over the effect relies on the same dynamic that of share repurchases. Both went led to their first paper in 1965: home bent on proving the other respectful disagreement, backed wrong. “We came in with big up by research. “I think the rea- proofs, and that became our first son we have worked together so journal article,” recalled Gruber. long is that we rarely agree about “That started the collaboration, anything,” said Gruber. “We’re and we’ve been collaborating still trying to prove that the other ever since.” guy is wrong. And our articles For 42 years, Elton and Gruber – Marty Gruber (left) and Ned Elton have been collaborating for come out better as a result, because who now are both Nomura 42 years, producing the best-selling finance textbook. it’s like having peer review all the Professors of Finance and who, way through.” respectively, have led Stern’s doctoral two other books and about 100 jour- And who has won more of the program for the last 12 years and nal articles. In 1999, MIT Press pub- arguments? “Each will tell you that chaired Stern’s finance department lished two volumes of their research. he has won more,” said Elton. “But from 1989 to 1997 – have engaged in Among their favorites: a paper on part of our good working relation- a most productive academic partner- ex-dividend returns and an article on ship is that we keep our disagree- ship. They co-authored the best-sell- simple rules for portfolio analysis, ments between ourselves.” ■ ing finance textbook, Modern published in the Journal of Finance. Portfolio Theory and Investment Elton and Gruber (who some- Analysis, which is now in its 7th edi- times receive mail addressed to DANIEL GROSS is editor of STERNbusiness. tion. Together, the duo has published Professor Elton Gruber) live near

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