51 minute read
Hostile Takeovers: Worried chief
RESEARCH: BIG IDEAS
GUARDING AGAINST HOSTILE TAKEOVERS, WORRIED CEOS EMPHASIZE THE BAD NEWS
CHIEF EXECUTIVES FOCUS ON THE NEGATIVE TO PROTECT THEIR COMPANIES, NEW RESEARCH SHOWS
by Deborah Lynn Blumberg
ur profit margins aren’t looking good,” the chief executive glumly told investors listening in on the company’s earnings call. “Unfortunately, I see gathering storm clouds in the coming quarter.”
Asked to picture CEOs, investors probably think of confident leaders offering positive statements about their companies, predicting rosy future earnings and pointing to news that’s favorable to their business.
But chief executives whose peers are targeted for hostile takeovers — and who worry their companies could be next — take an approach that departs from the common wisdom about cheerleading CEOs.
“Peer companies of hostile takeover targets promote bad news forecasts to mitigate the probability of becoming the next takeover target,” says Shuping Chen, the Wilton E. & Catherine A. Thomas Professor of Accounting at Texas McCombs. She is the lead author of a new paper that looks at the voluntary disclosures made by takeover targets’ peer companies.
Their CEOs voluntarily offer company forecasts that highlight the negative, and they tend to bundle these downbeat outlooks with earnings announcements to increase the visibility of the bad news.
The anxious executives also use a more negative tone and words during conference calls as a way to highlight the bad news, which tends to increase
“O the market’s uncertainty about a company’s value and limit takeover interest. To show how these peer companies tend to strategically emphasize bad news, Chen and her colleagues Bin Miao of Chinese University of Hong Kong and UT alum Kristen Valentine, Ph.D. ’19, of the University of Georgia examined a group of hostile takeover targets during a seven-year period along with companies they identified as the takeover targets’ peers.
THE PRESSURE OF BEING ACQUIRED
Chen and her colleagues identified 112 hostile takeover targets from 1997 to 2014 using the Securities Data Company (SDC) database, which provides information on M&A transactions. One takeover target was pharmaceutical company Allergan Inc. Its peer businesses Bausch Health Companies Inc. and Gilead Sciences Inc. both saw a three-day stock price increase on the heels of the news of the takeover. Other companies in the study included AIG, Morgan Stanley, Ford, GM, CVS Health, and Microsoft. By zeroing in on companies whose stocks saw positive three-day cumulative abnormal returns at the time of the hostile takeover announcement, the authors identified about 3,500 unique peer companies under pressure of acquisition. Higher-than-usual stock moves suggest investors believe these companies could also become takeover targets.
Using four measures, the researchers compared these peer companies to a control group of companies neither under threat of takeover nor considered to be a peer of a company under threat.
The four measures were the number of positive or negative earnings forecasts, how often forecasts were bundled with earnings announcements, the tone of the presentation section of quarterly conference calls, and whether companies spread negative words (including “arrears,” “canceled,” “insufficient,” “lack,” and “refusal”) evenly throughout the conference call presentation to reinforce the negative message. The researchers found that peers of companies under the threat of acquisition tended to hone in on bad news when discussing their own company.
A PENCHANT FOR NEGATIVE NEWS
Chen also found that peer companies with CEOs under age 60 and those with a higher total compensation relative to their industry peers, especially, focused on negative news because they have more of an incentive to avoid an acquisition.
“If I’m 30 years old, I have a lot more lifetime earnings to lose if I’m acquired,” she says. “And if I have more to lose, I fight harder.”
Earlier research has found that two-thirds of CEOs at acquired companies get fired and rarely find another CEO position after they’re let go.
SUMMER 2021
Anxious executives use a negative tone during conference calls as a way to highlight bad news, which tends to increase the market’s uncertainty about a company’s value and limit takeover interest.
Chen and colleagues also noted more negativity from companies with weaker anti-takeover provisions, such as staggered boards, blank check preferred stock, and restrictions on calling special meetings or acting through written consent.
What’s more, the researchers found that managers at these peer companies under threat managed earnings expectations downward, in line with their overall strategy of sticking to negative news.
This penchant for negative news contrasts with the behavior of managers at companies in the midst of takeovers who favor projecting good news as they attempt to secure favorable acquisition terms.
NO ONE-SIZE-FITS-ALL APPROACH
The study reveals that not all of CEOs’ career concerns automatically prompt them to promote good news about their companies.
“In other words, a one-size-fits-all approach to infer CEOs’ disclosure incentives is premature,” Chen says.
What’s more, the research shows that while some bad news disclosures are truly about the company underperforming, others are about obfuscating the good performance of the company, she adds.
Future research might look at whether acquirers can differentiate between the two kinds of bad news disclosure made by potential targets: true bad news versus bad news that’s disclosed to hide good performance.
“Corporate Control Contests and the Asymmetric Disclosure of Bad News: Evidence from Peer Firm Disclosure Response to Takeover Threat” is forthcoming, (online in advance) in The Accounting Review.
traveler
KELLY STECKELBERG, MPA ’91, HAS ALWAYS LOOKED FOR OPPORTUNITIES TO LEARN SOMETHING NEW. FOUR YEARS AGO, SHE JOINED A COMPANY CALLED ZOOM. THEN THE PANDEMIC HIT. HERE’S HOW THE CFO MANAGED THE COMPANY’S WHIRLWIND YEAR.
by Todd Savage | photograph by Dustin Snipes
The pandemic halted Steckelberg’s annual trips with family (at right with her late mother and a niece in London). A career highlight was Zoom’s IPO in April 2019 (below on the right with CEO Eric Yuan, second from left, and other members of the C-suite.
Just as dramatic as the growth in their customer base has been the expansion of their head count. Pre-pandemic Zoom had about 2,200 employees; today, that number has more than doubled to 5,000. “The brand awareness for Zoom and the flexibility of hiring has made it really easy,” Steckelberg says. “Of course, it comes with very unique challenges to double your workforce in a complete remote environment, but we’ve done it.” She has a strong memory of all-hands-ondeck days when they worked hard to keep pace with an accelerating increase in sales. “We were changed earlier for Kelly Steckelberg than it did for most of us. As CFO recruiting people from around the company to of Zoom, the Silicon Valley video communications giant, she and other help and started each day with a review of the company leaders had been watching the approaching coronavirus storm queue, which kept growing!” recalls Steckeland anticipating the disturbance it might unleash. ¶ For Zoom, it would berg. “But our team stayed with it, doing all be a deluge. ¶ Steckelberg’s last day in the office was March 4, making an earnings call with CEO Eric Yuan, the head of investor relations, and a we could to get the product to our customers as quickly as possible, and the reward for the long hours was happy customers at the end.”technical person who came in to assist them. The office had closed to workers the day before, and Zoom’s leaders focused on making sure their employees Locking Down felt safe and supported. Then they went home. ¶ “We had the luxury that we all lived in the technology,” Steckelberg explains. “We had to adjust to all When Steckelberg was faced with the prospect being remote, but the technology itself obviously was something we were of lockdown, she knew she didn’t want to spend all using every day for every meeting. Really, we were watching very closely an uncertain future living and working alone what was happening. Even watching, I don’t think we could have predicted how quickly it accelerated. On March 15 everything changed overnight for Zoom.” ¶ That was when many Americans started working from home, near Zoom headquarters in San Jose, California. She headed to what turned into more than 15 months living with her sister, brother-in-law, their two daughters, and two dogs in Southand Zoom was on its way to becoming a household name. The company ern California. If Steckelberg was going to blew up, going from an average 10 million daily meeting participants in be spending the year isolated and working December 2019 to 300 million in April 2020. ¶ “Thirty times increase in screen-to-screen with her colleagues, she knew four months,” Steckelberg says. “We did as much business in six weeks as we she would relish time with her nieces, ages 8 had almost done in seven years behind us. It was just incredible. The reaction and 10. “I don’t have any children of my own,” of the employee base was just as amazing. Everybody rose to the occasion.” ¶ For six weeks, she and the rest of the staff worked every day, including she says, “so it’s been a real special experience being there with them.” She set up a candy jar on her desk in her weekends to keep up with customer demand for Zoom. Days blurred as makeshift office. During our interview, she was everyone tried “to make sure that all of our customers and prospects that dressed comfortably in a Zoom hoodie with a had a need for Zoom had access to it,” she says. ¶ It was an exhausting pace, and Steckelberg still had to juggle her many duties at Zoom. She is responsible for the chief accounting officer function, financial planning and analysis, budgeting and forecasting, procurement, investor relations, tax and treasury, corporate development, and Zoom’s real estate portfolio, including its offices.
corporate virtual background. At one point her nieces broke through the screen to cozy up to her. “They came to say hi. This happens,” Steckelberg says, with a laugh. “They know where the candy stash is.” During high-profile interviews with CNBC and other media outlets, she locks the door.
While she has been locked down like the rest of us, she has had to put aside her wanderlust. Her tally stands at 60 countries — but over the last year and a half, the farthest she’s gone is to the nearby beach.
Early in her career, a stint as an expat working for PeopleSoft in Amsterdam whet her appetite for exploring new places, because it was easy to visit other countries in Europe.
“That really spurred my love for travel,” she says. “Living in another country and being in Amsterdam, I got the opportunity to experience countries in a different way, which was go sit, have a coffee, and not just run around.”
After she moved back to the States, she started taking her three eldest nieces from another sister on an annual trip to a new country. About 10 years ago, the excursions expanded to include Steckelberg’s mother and a sister. The first “big family adventure,” she says, was to Africa where they all volunteered at a children’s home and went on a safari.
Since then, they’ve gone to the Galapagos, Fiji, and Bora Bora for her 50th birthday. COVID-19 ended that. Next year, she hopes to resume the annual trip, perhaps with a trip to Brazil.
On the Move
Steckelberg is used to moving around. Her family moved often during her childhood, finally settling in Harper, Texas, a small Hill Country town where she had 15 students in her graduating class. She had just two electives in her high school: shop or home economics. She chose the latter. “I had four years of home economics and I was also, by the way, the president of Future Homemakers of America, which is really funny if you know me because I’ve obviously gone on a different trajectory in life.”
Arriving at the Forty Acres, she quickly switched majors from fashion merchandising to accounting at McCombs. (Her father was a CPA.) She took advantage of the five-year MPA program as a student in the program’s early days. “It seemed like a great opportunity to get my master’s done all at one time,” she says. The comprehensive curriculum also prepared her for the CPA exam and gave her a leg up on the competition, she says.
More than that, she says many of the analytical skills she learned have stayed with her. profile, she heard from a former colleague who would change her life. A colleague at WebEx, Eric Yuan, now the founder and CEO of Zoom, sent her a message. “I think he wrote something like, ‘It would be a dream if we could work together again.’”
At the time, Zoom was not the noun, verb, and adjective—as in “Zoom fatigue”—that it is today. Nor was Steckelberg very familiar with the company. “I had not paid attention to it,” she says. When she did, she was impressed.
“It’s a lot more about how you think through problems, how you problem solve, and how do you help make decisions. I think McCombs helped me do well.”
At each stage in her career, she has looked for opportunities that would broaden her skill set. Her first job was with KPMG in public accounting, where she gained exposure to different industries traveling around with Bay Area clients. She started in audit and then did tax work to learn something new. She went on to work in tax forms at PeopleSoft for a year, and then the company offered her a chance to move to Amsterdam. “I was like, ‘OK, here we go. An opportunity to learn something new.’ I agreed to move to the Amsterdam sight unseen.”
At the same time, she set a goal to become a public company CFO. “That started to help me target the types of roles I was going for,” she says. She landed at WebEx as the corporate controller, and although she thought one day she might have a shot at becoming CFO, the company was acquired by Cisco. New doors, however, opened.
“I had never worked for a company of that size,” she says. “That’s why I got to learn about hardware. I learned about consumers. I continued looking for new things I hadn’t done yet.”
From there she became CFO of the dating site Zoosk, her first experience working in a private company, a start-up, and a consumer web company. She moved into the COO role and learned the operation side of the business. A long sought-after goal of any CFO — taking a company public — ended with disappointment when Zoosk wasn’t able to adjust its business model quickly enough and called off its IPO. When the founders exited the company, the board asked Steckelberg to take over as CEO. “It was one of the hardest jobs I’ve ever done, but it was amazing and rewarding in the end. When you start to see your strategy come together, it’s really rewarding.”
After Zoosk, she expected to take a break, but within two days of updating her LinkedIn
Joining Zoom
Steckelberg was drawn by the opportunity to work with Yuan again and the chance to achieve her ambition of helping take the company public. When Zoom went public in 2019, it was a career highlight, she says. Of course, no one knew Zoom would command the world stage by spring 2020.
Yuan today is pleased he brought her on board. “Kelly is a brilliant leader and someone who makes Zoom a better place. She has an adept ability to make tough decisions and lead by example. We are so lucky to have her on our leadership team.”
Her earlier CEO experience came into play, especially in a growing company.
As a former CEO, “I had to learn exactly how products, engineering, marketing and sales — and your go-to market strategy — how that all comes together to drive a business and what the levers of that are,” Steckelberg says. “It’s helped me as I came back into a CFO role again to understand how to think about prioritization when things like, we’re setting budgets so that I know, ‘OK, if we’re going to invest here, this is likely what the outcome is going to be,’ and really having seen it and lived it in a very different way than just being more on the sidelines.
“I can be much more active and I can ask different questions because I've really seen it and lived it. I think it’s made me a much better CFO.”
“Zoom has become embedded in all aspects of our lives,” says Kelly Steckelberg, who last year was named CFO of the Year by the finance news site CFO Dive.
Steckelberg is generous with her time. She has mentored young women and recently “came back” to McCombs for a conversation—on Zoom, of course—in the VIP Speaker Series, hosted by the Undergraduate Business Council at UT Austin. A student asked how she handled failure, and she answered in her open, down-to-earth style.
“One of my friends told me, ‘I’ve never interviewed for a job that I didn’t get. And I was like, ‘What?! Then you are definitely not putting yourself out there enough, because I can tell you I’ve interviewed for a lot of jobs that I haven’t gotten.’ And yet look where I am. I’m sitting in what I think is the best job in the world.”
Over the past year, she says, the company has stayed focused on two goals: making sure their platform was stable and available to their customers, and supporting a boom in employees. At the same time, they have strived to make decisions that would be sustainable after the pandemic has calmed. They had to continue adding sales reps to serve their customers and engineers to keep developing their platform. It was a difficult balance to strike.
“We didn’t want to get ahead of ourselves from a hiring perspective,” she says. “How do you prioritize and think about our employees who need some support and help? Our customers need support. In that situation, for example, we turned to third-party partners to help us so that we can get an immediate influx of talent to support us but providing us the ability for long-term flexibility to scale that back down if we need to. That was the challenge.” She had to make sure the company wasn’t overcommitted, or, as she says, “out over our skis.”
Late last year, Steckelberg was named CFO of the Year by the finance news site CFO Dive. The magazine cited her earlier CEO experience, saying that knowing the “strategic side of running a company made her the ideal partner to manage Zoom's explosive pandemic-led growth.” In the story, analyst Ryan Koontz, who follows Zoom as managing director of Rosenblatt Securities, said, "Kelly and her team have done a tremendous job. She's an integral part of the machine there."
Of course, none of that could prepare her for the pandemic’s impact on Zoom. Now as cases of COVID-19 recede, at least in the U.S., and workers begin coming back to the office, how will that impact the company’s fortunes?
Steckelberg says she doesn’t expect us to stop Zooming. “Zoom has become embedded in all aspects of our lives. It’s in our work life. It’s in our children’s learning. It’s in our social life now,” she says. “As we move toward the time where we can all move around the world again more safely, we’re going to want to leverage Zoom for the aspects that make our lives the most convenient.
“The future of work is not ever going to look the way it did before.” Zoom is positioning itself for the post-pandemic world by building out some features that the company hopes will continue showing its value. One of them is the Smart Gallery, an innovation meant to improve the experience for a mixed environment where some employees are in a conference room and others are remote. Another new development: Zoom Apps— in-meeting applications by third-party developers to improve the meeting experience, such as integration with a service like Dropbox.
“Over time, what you're going to see is Zoom continues to evolve to be a platform where you spend your workday,” she says. “It’s not just where you come together to meet, but it’s also where you do your work and especially continue to collaborate with colleagues or with friends and family.”
After a year like no other, Steckelberg hasn’t visited Brazil yet, but her role at Zoom has taken her to places few people have been. She is proud of what the company has accomplished and says, “I can't imagine not having been here with the amazing team and gone through this. It’s a lifelong experience that I’ll never forget.”
CAREER AT A GLANCE
WINTER 2020
HOMETOWN Kerrville, Texas
EDUCATION McCombs School of Business BBA/MPA ’91
FIRST JOB Tax Manager KPMG 1991-1995
CAREER MOVES European Finance Director PeopleSoft 1995-2000
Various roles, including CFO of WebEx Division Cisco 2006-11
CFO, COO, and CEO Zoosk 2011-17
CFO Zoom 2017-present
OTHER ROLES Board Member, Qualtrics, Audit Committee Chair
Board Member, Episcopal Community Services of San Francisco
PANDEMIC PIVOTS
HOW STUDENTS, FACULTY AND ALUMNI CHANGED DURING UNCERTAIN TIMES
STORIES by SHARON JAYSON and MATT W. TURNER ILLUSTRATIONS by YANN SADI
McCOMBS STUDENTS, FACULTY MEMBERS, AND ALUMNI SHOWED RESILIENCE,
creativity, and determination in a strange, new world brought on by the pandemic.
They all pivoted. Faculty members moved to online instruction, students found ways to network and fulfill internships, and alumni found new approaches to maintain their livelihoods. Through it all, the McCombs community learned new skills, new strategies for solving problems, and new truths about themselves.
These are their stories.
After his semester abroad in Prague ended abruptly in spring 2020, Rodrigo Rivera, BBA ’21, resumed classes remotely from his hometown of Tampico, Mexico. “Classes started in the morning in Mexico, which was afternoon in Prague.”
THE REMOTE INTERN
TALK ABOUT A PIVOT. THE PANDEMIC COULD HAVE left Rodrigo Rivera, BBA ’21, at loose ends. Instead, he has learned a new skill: adaptability.
In spring of 2020, Rivera’s semester abroad in Prague abruptly ended. He would have to leave but could later resume classes remotely.
“I went in February and came back in midMarch,” he says, explaining that because “most countries in Europe were closed, I had to fly to Istanbul and then to Mexico City” to get back to his hometown of Tampico, Tamaulipas, Mexico.
Tampico is in the same time zone as Austin. So, it was a challenge taking four spring semester classes that were really remote — from Prague.
“I had to take my classes during European hours,” he says. “Classes started in the morning in Mexico, which was afternoon in Prague. It was a seven-hour difference.”
In summer 2020, Rivera had a remote internship with Goldman Sachs in Manhattan. He was still in Mexico, and everyone at the firm worked remotely. “My internship was most challenging,” he says. “It’s different working online and trying to network.”
Still, he made an impression. Goldman Sachs offered him a full-time job in New York, to belocking down? What would resonate? And then she thought, with more people staying home, demand for home delivery was rising. "I wanted to do something at the intersection of my passions and my talents,” says Laseter, founder and CEO of Peck Boards, which launched in September 2020. “I'm passionate about good food, and I've always worked in e-commerce. And, among my friends and family, I'm famous for charcuterie boards."
Peck Boards include a variety of meats and cheeses, as well as dried fruit, chocolates, and fig spread, among other extras.
The business had a successful holiday season, says Laseter, who lives in Austin. Now, she’s making a five-year plan, which includes increased marketing, hiring some help, and expanding into more DIY home food experiences for businesses and individuals. "My business strategy rests on one core assumption: that remote working is going to continue,” she says. “The office environment is evolving, and we're going to be there to help folks celebrate their teams virtually — with delicious food.” – Sharon Jayson
gin later this summer. Rivera, who arrived at UT in 2017, wrapped up his final semester at McCombs during the spring, with a double major in the Canfield Business Honors Program and finance and a minor in management information systems. He also managed to serve as a research assistant at the Salem Center for Policy through his graduation in May.
Reflecting on the past 15 months, Rivera says he “learned priorities” and the “soft skill to pivot.” – Sharon Jayson
FROM PANDEMIC TO PASSION
CECILIA LASETER, MBA ’15,
was trying to figure out her next step when the pandemic made it clear. As the mother of a 1-yearold in March 2020, Laseter, who had worked in corporate marketing at Whole Foods Market Inc., wanted to launch her own business “in a way that allows me to have a balanced life and keep working with a little one.”
But was launching a new venture a good idea during a pandemic when cities and states were
STRATEGIES FOR SOCIALIZING
SANJANA REDDY, BBA ’23, WOULDN’T LET HERSELF
believe she was going to study abroad until it actually happened. After all, this was a pandemic, and many countries’ borders were in flux. “Definitely, there was a lot of uncertainty,” she says. “Until the last moment, I was doubting whether it would happen. Countries could start enforcing new restrictions. It made me a little nervous. I was ready to go as long as it was possible.”
Reddy, a marketing major from Dallas, spent this spring studying at Corvinus University in Budapest as one of a handful of UT students who spent the past semester in Hungary. She was also named one of UT’s Spring 2021 Global Ambassadors, who shared their international experiences blogging and posting photos on Instagram. “Classes were fully online in the beginning,” Reddy says. “They were hoping we would eventually go to a hybrid format, but that never happened.” Even so, she was determined to make connections. Reddy met new friends through in-person events organized by a nonprofit international student group. Increased COVID-19 cases in Hungary forced a government lockdown during spring break
To ensure students stay engaged, lecturer David Quintanilla uses the same tricks for online teaching as he does in the classroom. If someone yawns, he says, “Hey! I saw that yawn.” It tells students he is paying attention to them.
that curtailed typical travel plans. She ended up exploring the country with friends on day trips and weekend visits at other times during the semester, which made her realize her biggest pivot “was really having to plan out my social interactions.” “I really took it for granted,” she says. “In the past, I’d meet people wherever I went. I didn’t realize I was a social person until I didn’t have that interaction.” – Sharon Jayson
NO YAWNING IN CLASS!
WHO KNEW A SNEEZE COULD FOSTER CLASS
engagement?
Teaching more than 500 students a semester across multiple sections this past year, David Quintanilla, a lecturer in the Business, Government and Society Department, finds keeping students’ attention in a live classroom hard enough, but engaging them for an hour or more in “Zoom U”? That challenge is in a class by itself.
Quintanilla employs an array of techniques to make sure students are following the lecture, but to his surprise, the simplest is the most effective. When teaching in a live classroom, he has a habit of saying “gesundheit” or “bless you” when people sneeze. If someone yawns, he says, “Hey! I saw that yawn,” or “Stay with me. Don’t get too bored,” or “We’re almost there!” When Quintanilla questions on Canvas’ discussion board feature, which allows students the freedom to discuss their answers with one another, as well as post video and audio files, without the pressure of being put on the spot when called on.
“Discussion boards offer distinct advantages over speaking out loud in the classroom,” she reports.
First, they ensure that 100% of the students have a chance to share their thoughts, which gives the instructor a much better take on their enjoyment and comprehension of the material. They also allow students to shine in different ways, especially those students who are stronger writers than speakers and are hesitant to voice their opinions out loud. Above all, Hussain finds that students are more honest and vulnerable when writing.
“I often ask students to relate the current topic to their own experiences and am amazed at the rich and relevant examples they provide,often talking about personally difficult situations from their own lives,” she says. And the feedback from fellow students to this sincerity can be quite validating.
“This is something I may continue to use even when we resume in-person learning.” – Matt W. Turner
imported these simple acknowledgments to the online world, he was surprised to discover that not only did students laugh just as hard, they knew he was really paying attention to them.
“I’ve heard from many students that this simple thing truly made them feel connected, as if we really had been in a live classroom together.”
Quintanilla recently won the Hank and Mary Harkins Foundation Award for Effective Teaching in Undergraduate Classes. – Matt W. Turner
DISCUSSION WITHOUT PRESSURE
THE PROFESSOR DELIVERS AN INSIGHTFUL, thought-provoking lecture, and the students are a) riveted, b) confused, or c) eager to ask a piercing question or offer a brilliant rejoinder?
It’s often difficult to gauge how students are thinking about topics and new concepts, says Insiya Hussain, an assistant professor of management. Even in a live classroom, an instructor only has time for a few student comments, which gives a limited view of how students are processing new information, she says.
The pivot to online instruction motivated Hussain to try a feature of Canvas, the webbased learning management system used by UT and thousands of universities worldwide. She had given only scant attention to it before the pandemic. Hussain posts weekly reflection
THE INTERNSHIP JUGGLER
JOSEPH TABUENA, BBA ’22, had many balls in the air during the spring semester, juggling two internships with UTNY, the university’s internship program in New York City.
There from January through May, he alternated work at two companies where he interned. “Both of them were remote,” says Tabuena. “I never went to either of the actual offices.”
He knew that going in. On Mondays, Wednesdays, and Fridays, he worked at Magnet Media Inc., where he assisted the marketing team with client development. On Tuesdays and Thursdays, he worked for Collegiate Sports Management Group, mostly working on spreadsheets to support marketing and analytics.
“It was a little strange, but that was also what they required at the time I applied,” he says. “They wanted someone in the same time zone for location and convenience.”
He was experienced at adapting to change. In spring 2020 when the COVID-19 outbreak sparked lockdowns worldwide, Tabuena left the UT campus and headed home to Coppell (in the Dallas-Fort Worth metroplex), where he completed his second year of college in his room.
“It was a huge adjustment at first,” he says. “At UT, it’s really easy to separate when you’re working on school and when you’re not. You’re not really able to have that luxury at home. You have to force yourself to stay disciplined at home.”
Tabuena says he did get a taste of collaboration with other interns. One company assigned its dozen interns to work on a final project together.
“I was really excited about New York. I knew it was a great opportunity for my career with the internships and letting me grow more as a person,” he says. – Sharon Jayson
NAVIGATING ON SCOOTERS
KEEPING A REAL ESTATE DEVELOPMENT COMPANY
thriving during the pandemic presented several challenges to Erik Johnson, MBA ’08, a co-founder of White Point Partners in Charlotte, North Carolina.
White Point’s five-person team got creative, Johnson says, so it could keep its focus on the tenant and capital relationships it had nurtured.
To show properties to potential capital partners when “no one was comfortable getting into a car (with others),” he says, they looked for an alternative. “We found a bunch of electric scooter rentals and brought them to where we needed to start. It ended up being productive, and we were able to see the neighborhood fairly quickly.”
Johnson says navigating on scooters and trying to communicate with the wind blowing was challenging but worked well enough that they did it again.
The company also improvised at its development Optimist Hall, an 1890s-era former gingham mill that had been transformed into a 147,000-square-foot mixed-use development. It opened in August 2019 and had 20 food and beverage tenants when COVID-19 emerged. Johnson says the development’s pivot to curbside and takeout — the only permitted food service allowed in the state in March 2020 — made Optimist Hall “the largest drive-thru in Charlotte.” The rideshare drop-off became the curbside pickup, and the janitorial staff became food runners.
White Point was nimble on its other projects, says Johnson, who serves on McCombs’ Real Estate Investment Fund advisory board. It sold some proposed office developments while proceeding with construction on other projects.
“We took a stand not to drop everything and see what happens and hope it was short-lived,” he says. “As we got further into it and realized it was not going away super quickly, we pivoted.” – Sharon Jayson
When the pandemic ruled out using a car to show properties to potential partners, Erik Johnson and his team got creative. “We found a bunch of electric scooter rentals and brought them to where we needed to start,” said Johnson, MBA ’08.
GETTING TO KNOW EACH STUDENT PERSONALLY,
rather than just as a class member, has been the big surprise in the pivot to virtual teaching for Linda Golden, a faculty member in Marketing and Business, Government and Society who holds the Joseph H. Blades Memorial Centennial Professorship in Insurance.
For starters, the simplest tech feature — the placement of student names at the bottom of each Zoom tile — gives instructors a leg up, Golden says. “You can call on students by name early in the semester, instead of waiting weeks until you’ve mastered them.” That also prevents students who might choose not to display their names in a live classroom from sitting on the sidelines, thus leveling the playing field, she says.
But a more remarkable advantage to virtual teaching, according to Golden, is the elimination of “group think.” She found that by setting strict time limits to Zoom’s chat feature, students didn't have time to read their classmates’ comments, and their thoughts ended up being more original and honest. They were more likely to pose questions they might otherwise be hesitant to ask. When she used the chat feature without time limits, she found that shyer students would “speak up” in front of their peers in writing much more than they would out loud. “Some students are simply uncomfortable speaking in a group even when it is clear that the environment is welcoming to whatever they have to say,” she adds.
Golden used Zoom’s polling feature to take a snapshot of how students were thinking about course material. Because they could not see one another’s answers, she maintains, group think was less likely.
Finally, the online classroom brought professors and students directly into each other’s office and living spaces, complete with decorations, memorabilia, and wandering pets, which opened a window into the lifestyles of others. Not only was this another example of real connection, she says, it injected a bit of “sheer fun” into the learning environment. – Matt W. Turner
STRATEGIC SHIFT
CINDY LO, BBA ’98, DIDN’T KNOW HOW CRITICAL her first moves would be in transforming her Austin-based company Red Velvet from an
When the pandemic hit her events planning company’s business, Cindy Lo, BBA ’98, acted quickly. By April 2020, Austin-based Red Velvet had added new services and products. A month later, it produced its first all-digital event.
events-focused agency to one that has successfully melded the in-person hybrid world with the virtual.
On March 6, the day South by Southwest canceled its 2020 festival, Lo says she started receiving cancellations from clients for in-person events taking place through April 2020.
“We became virtual event producers,” she says, giving clients the choice to cancel or stay on and evolve with her company.
By April, the business had added new services and products, including designing T-shirts and selling them online even though it had never sold products. Red Velvet also offered business consulting and résumé assistance — anything it could do to keep customers, she says.
Although Red Velvet had never produced all-digital events, the quick response enabled the company’s first such event by early May. Still, the pandemic took a toll.
“We were 27 when it started. Now, unfortunately, we are 12. I did layoffs that started off as furloughs,” Lo says. “I have not paid myself since April 2020.”
Lo says she lost more than 70% of her business.
“We lost so much business so fast,” says Lo, who serves on the McCombs BBA Advisory Board. “We ended up losing 80% and gained 10% through virtual.
“I’ve done everything I can to keep things going,” Lo says. “I was physically with my family but not mentally with them. Genuinely, I did feel like I was losing everything we built up for 18 years.”
The pandemic solidified Red Velvet’s metamorphosis from being viewed as a “party planner” to an “event strategist.” Now, she says she is poised to rebuild. – Sharon Jayson
MINGLING AND MEETING
McCOMBS ASSOCIATE PROFESSOR WEN WEN’S
surprise with the online pivot is that it has increased personal interactions and communication among students and instructors.
In a regular, in-person classroom, Wen, who teaches in the Information, Risk and Operations Management Department, notes that students tend to sit with the same group day after day and discuss class exercises exclusively with one another. Zoom’s breakout rooms randomly assign students to groups across class sessions and even across various exercises within a session. That forces students to interact with people of different backgrounds and perspectives and “significantly enhances their learning experience,” Wen says.
Going virtual also has easily enabled scholars around the globe to connect and learn about one another’s research as never before, she says. Even high-profile researchers who otherwise would decline invitations to travel to campus due to their heavy schedules are more than happy to give virtual research talks.
Another silver lining she cites during this unusual, difficult time: Professors and doctoral students have participated in more academic conferences because of the flexibility and lower costs that being online affords. – Matt Turner
MORE NIMBLE INNOVATION
SALOMI NAIK, MBA ’16, COULD NEVER HAVE
imagined how prescient her job title as head of innovation would be. The pandemic required a pivot toward more nimble innovation at the startup she joined in July 2019.
“We’re a lean startup always running tight on resources,” says Naik, the first employee hired at Ai Palette, a predictive analytics company. “We had to be very agile and make decisions very rapidly.”
The company is based in the tech hub of Singapore, where Naik also lives. She had made her way from Mumbai to Texas McCombs and then New York City before returning to Asia in 2017. At Ai Palette, the company analyzes public data and uses artificial intelligence to identify food trends, as well as consumer needs and motivations to help client companies create successful product concepts for rapidly evolving tastes.
“In the midst of the pandemic, we were seeing digital data really having its moment in the sun. At a time when traditional research was no longer an option, more people were shopping online and posting more on social media,” Naik says.
With clients across Asia and in the U.S. and Europe, Naik says the company shifted from traveling to meetings to virtual-only sessions. Ai Palette was already analyzing pandemic-inspired food trends when it captured the international spotlight and showed how quickly it could answer its clients’ most pressing questions.
Food Industry Asia, a research and advocacy group, told the team it wanted to better understand how consumer behavior was changing because of COVID-19, Naik says.
“The Food Industry Asia study really helped us get tremendous exposure,” Naik says of the resulting eight reports and seven webinars her company produced. “It reached almost 2,500 C-suite executives across 43 countries.” – Sharon Jayson
MASTERS OF ADAPTABILITY
STUDENTS IN McCOMBS’ FOUR MASTER OF SCIENCE PROGRAMS MAKE THE MOST OF DIFFICULT TIMES IN A YEAR LIKE NO OTHER
by Alberta Phillips | illustration by Brian Stauffer
LIZABETH CATHCART was all set to graduate from Midwestern State University in Wichita Falls, Texas, in spring 2019 and start an exciting, new chapter that fall: She had been accepted into the Master of Science in Finance program at Texas McCombs, the culmination of a long-held goal.
But then tragedy hit.
Her basketball coach at MSU Texas was diagnosed with stage 4 cancer. Cathcart graduated but stayed another year to spend time with her beloved coach and play basketball on an extended scholarship. She fast-tracked an MBA at the Wichita Falls school that year, but keeping a promise to “Coach J” to “make her proud,” she applied again to McCombs for the next year. Again, she was accepted.
Then the pandemic struck.
Amid shutdowns and COVID-19 restrictions, Cathcart, 24, and other students selected for the 10-month M.S. program weighed the benefits of giving up a traditional college experience against the advantages of earning a McCombs graduate degree, much of it online. Most students stuck with McCombs, whose M.S. programs are ranked in the top five worldwide. But it was a year like no other in the programs’ history, and this spring the students graduated and reentered the working world.
With fewer face-to-face classes, students battled Zoom fatigue and COVID-19, and endured tragedies, including deaths of loved ones. With the help of McCombs faculty and staff members, however, they carved out unique experiences that incorporated traditional aspects of campus life into their virtual experiences.
“The number of heart-wrenching emails I received has never been so high,” says Jade DeKinder, associate dean of McCombs Master of Science programs. “Students in our program lost parents to COVID and faced challenges so very close to home.”
The M.S., which runs from July to May, offers four graduate degree programs: Business Analytics, Finance, Information Technology and Management, and Marketing. All maintained their regular features, including McCombs signature Capstone projects, in which teams of four to five students work directly with organizations to solve realworld problems.
In all, 260 students enrolled in M.S. programs for the class of 2021, about the same as in previous years, though COVID-19 brought more deferrals and dropouts than usual.
“We did see a number of students who had been admitted say, ‘The world has changed so much that I don’t want do this anymore,’” DeKinder says, noting that international students, in particular, were affected by the pandemic.
“There were lockdowns and shutdowns around the world, so students literally and physically couldn’t go to embassies to get visas,” she says. “We saw a significant number of international students ask for deferrals because they just could not get here.”
Virtual-only study from their home countries was not an option for international students, DeKinder says. The U.S. government requires students on F-1 visas to attend all but one class in person. Many students, concerned about whether they could meet such requirements in a given period, deferred admission.
That enrollment drop for international students was offset by a surge of applicants in early spring, DeKinder says, of students wanting to expand their educational credentials during uncertain economic times.
THE HYBRID CLASSROOM
LIKE MANY STUDENTS, Cathcart wasn’t ready to fully surrender an in-person education. To accommodate those concerns, McCombs put together a hybrid of in-person and virtual classes, DeKinder says, devising at least three ways to attend classes: face-to-face in a classroom with a faculty member; online in a classroom, campus building or other location without an in-person faculty member; and online from home.
McCombs leaders left it up to faculty members and students to decide whether they were comfortable attending classes in person. “The faculty really moved mountains to make the most of the situation,” DeKinder says. “They kept students safe while pedagogically coming up with the best solutions.”
In-person classes were limited to 40% of the students wishing to be around their peers. Those who didn’t feel comfortable doing that could log on from home.
“I definitely was wanting an in-person experience to wind up, hopefully, what would be my last time in school,’’ Cathcart says. She opted to see peers in the classroom.
“I chose to go in person because I cannot stand being behind a screen all day,” she says. “Going to class has helped me put names with faces and get to know people a little better.”
The hybrid system also made a difference to Danielle “Ella” Akl, 25, who enrolled in the M.S. Information Technology and Management program after graduating from George Mason University in 2020.
“Most of my days were in person in that I myself went to campus,” says Akl. She set up her computer in the graduate student lounge and logged on to class with three to four students. Sometimes as many as nine others joined in, which she says, “essentially created this little classroom setting.”
HELPING STUDENTS LAUNCH THEIR CAREERS
AT THE SAME TIME,McCombs officials and faculty members went the extra mile to help students succeed and secure the lucrative offers from employers, just as their predecessors had under different circumstances. When all the data are in, officials expect the class to be as successful as past ones, says Merri Su Ruhmann, director of career education and coaching for the Master of Science programs.
“I tell incoming students that we don’t give you a job,” she says. “We give you the skills you can use for a lifetime of career success.”
Her team prepares students with skills to improve their résumés, interviewing techniques, job search strategies, and personal branding.
“Career Education and Coaching are amazing,” Akl says. “They work with you one on one (virtually) on résumé strength, mock interviews, and workshops. I have felt supported through every journey of my career program at McCombs.”
She accepted an offer to work in Austin for Google in a residency program in which employees rotate through various client-facing roles in the Google Cloud department. Akl describes it as her “dream job” because “it ties in the more business aspect of technology.”
Cathcart also praised Ruhmann and her team, saying they helped substantially in polishing her résumé and interviewing skills, with all employers conducting interviews virtually. She received six job offers, including from three of the big four accounting firms: KPMG, Deloitte, and Ernst and Young (EY). She accepted the EY offer in Dallas.
Other students say they found their “dream jobs.” Ruhmann’s team works with all of the students to navigate their job searches and launch their careers—up to six months after they graduate.
“We offered tailored workshops on interviewing virtually, networking virtually, and how to navigate the job search from home when (in the past) the typical advice assumed in-person
networking, interviewing, and recruiting,” Ruhmann says.
Did it work? Yes, she says, noting that while data are still being gathered, “we are seeing employment outcomes comparable to the class of 2020.”
In 2020, 93% of students in the M.S. Business Analytics program accepted offers within six months of graduation, with an average salary of $89,832. For M.S. Finance, 97% reported accepting offers during that period, with an average salary of $71,109; for M.S. Information Technology and Management, 95% accepted offers in that time frame, with an average salary of $91,444; and for M.S. Marketing, 86% accepted offers within six months of graduation, with an average salary of $64,625.
UPS AND DOWNS
THE ALL-VIRTUAL classes, group activities, and employer interviews have their downside, with Zoom fatigue being chief among them. But program leaders also found opportunities. DeKinder says online programs allowed McCombs to do something it hasn’t done before: bring in worldclass experts “who can come in and engage with students” from wherever they are.
Students also found ways to benefit from their online world. Jenny Robinson, who is in the M.S. Business Analytics program, says virtual interactions with her professor helped her stay on track after contracting COVID-19 in late summer. “I was tired and barely had energy,” says Robinson, 23, BBA ’20. “But I was able to get on a Zoom call with my professor and tell him the situation. He helped me out with the
Left to right: Aneeque Baqai, Elizabeth Cathcart, and Danielle “Ella” Akl decided that earning a McCombs Master of Science degree was worth the challenges of learning amid a pandemic.
classes I missed. I felt bad because I didn’t know how long (COVID) would last.
“I could sit in my living room on the couch and still get on (classes and group activities). … I honestly felt like I didn’t get behind.”
She accepted an offer from Deloitte, working with its Houston office.
Other benefits, says Aneeque Baqai, 24, who enrolled in the M.S. Marketing program, are the flexible office hours and help sessions professors held on Zoom. Baqai, an international student, graduated from UT Austin’s College of Liberal Arts in 2018.
During the five-week summer session in which students take nine credit hours, Baqai was having trouble working out a certain calculation, coming up with a different answer each time. He was concerned: “If you don’t understand one thing, you fall behind. Then it becomes like the domino effect. You keep falling more behind.”
He emailed his professor, who wasn’t available during day hours. Baqai didn’t expect what happened next. The professor responded, saying, “Let’s jump on a Zoom call at 9:30.” That is 9:30 p.m.
“It was a silly mistake, but the point is, I was able to have a one-on-one with my professor on Zoom,” Baqai says. Straightening out the mistake swiftly made all the difference in staying on track in an “intense five weeks,” he says.
Baqai accepted an offer from H-E-B, working as a quantitative research analyst from Austin.
Robinson also likes that Zoom provides audio and visual transcripts, which students could download to prepare for exams or to better understand more complicated lessons.
Benefits aside, the downside of all-virtual instruction “were very present and real,” says DeKinder, a sentiment echoed by students, who say they had virtual classes or groups/cohort assignments from four to 12 hours multiple days a week.
“There’s something about being in a classroom that is less exhausting for a student,” DeKinder says.
Getting to know classmates also was harder, students say. Meeting online “really takes away from the networking you get to do with classmates,” Cathcart says. “I still had an amazing experience, but I feel like I would know people better if we were all in person.”
To break up the monotony, McCombs staffers hired a company that had crafted “escape rooms” for M.S. Information Technology and Management students. To escape the rooms, students had to unlock the doors by solving puzzles together.
“This event was definitely a great team-building activity, and everyone had a fun time,” Akl says. “My cohort of 22 students was broken up into six- to eight-people groups, each in their own escape room. After we finished, we chatted about how the different groups did, and it was friendly and supportive.”
ADOPTING CHANGES
DeKINDER SAYS M.S. graduates consistently cite in-person networking with other students as a key benefit of McCombs. Those connections last years beyond graduation, students say on surveys. That’s one reason DeKinder says McCombs is looking forward to returning to all in-person instruction, as early as July 2021, when the new M.S. programs begin.
“We have felt a sense of loss not being face to face with our students,” she says. But, she adds, McCombs will take some of the things that worked well from their 10 months of virtual instruction, including career coaching opportunities for students who are unable to go to campus and guest speakers who can lecture from anyplace in the world. She says online faculty office hours are likely to continue, along with in-person hours.
Cathcart, who also battled grief, illness, and side effects of a COVID-19 vaccine, says it has been a tough year but worth the struggle. “It is true that I formed more bonds and memories with classmates in undergrad, but I am proud of our Zoom-U class of 2021.”
Alberta Phillips is an award-winning journalist in a career spanning more than 30 years. She lives in Austin.
Merri Su Ruhmann (left) and Jade DeKinder are among the McCombs officials and faculty members who go the extra mile to help M.S. students succeed.
COMMUNITY
STUDY ABROAD SCHOLARSHIPS
GLOBE-TROTTING ENTREPRENEUR HELPS PUT THE BENEFITS OF INTERNATIONAL TRAVEL WITHIN STUDENTS’ REACH
Studying abroad as an undergraduate, Sarah Groen, BBA ’05, says what she learned about leadership, allocating scarce resources, and other cultures was so enriching she wants others to have that opportunity. “These are all great things to learn in college at an age when you're still building so many neural pathways and opening your mind to new ways of thinking and being,” says Groen, founder of Bell and Bly Travel. To share her passion for expanding one’s education and life experience with travel, Groen recently created a fund that will provide study abroad scholarships for undergraduate students at McCombs. She caught the travel bug in high school and studied in Vienna and Singapore as a McCombs undergraduate. Now, she’s visited 100 countries and every continent. After working in investment banking and private equity, and eventually as an executive with Uber, Groen says entrepreneurship beckoned. She started planning her friends’ bucket-list trips as a side hustle, but in 2018 she left the corporate world and established her travel business to help top executives and business owners make the most of their precious downtime.
Sarah Groen, BBA ’05, created a fund to provide study abroad scholarships for undergraduate students at McCombs. The fund has been endowed to provide travel scholarships in perpetuity.
COMMUNITY: DONOR NEWS
“The people who’ve been rock stars and helped me to get where I am today were all MBAs,” says Lee Jamieson, BBA ’88. Jamieson and his wife, Krystyna, established a graduate fellowship at McCombs, specifying that it be awarded to a qualified former Longhorn athlete. This year’s recipient is Bailey Webster (above right), B.S. ’12.
When the pandemic crashed down on the travel industry, Groen was not sure her fledgling business would survive. But thanks to socially distanced travel, Bell and Bly handled 55 excursions and actually increased revenue in 2020. Now, the company is planning more trips than ever, Groen says. The scholarship fund is a longtime goal for her and her husband, Alex. “I've always dreamed about helping children or students who don't have the opportunity to travel,” she says. “So, when we had the funds to do so, we made it happen.”
The couple have endowed the fund so that it provides travel scholarships in perpetuity, and Groen will contribute $100 in her clients’ names for every successful client referral. She says the importance of travel for business students cannot be overrated.
“In a different culture, you learn to understand multiple perspectives, so you become more creative, more empathetic, and less likely to think you know it all,” she says. “It makes you a better leader.” – Judie Kinonen
NEW MBA FELLOWSHIP: A former Texas All-American helps other student-athletes test their limits—academically
The new slogan circulating in Longhorn locker rooms, “All Gas, No Breaks,” aptly describes Texas athletes—and it applies doubly to the ones who go on to pursue a Master of Business Administration degree, says Lee Jamieson, BBA ’88.
That’s why Jamieson and his wife, Krystyna, recently established a graduate fellowship at McCombs, specifying that it be awarded to a qualified former student-athlete, if possible.
“The people who’ve been rock stars and helped me to get where I am today were all MBAs,” says Jamieson, who earned an MBA from the University of Southern California after an athletics career at Texas. “I wanted to be able to pass on that legacy.”
This year’s recipient, Bailey Webster, B.S. ’12, was team captain and outside hitter for the Longhorn volleyball team, earning Most Outstanding Player at the 2012 NCAA tournament.
As an All-American swimmer for Texas, Jamieson knows what it takes to compete at that level. “When people tell me they want to be a Division I athlete, I tell them to be careful what you wish for,” Lee says. “It’s a massive sacrifice.
“And if that person also qualifies to get into McCombs’ MBA program—that’s a special person.”
The Jamiesons, whose philanthropy focuses on youth projects and homelessness, have given generously to several scholarships, including a Texas Challenge fund that’s helping 31 UT undergraduate students across campus.
But when they decided to target giving toward McCombs, they wanted to support MBA students, many of whom have already launched their careers and are pausing in order to up their game. “When you get an MBA, often you’re leaving a comfortable life and a great salary,” he says.
That’s the case for scholarship recipient Webster, a senior associate at Dimensional Fund Advisors in Austin, who has worked in financial services for four years.
“When I started working, I committed to learning whatever I needed to best serve clients,” she says. “It’s important to me to push myself to be the best at my craft.”
Jamieson says it’s this kind of discipline required of a Longhorn athlete and an MBA candidate. “Both require hard work and leadership and sacrifice,” he says. “I think that should be rewarded.” – Judie Kinonen
TEXAS CHALLENGE: TWICE THE IMPACT The memory of his first Texas friends moves one international alumnus to help future students
Memories of a friendship forged more than 50 years ago inspired Chester Liu, MBA ’68, to endow a Texas Challenge scholarship.
Texas Challenge matches new gifts over $100,000, doubling the impact on high-potential McCombs students who come from low- to medium-income families.
“I want students to broaden their horizons, just as I was able to,” Liu says. Born into a family of Chinese immigrants in Taiwan, Liu says he learned early the importance of families helping one another access education for their children. His own scholarship to UT came from a U.S. chemical company.
SUMMER 2021
Chester Liu, MBA ’68, says his horizons were broadened with the help of Amy and Darrell Jackson who opened their home to him during his time at UT. To help others broaden their horizons, Liu has endowed a Texas Challenge scholarship.
Liu had been in Austin only two weeks when he arrived at his host family’s house and discovered taped to the front door a bag of peanuts and a welcome note from Amy and Darrell Jackson. The Jacksons had volunteered as part of a program to open their home to international students.
Darrell, a retired lawyer turned rancher, and Amy, a retired artist, took Liu on trips, invited him to church services, and engaged him in dialogues on philosophy. Amy even taught him how to drive.
“Their understanding, compassion, and open-mindedness provided us with lots of conversations, without boundaries,” Liu says. “Amy Jackson had higher expectations of me than my own mother back in Taiwan.”
Liu retired in 2002 as vice president of systems development for Automatic Data Processing in Jersey City, New Jersey. Looking for a way to instill confidence in future generations of McCombs students, he established an endowed scholarship by directing the required minimum distribution from his IRA to the university.
Many of the scholarship recipients are first-generation college students from South Texas. “When I heard the many stories about the potential of students from the Rio Grande Valley, I wanted to provide the same opportunity to them as was provided to me,” Liu says.
He knows firsthand what a little help from friends can do. – Judie Kinonen
