THE MAGAZINE OF THE McCOMBS SCHOOL OF BUSINESS AT THE UNIVERSITY OF TEXAS AT AUSTIN
spring 2016
BIG GAME y
McCOMBS FUELS ENTREPRENEURSHIP
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REAL ESTATE STUDENTS LAUNCH PRIVATE FUND
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SILICON VALLEY’S BILL GURLEY, MBA ’93, ON THE HUNT FOR HIGH-TECH WINNERS
NEW MASTER’S FOR NEW-ERA MARKETERS
Big ideas start with knowing who has the big ideas.
Now offering classes in and Finance. Enrollment now open. modernexecutiveseries.com 1 (888) 996-7508
y DEPARTMENTS
2. LETTER FROM THE DEAN
11. RESEARCH
3. NEWS Short Takes: Alumni reach record 10 percent in giving, MBAs rate high for sought-after skills, McCombs shows global reach, student leads Sustainable Dairy Goat Initiative, and more. 6. Economic Forecast: Powerhouse panels look to the future. 8. Marketing: Launching a new master’s degree to prepare a new generation of marketers. 10. Leadership: Jay Hartzell is named the school’s new dean and introduces a new leadership team.
Interview: UT President Greg Fenves on research and the university’s mission. 14. Insights: Learning from failure, the carbon tax’s unexpected benefits, and why stock rankings matter.
35. COMMUNITY Up Close: Beauty marketer goes viral, social finance expert takes on new role, remembering Professor Reuben McDaniel, and more. 42. Gatherings: Alumni events and celebrations. 44. Alumni Notes
SPRING 2016 McCombs is published in the fall and spring for alumni and friends of the McCombs School of Business at The University of Texas at Austin. DIRECTOR OF COMMUNICATIONS
David Wenger EDITORIAL MANAGER
Todd Savage EDITOR
Molly Dannenmaier
48. BOTTOM LINE
ART DIRECTION/DESIGN
Lindsay Tucker Design
y FEATURES
CONTRIBUTING WRITERS
HIGH STAKES Bill Gurley, MBA ’93, partner at Benchmark Capital, is one of the top venture capitalists in tech. He shares insights on entrepreneurs, high-tech startups, and launching a Silicon Valley career. BY F R E D VO G E L S T E I N
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Kim Brown, David Canright, Adrienne Dawson, Melyssa Fairfield, Kate Harrington, Samantha Harris, Gayle Hight, Amira Jensen, Bradley Keoun, Jeremy M. Simon, Matt Turner, Fred Vogelstein CONTRIBUTING PHOTOGRAPHERS
BIRTH OF A TECHNOPOLIS Decades ago, Dean George Kozmetsky had a clear vision for how the business school could drive regional economic development by incubating technological innovation and propagating private sector collaboration. BY B R A D L E Y K E O U N
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Timothy Archibald, Sasha Haagensen, Matthew Mahon, Leah Overstreet CONTRIBUTING ILLUSTRATORS
Tim Bower, Ilya Boyko, Andrew Groves, Christian Northeast ONLINE
today.mccombs.utexas.edu/ magazine CHANGE OF ADDRESS
REAL WORLD REAL ESTATE Beginning this fall, McCombs will hold the distinction of being the only business school in the country where students have the opportunity to manage both public and private real estate investment funds. BY KAT E H A R R I N G TO N
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512-232-2441 alumni@mccombs.utexas.edu FOLLOW US
facebook.com/utmccombsschool twitter.com/utexasmccombs linkedin: http://bit.ly/UTexasMcCombs
#McCOMBSMAG 1
McCOMBS: FROM THE DEAN
A Simple Question
D
AY ONE of my my deanship
at the McCombs School of Business was full of congratulations and smiles, but Day Two brought into focus the reason for such hope and optimism. Sitting across the desk from me was a good friend of the university, an individual of notable talents and accomplishments. He asked me a simple question: “What can I do?”
I then understood why this school has such power, even beyond our campus facilities, intellectual strengths, or vibrant culture. With friends and advisors of such capacity and willing hearts, I thought, opportunity for McCombs is surely boundless. Traveling across the U.S. and to Mexico in the weeks that followed my appointment as dean, I met with educators, business executives, and alumni. Again and again I was asked, “How can I help?” To them, and to all who read this message today, I say, the school has never been so prepared to accept and leverage your support and engagement. As Rowling Hall construction continues on schedule for completion by the start of graduate classes in fall 2017, I’m grateful for the bedrock strength left behind by Dean Tom Gilligan, who departed last summer to become director of Stanford University’s Hoover Institution, and Dean ad interim Laura Starks, who skillfully guided the school until February of this year. Thanks to their leadership and the contributions of talented and dedicated faculty, staff, students, alumni, corporate partners, and friends, the school is prepared to strategically pivot to seize new opportunities. You will already see evidence of our progress in this issue of McCombs, and you can expect
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to read about more educational innovations in issues to come. In our cover story and companion articles, we highlight the role our graduates play in the rough-and-tumble world of VC funding and among high-tech pioneers and gutsy startups. Watch for our influence to grow as McCombs begins to engage more directly with alumni in these sectors. We look at how marketing analytics have evolved over time and introduce our new oneyear master’s degree program that will prepare graduates to use big data and new methods of analysis for consumer understanding and persuasion. UT Austin President Greg Fenves explains the crucial role business faculty and students
will play in his vision of a university that leads the world in interdisciplinary research. And finally, this issue offers a first look at the new student-managed private real estate investment fund, a milestone that makes McCombs the only business school in the U.S. to offer both student-managed public and private funds. As you read, look for a program or idea that excites your passion. I would love to get more calls that begin, “What can I do?”
JAY HARTZELL Dean and Centennial Chair in Business Education Leadership
NEWS
SPRING 2016
REWARDING ROLE MICHAEL CLEMENT’S CAREER-LONG COMMITMENT TO MENTORING MINORITY DOCTORAL STUDENTS LANDS HIM A PLACE IN THE PhD PROJECT HALL OF FAME
Professor Michael Clement has been inducted into the hall of fame of the PhD Project, a national nonprofit organization founded to increase diversity among business school faculty. The award recognizes his efforts to inspire and shepherd young scholars — especially African-Americans, Hispanic-Americans, and Native Americans — through the process of pursuing a doctoral degree in business. “This has been one of the more rewarding experiences of my career,” says Clement. “I have seen people from around the country go from simply being interested in applying to a doctoral program to actually becoming professors, and I have enjoyed taking that journey with them.” He also serves as UT Austin’s faculty liaison to the National Collegiate Athletic Association and mentors many student-athletes of color. Jennifer Joe, accounting professor at the University of Delaware and one of Clement’s nominators, says: “Michael served as a role model to many of us who were at the beginning of our doctoral careers. In his quiet, self-deprecating manner, he let us know that if he were able to succeed, the rest of us could.” CCOUNTING
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N E W S : S H O R T TA K E S CORPORATE GOVERNANCE AWARD McCombs research keeps corporations in line. Laura Starks, the Charles E. and Sarah M. Seay Regents Chair in Finance and the school’s associate dean for research, was honored this spring at the annual Academic Conference on Corporate Governance for her outstanding research contributions. Starks also gave the event’s keynote speech.
MBA Skill Set
Consulting: No. 1 Strategic Thinking No. 3 Communication Skills Energy: No. 1 Communication Skills No. 3 Leadership Skills Technology: No. 2 Creative Problem-Solving No. 3 Strategic Thinking
Top 10 Percent
Here’s another one for the record books: For the first time, McCombs alumni reached 10 percent in annual giving participation in 2014-2015. One in 10 McCombs grads gave financial gifts to the school, a goal set by former McCombs Dean Tom Gilligan as a first step toward matching the giving level of peer institutions. What helped McCombs reach its target? One factor was an emphasis on building connections with every potential donor.
BEDSIDE READING Your favorite McCombs professor can be as near as your nightstand. Marketing Professor Raj Raghunathan’s first book, If You’re So Smart, Why Aren’t You Happy? hit online and in-store shelves in April, while Marketing Professor Vijay Mahajan’s latest book, Rise of the Rural Consumer, is due out this summer. Business, Government, and Society Professor David Spence co-authored Energy, Economics, and the Environment, a new edition of which came out in fall 2015.
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I L L U S T R AT I O N B Y G I N A M AY E S
L AU R A STA R KS P H OTO G R A P H : A M Y M I K L E R
McCombs took top ranks for some of the hardest-to-find MBA skills, according to Bloomberg Businessweek. Drawing from the portion of its MBA survey focused on recruiters, the business publication included McCombs among its “schools hitting the sweet spot.” McCombs showed its strength in three leading industry sectors:
INTERNATIONAL POWER • 28 percent of all enrolled Texas MBA and EMBA students are citizens of a foreign country. McCombs alumni (including BBA graduates) reside in 107 countries around the world.
Goats for Good Complex problems don’t always need complex solutions. That’s what Samuel Garcia, BBA ’16, believes when it comes to empowering rural communities struggling with poverty. Through his Sustainable Dairy Goat Initiative, goats in Texas and elsewhere provide people with milk and dairy products that later can be sold for income. To spread his message, Garcia has written a book and given a TEDx Talk, both titled, “How Goats Can Fight Poverty.” As Garcia, who grew up in the Valley, told the Rio Grande Guardian, “I want to give my idea to anyone who wants to make it his or her own.”
PLANET McCOMBS
SPRING 2016
McCOMBS BY THE NUMBERS
5th
McCombs ranks fifth in the world for faculty research prowess in the Top 100 Business School Research Ranking by The University of Texas at Dallas.
16th
The Texas MBA Full-Time Program rose one spot to No. 16 in U.S. News & World Report’s 2017 survey of top graduate schools of business.
A popular McCombs event enables attendees to explore the globe — from Brazilian capoeira to Bollywood dance — without leaving Austin. With more than 40 countries represented across all the Texas MBA programs, International Night is the MBA program’s largest annual event. Held each fall at UT’s Frank Erwin Center, International Night is an opportunity for students, faculty, staff, and friends to explore the diverse backgrounds and cultures represented at McCombs by visiting student-run booths showcasing the food and culture of more than a dozen nations.
48%
of business honors students enrolled in 2014-2015 are women.
$380 million
Attracting LGBT Talent Bryant Ramirez, MBA ’17, was among 25 MBA students nationwide selected for the Reaching Out LGBT MBA (ROMBA) Fellowship program. McCombs joined seven schools to participate in the inaugural year of the program. ROMBA is a non-profit organization that educates and connects lesbian, gay, bisexual, transgender, and ally MBA students from across the U.S.
Combined amount of funding startups have raised after participating in the Jon Brumley Texas Venture Labs Accelerator housed at McCombs.
4,924
Number of alumni older than 80 years.
8,034
Number of alumni in their 20s.
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NEWS: BUSINESS INTELLIGENCE
McCOMBS ECONOMIC FORECAST EVENTS PACK A POWERHOUSE PUNCH STATEWIDE ALUMNI, EXECUTIVES, AND THOUGHT LEADERS COME TOGETHER IN AUSTIN, DALLAS, HOUSTON, AND SAN ANTONIO TO SHARE INSIGHTS ABOUT EMERGING ECONOMIC TRENDS
F
OR THE PAST FOUR YEARS,
the McCombs School of Business has partnered with Texas CEO Magazine and the Federal Reserve Bank of Dallas to host fall Economic Forecast events in Austin, Dallas, Houston, and San Antonio. Featuring panels of C-level executives, state officials, and federal economists offering predictions about economic prospects for the upcoming year, the McCombs Economic Forecast has become a significant networking opportunity for alumni across the state. A large number of this past year’s attendees were McCombs grads and more than a quarter of attendees were C-level senior executives. “The McCombs Economic Forecast is a powerful forum for the sharing of business intelligence among top industry leaders and alumni,” says Dean Jay Hartzell, who moderated several of the events. Headwinds: 2016 McCombs Economic Forecast for Texas events took place at the AT&T Executive Education and Conference Center in Austin, the Federal Reserve Bank of Dallas, the Houston Branch of the Federal Reserve Bank of Dallas, and the Plaza Club in San Antonio. Each city’s version featured a different four-member panel of industry leaders representing various sectors of the economy, including banking, real estate, entrepreneurship, health care, engineering, industrial construction, fast food, energy, and biotechnology. After individual presentations from panelists, McCombs faculty members moderated a question-and-answer session. Laura Starks, McCombs associate dean for research, mod-
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erated in Austin; Hartzell moderated in Dallas and Houston; and Bob Parrino, chairman of the McCombs Department of Finance, moderated in San Antonio.
In San Antonio and Dallas, respectively, special guests Red McCombs and Robert Kaplan delivered welcoming remarks. Kaplan is the new president of the Federal Reserve Bank of Dallas.
"BET ON THE SMALL HORSES AND NOT ON THE UNICORNS — LOOK TO EDUCATION AND HEALTH CARE TECHNOLOGY." Mellie Price, Founder and CEO, Softmatch
Red McCombs speaks in San Antonio; Mellie Price, CEO of Softmatch with Laura Starks of McCombs; Mary Garza, MBA ’82, of Wells Fargo, and Jim Nyquist of Emerson Process Management; Louis Kokernak, MBA ’87, of Haven Financial Advisors. CLOCKWISE LEFT TO RIGHT:
SPRING 2016 Daron Peschel, BBA ’88, senior vice president of the Dallas Fed, organized the Fed's involvement. McCombs alumni advisory board members attended the event in Austin as part of their semi-annual meeting, and several McCombs advisory council members in other cities attended and brought business colleagues. In Austin, panelists were Bech Bruun, BBA ’00, chairman of the Texas Water Development Board; Mellie Price, founder and CEO of SoftMatch; Jim Nyquist, president of systems and solutions at Emerson Process Management; and Mine Kuban Yücel, senior vice president and director of research for the Dallas Fed. In Dallas, panelists were Yücel; Mark Layman, chairman and CEO of Balfour Beatty Construction; Chris Heller, CEO of Keller Williams; and Dr. Eric Bricker, chief medical officer of Compass Professional Health Services. In Houston, panelists were Keith Phillips, associate vice president of the San Antonio branch of the Dallas Fed; Pieter Bergstein, CEO of Standard Oil Services; Chris Lloyd, CEO of Memorial Hermann Physician Network; and Earl Hesterberg, president and CEO of Group 1 Automotive. In San Antonio, panelists were Phillips; Marty Wender, owner of Charles Martin Wender Real Estate and Investments; Preston Atkinson, president and CEO of Whataburger; and Dr. Bill Henrich, president of the University of Texas Health Science Center at San Antonio. For the full story and videos of each event, visit bit.ly/2016McCombsEconomicForecast. The 2017 McCombs Business Forecast events will be Jan. 11 in Austin, Jan. 18 in Dallas, Jan. 25 in Houston, and Feb. 2 in San Antonio. — Gayle Hight
Panelists Bech Bruun, BBA ’00, chairman of the Texas Water Development Board; Mine Kuban Yücel, senior vice president and director of research for the Dallas Fed; and Jim Nyquist, president of systems and solutions at Emerson Process Management. IN AUSTIN (LEFT TO RIGHT):
“We really can’t talk about growing our economy if we don’t have water.”
bech bruun , chairman , texas water development board
“Any product manufacturer today who makes a dumb product is going to have to figure out how to play in this new world, or they won’t be around very long.” jim nyquist , president , systems and solutions , emerson process management
“The price of health care services is very different depending on where you receive care locally, even within network.” dr . eric bricker , chief medical officer , compass professional health services Keary Kinch, BA,’86, McCombs alumni director; Cameron Chandler, BBA ’83, president of Chandler Energy Resources; and Gayle Jackson Hight, MBA ’81, McCombs marketing and special projects manager. IN DALLAS (LEFT TO RIGHT):
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PREHISTORY Before the adoption of currency — people trade for goods and services. Unsure about the fairness of an exchange, they turn to a village elder for a ruling.
“W
E HAVE MORE CUSTOMER
data than we’ve ever had before; we have vast amounts of it,” e x p l a i n s Wa y n e Hoyer, chairman of the Marketing Department at McCombs. Every online product search, mobile coupon swipe, and supermarket barcode scan adds to the growing data troves. The missing link? All that data calls for marketers who understand how to extract consumer and product insights from it and leverage those insights to improve marketing outcomes. “The key to getting insights is not only to know how to crunch the numbers but also how to understand your customers,” Hoyer says. In response to the growing demand for marketing professionals who can navigate this new data-filled world with skill and creativity, McCombs is launching a Master of Science in Marketing degree this summer. The 10-month program is geared toward students with nonbusiness backgrounds and little to no prior work experience. “There has been a significant shift towards analytics, so a big chunk of our curriculum is going to be marketing analytics focused,” says Jade DeKinder, assistant professor of marketing, the program’s director. “The landscape has changed so much, but our fundamental marketing theories have not.”
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“The new curriculum is designed to take traditional theories and look at them through an analytical lens,” she says. “How do we use statistics? How do we use the new available data? How do we use new techniques to get better insights into these questions?” The degree will offer practicum courses with real companies and real data and provide a foundation in technical marketing skills. Faculty experts in marketing theory and analytics will work hand-in-hand with members of Austin’s thriving startup business culture to introduce students to real world marketing situations. “This program will provide them with an intensive year of study in basic marketing, a heavy dose of marketing analytics, and some consumer behavior theory,” says Hoyer. Students from a diverse array of undergraduate fields, such as math, statistics, psychology, and advertising and other communications disciplines, will make good candidates for this program, says Hoyer. McCombs career services will offer students exclusive resources and support to help them secure full-time positions in marketing analysis, digital marketing, product planning, pricing, and other marketing-related areas. The field of marketing has a faster-thanaverage projected job growth rate of 9 percent through 2024. “It is an exciting time to be in an evolving world,” DeKinder says. — Jeremy M. Simon
CHECKING OUT As items from your shopping cart move across a barcode scanner at checkout, the data is captured. Beginning in the 1970s, scanner data could show how a store’s changes in pricing or product displays affect customers behavior.
ARTIFICIAL EMPATHY If computer science and psychology had a baby, its name would be artificial empathy. This emerging interdisciplinary approach combines elements from each field, with a computer determining shoppers’ moods based on their facial reactions captured as images or video.
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NEWS: MARKETING SURVEYS Throughout the history of sales, information has been collected through direct questions to individual customers: how do they feel about products or how might they behave.
FRANK BASS Frank Bass, MBA ’50, is a giant in the marketing world. Before software, he creates a model showing how new consumer durables products (e.g., a washing machine or dryer) spread through a consumer population.
SOFTWARE SCAN Founded by researchers from MIT and Wharton in 1967, marketing consulting firm Management Decision Systems develops new software that analyzes the scanner data. In a nod to its penetrating insights, MDS called its software “the electron microscope of marketing.”
ONLINE SHOPPING In the 1990s, personal computers change the shopping landscape forever. While consumers embraced buying without setting foot in a store, marketers celebrated the ability to track web surfers’ online “window shopping” patterns and buying behaviors.
TEXT ANALYTICS When you post an online review, it’s not just fellow consumers reading your comments. Using text analytics, businesses can learn whether language is positive or negative and keep tabs on sentiment around their brand.
LOCATION-BASED DATA Marketers learn when you set foot in a store. With geofencing, mobile phone applications automatically send notifications when you cross certain pre-set physical boundaries, like entering a shopping mall. EYE TRACKING Where eyes move, will dollars follow? Researchers are investigating eye movement across a page, screen, or store shelf. Technology allows tracking so that research subjects aren’t even aware their eyes are being followed.
CUSTOMER DATABASES Companies begin using software to link databases and keep track of information on customers — data that previously lived only in their salespeople’s heads. The software makes the data less burdensome.
NEW FRONTIERS Artificial empathy research may provide a clue where marketing is headed. If in-store cameras can identify an unhappy shopper, the store’s employees could be prompted to cheer them up with special sale offers.
NEWS: LEADERSHIP
MEET THE NEW DEAN JAY HARTZELL AND HIS LEADERSHIP TEAM BUILD ON THE BEST OF McCOMBS by Samantha Harris
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HE NEWS BROKE DEC. 17
that Professor Jay Hartzell had been named new dean of the McCombs School of Business and will hold the Centennial Chair in Business Education Leadership. Not minutes after the email went out announcing his appointment, congratulations and support started flooding in through social media channels. Messages came from all over — faculty, staff, alumni, current students, colleagues, community leaders, and Hartzell’s old classmates — applauding the decision. UT Austin President Greg Fenves said in his announcement: “Jay is an outstanding scholar and engaged member of UT’s academic community, and I am enthusiastic about his leadership as McCombs continues to be a national innovator in business education and research.” Hartzell’s appointment was exciting for the McCombs community, but the outpouring of support was no surprise to those who best know the new dean. Associate Dean for Research Laura Starks, who served as dean ad interim following Tom Gilligan’s departure last summer, says Hartzell is a natural fit for the role. “Jay represents our highest ideals as an influential researcher in the field of finance, an innovative and effective teacher, and an inventive academic leader,” Starks says. “I’m thrilled by his selection, and I know it will energize and inspire the entire McCombs School community.” Hartzell received his bachelor’s degree in economics and business administration at Trinity University in 1991 and his Ph.D. in finance at UT Austin in 1998. He began his teaching career at New York University’s Stern School of Business. In 2001, he returned to UT Austin as an assistant professor of finance. He became executive director of the McCombs School’s Real Estate Finance and Investment Center in 2007 and served
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as chairman of the Department of Finance from 2011 to 2014. As chairman, he helped create the one-year Master of Science in Finance degree and the Undergraduate Real Estate Certificate program, which enables any student, regardless of major, to receive training in topics ranging from architecture and engineering to real estate law and urban planning. “The certificate program is an excellent example of the interdisciplinary collaboration that I would like to increase across campus,” Fenves says. Expressing appreciation for the strong position in which both Gilligan and Starks left the school, Hartzell was able to dive into his new role as dean on Feb. 1. His first priorities have been to connect with alumni, establish key leadership roles at the school, and engage in conversations about how to increase McCombs’ reputation across the U.S. and beyond. “We must start,” Hartzell says, “by making sure alumni feel engaged and connected and that they have points of contact within McCombs so that they can help us both recruit the best incoming students and give our new graduates a place to land professionally.” In thinking about how to leverage the school’s strengths and regional advantages, Hartzell sees natural opportunities in areas where McCombs is already active, such as entrepreneurship, energy, business analytics, and more. “The Dell Medical School, for example,
gives us a huge opportunity to become national leaders in the business of health care,” he says. As strategies continue to be developed, Hartzell wants alumni to feel involved and to take part in the conversation about how the school can advance even further among elite peer institutions. “We need to have ongoing conversations about what makes McCombs unique and how to build upon those strengths,” says Hartzell. “Our location for example — there is no school within 1,000 miles that is better than us.” Competing with top schools for student and faculty talent requires strong school leadership. To that end, Hartzell has appointed Eric Hirst to be the school’s new senior associate dean. In his prior role as associate dean for graduate programs since 2006, Hirst led the new Rowling Hall building design and groundbreaking and helped increase the school's graduate programs’ reputation nationwide. Filling out his leadership team, Hartzell also announced that Steve Limberg, faculty director of the MPA program, is succeeding Hirst as associate dean for graduate programs. Limberg served as the chair of McCombs’ No. 1-ranked Accounting Department from 1997 to 2003 and has been the faculty director of the MPA program since 2006. He also led the efforts to develop an online version of the school’s highly successful Business Foundations Program.
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RESEARCH
SPRING 2016
TEXAS RESEARCH MEANS BUSINESS UT PRESIDENT GREG FENVES LAUDS McCOMBS' BUSINESS PERSPECTIVE IN NEW ERA OF RESEARCH COLLABORATION
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O UNDERSTAND
Greg Fenves’ vision for The University of Texas at Austin and how he sees his role as its 29th president, it’s important to know one critical detail. He is, first and foremost, a structural engineer. Before joining the UT faculty as dean of the Cockrell School of Engineering in 2008, Fenves spent more than 20 years at the University >
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RESEARCH: INTERVIEW of California, Berkeley, researching ways to improve the seismic safety of coastal buildings, utilities, and transportation systems. ¶ While at Berkeley, he helped launch OpenSees, an open-source earthquake engineering simulation program to model more accurately and quickly how structures behave during a tremor. It’s the kind of work that requires precision, broad-minded collaboration, and unremitting perseverance. It’s the kind of work that, if successful, will one day save lives. ¶ OpenSees provides a glimpse into Fenves’ forward-thinking mindset and commitment to research at UT, where, he says, “we assemble the most talented people to solve the biggest problems.” Fenves, who was appointed in June 2015, talks about how the McCombs School fits into that vision. Q: Why does research matter? A: Research asks the important questions. If we’re lucky, it finds answers to those questions. And, ideally, it’s research that turns those answers into solutions people can use. Q: This is something you know a lot about, given your own work in seismic modeling. How do you apply that to leading an entire university’s research initiative? A: You need two things: Patience and a view that doesn’t stop at the horizon. Research requires a long timeframe to understand what the benefits and applications will be, and those aren’t always clear this year or even in five years. We’re placing really long bets on where we think we’re going as a society and as a culture so we can start solving tomorrow’s problems today. That’s what happens at UT. Q: When some people think of research, though, they think of the natural sciences or engineering — not business. So how does McCombs fit into your research vision? A: Almost everything has a business aspect to it — from energy to cyber security to health care — and almost any area of research affects the economy in some way. That means highly relevant business questions will come up in nearly every discipline.
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In medicine, for example, it’s critical to develop new treatments, but we also have to improve the way health care is managed and delivered so that those therapies get to the right patients in the most efficient way possible. That means everything from reducing clinic wait times to accurately diagnosing patients in the ER, and it might surprise people to know that a lot of that research happens at McCombs. There’s a natural collaboration that happens between the business school and the rest of the university.
“Almost any area of research affects the economy in some way. That means highly relevant business questions will come up in nearly every discipline.”
Q: What value does research provide to students across campus, especially those who aren’t going into academic fields? A: We don’t expect every one of our graduates to become researchers. That’s not it. It’s about adopting a research mindset. It means asking tough questions and analyzing a problem — whether it’s literary criticism in the humanities or financial analysis in the business world. You have to figure out how to deal with unknowns and uncertainties and learn how to study an issue from multiple perspectives, especially if you’re trying to create something new. Q: McCombs is ranked No. 5 in the world in business research productivity alongside schools like Harvard and Wharton. Clearly that’s a strong foundation upon which to build. A: It is, and research is a central feature of what McCombs has come to be. But we have to be careful because so much of what we do, especially when it comes to research, can’t really be ranked. How do you rank a paper that won’t reveal itself as hugely important for another 30 years? People pay attention to rankings, and I certainly do, too, but they’re indicators. When you’re top-ranked, it’s easy to think, “Why should you do anything differently from what you’re doing now?” That’s a dangerous attitude. What the rankings really tell us is that McCombs is a leader, and being a leader entails some risk. It entails taking chances. Research universities like UT are special places in the world where really smart people explore and create. That’s when discovery happens.
RIGHT: President Fenves’ vision for research at UT began as dean of the Cockrell School of Engineering. “When [former McCombs Dean] Tom Gilligan and I got here, both engineering and business were pretty siloed. It was radical to have deans of two major schools trying to force some collaboration.”
P H OTO G R A P H B Y M AT T H E W M A H O N
BREAKTHROUGH WORK President Fenves was one of the early civil engineering researchers to develop wireless sensor networks for assessing the stability of buildings and bridges in earthquake zones.
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RESEARCH: INSIGHTS
LEARNING FROM TRAGIC FAILURE WHY ORGANIZATIONS MAKE THE SAME MISTAKES AGAIN AND AGAIN by Adrienne Dawson
O
id rocket booster joints. But new leadership eventually stepped in, engineers with direct Challenger experience retired, and the focus returned to efficiency and avoiding launch delays. “This gradual forgetting was at the root of the Columbia disintegration,” says Polidoro, associate professor of management. External pressure to focus on safety fades over time as well. “Regulators shift attention to another crisis, and the media moves on to the next big news story,” he adds. To understand the dynamics that lead to repeated organizational errors, the researchers examined 146 pharmaceutical companies and found that 33 percent experienced a serious drug error between 1997 and 2004. Those companies usually react by increasing drug testing and clinical trial research (renewed focus on safety)
while significantly reducing patent applications (decreased focus on innovation). Researchers previously believed it was possible for firms to be equally good at two competing goals — safety and efficiency, for example — but these new findings suggest that is unrealistic. “What we have found is that organizations manage these conflicting goals by oscillating between them,” Polidoro explains. “One goal isn’t necessarily better than the other.” Given organizations’ tendency to forget, Haunschild and Polidoro urge managers to remain vigilant when promoting a culture of safety, even in the face of other priorities. “Tragic accidents should not result in a ‘here we go again’ attitude,” Polidoro insists. “Instead, they should instill a ‘never again’ resolve.”
N JAN. 28, 1986, THE SPACE
shuttle Challenger exploded 73 seconds after liftoff, instantly killing all on board. Seventeen years later on Feb. 1, 2003, Columbia disintegrated over Texas and Louisiana as it re-entered the Earth’s atmosphere. In Challenger’s case, rubber O-rings that separated sections of the rocket boosters were known to fail in temperatures below 53 degrees. That day in January, it was a near-freezing 36 degrees. For Columbia, a piece of insulating foam broke away during liftoff — as it had during previous missions — and gouged a 16-inch hole in the shuttle’s left wing, compromising the heat shield. If a material is known to fail in certain conditions, it’s only a matter of time before it will. Why didn’t NASA learn its lesson after Challenger? According to new research by McCombs’ Pamela Haunschild, Francisco Polidoro, and former Ph.D. student David Chandler, NASA did learn. Then it forgot. The issue, the management researchers write, is that all organizations go through cycles of learning and forgetting following major errors, and the reason is because priorities change the further away we get from a mistake. Immediately after the Challenger explosion, NASA increased both the number and status of safety personnel, strengthened operating procedures, and redesigned the O-ring and sol-
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I L L U S T R AT I O N B Y I LYA B OY KO
DEFINITION: EXPLANATORY LANGUAGE Explanatory language is the additional wording that auditors use to emphasize circumstances or matters encountered during an audit. It can signal risk, but most investors don’t heed it as closely as they should.
CARBON TAX COULD YIELD UNEXPECTED BENEFITS G UOMING LAI, ASSOCIATE PROFESSOR, INFORMATION, RISK, & OPERATIONS MANAGEMENT
I CO N M A D E BY F R E E P I K
Rival supermarkets, battling for market share, open across the street from each other. This means two supply trucks drive to the same area (and idle their engines) when one truck might have been enough to serve the volume of sales for that area. The extra pollution produced, from both suppliers and consumers, contributes to global warming. Enter the carbon tax. Opponents say it would raise production costs and put some companies out of business. According to Associate Professor Guoming Lai, “That’s actually true. But the country as a whole would still be better off.” The reason, according to Lai and his co-authors, is that artificially cheap transportation leads to inefficient and wasteful retail networks. The researchers examined the effect a carbon tax would have on rival retail chains and found that the more competitive a market is, the more beneficial a carbon tax would be. As a result, firms would be forced to modify their supply chains to stay in business.
SPRING 2016
STOCK PERFORMANCE: RANKING COUNTS MORE THAN INDEX
NONSTANDARD LANGUAGE IN AUDIT REPORTS CAN SIGNAL RISK
INESSA LISKOVICH, ASSISTANT PROFESSOR, FINANCE
JAIME SCHMIDT, ASSISTANT PROFESSOR, ACCOUNTING
What happens when a stock joins the top ranks of an index? Researchers have long suspected that performance is influenced by the dynamics of stock trading, but according to Assistant Professor Inessa Liskovich, who has worked as a trader for Goldman Sachs, “It’s been hard to prove it’s actually going on.” To test the theory, Liskovich and colleagues looked at the Russell 1000 and Russell 2000, indexes that list the largest American public companies based on market capitalization. Each year, up to 10 percent of stocks switch places between the two indexes. The researchers found that when a stock moved from the top of the Russell 2000 to the bottom of the Russell 1000, it averaged 5.4 percent lower returns. But stocks that moved into the top of the Russell 2000 averaged 5 percent higher returns and were in greater demand among mutual funds managers. The takeaway? It’s the ranking, not the index, that counts.
While investors often complain that audit reports are boilerplate and uninformative, research by Assistant Professor Jaime Schmidt suggests the opposite — that buried within the auditor’s language are clues to financial reporting risk. Most audit reports are unqualified, indicating that with reasonable assurance the financial statements should be presented fairly in all material respects in accordance with generally accepted accounting principles. However, in an analysis of more than 30,000 unqualified audit reports issued for public companies between 2000 and 2009, her research finds that auditors often add nonstandard (or “explanatory”) language to unqualified audit reports and that the financial statements associated with such language are 18 percent more likely to be subsequently restated within two years than those without. Schmidt advises investors to look for any nonstandard language. “Read the footnote it’s pointing to and see if it’s useful.”
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H I G H S T A K E S VENTURE CAPITALIST BILL GURLEY, MBA ’93, ON ENTREPRENEURS, HIGH-TECH STARTUPS, AND LAUNCHING A SILICON VALLEY CAREER by Fred Vogelstein | photographs by Timothy Archibald CREDIT TK
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venture capitalists in high-tech, and Bill Gurley’s name comes up quickly. Most of the world had barely heard of Silicon Valley when he earned his Texas MBA in 1993. ¶ Today, as the backer of marquee-name companies like Uber, Twitter, OpenTable, Yelp, Zillow, Dropbox, Instagram, and Snapchat, Gurley and his firm Benchmark Capital have helped make Silicon Valley arguably the hottest place to start a business career. ¶ Conventional wisdom among venture capitalists today says bigger is better. Yet Benchmark, where Gurley has been a partner since 1999, is unique among the top VC firms: egalitarian and small. There are only six partners, and all of them share in the firm’s profits equally. They limit each investment pool to a maximum of $500 million. And they hesitate to invest in any venture that is not within driving distance: Gurley says body language from a spur-of-the-moment coffee with an entrepreneur reveals a lot more about what’s going on at a company than a Skype call or even a two-day sweep through a city. The strategy has worked astonishingly well. Benchmark’s $12 million investment in Uber in 2011 alone has become one of the best investments in Silicon Valley history. When the ride-sharing company raised money last year, investors valued it at $62.5 billion. SK FOR A LIST OF THE TOP
VCs don’t typically talk like this — at least publicly. Most would rather stand accused of being too optimistic than going cautionary like Gurley has. But few dismiss his views, either. He’s been on the front lines of high-tech investing for 23 years, and he’s been part of the inflation and deflation of two tech bubbles — the big one in 2000 and the smaller one in 2008. After McCombs, he spent three years
on Wall Street as a financial analyst covering the PC industry. He moved to Silicon Valley in 1996 to become the lead analyst for top investment banker Frank Quattrone. There, at Deutsche Bank, he worked on the IPO for Amazon.com, among other deals, before joining venture firm Hummer Winblad in 1998 and Benchmark 18 months later. When the big Internet bubble popped in 2000, Bench-
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In the past year, however, Gurley has become the scold of Silicon Valley. He takes any opportunity he gets to make the case that hightech is in the midst of an unsustainable bubble that is months from popping. Venture money is flowing too freely, valuations for early-stage companies are stupidly high, and the quality of entrepreneurs he sees is falling.
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mark got hit hard. As you’ll see from my conversation with him, the sense of déjà vu is overpowering.
Q: How did you end up attending McCombs, and what took you from there to Silicon Valley?
A: I grew up in Houston. My father was in the
space program. He worked at NASA from the very beginning. Half the fathers on my street worked at NASA. I’m 49, so I’m old enough to remember talk about the Apollo program all over my house. My older sister went to Rice [University] as a double-E [electrical engineering] major and was employee 63 at Compaq. So that also played a role in my interest in tech. She got options. Compaq went public. So I was seeing this stuff that I wouldn’t have seen otherwise. After graduating from the University of Florida, I interviewed at IBM and Compaq. Compaq was offering way more money, so I moved back to Houston. And then Borland went public, and I bought the stock. I’d used its products Quattro and Turbo Pascal in college and at Compaq. I started trading stocks. That led me to more curiosity about business and finance. It was fascinating. I had gone from, “Okay, I like computers,” “I like comp-sci,” and “I like engineering” to watching Compaq and Borland go public and wondering, “How does this Wall Street thing work?”
I applied to a bunch of business schools. I got into Michigan and Texas. I went to Texas because I decided to stay closer to home and had always wanted to attend the university. I came into my MBA with a burning desire to get something out of it. I think one element of being successful at business school is making sure you aren’t doing it because you just think it’s the next thing you’re supposed to do. Because by the time you go you’re 25 or 26 — you’re not a young whippersnapper. This is a voluntary decision. So you have to ask yourself, “Are you going to roll around in it?” And I wanted every single thing I could get out of it. It was probably the first time in my life I became a voracious reader. And I’m not talking about just the textbooks, but business publications like Fortune and the Wall Street Journal and BusinessWeek and books — every book I could get my hands on. I just had a blast.
Q: After getting your MBA you went to Wall Street?
A: I toyed with the idea of getting into venture.
But I met with some AV [Austin Ventures] guys and knocked on doors. Just complete cold call, you know? I wound up at CSFB [Credit Suisse First Boston]. A guy named Al Jackson hired me and took a bet. They trained using trial by fire. They would just give a freshly
Bill Gurley at his Menlo Park headquarters. BELOW: Gurley talks about how to pick winners. “Anytime something gets overly choreographed — like virtual reality or self-driving cars right now — it’s probably not going to be a great venture category ... The stuff that comes out of nowhere — where no one was thinking it was possible — those are the grand slams that go out of the park." PREVIOUS SPREAD:
graduated MBA student a category and say, “You’re an analyst.” If you go anywhere else, you’re a junior analyst for a while. At CSFB a year and a half in, I made the II [institutional investor] ranking.
Q: That’s big. A: Then the top three analysts covering the
PC industry retired: Dan Benton, David Korus, and Charlie Wolf, who was at CSFB. Charlie became the advisor for young analysts, so I got to work with him. Dan and David became friends, so they both gave me all their [financial] models. So it’s like they all got out of the way. There was a ridiculous amount of serendipity.
Q: For how long were you at CSFB? A: I was there for three years, and that’s
when Above the Crowd [Gurley’s newsletter] launched, which is actually a knockoff of something Korus was doing. He did a weekly fax. People loved him for it. When he retired, that stopped. So I copied it. Back then the prevailing view was that research like Above the Crowd should only be given to a firm’s clients. But the economic incentive for analysts was to become well known. So I started giving away everything. That got me exposed to all the executives in the PC industry. One of the things that helped propel me into venture was that I got invited to the Agenda Conference, [writer and VC] Stewart Alsop’s conference. It was everything back then.
Q: I remember that. A: There was a Palm Pilot for sale. And I bought it at the event. It had every attendee’s contact information. So I spammed the entire Agenda
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Q: Talk about the current economic cli-
mate in Silicon Valley. What led you to conclude we are in a bubble? Why are you worried about that?
A: I believe that in a world where capital is
super easy to raise, it’s a net negative for great entrepreneurs. So if we’re in the business of backing the best entrepreneurs and helping them build long-standing, sustainable companies, this is a horrible environment for that. A good entrepreneur is systematically advantaged in an environment where it’s tough to raise capital. I would go as far as to say that you could have 60 years of business experience. You could be Jack Welch. You could be Warren Buffett. You could be [Jeff ] Bezos. And it doesn’t prepare you for a world where your less talented competitor can afford to lose $300 million next year and maybe the same the year after because of all the money they’ve raised. There’s no rule book for that world.
Q: Were there a couple of events or deals that made you say, “We’re there?”
A: Well, the first thing that started happen-
ing — a huge contrast to ’99 — is that there are fewer companies being funded than in ’99. But they’re being given remarkable benefit of the doubt, and they’re allowed to raise amounts of capital that are unprecedented. I’d have to look, but I’d bet 20 of our companies have raised over $100 million. And the burn rates are way higher now than in ’99. Way higher.
Q: That’s backwards, isn’t it? I thought it
was more expensive to start a company back then. I thought that more venture money was raised then compared to now. Back then you needed office space and expensive software, servers, and bandwidth to start a company. Now all you need is a credit card, a laptop, and an Amazon web services account to start a mobile app company.
A: That whole notion gets way too much air-
play — that you can start a company for nothing. Here’s why: People are more expensive than
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they’ve ever been. If you’re going to hire people, it’s expensive to build a company. There are engineers coming out of MIT making $175K. If you’re going to hire 30 people, it’s expensive.
Q: That’s a lot more than a Sun server. A: Exactly. There’s no super cheap company
out there. The press is obsessed with that notion, and it’s not realistic.
Q: Have there been a couple of deals that drove your thinking?
A: When I start seeing things that are overly
promotional and fall into the realm of entrepreneur-as-snake-oil-salesman, I always get concerned because I know that’s unsustainable. It’s also bad for Silicon Valley’s image. Silicon Valley looks the worst when we start acting entitled. You know, “We get to eat the world. We get to disrupt everything. But guess what? We don’t actually want to be profitable. We don’t want to be held to your rules. We don’t want to be accountable. We don’t want to have to go public.” That’s pretty entitled thinking. We look like babies. So you asked for specific exBORN amples. I can remember being Houston, 1966 at a conference where the Fab UNDERGRADUATE CEO was on stage. Someone DEGREE asks, “What’s your sustainable University of Florida competitive advantage?” And ’89, BSE Computer Science he says, “Oh, my co-founder is the best designer on the planet.” FIRST JOB I thought to myself, “You know, Engineer, Compaq Computer Corp., based on everything I’ve read Houston, 1989-1991 about business, starting back to MBA my Texas days and studying, that McCombs ’93 doesn’t add up.” It was like this doesn’t make sense. It eventualPC ANALYST CS First Boston ly became true and didn’t make Corp., New York, sense. [Fab raised $330 million 1993-1996 to create an Adobe Flash-based PC ANALYST e-commerce site for small deDeutsche Bank, sign shops to sell their wares. It Menlo Park, was valued at nearly $1 billion California, by summer 2013. Fifteen months 1996-1997 later it was effectively dead.] PARTNER Some of the work the Wall Hummer Winblad, Street Journal has done on ZenSan Francisco, 1998 efits is also worth looking at. I PARTNER think the CEO was quoted as Benchmark Capital, Menlo Park, saying, “We’re going to be $100 1999-present billion in revenue.” What is going through your mind to say that? I think they ended up doing $35 or $40 million in revenues last
BILL GURLEY: THE ROAD TO SILICON VALLEY
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attendee list with Above the Crowd without their permission. Then Frank Quattrone [the investment banker] called me out of the blue and said, “We’re leaving Morgan Stanley, we’ve heard a lot of things about you, we want you to join us.” Frank and I had a long talk, and he said, “What do you want to be long term?” I said, “I’d love to be a VC.” He said, “Come to work for me, I’ll move you to Silicon Valley and introduce you to every venture capitalist that I know.” So that’s how I got here. He did exactly what he said he’d do.
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year. So even $1 billion, 1/100th of that, is plenty aspirational. [Zenefits just replaced its CEO.] When I see that stuff, I feel like we’ve trained entrepreneurs to value the wrong things, to just be promoters.
Q: There’s a certain amount of promotion that’s required to be an entrepreneur though.
A: No question. I have a graph that has promotion skills on one line and execution skills on the other. The Bezoses know how to do both. But very few others do.
Q: Benchmark has had unparalleled
success. Do you have a model or a vision of the world that you use to evaluate companies you see?
A: We have this partnership model where
Q: Be more specific. What led you toward Twitter? What led you toward Uber? You’re not taking a dartboard approach. What’s the frame you use to evaluate companies?
A: When we failed to pursue Google in 2002, I
remember a lot of the reasons we didn’t chase it were rule-of-thumb things that we all had assumed were true about venture. Things like: “You can’t have two Ph.D.s running it,” “Search is a mature business,” “Yahoo has just gone from $82 a share to $10,” “Excite got sold for nothing, or went bankrupt.” I learned that if you use rules of thumb, you can actually get yourself in trouble. So we have an evolving rule set, which is a really amorphous thing. It works well to have a group of smart people juxtaposing and guessing together and challenging each other’s assertions. Because the rules change.
BELOW: Gurley was interviewed by New Yorker writer Malcolm Gladwell during SXSW Interactive in 2015. Their wide-ranging conversation, from innovation in health care to reducing drunk driving, was documented live by artists creating drawings of presentations at the world’s largest tech gathering.
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all the partners share equally in the profits. Things don’t scale well inside of that because we don’t have a CEO. We experimented with expansion coming out of ’99. We launched Benchmark Europe and Benchmark Israel and tried to replicate what we do, recognizing that entrepreneurism wasn’t
a U.S.-centric thing. And it caused all kinds of distraction. We had done a billion dollar fund in ’99. So we told our limited partners in 2007, “We’re going to $400-million funds. We’re only going to do early stage. We’re not going to do international. We’re not going to do growth. We’re not going to do seed.” I think it was very fortuitous timing because almost three or four years after we did that, all of our competition started scaling out in huge ways into different geographic sectors. They became stage agnostic. They raised huge, billion dollar funds. And, to me, that’s been the seminal event that led to our success — that we chose to focus. And being focused as an investor I think is the most important thing. It means giving up the notion that you’re going to scale up and take over the world. But I don’t believe that there are network effects to venture.
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One of the things that’s really important about venture is you have to conceptualize ideas that have lots of running room, and where the incumbents aren’t going to play. Anytime something gets overly choreographed — like virtual reality or self-driving cars right now — it’s probably not going to be a great venture category. Everyone’s talking about them 10 years before they are going to break out. That’s where all the incumbents go. The stuff that comes out of nowhere — where no one was thinking it was possible — those are the grand slams that go out of the park.
“I THINK ONE ELEMENT OF BEING SUCCESSFUL AT BUSINESS SCHOOL IS MAKING SURE YOU AREN’T DOING IT BECAUSE YOU JUST THINK IT’S THE NEXT THING YOU’RE SUPPOSED TO DO. BECAUSE BY THE TIME YOU GO, YOU’RE 25 OR 26 — YOU'RE NOT A YOUNG WHIPPERSNAPPER.”
Q: How do you prepare yourself for stuff that comes out of nowhere?
A: It ’s a hard question. Where we
really screw up is when we decide “no” for the wrong reason. If we bet $10 million on a company that doesn’t work, we lose $10 million. When we failed to put $12 million in Google, and the deal went to Kleiner and Sequoia, we missed out on a thousand times that. The real question is, “Are you getting enough at-bats?” If you’re getting the at-bats and you bat .400, you’re very successful in venture. But if you’re not at bat at all, then your odds of hitting a home run with one at-bat is low.
Q: When I wrote my book about
Apple and Google, one of the questions I got from a lot of people is how do we re-create the kind of energy that exists in Silicon Valley elsewhere? I know people have been asking that question for years, but what’s your answer? Is having all the companies you invest in be driving distance away part of the answer?
A: Yes. I can grab coffee with the VP of mar-
keting at one of our companies tomorrow. I can’t do that if it’s a plane flight away.
Q: But you can Skype. What ’s the difference?
A: The difference is immense. Like, your
ability to persuade someone if you have faceto-face time is so much higher. There are also all these other ephemeral things that make Silicon Valley different. It’s remarkably open in a way that probably would be super hard to explain to other people elsewhere. You can cold call someone here who’s fairly high up and say, “Man, I’m really impressed by what you’ve done. Can I get 30 minutes or an hour for coffee? I want to ask you some questions.” I’ve found 80 percent of the time they say “yes.” The knowledge sharing that can come from that is unique.
Q: How are Silicon Valley and the VC business different today than they were 15 years ago?
A: Venture has gotten much more competitive. Q: Even more than it was in 1999 and 2000? A: In seed and late stage, there’s hyper competition. What I think that has caused, unfortunately, is that most VCs live in fear of a bad reference.
Q: From whom? A: From entrepreneurs. I think Silicon Valley
boards are probably the softest they’ve ever been. If you go back to the old days of venture capital, you hear stories about the Don Valentines of the world just iron fisting their way through a board meeting. [Valentine founded Sequoia Capital in 1972 and was one of the early investors in Apple, Atari, Oracle, Cisco, Electronic Arts, Google, and YouTube.] No one does that today, and it makes the job of a VC a lot tougher. In a board meeting you can’t influence through fiat or contracts. You have to do it all through persuasion.
Q: Talk about the Valley bro culture. How
do you tell women and minorities that Silicon Valley will be just as welcoming to them?
A: I have a strong reaction to that. There’s bias
that’s intentional bias, and then there’s bias that comes from systematic exposure to something that causes me or someone to behave in a way that might be biased. I have never seen anyone in Silicon Valley talking in a racist or gender-biased way for the sake of it. And there are certain nationalities — India, China — that are well-represented in Silicon Valley. Probably overrepresented relative to the U.S. footprint. And I think if you look at African Americans, or if you look at females, they’re underrepresented. But I would heavily discourage the notion that
someone shouldn’t come here because of that. I don’t think there’s this intentional bias out there. Everyone is very opportunity-driven. I’d also say that we have to work equally hard at celebrating the successes as we do pointing at the problems. In other words, there are some remarkable female VCs, you know, Mary Meeker [Kleiner Perkins] and Ruby Lu [DCM Ventures] and Jenny Lee [GGV Capital], and Rebecca Lynn [Canvas Ventures]. You need to make it look possible. And it is possible. By the way, it’s way better on the entrepreneur side than on the VC side. We have numerous portfolio companies with female founders, female CEOs who are phenomenal. Katrina Lake, the 31-year-old CEO of Stitch Fix, is one of the best entrepreneurs I’ve ever worked with. Without a gender qualifier. Just flat out.
Q: If you had to do it all over again, would you do it any different?
A: That’s a great question. I get asked that in
every interview I do. I probably would have come straight to Benchmark, and I certainly would have tried to invest in Google. The second one would be the No. 1.
Q: Anything that’s not really obvious? A: No, look, I pinch myself. I love the ven-
ture game. I love entrepreneurism, I love technology, I love betting, I love investing. If there were an epitaph to my career, I would love for it to be, “He loved the job more than anyone else.” Fred Vogelstein is a contributing editor at Wired magazine in San Francisco. He is the author of Dogfight: How Apple and Google Went to War and Started a Revolution. He lives in Berkeley and has covered Silicon Valley for 15 years.
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BIRTH of a TECHNO ENTREPRENEURSHIP INITIATIVES BEGUN 40 YEARS AGO CREATED A LAUNCHPAD FOR GLOBAL LEADERSHIP
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by B r a d l e y Keoun illustration by Tim Bower
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OPOLIS ART BY FIRST NAMELAST
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INITIATIVES, VENTURES, AND ENTREPRENEURIAL ENTERPRISES FROM McCOMBS { Herb Kelleher Center for
Entrepreneurship, Growth, and Renewal
OUSTONIAN SCOTT TYNES came to Austin to get an MBA, and he never left. Tynes, MBA ’99, worked first at IBM’s edgy Tivoli enterprise management software division before taking a job at Trilogy, the geek-proud software startup formed by Stanford drop-out Joe Liemandt. In 2006, Tynes followed his own entrepreneurial yearnings to form Consero with fellow McCombs classmate Bill Klein, MBA ’99. A decade later, Consero has 300 employees and last year scored $5 million from Kayne Anderson Capital Advisors, a $20 billion investment firm in Los Angeles. There’s a pattern here, long recognized by McCombs faculty members who are acutely aware of the interaction among the university, the innovation and technology region in which it operates, and the entrepreneurial successes of business alumni. In his 2016 State of the Union address, President Barack Obama spoke of U.S. entrepreneurs “from Boston to Austin to Silicon Valley racing to shape a better world.” Unspoken was the role UT Austin has played in educating risktakers and visionaries in all of these markets and beyond. “Four decades ago, the Austin economy was the university and state government,” reminds Professor John Sibley Butler, founding director of the Herb Kelleher Center for Entrepreneurship at McCombs and former director of the IC2 Institute. “George Kozmetsky, who formed the IC2 Institute during his 16 years as dean of the school of business, had the clearest vision of anyone about the capacity of this region. He became our technology ambassador to the world.” >
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Started in 2001 with a donation from the founder of Southwest Airlines, the McCombs-housed center spurs entrepreneurship through teaching, one-on-one mentorship, and academic research. Center faculty help teach the university’s 28 entrepreneurship courses and
conduct research on innovation and creativity. Sponsored speakers share their insights with students on launching, funding, and sustaining a new business. The center’s entrepreneurs-in-residence are Laura Kilcrease, the first director of the Austin Technology Incubator and founder of Triton Ventures, and Preston James, a Dell veteran who founded E3 Angel Network.
PRESTON JAMES AND LAURA KILCREASE, entrepreneurs-inresidence at the McCombs Herb Kelleher Center. ART BY FIRST NAMELAST
{ Master of Science
Kozmetsky, who mentored tech entrepreneurs including Michael Dell (Dell Inc.) and Jim Truchard (National Instruments), and co-founded Teledyne, co-wrote the book Creating the Technopolis: Linking Technology Commercialization and Economic Development, a researched look at how entrepreneurial regions are created.
in Technology Commercialization
This one-year immersion in technology entrepreneurship is nearing two decades of operation, and it remains one of the most popular programs for science- and technology-focused professionals who want to take innovations to market. The coursework combines cutting-edge technology, hands-on entrepreneurship, and a proprietary approach for reaching “go-no-go” decisions in the startup phase. MSTC startup successes include Alafair Biosciences, Beyonic, and Seismos. Long-time director Gary Cadenhead retires this year.
DISSECTING THE STARTUP LIFE CYCLE TURNS OUT that Tynes’ journey is emblematic of the factors that drive entrepreneurial ecosystems. A new study by Butler and research partners Professor Rajiv Garg and research fellow Bryan Stephens explains how economic regions from Austin to Silicon Valley attract and keep tech founders in their orbits. Their paper “Social Networks and Regional Advantages in Technology Entrepreneurship” is one of the first studies to integrate personal-level and metro-level data to expand upon Kozmetsky’s seminal studies on the technopolis. Sifting through regional economic data as well as personal information drawn from sources such as tech entrepreneurs’ LinkedIn profiles, they identify three interrelated factors that combine to draw new entrepreneurs to a region and encourage them to stay and launch additional ventures:
CHERYL TULKOFF, CEO and founder of Flipped Health, which she launched as an MSTC student.
Presence of large technology firms
ROB ADAMS, director of the Jon Brumley Texas Venture Labs.
Established technology firms attract tech-skilled employees (such as Tynes) to the region, who are then more likely to start or join entrepreneurial ventures. Social network support
Personal factors, such as a strong network of professional colleagues, influence where entrepreneurs settle and serve to keep them in the same city as they launch new companies. Number of new funding rounds
{ Jon Brumley Texas
Venture Labs
Director Rob Adams and UT Austin graduate students run this business accelerator that helps companies move from the market research phase to startup, through consulting, analysis, and investor introductions. JBTVL also offers entrepreneurship courses and sponsors the Texas Venture Labs Investment Competi-
tion as a practicum for learning the art of venture capital pitches. Harlan Beverly, MBA ‘04, founder of Bigfoot Networks, joined as assistant director in 2015 and has introduced a new course for undergraduates about lean startup essentials. JBTVL and the MBA program provide scholarships of up to $174,000 combined value to attract entrepreneurial MBA students.
The number of new funding rounds in a region has a greater influence on drawing new entrepreneurs than the total amount of available funding. One hypothesis is that smaller regions appear to offer more early-round funding opportunities for new ventures.
ADVICE, COACHING, AND A PLACE TO SIT DANIEL NELSON, MBA ’06, needed an idea for a class
project in 2006, so he borrowed a programming
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{ Venture Fellows
project from friend Robert Reeves, Economics ’02. He pitched the business plan in the school’s Texas Moot Corp Competition (now Texas Venture Labs Investment Competition) and won. Scrambling to turn the class idea into a working business, Nelson and Reeves took up residency in the Austin Technology Incubator, founded by IC2, where they got seasoned advice from Rob Adams, a former investor and Lotus executive, who now directs the Jon Brumley Texas Venture Labs. They moved into an office at ATI, and four years later their company Phurnace was acquired by BMC Software for “a nice exit,” according to Reeves. Reeves was so impressed, he enrolled in the Master of Science in Technology Commercialization (MSTC) program at McCombs, a one-year immersion in tech entrepreneurship. While there, Reeves, MSTC ’12, launched another company, Datical, which now counts Bank of America, eBay, and Fidelity as customers.
Venture Fellow EMILY ASHBY, interned for the Austin investment firm Owner Resource Group.
The Venture Fellows program was started in 1999 to give MBA students real world experience. Participants are assigned to work with local venture capital and private equity firms. Recent fellows include Matteo Pacifici, MBA ’16, who worked for Spindletop Capital, an Austin-based venture capital firm focused on health care; Emily Ashby, MBA ’15, who interned for Owner Resource Group, an Austin investment firm that focuses on companies with at least $15 million of revenue; and Chris Barjum, MBA ’16, who worked at Sentient Ventures.
LAUNCHPAD FOR GLOBAL ENTREPRENEURSHIP THE UNIVERSITY OF TEXAS AT AUSTIN performs
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Distinguished Senior Lecturer in Finance JIM NOLEN with IC2 Advisory Board Member WILLIAM CUNNINGHAM at the McCombs Alumni Business Conference.
{
IC2 Institute
The IC2 Institute was founded in 1977 as a “think and do” tank to test the belief of its founder, George Kozmetsky, that technological innovation can drive regional economic development through university, government, and private sector collaboration. Since its inception, IC2 has had strong ties to the school of business through the active engagement of faculty members, who have
served in leadership and research positions, including former director John S. Butler, advisory board member William Cunningham, and current director Robert Peterson. The institute provides academic resources in support of technology innovation, nurtures global commercialization opportunities, and delivers economic and policy insights to government and private decision-makers.
A LU M N I B U S I N E SS CO N F E R E N C E I M AG E BY J E N N I F E R B E R T R A N D
on a big startup stage dominated by innovation giants such as Stanford. And Austin’s emergence over the last decade as a hot entrepreneurial region has been a steroid boost for the university’s reputation and the credibility of its graduates. Butler's research ranks Austin as second only to the Bay Area among top U.S. locations for launching tech startups. “When you brush off the Silicon Valley patina, McCombs is going to give you far more successful outings,” Reeves asserts. “We’re starting viable businesses that have legs, and that’s why we get so many acquisitions.” West Coast-based McCombs alums acknowledge Austin’s growing stature. Shane Brisbin, MBA ’94, a Morgan Stanley private wealth adviser, has personally invested in Datical and Austin-based Xeris Pharmaceuticals, a developer of new diabetes-drug formulas for pen injectors. He participated in a $41 million investment round for Xeris announced in January. “People want to live there [Austin], and the more innovation you have, the more people will want to live there,” says Brisbin, who got to know Datical and Xeris executives through his UT connections. Isaac Barchas, a former McKinsey consultant who now heads ATI, says the push into >
{ Austin Technology
Incubator
Started in 1989, ATI offers shared office space where budding entrepreneurs can work without signing multi-year leases. Companies must compete to enter the program, and once accepted, they get UT faculty and proven executives as
mentors, as well as introductions to investors. Among the companies to participate, BlackLocus, a Pittsburgh startup, was lured to Austin by ATI in 2011. The following year, it was acquired by Home Depot and still operates in Austin as an innovation lab for the home improvement chain.
ISAAC BARCHAS, director of the Austin Technology Incubator, addresses attendees at ATI Graduation and Reunion.
entrepreneurship by McCombs helped stem the tide of business and engineering graduates heading to Massachusetts and California in search of jobs and capital. While Austin lacks the big venture capital firms of Silicon Valley’s famed Sand Hill Road, there are plenty of Austin investors looking to put money into promising startups. Central Texas Angel Network, a pool of individual investors who back small but fast-growing companies, was the third most active investor of its kind in the U.S. in 2015, according to the Halo Report. The network was started in 2006 by Jamie Rhodes, MSTC ’02, a former IBM executive and co-founder of Austin-based National NanoMaterials. “That’s something that may not have been in place had we not been in the MSTC program and learned what startups were all about,” says Lance Adams, MSTC ’02, a real estate executive and one of Rhodes’ classmates. Bryan Stolle, MBA ’87, founded San Jose, California-based Agile Software Corp. and took it public before selling the company to Oracle in 2007 for $495 million. He says UT is doing for Austin what Stanford did for the Bay Area. Stolle is now a partner at venture-capital firm Mohr Davidow, working out of Menlo Park, California, and San Francisco. Stolle led the firm to invest in at least three Austin companies: Datical; OneSpot, a digital marketing company whose customers include Intel, Johnson & Johnson, and Whole Foods; and People Pattern, developer of a software platform that combs data from tweets and posts to identify potential customers. People Pattern was co-founded by Ken Cho, MBA ’03. “It’s been a pretty remarkable transformation,” Stolle says of Austin. “Now you’re getting a critical mass in the primordial soup.” Professor Garg points out that the university fits perfectly into the startup formula he and his colleagues identified in their study. “It begins with a strong presence of technology employment in the region, an active funding environment — a large number of funding rounds and not necessarily the funding amount —and finally a strong professional network.” Decades ago, Kozmetsky and others recognized the university’s potential for nurturing just such an environment. The big winners today are faculty members, students, investors, and the worldwide economic regions where graduates go to pursue their dreams. Bradley Keoun is a freelance writer and former editor of Bloomberg News.
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REAL WORLD REAL ESTATE
McCOMBS LAUNCHES STUDENT-MANAGED PRIVATE REAL ESTATE INVESTMENT FUND by Kate Harrington | photographs by Jared Tennant
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McCombs will hold the distinction of being the only business school in the country where students have the opportunity to manage both public and private real estate investment funds. After the school’s Real Estate Finance and Investment Center started its student-managed public real estate investment trust fund in 2007, it was only a matter of time before McCombs launched a private fund as well. “We were planning to introduce an opportunity for students on the private side right from the start,” says Dean Jay Hartzell. But the financial crisis of 2008 put the project on hold until now. EGINNING THIS FALL,
With the rebound of the real estate market in recent years, students and faculty began to revisit the shelved idea. “It took the right group of students and the right time,” says Hartzell, who served as director of the Real Estate Finance and Investment Center before he became dean in February. The majority of institutional real estate assets are held by private owners, says Greg Hallman, senior managing director of the center and the faculty director of McCombs’ REIT investment fund. With fundraising now underway, students will begin making investments for the first time this fall. It’s a learning opportunity that will give McCombs students the kind of experience typically reserved for professional investors and fund managers.
NEW FUND JOINS ROBUST REAL ESTATE OFFERINGS Real Estate Finance and Investment Center council members, a group of McCombs alumni, faculty, and MBAs began doing legwork in 2014 to get the private equity fund off the ground and serving on a development board for the new fund. As part of the feasibility study, they consulted with 10 firms. Over the last year they have been raising money and finding companies that will let students invest in deals. They are also personally investing in the new fund. Among them is Joshua Brown, MBA ’09, executive vice president and chief investment officer at First Washington Realty in Dallas, who has spent his entire career raising private equity for real estate. “We’re at a juncture at the business school where we’re trying to distinguish the real estate program from others TOGETHER WITH
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around the country,” he says. “This new fund gives students real-world experience analyzing potential private equity transactions.” Lynn Davis, BBA ’83, principal and executive vice president of Fidelis Realty Partners in Houston, says having the opportunity to manage the private fund will give students “the chance to do real deals and have hands-on experience with real assets,” Davis says. To date, McCombs has raised $800,000 of the $5 million goal for the fund. Hallman says the students are much more interested in managing a fund with real money. “Some alums have asked why we use real money,” he says. “I can tell you the impact is not as great if you don’t. Anyone can start a fund with fake money, but to start a fund with real money means you did some hard work to get
it there. It just really ups the ante of the experience and the effectiveness of the experience when students go out and look for jobs. Invariably one of the first questions students are asked in a job interview is, ‘Is it real money or funny money?’ It’s also a signal from us that we are serious about this. It shows that we have a strong alumni network in order to bring in this much money.” McCombs has consistently offered a number of “firsts” when it comes to real estate education. In 1999 the Real Estate Finance and Investment Center opened, offering in-depth research and classes on finance-related real estate issues. The center has a council of more than 200 industry professionals who support academic programs and help with new initiatives. The new private investment fund joins the national real estate
challenge and the REIT fund as the latest offerings to set the school apart. The REIT fund got its start in a tumultuous economy, with its investment coming months before the economic crash of 2008. In 2007, Hallman and Professor Sheridan Titman helped launch the student-run REIT fund at McCombs. At the start of the financial crisis, Titman and Hallman were concerned about the risks associated with heavy leverage and advised the student-managers to pay particular attention to both the short- and long-term financial conditions of the REITs included in the McCombs REIT Fund. Students assessed each REIT’s debt ratio and debt maturity structure before selecting it, and the McCombs REIT Fund outperformed the market. The silver lining to that timing was the very real experience it gave both undergraduate and MBA-level students in publicly traded real estate investment trusts at a pivotal moment in the life of the industry. With full-time MBA students acting as associates and undergraduates as analysts, students work together to analyze and invest in REITs. The fund has since yielded a 102.65 percent total return on the initial investment of $421,104, beating its benchmark REIT index, which returned 80.5 percent over the same time period. For Steve LeBlanc, BBA ’80, founding partner with CapRidge Partners in Austin, the private fund is the latest step in a decade of work toward making McCombs’ real estate program the top one in the country. LeBlanc, who has taught at McCombs, has been instrumental in helping move the new private fund forward as well. He has provided information about a CapRidge investment in an office building to help students working on the fund begin their own analytical process. This will be run just like a fund in the marketplace,” LeBlanc says. “When they leave McCombs, they’ll have experience running both a REIT and a fully integrated private real estate fund.” Having the private fund alongside the REIT will give McCombs students a unique perspective about investment performance, Hartzell says. “If they’re thinking of buying, say, apartment buildings, they can buy them through the REIT or directly through the private fund. Having both options gives them a way to assess what performs best. It all falls under the heading of experiential learning.” “We heard from the money managers in the big institutions that they are looking for >
REAL WORLD QUESTIONS THIS WINTER, GREG HALLMAN, REFIC SENIOR MANAGING DIRECTOR,
conducted a dry run with students to see how the new fund will operate. Steve LeBlanc, BBA ’80, founding partner with CapRidge Partners in Austin, helped provide preliminary data that students used to put together a first draft report and a set of questions to get their process and methodology ready for when the program launches this fall. Below are the kinds of questions that students used in evaluating investment opportunities.
QUESTIONS FOR THE DEAL PARTNER AFTER THE INITIAL UNDERWRITING IS COMPLETED: What yield is desired for this product type to keep the partner interested? y Would the partner include debt in the initial underwriting and/or during the acquisitions phase, or is debt put on later? At the property level or the portfolio level? y What is the lease-up strategy to bring the property from 86 percent occupancy to stabilized occupancy (90-92 percent)? y How did they think about abatements? a. Would you really give 6 months free rent regardless of whether they were signing a 3- or 5-year lease? b. Do the renewal options contained in the leases include 3 months free rent if tenants sign a 3-year renewal? How does a partner approach this? y What expenses would you consider most important to understand for a suburban office property? And why are those expenses most relevant for this type and/or quality of building? y Did they include any other capital expenditures over the hold period that are not modeled in the original broker? y What is the partner’s asset management strategy? Who will manage the property dayto-day? What are the terms of that management agreement? Will the new management replace the existing management? y Are the current owners in talks with any new/interested tenants? At what stage are those discussions during the DD period? y What amounts were used for land and replacement costs when comparing this to a purchase price sensitivity? Where did those costs come from and how did they judge the reliability of these numbers? y What is their bidding strategy? What other firms were competing for this deal? y Beyond general absorption data, is there a list of prospective tenants in the area who have rolling leases? y Have the capital expenditure costs been verified? Do they need to be? y How did the partner firm account for new office deliveries in the submarket? What is a good assumption for replacement costs on a per square-foot basis? y The current floor plans are subdivided into many smaller suites. Would the firm look to consolidate some of the space and seek a 10-15K SF tenant? y
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students who have been trained in both,” Hallman says. “It will be one of our competitive advantages as a program.”
A VARIETY OF INVESTMENTS EACH YEAR, STUDENTS might make four to five
investments of $200,000 to $250,000 each. Over the course of about six years they would get the money back, as the investments run their course, and eventually the portfolio could grow to 15 to 20 investments. Funds can be invested in Texas and beyond with no geographic limit. Those investments will likely be across a diverse range of project types, from office buildings to apartment developments. “These are small chunks in relationship to the size of these funds,” Hallman says, “but they are the size that some of our alums who run those private funds say they can get us in at.” “We don’t want to put strict boundaries on how much of one type they invest in,” Hartzell says. “We don’t want to tie the hands of future students.” It won’t just be following the investment that will give students hands-on learning time. Potential partners who have a deal right for the fund will connect with students, who will
then gather data on the project, build financial models of the deal, and decide whether it’s attractive or not and how it might fit into the fund. The students will present their findings to an internal team made up of other students and faculty and then present to an external investment committee. If the committee decides to move forward with the investment, they will monitor it and follow its performance. Hartzell says once an investment is made, they won’t make decisions — but they will keep track of how the investment performs. “We think a large part of the learning experience will be presenting to a committee of investment professionals,” Hartzell says. “That requirement raises the bar and their game — it’s with real dollars, presenting to real professionals.”
UNPARALLELED EXPERIENCE setting McCombs apart from other real estate programs, the private equity real estate fund will give both undergraduates and MBAs first-hand experience that will be a boost for them as they enter the job market. IN ADDITION TO
With the involvement of alumni, students have had the chance to speak with developers, brokers, and capital partners. On trips to Austin, San Antonio, Houston, and New York, they have learned about what’s happening in the market and what to look for when reviewing investment opportunities. Not only is the private side of commercial real estate much larger than the public side, the breadth and complexity of the transactions are different. REITs tend to be more specialized and don’t have the capitalization challenges of private projects. Gaining experience in the private development side of real estate projects will give students valuable market knowledge, says Hallman. It will also catch potential employers’ eyes. Explains Kenneth Aboussie, co-founder and managing partner with Stonelake Capital Partners in Dallas: “The ability for students to be able to speak intelligently about how they underwrote an investment, how they looked into the merits and risks of that investment, and how a decision was made — that’s a thought process to which all employers in real estate investment will give merit.” Kate Harrington, MA ’94, is a freelance writer who covers regional development, health care, transportation, and commercial and residential real estate.
McCombs Real Estate Milestones REFIC FORMS
REIT FUND LAUNCHES
McCombs Real Estate Finance and Investment Center opens, offering classes and expert resources on real estate finance.
Student-led public real estate investment trust fund launches in a tumultuous economy, just months before the 2008 crash.
1999
2007
2002 34 TODAY.McCOMBS.UTEXAS.EDU
PRIVATE REAL ESTATE FUNDRAISING BEGINS After the REIT’s success and the rebound of the real estate market in recent years, the time is finally right to launch private fund.
2015
2012
FIRST UT NATIONAL REAL ESTATE CHALLENGE
UNDERGRADUATE REAL ESTATE CERTIFICATE PROGRAM BEGINS
McCombs launches program for graduate student teams from top business schools to vie in real estate case competition.
The program offers business and non-business undergraduate students the opportunity to earn an official concentration in real estate.
COMMUNITY
SPRING 2016
BEAUTY EXPERT GOES VIRAL y
DEEPICA MUTYALA, BBA ’11
On-Air Beauty Advisor
E
ARLY LAST YEAR
TO M N E W TO N
Deepica Mutyala made a leap of faith. She quit her job with online beauty retailer Birchbox to go out on her own. Just one year later, her beauty-focused YouTube channel has 10 million views and 50,000 subscribers. Her beauty segments are a regular feature on NBC’s Today show and she has clients across the beauty industry. Mutyala, 27, decided to take the leap after the second video she produced for her own website, Deepicam.com, went viral. The video shows how to mask dark under-eye circles using red lipstick. >
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C O M M U N I T Y: U P C LO S E “It was terrifying, but it was a step I knew I had to take when that video went viral,” Mutyala says. “The day I got an email from the Today Show was when I put in my two weeks’ notice. I just felt like it was now or never, and I never wanted to look back and wonder, ‘What if?” This was not the first time she’s taken a risk. The Houston native broke from her family’s career tradition in medicine when she decided to apply to business school as an undergraduate and major in marketing. Her first big break came when she won a McCombs case competition that landed her a prestigious student internship at L’Oréal USA in New York City. After graduation and a brief stint as an analyst for Victoria’s Secret PINK, Mutyala went
“It was terrifying, but it was a step I knew I had to take when that video went viral. I just felt like it was now or never, and I never wanted to look back and wonder, ‘What if?’” to work for New York-based Birchbox, which markets high-end cosmetics through subscriptions. In addition to her marketing role at the company, she developed a forte creating how-to videos demonstrating the use of beauty products, step-by-step, on her own face. Mutyala’s meteoric rise into YouTube stardom over the past year has established her as a powerful presence in the beauty industry. She continues to increase her following and expand her personal brand through tutorials, product reviews, insider interviews, and television appearances. “I only talk about and promote
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products and brands I truly believe in and use,” she says. “It’s important in the long run to stay authentic and true to your voice and not let any brand deals steer you away from that.” Mutyala says her South Asian heritage gives her credibility and personal experience with a diversity of skin tones. She says she eventually might extend her brand to the Indian subcontinent.
“India is a vast and growing beauty market, and I’m fortunate to have the support of people in the country,” she says. “The end goal and dream has always been to have a global beauty product line. Right now, I’m focused on building my following, but when the time is right, I will absolutely go for that dream as well.”— David Canright
SPRING 2016
DATA-DRIVEN EXECUTIVE y
MICHAEL WESTGATE, MBA ’09
Vice President of Marketing, RealMassive
Michael Westgate got the opportunity to find out for himself what makes the RealMassive working environment so special when he joined the company as vice president of marketing. RealMassive, an online open data marketplace for commercial real estate, had just been named one of Austin Business Journal’s “Best Places to Work in Austin” for LAST SUMMER,
the second year in a row. Friend and classmate Zach Watkins, MBA ’09, recruited Westgate. Westgate says that not only is the real estate tech startup full of great people doing passionate work, but the job was also a perfect fit for him. “I’m a marketer at heart, but with a bent toward technology.” He says his approach to marketing is firmly data-driven. The company’s open, accurate, real-time data on commercial property availability and demand has broken new ground in the industry. “It’s a massive nationwide database,” says Westgate. “Nobody out there comes close to our comprehensiveness.” Technology has played a strong role in Westgate’s career choices. A Michigan native, he got his BA in business from Indiana Uni-
versity before moving to Austin for his MBA at McCombs. He worked at Microsoft for four years in customer acquisition and social media strategy and later worked on the Windows team in cloud-based services, which gave him an appreciation for making data useful to end users. Next, Westgate led marketing at W20 Group, where he provided strategy in audience analytics and digital communications for top entertainment and technology clients. Westgate has maintained his ties with McCombs: He and RealMassive have hosted MBA students in the Tech Trek program, bringing working teams from the school to analyze and solve problems in real-world working situations. It’s a relationship he says he plans to continue strengthening. — David Canright
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C O M M U N I T Y: U P C LO S E
NETWORK BUILDER y M AUREEN
MBA ’15
MCCAFFERY COLEMAN,
Marketing Manager, TenMarks Education MAUREEN MCCAFFERY COLEMAN likes to bring
people together. As an elementary school teacher for three years, she says she tried to bring her students together in the classroom. With so many different learning styles and backgrounds, it was a challenge. Her passion for improving student outcomes led her to study business so she could “develop a skill set that could make a real change in education.” While at McCombs, Coleman used her passion for making human connections to spearhead a new initiative with the school’s alumni office — the Texas 12 dinner program. The goal?
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To give alumni and students a chance to spend an evening together in an intimate setting — in the hopes of sparking new personal and professional relationships. The Texas 12 program brings together six students and six alumni, plus their spouses. Together with Christie Sutton, MBA ’15, Coleman kicked off the program in May 2015 with a dinner in Austin. Since the program started, dinners have been held in Austin, Houston, Dallas, and San Francisco. It is modeled after UCLA’s “Dinner for 12 Strangers,” a 47-year-old tradition that hosted 350 dinners last year alone and is emulated at hundreds of universities across the country. Now freshly armed with her McCombs MBA, Coleman, a Bay Area native, has returned to San Francisco to join Amazon’s budding education company, TenMarks. The company provides free math resources that match the needs of individual students. Its new products are designed to help close the education gap.
“It’s opened my eyes to a completely different set of resources that can make teachers’ lives easier and, ultimately, improve student outcomes,” Coleman says. “This allows teachers to really connect with their students in a powerful way.” Coleman says she also wants to forge her own ties. “For me in San Francisco, I’m longing for opportunities to connect with other McCombs alumni and almost relive my days at UT, which were really fun and special,” Coleman says. Texas 12 offers that possibility. “It’s not only a great social outlet, but also a professional opportunity to meet other people in my area and build my network.” The team is currently working to secure hosts for dinners to be held this year. If you’re interested in hosting a dinner in your city, please contact Robin Vallilee at Robin.Vallilee@mccombs.utexas.edu. — Amira Jensen
SPRING 2016
CHANGING THE WORLD THROUGH SOCIAL ENTREPRENEURSHIP y
HANNA JAMAL, MBA ’15
Associate Director, Social Finance Inc.
travel and work in impoverished areas across the globe, one observation struck Hanna Jamal: “Wherever you go in the world, you will see a Coke bottle. What does the Coca-Cola company know that gives them such world-wide penetration while we in the NGO and development community are still struggling to get a foothold?” That question led her to pursue an MBA at McCombs, which she selected after researchAFTER A LIFE OF
ing different graduate programs worldwide. Her goal was to ramp up her understanding of marketing and management in order to have a greater impact in her chosen field of social development. After graduation last year, she co-founded Urban Co-Lab, a startup incubator in East Austin where young, socially minded entrepreneurs can collaborate. And now she has taken on a new challenge. In January, Jamal assumed the role of associate director in the Austin office of Social Finance Inc., a Boston-based nonprofit that serves as an intermediary among governments, social service organizations, and private financiers. In her new role, Jamal quantifies the financial benefits and savings of non-governmental social programs and seeks out private investors interested in both financial and social return. Jamal says her ultimate goal at Social Finance is to create systems between private and government entities that can offer a whole new kind of support for innovative social change programs.
Born and raised in New York, Jamal traveled widely as a child. Her mother is Welsh and her father is a Briton of Indian descent who grew up in Tanzania. Her father’s work with the United Nations took him to stations around the world, including Bangladesh and Switzerland, for extended periods of time. She often joined him. With dual citizenship and family in the U.K., Jamal pursued her undergraduate studies at the University of Edinburgh in Scotland, where she earned her B.A. in anthropology with an emphasis in development studies. Eager to put her education to use in the field, she joined Voluntary Service Overseas (the U.K.’s version of the Peace Corps) and worked in Gambia to establish educational programs for impoverished children. After Haiti was struck by a hurricane in 2010, she spent a year there establishing schools for children from areas where infrastructure and shelter had largely been destroyed. She also worked for Plan International in Washington, D.C., researching outcomes of the education programs sponsored by the organization. Her work in Africa had impressed her with the need for rigorous quantitative analysis and evaluation in humanitarian efforts. With Plan International, she traveled to Ghana, Burkina Faso, Niger, Kenya, Mozambique, and again to Bangladesh. When she landed at McCombs in 2013, she found its small classes and collaborative approach to problem-solving a perfect fit. “I’ve always been a little different,” says Jamal, “and McCombs fosters an environment where difference is not only accepted but also embraced.” — David Canright
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In Memoriam
REMEMBERING PROFESSOR REUBEN R. MCDANIEL JR. community lost an influential and popular educator, researcher, and collaborator on Feb. 7, with the passing of Professor Reuben R. McDaniel Jr. at the age of 80. McDaniel was an expert in complexity science and held the Charles and Elizabeth Prothro Regents Chair in Health Care Management at McCombs. He was an active member of UT Austin’s faculty until his death. McDaniel was widely known and respected in his field for his research in the areas of decision-making within complex systems, creativity and innovation, management strategies for improved performance, policy analysis, and organizational theory. He was equally talented in the classroom and received numerous awards for his outstanding teaching of MBA elective courses. In 2013, McDaniel was named a “Texas 10” most influential professor by the Texas Exes. With a math-professor father and a business-professor mother, McDaniel practically grew up on a college campus, but he originally had no intention of following in his parents’ footsteps. “I could observe with my own two eyes how hard professors worked,” McDaniel recalled in a 2013 article published on McCombs Today. He spent 10 years as a mechanical engineer, but he didn’t stay away from education for long. He went back to school intending to go into higher education administration, but as a graduate student, he fell in love with teaching. McDaniel's career in higher education began in 1965 at Baldwin Wallace University’s Learning Center, where he was the only African-American staff person in the adminisTHE McCOMBS
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tration, serving as assistant to the dean and assistant professor of education. He received an Ed.D. from Indiana University in 1971 and then was hired by UT Austin, where he went on to serve as dean of students (1972-73), assistant professor of management (1972-75), and associate professor of management (1975-81). Also, in 1979, he served as acting deputy commissioner for medical programs for the Texas Department of Human Resources. McDaniel went on to become a professor of management science and information systems at McCombs, in addition to being adjunct professor in the departments of medicine and radiation oncology at the University of Texas Health Science Center at San Antonio. He was the founding coordinator of the McCombs Health Care Initiative, helping apply business principles to the problem of how to better extend the quality and accessibility of health care services. He was named to the Marquis Who’s Who in Medicine and Health Care in 2012. McDaniel believed in pushing students to go beyond expectations. “The students deserve more credit than we give them,” he observed. “Sometimes my colleagues look at my syllabus and they say, ‘You know MBA students will not read that stuff you assigned.’ My response is always the same: ‘I’m positive they will not read it if it’s not assigned.’” When he received an MBA Applause Award for distinguished teaching in 2007, McDaniel explained: “To best learn and retain, people need to be mentally engaged, to think back about what they have learned in the past and constantly link it to the present moment. My style in the classroom is usually pretty active, and I really like to get the students interacting. Sometimes I will just say something totally absurd just to get them to push back and say, ‘Whoa, wait a minute, that doesn’t make sense.’” Although he watched his parents teach for many years — and they never pressured him to become a professor — McDaniel’s decision to venture into academia had a different outcome than he expected. His parents “worked really hard,” McDaniel said. “I work really hard also. It just turns out that it really isn’t work but fun — lots of fun.
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C O M M U N I T Y: U P C LO S E
SPRING 2016 I just didn’t recognize that they were having fun, too.” Edward G. Anderson Jr., professor of Information, Risk, & Operations Management and director of the McCombs Health Care Initiative, said there are just too many things to say about the impact of McDaniel’s passing: “In research, as my colleague Dr. Douglas Morrice has beautifully stated, Reuben was an academic titan. While he single-handedly began the institutionalization of health care industry research here at McCombs, his influence stretched out far beyond the Forty Acres. One interesting fact: A number of his students have become deans at other schools. Not many of us can say that.”
Besides being a good friend and mentor to many of his fellow professors, McDaniel’s biggest impact was upon students, says Anderson. “Forget his many other awards for a moment,”
“Reuben made my brain hurt ... but in a good way.” Anderson says. “I think the greatest compliment I ever heard was made by one of his students, who said to me after one class, ‘Reuben
made my brain hurt today … but in a good way.’ Multiply that impact by all his students, whose brains he made think so hard — but they loved him for it — every year since 1972, and it makes you begin to realize the titan-sized hole that his passing has left at UT.” McDaniel’s enthusiasm won’t easily be replicated. “We will miss Reuben greatly, and the school will not be the same without him,” says McCombs Dean Jay Hartzell. To donate to the McCombs scholarship endowment established in McDaniel's memory, contact Dianne Bangle in the McCombs School at dianne.bangle@mcccombs.utexas.edu or 512-475-8177.
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C O M M U N I T Y: G AT H E R I N G S A REVIEW OF McCOMBS CELEBRATIONS, HONORS, AND ALUMNI EVENTS. 1
NW ARKANSAS ALUMNI CHAPTER EVENT SEPTEMBER 3, 2015 The NW Arkansas Chapter, led by Eva Agoulnik, BBA ’12 (third from left), and Mike Barry, MBA ’96 (sunglasses, seventh from left), hosted a “Welcome to Your Network” event where McCombs students interning at Walmart connected with alumni, including Charles Holley, BBA ’79, the recently retired executive vice president and CFO of Walmart (center, above sign).
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ALUMNI BBQ SEPTEMBER 19, 2015 Arthur Mills IV, BBA ’96, MBA ’04, along with his wife, Carla Shields Mills, returned to the Forty Acres from Georgia to enjoy Texas barbecue and reconnect with fellow alumni before the Texas-California football game. Mills was recently appointed to the McCombs Alumni Network MBA Advisory Board, which aims to strengthen alumni involvement with the school and increase opportunities for current and future students. The Alumni BBQ event draws more than 300 attendees each year. The next one is Sept. 4, 2016 before the TexasNotre Dame game. Tickets will be available in late May.
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TEXAS 12 DINNER — SAN FRANCISCO OCTOBER 10, 2015 The first San Francisco Bay Area Texas 12 — Dinner with 12 Strangers event gave McCombs alumni the chance to meet other graduates for the first time over a meal. Grant Cope, MBA ’15 (not pictured), and his wife, Breanne Cope (standing, in back), hosted the event in their home. 1
TEXAS ENTERPRISE SPEAKER SERIES JANUARY 29, 2016 The executive team of People Pattern (left to right) — Ken Cho, MBA ’03; Associate Professor of Computational Linguistics Jason Baldridge; and Associate Professor of Statistics James Scott — discussed entrepreneurial opportunities when you mix industry and academia. 5
SAN FRANCISCO ALUMNI CHAPTER EVENT SEPTEMBER, 13, 2015 More than 150 alumni attended a barbeque at Crissy Field to welcome new Longhorns to the Bay Area. Ian Kleinfield (left), BBA ’05, helped organize the event with Grace Kim (third from right), BBA ’12 (Business Honors), and Hans Malzar (second from right), BBA ’11.
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• M ARK YOUR CALENDAR WITH UPCOMING EVENTS OF INTEREST TO THE McCOMBS COMMUNITY AT WWW.TODAY.McCOMBS.UTEXAS.EDU/EVENTS
SPRING 2016
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YOUNG ALUMNAE DINNER NOVEMBER 18, 2015
HALL OF FAME SEPTEMBER 25, 2015
Marcie Zlotnik, BBA ’83 (fifth from left), hosted a dinner in her Houston home for young McCombs alumnae. The topic of conversation was “women leaders in business.”
New honorees were inducted into the McCombs Hall of Fame for dedication and contributions to the business community: Will O’Hara, BBA ’68; Bob S. Zlotnik, BBA ’75, MBA ’80; Marcie C. Zlotnik, BBA ’83; Ray Nixon, Jr., MBA ’77; and Alan Dreeben, BBA ’65. Recognized at the black-tie event as 2015 Alumni Rising Stars were David Busker, MBA ’07, and Jack Nelson, BBA ’98.
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ENTREPRENEURSHIP NIGHT — AUSTIN STARTUP WEEK OCTOBER 7, 2015 During Austin Startup Week, a five-day event celebrating Austin startups, McCombs hosted Entrepreneurship Night at Speakeasy. The event showcased Texas MBA and Texas MSTC alumni-founded startups and provided networking opportunities for current students, alumni, and local entrepreneurs. Pictured from left to right: Keerthan Kota, MBA ’15; Will Ying, MBA ’14; Susan Masson, director of full-time MBA career management; Sylvia Tseng, MBA ’14; and Michu Benaim Steiner, MBA ’14.
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ADVISORY COUNCIL MEETING SEPTEMBER 25, 2015 Laura Starks, associate dean for research and former McCombs interim dean, presented a “McCombs Lifetime Leaders” award to George Seay, MBA ’90. The other 2015 recipients were Robert Duncan, BBA ’70; Jeff Heller, BBA ’86; Sam L. Susser, BBA ’85; S. Todd Maclin, BBA ’78; and Norma Petrosewicz, BBA ’82. Special recognition was given to Rob Jones, MBA ’86, former McCombs executive-in–residence, and Beverly and Will O’Hara, BBA ’68, for establishing new endowments at McCombs. More than 70 advisory council members and spouses attended the event, along with UT President Greg Fenves, who also addressed the group.
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ADVISORY COUNCIL SPOUSE PROGRAM SEPTEMBER 25, 2015 Christie Skinner (seventh from left), wife of former Dean Tom Gilligan, and spouses of McCombs Advisory Council members enjoyed the view from JW Marriott’s Congress Avenue terrace. The group toured current construction projects throughout Austin.
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C O M M U N I T Y: A L U M N I N OT E S Please send your updates to alumni@mccombs.utexas.edu to be published in the fall issue of McCombs magazine and online at McCombs Today. Feel free to share news on behalf of a fellow graduate.
1960s Bennett Glazer, BBA ’68,
chairman and CEO of Glazer’s Inc., an alcohol distribution company, will help run Southern Glazer’s Wine and Spirits LLC, the largest alcohol distributor in the nation. The new company was formed by the merger of Dallas-based Glazer’s and Miami-based Southern Wine & Spirits. Richard W. (Dick) Evans, BBA ’68, chairman and CEO
of Cullen/Frost Bankers Inc., retired in March 2016. Evans first joined the bank’s training program in 1971 and worked his way up to CEO in 1997.
1970s Jim Heatherington, MPA ’71, was honored with the
2015 Rick Kells Outstanding Tax Professional Award from the Oklahoma Society of Certified Public Accountants. Heatherington began his career with Arthur Andersen & Co. and later opened his own firm in Tulsa where he continues to specialize in tax. Steven R. McCown, BBA ’72,
was named as a fellow of the College of Labor and Employment Lawyers. He is the
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co-founder and former managing shareholder of Littler’s Dallas office.
several years working for major medical corporations and operating his own business.
Guillermo (Memo) Benavides, BBA ’73, was
Paul Shoemaker, MBA ’85,
elected chairman of The University of Texas at Austin’s McDonald Observatory Board of Visitors. He has served on the Webb County Soil and Water Conservation District Board for 36 years, including 31 as chairman. Elizabeth Phillips Horne, BBA ’74, helped dedicate a
mortgage-free house for a wounded Marine veteran in partnership with Operation Finally Home. The house is in Santa Rita Ranch, a community developed by Horne’s company, Wilshire Homes. Rick Spencer, BBA ’74, MBA ’76, completed his term as
chairman of the Real Property Probate and Trust Law Section of the State Bar of Texas.
1980s Michael Selby, BBA ’80, MBA ’92, was a member of the
Highland Park School District’s 2014-15 Facilities Advisory Committee. The North Dallas school committee developed and advocated for the passage of a $360 million bond proposal for the district, and for its efforts was named “Citizen of the Year” by local paper Park Cities People. Rocky Lawrence, BBA ’82, is running for Faulkner
County Sheriff in Conway, Arkansas. Lawrence entered law enforcement in 2008 after
wrote the book Can’t Not Do: The Compelling Social Drive that Changes Our World. Shoemaker is an executive connector at Social Venture Partners Seattle, a global network of social innovators, entrepreneurs, philanthropists, and business and community leaders who fund and support social change agents in nearly 40 cities and eight countries. He is also the founding president of Social Venture Partners International. Rick Chouinard, BBA ’86,
recently released his book ACE Selling, which outlines strategies to help sales professionals borrow from many of the same skills used by successful poker players. Keith Jezek, MBA ’88, is the
new president for Cox Automotive Software Group. Jezek previously served as president of software solutions and was responsible for the strategic direction of the company's software division.
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after working in the Texas Department of Transportation’s project management office for two years. Maria Luna, MBA ’93, and
her husband, Dr. Hector Rodriguez, showcased their mobile app Bravo at a TechCrunch Disrupt event in San Francisco. The app won a “wild card” vote from attendees at the event, and gave Luna and her husband the opportunity to present on stage. The app allows users to more easily give or receive tip money in situations where cash may not be available. Andrea Petro, MBA ’93,
was recently elected as the first female vice president of the Commercial Finance Association, an international trade association that deals with asset-based lending and factoring industries. Petro is executive vice president and division manager for Wells Fargo Capital Finance. Sanem (Sam) Alkan, BBA ’94, a director at RMA, has
reached her 15-year milestone in the alternative investment space. Alkan is now challenged with building a global brand name for the boutique private real estate equity business.
Steve Harris, BBA ’91, joined
Charles Hans, BBA ’94, was honored with the Department of Defense’s Distinguished Civilian Service Award. The award is presented to civilian employees whose careers reflect exceptional contributions to DoD’s mission.
David Hunter, MBA ’93,
Jerome Kern, BBA ’96, MPA ’96, was named vice
Holmes Murphy and Associates’ national employment benefit headquarters in Dallas. He serves as a development officer responsible for growing the brand throughout the Southwest region of the U.S. has returned to HNTB Corp.
SPRING 2016 president and chief financial officer of Flexi-Van Leasing Inc., a lessor of specialized equipment for the intermodal transportation industry. Mike Bacon, MBA ’98,
founder of Bacon Lee & Associates, has been appointed vice president for advancement and alumni relations at Trinity University. Bacon has more than 25 years of experience as a senior-level development and external relations executive. James Conrad (Rad) Weaver, BBA ’98, was named to Cox
Enterprise’s board of directors. Weaver is the CEO of McCombs Partners, the San Antonio-based investment management division of McCombs Enterprises. Daniel Horowitz, BBA ’99,
has been appointed to the Texas Trial Lawyers Association’s executive committee for 2016. He will serve as vice president of legislative affairs. Horowitz is a plaintiff’s personal injury attorney with his own firm in Houston. Anna Tchernina, BBA ’99, MPA ’99, became Facebook’s
internal audit director. Tchernina previously served as a senior manager at Deloitte and has 15 years of experience in information systems auditing.
2000s Robert Thomas, MBA ’00,
was named by Texas Gov. Greg Abbott as the chairman of the Texas Facilities Commission. Thomas is an attorney, businessman, and found-
ing principal of the Thomas Consulting Group. Linda Guerrero Deicla, BBA ’01, MPA ’01, was promoted to
general manager at KGBT-TV, a CBS affiliate in the Texas Rio Grande Valley. Guerrero joined the station in 2004 and has served as an accounting supervisor, business manager, and media operations manager. Tomas Ackerman, BBA ’02, and Daniel Goodman, BBA ’04, left Natural Gas
Partners and founded Carnelian Energy Capital, an energy private equity firm based in Houston. Shalou Dhamija Barth, BBA ’02, MBA ’09,
transformed an old shopping center in East Austin into a hip restaurant row, which includes Dai Due restaurant and butcher shop and Sugar Mama’s Bakeshop. In addition, Barth and her husband opened Unit D Pizzeria in the same complex.
TARGETING GUYS WHO LIKE GETTING THEIR HANDS DIRTY John Adams, MBA ’04 Director, Business Development, Kimberly-Clark After 11 years at Kimberly-Clark Corp., John Adams has hardly settled into a routine. As he’s risen through the ranks, he’s held numerous positions, from marketing strategist to business line leader. Now, as the leader of a set of product groups targeted to men, Adams finds himself in an unusual niche at a company known for its commitment to women — both as customers and as employees. Kimberly-Clark, historically known for its personal care products, has garnered attention and praise over the last few years for its diversity inclusion initiative, which has dramatically increased its percentage of women and people of color in director-level positions. While the Fortune 500 company’s hallmark brands like Huggies and Kleenex are generally marketed to mothers, Adams targets a vastly different demographic: men who enjoy manual labor. Adams saw success last year in marketing shop towels with the “My Work, My Way” campaign and plans to continue its expansion. — Amira Jensen
Andrew Friedberg, BBA ’02, was elected mayor of
Bellaire, Texas. He previously served six years as city councilman and is senior counsel at Apache Corporation in Houston. Kevin McDonough, BBA ’02,
was named a “rising star” in Becker’s ASC Review, a publication that features business and legal information for the health care industry. McDonough was recognized for his efforts with VMG Health, a leader in financial valuation and advising in the surgery center industry.
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C O M M U N I T Y: A L U M N I N OT E S Stephanie Gause, BBA ’03, an attor-
a licensed attorney, fashion designer, and blogger, travelled last year to the United Arab Emirates to do make-up workshops and hosted the first three days of the Dubai Shopping Festival. Ghalichi designs and manages her own hair extension and eyelash line.
Alissa Bayer, MBA ’04,
first general manager of Chariot, an app-based commuter shuttle network based in San Francisco. Liao was previously a territory lead at Uber.
was added to the annual North American Entrepreneurial Winning Women Program by Ernst & Young. Bayer’s milk + honey is a chain of premier spas and salons with an organic product line. EXXON EXECUTIVE GIVES BACK Scott Darling, MBA ’89 Treasurer, ExxonMobil Development Company As a graduate student, Scott Darling knew that once he completed his MBA, he wanted to work in the heart of the energy industry. Since then he’s done it all: He has worked in all of the major ExxonMobil business areas — upstream, downstream, chemical, corporate finance, and supply and logistics. Although 17 different positions at ExxonMobil have taken him around the world, from Colorado to London to Egypt, Darling returns to McCombs every recruiting season to help prepare students for their future. For 15 years, Darling has maintained his relationship with McCombs as a recruiter. Since being appointed executive liaison last recruiting season, he works closely with students and offices within McCombs to help them understand what opportunities ExxonMobil can offer and to make the right job/student pairings. “It’s rewarding to work with students and show them how they can make a career here,” Darling says. “You make a personal stake and you want to see them succeed.”—Amira Jensen
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Lilly Ghalichi, BBA ’05,
ney in finance and real estate at Frost Brown Todd, was named president of the Dallas Association of Young Lawyers. Gause is on the board of trustees and board of directors of the DAYL Foundation and has previously served as the organization’s secretary, treasurer, and vice president.
Jeff Cleveland, MBA ’04, joined the
Seattle office of D.A. Davidson & Co. as managing director in its consumer and retail sector. Cleveland will partner in leading the firm’s efforts within the food, beverage, and agriculture sector. John Scarborough, MBA ’04, was
promoted to president of Deep Eddy Vodka Distilling Co., one of the fastest growing distilled spirits brands in the nation. Scarborough has been CFO of the company since 2011. Ed Hemphill, MBA ’05, and Travis McCollum, MBA ’06, are co-founders of
WigWag Inc. The company was honored by the Silicon Valley Technology Innovation & Entrepreneurship Forum with a Top 30 Innovation Award in September.
Kenny Liao, BBA ’05, was named the
Philip Krim, BBA ’06, is the CEO and
co-founder of Casper, a New York-based startup offering mattresses online. The company recently raised $13.1 million in venture financing. Jason Hsiao, BBA ’07, recently
became the managing director for Shaw Investments and is in charge of sourcing deals and maximizing the value of the company’s portfolio. Hsiao previously worked at Citrix in product marketing, and in 2013 set up an endowment in his parents’ name at McCombs to help other students pursue entrepreneurial careers. Natalie Marko, BBA ’07, was
promoted to run the client management division of Citi’s markets group in Singapore beginning March 1, 2016. Her previous role was COO of Citi Global Markets.
Casey Charlton, BBA ’05,
is the co-founder and CEO of River Linguistics Inc., a written translation and verbal interpretation company that works to break down communication barriers for its clients.
Dominic Fails, MBA ’09, was
named senior vice president of local media sales at Univision Communications. Fails has held roles at NBC Universal, WorldNow, Viacom, Enron, and Tribune Corp.
Kirby Allison, BBA ’05,
started Kirby Allison’s Hanger Project, a luxury wooden clothes-hanger company that aims to assist in the maintenance of fine apparel. The company was recently featured in the Wall Street Journal.
2010s Kedar Bhatia, BBA ’10, joined Green-
berg Traurig LLP as an associate for
SPRING 2016 the company’s litigation practice. He represents clients in civil litigation, white collar defense proceedings, government inquiries, and internal investigations. Perry Nelson, MBA ’10, former online director of Dwell magazine, brought her technology and design experience to Nicely Noted, a stationery service she founded in Austin. Each month, Nelson selects a suite of letterpress cards, pairs them with postage stamps, and sends them to subscribers. She says her hope is that the convenience of having the perfect card on hand, complete with stamps, inspires more people to keep the venerable tradition of letter-writing thriving. Christine Chen, MBA ’12, wrote and
directed the film Two Roads, which was selected as one of the top 20 films to compete in the Louisiana Film Prize competition. Chen’s feature film Funemployment is set to release this year. FROM HIGH FINANCE TO CANDLE POWER Sterling McDavid, BBA ’11 Founder, The Starling Project Sterling McDavid gave her notice at Goldman Sachs after a trip to Vietnam. Two weeks in the field working on societal issues as a member of UNICEF’s Next Generation steering committee propelled her in a new direction. She decided she wanted to use her expertise in finance to serve underprivileged communities. After raising $100,000, she founded the nonprofit Starling Project and started selling hand-poured candles in December at pop-up shops in Brooklyn, where the company is headquartered. Proceeds go to underserved rural communities, namely to fund the purchase of solar panels for a community center in the African nation of Chad. The solar panels will last up to 50 years and provide both electricity and clean water for the community. Until now, villagers had to trek six miles to reach clean water. When McDavid began thinking about candles, she was struck by a simple irony: In the U.S., candles are a luxury item. In communities without electricity, they are a necessity. “The parallel was really interesting to me,” McDavid says. “We don’t need them, yet people will drop $70 on a candle. I would prefer to buy a product that did a little bit more and served as a reminder on a daily basis of what’s going on in the world.” The candles produced by the Starling Project are available online and will soon will be carried in retail stores.—Amira Jensen
Jeff Utterback, MBA ’12, is the Port
of Seattle’s new real estate director for its economic development division. Utterback has also worked at the Washington State Investment Board and at his own business, where he developed nearly $1 billion worth of institutional properties. Jeanne A. Arnold, MBA ’14, was
inducted into the VIP Woman of the Year Circle by the National Association of Professional Women. Arnold, a military veteran with more than 30 years of service, is a principal at Arnold & Schröder, LLC. Christopher Hermanas, MBA ’14,
accepted a commercial distribution sales position with Wells Fargo Capital Finance, where he will provide inventory financing and working capital solutions for manufacturers and dealers in the agricultural industry.
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M c C O M B S : B OT T O M L I N E
DO BUSINESS SCHOOL RANKINGS STILL MATTER?
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THEY’RE FICKLE, THEY’RE FLAWED, THEY’RE FAR TOO NUMEROUS… BUT WE LOVE THEM ANYWAY by Matt Turner CTOBER 2002 :
BusinessWeek ranks the McCombs School of Business No. 21 among U.S. MBA programs — down from 17. Result: Concerned students line up outside the dean’s office demanding answers. October 2015: Bloomberg Businessweek ranks McCombs No. 21 in the 15th iteration of its annual ranking — up two spots from 2014. Result: Crickets. Why the different reactions? The first example was a drop in rank; the second, a rise. Everyone likes an upward trend, and ranks are always relative. In 2002, BusinessWeek only ranked 30 schools, while last year’s list included 74. The earlier result lies in the lower third (21 out of 30); the latter, the upper (21 out of 74). Then there’s the psychology of numbers. The earlier outcome represented the first time the school dipped below 20 in a U.S. ranking. BusinessWeek had started the top 20 comparison by ranking only a score of schools. Over the years, this number has inched up to a high of 85 (2014), and elite schools nationwide routinely move in and out of the top 20. The issue of credibility also plays a big part. The influential magazine changed its methodology several times over the years, and 2014 turned out to be a real howler: Duke suddenly took the No. 1 spot in the nation, above Wharton and Chicago; Harvard slouched in at No. 8; and Virginia plummeted to 20 (from 10), finding itself below UNC. Eyebrows were raised, and administrators began to chuckle. Trust once broken is hard to mend. 2015’s Bloomberg Businessweek ranking — with a major methodology overhaul in place — seemed like a return to normalcy, but the damage was done. Reversing a decades-old trend, applicants to the Texas MBA program now point to U.S. News & World Report, not Bloomberg Businessweek, as the most reliable business school ranking. Finally, rankings have simply proliferated. For most of the ’90s, just two magazines — Businessweek and U.S. News — held a virtual monopoly on MBA reputation. Then, everyone began jumping on the MBA ranking bandwagon: Hispanic Business (1998), Financial Times (1999), Forbes (2000), the Wall Street Journal (2001), and the Economist (2002). Adding to all the noise, business school rankings published by online media have recently exploded. Eighteen have crossed my desk in just the last few years. In the cacophony, schools, applicants, and employers stop paying as much attention to any one ranking. And in the digital age no media source maintains the authority it once held. Yet above the din, rankings still matter. They encourage schools to be accountable and publish comparable data. This provides transparency and allows for benchmarking, which raises everyone’s game. For all their flaws — and they are legion — rankings still provide applicants and recruiters with a roadmap to reputation. And alumni love them. As Director of Alumni Relations Keary Kinch put it cogent-
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ly, “Rankings give objectivity to passion. People like to see metrics confirm their fond memories of the school.” No matter how you look at it, McCombs’ placement in the rankings overall is as high as ever. McCOMBS’ RECENT RANKINGS BBA: No. 6 (Bloomberg Businessweek), No. 7 (U.S. News) Full-Time MBA: No. 14 (Forbes), No. 16 (U.S. News) Working Professional MBA: No. 7 (U.S. News) Executive MBA: No. 17 (U.S. News) MPA: No. 1 for graduate accounting (U.S. News; Public Accounting Report) MS in Business Analytics: No. 5 (The Financial Engineer Times) MS in Technology Commercialization: No. 6 in U.S. (Eduniversal) Faculty Research: No. 5 worldwide (UT Dallas) Matt Turner is a market researcher in the Communications Department at McCombs. He was director of admissions for the school’s full-time MBA program from 2001 to 2004.
I L L U S T R AT I O N B Y A N D R E W G R O V E S
“When I was a student, I benefitted in so many ways from the generosity of alumni. Now it’s my turn.” Ted Wang, MBA ’96 CEO of Puissance Capital Management McCombs Volunteer and Donor
TED WANG grasps the power of alumni who give back. “My studies and career were transformed by Texas graduates who contributed so much to my MBA experience. It left a lasting impression.” When Wang made partner at Goldman Sachs in New York 10 years after graduation, he established the Goldman Sachs/Ted Wang Scholarship Endowment. Since then, he has funded four different scholarships benefitting 15 students and is a donor to the Wall Street for McCombs Endowed Dean’s Scholarship in Business.
LEARN HOW YOU CAN GIVE BACK AT WWW.MCCOMBS.UTEXAS.EDU/INVEST-IN-MCCOMBS
NON-PROFIT ORG US POSTAGE
THE UNIVERSITY OF TEXAS AT AUSTIN McCombs School of Business 1 University Station B6000 Austin, Texas 78712
PAID BURLINGTON, VT 05401 PERMIT NO. 19
GOING GLOBAL, STAYING CONNECTED
MARISSA JARRATT has a question for every McCombs graduate. “Has your UT business education made a difference in your life?” Jarratt interned with PepsiCo Frito-Lay the summer of 2003 and never looked back. “I remember pinching myself thinking, ‘I can’t believe I can get paid to do this.’ ” she says. Since then, she has rebranded Cheetos, rebooted Rold Gold, and taken on global marketing. And she still makes time to stay involved at McCombs, from serving on the MBA Alumni Board and doing UT recruitment for her company to making a practice of generous financial giving.
“I’ve always been passionate about McCombs. It doesn’t end once you graduate.” Marissa Jarratt, BBA ’99, MBA ’04 Senior Director of PepsiCo Global Marketing McCombs Volunteer and Donor
LEARN HOW YOU CAN GIVE BACK AT WWW.MCCOMBS.UTEXAS.EDU/INVEST-IN-MCCOMBS
