Thursday, 31 May 2012
CEO Commencement Wisdom 2012
Eric Schmidt
Google, Executive Chairman
University of California at Berkeley, May 12
“Find a way to say yes to things. Say yes to invitations to a new country. Say yes to meeting new friends. Say yes to learning a new language, picking up a new sport. Yes is how you get your first job, and your next job. Yes is how you find your spouse, and even your kids. Even if it’s a bit edgy, a bit out of your comfort zone, saying yes means you will do something new, meet someone new, and make a difference in your life, and likely in others’ lives as well. … Yes is a tiny word that can do big things. Say it often.”
Dan Akerson
General Motors, CEO
Columbia Business School, May 13
“I hope you came to this great university with more in mind than getting a degree that would help maximize your earning power. Let me be clear. Making money is good. I’m all for it. I have been blessed in ways I never imagined, and I hope everyone has the same opportunities and success I’ve enjoyed. But society needs more from you right now. Some of the institutions our society relies on are in serious disrepair.”
Greg Brown
Motorola Solutions, Chairman
Rutgers University, May 13
“Whatever you strive for, don’t dwell on constructing the perfect plan or search for the flawless solution, because perfect can be the enemy of progress. Have the confidence to forge ahead with a good enough plan, with imperfect knowledge. Then continually adjust, adapt, and learn.”
Muhtar Kent
Coca-Cola, Chairman
University of North Carolina, Kenan-Flagler Business School, May 13
“I was in New York, and I answered a [Coca-Cola] newspaper ad. … I spent the next nine months on trucks. In Atlanta, Georgia, Lubbock, Texas, Needham, Massachusetts, and outside Los Angeles. It wasn’t glamorous work. Getting up at 5 a.m., going into supermarkets, bringing product in off the truck, stacking it on shelves, and building displays. And frankly, there were moments when I asked myself what I was doing. But I always believed that today is better than yesterday, and tomorrow is better than today.”
Charlie Ergen
Dish Network, Chairman
Wake Forest University, May 21
“I encourage you to take the jobs where you will learn the most, and the other paycheck will take care of itself.”
Private Student Loans Are Becoming More Competitive
Private student lenders are stepping up their game to compete directly with government loans. For several years, private lenders offered mostly variable-rate loans that students used as gap funding to cover their needs above what they could get on government loans. Now private lenders are introducing loans fixed at nearly the same rates as some federal products, seeking to nab a bigger piece of the student loan market as outstanding debts balloon to more than $1 trillion.
The largest student lender, SLM (SLM), known as Sallie Mae, introduced fixed-rate loans earlier this month. On May 21, Discover Student Loans (DFS), the third-largest education lender, started a fixed-rate loan program as well. Wells Fargo (WFC), the second-biggest lender, had launched fixed-rate loans last summer. For families with good credit, the private loans could be as low as 5.75 percent—a full point lower than the 6.8 percent for unsubsidized federal loans.
To understand this change, a brief bit of history is in order. In 2010, President Obama signed into law reforms that reconfigured how students borrowed money for education. It eliminated a program that subsidized private lenders to offer fixed-rate loans that the government guaranteed in case students defaulted. That left private lenders with only variable-rate loans—great for students when interest rates are low but painful when rates shoot up. “It created a huge hole in our product portfolio,” says Steve Olszewski, a senior vice president at Discover Student Loans.
Enter the Federal Reserve, which has been keeping interest rates near zero to try to spur lending and revive the economy. Banks can borrow for almost nothing, so now they can lend at a fixed rate that’s similar to what the government offers. “Clearly the funding environment is very conducive to it,” Olszewski says.
Right now, the fixed-rate loans primarily compete against the 6.8 percent unsubsidized Stafford loans, which are largely for graduate students or families that don’t demonstrate financial need. The rate on subsidized Stafford loans is at 3.4 percent. Federal loans have other benefits too, such as debt-forgiveness for public service work. ”Overall, the unsubsidized Stafford loan still offers a better deal for all except the most creditworthy of borrowers,” writes Mark Kantrowitz, publisher of FastWeb (MWW), a site that helps match students with scholarships. With staggering default rates and so many factors to juggle, the Consumer Financial Protection Bureau is trying to make it easier for students to compare loan offers.
That may be more important if Congress doesn’t act by July 1, when the subsidized rate is scheduled to double, to 6.8 percent. Then the fixed-rate private loans might interest an even broader audience.
Tuesday, 22 May 2012
Sunday, 20 May 2012
Saturday, 19 May 2012
Friday, 18 May 2012
The Ivy League's 2012 Presidential Pick
Mitt Romney and Barack Obama have two Ivy League degrees apiece. But they’re pretty far apart when it comes to fundraising from those campuses. Bloomberg News’ Hans Nichols reports today that the president has collected six times more money than Romney from professors, administrators, and others who work at the country’s most elite colleges.
Obama has hauled in $375,932 in Ivy League cash so far, compared with Romney’s $60,465. Employees of Harvard University, where both candidates studied, are the most generous to date: They gave Obama $131,654 and Romney $31,600.
Nichols says Obama’s Ivy League donors aren’t as enthusiastic as they were four years ago, when they gave him $573,168, compared with $17,046 for John McCain.
Still, Obama’s take bests Romney’s at every institution but one: Harvard Business School. And the numbers there are like the current polls—close. Employees at Romney’s alma mater have given him $14,000 and Obama $11,400.
Thursday, 17 May 2012
How I Got Here: Google's Brent Callinicos
Brent Callinicos took a non-traditional route to Google (GOOG), where he currently serves as vice president and treasurer. After moving to the United States from South Africa, he enrolled as an undergraduate business student at the University of North Carolina. Instead of looking for a job upon graduating, he immediately joined the MBA program at UNC. As part of Bloomberg Businessweek’s ‘How I Got Here’ series, Bloomberg’s Melanie Danko spoke with Callinicos about his shift from college life to consumer products—and his jump into the tech sector, thanks to some savvy networking skills and a multifaceted career path. What follows is the story of Callinicos’s career progression in his own words. (Some quotes have been edited for space and clarity.)
Name: Brent Callinicos, CPA
Current Position: Vice President and Treasurer, Google
Education: MBA, University of North Carolina at Chapel Hill, Kenan-Flagler Business School, Class of 1989
Unusual then, unusual now. I went straight from UNC undergraduate school to grad school. No work experience, just right into an MBA program. While working on my MBA, I also took the CPA.
—Procter & Gamble, assorted finance roles, June 1989-April 1992
I worked at P&G (PG) for three years. It was a great training ground, as they hired hundreds of post-grad and undergrad students. It was a good place for someone with zero experience. I started in the treasury [department] there, interestingly enough. I moved around to some other corporate finance roles within the company as well.
—The Walt Disney Company, senior financial analyst, Walt Disney Records, April 1992-December 1992
I read the book Storming the Magic Kingdom, which was all about how Disney had reinvented itself. It was extremely impressive and it compelled me to send them my resume. I made the move from P&G because I wanted a position where finance played more of a role in terms of what the company did. I had some exposure to technology while working at Disney (DIS) in their gaming industry and it interested me.
—Microsoft, various finance roles, December 1992-April 2000
—Microsoft, vice president, treasurer, April 2000-April 2004
—Microsoft, vice president, worldwide licensing and pricing, April 2004-February 2006
—Microsoft, chief financial officer, platforms and services division, February 2006-January 2007
While I was at Disney, I had a friend working at a tech start-up called Microsoft (MSFT). My friend really tried to convince me to move to Washington and I found it very intriguing. This was my first experience in tech. When I started [at Microsoft], only 3,000 people worked there. Essentially, I was doing the entire financial side for the company, as it was a startup: [mergers and acquisitions], financial analysis, development, etc. I rejoined the treasury [department] in 1995 with only about five or six people; the company was growing very fast. Ten years later, I was still working in treasury there. I became treasurer in 2000, and by 2004 there were hundreds of people in the treasury [department]. Microsoft then reorganized and I became a regional CFO.
—Google, vice president, treasurer, January 2007-Present
At the end of 2006, Google called. I like running things, I like building things, and it seemed like this was an opportunity to build new things. I remained interested in technology, and their small treasury group sparked my entrepreneurial fire. I was also attracted to the trajectory of the company. In 2007, I joined the treasury [department], made up of about five or six people. Today, the treasury group is over 50 people, and in addition I picked up the accounting and tax departments. I now have that group rolling up to me as well. It’s about 300 to 400 people, in all.
—Final Word
Get the work experience. In hindsight, I know what the school gave me, but the work experience is very relevant in the MBA program. I didn’t have the same context as the rest of the students. However, building the connections with professors and colleagues in grad school was crucial and became very strong and has helped me today. Make those connections. You never know what will come from them.
Thursday, 10 May 2012
Wednesday, 9 May 2012
Friday, 4 May 2012
The Fuzzy Math in Financial Aid Offers
When Susan Romano first read her son Zach’s financial aid letter from Drexel University, a private college in Philadelphia, her eyes immediately jumped to the line highlighted in yellow: “$13,442 expected payment” for the first year at the $63,000-a-year school. “At first, I thought it was great,” says Romano, an insurance claims representative from Huntingdon, Pa. “The more I read it over and over, the worse it got.” It turned out the college’s “offered financial aid” included $42,000 in loans to be taken out by the family. “A loan to me is not financial aid,” says Romano. “It is money I have to pay.”
While the federal government requires banks and mortgage companies to disclose interest rates and total payments on loans, the financial aid letters sent out by colleges are often unclear about how much families will have to pay. The format for packages varies by school, making it difficult to comparison shop: Loans and grants offered by the federal government are lumped together with the school’s scholarships, and the statements often don’t include information on interest rates.
Jennifer Silverberg for Bloomberg BusinessweekDaniel Jamrozik thought Butler University had made him a great offer—until he figured out his family would need to borrow $28,000 for his freshman year
“You have to be savvy enough to know the fine print exists, and then you have to be eagle-eyed enough to find it hidden in the letters and on websites,” says Debbie Greenberg, a counselor with College Bound St. Louis, a nonprofit that coaches low-income students. Salenia Shaw, a high school senior Greenberg has been advising, was directed to a website for details of her aid package from Bradley University in Peoria, Ill. After subtracting grants from the cost to attend, they realized Shaw and her mother would need to take out $17,000 in loans for the first year.
The U.S. Department of Education, consumer groups, and guidance counselors are pushing for a standard format for award letters. The department is aiming to have a model ready before the start of the next school year, according to spokesman Justin Hamilton. Only Congress, however, has the power to make it mandatory. “Our hope is that institutions will see the wisdom and benefit of moving towards a common form,” Hamilton says.
The National Association of Student Financial Aid Administrators went to Capitol Hill in March to lobby against the standardization. While the group isn’t opposed to requiring schools to use the same terms, members prefer the flexibility to design their own letters, says Megan McClean, director of policy. “We are always in favor of students and families having clear and accurate information,” she says.
The Consumer Financial Protection Bureau introduced a website last month that helps students compare financial-aid options at different schools. “Clear financial aid information with estimates for total debt and monthly payment after graduation would help them make decisions,” said Rohit Chopra, its student-loan ombudsman, in an e-mail. Educational debt has ballooned to $1 trillion, surpassing the amount owed on credit cards in the U.S., according to estimates compiled by the agency.
Joan McDonald, senior vice president for enrollment management at Drexel, said in an e-mail that the college includes federally backed and private loans in financial aid letters so families have a complete view of available resources. David Pardieck, director of financial assistance at Bradley, says the university has not had complaints about the clarity of its letters.
Daniel Jamrozik, 18, the top-ranked student at his high school near St. Louis, needed help from a coach at College Bound to interpret his aid award letters. A letter from the public Missouri University of Science and Technology presented a 10-line breakdown with a boxed amount of $22,536 that corresponds to the total cost for one year of attendance. The package, though, required Jamrozik and his parents, who are Polish immigrants, to take out $12,586 in loans. His father is a contractor and his mother juggles several jobs, including as a nursing-home aide.
A letter from Butler University, a private college in Indianapolis where the total cost of attending for the 2012-13 academic year comes to $47,168, initially appeared to offer Jamrozik more money: The figure highlighted was $28,100. Yet after crunching some numbers, he and his coach determined the family would actually need to take out $28,000 in loans, more than double the amount for the state school. “It’s certainly not our intention for them to be confusing,” says Melissa Smurdon, director of financial aid at Butler. “There is a significant amount of information that needs to be conveyed.” Lynn Stichnote, director of student aid at Missouri S&T, acknowledges the letters can be “intimidating.”
Jamrozik, who has until mid-May to make his choice, says he’s certain about one thing: “You’re just going to be suffering for an eternity to pay off the debt.”
The bottom line: College financial aid officers oppose an effort to introduce a standardized letter for assistance awards.
Thursday, 3 May 2012
MBA Journal: Finding My Way
Someone outside of MBA-land recently asked me if I was thinking about getting an internship this summer. I didn’t know what to say—after spending five months wringing my hands about the entire internship process, “yes” seemed to be an understatement.
When I accepted admission to Duke’s Fuqua School of Business, I remember giving a summer internship passing consideration, figuring it would be another small part of life at school. Since then I’ve realized that much of the focus of first-year MBA students is on landing an amazing summer job, even sometimes at the expense of academics.
Really, the entire process seems counterintuitive. Many students head into an MBA program to learn more about new fields or to make a career switch, but (almost) the second we arrive on campus, we begin recruiting for life after school, gearing up in black suits and name tags to tell our stories to company representatives, as if we’re certain we know what we want to be when we grow up. Throughout the fall I would wonder why I was focusing so much on finding an internship, when I really needed to understand accounting.
Fuqua had a mind-boggling number of top companies recruiting on campus this fall, first coming to give official presentations on their organizations, then usually back again to host “industry insight” panels or invite-only networking events. Looking back at the recruiting season, I suspect that my fellow first years and I didn’t realize just how competitive the on-campus process would be, perhaps because our school is so collaborative and team-oriented. When a group of us made the interview list for a competitive internship program, we prepared together, sharing insights from our various conversations with company contacts, helping one another hone our interview answers and reframe our various strengths and weaknesses. After all that effort, collaboration, and hope, it was disappointing to see some of us receive offers while others did not. I think the experience is typical at Fuqua, however—we got through the process together.
Unbelievably, this fall recruiting snapshot describes only what happens at school. Fuqua’s career center also prepares us to recruit “off campus,” where students go to companies to investigate job opportunities instead of companies coming to students (also known as the way the real world works). These are companies that don’t traditionally recruit MBAs or that don’t have the resources to conduct MBA recruiting on campus. Off-campus recruiting encompasses many social sector employers—socially responsible businesses, nonprofit organizations, and large companies with sustainability and corporate social impact departments—which is appealing to me. So, in addition to my on-campus recruiting, I was also setting up informational interviews and applying to internships to explore those less-traditional MBA career options.
I definitely found it challenging to determine the best line of experience for me to make the most impact in the social sector. There is no set path for people who want to do my line of work—and unfortunately, much of recruiting is all about path. I ultimately ended up interviewing across a few different industries, on and off campus. I have so many interests, and I was fascinated by the array of opportunities and experiences out there. I’ve ultimately decided to accept an internship offer with a large company with a strong corporate social responsibility focus, and I’ll be working on its social impact goals, an opportunity to blend my B-school education with my interests.
Now that I have an internship, and I’m preparing to head out west for the summer, I wonder if I could have made it through the year without all the internship-related hand-wringing. Looking back at the fall, I feels as if I had an out-of-body experience—where did all that time go that I spent researching companies, networking, attending presentations, and prepping for interviews?
In September, a few second years told me to write down the reasons I decided to come to B-school and post them on my bathroom mirror, so I could remember them throughout recruiting season. Of course, like a headstrong first year, I didn’t listen to them, and I definitely felt lost at certain points this year. As painful as it was, however, to find my way through the career path fog, the internship search also provided me with the chance to reflect on why I’m here, what my goals and values are, and what I’ve learned about myself since starting my MBA program. While I might have earned a few grey hairs in the process, the informal education was invaluable—perhaps as invaluable as learning accounting.
Between journal entries, you can keep track of Susan’s business school adventures at the Business Schools Facebook page. Follow the Bloomberg Businessweek B-Schools team on Twitter.
Susan Shell is a first-year MBA student at Duke University’s Fuqua School of Business. During her life before business school, Shell managed strategic polling and focus group projects for nonprofits, public interest organizations, Democratic political campaigns, major corporations, and the media. Her goal, she says, is to use her MBA to make a difference in the world. As part of a choir she helped launch, Shell performed onstage for President Obama in 2009.