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Transcript of Chicago Booth Magazine Summer 2012
The University of ChicagoBooth School of Business
5807 South Woodlawn Avenue
Chicago, Illinois 60637
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Nonprofi t Organization
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P A I DPermit No. 4444
Twin Cities, MN
How Scott Griffith, ’90, CEO of Zipcar, drove car sharing to the mainstream
Opening New Routes
CH
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12
The University of Chicago Booth School of Business Summer 2012
Critical DialoguesDean Sunil Kumar gets the inside track on Zipcar from CEO Scott Griffith, ’90 20
Temptation’s Siren SongResearch by Wilhelm Hofmann investigates desire, willpower, and self-control 10
Good Energy Experts discuss fueling the future at the 60th Annual Management Conference 26
Accessorize with Booth: It all started when David Booth, ’71, suggested that the school
should have a signature tie. The student-led Dean’s Marketing Advisory Committee
offered to help run a design contest, which concluded in May, with a $300 check and
bragging rights for the best overall design going to fi rst-year Full-Time student Joseph Ryu.
Meenakshi Dash, ’08, won $100 for the most original design and Mark Zmijewski,
Leon Carroll Marshall Professor of Accounting, won $100 for scoring the most “likes”
on Facebook. The fi ve-judge panel evaluated the designs for originality, suitability for a
business setting, and ease of manufacturing. To view all 60 design submissions, visit the
Booth Community Facebook page at Facebook.com/ChicagoBoothBusiness.
From left to right: David Booth, Meenakshi
Dash, Joseph Ryu, and dean Sunil Kumar.
Not pictured: Mark Zmijewski.
Chicago Booth Magazine…
Get it now Download the new Chicago Booth app at ChicagoBooth.edu/Boothapp.
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1Summer 2012 Chicago Booth Magazine
F E A T U R E S
Faculty Digest 9
Balancing Desire and Self-Control in Everyday Life A new paper by Wilhelm Hofmann investigates the temptations we struggle with
the most—from indulging in food and sleep to compulsively checking email—and why we respond
to them in the ways that we do.
By Erin O’Neill
Capital Ideas: Consumption Strikes Back 16Research by John Heaton on the correlation between stock returns and expected future
consumption offers a measure of long-run risk that proves fundamentals can drive risk
premiums in the stock market.
By Vanessa Sumo
Cover Critical Dialogues 20Zipcar CEO Scott Griffi th, ’90, tells dean Sunil Kumar about his journey steering an idealistic
Boston-area start-up into an infl uential public company.
Edited by Judith Crown
Management Conference 2012 26Chicago Booth faculty and industry experts considered the future of alternative fuels and the
challenge of reducing greenhouse gas emissions. Breakout sessions discussed corporate tax policy
and how data is best used to understand consumer shopping habits.
By Rick Popely, John Slania, and Duncan Moore
I N E V E R Y I S S U E
Letters & NewsFrom the Dean . . . . . . . . . . . . . . . . . . . . . . 2
News Update . . . . . . . . . . . . . . . . . . . . . . . . 5
Alumni NewsAlumni News . . . . . . . . . . . . . . . . . . . . . . 35
Career News . . . . . . . . . . . . . . . . . . . . . . . 39
Class Notes . . . . . . . . . . . . . . . . . . . . . . . . 43
In Memoriam . . . . . . . . . . . . . . . . . . . . . . . 63
Back StoryChad Syverson . . . . . . . . . . . . . . . . . . . . 64
Chicago Booth Magazine
The University of Chicago
Booth School of Business
Vol. 34, No. 2, Summer 2012
Dean
Sunil Kumar
Editor
Judith Crown
Associate Editor
Kate Fratar
Creative Director
Michael Rezac
Designer
Brian Ross
Print Production Manager
Kristen Lewis
Contributors
Kate Ancell
Paul Audia
Kalliope Dimitrakopoulos
Dan Dry
Allan Friedman
Matthew Gilson
Dan Kedmey
Chris Lake
Duncan Moore
Erin O’Neill
Mary Sue Penn
Rick Popely
Beth Rooney
Molly Schultz
John Slania
Gerta Sorensen
Chris Strong
Vanessa Sumo
Chelsea Vail
Chicago Booth Magazine
(ISSN 1072-7612) is published by
The University of Chicago
Booth School of Business
ChicagoBooth.edu/magazine
© 2012 The University of Chicago
Booth School of Business
All rights reserved.
Direct address changes to
directory.ChicagoBooth.edu
26
Chicago Booth Magazine Summer 20122
The pomp of convocation is behind us, yet summer brings its own excitement as we welcome
the next crop of faculty and students to Chicago Booth, as well as the newest group of graduates
to our alumni community. It is a time when the institution renews itself in a fundamental way.
As new people enter our campuses, the topics studied and taught change and the methods used
to study and teach change; the intellectual conversation changes in a lasting way. That said, if we
have done our job well recruiting faculty and students, our new crop will easily live up to our
standards of rigor, evidence, and open debate.
Thus far we have 12 new faculty members joining us in the next academic year: one full
professor and 11 assistant professors. Factoring in departures, we expect a net gain of seven
faculty members. They come from fi elds ranging from accounting and economics to marketing
and statistics. There is no doubt in my mind that our new crop will help enhance and broaden
the school’s intellectual footprint.
Two of our “rookie” hires were offered jobs at Booth last year. They chose to defer joining so
that they could spend a year in industry bolstering the applied side of their work. They spent last
year at eBay and Google, respectively, acquiring practical insights to complement their outstand-
ing academic training. I see this approach, where new members of the faculty invest signifi cant
time at the beginning of their careers in industry, as a very positive development.
Summer is bittersweet. We congratulate and
bid adieu to our graduating students. In turn, we
welcome our latest alumni. As you will read in this
issue of Chicago Booth Magazine, the career choices
of Booth graduates continue to diversify (page 39),
with marketing, e-commerce, entrepreneurship, and
general management featuring prominently in addi-
tion to consulting and fi nancial services. The last two
industries continue to account for more than half of
the class job placements, but graduates’ interests—
and their options—are broadening.
At the time of writing this letter, we have not yet
fi nished admitting the class of 2014. All indications
are that this will be another excellent class in terms of objective metrics like the median GMAT
score and GPA. Matriculating students not only come from a variety of backgrounds and have
diverse work experiences, but they also intend to use their Booth experience in a variety of ways
to support their aspirations. So far, our incoming students hail from 50 different countries.
Finally, summer is a good time to experiment with new ideas. One such idea is LaunchPad,
a workshop intended to help younger alumni with entrepreneurial ambitions get started on
putting their plans together. More experienced alumni serve as mentors and judges; Booth fac-
ulty run the workshop. We have done a few such workshops in Chicago, and, this year, we are
experimenting globally. This summer we will run a LaunchPad workshop at the University of
The New Crop
Sunil Kumar, Dean and
George Pratt Shultz
Professor of Operations
Management
Matt
hew
Gilso
n
“Matriculating students not only
come from a variety of back-
grounds and have diverse work
experiences, but they also intend
to use their Booth experience
in a variety of ways to support
their aspirations.”
Letter from the Dean
3Summer 2012 Chicago Booth Magazine
Chicago’s Beijing Center and one at Booth’s London campus. We see this initiative as one
effective way to support younger alumni globally and bring them closer to more experienced
alumni and the school.
While Chicago Booth is in great shape, we cannot afford to sit still. Given the breadth of
career aspirations of our students and alumni, and the range of issues confronting businesses
today, it is evident to me that for Chicago Booth to get better, we have to get broader. It is impor-
tant we do this without sacrifi cing our strengths and values. Each year, the new crop brings us
closer to this end. Please join me in welcoming our new faculty, students, and alumni. I eagerly
look forward to our community’s future accomplishments.
Sunil Kumar
Dean and George Pratt Shultz Professor of Operations Management
Letter from the Dean
Chicago Booth Magazine Summer 20124
“There is a level of engagement, hard work, and enthusiasm among the students that is absolutely infectious.”
—Anne Thomas,
W. Allen Wallis Distinguished Fellow
Chicago Booth attracts the best and brightest students.
The Annual Fund opens doors for many of them,
including students such as Anne Thomas. With your
continued support, there is no limit to what Chicago
Booth can achieve.
ChicagoBooth.edu/possibilities
5Summer 2012 Chicago Booth Magazine
Booth Receives $3.5 Million in Gifts
New Deputy Deans Appointed
Booth TV Studio Debuts
H E A R D A T C H I C A G O B O O T H
Consulting is a wonderful thing to do, but if you want to be the hero, it might not be the right thing for you.
Beth Rooney
Punit Renjen, chairman of the board, Deloitte LLP
Renjen sat down for a “fi reside chat” with dean Sunil Kumar
and 100 Booth students on a visit to Gleacher Center in
January. Renjen discussed how Deloitte has managed to grow
its consulting business by double digits in four of the past fi ve
years, despite a challenging economy. For complete coverage
of the event, go to ChicagoBooth.edu/ontheweb and enter the
keyword “Renjen.”
5
Chicago Booth Magazine Summer 20126
News Update
New Chief Information Officer Leads Information TechnologyKevin Boyd has joined Booth as senior director, information tech-
nology, and chief information offi cer. He has overall technical
responsibility for the school’s campuses in Chicago, London, and
Singapore, and manages a staff of 45 in operations, application
development, and project and service management. He replaced
Ligia Moreno, who retired after more than eight years at Booth.
For the past two years, Boyd was director of the project manage-
ment offi ce at the General Board of Pensions (Wespath) in Glenview, Illinois. Earlier in
his career, he held technical leadership positions at Tribune Company, CNA Financial
Corp., United Airlines, Bank One Corp, and W.W.Grainger, Inc.
Boyd taught e-commerce at Northwestern University as an adjunct faculty
member from 2003 to 2012. He has a master’s degree in communications
systems, strategy, and management from Northwestern and a bachelor’s degree
from Marquette University.—Chicago Booth Staff
H E A R D AT C H I C A G O B O O T H
As one of the world’s leading business schools in finance, Booth has the faculty capabilities, cutting-edge application, and research to thoroughly cover the CIMA curriculum and bring it to life.John Heaton, Joseph L. Gidwitz
Professor of Finance, on Booth’s
accreditation as a registered
education provider for Certifi ed
Investment Management Analyst
(CIMA) certifi cation. Heaton will
serve as faculty director for the new
program. Booth joins Wharton in
offering the educational component
for CIMA certifi cation, which is
designed for advanced investment
advisors and consultants.
Two Deans to Fill Leftwich’s ShoesDean Sunil Kumar named
two deputy deans for faculty
to replace Richard Leftwich,
who has held the post for the
past eight years and plans to
step down on July 31. The
second deputy dean is being
added as a result of the growth in faculty, Kumar said, and in order to accommodate
the expected future increase in demand.
Steven Davis, William H. Abbott Professor of International Business and Econom-
ics, began sharing responsibilities with Leftwich on April 1. John Heaton, Joseph L.
Gidwitz Professor of Finance, will succeed Leftwich on August 1.
Leftwich, Fuji Bank and Heller Professor of Accounting and Finance, joined Booth
in 1979 and will continue to serve as a member of the faculty. Under his leadership as
deputy dean, the number of tenure-track faculty grew from 113 to 130, with 12 new
hires for the 2012–13 school year. Overall, the number of teaching faculty grew from
169 to 197 during his tenure.
Davis, who joined the Booth faculty in 1985, is an applied economist with
research publications on employment and wage behavior, worker mobility, job loss,
and other topics. He is the former editor of the American Economic Journal: Macro-
economics, a research associate with the National Bureau of Economic Research, an
economic advisor to the US Congressional Budget Offi ce, and a visiting scholar at
the Federal Reserve Bank of Chicago.
Heaton studies asset pricing, portfolio allocation, and time-series economics. His
research in these areas has earned him numerous fellowships, including an Alfred P.
Sloan Research Fellowship, and a National Science Foundation Fellowship. Before join-
ing Booth in 2000, he was the Nathan S. and Mary P. Sharp Distinguished Professor of
Finance at the Northwestern University Kellogg School of Management. He is a former
editor of the Review of Financial Studies.—Chicago Booth Staff
A P P O I N T M E N T S
Bet
h R
oone
y
Steven Davis
Bet
h R
oone
y
Richard Leftwich
Dan
Dry
John Heaton
Cou
rtes
y of
Kev
in B
oyd
Kevin Boyd
7Summer 2012 Chicago Booth Magazine
P H I L A N T H R O P Y
Gifts Support Entrepreneurship,Energy Research Two contributions to Chicago Booth will enable the school to develop new initiatives
in the fi elds of entrepreneurship and energy. A $2 million gift from Edward L. Kaplan,
’71, will endow the New Venture Challenge (NVC), of which he has been the title
sponsor since its fi rst competition in 1996. A $1.5 million gift to the Energy Policy
Institute at Chicago from the Fuel Freedom Foundation will be used to explore eco-
nomic and policy questions surrounding transportation fuels.
The NVC endowment, once fully funded, will enable the competition to be self-
sustaining for years to come. Hosted by the Polsky Center for Entrepreneurship, the
NVC has helped launch scores of companies, including GrubHub, Inc., Braintree, and
BenchPrep, all based in Chicago. Kaplan is cofounder of Lincolnshire, Illinois–based
Zebra Technologies Corp., a pioneering company in barcode technology that went
public in 1991.
“Ed was an important catalyst for the New Venture Challenge and, more broadly,
for the Polsky Center,” said Steven Kaplan, Neubauer Family Distinguished Service
Professor of Entrepreneurship and Finance and faculty director of the Polsky Center.
“In the mid-1990s, he was one of a few alums who advocated that Booth should
develop a strong entrepreneurship program.”
The NVC’s infl uence has extended to the University of Chicago campus and
beyond. The more-than 75 alumni companies whose founders participated in the
competition have raised more than $242 million in equity capital collectively and have
created more than 1,000 jobs. This year, the NVC received a record 119 applications,
up from 89 entries in 2011.
“It is one of the country’s most successful venues for creating new business
ventures,” said Ellen Rudnick, clinical professor of entrepreneurship and executive
director of the Polsky Center.
“The endowment now being created by the Kaplan Foundation will insure the
long-term viability of the NVC and enable it to expand beyond its current limits,”
Rudnick said. “We are thrilled that Ed’s name will be forever linked to this capstone
program at Booth.”
Another fl ourishing discipline at Booth gained recognition with a gift from
the California-based Fuel Freedom Foundation to the Energy Policy Institute at
Chicago (EPIC).
Founded in 2011, EPIC is an interdisciplinary joint enterprise of Chicago Booth
and the Harris School of Public Policy that focuses on economic and social policy
questions related to energy. The gift will help launch the Initiative on the Future of
Transportation Fuels.
“This generous gift will help EPIC conduct the data-driven research that policy
makers and business leaders need to make sound, evidence-based energy policy
decisions,” said Robert Topel, codirector of the center and Isidore Brown and Gladys
J. Brown Distinguished Service Professor in Urban and Labor Economics.—Kate Fratar
To learn more about companies involved with the New Venture Challenge,
visit ChicagoBooth.edu/nvc
News Update
B Y T H E N U M B E R S
Booth Faculty on the AirIn early March, Booth opened
the Harper Center TV studio.
Professors were soon inter-
viewed on topics ranging from
sports to the European debt
crisis and US monetary policy.
Number of faculty
appearances as
of late May
Number of networks:
Number of professors
interviewed:
John Cochrane
Austan Goolsbee
Randall Kroszner
Tobias Moskowitz
Raghuram Rajan
Luigi Zingales
Chicago Booth Magazine Summer 20128
FOR OVER 50 YEARS,
Find out more at www.crsp.ChicagoBooth.edu.
WE’RE NOT DONE YET.
CRSP HAS EMPOWERED
THE WORLD OF FINANCE.
9Summer 2012 Chicago Booth Magazine 9
IQ and Investing Prowess
Two Sides to Innovation
Why Brand Preferences Vary
Dan Dry
I N T H E H E A D L I N E S
It’s very clear that the outside world is rethinking the India story.Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance and Charles M. Harper Faculty Fellow
India’s business boosters have been consistent in promoting
the potential of “brand India,” especially at prestigious venues
such as the World Economic Forum in Davos, Switzerland,
where Rajan, who is economic advisor to India’s prime minister,
spoke on the issue. But India’s country-with-great-potential
story is wearing thin among international business and political
leaders, according to Rajan and others, a view that was cited in
a February column in the Hindu Business Line.
To learn more about Rajan’s research, visit
ChicagoBooth.edu/magazine/facultylinks
Chicago Booth Magazine Summer 201210
On average, participants enacted 42 percent of the media
desires they had actively attempted to resist.
Hofmann credited this fascinating soft spot to societal
norms and our general feelings about the cost-benefi t analysis
of these activities. “Modern life is a welter of assorted desires,
marked by frequent confl ict and resistance—the latter with
uneven success,” Hofmann explained. “With cigarettes and
alcohol, there are more costs—long-term, as well as mon-
etary—and the opportunity [to consume] may not always be
the right one. Desires for media may be comparatively harder
to resist because of their high levels of availability and also
because it feels like it does not ‘cost much’ to engage in these
activities, even though one wants to resist.”
But, as vices go, aren’t work and media-usage relatively
good ones to have? According to Hofmann, it depends on
your overall goals. The study warns of the potential for
media habits to develop into abuse and noted, “Whether
underregulation of media use causes serious problems for
Westerners is an intriguing issue.” So, while compulsively
checking email or spending time on Facebook offers a quick
fi x for boredom and one’s need for connectedness, doing so
comes with its own pitfalls. “Even though giving in to media
desires is certainly less consequential,” Hofmann said, “the
frequent media use may still ‘steal’ a lot of people’s time and
attention away from other things that matter.”—Erin O’Neill
Faculty Digest
t happens to the best of us. We vow to lose 10 pounds.
We swear that this vacation, we won’t check email. But
then, after a few weeks, or days—or even minutes—we
give in to temptation.
But why?
In his recent paper, “What People Desire, Feel Confl icted
About, and Try to Resist in Everyday Life,” published in
Psychological Science, Wilhelm Hofmann, assistant professor
of behavioral science—along with two colleagues—found
that some desires are harder to resist than others.
“Self-regulation is important for both theoretical and
practical reasons,” the authors wrote. “Yet, the majority of
research on self-regulation occurs in the laboratory.” In order
to better understand the interplay among desire, motiva-
tion, and self-control in everyday life, the researchers used
smartphone experience sampling to closely monitor desire
experiences in a sample of 205 adults over the period of a
week. Using this technique, the researchers collected infor-
mation on more than 7,000 desire episodes in people’s daily
lives, and thus were able to directly compare various human
desires in frequency, strength, confl ict, and controllability
with each other.
Not surprisingly, the single most frequently mentioned
desire was that for food. Desires for nonalcoholic drinks, sleep,
media, leisure, and social contact also made it to the top of the
list. In terms of desire strength, the most potent desires were for
sleep, sex, and social contact, among others. Surprisingly, desires
for substances long considered to be highly addictive—such
as tobacco and alcohol—were among the weakest in average
strength. In terms of confl icting desires, participants reported
having the highest levels of confl ict in regard to leisure activities
and sleep, followed by spending, media use, and tobacco.
Yet, despite the strength and frequency of many of their
urges, participants were generally able to exhibit impressive
rates of self-control in resisting those desires that were expe-
rienced as problematic. But when it came to media desires
(such as watching TV, checking emails, or surfi ng Facebook)
and desires for work—their willpower often faltered.
Professor Wilhelm Hofmann investigates the
temptations we struggle with most, and why
we respond to them in the ways that we do.
Balancing Desire and Self-Control in Everyday Life
Not surprisingly, the single
most frequently mentioned
desire was that for food.
11Summer 2012 Chicago Booth Magazine
The subsequent research showed
that high-IQ investors are less subject
to the disposition effect, the tendency
to sell winning investments but hold
on to assets that have dropped in
value. These investors are also “more
aggressive about tax-loss trading,
and more likely to supply liquidity
when stocks experience a one-month
high,” the research found. The study
also found that investors with higher
IQ scores “exhibit superior market
timing, stock-picking skill, and trade
execution.”
“It’s difficult to justify why someone
wouldn’t have invested in the stock
market, knowing what a good deal it
has been,” Linnainmaa wrote. “It’s not
just that it may be expensive to buy
stocks and mutual funds, but people
may not have enough knowledge about
them.”—Erin O’Neill
When Brand Loyalty Is Divided
Why does a Bud-
weiser-guzzling couch
potato suddenly
switch to Heineken
when he’s at a cocktail
party with friends?
That’s just what
Pradeep Chintagunta, Joseph T. and
Bernice S. Lewis Distinguished Service
Professor of Marketing, and his co-
author set out to answer in their paper,
“Investigating Brand Preferences Across
Social Groups and Consumption
Contexts, ” published in Quantitative
Marketing & Economics.
Drinkers choose different brands
depending on what they’re doing (for
example, either bowling or sitting on a
They stated, “insider selling is associ-
ated with litigation risk only when
contemporaneous disclosures are
unusually optimistic.”—Dan Kedmey
IQ and Investing ProwessAre smarter people
instinctively bet-
ter investors? For
decades, economists
have debated the root
of the “participation
puzzle,” in strug-
gling to understand why such a small
percentage of the population takes
advantage of stock investments—which
generally produce a higher rate of
return than traditional savings.
Juhani Linnainmaa, associate profes-
sor of finance, and two colleagues
tackled this question in two papers:
“IQ, Trading Behavior, and Performance,”
published in the May Journal of Finan-
cial Economics; and “IQ and Stock
Market Participation,” published in the
December 2011 issue of the Journal of
Finance. The studies found evidence of
a direct correlation between an inves-
tor’s IQ and decisions to invest in the
stock market.
In the first paper, the researchers
collected two decades–worth of scores
from a mandatory army intelligence
test administered to Finnish men who
are required to enlist for nine months
to a year. They analyzed this data along
with records regarding equity return,
trade, and limit-order book data. They
found that higher IQ scores increased
the likelihood of later stock ownership
by 21 percent, even after being con-
trolled for environmental factors such
as wealth, income, age, and profession.
How Word Choice Can Land a Company in Legal Hot Water When a company
discloses informa-
tion to shareholders,
it should watch its
language. An overly
optimistic tone can
expose it to lawsuits
from angry share-
holders, according
to a new paper by
Jonathan Rogers,
associate professor
of accounting, Sarah
Zechman, assistant
professor of accounting, and a colleague
at Ohio State University.
In their study, “Disclosure Tone
and Shareholder Litigation,” which
was published in the November 2011
issue of the Accounting Review, the
researchers used a dictionary-based
measure of optimism in order to
gauge the tone of company statements.
Sued companies used “measurably
more optimistic” language in their
disclosures as compared to peers who
weren’t sued. “These results indicate
a strong link between disclosure tone
and litigation,” the authors concluded.
Further, said the researchers, the
link between tone and litigation
became even stronger when manag-
ers engaged in insider selling that
contradicted the optimism of their
statements. Therefore, according to
Rogers and Zechman, in order to
mitigate legal risk, managers should
avoid overstating the company’s per-
formance, particularly when selling
off their own shares and assets.
Dan
Dry
Jonathan Rogers
Faculty DigestC
hris
Lak
e
Sarah Zechman
Bet
h R
oone
y
Juhani Linnainmaa
IN THE NEWS AND JOURNALS
Chr
is L
ake
Pradeep Chintagunta
Chicago Booth Magazine Summer 201212
couch) and whom they’re with (alone
or among friends). These shifts in
consumption could provide valuable
information to marketers, but the data
for many of these scenarios tends to
be scarce.
Chintagunta and his coauthor
worked around this scarcity by devel-
oping a more parsimonious model
of context-based consumption. The
model reveals that context plays a
powerful role in brand selection.
Smaller companies could increase
their market share by marketing to
a highly-targeted “context or social
group setting.” (Think the Corona-on-
the-beach ad campaign.) Ultimately,
the study suggests “marketers should”
indeed consider how consumers’ prefer-
ences can vary across social group and
consumption context scenarios when
designing their marketing programs.”
—Erin O’Neill and Dan Kedmey
The Consequences of Innovation
There are two sides
to innovation. The
bright side is that
innovative firms are
able to produce more,
which in turn raises
their output, con-
sumption, and wages. The dark side
is that less nimble competitors can be
forced to slash pay and lay off older
workers, who are less able to adapt to
the innovation of the firms. This dark
side, which is called “displacement
risk,” is the subject of a new study by
Stavros Panageas, assistant professor
of finance, and two colleagues.
In their paper, “Displacement Risk
and Asset Returns,” which is scheduled
to be published in the Journal of Finan-
Finding Combinations That Satisfy
In his paper, “The
Combinatorial
Assignment Prob-
lem: Approximate
Competitive Equi-
librium from Equal
Incomes,” published
in the Journal of Political Economy,
Eric Budish, assistant professor of
economics, tackled the problem of
how to design a market-like resource
allocation system in settings where
there are legal or moral restrictions
against using real money to figure
out who gets what. He devised a
new “Competitive Equilibrium from
Equal Incomes” (CEEI) mechanism
that could be applied, for instance, to
course allocation at educational insti-
tutions: which students get to take
the most popular professors’ courses
at Booth? It also could be applied to
shift allocation at companies: which
employees have to work Thanksgiving
or Christmas this year?
cial Economics, and which won the
Best-Paper Award at the Utah Winter
Finance Conference 2011, the authors
measure the magnitude of displacement
risk by looking at consumption data
across generations. The authors find
that, because “innovation benefits the
young at the expense of the old,” growth
firms—which derive a large part of
their value from future inventions—are
a good hedge against displacement risk,
as opposed to less-innovative “value
firms.” Finally, the authors “identify
innovation shocks through their effect
on the consumption of individual
cohorts and show that inter-generation-
al differences in consumption correlate
with the return differences between
value and growth stocks.”—Dan Kedmey
Faculty DigestD
an D
ry
Stavros Panageas
Dan
Dry
Eric BudishThe dark side is
that less nimble
competitors can be
forced to slash pay
and lay off older
workers, who are
less able to adapt
to the innovation of
the fi rms.
Previously proposed
systems for these
kinds of problems,
from both theory and
practice, have
fairness problems,
incentives problems,
or often both.
13Summer 2012 Chicago Booth Magazine
T The CEEI system works as follows.
First, the participants log their prefer-
ences to a computer program. For
example, taking a particular profes-
sor’s class is worth 100 “utils.” Second,
the program assigns each participant
an equal amount of an artificial cur-
rency—say, 10,000 points, plus a
small random amount extra. Third, a
computer finds a “competitive equi-
librium”—prices such that, when each
participant “purchases” the set of goods
she likes best at these prices, subject to
not spending more than her budget of
artificial currency, the market clears, so
that supply equals demand. The reason
for the random amount of extra budget
in step two is to ensure that competitive
equilibrium prices always exist in step
three. Budish teamed up with computer
scientists at Carnegie Mellon University
to develop a computational procedure
capable of finding these prices.
Budish showed that CEEI is attrac-
tive on three dimensions: efficiency,
fairness, and incentives. Here, effi-
ciency means that welfare-improving
trades aren’t left on the table. Fairness
means that the participants don’t envy
each others’ allocations, or, if they do,
their envy is small: I may envy you
if you get one of the top professors
and I don’t, but you won’t get two of
the top professors while I get neither.
Incentives mean that it is in each
participant’s interest to report prefer-
ences truthfully to the computer in
step one—that is, it is impossible to
“game the system.” Budish argued that
all other previously proposed systems
for these kinds of problems, from
both theory and practice, have fair-
ness problems, incentives problems,
or often both.—Kalliope Dimitrakopoulos
Faculty Digest
Rajan and Weber Appointed to G30
Raghuram Rajan,
Eric J. Gleacher Dis-
tinguished Service
Professor of Finance
and Charles M.
Harper Faculty Fel-
low, and Axel Weber,
visiting professor
of economics, have
been appointed to
the Group of Thirty
(G30), an interna-
tional body that
examines the impact
of financial and economic decisions
in the public and private sectors.
The group also includes Mario
Draghi, president of the European
Central Bank, Mervyn King, governor
of the Bank of England, and other
senior participants from public and
private sectors and academia.
“The effectiveness of the G30
depends fundamentally upon the qual-
ity and stature of the group’s mem-
bers, and our new colleagues bring a
wealth of experience and professional
accomplishment to the group,” said
Dan
Dry
Raghuram Rajan
Cou
rtes
y of
Axe
l W
eber
Axel Weber
“The appointment of
Raghuram Rajan
and Axel Weber to
the G30 is further
recognition of their
stature as leaders in
the fi eld.”
—Sunil Kumar
Jacob Frenkel, chairman of the G30
Board of Trustees. Frenkel is also chair-
man of JPMorgan Chase International.
“The appointment of Raghuram
Rajan and Axel Weber to the G30 is fur-
ther recognition of their stature as lead-
ers in the field,” said dean Sunil Kumar.
“It also shows that Booth’s faculty influ-
ence is growing even stronger in the
public debate over key issues affecting
the world economy.”—Allan Friedman
Cochrane Named Guggenheim Fellow
John Cochrane, AQR
Capital Management
Distinguished Service
Professor of Finance,
has been named a
2012 Guggenheim
Fellow by the John
Simon Guggenheim Memorial Foun-
dation of New York.
He is among 181 scholars, artists,
writers, and scientists who received
the honor this year. The winners were
selected from nearly 3,000 applicants
on the basis of prior achievement and
exceptional promise.
Cochrane’s monetary economics
publications include articles on the
relationship between deficits and
inflation, the effects of monetary
policy, and the fiscal theory of the
price level. The Guggenheim Fellow-
ship was awarded for his further work
on the fiscal theory.
Cochrane has served as an editor of
the Journal of Political Economy and asso-
ciate editor of several journals, including
the Journal of Monetary Economics, the
Journal of Business, and the Journal of
Economic Dynamics and Control. His
recent awards include the TIAA-CREF
Institute Paul A. Samuelson Award for
his book, Asset Pricing, the Chookazian
Dan
Dry
John Cochrane
A W A R D S A N D H O N O R S
Jacob Frenkel, chairman of the G30
(continued on page 15)
Chicago Booth Magazine Summer 201214
BOOTHGEAR
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Gear up at ChicagoBooth.edu/boothgear.
Get in Gear
In the photo, Lauren Polo Patnaude, ’11.
15Summer 2012 Chicago Booth Magazine
American Academy of Arts and Sciences,
one of the nation’s most prestigious
honorary societies and a leading center
for independent policy research.
They are among more than 200 lead-
ers in business, science, the humanities,
the arts, and other fields to be recog-
nized this year. “Election to the acad-
emy is both an honor for extraordinary
accomplishment and a call to serve,”
academy president Leslie Berlowitz
said. “We look forward to drawing on
the knowledge and expertise of these
distinguished men and women to
advance solutions to the pressing policy
challenges of the day.”—Allan Friedman
Gary Becker, University Professor of
Economics and Sociology
Douglas Diamond, Merton H. Miller
Distinguished Service Professor of Finance and
Richard N. Rosett Faculty Fellow
Eugene Fama, Robert R. McCormick
Distinguished Service Professor of Finance
Robert Fogel, Charles R. Walgreen
Distinguished Service Professor of
American Institutions
Reid Hastie, Robert S. Hamada Professor of
Behavioral Science
Kevin Murphy, George J. Stigler Distinguished
Service Professor of Economics
Raghuram Rajan, Eric J. Gleacher
Distinguished Service Professor of Finance and
Charles M. Harper Faculty Fellow
Richard Thaler, Ralph and Dorothy Keller
Distinguished Service Professor of Behavioral
Science and Economics
Robert Vishny, Myron S. Scholes Distinguished
Service Professor of Finance
Bertrand and Zingales elected to American Academy of Arts and Sciences
Marianne Bertrand, Chris P. Dialynas
Professor of Economics and Richard
N. Rosett Faculty Fellow, and Luigi
Zingales, Robert C. McCormack
Professor of Entrepreneurship and
Finance and David G. Booth Faculty
Fellow, have been elected fellows of the
Endowed Risk Management Prize, and
the Faculty Excellence Award for MBA
teaching.—Allan Friedman
Hofmann Wins Early Career Award
Wilhelm Hofmann,
assistant professor of
behavioral science,
received this year’s
2012 Social Cogni-
tion Early Career
Award, which rec-
ognizes contributions to the study of
social cognition by junior scientists. It
was presented to him by the Interna-
tional Social Cognition Network.
Hofmann has received several other
awards in his burgeoning career, includ-
ing the 2009 William Stern Award of
the German Psychological Society, and
the 2010 Distinguished Young Scientist
Award (Heinz-Maier-Leibnitz Award)
of the German Science Foundation.
His work has appeared in numerous
psychological journals, including Psy-
chological Science and the Journal of
Personality and Social Psychology. His
work has also been featured in Scientific
American Mind, Discovery News, the
New York Times, Financial Times, the
Guardian, the Telegraph, and Forbes, as
well as many broadcast outlets includ-
ing ABC, NBC, CBC, and Fox News.
Hofmann also serves on the editorial
boards of Social Psychological and Per-
sonality Science and the European Jour-
nal of Personality.—Kate Ancell
Faculty DigestD
an D
ry
Wilhelm Hofmann
Bet
h R
oone
yMarianne Bertrand
Chr
is L
ake
Luigi Zingales
Among Their PeersBertrand and Zingales join nine other Booth faculty who earlier were elected fellows of
the Academy of Arts and Sciences
(continued from page 15)
Chicago Booth Magazine Summer 201216
JOHN HEATON Joseph L. Gidwitz Professor of Finance
Award Winner
Hoover Institution National Fellow (1993–94)
Sloan Foundation Fellowship (1993–95)
National Science Fellowships (1993–98)
Specializes in
asset pricing, portfolio allocation, and time-
series economics
Teaches
investments, fi nancial instruments, and
topics in empirical fi nance
Previous Education
PhD in economics, University of Chicago
MA in economics, University of
Western Ontario
BA in commerce, University of Windsor
Feature Capital Ideas
17Summer 2012 Chicago Booth Magazine
This article was originally published in the May 2012 issue of Capital Ideas,
a publication highlighting faculty research at Chicago Booth. This issue
featured selected papers on investment management. For more information, visit
ChicagoBooth.edu/CapIdeas
Mat
thew
Gils
on
By Vanessa Sumo
Fundamental economic variables regain importance in explaining risk premiums in stock markets
Consumption
Strikes Back
When investors think about the risk of investing
in the stock market, one of the things they pay
attention to is how stocks and the underlying
earnings of companies are affected by movements in the
economy. Stocks that closely follow the ups and downs
of business cycles are considered riskier, because these
stocks will typically fall at the fi rst hint of a downturn
and rise faster as the economy recovers. From the
investors’ perspective, then, stocks of companies whose
earnings are most affected by economic conditions
should promise a bigger return.
The high returns observed in the stock market would
therefore suggest that its performance is strongly related
to business cycles. Indeed, many people think that an
economic recession goes hand in hand with a bear market.
However, John Heaton, Joseph L. Gidwitz Professor of
Finance, says this often has not been true in the past.
“There have been a lot of settings where stocks have come
down but the economy has not moved,” says Heaton. Why,
then, would investors demand high risk premiums in the
stock market?
Perhaps equally baffl ing is why value stocks, which are
stocks with low market values relative to the fundamental
factors that determine their price, have had consistently
higher returns than growth stocks, which are stocks
whose earnings are expected to grow rapidly. This
difference in average returns arises even though the
returns on both types of portfolios are about equally
correlated with business cycles. It is unclear from simply
looking at the correlation between the returns of different
portfolios and the state of the economy why investors
would ask for a higher return for holding value stocks.
Chicago Booth Magazine Summer 201218
Feature Capital Ideas
These puzzling observations have overlooked the fact that
investors are concerned not only about the impact of short-
term fl uctuations in business cycles on stock prices, but also
about how an uncertain economic future might affect their
investments, according to a recent paper by Heaton, Lars Peter
Hansen, a professor in the Department of Economics at the
University of Chicago, and Nan Li, a professor at National
University of Singapore, titled “Consumption Strikes Back?
Measuring Long-Run Risk.” In particular, a decline in the
stock market today may refl ect an underlying shock to the
economy that will not dissipate quickly and will have an
impact over a long horizon.
“Maybe what’s really happening is that when the stock market
goes down today, investors think that this is telling them a lot
about the state of the economy in the future,” Heaton says. If
investors perceive that economic conditions will be worse in
the future, then investors will likely ask for a higher return on
stocks today to compensate them for that higher risk.
Measuring Long-Run Risk
Hansen, Heaton, and Li develop a theory that captures long-
run risk, or the risk that arises from the uncertainty about
the long-run growth of the economy. They show also how
to appropriately measure the relationship between current
stock market returns and future economic conditions—a
relationship that leads to differences in required returns.
Under this theory, stocks that have higher predicted required
returns should have lower prices to refl ect the additional
return needed to persuade investors to buy those stocks.
An economic downturn can raise uncertainty about the
pace of future economic growth in several ways. For instance,
a number of people who lose their jobs in a recession will not
fi nd work again and will leave the labor force, permanently
reducing the economy’s productive capacity. Other bad
shocks that investors may see as threats to future economic
growth include a widening government defi cit that raises the
prospect of higher taxes in the future or a recession that makes
politicians feel more protectionist in terms of international
trade. As a result, a recession today can make investors think
hard about the risk that the economy may no longer return to
its long-run growth path.
Hansen, Heaton, and Li use their theory to understand
whether an exposure to long-run risk can help explain the
difference in returns of value and growth portfolios. In
particular, if the cash fl ows generated by value stocks are more
highly correlated with future economic conditions compared
with those of growth stocks, then investors would demand a
higher return to hold a value portfolio that they perceive to
have a higher exposure to long-run risk.
Indeed, the study fi nds that the cash fl ows of value portfolios
are strongly correlated in the long run with macroeconomic
shocks, while growth portfolios show little correlation. The
results confi rm the authors’ argument that investors are
concerned not just about the short-term impact of business
fl uctuations, but also about how these disturbances will affect
economic prospects years from now. Investors see the long
run as an important source of risk, which they consider when
accepting a price for the assets they buy.
“When the stock market goes down today, investors think that this is telling them a lot about the state of the economy in the future.” —John Heaton
19Summer 2012 Chicago Booth Magazine
Consumption Makes a Comeback
Before Hansen, Heaton, and Li’s study, researchers had
somewhat abandoned the idea that stock prices largely refl ect
the relationship between the aggregate economy and the stock
market. The economic models that researchers typically use did
not adequately explain the consistently high equity premiums
observed in the data, leading academics toward behavioral
biases and transactions costs to account for this shortcoming.
But by fi guring out how to accurately measure long-run
risk, Hansen, Heaton, and Li have made it possible for
fundamental economic variables to once again play a key role
in determining asset prices. That’s the story behind the paper’s
title. “What we’re saying is that using fundamentals like
consumption to measure risk can actually work if you look at a
longer horizon,” says Heaton.
Consumption is the largest component of gross domestic
product and is an important indicator of economic well-
being. By looking at the correlation between stock returns and
expected future consumption, Hansen, Heaton, and Li were
able to come up with a measure of long-run risk that—when
linked to the economic shocks that investors see today—
proves that fundamentals can indeed drive risk premiums in
the stock market. ■
“Consumption Strikes Back? Measuring Long-Run Risk.” Lars Peter
Hansen, John Heaton, and Nan Li. Journal of Political Economy,
April 2008.
To watch a video of John Heaton explaining his research, visit ChicagoBooth.edu/CapIdeas
“Using fundamentals like consumption to measure risk can actually work if you look at a longer horizon.” —John Heaton
Chicago Booth Magazine Summer 201220 Chicago B
Feature Critical DDiiaalogguuesis a series of conversations with members
of the Chicago Booth community who
play key roles in shaping business and
economic policy worldwide.
In early 2003, following the internet boom, Scott Griffi th, ’90, had the experience of running two start-ups
under his belt and was looking for his next endeavor. He was intrigued by Cambridge, Massachusetts–based
Zipcar, the young company that pioneered the big idea of car sharing. The concept was simple. In large
cities, where car ownership was costly, Zipcar members could rent a Honda Civic or a Volkswagen Beetle to
run errands or head for a weekend getaway, all for much less than the cost of a conventional car rental. And
the venture was irresistibly green. Reducing the number of vehicles downtown would lower pollution, parking
demand, and gridlock.
But the company was ineffi cient and losing money, so when Griffi th stepped in as chief executive, he applied
the kind of rigorous data-driven analysis he fi rst learned at Booth. He nurtured a performance-based culture,
launched hyper-local marketing campaigns, expanded the vehicle fl eet, and targeted new markets, growing
the company to 18 metropolitan areas and 250 college campuses. He also broadened the appeal of the brand
from utilitarian to fun.
Membership at Zipcar has grown to more than 700,000, and the company boasts a fl eet of more than
9,000 vehicles, not just Civics, but Mini Coopers, BMWs, Fords, and even hybrid and all-electric vehicles.
The company went public in April 2011 and its stock is traded on the NASDAQ under the symbol ZIP.
Griffi th recently discussed his Zipcar journey with dean Sunil Kumar in a Critical Dialogues conversation.
20 Chicago Booth Magazine Summer 2012
Edited by Judith Crown | Photos by Matthew Gilson
21Summer 2012 Chicago Booth Magazine 21Summer 2012 Chicago Booth Magazinegazine
Kumar: When you were fi rst recruited to join the team at Zipcar,
what attracted you to the company’s idea and business? What
were some of the things you considered in making the decision?
Griffi th: I like to think of Zipcar as my own personal sweet
spot because it brought together three of my passions:
innovation, transportation, and cities. I grew up in Pittsburgh
and saw the incredible impact that innovation and technology
had in turning that city around after the death of the steel
industry. I had moved back to Boston after running two
internet start-ups. I was a cancer survivor, and I wanted to do
something that made a difference. In 2002, I started watching
Zipcar and saw a huge idea. When I was offered the CEO role
in early 2003, I knew I was taking a tremendous risk, but I
loved the vision.
Kumar: What kinds of changes did you have to make to move
the company forward?
Griffi th: We’ve been able to build the brand by being very
specifi c and deliberate in our business model and the processes
for everything from fl eet management to hyper-local marketing.
For example, when I arrived, there was a move afoot to do a
major media buy to place ads on trains and in bus shelters.
It didn’t go well because you can’t explain what Zipcar is
about on a bus ad. But out of failure came a better idea—very
localized zone marketing. We created print materials that
we placed in card holders at dry cleaners and cafés. We put
grassroots marketers on the sidewalks with collateral. I even
rode through neighborhoods on a fl atbed semi with Zipcars on
it and used a bullhorn to explain what Zipcar was about.
Also, when I joined the company, we had 60 cars in New York
City, but they were spread out, so effi cient marketing was
diffi cult. We moved all the cars to the Chelsea area, a hip, young
neighborhood in lower midtown, where we were able to target
our message. At the time, we were growing at a 15-percent rate,
but when we focused on Chelsea with our concentrated fl eet and
hyper-local marketing approach, our membership tripled in a
month and a half. That was a goose-bump moment.
Kumar: Did you have to change the brand’s positioning?
Griffi th: At the start the image was too basic, too green. We
offered mostly white or silver Honda Civics and VW Beetles.
To reach a broader audience, we needed to offer more variety
and make the brand about lifestyle. In 2004, we started adding
colorful Mini Coopers, Mazdas, and BMWs, even SUVs. That
generated some good press and expanded the appeal to a much
broader audience of users.
Kumar: Why did you make the decision to go public last year?
Griffi th: Although we went public last year, the strategy was
set years earlier when we decided to be a global company. The
car-sharing business traditionally has been divided into two
camps: smaller local operators with a tight geographic focus,
“When we focused on Chelsea with our concentrated fl eet and hyper-local marketing approach, our membership tripled in a month and a half. That was a goose-bump moment.”—Scott Griffi th
21Summer 2012 Chicago Booth Magazine
Chicago Booth Magazine Summer 201222 ChChicago BBoooth Magagazine SuSummer 220122222 Booth Mag
Feature Critical Dialogues
and larger global companies like Zipcar with operations in many
cities. The capital needs for each model are incredibly different.
We knew that to achieve our long-term business goals we would
need a funding model that involved the public markets given the
asset intensity of the business. While we don’t necessarily need
a lot of equity capital, going public has enhanced our ability
to tap more deeply into the asset-backed securities market to
support our fl eet growth with a low-cost leveraged model.
Kumar: What has been the biggest challenge for you and the
company since going public last year?
Griffi th: On a personal level, becoming a public company
CEO has challenged me to step up my game. The bar has been
raised and so have the expectations of many more people. I’ve
needed to get better at time and team management. No CEO
has extra time in the day to spend doing something new. You
have to fi gure out, what do I need to hold onto, and what can I
delegate to others on my team?
Kumar: Has the emphasis on quarterly earnings affected the
way that you and your team manage the business?
Griffi th: To some extent, yes. As a private company, you talk to
small groups of investors in business meetings. We now have
a much larger group of shareholders in the public market to
whom we have a fi duciary duty. They can be pretty focused on
Chicago Booth Magazine Summer 201222
“We knew that to achieve our long-term business goals
we would need a funding model that involved the public
markets given the asset intensity of the business.”
—Scott Griffi th
23Summer 2012 Chicago Booth Magazine
the short term, so we’re trying to make sure they understand
our strategy of investing for long-term category leadership. You
have to get consistent messages across in one or two sentences
through the media; I’m learning the art of the sound bite.
Kumar: Car sharing makes a lot of sense, especially for city
dwellers and college students. But the model is still young.
What will it take for sharing to become mainstream, and
when do you expect that to happen?
Griffi th: With more than 700,000 members—including
governments and businesses—sharing nearly 10,000 cars
in the US, Canada, the UK, and Spain, I’d say that Zipcar is
moving into the mainstream. With 10 million people who can
walk to a Zipcar in less than 10 minutes, we have substantial
room for growth in our existing markets, but compared to
when I took the wheel in 2003, this industry is no longer
considered a niche play.
Kumar: How do you stay in touch with your customers?
Griffi th: I think both members and employees believe that we
are all part of something much bigger than ourselves. So we
engage with our customers, whom we call Zipsters, virtually
and physically. As a global company, we strive to maintain a
local appeal, with storefront offi ces in our major cities where
Zipsters can meet employees for business and social purposes.
For instance, our San Francisco offi ce has frequent events
where members can play Xbox, foosball, and other games with
employees at the offi ce. We also have an active social media
program, with Twitter, which has more than 30,000 followers,
and Facebook, which has more than 100,000 likes.
We’re big believers in the Net Promoter Score, in which
customers rate their experience on a scale of 1 to 10, and
we use this feedback loop extensively to track and measure
customer satisfaction and loyalty. If there are detractors, we
call them to fi nd out what happened and what we can do
better. Sometimes I call them personally.
Kumar: What are the challenges of your business model that
still must be overcome? In particular, how do you plan to
improve profi tability?
Griffi th: There have been a lot of questions about the
profi tability of our model. Zipcar previously has reported that
it expects to be profi table on a GAAP basis for 2012. In our
established markets, our fi rst four cities of Boston, New York,
Washington DC, and San Francisco, Zipcar achieved 22-percent
growth in 2011 while producing earnings before tax of
23 percent of revenue. We have a long-term business model
that gets us to a very exciting corporate margin structure as we
scale the global operation.
We learned early on that the model could be profi table. In July
2004, a young controller came into my offi ce with results from
Boston, New York, and Washington DC. They were all bottom
line positive. That was a game-changing moment, when we
learned we could make money in individual cities. That’s when I
knew we could attract venture capital investors.
Kumar: Some worry that deep-pocketed competitors will come
along and dominate the market. How do you defend against that?
Griffi th: We think that larger companies getting into the
space validates what we’ve known for years: that car sharing
is a multibillion dollar opportunity. But car sharing is
2011 revenue: $242 million
Membership: 700,000
Fleet size: 9,000 vehicles
Metro areas: 18
College campuses: 250
$
Zipcar at a glance
Chicago Booth Magazine Summer 201224
Feature Critical Dialogues
2000Entrepreneurs Antje Danielson
and Robin Chase start Zipcar.
2003Scott Griffi th replaces
Robin Chase as CEO.
2004Company expands fl eet;
core cities of Boston,
New York, and Washington
DC turn a profi t.
2005Zipcar raises $10 million
in its fi rst venture capital
round from investor group
led by Benchmark Capital.
fundamentally different from car ownership and car rental, in
much the same way that streaming video on a smartphone is
fundamentally different from renting DVDs at a store. Zipcar
pioneered the category in the US and we continue to lead it.
With our fi rst-to-scale advantage, our unparalleled knowledge
base, a brand that has become synonymous with the category,
and a fantastic team, we’re in a great position.
Kumar: You have a relatively new partnership with Ford
Motor Co. Can you share any lessons of how a young,
small company can develop strategic relationships with an
establishment icon?
Griffi th: We share a vision of the future of mobility. Bill Ford
himself said a few years ago that he believes the future of
transportation would be a mix of privately owned cars, public
transit, and Zipcar. In this venture, we both brought something
to the table. Ford brought some great vehicles and a willingness
to help accelerate adoption of car sharing on campuses, and
we brought a powerful brand among millennials and urban
dwellers, as well as our decade of experience in car sharing. I
don’t think we would have been able to do this deal fi ve years
ago given our size and reach and the overall state of the industry.
Timing plays a big role when smaller companies want to do
deals with large global players. They’re looking for reach and we
had to achieve some scale before we could offer that to a partner.
Kumar: What are some of the lessons from your Booth years
that still resonate?
Griffi th: You have to do the math and get the business model
right. And one way to do that is to follow the Booth approach,
using data to drive decision making. This is an enduring lesson.
And Zipcar certainly is a treasure trove of data. How many cars
do you need in a city to make money? In the beginning, the staff
didn’t know. How many people are needed to run the business?
What is the cost to acquire a new member?
Professor Harry Davis was inspiring to me, given the impact of
his insights on the critical importance of product development
and on how customer research and data can drive great
products. Of course, he built on that platform with his
research on the importance of leadership development—how
great leaders lead great companies and develop great cultures.
Kumar: How do you recruit and retain top talent?
Griffi th: Zipcar is an innovative, disruptive technology
company, and, as such, we look to hire innovators and
leaders capable of thinking about the traditional issues of car
ownership—congestion and sustainability—in nontraditional
and innovative ways.
I think the biggest reason people come to and stay at Zipcar
is because they share our vision and are motivated by our
mission. They want to be a part of something that is larger
than themselves. People come to work at Zipcar because they
feel passionately about our values, are proud of the brand, and
want to see Zipcar succeed. Employees know that they can
have an impact, and that is meaningful. Of course, rewards
do matter—pay and benefi ts, stock options, and long-term
The road to an IPO
25Summer 2012 Chicago Booth Magazine
2007Zipcar acquires Seattle-based
rival Flexcar.
2008Company announces member-
ship has doubled in past year
to 225,000.
2010Company fi les with SEC for
initial public offering.
2011Zipcar acquires London-based
Streetcar; raises $174 million
in an IPO and begins NASDAQ
trading on April 14.
incentives are important factors. But if they are the primary
motivators, it’s a red fl ag for me.
Kumar: What entrepreneurs or business leaders do you most
admire and why?
Griffi th: We live in a world where genuine leadership and high
integrity are the hallmarks of great CEOs. CEOs with these
qualities are ones that I tend to admire. Jeff Bezos, with his
long run revolutionizing retail, online commerce, and brand
building, is inspirational. I think Ford is one of the greatest
turnarounds and one of the most interesting business success
stories of the past decade. I admire Bill Ford’s and Alan
Mulally’s vision, guts, leadership, and business acumen.
Kumar: What do you read for business—websites and print
publications, including business books? What do you read
to unwind?
Griffi th: I am constantly reading periodicals such as Fortune,
Bloomberg Businessweek, the Wall Street Journal, Time, and
Wired, probably to a fault. My team will tell you their inboxes
are full of links to articles
I fi nd interesting. If I
read business books,
they tend to be on or
about great leaders. I
thought Walter Isaacson’s
biography of Steve Jobs
was interesting. Other
than that, I’m reading
a lot about big data. I really liked Thinking Fast and Slow by
Daniel Kahneman. As for unwinding, believe it or not, I enjoy
reading about vintage cars and browsing them on eBay. If you
grew up in the late 1970s
in Pittsburgh—or maybe
anywhere in the US—you
know what I’m talking about!
Kumar: What keeps you up
late at night?
Griffi th: I think the biggest
thing for me right now is how to take what has made us successful
and extend it as the company grows. The culture we developed
during the past decade as well as our relentless focus on the
member experience has made us successful. We’ve got to fi nd a
way to keep this intact as we expand our global footprint. So, how
do we foster and keep the company culture across a broader and
broader set of operations and geographies; but also, how do we
continue to fi nd and recruit new team members globally that can
help us execute?
Looking back over the past nine years, we’ve seen Zipcar grow
something like 7,000 percent. I know that I can’t keep up with
this if I’m only growing at 15 percent per year. I know I have
to up my game through developing self-awareness and self-
innovation. I fi nd that the wee small hours of the morning are
a good time to take stock of myself, my work, and some of the
things I need to do to be a better leader. Self-innovation is the
most important innovation of all. ■
Chicago Booth Magazine Summer 201226
Feature 60th Annual Management Conference
27Summer 2012 Chicago Booth Magazine
THE ELUSIVE COURSE TO ALTERNATIVE FUELSBy Rick Popely | Photos by Matthew Gilson
US motorists won’t be abandoning the gas station for battery chargers
anytime soon, industry experts agreed in a keynote panel that considered
the future of transportation.
Internal combustion engines and petroleum-
based fuels will dominate transportation for
decades to come for a compelling reason:
the gas tank on a Toyota Prius weighs about
40 pounds, takes fi ve minutes to fi ll, holds
enough energy to travel 400 miles, and costs
$400 to manufacture. The battery to power
an electric car, on the other hand, weighs
more than 800 pounds, requires several
hours to recharge, travels 100 miles, and
costs 25 times more to make.
Chevron Corp.’s Michael Wirth (left) said that
it will take decades to reduce dependence
on conventional fossil fuels, just as today’s
energy market took a century to evolve and
trillions of dollars of investment.
Chicago Booth Magazine Summer 201228
deliver more effi ciency than any
other alternative. The energy density,
portability, and shelf life of a gallon
of gasoline “beats everything else
by a long way,” Wirth explained.
When it comes to fueling everyday
transportation, it is a matter of
thermodynamics and physics.
Vehicles have to provide utility
and convenience for the owner—and
be affordable—he added, and fi lling
passenger or cargo space with a battery
or a fuel tank for hydrogen or natural
gas runs counter to that philosophy.
“The reality is, most people buy a
vehicle for utilitarian reasons, and if
they can’t get the stroller in the trunk,
that car’s not very useful,” Wirth said.
“I think the real challenge is recognizing
that these technologies ultimately have
to serve the customer.”
Though neither panelist saw a
revolution in transportation technology
on the horizon, they agreed that cost-
competitive alternative vehicles and
fuels will emerge over time. In the
meantime, they said, government’s role
should be to promote research that will
group for Toyota Motor Sales, USA, Inc.,
in Torrance, California.
Driverless cars aside, Reinert said
he does not see customer demand for
electric cars outside of urban areas.
“We’re going to be using oil and gas
for quite a while—decades out. I know a
lot of people thought that batteries were
going to work, but if you try to make a
business case for a pure, battery-electric
car, it’s really, really tough,” Reinert said.
To underscore the diffi culty of
bringing electric vehicles (EVs) to
market, Reinert discussed plans for
Toyota’s RAV4, a battery-powered
SUV that the automaker will sell
initially in California and then offer
in other states if demand warrants.
The base price of the RAV4 EV is
$49,800—twice that of the Prius—
and Toyota has set a sales goal of just
2,600 units over three years. Toyota
sold nearly 61,000 gas-powered Prius
hybrids in the United States in the
fi rst three months of 2012 alone.
Wirth said that petroleum fuels
will dominate transportation for
the foreseeable future, because they
Feature 60th Annual Management Conference
This was the assessment of Toyota
engineer Bill Reinert during the 60th
Annual Management Conference
keynote panel, a wide-ranging discussion
that also covered the prospect of reducing
greenhouse gas emissions, the infl uence
of world economic growth on energy
consumption, and the government’s
role in energy policy.
This year, 600 alumni, students,
and business leaders gathered at the
Hyatt Regency Chicago for the keynote
presentation on May 11, while hundreds
more viewers from 39 countries watched
a live simulcast of the event. Breakout
sessions at Gleacher Center continued
the day’s dialogue on business topics,
which included an evaluation of US tax
policy (see page 30) and an examination
of the use of data in understanding
consumer behavior (see page 33).
Moderator Robert Topel, Isidore
Brown and Gladys J. Brown
Distinguished Service Professor in
Urban and Labor Economics, prodded
panelists Reinert—a member of the
team that developed the Prius—and
Michael Wirth, executive vice president
of downstream and chemicals for San
Ramon, California–based Chevron
Corp., to explore the prospects for
Jetson-style fl ying cars and vehicles that
drive themselves. Reinert and Wirth
served with Topel on the National
Petroleum Council, a task force that
studied the future of transportation and
fuels in the United States.
According to Reinert, earthbound
vehicles are here to stay.
“As long as there’s a three-ton pickup
with a drunk behind the wheel, there’s
going to be liability issues with an
automated car,” said Reinert, national
manager of the advanced technology
29Summer 2012 Chicago Booth Magazine
lead to innovation, rather than to dictate
what people should drive or use for fuel.
In California, for instance, a state
mandate for zero-emission vehicles has
pushed automakers to roll out several
“It’s extraordinarily frustrating to work as
collaborators with US science right now,
because of the cycles of funding.”
—Bill Reinert
Left: more than 600 guests gathered for the keynote session at the Hyatt Regency Chicago;
Toyota’s Bill Reinert (top) said research on alternative fuels depends on uncertain funding
from Washington; moderator Robert Topel (above) posed the question whether Jetson-style
fl ying cars are in the future.
EV models. As many as 10 other states
have similar emissions regulations and
could adopt the same rules. In addition
to designing EVs, manufacturers plan
to meet these mandates with plug-in
hybrids that run on battery power
for short distances—so-called
partial zero-emission vehicles—
and with hydrogen-powered fuel-
cell vehicles.
Instead of setting the industry
standard, government should
identify targets and give industry
the latitude to meet them, the
panelists said. “Picking winners in
technology, even if government were
completely uninfl uenced by interest
groups, is damn hard,” Wirth said.
Rather, government should provide
ample and sustained funding
through its national laboratories
to support basic research into
technologies that will help reduce
fuel consumption and greenhouse
gas emissions. These initiatives
include developing alternative fuels,
such as hydrogen; refi ning fuel
manufacturing and distribution
systems; and fi nding weight-saving
materials for vehicles.(continued on page 31)
Chicago Booth Magazine Summer 201230
Feature 60th Annual Management Conference
The corporate tax system in the United States is such a disaster
that tax attorneys routinely tell student entrepreneurs to
start their businesses offshore. As a result, multinationals are
investing outside the country’s borders, which suppresses
economic growth at home.
“Do not develop your international capital in the US. Get
free of these onerous tax policies,” said Merle Erickson, professor
of accounting and moderator of the breakout session panel on
corporate tax policy. “This is the advice we’re giving to our best
business developers in this country.”
With that as prologue, three corporate tax experts delved
into the technical problems that the US tax code presents to
large enterprises.
“We would take the tax system of any other country over the
tax system we have,” said David Lewis, vice president for global
taxes at Eli Lilly & Co. in Indianapolis. The nominal corporate
tax rate of 35 percent is too high to be competitive with other
advanced countries, he asserted. In addition, US tax law is too
convoluted. It allows double taxation on foreign income, and it
discourages spending on research and development, a vital issue
for the pharmaceutical industry, he said.
The present tax system is the product of a compromise made
between the Kennedy administration and Congress in 1962, said
Rod Donnelly, a partner with Morgan Lewis, LLC, in Palo Alto,
California. It was suboptimal from the start, he said, and has
only gotten worse. US trading partners around the world have
reduced and reformed their corporate income tax structures;
Canada, for instance, makes it a deliberate policy to undercut
US corporate tax rates, Donnelly said.
In 1981, the statutory US tax rate was roughly even with that
of the rest of the countries in the Organisation for Economic
Cooperation and Development (OECD). “Over time, we’ve
become the last high-rate jurisdiction out there,” said Jeff
Maydew, a partner at Baker & McKenzie, LLC in Chicago. The
huge tax burden inhibits multinationals from repatriating
foreign-earned income. To avoid the taxes, fi rms have preferred
to let $1.2 trillion in offshore earnings pile up abroad, money
that won’t be invested in the domestic economy.
Lewis noted that the United States lags in subsidizing
research and development through tax incentives, registering at
24 among 38 of its trading partners. The rest of the world seems
to understand the importance of such government support.
Other countries set lower rates and “allow capital to be deployed
around the world as a business sees fi t.” By doing so, “they
incentivize innovation,” Lewis said.
The United States instead has pursued inconsistent and
dilatory policies, the panelists agreed, and they acknowledged
that it is diffi cult to operate in such a climate of uncertainty.
The tax credit for R&D has expired 14 times and been extended
13 times during its 30-year history, Donnelly noted. President
Obama has proposed expanding the benefi ts of the credit and
making it permanent. Lewis noted that the tax credit funds jobs,
but Lilly is under competitive pressure to locate R&D functions
in countries where the payoff is higher.
The panelists agreed that the country’s need for increased
revenue can be met only if the tax code becomes fairer, more
balanced, easier to administer, and less punitive toward
crossborder economic activity.
But they were not optimistic that tax reform will happen
quickly—or rationally. In Washington, the conversation focuses
on revenue neutrality, said Lewis, who is part of a working
group that talks regularly to members of Congress.
Making matters worse are the enormous costs of compliance
with the technical peculiarities of US law. Many international
fi rms evince “a visceral dislike to touch the US tax system,”
Maydew noted. Large multinationals have as many as 1,000
in-house tax experts, he added, and companies’ efforts to keep
those positions staffed are “sucking in some of the most talented
students” from the United States and abroad. “Should the best
and brightest be coming to the US to help us solve this self-
infl icted wound?”
Unfortunately, the transformational leadership needed to
pilot this issue through the political process is nowhere to be
seen, Lewis observed. “Instead of rising to the occasion and
having a thorough public debate around how we should change
our policies, we’re erecting walls and barriers, trying to hang on
to what we have, based on laws that were passed in the 1960s.”
—Duncan Moore
TAX CODE NEEDS AN OVERHAULExperts agree high corporate rates discourage investment
31Summer 2012 Chicago Booth Magazine
Topel asked about the likelihood
of meeting an Obama administration
goal of cutting in half greenhouse gas
emissions from transportation by 2050.
Both panelists agreed that the target
is unrealistic.
Wirth predicted that global energy
demand will grow by 40 percent over
the next 20 years, a boom that will
increase worldwide greenhouse gas
emissions. Today, there are about 830
million vehicles in use globally, and the
International Energy Agency predicts
that the total will triple by 2050 as
personal vehicle ownership soars in
countries such as China and India.
“There are about two billion people
on the planet that are the emerging
middle class in some of the developing
economies, and all they want is the
lifestyle that you and I take for granted,”
Wirth said. The increase in demand
from developing nations will more
than offset gains made by reducing
greenhouse gases in the United States
and other developed nations.
The problem, under the current
system, is that funding for such
research can be turned on and off
annually, based on politics and on
who is in charge in Washington.
“It’s extraordinarily frustrating to
work as collaborators with US science
right now, because of the cycles of
funding,” Reinert said, pointing to
annual budget battles in Congress. “If
we could fi x that and lay out a fi ve-year
plan of ‘this is what you’re going to get,’
we could do so much better.”
Left: experts at the breakout session on
corporate tax policy agreed that the US tax
code must become fairer, more balanced,
and easier to administer. The three panelists
(from left) were David Lewis, Rod Donnelly,
and Jeff Maydew.
The reality is, most
people buy a vehicle
for utilitarian reasons,
and if they can’t get
the stroller in the
trunk, that car’s not
very useful.”
—Michael Wirth
(continued from page 29)
“
Chicago Booth Magazine Summer 201232
a demonstration fl eet of about 100
vehicles. Reinert estimated he gets the
equivalent of 60 miles per gallon from
gasoline and predicted that hydrogen
would cost about the same as paying
$5 to $6 per gallon of gas. Although
the cost of fuel-cell cars and the lack
of fueling stations are obstacles, he
predicted hydrogen cars could start to
make an inroad by 2020.
Reducing dependence on petroleum-
based fuels will be challenging, simply
because the energy market is enormous:
the world uses the equivalent of 300
million barrels of oil daily to satisfy its
energy needs. It will take decades to
develop viable alternatives.
“The system that we have today took
over a century to evolve and trillions
of dollars of investment,” Wirth said.
“We will transition off of hydrocarbons.
It’s inevitable. The question is when
and how. It will happen gradually,
and it will happen through sustained
investment in research, development,
and technology.” ■
To watch video of the
keynote panel and breakout
sessions, go to ChicagoBooth.edu/
mc12coverage
wind, biofuels, and geothermal, which
represent 1 percent of the energy supply
today—are expected to grow to about
3 percent in 20 years.
As energy companies continue to
search for new energy sources, the auto
industry will focus on making internal
combustion engines more effi cient,
Reinert said.
The average car today is about 17
percent effi cient, meaning that is how
much of the energy from the gas tank
gets to the wheels that drive the car.
A Prius hybrid is about 34 percent
effi cient. Reinert predicted that a
decade from now, engines will be two
to two-and-a-half times more effi cient
than they are currently. In addition,
weight reduction in vehicles, through
materials and design changes, will
improve fuel economy.
Fuel-cell vehicles, which convert
hydrogen and air to electricity, and
which emit little or no harmful
emissions, also show promise, Reinert
said. Toyota plans to offer a hydrogen-
powered fuel-cell vehicle globally in
2015, and other manufacturers have
similar plans.
Reinert currently drives a Toyota
Highlander SUV that was converted
to hydrogen fuel-cell power from a
gasoline engine. The car is part of
To prepare for a future with
escalating worldwide energy demand,
the United States requires a reliable,
affordable, and diverse energy supply.
Although there are dire predictions
that the world soon will run out of
oil, the development over the past 20
years of hydraulic fracturing, which
makes it possible to drill deeper and
horizontally, as well as vertically, has
led to the discovery of oil reserves
that previously were unreachable,
Wirth said. That has been “the single
biggest technology breakthrough”
for the energy industry, and has
increased the world’s recoverable oil
reserves by 30 percent, enough to last
70 to 80 years, while simultaneously
boosting oil and natural gas
production in the United States.
“We are running out of oil, but peak
oil is a long way out from a technical
and economic standpoint,” he said.
Though neither panelist identifi ed
an energy source that is likely to
displace oil as the dominant player
in transportation, both said that
hydrogen, along with compressed and
liquefi ed natural gas, could become
more prominent sources of fuel. Wirth
expressed doubt that renewable energy
would be a major part of the mix
any time soon. Renewables—solar,
Feature 60th Annual Management Conference
33Summer 2012 Chicago Booth Magazine
Retailers and consumer goods marketers are blessed with
buckets of data. They can discern what consumers are buying
based on credit card usage, customer loyalty programs, and
internet purchases.
But that data does not explain why consumers act the way
they do. Some grocery shoppers shun prepared meals because
they prefer to cook with fresh meats and vegetables. Others prefer
store labels because they are less expensive than national brands.
Still others hew to brands that tout healthy ingredients.
Lessons that can be learned to better understand consumer
behavior were the focus of the breakout session on the use
of syndicated consumer packaged goods and retail data.
Moderator Erik Hurst, V. Duane Rath Professor of Economics
and John E. Jeuck Faculty Fellow, asked the panelists to
provide insight into how data is accumulated by marketers and
how it is used to understand the way shoppers act.
The true test, according to the panel of Booth alumni with
expertise in retail and consumer marketing, is to analyze the data
and draw the right conclusions. “There is no shortage of data,”
said James Dodge, ’93, vice president and managing director at
New York consumer research giant The Nielsen Company. “The
challenge is clarity on the issues and outcomes.”
Dodge and his fellow panelists agreed that while retailers
and consumer packaged goods manufacturers have
become adept at collecting data on who is buying what, the
information does not provide an immediate understanding of
why a consumer makes a particular purchase.
“There is a difference between behavior and insight. The data
is very important to identify the behavior, but I would encourage
marketers to keep trying to peel the onion back and get to the
deeper motivation,” said Howard Brandeisky, ’85, vice president of
global marketing and innovation for John B. Sanfi lippo & Sons,
Inc., a nut and snack producer based in Elgin, Illinois.
To gain deeper insight into consumers’ buying decisions,
Brandeisky said he has accompanied shoppers to the grocery
store to conduct “shop-along ethnographies.”
“You can see in real time how consumers are reacting to
stimulus in the store. You can see what’s on their list, what’s
not on the list. What they buy on impulse. There’s nothing
quite like asking them as it happens,” Brandeisky said.
The lesson here is that while quantitative data is a valuable
tool, it is still diffi cult to predict shopper behavior.
“Consumers don’t behave rationally in any type of
retail setting. They are irrational by defi nition,” said Robert
Mariano, ’87 (XP-56), chairman and CEO of Roundy’s, Inc.,
the Milwaukee-based parent company of the Roundy’s and
Mariano’s grocery chains.
“In the old days, when I was a storekeeper, I knew every one of
my customers,” Mariano continued. “Today, on a relative basis,
we know very little. That’s why we use quantitative information—
to build a relationship so that we can be relevant.”
L. Dick Buell, ’78, former chairman and CEO of Catalina
Marketing, Inc., based in St. Petersburg, Florida, said that
research conducted by his fi rm on consumer loyalty uncovered
a troubling fact: less than half of consumers who are considered
to be highly loyal to a particular brand maintain that loyalty
a year later.
“Loyalty is a defection dilemma. Loyalty sounds like
the glass is half full. In truth, it’s a glass half empty,” Buell
said. “Loyalty is something you think you can build and
accumulate, but it can be fl eeting.”
The key to knowing the customer, according to the
panelists, is gathering both quantitative and qualitative
data, and then fi nding bright minds to draw the correct
interpretation based on both sets of information.
“The challenge is to turn all that data into insights and
action,” Brandeisky said. “The data is almost a commodity
there’s so much of it. The real value-add is turning that into
something insightful, something useable.”
Hurst concluded that the information was valuable for both
the professionals and the academics in the audience. “I think
the panelists really provided a lot of insights into how data
is accumulated and used to understand the way consumers
act,” he said. “I think this is the direction we want to move
as a school going forward, where we take this very detailed
quantitative analysis and use it for a variety of academic
pursuits.”—John Slania
UNDERSTANDING HOW SHOPPERS BEHAVEData doesn’t explain what drives purchasing decisions, panelists say
Chicago Booth Magazine Summer 201234
SAVETHEDATE
Alumni CelebrationOctober 5Millennium Park
Reconnect with fellow
graduates and honor
this year’s Distinguished
Alumni Award winners.
Get ready for an
unforgettable night at
Alumni Celebration on
October 5.
Visit ChicagoBooth.edu/ac12
for more information.
35Summer 2012 Chicago Booth Magazine
as a 3D animation firm and a farm management company,
both based in Uruguay.
One of the club’s most active and successful programs
is the Booth Entrepreneurs Advisory Group, which, for 10
years, has invited local area start-up founders and angel
investors to speak to Booth alumni involved in entrepre-
neurial ventures. They discuss business problems and receive
valuable advice that they otherwise would obtain only for a
hefty consulting fee, Stopak said.
In addition to clubs that are geographically based, there also
are special interest groups such as the Chicago Booth Black
Alumni Association (CBAA), the Real Estate Alumni Group
(REAG), and the Chicago Women in Business Alumnae
Network (CWIBAN) that are broadening Booth’s influence.
CWIBAN supports admission of women
to Booth and connects women gradu-
ates around to booth the world, said Zina
Markevicius, ’02, a founder of CWIBAN
who runs her family’s real estate business
in Los Angeles. Women represent more
than 20 percent of Booth alumni, a net-
work that is expected to expand as their numbers grow in
MBA classes. The group hosts discussions with successful
women professionals on career and life strategies, facilitates
job referrals, and assists alumnae moving to a new city.
CWIBAN’s capstone event is Women’s Week, which
includes events for prospective and admitted students held
in 30 cities during the first week in May. These range from
intimate to large events, and they can have a big payoff. “We
want to bring the best students in the world to Chicago,”
Markevicius said. “I feel the value of my degree, and I want
to give back.”—Judith Crown
For more information about Chicago Booth clubs,
contact [email protected]
When Erik Wallsten, ’04, returned to his native Mexico after
earning his MBA, five or six students a year from Mexico
were attending Booth. Now, eight years after Wallsten first
became active in the Alumni Club of Mexico and expanded
its programs, three times as many students a year are head-
ing to the school.
One of the club’s missions is to get the Booth name out to
top prospects who might not be familiar with its celebrated
faculty and global business connections. Consequently, the club
sponsors events ranging from a private tour of the Mexican
president’s residence to conventional cocktail parties. “We
publicize headline events so as to promote the Booth brand
name and attract more applicants,” said Wallsten, the outgoing
president who manages a private equity firm that invests in
socially beneficial projects.
The events impress prospective students who “see the
strength of the local network as compared to other schools
whose alumni get together only sporadically,” Wallsten
said. He has coffee with about 15 prospective students each
year; he and other alumni also contact admitted students.
Recruiting is important because, “I am convinced that Booth
has the top MBA program of any school worldwide and that
the best way of attracting top students is by interacting with
them directly,” he said.
The Alumni Club of Mexico is among 70 alumni clubs
worldwide that keep the Booth name front and center in
US cities and around the world. “A number of these clubs
are doing excellent community building and opening strong
networking opportunities,” said Rachel Nash, senior associ-
ate director, Alumni Affairs and Development. The clubs are
headed by professionals who juggle jobs and families but
find it rewarding to stay engaged with Booth.
In North American cities with large con-
centrations of Booth alumni, the clubs
have the opportunity to bring Booth’s
intellectual capital to alumni with particu-
lar interests and expertise. For example,
the Alumni Club of Washington DC
sponsors a group for alumni interested
in China, and another for those involved in energy issues
as part of the Booth Energy Network, noted Aaron Stopak,
’03 (AXP-2), the president of the club who is an advisor to
a hedge fund that invests in Asian equity markets, as well
Alumni News
Alumni Organizations Extend Booth’s Reach
Cou
rtes
y of
Zin
a M
arke
vici
us
Zina Markevicius
Cou
rtes
y of
Aar
on S
topa
k
Aaron Stopak
Chicago Booth Magazine Summer 201236
Alumni News
Changes inClub LeadershipRussia
President
Evgeny Tonkacheev, ’05 (EXP-10)
Outgoing president
Alina Gutkina, ’98 (EXP-3)
San Francisco
President
Patrick Zanoni, ’00
Outgoing president
Sandeep Ganesh, ’07
Spain
President
Brenda McCabe, ’02 (EXP-7)
Outgoing president
Francisco Trullenque, ’02 (EXP-7)
United Arab Emirates
President
Mark Corusy, ’94
Outgoing president
Fakhr-Eddine (Faysal) Mokadem, ’05
United Kingdom
President
Eric Martin-Vallas, ’08 (EXP-13)
Outgoing president
Kaustubh Wagle, ’10
Class Gift Campaign Achieves 100 Percent Participation
Alumni Angels Recognized
For the second year in a row, students from Booth’s Executive MBA Program united
to achieve 100 percent participation in the annual Class Gift campaign. Student
donations across the Chicago, London, and Singapore campuses totaled nearly
$130,000—about $32,000 more than the previous year—in an impressive display of
support for the student-led initiative.
Alumni and friends contributed an additional $55,000 to the campaign, and
the school offered matching incentives that brought the combined total to nearly
$310,000. The Class Gift will support two funds: the newly created Executive MBA
Program Office Fund, which will sponsor programs and initiatives that directly
benefit Executive MBA Program students, and the Global Visibility Fund, which
promotes Chicago Booth’s international presence.
“Our class was so intense, so adamant about maximizing its participation in
everything the Booth community had to offer. Our achievement with the Class Gift
was in part a recognition of how rich that community is,” said Leo Alves, ’12 (XP-81).
“We wanted to make a statement. To send a message about what we could accomplish
as a class, about what we mean to each other and what this institution means to us.”
—Chelsea Vail
The fifth annual Alumni Angel Awards (A3) honored four Chicago Booth alumni for
their exceptional engagement with students. Class Agents announced the winners dur-
ing Worldwide Booth Night on April 12. The event, which was hosted in 90 cities this
year, is an opportunity for alumni, as well as current and recently admitted students, to
meet in cities around the world and celebrate their connection to Booth.
This year, students honored Hoke Horne, ’97, vice president of pricing at Juniper
Networks in Sunnyvale, California; Roberto Ippolito, ’03, head of corporate finance
at General Electric Capital Italy; Kenneth Kelly, ’98, vice president of sales and mar-
keting at DaVita, a provider of kidney care based in Denver; and Karl Muth, ’10, a
consulting economist.
Students from all four MBA programs submitted nominations, sending stories
about contributions alumni made to their professional and personal development. A
list of finalists was selected and presented to the entire student body for a .
Horne was honored for his commitment to recruiting and mentoring Booth stu-
dents at Juniper Networks, and Ippolito was recognized for his enthusiasm in devel-
oping the Italian community at Booth. Kelly was honored for helping the student-run
Operations Strategy Group expand and find sponsorship, and Muth was recognized
for providing guidance to students interested in emerging markets.—Chelsea Vail
—Chelsea Vail
37Summer 2012 Chicago Booth Magazine
Chris Turillo, ’10, already had a plan when he entered Booth. He knew he wanted
to work in India to help increase education and employment opportunities in the
rapidly growing nation.
Earning his MBA, as well as a master’s
degree from the Johns Hopkins School
of Advanced International Studies, gave
Turillo the skills he needed to launch
the nonprofit he hopes will help address
India’s systemic unemployment. In 2011,
he and a partner opened Medha, which
aims to improve employment prospects for
students from low-income families, often
from rural communities, who lack the
resources to obtain and succeed in a job.
The nonprofit provides college and high school students with training, leadership
development, and career services in the northern Indian city of Lucknow.
“Booth was a big part of building the capabilities and the confidence required to
actually take the first steps to start Medha,” Turillo said.
He also said that Booth methodology influenced the structure of the program.
“We are focused on ensuring our program is taught in an experiential way,
creating real-life and simulation activities as a way of learning instead of the
traditional rote-based methodologies.”
For example, to learn basic supply and demand, students track the prices of
vegetables at a market, enter the data into an Excel spreadsheet, and present their
findings and conclusions. This simple exercise enables students to learn economic
principles, MS Office, the English language, and presentation skills.
A native of Boston, Turillo spent time studying abroad in India as an undergraduate
student at the University of Puget Sound. After graduation, Turillo spent several years
researching ways to return to the country. Finally, he landed a 10-month fellowship at
an Indian microfinance organization, which kept him on for another year as codirec-
tor of business development with now-partner at Medha, Byomkesh Mishra.
When he and his partner began researching unemployment and job-training in
India, they uncovered a formidable problem. “Fifty-nine percent of youth in the
labor market suffer some degree of unemployability, while 52 percent of employed
youth lack skills,” he said. “These low skill levels result in higher unemployment and
underemployment, and increased inequality.”
Luis Miranda, ’89, CEO of a Mumbai private equity firm who sits on Medha’s
board and is a member of Booth’s Global Advisory Board, agreed. “When Chris told
me about his plans to set up Medha, I immediately offered to be an advisor since the
need for skills training is so great in India and he is so passionate about it.”
Medha aims to improve employability levels for more than 20,000 college and high
school students across four Indian states by 2017.
“I am motivated by the opportunity to have a positive influence on young people’s
lives,” Turillo said.—Kate Ancell
Alumni News
Young Alumnus Launches Skills Training Initiative in India
Global Advisory Board Welcomes New MembersThe Global Advisory Board, comprised
of more than 85 business leaders and
entrepreneurs, including Booth alumni
and friends, advises the dean on strategic
choices and works to enhance the school’s
reputation. New members for the 2012
fi scal year are:
Americas Cabinet
Pedro Faria, ’02
Managing Partner, Tarpon Investments
Jorge Saieh, AM ’97, MBA ’98
Chairman, CorpBanca
Manuel Sanchez, AM ’83, PhD ’85
Deputy Governor, Bank of Mexico
Asia Cabinet
Thomas Chan, ’92
Managing Director, Golden Summit Capital
Clifford Chiu, ’82
Partner, KKR Asia Limited
James Quella, ’81
Senior Operating Partner, Private Equity,
The Blackstone Group
Steve Sun, ’97
Co-chairman,
Concord Medical Services Holdings
Dennis Zhu, ’93
Former Managing Director,
Oaktree Capital
Europe, Middle East, and Africa
(EMEA) Cabinet
Alexey Ananiev, ’05 (EXP-10)
Co-owner, Chairman, and
Managing Director, Technoserv A/S
Rolf Friedli, ’96 (EXP-1)
Partner and Chairman,
CapVis Equity Partners Ltd.
Richard Seewald, ’05 (EXP-10)
Partner, ALPHA Associates
Based in Lucknow, Medha's job training program
focuses on experiential learning.
Cou
rtes
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med
ha.o
rg
Chicago Booth Magazine Summer 201238
Share it with us.Help the Booth community and increase your company’s talent at the same time. By accessing
the most gifted business people around, you’ll do more than strengthen your network, you’ll
actually strengthen business itself. Together, we can make a difference.
Chicago Booth Magazine Summer 201238
Go to TheBoothEffect.com today.
Talk to Us:Connect to Booth and help
strengthen the school’s
relationship with your company.
Share a Lead:Have a job or know of a job
that Chicago Booth talent
could fill?
Access Resumes:Find students and alumni to fill
current opportunities.
39Summer 2012 Chicago Booth Magazine
Career News
Graduates Branch Out in Career Selections Booth graduates continue to diversify their career choices,
branching out into marketing, e-commerce, entrepreneurship,
and general management.
While the school remains a top destination for recruiters
from fields such as consulting and financial services, students
are weighing more options as they consider a job market
marked by Wall Street consolidation and growth in technol-
ogy and the internet.
“There is a growing interest among our students to
pursue new opportunities in the tech, e-commerce, and
internet industries, both at large companies and within
start-ups, said Nima Merchant, associate director, employer
relations for Career Services. “With the diversity of jobs
available, there really is something for everyone—and we’re
seeing a stronger, more vocal presence from alumni who
are successful in these fields.”
For example, more than 4 percent of the class of 2011
accepted jobs in the e-commerce and internet industries.
While that may seem like a small percentage, those fields
tapped a negligible number of recruits 10 years ago and only
accounted for eight hires as recently as 2007.
Marketing has risen from the sixth to third-most popular
function for graduating Booth students from 2001 to 2011.
General management went from ninth highest to fourth in
2011. The number of students joining start-ups or launching
their own firms has more than tripled over the past decade,
although that growth started off a small base.
Financial services and consulting contin-
ue to be top destinations, attracting more
than two-thirds of Full-Time graduates.
“Even during the recession, ‘bulge-bracket’
firms showed a real, demonstrated inter-
est in our students,” said Melanie Scarlata,
assistant director, employer relations for
Career Services.
But the explosion in technology and other fields are
presenting students with more options. Scarlata says Career
Services has been proactive in scoping out new markets and
opportunities, working in concert with Alumni Affairs and
Development and student groups, as well as the Kilts and
Polsky centers.
“Booth graduates are able to go into careers they feel pas-
sionately about,” Scarlata added. “The opportunities are very
real for them.”—Kate Ancell
For more employment information, go to ChicagoBooth.edu/employment
Melanie Scarlata
Fields of Their DreamsWhere Full-Time MBA Program graduates have headed over the past 10 years
76.8%75.2%
68.9%
2001 2007 2011
2.8%
5.4%
8.2%
2001 2007 2011
7.2%7.5%
10.8%
2001 2007 2011
4.2%
1.6%
0.6%
2001 2007 2011
3.2%
1.4%
0.7%
2001 2007 2011
Financial servicesand consulting Entrepreneurship
GeneralmanagementMarketing
E-commerceand internet
Not to scale
Chicago Booth Magazine Summer 201240
Career News
Booth Hosts First Start-Up Networking Night
H E A R D AT C H I C A G O B O O T H
You need to exist long enough for lightning to strike.Phil Nevels, ’10, advised students
on the early stages of business
development based on his experi-
ence launching Power2Switch,
an alternative energy provider that
started gaining traction as media
attention drove potential customers
to the company website. Nevels is
chief operating offi cer of the
Chicago-based start-up and was
among the entrepreneurs who
attended Booth’s fi rst Start-Up
Networking Night, a recruiting event
geared toward opportunities in
Chicago’s entrepreneurship scene.
A recruiter from tea shop operator Argo
Tea was on campus in April to meet
students, discuss its business model,
and recruit for a marketing internship.
The young Chicago-based company
was among more than 20 who attended
Start-Up Networking Night (SNN).
The recruiting event is part of Booth’s
effort to build relationships with young
companies and support the increasing
number of students pursuing entrepre-
neurship as a career. The joint effort of
Career Services and the Polsky Center
for Entrepreneurship drew 120 first-
and second-year students.
“We stress to stu-
dents that they have
to network to get
anywhere in the start-
up world,” said Nima
Merchant, associate
director, employer
relations for Career Services, and one of
the organizers.
The SNN followed the format of
Career Services’ Corporate Networking
Nights, industry- and function-specific
recruiting events that provide companies
an opportunity to connect with students
interested in particular fields.
“As an MBA student interested in
entrepreneurship, you don’t have the
traditional structure of recruiting,” said
second-year Full-Time MBA student
Kasra Moshkani, who works for his own
start-up, HireBrite, which helps entre-
preneurs to hire young business and
technical talent.
“The thing I was most excited about
tonight was the variety of companies
we’ve seen,” he added, noting the range
from established VC firms to companies
in their first few months of business.
Companies that attended included
winners and finalists from Booth’s New
Venture Challenge competition such
as Chicago-based firms BenchPrep, a
test-prep developer for mobile devices,
InContext Solutions, a market research
firm that specializes in 3D simula-
tions, and Power2Switch, an alternative
energy provider. Some, like Argo, which
operates cafés in Chicago, New York,
St. Louis, and Boston, were established
ventures looking to fill specific roles
based on company needs. Others, such
as KLUTCHclub, which delivers health
and wellness products to subscribers
monthly, were there to recruit more
broadly and raise awareness.
“I think events like this go a long way
in proving that Booth is investing in the
entrepreneurialism that’s going on,” said
Grant Zallis, vice president and head
of human resources and recruiting at
InContext Solutions.
Career Services would like to host
more networking functions for entre-
preneurship, Merchant said. She expects
many of the start-ups to return, espe-
cially as the number of events grows with
the school’s entrepreneurship program-
ming. And she hopes to attract more
start-ups from outside the Midwest.
“What could be better than the SNN to
connect students to start-ups interested
in Booth talent?” Merchant said.—Kate Fratar
Nima Merchant
41Summer 2012 Chicago Booth Magazine
To ensure that Booth stays top of mind for Asia companies
scouring the globe for premier talent, Career Services hosted
its first interactive workshop tailored specifically for Asia-
based recruiters.
The half-day Asia Recruiters Workshop in April attracted
several dozen multinationals and Asia-based companies. Career
Services staff provided an overview of the rigorous program
that sets Booth graduates apart and highlighted data on recent
student job offers and acceptances. They also demonstrated
how to use the school’s recruiting tools such as the Global
Talent Solutions (GTS) database and the online resume data-
base. The workshop was geared exclusively to employers.
“The firms I work with often seek general managers to
get new businesses up and running,” said Leslie Taylor, ’02,
associate director, employer relations, based in Hong Kong.
Students and alumni are increasingly interested in new
opportunities, including opening new geographic markets for
multinationals, she noted. “There seems to be an appetite to
seize these career opportunities.”
The event attracted a blue-chip roster of companies. Some,
such as General Electric Co., Goldman Sachs Group, Inc.,
Google, Inc., Microsoft Corp., Credit Suisse Group, and
McKinsey & Co., have established recruiting relationships with
Booth, mostly through their US headquarters. Others, such as
the World Bank, Intercontinental Hotels Group, Jones Lang
LaSalle, Inc., and software giant SAP AG, are building relation-
ships with the school.
“We foresee that Booth will be a good partner for us to
recruit for certain corporate positions and perhaps some senior
hotel operations positions,” said attendee Michael Blanding,
manager of school relations for InterContinental Hotels Group,
who recruits for Asian, Middle East, and African hotels from
Career News
Raising Visibility with Asia-Based Recruiters
Singapore. “We’re opening a new hotel every week across the
globe and need top talent to lead the business.”
Although some Asia-based recruiters may believe that
it is difficult to recruit from afar, several tools provided by
Booth make it easy. For example, employers can post jobs
online through the GTS database. The postings are free and
the best first step for connecting with Booth talent, Taylor
said. The resume database enables recruiters to search dif-
ferent pools of talent, such as alumni or students in the
full-time or part-time programs. Recruiters can search can-
didates using such criteria as language, years of experience,
and geographic preference.
Outside of traditional recruiting methods, companies use
video conferencing and Skype to present information sessions
or interview candidates. As another way to connect, some
Asian companies host events for Booth students who organize
visits to the region.
“It was extremely useful for the recruiters from our busi-
ness to understand how to search Booth’s databases and post
positions to give them access to talent pools,” said Kim Purnell,
SAP’s executive recruiting director for Asia Pacific and Japan.
Concluded Taylor, “One of my goals is to ensure we don’t
leave any stones unturned, that we don’t leave job opportuni-
ties on the table, whether entry-level for recent grads or senior-
level for our executive students and alumni.”—Judith Crown
Pau
l A
udia
Held at Booth’s Singapore campus, the half-day workshop introduced employers to
tools for recruiting Chicago graduates.
“It was extremely useful for the recruiters from
our business to understand how to search
Booth’s database and post positions to give
them access to talent pools.”
—Kim Purnell, SAPs executive recruiting director
for Asia Pacifi c and Japan
42 Chicago Booth Magazine Summer 2012
Alumni News
Reconnect with your class and relive your favorite MBA
memories at special reunion events on October 4–6.
YOU HAVE TO BE THERE.
2011, 2007, 2002, 1997, and 1992
2012
Visit ChicagoBooth.edu/reunion2012 for more information.
Chicago Booth Magazine Summer 201264
Back Story
“ We get analytical about what goes on when we play a round of golf. It’s all about probability and statistical distributions.”
Chad Syverson, professor of economics, is a frequent golfer and often plays with
University of Chicago economists Steven Levitt, John List, and Derek Neal. The team
usually plays in scramble tournaments, in which the best shot among the four
determines the starting point for each subsequent shot. Inconsistency becomes an
advantage as the golfers pick the best and discard the worst. “In a scramble, we don’t
need everyone to do something good, we just don’t want the same bad shot,” said
Syverson, who was photographed by Chris Strong at the Jackson Park Golf Course on
Chicago’s South Side. “It’s a portfolio problem.”—Judith Crown
Accessorize with Booth: It all started when David Booth, ’71, suggested that the school
should have a signature tie. The student-led Dean’s Marketing Advisory Committee
offered to help run a design contest, which concluded in May, with a $300 check and
bragging rights for the best overall design going to fi rst-year Full-Time student Joseph Ryu.
Meenakshi Dash, ’08, won $100 for the most original design and Mark Zmijewski,
Leon Carroll Marshall Professor of Accounting, won $100 for scoring the most “likes”
on Facebook. The fi ve-judge panel evaluated the designs for originality, suitability for a
business setting, and ease of manufacturing. To view all 60 design submissions, visit the
Booth Community Facebook page at Facebook.com/ChicagoBoothBusiness.
From left to right: David Booth, Meenakshi
Dash, Joseph Ryu, and dean Sunil Kumar.
Not pictured: Mark Zmijewski.
Chicago Booth Magazine…
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How Scott Griffith, ’90, CEO of Zipcar, drove car sharing to the mainstream
Opening New Routes
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The University of Chicago Booth School of Business Summer 2012
Critical DialoguesDean Sunil Kumar gets the inside track on Zipcar from CEO Scott Griffith, ’90 20
Temptation’s Siren SongResearch by Wilhelm Hofmann investigates desire, willpower, and self-control 10
Good Energy Experts discuss fueling the future at the 60th Annual Management Conference 26