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Michael G. Foster school of business

University of washington


LISTEN UP Foster’s Fritzky Chairs share their advice on leadership,

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Also :

Foster made, Page 12 Sharper Image, Page 16

Save the date Join us for

The 23rd Annual Business Leadership Celebration Thursday, October 23

Featured keynote speaker:

Robert Iger Chairman and CEO The Walt Disney Company

To be a sponsor or book a table, contact Sara Jack, director of corporate development at

Upcoming Foster Alumni Events, Near and Far: May 21: New York Dean’s Reception featuring Finance Professor Jennifer Koski

May 29: Seoul Alumni Reception with Professor Jennifer Koski

July 12: Denny Yard (Seattle campus) 6th Annual Foster Alumni Picnic

May 22: Washington, DC Dean’s Reception featuring Finance Professor Jennifer Koski

May 30: Tokyo Alumni Reception with Professor Jennifer Koski

July 12: Pyramid Alehouse (Seattle) UW Alumni Night at the Mariners, Foster Alumni Pregame Party

June 19: San Francisco Panel discussion with Fritzky Chair Neal Dempsey

For more information, visit


On the cover

8 Listen Up Foundational wisdom from the Foster School’s first ten years of Edward V. Fritzky Visiting Chairs in Leadership

12 Foster Made A growing number of Foster alumni are producing artisanal beers, wines and spirits of the highest order

16 Sharper Image William Sharpe’s seminal work at the Foster School in the 1960s forever clarified the relationship between risk and return in capital markets, and later earned him the Nobel Prize in Economics

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James Jiambalvo Associate Dean of Advancement


Steven Hatting Managing Director Marketing & Communications

Eric Nobis Managing Editor

Renate Kroll Contributing Writers



Ed Kromer, Sarah Massey, Eric Nobis Photography

Matt Hagen (principal), Paul Gibson


4 In the News

Exemplars, Mushrooms Win, Fostering Finance, The Avolio Portfolio, Foster Picnic and Reunion, Upwardly Mobile

20 Faculty

Dr. Sandman, Channel Changer, Leadership in the Long-Term, Great Reads: Macroeconomic Trends, Research Briefs, Diminishing Returns, Finding Fairness

28 Alumni

Kelly Miyahara, Mike Fridgen, Nancy Zevenbergen, Leslie Tubbs, Brooke de Boutray, Lateefa AlWaalan


a.k.a. design Foster School of Business Marketing & Communications University of Washington

Box 353200 Seattle, WA 98195-3200 206.543.5102 On the Web

Foster Business is published twice a year by the University of Washington Foster School of Business. The publication is made possible by donations from alumni and friends. No state funds are used in its production. Change of Address? Comments?


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Giving Thanks The Foster School is fortunate to have a remarkable network of alumni and friends who are passionate about the difference business education can make in the world. Personally, in my role as dean, I’ve been the beneficiary of sage counsel from many of these successful leaders. One particularly useful bit of advice has been to recognize the contributions of others. Surrounded by so many exceptional people, from the youngest freshman to the “senior-most” faculty member (yes, that’s you, Professor Saxberg), the opportunities to express gratitude are many. Thanking people continues to be a significant part of my job, whether it’s industry speakers, recruiters, donors, visiting dignitaries or anyone else who goes above and beyond to make the Foster School great. Today, I thank you for taking a look at our latest issue of Foster Business—it’s important and appreciated! The articles in each issue of this magazine represent just a fraction of the good things related to the Foster School, though it’s the kind of evidence we hope will support a proud and active network of UW Foster ambassadors. Thank you if you’ve been part of any of our recent successes. And if it’s been a while since you’ve been involved, I invite you to connect with us soon by attending an event, sending a prospective student or a job posting our way, emailing a favorite professor, sharing your business affiliations or participating in one of our surveys. Visit our website or email our alumni director Andrew Krueger ( for other ideas. Like our last issue featuring business alumni from the UW crew who defeated the world-champion Soviets behind the Iron Curtain in 1960, we’re taking another look back into the Foster School’s history with an article on former UW professor Bill Sharpe’s groundbreaking asset pricing research that went on to be recognized with the Nobel Prize. We’re also celebrating the 10th anniversary of our Edward V. Fritzky Chair in Leadership. This endowed position, established by the board of Immunex (now part of Amgen), has allowed our school to appoint iconic CEOs and entrepreneurs to our faculty for a year to deliver truly unique learning opportunities for students and faculty. It’s this access to outstanding business leaders combined with award-winning research like Bill’s, and other examples you’ll find beginning on page 20, that make your alma mater a top ten public business school. This spring, I had the wonderful opportunity to step back into the classroom and teach managerial accounting to the students in the Global Executive MBA Program. Being back in the classroom is a great reminder of why we do what we do—to see our students grow and succeed. For those students who entered Foster as Freshman Direct students in 2010, their class is the first to spend all four years in PACCAR Hall. Likewise, this year’s full-time MBAs are the first to graduate with the Career Management Center and MBA Program Office in Dempsey Hall. But for those alums who think students are missing out (or haven’t paid their UW Business “dues”) since they never experienced the charms of “Balmer High,” remember we still have good old Mackenzie Hall…for now. More on that in the future! Thanks once again for all you do for business education at the University of Washington. With gratitude,

James Jiambalvo Dean, Michael G. Foster School of Business Kirby L. Cramer Chair in Business Administration

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in the news

Distinguished Leadership awardees Dan Fulton (far left) and Tom Crowley (far right) pose with Dean Jim Jiambalvo and Builder of Our Future awardee Kate Kingen.

Exemplars Business Leadership Celebration honors remarkable alumni The Foster School of Business honored four remarkable leaders—of differing ages and industries—at its 22nd annual Business Leadership Celebration in November. David Bonderman (BA 1963), Thomas B. Crowley, Jr. (BA 1989) and Daniel S. Fulton (MBA 1976) received this year’s Distinguished Leadership awards. Kate Kingen (BA 2009) was named Builder of Our Future. And Richard M. Kovacevich, chairman emeritus of Wells Fargo & Company, delivered the keynote. Tom Crowley is the chairman, president and CEO of Crowley Maritime Corporation, the business founded by his grandfather in


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1892 on the San Francisco Bay. Since taking the helm in 1994 at the age of 27, after the death of his father, he has expanded the company’s tanker, tug and barge business and diversified its portfolio to include business services, transport and distribution, marine salvage, and naval architecture and engineering, serving many regions of the world. Dan Fulton, the retired president and CEO of Weyerhaeuser Company, recently completed a successful 38-year career with the iconic Northwest firm. After heading Weyerhaeuser’s real estate arm for many years, Fulton took leadership of the entire

company in 2008 and navigated it through the Great Recession to emerge stronger than ever. David Bonderman practiced and taught law, served as a special assistant to the US Attorney General, and was COO of the Robert M. Bass Group before founding TPG Capital, one of the world’s largest and most diversified private equity firms, earning him his own category of “Times Topic” in the New York Times. He also founded the Bonderman Fellowships that allow UW students freedom to experience and study cultures around the world.

Kate Kingen was named the Most Outstanding Accounting Graduate for 2009 at Foster before joining Deutsche Bank and quickly working her way up to lead analyst on a number of marquee M&A deals, writing her ticket to a powerful career on Wall Street. Instead, she joined the fight for education reform by first serving the Newark School District as deputy CFO/COO and now leads strategic projects for the New Jersey Commission of Education. In his keynote address, Richard Kovacevich offered his view on the

art of leadership as, above all, about empowering people. “You cannot share a vision unless you share the power to achieve it. Leaders don’t point fingers, they point direction. They show the way by personal example,” he said. “If you want to be a great leader, it is important to be humble. It isn’t about you. It’s about your people.” n

Competition’s top two teams make good use of waste by-products

Please join us on October 23rd for the next Business Leadership Celebration with keynote speaker Robert Iger.

Keynote speaker Richard Kovacevich spoke about how empowering people makes a better leader.

Photos of Exemplars by Kerry Dahlen

Mushrooms Win

A zero-waste farming technology that converts rice straw waste into a product that can be used for mushroom farming and the production of bio fertilizer in Vietnam took home the grand prize at this year’s Global Social Entrepreneurship Competition. The winning team, Fargreen, from Colorado State University, said they planned to use the prize money to build the first mushroom facilities for ten farmers who have already signed up with them. Second prize went to a team from the University of Dhaka in Bangladesh who plan to utilize sugarcane bagasse, an agricultural by-product, to manufacture environmentally friendly, affordable and sustainable materials for construction. And the Global Health Prize went to AYUDA Food Aid, a team from Ateneo de Manila University, that produces a nutrition-dense, ready-to-eat compressed food bar intended for victims of natural disaster in the Philippines. n

Dean Jim Jiambalvo hands David Bonderman his Distinguished Leadership award.

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IN the news

Fostering Finance Investment firm establishes new scholarship The Seattle-based investment firm of McAdams Wright Ragen has endowed a new scholarship to support undergraduate finance students at Foster who are affiliated with the UW Educational Opportunity Program. The EOP promotes academic success for minority, economically disadvantaged and first-generation college students. McAdams Wright Ragen established the scholarship endowment to commemorate its 15th anniversary. “We wanted to celebrate by reinvesting back into the institutions that educate our work force, and to create a means by which to encourage students to pursue a finance career,” says president and CEO Scott McAdams. “While honoring the best and brightest at the Foster School, we also wanted the scholarship to contribute to the most vulnerable parts of our community.” n

The Avolio Portfolio Founder of Foster Center for Leadership & Strategic Thinking awarded new endowed chair Professor Bruce J. Avolio (pictured second from right, with his family and UW President Michael Young) was honored this fall as the inaugural recipient of the Mark Pigott Chair in Business Strategic Leadership. This endowed award was established by the chairman and CEO of PACCAR Inc to ensure the Foster School can compete successfully for leading scholars around the world. Avolio joined the faculty in 2008 and founded the school’s Center for Leadership & Strategic Thinking shortly after his arrival. Among the most-published professors in his field, Avolio has authored or co-authored 11 books and more than 150 articles dealing with aspects of leadership. He teaches across degree programs at Foster and has been active in his research and consulting with numerous Northwest companies, hospitals and the US military over his tenure in Seattle. n

Mark Your Calendar

6th Annual PACCAR Hall Picnic For Foster Alumni, Friends and Families

Saturday, July 12 at 12 p.m. Enjoy a summer day full of food, fun and connections with your fellow alumni! More information and registration at


MBA Reunion Weekend

For the classes of 1989, 1994, 1999, 2004 and 2009

July 11-13 Reconnect with faculty and classmates, share your memories and successes! More information and registration at MBAreunion


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Upwardly Mobile Foster School is on the rise in a plethora of recent rankings T​ he Foster School has moved up in a wide range of national and international rankings published in recent months, showing significant advancement across degree programs, disciplines and academic research. U.S. News & World Report rated the Foster Full-Time MBA Program #25 in the country and #8 among public universities in its 2015 “Best Grad Schools” edition. In MBA specialty programs, Foster ranked #25 in accounting and #15 in information systems. In The Financial Times 2014 Global MBA Ranking, the Foster School jumped 20 places—the greatest leap of any US school—to #58 in the world, #31 in the US, and #14 among US public schools. Forbes 2013 Best Business Schools ranked the Foster Full-time MBA #27 in the country, nine spots above its 2011 ranking, on the strength of significant placement and alumni salary increases. The publication rated Foster among the top MBA programs for return on investment.

nationally for excellence in six academic areas, including #11 in accounting (#7 public), #15 in entrepreneurship (#8 public), #15 in management (#8 public), #17 in international business (#10 public), #19 in finance (#10 public), and #22 in marketing (#14 public). The Princeton Review/Entrepreneur Magazine ranked the Foster School #13 for graduate entrepreneurship (#5 public), noting its robust funding and support for student entrepreneurs as well as its track record of success. The Princeton Review ranked the Foster MBA Program #8 among its listing of the 10 US schools that offer the greatest opportunities for women. The Management Department Productivity Index published by researchers at Texas A&M and the University of Florida rated the Foster School #8 in North America for its total number of publications in top-tier management journals over the past year.

The Economist 2013 “Which MBA” ranking placed the Foster Full-Time MBA among the planet’s elite, moving up two places to #21 in the US (#7 among public universities), and one place to #33 in the world.

The Financial Times ranked the Foster faculty #24 in the world in research productivity, measuring per-capita publications in the top academic and practitioner journals across all business disciplines. n

In the Poets & Quants “Top 100 U.S. MBA Programs of 2013,” the Foster Full-time MBA vaulted nine spots to #24 (#8 among publics). The popular MBA portal’s composite ranking measures schools’ performance across U.S. News & World Report, Businessweek, The Financial Times, The Economist and Forbes.

Learn more and keep up to date on Foster’s rankings at

Businessweek promoted Foster’s Executive MBA Program to a #37 national ranking (#13 public and #1 in the Northwest), based on high ratings from EMBA directors and program alumni. U.S. News & World Report ranked Foster’s Evening MBA #11 in the nation and #7 among publics in its 2015 “Best Grad Schools” edition.

© / Samarskaya

The Businessweek 2013 ranking of part-time MBA programs rated the Foster Evening MBA Program #15 in the country (#5 among publics and #1 in the Northwest). Foster earned a top 5 national rank in academic quality. The U.S. News & World Report “Best Colleges 2014” ranked the Foster School’s Undergraduate Program #22 in the country (#12 among publics and #1 in the Northwest). Foster ranked

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LISTEN UP Foundational wisdom from the Foster School’s first ten years of Edward V. Fritzky Visiting Chairs in Leadership


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What is the Fritzky Chair? Edward Fritzky is the former chairman, president and CEO of biotech powerhouse Immunex Corp, acquired by Amgen in 2002. To honor Fritzky’s leadership contributions and express gratitude to a community of supporters that included the UW, Immunex presented the business school with a $1M endowment for a visiting leadership chair in Ed Fritzky’s name. In 2004, the educational philosophy of “bringing the outside in” was institutionalized with the appointment of Charles M. Pigott, chairman emeritus of PACCAR Inc, as the first Edward V. Fritzky Visiting Chair in Leadership. This faculty position was specifically designed to bring distinguished business leaders to campus to share expertise with faculty and students. In celebrating a decade’s worth of insights from a distinctive and delightful cast, Foster Business caught up with the former and current Fritzky Chairs and asked them to share some thoughts and lessons on leadership with our readers. Keep in mind these are people who could write books on leadership (and some of them have), so this article truly represents a mere two cents withdrawn from a wealth of intellectual capital. “One of the things that has made this chair so valuable to Foster students and faculty is the tremendous initiative each person has brought to the role,” says Jim Jiambalvo, dean of the Foster School. “We knew we’d get some terrific results by creating a teaching role for veteran business leaders, but I couldn’t have predicted how much impact they’d have over time. The applied learning, mentorship, networking opportunities and updates to our curriculum that these chairs bring to us are priceless.”

reward it within the culture. You don’t have all the answers—but you don’t have to, someone out there has the answer you need. Going back 50 years, I remember we had a senior engineer (at PACCAR) who came up with a radical design for a Kenworth truck. At the annual dealer meeting, I invited him up to the stage and presented him with a $25,000 check. That was a lot of money back then. That did more to encourage innovation than simply talking about innovation.”

Mike Garvey Fritzky Chair 2004-05 Notable role: Chairman of Saltchuk Resources; Owner of Seabear and Made In Washington “Too often, heads of organizations don’t follow their own rhetoric. Leadership is a lot like parenting, you need to behave in the manner you’re asking others to behave in, and model the outcomes you want. It’s easy to be judged by style, but what matters is substance. What’s important? How are you communicating that? If you want to avoid setbacks, create an environment where people aren’t reluctant to bring you bad news. If the team feels inhibited to bring up bad news, you’re going to find out about missteps you could have helped prevent after the fact. ‘Heroic leadership’ is a false concept. It’s not Patton out there; it’s about the objective and getting the group’s insights and buy-in to get there.”

Wayne Perry (BA 1978) Wisdom from the chairs…in their own words

Charles M. Pigott Fritzky Chair 2003-04 Notable role: Chairman of PACCAR Inc “My advice to up-and-coming leaders? Make sure you really know your stuff. A sound set of facts and expertise makes you ready to seize opportunity. The best business student is the one who fully believes in learning and will view all of the time and energy as truly worthwhile. Because you can never stop learning—things are always changing. One of the ways I learned was by being asked on to a few boards. That was my substitute for a graduate business education. You listen to other board members and get great ideas and insights. Whatever level you’re leading, listening is incredibly important. It needs to be engaged listening with questions and comments—you don’t get to the head of the class by being a sponge. You have to exude a little water now and then. As for creativity, you have to encourage it and

Fritzky Chair 2005-06 Notable role: President and vice chairman, McCaw Cellular Communications “The thing about experiential learning is…trying stuff out is great, but you have to know the technical dimensions of the problem or situation. In working with students, they can be overly eager to emulate a mentor’s style or approach. Take mergers and acquisitions. There’s excitement to learn the negotiating tactics that can catapult your career, which is great. But I’ll bring up a real-world M&A case and point out the difference between the buyer’s and seller’s weighted cost-of-capital and ask what terms they’d like to negotiate on. The punch line is that there’s no substitute for a strong knowledgebase. When it comes to my management philosophy, I’d say: listen, gather data, make sure it’s okay for heretics to speak up and then make the call. And share information broadly. People will selfbenchmark if they know what measurements matter and everyone can see the big picture of how they’re doing.”

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Fritzky Chair 2007-08 Notable role: CEO, Port of Seattle “In terms of leading, I always believed I could do it. When I was a boy my grandfather would tell me, ‘You’re a Dinsmore, you can do anything you want.’ That’s great encouragement, but he also stressed the importance of listening: ‘I never met someone who learned stuff while their mouth was moving.’ Most of what I’ve learned was by engaging with people at all levels of the organization, and doing a lot of listening. When you’re part of a large, public entity, it’s safe beyond belief to keep things status quo, but strong leadership always takes change into account. Two pieces of advice I’d give to someone assuming a leadership role: 1) don’t go in with preconceived notions, and 2) become a phenomenal communicator—whatever skills you already have in this area, be relentless in improving them.”

Howard Behar Fritzky Chair 2008-09 Notable role: President, Starbucks North America “What is the most important leadership role I’ve ever had? I’d say the role of leading myself. I think that if you want to become an effective leader of others, you have to have a dialogue with yourself, and it needs to be very honest. Who are you? What do you want to accomplish? What are your values? What are you good at? Not so good at? Take stock. Then you’ve got the basis to lead. You may find it’s easier to take risks at the outset, and then harder once you’ve had some success. But to keep learning, you have to assess what risks you can take. And be willing to be embarrassed when mistakes happen. I don’t see myself as an enlightened ‘business humanist’ when I say that, ultimately, everything we do in business is in service of another human being. Businesses and corporations aren’t greedy. They’re made up of people, some of whom are greedy. Want to make a lot of money? Me too. Doing it on the backs of your people…that’s greedy.”

Dorrit Bern (BA 1972) Fritzky Chair 2009-10 Notable role: CEO, Charming Shoppes “Getting the strategy right is one of the toughest things about leadership. Where do you take your business? How do you stay ahead of the competition and Wall Street? How do you make your cash flow decisions? I think the best way to inform strategy is to listen at all levels inside and outside of your organization. One of my most important executives sat at the front desk—our receptionist was the first point of contact, and she heard everything going on. Also, talk to your customers, and have the humility to

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really hear what they’ve got to say. I walked into one of our retail stores in Brooklyn and had a customer tell me our line of jeans doesn’t fit. The store manager looked aghast that she’d said this to me, as the top person in the company. But the customer took me back into the dressing room and tried on a range of sizes to make her point. As a result, we undertook a massive info gathering project, measuring 50,000 women to get the redesign right. The result in our product line was very successful. And it was an opportunity for me to reinforce a culture that welcomes ideas. If it’s not safe to throw ideas out, you’re not going to get good input.”

Tod Hullin (BA 1966) Fritzky Chair 2010-11 Notable role: Senior vice president of public policy and communication, Boeing “The key to discovering innovation within a large organization is that you have to manage as if you had a flat organization— where all have access to senior management. Get outside the chain-of-command and listen to what people have to say. This also creates opportunities to find and reward initiative and celebrate success. When people can see that the oar they’re pulling on is moving the boat forward they tend to behave in ways that make themselves and the organization more successful. Ultimately, good leadership requires the ability to persuade people that a specific path is the right one and it’s important to note that persuading people is harder than just communicating with them. It is important to realize that leading is inextricably connected to learning and they’re both lifelong processes. I believe that you need to start with an assessment of yourself and figure out what you do best, what you know and what you don’t, and then think about what you don’t know you don’t know. Determine how to best shore up your blind spots. I believe key factors include: be humble, listen, learn from your mistakes and maintain a core set of values that are not negotiable. You can’t impose order in a militaristic way and expect success in business or the public sector. You have to exemplify qualities of a leader that you would respond to. The attitude—and attitude is crucial—has to be, ‘We’re going to do this together, and here’s how.’”

Paula & Steve Reynolds Fritzky Chair 2011-12 Notable roles: CEO, Puget Energy (Steve); CEO, Safeco (Paula) “A genuine leader thinks about what’s good for the organization as distinct from what may be good for the leader personally. Leadership can be exhausting at times, so it’s important for the leader to remember that leadership is a privilege—and a tool to do good

Photo of M. R. “Mic” Dinsmore: Don Wilson/Port of Seattle

M. R. “Mic” Dinsmore (EMBA 1999)

in the world. The term you hear a lot now is ‘servant leadership,’ and that may tend toward jargon. But the concept is certainly on the mark because there is a quality of selflessness in great leaders. How do you stay fresh as a business leader once you are no longer the CEO? Remaining on boards is an important element for both of us. There’s nothing quite like learning a new company, industry, business model—or even country—to keep you on your toes. In the board room, we are sitting next to living libraries of knowledge from which we derive new ideas and keep our thinking fresh, independent and creative. What’s the way leaders grow? We’ve both asked (insisted!) that colleagues step out of their roles and take on special projects, maybe a skunk-works or some blue ocean or blue sky thinking. Getting away from the everyday framework and focusing on something completely different gives them the bandwidth to innovate. As we mature as leaders, we begin to discern there is a rhythm to business. By allowing ourselves some contemplative time, we give ourselves a chance to recognize the points of inflection in strategy and act accordingly. The ability to know when to change is essential to leadership. Recognizing when to stay the course, when to innovate radically, when to hunker down, and when to get out there and disrupt are critical to the success of the enterprise.”

Ken Denman (MBA 1986)

Neal Dempsey (BA 1964) Fritzky Chair Current—2013-14 Notable role: General partner, Bay Partners “Eighty percent of people aren’t risk takers, so my approach to leadership is to convince that large majority that it’s OK to fail. There’s a perception that success looks like everything going in the right direction along a certain trajectory, but that’s only through the lens of history. Decision by decision, things go great and things go badly and you have to tell yourself that it’s not failure forever—it’s just temporary mental stress. Because I’m in the business of starting up tech businesses from scratch, I have to embrace risk and the possibility of failure. There’s no better business if you love continual learning and you want to stay fluid and creative in your thinking. ‘The way things are done’ means very little in my work, and assumptions can be very costly. I learned a lot about how to focus on what matters to a business when I worked at a big company. I headed up sales, and my boss, who headed up the entire sales and marketing organization, would begin each week with five piles of paper across his desk. This is before everything became electronic. Every day he’d move the stuff he didn’t get to into the next day’s pile, and he’d end the week tossing everything that he hadn’t been able to address. We all looked on in amazement, but he pointed out that nobody ever came asking about that stuff. He said it was basically make-work and didn’t impact what matters for our business. Great lesson!” n

Fritzky Chair 2012-13 Notable role: CEO, Emotient “One great thing about being Fritzky Chair was really tapping in to the power of mentoring. It gave me a chance to get out of my everyday hustle and bustle and dive into a new aperture with the students. At the same time, I had a student team work on a project for my company and they brought a tremendous amount of value. I spent a lot of time working with students, in fact I’ve kept up my mentoring since being chair, and one of the recurring themes I saw was angst around what to do next. ‘How did you get where you are?’ type of thing. There’s no optimal decision tree for finding the next opportunity. The best place to start is by defining an end goal. Not the end goal, but an end goal where there’s joy in sight. If you know your destination, you can see multiple paths to getting there. The next decision and the one after that? They’re not going to be fatal. You’re going to gain the experience you need to do the next thing as you go. You can’t define someone’s objectives for them, but you can provide navigational advice and sound cautionary notes where relevant—it’s a lot like coaching. As a leader, one of the best tools you can have is a process for thinking and planning. As the velocity of innovation accelerates, there’s decreasing relevance in the things you learn by rote. You need to keep learning, and have a methodology for adapting so you don’t get tied up in knots.”

An exciting legacy In an era of higher business education in which blending technical, academic knowledge with hands-on and behindthe-scenes business experience is fairly common, the Foster School is fortunate to have the Fritzky Chair. The time, energy, passion and commitment we’ve gotten in the first 10 years of the program has been phenomenal. This hasn’t been about bringing successful business leaders on campus as part of a public relations push to market the kind of company we keep—far from it. The Fritzky Chair has been about working closely with students and faculty to provide a transformational business education. Our chairs serve as mentors, guest lecturers, conveners and consultants. They make themselves very accessible and they inspire and encourage greatness in our community. What more could a business school ask for? n

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Foster Made A growing number of Foster alumni are producing artisanal beers, wines and spirits of the highest order The Pacific Northwest is a culture of makers. Airplanes. Trucks. Software. Shoes. Coffee. Chocolate. Products of the highest quality, crafted by earnest hands. In recent years, this fertile corner of the country has also earned international renown for its production of fine wine, craft beer and distinctive distillery. And Foster alumni have played a leading role, driving forward the region’s latest growth industry— one being built by a network of independent, innovative operators that are both competitive and collegial. Here is a tasting menu of some of Foster’s master vintners, brewers and distillers in our midst.

Did we miss you and your brewery, distillery or winery? Send us a line at and we’ll include you in the online version of this article.

Emerald City Beer Company Rick Hewitt (BA 2004), founder/brewmaster

Bryan Maletis (EMBA 2010), owner Fat Cork is a selector, importer and retailer of Champagne that Bryan Maletis’ company buys directly from small, family-owned vintners in the bubbly’s namesake region of France. Operating out of a small and literally underground Seattle warehouse, Fat Cork sells online, in its Seattle Tasting Room, and via its Fantastic Champagne Club.


Fat Cork

Emerald City Beer’s founder Rick Hewitt is a self-described fanatic about creating the quintessential Seattle Lager— embodying a style, culture and taste that is Seattle beer. In 2010 he turned a grad school hobby into a viable brewery located in Seattle’s Old Rainier Building. ECB’s flagship beer, Dottie Seattle Lager, is a copper-colored session lager made almost exclusively from ingredients grown in Washington state.

Vinmotion Nicolas Quille (EMBA 2005), general manager/head winemaker The fifth-largest wine company in Washington state, Vinmotion produces Northwest wines that deliver great quality at a reasonable price—selling 3.6 million bottles per year. At its Eastern Washington winery, Nicolas Quille manages three brands from grape to bottle—Pacific Rim, the second-largest Riesling in the US; Rainstorm, a blend of Oregon Pinot Noir and Pinot Gris; and Sweet Bliss, a collection of three sweet wines.

Sokol Blosser Winery Alison Sokol Blosser (MBA 2004), co-president

Photo Leah Nash

Alison Sokol Blosser’s parents planted their first grape vines before there even was a wine industry in their home state of Oregon. Now she and her brother Alex run their family’s winery, located on their certified organic 120-acre estate in Oregon’s Dundee Hills sub appellation. Sokol Blosser Winery produces Pinot Noir and Pinot Gris under the family brand name, as well as “Evolution” label white blend, red blend and sparkling wine.

Dunham Cellars John Blair (MBA 2011), general manager From its home in a remodeled World War II-era airplane hangar in Walla Walla, Dunham Cellars produces world-class Syrah, Cabernet Sauvignon, Merlot, Riesling and Chardonnay using the finest grapes grown in the Walla Walla, Yakima and Columbia Valleys.

Sound Spirits Steven Stone (Evening MBA 2007), founder/head distiller Steven Stone acknowledges the irony of his upbringing in a dry county in Texas. Taking his inspiration, instead, from a great grandfather back in Kentucky, he founded Sound Spirits in 2008— Seattle’s first distillery to open since Prohibition. In addition to working as an aerospace engineer and head distiller, Stone serves as president of the Washington Distillers Guild.

Full Pull Wines Paul Zitarelli (MBA 2009), owner/head scribe

Full Pull

The lucky members of the Full Pull Wines private mailing list are afforded special access to the best boutique wines of the world. Recently, Paul Zitarelli has expanded that portfolio to include “Full Pull & Friends” private label wines, made from barrels of Washington juice carefully selected from Full Pull’s partner wineries and available exclusively to list members.

Genoa Cellars Derek Berger (MBA 1996), co-founder Genoa Cellars began as a hobby for founders Derek Berger and Scott Heinrich, who spent years honing their craft in Heinrich’s garage via the Boeing Wine Club. After winning numerous international amateur vintner awards, the duo launched their Woodinville winery in 2012. Genoa Cellars showcases some of Washington’s finest vineyards in its lineup of Super Tuscan-style wines bearing nautical names such as Ketch, Crosswind, Traveler and Flying Colors.

Black Rock Spirits Sven Liden (MBA 2004), co-founder Black Rock Spirits was conceived on a camping trip in 2007, when Sven Liden and his co-founders decried the lack of savory vodkas on the market. A test run of Bakon Vodka sold out in three weeks after international media coverage. Today, Bakon Vodka is making perfect Bloody Marys in 47 states and five countries, and Block Rock is busy promoting its newest product, Sparkle Donkey Tequila.

Partida Tequila Gary Shansby (BA 1959), founder A legendary builder of brands, Gary Shansby has most recently focused his considerable talents on creating the finest tequilas on the planet. Tequila Partida is an authentic, estate-grown, ultra-premium tequila made from 100 percent blue agave in Mexico’s historic Tequila Valley. Tequila Partida’s Blanco, Reposado, Añejo, and Elegante tequilas have been universally lauded by critics for their exceptional quality and consistency.

Fall Line Winery Tim Sorenson (BA 1982), founder

Photo Amanda Wilson

Former CPA Tim Sorenson worked for 20 years as an economics professor at Seattle University before finally succumbing to his passion and founding Fall Line Winery in 2003. He owns and operates the Georgetown winery with his wife, Nancy Rivenburgh, a professor of communication at the UW. Working with the best growers in Washington state, Fall Line crafts a small portfolio of acclaimed Bordeaux-inspired red wines that are classically styled.


Spot Color

Color Usage: Gradients

Bellevue Brewing Company Bryan Levy (Evening MBA 2009), investor When John Robertson and Scott Hansen wanted to launch the first locally owned brewery in their hometown of Bellevue, Bryan Levy provided some equity financing to help bring their dream to reality in 2012. From its 12,000-squarefoot brewery and taproom, Bellevue Brewing is producing and serving five flagship and eight seasonal beers. It has quickly become an essential Bellevue institution, and put the city squarely on the craft beer map.

2bar Spirits Marissa Kaiser (BA 2000), co-founder 2bar Spirits is descended from five generations who ranched their land in South Texas for well over 100 years. Nathan and Marissa Kaiser brought the 2bar name to Seattle and now handcraft vodka, bourbon and moonshine—another family tradition, it’s rumored—from all local grains.

WineGirl Wines Angela Jacobs (Evening MBA 2010), owner/winemaker After studying the fine art of wine-making around the world, Angela Jacobs (aka WineGirl) founded her own “nano-winery” in 2007. WineGirl Wines, headquartered on the north shore of Lake Chelan, is lately turning heads with its “My Derby Wife” wines, inspired by their maker’s rough-and-tumble days skating with Seattle’s Rat City Rollergirls. The characteristics of each wine match the personalities of the fellow Rollergirl for which it’s named—Lexi Luther Cabernet Franc, Sheeza Brickhouse Malbec, Raven Mad Cabernet Sauvignon, to name a few.

Color Solid Colors


SharperM E(R ) Image M

William F. Sharpe’s seminal work at the Foster School in the 1960s forever clarified the relationship between risk and return in capital markets, and later earned him the Nobel Prize in Economics


William Sharpe thought he was onto something big. No, he knew it. The freshly minted assistant professor of finance at the Foster School— known as the UW College of Business Administration when he arrived in 1961—had devoted his first years in Seattle to a paper introducing the Capital Asset Pricing Model. On its face, the CAPM was an elegant equation to calculate a security’s expected return. But in its essence, it held the lynchpin of modern investing theory and practice, a luminous primer on the relationship between risk and reward. If only his editors could see it. Certain of a grand slam off his first swing of the bat, Sharpe submitted the paper to his field’s preeminent journal, anticipating quick congratulations. Instead, his paper was rejected. Not just once, but twice. It was only on his third try (and third reviewer) that he secured a place in the publication. And even then, his theory hardly set the finance world ablaze, at least at first. “When I finally published the paper, I was expecting to receive a flood of calls and correspondence. But they didn’t come,” Sharpe recalls today. “It was really disappointing. I thought, man, this is almost certainly the best paper I’m ever going to write, and nobody cares.” The disinterest was only temporary. It took a few years for scholars to appreciate the CAPM, and a few more to reach the mainstream of investment advisors. And it took a quarter century for the Nobel Prize committee to recognize what has become a cornerstone of financial economics.

Photos courtesy of Stanford Graduate School of Business

Age of financial enlightenment


Economics had hooked Sharpe from his first semester at UCLA. But his introductory course in investments held no such love-at-first-sight. “There was no underlying theory, no defining principles, no notion of diversification or consideration of risk,” he says. “It was all rules of thumb and how to make a buck.” That didn’t sit well with a curious young microeconomist. And when he later sought a doctoral dissertation topic, a UCLA finance professor named Fred Weston introduced Sharpe to the work of Harry Markowitz. In the 1950s, Markowitz had fused economics and finance to introduce the radical notion of portfolio investing—diversifying across a broad assortment of stocks and bonds to remove the risk that is particular to any one security.


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Sharpe was enthralled. During graduate school at UCLA he joined Markowitz, then at the RAND Corporation, and expanded upon the breakthroughs of his unofficial dissertation advisor. Sharpe first applied computer programming and mathematics to cast portfolio theory as an investment strategy. And then he addressed the function of risk on the setting of market prices by those investors, each trying to make money on the market.

The Rainier factor Sharpe’s introduction to Seattle came one crystalline spring day while on assignment for RAND. As he took in the trim flotillas of sailboats breezing across the waters of Lakes Washington and Union, the lifelong sailor was sold. “It seemed like an ideal place,” Sharpe says. “I went back to my graduate advisor and asked if he could get me a job at the University of Washington.” He did find some time on the water, with the UW Sailing Club. But first and foremost, Sharpe was here to work. He got right to it, first converting his doctoral work implementing portfolio theory into a paper in Management Science. And then he began writing his defining contribution to financial economics. He worked alone on the paper, but regularly bounced ideas off of faculty neighbors at the Foster School and the Economics Department, including professors Yoram Barzel, Bruce Johnson, Walter Oi, R. Haney Scott and, especially, George Brabb. By 1962, Sharpe had a draft of “Capital Asset Prices: a Theory of Market Equilibrium Under Conditions of Risk,” and presented it at several universities to a generally positive reception. But few could have predicted what the CAPM would become.

The model, simplified As published—finally—in the Journal of Finance in 1964, Sharpe’s paper sparked a dramatic progression from the dark ages of investing.

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He started with Markowitz. Specifically, what would happen if everyone did as Markowitz advised—that is, invested in wideranging portfolios to diversify away the risks attached to individual securities? How would we price those securities efficiently, given the ever-present risk of just being in the market? To address the question, Sharpe cast the spotlight on systematic risk—the exposure of a firm to macroeconomic conditions. His measure of this risk is called “beta.” And what he assumed was that the prices of firms with higher betas tend to move more than the market overall; lower-beta firm prices move less. The CAPM demonstrates that expected returns should be related to systematic risk, which cannot be removed. “The first big practical message is that diversifying a portfolio in market proportions is a sensible and efficient strategy for the average investor,” Sharpe says. “And the second is, yes Virginia, there is a reward, in the form of higher expected returns, for bearing the risk of doing badly in bad times.”

Applicable theory By the late 1960s, the CAPM had caught on, sparking an entire literature on the topics of risk measurement and asset pricing that continues today. “Sharpe’s work is the bedrock of finance,” says Rocky Higgins, an emeritus professor of finance who joined the Foster School during Sharpe’s tenure. “It is the start of a great many discussions about corporate and investment finance. We like to think that we’ve advanced, and in many ways we have. But the Capital Asset Pricing Model is still the point from which you might contemplate making advances.” For his own part, Sharpe authored several subsequent papers while at Foster testing the empirical merits of his theory, including a 1966 mutual fund performance analysis that confirmed the CAPM in practice. He also fielded increasing calls from firms seeking help implementing the wisdom of portfolio management and the CAPM. He consulted for Merrill Lynch in the late 1960s, and later Wells Fargo, Allstate, AT&T, Frank Russell and many others. In 1968, his stature growing, Sharpe decided to return to the expansive academic environment of the Golden State, where he had spent most of his life. “I never really weaned myself from California,” he says. He joined UC Irvine briefly, then settled in at Stanford in 1970 for a productive period of research and consulting. He founded his own investment consulting firm in 1986.

Nobel and back again Early one October morning in 1990, Bill Sharpe was jolted awake by a phone call. A man with a Swedish accent announced that he had been awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, along with Harry Markowitz and Merton Miller. Sharpe has yet to find words that adequately describe his feelings upon receiving the ultimate professional honor.

“The Nobel Prize doesn’t change your life among your colleagues much at all, nor should it,” he says. “But it changes everything else.” Invitations flooded in for celebratory lunches and lucrative speaking engagements for all manner of audience. “It’s fun for a while,” Sharpe reports. “But eventually you find it’s more fun to go back to work.” He returned to active duty at Stanford for many more years. Today he’s the STANCO 25 Professor of Finance, Emeritus. And as his personal and professional interests evolved into retirement economics, in 1996 Sharpe co-founded Financial Engines, provider of retirement investing support to employees of large corporations. He continues to publish scholarly papers and books. And as he nears his ninth decade, the long-time technophile has become an active blogger (his site,, is a compendium of his latest evangelical efforts in financial economics and computer programming, his twin passions since the nascent days of both).

CAPM today About that asset pricing model he introduced to scholars and shareholders 50 years ago… Critics have probed it for flaws ever since. Scholars have scrambled to invent a better way to price securities in these days of Big Data. Yet the CAPM is still in the text books, and it’s still used daily by corporate and institutional investment managers to plan and assess their portfolios. Sharpe himself has long tinkered with the model and advocates a different computation of beta now. “We’ve come a long way since the original Capital Asset Pricing Model,” he says. “But I believe the big messages are still worth paying attention to, if not following entirely. That is, you need to diversify. And if you want to make a reasonable assumption about the expected return of your investments over the long haul, you should be thinking about how badly it would do in bad times. These conclusions hold up.” Of his scores of published works, did the CAPM paper really turn out to be his best? “Oh, yes,” says Sharpe’s own toughest critic. “I’ve done other work that might earn an argument, but partly because it includes the essence of the 1964 paper. In terms of something novel and with lasting value, that’s my best. “…though maybe I write better now.” n

At the University of Washington Summer Finance Conference, August 10-12, the Foster School will honor William Sharpe on the 50th anniversary of his paper introducing the CAPM.

Sharpe’s Living Laboratory In keeping with the era’s zeitgeist, William Sharpe’s time on the Foster School faculty (1961-68) was radically experimental. “I’m a great believer that if you really want to learn a subject, you should teach it (which is probably not fair to students),” he says. “I wanted to learn a lot so I taught a lot of courses.” Among them were classes in microeconomics, finance, investing, computer science, statistics, and operations research. He also consulted organizations ranging from Boeing to IBM, McKinsey to Western Airlines. In addition to his Nobel Prize-winning work on the Capital Asset Pricing Model, Sharpe published more than 20 papers during his Foster days. He also wrote two books—the first introducing the BASIC programming language and the second analyzing the economics of computers. His deep interest in programing led the push for the school’s first computer center (he claims the words “pooter center” were among his daughter’s first). “My time at the UW was fabulous,” Sharpe says. Rocky Higgins, an emeritus professor of finance whose tenure overlapped with Sharpe’s, says the impact of his scholarly explorations left a deep and positive impression on the school. “Bill was a supportive and enthusiastic colleague,” Higgins says. “He did a lot to create an atmosphere of collegiality and supporting unconventional thinking that lasted many years after he left.” “A lot of people who Bill mentored or worked with have gone on to impressive careers in finance,” adds Nancy Jacob (BA 1967), Sharpe’s undergraduate research assistant who later became dean of the Foster School (1981-88) before running two investment firms of her own. “His impact on people is probably as important as his path-breaking research.”

Sharpe Investor William Sharpe’s tips for investing, adapted from his 2007 book “Investors and Markets” Diversify – Really diversify. Buy a percentage of everything that’s out there, stocks and bonds as a start. Economize – Keep costs down. Investing in low-cost index funds can deliver 20 percent more income than actively managed funds over your entire retirement. Personalize – Every investor is different, with different preferences, different levels of risk tolerance, facing different situations and different stages of life. Invest in the way that suits you, not the herd. Contextualize – Remember that a share price is the result of many smart investors trying to figure out what it’s worth. Don’t expect to get something for nothing by following some hairbrained scheme that somebody is pushing on you. As for Sharpe’s personal strategy? “I don’t tell people how I invest,” he says. “But let’s just say I have really good friends at Vanguard.” n

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faculty Dr. Sandman Christopher Barnes is discovering the complete toll of fatigue in the workplace You are feeling sleepy. Vehhhhhhry sleepy. If you’re on the job, that’s not good. And we’re not just talking to you truck drivers, airline pilots, heart surgeons and operators of heavy machinery. Lost sleep affects every kind of worker and workplace, according to the research of Christopher Barnes, an assistant professor of management at the Foster School. Barnes’s pioneering studies are discovering surprisingly strong causal connections between even minor amounts of sleep deprivation and a litany of office ills—errors, accidents, procrastination, lack of creativity and ethical breeches, to name just a few. Extreme exhaustion

Barnes began his research career in the United States Air Force, as an officer managing a variety of behavioral studies. He became most intrigued by a series of experiments in what the military calls “Fatigue Countermeasures,” or coping with the effects of exhaustion that airmen experience during extended missions. “It became clear that sleep is incredibly important. When we don’t get enough, there are significant negative effects on the way we do our jobs,” he says. “This is especially critical when the result of fatigue is crashing your plane into the ocean.” When he began doctoral studies at Michigan State in the mid-2000s, Barnes scoured the management and applied psychology literature for existing work on sleep deprivation and found… nothing. He wasted no time opening the account. From his dissertation forward, Barnes has investigated many facets of fatigue in the workplace, publishing 20 papers in the past five years. Fatigue findings

His breakthrough was a 2009 Journal of Psychology paper that documents a spike in workplace accidents and serious injuries on the Monday following our annual “spring forward” into Daylight Saving Time—this

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after losing, on average, just 40 minutes of sleep. Two additional studies illustrate that insufficient sleep compromises self-control. In one, Barnes finds that sleepy workers tend to act less ethically (as compared to their own well-rested selves). In another, fatigued employees prove more likely to cyberloaf, or check out web sites when they should be working. And recently, Barnes published a study demonstrating that late-night use of smartphones for work results in a less engaged and effective employee in the office the following day. “As a manager, you should know that when your subordinates are not sleeping well, there are going to be a litany of negative effects in the workplace, and these are going to hinder your bottom line,” he says. “We’re learning that when people are short on sleep, they are less creative, less innovative, less productive, and more likely to make mistakes, behave unethically and cyberloaf.” Sound sleep policy

And yet… Barnes acknowledges that quality sleep is difficult to value ahead of other demands on our time. He’s even studied this modern dilemma, finding that when people get busy, sleep is the first thing to be sacrificed, over work or family time. “Everyone is aware that sleep is important,” he says. “But because we don’t appreciate just how important it is to performance and decision making, it’s an easy thing to deprioritize—especially if we don’t know that even small amounts of lost sleep matter at work.” What’s a concerned manager to do? No harm. Barnes explains that managers have the power to influence their

employees’ sleep habits. They set schedules, impose demands and model behavior. An ongoing study indicates that managers whose words and actions signal that sleep is not important can actually make employees sleep less. “In pushing subordinates to work harder and longer,” Barnes says, “managers may be unintentionally creating lapses of performance, creativity and ethics.” But the fallout of fatigue in an organization is avoidable, Barnes adds. Consistent, quality sleep has an enormous upside in the workplace, and should be encouraged. “Getting a good night’s sleep regularly is fundamentally about making sleep a higher priority,” he says. “When you do that, positive behaviors just click.” n

Tips for a good night, every night • Don’t use smartphones, tablets or laptops near bedtime. • Sleep and wake on as routine a schedule as possible. • Exercise regularly, but not too close to bedtime. • Avoid alcohol, cigarettes, caffeine and heavy meals in the evening. • Elevate the importance of sleep as essential to quality work and family time. n

Channel Changer New book by Foster professor is the definitive guide to marketing channel strategy



Rob Palmatier has written the book on marketing channel strategy. Literally. Palmatier, a professor of marketing and the John C. Narver Endowed Professor in Business Administration—made possible by the generosity of Charles and Gwen Lillis—is co-author of the eighth edition of “Marketing Channel Strategy,” along with Louis Stern and Adel El-Ansary. “Marketing Channel Strategy” is a comprehensive, research-based, actionoriented guide for practicing managers and managers-in-training with an interest in how to adopt and apply real-world channel strategies. The eighth edition of the book is

structured to provide background knowledge and process steps for understanding, designing and implementing high-performance channel strategies. “The framework presented in this book is useful for creating a new channel strategy in a previously tapped market, as well as for critically analyzing and refining a preexisting channel strategy,” Palmatier says. “While the book is based on nearly 50 years of years of research, we tried to make it very accessible to managers trying to apply our guidance to real-world sales channels.” n

Leadership in the Long-Term Army Research Institute extends Foster School leadership development study The Army Research Institute has extended its contract with the Foster School to examine the leadership growth and development of the US Military Academy’s 1998 graduating class. The institute will award nearly $300,000 over two years to Foster’s Center for Leadership and Strategic Thinking (CLST) to advance its Baseline Officer Longitudinal Development Study (BOLDS). The study was initiated at the US Military Academy at West Point in 1994 when the cadets first arrived. This extension follows an earlier $700,000 contract with the CLST to fund

the first phase of the study—one of the longest longitudinal studies of leadership ever undertaken. Leading the effort is Dr. Bruce J. Avolio, the Mark Pigott Chair in Business Strategic Leadership at Foster and executive director of the CLST. “We know that leadership development unfolds over time, but most of the evidence in the leadership literature covers very short time spans in terms of examining leadership development,” says Avolio, who has been involved with the project since its early days. “The BOLD study is unique in that we can look at early factors that have

shaped the leaders’ development in our sample—leadership roles in high school, at the US Military Academy and in first duty assignments—through to current midcareer leadership roles inside or outside of the military.” In addition to its goal of better understanding how leadership develops, the BOLD study will also attempt to provide insights on performance in extreme contexts such as combat. n

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Great Reads: Macroeconomic Trends Foster faculty recommend favorite books that illuminate the economy’s past, present and future We sent Foster faculty back to the bookshelf to recommend a title that helps explain what’s happening—or going to happen—in the economy at large. Here are their picks for some reads that are well worth your time: A Capitalism for the People: Recapturing the Lost Genius of American Prosperity (Luigi Zingales) A leading research economist, Zingales uses anecdotes and experience to motivate and personalize the story, but underneath is a bedrock of scientific research about the causes and consequences of economic growth and well-being. This book is fresh in its applications, yet backed by decades of evidence. – Jonathan Karpoff, Washington Mutual Endowed Chair in Innovation; Professor of Finance Free to Choose: A Personal Statement (Milton and Rose Friedman) The late Milton Friedman was a great public good for his clear analysis of the economics involved in policy issues. This book, while a little dated, is the best we can do now. Even better is the companion PBS television series that captures his unsurpassed quickness of thinking during discussions with opponents of his ideas, and his unmatched ability to explain the core reasoning behind his arguments using simple logic that any non-economist can understand. – Ed Rice, Associate Professor of Finance and Business Economics The Wisdom of Crowds (James Surowiecki) Surowiecki does a great job explaining important insights from informational economics to a general audience, in a way that illustrates their

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power. A large fraction of modern economic research is in informational economics, but this part of the field is typically very poorly communicated to non-specialists. – Philip Bond, Associate Professor of Finance and Business Economics; Norman J. Metcalfe Endowed Professor in Finance In 100 Years: Leading Economists Predict the Future (Ignacio Palacios-Huerta) Ten prominent economists consider the 22nd century, and forecast the potential effects of technology, increased longevity, work transformation, the rise of China and India, political extremism, repeating cycles of crisis and recovery, and climate change. I was especially interested in the consequences of understanding the human genome. – Stephan Siegel, Long Endowed Professor of Finance The World is Flat 3.0: A Brief History of the Twenty-First Century (Thomas Friedman) This classic opens, or re-opens, our eyes and ears to the opportunities in the global markets and cultures, and how we need to think about the changes necessary to be successful—as individuals, as companies and in our cultural awareness. – Rick McPherson, Lecturer in Management Code Red: An Economist Explains How to Revive the Healthcare System without Destroying It (David Dranove) The US spends almost $3 trillion on health care annually, making it a topical issue and one with ongoing political intervention. Code Red helps

interested readers understand why standard economic solutions do not work in healthcare, and why this industry is so hard to regulate. – Jonathan Brogaard, Assistant Professor of Finance The Myth of America’s Decline: Politics, Economics, and a Half Century of False Prophecies (Josef Joffe) For decades, pundits have been predicting the decay of the US economy and influence at the hands of a rising Japan, integrated Europe and, most recently, China. The author does an effective job placing these predictions in a historical context, and offers a balanced perspective to an environment in which pessimism and predictions of decline garner more votes and sell more books. – Kevin Steensma, Professor of Management; Evert McCabe Faculty Fellow The Big Short: Inside the Doomsday Machine (Michael Lewis) It’s one thing to spot an economic trend. It’s another to know when an acknowledged trend is wrong. And it’s yet another to incur the wrath of the majority by opposing it. Michael Lewis, of “Liar’s Poker” and “Moneyball” fame, tells the fascinating tale of a handful of brave souls and eccentrics who bet against the US housing market before it collapsed. It was harder than you expect. – Rocky Higgins, Professor of Finance; Marguerite Reimers Endowed Faculty Fellow

Capital in the Twenty-First Century (Thomas Piketty) Piketty is the foremost economist working on the distribution of income and wealth. In this book, he presents new and important facts on the changing level of wealth in the world’s leading economies. – Philip Bond, Associate Professor of Finance and Business Economics; Norman J. Metcalfe Endowed Professor in Finance In Fed We Trust: Ben Bernanke’s War on the Great Panic (David Wessel) This highly readable account of the 2008 financial crisis was originally recommended to me by Karma Hadjimichalakis. Even though the financial crisis and the subsequent recession are over, reviewing the 2008 experience helps us to understand current policies, including those designed to avoid another crisis in the future. – Debra Glassman, Senior Lecturer in Business Economics; Faculty Director, Global Business Center Who Stole the American Dream? (Hedrick Smith) This book outlines, in very accessible detail, the deterioration—in numbers and economic security— of the American middle class. It should serve as a wake-up call for those of us who think that all is well with the 21st century American economic system. – Thomas Jones, Professor of Management; The Boeing Company Endowed Professor in Business Management

The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (C.K. Prahalad) Understanding the differences in the perspectives and needs of the billions of potential customers that are the poorest people in the world is very valuable, and thinking about how business can help alleviate poverty is very interesting to me. – Rick McPherson, Lecturer in Management Makers: The New Industrial Revolution (Chris Anderson) This is an interesting book about how trends in open-source innovation, open-source design and 3D printing are enabling individuals to manufacture small batches of customized products. The author calls this industrial revolution “desktop manufacturing” and suggests that these trends, when combined, have the potential to change the world. He also examines through examples how crowdfunding and social financing are opening up opportunities for individuals seeking funds to start new ventures. – Suresh Kotha, Professor of Management; Olesen/Battelle Excellence Chair in Entrepreneurship; Research Director, Arthur W. Buerk Center for Entrepreneurship The Economist I recommend weekly reading of The Economist magazine. The coverage is timely, relevant, and thoughtful. First time through is a bit of a slog, but if you read it regularly then it will require an hour or less each week. The benefit is that you will be able to knowledgeably contribute to any discussion of current events, as well as

be aware of current things going on that may affect your firm or your family. – Kathy Dewenter, Associate Professor of Finance and Joshua Green Family Endowed Professor There Will Be Blood (film by Paul Thomas Anderson) For something completely different… This film has some great scenes on the difficulty of negotiation under asymmetric information (jargon for different people knowing different things), and between one party and a group. – Philip Bond, Associate Professor of Finance and Business Economics; Norman J. Metcalfe Endowed Professor in Finance n Too Big To Fail (Andrew Ross Sorkin), Liar’s Poker (Michael Lewis), and When Genius Failed (Roger Lowenstein)

Investors tend not to remember the past and believe that financial markets have become safer and that the future is rosier. But somehow, we once again went through a crash in 2008 and teetered on the brink of another Great Depression. So learn from the past, learn from the mistakes of others, and always be humble! – Thomas Gilbert, Assistant Professor of Finance n

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faculty RESEARCH BRIEFS Make, buy or ally?

ABCs of HFTs

Pricing Right

Some paths to innovation work better than others

High-frequency trading may improve market quality

Dynamic B2B pricing can increase profitability, maintain customer relationships

Innovating is always a good thing… right? Not quite. A new study by Abhishek Borah of the Foster School finds that the financial markets, on average, react negatively when firms innovate through the acquisition of another company. By comparison, innovations produced in-house or through alliances tend to be greeted positively by investors. In their analysis of three alternative paths to innovation—“make,” “buy” and “ally”—Borah and his co-author learned that buying innovation is the most prevalent of the three strategies in business today, despite its sketchy track record. Why? The study reveals that firms often choose to buy after periods of little commercialization, when they are desperate to innovate. Senior executives may have incentives to buy. And, perhaps most surprisingly, they simply fail to learn from past acquisitions. But the negative returns that plague “buy” innovations can be mitigated. Borah says that successful acquisitions require experience of the process, attention to detail, and resulting innovations that complement the firm’s core strengths and offer customers a real benefit. n

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An unsettling new force has emerged in the world’s financial markets. It’s known as high-frequency trading (HFT), a new breed of intermediary that buys and sells securities in unprecedented volumes and at unprecedented speeds using superior computing and blazing connectivity. The recent arrival of high-frequency trading has been disconcerting to traditional investors, and not only because HFTs profit—repeatedly, in tiny fractions of pennies—at their expense. “HFTs are obtuse and unregulated, and they are often accused of causing frightening market-wide events such as the flash crash of May 2010,” says Jonathan Brogaard, an assistant professor of finance at Foster. Yet his study of HFT activity on the NASDAQ and NYSE documents that high-frequency trades are associated with impounding information into prices and providing liquidity to informed traders. This is important—though far from conclusive—information for regulators looking to get a handle on these opportunistic new players. “We are able to establish important correlations between HFT and the price process,” says Brogaard. “However we aren’t able to nail down causality in this study.” n

You operate a business-to-business (B2B) enterprise, an essential link in the supply chain that transforms raw materials into products that serve the end consumer. And you make money the old fashioned way: by charging your cost, plus a reasonable margin. But what if you could increase profitability by as much as 52 percent simply by adjusting this pricing strategy? That’s the promise of a paper by Jonathan Zhang, an assistant professor of marketing at the Foster School. His B2B

pricing model demonstrates that switching to a dynamic pricing strategy—informed by data on customer behavior and adjusted over time—can both increase profitability and maintain customer relationships. “Our smarter pricing paradigm is focused on customer behaviors, and not on cost,” says Zhang. “Through increasingly sophisticated CRM systems in the current days of Big Data, we know a lot more about customers than ever before—their buying behaviors, their sensitivity to price and external factors, their business relationships with you. “So why not leverage this information to customize pricing for each customer, and adjust it over time to make sure that these relationships yield optimum profitability and still remain healthy?” n

© Gwoel, Dusit, kaarsten, NEGOVURA, Ecelop /;, ermek, fairywong

Mixed Messages

Look Out, Lovelorn Men!

Tax or Consequences?

Anxiety-inducing health appeals can prevent one disease, promote another

Romantic rejection could hit you in the pocketbook

Corporations caught avoiding taxes appear to bear no reputational costs

Lose weight. Drink less. Exercise more. Quit smoking. Get a flu shot. Don’t text and drive. Appeals such as these—and many others combating an array of diseases and disorders—accentuate risk and heighten feelings of anxiety, according to a new study by Nidhi Agrawal, a professor of marketing at Foster, and doctoral student Sokiente Dagogo-Jack. This anxiety can be a good thing, sparking your intentions to address the particular health issue raised in the message—improve behavior, get educated, see a doctor. It also can be a bad thing, depleting your regulatory resources, impairing selfcontrol and undermining your efforts to address other important health concerns. Agrawal stresses the need to find the right tone in public health messages, craft a message that tempers the scare with solutions. “If we look at the history of public health appeals, it’s been a fairly common practice to freak people out so that they will do something about it,” she says. “But we now know that this approach has costs. A better strategy would be to provide people with a realistic solution, empower them with a tool kit to address a given health concern.” n

She loves me. She loves me not. Upkeep of the former condition may require the occasional box of chocolates or bouquet of flowers. But the latter condition can cost much, much more. According to a Foster School study, men tend to splurge on luxury items in response to romantic rejection. Women, on the other hand, tend to indulge in opulent treats when they’re in a romantic relationship, not when they are rejected. The study is by former Foster doctoral student Eric Levy with Shailendra Pratap Jain and Mark Forehand, professors of marketing. “What we think is going on is that romantically rejected men are displaying their quality to potential mates,” Levy says. “And consistent with research just published, we believe that women don’t feel the need to display luxury items to potential male mates, but rather as a notice of their committed relationship, a way of telling other women to back off.” What’s not clear is whether women actually find such shows of male wealth appealing, though Levy is working on that question next. n

Who cares? Big deal. So what? Fuhgeddaboudit. That’s about the extent of collective public outrage upon learning that a business is avoiding taxation, according to new research by Jake Thornock, an assistant professor of accounting at Foster. Thornock and his co-authors ran a battery of tests to identify any reputational costs incurred when a firm is caught in the act of aggressive tax sheltering. They found no long-term cost—to the firm, its senior leadership, or its auditor. No drop in stock price. No damage-control advertising splurge. No slip in media reputation. No symbolic ousting of leadership. No plunge in sales. On average, the firm and its leaders bore no pain. Thornock notes that this finding exposes a chasm between perception and reality. “Any tax director would likely tell you that reputation matters in making the decision whether to use a tax shelter,” he says. “But we’re finding no negative reputational consequences in the long-term, nothing that would stick to a firm like a scarlet letter.” n

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Home Court Advantage

Tightening credit markets a key cause of doubling in corporate cash holdings

Proximity of college basketball recruits a performance advantage, so long as the coach stays

Any prudent corporation keeps a rainy day fund, a cache of cash reserves to see it through difficult times ahead. But lately, pundits and politicians have accused firms of sitting on too much cash and slowing the pace of economic recovery. New research by Jarrad Harford confirms that American corporations have doubled their cash holdings, as a percentage of assets, over the past 30 years. He also identifies a key cause: the marked shortening in the maturity of long-term corporate debt over the same period, which increases refinancing risk and the rationale for keeping more cash to mitigate that risk. “One way you can manage that risk is to have more cash reserves to afford some flexibility to refinance and to cushion the blow to cash flow,” says Harford, a professor of finance at Foster. “This allows managers a hedge against refinancing at bad terms, a cushion to hold off or refinance part of the debt, or the resources to pay off some of the debt.” But is it too much cash? Harford’s follow-up study demonstrates that corporate “cash” reserves are very much at work in the economy. n

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Like the personnel markets of corporations, the search for NCAA basketball players has gone national and even international, with scouts and coaches looking far and wide for the best talent available. But is there still an advantage to playing close to home? In their study of Division I collegiate basketball recruits, Terence Mitchell and Thomas Lee, professors of management at Foster, find that the decision to play college ball in close proximity to home generally pays off in both individual and team performance (as measured by game statistics and NBA draft status)—so long as there is stability in the coaching staff. “The coach is boss. He sets the policies, the expectations, the culture, the tone,” says Lee. “But when the coach goes, all bets are off. All of those positive effects of proximity go away.” Mitchell adds that any kind of organization would do well to establish robust social support systems to help individuals and teams “overcome the kind of challenges we all face when we come from afar or experience a change in leadership.” n

Diminishing Returns Burgstahler awarded Schoeller Senior Fellowship to study “size management” in European firms David Burgstahler, the Julius A. Roller Professor of Accounting at the Foster School, has been selected a 2014 Schoeller Senior Fellow. This prestigious fellowship is awarded annually by the Dr. Theo and Friedl Schoeller Research Center for Business and Society at the University of ErlangenNuremberg in Germany. Each appointment honors an internationally renowned senior scholar conducting research that contributes to responsible leadership in business and society. Burgstahler has been a member of the Foster School faculty since 1981. He served as the school’s acting dean in 2005 and was the American Accounting Association’s vice-president for publications from 2007-2009. He is a five-time Beta Alpha Psi Professor of the Year and won the AAA-AICPA Notable Contribution to Accounting Literature Award in 2002. His research focuses on firm valuation, management of earnings, and the relation between accounting information and stock prices. Burgstahler will use the fellowship’s research award of 50,000 euros to further his research on the practice of size management—minimizing assets, sales and employees—that some European private firms use to diminish the costs of mandatory audits and financial disclosures. n

© dotshock /;


Finding Fairness Equitable investment across generations requires reduction in risk and benefit payouts What is fair? It’s a serious question for policy makers whose decisions affect the economic and environmental well-being of current constituents and generations to come. A new study by Thomas Gilbert and Christopher Hrdlicka, assistant professors of finance at the Foster School, models a long-term form of fairness that takes into account the risk involved in managing shared assets—public pension plans, endowments and natural resources—equitably across generations. Gilbert and Hrdlicka find that fairness across time and varying states of economic health requires the reduction of both investment risk and benefit payouts. “If we value fairness across generations and economic states, we should expect our policy makers to take fewer risks in the investment of our shared assets, and to pay out less to us today,” says Gilbert. “At its root, fairness means less and less tolerance of any action that would put future generations at risk of suffering negative shocks in any state of the world.” Redefining fairness

Fairness has been a component of economics since Adam Smith wrote “The Theory of Moral Sentiments.” But the academic notion of fairness has traditionally focused on expectations, and abstracted away from uncertainty, according to Gilbert. The same could be said of policy makers, who often profess fairness while largely ignoring risk and the long-term ramifications of their decision-making. So, for example, the leaders of a university might well consider the “fair” investment policy of the university’s endowment to be the one that promises the highest expected return. Expected returns, though, are average returns over time. And timing matters. Higher expected returns come with greater

risk. Greater risk means higher volatility—the inevitable ups and downs on the road to that generous expected return. But what happens to beneficiaries when that risky investment turns down, even temporarily? Is it fair to tell that unlucky generation of students that they will receive less, or even nothing at all?

Thomas Gilbert

Preserving the public trust

Gilbert and Hrdlicka’s model addresses a fundamental dilemma of public asset management: how to please beneficiaries today while ensuring equity far into the future. They introduce a form of fairness— called “stochastic” fairness—that takes into account real-world risk as a factor in the management of public assets. And stochastic fairness demands balance. The model demonstrates that stochastically fair caretakers of university and non-profit endowments, sovereign wealth funds, and public pension plans would invest in lower-risk assets and reduce payouts from these shared assets, now and forever. These actions, Gilbert says, would ensure that we do not find ourselves in economic quandaries such as those faced by Detroit and much of the EU. “Stochastically fair managers would refuse to tolerate such inequality across time and economic states,” he says. Environmental protection

A more complex application of the model addresses the management of natural resource depletion. Specifically, our environment, which is becoming less habitable due—most scientists believe—to excessive emissions of carbon dioxide into

Christopher Hrdlicka

the atmosphere. We have the choice of curtailing pollution today or continuing to pollute while investing in technologies that might fix the anticipated problems associated with global climate change. But those massive investments have a significant risk of failure. The findings of Gilbert and Hrdlicka suggest that the fair way to prevent the coming crisis would be to reduce emissions now and for the indefinite future. This solution would avert the massive and risky cost of developing speculative technologies and spread the economic sacrifice equally across all generations, but it’s the safest way to ensure that no future generation inherits a hostile environment. If we value the stochastic notion of fairness, that is. “We are not making any normative statements about what policies should be put in place. And we are not making a case that this is necessarily the right way to view the world,” Gilbert says. “But if we as a society value the notion of fairness over the long term and if we want our policy makers to make decisions accordingly, then we have written the complete model of how to think about it.” n

SP RING 2014 27


Anything Is Possible

Category: Fascinating Foster Alumni for $2000 Answer: Serendipitous member of Jeopardy! Clue Crew and unexpected Ironman triathlete Question: Who is Kelly Miyahara? Miyahara (BA 2000) would be the first to admit she was born to do neither—that is, travel the world recording visual clues for the nation’s iconic game show nor compete in the world’s preeminent test of extreme endurance. Blessed (and cursed) with infinite interests, Miyahara graduated from Foster in 2000, not quite sure what to do with her

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degree. Around vagabond spells in Europe, she began building a career at Nordstrom. She had just been promoted to customer service manager of a Los Angeles store in 2004 when the phone rang early one Sunday morning. It was her mother, a schoolteacher and long-time Jeopardy! devotee, beyond excited to tell her daughter about an open casting call for the show’s Clue Crew. Why not her?

Miyahara decided on a lark to try out. She composed her crude audition tape on a 1984 camcorder. But, to her eternal surprise, she made the first cut of the nationwide talent search. Then a second.

Then a third. “Looking around at these professional actors I thought, I don’t belong here,” she admits. “But it actually worked to my advantage because the only thing I could be was myself. And it turns out that’s what they were looking for.” Ever since, Miyahara has traveled the world, recording Jeopardy! “answers” on location—often exotic location—as well as representing the program on tour and delivering “Classroom Jeopardy!” to schools across America. The past decade has been a whirlwind. She has recorded clues amid the swirl of Times Square and at the gates of an ancient Cambodian temple, aboard an America’s Cup yacht careening across San Francisco

Photo courtesy of Jeopardy!

Kelly Miyahara seizes the day, no matter what it brings


Bay and on a jetting kayak captained by Australia’s legendary Bondi Beach Lifesavers. A USO tour of Japan with host Alex Trebek helped her reconnect with her family heritage. A South African safari found her working among a pride of lions. And a Jeopardy! fan cruise gave her occasion to stroll among the giant tortoises of the Galapagos Islands. “So many places I would never have had the opportunity to see without Jeopardy!” she says. “I have to pinch myself every day. This is my job! What I do for a living!” Never say never

The experience has emboldened Miyahara to go after her interests and dreams, no matter how impossible they may seem. Exhibit A: triathlon. A string of catastrophic knee injuries that began in high school had ended promising soccer and softball careers; doctors had warned her to avoid running for the rest of her days. But a few years ago some friends were doing a triathlon for charity. Miyahara thought she would swim, bike, then just walk. “I should have known better,” she admits. “I’m competitive, and I just kept pushing.” She pushed that knee farther and farther, eventually training for a full Ironman—2.4 mile swim, 112 mile bike, 26.2 mile run—alongside a growing coterie of teammates who became close friends. One of the closest was a woman named Marisela Echeverria, with whom Miyahara made a quixotic pact: if either got the chance to go to the Ironman World Championship in Kona, Hawaii, they would go together. But on a training ride the very day of the 2012 Ironman Kona, Echeverria was hit by a bus and died. “I decided to find a way to keep that promise to Mari,” Miyahara says.

Her only hope was a program called “Kona Inspired” that awards seven spots for athletes whose stories are more compelling than their qualifying times. The program’s motto was her own: “anything is possible.” Kelly’s story was Mari. Friends from the Team in Training Ironteam helped produce her entry video, which went viral. Its inspiration touched hearts around the globe, helping raise more than $31,000 for the Leukemia & Lymphoma Society. And Miyahara booked a ticket to Kona, accompanied by 40 members of “Team Mari.” When she finally crossed the finish line long after dark on October 13, it became clear that the experience was so much more than a race. “I didn’t realize how much healing was happening until afterward,” she recalls. “That weight that we had all felt since Mari died just lifted. We all had this incredible sense of peace. I think she did, too.” Next start?

Miyahara plans to continue racing, though at distances more sensible for her compromised joints. And she hopes to ride her luck at Jeopardy! as long as it holds. “I know that I have the best job in the world,” she says. “But I also know that it’s not going to last forever. So I’m trying to prepare myself for what’s next.” That means creating opportunities out of her interests. And there are many. Miyahara would like to develop positive TV programming, do animation voiceovers, write a children’s book, develop an athletic clothing line for real-sized women, create a line of greeting cards, found a non-profit. Miyahara may have detoured from management to entertainment, but might she eventually fuse the two? “Let’s see what I can make happen,” she says. “Anything is possible.” n

19-23 Foster Business Week June 2014 8 Undergraduate Graduation Ceremony Hec Edmundson Pavilion 9 EMBA, GEMBA, TMMBA Graduation Ceremonies Meany Hall 10 Entrepreneurship Panel Discussion Anthony’s Forum, Dempsey Hall 14 Full-Time MBA, Evening MBA and PhD Graduation Ceremonies Meany Hall UW Commencement Ceremony Husky Stadium July 2014 11-13 MBA Reunions for Classes of 1989, 1994, 1999, 2004 & 2009 12 6th Annual Foster Alumni Picnic Denny Yard 12 UW Alumni Night at the Mariners; Foster Alumni Pregame Party Pyramid Alehouse September 2014 20 Foster Alumni Tailgate UW vs. Georgia State E1 Parking Lot October 2014 23 23rd Annual Business Leadership Celebration Visit for details and more events.

SP RING 2014 29


The Decider Mike Fridgen turns Big Data into sound advice to consumers leadership and dynamite technologists. A model for his own future. Next big thing in travel

What can Big Data do for you? In the raw, it’s overwhelming, driving us to a state of analysis paralysis where infinite choices make choosing infinitely difficult. Mike Fridgen (BA 1997) sees this as an opportunity. One of the co-founders of and, Fridgen has dedicated his career to solving the intensifying “paradox of choice.” “What’s exciting about this information revolution is not the access to data,” he says. “It’s the promise of insight from that data, objective guidance to simplify decision-making. That’s what drives me.” It has since his earliest days at the Foster School. One of the first students in the newly launched Program in Entrepreneurship and Innovation (now the Buerk Center for Entrepreneurship), Fridgen co-founded a packaged student tour company that evolved into, a venturefinanced online student travel portal. When the market turned and the VCs pulled the plug, he emerged bruised but a little bit wiser. A brief stint at Expedia afforded him the halcyon vision of a transformative company powered by visionary 30 fos te r BU S IN E S S

While taking a course on revenue management—that is, dynamic pricing—toward his MBA at Harvard, Fridgen was introduced by his former backers at Madrona Venture Group to a UW computer scientist named Oren Etzioni. Etzioni had been reverse-engineering revenue management, developing complex algorithms to predict variable pricing. But he needed partners to turn his technology into a market-ready product. Fridgen jumped at the chance to join, the world’s first price prediction engine. “We were really inventing something,” Fridgen says. “And turning a new technology into a consumer product was some of the most fun I had ever had.” Farecast found air travelers the best price and offered simple advice on whether to buy or wait, backed by a degree of certainty. It was a hit, first with the tech crowd and later with the average traveler. Microsoft noticed. It purchased Farecast in 2008 to enhance its Bing search engine. Time to decide

At Microsoft, Fridgen first served a mainstream audience. He could see that the opportunity to advise consumers was growing exponentially. More and more shopping was migrating online, and bellwether e-tailers like were driving dynamic pricing into every category. He reconnected with Etzioni to create a next-generation comparison shopping engine that would add insight to access. That engine was, a company powered by its proven technical team (largely made up of UW grads) and backed by serious Seattle venture funding. “It was getting the band back together,” Fridgen says. Decide aggregated user and expert reviews across the Internet to recommend the clear winners in a product category.

It also offered guidance on price and purchase timing. The goal was trust and transparency. The model was a “Consumer Reports for the 21st century,” Fridgen says. “Helping people decide what to buy, where to buy, and when to buy.” By 2013, Decide’s omniscient personal shopping assistant was offering intelligence on virtually everything sold on the Internet: electronics, apparel, appliances, sporting goods, toys, books, you name it. Obey eBay

Breakout success attracted many suitors. The one that convinced the Decide team to sell was eBay. The online auction site offered a tantalizing challenge: flip the model—from providing buying guidance to consumers to providing pricing guidance to sellers. It was a big decision for Fridgen & Co. “We had to reconcile this with our deep belief in the mission of leveling the playing field for consumers,” he says. What they found was the vast majority of eBay’s 25 million sellers were the little guys competing in the market with the likes of Amazon and Walmart. Though Etzioni departed to lead Paul Allen’s Institute for Artificial Intelligence, Fridgen and the rest of the team are working hard to level the playing field for eBay sellers. And what of the serial entrepreneur, now back at an established firm? Fridgen is committed to eBay, but always with an eye on new challenges. A devout fan of Husky and Seattle sports, he could see himself in the burgeoning industry of sports analytics one day. Wherever fortune takes him, the themes will undoubtedly include simplicity and transparency. “Big Data sounds complicated, but its real promise is in simplifying everyday decision making. That’s what we’ve aimed to do with all of these companies,” he says. “And that’s what I’ll continue to do.” n

Leaning... Forward Nancy Zevenbergen, Leslie Tubbs and Brooke de Boutray lead a proudly perceptive, fiercely aggressive Seattle investment firm Nancy Zevenbergen (BA 1981) recalls a childhood visit to her uncle George Zoffel’s (BA 1956) credit reporting firm where she found him and his business partner at the front desk reading the Wall Street Journal while a legion of ladies typed credit reports in the back. The image made an impression. “I thought, if I never learn to type, maybe I’ll get to sit up front and read the Journal someday,” she recalls with a laugh. That little girl with big ideas is now president and chief investment officer of Zevenbergen Capital Investments, a finance firm of her own making. She and partners Leslie Tubbs (BA 1982) and Brooke de Boutray (BA 1977) manage $3 billion in assets, boldly invested in companies on the uphill slope of significant and sustainable growth. And they are good, consistently—and sometimes spectacularly—beating the benchmark Russell 3000 Growth Index. The hard way

Each of these Foster finance alumnae forged her own path via banking—Zevenbergen at Rainier National, Tubbs at Key, and de Boutray at First Interstate—to the men’s club of investing. “In our first jobs,” Zevenbergen recalls, “the glass ceiling was thick.” So she created her own job. After six years in trust investment, Zevenbergen launched ZCI headlong into the market crash of 1987. “It was a terrible year,” she says. “But a perfect year to start the firm, because it was the equalizer that decimated everyone. People realized that their money was no safer in a 100-year-old investment firm than it was with an independent asset manager like me.” Zevenbergen started level, but quickly demonstrated her advantage. And ZCI grew rapidly. In 1992 she hired de Boutray, whom she had met while both studied for their CFAs. She convinced Tubbs, a sorority sister at the UW, to join in 1994.

Brooke de Boutray, Nancy Zevenbergen and Leslie Tubbs in ZCI’s Two Union Square offices.

Cut loose from the strictures of Big Finance, the team was free to invest on its own terms. Game changers

Zevenbergen says it feels strange reflecting back on a firm that’s perpetually looking forward. ZCI is the aggressive piece of clients’ investment portfolios. Growth is their game. “Investing is both an art and a science,” says de Boutray. “Because we are growth managers, we open our minds to what can be as opposed to what happened in the past. This approach has served us well.” This means relying less on historical analysis and more on assessing opportunity. “We’re not venture capitalists,” Zevenbergen adds. “But we share their focus on the people, the concept and the addressable market when we’re consider investing in a company. “We look for game changers.” Among them, Microsoft, Starbucks, Amazon, Apple, Tesla, Netflix, Facebook, Zillow, Google, Chipotle, LinkedIn, Qualcomm—each bought early and held until the waning of growth. Aside from impeccable timing, the secret to ZCI’s success may be its powers of perception. The women of Zevenbergen Capital are

proud of their success in the testosterone world of growth investing. They both accept and embrace their difference from other firms. “It’s Venus and Mars,” Tubbs says. While men in finance tend to be more analytical, more driven by ego, she says, “we collaborate, listen, observe. These are clichés, but they are also our competitive advantage.” Where are the women?

Having blazed a considerable trail in finance—especially in the Northwest— Zevenbergen, Tubbs and de Boutray have lately been wondering why they don’t see more young women entering their industry or other male bastions of computer science, engineering and mathematics. They’ve decided to stop asking and start acting. ZCI has created a number of ARCS Fellowships to promote science-related careers at the UW. They’re also offering internships to Foster students and recently endowed a scholarship fund to support undergraduate women studying finance. “We believe that funding education brings a richness to our community,” Zevenbergen says. “Instead of just asking where are the women, we want to do something about it.” n

SP RING 2014 31


Seattle Meets Saudi Lateefa Alwaalan wants to bring Arabic coffee to a global market through several iterations and improvements, and Alwaalan says, “I’m focusing on acquiring market share and building the brand.” Recently, competitors have entered the coffee market in Saudi Arabia with machines similar to Yatooq’s, and Nestlé introduced its own version of ready-made blends of Arabic coffee. Alwaalan views this positively; it means the market is growing. Networking advocate

Coffee and start-ups might seem more Seattle than Saudi Arabia, but not to Lateefa Alwaalan (TMMBA 2011). Yatooq, the company founded by Alwaalan, makes it easier and faster to brew Arabic coffee, a blonde, spicy coffee central to all social gatherings in places such as Saudi Arabia, Bahrain and the United Arab Emirates. Alwaalan came to Seattle to get her MBA after studying computer science, and working in IT and then banking in her home country of Saudi Arabia. While in the Technology Management MBA Program, she focused intently on gaining business and entrepreneurial skills. She competed in the Business Plan Competition with her idea for Yatooq. She also enrolled in the Entrepreneurship Certificate, offered by the Buerk Center for Entrepreneurship at Foster. She says her experience at the Foster School, “transformed me. I use everything I learned—from change management to supply-chain management to marketing.” Upon returning home after graduation, her father offered her a job in his pharmaceutical company. Her first job was entering

32 fos te r BU S IN E S S

invoices, but that didn’t last long. She quickly moved up the ranks and became the general manager in less than two years. During that time, Alwaalan was also busy launching Yatooq. The coffee business

Yatooq started by selling ready-made blends of coffee, with good results. The company’s most successful product, however, has been the introduction of its coffee machine last year. When made traditionally, Arabic coffee takes 20-30 minutes to prepare and requires over ten steps. Yatooq’s machine dramatically reduces the time and effort required to make Arabic coffee, and it’s one of the first such machines to be sold in Saudi Arabia. Within two weeks of launching the coffee machine in grocery stores and online, it sold out. Shortly after that initial success, Alwaalan was able to stop working at the pharmaceutical company and focus on growing her business full-time. She is relentlessly focused on improving the product. The coffee machine has gone

Not only has Alwaalan managed a pharmaceutical company and launched a successful start-up, she also co-founded the organization CellA, which offers women the opportunity to regularly network with each other—a foreign concept for many women in Saudi Arabia. CellA also provides career management training and a mentorship program for women who are just starting their careers. In 2011, the group had 70 members. Today, membership has ballooned to almost 3,000, and the organization has provided training to 600 women. Alwaalan was nominated to be president of the organization earlier this year. Onwards

The future looks bright for Alwaalan. Yatooq continues to expand. Last fall, the company started distributing its coffee and coffee machines in Kuwait and opened a store there. In December, she was chosen by Forbes Middle East as one of its “Leaders Inspiring a Kingdom in the Business World.” Alwaalan said her greatest challenges now are scalability and shifting from a start-up to a more established company. Her goal for the future is to bring Yatooq’s coffee and coffee machines to the world, and her vision is for Arabic coffee to be the next Chai tea. Look for Yatooq in a store near you soon. n

Companies driven to succeed. Careers powered by Foster. Let us know where YOU work!

Top Ten Employers of UW Foster Grads* 1. Microsoft

6. Deloitte

2. Boeing

7. T-Mobile


8. EY

4. PwC

9. Nordstrom

5. Starbucks

10. Intel

What’s in a list? For starters: an amazing network. From the top 10 employers of our graduates to the 10 most recent Foster-led start-ups, Foster alumni are mentors, speakers, sponsors, consulting partners, competition judges and donors who enhance the education we deliver. Knowing where you work is a huge benefit to our school and alumni network as we demonstrate our Husky strength in numbers. Give back to your alma mater this spring by updating your professional records with us, and help open doors for current and future UW Foster grads. Visit or simply send us your business card in the envelope enclosed in this issue of Foster Business. *Based on alumni self-reporting

足No nprofit Organization U.S. Po stage

PAI D Seattle, WA P ermit No. 62 ADVANC EMENT Box 353200 Seattle, Wa 98195-3200



Foster Business Magazine Spring 2014  

In this issue, benefit from the wisdom of a decade of CEOs who held the Fritzky Chair in Leadership; the man whose ground-breaking research...

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