Bid/ask: Campari adds Grand Marnier to its mix; a bid from China threatens Marriott’s Starwood deal
Campari mixes with Grand Marnier.
other forms of spending. By using the donated MLPS, the school was able to shift some of the risk of guaranteed compensation onto the coaches, says Chad Chatlos, a principal in the sports practice of executive search firm Korn Ferry. In exchange, the coaches had a chance at a bigger reward. “Unfortunately in this case, it hasn’t worked out for the coaches,” Chatlos says. Miller, Rodriguez, and Byrne were unavailable to comment on the bonus structure, according to Arizona athletics spokesman Jeremy Sharpe.
In theory, the deal could have been a winner for both sides. Arizona was in a position to keep the distributions the MLPS paid over the course of the coaches’ tenures and was also giving them an incentive to remain in Tucson. If they stayed, the coaches could look forward to a big payday at the end of their contracts. Rodriguez’s name was floated for a number of jobs last year, including some with higher salaries. He chose to stay put.
Several Division I athletic directors say they had never heard of such a bonus structure. Or if they had, they say they wouldn’t consider it for their own coaches. “In the world of higher education, many outside-the-box ideas need very close scrutiny,” said Bill Battle, athletic director at the University of Alabama, in an e-mail.
In the original Arizona deal, the MLP shares were set to be converted to cash and paid out only if the three men were still employed by the university at the end of March 2022. One year into the agreement, they all signed new deals that, among other things, changed the payout schedule. Byrne and Miller will get their final payouts two years earlier, in 2020. Under his contract, Rodriguez will receive his bonus in fragments, starting with 25 percent this month.
The ultimate value of the bonuses will be determined over the next four years. Should oil rebound, there’s time for all three to make back the lost amount and then some. But there’s also the possibility the payouts will become even smaller. �Eben NovyWilliams and Brandon Kochkodin
The bottom line Big-time college coaches are expensive, so Arizona got creative by paying them with donated energy-company shares.
Edited by Pat Regnier Bloomberg.com
Paypal co-founder Peter Thiel said MBAS are predisposed to “herdlike thinking and behavior.” Venture capitalist Marc Andreessen dubbed them a contrarian indicator, saying “if they want to go into tech, that means a bubble is forming.” In a post on the question-and-answer website Quora, Facebook Chief Operating Officer Sheryl Sandberg, who earned an MBA from Harvard in 1995, said that while she got “great value” from her experience, she wasn’t ready to recommend the degree to the country’s future tech stars. “MBAS are not necessary at Facebook and I don’t believe they are important for working in the tech industry,” Sandberg wrote.
Silicon Valley’s trash talking of the MBA obscures the reality that U. S. tech companies are hiring B-school grads in ever-larger numbers. Business schools sent 16 percent of their 2015 graduates into technology jobs, according to a Bloomberg Businessweek survey of students who’d accepted offers by that spring, making it the No. 3 industry for MBA grads after finance and consulting.
By one measure, Silicon Valley values MBAS more than Wall Street does. In 2015 tech companies paid business school graduates more than financial companies did, according to Businessweek’s poll of more than 9,000 MBAS. “If I said all people with a law degree are worthless, what would you say?” says Rich Lyons, dean at the University of California at Berkeley’s Haas School of Business. Fortythree percent of its 2015 class went into tech, according to the survey. “It’s such an unwarranted generalization. Firms wouldn’t keep coming back to hire our MBAS if it wasn’t a valuable skill set.”
Amazon.com, Microsoft, Google, and IBM were among the 15 companies that hired the most MBAS in 2015, according to data reported by 103 business schools schhools to Businessweek, prroof proof that while the founders and chiefs of some of the top U. S. tech companies may see themselves as renegades, they’re not above hiring trained managers to carry out their vision.
While a degree in computer science—or the lack of any degree at all—may confer a high mark of distinction, the Valley’s C-suites are packed with MBAS. Twenty-four of 67 companies in the S&P 500’s Information Technology Sector Index are led by chief executives with MBAS or equivalent degrees. Among those CEOS are Apple’s Tim Cook (Duke’s Fuqua School of Business) and Microsoft’s Satya Nadella (Chicago’s Booth School of Business).
In the eyes of Keith Rabois, an investment partner at the VC firm Khosla Ventures, the presence of MBAS at a tech company is a sign the business is mature, maybe even over the hill. “They tend to get hired after the company is already successful and it becomes a very bureaucratic organization,” says Rabois, an early employee at Paypal who later founded the real estate startup Opendoor. “They will probably keep you out of trouble, but they won’t create any value.”
The idea that MBAS don’t belong at startups has become a Valley meme. Guy Kawasaki, a onetime Apple employee turned venture capitalist, once quipped that in valuing a young company, he adds $500,000 for every engineer on staff and subtracts $250,000 for every MBA. Kawasaki has an MBA from UCLA.
“I don’t buy into the argument that entrepreneurs don’t need an MBA,” says Sri Zaheer, dean of the University of Minnesota’s Carlson School of Management. “If they were a little more clued up about how to make money in their businesses, we wouldn’t see these tech bubbles and the craziness that happens every few years.”
Twenty-four percent of 157 startupsups ups valued aatat $1 billion or more— frequently referred reeferred to as unicorns—were foundedd by MBAS, according to a recentt study published by David Fairb Fairbank,bank, a student at Harvard Busin Business ness School. They include eyeg eyeglassglass retailer Warby ParkerPar rker (all four founders atte attendedended the Wharton School), me medical edical directory Zocdoc (Ccolumbia (Columbia Business School), an andnd health insurer Oscar (HBS). “A unicorn is not necessarily the end-all measure of long-term successful companies, but it’s a pretty good metric for thinking big,” says Fairbank.
Business schools worry the MBAbashing may discourage potential applicants. The degree appears to be losing some of its popularity, with enrollment down 11 percent since 2009, according to a survey of 265 International,business b usiness schoolsan accreditby AACSB ing organization. “When you used to think about good business leaders, you would think about a Jack Welch. Now you think of Zuckerberg, and that’s a really different association with graduate schools of business,” says Amy Hillman, the dean at Arizona State University’s W.P. Carey School of Business, where 43 percent of 2015 grads went into technology.
Hillman says B-school grads will find even more opportunities at technology companies as investors become more discerning about the types of skills required to turn a good idea into a thriving business. “It used to be more risk-takers,” she says. “Today it’s a group of very sophisticated funders who are looking for very sophisticated business ideas.” �Natalie Kitroeff and Patrick Clark
MBA, Harvard MBA, University of Chicago
Almost one-fifth of B-school graduates in 2015 went into tech jobs, making the industry the No. 3 employer of MBAS.
according to figures compiled by AACSB International, an organization that accredits B-schools worldwide. “There’s a frustration on the part of a lot of women, and probably men, too, that we haven’t made more progress,” says Amy Hillman, the dean at Arizona State University’s W.P. Carey School of Business.
In August the White House convened 150 leaders from top business schools and had them sign a pledge to take steps to boost female enrollment by cultivating potential applicants early on in their education and by offering more financial aid. “When business schools are missing out on a large share of female college graduates, they are missing out on an extremely large share of the top qualified college graduates,” says Betsey Stevenson, a University of Michigan economist who served on President Obama’s Council of Economic Advisers and helped lead the August summit. “If they want to continue to be a relevant part of the training in the 21st century, they are going to have to make changes that will make them more attractive to women.”
Deans say business schools suffer from a unique timing problem. Unlike law and medical schools, which tend to enroll students soon after they finish college, the full-time MBA program is designed for people who’ve already proved themselves professionally. Elite B-schools typically prefer that applicants have about five years of work experience, which means the average MBA student is 30 years old at graduation, Bloomberg data show. Women in their late 20s who think they’ll want to have children at some point may feel they’d do better racking up career experience than taking two years off for business school. “You’ve got some prime childbearing years and prime career trajectory years, and I think we are seeing women who are not willing to come out of [the workforce],” says Arizona State’s Hillman.
There’s evidence that lowering the work experience requirement for applicants helps make classes more female. George Washington University School of Business mandates a minimum of two years, and 41 percent of its MBA students are women. Also, the same share of women and men enroll in specialized business master’s programs, such as accounting and marketing, which often don’t require any on-the-job experience, according to AACSB.
“If we decide to let women go straight through [to business school after college] and lower that bar, there’s no question that we would get more women in,” says Sarah Fisher Gardial, dean at the University of Iowa’s Tippie College of Business. But at what cost? She and some other deans argue that awarding the degree to younger students would make it less valuable. Students, they say, learn more when everyone in the classroom brings his or her work history to bear. Says Fisher Gardial: “You really are setting up a richer educational process, because the participants learn more from their fellow classmates.”
Women may also have trouble seeing themselves at business school because the classes are overwhelmingly led by male professors. The pledge signed by the 47 schools in August also committed them to try to boost the number of women instructors. Bhagwan Chowdhry, a finance professor at the University of California at Los Angeles’s Anderson School of Business, has argued that because of the limited number of women Ph.d.s in economics fields, a mandate to hire more women professors at business schools could end up lowering the caliber of faculty. Anderson’s dean, Judy Olian, who says she’s made hiring women professors a priority, counters: “If anything, our standards have risen.”
To tempt women to take time out from their careers to pursue an MBA,
Percentage of women enrolled, 2014-15
Law school The required five
years of work experience may deter women who want to advance in their field before having children