Latest “State of the School” note is out from Dean Saloner. In my mind, he’s doing a pretty fine job in his first year as Dean—I think most of us don’t notice it’s his rookie year, other than the fact that it was Bob Joss who spoke at our original admit weekend back in 2009.

Looking forward to getting my innovation on at the new Knight building…

Building the Future

Dear Friends,

It was wonderful to reconnect with many of you during my first year as dean — to admire the growth and accomplishments of those whom I have known for some time, to meet many more of you, and to marvel at the caliber and caring of our alumni community.

As I reflect on the last 12 months and look forward, nothing captures the essence of what we are striving for at the Stanford Graduate School of Business more than the words that will grace the cornerstone of our new

Knight Management Center: "Dedicated to the things that haven’t happened yet and the people who are about to dream them up."

We transform our students, through ideas, knowledge, and capabilities, into leaders prepared for the "things that haven’t happened yet" and inspire them to "dream them up." Underpinning this is faculty innovation in teaching and research, which generates new ideas, knowledge, and ways of imparting them. Our new Knight Management Center will be a place that kindles and embraces innovation and innovators, both students and faculty. We are building not only a new home but also new collaborations, new opportunities, a new future.

The MBA Program: A Transformational Experience

From any perspective — and I’ve been fortunate enough to have experienced it as a student, alumnus, professor, dean, and even parent — the transformation our students undergo is extraordinary. Simply put, when they graduate, our MBAs think, act, and even dream dramatically differently than they did when they arrived.

In constructing this experience, the figurative cornerstone is the knowledge gained in the first year through the Perspectives and the Foundations courses. Here, students are exposed to the canon of business knowledge. Perspectives classes, such as Ethics in Management and Strategic Leadership, give students the broad context of managerial issues. Foundations courses provide the groundwork for that context: how to use probability and statistics to understand what one can (and cannot) infer from numerical data; how to use accounting to understand the performance of a company; how to build models and use economic theory to project future outcomes. Students are exposed to a wide range of functional areas, including finance, marketing, operations, and human resources.

"It’s incredibly motivating to have your sense of the possible stretched — and so I’m leaving school with the conviction that I can do far more than I previously thought possible in the niche where my passions run deepest." — Reid Saaris, MBA 2010

Because we recognize that the needs of a former hedge fund manager differ from those of a past consumer marketer or an ex-Navy SEAL, we offer options for each Foundations course. One option is designed for students with little or no background in the subject. And, at least one other — an advanced applications class — is designed to challenge students with an extensive background in the subject. We recognize that different students have different learning goals and we now allow some tailoring of which Foundations courses students take. This ensures that every student graduates with the knowledge befitting the Stanford MBA degree, while at the same time maximizing the experience of each individual.

While this transformative experience is grounded in the base of Perspectives and Foundations, we then reach for the sky so that our graduates can soar. We seek to give our students not only knowledge but also the capabilities necessary to lead, to achieve, to change the world.

• The first capability is that of critical analytical thinking, the ability to construct and recognize solid logical arguments, their underlying assumptions, and their limitations. With this, our graduates can analyze problems, think independently, and thus see trends and opportunities that others may not.

• The second capability is personal leadership. This entails a deep self-awareness of one’s own strengths, weaknesses, and even identity, coupled with an understanding of myriad influence styles and how best to use them. With this, our graduates can enhance their personal effectiveness and their ability to motivate and inspire others.

• The third capability is innovative thinking — the ability to think creatively or out of the box. With this, our graduates can develop new solutions to old problems.

In combination, these leadership capabilities allow our students to diagnose problems accurately, to develop innovative solutions, and to motivate others in pursuit of these solutions.

An Intellectual Environment for Faculty Innovation

The creation of ideas and the communication of those ideas to today’s and tomorrow’s leaders are the building blocks of the student transformation. In our knowledge-based economy, Stanford is at the forefront of developing new insights and understanding.

Contemporary Economic Policy adds a new dimension to our offerings on government and business. The course was created by economics professors Edward Lazear and Kathryn Shaw, both of whom have served on the President’s Council of Economic Advisers, along with former National Economic Council Director Keith Hennessey. The course draws on real issues, such as income inequality, the financial crises, bailouts, and health care; analyzes them in an economic framework; and augments that analysis with the real politics that determined the result.

Management lecturer Mark Leslie led the development of Real-Life Ethics, in concert with a number of practitioners. The class examines complex and nuanced ethical situations. Students examined issues such as stock spinning (allocating stock in hot initial public offerings to CEOs who could bring in future business) or balancing fairness to outgoing employees versus the company when conducting layoffs. Students debated case vignettes, which often unfolded with murky issues. In most instances, the case protagonist was a guest instructor and provided context for discussion.

In marketing professor Jennifer Aaker‘s new course, The Power of Social Technology, students learn how to harness social technology to solve problems such as failing public education or finding organ donor matches. This year, one group of students created a visual presentation, posted it on YouTube, and raised awareness and money for Embrace, a $25 warmer for low-birth-weight babies that was developed in our Entrepreneurial Design for Extreme Affordability course in 2008. This year, Aaker will publish The Dragonfly Effect, which encapsulates research on using social media to achieve change.

We have more than 25 new courses already slated for the coming year. Among them are Creativity, Problem Solving, and Innovation, which surveys new research on useful ways individuals and organizations can become more creative; Leadership and Crisis Management, which explores techniques for solving problems in high-pressure, critical situations; and Sustainability as Market Strategy, which focuses on how companies are developing socially responsible strategies.

In addition to transforming our students, we want to transform how the world thinks. More new books from our faculty include Chip Heath’s Switch: How to Change Things When Change Is Hard, which leapt to number one on the New York Times "Advice" book list. Hayagreeva "Huggy" Rao published Market Rebels, about how collective action by activists underlies radical innovations in markets. And, Darrell Duffie, who has been a consistent influential voice as Congress wrestled with new financial regulation, will soon publish How Big Banks Fail and What to Do About It.

New research and ideas are critical to the creation of new courses and to affecting the broader world. To leverage the cross-disciplinary exchange of ideas that our small size allows and to encourage faculty initiative and innovation, we are supporting the self-organization of faculty programs aimed at new research and courses.

For example, Stefanos Zenios of our operations, information and technology faculty spearheaded a Health Care Innovation Program to catalyze work on innovations that will change global health care systems and to support new course content that will enable our students to lead and implement these innovations. Current research projects involve collaborations among faculty across operations, economics, and organizational behavior at the GSB, and with the schools of medicine and engineering. They aim, among other things, to identify ways that health care systems can prolong and improve the quality of patients’ lives, especially for those with complex medical needs in developing and developed economies.

A second example is accounting professor David Larcker’s established Corporate Governance Research Program, which conducted work with executive search firm Heidrick & Struggles revealing that more than 50% of North American companies could not name a CEO successor should the need arise. Larcker also created a comprehensive set of cases for his advanced Corporate Governance and Executive Compensation class, one of the few such courses offered among MBA programs.

Finally, we continue to infuse the school with more global content. This fall, we expect to expand activities in our Center for Global Business and the Economy. Required student study or service learning trips and internships already bring fresh global experience into the classroom. We also are planning faculty trips to India and China. These have proven successful in creating relationships and ideas for the next generation of global research. Last year I accompanied a student study trip to the United Arab Emirates and Saudi Arabia. I plan to meet up with one of this year’s study and service learning trips in Mumbai, and I have joined the board of Tsinghua University’s School of Economics and Management in Beijing, one of China’s foremost institutions in the field of business.

Our New Home, the Knight Management Center

Our future home — the Knight Management Center, a complex of eight buildings around three quads, across from the Schwab Residential Center — will provide innovative and fit-for-purpose physical facilities. It has flexible teaching space: There are traditional tiered classrooms but also small classrooms for seminars, such as Critical Analytical Thinking, and flat classrooms for experiential teaching that we often do in personal leadership courses. An open "Co-Lab" for collaborative work will support classes that employ hands-on and design thinking techniques. And, there is ample space in the faculty building for collaborative meetings, to ensure that new ideas and knowledge flourish.

We envision a place where people are clustered in groups, engaging in spontaneous intellectual discussion. We envision a place that encourages mixing and interaction among faculty, students, staff, and alumni. We envision a place that draws people in from the rest of the Stanford campus as well as from our extended community: alumni, executives, prospective students, recruiters, and family members. In short, we envision a warm, interactive atmosphere that encourages people to learn, to innovate, and to dream.

Move-in begins in January. By June, we will be holding all our classes there.

Building Connections

As we build the future, we envision a place where our alumni, students, and faculty continue to be closely connected. You are integral to our programs in every way. You help us identify and attract potential candidates, and help teach those students once they arrive. More than 150 alumni return to campus each December to participate in theExecutive Challenge, a role-playing exercise that is the "final exam" for our first-year MBA Leadership Labs. You also mentor our students and launch them on lives of meaning and impact once they graduate.

"Leadership labs and role plays in other classes truly prepared me to lead disparate personalities. I have learned the value of listening and absorbing social cues before taking action, and how to build trust, create a common vision, and bring enjoyment to my team’s experience." — Danielle Peltier, MBA ’10

Moving forward, we hope to create even more connections, both among alumni and with the school. Last year, for example, the number of alumni summer events — dinners or lunches with MBA students interning around the world — grew from 33 to 53. These are wonderful gatherings where alumni are able to reconnect with each other and mentor students. In the last three years, we’ve nearly tripled the number of alumni chapter events, with more than 6,000 alumni participating around the world. We’re looking for more ways to engage you in lifelong learning, to help support your growth throughout your life.

As we complete the Knight Management Center, I am extremely grateful for the many gifts, large and small, that have made it possible. As we look forward, unrestricted gifts will be critical to supporting the teaching we develop to keep management education at the cutting edge. Whether in dollars or time spent, I ask for your participation in a way that feels right for you. I look forward to seeing you on campus or at an event in your area during the coming year.

With best regards,

Garth Saloner, AM ’81, MS ’82, PhD ’82
Philip H. Knight Professor and Dean
Email: deansaloner@gsb.stanford.edu

Watch live video from Y Combinator on Justin.tv

Free stuff you MBAs might want:

• Windows – particularly for those who run Virtual PC for Mac and need Windows to run Excel
• OneNote  – an awesome app for note taking if you don’t have it yet
• Visio – For designing flow charts and website diagrams
• Groove – For working on group projects. It’s like a peer-to-peer version of DropBox without file limits. Though this solution only works if everyone’s on PCs…
• Project Professional – If you are a total nerd who loves gantt charts

The Microsoft Developer Network, a.k.a. MSDN, offers software for students on a special developer license originally designed for engineers building on Microsoft technologies who buy bulk licenses for building out products.

This is the academic version, which works great for everything except the core Office client. You can get the academic version of Office Professional for $80 at the time of this writing, and this promotion often ends around fall, so if you’re going to buy Office the start of school’s typically got the best pricing.

And if you’re excited about Office 2010 (and you should be), here is an ultra nerdy, why-did-we-spend-so-much-money-on-this trailer from Redmond:

Use a broker

Using NetworkSolutions for domain appraisal and approaching them anonymously on your behalf: https://www.certifiedofferservice.com/CertifiedOffer/offer/domainAssessment.do

Appraisal based on:

• Word Relevance - based on search frequency in Internet search engines
• Domain Name Length - shorter name (2-7 characters) ranks higher than longer name
• Live Web Site - a live site (especially an e-commerce one) commands higher rank
• Domain Extension - a .com extension is worth more than .net, .biz, .org, etc…
• Traffic Ranking - based on how many visitors go to that domain name per month

$19 appears to be a reasonable price to have an anonymous offer go in and appraise party’s willingness to negotiate.

Alternatively, GoDaddy offers a Domain Buy Service for $69.99 per domain name + 10% commission, offering:

• - Complete a Certified Appraisal within 2 business days of service purchase.
• - Attempt to contact current domain owner, to determine interest in selling their domain.
• - Negotiate the sales price of your desired domain (if the owner is willing to sell their domain)
• - Help facilitate the sales transaction (if a sales agreement is reached)

Ask Nicely

One friend sent some sincere emails sent to registrants of the domains he wanted. One guy asked for $1,500, another just gave him the domain free.

Use Stragerey

Forward note from GSB alum:

Most domain owners are decent people just trying to make a buck. If  you can contact them, then you will generally just need to negotiate over  email. Then when you have a price you can just use a simple domain name purchase agreement that basically says that they are selling it to you free  and clear and are authorized to do so. Then you can use a service like  escrow.com to handle the transaction safely.

What are you willing to pay for it? Have you decided on your BATNA? 

My sense is that the domain will cost between $2,000-$10,000. Remember, every domain is completely unique and therefore a scarce item, not a commodity. Basically it’s just a game of chicken – how much does the seller think you are willing to pay? If they let you go, will they ever get that good of an offer again? So you have to be strategic about it. But know that the opportunity cost to holding on to a domain is low – it costs nothing to maintain, and they will always receive offers in the future. So, unfortunately, you are going to pay up for it. You are likely not going to get a deal. I think you really need to ask yourself exactly what is the most you will pay for it. $1,000? $2,000? You have to decide. I would pick that number, and then likely offer from 40-60% of that as your starting offer. And when you contact them, you will have to make the starting offer. Don’t ask them a price because they will say something ridiculous. My sense is that if you offer less $500 you will be totally ignored. If you offer close to $1,000 at least they will respond. And from there, you’re in the negotiations

—

Many thanks to Walton, Naomi, Ilana and Erik for their help

Design at Facebook

August 27, 2009 by Luke Wroblewski

Today at their headquarters in Palo Alto, Facebook’s design team walked through their philosophy and approach to designing for a quarter billion users. In particular, they emphasized the importance of writing code, sharing designs early and often, being involved with a project from start to finish, and not falling in love with your work. Making sure designers are technical enough to write code came up a lot.

• The Facebook design team works on product design, marketing, UI patterns, branding, and front-end code. The team consists of 15 product designers, 5 user interface engineers, 5 user experience researchers, 4 communication designers, and 1 content strategist. 25 designers in a company of 1,000.
• Writing front-end code ties design into the engineering culture of the company.
• How does a team design for a quarter billion people? Four hypothesis: be there from start to finish, share early & often, get your hands dirty, don’t fall in love.

1) Designers need to be there start to ship: from strategy to launch. This is different from other companies.

• Facebook spends a lot of time making sure designers are there from beginning to end.
• Example: home page redesign that launched in March. Wanted to simplify and streamline the way information traveled around the site. This included the data structure and the visual structure.
• After defining vision, started writing code to make sketches. Designing in code allows you to see how real data works inside a layout.
• Balanced tradeoffs –did a series of explorations on home page designs including iterating on the interaction and visual details.
• To get a variety of teams on board -used a static mockup to communicate designs. Usually don’t advocate static designs.
• Having a designer that can write code allows details to get figured out and quickly implemented.

2) Share early and share often. Sharing with the team and users helps make the design better.

• There is no creative director at Facebook, instead use a bottoms up process to get alignment. It’s critical for the team to share what they are doing.
• Developed tools to share more effectively. One tool is called Pixelcloud and serves as an online gallery with commenting. Since launching in March, 15 images are added to the site per day.
• Working groups cover visual design, simplicity, and front-end code to help ensure Facebook designs remain consistent. All working groups have office hours to provide feedback to rest of designers.
• Example: privacy wizard design. In kickoff phase, brought in 12 users and showed them 30 mocks to get direction on project. In build phase brought in less users and only showed them 7 mocks.
• Feedback is good. Get as much as you can and as early as possible. Helps save time.

3) Get your hands dirty. Important that you understand how Web code works. All designers write a bit of HTML, CSS, and maybe PHP.

• Eases the relationship between design and engineering. Designers can tend to bugs and build quick prototypes.
• Designers tend to err on side of over simplicity. Engineers tend to err on side of more functionality.
• Understanding the medium in which you work, informs your designs.
• Moving fast is important. Facebook has a lot of competition in many areas and people’s use of the Web continually changes. Really crucial to quickly iterate.
• At the core, Facebook believes it is important to get products out early to see how they are used.
• Mockups lie. They lack content and context. Need to use real content and page designs to understand how the design will work.
• In order to move quickly, we need to prototype early. Example: commenting UI got tested internally first and changed before being shipped to users. The new design broke the existing scan line in the news stream.
• Designers at the company account for about 40 commits a week.

4) Don’t fall in love. Software is impermanent –it is always changing and you need to accept that.

• The goal is to be ok with continuous change.
• Don’t settle for what’s great today. You will fall behind. As a designer, you need to forecast and think about how things will be in a year from now.
• The longest standing design at Facebook was the front page from 2004 -it stayed live for 18 months.
• Example: global navigation redesign. Tried out many ideas over several months. Even yesterday the site header changed.
• More than ever our work is never done.
• Run A/B tests for most features. Clearly define metrics up front and measure against those. Don’t let the metrics drive the design.

If your regular attire isn’t cutting at work these days, check out Bcasual.com:

Our Mission

Bcasual.com was created to make it as easy as possible to find business casual clothing for any occasion. Our goal is to help people all over the world find the best business casual clothes possible. We strive to be the authority on business casual attire by offering valuable advice about what kind of business casual clothing is appropriate for any setting and then by recommending specific pieces of clothing that are appropriate. Bcasual.com makes shopping for Business Casual Clothes as easy as it can get.

Our Values

• Customer First

• Do a Good Deed Daily

• Have a Great Day

• Pet Friendly

Our History

The idea for Bcasual.com was conceived when the site’s founder, Jim, was forced to find a new pair of pants to wear to a meeting with potential investors. After moving across the country and then staining the only pair of decent khaki pants he brought with while golfing the weekend before, Jim had to find a new pair of pants quickly. Immediately jumping to the internet, the source of all answers, Jim hoped to find advice about the perfect pair of pants to wear to his meeting. Not wanting to look too casual or formal, he had hoped to easily search for and find the perfect pants for the occasion. Unfortunately, the search was far more difficult than he expected.

Faced with conflicting information, advice websites without actual product recommendations and retail storefronts with products but no advice, Jim eventually became frustrated and went to a real-life shopping mall. As you can imagine, his experience in the mall was even worse. With seemingly hundreds of stores offering men’s clothing, he had no idea where to begin. On top of that, add the crowds, lines, hassle of parking, unhelpful sales people, enormous selection, stock outs of his size….it was then that Jim knew there had to be a better way and the idea for Bcasual.com was born.

Bcasual.com was created to solve the problem’s mentioned above and make it as simple as possible to find business casual clothing and advice. Reflecting back on when he had to buy clothes for his first job and all the times he had to supplement his wardrobe throughout his business career, Jim knew a great website like this could help people all over the world find the business casual clothing they need.

Living up to that initial idea, we strive to be the authority on business casual clothing. Offering advice about what kind of business casual clothing is appropriate for any setting and then recommending specific pieces of clothing, Bcasual.com makes shopping for Business Casual clothes as easy as it can get. We hope the site helps you with your clothes shopping as well.

After a year at Stanford business school no class had discussed academic research on splitting founder equity—though I’d asked frequently. Weird. Finally I found something useful, notably from the University of Calgary and HBS, drafted just last month. Happy Canada Day everyone!

The First Deal: The Division of Founder Equity in New Ventures
T Hellmann, N Wasserman

This paper looks at the first financial decision within new companies, examining how founders allocate founder equity. To motivate the empirical analysis we develop a simple theory of costly bargaining, where founders trade-off the simplicity of accepting an equal division of equity, versus the costs of negotiating a differentiated allocation of founder equity. We test the theory’s empirical predictions on a proprietary dataset comprised of 1,476 founders in 511 entrepreneurial ventures. We find that teams with more heterogeneous founder characteristics, and teams with higher average experience, are less likely to accept an equal split, while smaller teams and teams where founders have family ties are more likely to split the equity equally. Within teams that adopt a non-equal split, larger equity shares are received by serial entrepreneurs, idea generators and founders who invest their own money . Equal splitting is associated with a lower pre-money valuation in the first round of financing, and this effect is more pronounced for teams that are quick to agree about splitting the equity equally. Counterfactual calculations suggest that founders that accept an equal division of shares may forgo approximately 10% of founder shares, worth approximately half a million dollars.

When asked where startups should do their banking, here’s what the community had to say:

PayPal – You can do a lot with a PayPal account and one of their debit cards

Wells Fargo and Bank of America – have extensive online support

Silicon Valley Bank – focused on funded or soon-to-be-funded startups, perhaps not a great fit for $1000 LLC checking account

When asked about software to manage finances:

Outright.com – only for Single Member LLCs, Self-Employed, and Schedule C filers, but very slick

Quickbooks – packaged software

Quickbooks Online – subscription service required

Xero – leading small business solution in AU/NZ/UK, not full featured in the US

NetSuite Finance – tremendous overkill for a small startup, but may be relevant if anyone on this list is spending the summer at a company with dozens of employees

Thanks to Alvin, Gus, Brendan, and Zak for their thoughts on this,

Feel free to chime in below if you have more info, thanks!

Mom and grandma didn’t even notice since they were on the ground floor. I felt it on the second as the house started to sway.

While I’m less keen to put posters on my walls these days, I’ll toss some on my blog to replicate the effect.