Tragedy at GSB
Three Stanford students die in Highway 1 crash
An insiders view of the Stanford GSB class of 2008
hitching a ride across the galaxy with my towel
Three Stanford students die in Highway 1 crash
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it
would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beers by $20. Drinks for the ten now cost just $80.'
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But
what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before and the first four continued
to drink for free, but once outside the restaurant, the men began to
compare their savings.
'I only got a dollar out of the $20,' declared the sixth man. He pointed to the tenth man, 'but he got $10!' 'Yeah, that's right, exclaimed the fifth man. 'I only saved a dollar, too.
It's unfair that he got TEN times more than I!' 'That's true!!' shouted
the seventh man. 'Why should he get $10 back when I got only two?
The wealthy get all the breaks!' 'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something very important....they didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes DO get the most benefit from a tax reduction. They also PAY more than the rest. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
1. Basics matter - cash management, solvency, inventory turns matter.
Understand operating leverage. What domension of your business is
important. Basics drive value. If you change a business, understand how
the basics get impacted.
2. Value is in the eye of the beholder - buyers set the value, not the
seller. Proxy ratios can be measured and track today, can be turned to
the DCF of tomorrow. Understand the factors and try to maximize the
value based on those drivers. Eg. Initial cable company valuation was
based on number of doors passed. However, remember as an investor
fundamentals matter, and the market will not be fooled for too long.
3- markets and businesses have cycles - these things have happened abd
will continue to happen. Acknowledge them and tough it out. Focus on
things that drive true value. Ensure that your business has adequate
degrees of freedom.
4. Truth matters - it is easy to fudge the numbers. All these things
start with perfectly acceptable reason and lead to bad results. Be
You can read more about Xobni's public launch in today's
New York Times here:
We look forward to receiving your feedback as we continue to work
to improve Xobni and the overall Outlook experience.
moral of the story: never give media interviews….
Stanford's mission to change lives flows through its students
BY JOHN RUSS
For his Founders’ Celebration speech, MBA student John Russ described how deeply he was affected by the words of alumnus Bob Lumpkins.
MBA student John Russ is one of two students who spoke at the annual Founders’ Celebration, held this year on April 7.
I took a risk coming to Stanford. It seems like an easy enough decision—beautiful sunny days; tall, winding mountains; lush palm trees. This is heaven on earth and who could ask for more? But for me, I just wasn't sold. I like the cold, I love flat land, and I am allergic to most trees. Coming here wasn't always at the top of my list. In fact, my other top choice—Harvard Business School—was closer to my family, and I had many alumni at my former company who told me that HBS was right for me. In fact, I was all set to go when I received a phone call from a GSB alum named Bob Lumpkins.
Mr. Lumpkins was the vice chair of Cargill, a Minnesota company located not too far from where I grew up. He and I had a nice enough conversation and I remember thinking that he was a good man and a good ambassador of the school. Near the end of our call, Mr. Lumpkins decided that he had one last question for me: Did I happen to know Rayfield Russ? Well, to his surprise, Rayfield Russ was my father. I say "was" because he passed away in 1988 and had been gone for almost 19 years by the time Bob and I were speaking. When I told Bob about this he immediately chimed in and said, "I am so sorry to hear about your father's passing. I knew him well. I was your father's first boss and I recruited him to come to Cargill. How is your mom, Flossie?"
I literally had to sit down. All these years, I had wondered what my father was like as an adult—the one relationship that we never got to share, and here was a man who had some of that information! Bob began to tell me the story of how he had encouraged Cargill, at a time when minorities were not as welcome in the corporate mainstream, to go recruit at schools that participated in the Consortium for Graduate Student Management (an organization that funds fellowships for high-achieving minorities to receive MBAs at member schools). He had done this because he thought that getting the best talent, regardless of race, was the right thing to do. If it wasn't for his action, my life and the opportunities my family has benefited from would have been totally different.
This struck me in a powerful way, but Bob said that he was just doing what he believed in, simply living out a sense of purpose through business that he had learned at Stanford. What he had walked away from Stanford with was a sense that business is not just about business. It is about impact and people and the strength of organizations to affect change. I realized then, as I do even more clearly now, that what makes Stanford special is that my classmates believe in a sense of purpose. Anyone can have a name, and anyone can have a message, but not everyone can provide a place where people can believe in principles and still learn in ways that allow them to grow and change as a person. Where people can explore what it really means to be a leader.
Because of this place, I will graduate with a changed mind, a changed perspective and a changed heart. I will take that into my workplace, into my relationships and into my community. Because of my fellow classmates and those who came to Stanford before us, I can change the world around me. I used to think the GSB motto, "Change Lives, Change Organizations, Change the World," was lofty at best and unattainable at worst. I was wrong. Bob changed my world before I was born, and I am forever grateful that he came at the right time to change it again. It was Stanford that changed his world and I am now part of a proud legacy that will truly continue to change the world in ways that will help countless others—even for those who may not ever know we've done so. This is what it means to attend Stanford and this is why Stanford means so much to me.
John Russ is an MBA candidate at the Graduate School of Business.
click on episode 1 – the first 3 minutes are on Stanford and I am featured on it. Actually, it is fairly dorky, but oh well!