Month: May 2018

$6 Million Gift Will Fund Expansion of Texas Venture Labs

Jon Brumley, BBA ’61Startup accelerator Texas Venture Labs at the McCombs School of Business is now the Jon Brumley Texas Venture Labs, in recognition of a combined gift of more than $6 million from Fort Worth businessman and entrepreneur Jon Brumley, BBA ’61, to fund the growth of the program at McCombs.
“This investment is a game-changer that enables us to expand the scale and accessibility of the Texas Venture Labs model. It’s a vote of confidence as well, because of the reputation of Jon Brumley as an entrepreneur, a business builder and a distinguished graduate of McCombs and the Wharton School of Business,” said Dean Tom Gilligan.

Brumley founded six oil and gas companies, all of which listed on the New York Stock Exchange. In 2005, Forbes magazine named Brumley and his son, Jonny, “Entrepreneurs of the Year.”

Brumley said his gift reflects the reality and the potential of Texas Venture Labs.

“Texas Venture Labs is a gem in the Texas entrepreneurial ecosystem. It provides critical, hands-on experience for aspiring entrepreneurs who learn as students the effort required to get a new venture through the financing process,” he said. “For me, this gift is an opportunity to build our capacity to grow the economy of Texas, while giving a leg up to young entrepreneurs, who remind me a lot of myself at that age.”

Since it was established two years ago, Texas Venture Labs has worked with 40 companies that have raised more than $25 million in investment capital, while providing direct entrepreneurial experience to graduate students in business, engineering, law, and natural sciences. Texas Venture Labs also sponsors the annual Venture Labs Investment Competition, which is being held May 2-5 on campus.

“Our theme for the investment competition is ‘Investor Ready,’ which reflects why graduate students from around the world flock to Austin every spring for the chance to launch their business as they finish graduate school,” said Rob Adams, director of Texas Venture Labs. “With this generous gift, Jon Brumley has signaled to the entrepreneurial community that Texas Venture Labs is also ‘Investor-Ready.’”

Do You Make Buying Decisions Based on Logic or Emotion? A Tale of Two Chickens

Let’s consider a popular consumer question you’ve likely thought about. Is the iPhone or the Android better for you? There are more than 97 million results on Google for that question, with lots of data points to consider. Which platform has the most advanced multitasking capacity? Which has better applications? You likely have a list of logical reasons in your head why one or the other is the best choice.

Raj RaghunathanYou may be disappointed to know two researchers at The University of Texas at Austin suspect those rational reasons may have little to do with your decision.

The fundamental question is whether consumers make their choices based on logical comparisons of performance, or are they emotional creatures who gravitate to products that appeal to their senses, feelings or moods?

McCombs marketing professor Raj Raghunathan and Ph.D. student Szu-Chi Huang point to their research study that shows comparative features are important, but mostly as justification after a buyer makes a decision based on emotional response.

The case of the attractive chicken and the unattractive chicken.

In one phase of their study, Raghunathan and Huang showed participants two photos. One was a nice looking, plump chicken. The other was a chicken that looked thin and sickly. Participants were told that the plump chicken was a natural chicken, and the thin chicken was genetically engineered.

The researchers informed half of the participants that natural chickens were healthy but less tasty, and genetically engineered chickens were tasty, but less healthy. The other half were told the opposite.

Overwhelmingly, sets of participants expressed a preference for the nice plump chicken, but their justifications were different. The first group claimed it was because they valued health above taste, and the second group said it was because taste was more important. Neither group seemed to justify their choice based on how they felt about the chicken’s looks. They felt compelled to justify their emotional choices with non-emotional reasons, to the point that the two groups found completely opposite ways to justify the same decision.

Post-hoc rationalization in marketing, politics, religion and life in general.

Ragunathan said that the researchers tested the same hypothesis using political candidates. Participants were asked to rate the effectiveness of certain work styles displayed by two politicians. Not surprisingly, Republicans tended to value the work style used by the Republican politician, and Democrats valued the work style used by the Democrat. Like the chicken example, different groups were told opposite work styles for each candidate, but each group made their decision based on their pre-conceived political preference, and then justified their decision by whatever trait they had been told “their politician” used.

“This is called post-hoc rationalization,” said Ragunathan, “and it is found in every aspect of our life, whenever we made decisions. We are ruled by our emotions first, and then we build justifications for our response. You can see this happening in hiring decisions, dating, you name it.”

Logic and reason are valued, emotion is mistrusted.

“In our society it is generally not considered justifiable to make a decision purely on an emotional response,” he said. “We want to be considered scientific and rational, so we come up with reasons after the fact to justify our choice.

“This process seems to be happening somewhat unconsciously, people are not really aware they’re coming up with these justifications. What is even more interesting is that people who claim that emotions are not that important, who consider themselves to be really rational, are actually more prone to fall into this trap.”

Szu-Chi HuangRagunathan and Huang [pictured right] believe this is because once someone has denied the possibility of making a decision based on emotion, there is no other option but to come up with justifications. “You paint yourself into a corner,” he claims. “You want to portray yourself as this rational decision maker, but in reality, you’re the one who’s most likely to show post-hoc rationalization.”

Brand image first, rationalization later.

What does this mean for marketers? Ragunathan suggests it confirms the importance of brand image advertising and marketing activities, particularly in the early stages of an introductory campaign. “The earlier you make the emotional connection the better, because once consumers have decided they like a particular option, the more difficult it is for them to backpedal. Their thinking falls in line with the emotions,” he said.

Which brings us back to the question of the iPhone or the Android. Which is best for you? Hey, if it feels good, go for it.

In Their Own Words: 2012 Commencement Speeches

What did the 2012 McCombs commencement speakers say to graduates? Take a look at these word clouds based on their speeches for an at-a-glance summary of their themes. The largest words were used the most frequently.

BBA

In a speech titled, “Cheers, Tears, and the Five P’s,” John AdamsBBA ’66, encouraged 791 BBA graduates to build their careers on the values of Plan, Perform, Persistance, Principle, and Positive.

“It takes a lifetime to build your reputation but [it’s] something you can lose very quickly,” Adams said about being a person of principle. In terms of positivity, he shared that when he was CEO of Chase Bank of Texas, he would drive around the block before parking if he wasn’t in a positive mood.

Read the complete speech (PDF) or see the video of the ceremony.

Adams is the retired vice chairman of industrial manufacturing frim Trinity Industries and former chairman and CEO of Chase Bank of Texas. Adams is currently on the board of directors of Dr Pepper Snapple Group and is a member of the McCombs School Advisory Council and chairs the McCombs Scholars Program.

 

MPA

Television journalist, photographer, and author Rosa Flores, BBA ’01, MPA, ’01, began her speech to the 182 MPA graduates with a top-10 list of why her friends say she is not an accountant. (#7: As an accountant, you wouldn’t be able to say “Rrrrrosa Florrresssss reporting.” #1: You wanted to work nights, weekends, mornings and holidays for half the pay.)

Flores also shared three quotes from her lifetime that have inspired her:

From an accounting professor: “Go for the sexy accounting assignments.” That encouraged her to pursue her dreams and change careers to journalism, where her goal is to “give a voice to the voiceless.”

From a state budget office: “Honey, it’s too complicated.” Flores heard this while on assignment in Oklahoma City, after requesting a copy of the state budget. She ignored the statement and broke a story about a $5 million discrepancy.

From a high-school teacher: “You’re this close.” Even when she was far from the right answer, that gave her the confidence to keep moving forward.

Read the complete speech (PDF) or see the video of the ceremony.

Flores covers enterprise and breaking news stories for the New Orleans NBC affiliate and is the author of “Progreso,” a history book about her hometown. Prior to her journalism career she worked for KMPG, where she earned the firm’s National Award for Community Service.

 

MBA

“In a sense, as morbid as it sounds, I planned how I wanted my obituary to read,” said MBA commencement speaker Robert Zlotnik, BBA ’75, MBA ’80, president and CEO of StarTex Power.

Zlotnik shared his four-part “strategic life plan” with the 494 assembled graduates, outlining intentional steps he took to find happiness and success in his family life, career, community service, and health. “You should treat your life as an entrepreneurial venture,” Zlotnik said.

Read the complete speech (PDF) or see the video of the ceremony.

Zlotnik founded StarTex Power in 2004 with his wife, Marcie Zlotnik, BBA ’83. The company’s customer service has been ranked #1 in Customer Satisfaction by J.D. Power and Associates and in 2009 StarTex was named one of the 40 Best Places to Work by Inc. magazine. He is a member of the McCombs School of Business Advisory Council, the Pro-Vision, Inc. board of directors, and the advisory board of Casa Esperanza.

 

MSTC

2008 MSTC alumnus Trey Mebane spoke to this year’s graduates about a tool they may not have realized they picked up during their education: the power of story. “The story which has brought us here today is known as ‘The American Dream,'” Mebane said, but he likes to think of it as “Our Shared MSTC story of creating value and wealth … one which can change the world we live in, one of value and one worthy of sharing.”

Mebane spoke about sharing his MSTC experience and lessons learned to help a coworker create a safer hard hat and to connect a Bulgarian businessman with the City of Austin to help him build an innovation ecoystem back home. He encouraged graduates to share their stories, saying, “You will be creating and expanding new connections, new communities, with new purpose and value. You will be motivating others to create a better tomorrow.”

Read the complete speech (PDF) or see the video of the ceremony.

Mebane is the director of business development at National Oilwell Varco (NOV) and is an engineer by training. After completing the MSTC program, he realized that the principles and skills it taught could address the challenges facing NOV, and he helped create a yearlong certifcate program at McCombs for fellow employees called NOV Ventures. 

 

Louise Epstein Named Entrepreneur-In-Residence

Louise Epstein, MBA ‘85 (right), founder of Charge-Off Clearinghouse and a former Austin City Council member, has been named entrepreneur-in-residence in the Herb Kelleher Center for Entrepreneurshipat McCombs.

“Louise continues a tradition we’ve established at the university to link our research expertise in innovation and creativity with real-world entrepreneurship practice,” said Dean Tom Gilligan.

From 1997 to 2008, Epstein ran Charge-Off Clearinghouse (COC), a distressed debt company that valued, purchased and sold $1 billion of charged-off credit cards. Distressed debt is debt for which no payments have been made for some time and which the lender has written-off (or “charged off”). Because banks and credit card companies are more efficient at lending than collecting, they sometimes put their charged-off credit card portfolios out to bid.

Epstein developed a proprietary model to value hundreds of thousands of charged-off credit card accounts. At the same time she created a market of ready buyers. Once she predicted a portfolio’s value, Epstein bid on the accounts. If she won the bid she then outsourced the accounts to a “scrubbing” company that identified accountholders that were dead or had filed bankruptcy.

“My objective was to sell a clean portfolio of accounts that were ready to collect,” said Epstein. She then uploaded the accounts to her Web site where interested collection law firms and collection agencies could manipulate accounts and obtain analytical reports on the portfolios that they created. Epstein’s Web site sanitized account-holder information so that no private information, such as Social Security numbers, telephone numbers or addresses, was released until after a sale closed.

Epstein now lends her expertise in debt valuation as an expert witness on behalf of major banks and the Securities and Exchange Commission. She is also a member of three think tanks. Epstein graduated from UT’s Plan II Honors program with a bachelor’s degree in history in 1980 and earned her MBA in 1985.

“I studied management information systems, database management systems and systems analysis during my coursework in the early 1980s,” Epstein said. “Although those were the days of punch-cards, the theories were the same—start out with what you know and build from there.”

“The entrepreneur-in-residence is a particularly valuable position for our students, who are looking for mentors and models that can help them link their business education with the realities of the startup,” Gilligan said. “Her proven coaching approach will be refreshing and relevant—I’ve already heard great feedback from students.”

“It is time to give back to the university that made everything possible,” Epstein said. “Mentoring students is a joy. I want every student to know that my sole purpose here is to help them identify and realize their dreams.”

She said she hopes to be a sounding board for students as they begin to develop their career plans.

“It’s never been a better time to be an entrepreneur,” she said. “There are lots of needs; we have lots of tools. Let’s match the tools to the needs.”