Avik News Stories of Note

Monday, October 25, 2004

Vikram Chatwal

Travel Desk; SECT5
TRAVEL ADVISORY

Ipods, Blue Leather and a Surrealist Touch

By TERRY TRUCCO
406 words
24 October 2004
The New York Times
Late Edition - Final
3
English
(c) 2004 New York Times Company

When Vikram Chatwal, owner of the Time Hotel at 224 West 49th Street, decided his latest Manhattan project would swap minimalism for surrealism, he coaxed the surrealist fashion photographer and music-video director David LaChapelle to try his hand at interior design The early results went on view in October when the 220-room Dream hotel, in a 109-year-old Beaux Arts building at 210 West 55th Street, quietly opened its glass doors.

The lobby -- with mirrors on the vaulted ceiling, columns crowned by blown-glass flames and a hand-drawn mural of nudes that evokes Italian futurism -- is indeed surreal, but it is the work of the architect Mark Zeff and Mr. Chatwal.

Mr. LaChapelle is credited with the Subconscious Bar, a cavernous subterranean space set to open in November, and the whimsically striped lounge next to the lobby. Vertical bands of yellow, chartreuse, mauve and baby blue beam from the lounge's walls, carpet and even the stained-glass plate windows, and are echoed in tiny mosaic glass tiles covering the expansive bar. Guests can relax on modish sofas or perch on bar stools, and gaze at their reflections in the mirrored ceiling.

Surrealism wafts upstairs into the blue and white guest rooms, helpfully labeled Small, Medium, Large and Extra Large (the larger ones are spacious, but Smalls are teeny). Framed by towering midnight-blue leather headboards, beds are perched on slender legs, dressed with snowy high-count Egyptian cotton duvets and illuminated from beneath by pale blue lights. High-tech toys include plasma TV's with digital cable and iPods programmed with 2,000 songs (to prevent pilfering, guests sign a contract).

Though children are welcome, the Dream proudly flaunts its adult trappings, like the huge photograph of a tattooed nude couple visible from the glass elevator to the underground bar. ''It's a little big naughty,'' says Brendan McNamara, the hotel marketing director. A branch of the Serafina restaurant designed by David Rockwell opened this month, and a Deepak Chopra Ayurvedic healing center designed by Mr. LaChapelle is planned for January. Rates at the hotel, which is between Broadway and Seventh Avenue, start at $279; (866) 437-3266 or www.dreamny.com. TERRY TRUCCO

News, Tips & Bargains; TRAVEL LOG; Dream hotel is reality

Robin Rauzi
189 words
19 September 2004
Los Angeles Times
Home Edition
L-3
English
Copyright 2004 The Los Angeles Times

Dream, the latest development from actor-model-hotelier Vikram Chatwal, is slated to open Oct. 1 in New York.

Chatwal, son of restaurateur and hotel owner Sant Singh Chatwal, also owns the New York boutique hotels the Time, Majestic and Lamb's Club.

Dream's 220 blue-illuminated rooms will go for $279 to $575 per night, and the 15 suites cost $550 to $650. All rooms include wireless Internet access, 37-inch plasma TVs and an IPod-based sound system loaded with ambient music.

Three bars and the lobby -- which features vaulted mirrored ceilings, black floors, wall-size charcoal murals and a giant fish tank -- was designed by photographer and music video director David LaChapelle. The hotel also plans to open an ayurvedic health spa, to be created by Deepak Chopra, around the end of the year.

Dream is at 210 W. 55th St.; (212) 247-2000 or (866) 437-3266 or www.dreamny.com.



Vikram Chatwal, Turban Cowboy
by George Gurley / New York Observer - Oct 25, 2004

Vikram Chatwal is not your usual rich Manhattan playboy. For starters, he has never cut his hair and he wears a turban, in keeping with his Sikh heritage. And while he does all that other playboy stuff—dating fashion models, tooling around town in an Aston Martin, running up an $11,500 bar tab in a nightclub, hanging out with Bill Clinton—he strikes many Manhattan night-crawlers as having something extra, something "spiritual", if you will. Or maybe it’s just that he has a calming effect on the people around him. When he himself wants to calm down, he says, he plays Sony PlayStation games and watches The Simpsons.

Mr. Chatwal will tell you he plans to be the first Sikh billionaire. His father says: "Why not? This is New York City; he’s just 31 years old; he’s got a base to start with. The problem right now is, he’s only spending 30 percent of his time towards business. The day he starts spending 70 percent of his time, within two or three years he’ll make it."

His father, Sant Singh Chatwal, has a lot to do with Vikram’s success: He owns the international chain of Bombay Palace restaurants, as well as 11 hotels in Manhattan. With his father’s backing, Mr. Chatwal opened the trendy Time hotel on West 49th Street in 1999 and, last month, the equally hip Majestic hotel on West 55th Street. He says he’s working with author and wellness guru Deepak Chopra to open another hotel, the Lambs Club on West 44th Street, with rates starting at $500, which will include an Ayurvedic spa and an upscale Indian restaurant.

He lives high above Central Park West in an Indian and African art-filled apartment in the Trump International. His parents, live in an Upper East Side penthouse where they’ve hosted fund-raisers attended by Bill and Hillary Clinton. During Mrs. Clinton’s Senate campaign, The Daily News reported that Sant Chatwal was one of her top soft-money donors, contributing $210,000. (Chatwal pere claimed he made no personal contributions, saying the donation came from a chain he created, Hampshire Hotels.)

Things between the Chatwals and the Clintons could have gotten sticky in 2000, when the U.S. government fined Sant Chatwal $125,000 to settle charges that he owed governments, banks and creditors tens of millions of dollars. But that soon blew over, and last June the Clintons both attended the arranged marriage of Vikram’s younger brother, Vivek, at Tavern on the Green. Mr. Clinton even gave a toast and joked, "We’re actually celebrating two events today: the couple’s marriage and Vikram giving up drinking."

Mr. Chatwal gets some good-natured ribbing from his family about his penchant for nightlife. Earlier this month, he attended Puff Daddy’s birthday party in Morocco, flying with the birthday boy on a 767 lent by the King of Morocco.

"He’s always cracking jokes, always up for partying," Mr. Chatwal said of Puff Daddy. "We both like to go out and party a lot. We’re both Scorpios. Every Scorpio I’ve met, I’ve connected with. We talk about music, women and the next party, how we’re going to be organizing the next big event. I think players are often confused with playboys, which is part of it, but it’s mainly Renaissance men—people who are doing a lot of different things and are successful. Someone like Puff."

I was sitting with Mr. Chatwal at La Goulue on Madison Avenue. He was wearing a Brioni jacket, an Hermès tie and Diesel jeans, but no turban—he said he’d been swimming and was running late, so his hair was up in a bun. He calls himself more of a "cultural Sikh," but goes to temple, prays every day and has five Sikh tattoos on his arms. He also has a "G" tattooed on his arm, for the Brazilian supermodel Gisele Bündchen, with whom he’s gone on a few dates.

I told him he didn’t seem like the usual nightclub type—not a hell-raiser at all.

"I think that’s the Scorpio side of me," he said, sipping a beer. "Scorpios are either religious or sexual. You know, Mother Teresa and Gandhi were Scorpios, but so was Charles Manson. So it’s a real sort of balance. That’s where the passion comes in. So sometimes I have that subdued, religious feel, but sometimes I’ll let it out and go completely sexual. Or nuts. Like when I’m with Puff."

(Later, I looked it up and found that Mother Teresa was actually a Virgo and Gandhi was a Libra.)

I asked what his social life had been like recently, and he mentioned a dinner party at the Manhattan townhouse of Lady Ghislaine Maxwell, the daughter of the late British media baron Robert Maxwell. The guest of honor, said Mr. Chatwal, was Prince Andrew, who told a "quite humorous" joke involving Pepto-Bismol and his brother Prince Charles’ girlfriend, Camilla Parker Bowles. Then Ms. Maxwell told a story about how she flew a Blackhawk helicopter in Colombia and fired a rocket into a supposed terrorist camp.

"Ghislaine is just the most rocking babe I’ve ever met," said Mr. Chatwal. "She blew up a tank. That is amazing. After that, my perception of her completely changed. I said, ‘You have to be the coolest person alive.’"

Mr. Chatwal said he had recently split up with his girlfriend, a Victoria’s Secret model from the Caribbean named Teresa Lourenco.

"I think we may get back together, but who knows?" he said.

I knew he’d dated lots of women; I asked what his favorite nationality was.

"Brazilian," he said. "It’s not just the fact that they’re beautiful, it’s the whole vibe—the language itself drips sexuality. It’s Italian squared."

Since I had an international playboy sitting right in front of me, I decided to take advantage of the fact and started rattling off nationalities.

"Russian women are sort of deal-makers; they are the smartest business people I’ve met," he said. "Indian women talk about marriage and kids before they’ve had the first date. British women … I’ve never met women who act so civilized but are so crazy—the craziest bunch of women I’ve ever met. Just nuts. Real mental.

"I’ve been around the world," he said. "The best thing about French women is the way they speak English. That accent is awesome. But they’re slightly pretentious, snobs. But when you get to know them, they become quite cute and cuddly."

Manhattan women?

"Very calculating," he said. "They’ll do their homework before, and everything is about what’s in it for them. You can rarely relax."

Always unsatisfied, right? I asked.

"Completely," he said. "Whether it’s sexually or socially, they’re just driven. When you talk to them, they never look at you in the eye; they’re kind of looking over the shoulder—who else is in the room? Like you’re the stepping stone to the next bigger and better thing."

He said he sees himself settling down with a Caribbean woman or someone from the Far East, where, he said, "they have sort of a traditional sense of understanding what a woman’s duty is, and what a man’s duty is, to be in a relationship together. If you date a woman from Manhattan, you feel like the woman in the relationship."

Last year, he bought a John Galliano dress for $26,000 at an AIDS benefit auction; Mr. Galliano had been commissioned by Vogue editor Anna Wintour to design the dress with a Moulin Rouge theme.

"I bought it and I was going to give it to the right girl, and I really haven’t found the right girl yet," said Mr. Chatwal. "Probably my wife, I guess. But if things keep going this way, I’ll send it back and tell them to give it to Nicole, she deserves it for her performance. It’s fitted for her, so it’s probably best that she had it."

He told me he thinks Gisele, the Brazilian supermodel whose initial he has tattooed on his arm, is the most beautiful woman in the world. I accompanied him recently to a party being thrown for Gisele by Vogue magazine at the Hôtel Plaza Athénée.

He sat a few feet away from Gisele, leaning forward and facing her. She was wearing a backless sequined mini-dress, soaking up the attention with Helena Christensen and two other models.

"We’re just friends, that’s all," said Gisele. "Vikram’s just a very sweet guy. I’ve known him since I was 17. I’m 22 now. Vikram! I’m talking about you! He’s just Vikram; he’s a funny guy. Look at him! Vikram, I’m explaining you to the world! He’s just a goofy guy—you know Vikram, he’s just … out there, you know what I mean? You never know what he’s thinking. In the clouds. A cool man."

Soon, Vikram left the party with his good buddy Robbie Kravis, the son of billionaire Henry Kravis. They were headed for the Chelsea nightclub Bungalow 8.

Going out at night isn’t always a party for Mr. Chatwal. After Sept. 11, some hooligans threw eggs at him; others have yelled "Osama!" or "Terrorist!" After one Sikh was murdered in the U.S, he had to hire a bodyguard, and his father bought $100,000 worth of newspaper ads supporting the Sikhs and making clear that they weren’t Muslim and had nothing in common with the Taliban.


Vikram Chatwal was born in Ethiopia. His father, a former Indian Navy fighter pilot, started a restaurant there, became close with Emperor Haile Selassie, but lost a $5 million fortune when the emperor was overthrown in 1974. Vikram remembers bombs going off. The family ended up in Montreal, where his father opened his first Bombay Palace. Vikram said his childhood was "comfortable and luxurious." His mother, a former actress, is a "typical Indian yenta" who smothered him with love and food.

"So I was really fat as a kid," he said. "My indulgence was food. I was a plump kid. Used to go surf and turf every day."

In kindergarten, he fell in love with his next-door neighbor, a cute French girl. He kissed her, then told his parents. "They slapped me and said, ‘Are you crazy? You can’t be doing that!’"

His comfortable surroundings did little to ease the pain of social harassment. Kids called the brothers "diaperhead" and knocked off their turbans.

"I could take it, I was a bit of a fighter," Mr. Chatwal said. "My brother was really timid and shy and couldn’t take it, so emotionally he has still been scarred by it. My father was very authoritative: ‘You have to pray, you have to wear the turban, you have to do this.’ We couldn’t understand him, because we were being raised in this sort of Western world. And we couldn’t understand our peers, because we seemed like those aliens from Mars Attacks."

Sant Chatwal also taught Vikram about work, making him a busboy at a Beefsteak Charlie’s he owned.

Things got less stressful for Vikram when the family moved to Manhattan in 1982 and the boys attended the private United Nations International School. Still, he said, "we were the only Sikhs in New York for a while."

He made good grades but skipped classes.

"It was right when hip-hop started—I became like a Sikh homeboy," he said. "Wearing thick laces, Run-D.M.C.-style chains. I got busted a couple times for shoplifting, because that was the cool thing to do."

His parents made him go to a Sikh camp upstate.

"I’m glad I went," he said. "One thing I’m happy about that my parents instilled is that I stayed a Sikh. I have never cut my hair, and I’m happy I didn’t."

He was accepted into the University of Pennsylvania’s Wharton School of Business. He got a job at Morgan Stanley but quit after eight months because, he said, "I couldn’t deal with the authority." He became a model, appearing in Vogue. "It was a lot of fun," Vikram said. "High-pulse fun. The downside is that it’s so arbitrary, subjective."

After eight months of modeling, his father gave him an ultimatum: Either he could have an arranged marriage or work in the family business. His parents had a few girls in mind, and Vikram had met them. He joined the family business.

Business has been good to him. Not only did he visit Bill Clinton in the White House, the two also spent time together on a trip Mr. Clinton made to India last year.

"We had a dinner, and every Indian woman was basically in love with him, and they were trying to sit next to him," Mr. Chatwal said. "These girls kept saying, ‘We want to go back to Clinton’s suite.’"

"I know him very well," he said of the former President. He added that the two men have sat down and talked often about books and Gandhi, as well as, he said, "women and models I’ve dated. He, like any man in the world, appreciates beauty."


What Mr. Chatwal really wants to be is an actor. He had a few seconds onscreen in the fashion spoof Zoolander, as a member of Owen Wilson’s posse, playing a prince in a drug scene.

"Owen’s a friend of mine," he said. "He’s a really good guy. We go jogging together a lot in the park."

He’s landed a starring role in a small independent movie that starts filming in February, called One Dollar Curry. He’ll play a Sikh cabdriver who falls for a Parisian woman, even though he’s supposed to have an arranged marriage. The movie will be shot in France.

In the meantime, he’s enjoying New York. On Halloween night, he celebrated his birthday with a party under a heated tent on the roof of his hotel, the Majestic. A Clockwork Orange was looping on the big TV screen, heavy-metal music was blasting, guests drank Cristal and Dom Perignon champagne. Many of the women wore skimpy outfits. I asked some of the guests about their friend Vikram.

"He’s very, very spiritual," said magician David Blaine. "He’s very, very, very giving. He’s very, very charming."

"I’ve known Vikram for a long time—long enough to know he’s a beautiful person," said a Siberian model named Irina.

Fashion designer Diane von Furstenberg—whom Mr. Chatwal calls "the most amazing woman I’ve ever met in my life, up there with Hillary Clinton"—said he had "a big heart" and was "extremely attractive."

Puff Daddy arrived, dressed as a king with a crown and a long, flowing red robe. "He’s a real cool, down-to-earth guy," said the rapper of Mr. Chatwal.

How were they alike?

"We’re not. Nobody’s like me. Nobody’s like him," said Puff Daddy.

The next day, the two would be on the 767 headed for Morocco.

I asked Mr. Chatwal how he felt.

"I’m feeling as high as I’ve ever felt, naturally," he said. "All my friends are here, and it’s just the best feeling in the world. I couldn’t be happier. Rock star, movie star—whatever it is, it just feels great.

Special-K // Deepak Chopra / Vikram Chatwal

When Scores is too lewd and the belly-dancing lounge Casa De La Femme too prude, what fills the gap better than a midtown Kama Sutra lounge?

K, created by spiritual guru Deepak Chopra’s children, Gotham and Mallika, and their pal, hotelier-playboy Vikram Chatwal, is not just about sex.

"It’s really about awakening everybody’s inner fire," said Gotham.

The Chopras intend to awaken that fire through the use of natural aphrodisiacs. The scent of jasmine hung over the new lounge, which opened May 5 above Mr. Chatwal’s father’s restaurant chain, the Bombay Palace.

Beyond the lounge’s entrance was a dimly lit room with low plush couches, an ornate bar and a dance floor. A second room was choked with diaphanous silk drapes. Waitresses walked around in revealing saris as Indian music pounded from the speakers.

"Everything else is very minimalist and very modern, so we kind of wanted to do the complete opposite—create a mix of all the senses, all the colors, all the sounds," said Gotham. To draw customers, the trio kept K quiet. "We kind of want people to sort of know about it, almost like a private destination," said Gotham. "It’s to keep the mystery."

A speech by Gotham’s father, Deepak, entitled "Sensuality and Exultation of the Human Spirit," added to the evening’s mystery.

After the guests, including Marisa Tomei, Alexander von Furstenberg and Karenna Gore-Schiff, watched a scantily clad dancer named Manjit gyrate to Indian-inspired rap music, Mr. Chopra doled out some romantic advice.

"Love is the mirror of our souls," he told the audience, most of whom were still staring at Manjit. "We start with attraction, then infatuation and then communion, and then intimacy and then sexuality. When you are having your peak experiences of sexuality, you lose all sense of time—hopefully you’re not looking at your watch."

Hopefully not.

Mr. Chopra had aroused the attentions of his audience. He went on: "Male energy has so taken over this environment, especially in the West. I’m sure you know what a missile looks like, the ultimate phallus out there."

Mr. Chopra’s concluded by instructing everyone to close their eyes and listen to a song.

"Feel it," he said. The crowd felt it all right.

"Sex is something that we live," said model Patricia Velasquez. "If that makes you have a better relationship with your husband or keep a family, that’s good. Sometimes we have such a hard time touching the physical subjects. When you’re getting your period for the first time when you’re young, you don’t talk about it."

Socialite Ann Jones was right there with Ms. Velasquez. We think.

"Sex is good," said Ms. Jones. "The whole club scene has an underbeat of sex. So why shouldn’t the club be called Kama Sutra? Let it feel sexy, but it doesn’t mean you have to have sex. I think Kama Sutra is safe sex. You can just seduce and feel sexy and not have to go further."

—Alexandra Wolfe

Tuesday, October 19, 2004

Real estate's new rulers

Real Estate Articles

Working together, a small group of New York-based investors is bagging the biggest buildings in the land

Crain's NY
By Andrew Marks
Published on October 18, 2004

When 95 Wall St. hit the market in June, the broker leading the sales effort immediately knew whom to call--Joseph Moinian.


"I knew Joe would want a crack at it," recalls Ron Cohen, executive director in Cushman & Wakefield Inc.'s investment sales group. The problem was that Mr. Moinian was in Florida wrapping up the purchase of a hotel, and was about to head off to Chicago.


Reached at the airport and told that he would have to act fast if he wanted the property, Mr. Moinian fired back a few questions about the building's leases and cash flow. Then, without missing a beat, he simply told the broker to "write up the contract.


That was a Monday. By Tuesday, the contract--at the asking price--had been signed and a check for a nonrefundable deposit of $18 million was in the seller's hands.


"I wasn't worried about maximizing my profit in the negotiation," says Mr. Moinian. "I wanted that building, and I wasn't going to let a few million dollars stop me."


Not until Friday of that week did Mr. Moinian actually get his first close look at what he'd agreed to buy for $184 million.


Speedy decisions


It might sound hard to believe that a private investor would be willing to purchase a building at such a lofty price sight unseen, especially since it had been offered two years before in a two-tower package that fetched less than $150 million. But investors and brokers say that sort of scenario is close to the norm, because a loose circle of New York-based private investors are willing to move at blinding speed. In the process, they have also become increasingly controversial.


"It's become the question to ask in the industry," says Woody Heller, an executive managing director in the capital transactions group at broker Studley. "Are these guys going to end up blowing themselves up?"


Maybe so, but for the time being, the group, known simply as "the New York guys," is on top of its game, routinely blowing other bidders out of the water. Working together in various combinations, a group of no more than 10 men--including Mr. Moinian, Asher Zamir, Joseph Chetrit, David Werner, Lloyd Goldman and Jeffrey Feil--has snapped up some of the most prestigious properties on the market in the past year.


Incredibly, they have done all this while remaining faceless. Few have even been photographed or interviewed by the media.


Active nationally


Their list of deals is topped by the $855 million purchase of Chicago's Sears Tower, a conquest in which five of the men participated. In addition, in the last 10 months, one or more of the New York guys have been behind the purchase of 11 Madison Ave. for $675 million, a half-interest in the Bank of America building in San Francisco for $400 million, and all of 180 Maiden Lane for $355 million.


"They really are a force to be reckoned with," says Eric Negrin, a senior vice president at CBRE Investment Properties. "They act fast, are very aggressive and are willing to buy in a seller's market."


They have scrambled to the top of the heap by aping an approach pioneered by someone outside their ranks. Harry Macklowe set the pattern in 2003 with his purchase of the General Motors Building for $1.4 billion. Not only did Mr. Macklowe far outbid his rivals, but he also did it with staggering amounts of borrowed money, putting up merely $50 million of his own cash.


Like Mr. Macklowe, and the Japanese buyers who dominated the market in the late 1980s by paying unheard-of prices for such trophy properties as Rockefeller Center--before falling to earth in the bust--the latest group is betting that interest rates will stay low and that rents will rise.


Before this group emerged on the scene, most big buildings were purchased by real estate investment trusts. "Any number of REITs would have loved to own the Sears Tower, but not at that price," notes John Stewart, a REIT analyst at Smith Barney.


The REITs typically want their properties to have a capitalization rate, a property's annual income as expressed as a percentage of the purchase price, of 7% or 8%. The New York guys are willing to settle for as little as 5% initially by optimistically projecting that they will boost those rates quickly by increasing rents when leases expire. By accepting a lower cap rate, the men can afford to make much higher bids.


In addition, they are able to borrow money more cheaply by taking out floating-rate loans, which can carry interest rates of up to 1 percentage point less than fixed-rate financing. If interest rates should spike or if rental rates fail to rise, however, the consequences for them would be swift and dire.


Still, the long and growing list of the group's willing lenders--institutions such as Wachovia, Goldman Sachs and Deutsche Bank--suggests that the men are not just bold but also bright.


Fast, loose, sophisticated


"Everybody thinks, `How can these guys pay that much?' But the same thing was said several years ago when Steve Witkoff bought the Daily News Building," says real estate attorney Andrew Herz, a partner at Patterson Belknap Webb & Tyler. "These guys may play it a little fast and loose, but they are very sophisticated investors who know what they're doing."


Not new to the game


Indeed, most of the members of the so-called "new crowd" have been buying and selling real estate for over 25 years. Mr. Werner and Mr. Chetrit are known for making shrewd investments in Williamsburg, Brooklyn, long before it became hot. Others, like Mr. Goldman and Mr. Feil, are second-generation members of well-established real estate families.


The group is also helped by its ability to work together, to combine knowledge as well as checkbooks. "We have our little fights," says Mr. Moinian. "But we all respect one another, and that allows us to work closely together."


Social, religious and cultural ties also serve to bind them. Messrs. Moinian, Zamir and Hakim are Persian Jews who came to the United States in the late 1970s, when the Shah of Iran was overthrown, and attend the same synagogue on the East Side.


Mr. Werner, a Russian, is a rabbi in Brooklyn, Mr. Chetrit is a Moroccan Jew, and Mr. Goldman is a fixture in the social scene swirling around East Hampton's synagogue. Despite their different backgrounds, their religion is an important link.


"They don't all belong to the same temple--some are Ashkenazi, some Sephardic, some are recent immigrants, others are second-generation--but a lot of deal-making among these guys gets done after temple or at bar mitzvahs," says Cushman's Mr. Cohen.


Those deals are literally leading the market. Gentry Hoit, managing director of California-based Shorenstein Co., has competed with the new titans on many transactions, and lost several to them.


Yes, she agrees, they are willing to take risks in the form of paying very high prices while accepting low cap rates that she wouldn't. "But they are very smart, and very fast," she says. "At the same time, they have proven themselves to be not just shrewd investors but honest and reliable, too."

February 6, 2005
A Developer Finds Many Opportunities
By WILLIAM NEUMAN


IN a little over two years, Shaya Boymelgreen, an Israeli immigrant who came to New York in 1969 to study at a yeshiva, has gone from being an obscure builder of low-rise apartment houses to become one of the city's busiest residential developers.

In partnership with Lev Leviev, an Israeli billionaire and diamond magnate, Mr. Boymelgreen has plans to build some 2,200 apartments in Manhattan, Brooklyn and Queens, at a total cost of more than $1.3 billion - with more on the way. His buildings have attracted wealthy buyers and media attention, and along the way he has clashed with the city's powerful construction unions.

Three years ago, Mr. Boymelgreen's company had about 20 employees; now, as president of Leviev Boymelgreen, he oversees a staff of more than 200 (including six of his eight children). The new company, jointly owned by Mr. Boymelgreen and Africa Israel Investments - the holding company for Mr. Leviev's real estate interests - has also branched out to Miami and Las Vegas, with real estate investments there totaling more than $500 million.

But perhaps the most intriguing thing about Mr. Boymelgreen, 53, is his ability to see real estate gold in the most disparate places. In mid-December, Leviev Boymelgreen paid $170 million for 20 Pine Street, a 35-story office tower a block from Wall Street, which Mr. Boymelgreen plans to convert to luxury condominiums.

About a month later, the partners paid $8 million for a property on the Gowanus Canal in Brooklyn, the last piece in an assemblage of industrial parcels he hopes to turn into a hip village of 400 apartments beside the still-murky waterway. While he is a long way from getting zoning changes and myriad approvals, he has hired the cutting-edge architect Enrique Norten to start shaping the complex, complete with waterfront esplanade and sidewalk cafe, into a dream of urban reclamation.

Not every developer has the imagination to tackle two projects as economically and spiritually far apart. The common thread, it seems, is that, in its own way, each is helping expand what New Yorkers think of as livable neighborhoods.

Richard Marans, a lawyer who handled the closing on the Gowanus property, said he has seen Mr. Boymelgreen plunge into risky ventures before, in fringe areas shunned by others. "It's an example of his convictions, his vision for the market and where things are going to go and his ability to stand by those convictions," he said. "You have to be a tough guy to do that. He's not afraid of the risk."

After buying their first building in August 2002, Mr. Boymelgreen has taken his partnership with Mr. Leviev from zero to 60 in a New York minute, embarking on an impressive variety of projects.

They are building a boutique hotel with 50 luxury apartments at Atlantic Avenue and Smith Street in downtown Brooklyn. And he is building the tallest building in Dumbo in Brooklyn, Beacon Tower, with 23 floors and 79 apartments, at 85 Adams Street.

They have an agreement with the Empire State Development Corporation to turn the Empire Stores, a group of Civil War-era warehouses in Dumbo, into a Chelsea Market-like complex of shops and restaurants.

In Queens, they have plans to build on top of the historic RKO theater in downtown Flushing, to create some 250 apartments.

And then there is Manhattan. Mr. Boymelgreen has pushed the fringes of TriBeCa, with a 68-unit development called River Lofts at West and Laight Streets. In trendy NoLIta, he is converting the former East River Savings Bank building at 60 Spring Street into 42 condos. He has changed the face of the financial district, hiring the flamboyant designer Philippe Starck to carry out the high-concept conversion of the old J. P. Morgan offices at 15 Broad Street into 326 condos with a view of the New York Stock Exchange across the street.

"Right now he's one of the most active developers in the New York City area," said Richard Bassuk, president of the Singer & Bassuk Organization, a real estate investment banking and advisory firm that helped Mr. Boymelgreen put together tax-free Liberty Bond financing for yet another project: a 19-story, 352-unit rental building by the architect Costas Kondylis, under construction at 88 Leonard Street in TriBeCa. "Shaya is an unusual guy," Mr. Bassuk said. "He hasn't been on the screen for a very long time, but he's able to juggle a lot of things."

Pinchas Cohen, the chief executive of Africa Israel Investments, said the company is looking for even more deals in New York. "We believe the market is strong and we want to be a part of it," Mr. Cohen said.

The transformation of Shaya Boymelgreen began a little more than three years ago, in late 2001, on a Lubavitcher-sponsored cruise from Miami to the Caribbean. A friend introduced him to Mr. Leviev, an Israeli businessman born in Uzbekistan, who, like Mr. Boymelgreen, is a Hasidic Jew who belongs to the Lubavitcher movement.

In Jewish circles Mr. Leviev is well-known for his philanthropy. In business circles he is known as the man who challenged the powerful De Beers diamond cartel and won. Thanks to his diamond business, which includes mines in Africa and a farflung cutting operation that is one of the largest in the world, Mr. Leviev was ranked at No. 277 last year on the Forbes magazine list of the world's richest people, with an estimated net worth of $2 billion.

Part of that fortune comes from Africa Israel, which has diversified in recent years into gasoline stations, swimwear, telecommunications and construction. The company was begun some 70 years ago by a group of Jewish investors from South Africa that bought land in Israel. It now owns property or does business in Israel, Russia, Eastern Europe, the United States, Canada, Angola and Namibia. Mr. Leviev bought a majority stake in the company seven years ago.

Mr. Leviev and Mr. Boymelgreen hit it off during a walk on the beach in San Juan, Puerto Rico. By the end of the cruise, Mr. Leviev asked Mr. Boymelgreen if he was interested in forming a partnership to do business in the United States, where Africa Israel was looking for real estate opportunities.

Until then, Mr. Boymelgreen's real estate ventures had been successful, but on a more modest scale. He was born in Israel and came to New York in 1969 to study. He went into business, opening a religious bookstore in Brooklyn, working a diamond mine in the Brazilian jungle and then, in New York, running an asbestos-removal company.

In August 1991, his life intersected briefly with the broader life of the city. He was driving home to his house in Crown Heights, Brooklyn, one evening when he saw a man staggering in the street. He stopped and got out, and the man collapsed against him. "I feel on my clothes this blood," Mr. Boymelgreen said. "He held my hand and said, 'I'm scared, I'm scared.' I said, 'What's your name?,' and he said, 'Yankel.' " It was Yankel Rosenbaum, the Hasidic student who had just been stabbed in the Crown Heights riots. Mr. Boymelgreen comforted the wounded young man until an ambulance took him away. He wanted to go along to the hospital, but the police would not let him. He said he still blames himself for not being more insistent. Mr. Rosenbaum died after emergency room doctors failed to detect a chest wound and Mr. Boymelgreen feels that if he had been there he might have been able to demand the kind of care that could have saved his life.

In the mid-90's, Mr. Boymelgreen turned to real estate. He built his first building, with 35 apartments, on a lot at Avenue A and Third Street in Manhattan.

That was followed by another building on Avenue B (on a whim, he wired it with T1 lines for direct Internet connections, making it perhaps the first such apartment building in the city), then a condo conversion in Williamsburg, Brooklyn, a building on the Upper West Side, and the conversion of an old Daily News printing plant on Dean Street, in Prospect Heights, Brooklyn. Next came a conversion in Dumbo and several buildings on the fringes of Park Slope, off Fourth Avenue.

But with the backing of Mr. Leviev and Africa Israel (they have called their joint company both A. I. & Boymelgreen and Leviev Boymelgreen), Mr. Boymelgreen took his game to another level. In August 2002, he made his first purchase with Africa Israel, paying $26.5 million for a group of adjoining properties between West and Washington Streets, north of Laight Street, in TriBeCa. One of the properties was a 19th-century warehouse that is being converted to condos. The rest of the parcel will hold a new 13-story building. He dubbed the complex River Lofts and hired the architects Ismael Leyva and Calvin Tsao to design it.

The same month, he signed a contract to pay $36 million for 60 Spring Street, closing the deal the following January. And in May of 2003, he signed a $100 million contract for 15 Broad Street, which is being called Downtown by Philippe Starck.

That was only the beginning. Mr. Boymelgreen now oversees 15 projects financed jointly with Africa Israel in Manhattan, Brooklyn and Queens.

The former bank building at 60 Spring Street, a creation of the architect Cass Gilbert, is the first of the Leviev Boymelgreen projects to near completion, with 17 owners closing on their apartments last month. The 42 apartments, which were also designed by Mr. Tsao and Mr. Leyva, cost from $895,000 for a 936-square-foot one-bedroom, to $2.98 million for a two-bedroom with 2,063 square feet. They have dark Brazilian oak floors, flush baseboards, marble bathtubs, Bosch stoves with recessed hoods that slide out silently at the touch of a finger, and, in every unit, a safe.

Inevitably, however, there are growing pains. The Spring Street apartments were initially to have been delivered last spring, and time is the essential, invisible component of a developer's work. Delays of weeks or months can mean enormous extra costs as interest payments pile up on large construction loans.

Time was clearly on Mr. Boymelgreen's mind last month during a visit to River Lofts, the TriBeCa development, where about 125 workers bustled around the two buildings, old and new. "Every day costs me over here," he told Alan J. Krause, his director of operations, urging him to coordinate the work of the many subcontractors to avoid delays.

Much of the work at River Lofts and virtually all of it at 60 Spring Street and several other projects has been done without union labor, and this has put Mr. Boymelgreen on a collision course with the city's construction unions.

Union members have held almost daily rallies outside 15 Broad Street -sometimes setting up a large inflatable rat - and during a recent interview they could be heard chanting outside. Mr. Boymelgreen said he decided to handle the conversion of 15 Broad Street without union labor for the simple reason that it was cheaper that way and it allowed him to bring his condos to market at a more competitive price.

But pressure from the unions has clearly taken a toll. Mr. Boymelgreen says union protestors have threatened his workers. He accuses them of putting sugar in gas tanks and pouring cement down sewers. He says a bulldozer was stolen from the River Lofts site, and another disappeared from a construction site in Brooklyn. But he has done business with union contractors on some of his projects. Most notable is the building at 88 Leonard Street, an all-union job where work has begun on the foundation.

Edward J. Malloy, the president of the Building and Construction Trades Council of Greater New York, said he was unaware of any interference by union workers with Mr. Boymelgreen's projects. He said he hopes the two sides can work out their differences. "He is a major new player in real estate in New York City," Mr. Malloy said. "We would like to just hopefully convince him that building union has more positives than doing the work the way it's being done today."

Mr. Boymelgreen combines the bottom-line mind-set of all developers with an almost quixotic sensitivity that reveals itself in unexpected ways. At such moments, he seems blithely unaware of the fact that for many New Yorkers, developer is a dirty word.

Mr. Boymelgreen and his partners chose 20 Pine Street to piggyback on the success of Downtown by Philippe Starck, a block away. But instead of tapping Mr. Starck for a reprise, Mr. Boymelgreen said he is in talks with a well-known fashion designer to lead the team that will transform the office building into about 400 luxury condos.

It would have been easy, he said, to repeat the formula and simply do another Philipe Starck building. Easy, but boring. And then, too, there's the seduction of the new.

"It's second nature to a developer to do new things," Mr. Boymelgreen said. "We're kind of artists, to come up with new things, new ideas. An artist paints the 'Mona Lisa,' he's going to do a second 'Mona Lisa'?"



Borough barons hit the big time
Developers, consultants on luxury projects evoke dot-com lifestyle; trouble for tyros?
By Christine Haughney
Published on February 07, 2005


Elan Padeh recently celebrated a profitable year by buying a 40-foot
powerboat named Aquasition, a 28-foot sailboat called Lost Horizon and a
silver BMW convertible. His testosterone-fueled shopping spree may sound
like a Wall Street bonus-backed splurge, but Mr. Padeh is making his money
in a far less glamorous venue. He's consulting on the development of
luxury condominium projects, mostly in the boroughs beyond
Manhattan--namely Brooklyn.
Mr. Padeh is one of a group of developers, architects and consultants who
have engaged in a spurt of deals, reaped their fortunes and started
indulging in personal spending with an excess reminiscent of the dot-com
era. Their mission is to satiate what they believe is an almost unbounded
demand for luxury residential properties across the East River.
"I'm trying to think if I envision a limit, but I don't see it," says the
34-year-old chief executive of The Developers Group. "If you have young
people who are driven, you can do almost anything."
In the past 22 months, the company co-launched by Mr. Padeh has exploded
into a 32-person shop working on 76 development projects. The Developers
Group, which takes a 4% commission, expects to take in roughly $125
million on $3.5 billion in sales over the next four years.
The community of new profiteers ranges from professionals who have spent
decades trying to drum up business in overlooked neighborhoods, to
newcomers with little experience. Almost all are working through the
weekends, getting little sleep and bemoaning the lack of a personal life.
But they also are enjoying newfound wealth surpassing that of their
contemporaries in Manhattan development and even on Wall Street.
"I have lived through three previous booms in the real estate cycle, and
this is huge compared to anything I've seen," says Jay Schippers, head of
The Corcoran Group Inc.'s Brooklyn development division. "Everybody is
making a huge amount of money."
Carpetbaggers
Some old-time players view the profiteers as little more than
carpetbaggers. Although extensive rezoning has created more opportunities
in the boroughs, the veterans warn that some developers are paying too
much to build on sites that have long languished. They question whether
those newer to Brooklyn and Queens are prepared to tolerate the
historically glacial pace of turning around some of the most downtrodden
neighborhoods.
"Eventually, the people who are in it for the quick dollar will move on to
the next hot thing," says Jason Muss, a principal at Muss Development Co.,
which has been building residential properties in Queens and Brooklyn for
98 years.
At the moment, developers are feasting on the boroughs as rezoned new
frontiers offering alternatives to Manhattan, where land prices are
escalating to unheard-of levels. Brooklyn alone now has at least 250
development projects worth $16 billion. Since zoning changes for downtown
Brooklyn were approved last summer, sales brokers say, land prices have
soared by 20%.
"Zoning is so favorable to residential or commercial deals, residential
condominium developers are willing to pay a premium for these sites
because of the strong sell-off values," says Brian Leary, a partner at
Massey Knakal Realty Services Inc. who runs the firm's Brooklyn office.
As more developers move into rezoned areas, The Developers Group is
cashing in on its borough expertise.
Mr. Padeh and his team advise developers on how to market to younger
buyers looking for, say, $450,000 one-bedrooms and $775,000 two-bedrooms.
They offer counsel on materials and layouts. Mr. Padeh recently showed
development firm GLC Group why buyers for a Williamsburg condominium
project may prefer terra cotta tiles over brick and pointed out their
preference for glass curtain walls.
Developers say that the group's insights on youthful customers clearly
help move their properties. For one project, potential apartment buyers
slept at the marketing offices to win a chance to bid and another open
house attracted so many prospects that the police shut it down.
Know their audience
"The Developers Group executives are experts in condominium sales to the
younger generation," says Pinny Loketch, chief executive of GLC Group,
which previously developed less high-end projects in Bay Ridge and
Canarsie.
Successes in areas such as Williamsburg and downtown Brooklyn are leading
sales brokers to delve deeper into the borough. Since Massey Knakal opened
its Brooklyn office two years ago, the number of brokers has grown to 35;
it's expected to climb to 75 this year.
Income is soaring as well. Mr. Leary, who closed four deals in 2002,
earned commissions estimated at about $120,000. This year, he is already
marketing 15 properties, which could bring his income to more than $1
million.
Yet the Wall Street veteran remains cautious about how he spends his hefty
paychecks.
"My advice to newcomers in the business is, `Don't get caught up in this
prosperous time, because it may not last,' " he says.
Still, when company revenues jump to $5 million from $2.5 million in two
years, as they have for architecture firm Scarano Associates, the
temptation to treat oneself is hard to resist. Discouraged by his wife
from buying a Corvette, Robert Scarano bought a limited-edition Cadillac
XLR convertible. He justifies it as a little pick-me-up for working on the
weekends.
"I come in late afternoon on Sundays so I can get enough of a head start,"
Mr. Scarano says.

Report on B-Schools / Rankings

SPECIAL REPORT -- 2004 RANKINGS

The Best B-Schools
Schools known for tougher academic standards gained ground -- with
students and recruiters
Midway through his MBA program, Andy Brown had a big decision to
make. His career choices -- to start his own small private equity
firm with a partner, or join a prestigious firm and learn at the
feet of the masters -- were enviable for any soon-to-be graduate.
But Brown, a student at Northwestern University's Kellogg School of
Management, was torn. So he did what he'd done dozens of times
before. He turned to Professor Larry Fox.

At Fox's home north of Kellogg's Evanston (Ill.) campus, the two
spent hours sipping tea and sorting through Brown's options. Fox,
61, who led an elective class on private equity in 2003, helped
Brown hash out the pros and cons of each path and examine his
long-term goals. Fox shared his own experiences at similar career
crossroads. When Brown left, he had the names of three high-level
executives Fox knew personally to call for more brainstorming. For
the next year, the two continued to dissect Brown's choices by
phone -- by then, Fox had retired to California.

It might seem an unusual relationship, but for Brown, 29, it was not
uncommon. Other professors had been equally generous: One was a
sounding board for Brown's business ideas, and another helped Brown
raise money for a Kellogg business plan competition. "One of the
main reasons I chose Kellogg was for its extremely accessible
faculty," says Brown, who ultimately chose to join a Houston-based
private equity firm. Kellogg's academic rigor, responsive
administration, and closeknit community were equally appealing.

The balance between an in-depth academic experience and a welcoming
culture is what once again put Kellogg at the top of BusinessWeek's
2004 biennial survey of the world's best business schools. In a year
when MBA students rebelled against academic corner-cutting and
sloppy ethics, Kellogg's achievement represents a high-water mark
of sorts. With five No. 1 rankings to its credit, Kellogg now has
more than the University of Pennsylvania's Wharton School, the only
other school to win the top spot since BusinessWeek began ranking
B-schools in 1988.

Clearly, Kellogg's is a formula that works. But it wasn't the only
way to ascend to the top. Downtown rival University of Chicago
Graduate School of Business, with its cerebral environment and
research-oriented bearing, stands in stark contrast to Kellogg --
and it landed at No. 2 for the third time since the rankings began.
Yet it may be what Chicago has in common with Kellogg that made the
difference this year: a mix of pure scholarship and can-do culture
that permeated the ranks of administration, faculty, students, even
recruiters. Indeed, Chicago's grads were hands-down favorites in our
survey of companies that hire MBAs. More than just a factory for
churning out economic whiz kids, the school's capacity for shaping
students' thinking was at the top of recruiters' minds. "Everything
is grounded in theory and analytics," says Blaine Barnett, a 2004
grad now working for high-end recreational product maker Brunswick
Corp. (BC ). "In every class it was, 'prove it to me,' 'show it to
me,' 'tell me why you think that,' 'give me the data.' It's a way
of thinking, a way of conceptualizing the problem."

Chicago's penchant for critical thinking has a long and storied
history. But enthusiasm among students, and even faculty, is a
newer phenomenon, ushered in by alum and now-dean Edward A. Snyder,
who joined the school in 2001. Just three years later, his ambitious
plans to revitalize the school and shape the program's culture
around its academic strengths and thought-provoking environment are
bearing fruit, and Chicago has ended its inconsistent performance in
the eyes of students. The success of this type of culture, says
Snyder, hinges on the expectations he announced on Day One,
including mutual respect, professional communication, and personal
responsibility. Snyder's weekly roundtable breakfasts are a hot
ticket, and not just for the flapjacks. Every student (each class
has about 500) is invited at least once to the anything-goes
meetings. Just weeks ago, a big source of student gripes -- poor
facilities -- was remedied when a new seven-story,
415,000-square-foot home for the business school opened.

If there's one lesson to be distilled from this year's ranking, it's
that student satisfaction is cruci- al. At Wharton, a new building
did little to remedy student unhappiness in 2002, when the school
fell from its long-held No. 1 spot to No. 5. Waning student
satisfaction, an ineffective placement office, and a dip in hiring
by its most reliable recruiters led some to question whether the
venerable finance school had lost some of its luster. But in 2002,
Dean Patrick T. Harker hired Peter Degnan, a former investment
banker, to overhaul career services, and students have taken
notice. Says one Wharton grad, who landed a six-figure job at an
investment management firm: "Degnan and his team have done an
incredible job attracting employers, increasing the number of
interviews and the number of job offers -- all in a very short
period of time." Recruiters noticed the well-oiled machinery, too
-- they named the placement office at Wharton the most effective of
any school. It all added up to a No. 3 spot for Wharton this year.

Also on Wharton's improvement checklist: 23 new faculty across
several disciplines and some fine-tuning of the program, including
more "soft-skill" classes in communications, and experimenting with
new interactive tools developed in the school's learning lab. And
though students still complain about spotty teaching, Wharton's
faculty -- 223 full-timers -- rivals that of any program. That's
borne out by the school's intellectual-capital ranking -- based on
published research and book reviews -- which was among the best
this year. It's not uncommon at Wharton to look down at a class
textbook and find that your professor wrote it.



SCHOOLS OF HARD KNOCKS
For the class of 2004, a school's intellectual prowess was just one
way students judged a degree that was beginning to feel less
valuable. Remember, the most recent group of MBAs applied not long
after September 11, with the economy in tatters. They witnessed the
layoffs of tens of thousands of employees, and some were downsized
themselves. What's more, just a few months before applications were
due, the Class of 2004 watched in disbelief as recruiters in 2002
reneged on job offers to hundreds of newly minted MBAs. An MBA was
no longer a golden ticket, and more and more grads found themselves
without jobs, even months after commencement. At the same time,
B-schools continued raising tuition, making the price tag for the
degree -- already staggering -- an even bigger reach. All of this
at a time when pundits and even B-school insiders were questioning
the value of the degree after a spate of corporate scandals that
often involved MBAs. "It has been a sobering experience for the
business community as a whole," says Bruce Willison, dean of UCLA's
Anderson School of Business, No. 14 this year. "People are mindful
of that as they decide to go back to business school."

The tumultuous state of Corporate America and the world of
management education created near-perfect conditions for a backlash
against the "glitz factor." In the late 1990s, many MBA programs
catered far too much to student whimsy, sometimes to the point of
dumbing down curriculum, reflecting the "I-want-more" culture that
permeated the boom years. But the MBA is, after all, a $100,000
investment, and the country club atmosphere just doesn't cut it
anymore with students. "[The MBA] is really about investing in
yourself, acquiring a knowledge base you didn't have before so that
you have a professional future that's brighter," says Robert L.
Joss, dean of Stanford Graduate School of Business, No. 4 this
year. "That has to come from effort and work, and there has been a
growing awareness of that."

That may be why business schools known more for their tough academic
environments have gained ground in the ranking this year with
students and recruiters. Carnegie Mellon Tepper School of Business,
with a reputation for turning out grads skilled in quantitative
analysis, shot up four spots, to No. 15, and technology powerhouse
Purdue University's Krannert School of Management leapt five spots,
to No. 21. For Purdue, the improvement came despite student
complaints that the career services office didn't do enough to help
them with job searches. They also said alumni contacts were barely
useful in the hunt.

Schools that failed to meet students' intellectual needs paid dearly
in the 2004 student survey. University of Southern California's
Marshall School of Business fell 10 spots overall, to No. 27, and
nine places in the student poll, to No. 23. In spite of a class
boasting perhaps the highest average GMAT scores in the school's
history, "the administration failed to match the caliber of
students with an equally tough and challenging curriculum," says
one grad.

This year's class saw the first signs of a recovery in the MBA job
market after three years of lackluster recruiting. You could almost
hear the sigh of relief. About 75% of grads at the top 30 schools
had at least one offer by graduation. By three months after
graduation, only 11% were still looking for work. That's in stark
contrast to 2003, when nearly 35% of grads at the top schools were
still pounding the pavement at summer's end. Harvard took the lead
this year -- 94% of the Class of 2004 had at least one job offer by
graduation. And even though students complained about the school's
lack of connections with smaller recruiters, grads received an
average of 2.6 offers per student -- more than any other school.

Most schools had to pull out all the stops to maintain and
strengthen relationships with companies -- and get them to come
back to campus. Cornell University's Johnson School of Business,
No. 7 this year, used a private jet, loaned by its B-school
namesake, S.C. Johnson & Son Inc., to fly recruiters to
out-of-the-way Ithaca, N.Y., for presentations and interviews. Some
29 companies took advantage of the unique perk to recruit first- and
second-year students. And 14 job or internship offers from companies
like GE Consumer Finance (GE ) and IBM Global Services (IBM ) came
about as a result of those trips.

Companies weren't just back in hiring mode for the Class of 2004.
They were also more willing to pay a little more for grads' skills.
Median graduate-reported total compensation -- salary, signing
bonus, and other guaranteed payments -- was up 26%, to on average
$136,569 in 2004. Many grads had something even better to be
thankful for -- a big part of the compensation increase came from
companies paying off their loans. Others were just happy to see
more recruiters on campus -- and to be among the employed.



RETURN OF THE RECRUITERS
Career service directors privately worried that 2004 wouldn't be
much better than 2003. But in the spring, their phones started
ringing. Banks and consultancies, months after fall recruiting
ended, came back to campus to snatch up uncommitted grads. Hiring
among consulting firms and banks that answered the BusinessWeek
survey in 2002 and in 2004 was up 21% this go-round. And prospects
are looking even better for the Class of 2005. "Two of the major
firms hosted summer receptions for students who hadn't even started
business school yet," says Sheryle Dirks, career services director
at Duke University's Fuqua School of Business, ranking No. 11. "We
haven't seen anything like that in at least five years." Students'
growing coolness to hard-charging Wall Street jobs has pushed the
banks, in particular, to be more aggressive in their recruiting
(page 76).

And that's not all. Recruiters, who have long grumbled about MBAs
who can't hit the ground running, now say MBAs are making a
contribution from the get-go. Of those who responded to the
BusinessWeek survey, about 50% reported that grads' skills and
abilities were better today than they were three years ago. Only 4%
said grads were worse now than in 2001. "Before, everybody was going
to business school just to go or because they were [laid-off]. Now,
the people who are there really want to be there. It's more
competitive to recruit, but the quality [of grads] is much better,"
says the head of a top consulting firm.

One reason could be that schools have become more innovative,
adopting hands-on learning techniques designed to give them a taste
of the business world they're about to inhabit. What had been a
smattering of experiential learning projects at a handful of
schools has turned into a full-fledged phenomenon over the last few
years. Students at most schools aren't just learning about
structured finance, marketing strategy, or brand management.
They're doing it. Through a variety of consulting projects, teams
of students get a chance to test-drive their new skills.

At Kellogg, students have hundreds of opportunities to consult or
work on real-life corporate projects -- often as a supplement to a
particular course. The combination has won them kudos from
corporate recruiters who named the school's curriculum the most
innovative. For example, students in technology marketing studied
the latest marketing concepts for high-tech firms under the
watchful eye of professor Mohan Sawhney and Dean Dipak C. Jain.
Between pop quizzes and homework assignments, they consulted with
senior management at Microsoft Corp. (MSFT ), identifying business
problems, writing case studies, and developing solutions for the
company. Microsoft has already implemented several student
marketing ideas related to its .Net initiative to sell Windows
software as a service.



TURNING OUT LEADERS
One of the biggest changes in the B-school world this year has been
a recognition among students that leadership is important. As
important as, say, cost allocation or strategic planning. But
teaching the fine art of leadership to Type-A MBAs is a challenge,
especially when many already see themselves as destined for the
corner office. Harvard Business School, alma mater of a sitting
President and dozens of CEOs, made the biggest splash by making its
first core-curriculum change in 25 years. Last fall, it launched a
year-long required course on leadership and ethics, team-taught by
10 of the school's top professors (35 applied to teach it). Student
response was overwhelming: One student wrote to a professor about
his visit years earlier to a Polish concentration camp where he
lost relatives during the Holocaust. The trip left him certain that
human beings were incapable of changing their ethical stripes. "You
have proven me wrong. While we become harder to convince over time,
we are still...'moldable' at any age."

Of course, Harvard doesn't own the market for creating leaders.
Under Dean Robert J. Dolan, University of Michigan's newly named
Stephen M. Ross School of Business expanded its flagship leadership
program from one week to two and added a third week just before
students graduate -- and won raves from recruiters, pushing it up
two spots to No. 6. University of Virginia's Darden Graduate School
of Business Administration, at No. 12, creates leadership and ethics
case studies from its own center dedicated to the subject. And Emory
University's Goizueta School of Business moved up two spots to No.
20 this year, with grads giving it the highest score among all
programs for the school's numerous efforts to nurture and improve
their leadership skills. Through a mix of seminars, workshops, and
year-long classwork, the school constantly reinforces the idea of
leadership. Next year, Emory will add a Leader's Academy for
students who want even more training. They'll have to be committed,
though -- the academy meets on weekends and requires serious sweat
equity in exercises that include working a minimum wage job and
spending a long weekend at Marine Corps boot camp.

Grads who are grounded in the fundamentals but who also have
business-building skills are in high demand these days. That's
something that sets Babson College's F.W. Olin School of Business
apart from its peers. "Companies can only do just so much with
operating excellence or cost-cutting," says Dean Mark P. Rice. "At
a certain point, you need new products, processes, and services.
That's what drives revenue growth, and that's what Wall Street
wants to see." In recent months he has received many requests to
talk to executives at companies like Gillette Co. (G ) and United
Technologies Corp. (UTX ) about innovation.

Babson, which enters the ranking for the first time at No. 26 this
year, lives and breathes entrepreneurial zeal -- even though
upwards of 80% of its grads go on to work for traditional
companies, which increasingly appreciate their creative thinking.
Even hard-charging schools are getting on board the innovation
bandwagon. R. Glenn Hubbard, recently appointed dean of Columbia
Business School, hopes with a new mandate he can infuse a dose of
entrepreneurial thinking into every course the nearly 500 MBAs take
each year.

Such changes reflect a sense of optimism in the classroom that was
fading two years ago. After surviving an economy in free fall and
an unprecedented loss of faith in business itself, it wouldn't come
as a surprise if the class of 2004 were a hard-nosed lot. But that's
not the case -- and with good reason. Recruiters are back, and
schools are making meaningful changes. In the increasingly complex
business world this year's grads have inherited, it may just be
worth more than ever.


By Jennifer Merritt with Erin Chambers in New York

Friday, October 01, 2004

New Ethical Minefield: Drugs to Boost Memory And Sharpen Attention

WSJ, October 1, 2004; Page B1

Move over, Botox. Although injections of the most potent natural toxin known to science are marketed as knife-free plastic surgery to reduce wrinkles, Botox treatment is actually a neurological intervention.
The toxin blocks the release of a neurochemical, acetylcholine, from neurons. That makes it the opening act in what promises -- or threatens -- to be a significant new drama. Welcome to "cosmetic neurology."

Sure, there have been reports over the years of, shall we say, recreational use of prescription pharmaceuticals. Some musicians and nervous public speakers take beta blockers (a heart drug) to vanquish stage fright. Modafinil (aka Provigil) is a stimulant approved for narcolepsy, but it has an underground following among those who want to feel as alert and rested after five hours of sleep as after eight. Ritalin, for attention-deficit hyperactivity disorder, improves concentration and the ability to plan, making it popular among healthy adults who simply want an edge in multitasking.

A string of recent discoveries, many of them from small studies that have flown under the radar, suggest that this is only the beginning. Ritalin, for instance, specifically boosts spatial working memory, or the ability to remember layouts and locations. Just the thing for back-country hikers, perhaps, or architects mentally juggling blueprints?

Compounds called cholinesterase inhibitors boost levels of the neurotransmitter acetylcholine, which lets neurons communicate with each other. One, donepezil (sold as Aricept), is approved for Alzheimer's disease. But that may be only one of its talents. In a 2002 study, scientists gave donepezil to one group of healthy, middle-age pilots and dummy pills to another. The donepezil group did markedly better learning maneuvers in a Cessna 172 simulator, particularly those used in flight emergencies.

Some drugs that affect memory work very selectively. So-called CREB inhibitors (CREB is a protein essential for incising memories in the brain) "seem to selectively erase only disturbing memories," says neurologist Anjan Chatterjee of the University of Pennsylvania, Philadelphia. And propanolol, a beta blocker, enhances the memory of events that are emotionally charged and that the brain otherwise suppresses. It also seems to erase the negative emotions associated with bad memories. Healthy people given the drug recall disturbing stories as if they were no more emotionally charged than a grocery list.

It's not that neuroscientists are deliberately looking for drugs that might be used for cosmetic neurology. Rather, these more frivolous uses are being discovered serendipitously, often in research on serious neurological diseases such as stroke. For instance, scientists find that small doses of amphetamines help stroke patients undergoing physical therapy relearn motor skills, such as tying shoes and using utensils, better and more quickly than with therapy alone. Taken half an hour before a therapy session, amphetamines seem to promote what's called neuroplasticity, the ability of the brain to form new connections or strengthen existing ones between its neurons. Those connections underlie both simple and complex sequences of movement.
"With amphetamines, the effects of therapy are more pronounced," says Dr. Chatterjee. "And animal studies suggest that pairing amphetamines with motor training leads to greater brain plasticity."

The day may be coming when perfectly healthy people will pop speed before a tennis lesson or piano instruction, knowing it may stimulate the brain rewiring that underlies a perfect backhand or a flawless "Für Elise." Botox, after all, originally received government approval to treat two serious eye-muscle disorders, and now aging boomers regard a quick fix as no more momentous than a swipe of mascara. Cosmetic neurology could well follow the same arc, which means that the time for neurologists to weigh in on the ethical implications of all this is now.
Those implications are profound. If drugs can improve learning, make painful memories fade and sharpen attention, should physicians prescribe them? Must physicians prescribe them? Must patients -- perhaps pilots compelled by an employer -- take them? Might one airline distinguish itself from competitors by advertising its donepezil-taking crews?

Dr. Chatterjee captures the dilemma in a paper he wrote for the current issue of Neurology: "The distinction between therapy and enhancement can be vague, particularly when the notion of 'disease' lacks clear boundaries. ... If one purpose of medicine is to improve the quality of life of individuals who happen to be sick, then should medical knowledge be applied to those who happen to be healthy," lifting patients from normal functioning to enhanced functioning?
We can wring our hands all we want about pills that make learning more effective without greater effort, offending the belief that gains should be hard-earned, or about drugs that selectively erase painful memories, evoking a Brave New World of the happily drugged -- and less-than-fully human. I have a feeling it won't make much difference. "Patient" has become synonymous with "consumer," someone unlikely to take kindly to physicians, let alone ethicists, blocking his or her pursuit of self-improvement and happiness.

Next big thing: The Web as your servant

What if the Web could anticipate your needs?

By Kevin Maney / USA TODAY / 10.1.2004


The Web is over. Now comes the next big thing, growing out of the primordial soup of wireless and wired networks, gadgets, software, satellites and social changes created over the past decade.


This coming wave doesn't even have a name yet. Some in tech call it the world network. A big part of the promise is that it will turn the Web around: Instead of having to find information or entertainment, it will find you ? and be exactly what you want or need at that moment. The network becomes a butler.


"This is the real Internet 2.0," says Halsey Minor, CEO of Grand Central Communications, a start-up helping catalyze the new era.


What will the world network do for people? One example, culled from interviews with executives and entrepreneurs across the tech industry, might be a service we'll call Travel Butler, or TB for short. It doesn't exist, but services like it are a gleam in the eye of companies ranging from Orbitz to AT&T.


Let's say it's 4 p.m. TB knows you have a flight scheduled for 6 p.m. because it regularly prowls the Web sites you use for travel and found you booked a ticket on Orbitz. TB can tell, perhaps by checking your online calendar, that you're at a meeting downtown.


The service cross-checks with a map service such as MapQuest to find the route you'd have to take to the airport. Once it knows that, TB goes out on the network to monitor traffic on your route ? and finds the streams of data on the Department of Transportation Web site, which monitors road cameras and sensors.


TB might see that accidents have backed up traffic for miles. It sends you a message, which finds you on your BlackBerry e-mail, saying that to make your flight, you'd have to leave now. TB also shows you an Orbitz listing of later flights.


You decide to go on a later flight, so you click on the one you want. TB rebooks you, sends an e-mail to your spouse and contacts the car service in your destination city to change the time to pick you up.


That's an experience that rises above a particular technology. "People really don't want to buy technology," says Lisa Hook, head of America Online's broadband unit. "They do want to buy experiences."


"We're completing the revolution begun in the bubble economy," says Glover Ferguson, chief scientist for consulting giant Accenture. "The basis for this next really big thing has begun to be laid down." This is a point of transition as the World Wide Web gives way to the world network.


Ten years ago, the consumer version of the Web grew out of the academic and military Internet that had been around since 1969. Amazon.com was founded in 1994, eBay and Yahoo in 1995, followed by truckloads of other consumer Web companies. They created the now-familiar system of Web sites built on HTML code and viewed on browsers. Those sites profoundly changed shopping, travel, news, dating, homework, music and many other aspects of life.


But after a boom and bust, the Web has stalled. Its power to rock our world is largely gone. The only company that's had that kind of impact in recent years is Google.


The Web, though, is becoming the first piece of the bigger network as it meshes with new technologies that started from disparate corners of the industry ? such as Wi-Fi wireless broadband connections, the Global Positioning System (GPS) and radio frequency identification tags (RFID).


The technologies are becoming a network of networks, enabled by a sea of powerful new devices and databases, all interlinked and talking to each other. To some extent, these are the "Web services" and .Net that Microsoft and other companies have tried to encourage, but broader and better.


Web creator Tim Berners-Lee has been talking about a version of such a system for a couple of years. "The Web can reach its full potential only if it becomes a place where data can be shared and processed by automated tools as well as by people," Berners-Lee said Wednesday at the Massachusetts Institute of Technology.


Yet, "This was never really foreseen in the 1990s," says Alan Ramadan, a top executive at software company Macromedia and founder of Quokka Sports, an early Net multimedia firm that didn't survive. "We're out the other side, and the Internet has emerged as more of a fundamental world network."


On that world network, companies will build services only dreamed about during the Web mania. In the Web era, you went on the Internet to find something ? you sat down at a computer and tapped into search engines or shopping sites. In the new era, the network and the information will give you, unprompted, what you want depending on where you are and what you're doing.


We got to this point by accident.


Sure, prognosticators have long had visions of technologies coming together, but most networks and gadgets weren't built with that in mind. Since the mid-1990s, hundreds of companies invented and developed myriad technologies that all had their individual, narrower purposes.


For instance, the Pentagon put GPS in place for all-weather military navigation. The first full GPS satellite constellation was up and functional on March 9, 1994. Now GPS can let the network know when your car is approaching a McDonald's at lunchtime.


All of these pieces will contribute to the new world network:


?The Web. In 1994, it was static and slow. Most people dialed in from a PC and clicked on text or graphics. Since then, Sun Microsystems invented Java ? a programming language that can make a Web page become an interactive game or work tool. Macromedia made Flash, which helps bring multimedia to the Web. Little by little, homes got high-speed Internet connections ? cable modems or DSL ? until, as of July 2004, half of all homes with Internet connections had broadband.


Broadband brought video and music to the Web and, in turn, helped persuade media companies to create digital content, record labels to sell downloadable music on services such as iTunes, and movie companies to sell downloadable movies on Movielink and elsewhere. So entertainment is becoming digitized and ready to send anywhere.


?Infrastructure. Behind the Web, companies built infrastructure that stands ready to do much more than just run Web sites.


Orbitz started out as a site for selling airline tickets. It has since constructed a massive database of travel information and user preferences and a transaction system that can handle millions of purchases a day, says Chris Hjelm, Orbitz's chief technical officer. Now Orbitz can build on that, creating new kinds of services ? perhaps like Travel Butler ? at a low cost.


"We'll just continue to leverage that power," Hjelm says. One example that shows a glimpse of the future is Orbitz's Deal Detector, which monitors changing airfares on a particular route for a user.


Google, Amazon.com, eBay, Yahoo and other big Web players have built similarly turbocharged systems ? powerful engines waiting for those companies to step on the gas. Amazon.com did exactly that on Sept. 15, when it unveiled A9, its new search engine. A9 meshes the personalization capabilities Amazon has built over the past decade with Google-style search, taking a step toward delivering more useful information.


?Hardware. Just think of what's been developed in the past decade. Cellphones with cameras. BlackBerry e-mail devices. Pocket PCs such as Hewlett-Packard's iPaq. Music players such as the iPod. And $500 PCs with more power than anything that would cost 10 times that in 1994. All will play a role in the world network, helping messages, content and services reach users wherever they are.


?Software and more. Advances in software such as XML coding lets Web sites exchange information with each other automatically ? crucial for something like Travel Butler. Wireless networks, whether new high-speed cell systems or Wi-Fi, enable information to follow people. Meanwhile GPS and cellphones that can pinpoint the user's location can help the network deliver information based on where he or she is.


RFID is beginning to let inanimate things identify themselves wirelessly. It might be the most profound new piece of this world network. On Monday, IBM said it will spend $250 million to develop its RFID business. Companies are increasingly putting RFID tags on products. The tiny tags hold information about the items they are attached to, constantly pinging the network with radio signals It's the beginning of the network's ability to know not only where you are but what's around you.


Take your handheld wireless network device into your pantry 20 years from now, and it might instantly know all the items there and deliver a list of recipes you could make from the ingredients.


"We are beginning to give the gift of information technology to objects," says Ferguson.


One other factor makes tech experts optimistic about this next phase: The economics in place are 1,000 times better than 10 years ago, says Internet pioneer Marc Andreessen. "If you launch an Internet business today, it's probably going to cost you about a tenth of what it would have cost five years ago, but you're going to have 10 times more consumers you can address and probably 10 times the ad revenue," Andreessen says. "And people are going to be 10 times more willing to buy online. So you have this big economic swing" in favor of a next wave.


Around the tech industry, companies are working on embryonic versions of the next-generation world network. It's a priority at AOL. When the online service looks at its future, it sees itself detached from the PC ? a brand that transcends any one technology.


An early example is Radio@AOL. It started as 175 channels of commercial-free music you could hear only when signed on to AOL through a PC. Thanks to a deal announced in July with wireless-networking company D-Link, AOL members can now use a wireless router to get and stream Radio@AOL directly into their stereos without going through the PC.


The idea, says AOL's Hook, is to let users break off pieces of AOL. Maybe a user will listen to Radio@AOL through a cellphone or handheld computer while walking. AOL's photos, e-mail, news and other features will go through similar transformations. "We want users to be able to create an ecosystem of devices and put the AOL experience on them," Hook says.


On a business level, AT&T and Grand Central have started offering a system that can connect Web sites and services and let them share data. That would be necessary for companies that want to offer a service such as the fictional Travel Butler, says Grand Central's Minor, who previously co-founded tech news site CNet.


Motorola is aiming its whole corporate strategy at what it calls "seamless mobility." The company wants to make both the wireless gadgets and infrastructure to allow information to follow you anywhere, switching between wired, Wi-Fi and cell networks without you having to do anything.


"The big change is going to be when the Internet follows you, not you trying to follow the Internet," says Motorola CEO Ed Zander. "It's just there. Your life is just affected the way it's affected today by the lights in a room."


"We're at an incredibly exciting place," says Macromedia's Ramadan. "The kinds of products and services we'll see in the next five years will make those of the past five years look like child's play."