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Empire of Eph

Check out this great New Yorker article, “The Empire of Edge,” about the insider trading conviction of Matthew Martoma of SAC. Key testimony in the case came from Sid Gilman, the doctor with information about an important drug trial. The Eph connection:

One day in 2002, Gilman was contacted by a doctor named Edward Shin, who worked for a new company called the Gerson Lehrman Group. G.L.G., as it was known, served as a matchmaker between investors and experts in specialized industries who might answer their questions. “It was kind of ridiculous that the hedge-fund business got so much information by asking for favors . . . when it would certainly pay,” the company’s chief executive, Mark Gerson, told the Times.

Shin proposed that Gilman join G.L.G.’s network of experts, becoming a consultant who could earn as much as a thousand dollars an hour. Gilman was hardly alone in saying yes to such a proposal. A study published in the Journal of the American Medical Association found that, by 2005, nearly ten per cent of the physicians in the U.S. had established relationships with the investment industry—a seventy-five-fold increase since 1996. The article noted that the speed and the extent of this intertwining were “likely unprecedented in the history of professional-industrial relationships.”

Gilman read the JAMA article, but disagreed that such arrangements were objectionable. In an e-mail to Shin, he explained that investors often offered him a fresh perspective on his own research: “Although remuneration provides an incentive, the most attractive feature to this relationship (at least for me) is the exchange.”

Gerson (class of 1994) created the company that put Gilman in touch with Martoma, thereby starting a chain of events that, the article makes clear, ruined both men’s lives. And Gerson got paid for doing so!

What lesson should we draw from that?

We wrote about Gerson nine years ago.

Investors want information. They are willing to pay for it. Doctors (and other technical experts) have information. They are willing to sell it. GLG and other firms bring the two together. Now, obviously, if a doctor has signed a contract promising not to reveal information about X, then she had better uphold the contract. Otherwise, she could be in a world of trouble.

Exactly right. Gilman should have read EphBlog, as should you all.


Eph Philanthropy Round-up

Lots of Ephs in the news lately related to philanthropic endeavors, large and small.  Anyone else know of other Ephs engaged in interesting philanthropic work?

  • Juniors Josephine Warshauer and Stefan Ward-Wheten organized a community tree planting at the Williamstown veteran’s memorial, and earned praise from town selectmen for their efforts.
  • A large group of Ephs founded and now run Crawfish for Cancer, which sounds very cool (although shouldn’t it be Crawfish AGAINST Cancer?  Isn’t that organization slandering crawfish?  Or perhaps that is why the crawfish are consumed — that many fewer pro-cancer organisms in the universe!  It would be silly, for example, to eat pandas, because everyone knows pandas are cute and hate cancer, whereas crawfish have the look of something that might well be on cancer’s side).
  • Last month, the Williams College Center for Community Engagement sponsored the Williams Great Day of Service.
  • Eph swimmers from multiple generations joined forces to raise money for the Make a Splash Foundation.
  • Juniors J.J. Augenbran and Jennifer Rowe were were both named Udall Scholars, thanks to their environmental / alternative energy research and advocacy.
  • Peter Thorp ’70’s work at the Gashora Girls Academy in Rwanda, featured in the Wall Street Journal, is particularly impressive:

A few weeks ago, 62-year-old Peter Thorp was relaxing in his San Francisco Victorian. Now he lives in rural Rwanda.


Mr. Thorp is the newly appointed director of the Gashora Girls Academy, a school funded and organized by the Rwanda Girls Initiative, a Seattle-based nonprofit. The school will open next January in the south-central part of the country, an area hard hit in the 1994 genocide.

“I’m here to apply my experience and passion for education, but also to learn from my Rwandan colleagues what works best in their culture,” says Mr. Thorp, who will spend 3½ years taking the school to its first graduation day in 2013.

As daunting as his task might appear, Mr. Thorp says his 30-year career in education has prepared him well. He spent 23 years as a boarding-school teacher and administrator, eventually taking the reins at Cate School, a small, private program near Santa Barbara, Calif. But after five years at Cate, Mr. Thorp grew restless.

“Here I was with tremendous resources, working with the most motivated students you can imagine—but at heart I was a public-school kid,” says Mr. Thorp, who went to public schools as a child in Massachusetts before attending Williams College.

“I wanted to…bring some of the educational advantages to a wider population,” Mr. Thorp says.

He moved to San Francisco to create Gateway High School, a public charter school. As principal, he faced a new set of challenges—including having no school site until 48 hours before the doors opened and working with a population of mostly low-income students, many of whom had fallen behind in regular high schools.

But he loved creating a school from scratch, and Gateway became an award-winning program. He left in 2007 to become chief of staff for the California Charter Schools Association. After retiring from that position in 2009, he cast around for a job where he could “truly make a difference.”

“Whatever I did next had to be both a professional and personal calling,” he says. Having traveled to sub-Saharan Africa with his wife and three children a few years ago, Mr. Thorp says he felt a “personal pull” to help on that continent.

The Gashora Girls Academy will put Mr. Thorp’s public and private education experience to the test. The school is currently a private institution, with the goal of half the girls receiving a full scholarship funded through donations.

But Mr. Thorp’s aim is to work with local authorities at turning the school entirely over to the Rwandan Ministry of Education within seven years.

“I will be Skype-ing a lot with my wife, who couldn’t leave her job to come with me,” he says. “But when you find your calling, you just have to seize it.”


Williams in Africa

Check out this great web site chronicling the work Williams prof Kiaran Honderich and her students have done to train AIDS activists in Africa.   Read more about the Williams in Africa initiative here.  Have any Ephblog readers been involved in either effort?  Would be great to hear more …


Peace Corps Rankings

This year, Williams ranks fourth among all small colleges and universities in terms of sending grads into the Peace Corps.  This is particularly impressive when you consider that all of the schools Williams is tied with or ranked below have substantially larger student bodies.  Williams ranked fifteenth on the same measure last year, and again, all but a few of the institutions ranked above Williams are far larger in size.  I noted the conspicuous absence of both Amherst and Swarthmore from the top 25 each year … no big surprise from the progeny of noted war-monger Lord Jeffrey, but the institution with Quaker roots needs to seriously step it up.  Read more about Williams and the Peace Corps here.


Things That Make You Go Hmmmm

I did not know that this Mark Gerson ’94 (campus wingnut) was that Mark Gerson ’94 (wildly successful entrepreneur).


Socially Awkward Networking

Major Wall Street Journal article about Mark Gerson ’94.

At some point, we need to create a collection of all the WSJ “dot” portraits of Ephs. The article opens with:

Marlin Kilgore’s day job is purchasing parts for Penske Truck Leasing Co. in Memphis, Tenn. His second job, which pays $100 an hour, is to answer questions from hedge funds and other big investors about the truck-parts makers he buys from.

The investors interrogate the 36-year-old maintenance manager about the pricing and availability of parts, about how long they last, about how the warranties work and how often they are used. What they are after is intelligence about publicly traded parts makers such as Federal-Mogul Corp., ArvinMeritor Inc. and Exide Technologies.

Mr. Kilgore’s moonlighting job is the creation of Mark Gerson, a New York networking wizard who has done for professional investors something akin to what has done for the nation’s singles. He hooks up current and former middle managers from hundreds of companies with professional investors desperate for an investing edge. Mr. Gerson has assembled an army of 180,000 “consultants” from companies ranging from J.P. Morgan Chase & Co. to New York Times Co., and he sells their time for top dollar.

Two things have made Mr. Gerson’s network both successful and controversial: Some of his consultants dish to investors without the knowledge of their bosses, sometimes in violation of their employers’ policies. And they are doing so at a time when federal regulators have made executives at public companies gun-shy about talking shop privately with big investors

Whole article is a fun read. See here for my take on Gerson’s company, Gerson Lehrman Group. I claim that GLG serves an important function.

Investors want information. They are willing to pay for it. Doctors (and other technical experts) have information. They are willing to sell it. GLG and other firms bring the two together. Now, obviously, if a doctor has signed a contract promising not to reveal information about X, then she had better uphold the contract. Otherwise, she could be in a world of trouble. But doctors (and nurses and even the patients themselves) who have not signed such contracts have useful information.

The markets appetite for such information is insatiable. Kudos to Gerson and others for providing such an important service. The more information available, the more efficiently our capital markets will operate. The more efficiently our capital markets operate, the more quickly we will all grow rich.

I liked this part of the article.

Mr. Gerson, who has never married, seems unsuited to the business of matchmaking. His friends describe him as socially awkward. “He’s intensely serious,” says Roger Hertog, vice chairman of AllianceBernstein Corp., who has served with Mr. Gerson on the board of the Manhattan Institute, a conservative think tank. Newark’s Democratic mayor, Cory Booker, became a fast friend of Mr. Gerson at Yale Law School. While praising Mr. Gerson’s philanthropic and professional accomplishments, he says: “He’s a little peculiar, but I relish his strangeness.”

Mr. Gerson approaches the activity of meeting people and introducing them to one another methodically and indefatigably. “Mark is the most successful networker I’ve ever met in my life,” says Ed Nicoll, the chief executive of broker Instinet and an early Gerson investor.

“The Internet has changed connectedness,” Mr. Gerson observes, enabling “people like me to become connected at young ages.”

Indeed. I just got an e-mail from a member of the class of 2011 (deferred from 2009) looking for information about summer internships. All Ephs should follow Gerson’s lead. The more networking you do, the better off you will be. Heading to Cambridge anytime soon? Drop by. Lunch is on me. We socially awkward types make for fun mealtime conversation. Really!


Gerson ’94 Networks

Mark Gerson’s ’94 firm makes a not-excessively positive appearence in this New York Times article entitled “Doctors’ Links With Investors Raise Concerns”. Basic idea is that investors want information about the products of the companies in which they invest, doctors have that information, and Gerson brings the two together for a fee. AFAIK, Gerson’s firm has been very successful in this endeavor. Indeed, outside of the Tripod, I can’t think of a more prominent Eph-founded firm in the last decade. Luckily, the only people whose “concerns” are raised are those that understand neither markets, nor research nor contracts. More commentary below.

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