Tepper gives $55 million to business school
"Tepper! Tepper! Tepper!" cried the Carnegie Mellon community, celebrating the University's announcement of one of the most important events in the school's 104-year existence.
Last Friday, David A. Tepper and his wife Marlene donated $55 million to Carnegie Mellon's School of Business — the largest single donation the University has ever received. In honor of his donation, the University has renamed GSIA the "Tepper School of Business at Carnegie Mellon."
University President Jared L. Cohon hailed the collective events as "truly a momentous and historic day" at a press conference Friday morning.
Tepper began his road to professional success by earning his MBA from Carnegie Mellon in 1982. After having grown up in the Stanton Heights neighborhood of Pittsburgh, he earned an undergraduate degree in economics from the University of Pittsburgh in 1978. He went on to work for Republic Steel and Keystone Mutual Funds after earning his MBA at CMU. Just six months after being recruited by Goldman Sachs in 1985 as a credit analyst, he began an eight-year stint as head trader of the esteemed firm. In early 1993, Tepper elected to leave Goldman and found his own company, Appaloosa Management, a Chatham, N.J. hedge-fund firm currently worth $3 billion.
The now "Tepper School of Business" Dean Kenneth B. Dunn, to whom Tepper magnanimously attributes much of his professional success, stated at the press conference, "he is known in every investment circle."
Dunn then elaborated on how successful Appaloosa Management has truly become. He offered as an example that a hypothetical $1 million invested in the fund in 1993 would have earned $15 million by 2003, compared to the same amount invested in the Standard & Poor's 500 Index, which would have earned only $2.5 million over the same time period.
Dunn, just one of Tepper's professors at Carnegie Mellon, noted, "He was a very special student, indeed. I always knew, and never doubted, that he would be extremely successful."
Dunn credited Tepper with having contributed to the learning experiences of himself, other professors, and students. He joked that Tepper often posed questions that simply could not be answered. "I learned a lot from David," Dunn said. "His general enthusiasm for learning was obvious and contagious. He was a tremendous asset to his class."
When Tepper finally rose to speak to the packed crowd that turned out at the UC, the same classroom enthusiasm for learning and contagious smile that Dunn spoke of was evident. "Not bad," he said, "for a kid from Peabody High School, huh?"
Tepper reflected upon his experiences growing up in Pittsburgh, the charitable examples set forth by his parents, and the business school at Carnegie Mellon, "which gave me the knowledge that has been so instrumental to my career." Tepper almost apologetically offered that "I was compelled by an overwhelming sense of gratitude [to make this donation]." "What I learned back then helped me develop an understanding of the market," Tepper said, then mentioned that this experience continues to help him "each and every day."
While Tepper is confident that this donation will lead the school in a positive direction, he stressed that more needs to be done, that the school needs the financial resources to create the best student resources possible. Fifty million dollars of Tepper's donation will contribute to the school's endowment, increasing it to $137 million. But according to Tepper, this still is not enough, noting that Harvard has a $1.3 billion endowment.
"It's important that it starts today," said Tepper. "Today's the day, there's no reason to wait. Why wait?"
"David represents the pied piper of additional gifts to come," said Jerry Holleran, a member of the Board of Trustees. "I think we're going to see a much greater buy-in. People want to put their money in the winners." Holleran earned his undergraduate degree in 1957 from Carnegie Tech and his MBA from GSIA in 1969.
"To make this investment to improve the program is pretty significant," said Ken Aponte, president of the Graduate Business Association. Aponte added that this contribution challenges the administration and students of the School of Business to succeed in fulfilling the improvements Tepper wishes will come to fruition.
"He'll be back to make sure," Aponte said.
Tepper is on the Business Advisory Board at the School of Business and hopes to henceforth treat it as a board of directors, with Dunn as the CEO. Tepper also mentioned that he would be willing to potentially teach a course at Carnegie Mellon someday.
The remaining $5 million of the donation is earmarked to four separate goals, the first of which is intellectual capital, as the school will make a concerted effort to retain and attract renowned professors. "The strength of the school's faculty," Dunn said, "is why it is known around the world."
The second component to the donation will focus on the school's continued development of "academic innovation, which has always been decidedly different from other universities," Dunn added. "It's the heart of our culture, we'll build upon that."
The third goal is to invest moneys in enhancing the student experience, which includes improving the current facilities. "We recognize the need to provide a one-of-a-kind environment for our students," Dunn said. "The focus will be on people and programs."
The final goal is to build a strong global reputation. "We've got to get the word out [about] how great we are," said Dunn. "We'll continue to do that with the help of these resources."
Dunn feels that the Tepper School of Business is one of the best in the country right now. "We need to get the word out," he repeated.
He added that this donation will impact the entire student experience, not just within the confines of the graduate business program.
"The undergraduate business program is in good shape," he said. "I want it to be [ranked] one, two, or three." The program currently ranks seventh among undergraduate schools, according to U.S. News and World Report. One immediate ramification for the undergraduate students, according to Dunn, is that it may be possible to have access to all courses, including graduate courses.
The Graduate School of Industrial Administration was founded in 1949 by William Larimer Mellon. Three years later, the building was completed, and the name remained unchanged until now.
School name changes within the University have been rare since the Carnegie Tech and Mellon Institute merger of 1967. Only once has it involved a school being named after an individual. In 1992, the School of Urban and Public Affairs was renamed the H. John Heinz III School of Public Policy and Management.
The now "Tepper School of Business" became the first business school to use computers for research and teaching in 1955.
In addition to having four former faculty members earn Nobel Prizes, the Tepper School of Business is also renowned for having created the Management Game, a course that teaches the skills to manage a corporation. Carnegie Mellon graduate students compete against other students in such programs around the world.
Following the press conference Friday morning was a business school celebration at noon in Rangos Hall, where undergraduate and graduate business students alike joined to celebrate the importance of the day in Carnegie Mellon's esteemed history.
"I'm very lucky. It's great to be smart, but you need to be lucky," Tepper said in the informal setting.
Tepper has reached many career milestones for such a young career, most notably becoming the Goldman Sachs head trader and establishing such a formidable business as Appaloosa.
"This is up there if not exceeding any of those," Tepper said of the donation. "This is great."
Reflecting upon the scene in Rangos Hall, Tepper humbly attributed its being larger than the crowd in attendance for the Bill Gates lecture to the free food being offered.
The highlight of the event was Cohon and other dignitaries raising their (non-alcoholic) champagne glasses to toast David A. Tepper and his family.
Students were then given commemorative red, long-sleeved t-shirts for the occasion. As the hundreds of students surrounded Tepper, Dunn, and Dr. Cohon in Kirr Commons of the University Center — on the floor, up the stairs, and on the balcony — cameras started flashing.
The smiles and cheers were evident among the business school students in attendance. And then the chants began, "Tepper! Tepper! Tepper!"
Andrew Carnegie once said, "All is well, since all grows better." This could not have been any truer last Friday when David A. Tepper and his family's donation profoundly impacted the University. No doubt Tepper will return to CMU to check up on the progress of his contribution.