01 Apr 2002
Back in Business
HBS Alumni and New York City's RecoveryTopics:
to the author: Garry Emmons
photos by AP/Wide World
September 11, 2001, was a day that New Yorkers will never forget, particularly those who live and work in Lower Manhattan, the citys business and financial center. With the passage of time, the initial trauma, grief, and anger of that day were joined by another emotion - the determination of New Yorkers to see their city back on its feet again. In this metropolitan area that is home to more HBS graduates than any other, the Schools alumni have played a leading role in the recovery effort - at all levels and every step of the way.
It was Primary Day. As was his habit on this occasion of civic
duty, Joseph J. Lhota (MBA '80) had risen early at his
Brooklyn Heights home in order to vote at his local polling place
before departing for Lower Manhattan and his City Hall
His boss, Mayor Rudolph Giuliani, was at a midtown breakfast,
so the daily 8 a.m. staff meeting had been canceled, and Lhota
was planning on catching up on some paperwork. He sat in the quiet
of his first-floor office, whose tall, west-facing windows
looked out on the morning's golden light and an uncommonly
blue sky. It was a glorious September day, Lhota thought, as
beautiful as any the city ever sees.
After seven years in the Giuliani administration,
including service as the city's budget director, Lhota, the
deputy mayor for operations, was becoming more conscious of each
passing day. His job as the city's COO would be ending in
a few months - the mayor, under a new term-limits law, was
barred from seeking reelection. Only a few days before, Lhota
recalls, he and Giuliani had spoken about "how fortunate
we were that the city had not had a major disaster during our
time. We wanted to make sure we would complete our service without
any such occurrence."
Seated at his desk, Lhota suddenly heard "a screeching noise"
and then an explosion. He ran to the front steps of City Hall,
where a police officer told him that a plane had hit the north
tower of the World Trade Center, five blocks away. Thanks to
his city-provided car and driver, "I was at the building
three minutes later," says Lhota, who started directing traffic,
knowing that emergency vehicles would soon be arriving at the
scene. "At this point, I assumed it was an accident."
Lhota was spotted by Police Commissioner Bernard Kerik, and as
the two men pumped each other for information, the second
plane hit the south tower and exploded. Debris rained down, and
Lhota sought cover by jumping into a nearby parked car.
Seconds later, a huge chunk of falling metal - part of the
Trade Center's facade - crashed onto the car's
all its windows and nearly crushing it. Sprayed with glass, Lhota
scrambled from the wrecked vehicle and made his way to a
nearby fire command center, a location previously designated as
an emergency rendezvous point, where he found the mayor and
other city officials had gathered. As Fire Department officials
headed toward the Trade Center, Lhota and the others went to
75 Barclay Street, formerly a Merrill Lynch office, searching
for working phone lines - "communications meant everything
that point, and cell phones were useless, overloaded with calls,"
Lhota says. "We got through to the governor's office
peppered them with questions: Is this terrorism? Are more planes
on the way? Are the airports closed? Should we close the
tunnels? The mayor also wanted to talk to the White House. As
I handed him the phone, saying, ‘Vice President Cheney is
to get on the line,' a police official ran in yelling, ‘Get
down! Everybody get down! It's coming down!' "
If any rationale
underlay the nihilism and bloodlust of the WTC attacks, perhaps
it was a belief that massive death and destruction in the heart
of the world's most successful economy might unleash that
system's perceived flaws - fear, selfishness, and greed
- and cause it to self-destruct. But to an extraordinary
extent, the response of the city, and its financial and business
community, was quite the opposite. In the months following September
11, compassion, not self-interest, was most in evidence, as this
highly competitive community reached out to help all individuals
and enterprises, no matter how small, that had been affected by
No other city in the world has a larger concentration
of HBS alumni than New York, particularly Lower Manhattan, home
of the financialservices industry. So it is fitting that HBS alumni
- as members of government, the business community, nonprofits,
charities, and as volunteers and individual donors - have
played both prominent and unsung roles in helping the city to
get back on its feet. Says John S. Chalsty (MBA '57), a Wall
Street veteran and longtime New York civic leader, "I think
all New Yorkers felt personal outrage that this had happened and
a commitment to seeing the city rebuild."
"To see that kind of
trauma inflicted on my city made me angry," declares Paige
Sutherland (MBA '85), a former investment banker who has
volunteered her expertise to help small businesses affected by
the attack (see sidebar). "I wanted
to fight back in the best way I could." And Mayor Giuliani's
successor, Michael R. Bloomberg (MBA '66), voiced the sentiments
of many city residents when he said in his January State of the
City address, "In the face of a vicious attack, New Yorkers
came together and helped each other cope with the loss, the pain,
and the shock to our everyday lives. When New Yorkers join together,
nothing can stop us." But for most New Yorkers, that resolve
would not come immediately - the shock of Tuesday morning,
September 11, was simply too great.
75 Barclay Street by fallen debris, Joe Lhota, Giuliani, Kerik,
and other city officials were stunned. "At first, we couldn't
comprehend that the tower had completely collapsed," Lhota
recalls. "We'd been standing with First Deputy Fire
Commissioner William Feehan and his team moments before; now it
hit us that all these heroic, wonderful people who had rushed
back to the WTC were probably dead." Eventually, they found
a janitor who was able to lead them to safety, as they stumbled
through the darkness of some basement tunnels that connected to
other nearby buildings.
"A terrible catastrophe had occurred, but we were prepared,"
Lhota explains. "We had done a tremendous amount of contingency
planning for disasters and terrorism events. Within a few hours,
we were able to set up a command post at the Police Academy
on East 20th Street. My role was to help focus the rescue effort,
assess what we had left of functioning city government,
handle security issues, find out what resources were available
and what was needed from the state and feds, and generally try
to get things back to normal as soon as possible throughout the
There were endless decisions to be made, minute by
minute. Take the matter of the city's schools, for example.
"The initial reaction was to close them, but what's
really best?" asks Lhota. "What do parents do if school
is closed? Do we really want a million kids - the school
population of New York City - on the streets? We decided
to leave the schools open but encouraged parents to pick up their
kids if they wanted to." (For his part, Lhota had been able
to confirm by phone that his wife and two children were safe,
while leaving messages that he was, too.)
Some sixteen hours later, Lhota returned to City Hall
to retrieve his wallet and keys. Around 3 a.m., he decided to
walk to the WTC site. "It was a vision of hell - dark
and still, except for the fires and the noise they made. There
was twisted rubble everywhere, crushed fire trucks, crews of soot-covered
rescue workers, some with search dogs, and bucket brigades carrying
debris away by hand. In the air was an acrid smell, unlike anything
I'd ever experienced. Everywhere on the ground, there were
Exhausted in body and spirit, Lhota went home and napped. When
he awoke, for a split second his mind was blank, until the
day's horror returned. He took a shower, packed a suitcase,
and headed back to work.
A pro bono study
by several of the city's top consulting firms has estimated
that the damage to New York City totals $83 billion. That figure
may be low, some observers say, and of course it cannot measure
the nonmonetary toll of grief, fear, and anxiety inflicted on
the city's surviving population. The study calculates that
over the next two years, New York City will suffer $30 billion
in capital losses, $14 billion in cleanup costs, and $30 billion
in lost economic output. The tourism, retail, financial-services,
and small-business sectors have been especially affected.
In the wake of the attack, there are two central questions:
What should be done with the site where the twin towers once stood?
How will those decisions be made? Empowered to address those questions
is John C. Whitehead (MBA 11/ '47), named chairman of the
newly formed Lower Manhattan Development Corporation (LMDC) by
New York Governor George Pataki. For Whitehead, this may be one
of the most challenging assignments in a remarkable career in
which he has served as cochairman of Goldman Sachs, deputy secretary
of State, chairman of the Federal Reserve Bank of New York, and
a leading figure in the nonprofit world. The first priority for
the site is a memorial, all agree, but after that, there is much
disagreement. "The size of the plot is not nearly as important
as the nature and quality of what is built there," Whitehead
has said. "We want a memorial as beautiful as the Lincoln
or Jefferson Memorial - this will memorialize an incident
that is just as important as what they originally memorialized."
The LMDC - whose directors include Deborah C.
Wright (MBA/JD '84), president and CEO of Carver Bancorp
and a former New York City housing commissioner - will work
with all the involved constituencies, with victims' families
first and foremost, Whitehead says. "We will try to meld
all those views together into a plan for the memorial site,"
"Some of the 25 million square feet of office space must
be rebuilt," Whitehead states, adding that he envisions a
residential, cultural, and business environment with no buildings
taller than fifty or sixty stories. For his part, Bloomberg
wants an "appropriate" memorial, but notes that the
city's interest extends beyond the WTC site to all of its
citizens, suggesting that education, housing, and business needs
should all be addressed in the site's final composition.
The LMDC is also responsible for determining how to spend the
federal funds earmarked for redeveloping and revitalizing the
disaster site. While President George W. Bush (MBA '75) has
promised $20 billion to New York, some of that will be directed
to the state and city for expenses already incurred. The LMDC
has received an initial $2 billion, targeted for infrastructure
needs, such as rebuilding the subway and commuter train lines
destroyed at Ground Zero.
Fires were still burning
at Ground Zero but Joe Lhota wanted the city back about its regular
commercial business. "The business community's number
one concern," he says, "was getting the power back on,"
so that computers, elevators, office lights, and heating would
work. A Con Ed generating plant in Lower Manhattan had been knocked
out, so dozens of generators were brought in, many donated by
General Electric and its CEO, Jeffrey R. Immelt (MBA '82).
Next on Lhota's agenda for the business community was getting
the New York Stock Exchange - closed for four days -
up and running. "We wanted to get it reopened quickly,"
Lhota explains, "to show that the financial capital of the
world was fully functional and that terrorism would not stop the
American economy. Secondly, the city's economy needed to
have the exchange back in business." (The city's financial
sector generates 26 percent of the city's economic output
and 14 percent of its tax revenue.) The exchange and nearby buildings
were checked for safety and cleaned up, power was reestablished,
and computer systems tested and retested over the weekend. On
Monday, September 17, Lhota stood by as the bell rang to open
the exchange for business.
Even as they worked feverishly over the weekend to get the NYSE
operating again, Lhota and others at City Hall engaged in
frequent conversations with the White House and Washington about
financial aid and other assistance, with Lhota acting as
City Hall's liaison to the state's entire Washington
delegation. At the same time, the New York City Economic Development
Corporation (NYCEDC), chaired by John Chalsty, began to act as
the coordinator between the city and the business community,
setting up separate offices to assist small, medium, and large
businesses with state and city funding for emergency and
Meanwhile, the city was being
deluged with goods and services donated by businesses, an outpouring
that came in addition to the enormous sums that corporations and
individuals were contributing to several prominent relief funds.
The New York City Partnership (NYCP), a business leadership organization
founded in 1979 to promote the growth of the city's economy,
was asked by the city and state to take over management of these
donations. In turn, an NYCP subsidiary, the New York City Investment
Fund (NYCIF), took charge of this mission. Maria G. Gotsch (MBA
'89), SVP of NYCIF and president of its charitable affiliate,
the Civic Capital Corporation, founded and became the overseer
of an operation called ReSTART Central. ReSTART assigns business-savvy
volunteers to work with donors and to act as troubleshooting case
workers to help small businesses (some with up to two hundred
employees, most with fewer than fifty, many with fewer than five)
in dealing with landlords, grant applications, and city agencies(see
sidebar on ReSTART volunteer, Nancy Taubenslag). These volunteer
advocates also match businesses with donated goods and services,
such as office space and equipment, and provide or arrange for
advice on business strategy, taxes, and other matters. As of late
January, some 350 donors had participated, and some five hundred
businesses had been served through ReSTART Central.
Of ReSTART's two hundred volunteers, more than fifty have
been HBS alumni. Many of them were directed to ReSTART by the
Club of Greater New York, whose EVP, Elena C. Crespo (MBA '93),
explains, "We felt we had a special responsibility and role
to play after September 11, and given the skill base of our members,
we thought the best way to contribute was volunteering
through the New York City Partnership." Setting aside $10,000
to be matched with alumni donations, the club also distributed
$20,000 to three local charities assisting families of WTC victims;
in addition, it set up a speakers' program featuring
individuals involved in the city's recovery effort.
Among the club's ReSTART volunteers was Nancy R. Weinstein
(MBA '00), who was given a three-month leave by her employer
she was asked by the NYCIF's Maria Gotsch to oversee ReSTART's
day-to-day operations. "Businesses seeking help are first
interviewed at ReSTART's center in Battery Park to determine
their needs," explains Weinstein. "They are then assigned
volunteer advocate - typically a 30-something MBA with business
experience who donates 15 to 25 hours per week and oversees
five to ten cases at a time."
"The biggest challenges," notes Gotsch,
"are staying responsive to the changing needs of the businesses
- important issues now are different than what they were
in the fall - and informing people that volunteers and other
help are still needed. As a volunteer, you can really make a difference."
during the most terrifying moments, I saw people
in the streets helping each other, and helping the handicapped
and those who couldn't move fast," says Joe Lhota, now
an EVP at Cablevision. "Yes, people were afraid, but still
they looked out for one another. There was no pushing and shoving.
It was amazing and inspiring to see ordinary people respond with
such courage and humanity."
Individual courage has been complemented by collective determination.
The consulting report sponsored by the New York City
Partnership notes "a rare depth of commitment among New York's
business leaders" to promoting, and remaining in, the city.
John Chalsty, who worked on the study, believes that while some
backoffice operations may be moved out of the immediate area,
financialservices companies will remain a fixture in Lower Manhattan.
"I think most of the major decisionmakers in the
financial community recognize the benefit of proximity and a concentrated
presence," Chalsty observes. "I'm proud, and not
surprised, at the way the business community has reached out to
help itself -it's what New York is all about. They say
good comes out of evil, and the good is that New Yorkers of all
stripes have really hung together."
While there may be a number of metropolises around
the globe that aspire to be the "greatest," there can
be little doubt that New York City currently reigns as the undisputed
champion of the world. Perhaps Mayor Michael Bloomberg says it
best, when he speaks for his eight million constituents and several
thousand fellow HBS alumni who live or work in the Big Apple:
"We are the toughest, most resilient, and most determined
people on the planet," declares His Honor. "New Yorkers
have always made the sacrifices necessary to achieve a better
tomorrow - and there will be a better tomorrow."
G. Taubenslag (MBA '82), a McKinsey veteran who is
now an independent general and nonprofit consultant, has
worked on some thirty cases since volunteering with ReSTART
Central in mid-October. Her clients ("All nationalities,"
she notes, "like the UN") range from a one-woman
clothing design business to a two hundred– person international
brokerage firm. Neotecra, a ten-person software development
firm, is a case in point. Located in the WTC, the company
lost everything, including the prototype of an important
new product. Says Taubenslag, "We helped them get their
security deposit back from their landlord and found them
computers and furniture; we're also arranging for office
space and providing general advice." (Before accepting
donated equipment, Taubenslag notes, some businesses ask,
"Does somebody else need it more than we do?")
Taubenslag also aided the co-owners of a restaurant business
who operated three restaurants located at different sites
Ground Zero. "We helped with matters related to reopening,
such as tracking down pro bono legal assistance on critical
insurance and real-estate issues," she says. "We
also brought in top experts from the restaurant industry
to give advice."
There are frustrations, Taubenslag acknowledges.
To date, funding for recovering businesses has been insufficient
and eligibility guidelines often too rigid, despite the
best intentions of city, state, and federal bureaucracy.
And, she notes, small-business owners sometimes are simply
too undermanned or preoccupied to follow up when donated
goods or services are arranged for them. "But when
it all works," she says, "it's a pleasure
to use our skills, honed with large clients, to help these
folks who have such great immediate need."
Thick and Thin
A few years ago, Paige Sutherland (MBA '85) took time
out after ten years in investment banking and - as
a new owner of an apartment - threw herself into interior
design and antiques, taking courses and attending events
and lectures. More recently, she's been helping develop
The Franklin Report, a start-up publication that rates home-service
providers in several cities, much the way Zagat's guides
One of the fifteen companies Sutherland has
helped since volunteering with ReSTART last October has
been Linea, a two-person architectural firm whose office
was located in 1 World Trade Center. "They lost everything
- work in progress, sophisticated equipment, and financial
and other records - as their space was completely destroyed,"
Sutherland explains. "Like most of these small companies,
they had no insurance."
Sutherland was able to help Linea set up in new, temporary
office space with donations of a computer monitor, a printer,
office furniture, and Staples gift certificates to purchase
a new zip drive and fax machine. Along with such essentials,
Sutherland notes, "Often what our clients really need
is a sympathetic ear." As Linea's Lisa Vangelas
wrote in a letter to
the New York City Partnership, "There were many, many
times when I felt I could not go on, and it was always at
that I got an encouraging phone call from Paige. She has
stuck by me through thick and thin and made all this happen
the goodness of her heart. Words cannot express the gratitude
I feel for her and this organization."
For her part, Sutherland says, "It has
been very rewarding doing this work. These companies have
been through so much horror, and then they have to figure
out how to start up all over again. They really appreciate
even the littlest things we do for them. It's inspired
me to become a board member of the HBSCNY's Community
Partners, a program that organizes consulting projects to
help nonprofits. I realize what value we as businesspeople
Class of MBA 1980, Section C
Class of MBA 1985, Section G
Class of MBA 1982, Section D