01 Apr 2002

Back in Business

HBS Alumni and New York City's Recovery


send e-mail 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 city’s 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 School’s 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 office.

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 roof, shattering 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 at that point, and cell phones were useless, overloaded with calls," Lhota says. "We got through to the governor's office and 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 about 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 the attack.

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.

Trapped inside 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 entire city."

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 empty shoes."

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," he explains.

"Some of the 25 million square feet of office space must be rebuilt," Whitehead states, adding that he envisions a mixed-use 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 eight million 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 operational needs.

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 HBS 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 after 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 a 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."

"Even 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 that 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."

Great Immediate Need

Nancy 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 near 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."


Through 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 rate restaurants.

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, some 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 those moments that I got an encouraging phone call from Paige. She has stuck by me through thick and thin and made all this happen out of 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 can add."

Featured Alumni

Featured Alumni

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