2003 Investiture Address by Peter M. Fahey D'68 Th'69 '70

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Retired Limited Partner, Goldman Sachs & Company

June 7, 2003

I am delighted and humbled to receive the Robert Fletcher Award. I'm not sure I can ever live up to the model which he has provided. I feel a bit the way I did in 1990 when Dean Charles Hutchinson came down to New York to offer me a position on the Board of Overseers of the Thayer School. I then hadn't practiced engineering in the usual sense for over 15 years. I hadn't had any formal engagement with Dartmouth or the Thayer School since I left in 1970 ... or, to be more precise, engagement of a non financial nature; but even my financial commitment was then quite minor. I had been working the better part of 80 hours a week for the previous 15 years so I didn't have time to do much beyond writing the occasional check. Nevertheless, I told Hutch I would consider joining the Board if I could conjure up a decent rationale because it was my first opportunity to give back to Dartmouth, which I had loved since the day I set foot in Hanover in 1964.

Peter M. Fahey I reflected on the personal capabilities that had been most useful to me in my non-technical career. It dawned on me that the most useful tools I had picked up in 20 years of formal education came from my two years at the Thayer School. The first capability had nothing to do with what you would expect to absorb from an engineering education ... it was not the ability to solve differential equations or to make an oscilloscope work ... I learned to write effectively not in my great liberal arts education at Dartmouth but at the Thayer School. Each year I had to write a new research proposal to the US Department of the Interior under the tutelage of then Dean Myron Tribus. Tribus was an imposing figure and he refused to put his name on the proposal until it sang with concise and precise declarative sentences. Writing is a vitally important communications medium in the business world. The way you write often is the basis of the first impression you make on colleagues and clients. My ability to write clearly, as acquired at the Thayer School, has been important to my success in business. The second and even more important capability that the Thayer School taught me was the importance of innovation. Professor George Taylor taught a course that was entitled "Methods Engineering" but a more descriptive title would have been something like "Thinking Outside the Box to Come Up with Off the Wall Alternatives that Will Provide Truly Creative Solutions to Real Problems." This course provided one of those precious but rare academic experiences that forever change the way you look at the world. Every problematic situation around you became the springboard to thinking of a better way of doing things even if the new way represented a radical departure from the way things had always been done. When I came to Wall Street in the mid 70s, it was a conservative, risk-averse environment that was dominated by linear, legalistic thinking. Even my firm, Goldman Sachs, which was then in the process of becoming the foremost professional service enterprise in the world, fit this mold. When reviewing approaches for raising money for our clients, the first question people asked was "how did we do this the last time?" By the early 1980s, the financial world began a process of continuous revolutionary change with major new methods of matching the needs of capital users with those of investors arising every year. New techniques such as unfriendly takeovers, leveraged buyouts, high yield bonds, mortgage-backed securities and many more were all creations of this era. With George Taylor's conditioning, I was able to make meaningful contributions to bringing Goldman Sachs out of the old world of precedent-based linear thinking and into the new world of aggressive innovation on behalf of our clients to the great benefit of my career success. In the process, I suppose you could say that I never really left the practice of engineering; I was rather involved in the new profession of financial engineering, a term which unfortunately has come to convey negative connotations.

Peter M. Fahey

So I called Hutch and told him I would join the Thayer School Board. But I told him that I still had a couple of concerns. The first concern was that I would feel uncomfortable behaving in the same way I was accustomed to when I returned to campus. Although I was objectively a grown up at that point ... age 43 ... , I didn't always act like a grown up especially around Hanover. I told you before that I hadn't had any previous formal engagement with Dartmouth since I left in 1970 but I had then been to 25 consecutive Harvard-Dartmouth football games and most years I visited campus once or twice to recruit students. In my visits to campus, I was accustomed to finishing the night in a fraternity basement, not at a poetry reading. Hutch said, in his inimitable manner, "Ok, what's your other concern?" I had difficulty expressing this one but I said, "Are these other guys on the Board typical nerdy engineers with belt-mounted slide rules and pocket protectors?" Hutch then assured me that on both scores, I would have no problems and he couldn't have been more right. The guys (and now a woman too) on the Thayer Board have been a remarkable collection of role models for me. The center of gravity of their life work is entrepreneurship, not nerdism. And I've spent more than a few nights together with more than a few of them in fraternity basements, and equivalent venues around the country. We also have shared in the satisfaction of building this great school, first under Hutch's leadership, and now under the leadership of Lewis Duncan, who we also had a hand in hiring. So most importantly, my humility in receiving the Fletcher Award this year is compounded by the fact that I now join my outstanding friends and colleagues such as Barry MacLean, Ralph Crump, Peter Brown, Jake Krehbiel, and John Ballard as a recipient of this honor; not to mention my mentors, Deans Tribus and Hutchinson. I am especially humbled by joining the ranks of last year's recipient, Jeff Immelt, who most of you know is Chief Executive of General Electric Company but who most of you may not know was my successor 10 years later as the President of the Phi Delt house at Dartmouth. It seems as though Jeff's career trajectory passed mine somewhere along the way.

What can I draw from my experience that might provide useful advice to you outstanding graduates of the Thayer School in 2003? First, you should leave Hanover with supreme self-confidence that you have the capability to have a positive impact on this world and that you and your families will ultimately be rewarded for your contributions. Your capabilities come from your parents and families who have worked hard to get you here, from your own abilities and hard work, and from the devoted faculty and staff of the Thayer School who have nurtured in you (perhaps in ways you don't now anticipate) the means to achieve success.

Peter M. Fahey and Dean Lewis Duncan However, before you achieve success, you have to get through the next 5-10 years. Based on my experience and those I have observed around me, these will be the most challenging years of your life. And yet, if you handle them appropriately, they will provide the foundation for a full and satisfying life. Why will these years be so challenging? In summary because most of you are going to lose your peer group, gain a family, and start without a reputation. You have been used to working with people who are about your age but you will now work shoulder to shoulder with people who might be 10 or 20 years older than you. Your success will no longer be determined by how well you do on a test but by how you contribute to a group effort involving these people who are unlike you. Most of you have been able to devote yourself to your education without concern for supporting others needs at the same time. Most of you will now or soon have the responsibility to support a family alongside your own needs. You will leave Hanover and enter a new environment where you will have to start over to prove yourself. No one will care what your test scores or GPA have been.

Here are a few suggestions to turn this challenging period of time into the great foundation for the future that it should be.

If you do these things early on:

The rest of your career becomes very easy. You have built a reputation in your organization and /or professional field such that people seek you out for ever increasing responsibilities. It is no longer a job, it is a continuous fulfilling series of opportunities which you would pursue for a lot less money than they pay you. And if they really overpay you, as Goldman Sachs did me, you can afford to leave it all behind and devote another phase of your life to supporting the institutions that made it all possible as I have with Dartmouth College and the Thayer School of Engineering.

My humble thanks again to the Thayer School for this award. Thanks to all the parents and families who have enabled this extraordinary group of graduates to be in this room. And the very best of luck to the graduating students for rewarding careers and satisfying lives.