Becoming an Effective CEO

By Mike Myatt, Chief Strategy Officer, N2growth

We’ve all witnessed the CEO who tries to do too much, and conversely most of us have also observed the chief executive in stealth mode who accomplishes very little. We’ve gladly followed the bright, affable and charismatic CEOs, and we’ve rebelled against the arrogant and self indulgent executives who love to do little more than pontificate about their legendary prowess. So what makes a great CEO? In today’s post I’ll share my perspective on what constitutes a CEO worthy of the title… 

No single position within the corporate hierarchy receives the unrelenting and often terse scrutiny (public and private) that a CEO must deal with. The pressure is intense, the risks are high, and the rewards can be tremendous for those who possess the requisite leadership skills and character to hold the title of chief executive. Many CEOs initially rise to their position based upon leveraging a particular skill set, however a single area of strength will rarely be enough to keep a CEO in the corner office for long. Those CEOs who remain in the position long-term do so based upon the ability to broaden and deepen their skill sets and competencies while understanding the priorities of the job. 

Believe it or not, the biggest challenge a CEO faces is gaining a true understanding of their job…While the job of a CEO is really a very simple one, it is also happens to be far from easy.  The fact of the matter is that a CEO is responsible for everything…yes I mean everything. Because the CEO is ultimately held accountable for the success or failure of the company, he/she must assume responsibility for operations, finance, sales, marketing, PR, technology, HR strategy, vision, culture, etc., as the proverbial buck stops with the CEO. Therein lies the both the problem and the greatest challenge for most CEOs…How can they possibly do it all? The reality is that they can’t, but you’d be surprised at how many try…

They key to becoming a great CEO is understanding the difference between duties and responsibilities. The CEO’s duties are the activities he/or she actually performs, or in other words, the responsibilities that don’t get delegated to others. While the CEO clearly cannot endeavor to be all things to all people while attempting to do everything on his/her own, the CEO must take on certain mission critical duties. Not everything can or should be delegated…In the text that follows I’ll put forth the areas which the CEO must view as his/her duties to perform and master:

  1. Becoming a true leader: While respect can in certain instances be commanded, it is at its best and strongest when earned. It is not only through success that confidence is instilled, but also in doing things properly regardless of the outcome. Management and staff will work through failures alongside leaders that possess integrity and character, and will they will also resent and mock the success of ill-gotten gains. In addition to being productive and effective, great leaders understand the value in remaining approachable and human. Communication and conflict resolution skills need to be developed to their maximum.
  2. Setting the tone: A CEO’s primary function is to set the vision, mission and strategy for the company. Executives, management and staff will be responsible for setting the goals, determining the tactics, implementing toolsets and managing the processes. It is the clarity of the CEO’s vision that instills purpose, which in turn creates the passion that will drive focus and productivity. These traits will create a positive culture which is crucial for long-term success. Each and every action or inaction on the part of the CEO makes a cultural statement. Because the work of the corporation is performed by people and people are profoundly impacted by culture the CEO must insure a healthy, safe and positive culture.
  3. Focus on Team Building: A CEO that abdicates control of player personnel is taking on huge amounts of risk. The CEO must take responsibility for recruiting, deploying, mentoring and retaining the executive team. They, in turn will lead the balance of the organization. An alignment of vision, mission and strategy between the CEO and the executive team is crucial for creating a healthy and sustainable enterprise. If the executive is not functioning smoothly this is a reflection of poor leadership and team building skills on the part of the CEO.
  4. Understand Resource Allocation: Great CEOs insure that the best talent is applied toward the best opportunities. Moreover the CEO needs to insure that the proper financial and non-financial resources are applied appropriately across the enterprise. While not all CEOs possess strong finance backgrounds they are still ultimately responsible for the financial decisions that can determine the company’s fate.
  5. Become the brand champion: A good CEO is the public face of the company. CEOs need to champion the brand internally and evangelize the corporate brand externally. CEOs that don’t work the media, key partners, and capital sources are not doing their job. If the CEO is not intimately familiar with what it takes to increase brand equity then it is only a matter of time until the company will see a brand in decline.

As I mentioned above, a CEO’s job is rather simple but not easy…You don’t have to do all things, rather just focus on the right priorities with the proper talent and resources and your enterprise will prosper. If you would like more information on how to refine and develop you executive skills you might be interested in this blog post entitled “The benefits of using a CEO coach.” 

The War on Terror

By Mike Myatt, Chief Strategy Officer, N2growth

After watching the State of the Union Address this evening I felt compelled to refrain from my normal discourse on the topic of business in lieu of a one night only departure in favor of political commentary. Following the devastation that occurred on September 11th there was little doubt in anyone’s mind that a full-scale war was not only imminent but justified. Much like the bombing of Pearl Harbor was enough to unify the United States which had been previously divided over the war in Europe, 9-11 similarly united the American public in their conviction to aggressively defend our soil against those that would commit such heinous acts of aggression against innocent civilian targets. In today’s post I’ll share my thoughts on the war on terror

What has happened to the American spirit that we could forget not only what happened on 9-11, but that we could also be so naïve as to believe that if we haphazardly change course now that such acts of terror won’t simply happen again? Have we become so soft and so short-sighted that we have forgotten that our safety and freedom have always come at a great sacrifice? No one likes war as it is costly on all accounts. President Bush never said this was going to be easy, in fact quite to the contrary He told us before we ever embarked upon this journey that the war on terror would be a long and hard fought battle that would last for years. As wars are won with commitment, determination and conviction, they are most certainly lost without them.

To withdraw now is to display a lack of resolve and concede victory to an enemy that would only welcome such a move as it would enable them to accomplish their mission more easily. The war on terror will not end simply because we choose to withdraw from Iraq. The terrorists will never surrender, but they can be weakened, deterred and hopefully someday defeated. The only thing that I’m certain of is that a weak and divided United States makes us more vulnerable to attacks both domestically and abroad.

I am all for freedom of speech and the right to peacefully assemble. I have no problem with those who choose to voice their opinion about military conflict except when they take a stand against those that honorably place their life in harm’s way to defend the very same people who mock them. I have heard many express sentiments along the lines of “I support the troops, but I don’t support the war.” While this makes for a nice sound bite, you’ll be hard pressed to find many serving in the military that will be comforted by statements such as this.

I grow very weary of the political outcries for diplomacy. Negotiating with terrorists is nothing short of an exercise in folly. In my mind the war on terror is not a battle of nations or flags, but rather a battle of good vs. evil. Evil has always existed in this world and regrettably I believe it always will. Simply wishing evil doesn’t exist or wanting to look past its existence does not mean that it is not ever present. Evil shows no remorse or contrition Evil does not discriminate and evil can strike at a moments notice as we witness on the news each and every day. It is evil that I see as everyone’s enemy and that I choose (it is clearly a choice) not to seek common ground with or to build rapport with. You cannot negotiate with evil as evil is not trustworthy and will not honor commitments and promises. I don’t mean to come-off as cynical or jaded, but I simply believe in dealing with the reality (at least as I see it) at hand.

It has been said that the true test of a nation’s conviction is based upon their willingness to sacrifice in order to achieve their objective. War is hard…I don’t like it nor do I know many who do. As devistating as the loss of human life is I shutter to think at how many American lives would eventually be lost should we tarry or fail.

I implore those reading this post to come to the realization that the war on terror is not optional It was thrust upon us and we must defend ourselves. Democrats and Republicans alike must come together and stay the course as to do anything else will end in a disaster of catastrophic proportions What would have happened if we had thrown in the towel in WWI or WWII? What would the world look like now?

Interview with Carolyn Kepcher

By Mike Myatt, Chief Strategy Officer, N2growth

Interview - Carolyn KepcherAs most of you know I’m always interested in exchanging information with people who have successfully crafted strong personal brands through careful attention to managing their reputations while in the public eye. I recently had the pleasure of interviewing such an individual. Carolyn Kepcher formerly of The Trump Organization and best known to the public for her role as Donald’s intelligent and level-headed top executive on the hit TV show “The Apprentice” has built a very strong personal brand. Donald hand picked Carolyn for her part on “The Apprentice” from the ranks of his senior executives. “She’s also very firm, very tough, very smart, very shrewd and has good judgment” said Trump. My perception based on my interactions with Carolyn is that she has played her cards well…She has obviously leveraged her experience, savvy and very strong work ethic to create a level of personal branding to be envied by all.  On to the interview…

Mike Myatt: Our readers are obviously familiar with you based upon your role with The Trump Organization and “The Apprentice,” but please give us some background on your career prior to your association with Trump.

Carolyn Kepcher: Considering that I have worked for The Trump Organization for 11 years, it is fair to say it has taken up most of my “career history” (I am 37). Prior to working for Donald I was employed with a management company, which is how I actually met him. I was operating one of the properties he purchased and after we closed on the property he asked me to join his organization.

Mike Myatt: What do you feel are your greatest strengths?

Carolyn Kepcher: I have developed excellent communications skills along with an innate sense of how to manage people, process and risk while still achieving the desired objectives.

Mike Myatt: What would you say was your “defining moment” as an executive?

Carolyn Kepcher: I held a senior management position at a very young age in a predominately male arena…the golf industry. While this was very difficult because I had a lot to prove, I learned many invaluable lessons about what it takes to be successful in business.

Mike Myatt: Do you have a mentor and how important was that person to you?

Carolyn Kepcher: Yes…His name was John Murray and I worked under him before I worked for Donald. He taught me “the ropes” because he had a genuine interest in my success. I could not have risen to EVP status without his guidance years ago.

Mike Myatt: Who do you respect most in the world of business?

Carolyn Kepcher: There are really too many people who deserve mention…I have benefited from many quality relationships that have afforded me experience, wisdom, assistance, guidance and opportunity. As a result I have a profound respect for many of those whose paths I’ve crossed and for many others whom I’ve yet to have the pleasure of meeting.

Mike Myatt: If you could give one piece of advice to our readers what would that be?

Carolyn Kepcher: Seek out and find what matters in life! It isn’t easy, especially for a woman to balance a career, a family and YOU! Stay true to your beliefs, find steady ground (although it isn’t easily found), keep your PRIORITIES in check and choose your spouse carefully.

Mike Myatt: What’s next for Carolyn Kepcher?

Carolyn Kepcher: I have recently formed Carolyn & Co. for the purposes of providing a broad array of services and assistance to career women. Given my background and experience I have a very unique perspective on what it takes to become a successful woman in today’s competitive marketplace. I have developed a passion and desire for sharing my insights with other career women seeking a better quality personal and professional life and have developed a business around fulfilling the unmet needs of the working woman. Among other things, Carolyn & Co. will provide women with an opportunity to chat with experts as well as collaborate with other women experiencing similar circumstances and situations. More information can be found at www.carolynkepcher.com.

Mike Myatt: Is there anything else you’d like to share with our readers?

Carolyn Kepcher: Don’t believe everything you read!

Branding Gone Bad…

By Mike Myatt, Chief Strategy Officer, N2growth

Branding when done properly is extremely powerful and branding gone bad is well…bad. This will likely be the shortest post I ever author as the link to the following video speaks for itself…If you want to view the ultimate case study in poor brand management then turn up your speakers and click here…I hope you enjoy this as much as I did…

Interview with Marty Secada

By Mike Myatt, Chief Strategy Officer, N2growth

Marty SecadaWhen it comes to the business of business few decisions are as pivotal as those surrounding capital formation issues. Understanding when to seek capital, where to look for funding, how to structure the deal and other such decisions are at a minimum complex, and if made incorrectly problematic if not disasterous. For those executives and entrepreneurs who deal with such issues you’re in for a treat…Today’s post contains an exclusive interview with Marty Secada, one of the leading minds in alternative corporate finance.

For those of you not already familiar with Marty Secada let me give you a brief overview of his background…Marty received his Bachelor’s degree from the University of Pennsylvania, a Masters in Science from Drexel University and his MBA in Finance from the Wharton School of Business. As the Managing Director of Broad and Wall Advisors Marty is an advisor to Hedge Funds, Private Equity Funds and Merchant Banks where he evaluates hundreds of transactions every year. In addition to advising clients like Goldman Sachs, UBS, Deutsche Bank and Chase, Marty also founded the Wharton Angel Group, revived the Wharton Investment Resource Exchange (WIRE) and founded the IvyPlus alternative investment network. 

As a recent guest lecturer at Wharton, Marty was kind enough to refer to me as one of today’s top business advisors and while I appreciate the compliment I will gladly defer to Marty’s capital markets expertise. I hope that the following interview will shed light on the reason’s why I value Marty’s advice and counsel. On with the interview…

Mike Myatt
: As the Managing Director at Broad and Wall Advisors, can you give our readers a brief overivew of your company and the constituencies you serve?

Marty Secada
: Broad and Wall Advisors is an advisory company to alternative investment firms. We assist private equity firms with deal origination, mergers and acquisitions firms with deal fulfillment and hedge funds migrating to private equity with their strategy. We typically interact with fund managers who are looking for deals or strategy.I also run a network for alternative investors called IvyPlus, www.ivyplus.biz.  IvyPlus runs closed and sometimes open events for people in the alternative universe so they can socialize, share ideas and strategies.  We’ve developed great feelings of fraternity in the group and are dedicated towards positive networking and fantastic time management practices.  We had more than 350 good referrals last year and probably already have around 100 for the first two months of the year. We seldom have meetings run over schedule and are remarkably efficient networkers. That’s important when you work long hours and want to get home to a family life. 

Mike Myatt
: You have been involved in a number of high profile deals over the years. What was the toughest transaction you ever put together and why?

Marty Secada
: There isn’t any one toughest transaction, but the toughest transactions usually entail getting both sides to see each other’s intrinsic value.  Early on I spent time trying to get sides that didn’t necessarily match to see each others intrinsic value.  Because of trends in private equity finance and greater specialization, many aspects of early stage finance have become more about knowing who is the right investor for you rather than trying to coax an investor who doesn’t invest in your sector to move out of his sweetspot.  Though most investors are looking for good deals, deal flow is so strong at the early stages that if you have to educate the investor over too long a period of time, it is highly likely they will find a deal over that period that is more desirable and closer to their comfort zone.  One well known investor out of Silicon Valley who invested in Google early on told me that the best deals are always the easiest.  That may be true as investors continue to have narrower focuses, however, terms for deals and syndication of deals continue to become more sophisticated.  There are more players with more types of financing than ever before. 
 
Mike Myatt: CEOs and entrepreneurs seeking financing often have a difficult time sorting out the differences between various investors as well as the types of financing and capital structures that are proposed. Can you give our readers a brief overview of the differences between VCs, private equity firms, hedge funds, merchant banks and investment banks?

Marty Secada
: Great question. People seeking funds need to educate themselves on the variety of potential investors out there and the trends with those investors.  The groups you mention above can really be put in the alternative investment category which has had incredible growth over the last 10 years for many reasons.  Source information varies but for global assets under management, there is somewhere between $1.5-4 trillion in hedge funds, $400-750 billion in private equity of which about 15% can be classified as Venture Capital (VC).  There are also angel investors who as a group, invest about the same amount in total as VCs but spread over far more deals.  These groups can be differentiated between those who invest in high growth, asset poor companies and those who invest in asset rich, lower growth companies or public companies. 
 
VCs typically invest in high growth companies and expect high returns.  There is a known gap in early stage investing that is widening for average investments made.  Most of this can be found at the University of New Hampshire web site for angel investing or at the Angel Capital Association web site. The average VC investment these days is about $8 million. Less than 4,000 deals were done by VCs in 2006.  The average VC invests in 4-6 deals annually, they see more than 2,000 a year.  The average angel investor deal is about $450,000.  About 44,000 Angel deals were done in 2006.  Follow on rounds are included in these figures.  If you are looking for investments between $800,000 and $5 million, it may be problematic to find funding sources.  There is some conjecture on hedge fund migration or convergence to private equity but most hedge funds from my network don’t play in the VC space, though some hedge fund individuals may from time to time. 
 
There are also family offices, foundations and institutional investors.  Investment banks may help later stage and some times early stage companies find funding.  Merchant banks have some elements of an investment bank but may also invest their own capital in deals.  There are many creative ways to structure these deals and business owners need to educate themselves on the best fit for them and their business philosophy. 
 
Mike Myatt: From your perspective what’s more material to a potential investment; the idea, the management or the market?

Marty Secada
: It depends.  Most macro-economists would argue that market conditions influence the overall success more than anything else.  Market size matters but without a strategy to dominate, can be irrelevant.  Ideas are more common than most entrepreneurs believe.  I’ve had the same idea pitched to me by people from radically different backgrounds on the same day.  
 
Most investors come back to assessing the management team as the key deciding factor.  Management teams should have skin in the game, chemistry working together, and overwhelming trust with the investors and other key stakeholders.  Lots of VCs talk about picking managers who refuse to lose, but that really translates into management that reacts well to market changes and are robust enough in their thinking to stick with a winning strategy and find a new one when the old one no longer works.   I find some entrepreneurs exaggerate the role their advisors play with them and they should try not to overstate it.  Great management teams know how to generate interest in their product without exaggeration.  
 
Mike Myatt: Which sectors are receiving the most attention from investors right now and what sectors are falling out of favor?
 
Marty Secada: There is a strong political and economic push for alternative energies and a political push for ecology friendly energy strategies.  China buys extended forward contracts on energy promising competitive consumption with the U.S. for years to come and consumers are concerned about the environment.  Wellness is hot as our population ages and related biotech and medtech are meaningful.  Homeland security is an essential growth industry.  In larger private equity deals, infrastructure projects in emerging and newly industrializing countries are pervasive as well as rollup deals and mergers in those same arenas.  On a lesser note, I like on-line communities because of the immense value they add to members lives but think there may be a correction in valuations. 
 
Several alternative energy strategies such as solar energy or corn based ethanol may not be the most economically efficient and vulnerable to changes in political winds and valuations. 
 
Out of favor sectors are shrink wrapped software (vs. services) which is dead, wholly internet advertising driven businesses and old media.  I’m not too sure about the effectiveness of electronic grids delivering broadband as a meaningful strategy outside of the absolute value an electrical distribution network may have from locating sensors ubiquitously and the savings and efficiency delivered from that.  But that has little to do with broadband and may actually be more of a clean energy play than broadband.  It’s amazing that Microsoft still makes money from selling shrink-wrapped software like Office but they have a great brand and monopoly capability.

Mike Myatt
: What do you feel is the most important element of a company’s core strategy?
 
Marty Secada: The core component I like to review once I make sure the financials sound right is how the company will come to dominate it’s market sector or market segment and then leverage that dominance to take over related segments.  I like to hear numbers like months of competitive advantage and market share.  That entails solid knowledge of distribution, channels, revenue and branding.  If you don’t have dominating market share, branding and marketing power then you probably don’t have pricing power.  Without pricing power, profitability may be questionable. 
 
Finance is always important.  I like to look at the components of expenditures as a way to do a reality check on the overall strategy.  If it is a software or web platform, I start to question numbers if I see product expense spiraling past 20% or if the rollout period is too long.  I want to see a management team that keeps its product development expense in check so it has money to market it’s product and create brand value.  Likewise, I like to see the company have realistic quarterly milestones including product rollouts. 

Mike Myatt: What’s the most common mistake you see entrepreneurs make when attempting to raise capital?
 
Marty Secada: Many entrepreneurs underestimate the value of professional management practices in their plan and presentation.  Most of the questions in business at any stage are around who is going to do what next.  Some think that because they have an idea, investors are beholden to them, but it actually is the other way around.  A company puts together its list of milestones and timelines and the next question is who will accomplish these milestones?  Many entrepreneurs walk in with ill-conceived org charts, no management practices or an idea with a board of advisors and no management team.  Well, how is that management team and organization going to change from year to year? Is management going to be able to take advantage of human resource arbitrage opportunities to keep expenses down?  How does the management team make decisions and who do they look to for advice on making those decisions?  Who from the existing management team is going to hire the required new staff?  It all comes down to who is going to do what today and in the future.  Otherwise it’s just another piece of paper, not a business.
 
Early stage investors do due diligence but most of them are really looking at the maturity of the management and how one builds a management model that grows from year to year and sustains the business through to success.  There’s a project that Laura Romeo, a good friend of mine, runs called the Fortunate 400 project.  She has letters that are hundreds of years old from some of the most savvy business people in american history mulling new ventures.  One of the the first things they would conceive back then was an org chart to say how the business, once up and running, would be managed.  It was important then, it is important now.
 
Mike Myatt: Do you have a mentor and how valuable has that relationship been to you?
 
Marty Secada: I’ve had many mentoring style relationships that I’ve taken something away from though I wouldn’t say I had any one relationship that led me to where I am today.  Of course I had a strong relationship with my father who was an immigrant and worked 3 jobs to make ends meet yet found time to attend school activities.  Other than that, a professor named Myron Lieberman was a straight shooting philosopher on life, Mike Singer, another Wharton grad was one of the first master networkers I met preceding the internet era.  Vartan Gregorian and Sheldon Hackney were two great networkers I met at university who had huge, high quality, trusted networks.  All these influences made me realize early on that great information can come from several sources and that one must continually grow and re-evaluate these sources.  Nowadays I am as likely to seek advice from grizzled 30 year industry veterans as well as 22 year old Canadian newsletter writers.  I’ve found Darren Herman, an under 30 entrepreneur out of New York, to have great insight on what works and what doesn’t when it comes to internet marketing and generating traction in business.  It all depends on the circumstance and question. I also like to read Mike Myatt’s blog!
 
Mike Myatt: If you could give one piece of advice to our readers what would that be?
 
Marty Secada: Continually add to your network and continually re-evaluate your network for its best elements and its elements that can be trusted.  Staying in touch with and helping your network is essential to grow in business and in life. 

Mike Myatt
: What’s next for Marty Secada?

Marty Secada
: I’m heading to the nexus of private equity convergence. 

Mike Myatt
: Is there anything else you’d like to share with our readers?

Marty Secada
: Yes, keep a positive outlook.  Long term positive outlook reflects the market, shortsellers i.e. negative types, seldom have great long term success.  It is always important to remember that the overall value in markets is to move upwards even though commodities themselves may decline in value.  Keep a positive outlook.