Announcing the new – ExpertCEO 2.0

April 24, 2010

We are excited to announce the launch of our next-generation site, with a new look, greater flexibility and other enhancements.  Many of the new features evolved from our member’s suggestions; our goal is to build a community that makes their world a little less isolated and their day-to-day challenges easier to confront.

Here are some of the highlights you’ll notice on this site:

ExpertCEO Content Now Visible to All Site Visitors

We’re now ready to scale our membership in order to meet the needs of more executives with a complex range of questions, Greater visibility will also enable us to respond to the needs of sponsors who desire broader exposure for their messages,

Participation in discussions, posting of questions, and viewing of member profiles will remain the privilege of members, and our membership criteria remains unchanged.  They’ll continue to have the option to ‘post’ by name or anonymously.

Knowledge Base Now Available Free of Charge

Knowledge Base content is open for viewing by all site visitors.  The inaugural KnowledgeBase topic focused on CEO Compensation; other relevant topics, such as Board Effectiveness, are coming soon.  You’ll be hearing more from us on the content we want our users to contribute to the site.

Easier Navigation

  • Enhanced Search Capability:  We’ve implemented a new algorithm that not only makes it easier to find the particular article , but they will be presented with related items that may be of interest.
  • Discussions Organized by Topic:  When Discussions are viewed, notice that Discussions are now grouped by Category (think “Topic”), as well as by recent activity.  To initiate a conversation, go to the relevant Category and click the ‘New Discussion’ button.
  • Notification Option by Topic: Per members request, they can now ‘subscribe’ to discussions by Category, even if they aren’t a direct participant, you’ll receive notifications of new activity on that topic.  For more information about this area, take a look at the FAQ located on the “Help” tab of the Discussion area.
  • Discussion Preview:  Members can now preview a discussion or comment before posting it, something members have repeatedly requested.
  • In the Spotlight by Topic:  Same weekly content, but now organized by topic, rather by the type of media in which it originally appeared.  Searchable by topic, as well as keywords.
  • Groups & Ask the Expert:  We have streamlined other areas of the site as well. Rather than separating discussions into smaller Groups, the Discussion area will be the single source for all Discussions – making it easier for you and other members to comment upon.  Additionally, “Ask the Expert” has been incorporated into the Discussions area where the experts will directly participate in discussions rather than having members go to a separate area of the site.

Background

ExpertCEO has built a vibrant community with high quality and thoughtful discussions.  In order to scale our site and to increase the participation from other members of the community, we felt we needed to open up many aspects of ExpertCEO to the outside world.  We believe our new structure has done this in a way that both protects the privacy of our members who post questions and retains the credibility of the comments and answers.

And we needed to be more “nimble” in our ability to enhance and modify the site and its features in response to member feedback.  In essence, we needed to be like a startup .  We decided to move to an Open Source product called “Joomla” .  This technology has enabled us to set up the site with minimal programming effort, and to dynamically configure it in response to user feedback.  The breadth of add-ons (extensions), has also enabled us to provide comprehensive features without resorting to expensive and inflexible programming resources.

As with any change, there will almost certainly be a few bumps along the road.  We appreciate your patience and welcome your feedback (info@expertceo.com).  One dividend of the new open-source site architecture is the ease with which we can implement changes going forward, so don’t hesitate to let us know what you like, and how you’d like to see us improve.

We hope you find these changes make ExpertCEO site more useful, and that you share it freely and frequently with other executives you believe will benefit.

Regards,

Ken Ross

Founder and CEO

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CEOs Are Bullish on 2010

October 8, 2009

80% of Respondents Expect Bonuses Next Year vs. Only 45% for 2009

Is optimism returning among corporate leaders?  Better times are coming, according to a recent poll of chief executives.   Expectations for 2010 compensation reflect an upbeat outlook on business performance and resultant pay packages.

Executive salary and bonus plans remain a hot topic if the response to ExpertCEO’s Fall CEO Salary Survey is any indication, with more than 150 members participating.  Poll highlights include the following observations:

  • CEOs are upbeat about overall 2010 pay prospects (and, implicitly, operating results), anticipating a bounce of nearly 7% in 2010 total compensation vs. 2009 levels, to an average of $340,000.
  • About 80% of members expect to receive a 2010 bonus; the average expected amount is $105,000, up from $92,000 in 2009 and $100,000 in 2008.
  • Pressure on bonuses reduced average anticipated 2009 take-home pay from 2008 levels for the CEOs surveyed; 55% of respondents expect to receive NO bonus.
  • Though average 2009 salaries are roughly flat with 2008 (about $228,000), total compensation is estimated to drop to $319,000 from $332,000 in 2008.
  • Technology and Media/Internet CEOs, 67% of the survey population, expect total compensation of $306,000 in 2009 with a projected 8% increase to $331,000 in 2010.
  • CEOs who head companies with revenues under $1MM have compensation packages heavily weighted towards equity, rather than cash, as anticipated.  70% of these individuals expect no bonus in 2009; their average equity ownership is 40%, compared with the median ownership of 8% for the entire survey population.
  • Trends from the Feb ’09 ExpertCEO survey held steady.  The larger a company’s revenue base, the larger the CEO’s salary and bonus–and the more likely he or she will receive a bonus.  CEOs who manage companies with more than $50 million in revenue reported average salaries of $313,000, compared with $162,000 cited by CEOs heading firms with less than $1MM in sales.

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CEOs REMAIN PESSIMISTIC ABOUT Q3 ECONOMY

August 4, 2009

Yet Majority Expect Their Own Results to Improve

SAN FRANCISCO, Calif. – Aug. 4, 2009 – Despite hopeful signs that the worst of the recession is behind us, most CEOs, remain skeptical that the economy will improve in the current quarter, according to a recent poll of small to mid-size companies.  In a just-completed survey conducted by ExpertCEO, 62% of responding executives say the economy will not improve in this year’s calendar Q3.  Among CEOs of companies with annual revenues above $50M, the pessimism is more pronounced, with 91% expressing skepticism about economic recovery in the current quarter.

Just under half of the participants met or exceeded their forecast results for the quarter ended June 30, 2009.  A similar percentage of respondents recorded June quarter revenue growth, as compared with the same period in 2008.

Despite their downbeat predictions for the overall business climate, 55% of surveyed CEOs are optimistic regarding demand for the solutions their companies offer, anticipating greater revenue in this year’s September quarter than the same period last year.

ExpertCEO (www.expertceo.com) is a private on-line community where senior executives can confidentially exchange ideas with peers, locate trusted resources, ask questions of experts across a range of disciplines, and quickly solve real-world business problems. The site combines social networking technology with concepts proven by CEO membership organizations like Vistage and YPO. The sample size of this survey was 96 CEOs, with the majority of respondents heading technology and Internet companies.  Most are privately held firms.

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Rule #15 – Make Staff Meetings Productive

July 25, 2009

One of the functions that has always frustrated me has been management staff meetings.  Who should attend?  How frequently should they be held?  What’s the agenda?  How to control “bickering”?  How to make them more productive?

I have always felt that the primary objective of these meetings is to facilitate communication amongst the various members of the executive staff.  My style has always involved open communication, so I usually am knowledgeable about the status and issues of the people that work for me.  However, I am continuously amazed at how little informed the staff members are of each other’s status and issues.

For some sound, timeless advice, I again return to George Von Gehr’s new book, “The Effective Entrepreneur: Fifty-nine rules to Create Value Throughout the Life Cycle of Your Company” (Amazon Link) and, with permission, reprint here Rule 15.  Here’s George’s background in a previous post.

“Staff meetings often suffer from lack of productivity because they:

  • Are too frequent
  • Last too long
  • Are contentious instead of problem solving
  • Lack consistent structure

Since immediate problems are addressed as they occur, staff meetings should be less frequent than most managers expect.  Once can experiment with the frequency, but weekly may be too often.  Less frequent scheduling encourages attendance.

Fixed agendas help provide structure and may minimize argument.  Most arguments result from company politics and/or narrow functional, business unit or divisional views.  To maximize productivity and efficiency, it is the CEO’s responsibility to remove politics from these meeting and to foster cross-functional or cross-divisional cooperation.

Most emerging companies typically have more opportunities than people to support them, so setting priorities for the use of resources – human and other – is a frequent task at these meetings.  In addition, it is imperative to establish who “owns” or is responsible for each major initiative resulting from the priority setting.  Ownership facilitates tracking and results in the owner feeling responsibility.

These meetings should also be time-constrained so that attendees can plan their days.  Such planning also encourages a crisp trip through the agenda.  If special topics need longer treatment, then notice should be given.

An important periodic topic for this meeting is progress on both the annual operating budget and the longer-range strategic plan.  It is critical to recognize inflection points for each of these plans.  If it appears the operating plan cannot be met, then the causes for the shortfalls are essential discussion points and may require a longer, supplemental meeting.  The strategic plan may not be a normal agenda topic at all meetings, but when market disruption of a technological or competitive nature occurs, this event should be explored.

Beware of unrealistic operating targets accompanied by overbearing pressure to reach them, especially when these targets and pressures have major effects on compensation.  These sorts of plans were the seeds for an entire garden of fraudulent account and high bonus payments at Fannie May, Enron, Sunbeam, Tyco International and many other companies.” [KR Note – add Lehman Bros. and AIG]

My experience indicates that weekly staff meetings are the right frequency, and they should be conducted with a strict time limit of about 2 hours or less.  Work and meeting time can easily expand to fill whatever time is allotted.  The other thing I have found effective is to have each participant submit an email to the group with his or her weekly status, issues, etc.  That way, most minor, operational items can get taken care of via email without wasting time at the meeting, and the participants have some time to consider questions and discussion topics prior to the start of the meeting.  Lastly, I have found that it is effective to have a major topic to be covered at each meeting and this should be laid out in advance – product status, annual budget, a new system implementation or whatever.

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OffShoring – Revisited

May 26, 2009

Last October, I wrote a blog entry titled “Off-shoring software development.”  It was a cautionary description of some experiences I had with a previous company.  I concluded with a paragraph that said:

“Bottom line:  communicating effectively with an off-shoring organization, especially for small and evolving organizations, can be challenging.  When considering the economics and time involved in managing such an effort, build cushion into your budget expectations to account for these inevitabilities, before deciding what’s right for your organization.”

Well, we at ExpertCEO have just finished migrating our development partner from a local (San Francisco) organization to one located in Costa Rica.  We also moved our hosting service to “the cloud.”  We’re now up and running after a successful migration, and I thought it would be useful for me to share some of what we’ve accomplished.

First, our primary reason for this transition was cost.  We carefully manage our expenses, but we have a long list of features and capabilities we want to add to ExpertCEO.  These represent our own strategic direction as well as customer-requested features.  We felt by off-shoring the development, we could dramatically reduce our hourly development cost, thereby enabling us to add needed capabilities for our members while controlling our expenses.  However, we didn’t want to fall into the communication trap I had previously experienced using development resources located halfway around the world.  And we certainly did not want to spend long nights on conference calls with an organization many time zones away.

Avantica (www.avantica.net) in Costa Rica is our new partner, and we selected them because they are roughly  in the same time zone as California, and their team speaks excellent English.  It turns out they’re great developers, too!  We’ve found by using Google Sites for our Wiki, Skype (for chat and video conferencing), and Unfuddle for bug tracking that we’re able to work with the people in Costa Rica as closely as if they were next door, say Palo Alto or Mountain View.  The combination of similar time zones, no language barrier and web-based communication technologies has streamlined our interactions.

The ExpertCEO site has been developed using Ruby on Rails, and Engine Yard seemed the logical choice for hosting our site.  Their SOLO offering (based on Amazon’s EC2) offered us the growth flexibility we required, at a cost that was appropriate for our size.

We’ve also now working with Open Mountain, located in the Bay Area, which provides engineering management and oversight services to insure that all of the technical, architectural and operational aspects of our technology are synchronized.

We’re now positioned with excellent, cost-effective development resources so that we can execute our long range plan to make ExpertCEO the premier site for senior executives to confidentially exchange ideas with peers, locate trusted resources, ask questions of experts across a range of disciplines, and quickly solve real-world business problems.

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Hail To The Chief (Executive)

January 14, 2009

With the nation’s attention on next week’s inaugural events, speculation around President-elect Obama’s agenda for his first weeks in office is the focus of presidential scholars and leadership experts alike.  Whether elected or appointed, every new CEO must gather information, understand challenges and opportunities, set priorities, and communicate with a variety of constituents during their first 100 days in office.  I’ve taken the helm more than a dozen times as a founder, “hired” CEO and interim CEO, and over the years I’ve developed a new CEO’s to-do list that’s proven effective in achieving these goals, which I’ll summarize below.

 

Executive-staff Interviews

  • Listen carefully – Learn about their strengths, weaknesses and issues (you’ll also hear a lot about other members of the executive staff).  Try to ferret out names of others, lower in the organization, who are especially well-respected.  These latter individuals can be key to future organizational changes.
  • Identify common themes – people, products, technology, etc.
  • Go back and do it again, trying to organize your thoughts and interview points based upon what you learned the first time.

Short-term Budget/Cash Flow

  • Understand the company’s short-term financial status – Cash issues will take priority over everything else if there are short-term problems.  If you have breathing room (or positive cash flow) so much the better.
  • Focus on immediate actions, if necessary

Products

  • Understand current offerings/programs/services.
  • Get demos from current product managers.
  • Identify key product priorities.

Customers

  • Meet customers – listen to their concerns and priorities.
  • Note: Make sure you do this after you’ve gained a basic understanding of the people, products and issues.

Keep an Open Door (and an Open Email Box)

  • It’s amazing who will wander in and unburden themselves with issues and concerns.  This is a great source of information to cross-reference against executive-staff interviews.

Communication 

  • Communicate frequently and often with investors, customers, board members and employees.  It goes without saying that all of these stakeholders are nervous and anxious for information from a new CEO.

President-elect Obama has had 11 weeks to prepare, and as he takes the helm, he’ll be employing some of these very same techniques.  For example, we can already see his focus on budgets and cash flow, though, unlike any of us, he can “print money” to overcome it (in the short-term).  And he is focused on taking the immediate actions he believes are necessary to remedy the problem.  Like any CEO, he needs to persuade various constituents to support his efforts.  Regardless of our political leanings, the nation needs Obama to succeed, so let’s hope his “getting started” list stands him in good stead. 

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The New Dynamics of Venture Capital

January 5, 2009

A few weeks ago, Scott Duke Harris of the San Jose Mercury News wrote an article titled, “Will Undone Deals Be The Next Big Thing in Silicon Valley?”.   The article evolved from a conversation about two recent ExpertCEO posts. The posts were entitled “VCs Yanking Funding” and  “Series A Deals Getting Undone”.

A friend of mine, who is a general partner of a top tier venture fund, related another “busted financing” anecdote.  His firm is a shareholder in an early-stage company that, like many others, found itself unable to find a new investor when it sought financing about six months ago.  The existing investors agreed, instead, to raise an “inside” round, to be parceled out in two tranches, the second of which would be triggered by the company’s achievement of three milestones.  The first tranche was funded, as expected, in late summer.  Subsequently, the company met 2 of the 3 milestones, and the investor syndicate agreed to loosen the criteria of the third milestone, making way for the last tranche to be paid out.  However, one of the investors also decided to require the company to make a final presentation to its partnership, prior to closing.  The presentation took place in mid-December, but ultimately, the partnership elected not to participate in the final tranche.  This unfortunate surprise left the remaining investors with two options:  put in more money than they had planned to support the company, potentially indefinitely and in the face of a no-confidence vote from an existing, top tier investor, or drop out, leaving the company high and dry.  In the end, the existing investors opted for the second option.

 

Issues Faced by VCs are Similar to Those of Venture-Backed Companies

Many venture capital firms are either experiencing or are fearful of facing their own cash shortfalls (just like their portfolio companies). Their source of funding (their limited partners) have been hard-hit by the market’s precipitous decline.  Venture funds collect or “call” cash periodically as they need it.  As these capital calls are issued, some venture firms are finding that their limited partners are either unable or unwilling to meet their contractual commitments, leaving the funds with fewer resources than they’d anticipated. 

As a result, venture firms, which typically “budget” funds for each of their investments, are being forced to rethink these plans (again, just like CEOs) – because of the possibility of the reduced size of their funds, as well as the probable need for greater total investment in each portfolio company than was budgeted.  And liquidity events will be few and far between due to a less forgiving stock market and a reduced pace of acquisitions at lower valuations.

Facing these new realities, many venture funds are carefully re-evaluating their portfolios, deciding which companies to support with their scarce cash and which to “abandon.”  To conserve cash, venture firms must categorize their investments.  They are requiring those with existing revenue streams, where expenses can be cut to quickly achieve positive cash flow (the Sequoia Capital approach), to survive on their own, while supporting those that are promising but pre-revenue.  Others will be allowed to fail or forced into a sale.  These issues are well chronicled in the following two articles.

The Wall Street Journal – Venture Capital Hits a Cash Call Crunch

Forbes – Venture Capital’s Coming Collapse

What Should Venture-Funded CEOs Do?           

The operational aspects of managing in this environment have been discussed at length (cutting costs, etc.).  A more complicated task for a CEO is how to manage his or her investors!  Assuming you can’t reach cash flow breakeven via the Sequoia route:

1.     Be creative when considering funding sources.  The organized venture community is one, but by no means the only option when seeking financing for your business.  Identify potential strategic partners or large customers with a vested interested in your success.  They can fund development, make large purchases, and provide cash in a variety of other ways.  One company I work with just received a 7 figure (cash) payment on a large product license from one of the big 3 U.S. automakers!

2.     Communicate often and frequently with your investors.  Level with them about your opportunities and challenges.  Let then know you expect the same from them.  Don’t be afraid to probe the extent of their commitment and understand their problems in a respectful way—you owe the diligence to all the shareholders. Most of all, be prepared for necessary financing parameters to change often.

3.     Don’t rule out acquisition as a potential avenue.  What was unthinkable just months ago could well be the best outcome for you and your shareholders.  If you’re flush with cash or have liquid stock to use as currency, acquisition opportunities will be more numerous than your ability to consolidate them—so prioritize!  And if you’re running low on capital, don’t wait to explore possible combinations.  The process is time-consuming, and many more potential marriages are considered than are consummated.

4.     Plan for the worst – hope for the best. Whether you’re seeking funding or a merger partner, assume the process will take longer than you think.  Read my blog entry titled “Crisis Management.” 

 

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What Keeps CEOs Awake at Night?

November 6, 2008

A lot has been written about the financial crisis, and even more about what companies should do. The layoffs have begun; discretionary spending is being slashed, as plans are getting revised with an eye on cash conservation , and those with liquid resources are eagerly identifying potentially opportunistic acquisitions.

I attended the Venture Beat event on October 29 where these tactics were discussed at length by investors and by entrepreneurs.  This kind of talk is very focused on process and doesn’t really convey the intense emotional issues that confront a CEO having to manage in this difficult environment.

Last week, we at ExpertCEO decided to try and put a human face on these discussions, so we polled our members to find out “what keeps them awake at night.”  Not surprisingly, “running out of cash” was the number one response with 56% of respondents indicating that this was their worst fear.

Why is this so scary?  Because the results that could ensue are far greater than simply the financial impact on the company. Many CEOs have spent years building a company and have a large percentage of their net worth, not to mention identity, tied up in it. The employees of these companies have families, mortgages, tuitions and careers that will be directly affected by these decisions.  Running out of cash results in cascade of events–a complex process of laying off respected people who rely on employment to meet their obligations, letting down customers who may depend on a company or its product, and possibly acrimonious negotiations with investors, landlords, lawyers, etc.
Here are the results of the poll:

What keeps you up at night (check all that apply)

My own job security (4%)
Laying off employees/poor morale (34%)
Missing the sales forecast (43%)
Running out of cash (67%)
Competition (15%)
Nothing, I sleep like a baby (14%)
Other (16%)

Which of these concerns you the most

My own job security (7%)
Laying off employees/poor morale (10%)
Missing the sales forecast (18%)
Running out of cash (56%)
Competition (4%)
Other (5%)

Conclusions: The fact that so many CEOs are worried about running out of cash (and missing their sales forecast which is related) indicates the state of mind of our CEO member community.  It also confirms their likely actions – cost reductions, layoffs, deferred purchases; with the resultant impact on the economy.  This poll is just another piece of corroborating evidence of the financial crisis.

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