Posts Tagged ‘trust’

Something For Nothing

Tuesday, November 20th, 2018

If you are seriously confident about the prospects of your business growth, and the impact of our potential collaboration, why do you insist on asking me for “free” help and to assume the overwhelming risk? Is it that you are “cheap”, don’t trust me, fearful of the future or broke? Those are the only viable conclusions. 

Entrepreneur Blindspots

Sunday, October 28th, 2018

Who get’s my time and interest? Two exploratory conversations with contrasting entrepreneurs with high-growth businesses this week. 

Entrepreneur A: “Let me show you my powerpoint presentation.” Five minutes later in response to what are you seeking to accomplish and where might I be immediately helpful, “I am just looking for money, I don’t need anything else.”

Entrepreneur B: “Let me tell you where I am at with my business, where I’d ideally like to be in future and what I am needing to change including raising new money.” After ten minutes of discourse and accepted vulnerability, “I’d be interested in your advice for me.”

As investors we want confident, not humble entrepreneurs. We want entrepreneurs with high levels of self-worth and a willingness to be vulnerable. To voluntarily admit weakness and display smart judgement.

We don’t want defensive entrepreneurs or those, who seek to excessively control our view into their business. Entrepreneurs don’t have to be transparent, translucent will do fine. When your use of powerful language, social skills, and intellect is obscured from us, little wonder investors move on.  

Here is my observation: have you adapted your behaviour to the life you now lead (entrepreneur), or insist on behaving as you learned to do in a former life as a former Citi banker, BCG consultant or CEO of a global company? 85% of the first-time entrepreneurs I meet persist in behaving as they have in their prior life with one obvious exception. Money. They happily claim poverty “I am not in the position I was….” at the mere mention of paying for advice. When the reality is they remain in the top 2% of the nation’s wealthiest people.  It is simply not credible. 

Video Action Replay (“VAR”) Uncovered

Thursday, June 28th, 2018

The public debate about the introduction of video action replay “VAR” at this year’s World Cup is largely centred on a binary question: is the technology applied accurately or not by the officials? The real question that John Naisbitt talked about in his book “High Tech, High Touch” is are we happy with the consequences  of technological change on our lives, relationships and societies, at a macro and micro level? That is a far more profound question, about any new technology that we might bring into our business or home. The only certainty is that we are not “neutral”.

© James Berkeley 2018. All Rights Reserved.

Kung Hey Fat Choi Mrs May!

Friday, February 16th, 2018

 

Perhaps no international leader would be more grateful for some traditional “Lucky Money” at this Chinese New Year than Britain’s Prime Minister, Theresa May. Her recent visit to China generated positive headlines (£9 billion of deals, 2500 UK jobs) but the litmus test is to what extent are UK and Chinese private sector companies, particularly those under £500 million of enterprise value able to make significant strides in each other’s market. These companies are the engine of employment growth.

Ralph Jennings, a senior reporter at Forbes interviewed me on the eve of Mrs May’s recent visit

https://www.forbes.com/sites/ralphjennings/2018/01/31/chinas-economic-expansion-hits-a-roadblock-at-the-far-end-of-europe

I remain highly skeptical about “symbolic success”, recalling a visit to the much heralded MG Rover plant in 2012, at the behest of a senior executive at the new Chinese owners, SAIC. A couple of months earlier, political leaders from the UK and China stood on the very same steps in Longbridge heralding this partnership as a  symbol of new era in bi-lateral trade. Walk inside, and talk to British and Chinese workers as I did, and there were telltale signs of mistrust, viper tongues, and unflattering comparisons with the Japanese car makers welcome in the North East of Britain. One Chinese manager, Annie Qi, on an earlier planned visit, called me 5 minutes before the scheduled meeting time to cancel the entire meeting because she had to drop her kids off at school! “Sorry, go back to London” was the curt one-line response. Car assembly ceased, design continues but the heritage of the MG Rover brand has not been exploited some 10 years later by SAIC. Sustaining these relationships is highly complex and ambiguous, it is a very long game for those with deep pockets and deep pools of patience.

© James Berkeley 2018. All Rights Reserved.

Trusting Relationships Trump A Deal

Friday, June 2nd, 2017

 

Donald Trump follows through on one of his campaign promises and there are cries of “quelle horreur” and “nein” from his European partners, at the mere thought of any re-negotiation. It begs the very same question in your business, are you putting too much emphasis on signing a contract, and too little on continuing to nurture a peer-level trusting relationship and creating alternatives, where the original signatories (investor, customer, employee or business partner) may change, and the anticipated value derived from the deal is in all likelihood a long way in the future?

© James Berkeley 2017.

 

 

Profit In A False Sense of Security

Wednesday, April 26th, 2017

 

I am fascinated by the probable cause when owners, Boards and top management in mid-market businesses (US$10M to US$Bn), “don’t take the money” and shortly thereafter, end up with a failing or failed business. Specifically, when a serious offer is made for growth capital or even an outright sale of the business, and in the next 6-12 months after the refusal, the fortunes of the business partially or totally collapse. Nowhere is this more visible than today’s high growth private tech businesses (the infamous “unicorns”) and in an often overlooked area, service businesses with a powerful owner-operator or managing partner in a partnership structure.

The decision-making factors are consistent throughout. The business has deliberated carefully or taken an opportunistic approach to accepting external capital or key talent. What has varied is the owners’, the Board’s  and/or top management’s judgement, resilience or trust over time. Faced with changing market conditions (regulation, technological and other convergent forces), a key client “win” or “loss”, rising/declining investor or trade interest and so on, there is a discernible change. They consciously ignore other’s prudent advice that they have implicitly trusted in the past (mitigating risk). They increasingly believe that they are “impregnable” in their market position (market hype or vanity investments). They allow common sense to be distorted by inflated but unsubstantiated talk (valuations, growth prospects, barriers to entry, unique technology etc.).

Having worked with six privately-held mid-market businesses over the past 3 years around the globe, who turned down offers and subsequently, experienced very public falls from grace (legal, e-commerce, hotels, gaming, financial services), the underlying “cause” in my experience is ultimately, poor leadership. It is people, not the business that have screwed up.

For my current and prospective clients reading this, who fear my strategic advice comes with a poison in the tail, rest assured I have had a great many more winners than losers!

Yet in the immediate aftermath of a partial or total business failure, there is a rush to assume that the firm’s opportunistic or conservative approach to accepting new capital or talent is the “cause”. That is inaccurate, and here is why. There are a great many successful businesses, who have been consistent in adopting diametrically opposed approaches to accepting external capital or ownership (in insurance, AJ Gallagher vs Hub International, in hotels, Peninsula vs. Fairmont Raffles, or in the premium art business, Christie’s vs Sotheby’s). In just the same way, sticking to niche products, services or geographies or constantly, adopting a diversification approach, is rarely the “cause” of failure.

Take great care in jumping to a conclusion. Profit is to be found, as many smart long-short investors have found, in looking out for a business owner’s, the Board’s and/or top management’s increasing false sense of security, the resulting changes in their behaviour and the positive/negative impact on their business and the competition.

© James Berkeley 2017. All Rights Reserved.

 

Let’s Spend The Night Together

Wednesday, June 17th, 2015

The classic Rolling Stones refrain ends with “Now I need you more than ever”. Many experienced professionals in advisory businesses often have a very similar mindset when it comes to entering into collaborative discussions with other firms in order to profit from a client opportunity. Here is why they are more often wrong than right.  Trust trumps money. No amount of riches will arise if promises and expectations are not openly shared or honoured to the satisfaction of both parties.

In the opening conversation, my best clients at a minimum, ask five powerful questions:

1. “I am curious, what motivated you to contact us about this opportunity?” Find out the business and personal reasons.

2. “Do you a short term opportunity in mind?” You want to hear a buyer’s name, organisation and need. If the other party cannot provide that level of clarity, your retort is “I will happily tell you briefly about my firm’s expertise and an ideal client. However experience tells me it is a poor use of our valuable time to have a detailed conversation about a conceptual collaboration that may very well not happen.” Stop there, don’t go into the following questions.

3. “What stops you doing this yourself?” Identify the perceived or actual gaps in the potential partner’s competency and passion to address the client’s need.

4. “What has been the secret of past collaborations with people like me?” You want to find both the substance (expertise, knowledge, contacts) and the style (personal chemistry, appearance, image) that best suits the other party.

5. “What are your expectations about the investment each of us would ideally make in the relationship (communication, priority, accountability marketing, sales, revenue sharing, resources, branding and so on)?” You want to lay the cards on the table. Note, not all the cards are of equal value or importance in meeting or exceeding your client’s expectations so devote time accordingly.

In my experience, on average most service businesses will have between 10 to 40 such exploratory conversations in any given year. Typically, there is 1-10 hours spent on due diligence. 80% result in “it was great to meet you” and no business. Only 5% result in a long-term relationship. In other words this can be a huge “time dump” if you don’t apply the rigour I am suggesting. Equally, no advisory business can ignore alliances as a growth alternative.

Know where you are headed, ask the right questions and use your time wisely.

© James Berkeley 2015. All Rights Reserved.