Getting You to Point B

Thoughts from Biz Stone's head

Commentary by Keith Kirkland

I was at a financial industry conference not too long ago, and I had my first opportunity to hear from Biz Stone, the co-founder of Twitter.  It's not often that we financial types bring in those creative and technology types to offer us some message of wisdom.  That was part of the lure, I think, for me, because I like the not-so-well-known "creative-financial-type" category. What can this young guy tell a roomful of lenders that will inspire us beyond...well...beyond the breakfast that we were eating during his speech?

He offered us some assumptions and statements...things that permeate the culture at Twitter. Things that all of his co-workers should assume to be true as they go about their daily tasks.  I was inspired by these. Not because each one can be specifically applied to the financial industry, or to lenders and other financial types.  I was inspired by these because regardless of what we do in our day-to-day business, we still run a business.  We still strive to build cultures of our own, and motivate employees of our own.  

The following were my favorites:

• There are more smart people outside of our company than inside of our company.  He wasn't saying that we don't have smart people in our companies.  We do.  But based on numbers alone...with hundreds of millions of people in just the US...there are bound to be more smart people out there than in here. It's easy to focus only on our internal knowledge, so don't forget to reach outside your world to those smart people and take advantage of what you can learn from them.

• Creativity is a renewable resource.  You may run out of creative ideas on a particular subject at any given time.  But you never run out of the ability to be creative.  I liked that one a lot, and it ties in with the next one.

• There is a creative answer to every problem.  We tend to solve problems with the same logic and thought processes we've used for ages.  Many times, that works.  But don't you love it when you come up with new ways to solve problems? 

• Opportunity can be manufactured.  Create the environment that generates the opportunity, then take the opportunity.  This one takes some thought, but isn't this exactly what he did with Twitter? Who knew that there was an opportunity to change the world of communication with blasts of 140 character or less?  The underlying message was that we don't have to wait for opportunity to come knocking.  We can create the opportunity ourselves.

Fun stuff to think about while we run our businesses.

No One Can See Their Own Backswing

Commentary by Keith Kirkland 

The idea of having a mentor and the value of tapping into the experience and insight a mentor brings is not a unique concept.  But this may be the most uniquely descriptive way I have seen it presented. 

If you have ever played golf, you know that your backswing is the foundational component of all that happens after it.  It will determine the direction your ball travels, and at what speed.  It determines whether you end up in the intended location.  It can also be the reason you strike the ball perfectly, or miss the ball completely.  And haven’t we all whiffed at least once? 

Yes, the backswing is crucial to success, but no one can see their own backswing.  So how do you fix it when you can’t see it and you don’t know what you are doing wrong?  That is where the mentor comes in.  He is the one that has whiffed before…maybe many times.  But he learned how to fix it, and master it.  The time it takes for you to correct and master it on your own can be significantly reduced and improved by listening to the mentor.   

Recently, I was fortunate to hear a presentation by Rob Slee, Managing Director of Robertson & Foley, a middle market investment banking firm.  His presentation was intriguing and led me to purchase one of his books, Midas Managers: How Every Business They Touch Turns to Gold, which is where I first read the quote “no one can see their own backswing”. 

In this blog, we sometimes discuss books we are reading and publish a few nuggets that are worthy of passing along.  One of the underlying themes in this book by Mr. Slee is the idea of creating business wealth, which is distinctly different from running a business that provides a decent, or even above-average, source of income for the business owner.  

Take note of this following quote from the book: 

Privately owned businesses generate more than 50 percent of America’s gross domestic product and account for 80 percent of new jobs.  On their own, U.S. private capital markets would rank as perhaps the world’s largest economy.  But we should be alarmed: Currently about 75% of owners of private businesses are not increasing the value of their firms.  If the private business sector fails, America fails. ¹ 

Among the many interesting discussions in this book by Mr. Slee is the chapter entitled “The Midas Mentor”, in which he describes the differences between a consultant and a Midas Mentor.  Here are a few examples: 

            Consultants exist to solve problems.  Midas Mentors exist to create wealth.
            A consultant’s business experience is narrow.  A Midas Mentor’s is broad.
            A consultant’s expertise is tactical.  A Midas Mentor’s expertise is strategic.² 

Because of what we do at Presidential Financial, these two sections of the book stuck with me.  Our clients are privately owned businesses.  They are the ones that are creating the new jobs in America.  They are the ones that will help America to prosper and succeed.  It’s our job as their financial partner to mentor them on their backswing, because what we do is foundational to their business.   It’s our job to help them create business wealth. 

That ideal location where they want the ball to land?  We call that “Point B”, and it’s our job to get them there.  We help them to focus on speed, direction and that ultimate place of success.  And because we have thirty years of experience with all types of commercial and healthcare companies all across America, we have the broad business experience, and we have that strategic expertise.  And every day, we help our clients by “getting them to Point B”.   No whiffs allowed. 

 

¹  Midas Managers, preface, page 1 

²  Midas Managers, page 126

 

Bill Gates, The Beatles and The 10,000 Hour Rule

Commentary by Keith Kirkland

Ten thousand hours.  Have you ever done one thing for ten thousand hours?  If you did this one thing for twenty-four hours a day, it would take you more than four hundred and sixteen days, or about fourteen months.  Over an eight-hour day, it would take you five years.  However you look at it, it is a very long time.  But ten thousand hours is described as “the magic number of greatness”. ¹ 

If you’ve read Malcolm Gladwell’s book, Outliers, you are already familiar with The 10,000 Hour Rule.  (If you have not read this book, I highly recommend it.)  

It is difficult to condense even this one chapter from Gladwell’s book, but the general question discussed is this:  “Is there such a thing as innate talent?  The obvious answer is yes.”  Achievement is defined as talent plus preparation, but “the closer psychologists look at the careers of the gifted, the smaller the role innate talent seems to play and the bigger the role preparation seems to play.” ² 

A look at musicians showed that “once a musician has enough ability to get into a top music school, the thing that distinguishes one performer from another is how hard he or she works.  That’s it.  And what’s more, the people at the very top don’t just work harder, or even much harder than everyone else.  They work much, much harder.” ³  “The students who would end up best in their class began to practice more than everyone else: six hours a week by age nine, eight hours a week by age twelve, sixteen hours a week by age fourteen, and up and up, until by the age of twenty they were practicing – that is, purposefully and single-mindedly playing their instruments with the intent to get better – well over thirty hours a week.  In fact, by the age of twenty, the elite performers had each totaled ten thousand hours of practice.” ⁴ 

Consider Bill Gates, one of the founders of Microsoft and one of the world’s richest men.  We know he dropped out of college and started a computer company with his friends.  But what you don’t hear much about is that he had access to a computer terminal, through his middle school’s Mother’s Club, when he was sixteen…in 1968.  At that time, most colleges didn’t have access to computers.  Throughout his high school years and early college years, Gates would seek out access to computers and spend hours and hours learning how to program them, many times staying up all night in order to use a computer terminal that was free during the night hours.  “By the time Gates dropped out of Harvard after his sophomore year to try his hand at his own software company, he’d been programming practically nonstop for seven consecutive years.  He was way past ten thousand hours.” ⁵ 

Consider the Beatles, one of the most famous rock bands ever.  In 1964, the band came to the United States and “put out a string of hit records that transformed the face of popular music”. ⁶  But by  1964, the band had already been together for seven years, and it’s what happened when they were just a struggling high school rock band that is the really interesting thing. 

The band was invited to play in a strip club in Hamburg, Germany.  The job didn’t pay well, and the audiences weren’t great.  But over time, the band was playing on stage seven nights a week for hours at a time.  Over five trips to Hamburg between 1960 and 1962, “they performed 270 nights in just over a year and a half.  By the time they had their first burst of success in 1964, they had performed live an estimated twelve hundred times.  Do you know how extraordinary that is?  Most bands today don’t perform twelve hundred times in their entire careers.  Philip Norman, author of the Beatles biography Shout! said, “They were no good on stage when they went there…but when they came back, they sounded like no one else.  It was the making of them.” ⁷ 

The best of the best have great talent, but they also put in the time.  Days, months, and years of practice and experience define the best of the best.  

In 2011, Presidential Financial celebrates its 30^th anniversary.  I’ve been thinking about what that would be in hours.  Eight hours a day, five days a week, fifty-two weeks a year…for thirty years.  We have put in the time, and it comes to over sixty thousand hours.  Come and see what time and experience has made of us.  We feel that we are the best of the best. 

Oh…and we have great talent, too.

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All quotes are from the book Outliers, by Malcolm Gladwell

¹ page 41; ² page 38; ³ page 39; ⁴ pages 38-39; ⁵ page 55; ⁶ page 47; ⁷ page 50

 

Newt Gingrich...on understanding the healthcare system

[Live remarks from Newt Gingrich at an event at The Atlanta Press Club, sponsored by Presidential Financial and Presidential Healthcare Credit.  February 24, 2010]

[Regarding the efforts toward healthcare reform and the proposed bills]..."We don’t know enough right now.  And most of what we do know is wrong. 

Because what’s happened is, you have a 1980 or 1970 bureaucratic model of centralized healthcare growing out of the Great Society in the 1960’s.  All in a world which has changed rapidly.  It would be like my rushing in here with a 1985 model car radio phone, and saying we have this great new device that we’re going to mandate for the whole country.  And having all of you pull out your cell phones, and your Blackberrys and your iPhones, and saying ‘why would you want that?’  That’s where we are right now in terms of this whole debate. 

They system is evolving faster than the politicians are able to understand it.  The politicians want to do what they learned as kids, so Henry Waxman who’s been there 37 years is desperately trying to write the bill he believed in...in 1972.  It’s just utterly irrational."

Newt Gingrich...on the challenges facing healthcare

[Live remarks from Newt Gingrich at an event at The Atlanta Press Club, sponsored by Presidential Financial and Presidential Healthcare Credit.  February 24, 2010]

"I look at the challenges facing healthcare as a triangle.  One of the sides of the triangle is competition with China and India, and this is a challenge that will last for the rest of our lives. 

The second [side of the triangle] is the increase in Science and Technology.  The effects of this increase are unknown.  One of the problems, is that we’re trying to come up with a solution based on the healthcare system of the 1970’s. 

The third [side of the triangle] is that government is the fourth bubble.  If information technology was the first bubble, and housing was the second bubble, and Wall Street was the third bubble…government is the fourth bubble.  Most western countries have adapted a level of government that they cannot afford.  Atlanta has adapted a level of government that it cannot afford.  The state of GA has adapted a level of government that it cannot afford.  California has a government that it cannot afford.  The United States as a nation has a government that it cannot afford. 

Going through the excruciating process, which every private business does every recession, of coming to grips with the fact that we’re going to have to fundamentally re-think, and in many cases, replace – not reform – failing systems, is going to be one of the great challenges of the next 15 to 20 years."  

Newt Gingrich...on comparing delivery of care

[Live remarks from Newt Gingrich at an event at The Atlanta Press Club, sponsored by Presidential Financial and Presidential Healthcare Credit.  February 24, 2010]

"If you look at the gap between the best care delivery in America and the worst care delivery in America, it’s breathtaking.  If you look at the difference in cost, it is stunning.  The best places are cheaper.  Consistently.  They focus more, they have fewer infections, they have fewer medical mistakes, they have fewer medication errors, they work harder at getting people healthy and out of the hospital, or not ever getting into the hospital.  

And so you really want to figure out [the migration].  You can’t get into it by some bureaucratic order.  This is a continuous process, because this year’s best is not going to be next year’s best.  And so there is a continuous evolutionary process underway, and I really think that health innovation may replace health reform as the battle cry of the next decade." 

Act Like You've Been There Before

Football, Success and the Chicken Dance

Commentary by Keith Kirkland

It’s the NFL postseason.  If you are a football fan, the playoffs provide the best opportunity to watch some great battles on the field. 

It’s also the time when highlight reels are packed with clips of professional players, so proud of themselves, doing their chicken struts, silly gyrations, self-congratulatory chest beating, and overall foolishness.  Many football fans grow weary of the self-importance and selfishness shown in the end zone and on the sidelines.  At least I do. 

These guys are paid to make plays, right?  It is their job to score touchdowns, or force turnovers, or sack the quarterback.  Yes, be proud of your work.  Do some high-fives and fist-bumps.  Celebrate success.  But please, keep the “I’m the Man” dance to yourself.  

I was watching a game with a friend recently, and during a particularly ungraceful chicken dance, he said, “Come on!  Act like you’ve been there before.” 

I’ve been pondering that comment, because it really stuck with me.  And like many things, I began to apply it to what we do every day as a lender.  Here are my thoughts: 

Be professional.  Especially when you are successful.  Celebrate your success, but do it in a professional way. 

Don’t act like this is your first time to succeed.  Others may think that your success is a fluke and take you less seriously. 

Your success is not yours alone.  Don’t act like you were the only contributor.  There is usually a whole team around you that affected the outcome in some way. 

There are some great battles being fought in the midst of this economic chaos.  We are fortunate to be standing strong, so I’ve been thinking…”act like you’ve been there before”.  And you know what?  We have been here before.  We have been providing working capital financing to businesses and healthcare providers for almost thirty years.  And during those thirty years, we have experienced recessions, stock market declines, real estate cycles, and all types of ups and downs. 

But we didn’t panic.  

Have we made adjustments?  Yes.   Have we made some changes?  Yes.  Have we been successful?  Yes.  But you won’t find us doing any chicken dances. 

In fact, we would not be successful without the huge team of people that surround us every day.  These include our incredible employees, our clients, and the many people (bankers, private equity sponsors, brokers, other lenders and friends) that trust us enough to send businesses our way with hopes that we can help. 

Yes, we do celebrate some, but only with some high-fives and fist-bumps in the form of deal announcements and marketing emails.  We are proud of what we are able to do, and if you know of a business or a healthcare provider that is in need of a financing solution, we’re here to help.

Commentary on recent 3Q results for Georgia banks

Georgia Banks to Report Poor Results for 3Q (Atlanta Business Chronicle, October 16-22, 2009)

The following are quotes from this article:

"Georgia banks are facing another wretched report card..."
 
"...[banks are] expected to show more steep losses on bad loans, and signs that the state faces more bank failures in the weeks and months ahead."
 
"...Georgia banks are continuing to feel the impact of troubled residential construction loans and foreclosures."
 
"...40% of banks nationwide would be unprofitable in the third quarter, up from 34%, according to FDIC data."

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Presidential Financial is unaffected by the real estate crisis and focuses its lending efforts entirely on small and mid-sized businesses, and healthcare providers, throughout the United States.  Because of our commitment to businesses, we have avoided the pitfalls of real estate lending and continue to help businesses and healthcare companies reach success.  The banking outlook for 2010 and beyond continues to look bleak.  Presidential is not distracted by the declining values of real estate, or by the chaos in the banking market.  Look to Presidential for financing solutions for small and mid-sized businesses.

 

Consumer Confidence Index Falls

The following includes quotes from an article in the Kansas City Business Journal dated 9/30/09 (Download Conference Board’s Consumer Confidence Index falls - Kansas City Business Journal_)

The Conference Board's national Consumer Confidence Index fell in September to 53.1, down from 54.5 in August and 61.4 in September 2008.  The index number is relative to 100 for 1985 and is based on a representative sample of 5,000 U.S. households.

Consumers' assessment of current conditions was less favorable in September, with 46.3% calling business conditions "bad", up from 44.6 percent.  Consumers claiming jobs are hard to get increased to 47% from 44.3%.  Those anticipating improved business conditions in the next six months fell to 21.3% from 22.2%.

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Our comment:  It is interesting to read results from various surveys around the country (and we've posted some of those on this blog), and it certainly reinforces the idea that "it all depends on who you ask" when trying to determine what the state of the market is.  In reality, there are differences depending on location, industry, type of business, etc.  In general, the feeling is that things are very tough, but business owners are really hopeful that a turnaround will come soon.  There just don't appear to be any strong numbers to support that yet.

Perspective on the Down Economy

The following is a quote from an interview with SSG Capital Advisors, LLC in the ABF Journal, Sept/Oct 2009 Issue

ABFJ: "I'd love to get your perspective on where we are in this down economy."

Scott Victor of SSG: "It's going to continue until the lender - the banks, the mezzanine institutional funds, hedge funds - until these institutions across the board wash through and resolve the credit problems, resolve their balance sheets, resolve their funding problems.  And the question is how long?  And it's a question we discuss all the time, and right now you're looking at clearly through the end of this year and I think deep into next year before the banks clean up their balance sheets."