CFO Core Concerns Conference 2010
June 30, 2010
Thanks to my friend at HJMT, Lisa Gordon, I got an opportunity to attend the 2010 CFO Core Concerns conference in Baltimore MD June 27-29, 2010. This conference - a 3 day event - was designed by CFO Magazineto help and assist CFOs to identify and mitigate risks in today’s world, as well as take advantage of opportunities. The topics covered were broad - everything from traditional accounting issues (borrowing and debt) to more IT related topics. So you might ask yourself - why should I, as an entrepreneur, spend time with bean-counters and accountants?
Well one thing you’d find if you actually attended is that bean-counters and accountants and especially CFOs are pretty darn smart people - and not boring at all. They have to handle all sorts of impacts to their companies, evaluate risk, take advantage of opportunities, and in general protect the company and track and optimize it’s progress. This is not an easy task. They have to think like entrepreneurs - trying to get the best bang for the company’s buck, protect the company from catastrophic events, optimize it’s assets, investigate new opportunities for growth, decide when best to invest, and be sure that the company doesn’t run out of money in the process.
Equally interesting were the vendors that showed up for the conference - coming from every avenue of risk that the CFOs might be tackling from health care, to import/export regulations to cloud computing, to general IT support and everything in between. The core concerns identified as important at the conference were:
- Credit Markets/Interest rates
- Federal Government policies and regulation
- Health Care costs
- Managing IT Systems
- Federal Budget Deficit
- Accurately forecasting results
- Managing and obtaining working capital
- Consumer Demand
- Maintaining employee morale and productivity
- Financial regulation and changes in regulation
- Currency risks
- Cost of Fuel
- Margin Maintenance
“So what?” you say - why should I care, I’m just a lowly entrepreneur - most of these are things I don’t have to worry about. My answer is - you are wrong. Now you DO need to worry about some of these things within your own company. If you’re developing a music delivery platform and all of a sudden there is a court decision handed down, or a change in copyright regulation - you could find yourself holding a product that is both useless and suddenly illegal. If you don’t pay attention to patent law you might not have noticed that the supreme court allowed a business method patent to stand - strengthening the status of all business methods patents. Assessing these risk is an important part of your job as an entrepreneur. You must envision both the best case “hockey stick” scenarios and the worst case scenarios as well and develop measurement and contingency structures to be sure you don’t get in over your head.
More importantly though - every concern issued above is a problem looking for a solution. A problem that has been stated as CORE to a business’s ability to thrive and grow in today’s world. A problem that there is probably some funding to solve because CFOs who write the checks across the world share these concerns. It is a built in market, with specific desires and requirements, and an awesome potential for the right entrepreneur to create a solution and step into the fray.
You can check out the twitter history to see my CFOCore tweets from the event, that cover most of the main speakers, and check out the speakers and their topics for the event at CVent. As an entrepreneur I was fascinated by the issues that the various speakers raised. Frank Partnoy, a professor of Law and Finance at USD, covered how today’s recession and lead up to a crash were eerily similar to a time 79 years ago when Ivar Kreuger nearly brought the world economy to it’s knees. He pointed out the similarities - and the differences - to today and how that might affect the economy in the next few years. He also said that the Moody’s and other bond rating agencies were useless and should be replaced by cold hard facts. Moody’s rated many failing banks as “A” or better right up until they collapsed - proving that their predictions for an investments risks were practically useless.
Rita McGrath, a professor at Columbia University, gave an awesome talk on using Discovery Driven techniques to stimulate, encourage and foster innovation and growth within large companies. In discussing the topic with her after her speech I discovered she has a similar presentation that applies to entrepreneurs, and another that applies specifically to software development. Interestingly, she’d heard little of Agile Methodology, which her proposed tactic resembles.
Michael Hughes CIO At Large for C4si, was heard saying that the end of the company sysadmin could well be approaching - that cloud technologies could, and would, shift the burden of technical support off internal staffs and onto remote and outsourced solutions like no other technology before it. He also claimed that systems security wasn’t as big a deal as everyone made it out to be since most data was obsolete after 1 month anyway (I beg to differ with him on this point - maybe I misunderstood what he was saying).
Dennis Jacobe, Chief Economist at the Gallup Organization had a fascinating lecture on measurements of consumer demand, company confidence, and the attitude of the general public. He cited, for example, that while 95% of people favored small businesses and entrepreneurialism, 36% of the same group of people believed that socialism (which is antithetical to the aforementioned concepts) was a viable economic alternative for the United States. Consumer confidence has remained flat for over a year, and those with money have not yet tired of saving and begun spending. Jacobe claims that the recession is not ending but we are entering a long tail where there will be considerable volatility and only small organic growth in the marketplace.
Greg Schaffer, Director in charge of Cyber Security at the Department of Homeland Security came and talked to CFOs about the new, more dangerous, online world we now live in - stating that most company manufacturing and production infrastructure had little or no hacking or security protection - endangering the lives and the livelihoods of many major US Firms - as well as our overall global economy. He pressed CFOs to examine carefully their spends when it came to cyber security risks and evaluate them carefully.
We heard encouraging news on the technology front from Edwin Yuen, Microsoft and Hope Cochran, Clearwire on how broadband ip based 4g networks were coming from companies like clearwire, and that virtual technology had allowed some companies to consolidate from over 600 running servers to just 40 at tremendous cost savings.
We heard discouraging news on the health care front, with some analysts predicting 20-40% raises in health care insurance costs for companies witih under 100 employees over the next few years until 2014. Some said that these rate increases would disproportionately affect companies with under 100 employees. This will force many small businesses out of providing health care benefits and into the state-run pools, which may well not be up to the task prior to 2014 of absorbing so many subscribers, and may create two levels of care: one for the “have-nots” on the public funds and one for the “haves” that are in private insurance or are self paid. Most large companies that self insure were interested in creating wellness programs to be sure their rates stayed low - some claimed that could result in discrimination against overweight people, or those with chronic diseases prior to hiring.
We heard a fascinating panel discussion on risk management and how to plan for and mitigate everything from natural disasters, to cyberintrusion to key persons becoming ill. The panel had the Lizabeth Zlatkis, head of risk management for Hartford Insurance, who stated that you have to put most of your risk management eggs into the baskets of problems that would put your company out of business. While it’s good to have plans for smaller risks - you MUST have plans for the risks that can ruin your business.
We heard from the supply chain manager at OfficeMax, Ruben Slone, about how he used the downturn to implement a series of cost reductions and supply chain optimations that saved his company millions of miles of truck time, improving the environment and saving the company millions of dollars - using just a few simple changes. We heard from Ronald Jadin, the CFO of Grainger - one of the largest catalogs in the world - about how, despite the downturn they continued to grow by optimizing their relationships with customers and suppliers to meet their own needs and the needs of both. They cut turn time on inventory by 20 days in less than a year, while improving on-time delivery of product.
We heard from a career expert at Accenture and author of ”The Workforce of One”, David Smith, about how today’s consumer driven world is changing the expectations of employees - that they want their careers and their day to day jobs to be more like their experience outside work - customized to their needs and their desires.
If you read the above and thought to yourself - hey, I could come up with a solution that solves one of those problems (or even a part of one of those problems) then you probably have a pretty good seed of an idea for and entrepreneurial venture. The first thing that they teach you in “entrepreneur school” is that you must come up with a compelling solution to an entrenched and difficult problem or desire that people have. This conference was FULL of such problems and desires - and is a hotbed of ideas for an entrepreneur to live off.
For more information you may want to consider getting one of the books from the presentation authors. I’ve organized the books into an Amazon Store which you can visit by clicking the link. There is even a link there to subscribe to CFO Magazinewhich I highly recommend you do. So if this interests you - think to yourself - what convention can I attend and learn from that might be slightly outside my normal field and how can that enhance my ability to either run my company or come up with awesome sellable entrepreneurial ideas?
Retaining Young Talent event
April 8, 2010
Students Tackle “Bright Flight” in Upstate New York
Thursday, April 15, 2010 7 p.m.
Alumni and Advancement Center
300 East River Road
Rochester, NY
In November 2009, students from the University of Rochester, Cornell University, and Syracuse University gathered for a weekend-long collaborative brainstorming session called “Work/Play/Stay//Mitigating Bright Flight: How to Retain Graduates in the Upstate Region.”. Join University alumni, parents, and friends April 15th at the University of Rochester for an enlightening evening with the Rochester students and faculty who participated in that session. There will be a panel presentation, a video, and a discussion about the “bright flight” issue and potential solutions.
Acording to U.S. census data analyses by the New York Times and the Brookings Institution, the population of young adults in upstate New York has been declining at an unprecedented rate. Between 1990 and 2004, the number of 25-to 34-year-old residents in the 52-county upstate region declined by more than 25 percent. In the Buffalo, Rochester, Syracuse, and Binghamton areas, the decline was more than 30 percent. The rates of emigration were found to be highest among college graduates and termed “bright flight.”
What implications do these trends have on the well-being of upstate communities? What can be done to mitigate this exodus? Please join us in a discussion of the causes and possible solutions to the “bright flight” phenomenon.
Following the program, enjoy a reception sponsored by the Office of Alumni Relations.
Admission is free. Advance reservations are required. Special thanks goes to High Tech Rochester for its support of this event!
To Register:
Online: www.rochester.edu/alumnievents
Phone: 877.MELIORA (877.635.4672) toll free or 585.273.5888
Rochester, NY still faring well despite economy
December 21, 2009
In two recently released studies, Rochester came out among the top cities nationwide. A Brooking’s Institute report ranks Rochester’s economy among the top 20 (14th overall) in the last 3 quarters. Rochester is the only city in the entire Northeastern United States to enjoy that distinction. We’re also the only city that ranked among the top 20 in every single quarter of the year. The report mentions our strong real estate economy with rising home values, a stabilizing job market compared to other regions, and an overall increase in goods and service output. Even Buffalo and Syracuse NY made the list for the last quarter (though their overall growth has not been consistent like our’s has).
In addition a Farmer’s Insurance report lists Rochester NY 5th in overall secure places to live. This list is compiled each year using factors such as housing values, risk of natural disaster, crime, job market, life expectancy and air quality. I suspect our strong local health system, stable housing prices, and relatively lower unemployment due to a strong small business economy contribute to these factors greatly.
According to www.bestplaces.com Rochester’s cost of living is a full 20% lower than the average US City. That means that we have inexpensive real estate - a dollar’s salary is worth 15-20% more in Rochester than anywhere else, our crime rates are low, our real estate values are lower but stable, and we enjoy a lower unemployment rank than most of the country. That all sounds positive to me.
So why then is NYS overall rated as one of the least happy places to live? Can the “upstate divisionists” be right and (as they claim) downstate is so unhappy they’re dragging the rest of us down with them? Is it just the weather and the “long gray” we get each winter? Is it our highly conservative approach to promoting small businesses and entrepreneurialism (most of the small businesses and entrepreneurs I know live in Rochester despite the low level of angel and venture capital - not because of it)?
I’m curious - what are your views? How can we continue to outshine the competition as the folks at Eyes on the Future point out each year and yet we’re still down on Rochester and NYS all the time. There must be something strong about us that makes us what we are - why isn’t that making us happy?
Only our highest achieving children being left behind.
August 28, 2009
In a recent post by Tom Loveless and Michael Petrilli on the NY Times editorial page they go into a detailed analysis of a recently touted study that showed that our highest achieving children were also benefitting from NCLB (the No Child Left Behind Act). In a rather thorough debunking they showed that, in fact, the rate of growth in achievement of these highest performing children had decreased over time (not the growth - the rate of growth) and that it fell far behind the improvement curve of the bottom section of the bell curve. While our lowest performing children improved by as much as 25% under the new system - higher performing children improved by no more than 5%, a slower rate of growth than in times previous to the enactment of NCLB.
Furthermore the studies had some significant statistical WTFs. Improvements in states such as North Dakota were weighted the same as states such as California - despite the fact that California has 60x the students of North Dakota.
As a parent of a high-performing child I can tell you from personal experience that the NCLB program and “experiential learning” experiments like “fuzzy math” are failing our high performing children. The saving grace is that private enterprise and colleges are stepping in to assist where schools are leaving off with programs like FIRST Robotics and John Hopkins University’s Center for Talented Youth. The fact of the matter is though that these programs - which generally require either substantial financial resources or corporate sponsorship - are having trouble helping bright children in the most economically challenged sections of our country. Think what could happen if the government got behind not just lifing up the lower 1/3 of our performers, but in enhancing the education of the top 1/2 of our performers. How much more productive could we be if our best and brightest were even better and brighter and were encouraged to succeed rather than beaten down into the general average population? Programs like FIRST and CTY show that it can be done - we just need to produce the will to do it.
If you don’t believe this is true look at your local school’s budget. How much of that budget is dedicated to assisting children with disabilities of one kind or another vs enhancing the education of our top performers. Now I’m not suggesting we reduce help for children with IEPs - they need that help to make them productive members of society. Is it so hard to envision though a scenario where we not only help our disabled children but we truly challenge our smart and creative ones? These are our next CEO’s, entrepreneurs, engineers, software developers, and visionaries. Our current educational system fails these kids in a fundamental way - by forcing them into an environment where they must “conform to the norm” instead of “exceed to succeed”. My son’s public school for instance (a well funded suburban school) fails to offer advanced software development classes, entrepreneurial programs or other challenges for high end performance. Getting teachers involved and reimbursed for helping with these programs is always last on the agenda, because the state and federal government mandate that they must spend so much on servicing the bottom 50% of performers.
So how do we change this? We need to take action at the grass roots level - every entrepreneur in America - to encourage our leadership to look at how we can best enhance programs like FIRST and CTY to push them into every school, even the disadvantaged ones. My son’s FIRST (Penfield Robotics team 1511) team adopted an inner-city team (team 2999) and helped them through their rookie year with money, mentors and facilities - if our children can step up to help why can’t we? Take some of your entrepreneurial dollars and dedicate them to your future by sponsoring a FIRST team, creating a CTY scholarship, or just volunteer to help and assist a program like Science Olympiad or Mathletes. It’s a great way to give back to the community and help create the next generation of employees, entrepreneurial partners, and industry visionaries.
The chilling effect of bandwidth caps on Entrepreneurial Culture
April 14, 2009
Coming soon to a city near you, imagine this scenario:
Your city, one of the first to be wired with Roadrunner cable has a highly concentrated available pool of engineers, software programmers, business owners, small businesses and over 6 excellent, nationally known schools pumping out hundreds of entrepreneur-ready highly-educated students. The region has enjoyed the ability to use Broadband internet for reasonable though not inexpensive prices through Time Warner Roadrunner. When initially introduced the service was rolled out at 10mb/s but that was quickly scaled back to 1 (the speed of DSL at the time) and then slowly increased to remain competitive with the local DSL provider - always one step faster than they were. A higher bandwidth option was offered, which restored the original 10mb/s speed at a higher price point, but most people settled for just slightly faster than DSL.
Then suddenly - your cable company, who now has essentially a lock on anything faster than about 4mb/s down, announces a new policy: They are going to cap usage and make users pay not only by the speed of their connection but by their consumption of bandwidth. Various “tiers” are offered in which users get a “bucket of usage” which, if they exceed, they pay between $2 and $1 per gigabyte of usage over the amount. Your bill, currently at $40-50/month, could easily max out at over $150. The “buckets” are so small that even with the largest, fastest plan an advanced user family of 3 could easily blow through the entire $150 in bandwidth in the first week or so of usage. 100gb (3gb/day) would cost over $75/month and 150gb or more would cost $150. The cable company isn’t offering this “tiered usage plan” to people outside your region, because outside your region they have competition like Verizon FiOS to keep it in check. But here - a monopoly on the high speed Internet prevents penetration by other vendors. They justify this tiered usage plan by blaming users for their consumption and claiming that their pricing wouldn’t support necessary costs of providing the bandwidth.
The time for this to happen is - now. As of August Time Warner Cable will institute tiered pricing with bandwidth limits in 1, 10, 20, 40, 60 and 100gb increments. They are generously offering unlimited bandwidth (at any speed) for “only” $150/month (that’s not a 3-in-1 plan, that’s $150/month for Internet alone). If they aren’t doing this in your area, and they are your primary provider - you may want to prepare for a fight. They are planning to roll this out everywhere that they don’t currently have competition that would cannibalize their user base.
So what is the effect that this has on entrepreneurs specifically, and the region in general?
- Most entrepreneurs these days are “heavy users” of the Internet. Between developing their software, creating distributed development teams, uploading and downloading information to servers, twitter, website updates, video presentations, and all the other myriad ways that entrepreneurs market themselves - they almost all will fall into the high bandwidth usage scenario. Many do this sort of work from home, either during work hours, or just during off hours. This means that they will typically be paying between 3 and 4 times what they are now for Internet access - times as many employees or collaborators as they currently have. This additional cost will not only discourage the average money-conscious entrepreneur, but also discourage their collaborators, their users (for after all if they develop a high-bandwidth application like HULU, or NETFLIX , or even medium bandwidth services like BLIP.FM, or they will be trying to get users in this city as well, and their financiers (what venture capitalist will take seriously an investment developed in a city where they know that everyone is watching their “Internet gas meter” to see if they go over). They’ll simply move on to invest in other areas that are more tech-friendly.
- Students and new, young minds are the core to successful entrepreneurial ventures. New ideas come from youth, and the more we can encourage our youth to come to Rochester to learn their trade, and stay here once they have learned it, the more competitive our city can be in attracting and retaining young hard-working bright men and women to our area. But if their first impression when they arrive in Rochester is to get a bill for a 10mb/s connection for $150/month(because believe me - college students are probably the definition of high-bandwidth users) which they get at home in a combo bundle form Verizon FiOS for$60/month which includes phone, TV, and Internet at a blazing 20mb/s down and 10mb/s up - are they going to stick around here after they graduate, or move to a more progressive area with more reasonable Internet access. I’ve already gotten tremendous feedback from the RIT campus here in town that students en massse’ (and especially the deaf and hard of hearing students at NTID who use video streaming) are up in arms about this latest proposition form Time Warner. So, as a region, we have to decide - do we tolerate this monopolistic pricing scheme, or do we legislate it away?
- Collaboration depends on a highly connected community. According to this study made by the state of South Carolina, a highly connected, inexpensive to access broadband infrastructure is one thing that can make a region more competitive and connected to the future. Having this strength available makes the collaborative process easier to manage, results in more ideas, creates those ideas faster and brings them to market. Adding high price or being unable to access high speed broadband on the other hand puts a community at a definite disadvantage, because the oppressiveness of monitoring and paying for the bandwidth cap drives collaboration down and highly skilled employees and technical people away from the community to areas where they can get these features.
- Driving prices up in an already suffering economy hurts our residents, whether employed or unemployed, ability to recover quickly, and adds to inflation. A full package of internet, phone, and cable television services could easily run into the $300-400/month range depending on features selected. A marginal price increase would be painful, but doubling or tripling the rates for many users renders them impossible to bear.
- Price caps selectively punish your most tech savvy and powerful users - the ones who help all other users, the ones that drive change and innovation on the internet. It selects against young people, active business people, and the businesses that they drive.
- It selects against tech-savvy small businesses who use the web to their advantage to market their products and services. Ah you say, businesses themselves won’t be bandwidth limited, while this is true (for now - I wouldn’t bet on it being true forever if we let price caps enter the market), its not the business use of bandwidth that is at issue, it’s their end users. Am I as likely to search for houses on www.nothnagle.com if I find out that each house I look at and all the attached pictures represent over 1MB of my precious bandwidth? Am I likely to create www.webhomeusa.com if I know that the pictures and map mashups my users download are chomping bandwidth as I browse for houses? Both of these interesting and innovative sites started here in Rochester - pre-cap. Would they be as likely to be invented in the future if we knew we were penny-pinching every download and web page?
- The very fact of bandwidth caps subtly changes our Internet usage - and reduces the power of the internet to entertain, increase productivity and provide better services to our clients and end users. People have become dependent on “instant access” - it’s now EXPECTED in the business world. If we have to watch every gb of usage though, we’re more likely to “Skim the surface” of the Internet, rather than dive in head first. That is doing a disservice to our high school students, college students and others across the region.
- What about companies that have moved to a more distributed “work from home” environment. Many companies (I know of one local Rochester top 100 company at least) have eschewed large installations of capital investments in buildings, leases, and office space, in favor of a distributed environment. Their “workers” work from home and are paid based on their productivity. Typically these work from home users are vpn’ed into the central office machines during work hours - happily performing their tasks. They used to pay one flat fee for the privilege - but if they now have to pay metered bandwidth rates - what happens? Do they pass that cost up to their employer, who then passes it to the customer - yet again we run into an inflationary situation.
So what can the Rochester (or other region) entrepreneur do to protest these caps? Fortunately the Rochester Community - recognizing the peril this puts our region in - has stepped up to the task. Here are specific things that you can do - right now - that are listed on my website. Bringing FiOS to Rochester (www.verizonfiber.com ) is a long-term plan - they have no plans yet to enter our market. If we continue to let Time Warner own this market then it will be difficult to bring other competitors in. I strongly suggest you take action on multiple fronts:
- Visit other websites like www.stopthecap.com and www.dslreports.com and look for ways to resist the tiered billing system.
- Spread the word - get 5 people you know to sign up for www.verizonfiber.comsurvey, or post some flyers around campus, or tell your neighbors and co-workers. Most people BELIEVE TIME WARNER that their bills will not go up. We know otherwise and we should spread the word to all who we know that they can expect to pay more for internet under the new plan.
- Support Congressman Massa who has taken up this cause as his own. Senator Massa is the REAL DEAL and has gone out of the way to hep us in this quest. Please take time to visit his website or write a supporting letter.
- Take time to write Time Warner and tell them how you feel. Also engage Time Warner’s PR mouthpieces in as many venues as you can - ask them the hard questions. The more they don’t have an answer the worse they look in the eyes of the media and the public. We’ve slowly been turning the media’s attention around from just reprinting their press release to seeing it from a user’s eyes.
- Attend the protest April 18th and let them know IN PERSON you are not going to take this lying down.
- If you have connections in the media, talk this issue up. Ask them why they’re not giving it more attention and coverage.
- Take time to write the Attorney General and let him know that you believe that this new tiered pricing is a discriminatory policy and is based on Time Warner’s monopoly in our area. Insist that if Time Warner wants to implement tiered pricing it do so in competitive markets as well. They never will because they know that Verizon Fiber and others would eat them alive.
- Help me with writing content - if you have a link to share, or a profile to post, or a blog post to register, I would love to have help and input. Writing content is very time-consuming and I do have a company to run. Any help anyone would like to lend would be welcomed.
You can find all these resources at: http://www.verizonfiber.com/TWCProtests/tabid/57/Default.aspx
Thank you for your support - please spread the word,
