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Have You Overstayed Your Board Seat Welcome…?

February 26th, 2013 Comments off

For those that know me, I am a fiercely competitive individual and that competitiveness extends to not only my cycling, but to a different degree, the office. Depending on the environment and who I am dealing with, my competitiveness will be adjusted accordingly. The satisfaction I have gotten from my career has been the derivative of the environments I have hired into and being able to let that competitiveness play out in the form of driving improved financial results at all levels, thus improving the financial health of the company. Over the last few years the scope of my involvement broadened as pursued my first Board seats, both of which were with non-profits. Both were equally enjoyable and had satisfying missions.

One of those Boards, the Orange County Marathon Foundation, was dedicated to the organization and execution of the OC Kid’s Run, which is a peripheral event to the Orange County Marathon. The Board already had a strong line-up, but I was asked to participate on the Board and very quickly was asked to be the Treasurer, a nomination I gladly accepted. I decided to participate since there was a strong initiative to increase participation, address sponsorships, and a few other key items. Seemed like a perfect strategic fit for what I had essentially done at a corporate level in the past. I spent my first few Board meetings getting to know the broader team, as well as the past challenges they had to deal with in the past. Very quickly I found that it was a very capable crew. Yes, there were a few contributions I made, but I also came to realize that it really wasn’t the standard “restructuring” I was used to, nor was there really a need for any intensive financial planning. The expenses that the team was dealing with were almost entirely variable with the runner count for the event.

Now let’s rewind to that whole “Performance” thing that drives me in my personal life. Essentially the Board really only needed an accountant or bookkeeper to count the debits and credits. I also really started to question my contribution to the Board and whether I was adding value to the seat I was occupying at each Board meeting. It took a bit of time to admit, but I arrived at the decision to discontinue my involvement with the Board because I knew there was somebody else out there that would deliver much more value than I was, which ultimately, would benefit the kids that much more. With such a capable team behind the Foundation, I didn’t want to hold onto my seat strictly for the sake of having a placeholder on the resume.

Whether non-profit or your standard corporation, it’s the duty of Board members to ensure that they are delivering value and helping the team drive a higher level of performance that might not be there in their absence. If that is not the case then perhaps they should be rethinking their position on the Board. I received some feedback that suggested I should hold my seat until I found another Board, but that certainly wouldn’t have been appropriate, or fair, to the Foundation Board. I know that as I continue my networking efforts I will find that next Board opportunity that will allow me to leverage my experience and deliver the value I expect to.  Have you overstayed your Board seat welcome…?

Thanks for reading…

Jeffrey Ishmael

When Everyone Is Your New BFF…

February 22nd, 2013 Comments off

As I had announced in my last posting, Cylance had officially launched, and with that news came additional details on our Board of Directors, Advisors, and the funding that we had secured. More specifically, $15 million that have been secured through two of the top VC firms, Khosla Ventures and Fairhaven Capital Partners. Now keep in mind, while we are still technically a start-up, there is no shortage of work and structure that needs to be in place to secure this kind of funding. The last I checked, you just don’t go knocking on a few doors and hope that someone writes you an 8-figure check.

I’m also not going to go into the details of our current structure, but I get a bit of a chuckle seeing the onslaught of marketing materials that we have received since our launch. You would think that in one fell swoop we had just filed our fictitious business name statement and only moments later had already sold the company for a HUGE payday. To start things off, there were countless solicitations for real estate representation and wanting to help us find our future home. Check. Already have that covered through a long established and trusted network. The next onslaught would be best characterized as the recruiter onslaught. With a management team that has decades of experience in cyber security then they better be able to recruit from within their own network. Check. We are already solidly moving forward with an A-grade team. Next you wonder? A myriad of folks who want to help us navigate the stormy waters of insurance coverage. Check. Already have that covered as well through our long established and trusted network. Whether workers’ comp or D&O, it we don’t have that in place we have no business being in the positions we are.

The next wave of solicitations was even more amusing. As you know, when you start a company you are destined for riches and it might as well be a slam dunk. It’s a good thing that we started receiving all the literature now on what to do with the vast wealth that will occur at some assured time in the future. Again, this is an area where I wouldn’t trust anyone I didn’t already know and was a trusted advisor or source in the past. I just have to wonder what kind of success these firms have by reading the paper, assembling an envelope of marketing filler, throwing on some postage and dropping it in the mail. In the Finance world, unless you have a unique value proposition that will help me improve my results, in a sustainable way, and isn’t offered by my existing trusted network…then you’ll have a long line to wait in.

As our work and efforts require, we secure our business on trusted relationships and a definitive expertise that we bring to the table and not a glossy brochure. A unique value & protection proposition that our customers can plainly see. What are you bringing to the table…?

Thanks for reading…

Jeffrey Ishmael

Cylance, Inc. Launches & Comes Out of Stealth Mode…!

February 13th, 2013 Comments off

Cylance, Inc. today formally announced $15 million in funding from Khosla Ventures and Fairhaven Capital, along with the Board of Directors and Advisors that have been put in place to help guide the company for the years ahead. While this day is merely the culmination of months of hard work by a team I have come to admire over the last 7-months, it still feels fantastic to take a day and celebrate the accomplishments of the team and what we have to look forward to. The full details of the press release can be found on our website at www.cylance.com .

A bigger affirmation for the mission and future of this company are the backers and advisors that have come on board. Khosla Ventures was founded by Vinod Khosla in 2004 where he was formerly a General Partner at Kleiner Perkins, as well as a co-founder of Sun Microsystems. Fairhaven Capital is a venture capital firm focused on themes in the enterprise, physical technologies, media infrastructure, and security markets. Both are neither strangers to technology, nor are they a stranger to the talent and abilities of Stuart McClure, the founder of Cylance.

In addition to the funding, Stuart has been able to assemble an incredibly high caliber Board of Directors and Advisors with additions that include Patrick Heim, former Kaiser Permanente CSO and now Chief Trust Officer at Salesforce.com, Admiral William J. Fallon, U.S. Navy (Retired) former Commander, U.S. Central and U.S. Pacific Commands, and Alex Doll, former co-founder and COO of PGP who sold to Symantec in 2010, who will guide the Company to achieve its goals. With this Board pedigree, Cylance has a deep and diverse team to help guide the Company. An equally talented Board of Advisors brings together a diverse group of experts to solve the complex security problems that the industry currently faces. Advisors include: Paul Forney (Invensys), David Willson (Army/NSA), Shane Shook (KPMG/PwC), Robert Bigman (CIA), Stewart Baker (Steptoe/NSA), Alex Nazaruk (GetCo), Michael Rauchman (GetCo), Eric Culp (formerly of ESRI), and Joseph Gabbert (formerly of McAfee and EMC).

The team here at Cylance has an incredible opportunity, and a fantastic level of support to carry out the mission at hand. As I’ve written in previous posts, it’s all about delivering on what you promise and driving high levels of performance. With the team and backing that has been assembled, this is merely the first step. There’s more to come, but it feels great to formally step out from behind the curtain and share more detail about what has been assembled for the future.

Thanks for reading…

Jeffrey Ishmael

Glad to see the Hockey Stick Forecast is alive & well….

July 30th, 2009 Comments off

     This morning I attended the 33rd gathering for the Growth Capital Conference in West Los Angeles, which is organized by the Growth Capital Institute. Aside from the standard self-serving pleasantries, which lasted the better part of 20-minutes, the conference showcased a presentation of 5 companies seeking growth capital. This was then followed by a 4-person panel discussing the current lending and capital environment. Although this was the first time I had been to this particular function, there were many of the usual suspects in attendance, which included the Tech Coast Angels, Pasadena Angels, Garage Technology Ventures, and various SBA reps. While a bit annoying at first, the lack of seating for an rsvp fee event was somewhat refreshing and the energy levels were high.

 

     Once of the greatest comments that was made to me by a successful business person, and later expanded on, was “Boring is not bad….”.  Well, that’s a bit of what we had this morning; some boring concepts, but not all bad. Unfortunately, what many of the concepts were lacking was the real “Wow” factor in their presentation and presenting the merits of their concepts in a simple 40k foot level. The presenters were give a simple parameter….7-minutes or less.  Many had problems staying within those confines and infused their presentations with too many details; details that could have been easily covered in a secondary meeting after capturing the attention of potential investors.  What was also somewhat amusing was the collection of hockey stick sales pr0jections without discussing any of the basic elements of a sales effort to achieve revenue goals.  In fact, one company even cited an 8x revenue multiple of a peer, from Q2-07, as a compelling reason for investing in their company. Don’t know if I’d be referencing valuations from 2-years ago….

 

     After the presentations were complete the conference transitioned to the panel of speakers, who would be discussing the current lending environment.

 

With regards to the SBA lending environment there were a number of points worth noting:

          Owners with an equity position of >20% are being required to provide personal guarantees on all loans.

          There is no longer 100% financing available.

          Start-Ups are requiring 30% infusion by Founders

          Ongoing entities are still only getting 80-90% with the remainder contributed by Founders.

 

     There was also a very consistent message by the panelists that they are only investing in entities where there is a unique proposition or offering. They are no longer investing in companies that are simply a variation of an existing and successful venture.  It was also noted, particularly by the Pasadena Angels ($25m / 65 deals) that they are doing more follow-on deals. While their investments in companies have doubled the number of companies in the portfolio has only increased by 50%. Further, the panel commented that “you can never assume that there will be follow-on financing and cite that as a basis for making an original investment”. They clarified that due to the environment, you need to make your investment decisions based on the merits and projections of the entity and not the hopes of bridging to more capital invested.

 

     Although a number of the discussion points were rather rhetorical, it was good to see the entrepreneurial drive alive and well at the conference this morning. It was clear that a number of the presenters really had not done their appropriate homework, or were being given some less than stellar guidance in their preparations, or just discarded that guidance outright. Regardless, I got a kick out of seeing that the Hockey Stick Forecast is still alive and well in funding presentations….

 

Thanks for Reading . . . .

 

Jeffrey Ishmael

Your lack of planning is not my new “emergency”. . . .

April 28th, 2009 Comments off

     It’s really amazing how quickly you can progress from a rather nicely paying Project on a Friday afternoon to a complete implosion over the course of a weekend, culminating in a withdrawal from the project. I certainly wasn’t anticipating it, but that’s exactly what happened last weekend.  The crazy part about the situation is that it was really the product of two inappropriately worded emails outlining the disappointment in progress and the lack of execution to date. Funny, while discussions had been happening the better part of 6-8 weeks, the engagement wasn’t supposed to start until May 1, and the majority of the time until now had been gratis…or perhaps “ungratis”.

     The entity I had been having discussions with was effectively a 3rd round funding candidate who had developed a pretty fantastic product, and in the characterization of any MBA student, was looking to legitimately be a “disruptive technology”.  They had been able to keep their operations lean and were making effective use of existing cash resources. However, as early as the open of Q1 it was clear that they were going to need to bring in additional operating funds. However, there was an incumbent “CFO”, who really did not have the background for the position, but nonetheless was tasked with the responsibility. Quite simply, the Company had an obligation to support this individual so long as they allowed him to remain in the position. Unfortunately for the company, and their need to aggressively pursue additional funding, there were no results on the part of the incumbent. The Company finally decided last week that they wanted to move forward with an agreement that would have me pursuing funding (#1 priority), but would also be setting the foundation for the broader finance function within the company. From the development of a new software platform, to the tracking of cost standards, the development of all their financial reporting, to representing them at certain investor events. This was all last week.

     Within the span of 72-hours after having my first on-site meeting after agreeing to the engagement, I immediately was being called to task as to why the fundraising wasn’t happening in a more agressive manner, that I had been provided all info over the preceeding 6-weeks, and questioning whether I was truly committed to the project. Did I miss something, or did we just agree on a May 1 start to the project?  The wording of the emails was also strong enough, and disrespective enough, that I knew immediately that this was not a long-term engagement I wanted to be a part of.  I was basically being held responsible for the inactions of a previous incumbent and the lack of action on the part of founders to ensure that their financing goals were on track for achievement. The situation was no different than missing key patent filings over the last quarter, hiring a new VP of Design/Engineering, and asking why patents weren’t filed….before their arrival.

     There’s no question working in the role of Finance, we are all accustomed to having to deal with emergencies and having to reprioritize tasks as conditions shift. However, there is also the element of appropriately placed accountability and following up on deliverables that were properly planned for.  It’s also quite clear, that even with proper planning, certain goals aren’t achieved, and that strategies need to be altered. However, a complete lack of planning, a lack of collaboration with current staff, and not supporting them in the necessary way does not translate as my emergency and something new players should be held accountable for. High caliber Finance consultants can provide solutions, but when the work is conducted under a condition of desperation, the results will never turn out positive, and quite often, result in the least desirable situation.

Thanks for reading . . . .

Jeffrey Ishmael

Investor Relation efforts – Not just for Public companies.

April 7th, 2009 Comments off

     I was talking with a friend over the weekend and telling him about I group I would infrequently attend meetings for, NIRI, or the National Investor Relations Institute. They have a fantastic Orange County chapter and a number of the members have become friends over the years.  I was asked why I attended the events since they typically catered to the I.R. position for public companies, or those heading down the IPO path. True, the meetings are targeted to those individuals, but the investor relations effort isn’t confined to a delegated / dedicated position or solely public companies. In fact, I tend to believe the effort needs more focus for a private company since public information isn’t readily available and if banking, vendor, and other key relationships are to be fully leveraged, then there needs to be some level of transparency for them to base their decision making on.

     More specifically, I make a point of maintaining active discussions with our bank to keep them updated on our monthly & quarterly results, as well as any material changes to our Forecast. While there’s a certain built in level of accountability (& risk) in starting these conversations, the benefits gained from delivering on previously discussed plans is invaluable. Not to mention the credibility that will be built over time. It’s a message constantly delivered in the market place…”Relationships need to be developed before you need them”, or in this case credit lines, but it’s absolutely true. No, I’m not undertaking this exercise because I have covenants that need to be managed or our company is in some level of distress, it’s merely good business practice.

     I’ve had some great folks that I have been able to work with and for, who have provided some great circumstances to learn from with respect to investor relations. More importantly, the investors in your company are not only those who have contributed working capital, but those who are investing their time and corporate resources to help your company succeed. Whether they are getting a return as an investor on the sidelines or securing returns working as a corporate agent, they should still be viewed as investors?  How do you view your key relationships and manager your IR efforts?

Thanks for reading . . . .

Jeffrey Ishmael

When SOX is undermined by the actions of management…..

April 25th, 2008 Comments off

     With only the best intentions, the Sarbanes Oxley Act was enacted in 2002 as federal law in response to a number of high-profile accounting scandals that rocked the financial markets and individual investor trust.  The Act also established the formation of the PCAOB, or Public Company Accounting Oversight Board, which is entrusted to oversee, regulate, inspect, and discipline the work of accounting firms regarding public companies.  The Act also provides guidance on major other issues such as auditor independence, corporate governance, internal controls, as well as enhanced financial disclosures.

     With almost six years since the passing of SOX, the vast majority of public firms have moved well beyond the implementation, testing, and validation phase to now begin working on new major projects.  Further, I have been seeing a shift in the demand for new candidates softening in this area since most implementations are complete and internal audit departments are established.        So all of this must be fantastic for the individual investor and trust must certainly be building exponentially in the public markets?  Right?  Not necessarily……      Let’s take a look at one company, who’s management seems to have undermined the effectiveness of SOX through ineffective forecasting, poor communication, and inattention to key corporate performance indicators.  My company of choice for this analogy is Crocs, Inc. (CROX).

 

Read my full commentary in Undermining Sarbanes-Oxley .