Being a CFO and other topics

Airplane movie review – Creed

On March 26, 2016

One unfortunate part of my job is the fact that I am on planes a lot. Not for short flights, for long ones. I have the habit of watching movies when they come out if I am interested, so normally there is not many movies available on the plane that I want to see, so instead I listen to books or read comics or work or write a blog entry or two.

This flight was a little different. I had missed Creed when it came out and had wanted to see it. So when I looked at “recent hits” on the screen, preparing to be disappointed again, I was happy to see that Creed was available.

When I first heard about the film I was somewhat taken aback. I thought that the sixth film in the series, Rocky Balboa had pretty much summed up the character and there was no where else to go. He was done as a fighter and he had finally put Adrian behind him. Loved but now open to other possibilities. So a “reboot” didn’t make that much sense to me. Sylvester Stallone is far to old to play a fighter and his story had seemed to have ended in a good way.

Creed is the story Adonis Johnson, an illegitimate son of Apollo Creed, Rocky’s opponent in the first two Rocky films and who was killed by Ivan Drago in Rocky 4. Adonis starts the movie in some sort of juvenile detention system and he is fighting against a larger kid there. Mary Ann Creed, Apollo’s widow, comes to the institution and takes him in. The next you see of Adonis is him fighting and winning in Mexico and then going to his financial institution job. He decides he wants to be a fighter and quits his job even though he just got a promotion. His mother (they live in some sort of large house or mansion) does not agree with that choice and does not want him to fight and risk his life like his father did. Adonis tries to get accepted at Delphi Gym, the local high end gym with great boxers and connections to his father but he is rejected. He decides to go to the East Coast and find Rocky to get him to help. Up to that point, Adonis claims that he is entirely self taught (15-0 in Mexico).

The rest of the movie is a typical boxing movie, especially ones after Rocky. Donnie (Adonis) finds a love interest, a singer-song writer who lives in his building. He keeps trying and trying to get Rocky to train him. Rocky says no but after a scene where he visits the graves of Adrian and Paulie, he changes his mind and starts to train Adonis. After some training, Adonis gets challenged by a local up and coming boxer. Rocky does not think he is ready but Adonis wants the fight and Rocky starts to train him full time with full intensity, including bringing in an experienced fight team.

The story rolls along with a few twists and turns, Rocky is sick, trouble in the love relationship, and a challenge by the reigning champ who wants a fight because it is now known that Donnie is Apollo’s son. It ends with the big fight (which follows the first Rocky fight in many ways) and then Rocky and Adonis climbing the library steps in Philadelphia and looking down over the city.

As a boxing film, it is engaging. The formula of train and then get your lucky break where you have to dig deep and find a way to win is old but still works well. The boxing scenes are well staged. There are more and more brutal punches than I ever see in real fights, but they are exciting and the rounds are obviously condensed to highlights so the extra energetic fighting is not too jarring. Rocky turns out to be a pretty savvy cornerman and gives good advice to Donnie. I thought that Stallone turned in an excellent performance and deserved the recognition he received in terms of award nominations. Maybe he did a better job in Rocky Balboa and was over looked, but he does well in Creed.

I could end the review here and just say that it is an excellent plane movie. Engaging and simple story that moves along well enough and ends with a nice emotional payoff. However, there are a few things that did not quite work for me. The first is the background story of Adonis. He has a big emotional issue over his father who died before he was even born and he appears to have had a hard time up to whenever the scene in the institution is, but he looks very young then and obviously had a good upbringing and loving relationship with Apollo’s wife becoming his mother. There is not really any grist for the mill for motivation there, so later when Rocky is telling him to channel all his frustration from the past, I didn’t get how he had anything to draw on.

The second is the physical build of the actor (Michael B. Jordon). He had worked with the director in a previous film, Fruitvale Station, but he seems too small to be credible as a light heavyweight. He looks well sculpted enough, but is very thin and the other fighters look much bigger than him. Finally, the style he is fighting with is a very Rocky style where he absorbs punishment and just does not go down, but it doesn’t fit the actual character there in the movie. It is not too bad, but it was a little distracting to me. The love interest also seemed a little superficial.

Finally, Rocky seems to have taken a big step back after the last film. His son moved away and doesn’t seem to have that close a relationship with him. Paulie is dead. He is once again visiting Adrian’s grave and no love interest or relationships from the past films. Almost like Rocky Balboa never happened. Rocky is definitely the supporting character here, but I grew up watching those films and it makes you wonder.

So the movie is good and I recommend it. The final scene in the steps would be a good send off for the Rocky character. Creed sets the stage for maybe a new film series but one that does not really need Rocky in it. I won’t give stars as I have no real benchmark, but is is not the greatest Rocky movie but it is solidly in the middle compared to the previous 6 and that is good enough.

Creed (Blu-ray + DVD + Digital HD Ultraviolet Combo Pack)

Magic the Gathering – Planeswalking for fun

By Michael

On March 24, 2016

In Gaming, Magic the Gathering

Last week I did a top level blog on board games and I previously did one on Dungeons and Dragons. This week I will tackle something a lot more difficult, discussing the collectible card game Magic the Gathering. There is a link between MtG and D&D, both are owned by a company called Wizards of the Coast which is a subsidiary of Hasbro. For the rest of this blog I will just say Magic instead of Magic the Gathering as that is what most players call it. It was the original name for the game before it was decided that Magic could not be used as a trademark. It was also a “Deckmaster” game which is on the cards today but has not been used in any real way since almost the beginning of the game.

Magic has been described as one of the best games invented. It also is a tremendous profit center for Hasbro. I am not going to go into the origin story of the game, it has been told many times before and it is easy to find with a search. One of the key innovations was a random assortment of cards (15 in total) sold in a pack not much different than hockey cards (OK, baseball cards for my mainly American reading audience). Unlike a pack of playing cards, you did not get everything you needed to play in one pack and you did not know what was in the pack before you opened it. Today the game is going strong with both physical packs and digital packs being opened in record numbers. Even online, you still open a pack of 15 cards at the same retail price as the physical cards. The collectible nature of the game added an extra foundation to the game. WoTC still protects the original collectors be promising not to reprint certain cards.

Although I will not explain the origin of the game, I will cover the basics. Each player, and the game is usually played as a two person game, best 2 of 3, is considered to be a planeswalker. The game universe accepts that there is a multiverse and the planeswalkers can move from universe to universe. The energy source is mana and the mana comes from the land beneath you and it comes in 5 favors linked to the type of land plus “colorless” mana that does not come from the land. The colors of mana are white, blue, black, red and green and they are five points around a circle to represent the colors and the adjacent colors are allies with each other and the opposite colors are enemies. The land types are plains, islands, swamps, mountains and forests.

You use the lands you play from your hand to generate the mana you need to play other cards. The more mana a spell requires the more powerful the spell is (not always, there are better cards and worse cards printed but that rule normally works). You can only play one land a turn (all rules can be changed or broken) so powers ramp up over time and you also need the right color of mana for the spell you want to cast.

Spells are divided into a few basic categories. Creatures, sorceries, instants (faster sorceries), enchantments and artifacts. Since a main part of the game is that rules can be changed or broken by the text on any card you can only take that as a general guideline. A basic spell just needs one specific color mana plus any other color to cast. Some spells (called gold spells) require more than one color of mana to cast. Some spells resolve immediately and some stick around. Creatures are a good example of a basic spell that sticks around and can attack or defend in the future (all rules can be changed and creatures can die and can be resurrected). Each land type/color has a basic personality (search Mark Rosewater color pie if you want a detailed explanation of this).

Each player starts with 20 life and the game ends when someone goes to zero life or runs out of cards to draw. There are three typical ways to play. Constructed decks are at least 60 cards with no more than 4 of any one card except for lands (these have additional restrictions and rules an change based on cards played). Sealed deck is played with 40 card decks built. From a card pool you are given (normally sealed packs plus extra lands). Draft is also played with a minimum 40 card deck except that you choose the cards you play with by opening packs and choosing one card and then passing the remaining cards to your opponents.

This may all sound complicated, but WoTC has invested a lot of time and effort into teaching tools and apps. Just go to www.wizards.com to the Magic section and look for the PC or smartphones apps and you can quickly learn how to play.

The true genius of Magic is that the text on the card can modify any rule. Usually a card does not modified a standard rule, but they can. The mix of the randomness that comes from shuffling cards, the rules not being constant and the skill that each player brings creates a game that is not only just worth playing but a game I think that everyone should try at least once.

Just to give some examples:

Hockey cards (collectible)

Basic land types

Normal spells (including a foreign language card)

Non-standard lands, artifacts, and spells that require more than one mana color

Foil, mana color choices, land that makes no color mana, a card that contains two cards and a card that has been printed at different rarities over the years.

As can be seen from the pictures, the most prominent part of each card is the art. This was another decision made early in the game development. The art makes each card distinctive and easy to identify. I own several original art pieces that I purchased from the artists that created the art for the game.

The second major element of the game is the rules box below the art. This is where any additional rules or effect that the card has are described. The top and bottom is used to display the basic parts of the card that do not vary too much from card to card. These are the mana cost to play the card, the card name, the card type, and if a creature, the power and toughness of the creature. The rules text explains the rest of what you need to know about the card.

The cards and the game itself is fun, but the social scene around the game is another key part of the appeal. The game is so large and successful that WoTC runs a Pro Tour with a large structure around it. New cards are released on a regular basis and existing card are rotated out of standard play so the game is always changing. There is a large internet based community that is constantly refining new decks. As a physical game, you need to play in person against other players and that represents a social outlet and chance to meet new people. The game is global and published in many languages so even if you travel to China you can find players.

I enjoy the game because it is a good game. But I ended up loving the game because of the people I met and played with. When I started playing in my current town in the SF Bay Area, I quickly found a store and ended up with a good social network from the players in the store. One of the regular Magic players I met then is playing D&D with me now. When I moved to Singapore, there was a team-based tournament and I reached out on the Internet to find a teammate and to this day the guy I found (Gabriel) is a good friend. I traveled to NYC and met BDM (Brian David-Marshall) who was running the main store in NYC for Magic when I met him. BDM is a journalist and historian covering the game and the Pro Tour and when he traveled to Singapore he already knew me and met Gabriel. So he was able to sample local food recommended by a local. He has returned the favor to me in NYC several times.

Magic is a friendship game. Anyone that has been playing it for a while and goes to competitions quickly expands their social circle. Any city or town that has a hobby store that sells Magic will have a Friday Night Magic tournament (normally draft) and you can meet locals there. I have been in some small towns and still met Magic players. You can play online as well, so even if there are no local players, you can always find someone to play with. I met pros like Jake and John and just regular people that liked the game and everyone was always friendly.

One more ironic point. I bought Hasbro stock a few years ago under the theory that their dividends would cover what I spend playing Magic and it is now one of my absolute best performing stock.

So reach out and feel the mana in the land beneath you. Cast some spells, meet some people and enjoy yourself. Just be warned that the game is nicknamed cardboard crack and it can easily draw you deep within itself.

Non-Deal Roadshows – what happens on them?

By Michael

On March 22, 2016

In CFO, Investor Relations, Working With Investment Banks

Last week I covered investor conferences, this week I will discuss non-deal roadshows (NDR). In a typical company, NDR are the second highest source of in person meetings with investors (conferences tend to have the most meetings).

In many ways, NDR are very similar to investor conferences, they are another form of corporate access run by the banks that being management to meet with clients of the banks. Their difference is that the meetings are in the offices of the investors instead of at the conference site, but otherwise the meetings are similar in format to those at investor conferences. They are either questions and answers directed by the investor, a review of the standard investor relations presentation by the company or usually a combination of both. Regulation FD (fair disclosure) is still in full effect, so no material, non-public information can be discussed. You need to be extra cautious on any answers related to disclosure as you cannot confirm guidance as the SEC considers that as giving new guidance.

The main reason for doing a NDR is that it greatly increases the chances of you talking directly to portfolio managers or other key decision makers. These are the people that make the buy or sell call on your stock and they normally do not go to conferences on a regular basis. Normally they send their analysts to conferences. Another important advantage is that the larger firms with multiple funds often send multiple analysts or portfolio managers to your meetings where in a conference they normally only get one slot. So you directly access more decision makers at once. For the large companies, who and how many attend can be a good indication of how deep and broad the general interest at the firm is.

Logistics

Banks normally ask you to do a NDR for them. If there is significant demand, you may even get requests from banks that do not cover you. I recommend sticking to the banks that cover you as a courtesy and payback for the effort they make, but there might be a specific reason to use another bank. If no one has asked you and you want to do one, reach out to your covering analysts yourself or the investment banker that covers you.

Meetings are normally arranged by the sales force with the assistance of the analyst. If you remember from my blog on working with investment bankers, the sales force works for “the desk”, so your banker can help give a push inside the bank. So even if the analyst asked you to go out for them, there is no harm in mentioning it to your covering banker.

You can arrange your own meetings or suggest investors that you are targeting or that have requested a face-to-face meeting. The bank will want to limit the meetings to their clients and different banks have different tiers they service (large banks do not have many small clients while smaller banks will have more small clients). Even if you are suggesting a meeting, it is good practice to tell the investor to contact the bank and ask as well. The sales force may appreciate a chance to pitch to a client and start a relationship.

You are expected to make your own travel arrangements and pay your own hotel and meals expenses. The bank almost always provides local transportation at the city where the meetings are happening. Meetings are typically booked in 1.5 slots with 1 hour of meeting time and 30 minutes of travel time. In some cities the travel time is reduced and sometimes when there is big demand for meetings the meeting time gets crunched down to 45 minutes. Expect a long and tiring day, so try and get rest before the meetings. If demand is really large, expect a group lunch or dinner. Otherwise, make sure you eat.

Typical cities

This will vary, and I am writing as a USA-listed company CFO. I have lived in Asia, so I have more experience there, but not as much in Europe and none in the Middle East.

New York and Boston

These two have the most funds and have the most investment dollars available to invest in US companies. When you are offered an NDR, the analyst, who is at least partially paid based on trading volume run through his firm, will wants to do meetings in these two cities. I don’t mean this to be a travelogue, and I would assume that most people are familiar with the cities. NYC is bigger and even with the high density of funds, there can be lots of travel time from place to place. Very often you will get to a meeting faster if you walk. Traffic can a very, very bad. When the UN is opening a session or the President is visiting (or another major leader like the Pope), bad traffic can turn into a nightmare. Boston is a little easier to navigate as the central core where most of the funds are is smaller. There are several very large funds in Boston where you could draw a large crowd if they are interested.

There are a few pockets of investors outside in the greater NYC area, but normally the time it takes to get to New Jersey, Connecticut or Philadelphia is not worth it. NYC tends to have more hedge funds. Boston a bigger concentration of more traditional mutual funds. Both cities draw lots of management teams and the funds are not as excited about that as other cities are.

If you are traveling between the two cities, I suggest the Amtrak Express train. Much less affected by weather and the stations are right in the middle of where your meetings are. One major fund company is a cross the street from South Station in Boston.

Give yourself extra time, especially in NYC, to show ID to enter every building. Security can be tight. Make sure you bring picture ID.

London and Europe

This is probably the location with the largest concentration of investors. A few other cities like Zurich and Frankfurt have a good amount as well, but London is the biggest. My experience here is much more limited, but I have been to both conferences and NDR in London. Not too different than NYC where the concentration is good but traffic and the sheer size of the city means that getting from meeting to meeting can add delays. I was stuck behind the Queen in a horse drawn carriage once in London as some ceremony in the Parliament had her traveling and the traffic loop in from of Buckingham Palace is a main route to and from the City. You can end up with a few meetings pretty far apart and the Tube is the best bet to avoid traffic in that case.

Zurich, Geneva and Edinburgh are other cities that may be worth a visit. I have not been to Frankfurt or Paris but both have fund managers there as well. If you are already in Europe anyways, it may be worth an extra day or two to visit cities other than London.

Hong Kong

Like NYC, this is the city with the highest concentration of investors and probably the one where you are most likely to walk from meeting to meeting. The walking is through a maze of shopping malls, so a local guide is good. A lot of American and European funds have their Asian office here, so if there is an Asian connection to your company it is a good place to visit. Many hedge funds here that are either local money or branches of other Western hedge funds.

Singapore

I lived here for a few years and was CFO of a company listed in the USA but HQed here, so I did quite a few NDR there. You probably will not do too much walking here because of heat and humidity but the central core with most of the funds is not that large. For the most part, the funds here also have an Asian theme so not as much demand for pure American companies but if you have flown to Hong Kong it is not that far to Singapore. The sovereign wealth funds here can be good, long term shareholders if they are interested.

Smaller USA cities

One you get out of NYC and Boston, it does get harder to fill a whole day with meetings in most other cities. However, there are probably 10 other cities that have enough funds that a visit is worthwhile. One big benefit is that management teams do not travel to these cities anywhere near as often and you are much more likely to meet with a portfolio manager or other investment decision maker in a smaller city than a larger one. Smaller cities tend to have smaller accounts and make a good match for any smaller banks that cover you.

The meetings themselves

As always, I suggest that you do not go to the meetings alone. Running around NYC or other cities can be a logistical nightmare, and having a friendly person in the room with you can help protect you should strange trading happen while you are doing the NDR and people wonder what you said.

Your covering analyst will often go to meetings with you. They will write a report after the NDR, usually after giving their clients a couple of days to act themselves. This is a good chance to make sure they know you story better and can articulate the points you were making in the meetings. You also will get to spend more time and develop a better and more personal relationship with your analyst. I have never met one that was not overworked and understaffed, and spending 2-3 days with you on an NDR is a pretty big commitment. Understand that and try and return the favor, even if it is a few kind words about the analysts to the accounts they cover.

The other person that may attend your meetings in the sales person that covers the account. It might be tempting to think they are not as important as the covering analyst, but they are the ones with the day to day relationship with the people that may be buying and selling your stock. Many are very experienced and meet management teams all the time. Saying a thank you for their help and asking them what their clients are worried about might give you a good tip or two. I do know a good sales team makes a difference for your covering analyst and it doesn’t take much effort to show appreciation for the meetings you set up. If you ask in advance, the sales force will print your standard presentation out and make sure that their accounts have a copy. When they can’t attend the meeting, they might give you a copy to leave with their client.

Some accounts, especially in Boston, do not allow banks to attend unless on a deal roadshow.

The meetings with the investors themselves are quite different than at conferences, if only because they are in their office. You probably are meeting with some of the most senior people at the firms you are visiting, so listen to what questions they ask and ask a few questions back to them as well. I have always found the very big funds in Boston are the most courteous and respectful but they are also super professional. The notes from your meeting will go into a database and they keep track of what you say and what happens. The meetings are very much part of judging you as well as the company and the person that could be pulling the trigger on very big investments in you is asking you questions.

Like any marketing speech, you need three to five key points you want to leave at each meeting. Make sure you know what they are and deliver that message each time. You really only have time to do a few NDR a year at most, so make it count. Unlike investor conferences and talking to analysts, talking to portfolio managers at their offices can lead to quicker decisions.

Beating the Street

One Up On Wall Street: How To Use What You Already Know To Make Money In The Market

Book review – Robert A. Heinlein’s Starship Troopers

By Michael

On March 20, 2016

In Book review, General, Uncategorized

As always, my Sunday book review is presented as a suggestion just before you are going on a trip with a link at the bottom to the kindle version so you can download it right before leaving on your trip. I am picking interesting and easier reads to help distract and entertain, not meatier tomes.

This week’s book is a SF classic and Hugo award winning**, Starship Troopers by Robert A. Heinlein. The book is a very straightforward story about the creation of first a soldier and then an officer. We meet the soldier, Juan “Johnnie” Rico, in the midst of a raid on an enemy called “Skinnies” who are allies of the Arachnids of Klendathu who are at war with the the Terran Federation. The. First part of the book is a simple and action filled account of Johnnie conducting his raid as part of a unit of Mobile Infantry that use suits of futuristic body armor to augment their abilities to fight. The raid is meant to smash and terrorize the Skinnies in the hopes that they would abandon their alliance with the Bugs (as the Arachnids of Kendathu are called in the book).

The next two sections of the book are of Johnnie in high school, and in particular with his History and Moral Philosophy course, taught by retired Lt. Colonel Dubois and boot camp. That particular course in HS is important in the book and there is a theme of taking responsibility throughout the book. The discussions with Lt. Colonel Dubois are the main way that the philosophy of the Terran Federation is explained, not only in the chapter when he is in high school, but in flashbacks during the rest of the book. When I read this book as a teenager, the discussions had a big impact on me. As an adult, I can tell that many of the things discussed were somewhat set up as a straw man with the hero knocking down the straw man, but even today it makes me think. The high school section ends with Johnnie joining up for Federal Service and falling out with his father.

I do not want to spoil the whole book in this short review, but the pattern is similar to many other military fiction books with book camp preparing Johnnie for war and then his war experiences showing just how unprepared he was. He eventually becomes an officer and there is a good combat scene at the end of his training with several returning characters.

The book was first published as a serial and then as a novel in late 1959, and many of the foundation technologies that as discussed in the book are extrapolated from that time. For a book of that time, there are a lot of social advancements that happen without any real comment. Johnnie’s real name is Juan and he is a Filipino, but there is no mention or reaction to him not being white in the book. Although there are no women in the book’s Mobile Infantry (the film adaptation does have this), women also sign up and serve in active combat on the ships that transport the Mobile Infantry and ships do get blown up pretty often, so women in the story are dying in combat as well. Again, there is nothing special about this in the book.

The society Johhnie lives in is certainly militaristic. You cannot vote or hold public office unless you serve your Federal Service which is military service. There is a strong theme of appreciation for the common foot soldier, and Lt. Colonel Dubuis knocks down several anti-war straw men during his lectures. However, I do not feel the book glorifies war. Johnnie suffers person loss from it and the Federation has at least one major defeat. The role of the common soldier is held up, but more because they are putting their lives in harms way to protect others than anything else.

Heinlein is an excellent writer. He is quite skilled in writing dialog. Even the real technology bloopers he extrapolates are written well. The action scenes move along well and the fighting technology of the Mobile Infantry suits is well thought out and even amusing every once and a while.

There are few books I have enjoyed more than Starship Troopers and my youngest daughter recently read it and was fascinated by it as well.

** Hugo award is an annual award chosen by paid members of a large SF convention called Worldcon. I have never read a novel that won the award that was poor, but they certainly have picked books that compare unfavorably against other books with the passage of time and more critical thought.

Starship Troopers

The movie

There was a movie version of the book made. They do not have the powered fighting suits, but otherwise I have always thought that they did a good job with capturing a lot of the story and the society in which Johnnie Rico lived.

Starship Troopers (+ BD Live) [Blu-ray]

Board Games – New types of fun

By Michael

On March 17, 2016

In Gaming

I was the president of my high school and my college’s war gaming clubs. So it should be no surprise that I like board games, and the fact that I play D&D and Magic the Gathering as well makes this extend to table top games in general.

There was a time in the 80’s and into the 90’s that it was thought that board games were a dying breed. Sales stagnated and went down and video games seemed to be the replacement. There were not that many new games sold in the USA and the old standbys like Monopoly, Clue and Life were rarely played. Even games like Risk which are more involved than many other games only had a basic level of popularity. All the popular games relied on dice and being random.

In fact, while the then mainstream games were dying out, other games were growing in the background. Dungeons and Dragons is a good example. It started out in a small crowd that liked miniature war games and then hit critical mass and started be played all over the country. Magic the Gathering was release in 1993 and was an immediate hit and has grown in popularity every year since. My war gaming interest introduced me to Diplomacy which I still think is one of the best games I ever played and probably has the most total hours of game play for me in a board game (D&D and MtG best it but are not board games).

Diplomacy was actually a template for the games that would come over to the USA and restart board game playing. They are generally called Euro games or German games. These games tended to have a few distinct features, and one of these was that they did not use dice to control movement or to resolve a game element. They were not a random chase across a board. They also tended to be symmetrical in that each player started off with the same resources. A lot of the games were around gathering resources and building something, not a direct competition to attack and take out the other player. Chess is a good example of the symmetrical start and the non-random game except it is much more combative than the wave of games that came from Europe. These games were competitive, but you generally were not attacking the other player.

One example is Settlers of Catan (which is now just called Catan). This a very typical “German” game right down to as little as possible text on the board or the cards being used in order to increase international appeal. The game uses tiles which are either randomly drawn and placed or placed in a specific manner to make the game as fair as possible for all players. The quality of the components is high compared to the usual American family board game. The rules are simple enough, but allow for deep strategy. The game is a resource gathering and building game, and you can target other players (move the robber to get them) but it also allows for trading between players which rewards social interaction. Last time I played, my 13 year old daughter won the game.

Similar games in component quality and abstraction moved over from Europe to the USA (Puerto Rico and Ticket to Ride are two other examples) and interest in board games grew. The Internet made it easier to discuss the games with other players (www.boardgamegeeks.com is a famous and popular site for this). New designers in the USA and Europe still faced pretty large obstacles in getting a game out. The developer either had to front the large cost of ordering the initial games to be sold, or they had to interest a game company with no past sales to attract them. That problem has recently been solved by crowd funding sites like Kickstarter.com. As crowd funding grew more acceptable and popular, designers could launch a campaign online and raise the funds needed to do the first printing.

Kickstarter not only helped many new Euro Games get started, it also helped to fund a whole new generation of card and miniature based games. I recently started buying games there starting with a superhero card game called Emergents Genesis and I have since bought several others. Also, companies like Fantasy Flight games published quite a few hits without using Kickstarter like Arkham Horror (Call of Cthulhu based) and Star Wars: X-Wing (a miniatures based space combat game using the ships from the Star Wars movies). Game sales grew and grew over the last 10 years and it is now a popular pastime again.

The availability of better and more interesting games is good, and Kickstarter and similar sites are helping fund new games, but it still does not solve the one basic issue of playing board games. – you need a few people to all be available at the same time and place. There are two solutions to that problem plus other options as well. If you play a very established game like Magic the Gathering, it is pretty easy to find a specialty store that will have players plus Wizards of the Coast has an organized play network including a professional tour. MtG is worthy of a blog in and of itself, and I will do one soon.

Very often the same stores that sell MtG and offer play space for it also sell and offer play space for board games. One other increasingly popular option is board game café’s which are coffee shops built around offering play space for games (including supplying compiles of some games) and building a group of players that love games and are there to play. One final option is www.meetup.com which very often has groups of board game enthusiasts who meet several times a month at different public places.

These type of meet-ups are good for someone who travels a lot to strange cities and has lots of nights alone. It is a good way to meet locals and get some games in against new opponents. Maybe even get to play some new games. I have stopped in local stores to play MtG for years when traveling on business and I plan on starting to stop by some board game cafes in the near future.

I’ll list some different games at the bottom of this blog in case you are curious After reading about it. I will be doing game reviews as well like I have been doing book reviews and I have a large stack of games I will be playing through. One thing that is very different from the old games I played are the quality of the components today. The Cthulhu Wars game has detailed game pieces larger than an average banana and the Arcadia Quest figures are also very detailed and in a fun style. Pandemic is a fully cooperative game where the players try to beat the game, not each other and everyone wins or no one wins. If you want a social gathering game that is quick to learn and play, the card game Fluxx where the rules are constantly changing is quite good.

Enjoy the pictures and I even did an unboxing video for Cthulhu Wars. I will try and figure out how to get it onto YouKu so that readers in China can see it.

Games I recommend

Catan 5th Edition

This is a classic example of a Euro or German Game

Cthulhu Wars

This game is a big commitment in terms of cost, but the playing pieces are amazing and the game play is very deep.

Emergents – Genesis SW

This is the deck building game that got me into Kickstarter. A friend helped to design it and market it. Not a video game even though that is the category.

Arcadia Quest Board Game

A fun RPG game in board game form. Nice game pieces.

Fluxx 5.0 Card Game

Card game where the rules are constantly changing

Pandemic Board Game

Cooperative game – you all win or you all lose.

Star Wars: The Force Awakens X-Wing Miniatures Game Core Set

Play out the small ship space battles from the movies (many expansions)

Diplomacy

Strategy game where the art of a well timed backstab is key to victory

Ticket To Ride

Another classic Euro game

Investor Conferences

By Michael

On March 15, 2016

In CFO, Investor Relations

A pretty standard press release from most public companies is an announcement that their executives will be attending a conference sponsored by a bank where they will be meeting investors. I’ll try and use this blog entry to describe what goes on at a typical conference and how to get your company invited to one. Unfortunately, these conferences tend to be invite only for the investors and they invite professional investors that manage money for mutual or hedge funds for the most part. There are conferences to meet angel investors or other forms of venture capital, but that is not what I’ll discuss here. Some conferences invite some private companies as well, but usually the presenting companies are all public companies.

You normally will want to go to a conference because it is a chance to directly talk to existing or potential investors. Almost every single potential investor will have evaluating management as one of their investment criteria and meeting in person is important. A non-deal roadshow is typically better because you meet more portfolio managers or other top decision makers, but conferences are an efficient way to meet many different investors all on the same day.

The first thing you need to do is get your company invited to the conference. These are run by the research division of the bank and legally they are separate from the investment bank services. So the banker you may have a relationship with can ask that you get invited but there is no guarantee (it almost always will be honored). If you are covered by the research group, you will almost automatically get invited to their relevant conferences. One service they offer to their customers is access to management and the conferences they run are very important to their marketing.

As coverage on your company grows, the number of invites to conferences also will grow. You will get invitations by banks that do not cover you. At a certain point, you will start to have to make choices about which conferences you will attend because you will get invited to more than makes sense, but that is a good problem to have. I tend to focus on and choose conferences held by the banks that cover my company to try and repay the resources they are spending on us, but you may also be building a relationship with a bank in the hope of getting coverage so that is just a rule of thumb.

Once you are invited, you need meetings. Normally, these are arranged by the sales force, sometimes with your analyst pushing. The investors that are attending have the list of attending companies and they normally request the companies they are most interested in. I generally try and be as efficient as possible and only sign up for one day if there are multiple days available. If demand is high, then you end up with some meetings of smaller investors that are 2 on 1 or 3 on 1. If demand is very high, the bank will ask for another day.

Conferences are a good opportunity for you to bring other staff along to learn something about investor relations. If your Controller has a goal to be more involved in IR, a conference can be good training. Since you are not doing a deal and because the meetings are a little more controlled and private, a conference is a good place to do some training and allow more staff to answer some questions. For local conferences, I have brought along the staff analyst who helped prepare the presentation. It is a good opportunity for them to see what questions you are asked and helps for the next version of your IR presentation.

I always try and have at least one other friendly person in the room with me. I do this for two reasons. The first is so that you have someone to help by giving you a break and answering a few questions or who can handle logistics like the presentation slot prep work. Although I have not actually had this happen, it is defensive as well. In case there is any doubt what was said in the meetings, you have another witness with you.

Conferences typically have two different ways of talking to investors. The first in private meetings, usually in one of the hotel rooms. They remove the bed and replace it with a small table and chairs. Most of your day will be sitting in that hotel room at the table talking. In a conference with normal demand, you will be answering questions from 8 AM to about 6 PM with the investors changing every 30 to 45 minutes. When I first started, it used to be common for management and investors to be constantly changing rooms and often dashing from floor to floor, but now the organizers tend to keep the companies in one room and the investors rotate.

I cannot emphasize it enough that you need to be prepared to be talking pretty much non-stop the entire day. Some meetings with just be you reviewing your standard presentation. Usually that is for investors that do not know your company or your sector very well. It can be a little frustrating to realize that you have potential investors in front of you that know little to nothing about you. You would think that they would do so,e homework before getting in front of a senior executive or that the covering analyst would have prepared them. However, many analysts use conferences to develop new ideas on companies or areas that they may become more interested in. Quite often they do not know your covering analyst as they have not really started to do any work yet. They have not done a lot of research on you yet either because they have not decided if you are worth it. So this initial meeting is your chance to make a good first impression. Of course, some people just randomly take a meeting to fill up their day and really should have done more work in advance, but you do want to talk to potential new investors so a few meetings like that can be good.

The other style of private meeting is just questions and answer. You never quite know what questions you’ll be asked and exactly what the topic will be. Time passes a lot quicker because you’re answering questions instead of doing your prepared pitch (which can get dry and boring if you do it often enough). You need to be careful when you answer questions because reg FD is in full effect – you cannot reveal any material, non-public information. You need to be particularly careful about guidance. You cannot reiterate guidance or change guidance. The SEC views both as new material, non-public information. Any past guidance needs to be treated as a historical fact, and you cannot express a current opinion on it.

The whole private meetings content is somewhat ironic. You are not supposed to reveal anything new that is material. You can give out some explanatory color around your public statements, but you need to be extra careful about what you say. That means in your scheduled meetings and in social events at the conference. Essentially the meetings should be about assessing management and filling in tiny holes in the public disclosure.

As an aside, it is not uncommon that someone does not show up for one of your meetings. Things happen and plans sometimes get changed. Let the event organizers know and ignore it. If there are a lot of cancellations maybe the demand was not too high and the sales staff tried to stuff a few meetings in but their clients changed their minds. Nothing you can do about it at the conference, so don’t let that effect your other meetings.

The other event that usually happens is some form of presentation. This is either you doing you pre made presentation or some form of fireside chat or panel in which the covering analyst asks you questions. If the conference offers the opportunity to webcast these, then take it. Each person at your individual meetings probably invests an order of magnitude more than any retail investor, but your retail investors are usually the largest investor, in aggregate. They are usually starved of any direct contact with management and the earnings call and anything you webcast from conferences is the only chance they will have to hear you speak.

No matter what, whether in one-on-one meetings or in the presentation, you need to have your key talking points decided before the conference even begins. Like a politician, not matter what the questions are, make sure that you deliver your message. This is an absolutely key feature of the conference. It is a chance to hammer home a specific message over and over.

When you are done, you might be thinking if what you just did will impact the stock price. There might actually be a big move around a conference but that is normally caused by groupthink of all the investors there. They tend to know each other and talk. If there is a good and positive vibe that comes from the conference they get excited. If they pick up a lot of negative body language from a lot of management teams they may get down on your sector or the market as a whole. Otherwise, as a general rule, you are talking to an analyst at the investor fund and they need to get back to the office and do a report to their boss, the portfolio manager. If they like you and convince their boss to invest it might be a week or two before any decision is made. If there is an immediate move in your stock at a conference you need to consider if you have out material non-public information. If you did, involve your lawyer right away and there is a good chance that you need to put out a press release.

The final advice I would give is that other covering analysts often ask you to meet with their clients while you are in town, or even do an NDR and you should say no. As a general rule, it is considered to be impolite to book client facing activities around the conference. So meeting with the analyst themselves is ok, but if you do client meetings you will distract attention from the conference you are at. So unless there is a very compelling reason, politely decline client meetings except at the conference.

(picture taken at Dana Point, CA at the one conference a year with that type of scenery)

Book review – Brandon Sanderson’s the Reckoners

By Michael

On March 13, 2016

In Book review

As always on my Sunday review, these are books I recommend if you are about to go on a trip and are at the airport want to download something to read. I have tried to pick books that are entertaining and will help to pass the time, and all are books I have read myself.

This week, I am doing a mini-review of the Reckoners trilogy by Brandon Sanderson. These books are actually targeted at the young adult (YA) market, but the story and characters are interesting enough that I think that the YA target doesn’t detract from their appeal. Just be prepared for no swearing and where the lead character kissing one of the woman characters is a very big deal. At least if you like these books you can pass them onto your kids and not be concerned about what is in the books.

I actually prefer his Mistborn/Well of Ascension series more, but the Reckoners is less involved and very entertaining to read. The series is set in an alternate version of our world where an unexplained explosion in the sky which came to be called Calamity gave some people super powers. These people are called Epics. Unfortunately, using the superpowers causes emotional changes and a form of madness where they become amoral tyrants.

David Charleston, the main character, sees his dad shot down in front of him in a bank by a very powerful epic called Steelheart. The explosion in space that created the Epics happened when he was 6 years old and his father was killed when he was 8. Steelheart is one of the most powerful Epics (a High Epic) and rules Chicago. He is able to transmute other materials to steel and he is invulnerable. Most of the top Epics are immune to any regular way to kill them. All Epics have a vulnerability that shuts down their powers. The story really starts with David as a teenager burning with the desire to get his revenge on Steelheart. A shadowy group called The Reckonors hunts and kills Epics and David forces them to let them join them because he knows a secret about Steelheart. When his father was killed, David saw Steelheart bleed.

That is the basic set-up. The world is a dystopia with the calamity explosion causing a permanent twilight and with the super powered Epics being tyrants all over the world with the basic governments all shut down and the USA now being the Fractured States. David wants to kill Steelheart in revenge and the Reckoners want Steelheart dead too. The action ramps up quickly and the small band of heroes goes toe to toe with powerful Epics. There is teenage romance, drama, misunderstandings and heroism. Secrets of the world slowly get revealed. Cliffhangers and heartbreak follow.

The books are comic book action in written form. There is some character development, but I would call it more plot development that changes the characters. The story is fun and lots of twists and turns happen throughout the books that keep you locked in and interested. The books are very enjoyable and I stayed up too late finishing them. I actually listened to them via Audible.com instead of reading them, but I ended up buying them in book form because my youngest daughter (13 years old) loved them and wanted to read them faster than just listening to them.

If you want a fun read and like a good mystery that is revealed, I highly recommend trying the Reckoners series.

(And for people who have been reading SF for a long time, yes, the notional origin and then people gaining powers is similar to the Wildcards series.)

Steelheart (Reckoners Book 1)

Firefight (Reckoners Book 2)

Calamity (The Reckoners)

Reading Comic Books the modern way

By Michael

On March 10, 2016

In Comic Books, General, Hobbies

With the recent success of super hero movies and TV programs, especially the Marvel Universe movies, liking comic books is solidly back in the mainstream. That is probably a little bit of an exaggeration as comic books have been widely popular for decades and decades. They are about the purest example of popular fiction out there and for a very long time the comics code authority kept them no worse than PG rated and a G rating was probably closer to the truth except for the violence.
What I think happened is that the mass market appeal dropped in the 1980’s and they started appealing to the collector crowd and not so much to the regular kid. Newsstand sales became much less important and specialty comic book sales became more important. There were still plenty of Saturday morning cartoons and I don’t think there ever was a period without at least a TV show that was super hero based in some way, but the comics themselves moved solidly up in printing quality and cost and moved away from dime sales to younger kids.
So there was a whole portion of the nerd population that was into comic books when the average person wasn’t. The late 1970’s and the 1980’s was my period of reading comics in a more classic way. I went to the comic store weekly and bought what I had allocated from my allowance. I quickly learned to buy a bag and a cardboard insert and I carefully read and saved my comics. I think I was a very typical cross-section of the group that would like them. I was playing D&D, reading SF and Fantasy, had just started programming on my high school’s Apple ][+ computers, and I was reading comic books. At the time, I was a big Marvel fan, and in particular, the X-Men and any comics associated with them. I also liked The New Teen Titans a lot and read the occasional Batman issue.
By the time I got to my last year of University, I had a pretty decent sized if narrow collection and I had some bills I needed to pay. There was a large comics book dealing in Montreal (called 1000000 Comix or something similar) that advertised in the comics themselves and I took my collection out to the West Island and sold it to them. That trip was important to me in a few ways. The first is that I was able to negotiate better than average dealer buy prices for my comics. The second is that I was actually at their warehouse, and I got a first hand chance to see just how big an industry comic collecting was. The owner had well over 1,000,000 comics there. I was able to find an interview of the owner from back in 1986 on Youtube: https://www.youtube.com/watch?v=7j03FeFuZkg
After I sold off my collection, I occasionally would buy and read a comic, but I was travelling and moving a lot after college and hauling around comics just didn’t seem like the best use of my time and space. I missed reading them, but they were not very convenient when on planes and packing suitcases as they were guaranteed to be ruined. The Batman movies came out, and that rekindled some interest in comics. I still had the same problem, though. Too many moves, too easy to damage the comics when on planes or in hotels. Plus, for the time it takes to read a comic, they take up a fair amount of room and add too much weight to your luggage. I had pretty much resigned myself to reading only the occasional “blockbuster” series that came out in graphic novel status, until maybe 5 years ago I found a new way to buy and read comic books called Comixology. Comixology not only had real comic books from Marvel and DC in ebook form, they had a very good reader for my iPad. At that time, you could even buy the comics directly from your iPad (today you need to visit their website).
Comixology developed a very good method to read comics on a smartphone screen or on an iPad called Guided View. Basically, they give you the choice of reading the whole page on one screen similar to how it would look on the actual comic book page or by naturally zooming in panel by panel (even word balloon by word balloon) . On top of that, they had regular sales of back issues for 99 cents each.
I now had a way to buy comics and could buy them anywhere I had an internet connection and my storage worries were solved. What followed over the last 5 or so years was an explosion of me buying comics, both new issues and catching up on back issues. I now have over 5,000 comics in ebook form and new comics Wednesday is a day I look forward to again. Comixology carries the comics from many publishers, not just DC and Marvel and their back issue library keeps growing and growing.
If you used to like reading comics when you were younger, or even if you never did, I suggest that you give it a try. The maturity level of comic books writing and the art has greatly increased compared to the time before the 1980s. The comic code authority is gone, but the mainstream comics are still owned by major media companies (Disney for Marvel and Time Warner for DC) so they still are tame enough. Many titles are solidly in the PG range, but only smaller publishers make comics that would be R rated.
I had dropped out of reading comics right when many of the smaller, independent publishers were springing up and starting to gain market share. A good example is Image Comics that publishes The Walking Dead, the source for the popular TV series. Image was founded in 1982 by several artists to try and keep ownership and copyright of their creative work. Another example is Mirage Studios which published Teenage Mutant Ninja Turtles. I actually started reading TMNT when it first came out, but I think it was the only independent comic I did read back then. Comixology opened up those comics publishers to me and I was able to greatly expand my comic book reading horizon.
The Comixology app on a tablet makes it very easy to read and enjoy the comics. You can drop in and out of guided view if you want to see how the comics were originally laid out on the page. The artwork looks very good and you can carry many comics on your device with all the books available on the server if you want them. I was a little worried that maybe they might go bankrupt and I would lose access to them, but then they were bought by Amazon.com and I am a lot less worried today.
I could go on for quite a while describing which series I like (the main character/series I buy is Batman but I buy quite a few others regularly) but I think it is better that you try it yourself if you want to take a look. You can download the app for iOS or Android tablets or read the comics right on your computer screen if you want to.
www.comixology.com
If you used to read comics when you were younger and now are coming back to them, I should warn you that DC and Marvel have had several events where they have blown up and reset their universes. For example, as of this writing Batman is Commissioner Gordon, not Bruce Wayne and Thor is a woman. They also have taken a jump to much more of a PG rating and there are plenty of publishers that go past that. Comics have always been a place that pushed the boundaries of social acceptance, and this is even more the case today. The X-Men have featured bigotry and the effects on the mutants since their very first issues, and the comic has carried on that tradition to the comics today. A good example is homosexuality. There are many openly gay characters in the mainstream comics today (Midnighter by DC features a gay main character). Someone wrote a letter to Marvel a few years back complaining about a gay couple in the X-Men comics. Marvel responded by having them get married and that was on the cover and the main story that issue. I don’t think anyone should get offended by such stories, but the language and open nudity and sex scenes in some titles from the independent publishers might not be appropriate for younger readers. I even have to be careful on planes from time to time in case something is too explicit.
I have had to slow down my buying a little as I have a few too many back issues to catch up on, but maybe I’ll be sitting next to someone reading this one day in the future and then I’ll know that my blog helped someone else become a fan or rediscover their fandom.

Marvel Encyclopedia

The DC Comics Encyclopedia, Updated and Expanded Edition

In case you want a preview of some upcoming movies:

Captain American vs. Iron Man
Civil War

Batman vs. Superman
Batman: The Dark Knight Returns

Infinity Gauntlet
Infinity Gauntlet

Working with investment bankers

By Michael

On March 8, 2016

In CFO, Finance, Working With Investment Banks

If you have followed a normal career progression through finance to make it to CFO, you probably worked with investment bankers at least once along the way. It is possible you did not, maybe you are at a start-up that is just now successful enough to go public or do some form of pre-public fund raising and you are dealing with bankers for the first time. It is a fallacy to believe that working for a big company means you would have worked with investment bankers as you climbed the ladder as normally only the Treasury department and the CFO do that, division finance staff normally are not involved. Even if you are involved, it is as a data source, not negotiating the deal. Mid-sized companies tend not to have formal Treasury departments and are a lot more egalitarian, so a much better chance of gaining some experience.

This blog is about working with the bankers themselves. Each investment bank is different and has resources far beyond the bankers that directly cover you, but you will probably never see the rest of the bank, just the small staff that covers you and the few people within their bank that they introduce you too. I try not to be too caught up in the name of the bank they work for and focus more on what my coverage team can deliver. Obviously, there are different tiers of banks, but which ones want to serve you is already at least partially driven by your company size. There just is not enough business for larger investment banks to devote resources to smaller companies.

Investment banks and their bankers get a lot of negative press. The recent, Oscar nominated film “The Big Short” is a good example. They usually are a topic in just about every major political campaign, and populist anger is stirred up against them. The current hit musical “Hamilton” has some of the Founding Fathers attacking them as doing nothing but moving money around. At the end of this blog, I will link some books that are quite critical on bankers and their culture. I can tell you that I have worked with quite a few bankers over my career and I have cannot remember working with any that are like the tell all books I have read, but the banking culture certainly is a culture into and of themselves. I will also link a few more “studious” books as well, if only for balance.

Let’s start with describing the three types of bankers you are likely to work with. The first, and most important, in your coverage banker. The leader of that team is almost always a “managing director” and typically has a small team that works for them. The MD is usually an industry specialist but otherwise a generalist. The next type of banker that you are likely to meet is a product specialist. There are many different products that a bank can sell to the market or to you and the product specialist is the one that supports the MD in pitching the products. Examples are syndicated loans, hedging instruments, convertible bonds, asset backed securities. The bank probably has someone who specializes in that product. The final banker that you are likely to meet is someone from one of the “desks”. This may or may not be one of the specialists that came to sell a product to you, but the important ones you want to meet are the heads of the Equity Capital Markets desk or the Debt Capital Markets desk.

The “desks” are always a little hard to understand, but the easiest way to think of them is that they run the sales force that will be selling your instrument to investors and they are the ones that decide on how it will get allocated between the bank’s customers (not you in this case).

What is very important here is that your coverage banker must be experienced and have clout internally. If you do a deal run by that bank, you need to best and most experienced team executing the deal and the relationship that the coverage banker has with the desk is key. A good relationship can result in above average resources devoted to your deal. A bad relationship or lack of clout in their bank and you might get the the C team and so-so execution.

One question that I get from time to time is how do you even get covered by a bank or bankers so you can get access to them and their resources. I find that question a little strange because bankers survive on fee income. So if there is a way for them to earn a reasonable fee, you should be able to get the attention of a banker. The main way to meet a banker up front is through your lawyers, accountants or through your investors if you are VC funded. If you have a deal for them or a good possibility of a deal in the near future, you will get some attention at least. If you actually have a transaction like an IPO, you can do a “bake-off”, and get a few banks to compete for your business.

Choosing a banker

Let’s say you have had your bake-off, or you have met a few bankers and now you are trying to decide which one to go with. I’ll try and list out some of the things that I consider the most.

The first is that is this is not a smaller transaction, then you probably will have several different banks working on the deal. Whoever you choose as the lead banker (the bank on the left of the list of bankers on the front page of the offering document) will end up controlling the deal, so I generally try and focus the most on picking that one. As an aside, banks and their bankers are very competitive and expect to have several ridiculous conversations about position and typeface and variations of the title they are called. You will need to make it very clear that the banks are to work together well. Most are professional, but they also want to position themselves for the next deal and they are perfectly happy to throw their competition under a bus if given a chance.

I tend to look for experience, both in the bank and from the banker, trustworthiness, and strategic sense. All banks will have two different experience elements in their initial pitch books – league tables and deal tombstones. They will cut industry data in a way that shows that they are a leader, usually the leader in whatever deal they are trying to get onto (or your industry if an initial meeting). They will list out all the deals they were on, sometimes even if they had only very minor roles if they need to, but usually any deals they were some form of bookrunners.

I am a little cynical about league tables because the data chosen is cherry-picked to make the pitching bank look good, but they do have some reference value because if you have 3-4 banks come see you, you can compare the tables and see if there is a pattern as to who is number 2 or three in all of them. That is a good indication of who the leaders really are. Having a big market share and being a leader for a long time can be a good indication of how strong the bank is. And if the banker cannot make his bank look good, then you need to ask yourself how good a job they will do for you with investors.

The tombstones are much less useful. I normally look at the dates to make sure enough are recent, and I ask if the banker and his team personally worked on the deals presented. With typical turnover, anything more than several years old was likely done by a different team and different leaders at the bank.

The next criteria is trustworthiness. This may be surprising, but even with the books listed at the end and my cynicism about the process, I like my current bankers very much and I have had almost uniformly positive experiences with them. What I need to know is that are they there to help me as their priority or themselves or their bank and if they can keep details confidential. Both are easy to tell. Are they listening and advising or are they selling? Are they sharing details of competition that would make you uncomfortable if they shared the same about you?

One of the best ways to tell if you are a priority is coverage (visits, phone calls, emails) even when there is not a deal on the table. The next best indication is if they lend you resources, typically an associate or two to help in a project you are working on. Banks tend to have very good in house models for M&A, for example, or they may have very good knowledge and advice on what to use for standard valuation metrics.

The final part, their strategic ability, is the toughest to determine from just one meeting. Normally this comes out over time. I already have defined that the purpose of strategy is to win. If you find a banker that can help you win more often and by bigger margins, then you have found someone worth their fees. The first thing you need as a start is that they have to look at your business and start giving suggestions. Could be a suggestion on recapitalizing your company. Could be intel on what the competition is up to. Maybe how to reposition yourself with your investor base. The idea is some value added advice that. Comes from them and. shows their understanding of your business and how it is positioned in the marketplace. I have found that the average banker I work with to be quite smart, And the more experienced and business savvy ones can give you very good advice.

Fees

Fees are always negotiable to a certain point. If there is push back on banking fees, you can often tackle it another way via professional fees like the lawyers and accountants. Your lawyers and accountants can tell you what is usual and standard. Do not be afraid to push back here. There is a risk that if you push the fee too low the desk and sales people may not be too excited to sell your deal, but normally only the hugest deals get the very low fees. You can move part of the fee into a success or bonus fee payable at your discretion for over performance.

This isn’t an area to ignore as they can add up, but better performance can give you much better terms than expected and will save a lot more than a small fee reduction up front. Of course, the fee reduction is guaranteed and the extra performance is not, but you do want a motivated banking team.

Indicative Ranges

When a banker is pitching a deal to you, they can be a little too aggressive on the terms they say they can close a deal at. I have seen interest rates quoted well below the last few deals for similar companies quoted to me. Some think that once they have won your business and you are committed and on the road with them, they can always talk you up and blame market conditions. You are somewhat trapped and exposed once you start a deal process. This is where pushing the fee down and making some contingent on performance helps. If they start waffling on their indicative terms once you put some of their fees at risk, you know they are not as sure as they claim. You can always ask them what rate they would backstop the deal at or if they are willing to make it a bought deal and they take the risk or reward of the marketing. This is an area where getting several different banks pitching gives you a much better read on the market.

You need to trust your banker and believe that he is honest if you are going to be happy working with them. Their honesty about indicative ranges is a good touch point. No one can really guarantee what the market will be when the deal is launched, but over promising is dangerous to you. Someone that is not scared but who properly prepares you before a deal launches is very important. Fund raising is very much your responsibility as CFO and delivering a good deal reflects well on you. You need a banker that is a reliable team member.

A few final items

I have been out at events where several CFO’s are being taken to dinner. I find it quite questionable that some take the opportunity to order the most expensive bottle of wine. As much as you will see stories from the books I linked below about the excesses of Wall Street, the real crazy days are way behind us. You don’t want your banker to take advantage of you, so give him the same respect and courtesy. This may be someone you build up a relationship that spans years and maybe they are the one that give you the recommendation that gives you a board seat later in your career.

If you borrow staff and get additional support over time, remember that and try and steer business their way. If they do well, recommend them to other business contacts. They can be very helpful to you personally and can make a big difference in your career prospects, and it is much easier to work with people you respect. Don’t forget their lower level staff that work on your deals. Far too often the celebration at the end forgets your staff and the banking associates. Try to make sure that they get included. If not appropriate for the formal closing dinner, have the junior bankers take your junior staff out.

Finally, don’t get too caught up in the anti-banking media hype. There are plenty of good bankers out there that really care a out their clients. Be careful, remember that they are probably smarter than you with much more resources than you can bring to bear, but buil the right mutually beneficial relationship.

Books and Movies (I have read or seen these myself)

The Culture of Bankers

Liar’s Poker

Liar’s Poker (Norton Paperback)

Liar’s Poker (25th Anniversary Edition): Rising Through the Wreckage on Wall Street (25th Anniversary Edition) Kindle

The Big Short

The Big Short: Inside the Doomsday Machine

Bankers Behaving Badly

Straight to Hell

Straight to Hell: True Tales of Deviance, Debauchery, and Billion-Dollar Deals

Wolf of Wall Street

The Wolf of Wall Street

The Wolf of Wall Street (Blu-ray + DVD + Digital HD)

The Buy Side

The Buy Side: A Wall Street Trader’s Tale of Spectacular Excess

The Industry

Too Big to Fail

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System–and Themselves

The Bankers’ New Clothes

The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It

Book Reviews – Larry Correia’s Grimnoir series

By Michael

On March 6, 2016

In Book review, General

As a reminder, my Sunday book reviews are with the idea that you are in the airport and about to leave on a trip and need something to keep you entertained or informed while travelling. I link to Kindle versions (could just as easily be Nook or whatever is popular in your home country) so you can just buy and download them if you decided to give them a try. I prefer not to travel with paper copies of books if I can avoid it for weight and clutter reasons.

Larry Correia is famous for his Monster Hunter International series (and political cause reasons that have nothing to do with enjoying his books). I enjoy the Monster Hunter series, but I actually prefer the Grimnoir series instead.

These books are set in a fictional period after WWI. The world is essentially a derivative of our world, except that an event in the past triggered the ability for some humans to use magic. Exactly what the source of magic is for the world is a mystery at the start of the series and it is slowly revealed through the trilogy.

The series pits a secret society called Grimnoir that tries to stop and fight against improper use of magic. The main foe in the series is the Prime Minister of Imperial Japan and his agents. The Japanese have a more advanced understanding of how to use runes to augment the innate magic of their agents and they are more technologically and magically advanced in their weapons of war.

WWI was ended through the use of ‘Tesla” beam weapons which for all intents and purposes can be thought of as being a nuclear death ray. So there is somewhat of a standoff between imperial Japan and the rest of the world powers because of fear that the Tesla weapons will be used again. They were used to end WWI and the devastation is still scarring Europe.

Although the point of view switches between several more characters, then two main characters are “Heavy” Jake Sullivan and Faye Vierra. Jake is a hard boiled P.I. in full noir tradition. Jake is a very interesting character in that he is a physically large character, and his magical ability (localized gravity control to make things heavier or lighter) typically goes with slower thinking people but not true for him as he is as smart as he is large. Although the cliché of the hard boiled detective with an unbreakable code of honor is the foundation for his role in the books, he becomes more complex as the books continue.

Faye is a little bit of a Mary Sue character as her abilities grow and evolve as the series goes on as needed by the plot. Overall the magic system in the series is reasonably consistent, but the heroes are able to break previously established rules and their powers scale higher as the series progresses.

Mr. Correia is also a gun enthusiast and occasionally the narration gets slightly derailed as he details out the latest hardware one of the characters is using. This is nowhere near as constant as happens in his Monster Hunter International series, but it is a little distracting when it does happen.

With the above caveats in mind, this series is just about epitomizes what is needed to meet “entertain you on a flight”. The action is pretty much non-stop, well written and fun. The characters are not exactly multidimensional, but they are fun and easy to identify and they certainly do move the story along. The villains are interesting and have their own motivations that are not “be pure evil”. The source of the magic is the world is slowly revealed and opens up the final quest in the book. The ending is satisfying and I stayed up late a few times to finish the book that I had started.

I give the series a very good rating for pure entertainment value and I think pretty anyone looking for a fun read will enjoy it.

I originally “read” the books by listening via Audible.com and I found the narration good and entertaining.

Hard Magic – Book 1

Hard Magic – Kindle version

Spellbound – Book 2

Spellbound – Kindle version

Warbound – Book 3

Warbound – Kindle version

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