Looking for a job can be a way for the unscrupulous to steal your identity.

These days I am in a perpetual job hunt mode.  The job can be as a new client of my consulting business, whether as it is an interim or long-term assignment or as a full-time employee.  The roles are typically in the C-Suite (CFO/COO), but sometimes are in senior management.  Most of the companies are unknowns, which means I have never heard of them prior to the assignment or job.

I read somewhere that there are approximately 6 million businesses in the United States with the average number of employees around 20 people.  While the numbers may not be completely accurate, it makes sense, since the US Small Business Administration use to say that 80% of all businesses were small businesses, defined as under 50 employees.

Not that I really digressed, but added some color to this statement: just because I never heard of a company does not make that company dishonest or bad, it is just a statement of fact.  Then again, it does not make them (or individuals in them or just individuals pretending to be them) honest.

I just had a “client” try to pull a scam, but there were so many tell-tale signs I after the first e-mail or so, my hackles raised and I was on-guard. So now, I have framed in my office a fraudulent certified check for $98,700.

Process

I apply to a fair number of jobs every day.  Many of these jobs (whether through a recruitment firm or direct) just ask for my resume and some level of contact information.  Easy peasy, and since I control that information, I can say that I haven’t been bothered by many unwanted calls or spam for the most part (although there are the less than stellar recruitment companies that do data mining from either recruiting sites like Monster, et. al. or LinkedIn that offer me jobs as an Administrative Assistant and the like.  Come to think of it, I’ve gotten a few text messages about jobs from the same types of people.).

Some firms ask me to regurgitate my resume into their database (a futile and time-intensive act), while others use more sophisticated software to parse either LinkedIn or my resume and attempt to pre-fill their forms (again, a maddening proposition for the candidate).  Then there are those who ask for additional information that automatically raise my internal Robot warning (if you remember seeing “Lost In Space” the 1960’s Sci-Fi TV show, the Robot was always flashing red and saying “Danger, Will Robinson!”  Or “Warning! Warning! Alien spacecraft approaching!”)

There are those US based entities that ask for my social security number and date of birth.  Now if you remember, most of the companies I come across are unknown to me.  What in the world, do they need to have Personal Identifiable Information (PII) at this stage of the game?

Their rationale is that they will run a credit check.  That’s fine, but again, why are they running a check now.  My resume may not passed muster, I may blow the interview or conversely they blow the interview (to the individuals who interview or interact with candidates please take note; the interview is a two-way vehicle. We both want to see if we want work together, think of it as a first date).

It is illegal while in the process of hiring to ask your age, so if I give my date of birth, I have given you my age.  The law is there to protect us older and for that matter younger folks from age discrimination.

Self-Protection

There is no reason to provide PII to a potential employer until they are ready to provide a (conditional) offer.  By this time you will have hopefully done your due-diligence and know whether you would consider working for the firm.  They, the potential employer has provided you with a letter of intent, specifying the job, salary, benefits, etc. and may include such language to the effect of “…upon successful completion of a background check….”.

It is now up to you whether you want to provide your PII.  Obviously, if you were to be hired you would need provide this information for payroll.

What have your experiences been like?

The Venture Capital/Private Equity market space from all accounts seems to be slowing down, with no one predicting a great 2016.  Pundits abound as to the reasons behind this phenomenon, from over valuation to lack of deals.

“Venture capital funding overall has risen so far this year. Through the first nine months of 2015, $57.9 billion has already been invested, more than the $56.5 billion raised in all of 2014. But the weakness in the IPO market is likely to catch up to the private market when investors can’t depend on public markets to provide a profitable exit.

Already, while VC funding is up from last year, deal activity has fallen off in 2015. Only 3,355 deals have been reached through the third quarter of 2015, down from the 4,943 reached all of last year, according to a report from CB Insights and KPMG. If deal activity continues at this pace, the 2015 total will fall short of last year’s. “

Don’t Be Fooled by Ferrari: The IPO Market Is Spinning Its Wheels By Millie Dent; October 22, 2015; The Fiscal Times
http://www.thefiscaltimes.com/2015/10/22/Don-t-Be-Fooled-Ferrari-IPO-Market-Spinning-Its-Wheels

However, how can there be a lack of deals?  There are a zillion companies out there all looking for some type of funding.  The PE/VC industry even have their own prime-time television show (“Shark Tank”) in which to wet the appetite of those young start-ups.

Granted, not every business would be a candidate for investment, nor would every idea for a new business work.  If you watch Shark Tank how many of those deals would you invest in.  Did the Sharks overpay or miss opportunities.  Were all the business-people realistic with what they products could and could not achieve.  Did they value their companies correctly?

• “Deal volume is likely to decline, attributable in part to increased volatility and sustained high valuations

• Access to debt financing will begin to narrow in some cases, with lenders growing more cautious

• The vast majority of respondents indicated they were planning to raise funds, with distressed investing popular in particular”

2016 Crystal Ball Report Pitchbook
http://pitchbook.com/news/reports/2016-crystal-ball-report

Notwithstanding, from the episodes I have seen, there did not seem to be a unicorn present.  Granted, this is TV, and it is a reality/game show hybrid, but it does underscore the breadth of possibilities available.

Let us not forget there is also a large distressed market.  The distressed market is becoming more popular as the sum of the parts can be greater than the whole.  A perfect example is in aviation, where companies are buying up aircraft and selling them on the parts market, and making positive returns on their investment.

“Venture capital fundraising appears to be suffering from the slow IPO market for technology offerings and the overcapitalization of unicorn investing. This has been particular evident lately, as U.S. fundraising activity in the fourth quarter through November has slumped to the …”

Year in Review: Venture fundraising suffers from sour tech IPO market; VCJ; By Mark Boslet; November 25, 2015
https://www.pehub.com/vc-journal/venture-fundraising-suffers-from-sour-tech-ipo-market/

The Year in Review seems to have hit the nail on its proverbial head.  Unicorn investing.  Here lies the crux of all our business ills – expectations that cannot be sustained.

What happened to the cliché from the classic Aesop’s fable, the Tortoise and the Hare?  “After that, Hare always reminded himself, “Don’t brag about your lightning pace, for Slow and Steady won the race!””  Why does every transaction have to be about the unicorns and massive returns?

There are unlimited number of companies in just the United States where investment could pay off.  Granted, not like a unicorn, but then again, they could be at average or better. “The average investor realizes returns of about 3.7 percent…” so says a Bloomberg article Average Returns, Rarer Than You Think By Barry Ritholtz  APR 9, 2015 http://www.bloombergview.com/articles/2015-04-09/average-market-returns-are-rarer-than-you-think Ritholtz goes on to say “This underperformance occurs regardless of the investment vehicle, whether it’s mutual funds, hedge funds or just plain old stocks. The reason investors tend to underperform is that they chase alpha (above-market returns) and fail, rather than aim for beta (market-matching returns) and succeed.”

So why do PE and VC capitalists risk so much on companies that have just as much chance as failing and only a 1% chance of becoming that unicorn.  In fact, CBInsights.com claims that a start-up has a 1.28% of developing a billion dollar valuation https://www.cbinsights.com/blog/unicorn-conversion-rate/.  It has been postulated that 90% of all start-ups fail to get Round “A” financing.

The Cure

Maybe the cure to the downturn in VC/PE deals is to lower their sights, look for reasonable returns and help move the greater economy along.  Every successful company pays taxes along with their employees who in turn spend their earnings on goods and services as well as investing themselves in vehicles that provide the working capital for more investing.

Some food for thought as we close our books on 2015.

Ethical Challenges:

Cooking the books has been a long and time-honored (albeit illegal) pastime from time immemorial. The earliest know game was diluting olive oil during the Roman Empire.

The Roman’s solution was to record all aspects of each amphora of oil with all the particulars about the production, inspection, quality for the creation of the first (or one of the first) audit trails.

So what do you see as the pressures for cooking the books? Is it meeting investor expectations? Tax fraud? Fooling the bank? The writing off of non-business related expenses?

Is the size, ownership structure or other parameter more likely to influence the stressors and Ethical Challenges the C-Suite faces?

A recent in the Wall Street Journal discussed this topic: http://www.wsj.com/articles/the-ethical-challenges-facing-entrepreneurs-1448247600

Do agree with Kirk Hanson (the author)?

SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak SBA * Consulting LTD Wayne Spivak

Thornton Melon: Oh, you left out a bunch of stuff.
Dr. Phillip Barbay: Oh really? Like what for instance?
Thornton Melon: First of all you’re going to have to grease the local politicians for the sudden zoning problems that always come up. Then there’s the kickbacks to the carpenters, and if you plan on using any cement in this building I’m sure the teamsters would like to have a little chat with ya, and that’ll cost ya. Oh and don’t forget a little something for the building inspectors. Then there’s long term costs such as waste disposal. I don’t know if you’re familiar with who runs that business but I assure you it’s not the boy scouts.
Dr. Phillip Barbay: That will be quite enough, Mr. Melon! Maybe bribes, kickbacks and Mafia payoffs are how YOU do business! But they are NOT part of the legitimate business world! And they are certainly not part of anything I am doing in this class. Do I make myself clear, Mr. Melon!

From the Movie “Back to School” (1986) starring, writer and screenplay Rodney Dangerfield

An Un-educated businessperson

Years ago, I working with a Thoroughbred Horse Racing Farm.   All the horses were strictly Thoroughbreds.  Some were just boarder for their owners, other were directly owned (with a fair share of disparate partners) by the Farm ownership.  Besides boarding, the Farm also bred, and foaled the mares.   After spending time at the Farms, I came too fully understand the cliché “hung like a horse”.

The major owner was an older Italian Gentleman from Brooklyn.  He originally was in the trucking business, owning a small but I am guessing lucrative trucking company.  He barely completed high school.  However, that did not stop him from becoming one shrewd businessman.  Did he make money on every deal, no, but he did make money.

He was from the old school, the pre-computer, pre-cellphone days.  He liked his rotary phone.  Fax machines were okay, but he really did not trust computers.  His partner’s in the Farm (actually there ended up being two farms, one in New York State, the other in Florida) demanded that the operation be computerized, which is how I came into the picture.   It was educational, from both our perspectives as I tried to explain the why and wherefores of computerizing the operations and he would explain how it was not necessary.

He had a unique philosophy that was summed up by a favorite quote of his; and has since become a part of my lexicon.  “High Tech is not High Touch”. Six simple words to convey a concept that seems to be lost in our rush to embrace the B-school mantra of spreadsheets rule.  Forecast: look at every financial angle, calculate the IRR, projected EBITDA, whether the project on paper is profitable. Decision: Go or no go based on the numbers. businessperson

His feelings were that while High Tech certainly had it place, that place was being overly prioritized to the detriment of “High Touch”.   High Touch demanded that one looking at the angles that could not be quantified with data points. businessperson

Having been involved in M&A transactions, the bottom line decisions were always related to hard data points regardless of symmetries, synergistic advantages, market or leadership, intellectual property being acquired. businessperson

Even during budget season, the same arguments are made, with the counter arguments (not always coming from the Office of the CFO) of why a budget item need to be $X, not the $Y figure in the current iteration of the budget.

Bottom line, we as CFO’s need to move away from the data point analysis (High Tech) and start moving to the strategic (High Touch) mindset if we want to be a true financial partner to the CEO.  Sometimes spending more on esoteric items (Employee benefits and education), charging less to customers, allowing vendors to make a little more actually means that we as a company will in the end gain.  We can gain respect, productivity, market share, improved quality.

Productivity increases, market share increases, improved quality translate to a value proposition that causes profits to increase.  Therefore, at the end of the day, another favorite of the B-School crowd is satisfied, increased shareholder value.