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| Volume 7, Issue 3 |
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In This Issue:
 The art of the deal: Integration strategies that work
The new CEO Boardroom survival guide
Cruise[ing] control
 Cracking Google’s ‘secret sauce’ algorithm
 The kid who turned down 1 billion dollars
Lessons from the tarmac
Who is Sylvia [Paul]?
 How to develop client and customer trust
 Find it. Use it. [Intellectual Property]
Recruiting the top 1 percent
 Think before you hit ‘Send’
6 Ways to kill your credit score
7 Net-worth killers
25 Dream vacation homes
 The [CEO] ownership incentive
Gilded [CEO] greetings
Tech toys for business travelers
Most stolen luxury cars
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The Art of the Deal: Integration Strategies That Work
Late winter snowstorms aside, February was a particularly cold month on Wall Street. After the former Federal Reserve Chairman Alan Greenspan mused about a coming
recession, the Asian markets tanked and panicky investors sent the Dow spiraling. But not even that frost could dampen the M&A fire that has been raging for well over a year.
Worldwide announced M&A activity for first-quarter 2007 topped $1.1 trillion, according to Thomson Financial, which provides information and technology solutions to the
financial community. Though that number is slightly down from last quarter, it still represents a 27 percent increase over first-quarter 2006. Last year’s worldwide
announced M&A deals reached nearly $3.6 trillion, with the U.S. alone accounting for 44 percent, or $1.6 trillion. That represents a 36 percent jump in M&A volume for the U.S.
over 2005. High liquidity levels and strong balance sheets are inspiring both strategic and financial buyers to go in search of the perfect (or good enough) deal. Private
equity firms, sitting on huge war chests, are spending billions gobbling up companies they aim to flip for a reasonably swift return. And strategic buyers of all sizes,
feeling pressured to spend idle cash or find ways to speed growth, are getting in the game, lest they be left behind as their industries consolidate. Foreign conglomerates
have added another dimension, competing with domestic buyers as they go on spending sprees in the U.S. in an attempt to expand their global reach and better compete
stateside. According to Thomson figures, M&A volume for announced deals with a U.S. target increased 35.7 percent over 2005. Of all the compelling facts and figures,
however, the most astonishing may well be one that hasn’t changed in years...
Read the article. Back to top
New CEO Boardroom Survival Guide
New CEOs typically inherit the boards of their predecessors—boards that today have become far more actively engaged than those of a decade earlier and have little hesitation in making changes in the corner office.
The New York Times reports that American companies replaced roughly 1,400 CEOs in 2006, up from 1,322 in 2005 and 663 in 2004. Starting off on the right foot with the board is
crucial to a new CEO’s success—and survival. Here are some practical tips for new CEOs who want to try to cultivate a relationship with their boards that is constructive and
valuable right off the bat...
Read the article. Back to top
Cruise[ing] Control
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When not at the helm of HD Brown Enterprises in Ontario, Douglas Brown is likely to be found steering—literally—a very different ship.
Last spring, he captained a 47-foot catamaran to island-hop in the Caribbean with his family. A few months later, he toured the Greek Isles at the wheel of a 39-foot
Beneteau yacht with his wife, Sandee, in the self-described role of hood ornament. With phrases like “trimming the sails,” “running 20 knot winds,” and “heeling 20 degrees”
peppering his reports on these excursions, Brown sounds every bit the seasoned seafarer. Not so, says the 51-year-old, who credits an intensive sailing class for his
competence and comfort-level on deck today. “Before Sandee and I took the course, I knew very little,” he says. “By the time we finished, we were able to rent a 36-foot
catamaran and cruise the North Channel [in Canada] for eight days on our own.”The course the Browns took was a 10-day immersion learning program in the British Virgin
Islands called “Fast Track to Cruising” intended to ready even the novice sailor for a “bareboat cruise,” or chartering a boat without a captain or crew. Offered by the...
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Cracking Google's 'secret sauce' algorithm
A clue: 'pretend we're not here'; a reward: tens of millions of dollars.
-- Rand Fishkin knows how valuable it is for a Web site to rank high in a Google search. But even this president of a search engine optimization firm was blown away by
a proposal he received at a search engine optimization conference in London last month, where he was a panelist. The topic -- Can a poker Web site rank high on a Google search
using purely white hat tactics -- meaning no spamming, cloaking, link farms or other frowned-upon "black hat" practices. Fishkin answered yes, provided the site also added
other marketing techniques and attracted some media attention. The rest of the panel scoffed. "Don't bring a knife to a gunfight," one chided. After all, this is the
cutthroat online gambling sector. But one poker Web site owner was intrigued, and he later approached Fishkin. "He said, 'If you can get us a search ranking in the top five
for online poker or gambling [using white hat methods], we'll buy that site from you for $10 million,'" recalls Fishkin, president and CEO of SEOmoz in Seattle. Intrigued
but skeptical, Fishkin consulted other gambling site owners at the conference. "They said, 'If it really does rank there, we might be interested in paying you $10 million
more.'" Turns out, a single online gambling customer brings in at least $1,000 in revenue. With a recent Google search of "Texas Holdem Poker" yielding 1.64 million
results, it's easy to see why site owners would pay millions to crack the code for Google's PageRank algorithm -- the elusive Holy Grail of online marketing. The stakes
are high for online businesses -- and Google is the formidable gatekeeper between site owners and their customers. Web sites, such as kinderstart.com, have even sued Google
for what they allege are deliberate de-rankings, though none have been successful to date. Site owners are eager to get their hands on the 75% of free Google traffic that
is not affected by AdSense and AdWords, Google's pay-per-click programs. With 47% market share among search engines and 3 billion search inquiries a month, Google is indeed king...
Read the article. Back to top
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The Kid Who Turned Down $1 Billion
When Mark Zuckerberg showed up in Palo Alto three years ago, he had no car, no house, and no job. Today, he's at the helm of a smokin'-hot social-networking site.
Here's why this 22-year-old CEO spurned Yahoo and Viacom to go it alone...
Read the article. Back to top
Lessons From the Tarmac
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| He just wants to run the company: "It's belts and suspenders," Neeleman says. "If your suspenders fall off, your belt keeps your pants up. You have to have contingency plans for everything. My job is to make sure no one ever forgets what happened." |
Take it from David Neeleman and JetBlue: Recovering from a crisis is about the trust you build beforehand.
David Neeleman, the founder and CEO of JetBlue (NASDAQ:JBLU), glares at me from across the small round table in his office in Forest Hills, New York. It's 50 minutes into the
conversation, and he's burdened, testy, exhausted. "Look, I haven't slept in three weeks," he says. "I'm tired of talking. Emotionally, I am done … I just want to go out
and run the company." I've come to pick Neeleman's brain on trust, crisis, and redemption. In its notorious Valentine's Day debacle, his airline suffered a startling
breakdown due to 2 inches of ice at New York's JFK Airport. More than 1,000 cancellations. Massive delays. Passengers stuck on planes for up to nine hours. And it
all played out, unfortuitously, in the media capital of the world. It took nearly a week for JetBlue to return operations to normal. No surprise that Neeleman wants to put
what he calls "the event" behind him. "For the 15th time, we've learned from this," he says. "That's why it's never going to happen again." He knows, of course, that it's not
as easy as that. Eventually, even good companies screw up. They lose track of Social Security numbers, release buggy software, manufacture faulty cars. And customers are
watching, trying to decide whether or not to forgive. In this precarious and very public moment, companies and leaders reveal what they're made of...
Read the article. Back to top
Who is Sylvia [Paul]?
One of the most effective behind-the-scenes connectors in the Valley, Sylvia Paul, started out throwing some of the hottest parties at computer-industry conventions in
the '80s. Now she links the hard-core geeks, entrepreneurs, media insiders, and the political activists, too.
A lot of Silicon Valley insiders first met Sylvia Paull in the late 1980s, when as the marketer for a software startup, she threw some of the hottest parties at
computer-industry conventions such as Comdex and Macworld. Bill Gates came. So did nerd goddess Esther Dyson and Grateful Dead lyricist turned cyberactivist John Perry Barlow.
Paull began drawing an eclectic mix of the brilliant, the influential, and the ambitious to soirees at her home in the Berkeley hills...
Read the article. Back to top
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How to Develop Client and Customer Trust
Selling is not so much about the features of our products or services—or even the benefits the customer receives. Rather, it is about our relationship with the customer. People do business with people they trust.
That does not mean people will not make an occasional purchase of a specific item or service from someone they do not trust, because most people will. However, those
purchases tend to be exactly that—one-time purchases. To generate consistent, repeat business, to generate high-quality referrals, and to generate larger, more profitable
sales, you cannot rely on the occasional one-time purchaser. To build a sales business, you must develop a book of clients who trust you. Most people will pay a little more,
sacrifice a little, or wait a little longer when buying from someone whom they really trust and respect. The hard part is building the trust and then maintaining the trust.
What are the keys to building client trust?...
Read the article. Back to top
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Find It. Use It. [Intellectual Property]
It's a good bet your company possesses intellectual property it isn't exploiting. Here's how to identify those assets and turn them into new business.
Think of your company as a couch, with rich deposits of coins, pens, keys, and jewelry buried beneath the cushions and deep inside the cracks. Think of Andrew J. Sherman as a couch cleaner eager to shake out those cushions, excavate those cracks, and dig right down to the springs to bring to light anything of value. Sherman, a partner in the Washington, D.C., office of the law firm Dickstein Shapiro and general counsel for the Entrepreneurs' Organization, is a jovial, bearlike fellow with a stock of stories larger than Scheherezade's. Most of his tales are about intellectual asset management, which roughly speaking means making the best possible use of everything a business knows. So for example, Sherman tells how Procter & Gamble (NYSE:PG), disappointed by the queasy reception for its fat substitute, Olestra, gave the substance new life as a cleanser for contaminated soil. He describes how Duke Energy (NYSE:DUK) licensed to other utilities a safety device it invented to prevent workers from falling off transmission towers. And he recalls the time his firm audited the intellectual property portfolio of a big-name IT company and found the company was using only 200 of its 800 patents. All Sherman's stories share the same punch line: "…and they realized they could cash in on something they'd taken for granted." Mention "intellectual asset" in a corporate word association game and most players will snap back with "patent" or "trademark." But the category is much broader, extending to such things as...
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Recruiting the Top 1 Percent
There's a better way to find and hire the very best employees.
I keep hearing people say that they only hire the top 1 percent of job seekers. At my company, Fog Creek Software, I want to hire the top 1 percent, too. We're doubling in
size each year, and we're always in the market for great software developers. In our field, the top 1 percent of the work force can easily be 10 times as productive as the
average developer. The best developers invent new products, figure out shortcuts that save months of work, and, when there are no shortcuts, plow through coding tasks like a
monster truck at a tea party. From a recruiting perspective, the problem is that the people I consider to be in the top 1 percent in my field barely ever apply for jobs at
all. That's because they already have jobs. Stimulating jobs. Jobs where their employers pay them lots of money and do whatever it takes to keep them happy. If these
pros switch jobs, chances are the offer came through networking, not because they submitted a resumé somewhere or trolled a job site like Monster (NASDAQ:MNST). Many of
the best developers I know took a summer internship on a whim and then stayed on. They have applied for only one or two jobs in their lives. A lot of companies think they're
hiring the top 1 percent because they get 100 resumés for every open position. They're kidding themselves. When you fill an opening, think about what happens to the 99 people
you turn away. They don't give up and go into plumbing. They apply for another job. There's a floating population of applicants in your industry that apply for nearly
every opening posted online, even though many of them are qualified for virtually none of these positions. So if the top 1 percent never apply for jobs, how can you recruit
them? My theory is that the best way is to find them before they realize there is a job market--back when they're still in college...
Read the article. Back to top
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Think before you hit 'send'
Careless e-mailing has brought down some high-flyers. Here are a few of the executives who lost their jobs, their careers or their reputations thanks in part to e-mail.
A saucy detail in the scandal surrounding Wal-Mart's firing of Julie Roehm is an e-mail that she sent to her subordinate, Sean Womack. In it the former senior vice president of marketing communications wrote: "I think about us together all of the time. Little moments like watching your face when you kiss me.
Steven Heyer stepped down as CEO of Starwood Hotels after the company's board reportedly pressed him to explain allegations of suggestive e-mails between him and a younger female employee...
Read the article. Back to top
6 ways to kill your credit score
A low score means higher rates. Here's how you may be doing yourself harm.
Lenders, insurers, landlords and others will charge you more or flat-out reject you if you show up with a low FICO score. Here's how you may be doing yourself harm...
Read the article. Back to top
7 Net-worth killers
Saving and spending aren't the only factors affecting your net worth. How you manage (or don't manage) your assets and liabilities can make a big difference, too.
...
Back to top
25 Dream vacation homes
Shangri-La really is for sale -- and so are these breathtaking getaways in Anguilla, Tuscany and France
...
Read the article. Back to top
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The [CEO] Ownership Incentive
An interesting observation from this year's survey of executives at America's 500 biggest companies:
The 10 chief executives with the largest percentage stake in their respective companies delivered superior stock performance over the last 12 months. Shares of these 10 companies (see our table) are up an average of 25%, versus 19% for their peers and just 12% for the S&P 500....
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Gilded [CEO] Greetings
It was a tiny but revealing item, buried deep in Hewlett-Packard's 2006 proxy, a disclosure that spoke volumes about how the link between executive pay and performance has been severed for good.
Tucked away in the details about incoming Chief Executive Mark Hurd's very lustrous $23.5 million "golden hello," a front-loaded contract HP gave him in March 2005 to replace Carly Fiorina, HP whipped this fastball by shareholders. To help woo him
away from computer maker NCR, HP gave Hurd a $2.8 million "pay for results" incentive bonus, a performance bonus that was part of the $23.5 million golden hello, which he got without so much as lifting a pencil.In describing Hurd's unearned bonus, HP
disclosed that for the second half of fiscal 2005 and the first half of fiscal 2006, all of Hurd's "performance goals will be deemed to have been achieved," meaning that
Hurd got paid millions of dollars as if he had already met future performance targets. Hurd's "Back to the Future" bonus is another sign that companies are increasingly cooking up new, innovative ways to buff the golden hello. More than the corporate
jet, the company car, more than the season tickets or the company-paid golf club membership, the focus now is on the princely pile of guaranteed pay, bonuses
and outsized stock grants companies are shelling out just to get executives to walk in the door...
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Tech Toys for Business Travelers
In the air five days a week and finding yourself calling the Ritz Carlton home?
We understand. You need a one-way ticket to Canyon Ranch. Sadly, man must work. But business travel doesn’t have to be so tough. Taking along a few time-saving, stress-free can mean the difference between a trip without a bump in the road and a trip that is, well, bumpy....
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Most Stolen Luxury Cars
After almost 10 years on the market, Cadillac's recently overhauled $56,000 Escalade SUV is hotter than ever, with first-quarter sales up 36% over last year.
But a less frequently used measure of the car's heat is its popularity with thieves. The Escalade's rate of insurance theft claims is higher than that of any other luxury car--by far--according to recently released data from the Highway Loss Data
Institute (HLDI).The HLDI tracks per-car theft losses and reports loss results in relative terms. A car with an HLDI theft loss score of 100 has average theft
losses. Anything above 100 is higher than average. The HLDI theft loss scores for six of the seven most stolen luxury cars on our list range from 209 to 431--and the HLDI
says each of these cars has "substantially worse than average" theft loss results...
Read the article. Back to top
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