We are keeping our content light during the dog days of August. Perhaps you have seen our previous posts regarding CEO personalities? Our Mid-Cap Software CEO Personality Analysis made the rounds this spring (access HERE). For fun we thought we would put a new spin on the debate that has dominated NBA circles this offseason…
1.) Be Bold:
- Similar to VCs, public investors want to invest in a bold vision. (See Tesla). Why does TSLA enjoy a premium valuation to other Auto OEMs? Answer: Musk’s vision and spin.
2.) Don’t Be Bullied by Investors – Dictate Your Story:
- Tell the Street you plan to take margins down temporarily to pursue “X” initiative. Investors will cut you slack so long as you explain the rationale, the execution and the intended outcome.
3.) Balance Execution Today with Investment for Tomorrow:
- Don’t fall into the short-term EPS growth trap at the expense of new product development, keeping your products fresh and building a culture of innovation.
- If you pursue the short-term – investors will love you in the short-term (fleeting). The key is to build long-term value over years and decades (see AMZN, CSGP and SSNC as examples of the latter).
Some have asked the question regarding our most recent article: Personality Analytics: Technology CEOs Analyzed – “what does it mean?”
Let’s contemplate one example as depicted in the enclosed picture which plots the 56 Mid-Cap Software CEOs we reviewed against the personality trait “Openness“. The output is that the two CEOs who scored in the 99th percentile (Ryu of Guidewire Software, “GWRE” and Marr of Tyler Technologies, “TYL”) are:
1.) less likely to suffer stalled revenue growth on their watch;
2.) less likely to allow their products and services to become stale;
3.) less likely to be disrupted by a competitor or new market entrant;
4.) less likely to see their respective customers move elsewhere and/or become disintermediated from customers;
5.) more likely to adopt new technology to deliver their respective products and services;
6.) more likely to identify adjacent market opportunities..
..as compared to the Mid-Cap Software CEO universe we analyzed (56 CEOs in total), all else held equal.
We created the CEORater Technology Founder CEO Index in 2017 in large part to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Technology Founder CEO Index returned 13.0% and 10.5% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018…
Everyone Wants Their 15 Minutes of Fame
It’s a primary reason why Instagram “Stories” are so popular. That and the feature’s ease-of-use. Instagram has created an engaging, almost frictionless user experience that enables anyone to vlog their life in a series of micro videos with a 24-hour shelf life – i.e “Stories”. Stories is the platform feature that single-handedly kneecapped Snap before its March 2017 IPO (we reviewed in our piece about CEO overreach). We covered the “Stories” topic in episodes 58 and 67 of our CEORater Podcast.
Snap recently countered by opening its Stories feature to platforms outside of snapchat whereas Instagram remains within Facebook’s walled garden. Were the two platforms equal, Snap’s counter move likely would have provided an advantage. However, the two platforms are not equal. Instagram continues to enjoy the ease-of-use advantage over snapchat (a powerful advantage) and Facebook’s walled garden is an expansive one with 2 billion-plus monthly active users (“MAUs”).
Mobile Devices that Best Leverage Social Media Platforms Will Win
The “Stories” feature matters not only for social media companies but also for mobile phone OEMs as consumers increasingly record and consume mobile video. Therefore, mobile phone camera features, in-phone storage (external storage devices add friction to the user experience) and battery life will increasingly matter.
Here’s a look at four mobile phones across attributes:
Platform Cloud Vendors Also Win
Facebook stores Instagram videos. Google stores Snap’s content. Expect cloud service leader AWS (Netflix on AWS) to make its mark as companies that were built on top of AWS roll out video content (Amazon/Open Tube?)
The mobile video phenomenon extends beyond user-generated content to professional content. For example, Steven Soderbergh’s forthcoming theatrical feature – “UNSANE” – was recorded entirely on an iPhone.
We published CEORater Podcast episode 120 subsequent to posting this article.
Welcome to Apple Health Apple recently announced that this spring it will release an update to its iOS for iPhones and iPads that will include a new “Health Records” feature that will provide access to personal medical records covering allergies, conditions, immunizations, lab results, medications, procedures and vitals. Given the ubiquity of the iPhone we…
Time for A CEO Change and Board Swap Out at IBM
Neither IBM’s CEO Ginni Rometty nor IBM’s Board understand the nuances of crafting a story for Wall Street nor executing a strategic M&A program to offset the negative impact to IBM’s revenue as a result of the strategic shift to recurring revenue products & services.
GE CEO John Flannery has his work cut out starting with re-vamping GE’s Board. Our advice? 100% of GE’s BoD members should have experience within the industry verticals GE cares about. Equally important – GE BoD members should consist of a mix of Insiders and Outsiders with the weighting in favor of Insiders. More detail in CEORater Podcast Episode 81:
The Three “I”s for Selecting Board Members:
1.) Intellectual Curiosity
2.) Industry Experience
IBM lacks Board members that have Software industry experience other than CEO Ginni Rometty. We recommend that IBM turn over its Board and replace BoD members with new members who have significant Software industry experience given that Software – particularly a strategic M&A plan focused on Software/SaaS/AI/ML/Info Services acquisitions – is likely what will lead IBM out of its malaise. If IBM does not address its BoD and Executive shortcomings proactively it is probable that an Activist investor will make changes for IBM – with or without the latter’s consent. Click HERE for our CEORater Podcast episode concerning the 3 “I”s.