Does wearing a hat makes you bald?


hatsUpon meeting the wife of a friend in Southern California, she told me that I should remove my hat since wearing one would make me bald. I did note that my friend had a head of healthy hair, but I immediately ignored her statement.  Why?  By seeing bald men in Southern California wearing hats constantly can one correlate that hats cause baldness? We all know that the cause is described medically as androgenetic alopecia.  Then I gave thought to how she reached her pattern recognition and why it was incorrect. Men, with incipient baldness or fully bald, will be exposing their scalps to the Southern California sun.  That alone would warrant wearing hats if only to avoid sunburns on the scalp or, more often, add freckles or skin reactions, including melanoma – a deadly cancerous disease. However, her strange correlation analysis, I see such weird conclusions in hiring for startups or companies in distress.

National news have been discussing the management battle for Yahoo practically on a daily basis.  Its CEO, Marissa Mayer, has contributed over $20 billion dollar loses during her leadership. https://medium.com/@loukerner.  She even hired a marketing chief, who lasted a year, but whose severance paid him over $100 million – great payday. And more controversy surrounds the manipulation of the corporate board in order to keep her job.  And only a year remains so that her payday would be over $400 million dollars based on her employment agreement. In the meantime, she has laid off over 15% of the staff, shut down projects and divisions.

How did she get her job in the first place? I call this the bald hat syndrome. She worked at Google in the early era and attended Stanford. Just as someone had commented on the Theranos founder, she had the right credentials for the job.  Mind you that she did not hold a major management position or even earned a MBA.  But it seems to the selection committee she was the right hat to avoid baldness.

While in NYC some years back, I witnessed another “bald hat” when asked by an investment firm to do due diligence on an early Fintech startup.  For a year, this startup had no invites by any VC firms to pitch its story. I redid the company’s PowerPoint and was able to secure its first pitch. Its management team was selected from brand name companies – Bank of the West, Perot Systems, Asian Bank of New York.  Its team was dispersed throughout the U.S.

Its business plan, however, was wanting I discovered later. The investors selected this team based on the company brand names, rather than seeing whether they were capable and hungry. I was able to introduce this company to a major VC firm in the financial space in Boston.  During that meeting, I was appalled on how little effort had been made by this so-called team to articulate the right business model for this company.  The VC’s MD remarked that he had over 10 years of experience in this space and that the putative projected product sales were totally out of whack in the industry.  Furthermore, I went to the JP Morgan VC firm and inquired about this particular technology. And this MD also confirmed what the other MD had noted. So, I related this to the shareholders who immediately dispatched this team.

Unfortunately, the year to discover this major management flaw took its toll on the company, eviscerating its value. Rather than focusing on management’s effectiveness, everyone else relied on their brands, not their true value.

A colleague had made a couple of investments relying on brands or labels, rather than looking beyond the façade of the senior management.  And related to him not to expect to see any return on his investments. Just by looking at the “T”eam, I would question whether these companies would have the right leadership to achieve decent returns for the investors.  (I even spotted that in the NYC startup a few months ago.) One CEO was too academic.  Another had no experience. In looking for the 5 Ts, I always view companies in their harshest light. Executive management can make or break a company. One must sever emotions and see what could go awry in any small, startup organization.

I have witnessed horror stories by senior managers in startups: buying a Ferrari after a Series A, although the company never hit profitability; the President of a Telecom company placing his nannies on the company’s payroll; moving a company to Barcelona, not for business access, but for its weather.  Selfish executives, blatantly ignoring shareholders, lead to failure.

Unfortunately, the Silicon Valley mantra is that it is great to fail. But relate that philosophy to retirement funds and the very people who rely on them, whose money contribute to VC funds.

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About Juan Ramón Zarco, SVVGP 胡安•雷蒙•扎尔科

Juan Ramon Zarco, 胡安•雷蒙•扎尔科, Silicon Valley Ventures Growth Partners llp, Hygieia Healthcare Technologies Company, AllRest Technologies LLC, Crimson Growth Partners LLP, jrzarco2001@yahoo.com, is an experienced as CxO, General Counsel and Secretary to public and private companies with global operations. Established track record of producing practical, revenue-focused solutions. As Counselor and Secretary, demonstrating vision, integrity, and sound business judgment, to CxOs. Managed complex, strategic transactions, M&A, contracts support, PE Financing, IPO, SEC compliance, Corporate/HR governance, IP licensing, Budgeting, Staff, outside counsel management, International market access strategies, Domestic & foreign government relations and advocacy. Creative in designing and implementing market access strategies. Practices law beyond conventional model with low-overhead and project-based fees. Effective at managing departments, formulating marketing strategies, balancing budgets, and implementing cost-saving measures. Extensive in-house and private practice experience, advising clients on commercial, corporate, international business, and technology law and policy. http://www.docstoc.com/video/89135472/make-your-business-an-international-presence; http://www.youtube.com/watch?v=fx5gijf3yoc For Sprint, he managed iDen international development in Southeast Asia, Middle East, and Africa, and contractual issues with Verizon. In Private Equity, he worked with Pegasus in vetting international investment deals and interim President for portfolio companies, such as Data Foundation, a data storage company, handling marketing, strategy, fund raising, and accounting. Before Pegasus, Mr. Zarco, as CLO and V.P. of Corporate Development, played a principal role in the structuring, international expansions for 2 telecom companies, U.S. Cable Group and Viatel, Inc. in financing and M&A deals exceeding $200 million. Mr. Zarco earned a J.D. from NYU Law School, M.B.A. from Cornell, and B.A. from Williams College; is fluent in Spanish, Portuguese, French, and German, with working knowledge of Russian, Arabic and Japanese.
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