On intelligence.
It’s all relative. Yeah sure, Einstein, tell us something we don’t already know. Well, for one, I’m nowhere near as smart as some people think I am. I think my IQ is somewhere around 130, between 125-135. But I can sometimes come off as someone that’s a bit higher than that, at least I think I can, because of the following reasons, in this order.
1) Knowledge base.
a) acquisition of new knowledge.
b) preparation of answers to questions for future engagements.
2) Realizing connections within that knowledge base.
a) everyone can figure things that operate in a vaccuum. But it’s another to quickly see connections in other areas.
3) Articulation of answers in a concise and intelligible manner to the common person.
a) Figuring out how to respond a certain way to different people.
The knowledge base is a huge factor, but it actually paints a false picture of intelligence when it’s really only a representation of what I remember. I’m a naturally curious guy who likes to read a lot of stuff. Business, economics, politics, psychology, music, theology, and so on. I think people mistake this breadth of knowledge with intelligence, not just as a simple reflection of things that I remember. I also think a lot about questions and possible answers to them way in advance. If a question was posed earlier in the day that I didn’t think I answered adequately to, I’ll go home and think about responses until I think one of them is good enough. So when someone in the future asks me the same question, I can answer it in the best manner very quickly, which again gives off the wrong perception that I’m a smart guy.
I think one of my strongest strengths that is actually reflective of intelligence is my ability to connect things together. I think this is actually one area where EQ and play a role with intelligence. Yeah sure I may not perform as well on spatial tests against those with high IQs, but I can usually see how one thing is connected to several other issues at the same time. This doesn’t have much to do with actually performing permutations of possibilities; I’m definitely lacking there as well. It has more to do with even realizing the possibilities of certain permutations that those with high IQs may not even realize. Making those connections, I think, is a function of both IQ and EQ.
And lastly, I think I can sometimes come off as someone who is intelligent if I speak clearly and concisely enough. This is something that I’m not an expert at doing, but if I am comfortable with the topic in discussion, I can say pertinent thoughts and ideas quickly and in a meaningful way, which also gives off the wrong perception of intelligence.
So in conclusion, I think I could potentially come off as someone with a 140-150 IQ to someone who has a similar IQ as me (around 125-135) or to someone who has a lower IQ, mostly because I’m knowledgeable about certain areas and spend a lot of time preparing some of my answers ahead of time. But I think a person with a real 140-150 IQ level can pick me apart and can probably see right through it.
I think I’m at least 3 tiers away from geniuses like Stephen Hawkins and Albert Einstein. If I’m someone who could get into Berkeley, the next tier will probably get into Stanford/Harvard. But not all those kids are brilliant. I think honestly, many of them get in because they study hard and go the extra mile to abandon other areas of their lives just to do that. I think the tier after that would be someone who can solve all the toughest brain teasers. There are certain people I know (not too many of them) who can analyze and come up with the solution to a very complicated brain teaser within seconds DURING a stressful interview better than I ever can. That’s IQ that I can never match. And the tier after that I think gets to Hawkins and Einstein.
So I’m clearly not a genius. I’m at least 3 degrees away from it. What does upset me, however, are people who are clearly not as smart as I am that get pissed off because I call them out on making unfounded and often fallacious arguments. Religiously speaking, I sometimes wonder if the relationship between me and God are similar. I probably get flabbergasted on issues that seem like no brainers to God.
On small-cap/large-cap commpanies.
Small cap usually refers to small capitalization companies. Meaning they’re usually startups. Large-cap companies have been around for a while. Think Microsoft and IBM.
I personally feel, at least from my personal experience, that the responsibilities of CEOs of the small-cap companies and large-cap companies are very different. Same title, very different responsibilities. And those businesses are also run very, very differently.
The responsibility of the CEOs of many small-cap companies, I think, is to grow at an exponential rate year after year. The terminology they use is called “hockey-stick” growth. If you plug in compounded, exponential growth year in and year out, you’ll get growth that may start off a bit slow and horizontal at first, but that growth rate will quickly go vertical in the end. If you fail in that regard as the CEO, you’re done. Most start-up CEOs, I think, are in a high-risk, high-reward kind of job. If they succeed, they make out with a large percentage of a very valuable company. If they don’t succeed within a couple years, they are left in the dust. I think the position of a CEO is definitely a requirement in all startups, and a 3 month absence will have a significantly material and negative impact in the company’s financial performance.
I think the responsibility of the CEOs of many large-cap companies (that are steadily growing like Microsoft and IBM, and are not in life support like Yahoo) is to simply not screw up what is good. If the company has been growing 5% a year (either revenue/EBITDA/Stock price, et al), then continue that rate. Any higher than those miniscule advancements are considered huge successes. And there isn’t a lot of innovation to be had. If you consider, for example, that one out of every ten companies fail, then why would they invest $1 Billion in innovating in 10 different things, 9 of which will generate no revenue and 1 of which may and probably will not generate enough money to make back that $1 Billion? So what you end up doing is going out and acquiring smaller companies for say, $250M, because it’s a safer bet. You pay a premium for it, but you have the cash and the odds of failure is almost nil. So even though the jobs of these CEOs isn’t really all that hard, they get paid millions upon millions to do that miniscule job since they are in charge of hundreds of thousands of other employees and/or a large amount of revenue. I can guarantee you that if IBM didn’t have a CEO for an entire 3 month period, absolutely nothing will change in their financial performance.
So in short, I think the CEO’s job of a small-cap company is to succeed, and the CEO’s job of a large-cap company is to not fail.
One more difference about small-cap and large-cap companies. Small-cap companies don’t just lack resources but also proper measuring sticks. You have very little market data on how things will pan out because, by nature of start-ups, it’s brand new. And with that kind of small sample size (or altogether non-existant sample size), I think it’s very hard to gauge the likely success of one new endeavor over another. On the other hand, large-cap companies not only have the resources to run numbers in as many ways as they want, but they have the data to be able to do that work.
On hiring/firing.
The CEO of my current company was laid off a few months ago. I never quite understood how a CEO and only the company’s sales force can all work in Colorado while the rest of the company worked in New York. She always treated me well, and I responded in kind. During her tenure, a lot of good things happened. We doubled our revenue one year and tripled it the next. By the end of 2010, however, the company was on life support as the company barely managed to match the financial performance of the prior year, and had to close a debt offering to stay solvent. Looking back, it’s amazing how well the company did in the first four months of 2010. The last 8 months simply was dismal.
Several mistakes happened in 2010.
1) We spent a lot of money recruiting more people for the business that we expected but never came. The lesson here is that hiring should always follow the business, not the other way around. Just because the trend looks positive doesn’t mean that the trend will continue. A lot of people used to work late hours here when I came in. But now, even after the latest round of layoffs, you’d be hard pressed to find more than 3 non-executives working past 5 or 5:30 at the latest. For a cash-strapped company, this should not be the norm. If we hired responsibly, our company will not be facing the cash issues that it’s facing right now.
2) We spent a lot of money recruiting people at a higher salary than they’re worth. So we’re paying many underqualified people a more money to do lesser quality work. I think we now have the right people at the top. But now we don’t have the right people at the bottom.
3) We spent a lot of money doing a lot of really silly things that have brought us no benefit. The CEO had a very expensive “CEO coach.” The Sales people sometimes made over 10% in commission, even as the company was begging for cash. 8 people worked in the Colorado office that cost a quarter of the New York office that employed over 40 people. We invested in hiring people in the wrong departments and the parts of the businesses that really needed help didn’t. We spent a lot of money trying to get customers to our website when we didn’t even have the business to refer them to.
As 2010 came to a close, it was evident that the company wasn’t going to continue its trajectory. And I think the CEO knew that her job was on the line. She started making extravagent sales forecast that we had no way of reaching. As December came to a close, we “booked” several deals that didn’t have an actual signed contract but instead had nothing more than a response from some marketing manager that said that our business sounded like a good idea. In effect, we were misled to unknowingly cooking our future forecasts with non-existing business.
But the thing that really has me upset is the fact that the CEO, even months after being fired, has been doing real harm to the company. We tried to raise money 2 months ago, but the former-CEO had sent several slides to the venture capital firms that no one else knew she had sent. They were unreasonable projections at best, and the venture capital firm walked away, because their term sheet was based on a valuation of a very high-growth company. She then became the CEO of a Sales software company, which we had employed for the past few years because it was the brainchild of our current VP of Technology, who is also her brother. Then she started to copy all the contacts from our company’s database. She would then literally send emails out to them and let them know that she used to be the CEO of my company but is now the CEO of another company, and believes that she can produce something that my company can’t. When confronted, she would say that as the CEO of that Sales software company, she has free reins to all data, including my company’s. But the data is not hers; the software, and the software only, is what she should have access to, not the data of all our sales contacts. We are not paying that company so that they can sabotage our sales. Our technology guy then blocked her from all listings. And her brother, the VP of Technology and the creator of the Sales software, then clandestinely logged into the technology guy’s computer to do god knows what. And before she left, she gave her husband, who is also a salesman at our company, a $35,000 raise.
My personal opinion is that we need to re-start in many ways. Get rid of the excess headcount. We still have at least 3 or 4 that don’t really need to be employed here. Then replace any of the people who are either too expensive or not pulling their weight. And hire superstar sales people and the technology people. Export many of our operational processes and invest in bringing in-house many functions that we spend too much money outsourcing. And obviously, give me a 100,000% raise.
My other personal opinion is that some people who worked with her in Colorado are probably sabotaging my company. I think the loyalty runs deep to our CEO there. Hopefully, I’m just being too paranoid. But my experience with her departure and how she’s handled it hasn’t been very good.