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Supply Chain Now Radio Episode 59

March 20, 2019 by angishields

Supply Chain Now

Supply Chain Now Radio Episode 59

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Supply Chain Now Radio, Episode 59
“Disruption, Plastics Manufacturing and Risk Mitigation”
Live broadcast from the offices of Arnall Golden Gregory LLP
Learn more here: https://www.agg.com/

Jeff Frankish serves as Managing Director for KRAIBURG TPE Corporation (USA). As Managing Director, Jeff has been responsible for KRAIBURG TPE’s North American division and business operations since January, 2008. After earning his college degree in Marketing from Miami University in Oxford, OH, Frankish began his career in plastics in the early-1980’s working for one of the major US chemical companies progressing through positions in sales, financial planning, product management and commercial development.

His first involvement with the TPE industry began in the early-1990’s when he accepted a business development position with a joint venture company which was spun off from the parent chemical company. Frankish subsequently hired on with one of the major North American plastics compounders in 1997 where he advanced through several different commercial management roles, ultimately to the position of commercial director for engineered compounds just prior to his joining KRAIBURG TPE in August, 2007.

With over 35 years of professional experience in the plastics industry, Frankish brings a diverse business background into his management role. Based out of KRAIBURG TPE’s regional headquarters in Buford, GA, he now manages a cross-functional staff of over 80 employees with the responsibility of expanding KRAIBURG’s business throughout the Americas as well as providing critical support to many of the largest OEM customers on a global basis. Connect with Jeff Frankish on LinkedIn and learn more about KRAIBURG TPE here: https://www.kraiburg-tpe.com/

Jeffrey “Jeff” Y. Lewis is a partner in the Business Litigation Practice at Arnall Golden Gregory LLP. Mr. Lewis practices in both state and federal courts, doing both trial and appellate work. He practices dispute resolution for large and small companies and individuals, both in the United States and abroad, in widely diverse industries.

Mr. Lewis focuses his practice on all manner of business disputes, the subject matters of which range from a breach of contract for renovation of a chemical storage tank, breach of contract for hospital linen services, indemnity claims on shipping contracts, real estate disputes, assisting a foreign manufacturer in a product recall with the U.S.  Consumer Product Safety Commission, representing a franchisor in disputes over franchise and guaranty agreements in the fast food industry, trade secrets for proprietary yeast strains in the ethanol industry, pharmaceuticals license agreements, defense of manufacturers in product liability cases, defective construction products, beer distribution rights, and representing a foreign manufacturer of equipment for the cable television industry. Other matters include a claim against a client’s health insurance provider over reimbursement obligations, inter-generational estate litigation over a will in Georgia, a defamation and tortious interference claim arising out of the World Trade Center disaster on Sept. 11, 2001, and numerous restrictive employment covenants.

In addition, he has represented a company accused of negligent inspection in wrongful death/personal injury cases arising out of an explosion and fire at a sugar refinery. Mr. Lewis has litigated cases and handled mediations and arbitrations in areas including healthcare, biosciences, pharma, logistics, building materials, business defamation and tortious interference, class action defense, commercial paper, computer hardware sales, computer software licensing, construction disputes, estate litigation, family business, false labeling, fast foods, global commerce, insurance coverage claims, labor and employment and non-competition agreements, letters of credit, secured transactions, trade secrets / computer theft and the Uniform Commercial Code.

Mr. Lewis was also a professional actor from 1985 to 1992. He is a member of the Screen Actors Guild and the American Federation of Television and Radio Artists, and served on the Board of Directors for the Southeast Playwrights’ Project and the Georgia Shakespeare Festival. Mr. Lewis has performed in the “A Courthouse Line” charitable productions of the Atlanta Bar Foundation. Mr. Lewis also served on the Vincent J. Dooley Library Endowment Fund Committee at the University of Georgia and participated in Leadership Georgia. He is a panelist on the “Neil ‘Hondo’ Williamson and The Georgia Bulldog Allstars” radio program. He is a member of the Alumni Board of the Westminster Schools, and is an elder and Sunday school teacher at First Presbyterian Church. He has also participated in the Liberty Fund, and in YMCA Indian Guides/Princesses, and as a football coach for the Northside Youth Organization. Connect with Jeff Lewis on LinkedIn and learn more about Jeff & AGG here: https://www.agg.com/Jeffrey-Lewis/

Will Haraway is Founder & Lead Evangelist at Backbeat Marketing. Will has 20 years of executive experience in B2B Technology Marketing. Will is a certified analyst relations practitioner by the Knowledge Capital Group and has helped companies including Manhattan Associates, Aptos, Atlantix Global Systems, American Software and Rubicon Global improve their brand reputations with marketing results that help increase sales. Will also serves as a member of the APICS Atlanta Executive Advisory Board.The Backbeat team includes lead generation, digital marketing, media relations and content marketing specialists with a combined 50 years of experience in their chosen disciplines. Connect with Will on LinkedIn and learn more about Backbeat Marketing here: www.backbeatmarketing.com

As a Veteran of the United States Air Force, Scott also volunteers on the Business Pillar for VETLANTA, and maintains active membership in the Georgia Manufacturing Alliance & CSCMP Atlanta Roundtable. Connect with Scott Luton on LinkedIn and follow him on Twitter at @ScottWLuton. Learn more about TalentStream, a leading recruiting & staffing firm that helps companies find top talent in the Engineering, Manufacturing and Supply Chain space, by visiting their website here: www.talentstreamstaffing.com

Upcoming Events & Resources Mentioned in this Episode
Partnership Gwinnett Movers & Makers Awards: https://www.partnershipgwinnett.com/movers-and-makers-awards/
eCommerce Operations Summit: https://www.operationssummit.com/
MRO Americas: https://mroamericas.aviationweek.com/en/home.html
Velocity 2019 Conference: https://velocity-conference.com/
AME Atlanta 2019 Lean Summit: https://www.ame.org/ame-atlanta-2019-lean-summit
EFT 3PL & Supply Chain Summit: click here
Resilience 360: https://www.resilience360.dhl.com/resilienceinsights/
Georgia Manufacturing Alliance: https://www.georgiamanufacturingalliance.com/

Decision Vision Episode 6: Should We Hire a CFO? – An Interview with Jay Ruhm, JCR Financial

March 14, 2019 by John Ray

Decision Vision

Decision Vision Episode 6: Should We Hire a CFO? - An Interview with Jay Ruhm, JCR Financial

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Should We Hire a CFO?

Michael Blake, Director of Brady Ware & Company and Host of the Decision Vision podcast, interviews Jay Ruhm on when to hire a CFO, what a good CFO offers a growing company, and whether there’s a role for the fractional CFO.

Jay Ruhm, JCR Financial

Jay Ruhm recently retired from Dinova, where he was CFO for the past 8 years and is currently offering financial consulting services to startups, early stage, and venture companies through his newly launched firm, JCR Financial Consulting.

As CFO of Dinova, he worked closely with the Founder and CEO as they took a bootstrap startup through several funding rounds of both debt and equity, culminating in a $40 million equity investment by Frontier Capital in 2017. Finding the startup and venture world the most exciting environment of his career, Jay is looking to share the benefits of this experience with today’s aspiring entrepreneurs.

Jay received his MBA from Columbia Business School in NY. He spent the formative years of his career at American Express where he rose from Financial Analyst to Southern Region Financial Officer of the Corporate Services Division. As Financial Officer, he also had financial oversight responsibilities for several other Amex businesses based in Atlanta. Jay led several major strategic initiatives including a major pricing initiative that saved Amex $125 million of at-risk annual revenues.

Between his stints at Dinova and Amex, Jay spent time as a Senior Managing Consultant at Huron Consulting, leading varied teams of up to 40 people working on the Delphi bankruptcy from the initial filing to post-emergence. At the time it was the largest manufacturing bankruptcy in US history. He also initiated and led the development of a system to coordinate the claims across multiple parts of the case. He also spent time as a Division CFO at Kelly Services improving back office systems and pricing methods.

Michael Blake, Brady Ware & Company

**Mike Blake, Host of “Decision Vision”**

Michael Blake is Host of the Decision Vision podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. Mike is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

He has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

Decision Vision is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the Decision Vision podcast. Past episodes of Decision Vision can be found here. Decision Vision is produced and broadcast by Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn: https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript:

Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.

Michael Blake: [00:00:21] And welcome back to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we’ll discuss the process of decision making on a different topic. Rather than making recommendations because everyone’s circumstances are different, we’ll talk about and we’ll to subject matter experts about how they would recommend thinking about that decision.

Michael Blake: [00:00:41] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. And if you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast as well.

Michael Blake: [00:01:05] So, today we’re going to talk about whether to hire a chief financial officer and when to hire a chief financial officer. And this is a decision, I think, that any company that plans to grow to any size must wrestle with. You can’t manage a business without numbers. It’s just impossible to do that. And then, managing by the numbers goes a lot beyond simply debits and credits, counting beans, counting money as it comes in. In fact, on another podcast, we’re talking about data analytics, and that is becoming part of the CFO’s job description.

Michael Blake: [00:01:49] But the big question, particularly for small companies, when you take that plunge, because CFO, these Chief Financial Officers, if they’re any good, they ain’t cheap. And that represent — and they’re not generating revenue – at least, not directly – they’re not selling, they’re not marketing, they’re not advertising, but you can’t find a big or even medium-sized successful company that does not have a competent CFO at the helm.

Michael Blake: [00:02:18] And, as a listener, you’re probably wondering — you might be wondering, “Should I hire a CFO now? Is it something I should wait two to three years on, or did I hire a CFO too quickly? Did I take that plunge too quickly, and maybe I should have waited?” And we’re going to talk about that. We’re going to talk about this issue with one of the best in the business. I am delighted to have my good friend, Jay Ruhm, on the program with us today.

Michael Blake: [00:02:49] Jay and I have known each other for a long time, longer than any of us would probably care to admit. We know where each other’s bodies are buried. We’ll just sort of leave it at that. But Jay recently retired from a company here in Alpharetta, Johns Creek, called Dinova, where he was the Chief Financial Officer for the past eight years, really from startup until exit. And he’s currently offering financial consulting services to startups, early stage, and venture companies to his newly launched firm JCR Financial Consulting.

Michael Blake: [00:03:25] As CFO of Dinova, he worked closely with the founder and CEO as they took a bootstrapped startup through several funding rounds of both debt and equity, culminating in a $40 million equity investment by Frontier Capital, which is a North Carolina-based private equity firm in 2017.

Michael Blake: [00:03:41] Finding a startup and venture were the most exciting environment of his career, Jay is looking to share the benefits of this experience with today’s aspiring entrepreneurs. That’s why he’s here. Jay received his MBA from Columbia Business School in New York. I didn’t realize that. You’re smarter than I thought. That’s great. He spent the formative years of his career at American Express where he rose from financial analyst to Southern Region Financial Officer of the Corporate Services Division. As financial officer, he also had financial oversight responsibilities with several other AMEX businesses based in Atlanta. Jay led several major strategic initiatives including a major pricing initiative that saved AMEX $125 million of at-risk annual revenues.

Michael Blake: [00:04:23] And. there’s sort of the canned introduction. I’m going to go off the script a little bit. Jay brings a wonderful and very unusual combination of technical acumen and just plain horse sense that you don’t often find. And maybe I’ll let him tell you about the Dinova story. I like it so much. I want to tell it, but that’s depriving him of the opportunity. But this is a guy who’s paid his dues. There are a lot of CFOs around, but this is a guy who really paid his dues to get from where he started off with Dinova to now enjoying, at least, a semi retirement. If I build him up any more, he’ll never be able to live up to the hype like the Batman movie. So, Jay Ruhm, welcome to the podcast, my friend. It’s great to have you on.

Jay Ruhm: [00:05:14] Thank you, Mike. Thanks for having me. It’s a delight to be here.

Michael Blake: [00:05:17] So, I’m going to start. I’d like you to talk about the Dinova story because, I think, it talks about the evolving role of the CFO. That company literally went from napkin to something big, something that had an eight-figure exit, and you were there pretty much every step of the way. So, talk about the Dinova story and your role. And I’m already jumping off the script, but we’ve known each other long enough. I can do that from day one, minute one. Talk about that story. It’s so awesome. The world’s got hear it.

Jay Ruhm: [00:05:53] I was on a consulting gig for a number of years in the bucket of no good deed goes unpunished. This was supposed to be a short bankruptcy, 90 days, solve one of the first day motion issues, and I ended up staying for four and a half years helping the Delphi company through its bankruptcy from the day they filed until well after the emergence. So, as I roll off that gig, my second phone call — The first phone call was home of course. The second phone call was to a very, very good friend of mine named Vic Macchio. Vic had this idea for Dinova. And so, I called him and said, “Hey, I’m off. How are you doing?” And he says, “I’ve got Dinova up and running.” I said, “That’s terrific.”

Jay Ruhm: [00:06:46] So, I get home, I go visit him, “What are you doing?” He says, “Well, I’m trying to raise some money. This thing is going to be bigger than I am.” And I said, “That’s a delight. I’m happy to help you. Do you have financial statements?” He says, “No. I don’t need financial statements. This is a pretty simple business model.” I said, “Vic, you need financial statements.” He comes around and says, “Okay. Let’s get some financial statements.” And he says, “But I can’t pay you.” And I said, “Vic, not a worry. I’ve known you 25 years,” at that time. That was 10 years ago. And I said, “It will all work out in the end. I believe in the business. Let me help.”.

Jay Ruhm: [00:07:27] And so, we started looking to raise some funds. That’s where I met my good friend, Mike Blake. Mike, you had no small role in that with your introductions to people in the community. You were a great, great help in helping us secure that funding and helping us network through the community.

Michael Blake: [00:07:46] I think I was the ugliest cheerleader on the planet, but okay. If you want to give me the credit, I’ll stop resisting it. I’m awesome. Go ahead.

Jay Ruhm: [00:07:53] There you go. So, we raised a few million dollars and got the business up and running. And over the years, took in some small amounts of equity, but I would call that A round the primary round. And their incomes, what does a CFO do? The first thing I did was work with Vic and manage the financials, so that we were cash flow-positive. As quickly as we could be cash flow-positive, that’s key. An investor does not want to hear, “I need money from an entrepreneur. I need money to make payroll.” An investor wants to hear, “I have an opportunity, which I’d like to take advantage of. Are you in?”

Michael Blake: [00:08:39] When an investor hears that, “I need money to make payroll,” it’s like we’re talking about the movie Airplane. By the way, does anybody know how to fly a plane? It goes over about that well, right?

Jay Ruhm: [00:08:53] So, right away, early on, you could use, at least, some CFO to help guide the financialship as it were. And through the years, we maintained financial discipline, turned profitable in the middle of the period, somewhere around 2014-2015, and grew the business that way. I think one of the key things that a CFO does that’s helpful to a business in that stage is other than the CEO, the CFO is the only other one that doesn’t have a parochial view or a view from a department head. It’s the one place in the company, other than the CEO, where an individual has a cross-company view. And that’s a pretty vital role, and it’s important that the CFO understand that and apply that. So, when one department head says, “I want to do this,” where’s the one place who’s going to say, “Well, you need to talk to this department and that department because you’re going to have impact over there”?

Michael Blake: [00:10:03] That’s interesting. I’d never heard of the CFO’s role being described that way. So, in effect, you become the air traffic controller?

Jay Ruhm: [00:10:10] In effect, yes. And it’s at a peer level too because the department heads and the CFO, they all report to the CEO. And so, that’s key. And so, you’ve got to be a good partner and a good team player.

Michael Blake: [00:10:26] So, let me ask this then. So, you’re brought into Dinova, Dinova, I think, at that time, was not generating revenue, or if it was, it was de minimus revenue. Is that correct?

Jay Ruhm: [00:10:37] It was de minimus, right. As I said, Vic had said, “Yes, I got Dinova up and running.” He didn’t tell me it was $12. Just getting started at 12 bucks, but it was small.

Michael Blake: [00:10:47] But it’s higher than zero, right?

Jay Ruhm: [00:10:49] Yes, it was more than zero.

Michael Blake: [00:10:50] So, technically, it was revenue-positive. So, why do you think he saw wisdom in hiring a person whose job is to count money when there is no money to count yet?

Jay Ruhm: [00:11:03] I’m not sure that that’s why he brought me in. I don’t know that Vic was thinking, “I need financial help.” It was more that-

Michael Blake: [00:11:12] Yeah, clearly.

Jay Ruhm: [00:11:14] It was much more that we had been good friends for a long time, and I offered to help for free. And when you’re starting a business, and you’re a CEO, and you’re trying to get something going, you take all the free help you can get.

Michael Blake: [00:11:28] So, one of the things I’m taking away from this is that a CFO, and at least in your case, you tell me if you think it’s more common or not, but you are kind of internal trusted advisor, right? We talk about trusted advisors and the outside. Ostensibly, I am a trusted advisor to god knows who. But you became Vic’s internal trusted advisor that was captive, somebody he could talk to, and early on, would have skin in the game by the way of having a modest ownership of the company and so forth.

Jay Ruhm: [00:12:03] Sure.

Michael Blake: [00:12:03] Right?

Jay Ruhm: [00:12:04] Yes.

Michael Blake: [00:12:06] And that has maybe very little to do with finance.

Jay Ruhm: [00:12:11] It has. You’re correct. It doesn’t require the knowledge or the technical skills that a CFO typically has, but that role is vitally important. And many experienced CEOs know that when they’re hiring a CFO, they are hiring a trusted adviser.

Michael Blake: [00:12:33] And is that why you wanted to have a CFO role? I mean, the CFO role is not easy, and it’s high stress. There’s very high turnover in the CFO world. It’s like a baseball manager almost hired to be fired. That’s the nature of the game. Why do you want to do that? What was your calling to do that?

Jay Ruhm: [00:12:55] I was lucky. Early in my career, I started off as an engineer and didn’t succeed very well. And so, went to – as we used to say in the ’70s – find myself. And I found myself curled up in a ball over in a corner, and picked myself up, and started looking at all different kinds of things, and found the business classes to be easy and fun. And the more I got into it, the more I enjoyed the operating finance role as opposed to accounting. What I like about operating finance is it’s there on the front line of the business.

Jay Ruhm: [00:13:33] As you said before, no, I’m not the one ringing the cash register, but I am the one working with the sales leader to price, and what’s a good deal, and to coach and advise not only the CEO but all of the other department heads as to what makes good financial sense.

Michael Blake: [00:13:57] All right. So, now, I think one of the reasons to bring in a CFO is to get the CEO out of the CFO business, right?

Jay Ruhm: [00:14:07] Yes.

Michael Blake: [00:14:09] To let them do what what they do well. So, if you’re at liberty to do so – We’re going off script again, that’s okay – Talk a little bit about your relationship with Vic. And we know what his strengths are. What did him hiring you enable him to do more of that made Dinova successful?

Jay Ruhm: [00:14:27] In a bootstrapped startup, you have to do everything. And Vic was paying the bills, literally, writing the checks, and keeping track of everything. And so, I took him out of that business. I started paying the bills, keeping the books. That was the very, very beginning, preparing the financial statements, as well as advising on business direction and strategic issues.

Michael Blake: [00:15:00] And then, that enabled him to do more of what?

Jay Ruhm: [00:15:03] At that stage in the business and pretty much throughout, his forte is is marketing, sales and marketing. And so, it really allowed him to work that much closer with the sales and marketing folks and build the business on that side. As Vic and I often joke, I say, “Vic, you take care of the revenue. That’s not my thing. You bring in the revenue. I’ll take care of the expenses and the bottom line and make sure we have a healthy balance sheet.”

Michael Blake: [00:15:34] And as I recall, he is very good at raising capital too, which if you’re to generate revenue, you’d better be raising capital. You’ll have one of those two things in the short trip, right. So, I think, the wisdom of him bringing you in as that internal trust advisor enabled him to get out the things that were not value added from his perspective and really focus on the things that were required for Dinova to ultimately thrive, right?

Jay Ruhm: [00:16:01] Yes.

Michael Blake: [00:16:02] Right.

Jay Ruhm: [00:16:02] Yes, absolutely. One of the things that you mentioned raising capital as a value-add, to a point. When you spend too much time raising capital, you’re not focusing on the business. And one of the things I wanted to do was get Vic out of the capital racing business and raise funds when we had to, when we needed to. And when I say when we had to, it wasn’t to make payroll. Remember debt, from a CFO’s perspective, is a tool if you can lever up the balance sheet from nothing. The example I use is the cost of capital. If your equity costs 30%, then you’re not going to take on a 25% return project. That’s not worth it. But if you can throw a little debt on there at 5% or 10%, you bring that cost of capital down to 20%, then, all of a sudden, you’re 25% projects start to look pretty good, and it lets you do more.

Michael Blake: [00:17:08] And, now, working cost of capital. Now, we’re talking dirty. That’s good. Yeah, the finance geeks are going to really geek out on this. So, I think, a lot of listeners don’t necessarily understand the difference between a CFO and a controller. And many companies, I think, hire a controller and they may decide that that’s enough. But I wonder how many people really understand the difference between a CFO and a controller. Can you explain that difference because they are different roles? The controller typically reports to a CFO if there is one. What are those jobs? How do those job descriptions typically differ?

Jay Ruhm: [00:17:50] Well, it starts right with the skills that are brought to the table. There’s a reason one can major in Finance in school, and one can major in Accounting in school, and they are different. So, it starts right with the skill set. Accounting is very technical, very important. The financial statements are how a business communicates to its audience, its investors. And it’s very, very important that the language of accounting be observed, so that those financial statements mean something. That is the primary focus of a controller is not only the preparation, the debits and credits, also the controls – hence, the word controller – but there are checks and balances that one needs to put in place, segregation of duties. We’re really going to get into it now, Mike.

Jay Ruhm: [00:18:45] When we started, we had our first audit, and I told the auditor, “Yes, I pay the bill. I pay the bills, I reconcile the bank account, and I prepare the financial statements. How’s that for segregation of duty?” Man, there wasn’t any, but that’s what it was. So, the controller is going to build all those processes as the company grows and prepare the company for its first audit, which, by the way, I recommend be done as early as possible. You always want to build the infrastructure ahead of the future growth. You don’t want to find you’ve got all this money coming in, and you can’t control it. That’s a recipe for losing some. And so, that’s the primary focus of the controller.

Jay Ruhm: [00:19:35] The CFO is a broader job. The CFO must be fluent in accounting and all that goes along with it. But the CFO, as we’ve talked earlier in the show, also has to be the internal advisor. Another piece of the CFO job that we didn’t talk about is strategic. And that is, what’s the strategic plan? There’s another function that many folks know is BP&FA, business planning and financial analysis. That falls under the CFO as well. And, oftentimes, in a growing company, the CFO is wearing many, many other hats. I had responsibility for HR. And so, there’s lots of things.

Jay Ruhm: [00:20:25] I had a mentor once, when I was at American Express, a young lad was working for an executive. And he said, “Hey, I’ve got an HR person. I have a marketing person. I have an operations person. And if it’s not HR, marketing, or operations, it’s finance.” And so, the finance is the one place that’s got to pick up all the loose ends. Make sure all the Ts are crossed, and the Is are dotted.

Michael Blake: [00:20:52] Interesting. Okay. So, I’ve never heard the role quite that described and quite that way, but it does make sense of the C-level positions other than CEO as you talked about. It’s the least siloed of any of those functions, right? And I’m reading a lot about the CFO role even changing beyond that as the stereotypical CFO role is you’re the numbers guy. And you leave the strategy to somebody else or the job is to somehow make the finance work with that strategy or advise when the finances will not support that strategy and it must be altered. But I’m seeing a trend where those two roles are now converging. You cannot be a non-strategic CFO and be successful anymore in that role. Do you agree with that?

Jay Ruhm: [00:21:50] I completely agree with that. One of the benefits of being at American Express early in my career is that’s a very, very forward-thinking company. It’s been a leader. What I define as a great company is a company that’s been a leader in its field, top of its game for a hundred years, not 15 or 20, because all of those companies that are leaders in their field and have been for a century are in a completely different business than they were a hundred years ago. How did they do that? Microsoft may very well be a great company, and it is a great company, but their business model hasn’t yet been turned completely upside down. They’re growing, they’re bigger, but they’re not in a completely different business than they were when they started. I think Procter & Gamble has one product that’s a hundred years old, and that’s Ivory Soap.

Michael Blake: [00:22:49] Is that right? I didn’t know that.

Jay Ruhm: [00:22:51] Yeah. Ivory Soap has been around a very, very, very long time.

Michael Blake: [00:22:54] Okay.

Jay Ruhm: [00:22:54] So, right there at the operating level within AMEX, there was a distinction between accounting and a business unit CFO as I was. Now, of course, if something went wrong on an audit report, it landed on my desk. But, generally, I was not involved in the debits and credits. It was BP&FA, and it was an advisory role to the general manager. And that was back in the late ’80s. And the world has since moved much, much more in that direction. And I don’t mean to take anything away from my CPA brethren. They bring a whole lot to the table, and I’ve seen many, many CPAs who are just as strategic as any other CFO, and they make great CFOs.

Michael Blake: [00:23:51] So, I was going to kind of ask this. Historically, there’s been this dichotomy or this distinction that you either had a CFO who is a real accounting wiz, or you had a CFO that really understood finance, could have conversations with bankers, venture capitalists, and so forth, set up financing schemes, and you really couldn’t have both in the same individual. So, you had one of the other, and you chose that role depending on how the organization shakes out, and what their particular goals and needs are. Is that distinction meaningful anymore?

Jay Ruhm: [00:24:36] Yes, it still is.

Michael Blake: [00:24:38] Okay.

Jay Ruhm: [00:24:38] Because as we were talking earlier, when I described the differences in the roles between what a controller does and what a CFO does, they’re still extremely vital to the company. And even a CPA and CFO. And I know many of those, they will also have a controller work for them, so that they’re not totally focused on that, and they free up some time to do the advisory role and the strategic role that’s required of a CFO today.

Michael Blake: [00:25:14] Okay. So, do you have a story out there where you, as a CFO at Dinova, what’s an example where you felt like you made the greatest impact on the company?

Jay Ruhm: [00:25:28] That all comes back in my view, ultimately, to a leadership question. And it’s much more about leadership than it is about necessarily technical finance. So, as we were growing, it had been my approach to prepare the infrastructure for the growth, so that when we had outside funding coming in and needed to deliver audited financial statements that we had the processes and procedures in place, and how would I get that done.

Jay Ruhm: [00:26:05] And in leading a team it wasn’t me. I was fortunate enough to have a dedicated team of professionals, great, great people who I keep in touch with, of course, who I would set the guiding way, and said, “Okay, we need to-” A great example is the implementation of NetSuite. We were on QuickBooks Online. Just didn’t meet our needs. A great product, we used it for many years, but we needed something much, much more. And I wanted online, which, at the time, QuickBooks didn’t have. QuickBooks would have meant a server. I didn’t want that.

Jay Ruhm: [00:26:42] So, we went with NetSuite, and it gave us a lot more flexibility in terms of analytics. It gave us great, great efficiencies, and that had a huge impact because it allowed us to grow and build the finance team and structure and get all those things done.

Jay Ruhm: [00:27:07] Well, I always had my eye on, what’s a world class finance organization? What is it as a percentage of the expenses or the headcount? And my research indicated it was something less than 10%. I wanted less than 10% of the resources of the company going to the finance and the infrastructure. And so, that was the target. And to do that, like I said, it comes back to the team and the leadership. And in leading a team, you set a direction, you leave your door open, and then you get the hell out of the way and let them go to work.

Michael Blake: [00:27:50] So, all right. So, I think this is drawing out a very important point because, I think, many folks, especially if they have not hired a CFO before, we equate CFO with accounting first; finance second, ironically, but there are intertwined. But what’s coming out of this is that it’s not about how much money you have to count. It’s not about how complex your finances are, but do you need somebody else, or you always need somebody else on the team who is a good leader who happens to have a skill set in those particular areas. And no firm can ever have too much leadership, right?

Jay Ruhm: [00:28:36] Right. There’s an old saying, and you mentioned it earlier, you said a CFO can be expensive. I would suggest that it’s less expensive than not having one.

Michael Blake: [00:28:50] Because things get missed, right?

Jay Ruhm: [00:28:53] Yes.

Michael Blake: [00:28:53] And people don’t get led. And when you’re in a startup position particularly, right, you can outspend your mistakes.

Jay Ruhm: [00:29:04] That’s true. And I’m going to relate it back to the advisory role. Every small company tries to get a good board of advisors, but they’re external people. And the CFO can be the internal advisor, as you pointed out earlier. And how that differs from the external is not only a better understanding of the nuts and bolts of the business, but it’s also a frequency. How often does the CEO get to turn to somebody and ask a question? You make use of the outside advisors, but on a daily basis, it’s the CFO.

Michael Blake: [00:29:44] Yeah. It’s a lonely place, right? So, the CFO makes it a little bit less lonely. I’m curious about your position on this. Of course, in your position with Dinova, where Vic didn’t have the money to pay you right off the bat, you accepted equity as part of that compensation. But even if a company has cash, do you think that ownership of the company in some fashion ought to be a requirement of the CFO, or do you think it matters?

Jay Ruhm: [00:30:16] It matters a whole lot. And my own view is that ownership of the company should be spread as far and wide inside the company as possible. Absolutely critical. What goes along with that, just giving somebody ownership of the company doesn’t mean that they’re always going to act in the best interest of the company. And I’m not suggesting malfeasance. What I am suggesting is a simple lack of knowledge. When you give a financial device or implement such as a share of stock to an HR manager who is not very terrifically skilled in HR matters, but not in finance-

Michael Blake: [00:31:01] They’re not Warren Buffett necessarily.

Jay Ruhm: [00:31:04] So, what goes along with that is some level of financial knowledge has to be spread along. So, in my view, just a recap, I think as many people as possible should have stock. And when that stock goes out, there should also be workshops and sharing of knowledge of what is finance. And as a valuation expert, Mike, you understand the name of the game for small companies. To get to that exit, you have to understand valuation. What makes the stock price go up?

Michael Blake: [00:31:37] Yeah. Yeah, for sure.

Jay Ruhm: [00:31:38] And it’s more than just making money.

Michael Blake: [00:31:40] So, one of the roles we often associate with a CFO is to be a counterweight to the CEO. That’s stereotypical. Do you find that to be true? And if so, how do you manage that, so the conversations are always constructive and not potentially destructive?

Jay Ruhm: [00:32:14] I would say that’s even desirable, Mike. You want a yin and yang. There’s no better role for a CFO than to have the classic entrepreneur as the CEO. That CEO is going to do a lot of things that the CFO just can’t. They’re not in the toolkit, right? And that’s where the advisor and the relationship comes in. There has to be healthy discussions. Not every entrepreneur can bring in a CFO that they knew for 25 years. You’re going to have to hire somebody who you previously didn’t know. However, you’ve got to start building that relationship immediately, and there has to be that healthy give and take.

Michael Blake: [00:33:06] And one thing, often, in observing how you manage that, I don’t recall a story of you ever telling Vic no but rather responding to a decision and saying, “Here’s what the impact is.” And we’ve said that we’ve had certain goals. In your case, it was on a certain amount of cash in the account, right, certain amount of safety. And if we do it this way, it’s going to take some of that safety away.

Jay Ruhm: [00:33:37] I would say yes to both. I don’t often retell stories of when I’ve told Vic no, and I’ll let him tell you how many times he’s heard me say no, but it’s always followed up with, “Here’s why.” I would not trade away the classic entrepreneurialism that Vic brought to the table-

Michael Blake: [00:33:57] Sure.

Jay Ruhm: [00:33:58] … for anything.

Michael Blake: [00:33:59] It was critical.

Jay Ruhm: [00:34:00] It was absolutely critical to the growth of the business. So, that’s where our healthy discussions came in is, “You want to do what?”

Michael Blake: [00:34:11] But you didn’t always agree necessarily right off have to achieve a consensus somehow.

Jay Ruhm: [00:34:16] I would say most of the time, we came to consensus. And there were times where he would take my advice and not do something. And there were other times where he would say, “Nope, we’re doing this, and I’m pulling rank on you.”

Michael Blake: [00:34:38] And that happens.

Jay Ruhm: [00:34:39] That absolutely happened. And you know what, didn’t hurt my feelings at all.

Michael Blake: [00:34:42] That’s the NFL, right?

Jay Ruhm: [00:34:43] Yup.

Michael Blake: [00:34:46] So, one last question I want this could be a two podcast. But do you think about part CFOs? There are a lot of those services around, fractional CFO services. Is there a useful role for providers, advisors like that to you’re not quite sure about if want a CFO full maybe you don’t feel comfortable financial commitment, or do you think you’ve just got to the Band-Aid off and just go?

Jay Ruhm: [00:35:19] No. I think, there’s a role for the fractional CFO. There absolutely is. What I would advise in a relationship with a fractional CFO is that you don’t have that CFO doing the accounting.

Michael Blake: [00:35:36] Really?

Michael Blake: [00:35:37] Why?

Jay Ruhm: [00:35:40] Because I would want that CFO going over business plans, making forecasts, understanding the business, and advising. I would have an outside CPA or a bookkeeper. What many, many businesses do when they start up is get that accounting piece done. I would keep that away from the fractional CFO, just so that I’m not spending my resources having the CFO doing that.

Michael Blake: [00:36:12] And in effect, spending $250 hour and a $60 an hour skill set, among other things. Right?

Jay Ruhm: [00:36:18] Yes. That’s a good way to describe it.

Michael Blake: [00:36:20] And I think I’ve seen this too is that, sometimes, a CFO will be hired, but then they’re doing the wrong not doing CFO things. And that’s not great either.

Jay Ruhm: [00:36:36] Yeah. There is a balance that has to be struck between where the CFO spends their time. As you recognized right up front, we’re not the ones who make the cash register ring, but I sure want to help make it ring. And if I’m preparing a financial statement, which I did in the beginning because I had to, when I’m doing that, I’m not out meeting a customer.

Michael Blake: [00:37:06] Right, okay. This has been great. We have all kinds of other things we could cover, but we can’t cover this topic exhaustively. If somebody wants to follow up with you and ask about some of this, can they do that?

Jay Ruhm: [00:37:27] Absolutely.

Michael Blake: [00:37:27] So, how would they get a hold of you?

Jay Ruhm: [00:37:30] Best way to do it is through e-mail. I’m at Gmail. It’s my name followed by the number one. So, it’s jayruhm1@gmail.com.

Michael Blake: [00:37:42] All right. Very good. Well, that’s going to wrap it up for today’s program. I would like to thank my good friend, Jay Rhum, so much for joining us and sharing his expertise with us on this CFO issue. We’ll be exploring a new topic each tune in, so when you’re faced with your next business decision, you have clear vision when making it. Again, if you enjoy this podcast, please consider leaving a review with your favorite podcast aggregator. It helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision Podcast.

Tuesdays with Corey Episode 18

March 13, 2019 by angishields

Atlanta Business Radio

Tuesdays with Corey Episode 18

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As the CEO of Simple Fat Burn, Cathryn Marshall teaches people to get fit fast and make it last. As a motivational speaker, author and fitness educator, she teaches simple strategies that result in immediate change. She coaches clients online, via webinars, phone, and text message accountability.

Cathryn coaches professionals to acquire clients, build their network and to get immediate results. The Simple Fat Burn Certification includes business development, networking, marketing and social media skills for professionals. Cathryn is the author of Simple Fat Burn: Three Steps to being Fit & Lean, available on Amazon, Kindle and Barnes & Noble. She has sold over three thousand copies, and the book is being sold internationally.

With 22 years of experience in the personal training and fitness industry, Cathryn offers custom designed fitness programs to create immediate change. Her specialization is creating strategies for motivation, behavior modification and fat loss. Cathryn sets the bar high for a standard of excellence in the personal training and nutrition education industries.

Connect with Cathryn on LinkedIn, Twitter, Facebook and Instagram.

A neutral provider of Long Term Care Solutions since 2001, Corey brings a unique and comprehensive consultative perspective to this issue. Since 2003, part of his commitment to the Long Term Care Industry includes his having trained over 3,500 advisors from San Francisco to Wall Street on how to properly position Long Term Care to clients through the CLTC organization. Additionally, he has authored dozens of published industry articles on Long Term Care and has assisted many of the nation’s leading LTC carriers on operational and educational matters.

Jeffrey Wolf with Quarles & Brady, Marisa Felker with Washington Federal, and Chad Barnett with Foods 2000

March 5, 2019 by angishields

The State of the Franchise Industry in Arizona

Valley Business Radio

Jeffrey Wolf with Quarles & Brady, Marisa Felker with Washington Federal, and Chad Barnett with Foods 2000

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Jeffrey H. Wolf, Quarles & Brady

Jeffrey H. Wolf, a partner at Quarles & Brady in Phoenix, is a commercial litigator with nearly 30 years of experience representing clients in a variety of business sectors. His practice focuses on franchise, employment, health care, contract, partnership, real estate, and intellectual property matters. He also serves as outside general counsel to several Phoenix-based behavioral health care companies.

As a member of the firm’s national Franchise & Distribution team, Jeffrey devotes a significant part of his practice to representing franchisors in litigation involving issues of unpaid or under reported royalties, fraud, liquidated damages, system standards, earnings claims, encroachment, advertising funds, trademark and trade dress infringement, and vicarious liability. He also has extensive experience handling cases requiring the enforcement of restrictive covenants and other post-termination rights and the defense of franchise and consumer class actions and other system-threatening cases.

Jeffrey has handled numerous arbitrations, bench trials and jury trials in state and federal courts throughout the United States. He is a highly effective, detail- oriented and responsive attorney committed to helping clients resolve their disputes as cost efficiently as possible, whether through early settlement, mediation or, if necessary, trial.

Connect with Jeffrey Wolf on LinkedIn and follow Quarles & Brady on LinkedIn, Facebook, and Twitter.

Marisa Felker, Washington Federal

Marisa Felker is the Franchise Finance Manager at Washington Federal. In mid-2028, Washington Federal launched a formal Franchise Finance Division focused on helping established restaurant franchisees secure funding for their businesses. The division is being led by industry veteran Felker, who will work from the Arizona Regional Headquarters office in Scottsdale and oversee the program across Washington Federal’s eight-state footprint.

Over her 25-year career, Marisa has served as a leader in franchise funding and also brings expertise in the areas of private banking and portfolio management. She has worked in leadership roles with both CitiCapital and GE Capital in franchise finance. She holds a Bachelor’s degree in Liberal Arts from Southern Illinois University and a Master’s degree in International Management from the Thunderbird School of Global Management.

Connect with Marisa Felker on LinkedIn and follow Washington Federal on Facebook and Twitter.

Chad Barnett, Foods 2000

Chad Barnett is the President of Foods 2000, a SUBWAY franchise company. With nearly 44,000 locations in 110 countries, SUBWAY is the world’s largest restaurant chain in the number of locations, and the second largest restaurant chain in terms of sales. With over 40 restaurants and 450 employees, Foods 2000 is one of the larger multi-unit owners in Arizona. Foods 2000 has been in business since 1990 and Chad has been leading the company since 2000. He is responsible for establishing, implementing, and enhancing the mission, goals, and objectives of the company while building and developing a team of administrative and supervisory leaders that effectively execute in these areas and lead the team of 400+ employees.

Chad is a board member of the SUBWAY Franchisee Advertising Fund Trust, which oversees the marketing efforts for SUBWAY franchisees throughout the greater-Phoenix and northern Arizona markets, including all advertising, marketing, promotions, public relations, and other activities designed to increase business at individual franchise locations and brand awareness in the marketplace. He is also a board member of SUBWAY Kids and Sports of Arizona, providing sports equipment, uniforms, registration fees, and access to major sporting events for kids who might not otherwise be able to participate.

Connect with Chad Barnett on LinkedIn.

Tuesdays with Corey Episode 16

February 14, 2019 by angishields

Atlanta Business Radio

Tuesdays with Corey Episode 16

00:00 /

Jill Heineck is a leading authority on corporate relocations, and is highly sought after for her real estate industry acumen and business insights. As a published author, frequent panelist and keynote speaker, Jill shares her experience and perceptions with people from around the globe.

Jill is a founding partner of Keller Williams Southeast, established in 1999, and the founder and managing partner of Heineck & Co. Her real estate practice specializes in corporate relocations, individual relocations, luxury residential, and commercial properties. Jill’s analytical approach to problem-solving, along with her expert negotiation skills and sophisticated marketing, deliver superior results to her clients. Her winning strategies and tenacious client advocacy have earned her a reputation for excellence among Atlanta’s top producers.

While Jill has received many accolades throughout her career, she is most gratified by the personal testimonials and referrals she receives from her clients. Jill’s unwavering commitment to the customer experience, and her focus on the unique needs of each client, serve as the foundation of her success.

Follow Jill Heineck on LinkedIn.

Corey Rieck is the President and Founder of The Long Term Care Planning Group, a firm that specializes in delivering Long Term Care education and coverage to companies, high net worth individuals and large organizations. Since 2001, Corey has devoted his career to Long Term Care as a result of multiple personal experiences. A neutral provider of Long Term Care Solutions since 2001, Corey brings a unique and comprehensive consultative perspective to this issue. Since 2003, part of his commitment to the Long Term Care Industry includes his having trained over 3,500 advisors from San Francisco to Wall Street on how to properly position Long Term Care to clients through the CLTC organization. Additionally, he has authored dozens of published industry articles on Long Term Care and has assisted many of the nation’s leading LTC carriers on operational and educational matters.

Decision Vision Episode 2: Should I Fire My Client? – An Interview with Jim DeBetta, DeBetta Enterprises

February 14, 2019 by John Ray

Decision Vision

Decision Vision Episode 2: Should I Fire My Client? - An Interview with Jim DeBetta, DeBetta Enterprises

00:00 /

Should I Fire My Client?

Michael Blake, Director of Brady Ware & Company and Host of the Decision Vision podcast, interviews Jim DeBetta on how to recognize when a client might be a bad fit, why it’s best to part ways, and how to do it gracefully.

Jim DeBetta, DeBetta Enteprises

Jim DeBetta is the Founder and President of DeBetta Enterprises which specializes in coaching and consulting for inventors and consumer products start-up companies. DeBetta Enterprises also assists clients with product development and engineering of consumer products as well as sales and marketing representation to major retailers for our select clients. Recently, Jim was Vice President of Retail Distribution for TV Goods which is owned by Kevin Harrington from the ABC show Shark Tank. I headed up a team of retail specialists that called on the world’s most prestigious retailers and TV shopping networks including HSN and QVC.

Jim is the author of the top-selling book, The Business of Inventing, former Staff Writer for Inventors Digest, and has sold over 100 million dollars of products for product entrepreneurs and inventors alike. His podcast, Get Retail Ready, is a valuable resource for those just starting out or looking to scale their business.

DeBetta Enterprises has formed a solid network of product engineers, factory brokers, angel investment firms, licensing experts, and sales and marketing professionals among many other areas of expertise. The firm works with Fortune 500 companies, celebrities, and individual inventors alike. They specialize in finding factories to produce products, create pricing strategies, marketing and public relations, and selling products to major retailers such as Target, Wal-Mart, Best Buy, Costco, Bed Bath & Beyond, Michaels, Walgreens, HSN, Macy’s, Amazon, and many others.

Prior to forming DeBetta Enterprises, Jim led a successful start up company which produced sport optics such as binoculars and hand held magnifiers. Jim was President and COO as the company grew from insignificant revenue to nearly $50 million dollars in sales in under 8 years.

For more information on Jim DeBetta and DeBetta Enterprises, go to http://www.jimdebetta.com/.

Michael Blake, Brady Ware & Company

Brady Ware & Company

Decision Vision Podcast Series

Visit Brady Ware & Company on social media:

LinkedIn: https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript:

Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.

Michael Blake: [00:00:22] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we’ll discuss the process of decision making on a different topic rather than making recommendations because everyone’s circumstances are different. We will talk to subject matter experts about how they would recommend thinking about that decision.

Michael Blake: [00:00:41] My name is Mike Blake, and I am your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe on iTunes, and also please consider leaving a review of this podcast as well.

Michael Blake: [00:01:03] So, today, we’re going to talk about something that doesn’t get talked about a lot, which is firing a client. And firing a client when you’re in business, and particularly, if you have a sales role is something that just seems wrong. We work so hard to get clients. Clients are not easy to get. They’re not easy to keep. And so, we’re hardwired that every client is precious. And to, a large extent, I think that’s a healthy attitude to have.

Michael Blake: [00:01:33] When you’re not grateful for your clients, bad things happen, your business is not going to survive long. But there is a point where enough is enough. The customer isn’t always right. In fact, sometimes the customer is not the right fit, or they’re just a raving lunatic, or somewhere in between. But the thing about that process is important. If you fire the wrong client, you’ve passed up revenue for no good reason. If you fire the client badly, then your reputation is going to suffer. But if you’ve been in any business long enough, firing a client or firing customer is a fact of life.

Michael Blake: [00:02:09] So, we’re going to talk about that today with Jim DeBetta. Jim is the Founder and President of DeBetta Enterprises, which specializes in coaching and consulting for inventors and consumer products startup companies. His firm also assists clients with product development and engineering of consumer products, as well as sales and marketing representation to major retailers for their select clients.

Michael Blake: [00:02:31] Recently, he was Vice President of Retail Distribution for TV Goods, which is owned by Kevin Harrington from the ABC show, Shark Tank. Jim headed up a team of retail specialists that called on the world’s most prestigious retailers and TV shopping networks, including HSN and QVC.

Michael Blake: [00:02:48] Jim is the author of the top selling book The Business of Inventing, aformer staff writer for Inventors Digest and have sold over $100 million of products for product entrepreneurs and inventors alike. Jim’s podcast, Get Retail Ready, is a valuable resource for those just starting out or looking to scale their business.

Michael Blake: [00:03:07] His firm has formed a solid network of product engineers, factory brokers, Angel investment firms, licensing experts, and sales and marketing professionals among many other areas of expertise. They work with Fortune 500 companies, celebrities, and individual inventors alike. Jim and his team specializes in finding factories to produce products, create pricing strategies, marketing and public relations, and selling products to major retailers such as Target, Walmart, Best Buy, Costco, Bed Bath and Beyond, Michaels, Walgreens, HSN, Macy’s, Amazon, and many others.

Michael Blake: [00:03:39] Prior to forming the DeBetta Enterprises, Jim led a successful startup company that produced support optics, such as binoculars and hand-held magnifier. He was President and Chief Operating Officer and led the company from insignificant revenue to nearly $50 million in sales in under eight years. We welcome Jim DeBetta to the program. Jim, thanks for showing up.

Jim DeBetta: [00:03:59] Hey, thanks Mike. Good to see you again.

Michael Blake: [00:04:01] So, it’s interesting. When I put this topic out there. I really put it out on social media. I’d like somebody to come on and talk about firing clients. And sort of you rose your hand and said that, “I really like to come on and talk about that.” What motivated you to do that? Why is that a subject that is close to your heart?

Jim DeBetta: [00:04:23] Well, I mean, I think, in any business, but particularly my business, inventing is an emotional business. So, when people have a product, it’s not just, “Hey, I have a particular thing, I want to get out there.” But they get very tied to it because it’s like their baby. I mean, it’s something that they created out of a need or because there was a problem, and they couldn’t solve it, or couldn’t find a solution. So, they say, “Well, I got to do this on my own.” And then, they spend years developing it. And then, when they come to me, then I have to see if it’s a good fit for me. And when I saw that, I was like, “Oh, I got to jump in on this one.”

Michael Blake: [00:04:55] I have a little of experience to that myself. As you know, I used to run a nonprofit called StartupLounge, and I’m still at a monthly office hours. And sometimes, an entrepreneur shows up, and they want to run their idea by me. And you have to tell them, “Well, I’m sure your baby’s healthy but it ain’t all that good looking.”

Michael Blake: [00:05:15] And that is something that is not necessarily well-received from somebody that has internalized their problem or their business, I should say, the problem that they’re trying to solve, and they’ve had a lot of people cheer them along the way. So, that’s friends and family, “Go for it. That’s a great idea.” People, by the way, who lose nothing if the business fails, advisors like me that can make money if they start their business, start spending money on advisors. And there’s this feedback loop that just internalizes. And all of a sudden, you can get to a point where you think, “Wow, I’ve got the next iPhone.” It’s just that obvious. Do you encounter that as well?

Jim DeBetta: [00:05:51] Oh yeah. And friends and family are the worst because they they love you or-

Michael Blake: [00:05:55] They really are.

Jim DeBetta: [00:05:55] … they’re supposed to love you, but you’ll always have that obnoxious one that will say, “Oh, that’s crappy,” or “I wouldn’t do that ever.” But most of the time, they’re going to give you support, whether it’s the product’s good or not good in their mind. And that’s what they should do, in a way, but that’s why we don’t want them to say, “Well, my next door neighbor, or my parents, or my kids think this is great.” That’s a red flag to me. What matters is what everybody else in the world thinks objectively, so people can look at it and say, with no vested interest saying, “I would buy this,” or “I don’t like that.” And that’s an important thing.

Jim DeBetta: [00:06:27] But all of this comes down to, which I know we’re going to talk about is managing expectations when people start to work with me. And right off the bat, that’s how I determine if I should take on a client or even move on from a client when things start — when I get that feeling that things aren’t going right.

Michael Blake: [00:06:44] Okay. Well, we’ll come back to that. Let’s start off with, how do you work with a client?

Jim DeBetta: [00:06:50] Well, I mean, usually, people will come to me in all stages. Some people will come to me, and say, “Hey, Jim. I’ve got an idea for something.” And they haven’t really done anything. Maybe they’ve done a patent search, or they just went online, and wanted to see if the product was actually out there. And assuming that they haven’t found what it is that they’re creating, they will come to me, and I basically project manage them through the whole process. So, people will come to me at that stage. And then, people come to me that have multi-million dollar businesses, and they’re already selling some retailers, but they want to go further. They want to scale. They want to get into every retailer they can. They want to be a huge company.

Jim DeBetta: [00:07:24] So, they come to me at all phases and stages. And they come from everywhere, from social media, all over the world from referrals. And because the world’s so digital, people can find me easily, and I get a lot of lead flow, and people just reaching out because they see me out there online.

Michael Blake: [00:07:44] And you’re not hard to find. I mean, you’re a pretty prolific creator of content as well. And, I mean, you always want to give advice. I’m sure that helps. So, doing what you do, and I think I know the answer to this, but I don’t want to assume, what do you think is the hardest part about working with a client in your space? What’s the hardest hurdle you had to get over, the most common challenge?

Jim DeBetta: [00:08:05] It’s that emotional part that they all believe that their product is going to be the next billion-dollar idea. And most aren’t going to be million-dollar ideas. And I always say to people, “It’s okay to be a thousander,” because no inventor that I know invents for a living. They have a day job or a night job. And so, they have a living. They live a normal life, and this is something they do on the side. They do it at their lunch break, on the weekends, at 10:00, 11:00, 12:00 at night. So, for them, it’s a part-time thing, if that makes sense.

Michael Blake: [00:08:37] That’s really interesting. You’re right. I mean, there really is, now, kind of modern day Thomas Edison, right?

Jim DeBetta: [00:08:43] Yeah.

Michael Blake: [00:08:44] Maybe the late Steve Jobs. Maybe he was kind of that, and he had like a whole huge corporation to sort of back that. And maybe the late, I’m sure you’re aware of him. The late Ron Popeil.

Jim DeBetta: [00:08:55] It’s huge.

Michael Blake: [00:08:55] That kind of that guy, right?

Jim DeBetta: [00:08:56] Yeah, absolutely.

Michael Blake: [00:08:57] By the way. I have one of those those Showtime Rotisserie.

Jim DeBetta: [00:08:59] Doesn’t everyone? I think.

Michael Blake: [00:08:59] I got one of those things for Christmas. The damn thing actually works.

Jim DeBetta: [00:09:03] They are good.

Michael Blake: [00:09:04] I can’t believe it. We don’t make a turkey without it now.

Jim DeBetta: [00:09:06] Yeah.

Michael Blake: [00:09:06] I got that thing for Christmas, and I thought, “For sure, this is going in our attic. It’s never coming out again.” And now, I was going to fry a turkey last year, and my son, “Oh, you’re going to fry a turkey?”

Jim DeBetta: [00:09:16] Yes.

Michael Blake: [00:09:17] “I really like the rotisserie one.” So, Ron, if you’re listening buddy, you’ve got one satisfied costumer down here.

Jim DeBetta: [00:09:21] That’s right.

Michael Blake: [00:09:21] But you’re right. Most people do this as a side gig. I hadn’t thought of that. That’s a really interesting.

Jim DeBetta: [00:09:27] Yeah. And they have to because when you start, like you start any business, you’re writing checks, but there’s no money coming in. So, they need to fund the business through whatever it is that they do for a living. Very few people will call me with an inheritance on their hands, or they’ll just max out their cards, but that’s another thing too. I have to kind of temper that. If somebody says to me, “Jim, I’m going to empty my 401(k),” I push back. I don’t want it. I don’t want to feel — because I know it’s a risky business, I don’t want to be the one that takes the money there and leads them down that path. They fail, and now they really have nothing.

Michael Blake: [00:09:58] And that puts a lot of pressure on you.

Jim DeBetta: [00:10:00] Sure.

Michael Blake: [00:10:00] That, for me, would create performance anxiety.

Jim DeBetta: [00:10:05] Right.

Michael Blake: [00:10:05] When somebody comes to me and says, “I’ve just emptied out my 401(k). I’ve leveraged the 529. My wife doesn’t know any of this.”

Jim DeBetta: [00:10:12] I have that too. It’s like, “Don’t tell my wife. Don’t tell my husband.” I’m like, I don’t really want to start off this way. I always say, “Don’t tell me. If it’s something you don’t think I want to hear, don’t even bring it up.”

Michael Blake: [00:10:21] That’s right.

Jim DeBetta: [00:10:23] It’s a scary thing out with people. Because they get so emotionally attached, they will do just about anything to fund it or come up with money for it. And that’s a scary notion sometimes.

Michael Blake: [00:10:33] So, it sounds like part of your job, and I find this in mine too, sometimes, you have to be an amateur therapist.

Jim DeBetta: [00:10:40] You do. I mean, and again, a lot of it comes down to just calming people down. They call me up, “Jim, I’ve got this thing. It’s awesome. I’m so excited. And I’ve been doing this, and I’ve been doing that.” And you have to get them on the phone. You have to say, “All right, look, it’s a business, it’s like any other business. It’s risky.” And I have to almost scare them away because if I don’t let them know the realities of it and that they can fail.

Jim DeBetta: [00:11:01] And some people say, “Well, why do you do that? Why do you scare people away? Why aren’t you being more positive?” I’m like, “Look, I’d rather air on the side of, ‘Okay, I prevented somebody from doing something basically stupid,’ and encourage their misbelief of something than-” You know what I mean? That’s important to me. And I’ve been doing this for you 20 plus years. I think I have a good handle, a good intuition when it comes to how people are with me. And within 30 seconds, I know how they’re going to be.

Michael Blake: [00:11:30] And I think that’s a sign of a strong professional is you know there are some times you shouldn’t take your client on because you could take their money today. In fact, in your case, they’re probably saying, “Shut up and take my money. I got to get this thing on Walmart and Target.” And you make it hard. And I suspect, because I run into this also, when people think that they want their business appraised, I don’t want them at the end of a 30-day, 60-day, one-year process thinking that I had told them that I laid out the yellow brick road for them, and then it didn’t end that way. That’s bad all the way around, right?

Jim DeBetta: [00:12:10] Yeah. And you’ll hear me say this a few times, it’s managing expectations for people. You have to do it for them. They’re not going to do it themselves. They’re excited, right? They’ve got an idea. I mean, they see other people, they watch Shark Tank, they see all the activity out there, and they believe that their product is the next one or it’s better. And they get fooled by that. And so, it is. I have to. I don’t want to.

Jim DeBetta: [00:12:33] I mean, who wants to turn away business, but I have to tell some people, “This is not right. You shouldn’t be doing this,” or “You should slow down,” or there are people that want to hire me, they see the offerings I have in terms of packages and things that I offer. “I want the best. I want-” I’m like “No, no. You’re not ready for that.” “What do you mean I’m not?” They get — I’m like, “Look I could take your money. I’ll send you an invoice. You’ll pay me in five seconds.”.

Jim DeBetta: [00:12:54] But that’s not the right thing to do. The right thing is to get them in a better position to have a better chance at success. And the way to do that is to calm them down, right, and say, “Here’s what’s likely to happen. Here’s the path. It’s not going to take three weeks. It’s going to take three months or six months.” And then, they go back and sleep on it. And then, usually, most people will come back to reality and say, “Okay, I got it. I talked it over with whoever. I appreciate it. I feel good about it. Okay, how do we move forward?”

Michael Blake: [00:13:23] So, do you remember the first time or one of the first times you ever had to fire a client? And if so — Or maybe talk about any time you had to fire a client. What prompted that? And how did somebody get through your gate process, your gate keeping?

Jim DeBetta: [00:13:38] Well, some people, you just can’t get through to. I mean, if somebody is really that excited, you’re not going to stop them. If they don’t go to me, they’re going to find somebody else to do it for them, or they’ll do it themselves, which is scary because they really don’t know what they’re doing. I would always say, “You’re sick, you go to a doctor,” that kind of thing. You can’t be a product designer, a package expert, a factory, an attorney, and all those things. You can’t be, right?

Jim DeBetta: [00:14:01] So, those people will go ahead and try to do it anyway. Who knows who listens to this. Of course, there’ll be no names mentioned, but I have fired a lot of people. And the first time I fired somebody, it was hard for me because it was many years ago. And, again, you’re earlier in your business, and you need all the business you can get, but you still want to have integrity and do the right thing. But you try to justify it in your own mind like, “Should I fire them or can I just — They’ll be OK you know and I’ll still work with them.”

Jim DeBetta: [00:14:29] But I had a woman who, right off the bat, was, “This is the billion idea. And then, it’s going to be great.” You get excited by their enthusiasm. But then, literally, the next day, I’d be getting emails saying, “What’s getting done here? Are you doing this? Are you doing that? How can we ever reach out to one of the chain stores yet?” And I’m like, “We just started yesterday.” And even though I said, “It’s going to take time, this is the process,” I couldn’t calm this person down, ever. And it drove me crazy.

Jim DeBetta: [00:14:58] Then, they get mad because you’re not performing even though you’ve had in writing saying, “This is what it’s going to take.” And you have a phone call, “This is what it’s going to take.” It’s almost like I didn’t say anything. And then, they are like almost going after, and I’m like, “I can’t.” I mean, forget the money. It’s like, “I can’t do this. It’s too stressful. Here’s somebody else you can go talk to.”

Michael Blake: [00:15:20] It’s the kind of client where every time they contact you, it’s never just talk about what a great job you’re doing.

Jim DeBetta: [00:15:26] But you cringe, you see that e-mail in your inbox, or the phone ringing, and you’re like, I don’t want to answer the phone when you call or be happy to get your email. I shouldn’t be working with you.” Over time, you evolve. Right now, I’m really picky. I want to work with people that are fun to work with, that I enjoy talking to. That’s like my biggest criteria now. I mean, a product is product, right? I mean, they’re made of something, they made in a factory, we sell it to the same stores, they’re widgets to me.

Jim DeBetta: [00:15:53] I mean, I get excited and passionate about the products when I go to the retailers, but, at the end of the day, a product is a product. I have to enjoy working with you because if I cringe or even shudder at the thought of hearing from you, who wants to do that? I don’t want to do that, enough for any amount of money really.

Michael Blake: [00:16:10] Yeah. Well-

Jim DeBetta: [00:16:11] Maybe, maybe.

Michael Blake: [00:16:15] So, this is actually segueing nicely into the kind of the next question I want to ask, which is, what are some of those warning signs that this relationship is a mistake and we got to think about ending it?

Jim DeBetta: [00:16:26] Yeah. On their end, they’re overenthusiastic to the point where they’re not being realistic. That’s the number one criteria to me. Number two is somebody that will tell me that they’re on their last dime doing this. And I have people that I start with. So, I’ve hired them, or they’ve hired me rather. And then, I have to fire them because they reveal something like that to me, something personal or something financial, and I’m like, “Look, it’s like building a house. You got to have the money to build the house. Once the architect lays out the plans, what are you going to build? The frame? And then, go out of money,” and I get that kind of scenario.

Jim DeBetta: [00:17:03] Those people, I have to try to help them for free, so to speak, and transition them off of what they’re doing or onto another, like maybe go to licensing versus doing it themselves, and introduce them to those people. But I got to let those people go to because that kind of thing where they reveal something personal to me, I know it’s going to be — Then, yes. There’s that performance pressure. If this thing isn’t a home run, maybe they won’t get mad at me, but I’m going to feel bad and it’s going to be devastating for them.

Michael Blake: [00:17:33] Right. I mean, if you have any sense of integrity, you do feel responsibility for the client outcomes. And yeah, I’m sure some people just want to bring inventions to the market because that’s just a vision they have. But people want to make money. They’re putting a significant financial investment. I get that too. And particularly in the startup space, someone will call me up and say, “I want to get my business appraised because I’m going to raise money.”

Michael Blake: [00:17:55] And one of the first questions I ask them is, “Well, you’re talking to this one investor. If they no, what happens?” “Well, I don’t know. I’m not sure.” “Well, do you have enough money to survive?” “Well, no. I need this investment.” I said, “Well, then my valuation doesn’t matter.” Right?

Jim DeBetta: [00:18:10] Right.

Michael Blake: [00:18:10] If that person walks away, you’re out of business. I’ve taken a check, but I haven’t helped, I really haven’t helped anybody in that process, right?

Jim DeBetta: [00:18:19] Right.

Michael Blake: [00:18:19] And that invention, inventor story sounds very similar to that.

Jim DeBetta: [00:18:24] I think that’s a big part of it. I think because those people that come to us, you hope that they’re coming to us for a reason because they don’t know something, we know something, they need our help. And that’s another reason that I’ve let people go is because people will hire me, and then they tell me everything that I’m supposed to be doing. Even though they have no knowledge, they say, “Jim shouldn’t you do this? And this is how this should be done. No, when you talk to a buyer this is what you should be saying.” I’m like-

Michael Blake: [00:18:48] Oh, that drives me crazy.

Jim DeBetta: [00:18:49] And look, I’m open here. Look, I’m willing to learn something new. I don’t care where it comes from. I mean, my kids can tell me something, and if I could pick up something, and it helps me to do my job better for them, great. I’m not about, “You hire me, so I tell you everything. You have no say. You have no ability to help.” I always tell people right off the bat, “This is a two-way street. We have to communicate. I need things from you. You need things for me. And if there’s differences, we talk them out. But primarily, you’ve hired me. You’re paying me to do something that you can’t do or don’t know how to do. So, when push comes to shove, you have to make a choice,go with my words because I’ve done this ten thousand times.”

Michael Blake: [00:19:29] Why hire me if you’re not you’re not going to listen to my advice?

Jim DeBetta: [00:19:31] Right. And I’ve let a couple people go in the middle of things because they were so overbearing with them hiring me, but then all of a sudden, they where the expert and I was the client. It shouldn’t be that way. Again, it should be collaborative, but it shouldn’t be where if I pay somebody to come do something for me, I expect that they’re going to be competent, and they’re going to do their job. And I say, “Hey, what about that?” or “Can you maybe look at this?” That’s your right. You’re paying money, but if you’re going to overwhelm, overtake the whole process, then you know what, go do it yourself or find somebody else. And it’s frustrating sometimes.

Michael Blake: [00:20:01] I think that gets a fundamental lack of trust, and not in your trustworthiness, but the client’s inability to trust you. I actually fired a client earlier, it’s now 2019, middle of last year because we did an appraisal for them, sent them a draft. And the client, then, took our drafts, started showing it, and said, “I showed it to my friend who’s an investment banker,” and he says, “Your numbers are wrong.” And I listened very carefully to investment bankers because they’re out in the marketplace. So, many of them are very good experts.

Michael Blake: [00:20:34] So, well. “What did you show them?” “First of all, I showed you the work product.” “So, okay, our engagement, I said, you weren’t supposed to do that, but, okay. What information did you give them besides the work product?” “Nothing, we had a 10-minute conversation.” “All right. So, our teams put in 25 hours on this, but you’re going to show this to one person with a 10-minute conversation, you’re going to decide that their opinion is more valid than mine. I think that you should retain them or somebody else. Let’s settle up and split because if that’s the level of trust you have in this process, I can’t think of what’s going to make it end well.”

Jim DeBetta: [00:21:16] Yeah. And we fight that in my business too. Somebody will immediately go somewhere else, or they’ll try to reach the retail buyers themselves because I haven’t gotten in touch with them quick enough. There’s always going to be those types of people. So, all you can do really is just try to set the table from the beginning, “Here’s how I work. This is what I expect of you. This is what you should expect of me.” We talk about it. We write it out.

Jim DeBetta: [00:21:37] Beyond that, you lose control a little bit. But, again, you can usually — I know I can get a great sense of how somebody is immediately. I could just tell. I could tell their tone. It also depends on how much experience they have. If they’ve been trying to do this on their own, and they’ve failed repeatedly, they’re coming to me at a desperation. They really will then say, “Okay. Jim, you do what you got to do,” because they’re at their end. They don’t have other option. They’ve probably tried other avenues, or tried calling other people, and they aren’t getting satisfaction. So now, I’m the end game for them.

Jim DeBetta: [00:22:08] Those people are a little easier to deal with because they let me do my thing, and they listen better. The ones that, like I said, get very emotional or very connected to their own thought about, “This is not going to fail no matter what,” I’m like, “Well, you need to have a great mindset, this is not going to be an easy road, but I’m telling you right now, the chances of you succeeding, they’re small. And I just want to let you know that right off the bat.” But we get that people will go around you, or talk to a name, or somebody who’s not from the business at all even, and say, “They said that this packaging doesn’t look good or the pricing is wrong.” And I’m like, “Are they buying it? Are they in this business?” I get a lot of that. And it’s easy usually to kind of squash it. But, once in a while, you get somebody who really push the envelope on it.

Michael Blake: [00:22:54] So, how do you tell whether or not there’s a systematically bad fit versus it’s just a bad day, bad week ,bad month for you or the client?

Jim DeBetta: [00:23:03] Yeah. I have people that they are a good fit, and then they’ll have that breakdown because they’re right, they’re spending money, and nothing’s happening yet. They’re not selling. It’s much easier to write a check to get prototypes done or patents done, but to sell a retail, it’s such a long-selling cycle. So, they won’t see money for six months, a year, and it’s hard for them. And so, sometimes people will — It seems like everything is going great, and I get that email that I’m happy to get or that call, but it’s a total flip. They’re like, “Jim, I don’t know what’s going on, and I feel this way, I feel that way.” That’s a bad day. They just need you to encourage them. “Look, this is the business. This is what we talked about. It’s going to be all right. I understand.”

Jim DeBetta: [00:23:46] Nine out of 10 times, they’re good. You talk to them right through, But other times, you get people who are completely the opposite. And, again, I got a pretty good feel, I rarely get it wrong these days. I used to not always get it right, but, now, I’m a much better because I’m even more patient with waiting for people. I don’t look to sign somebody up so quickly anymore. Now, I let people sleep on it, and I sleep on it.

Jim DeBetta: [00:24:12] I had been talking to a woman just yesterday, actually yesterday morning. Long story short, I talked to her a couple of weeks ago. She sent me samples, I looked at them, I thought they were really good. And I took a few days to call her back. I wanted to feel like this was a good fit for me as well. And we got on the phone, and we talked it out, and she understands. And I said, “Well if you’re good,” and then, I followed up with an email and said, “Let me know what you think.” And so, I’m slower in my process, but I think that allows me to have less error in what kind of client I have and how they’re going to be.

Michael Blake: [00:24:46] I tell people, there’s not that much benefit to being older. You get gray hair, and in my case you get two arthritic ankles, but the positive side of that is wisdom.” And realizing that the value of a deep breath, the value of sleeping on things, the value that you don’t have to respond to everything right in the moment because that leads to a bad decision more often than not.

Jim DeBetta: [00:25:15] And I’m not that way. I’m more of the impulsive type. It’s hard for me to sit back and wait. I’m not afraid to lose anything. There’s always businesses. There will always be. As long as there are inventors, I’ll be in business. I never worry about that anymore. But it’s still my nature to want to respond quickly, but I have to actually stop myself and find something else to do. Otherwise, I will be reactive too quickly.

Michael Blake: [00:25:40] Yeah. I mean, you’d love to resolve it, get it off your plate, and not have to worry about it. But again, that’s just growth. That’s the benefit we get for the gray hair. Do you have a preferred kind of method for firing a client? In other words, there’s a passive way to firing a client, which is basically raise your rates, and then they don’t want to work with you anymore. Or there’s that, “It’s not me, it’s you” conversation, even though in your mind you’re saying, “It’s not me, it’s you.” Do you have a preferred method or have you use different techniques based on a different scenario?

Jim DeBetta: [00:26:17] Yeah. When you had written that out about the raise your prices sort of thing, I think I do that naturally only because I know the type of client I want, and I know that will do well, and I know that client has to be financially capable of doing things. I know that there are people who will — I don’t do the free stuff or the 1999 to get them in the door. I don’t like doing those types of things because I know that that client will pay a few dollars to get information, but they probably won’t want to pay a lot more to have the real work done.

Jim DeBetta: [00:26:47] I don’t know if I have a specific way I go about that. I think I just feel it as I go and as things develop. But my criteria is, just like I said, it’s just more instinct than it is anything these days. I just get a sense. I get them on the phone. I won’t do it via email. If I have a problem with somebody, I am a big emailer. I prefer to actually email and text people than to talk all day long. But if I have a problem with somebody, I will call them, and I will say that it’s them. I won’t blame me because I know that I do the same thing for you, that I’ll do for you, that I do for everybody, if that makes sense.

Jim DeBetta: [00:27:24] So, I will let them know that. It’s not tolerable. I can’t work on the — You hired me to help you, and you’re telling me what to do, or you’re unrealistic. And I know this is going to lead to bad things. So, I tell them that either they need to change, and some people will, or they need to understand that we can’t work together anymore. And then I’ll finish up and help them transition, but that’s usually what I would do.

Michael Blake: [00:27:48] Well, that’s good. So, you don’t break up by email, or text, or anything like that.

Jim DeBetta: [00:27:52] No. Not like that.

Michael Blake: [00:27:53] Do it like a professional, right?

Jim DeBetta: [00:27:54] That’s a tough one to do.

Michael Blake: [00:27:55] But the object lesson here is if I ever see you calling, that means you’re going to break up with me.

Jim DeBetta: [00:28:00] That sounds great. I would tell people, “If I call you, and I don’t outbound call a lot of my clients a lot, it’s either something is going on bad, or something is really good, like we get a big purchase order from a retailer, but you’ll like it enough. That’s a fun phone call to get. But if I call you otherwise, something is up. Otherwise, we’re going to email and correspond that way.”

Michael Blake: [00:28:18] Okay. Is there a client you can remember that you should have fired, but didn’t?

Jim DeBetta: [00:28:27] There’s probably a bunch that I probably should have. And again, those with were the early days when I tried to hang on, not necessarily I really needed to, but I felt like I could. I tried to — Like I said, with age comes wisdom. Now I know that I don’t want to wake up tomorrow feeling stressed. I don’t want to go through a month of stress before I let somebody go. If I feel the tension, and I know it because it’s not me, even if I’m wrong, I’m still going to let them go.

Michael Blake: [00:28:57] I found that I cannot think of a time where I’ve ultimately regretted either firing a client or turning one away, but I can tell you for sure the clients that I’ve regretted taking on are not fired.

Jim DeBetta: [00:29:13] Yeah, I agree. I think you remember, if you will, the mistakes more than.

Michael Blake: [00:29:16] That’s right.

Jim DeBetta: [00:29:17] Because we don’t know what would have happened with that the other way. But we know when we keep ones that are difficult, you still try to see it through though, right? I always try to ignore how they get, and I just say, “Just let me do my thing.” If I just keep going on, and they don’t like what I’m doing, they’re going to fire me. So, I almost put it on them. I’m like, “I’m going to keep doing what I’m doing.”

Michael Blake: [00:29:37] Well, you think they’ll fire you, right? But some don’t.

Jim DeBetta: [00:29:39] Yeah. No, you’re right. But then it winds up working out because, then, they see what they hired me for, right. At the end of the day, at the end of the road, look, it worked, or you got your product developed, or hey, you’re selling it on whatever website. Then, they’re happy and appreciative later on.

Michael Blake: [00:29:56] So, that’s interesting. So, I think that’s sort of a lesson. It seems to me like you know pretty early on if it’s a bad fit. It doesn’t sort of sneak up on you necessarily. It’s not like the boiling fraud for example. It sounds like you know pretty early on.

Jim DeBetta: [00:30:09] Yes. Almost every time, I know right away.

Michael Blake: [00:30:12] Really?

Jim DeBetta: [00:30:12] Very quickly.

Michael Blake: [00:30:13] That’s awesome.

Jim DeBetta: [00:30:13] Because I can, again. And I think that a lot of it, it’s just instinct and experience. I’ve done it a million times. There’s only certain ways people can be. It’s not like there’s a thousand different ways people are going to act. It’s just really a handful when I see those that are red flags to me, I know. And like I said, again, even before there is a higher fire, I know how people are going to be. If I can’t manage their expectations immediately, I know that I shouldn’t even begin working with them. Never mind having to fire them, so to speak.

Michael Blake: [00:30:41] Because it’s not going to get better.

Jim DeBetta: [00:30:42] It’s not. I know it’s not going to be.

Michael Blake: [00:30:44] The more ingrained you get, you’re more entrenched, right?

Jim DeBetta: [00:30:46] Yeah. And I don’t need that. I don’t want that.

Michael Blake: [00:30:48] Okay. Has a client ever talked you out of firing them? You’re all set, you’re going to fire them, but then they said, “No, I really want to stick it. Please, Jim. You’re so great. I promise I’ll be better.”

Jim DeBetta: [00:31:03] I don’t know if I’ve had that. I think it’s either it’s cut or dry. I’ve had a few people where I’ve told them they need to calm down. It wasn’t like you’re getting fired. I guess it’s like the warning, right?

Michael Blake: [00:31:15] Yeah.

Jim DeBetta: [00:31:16] You need to chill out, you need to do this, you need to do that, or you’re not communicating well, or you’re going and trying to email a buyer when I told you do not do that. People will go off the script, so to speak. And I’ll warn them. And then, those people will say, “Okay. I’m sorry. I didn’t realize it,” even though they probably knew what they were doing. And then most of the time, they’re good. They turn around because I try to be friendly. I’m not like, get on, I’m trying to be rough with people when I work with them. I’m not trying to dictate. I’m trying to do my job.

Michael Blake: [00:31:43] People hurt themselves when they do that.

Jim DeBetta: [00:31:44] Right. So, it’s kind of like a parent to a kid. Look, you’re doing this wrong, and then you hug him later and it’s fine, and usually that works out.

Michael Blake: [00:31:53] Okay. Any concluding comments? Anything we haven’t covered that you think we should before we wrap up here?

Jim DeBetta: [00:31:59] Well, I think we’ve hit on all the big things. I think you have to — I think, for me, and I think what other people can benefit from is even though you want that client, even though it may be important to you, whether it’s financially or just for your own self to feel like you can obtain clients. I think you have to go with your gut. I think you have to realize that if something just doesn’t feel right, and you feel like it’s overwhelming, or there’s going to be undue pressure, or you can’t manage those expectations, just don’t even do it. Don’t even start. I know it’s easy to say because I’ve been doing this, and I have an established business, but if I could look back at my younger self and do certain things over, I would probably have been a little more patient with the hire, so I didn’t have to worry about the fire.

Michael Blake: [00:32:43] Because hiring the wrong client can actually do more harm than good, right?

Jim DeBetta: [00:32:48] Yeah. And, also, if you get people who are a little off the wall with the way they are, they’re very aggressive, or they’re hotheaded. Then, today, with social media, they could just go online and be reckless in what they say about you.

Michael Blake: [00:33:01] That’s true.

Jim DeBetta: [00:33:01] I’ve been fortunate, I’ve never had anybody do that. Although I’ve not had many people that have gotten upset like that. But, still, it’s so easy. I mean, someone could just comment on this podcast blah, blah, blah. People do whatever they like.

Michael Blake: [00:33:13] You can walk out of here and accuse me of a federal crime.

Jim DeBetta: [00:33:15] Before I even get to my car, right?

Michael Blake: [00:33:17] Absolutely.

Jim DeBetta: [00:33:17] And that’s scary. So, you have to also be cognizant of that, that if you feel like that person is going to be that person. I have people call me up and they say, “Jim,” and they tell me how confrontational they are with other things in their life. And I’m like, “Yikes. Is that the kind of person I want to even work with? If things go south, maybe they’re going to-” If they’re telling me what they’re doing to other people, maybe they’re going to do that to me.

Michael Blake: [00:33:38] Sorry, I was late, I got a ticket for road rage on my first meeting.

Jim DeBetta: [00:33:41] Right, yeah.

Michael Blake: [00:33:41] Not a good sign.

Jim DeBetta: [00:33:43] Well, I’ll call you back tomorrow. We’ll see if we could work together.

Michael Blake: [00:33:46] So, well this has been great. I want to make sure people know how to find you. So, if they want to learn more about this or what you would actually do for a living, how do they find you?

Jim DeBetta: [00:33:55] Well, can you hide anymore these days? I mean, if-

Michael Blake: [00:33:57] I’ve tried, man.

Jim DeBetta: [00:33:59] You can’t. No, not today. Yeah, we push too much out there to be — I would say social media is the best way. I have one of the largest invention groups on Facebook in the world. It’s called We Know Inventing. People could go on there. But if they just go on and Google Jim DeBetta, it will lead them to my websites, which one is my namesake jimdebetta.com. I’m on Facebook, I’m on Instagram, I’m on LinkedIn very heavily, I’m on Twitter. They’ll find me in two seconds. They’ll be able to reach me. And I answer everything. It’s hard to because I get a couple hundred emails a week or messages. And I believe in that. I’ll sit up, and I’ll, at least, say, “Got it. And thanks for reaching out.” So, I respond to people. And I think it’s important to in business to be busy as you get to, at least, acknowledge somebody coming along.

Michael Blake: [00:34:47] Yeah. Well, very good. Well, that’s going to wrap it up for today’s program. I’d like to thank Jim DeBetta so much for joining us and sharing his expertise with us. We’ll be exploring a new topic each week. So, please tune in, so that when you’re faced with your next business decision, you have clear vision when you’re making it. Once again, this is Mike Blake. Our sponsor is Brady Ware & company. And this has been the Decision Vision Podcast.

Supply Chain Now Radio Episode 46

February 11, 2019 by angishields

Supply Chain Now

Supply Chain Now Radio Episode 46

00:00 /

“Trade, Taxes & Tribulations”

SCNR – Episode 46

Cathy Morrow Roberson is Founder & Head Analyst of Logistics Trends & Insights LLC. She has over 15 years of experience in the logistics market including ten years with UPS Supply Chain and several years with specialized consulting firms. Besides being quoted in numerous publications, Cathy also has published numerous articles in various business and logistics publications. A big fan of all things supply chain, Cathy has a particular interest in e-commerce, cold chain logistics, air and ocean freight, freight forwarding and industry-specific logistics. Based in Atlanta, Georgia, Logistics Trends & Insights LLC aims to cut through the content noise and provide customized logistics research and consulting services utilizing a global network of trusted and experienced analysts. Services include white papers, reports, surveys, case studies and more. Follow Cathy on Twitter for real-time industry news and learn more about Logistics Trends & Insights LLC here: https://logisticstrendsandinsights.com/

Laura Madajewski is a senior manager at HLB Gross Collins P.C., serving in the firm’s Audit and Advisory department. With over 16 years of public accounting experience, Laura leads the firm’s Manufacturing and Distribution Practice, as well as the Employee Benefit Practice.  She has extensive experience in managing audits and in the preparation of financial statements. Laura is committed to making the assurance process run smoothly for her clients and looks for ways to help clients improve controls, strengthen management, enhance governance roles and oversight and streamline operations. Laura also has extensive expertise serving nonprofit organizations including private schools, religious organizations, trade associations and foundations.  She is a regular presenter and published author on various topics within her areas of specialization. Connect with Laura Madajewski on LinkedIn and learn more about HLB Gross Collins here: https://hlbgrosscollins.com/

Iliana Malinov is the Director of Tax Services at HLB Gross Collins P.C. In addition to providing clients with tax planning and compliance services, she leads a team of tax specialists and ensures that the firm remains abreast of tax regulations, ever-changing tax laws and compliance matters. In order to provide the caliber of service that her clients expect and are accustomed to receiving, the HLB Gross Collins’ tax department strives to always maintain operational efficiency and high-level competence. Iliana is committed to adhering to this objective and dedicates her attention to the development of the firm’s professionals and tax practice. Iliana serves both international and domestic companies, as well as high net worth individuals. She has extensive expertise in tax compliance & tax planning and works with many foreign clients with domestic operations in order to resolve any U.S. income tax issues. Likewise, Iliana assists her U.S.-based clients with foreign-owned subsidiaries in navigating the intricacies of international operations. Connect with Iliana Malinov on LinkedIn and learn more about HLB Gross Collins here: https://hlbgrosscollins.com/

Elba Pareja-Gallagher is a finance and strategy professional with 20 years of experience at UPS. She’s held roles in Finance, Investor Relations, Marketing and Strategy. She lived as an expat in Asia for three years. After working on a cross-functional team developing long term strategies for Global e-commerce, she recently transitioned to a new role as part of UPS’s Business Intelligence and Analysis team reporting on US Domestic Product Performance. Elba is also the founder of the social impact organization ShowMe50.org. The non-profit’s vision is to achieve 50% women in senior leadership positions through a grassroots movement. ShowMe50 programs teach leadership skills, career management strategies and influencing techniques. Elba holds a Bachelor of Business Administration degree from Millsaps College in Jackson, Mississippi, and a Master of Science in Supply Chain Management from the Florida Institute of Technology. She is an APICS Certified Supply Chain Professional. She serves of the board of the HOPE (Hispanic Organization Promoting Education) and is the Chair of the UPS Hispanic Business Resource Group, Crecer. Crecer was recognized in 2017 as the #1 Hispanic Employee Resource Group by the U.S. Hispanic Chamber of Commerce and Latina Style Magazine. Connect with Elba Pareja-Gallagher on LinkedIn and learn more about ShowMe50 here: https://www.showme50.org/

Scott W. Luton is the founder of Supply Chain Now Radio and also serves as Managing Partner for TalentStream. He has worked extensively in the end-to-end Supply Chain industry for more than 15 years, appearing in publications such as The Wall Street Journal, Dice and Quality Progress Magazine. Scott currently serves as Executive Vice President of APICS Atlanta, was recently named a 2019 Pro to Know in Supply Chain by Supply & Demand Executive. He served on the 2018 Georgia Logistics Summit Executive Committee and currently serves as Chair of the 2019 Atlanta Supply Chain Awards Planning Committee. He is a certified Lean Six Sigma Green Belt and holds the APICS Certified Supply Chain Professional (CSCP) credential. As a Veteran of the United States Air Force, Scott also volunteers on the Business Pillar for VETLANTA, and maintains active membership in the Georgia Manufacturing Alliance & CSCMP Atlanta Roundtable. Connect with Scott Luton on LinkedIn and follow him on Twitter at @ScottWLuton. He can also be reached by email. Learn more about TalentStream, a leading recruiting & staffing firm that helps companies find top talent in the Engineering, Manufacturing and Supply Chain space, by visiting their website here: www.talentstreamstaffing.com

Decision Vision Episode 1: Should I Get a Patent? – An Interview with Jackie Hutter, The Hutter Group

February 7, 2019 by John Ray

Decision Vision

Decision Vision Episode 1: Should I Get a Patent? - An Interview with Jackie Hutter, The Hutter Group

00:00 /

Should I Get a Patent?

Michael Blake, Director of Brady Ware & Company and Host of the Decision Vision podcast, interviews Jackie Hutter on when it may be best to forego the patent process, the steps in a patent process and the cost, how an entrepreneur should select and manage their patent attorney, and other key topics related to patents.

Jackie Hutter, The Hutter Group

The Hutter Group enables start ups and small companies to generate and deploy intellectual property that can enhance revenue and exit goals. While working with innovators to obtain meaningful patent protection that “makes it cheaper to go through you than around you,” we work with our clients to identify IP Strategies that are meaningful to their businesses, with the objective of creating IP that is aligned with real value.

Jackie Hutter has been recognized for each of the last 8 years for her innovative insights in creating value from IP Strategy with the peer-awarded Top Global IP Strategist by Intellectual Asset Magazine. Ms. Hutter’s IP Strategy clients have been varied, and include a Fortune 500 consumer hardware company, a large alternative energy company, several funded medical device ventures and dozens of startup companies with diverse technology offerings. From 2011-2015, Ms. Hutter also served as a the CEO of a startup battery-related company, which has provided her with a unique vantage point among her experienced colleagues about what it means to work with counsel to generate the critical IP necessary to prevent competitors from “knocking off” the innovator’s technology. Her experience extends beyond the IP realm: she frequently handles contracts and related matters for her clients, especially those relevant to clients’ IP rights.

Michael Blake, Brady Ware & Company

Brady Ware & Company

Decision Vision Podcast Series

Visit Brady Ware & Company on social media:

LinkedIn: https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript:

Michael Blake: [00:00:23] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we’ll be covering a key topic to discuss the process of decision making rather than making recommendations because everyone’s circumstances are different. We’ll talk to subject matter experts about how they would recommend thinking about that decision. And then, you can make that decision on your own.

Michael Blake: [00:00:44] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton, Columbus, Ohio, Richmond, Indiana, and Alpharetta, Georgia, which is where we are recording today. Brady Ware is also sponsoring this podcast. If you like this podcast, please subscribe on iTunes, and please consider leaving a review of the podcast as well.

Michael Blake: [00:01:07] So, today we’re going to be talking about — We’re going to be talking about patents. And patents are increasingly important. There’s a lot of data out there that suggests that, in the last 30 years or so, most of the value that’s being created in our economy consists of intellectual property. Now, the accounting world is actually only very slowly catching up to this. A lot of intellectual property does not show up on a balance sheet. In fact, some of the benefits of having intellectual property is that nobody knows it’s there at all. And that’s one of the things, I think, we’ll be talking about today.

Michael Blake: [00:01:41] But one of the things that I’ve learned over the years I’ve been, myself, working with advisors, and entrepreneurs, and business people is that some patents are great, some patents aren’t great. Sometimes, they are all cracked up to be. Sometimes, there are better ways to accomplish protecting your intellectual property. But I’m not an attorney. I don’t know anymore about patents than I just said over the last 35 seconds or so. So, in order to not commit malpractice and be sued because I do not have the bar, we’re going to bring on a subject matter expert to talk to us today.

Michael Blake: [00:02:12] Joining me today is my dear friend and colleague, Jackie Hutter. Jackie has been helping innovators capture the value of their ventures at The Hutter Group since 2008. During this time, and probably not coincidentally, Jackie has been named by her peers as a Top Global Intellectual Property Strategist. For several years, Jackie took a break from the law as CEO of a startup technology company where she experienced entrepreneurship from the inside, which gives her a unique perspective among patent experts.

Michael Blake: [00:02:42] Prior to striking out on her own, she was a Senior Intellectual Property Lawyer at Georgia Pacific and a shareholder at an Atlanta intellectual property law firm. She started her non-legal career as a research scientist in an innovation group of a hair and skin product company. I didn’t know that. Jackie lives in the Decatur area in a groovy, mid-century house with her husband, teen daughters, and far too many pets. Again, joining us today is Jackie Hunter.

Jackie Hutter: [00:03:08] Thank you, Mike.

Michael Blake: [00:03:09] Thanks for coming today. And how many pets do you actually have now?

Jackie Hutter: [00:03:12] Oh, gosh. We have three very large dogs, including one that’s just emerging from puppyhood that requires me to walk him about six miles every day.

Michael Blake: [00:03:22] That’s why he looks so fit.

Jackie Hutter: [00:03:24] Well, thank you for that. We work hard. And then, three cats.

Michael Blake: [00:03:28] So, how far — I mean, what is the line between having too many pets and being the cat lady from The Simpsons?

Jackie Hutter: [00:03:34] Having a husband.

Michael Blake: [00:03:39] All right. Well, you heard it here, folks. You heard it here, folks. If you have too many pets, and you want to not be clinically insane, be married. That is apparently the line.

Michael Blake: [00:03:47] So, Jackie, thanks for coming on today. I’m really looking forward to this conversation. And you and I have had patent discussions forever, as long as we’ve known each other. I do a lot of work with entrepreneurs, many of whom think they want to have patents, and you sort of help talk them off the ledge, or maybe they should have patents, and you’re like, “God, why don’t they have a patent? They need to talk to me,” like, “Stop.” But let’s kind of build a foundation here. I’m not sure everybody understands what exactly a patent is. So, talk about what is a patent and how do patents work?

Jackie Hutter: [00:04:17] Well, patents are confusing because, quite frankly, lawyers make it too complicated. It’s really a simple framework in that a patent sets out the property lines of what you want to own. And when you file a patent application, you are setting out, laying a marker, if you will, into the world that, “I have come up with this, I have invented this, and I want to own it.” And so, that’s a very important part of the process that people don’t spend enough time on. But, generally, folks will think, “I need a patent,” and not really understand why they need it and why it creates value for them.

Jackie Hutter: [00:04:59] And because there are so many people who write about patents and who actually obtain patents for a living, there’s a lot of junk that’s out there that prevents people from really understanding. But, at the end of the day, a patent is something that protects something you’ve brought — that should protect something you’ve brought to a customer, and that customer will pay for it. And in order to retain that customer — In other words, to get them to be able to continue buying from you as long as you want them to, you need to consider whether or not it makes sense to draft a — obtain a patent that actually covers that stuff. And if it doesn’t, then patents are irrelevant to you.

Michael Blake: [00:05:47] So, just having a patent for the sake of a patent doesn’t sound like a great idea.

Jackie Hutter: [00:05:51] Well, if you like to have really pretty things on your wall. For a lot of people, the objective is, “Hey, I got a patent.” And, sometimes, they don’t even think about what the value is, or they assume there’s value, and they never really care or have to figure out what that value is. Certainly, for patent attorneys, the goal is to get patents because if they didn’t, they wouldn’t be in business. But the ultimate goal if you’re doing this the right way is because you have a validated customer, somebody wants to buy what you’re selling to them. And in order to continue to hold that customer and realize that value, you should have a patent. You don’t have to have a patent, but you should have a patent.

Michael Blake: [00:06:38] Okay. So, let’s say you sold me. I want to get a patent. And, for the moment, let’s leave a side value. Maybe, I do just want something pretty on my wall, and it’s cheaper than a Warhol.

Jackie Hutter: [00:06:51] Maybe not.

Michael Blake: [00:06:52] Maybe not. We’ll talk about that later, right. But I decided I want it, how do you go about that? Can I just go down to Washington and say, “Hey, give me a patent.” How does that work?

Jackie Hutter: [00:07:01] Well, it’s a very arcane process, even for patent experts like me. I’ve been doing this for far more years than I like to admit. And the details are just way too complex. Now, if anybody is a DIYer, there are plenty of books out there that purport to tell you how to do it, and I have seen some patents that have been generated that way. Usually, they’re not worth anything, not even the paper that they’re written off, but that’s just the nature of the business. Although there are some exceptions, but they’re very, very, very extremely rare. So, then, what you have to do is you have to hire a patent expert. It’s kind of like, “the fox guarding the hen house,” as a mentor of mine used to say. When you ask a patent attorney if you need a patent, the answer is probably going to be yes.

Michael Blake: [00:07:52] Of course, you need a patent.

Jackie Hutter: [00:07:56] And that made-

Michael Blake: [00:07:56] I got to get paid.

Jackie Hutter: [00:07:57] Yes, well-

Michael Blake: [00:07:59] I don’t know if you need a patent, but I need a patent.

Jackie Hutter: [00:08:01] Well, you said it, I didn’t, or maybe I did. But what typically happens in that process – and I know this is the way the training is – we say to our clients, “What did you invent?” And this is what my retainer is going to be. And most of the time, the vast majority of time, that gets things off in the wrong direction because when you’ve talked about what you’ve invented, you’re talking about what has happened in the past.

Jackie Hutter: [00:08:32] But if patents are to have value for you in your business strategy, as part of your business strategy, you need to be looking at the future and understanding why this patent is going to have meaning for you at some point in the future. And that’s with respect for my clients, with respect to potential sales and potential customers in the future.

Jackie Hutter: [00:08:53] So, by starting with, “What did you invent?” and starting writing about the past is where most patent applications and, actually, granted patents go awry, but it’s just the nature of the business. I take a different approach, a very different approach actually. When clients come to me, I use a gate. I will not take any client who has not been able to demonstrate or will not be able to demonstrate to me that they know who their customer is, why the customer cares, and why the customer will write a check in the future.

Jackie Hutter: [00:09:31] And when they do that, and only if they can do that, we talk about why it matters for them in the future to have this protection. And very often, it won’t be relevant. So, I say, “No, you don’t need a patent. Let’s go ahead and work on another type of intellectual property that might give you even more value than a patent.”

Michael Blake: [00:09:52] I think that’s great. I’m going to go off the script here because, I think, it’s a sign of a great professional that makes a client work a little bit to hire you. And I like to think I do the same thing in my practice where you don’t want to do an unnecessary operation, right. You got to live with yourself. And, at the end of the day, the client’s going to wise up and realize you took out their appendix when it’s perfectly healthy, right. And they’re going to be mad. It’s going to harm your reputation. And Atlanta is a big small town, right. So, I think that’s really important that you go through that process, and you challenge the client to think, “Do you really need a patent?” as opposed to, “Are you looking for something really pretty to put on the wall?”

Jackie Hutter: [00:10:36] Well, for professionals like us who had gone to school for a long time and been doing it for even longer, it’s really easy to make it complicated. And it’s hard to make something simple when it really is hard. And therefore, it has become, or not even become, I think it’s always been this way in the patent world that folks just want to hand stuff over to somebody else because it’s uncomfortable and difficult to learn something new, especially when you’re professional does not take the time or have the skill to be able to explain it to you in a way that’s meaningful to you.

Jackie Hutter: [00:11:13] And, actually, that’s sometimes the hardest part of my practice is to figure out the right way to talk to this person, this client, this potential client because you have to meet the client where they are and to be able to communicate to them in a way that’s meaningful for them. So, that has — I have actually fired clients and, I think, I’ve had my clients have fired me because I require them to do the work. At the end of the day, a patent is a business document. It’s not a legal document. It’s not a technical document. It’s something that sets out your business plans, and you have to be able to execute on those business plans. That’s why I write patent applications with my clients the way I do.

Michael Blake: [00:11:54] If you haven’t been fired, and you have never fired a client, you’re not really doing your job as an advisor because that means you’re just rolling over every time, and that’s not a good advisor, right? So-

Jackie Hutter: [00:12:06] Yeah, but it pays well, right?

Michael Blake: [00:12:08] In the short term, it does. So, they talk to you. Let’s say they’ve now convince you that a patent is the right thing, and you agree, they’re going to take you on. What happens then?

Jackie Hutter: [00:12:19] Well, what I’ll do is first figure out what the lay of the land is. Usually, we all. And that’s very different than what other folks do. People, just generally, clients will say to me, “I’ve done a patent search.” Well, usually, a patent — Well, not usually. The vast majority of times, clients really have no idea what a patent search entails. It is really a specialized process. So, that, you do need to have somebody who’s trained. You don’t necessarily need a lawyer. But the traditional way of doing searches is quite binary. Actually, that’s right. You can’t have quite binary. It is binary. And it’s either, are you patentable or you’re not patentable?

Jackie Hutter: [00:12:57] So, when you say, “Is something patentable?” you have defined what you’re going to patent. That is, again, looking backward, not looking forward. So, the approach I take with clients is I say, “I don’t know what we should patent. Help me understand your business better. I will go out and look to see what others have done and what the patent world looks like.” I don’t want to say landscape. I don’t want to use existing words because it really is a graze. It’s just trying to collect information and develop a frame of reference for moving forward.

Jackie Hutter: [00:13:36] And what’s interesting in there, especially since I work with early stage, smaller companies that are seeking to create patents that are meaningful to others, to get others to potentially write a check for the rights to practice or own that technology is you really have to patent for other people, and use the language, use the framework, use the context that the folks that you want to get their attention are going to be interested in.

Jackie Hutter: [00:14:07] If you look very different from them, they’re not going to want to buy you, right. They’re not going be interested. That’s just basic human nature, whether it’s patents or not. But, also, from the standpoint of companies that don’t file hundreds or thousands of patents a year, which seem to get all the noise is about all these large companies that are filing an enormous number of patents a year, those are not most of the people getting patents. Most people getting patents are much smaller companies, and they’re getting them Wednesdays ad Tuesdays.

Jackie Hutter: [00:14:41] Those folks don’t know their patent attorneys, as well as the people themselves, they’re not experts in getting patents. So, by going out looking at the existing patent literature and figuring out what other characterizations, what other language, what other definitions the experts have used, you can shortcut. You could not only make your patent look more similar to the people whose attention you want to get, you can also shortcut the drafting process and get a less expensive and higher quality work product because of that.

Michael Blake: [00:15:12] I’m sorry, go ahead.

Jackie Hutter: [00:15:13] No.

Michael Blake: [00:15:13] So, that front-end work, then, really makes a big difference?

Jackie Hutter: [00:15:19] Absolutely. And that’s one of the biggest problems with patents in the way that I learned how to do them, as well as the way that most folks do them today is that it’s a “File it and see what happens.” Well, that’s like going to battle without having any planning associated with it, right We know what happens from that. You’re fighting battles, and you don’t have a strategy to win, or even if you can win.

Jackie Hutter: [00:15:49] So, by setting up the groundwork in advance, it’s more work, and it can be challenging for the client to be pushed in this direction, especially for technical people. Business people get this. Marketing people get this. When I sit down with a technical person, they typically want to talk to another technical expert, and they get into a siloed conversation that ends up looking like a technical diagram, right, a technical document.

Jackie Hutter: [00:16:17] And to say to them, “I don’t care what your technology is. I want to know why it matters, and why it was so hard, and why nobody has done this before because you’ve been working on this for X number of months, X number of years, and it took you this long. We need to make sure that story is told to the patent office, so that the patent office is not going to say, ‘Looks like everything else that comes in.'” I don’t want to fight that battle on the back end. I want to make sure I’ve strategized, so I don’t have to fight a battle I know that’s going to happen.

Michael Blake: [00:16:46] I bet a big challenge of that too as an inventor has internalized that story so much that they find it hard to expressly articulate.

Jackie Hutter: [00:16:53] Absolutely. Everything is obvious in hindsight, even to the inventors sometimes. And I love to get to innovators before they have actually, hopefully, started their innovation journey or in the middle of the innovation journey because what I say to them is, “As a former research chemist, so often, nothing comes together until everything comes together.” And you’re struggling, you have that pain, you don’t know how you’re ever going to get through this block that you have. And then, you’re through that block, and everything’s going swimmingly. It’s the absence of pain. You have this feeling that, yeah, it was hard, but you can’t very often re-articulate it.

Jackie Hutter: [00:17:36] So, if I can get to folks before that that they get through that process, and everything is going swimmingly, I can get them to think about, “Hey, this is really hard. This is something I need to write down for Jackie, because Jackie said this is important to the story.” And for a lot of my clients, and this is where a lot of the noise comes about patents, you say, “You cannot patent this,” or “It’s really hard to patent that because of what the Supreme Court has done.” And I can’t change what that is. And there are many people who spend an inordinate amount of time trying to pull out threads from something that is frankly unintelligible because the rules are — There really are no rules these days that can’t be articulated to a client in a way that can help them plan and strategize. In other words, it’s left up to the lawyers and, hopefully, it’ll all work out.

Jackie Hutter: [00:18:29] Well, there is one rule that has been made by the courts that is clear and unambiguous in the realm of software technology, all this stuff where all the noise is out of Silicon Valley and here, actually, in various areas. Attorneys will say, “Well, let’s just try and see what happens.” Well, that’s the wrong approach because the courts have been extremely clear that, yes, you may not really be patentable, unless you can show more. Well, you know how to show more. You show more by telling a story, and why it was so hard, and why it’s meaningful.

Jackie Hutter: [00:19:08] So, especially for my clients that are in the software-related areas, I have several of those, we work really hard to be able to articulate that story in our patent application, which is very different from what they’ve done before, unquestionably, and it’s very different from other folks. They haven’t gotten it — The patent attorneys who do this every day haven’t gotten the message that you have to tell a story.

Michael Blake: [00:19:32] What you’re describing, try and see what happens, it’s like when I ask my teenage son to ask his mother a question. Then, he yells up the flight of stairs. It’s like, “Well, I could have yelled. I’m not that old yet.” And you don’t necessarily need to be a lawyer to sort of try something and see what happens.

Jackie Hutter: [00:19:51] But, also, there’s no accountability. There’s so many ways to blame other things, other externalities than your skills and abilities as a patent attorney on why something doesn’t work out. Even attorneys I really respect, they just seem to just shrug their shoulders sometimes and say, “Hey. Who knew? You never know what’s going to happen when it gets in the patent office.” Well, I know that’s not the case because while I can’t guarantee a patent is going to grant for any of my clients, by doing it this way, we consistently get broad patents out of the patent office in a very accelerated framework. But, again, we do the work, the hard work, on the front end, which effectively lays the groundwork for getting something through the office in the way we want it to get.

Michael Blake: [00:20:37] So, let’s drill down then. Let’s say we’ve sorted it. So, actually, there’s a bullet point that, I think, needs to be made here is that getting somebody like you involved early in the innovation process really helps. It sounds like it’s harder if I just say, “Hey, I just gave birth to an innovation. Let’s go patent it.” If you think that a patent is on the table, prepare for that along the process. Is that right?

Jackie Hutter: [00:21:01] I would not say if a patent is on the table. I would say that if you’re a company that’s bringing innovative technology to a customer to solve a long unmet need that you’re investing time, effort, and resources in that, then you need to bring somebody like me in at an early stage to, at least, lay the framework for what you need to know, what you need to be looking for. Waiting to the end is typically too late. It’s not always too late, but if you’ve already made all of your decisions, it’s kind of hard to go back if you’ve made the wrong decision.

Jackie Hutter: [00:21:41] And so, having that knowledge from the front end can be invaluable. And to that point, I’ve got clients that I’ve been working with on an ongoing basis, and they know to call me. One of the reasons why they’ll call me, and I’m not with them every day, but they know how important this is to their business strategy is, we’re going to go out and talk to a customer. And this customer does X. And we want to have, at least, a short meaningful patent application on file before we go talk to these folks because they know that, because I’ve trained them, they won’t to have a patent application on file today, so that if it works, they’ll be arguing in six months about how much their already-filed IP is going to be licensed for as opposed to arguing about who owns what was successful.

Michael Blake: [00:22:29] So, we’ve gone through that process. Now, are we close then to filing an application, telling the government that we’d like a patent. How does that-

Jackie Hutter: [00:22:38] So, you file the application, and you might want to talk about costs. We can come back to that, but we got the patent application on file. The typical process is to file the slow boat through Alexander — Is it? Arlington to get the patent. And it could be anywhere from two, to four, to five years based upon the technology. And, for my clients, that’s not an appropriate timeline for most cases. Some cases, we do file during that because it’s for non-leading-edge stuff but what I had incredible success for.

Jackie Hutter: [00:23:15] And unfortunately, it doesn’t seem to be in the toolbox of a lot of attorneys out there. I don’t know why. But there is an accelerated process. You pay a little bit extra on the front end to file a patent application. It goes in a special lane, if you will, in the patent office. And we have consistently begin the examinations within about six months. And if we do the front-end work correctly, we get allowances in less than a year. That is incredibly meaningful for early-stage companies, small companies that are looking to accelerate the value.

Jackie Hutter: [00:23:48] For larger companies where patents really aren’t meaningful because they’re not going out of business if they screw up their patents or don’t get a patent, then the longer path is fine. But specifically, for my clients, we do that. The examination process is back and forth. It’s like the patent examiner says, “You’re not patentable.” We say, “Yes, I am patentable.” And what often happens is that the attorney is incentivized to get an allowance. And so, they’ll amend the claims. And if they’re not absolutely talking very closely to the business team of the client, what happens far too often is that the client is left with a patent that doesn’t cover their product or anybody else’s product for that matter because you’ve got a patent, but you don’t have valuable patent, and the attorney has done exactly what you hired him to do.

Michael Blake: [00:24:39] Yeah, which is to get a patent. Okay.

Jackie Hutter: [00:24:42] Get a patent. Yeah.

Michael Blake: [00:24:42] So, good. So, I think that covers the process. And you touched upon this. It’s important. It’s a business decision. Can you talk about a range of what we’re talking about in terms of fees to obtain a patent?

Jackie Hutter: [00:24:56] Sure. I basically manage outside counsel a day. And that’s a big change than what I used to do because there’s really no transparency to legal fees if you’re not talking to a bunch of people. It’s to consult. Yeah, I’m a consultant. I see a lot of stuff, and I’m able to make assessments in that regard. Most of them cost far more than they need to cost. Typically, these days, I’m seeing — I’m not involved because I can keep these costs down and do it in a different way. Typically, what you’re looking at from outside counsel at a smaller firm, specialized firm, you’re looking anywhere from $8000 to $15,000 on the filing. For large firms that have different business models, you’re looking at double that. There are good attorneys, excellent attorneys at small firms, and there are lousy attorneys at big firms.

Michael Blake: [00:25:49] Same way the CPA works.

Jackie Hutter: [00:25:50] Yeah. And so, cost shouldn’t really be a driver. You should be hiring the attorney, not the law firm, but it’s the same way in your business, right. So, a lot of people immediately gravitate to a named brand firm.

Michael Blake: [00:26:03] Nobody gets fired for hiring Dentons, right?

Jackie Hutter: [00:26:06] Exactly, exactly.

Michael Blake: [00:26:08] Unless it bankrupts them. That’s a separate discussion. So, a patent is obvious. It’s a complicated process, not to be taken lightly. When do you find yourself talking people out of a patent? What are the kinds of things they say to you that sort of trigger, “You know, I don’t think a patent is right for you.” What does that look like?

Jackie Hutter: [00:26:28] So, in-and-out products. I think one of your guests today may be talking about in-and-out products. Nice business models, but they have a finite-

Michael Blake: [00:26:35] What’s an in-and-out product? I’m not familiar with that term.

Jackie Hutter: [00:26:36] Something that’s got maybe a six-month timeline, one-year timeline. I like to use the example of the endcaps in Target. Products-

Michael Blake: [00:26:45] The Snuggies.

Jackie Hutter: [00:26:46] Actually, Snuggies is a great story. Actually, I use that example. I probably could have got a patent on a Snuggie, believe it or not. It seems so obvious, but there’s a story there, right. So, you probably could have gotten something if it had been skillfully done. But there’s only a limited number of people that are going to buy a Snuggie.

Michael Blake: [00:27:06] I mean, it came and went, right?

Jackie Hutter: [00:27:08] Yeah. And also-

Michael Blake: [00:27:09] So, you don’t need 20 years of protection for a Snuggie.

Jackie Hutter: [00:27:11] But, also – and this is another aspect of that – really is Walmart going to slot to two shelf spaces for completely Snuggie? It ain’t going to happen, right. So, in that environment, patents really aren’t meaningful.

Jackie Hutter: [00:27:27] The other situation, and I use this example for folks that have products, Kim Cracks, whatever you want to call them, I ask people to walk through Tuesday Morning, which I effectively think about as the Island of Misfit Toys. You walk through Tuesday morning, and what I see is people’s 401(k)’s that had been totally evacuated because somebody convinced them that they could make a zillion dollars on their new way of doing X, Y, or Z. And the people who got that product to market, the people who patented that product, got paid. And this poor person had to sell. The only way they could make any revenue, which was far less than they invested, unquestionably, is to get it to be sold into a place like Tuesday Morning.

Michael Blake: [00:28:16] It’s like the gold rush, right?

Jackie Hutter: [00:28:17] Yeah.

Michael Blake: [00:28:18] You made money selling the axes, and the shovels, and the sifting pans but not actually digging for gold.

Jackie Hutter: [00:28:22] Great example, great example. So, I want people to realize that that’s not a real outcome, a probable outcome, for when you have just a better idea. You think, it’s a better idea.

Michael Blake: [00:28:34] Now, what about the argument that because when you obtain a patent, you’re also sort of opening the kimono, right. Is there an argument to be made that, instead, trying to protect something as a trade secret just by virtue of keeping something secret?

Jackie Hutter: [00:28:48] Yes and no. It depends on how you do it.

Michael Blake: [00:28:53] Okay.

Jackie Hutter: [00:28:53] The kimono only needs to be opened. That is a real legal term, opening the kimono, but it actually falls apart when I talk about this.

Michael Blake: [00:29:01] That’s a term of art?

Jackie Hutter: [00:29:02] Open the kimono, yeah, absolutely.

Michael Blake: [00:29:05] I have no idea.

Jackie Hutter: [00:29:05] Yes, absolutely. Yeah, it goes back to the old days when it was all men. But in any event, you only have to open the kimono if your claims are related to the goods, if you will. So, if you strategically define your claims in a way that doesn’t require the secret sauce to be disclosed, then there’s less probability that that’s the problem.

Jackie Hutter: [00:29:36] So, when I talk about my software clients, my software-related clients, we’re not claiming the algorithm. Why would you do that? Because there are probably 62 other ways to do the same thing with a different algorithm, but that’s not what we’re talking about here. If you claim the algorithm or the process, you have to disclose how you do the process.

Jackie Hutter: [00:29:54] But if you’re claiming something different – For example, what the customers buy, a product – the technology enables that claimed product. The technology does not lead that product. So, you have different — The legal requirements don’t change. But because you’re setting up the question to be different, very often, what I find is that the issue of trade secret disclosure is much different when you strategically define the claims in a way that’s actually more meaningful in the long run.

Michael Blake: [00:30:29] So, as we wrap up here, I would like to invite you to maybe share a little bit of a case study. Is there a patent success story you can think of that you could share?

Jackie Hutter: [00:30:40] I have, well, a couple of recent ones, but one that I had — And they’re a little bit different. So, I’ll briefly talk about both of them. First one is a medical-related client, detection client of mine that I’ve been working with for a few years now. They came to me very early. And they have been doing some really tough research on a condition, a medical condition that if you catch it before at the right time, it doesn’t become chronic. But if you don’t catch it, then the patient suffers for the rest of their lives.

Jackie Hutter: [00:31:15] And the problem there was you have to be able to detect it, and so that you can diagnose it, but the detection was very difficult because it has to be done fairly continuously. So, you can’t have a person come into the medical imaging office once a week. It’s just not feasible in most cases. So, they’ve developed a way to diagnose it on a regular basis. Ostensibly, there’s prior already out there, but why would they be working on it if the problem has been solved? That’s a big deal for innovators. Just think about you’ve got all these people working really hard on something, that means the problem is not solved. And that was the case here.

Jackie Hutter: [00:31:53] And they’ve got some really keen insights, amazingly smart people. They’re great technologists, great entrepreneurs. And it’s been a collaborative process. It’s always a collaborative process. And we were able to get them two patents within just shy of a year and a half. And after a year of really having cracked the code on this particular innovation, they obtained very substantial licensing revenue, a license agreement from a company that makes a medical device that has kind of been a moribund market.

Jackie Hutter: [00:32:29] And my client’s technology allows more sales to be had of an existing medical device that was pretty much a flat market. And they’re thrilled. And, also, importantly this revenue is not investor revenue. They didn’t have to give up any of the company to get this revenue. But they were very strategic. It was all about customer discovery, what the customer needed, why the problem existed, and the continuous collaboration with me to make sure our patents covered that.

Jackie Hutter: [00:32:55] The second example, and this is a quick example, but it’s a fun example because it tells me that I’m doing things right, I’ve been working with a startup technology company, actually, since the day they were they were founded: the CTO, a PhD, and a CEO. And we’ve been strategically working to generate IP protection. It turns out patents are very important in this space. We can tell that because there’s lots of patents in this space. It’s got a pretty obvious signal. And they have been getting the attention of the established companies in this market because of the patents because patents are technology-virtue signaling, right. I’ve got patents. I’m doing something different. So, that differentiates them from the other startups out there. But, also, that client is now going through Series A. And I found out that there was a bidding war between two VCs over the term sheet. And I found out the reason that-

Michael Blake: [00:33:52] Is it an Atlanta company?

Jackie Hutter: [00:33:53] It’s an Atlanta company, yes.

Michael Blake: [00:33:55] Two VCs bidding over an Atlanta company?

Jackie Hutter: [00:33:55] Yes, exactly, exactly. They were Atlanta VCs.

Michael Blake: [00:33:58] That’s urban legend.

Jackie Hutter: [00:33:59] Yes. It’s this truth. But how I found out about it was because the losing VC asked for my name, and they’re hiring me for one of their portfolio companies-

Michael Blake: [00:34:09] That’s good.

Jackie Hutter: [00:34:10] … which is great. But in this case, IP didn’t drive all the value. The technology and the validated business model for my client absolutely did that. But augmenting that with IP that actually covers what the customer cares about was a definite, definite plus to that valuation.

Michael Blake: [00:34:32] So, Jackie, I’d like to get a concluding thought out of you, kind of a 30-second sound bite. Most important to think about when deciding whether or not to get a patent, what do you think that is?

Jackie Hutter: [00:34:46] So. patents really matter. When they matter, they matter a lot. And being able to understand when and when that isn’t. And if it is, how to go about getting what you need in order to grow that company value, either in revenue or an exit, is the crucial first step to any patenting process.

Michael Blake: [00:35:13] Well, this is great. So, how do our listeners find you? I’m sure they’ve listened to us for the last, whatever, half an hour or so. They’ve fallen in love with you, as they should. How do they find you if they want to ask from ask you for more information?

Jackie Hutter: [00:35:24] Well, they can see me driving around Atlanta in my red Mustang convertible with the license plate that says, “I’m a lawyer,” or they can find me online at The Hutter Group. That’s H-U-T-T-E-R group.com. And more preferably look for my writings out there. I’ve been blogging for over 10 years – actually, 11 years now – about these topics. I’m passionate about them. And more importantly, I’m passionate about people learning about the patent process and why it matters before they come and talk to any patent expert, me or anybody else for that matter.

Michael Blake: [00:35:59] All right, terrific. Well, that’s all the time we have for today’s episode. So, we’re going to wrap up today’s program. I’d like to thank Jackie, again, for coming on, Jackie Hutter, for joining us and sharing her expertise with us. I think we’ve learned a lot, and there’s a lot to sort of unpack. So, the nice thing about podcasts, you can pause, rewind, play again. We’ll have a transcript posted as well. I have show notes posted.

Michael Blake: [00:36:21] Next week, we’ll be exploring a new topic. So, please tune in so that when you’re faced to making your next business decision, you have clear vision when making it. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company, and this has been the Decision Vision Podcast.

Supply Chain Now Radio Episode 44

February 4, 2019 by angishields

Supply Chain Now

Supply Chain Now Radio Episode 44

00:00 /

SCNR broadcasts live from Jump Start 19
Hosted by SMC3
Learn more: www.SMC3.com

Michael D. Golden is partner at Arnall Golden Gregory LLP and is co-leader of the firm’s Closely Held and Family Business Practice. He is also a member of the Mergers and Acquisitions, Real Estate, and Logistics and Transportation Practices. Mr. Golden’s practice focuses on counseling clients, both publicly held and privately owned, in growing their businesses through mergers and acquisitions, strategic partnerships and joint ventures, and creative financing arrangements (including both equity and debt). Mr. Golden also represents companies in their employee matters such as negotiating executive employment agreements and non-competition agreements. Mr. Golden’s clients cover a variety of industries, including business services, manufacturing and distribution, logistics and transportation, healthcare, and real estate. Prior to joining AGG, Mr. Golden was a law clerk for Judge Ernest Tidwell, United States District Court for the Northern District of Georgia. Learn more about AGG here: https://www.agg.com/

Rob Adams serves as Managing Partner for JGS Resources, a leading firm that provides transaction advisory services for the logistics, waste management, and staffing industries.

Will Haraway is Founder & Lead Evangelist at Backbeat Marketing. Will has 20 years of executive experience in B2B Technology Marketing. Will is a certified analyst relations practitioner by the Knowledge Capital Group and has helped companies including Manhattan Associates, Aptos, Atlantix Global Systems, American Software and Rubicon Global improve their brand reputations with marketing results that help increase sales. Will also serves as a member of the APICS Atlanta Executive Advisory Board and serves as co-host of the popular #SupplyChainCity series on Supply Chain Now Radio. The Backbeat team includes lead generation, digital marketing, media relations and content marketing specialists with a combined 50 years of experience in their chosen disciplines. Connect with Will on LinkedIn and learn more about Backbeat Marketing here: www.backbeatmarketing.com