Chris Lewis from Riordan, Lewis, & Haden spoke to our leadership class about how he evaluates potential private equity investments.

The firm operates somewhat like Berkshire and uses little leverage. They buy private companies and over the last 20 years have averaged generous returns without leverage.

They started the firm to invest in VC-type opportunities (pre-revenue) but now have more of a buyout mentality but still earlier stage ($40M revenue companies). They buy these companies with the goal to build them to $200M revenue companies.

Chris grew up in LA and was the national tennis champion at USC. He even played on the pro tour and was something like 60th in the world. Nice! After going to business school at USC, he worked at Bank of America in money management. Chris met Mayor Riordan who had been doing VC for 10 years and that's what led to them starting RLH.

He emphasized that the most important component they look at is people. Successful businesses almost always will pivot their business, so having a long-term perspective and dedicated, flexible people is key. The top "people" qualities they look at are the following:

• Listening skills
  
• Curiosity
• Confidence
• Teamwork
• Good judge of people
• Creative
• Clear vision
• Empowering, caring for people
• Realistic

In evaluating an opportunity, the 4 questions they always ask are the following:

• Are the people capable?
• Are growth attributes there?
• Do they do something different?
• If they execute on their vision, will it be valuable?

Chris was a fun speaker, and it was interesting to hear him recap these points through a number of stories that he told us.

I was quite impressed by a talk I recently heard by Sasha Strauss, Managing Director of Innovation Protocol, a branding agency serving a variety of companies -- from start-ups to Fortune 500. Sasha's also a USC Professor in Communications.

First off, what made the talk super engaging was the intense energy and humor (often self-deprecating but always keenly observant) of the speaker. That just rocked.

Secondly, the content, while not particularly new, was super distilled and weeded down the core of what matters, and it made me consider the strategy of some of the biggest brands in a new light.

I would have liked to hear more examples of brand strategy at start-ups versus big companies whose brands everyone knows; that would have been a nice application of some of Sasha's frameworks.

Below are my main notes and takeaways from the talk. Overall, it was a blast, and I don't even dare to do justice to the full force of the event simply in writing.


Introduction

• Brand != logo
• Brand = exclusive and desirable idea embodied in products, places, services, people, and experiences
• Example product: Nestle Water (nothing special about it -- just an idea)
• Example person: Britney spears
• Example place: Hollywood
• Example experience: Disneyland (not the fastest rides, not the cheapest park, but the most desired)
• Disneyland vs. Universal: We pay more, drive farther just for a different experience (brand)
• Need to have that core idea everyone will sink teeth into
• Difference for winner is to sell the idea, the brand
• Great brand has power to change perception, influence preference, and command loyalty
• Change how others think about the business; don't use old definitions
• Brand = an idea that influences perception
• Case study: Starbucks (idea of the third place) [my notes here!]
• Other examples: Mercedes, Mickey Mouse (first brand that any human born knows from earliest age), McDonald's, Michael Jordan, Marilyn Manson, Mr. T (created his own brand)
• Have to tell the story consistently no matter what or where, even if change name, logo, etc.
• Specific product brands are more important because of the story than the overall corporate brand
• Managing many brands ("house of brands") more expensive; must not do this until at least $5M business; focus should start on one branded house
• Connection to creativity and self-expression
• Spend less time trying to build business than tell story

Brand Research

• Identify stakeholders before building brand; must first research
• Find the professional associations your customers join
• You can join too; go to their annual meeting, get their newsletter
• Find the industry experts, like JD Power
• Find the retailers and vendors; experience the places where your product will be sold
• Find the opinions of the general public
• Find direct and indirect competitors
• Find alliances and partners (example: BMW/Apple: similar demographics, similar focus on tech)
• Find the community around the topic and ask them about it
• See what media is saying
• See what investment community saying
• See who constitutes Board of Directors of important companies in your segment; the members on it will tell you a lot about where the business is going
• Ask competition's employees questions; ask who they're losing customers to
• Talk to customers and prospects: find on Twitter, offer Starbucks cards for quick phone call

Brand Strategy

• Don't rebrand: evolve
• Useful resources for start-ups (that he uses): LegalZoom, DocStoc, GoToMeeting, FreeConferenceCall, 99 Designs, Toastmasters
• Advertising (magazines, TV commercials, billboards): all feel different
• Ad = attempt to influence an audience through indirect, repeated communication
• Marketing: collateral, events, direct mail
• Marketing = attempt to influence an audience through direct communication (much more specific, not big broadcast, individual)
• Public relations: company meeting, annual report, newsletter, conference
• PR = attempt to influence an audience through third party validation; all already listening, become your advocates, most valuable marketing device (word of mouth)
• Brand message: who we are, why we matter, why unlike anyone else's story, exclusive, desirable
• Personal brand: only trying to tell the world about who I am, what it says about me as a person to others

"The perfect is the enemy of the good." --Voltaire

"Any idiot can come up with a perfect plan for war as long as he's not actually doing it." --Churchill

In one of my classes with former Mayor Riordan, he presented these two quotes to us in connection with his "axioms of leadership."

Voltaire's quote is definitely at the heart of entrepreneurship: the importance of "getting on with it" and making decisions. This ties in to Riordan's "courage" axiom of leadership.

Churchill's quote goes one level deeper into this in pointing out that it's much easier to be an external party considering what would be best for others to do rather than having to actually do it yourself (especially when it's something as difficult and risky as going to war -- or launching a company). That's why many people write about it instead of doing it.

An interesting way to combine the two quotes is to realize that when you're making a plan for yourself, you can't aim for perfection -- goodness and timeliness matter most.