Content Marketing Lessons

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When blog sites like Blogger started in the late 1990s, creators primarily consisted of individuals sharing their research and opinions in word processing-like format with hyperlinks. Early blogs were primarily personal and were often used to share information with friends and family. Commercial blogs quickly followed and the format—text with hyperlinks—remain unchanged. Blogging, which started nearly 25 years ago, was the earliest digital form of content development.

There are now young professionals who grew up considering the web browser as their first source for answering questions. They did this to conduct academic research and to solve personal problems. These users relied on early content, like blogs, to direct their online research. They carry these habits into their professional life. Many professionals now search for answers to business challenges as readily as they use search for their personal inquiries. It is time to bring what we know about B2C content creation to the B2B sales process.

Become a Trusted Resource with Original Content

The key to developing great content for a prospective customer is to have a firm grasp on what the prospect’s problem is. Understanding their pain points will help you to develop content that answers the question they ask when conducting research. You establish credibility by knowing a prospect and providing content, authored by your business, that is relevant and helpful. You turn an anonymous website visitor into a lead when the visitor deems your content as credible.

The consumption of original content establishes your authority in your domain in the mind of a prospect. So, not only do you gain credibility with topnotch content, but you also improve your chances of converting the lead to a customer. As you gain authority and build trust, you make the lead more amenable to your solution. This improves the chance of conversion as the hand-off from marketing to sales is effectuated.

Reduce the Noisiness of Available Content

If you know your prospects’ problems, you know what is important to them. Share information from relevant resources—not just those created by your team. This helps to establish your website and other digital assets as a go-to resource for industry knowledge. Relevant information could be from academia, market research reports, government agencies, news media or independent authorities.

By sharing this curated content through email, social media, podcast interviews or other online sources, you demonstrate an understanding of what is important to prospective customers. Potential customers are more likely to follow, like, read and otherwise engage with by your emails and digital assets when you are a go-to resource.

Put Your Content on Repeat

There are several reasons to reuse your existing content. Perhaps the best and often overlooked reason is that people absorb information differently, depending on how it is presented. Producing existing content in new formats (like transcribing a podcast interview into searchable text) creates additional opportunity for your content to be heard, understood and even shared.

Refresh content to maximize your investment in content development. Expect to put as much effort into the distribution of content as you do into the development of it. Putting content on repeat is not just about updating content for indexing web crawlers. It might include linking to cornerstone content in emails to new leads. It might be turning a blog post into a digestible infographic. Reimagine how content can be reused to increase market impressions.

As you build your B2B content library, be sure to create original content, curate relevant content and repurpose existing content. Your library will draw new visitors and turn them into sales leads.

TechCXO Grows Services Revenue 47%

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TechCXO Reports Full Year Revenue Growth for 2021; 18th Straight Year of Top Line Growth

TechCXO, a pioneer in providing industry-relevant interim and part-time executives and teams to companies in the U.S. and U.K., reported an increase of 47% in annual service fees in 2021 over 2020 to more than $41 million. TechCXO has increased revenue every year since its inception in 2003.

TechCXO and its clients worked together past the COVID-related business challenges in 2020 and 2021 with its largest revenue quarter ever in the fourth quarter of 2021.

TechCXO was founded in 2003 on the premise that companies can benefit from having the best executive talent available and serving as their CFOs, CTOs, CSOs, CMOs, CROs, COOs, CHROs and other executives on a part-time or interim basis. Companies might not otherwise be able to access the talent and experience level of a TechCXO partner and teams due to cost or availability.

Read Full Press Release

Companies can also outsource their entire Finance, Sales & Marketing, IT, HR and Operations functions to TechCXO for 50-75% less than it costs to staff full-time, loaded salaries. All TechCXO partners and staff are U.S. and U.K.-based.

“We battled and rallied alongside our customers to stay flexible, preserve cash, and do what was necessary to assist them throughout the pandemic. Then, in 2021, we blew the top off with incredible growth,” said J. Kent Elmer, TechCXO’s Managing Partner and co-founder. “Companies are seeing how we can quickly turn on an entire Finance & Accounting, Revenue Growth or HR function in a couple of weeks with no overhead or added costs.

“We are benefitting from a tight labor market, particularly the difficulty in finding senior talent for leadership roles, but our value is more than that. Companies are realizing that TechCXO is a great option to bridge a company to the next level. We believe our approach is the future of how companies will quickly build, scale and grow,” Elmer added.

“What has been gratifying is how we’re growing. We saw significant increase in the diversity mix of our partnership last year, highlighted by two women leading the firm in billings,” said Mike Casey, TechCXO’s co-founder.  “In terms of services, our CFO practice has always been a mainstay and our largest practice, but now our Human Capital and Product and Technology groups are leading our growth with Marketing and Sales significantly rebounding from COVID business pressures.”

TechCXO added that it sees greater adoption of its executive operations practice and team coaching delivery model, in addition to interim and fractional executives, specialized training and the full outsourcing of strategic and operational functions.

Top Tech Consultants 2022

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todd-merrillTechCXO’s Todd Merrill has been recognized as one of the Top 25 Tech Leaders in Consulting for 2022. Todd is an experienced software executive who typically assists his clients as a fractional or interim CTO and CiSO.

He has served in a series of companies as a C-Level executive focused on leveraging the Cloud to bring SaaS offerings to market.  As an entrepreneur, turn-around expert, technology and product leader and mentor, Todd has held full corporate P&L and product development responsibilities and directed diverse international teams of Engineering Managers, Mobile Architects, Developers, Dev Ops, QA, and Customer Success professionals.

He was honored alongside other tech leaders from organizations like McKinsey, PwC, and Wipro. According to The Consulting Report, which compiled the list, the “… executives selected for this year’s awards represent some of the most experienced, trusted, and knowledgeable leaders when it comes to technology design, strategy, and implementation. We evaluated each nominee based on a series of factors, carefully weighing their demonstrated expertise, professional milestones, tenure in the industry, and capabilities in technological innovation.”

Todd serves as the Interim Chief Technology Officer at the autonomous drafting solutions company AirWorks. Todd also served as an Innovation Mentor at Chick-fil-A’s Georgia Tech Rev Center. There, he led teams delivering machine learning, computer vision, NLP, and modern web apps based on AWS and GCP. Previously, as CTO at HireIQ, he established Agile software development and moved from a Co-Lo private cloud to AWS for a global, high-availability SaaS offering. He also founded and was CEO of Global Crypto Systems, where he was an early adopter of AWS and secured patents on steganographic distribution of PKI credentials. Merrill holds fundamental patents on the first cable modem and has had software deployed on a satellite launched from the Space Shuttle. Earlier in his career, Merrill held critical engineering and security architecture positions with organizations including Air Defense, Scientific Atlanta, BellSouth, and Ciena. He received his Bachelor of Science in Computer Engineering as well as both of his Master of Engineering Degrees from the University of Florida.

Recently, TechCXO’s Kevin Carlson was similarly honored as a Top 50 Information Security Professional.

Referral Marketing

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Reduce Customer Acquisition Costs (CAC) with Referral Marketing

Too often, CEOs and business owners overlook an obvious opportunity to grow their business. For a company that has turned media buying over to an agency, it is very easy to ignore the referral marketing channel. After all, the agency is not going to benefit from recommending referrals. They want a higher media spend. But referral marketing can have an invaluable effect on a company’s top and bottom line. It is an essential component of the marketing mix.

Referral Marketing Requires Minimal Change in Budget

Many business leaders think marketing and spending go hand-in-hand. To reduce customer acquisition costs, marketers often focus on changing the marketing spend to generate more leads. Referrals generate leads with minimal or no increase in budget. Essentially, making each marketing dollar work harder and smarter. While financial incentives can increase referrals, process changes are the key to a healthy referral program.

Additionally, referral marketing is beneficial because it allows businesses to reduce customer acquisition costs. Consider the customer who tells a friend about a wonderful dinner. This customer was delighted with an experience they had over the weekend at a new restaurant. The friend and their partner try the new restaurant the following weekend. Regardless of what the restaurant paid to get the first customer in the door, their customer acquisition costs are reduced. If the cost was $100 for one customer, it is now $50 for two. They received two customers for the price of one!

Delightful Customer Experiences Deliver

Research has shown that customers are far more likely to refer a company if they have had a good experience. This is true even in situations where the company delivers an average product or service. Before launching a formal referral program, ensure your product, marketing and customer support teams are working collaboratively. They should jointly deliver an experience that exceeds expectations. People love to tell others about a delightful service experience they have had.

Customers and Employees Are Your Best Advocates

Referrals can come from multiple sources, including customers and employees. Current customers are a great source for referrals. They can give testimony about your product that even your best sales rep cannot top. The best trained sales reps will advise prospective buyers on all the features of the product. They can articulate the benefits whether they have used it or not. But a customer is more likely to be seen as giving a more fair and impartial review of your product. When a customer recommends your product, they become your best advocate. Thus, it is important to give customers who have had a stellar experience an opportunity to review your product.

According to a study published on eMarketer, leads referred by customers and employees generate the best referrals. They are more than twice as likely to convert than leads from any other lead source. When an employee produces a “referred lead” to an internal recruiter, that referral is more likely to be interviewed and hired. If wait staff recommends a particular dish, the dish is sold more often. The same is true for nearly every product on the market.

When an insider with first-hand experience sends a lead to a company, that lead is more likely to engage. Ultimately, they are more likely to buy the product. Some employees might refer business own their own. To maximize referrals, set up a formal process for those who frequently connect with customers. Customer care specialists who successfully resolve customer concerns should be trained to ask for the referral. Consider doing the same for other employees with direct customer access.

Develop Processes that Encourage Referrals

Most businesses that deliver a good experience will have some level of ambient referrals. But why leave these opportunities to chance? Create a proactive referral marketing program. Set up processes that make it easy for customers to refer friends, family and acquaintances. Give them opportunities to share their experience with others. Ensure employees are encourged to and recognized for bringing in new referrals.

The costs to launch a referral campaign are low and the potential pay-off is high. Develop your referral marketing plan today.

]Email Katherine  | LinkedIN | 626-344-8730 | Download Katherine’s CV (PDF) | Twitter

What’s really happening with supply chains?

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What’s REALLY going on with the supply chains? TechCXO’s Marty Parker is also a University of Georgia – Terry College of Business lecturer on the topic. He offers some unique insights the lack of data and why variations in toilet paper gum things up.

This article originally appeared at UGA Today

Expert explains why we can’t get some goods fast enough, and what that means for the holidays

Whether it’s because of COVID cancellations, labor shortages or increased demand, America’s supply chain system is choking.

As we approach the busiest shopping season of the year, containers are piling up at the nation’s ports, and many consumers worry their gift purchases will be backlogged or unavailable.

We’re witnessing a perfect storm of disruptions to the very complex, but generally reliable, system that connects manufacturers to customers, said supply chain expert Marty Parker — a lecturer in the University of Georgia’s Terry College of Business department of management. Parker said logistics experts are learning valuable lessons about how to strengthen the system in the future.

When the media calls this a supply chain crisis, what does that mean?

Simply, we are not getting the things we want or need when we want or need them.

For example, a lot of people want to buy new cars. But because of the pandemic there was a substantial reduction in purchases of the computer chips used in cars. Car companies expected the pandemic recession to continue, but the economy just came roaring back after everything opened. Suddenly car companies couldn’t get the chips and other parts they needed for cars.

Similarly, companies can’t get new trucks. That’s a crisis because trucks deliver our food, they deliver our packages, they deliver the fuel we need for our power plants.

How did we get here?

We got here for a lot of reasons. First and foremost, we’re still in the midst of a pandemic that has sickened or killed a lot of people. If people get sick in China in a manufacturing area, suddenly they can’t make the products we need. Or if there’s an outbreak in a shipping port or a distribution center, you can’t ship from there.

The other thing about the pandemic is that it’s taken 6-7 million people out of the workforce. You have [older workers] who don’t want to put themselves at risk, so they retired several years early. Men and women who couldn’t get child care had to stay home with their children. When you don’t have enough labor, you don’t have enough people to unload the shipping containers. You don’t have enough labor in terms of truck drivers to deliver goods. You don’t have enough people to store and distribute goods.

The pandemic was the big factor. The second thing is that there was a large change in the demand curves. Many of us went from eating out in restaurants pre-COVID to cooking at home, so the amount of demand on grocery stores went way up, and the amount of demand on restaurant suppliers went way down. That’s starting to change now but we don’t know what’s going to happen next.

Logistics and supply chain operations are more than a $60 billion industry in Georgia. How is the current crisis affecting Georgia’s Port of Savannah and distribution centers?

It’s making all of America’s ports think about how they can run faster and increase their capacity. I just saw on the news that the Long Beach Port is moving to 24-hour operation to increase its capacity. They’re running out of capacity at the port, but truck drivers are in short supply and trucks themselves are in short supply.

We have a lot of distribution centers in Georgia and as soon as they get materials in from the port, they’re already shipping all those products out to meet back orders.

Is the Port of Savannah, the fourth busiest in the nation, in better shape than other ports? Are West Coast ports seeing more cargo?

Companies are using whatever port they can right now. I don’t think Savannah’s situation is better or worse, I think that they’re all in the same boat. In the past, companies would ship to the lowest cost port, but now they’re just trying to get docked and offloaded.

Is there something consumers or companies should do to prevent this in the future or is it just one of those perfect storm things?

I’ve read that the data at our ports isn’t very available. One of the longer-term fixes would be to get all the data from ports available. That’s one big thing that would help a lot. If you knew where everything was in real time along the entire supply chain — from manufacturing to customer delivery — that would help substantially.

The second thing is that we probably don’t need as many versions of things. The best example is toilet paper. There’s every kind of toilet paper you can imagine— soft, strong, single roll, double roll, triple roll. Do we really need all those different kinds? The answer is no. And having that variety makes the availability of all the toilet paper worse because to make more the manufacturing and packaging equipment has to be changed over and set up again.

For the first time in my career, I’m hearing about products being discontinued. It’s great to have multiple products and choices if a company can truly differentiate a product and if there’s a good reason why the consumer needs it, but I don’t think that’s the case with something like toilet paper.

Will this crisis affect Thanksgiving dinners?

The only way I could see it affecting Thanksgiving dinners is in the case of individual shortages, and those would be more connected to weather effects. I have seen a shortage of pumpkins, but that had more to do with weather than it had to do with supply chain.

Should we hurry up and buy our holiday gifts now?

Yes, absolutely. This is a good idea anyway because the popular gifts disappear early. This year with the backlog of shipments, you should buy early if you can.

TechCXO Fintech 250

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TechCXO Hosts Fintech 250 Founders Fest Oct. 5, 2021

Executives On Demand Firm Welcomes the Most Promising Private Fintech Companies

NEW YORK, Oct. 4, 2021 — TechCXO®, a pioneer and leading provider of industry-relevant, part-time, fractional and interim executives and teams, is pleased to announce its sponsorship of Fintech 250 Founders Fest event on Tuesday, Oct. 5, 2021, during the Future of Fintech conference presented by CB Insights in New York.

The Founders Fest will reveal for the first time the 250 fintech companies selected to the CB Insights Fintech 250 for 2021. In 2020, companies from 25 countries were selected from a pool of nearly 16,000 companies based on factors including patent activity, business relations, investor profile, news sentiment analysis, market potential, competitive landscape, team strength, and tech novelty. The event is being held at The Glasshouse in New York City.

“We feel a special kinship with these companies, as we’ve helped thousands of startup and growth stage companies achieve their goals,” said Kent Elmer, Managing Partner of TechCXO. “Fintech may be the most dynamic segment in business today and these companies represent the very best of new innovation.”

TechCXO was recently named to the Inc. 5000 list of the nation’s fastest-growing private companies for the 13th straight year. TechCXO was founded in 2003 on the premise that companies can benefit from having the best executive talent available and serving as their CFOs, CEOs, COOs, CMOs, CTOs and other executives on a part-time, interim or fractional basis. Companies can also outsource entire functions to TechCXO, including Finance & Accounting, Operations, HR and Sales and Marketing. TechCXO also provides executive and team coaching support.

Companies call on TechCXO due to its unique, cost-effective model that enables ready access to top talent without high costs, long-term commitments or lack of availability.

“Many of these companies will create disruptive new products and services, enter into strategic alliances, raise capital, go through successful exits and even go public,” said Kent Elmer. “We’re proud to support them at this early stage.”

About TechCXO
TechCXO is a pioneer in providing high potential companies across the country with industry-relevant interim, part-time and fractional executives on-demand. More than 3,000 companies, from startups to the Global 1000, have entrusted TechCXO to help with their critical functions by calling on TechCXO executives as their CFOs, CEOs, COOs, CSO, CROs, CTOs, CMOs, CHROs and other executive roles. TechCXO’s major practice areas are: Finance & Accounting, Product & Technology, Revenue Growth, Human Capital and Executive Operations. TechCXO has appeared on the Inc. 500/5000 Fastest Growing Private list every year since 2008. For more information about the firm, please visit https://www.techcxo.com.

TechCXO partners attending the conference include:

TechCXO Philadelphia

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TechCXO Opens Philadelphia Office

Executives On Demand Firm Led Locally by Jim Corr and John Capobianco

TechCXO®, a pioneer and leading provider of industry-relevant, part-time, fractional and interim executives and teams, today announced that it is establishing a Philadelphia presence led by veteran finance executive Jim Corr and growth and operations expert John Capobianco.

TechCXO was recently named to the Inc. 5000 list of the nation’s fastest-growing private companies for the 13th straight year. (View Press Release)

TechCXO was founded in 2003 on the premise that companies can benefit from having the best executive talent available and serving as their CFOs, CEOs, COOs, CMOs, CROs, CSOs, CTOs and other executives on a part-time, interim or fractional basis. Companies can also outsource entire functions to TechCXO, including Finance & Accounting, Operations, HR and Sales and Marketing. TechCXO also provides executive and team coaching support.

Thousands of startup and growth-stage companies have called on TechCXO due to its unique, cost-effective model that enables ready access to top talent without high costs, mandatory long-term commitments or lack of availability.

“Philadelphia is a key market for our expansion plans, and with Jim and John, we have the right people to lead our efforts here,” said Kent Elmer, TechCXO’s Managing Partner. “Not only are they distinguished and effective executives and advisors, they are both terrific networkers focused on building an ecosystem of entrepreneurs, investors and valued service providers.”

“Philadelphia’s entrepreneurial energy is exceptional. The increase in startup investments has been significant, and there is a fast-growing emphasis on innovation in regional industry strengths like fintech, health care and biotech,” said Jim Corr. “In TechCXO, we have a peer network of incredible executives who have successfully led companies as their CEO, COO, CFO, CRO, CTO and other executive roles. The firm’s track record of growth and success is phenomenal. We are ready to begin growing in Philly immediately.”

“There are so many built-in advantages for Philadelphia as a tech hub. There is a robust Incubator, Angel, Venture Capital, and Private Equity Investor network. Then, there’s a world-class education infrastructure of colleges and universities. Rents and housing are relatively low-cost. Young, creative people who come to school here are staying here for the lifestyle,” said John Capobianco. “Couple all that with a culture of hard-work, hustle and grit and you have something special here.”

About TechCXO

TechCXO is a pioneer in providing high potential companies across the country with industry-relevant interim, part-time and fractional executives on-demand. More than 3,000 companies, from startups to the Global 1000, have entrusted TechCXO to help with their critical functions by calling on TechCXO executives as their CFOs, CEOs, COOs, CSO, CTOs, CMOs, CHROs and other executive roles. TechCXO’s major practice areas are: Finance & Accounting, Product & Technology, Revenue Growth, Human Capital and Executive Operations. TechCXO has appeared on the Inc. 500/5000 Fastest Growing Private list every year since 2008. For more information about the firm, please visit https://www.techcxo.com.

Top 50 Information Security Professional

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TechCXO’s Kevin Carlson has been recognized as one of the Top 50 Information Security professionals in the world. Kevin is a TechCXO partner and supports clients as a fractional CISO and CTO.

He was honored alongside other CiSO and Global Security Officers from organizations like City of Tucson, Equifax, Harley-Davidson, The Hershey Company, Kraft Heinz, Oracle and the US Secret Service. The 2021 OnCon Icon Awards recognize the top information security professionals and information security vendors in the entire world. Finalists were voted on by peers to determine the winners.[/fusion_text]

Making Progress

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sticky_display=”normal,sticky” class=”” id=”” margin_top=”” margin_right=”” margin_bottom=”” margin_left=”” font_size=”” fusion_font_family_text_font=”” fusion_font_variant_text_font=”” line_height=”” letter_spacing=”” text_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]When effort or intention aren’t enough, how does one progress something important? Making real progress comes down to three things. Watch the minute and a half video from TechCXO executive coach and partner Piers Mummery for awesome insight. [p.s. Piers also has a really cool English accent.][/fusion_text][/fusion_builder_column_inner][fusion_builder_column_inner type=”2_3″ layout=”2_3″ align_self=”auto” content_layout=”column” align_content=”flex-start” valign_content=”flex-start” content_wrap=”wrap” spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” type_medium=”” type_small=”” order_medium=”0″ order_small=”0″ dimension_spacing_medium=”” dimension_spacing_small=”” dimension_spacing=”” dimension_margin_medium=”” dimension_margin_small=”” dimension_margin=”” padding_medium=”” padding_small=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” hover_type=”none” border_sizes=”” border_color=”” border_style=”solid” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” render_logics=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” last=”true” border_position=”all” first=”false”][fusion_youtube id=”https://youtu.be/WRRioeIuJ7A” alignment=”” width=”” height=”” autoplay=”false” api_params=”” title_attribute=”” video_facade=”on” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” css_id=”” /][/fusion_builder_column_inner][/fusion_builder_row_inner][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”no” hundred_percent_height=”no” hundred_percent_height_scroll=”no” hundred_percent_height_center_content=”yes” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” status=”published” publish_date=”” class=”” id=”” link_color=”” link_hover_color=”” border_color=”” border_style=”solid” margin_top=”” margin_bottom=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_blend_mode=”none” video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ type=”legacy”][fusion_builder_row][/fusion_builder_row][/fusion_builder_container]

Incentive Stock Options Guide

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Creating Incentive Stock Option Plans

The appeal of stock options for startups and earlier-stage companies may not be what they once were, but there remains a high expectation on the part of your best employees that they will one day share in the runaway success of the firm. Stock options, particularly those that are fully vested, are a significant motivator, ensuring that employees are aligned with the long-term goals of the company.

Your chances for attracting and retaining the top tier people you need for success are much better with some up front equity budgeting by founders and careful annual thinking about the equity pool you’ll need going forward for both new hires and merit-based awards to existing key contributors.

Incentive Stock Option (ISO) Plans remain an important retention and motivation strategy. There is room to get creative with ‘synthetic’ options and bonuses tied to successfully completed projects and key milestones. By offering these options, companies can manage the exercise price effectively, ensuring it aligns with the price and the fair market value of the company shares at the time of grant.

Equity Still Matters

As unicorns and IPOs have become more rare, the appeal of stock options for startups may not be what it once was, but ISOs remain table stakes for startups that want to draw exceptionally talented people. The favorable tax treatment of ISOs, especially when compared to the alternative minimum tax, makes them a more attractive option for employees.

There is more inherent power and flexibility in ISOs for recruiting and retention than many founders may realize. Also, a management team can get extraordinarily creative in using synthetic and restrictive options based on the successful completion of a particular project or initiative. This creativity can extend to managing the expiration date of options to maximize their benefit to both the company and the employee.

Founders’ Equity

Founders are generally good at thinking through equity allocations among themselves, but something easily overlooked in the early capitalization structure is model options for new employees. Understanding the impact of equity grants on future dilutive events is crucial, particularly in how they relate to qualified stock options and their tax implications, including long-term capital gains considerations.

The size of the initial option pool you need available depends on the executive team you have on hand and those you will need. For example, if among your founders you already have your CEO, COO, CTO, and other key executive team members, you may only need a pool of 10-12% of fully diluted shares available to create a suitable equity compensation plan. However, if you are yet to bring on several key members of your executive team, you may need 15-17% or more of fully diluted equity in the equity pool. I’ve seen founders caught off guard because they needed to come up with 5% equity for the CEO they really wanted.

The earlier an equity incentive plan reserve can be built into an equity strategy, the sooner it can be leveraged, usually in the form of winning a star employee through the draw of equity (in exchange for a lower salary).

Budgeting for Equity

Building the Organization You Want

In addition to the executive team, you will need to think through your organization as it is and how you ideally want it to be. A good practice is to map out an entire organization chart and then do a bottoms-up budget for granting equity throughout the entire organization. Budget out at least two years or to the next anticipated equity raise, ensuring the income tax rate implications are considered for each equity grant.

One example – and this is merely an illustration as equity grants have many moving parts and variables – is if you anticipate the need for a great software engineering team, you may allocate for your Engineering VP 1%; a senior engineer 0.5%, and a line employee 0.25% (of fully diluted shares outstanding). Go through the same exercise for sales, marketing, operations, and other functions. To avoid confusion at the time of future dilutive events, it is always prudent to detail option grants as a specific number of shares versus a percentage.

Again, not only do you want to create a pool of equity for new hires, but for merit awards; particularly if your horizons for major events (such as IPO or an M&A transaction) stretch beyond 3-5 years.

Common Forms of Equity Incentives

The most common forms of equity incentives for the employees of startups are stock option plans, stock grants, and stock purchase plans.

Stock options are the most common and preferred form of equity-based compensation. A stock option gives the employee the right to purchase stock of the employer or its parent corporation. Stock options typically are granted to employees subject to vesting requirements, which prohibit exercise of the unvested portion of the option prior to completion of specified employment or service requirements (or may permit immediate exercise but with the stock subject to a repurchase right on the employer’s part that lapses over the vesting period in a manner similar to restricted stock).

An employee will generally receive one of two types of stock options: Incentive Stock Options (ISOs) or Nonqualified Stock Options (NSOs).

ISOs

Employees are typically granted ISOs, which must be granted subject to a formal stock option plan and are subject to certain restrictions. ISOs have favorable tax treatment for the recipient in most cases, often leading to long-term capital gain taxation rather than ordinary income tax rates. To ensure ISO treatment of option grants by the IRS, the company should follow certain rules to properly grant stock options to its employees including but not limited to having a valuation of its common stock performed on at least an annual basis or more often if material changes to the business have occurred. Improper option issuances may lead to unintended tax liabilities for both the company and the employee.

NSOs

NSOs are often issued to non-employees such as consultants, who are not eligible to receive ISOs or participate in statutory employee stock purchase plans, and to key employees or directors to whom the company wishes to grant options.

Assuming that the NSO does not have a “readily ascertainable value” at the time of grant (and virtually no NSOs do), there are no tax consequences for the optionee at the time of grant.

Rules of the Road for ISOs

  1. Stock Option Plan must be in writing;
  2. Stock Option Plan must be approved by the shareholders of the company within twelve months of the plan’s adoption by the board of directors (the plan may also be approved up to twelve months prior to adoption by the board);
  3. Options must be granted within ten years of the formal approval of the option plan;
  4. Options must expire less than ten years from issuance (or five years from issuance for any holders of more than 10% of the company’s stock);
  5. Options must be granted only to employees of the company (not to directors or consultants);
  6. Options must be exercised within ninety days of termination of employee status or one year following the death or disability of the employee;
  7. The value of the stock to vest in any one year under the option (based on the value at the grant date) shall not exceed $100,000; and
  8. Options may not be transferable except in the event of death by will or laws of distribution of assets.

Incentive Projects

For companies with major milestones such as clinical trials and securing regulatory approval, incentives, and stock options can help motivate and direct work toward specific outcomes.

Whether you incentivize key contributors or energize projects, Incentive Stock Option Plans remain an important retention and motivation strategy. For detailed plan development, schedule a call with us.

CFO Survey – Would you add Bitcoin to your balance sheet?

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Bitcoin as a store of value and payment mechanism has been growing in acceptance as evidenced by some publicly traded companies putting a portion of their cash reserves into the cryptocurrency.

Tesla invested more than $1.5 billion in Bitcoin to its corporate balance sheet, noting that the purchase was made with cash not needed for operations.  Time Magazine, owned by salesforce.com inc.,  said it would also add Bitcoin to its balance sheet.  MicroStrategy has aggressively urged companies to shift corporate cash into cryptocurrencies like Bitcoin, and also announced it would be paying Board Members in Bitcoin.

TechCXO wanted to know where its CFO partners stood on the issue, so we surveyed 25 CFOs.  Many TechCXO clients are privately-held technology startups, and we asked them:

Resistance to Risk, Preserving Limited Cash

By a wide margin, TechCXO CFOs said they would not put cryptocurrencies onto client companies balance sheets. There were 21 “No”; 3 “Yes” and 1 “Maybe”.

When looking at the comments, the resistance was not necessarily due to not seeing crypto or Bitcoin as a legitimate asset, but more in response to their clients’ current cash and risk profiles. Some of the  comments added are below.

Currently I would not. Bitcoins are accounted for as intangible assets in the U.S. You cannot recognize gains until you sell but do have to write-down impairment if the price drops. Most of my current companies have limited cash resources. As such, they are risk averse.

Cash requirements precluded consideration:

Crypto is volatile. Our clients’ main goal with their funds is principal protection. Not until they have significant excess cash would I consider this as an investment thesis.

And:

The volatility of cryptocurrency erodes the ability to preserve capital. Most of my companies do not have enough capital to put it at risk.

However, some with more significant cash reserves would consider higher risk investments, even amending policies to do so:

One of my current clients, publicly traded, has raised a significant amount of equity that we have difficulty investing for any type of return. We have discussed amending our Investment Policy to allow up to 10% of investable cash for higher risk/higher reward investments, like Bitcoin.

Still others are ready to go:

One client I have has indicated he wants 5% – 10% of fundraising proceeds to be deposited in Bitcoin.

Startup or Start Over?

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Is your startup now a start over? There is nothing wrong in that, so long as you have given it your best shot and learned from it. Maybe things centered around an undefined strategy, an unclear mission, an unaligned team, a disconnection with customers, an ill-defined market or perhaps some other oversight or stroke of bad luck? In any event, an after action review and thoughtful questions from an executive coach may reveal where things went wrong. TechCXO executive coach Piers Mummery explains.

The following article originally appeared on Pierso.co.uk

If at first you don’t succeed, try, try and try again. That is the nature of entrepreneurialism. Sometimes successful entrepreneurs get lucky on the first attempt, but more often than not, a successful entrepreneur will have made many mistakes before reaching success. The trick is to learn from your mistakes. Do not be afraid of making mistakes, nor admitting them to those around you. It’s OK to fail… I promise; I know, and I have been there!

An investor in one of my businesses said once, that it is not a crime to lose money, but it is a crime to run out of money. Now I buy that sentiment to a point in the context of a one-dimensional business, but most businesses can adapt and change and flex according to their circumstances and there are times when you set out with the best of intentions, based on all of the foresight and research and knowledge you have but due to a fundamental issue (often unforeseen), you may be heading on a trajectory towards failure.

I have a personal example of this in a garden retail business that I created and eventually sold. 2 years before we sold the business, we embarked on a very expensive and what we thought at the time would be a killer e-commerce plan to extend our products to our existing customers online. We spent a small fortune on instore promotion and a fantastic e-commerce site, with all the bells and whistles, but when we launched, we found the level of sales after just 2 months, wouldn’t have even paid for a celebratory drink!!

The fundamental reason for our failure that we found out was our existing customers preferred to physically visit our stores for their shopping experience and that in trying to get them to go online as well, we risked cannibalising our existing customers experience in the store. We took a very brave decision to shut down the service after a few months, having spent over six figures on the experience and a great deal of time and internal resources. The result was that we needed to start again, which we did, but with an emphasis on driving local web visitors physically to our stores through local marketing….it worked, but it was an expensive, six figure mistake we made.

The important point here is that there are times, when you give your business the best shot possible, you throw everything that you have and know to try and be successful, but even having done your best, you may not succeed and the skill of great people is to recognise this and make conscious changes. It was Albert Einstein who said the definition of insanity is doing the same things over and over again expecting different results.

Be prepared that at some point your Start Up business may just become a Start Over business and there is nothing wrong in that, so long as you have given it your best shot and learned from it.

Think about what you have learned. Maybe things centered around an undefined strategy, an unclear mission, an unaligned team, a disconnection with customers or perhaps some other stroke of bad luck.

Active Listening Quiz

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Active Listening

How good a listener are you?

The importance of active listening for business applications like customer success and customer experience management are clear: successful companies and executives are attuned to the needs and desires of what customers want. But there are simpler, day-to-day things like team meetings and one-on-one conversations through which the quality of the interactions have an enormous overall effect on important things like employee trust, productivity, corporate culture and effectiveness of leadership.

Leaders are often poor listeners

Leaders are often the worst among us as listeners as they are so focused on driving growth, meeting numbers and deadlines, and asserting out authority that we often forget that our most valuable resource is our employees. That’s not just a cliché; Our employees usually have the deepest knowledge of our products, services, and customers. They often know more about how our organizations work than we do. They are the ones who can provide the context we need to actually meet our goals. But we can’t learn from them without listening.

 

Social Enterprises

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Paul Sansone, TechCXO partner and former CFO of the Boys and Girls Clubs of America and Better World Books, is an expert in social enterprises, social entrepreneurship and B Corps. Paul also serves as a member of the CASE (Center for Advanced Social Entrepreneurship) Advisory Council at Duke University.

Social entrepreneurship is the process of recognizing and resourcefully pursuing opportunities to create social value. With decades of experience in financials for social ventures, Paul knows what it takes for social ventures to raise capital. Learn what impact investors are looking for in their investments, raising capital as a B Corp, and trends he sees in social entrepreneurship. View Paul Sansone’s full bio.

Update: Issues for Non Profits in 2021

Recently, Paul also conducted a radio interview that included a discussion of issues Non Profits are facing in 2021. Starting at the 5:50 mark and through 9:00, he details some of the resource development and fundraising issues Non Profits faced in 2020 and the innovative strategy pivots they need to pursue in 2021 to carry out their mission. This may including some M&A activity among Non Profits. He goes on to talk about the entrepreneurship tactics of organizations like Goodwill and Habitat for Humanity.

Managing the Whole Person

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How an Increase in Empathetic Leadership May Have Staying Power

What workplace changes will stick once the pandemic subsides? Maria Goldsholl, TechCXO’s Managing Partner – Human Capital, identifies three HR and leadership trends that will have staying power.

This article originally appeared on CirrusMD and their series on top trends in human resources

In a year when Zoom fatigue became a real thing, and millions of bosses and employees personally experienced any number of emotional and psychological challenges due to quarantines, stress and isolation, trends have emerged that may redefine workplace interactions for the better.

No one went untouched in 2020, and when all experience some pain and loss – including the boss — empathy can grow, particularly for leaders. Suddenly, stubborn, long-held biases held by some managers, such as “working remotely is just a way to sleep in and avoid work,” instantly vanish. When a manager is struggling with their own kids being out of school and stuck at home for months, they may be ready to extend more grace to single parents.

The pandemic has been a test of true leadership for many and a new perspective on viewing the whole person. Leaders have asked themselves, “How can we support people through this pandemic?” and “What really matters (and what is just corporate nonsense and busy work)”?

What emerges will be stronger, more holistic leadership with an eye toward prioritizing employee wellness, not just to reduce health insurance premiums, but to care for the whole person.

Here are three positive trends that may take hold.

New Respect for Wellness

It’s not a mistake that in the realm of “Health & Wellness” programs, Wellness is listed second. It may be an even more distant consideration than that. This year changed just how real mental and psychological wellness are for people. Physical health has always had quantifiable costs and benefits attached to it, including productivity, healthcare costs and culture. Now employers can more clearly connect how health and wellness have evolved with how contributors like sleep, exercise, and burnout all play a role in our overall mental health. What was otherwise considered a stigma to discuss has now become a mainstream part of the employee conversation.

Look for employers to offer their employees more through their wellness plans to diagnose things like sleep issues, and to lean more heavily into practical applications such as wearables that can monitor mental health.

Project Management, Prioritization & Efficiency get a boost

Almost all research suggests that people worked more, not less, this past year with the surge in remote working. Early on in the pandemic, frequent one-on-one check-ins were popular. However, as people tired of these tactics (Zoom fatigue) as overkill, they lobbied directly to supervisors to cut out endless forms and tedious meetings. With other things tugging at them, such as caring for children or parents, there was little time to waste on bureaucracy. Drawn out presentations became crisper. Online meetings got shorter and priorities became more pointed. Project management applications got a boost and soul-crushing, email-centric management got jettisoned.

More goals and objectives were turned into sprints with tidy deliverables and success criteria.

Performance Management Overtakes Performance Reviews and Evaluations

We’ve long lobbied for more of a performance management culture versus the overuse of quarterly and annual performance reviews.

Performance management calls for ongoing communication, a focus on clear actions, behaviors and results, and linking work to larger strategic objectives. In the year of more empathetic leadership, many company leaders reported that they are easing up on the dreaded end-of-year performance review. For example, Google skipped mid-year appraisals while the number of promotions doubled.

Shorter, more frequent check-ins actually made supervisors better informed as to how people were progressing. Managers were grateful too as some said getting rid of mid-year reviews saved them 20 hours or more.

We can all hope that leaders retain some of these trends, and that they no longer draw a hard line between a person’s work life and their personal life but rather view them as a whole person.