Goodwill Accounting

Back in April, I outlined Yahoo's "goodwill" account to highlight how they were overpaying for acquisitions - other technology companies developing products that should have been developed in-house at Yahoo!.

Today, I say this link on Twitter which provides a list of companies whose "Goodwill" accounts exceed their current market capitalization. Most of the companies appears to by in the Consumer or Communications industry. Not sure what the implications are, but interesting nonetheless.

Michael Lewis - "The End"

Just in case you missed it, here's an interesting piece from Michael Lewis, author of Liar's Poker (a book about Wall Street back in the 1980's that you should read if you haven't). His new article - "The End of Wall Street's Boom"- is a new perspective on the current financial market situation. It's about 18 pages printed, so grab a cup of coffee first.

(Chris M. - thanks for sending to me...)

Freddie Mac, Fannie Mae, & Cheap Furniture

A friend of mine that works at a hedge fund called me on Friday. He wanted my opinion on the Freddie Mac/Fannie Mae situation. My immediate reaction was – “Good news – the free market works.” Over the weekend, I thought about it some more, and here’s what I think now -

“Good news – the free market works.”

I remember just after college, another close friend (“Mike”) started working as a manager at Heilig-Meyers Furniture in North Carolina. Heilig-Meyers was a chain that focused on lower income consumers – mostly anyone that needed a chair to sit on and a coffee table to eat off of while watching Jerry Springer… (Mike also informed me that the furniture protection upsell is a crock, but I digress….) Their specialty was extending credit to lower-income purchasers. I remember reading one of their credit agreements once – 24% interest for those lacking the cash to complete the transaction. Additionally, Heilig-Meyers sold credit life insurance at a value above the price paid for the purchased furniture to prevent downside risk against “unpaid indebtedness.”

So if I have this right, Heilig-Meyers would sell furniture to non-creditworthy individuals on credit, include additional debt insurance payments for an amount higher than the value of the purchased goods, and charge an interest rate that reflects the appropriate risk level of the consumer to which they were extending credit. Hmmm…. Sounds familiar for some reason. This may be shocking news, but Heilig-Meyers went bankrupt in 2000.

I wonder what would happen if a mortgage company provides financing for a house to individuals lacking the appropriate credit at an appraisal value above market value, and include additional payments on top of the loan for private mortgage insurance for the total loan amount. And, what if the home mortgage lenders had fair confidence that default risk for these loans would be covered by the US government? Oh wait, that’s happening…

Why is it hard for the market to understand that people and companies respond to incentives? (Check out "THE ARMCHAIR ECONOMIST: Economics and Everyday Life" by Steven E. Landsburg for more on this.)

(More info about eventual lawsuits against Heilig-Meyers’ practices can be found here – some interesting reading. How do companies even get this large following such company practices?)

Employee Retention at Yahoo!

Things aren't looking terribly rosy at Yahoo! nowadays. It's never a good sign when webpages like this start sprouting up.....

http://yahoorezinr.com/

(Mike - thanks for the link....)

"I've got the conch!" - What now for Facebook?

Jessi Hempel’s article in the most recent edition of Fortune Magazine – “Finding Cracks in Facebook” - intends to uncover some new foundational flows with Facebook. The article itself doesn’t necessarily reveal any new revelations about Facebook, but further asserts some of the ongoing concerns that those in the technology arena have long had about Facebook (an inexperienced CEO, an emerging firm without a clear revenue growth model, and an extreme market valuation).

As I wrote several months ago, Facebook’s economic value may vastly different from its business and market value. While the company is bringing several new experienced executives on board, I can’t help but imagine that Facebook corporate headquarters at least mildly reflects the tensions in the Lord of the Flies.

While Yahoo!, once an Internet powerhouse, slowly fades into oblivion as a Microsoft acquisition target and under talk of selling off company assets, it would be imprudent to consider Facebook’s market share and daily visitors as validation that the company has assured a long-term future for itself.

The latest scoop has Microsoft considering an acquisition of Facebook themselves - another story unto itself.

In looking at the lack of revenue growth and ongoing struggles with launching new platforms and working with developers, the technology development and appeal of Facebooks seems to be reaching an entropic stage. Perhaps this would be a good time to cash out and start anew with the next idea that is inevitably rolling through the minds of Zuckerman and his cohorts. I only wish I had such decisions to consider in my our career and the opportunites available to him should be nearly boundless.

Yahoo's Entrepreneurial Capacity

Attending local Silicon Valley events always seems to provide great fodder for articles and conceptual gymnastics --

I attended an SVASE event last week – “Startup Founders – New Kids on the Block” – where Eric Marcoullier, Founder & CEO of Gnip, served as one of the panelist. Eric developed MyBlogLog (I'm a member) which sold to Yahoo! for $10 million back in January 2007. After less than a year, Eric left Yahoo! and is now in the process of launching Gnip, a stealth company that no one seems to know exactly what it does.

Could this showcase the pending problems that Yahoo! might have with its acquisition spree over the past few years? Yahoo’s strategy has been to acquire new technology companies and then fold them into their product and service offerings. To account for the prices that they pay for these companies, the “Goodwill” account on Yahoo’s Balance Sheet continues to grow – a practice that I’ve recently criticized. When a company’s accounts for intangible assets by using the “Goodwill” account, those intangible assets may include the future innovation and development that the acquisition’s management and employees with bring with them. Advocates of overpaying for an acquisition will often defend the price paid by infusing the argument with the future intangibles yet to be realized.

Entrepreneurs inherently dislike the bureaucracy and structure of a large corporate organization. So what happens when these unrealized intangible assets disappear when key managers decide to leave the acquiring firm? When key managers leave the acquiring firm in short order, then the expected future benefits from those managers are lost.

(Sidenote #1 - Gary Becker, Nobel Prize-winning economist for contributions to the concept of Human Capital, estimated that human capital represented 70-75% of a company’s value.)

(Sidenote #2 - this is one of the reasons that acquiring firms will use its own equity shares in acquisitions instead of cash – the equity paid to the target firm managers can be spread out over a period of time to increase retention of the acquired managers and key talent.)

When Yahoo is purchasing new technology companies such as MyBlogLog, they are attempting to buy “entrepreneurial capacity” that otherwise doesn’t exist organically within its own corporate structure. The struggle that acquiring firms face is that increasing entrepreneurial capacity, according to Becker, is accompanied by “significantly rising costs and that the “accumulation of human capital is not instantaneous” (from Becker’s book - “Human Capital”). If ineffective incentive programs are implemented, this purchase capacity flies out of the window as the key managers walk out of the door.

If other key managers like Eric are walking, so too are Yahoo’s "Goodwill" assets.

H1B Visas & American Innovation

Recently, the H1B visa issue has received significant media coverage. In the Wall Street Journal, Miriam Jordan wrote about this issue on March 31 and Shikha Dalmia wrote an editorial in Saturday’s edition.

As Milton Friedman free-marketeer, I share Bill Gates’ viewpoint (detailed in his testimony last year to the US Congress) that the current system should be scrapped to open the American borders to a more effective labor force populated by the best available human capital (labor) available.

Paul Romer, developer of “endogenous growth theory” (or “new growth theory”) showed that technological progress is a primary engine for an economy’s economic growth. The notion of “building a better mousetrap” is the key motivation for profit-maximizing firms in a competitive environment. In short, ideas are “nonrivalrous” – meaning that the developer of a new innovation or idea has a natural monopoly on that idea’s implementation and use. This leads to increasing returns to scale and firm profits. In the context of economic growth, creating an environment where new innovations and ideas are abound results in subsequent increases in an economy’s growth. (Romer’s complete academic article – “Endogenous Technological Change” - is available in The Journal of Political Economy, October 1990.)

The H1B visa system handicaps American firms from employing the world’s best and brightest minds where these individuals could be developing new innovations for these firms, providing increasing returns to its research and development investments.

For obvious national security reasons, developing and enforcing stringent background checks should certainly be required for all emigrants to the United States, but limiting the number of foreign workers solely to protect American jobs frankly sounds a bit socialistic to me. The competitive nature of the market, including the labor market, is a key ingredient to the ongoing success of the US economy during increased economic globalization. Why should we deliberlately disadvantage American companies?

What if the United States decided in 1933 that we had reached our quota of foreign workers, disallowing Albert Einstein’s entrance to the country?

Yahoo!'s Valuation - Goodwill leads to Goodwill

Recent word is that Microsoft has no plans to raise its $44.6 billion bid for Yahoo! Inc. $44.6 billion got me wondering how this matched up to Yahoo's value based on its balance sheet. I found one item to be particularly interesting - "goodwill" - which seems to be indicative of Yahoo! Inc.'s problems, and could be leading the company to Goodwill Industries very soon. How about a new logo?

As defined on Investopedia - "goodwill appears on the balance sheet of the acquirer in the amount by which the purchase price exceeds the net tangible assets of the acquired company." In other words, goodwill is the extra that you pay for after accounting for the actual company assets.

Keep in mind that I don't know what the media industry norms are with regard to the goodwill-to-acquisition price ratios, but looking at the Yahoo! Inc.'s 2007 Annual Report, it seems to me that they're pretty good at throwing cash into the goodwill bucket for acquisitions without getting much of a tangible return.

A few examples from Yahoo! Inc.'s 2007 10-K to illustrate (this info is found around page 70-85 of the report...):

1. Purchase of SOFTBANK, a firm with which Yahoo! had a couple of joint ventures (2005)

Total purchase price = $500 million in cash
Amount of purchase price allocated to Goodwill = $388 million

2. Purchase of Right Media (2007):

Price = $526 million ($246 in cash, $237 in equity)
Amount of purchase price allocated to Goodwill = $440 million

3. Purchase of Zimbra (2007):

Price = $302 million ($290 in cash)
Amount of purchase price allocated to Goodwill = $241 million

4. Purchase of Blue Lithium (2007):

Price = $255 million ($245 in cash)
Amount of purchase price allocated to Goodwill = $221 million

5. Alibaba (2005):

Price of 46% of shares = $1 billion in cash
Amount of purchase price allocated to Goodwill in 2007 = $443 million

Like I said, I don't know what the normal allocation to goodwill as a percentage of total purchase prices in the media business, but when I look at these transactions, I see a significant trend -

Yahoo! likes to take cash from its pockets and exchange it for an accounting asset called "goodwill" that you can't touch or see. These investments are not all-inclusive of all of the deals on Yahoo! Inc.'s books, but just up the cash spent on these five examples and you get nearly $2.3 billion.

I'd like to think that the brain trust at Yahoo! Inc. would like to have that $2.3 billion to spend on projects developed internally to produce organic company and product growth. Perhaps these actions are a microcosm of what's happened to the Yahoo! brand. A company that led the Web 1.0 revolution is now becoming a sideline watcher in the Web 2.0 and Web 3.0 evolution.

To put some perspective Microsoft's $44 billion offer - Yahoo! generated $6.9 billion in revenue in 2007, putting Microsoft's offer at a bit more than 6x revenues. Compare that to Microsoft's valuation of Facebook at $15 billion, estimated to be 500x revenues.

Illustrating Market Value vs. Intrinsic Value with Starbucks

Starbucks is favorite company of mine to use in various finance and business strategy lectures, (and to get a jolt before our Sunday strategy meetings at Altos Research). Over the past decade, Starbucks enjoyed a steady rise up, initiated aggressive international expansions plans, and with their recent reappointment of Harold Schultz as CEO, is now working to repair some erosion of their brand and product quality.

Most recently, I’ve been watching the Starbucks’ market valuation plummet over the past year with great intrigue. The current share price movement provides another great illustration of the difference between "market value” of a firm and the actual “intrinsic value” of a firm

In early January 2007, SBUX traded at about $35/share, yielding a market capitalization of over $25 billion (=$35/share x 725 million shares outstanding). At Friday’s market close, SBUX traded at $17.05/share, yielding a market valuation of only $12.36 billion.

While the company is focusing itself on re-establishing its brand, quality, service, and products, there certainly haven’t been any fundamental shifts in the demand for coffee. It doesn’t appear that Starbucks customers are flocking to Peet’s Coffee & Tea or Caribou Coffee to get their daily caffeine fix. Share prices at Peet’s are down about 20% since last year, and shares of Caribou have fallen from about $7/share to $2.75 in the same period. McDonald’s is rolling out a plan to compete in the specialized coffee business and their stock is up from $45/share to $55/share over the past year, but can they really take significant market share from Starbucks? Probably not.

So have operations at SBUX really taken such a negative turn that the company is now worth less than half of its value from early 2007? Clearly stock market thinks so, but this is why there is a difference between market value and intrinsic value.

When SBUX traded north of $30/share, that run up was based on increased demand for the market supply of shares (the 725 million outstanding). Strangely, in the middle of this run-up, the stock had a 2:1 split which changed the supply from about 362 million shares to the current 725 million shares outstanding. Supply doubled and the demand continued to force the market price per share to the $40/share range. The change in price reflects increased demand for shares, not necessarily a change in the intrinsic value per share of Starbucks.

According to Starbucks’ financial statements, the company increased its net income over 33% and increased their assets by over 50% in this two-year period. Let’s look at the market price per share during this same period.

In January 2005, SBUX traded at about $30/share. Taking into account the 2 for 1 stock split in October 2005, this means that the shares trading at nearly $40/share in April 2006 were really trading at $80/share. From at the same time that SBUX increased net income by 33% and increased their company assets by 50%, individual shares (actual pieces of ownership of the company) increased in value by over 250%. This means that the market value of a share of SBUX was increasing at a pace much faster than the actual value of the Starbucks.

Remember, market value ≠ intrinsic value.

Read the financial statements. Look at the assets and cash before making a decision on any company’s value – public or private. This isn’t my own idea, Ben Graham and David Dodd wrote about this in Security Analysis and this has long been the mantra of Warren Buffett.

Tips for Entrepreneurs from Sequoia Capital

If you're an aspiring entrepreneur, the "Ideas" page on the Sequoia Capital website is an outstanding resource. It's rare (very rare) that a start-up can submit a business plan without any prior contacts and meetings with a venture capital firm and receive financing. But, this page is an outstanding primer of the themes and ideas that you'll need to tackle in order to build a successful company.

More on the Bear Stearns Valuation

At market close on Thursday, Bear Stearns was trading at nearly $6/share, yielding a market capitalization of just over $800 million, nearly a tripling of the publicly-announced offer of $2/share ($236 million) from last weekend.

The general consensus indicates that the real estate owned by Bear Stearns in New York City is worth about $1 - 1.3 billion. On March 16, Paul Kedrosky wrote that that this real estate asset would account for a large portion of the sale price.

If this is the case, some things still don't add up to -

1. At the original sale price of $2/share ($236 million), it seems that JP Morgan was buying a $1 billion real estate asset for about 25% of market value. There are proponents of the $236 million price tag that argue that JP Morgan is "buying the stock, not the assets." In the simplest terms however, when you own a stock, you own a share of the company. When you own a share of a company, you own a share of all of its assets. This is the basis of intrinsic valuation.

This is my fundamental position againt the low valuation. I agree that Bear Stearns is not worth the $20+ billion when BSC share traded at $170, but their largest underlying real estate asset is worth more than $236 million.

2. What about the human capital at Bear Stearns? The company paid $3.4 billion in compensation in 2007 (according to their 10K). Assuming that anyone worth their salt has left the company by now, you can probably estimate that the remaining human capital still with the firm by the time this shakes out is worth some value of what they were paid in 2007. Let's call it 10%, which provides a current human capital value of about $340 million.

By these estimates, assuming all other assets in the company are worthless:

Real Estate + Remaining Human Capital = Total Current Value of Bear Stearns

So:

$1 bln + $0.340 bln = $1.340 billion, which calculates to $11.35/share. Given the risk profile of BSC right now, JP Morgan could justify a discount, a "risk incentive" to take the shares at a price slightly below this level.

So with a share price at the $6/share area and a secondary market valuation of about $800 million, we're getting warmer. But it's not surprising to see current shareholders balk at the $2/share originally proposed.

$236 million? Bear Stearns, Valuations, and Train Wrecks

An astonishing train wreck. That’s all that comes to mind in reading about Bear Stearns’ collapse and J.P. Morgan’s purchase of the Wall Street mainstay since 1923.

According to the Wall Street Journal – “J.P. Morgan Rescues Bear Stearns.” "Rescues?" Seems more like Cousin Vinny bailing out the “two youts” somewhere in Alabama after being charged for murder…

Part of me feels like the $236 million price tag might still subject J.P. Morgan to the “winner’s curse,” but seeing that no other bidders were evident, I guess not...

To put the $236 million number into perspective, the latest Bear Stearns balance sheet is showing over $600 million in Plant, Property, and Equipment, so at least J.P. Morgan can have a sidewalk sale to liquidate the remaining office equipment and cover the legal fees associated with the acquisition. And the $236 million would have been pocket change for the LBO equity firm about a year ago.

Or if you started with $200,000 in 1923, earning the market return of 8.66% per year would have yielded you $232 million by now.

The latest venture capital investment-based valuation of Yelp is somewhere around $200 million. So Web 2.0 companies with revenues at $10 million a year are worth more than Bear Stearns in its current state?

When I introduce the concept of fundamental analysis to my finance students at the University of San Francisco, we do an exercise to illustrate the difference between “market value” and “intrinsic value” of a firm. Guess I have a new company to use for next semester’s lecture.

Venture Capital Investment Trends since 1995 (Deals by Stage)

Doing some research about Venture Capital trends, I came across some interesting data provided by PWCMoneyTree.showing convergence in the number of venture capital deals between Early Stage, Expansion, and Later Stage deals, while the Start-up/Seed Stage dropped considerably over the past 12-13 years:

Reading nothing more than the data presented in these graphs, I'm hypothesizing that this decline was a function of a number of factors:

1. Venture Capital followed itself.

If there were a plethora of start-ups in the mid-1990s at the start of the internet/tech bubble, then it would make sense that targets that received venture capital in the "Start-up/Seed Stage" would then receive subsequent rounds of funding while in their "Early Stage" and "Expansion Stages", then eventually as "Late Stage" investments. Seems there may be some evidence of this effect as you examine the decrease of Start-up/Seed Stage funding with increases (and then decreases) in Early Stage and Expansion targets. These Early Stage and Expansion investment targets then became targets for Late Stage funding.

2. Venture Capital has become more risk averse.

Following the fallout of the last tech bubble in the late 1990's, venture capitalists turned their attention to firms that were past the start-up stage and had a better chance of survival. This would certainly explain the dramatic rise in the percentage of deals in Later Stage companies from approximately 10% to 30% of investments.

3. Venture Capital has become more selective

Certainly there was not a drastic decrease in the number of firms seeking Start-up/Seed Stage funding during the past 12-13 years - just the number of venture capitalists willing and able to fund these start-ups.

4. The ongoing emergence of Angel Capital

As angel capital groups continue their emergence, they may be filling the void - funding Start-up/Seed Stage companies instead of traditional Venture Capital.

I am actively researching these thoughts to support with further evidence, but this certainly provides some interesting fodder for discussion. I'm interested in your feedback on this thought process.

Using Salesforce

I'm in process of migrating to Salesforce.com for our company's CRM. Here's what I know so far:

1. Salespeople there are meticulous during the sales process. I'm hoping this is because they're using Salesforce for their CRM.

2. You can get a user "seat" for about $65/month, and set up billing quarterly, semi-annually, annually, or bi-annually. Bi-annual prepayment gets you a discount.

3. I posted a "user case" on my profile, and received a call from a tech guy within a couple of days. He left me a voicemail because I couldn't take his call. I called him back and left him a voicemail. Another tech guy called me back about an hour later and walked me through the answer to my question. He was clear and thorough.

4. If you are using a contant/registration form on your website and you want to fully integrate Salesforce into your sales processes, you'll need to pull out the contact/webform on your website that exists and replace it with the Salesforce "web-to-lead" form.

That's all for now. Still haven't migrated our contact data over because of the day-t0-day fires, but I'm cautiously optimistic. Would be nice to be able to employ a consultant to handle the migration for us. But seeing that we're paying less that $1500/year, I'm not about to pay $2-3K to have someone come in and do this for us. (Though maybe I should, but cash flow is always the challenge in start-up land...)

Innovation, Google & Employee Retention

[Author's note: A new article on this blog regarding Google employee retention is also available.)

A recent Wall Street Journal article - "Start-Ups Make Inroads
With Google's Work Force" has many people in the technology and business community clamoring with regard to Google’s innovation and employee retention challenges.

Google has long been a source of personal interest, stretching back to 2000 when I was first introduced to the website by a business school professor. What most intrigues me about Google is its culture of innovation and development. I organized a tour of Google for an executive MBA cohort from Kyiv-Mohila Business School in 2005 and obtained brief exposure to its corporate life.

In reading the WSJ article, I began to think about Google’s innovation strategy from an economic point of view, and found the following “Equilibrium Innovation” model in a textbook sitting on shelf (stick with it - it's not as complicated as it looks!):



Where:

CoI = Cost of Innovation
PVI = Present Value of Innovation
L_R&D = Amount of Resources devoted to R&D
g = Innovations/year
B = Amount of resources needed to create an innovation

(Source: Van Den Berg, Hendrick. “Economic Growth and Development,” c. 2001, McGraw-Hill. Page 216.)

PVI is a function of the monopoly profit (π), discount rate (r), and L_R&D/B.

CoI is a function of the price of resources (w) and the amount of resources needed to produce an innovation (B).

This graphical model shows that as more resources are dedicated to R&D, the “Cost of Innovation” increases and the Present Value of Innovation decreases. In economic terms, the CoI curve is the “marginal cost curve” and the PVI curve is the “marginal benefit curve.”

So how does this relate to Google and its innovation strategy?

An article printed in the July 10, 2006 edition of BusinessWeek , considers the success rate of Google’s innovations – citing that the success rate of new products at Google is below planned corporate levels.

According to their 2006 annual report, Google anticipates “that research and development expenses will increase in dollar amount and may increase as a percentage of revenues in 2007 . . . because we expect to hire more research and development personnel and build the infrastructure required to support the development of new, and improve existing, products and services.”

In order to maintain the innovation growth rates of previous years, say from 2002 – 2004, Google is looking at a HUGE expenditure if it considers this investment in R&D in a per employee basis. Employee counts at Google have risen tremendously in the past 3-4 years, from approximately 1500 employees in 2003, to 3000 in 2004, to 7000 in 2005, to 11,000 in 2006.

Going back to our model and considering the R&D and infrastructure costs on a per employee basis, this equates to a potentially substantial rise in the Cost of Innovation (CoI), especially as labor markets remain competitive during the current period of economic growth – leading to a higher price of resources (w) and the increasing amount of resources necessary to create an innovation (B). As CoI shifts upwards, the number of innovations will ultimately decrease.

Regarding PVI, increases in B will contribute to a lower PVI. Additionally, as innovation occurs more rapidly, the monopoly profit that Google will receive for their innovation will decrease because new innovations will overtake the usefulness of current innovations (Joseph Schumpeter and “creative destruction”). These factors will shift the PVI curve downward, further decreasing the number of innovations produced.

If we couple two factors:

1. The effects of shifts in CoI and PVI due to higher overall innovation costs; and
2. The appearance of Google’s “shotgun” approach to innovation

the net result is slower innovation and development within the company.

If Google has had a penchant for hiring those unique individuals that want to innovate, incubate, and develop new ideas but their internal structure inhibits employees from doing so, this may explain the reported move of employees to new companies and start-ups.

"Entrepreneurship is a team sport."

Last Thursday (6/14/07), I attended the SVASE "Leveraging Service Providers" lunch event hosted at DLA Piper's office in San Francisco. The speakers of the event were Christopher Keene, CEO of Active Grid Software and Radu Barsan of Redfern Integrated Optics.

A couple of key concepts were presented throughout the course of the discussion. The first of which was:

"Entrepreneurship is a team sport."

Although we all here about the tremendous success and innovations of Bill Gates and Steve Jobs, their success was only made possible through the major contributions of those around them. This is a key idea with which those in the start-up world struggle – founders struggling with the necessity to delegate key aspects of the business to others and venture capitalists struggling to help company founders understand this concept.

At Aplia, I stepped into the lead Business Development role with semi-defined company structure in place. There were those that focused on product management, those that focused on content development, and those that did business development. Though we all cross-pollinated with support to each other, this structural concept was well enough defined already that those of brought on to the team for a specific purpose. And most importantly, the company founder was generally supportive of loosening the reigns to each of us to excel at what we did. Of course, there were always developments and conversations behind closed doors between the founder and CEO, but the fact that there was a CEO separate from the founder showed the understanding that entrepreneurship had to be a team effort.

There are important applications in for those leading teams in larget organizations as well. I can remember my first district sales manager at Prentice Hall – William “Butch” Porter (now the CEO of Optimized Learning. It seemed that he was only a “manager” for a few months each year – mostly in the summer between sales cycles in the Spring and Fall. During this time, he helped to define sales targets, territory goals, and lead training to increase our capabilities. The rest of the year, he took the active role of a customer service and sales support personnel, insuring that each of the reps had the adequate resources to close the sale. He had the faith that he hired the right people to do the job. Same concept as understanding that business is a team sport, even as a manager.