Q4 2020 Texas CEO Magazine

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Q4 2020

Chris Savittiere’s







They’re not just your workers. THEY’RE OUR HEROES. At Texas Mutual, we know a lot about heroes. We see them every day and every one of them is essential, especially now. They might not make headlines but they make Texas a better place for all of us. Texas Mutual is proud to be ON THE JOB with 1.5 million hardworking Texans — and we’re honored to have the opportunity to help you keep them safe. To learn more about our safety-focused workers’ comp, go to texasmutual.com. © 2 020 Texas Mutual Insurance Company


Letter from the OWNER Warren Buffett famously said, “You only find out who is swimming naked when the tide goes out.” Never in the history of this country has the tide gone out faster than in 2020. Unfortunately, I am concerned that we have not yet seen the worst. When a business fails, it often leaves in its wake a group of unpaid vendors and surprised employees. The economic impact of these failures can then create a series of negative repercussions that persist long after the onset of a crisis. Of course, for the strongest, best-capitalized companies, situations like this can create an opportunity to grab market share and hire talent. It is amazing to me that less than a year ago, the biggest challenge for most businesses was finding qualified employees to hire. Little did we know that in May of 2020, we would see US unemployment peak at 13 percent.


In addition, CEOs are dealing with the issue of whether and when to bring employees physically back to the office. While some employees thrived in the work-from-home situation, it has presented huge challenges for others. And for service businesses that require physical interaction with customers, COVID-19 has been a catastrophe from which many will never recover. Even for those businesses that weathered the storm so far, how do you plan for 2021 when uncertainty is the word of the year? I hope that whatever your current circumstance, we at Texas CEO Magazine can be a resource for you in the coming months. In this issue, we have dedicated several pages to recognizing Texas CEOs who provided strong leadership over this rocky year — though they represent only a fraction of those worthy of mentioning. We’ve also got our usual lineup of Texas experts on topics like reinventing supply chains (p. 10), executive alignment (p. 32), and tracking the data points that tell us about our state’s future (p. 74). Turn to page 89 and 91 for a couple of short takes from economists on the tradeoffs individuals and businesses find themselves making in the COVID era. And for insights on what motivates us to be CEOs in the first place, I hope you’ll enjoy my discussion with Patrick Lencioni (p. 38). As always, please reach out to us with story ideas, comments, or ideas at info@texasceomagazine.com. We look forward to being a continued partner to you in the remainder of 2020 and beyond.



FEATURES Q4 2020 Publisher Lauren Daugherty


7 STEPS TO REINVENT YOUR SUPPLY CHAIN POST-COVID-19 Kimberly Watson-Hemphill & René Ffrench









A Conversation with Evan Beard, Managing Director of Fine Art Services for Bank of America Private Bank


THE COLLECTOR A Conversation with Howard Rachofsky

Texas CEO Magazine Q4 2020

Operations Tamara Trammell VP of Sales Whitney Bilyeu Graphic Design Michele Rodriguez Contributors

Bob Barker, Ebonique Boyd, Ed Curtis, Gordon Daugherty, René Ffrench, Jeremy Horpedahl, PhD, Theo Kosub, Megan de Linde Leonard, PhD, James O’Gara, Joel Trammell, Holly Tsourides, Kimberly Watson-Hemphill, Ilana Zivkovich To subscribe to the print or digital edition of Texas CEO Magazine, please visit our website: www.texasceomagazine.com and click subscribe.


A Conversation with Patrick Lencioni

48 THE


A Conversation with Denise Villa, PhD & Jason Dorsey 4

Editor Aaron Hierholzer

POSTMASTER Please send address changes to: The American CEO, LLC dba Texas CEO Magazine 8012 Bee Caves Road Austin, TX 78746 © 2020 The American CEO, LLC dba Texas CEO Magazine. All rights reserved. The Content in this issue may not be reproduced, distributed, or otherwise used without the prior written consent of the American CEO, LLC. The various contributors own their respective Content that is published in this magazine. The beliefs, content, comments, opinions, statements and viewpoints (collectively, the “Content”) published in this issue are those of the respective contributors and we do not necessarily agree, endorse, support or verify such Content. The Content presented in this issue is for informational purposes only and is not advice of any kind. Your use of the Content is at your own risk. The Content is provided on an “AS IS” basis, without any warranties of any kind, either express or implied. Neither The American CEO, LLC nor any person associated with us makes any warranty or representation with respect to the completeness, reliability, quality, or accuracy of the Content. Without limiting the foregoing, The American CEO, LLC does not represent or warrant that the Content will be accurate, reliable, error-free, that errors will be corrected, or that the Content will otherwise meet your needs or expectations. The American CEO, LLC disclaims all warranties of any kind, whether express or implied, statutory or otherwise, including but not limited to any warranties of merchantability, non-infringement and fitness for particular purpose. The foregoing does not affect any warranties which cannot be excluded or limited under applicable law.











A Conversation with Sam Starling, Partner at JetPro Texas


















Ilana Zivkovich













Jeremy Horpedahl, PhD




Megan de Linde Leonard, PhD

Joel Trammell



Theo Kosub




Tom Nolan, President at Kendra Scott, Interviewed by YTexas CEO Ed Curtis

A Conversation with Mikaila Ulmer








Texas CEO Magazine Q4 2020


Convertible securities—a form of investment that will later convert into a different form of investment—are by far the most popular fundraising instrument used for seed funding rounds of $1 million or less. But in addition to coming with unique terms and mechanics, convertible securities also introduce an interesting phenomenon referred to as the rolling close. And it’s the rolling close that causes the seed fundraising dance I will describe in this article.

ATTRIBUTES OF THE ROLLING CLOSE Here is how the typical rolling close works: As each investor (most often an angel investor) commits by signing the convertible security, they can transfer their funds and the fundraising startup can immediately put those funds to work. This is very different from equity rounds of funding, which have one or more official close dates with minimum threshold amounts that must be met before the startup gets access to the new funding. The rolling close is a double-edged sword. On one hand, being able to gain access to new funding as the commitments are made allows the startup to immediately put the increments of new capital to work. On the other hand, if the commitments are spread out over several months, it can create a hand-to-mouth scenario that never lets the company really make the intended investments and commitments. A rolling close also introduces the risk of closing some investors in the starting phase of the fundraising campaign, only to later discover that the terms aren’t attractive enough to fill out the rest of the funding round. Because of this, the risk profile for investors during the rolling close changes quite dramatically throughout the phases of the fundraising campaign.

SECURING THE FIRST INVESTORS The first 20 percent or so of the target funding amount is by far the hardest to close. Think about it from the investor’s perspective. If a startup has a target to raise $1 million and an investor writes the first $50,000 check, what happens if the company isn’t successful raising any more funding? Their investment is basically dead on arrival. So instead, if they like the investment opportunity, they will want to write the last $50,000 check, after the company has already reached $950,000. The first investments in the funding round are the riskiest, and conversely, the last investments are the least risky. Investors pitched during the starting phase won’t usually come right out and say they don’t want to be the first investor. Instead, they will give another homework assignment, ask for another meeting to dive into a different part of the business, or otherwise find ways to drag things out in hopes the startup will raise some money from other investors first. But if no investor is willing to write the first check, how can a startup ever get a seed round closed? Here are two ideas.

Favorable terms

If the very first investors in the round are taking more risk, should they get the exact same terms as the last investors in the same round? The flexible nature of convertible securities allows varying the terms, as necessary, for situations like this. Essentially, a startup could offer more favorable economics to the first investors to help offset the additional risk they are taking. The favorable terms are often aligned with the first 10 to 20 percent of the target amount for the round. For example, for a startup raising $1 million in total, the first $100,000–$200,000 worth of investment would come with more favorable terms. TexasCEOMagazine.com


Verbal commitments

A second tool for getting some first checks written is verbal commitments. Fundraisers can use this instead of, or in addition to, favorable terms. It basically involves asking the first highly interested investors to initially commit only verbally. In other words, if they seem to have decided to make an investment but aren’t reaching for their checkbook, they are asked if they can be considered verbally committed and asked what they will need to see before they will write their check. Most likely it’s raising a certain amount from others first. It is really important to understand what bar needs to be reached to secure their follow-through. The first verbal commit is used to help secure the second one, and so forth until reaching the bar to have a virtual check-writing party. This sequential process is dramatically enhanced if the committed investors will allow their name and committed amount to be shared with other prospective investors.

ENTERING THE GRIND After closing the first part of the seed funding round, there’s no way to best describe the next phase other than a true grind. The mission during this middle phase is to reach a genuine downhill slope for the round. I’m talking about something in the range of 65 percent of the total target. Whereas the starting phase involves selectively finding the first movers, this middle phase involves tons of meetings and often tons of disappointment along the way to that 65 percent.

logical next steps are all important to reduce the chaos. Most fundraisers just use a spreadsheet, with color-coded text and highlights to visually assist with the sheer volume of information. If you want to figure out why a particular investor won’t give their commitment, you can use my favorite question for this purpose: “What is it that you would need to see in order for this to be an exciting investment for you?” Variations of this question break the cycle of the investor repeatedly asking for another meeting or issuing another homework assignment just because they either can’t make a decision or already know they won’t invest but simply don’t want to say so. To either of those requests, the fundraiser can reply, “Sounds good. So, in addition to [fulfilling their follow-up meeting or homework request], is there anything else you will need to see in order for this to be an exciting investment for you?” Grind, grind, grind until you get to 65 percent of the fundraising target. Investors should be assumed to have attention deficit disorder, whether it’s true or not. Active investors see lots of deals. If they seem really excited by the end of one meeting, that excitement has an extremely short shelf life. It wears off unbelievably fast, and that’s partly because of the other exciting investment opportunities they come across shortly thereafter. Sharing progress on traction is always the best way to remain top of mind with investors who have short attention spans.

By now, the prioritized target investor list should be robust. And with the first investors closed, the fundraising founder should know who to go after next. In fact, there should be some investors who previously gave clear indications of interest but specifically rejected the attempts to close them using favorable terms or verbal commits. With the first chunk of the round closed and with money in the bank, those are the best investors to approach again. The most significant asset for this middle phase is pure hard work and a positive attitude. But there are a couple of other tools to use. One is a system for tracking and managing investor interactions. Grouping investors in ways that make the most sense (possibly by their assessed odds of investing), capturing information to remember about the conversations, and recording 8

Texas CEO Magazine Q4 2020

CLOSING OUT THE ROUND Finishing the final 35 percent of the fundraising target is not easy; it just won’t be as chaotic. Upon entering this phase, the messaging about fundraising progress should absolutely change. Whereas previously the amount closed so far is usually mentioned to new prospective investors, reaching this last phase allows messaging about the scarcity, the amount to be closed.

[ENTREPRENEURSHIP] For example, “We’re raising $1 million and only have $150,000 left. Can I save you a slot?” What, there might not be a slot left to invest if I don’t move quickly? That’s absolutely the desired reaction from the potential investor. If there is good fundraising momentum upon entering this final phase, this tactic will typically play out to the fundraiser’s great advantage. If, instead, they barely limped into this final phase, they probably won’t get the desired reaction.

GETTING STUCK The rolling close scenario that causes the most frustration and confusion typically looks like this: The fundraiser has gotten through the middle phase but does not have enough of a pipeline of interested investors to fully close out the round. Most often, I see fundraisers getting stuck somewhere around 70 percent of the original target. This situation represents a dilemma, in that the ultimate goal is within sight, the effort required to get to 70 percent was significant, and forfeiting the missing 30 percent of funding changes the expected outcomes enough to make a meaningful difference. Founders find themselves not wanting to give up. That is admirable but may not be the best decision. A founder in this situation might be inclined to dial fundraising efforts back to 30 percent of their time so that energy can be put back into the business. After all, the cofounders and coworkers have been picking up their slack since fundraising was dialed up to 80 percent. But in truth, the best approach is to first step back and closely assess the situation to decide whether fundraising should remain a priority or if it should be stopped altogether. Anything in between is going to result in huge disappointment. Dialing fundraising down to 30 percent will result in little fundraising success, yet will still put the business results in some jeopardy. It’s a lose-lose situation. As for assessing the situation, there are a few things to be scrutinized very carefully. After doing so, it will hopefully be clear whether it’s best to remain fully engaged or to pause the fundraising efforts. I say pause rather than stop because certain conditions could exist in the near future that cause resumption of the efforts, and the flexible nature of convertible securities is very supportive of that situation. Here are three of the factors to scrutinize before making the decision on whether to pause or keep pushing.

Investor pipeline

If the investor pipeline has run completely dry or if only poor-quality investor prospects remain, the answer is clear. Fundraising should be paused, because spinning up fresh investor prospects is going to take too long and too much energy.

Common investor concerns

If there are common themes or issues voiced by investors, the fundraiser should evaluate the time and effort needed to solve them. Being able to easily or quickly solve a small number of issues that, once addressed, will reliably unlock additional investment might be enough justification to continue the campaign. Otherwise, fundraising should be paused.

Need for the remaining additional capital

Time has gone by since the fundraising campaign started, which means the startup should be smarter about their business venture. Some assumptions in the business plan might now be validated, and some of the original financial projections might have been too conservative. In other words, the startup might not absolutely require the full original fundraising target in order to achieve enough outcomes to successfully raise their next round of funding. Of course, the opposite could be true, which leaves them even more desperate to close the remaining funding. • • • Fundraisers who follow the recommendations and best practices that we have covered so far will not only be better seed fundraising dancers, but they’ll end up with a couple of extra zeros on their bank account balance. While doing the dance, they’ll be thrown a few curveballs by investors amid being asked some of the same questions over and over again. In my article in the next issue of Texas CEO Magazine, we will further improve those dance moves by diving into best practices for investor interactions. Gordon Daugherty is a seasoned business executive, entrepreneur, startup advisor, investor, and the bestselling author of Startup Success: Funding the Early Stages of Your Venture. A proud native Texan, Gordon graduated from Baylor University. He has vast experience with early-stage fundraising from both sides of the table, making more than 200 investments and raising more than $80 million in growth and venture capital as a company executive, fund manager, board director, and active advisor.






YOUR SUPPLY CHAIN POST COVID-19 Kimberly Watson-Hemphill and René Ffrench

Since March 2020, global supply chains have been significantly disrupted in almost every industry. Surveys conducted in March by the Institute for Supply Management revealed that a staggering 75 percent of companies report supply chain disruptions.1 The US healthcare industry, representing 17.7 percent of GDP,2 has been broadly impacted. In addition to the well-publicized concerns about shortages of ventilators and PPE, in the first two months after the pandemic began, 15 new drugs were added to the FDA drug shortage list.3 Most of us saw ourselves impacted as customers of the consumer packaged goods industry, when panic-buying of food, beverages, and cleaning products led to temporarily empty shelves. Now, as states open up, it’s wise to continue learning and reinventing. Today’s challenges present tomorrow’s opportunities — and that includes how businesses manage their supply chains going forward. Here are some key thoughts to consider as the economy reopens: 10

Texas CEO Magazine Q4 2020

Feature DEMAND IS CHANGING; DETERMINE YOUR NEW NORMAL. Review updated demand forecasts

regularly and check inventory levels. Flexibility will be key going forward. Consider putting inventory management on a “replenishment pull” system, in which manufacturing occurs in response to customer demand. In our many years of experience with implementing such pull systems, we’ve seen them reduce working capital by as much as 50–75 percent and improve on-time delivery by 35–50 percent. We’ve also seen significant quality improvements. One manufacturer went from an 18 percent failure rate to less than 3 percent. Pull systems can be tuned to the needs of your own people, products, and processes.


companies have developed a full digital twin. Many would benefit from process modeling in key areas. Building simulation models that consider inventory levels, demand patterns, and supplier lead times will not only enable a comprehensive view of operations and value chain risk now, but the models will also help anticipate if interventions are needed as disruption continues or becomes more severe. Modeling software costs have reduced significantly, making this option widely accessible.


Industry Action Group recently developed a new “failure mode and effects analysis” (FMEA) process — used to identify causes and effects of various potential failures in the supply chain — harmonized with their European counterparts. Compared with their previous risk management approach, this one is much more comprehensive, with increased focus on prevention.

CHECK YOUR MEASUREMENT SYSTEMS. Are your metrics and dashboards providing the information you need to move forward in this environment? All companies benefit from key data analytics around the supply chain. For example, ability to see realistic on-time delivery metrics is essential. Metrics showing the level of work-in-progress throughout the end-to-end processes are frequently overlooked, creating a common gap in understanding. Business guru Peter Drucker famously said that “what gets measured gets managed.” That’s never been more true than now.

We recently worked with a manufacturing company that was planning to implement some state-of-the-art automated equipment; in their case, this FMEA process offered great benefit. This manufacturer was experiencing substantial growth in demand, and also wanted to offer more flexibility in models to their customers. Multiple vendors were supplying parts. The area this company operates in has an aging workforce, with the most experienced and knowledgeable personnel retiring. The new FMEA approach helped with risk mitigation across the system, and also with knowledge transfer to less experienced personnel. TexasCEOMagazine.com



Six Sigma professionals have many of the skills needed to implement change in this challenging time. Here’s how Joel Smith, Director of Rapid Continuous Improvement at Keurig Dr Pepper, describes what happened when members of the continuous improvement team were asked to contribute to the COVID response:

The playbook was no different than for managing any process change in supply chain. First, standard work for screening, distancing, and hygiene was developed, deployed, and tracked across all sites to ensure that employees felt safer inside the company’s walls than out. Then a continuous improvement loop was developed that started with formal COVID risk identification using a modified FMEA and input from employees; this in turn led to the development of best practices, which then were shared across all sites and became standard work if proven to be especially effective.

The team added to this with predictive analytics that ensured employees’ health would not be put at risk. Smith credits the Lean Six Sigma mindset and toolkit with helping Keurig Dr Pepper’s operations run effectively, even through unexpected growth and change.


Traditional models are changing. As an example, prior to

COVID-19, Walmart offered a “ship from store” service from about 100 locations. As their online fulfillment centers became overwhelmed during the pandemic, they quickly expanded “ship from store” to 2,500 stores, which allowed them to better serve their customers and distribute their inventory locally. Walmart also announced a plan for a two-hour delivery service. The company said it had tested the service in 100 stores since mid-April, expanded it to nearly 1,000 stores in May, and had plans to reach nearly 2,000 locations in the following weeks.4

CONSIDER BROADENING YOUR SUPPLY BASE. Historically, many US companies have looked

abroad to realize increased value across the supply chain. Some of these partnerships now look vulnerable to trade barriers caused by the pandemic or ideological disputes. In a late-March survey of CFOs, mainly from US Fortune 1,000 companies, 42 percent told auditing firm PwC that their supply chains would likely broaden as a result of the coronavirus crisis. As an example, auto parts retailer AutoZone has made a public statement that geographic diversity will be a priority to manage risk moving forward.5 *** For business leaders, the pressures of setting the right course are unmistakably high at the moment. Yet, even in this makeor-break environment, there are opportunities for businesses to improve. Use this list as a starting point for a systematic investigation into your supply chain — where it can be strengthened, improved, and maybe even reinvented.

Kimberly Watson-Hemphill, president of Firefly Consulting, is a globally recognized leader in the field of Innovation and Operational Excellence. She has coauthored two books, Innovating Lean Six Sigma and Fast Innovation. She has led operational excellence programs in multiple manufacturing and service industries, including a deployment with a global Fortune 500 company that generated over $1B in savings. Reach her at kimberly@firefly-consulting.com.


René Ffrench, principal with Firefly Consulting, has over 20 years of experience working with clients to develop effective operational improvement strategies, and has significant expertise in supply chain optimization. Previously, René was an operations director with George Group Europe. His leadership style was developed in the US Army, where he served five times as a company commander in helicopter, combat engineer, and special operations units. Reach him at rene@firefly-consulting.com.

Institute for Supply Management, “COVID-19 Survey: Impacts on Global Supply Chains,” News Room, March 11, 2020.

Centers for Medicare and Medicaid Services, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/ NationalHealthAccountsHistorical. 2


Stuart Henderson, et al., “Addressing the Pharma Supply Chain Problem During COVID-19,” MedCity News, April 22, 2020.


“Walmart Ekes Out an Edge in Groceries During the Pandemic,” The Economist, May 23, 2020.


Emma Cosgrove, “AutoZone Rethinks Supplier Diversity After Coronavirus Disrupts Parts Supply Chain,” Supply Chain Dive, May 27, 2020.


Texas CEO Magazine Q4 2020




It is common practice for magazines and organizations like ours to publish lists of honorees. I am not generally a fan of lists such as these. First, how does one pick the metrics by which these honorees are chosen? These things are often rather subjective. Second, such lists inevitably leave off some spectacular people who are just as notable and worthy of honoring as the honorees. Third, I think that many of the people who deserve the most credit never receive it because they are busy doing the type of good things that rarely make it into the limelight.

magnificent accomplishments. Sometimes those magnificent accomplishments have been as simple yet profound as staying in business during the biggest economic upheaval of our lifetimes. Sometimes they have been finding clever ways to pivot. Sometimes they have been keeping people employed, which is so impactful on those employees’ lives and their families’ lives, especially during a massive healthcare and economic crisis. And sometimes these accomplishments have been serving as an advocate for important causes in their communities.

Nevertheless, here we are, compiling a list of honorees for exceptional leadership in 2020. Given the circumstances of this year, it felt appropriate to honor the challenges, sacrifices, and triumphs of 2020, and name a few of the people who have done exemplary or notable things. They stand as representatives for all business leaders in Texas, as we work to rebuild our economy into a powerhouse that provides options and opportunities for Texans. Alongside the hardships and challenges of 2020 have come some

Many of the people who deserve recognition for their work in 2020 will never be known or recognized for it. So, before we move on to our honorees, we want to take a moment to honor them here. To all of those people, from leaders to frontline workers, in companies of all sizes, who worked tirelessly this year to help keep their business afloat, to help keep their teams safe and employed, to continue serving their customers and communities—we honor you, thank you, and recognize you.

On our cover, we have featured Chris Savittiere of Savilino. Before COVID-19 hit, Savilino produced high-end restaurant aprons and similar items. When COVID-19 hit, Chris quickly realized that he needed to pivot, and fast, if he wanted to save his business. He started making masks before most others did, and in so doing he managed to keep people employed (and at decent wages!) and help his business survive and even grow during the last several months. You can read their story starting on the following page. Following that story, you’ll see a selection of other Texas CEOs and leaders nominated to us for recognition, often by their own staff. We could’ve filled 100 pages with worthy contenders, but we hope this small slice reflects the extraordinary efforts of so many CEOs, their executive teams, and their workforce at large. — Lauren Daugherty, Publisher, Texas CEO Magazine





Photo by Brigham Mayfield



Chris Savittiere never imagined himself making face masks. For the past five years, Savittiere has run Savilino, an apron and leather goods business serving restaurants, chefs, and boutique hotels in Austin and all across the US. His tasteful, creative pieces are known for complementing the concept and décor of each of his client establishments— the custom leather menus at Jeffrey’s, for example, or the flower-print dresses and shirts at Elizabeth Street Café (one of his first projects, done in partnership with Ryan Smith at McGuire Moorman Hospitality). Over the years, Savittiere has lent his design, tailoring, and leatherwork skills to a who’s-who of top Austin eateries, from Uchi to Emmer & Rye to Ramen Tatsu-Ya. But in mid-March of 2020, things were beginning to look bleak for 14

Texas CEO Magazine Q4 2020

Savilino. It was becoming rapidly apparent that the COVID-19 shutdowns would have a particularly devastating impact on the restaurant industry. Savittiere realized that business was about to come to a screeching halt. He—and his employees at Savilino— were on very uncertain ground. After pondering the situation for a day, Savittiere called up John Grady, a mentor of his and an investor in Savilino, who often stopped by its East Austin production facility to help out. “I’m going to go into masks,” Savittiere told Grady.

ROLLING THE DICE ON MASKS Grady was initially skeptical of this new mask plan. “Chris could hear the doubt in my voice,” says Grady. But as a sales and marketing pro and

successful entrepreneur, Grady’s philosophy has always been to give every idea proper consideration before dismissing it. Grady ultimately encouraged Savittiere to move forward. And move forward he did: Two days later, on Saturday, Savittiere had worked up a prototype: a washable cotton mask in a clean, gangster-stripe design, sized for adults and kids. By Sunday, the masks were up on his website. By Monday, production was cranking. Grady started coming into the facility every day to help. But this pivot to masks was not a quick or easy fix. For one, masks were still a novel concept. Would people buy them? It was an open question. When Savilino first began cutting and sewing them, there was no clear consensus among health officials or the public on whether cloth masks

Feature were even worth wearing. “I knew I was rolling the dice on this idea, but I decided to make masks anyway,” says Savittiere. By his reasoning, getting more cloth masks in people’s hands would not only free up N95 masks for frontline healthcare workers—it would also prevent people from simply touching their own face and mouth. The other, more pressing issue facing Savittiere was his staff. With restaurant business totally dried up, Savittiere had little choice but to let them go. When he broke the difficult news, he asked if they would stick around for a couple of days on a contract basis to help cut, sew, pack, and ship the new masks. This way, they could make a little money while looking for a new job, and Savittiere could build up some inventory.

The new mission would be to promote public safety via face masks, selling some to keep a bit of revenue coming in while also donating to those in need.

“THINGS BLEW UP OVERNIGHT” Chris Savittiere moved to Austin from New Orleans, in the wake of Hurricane Katrina. For years, he bartended parttime while running a custom sewing and tailoring shop with his then wife. It was behind the bar at Lamberts that Savittiere got to know John Grady, who had an apartment across the street and would come into the restaurant once a week or so. Savittiere would occasionally ask Grady—who had sold a successful sales company and was now doing business consulting— about how to grow his sewing

business. “He was thirsty to learn,” says Grady. “And he didn’t just pay ear service. He actually put it in place.” In mid-March, once Savilino shifted to mask production, Grady joined Savittiere at the Savilino production facility on a daily basis, along with Chris’ two closest friends, Craig Nigh and Camille Brower. Orders started coming in right away, and in a decent quantity. “It was a little hairy for a couple of weeks,” says Savittiere. “I think the staff thought we were crazy!” Nevertheless, they forged ahead. And Savittiere was able to continue giving his staff full-time work for the time being. Then, at the end of March, the Centers for Disease Control officially suggested that all Americans wear masks outside their homes. “Things just blew up literally overnight,” says Savittiere. Orders began pouring in faster than Savittiere, Grady, and the team could fill them. Suddenly, Savittiere could not only keep his former employees— he could bring on new ones. “Savittiere's mentality was very much, ‘Let's go hire locals. Let's give back,’” says Grady. “We hired people who came from the restaurant industry, from hair salons, from entertainment work like lighting, sound, and stage design.” The Savilino team even developed an ingenious work-fromhome solution: Home sewers could pick up kits from Savilino curbside and complete them in their own homes, with the help of an instructional video. When the home sewers dropped the masks back off at Savilino, they were paid right then and there. “Once people realized that they could work right away and get paid right away, that part blew up very quickly,” says Savittiere. “Everybody was hungry for work.” To date, Savilino has worked with over 50 home sewers. TexasCEOMagazine.com


Thanks to the extra help, the Savilino team worked through the order backlog quickly, reducing delivery time from over a week down to just a day or two. Soon they were constructing 1,500 masks per day. Amid the frenzy, they also found time and resources for giving back. In conjunction with the Austin Municipal Court and Front Steps, Savilino donated over 3,000 masks to the homeless and hundreds to underserved children.

got to ride out those disasters and miracles together. If you stay scrappy, then you can turn any situation into something useful or good.”


Today, Savilino has expanded its product line, offering masks in various materials—from Japanese chambray to a light hemp-cotton blend for the Texas heat—and masks with a pocket for additional filters. They have even partnered with Red Bull, Penn State, Harvard, and dozens of businesses and schools on branded masks.

Although the Savilino team was experiencing success, it wasn’t a cake walk. There were supply chain issues, for one. The necessary fabrics and elastics were depleting fast. Fortunately, very early on, Savittiere had found a supplier with a big stockpile of elastic and bought a ton of it up front. “I’m not running out of elastic,” Savittiere told Grady. And they didn’t—though they got close at one point. “We had small disasters almost every day,” says Savittiere. “Once, we took on a group of 20 out-of-work sewers who had worked for a different company, but after about two weeks, the whole crew had to stop work because someone got COVID. Another shop overcommitted and we were left with thousands of orders and no one to sew them. But through those disasters we found new ways, ways that worked better. “But if there’s a small disaster every day, there’s also a small miracle,” says Savittiere. “You’ve just 16

Texas CEO Magazine Q4 2020

Grady agrees. “We ran into so many walls that we had to find a way over, under, around—or through. We had to recognize that things are never as bad as they seem, nor are they ever as good as they seem. The amplitudes aren't as big as they might feel in the moment.”

But Savittiere emphasizes that, by getting into masks, Savilino is not trying to simply capitalize on the current situation.

When you speak to him about his rapid business pivot, he seems proudest of offering continued employment to people in the community. “We've taken on 17 new staff members since all this began,” he says. “They’ve become family to us. It's been really important to us to not just keep these people employed but to also make sure that they're getting a livable wage through this process. Not a single person here is making an unlivable wage. And when you take on a lot of new people at once, there's a tremendous responsibility that you feel towards them. If you have to let someone go, they're literally going to have to figure out how to survive. That puts on a lot of pressure, but also just heightens the importance of how well we manage the business.” “Now, we’re focused on giving back and being a part of the community,” says Grady. “When we work with schools, local K–12s or colleges like UT and Baylor, we look for ways to offer discounts, bulk pricing, givebacks, et cetera. We’ve even bought advertising in struggling school papers and given them a percent of sales. We have really tried to help out in that arena.” What does the future hold for this retooled version of Savilino? “That’s really uncertain right now,” says Savittiere. “We are looking now at the next phase, for the products we can add that will take over when masks begin to slow down. We realized that we get a lot more satisfaction out of providing something to the masses versus a niche market. But we do think that masks will be around for a while, even if they aren’t the key to our future success.”



Founder & CEO, iCode

Over his career as a serial tech entrepreneur, the startups founded by Abid Abedi have generated more than $1.5 billion in revenue. Abedi’s most recent venture is all about preparing young people for the jobs of the future: iCode offers K–12 students computer science and coding classes, delivered on-site and virtually. As COVID-19 hit the US, iCode had to quickly reformulate how it interacted with students, shifting away from all in-person contact. Within two weeks of the coronavirus outbreak, the brand centralized all of its education resources and launched a comprehensive online education program. And they did it quickly, efficiently, and well: 85 percent of parents were highly satisfied with the new online courses after the brick-andmortar iCode locations temporarily suspended operations in accordance with local requirements. The move online wasn’t easy, but as Abedi told the Dallas Business Journal over the summer, “sitting around, twiddling your thumbs is not the answer.”


ReadyOne Industries manufactures apparel for the military and general public, with an entirely USbased workforce. And it operates with a distinctive mission: to give individuals with disabilities employment opportunities in an environment that supports their self-determination and growth. As president and CEO of ReadyOne, Luis Alvarez remained committed to that mission as the pandemic destroyed Texas jobs at a staggering rate. In the spring, ReadyOne shifted gears from apparel and activewear and began manufacturing tens of thousands of antiviral face masks each week. As demand increased from hospitals, the military, government agencies, and other entities, the company was able to give El Pasoans much-needed work at the sewing machines, regardless of their background or disability status. “We’ll take somebody with a lot of experience and we’ll take somebody with no experience whatsoever,” Alvarez told MEXICONOW in June. He’s a shining example of the many leaders who used a quick business pivot to get PPE into the market and offer people part- and full-time work during a time of skyrocketing unemployment.



CEO, Combined Arms

As a former US Marine, John Boerstler understands the challenges of transitioning from military to civilian life. That makes him a fitting leader for Combined Arms, a nonprofit that helps Texas service members make this shift. When COVID began ravaging the United States, many common veterans’ issues—such as access to employment, housing, and community—were significantly amplified. Like any effective leader, Boerstler immediately saw an opportunity to serve embedded in crisis. In a moment when most organizations contracted, Combined Arms expanded. Cooperating with its 70+ member organizations, the nonprofit launched a phased COVID response on March 13. In addition to immediately transitioning its workforce online, Combined Arms reached out to thousands of older veterans with the latest information on COVID symptoms and testing, advocated to fill gaps in financial assistance programs, and mobilized hundreds of veterans to serve in frontline healthcare roles. This fast, comprehensive response was modeled on Combined Arms’ Hurricane Harvey response, and put Boerstler and his team’s valuable crisis-response training to use for the greater good.


President & CEO,

Greater Irving-Las Colinas Chamber of Commerce & the Irving Economic Development Partnership

President & CEO, ReadyOne Industries



President, Childrens Lighthouse Franchise Company

CEO and Founder, Everlywell

Fort Worth


In her role as head of the Greater Irving–Las Colinas Chamber of Commerce, Beth Bowman is committed to the economic growth of her region. Naturally, once the pandemic threatened businesses in every sector, Bowman was called to action—and has proven herself a fierce advocate for the health and prosperity of North Texas.

The childcare industry has been hit extremely hard during this pandemic, with an estimated 40 percent of centers at risk of closing their doors for good, according to a survey by the National Association for the Education of Young Children. Despite that trend, Childrens Lighthouse Franchise Company, which franchises almost 60 early childhood educational schools, has continued to grow.

As an acknowledgment of Beth’s expertise, she was appointed by Dallas County Judge Clay Jenkins to the Dallas County Economic Recovery Advisory Committee, where she helped mold reopening guidelines for Dallas County, as well as securing grant funding for businesses most affected by the pandemic. Among her other achievements as part of the committee and as head of the chamber: aiding in the creation and retention of thousands of jobs in the region; helping secure tens of thousands of N95 masks and other PPE equipment for hospital staff; and surveying local employers to report their needs directly to public officials. It’s thanks to advocates like Bowman that Texas communities are weathering the ongoing storm of COVID-19.

As the pandemic raged, Brown and the Childrens Lighthouse Franchise Support Center team proactively halved royalty payments owed by franchisees, giving them a lifeline during an extraordinary crisis. Meanwhile, several franchises in Texas passed on the relief to families with discounts for children of essential workers during the first wave of the pandemic.

As CEO and founder of an at-home sample collection lab testing company, Julia Cheek found herself uniquely positioned to assist her fellow Texans through a globe-spanning pandemic. Everlywell offers at-home testing kits for cholesterol, metabolism, fertility, STDs, thyroid levels, colon cancer, vitamin deficiencies and more, but at the very earliest stages of the crisis, Cheek's team was already working on a PCR test for COVID-19, something of a dramatic pivot for the company. By mid-May Everlywell had received authorization from the FDA for its COVID-19 Test Home Collection Kit—the first such authorization for a digital health company. Today, Everlywell’s COVID-19 Test Home Collection Kit offers consumers a safe, in-home option for knowing whether they have been infected, via a short, self-administered nasal swab. “Americans deserve safe, convenient options to keep themselves healthy,” says Cheek, and she has shown that, despite the pushback, she’s willing to fight to give them those options.


Not long after, the Franchise Support Center further helped franchisees keep their doors open — so to speak — by quickly launching a Virtual Learning Assistance program that features customizable scheduling options and a more connected environment for young learners as they get their school year started. This was also crucial for many parents who could not work from home and who rely on public schools to assist with their child’s care and development.





Owner, Dallas Mavericks

Owners, Chops & Eggs Hash House

Corpus Christi Last year, brothers Jordan and Ramzi purchased and reopened the Southside homestyle eatery Chops & Eggs. It had been two and a half years since the original closed following a devastating fire, but now its organic, breakfast-all-day menu of flapjacks, crepes, chicken and waffles, and of course, steak and eggs was newly available. When COVID-19 struck its first terrible blow, Chops & Eggs struggled along with the rest of the food service industry. In the first week after lockdown, the brothers decided to do everything in their power to keep employees on payroll—and that meant giving up their own salaries. “I would split my last dollar with you guys,” Chef Jordan told his employees, according to Corpus’ Action 10 News. Chef Jordan and Ramzi gave all employees two and a half dozen eggs and quickly began selling other lockdown supplies—toilet paper, orange juice, more eggs—to keep some revenue coming in. Months later, Chops & Eggs’ restaurant was still showcasing its community spirit: For the weekend of 9/11, first responders got a meal on the house.


State Director– Texas, Older Adults Technology Services (OATS)


When the NBA suspended its 2019–2020 season, it was one of the first signs that COVID-19 would have previously unthinkable effects in the United States. The news rolled out during a Dallas Mavericks game, and cameras caught Mavs owner Mark Cuban’s dropped jaw as he read the headline. Two days later, the Shark Tank star and ever-present encourager of entrepreneurs announced that the Mavericks would continue paying hourly employees— security staff, parking attendants, housekeeping teams, and many others—for the initial six cancelled Mavs home games, preserving their livelihoods during a highly uncertain time. “I’ll keep on paying and I’m doing it not just for the Mavs, but other companies as well,” he said in an interview with KDKA Radio. “It’s just the right thing to do.” It was the beginning of a blitz of initiatives from Cuban and the Mavs, ranging from reimbursing employees for meals bought at independent local restaurants to major donations to healthcare workers and North Texas COVID relief funds. In the wake of the killing of George Floyd, as protests against police brutality and systemic racism spread, Cuban spoke his mind on that matter too. He bluntly challenged white Americans to shift their behaviors and mindset to address ongoing racism in this country, calling it a “moral imperative” to do so. That, once again, was strong leadership—speaking up when it matters, whether it’s popular or not.


San Antonio As a tech equity advocate, DeAnne Cuellar believes that every person deserves equal access to technology, including seniors who face social isolation in the era of COVID-19. Through her work as state director for Texas at Older Adults Technology Services (OATS), she helps bring free, dynamic programming to adults over 60 in San Antonio—giving them the opportunity to become thriving members of the digital world. When COVID hit, OATS programming had to move fully online, a dramatic shift that Cuellar and her team pulled off quickly and effectively. These efforts kept seniors engaged and connected at the precise moment when they faced the solitude of quarantine. Since March, Cuellar’s team has offered 60+ hours of online programming each week to more than 54,000 older adults. Classes range from virtual grandparenting, acting (with Ugly Betty’s Tony Plana), and How to Use Zoom, Gmail, Google Docs, and Social Media. A longtime advocate for historically underrepresented communities, Cuellar also serves as Mayor Nirenberg’s digital inclusion appointee to the City of San Antonio’s Innovation & Technology Committee.



Owner, Dao Chloe Dao

CEO, ErgoGenesis

President & CEO, CPS Energy



San Antonio

“What can I possibly do to help?” Chloe Dao asked herself as she temporarily closed her boutique in March due to the erupting COVID-19 pandemic. The Houston-based designer and Project Runway winner came up with a logical answer: apply her design skills and team to producing personal protective equipment for those in need.

When many Texas homes transformed into makeshift offices last spring, few were equipped with ergonomic solutions. ErgoGenesis, a leading manufacturer of ergonomic office seating, tools, and workspaces, makes those solutions—but had historically been a B2B organization, selling its BodyBilt products to clients like Boeing, Southwest Airlines, and Raytheon.

Paula Gold-Williams took the helm of San Antonio’s CPS Energy—the largest public natural gas and electric company in the United States—in 2015. Leading a team of over 3,000 and serving as the nation’s only Black female energy CEO, Gold-Williams describes her leadership philosophy as People First. Earlier this year, the San Antonio Business Journal recognized how well she lives that philosophy, naming her Woman of the Year in its 2020 Women’s Leadership Awards.

Dao took a strong lead. Though the boutique was closed, she continued to pay her staff and, with their help, produced about 150 face masks a day, which she then gave away to frontline healthcare workers and others in the Houston community. The washable, 100 percent cotton masks include a pocket where the user can insert a filter or additional material. Dao even put a mask-sewing tutorial up on her Instagram account for those stuck at home. To date, she has donated over 5,000 masks in Texas and throughout the US. Now that the shortage is long over and masking is a way of life, Dao’s boutique offers a whole line of designer masks to keep people safe— including one that allows the wearer to safely sip an iced coffee or smoothie while wearing.


Texas CEO Magazine Q4 2020

Given this “new normal,” however, it was time for a shift. Under Tony Gerbino’s leadership, ErgoGenesis took a few short months to launch a number of ergonomic workfrom-home solutions geared toward the individual—and priced accordingly. Individual consumers now have access to BodyBilt ergonomic and customizable solutions that have proven to increase productivity and comfort. And as industry innovators, ErgoGenesis developed several of these solutions with antimicrobial and copper-infused fabrics for an added layer of protection during this heightened time of health and safety. Through it all, ErgoGenesis operated as an essential business, especially for DOD companies such as Lockheed Martin and Northrop Grumman, keeping its plants open on a reduced workweek while adhering strictly to CDC guidelines. Gerbino’s twin priorities remain the same: to keep the employees and the business safe and healthy.

With the COVID-19 pandemic, Gold-Williams stepped up to the toughest test of her career. CPS Energy quickly rolled out protocols for three different employee groups, ensuring that the safety of team members and the public remained top priority while continuing to provide reliable service. The utility also worked to further protect their customers by suspending disconnections while looking for resources to increase funding for utility assistance programs. Gold-Williams points out that these decisions were a team effort and not solely her own. “My general philosophy is the team is exponentially wiser than the individual,” she told the Business Journal. Nevertheless, Gold-Williams has proven herself a strong and steady presence through an unprecedented crisis.


THE H-E-B TEAM From top to bottom, the H-E-B team has modeled excellent leadership and crisis response in 2020. In the early, frenzied days of the pandemic, the sight of bare grocery shelves and long lines of masked shoppers looked borderline apocalyptic, but behind it all was a team working hard—and with long preparation—at keeping Texas communities supplied and healthy. H-E-B has been iterating its pandemic and influenza plan for over 15 years, and employs a full-time director of emergency preparedness. Through each crisis, from H1N1 to Hurricane Harvey, the H-E-B team strengthens and grows its response protocols. They were already thinking ahead about COVID-19 back in mid-January, running simulations, considering supply chain adjustments, and watching trends in customers' purchases. When the pandemic hit full-force in March, H-E-B already had the ball rolling. With abundant communication to customers, partners, and the community at large, the store implemented purchase limits on certain items, reduced store hours, enforced comprehensive safety guidelines, and set employees up with a $2 raise and a COVID-19 information hotline. Not everything was foreseen: “I don’t think anybody saw the toilet paper rush coming,” Justen Noakes, director of emergency preparedness, told Texas Monthly in March. Nevertheless, H-E-B opened its Emergency Operations Center in San Antonio and partnered with suppliers and distributors to keep its stores stocked with essentials and more. True to its community-minded nature, H-E-B did not skimp on relief efforts outside its stores. It committed $3 million to local organizations supporting people in need through the pandemic; it delivered free meals to frontline healthcare workers; and it dropped off extra truckloads to Texas food banks. It also began selling prepared meals from local restaurants—like Fresa’s Chicken in Austin and Rosario’s in San Antonio—in its stores, with 100 percent of the proceeds going straight back to the restaurants. Watching a Texas original like H-E-B lead through this crisis has inspired many during a difficult year. And today, many Texans now have a deeper appreciation for every grocery store checker, bagger, manager, stocker, shopper, and delivery driver, the people who kept so many of us fed, clean, and safe—pandemic or no pandemic.



Partner, Hajjar Peters

Austin Kareem Hajjar is widely known as an exceptional attorney for Texas bars and restaurants. In the era of COVID-19, he’s taken his advocacy to the next level, working diligently to not only keep his clients’ doors open but lobbying for solutions that benefit the broader food service industry. Hajjar’s efforts include helping bars restructure as restaurants (allowing them to stay open during lockdown) and launching the MargsforLifeTX campaign, which advocates for the extension and expansion of Governor Abbott’s waiver on to-go alcohol. Via MargsforLifeTX (7.9k Facebook followers and counting) and in local media, Hajjar has tirelessly argued that restrictions on to-go alcohol sales, such as forbidding mixed drinks or containers over 375 milliliters, caused further damage to already struggling Austin restaurants. In June, MargsforLifeTX celebrated a win when these restrictions were lifted—offering Texas restaurants a lifeline through their most difficult time on record. But his work is only beginning: On the MargsforLifeTX Facebook page and elsewhere, Hajjar offers resources and news (often multiple times a day) for an industry still persevering through a punishing year.

Delta Restoration Services of Northeast Dallas and Southeast Collin Counties


When Erika and Randy Herman met—and later married—they were both franchisees of a carpet cleaning company, a career that gave each of them a greatly cherished independence. This entrepreneurial couple now jointly owns Delta Restoration Services of Northeast Dallas and Southeast Collin Counties, where their team fixes damage from fire, water, and weather of all types. The Hermans deep expertise in cleaning and repair didn’t sit unused through the COVID pandemic. They partnered with their local fire and police departments to offer deep-cleaning of stations, vehicles, and quarantining areas as needed. In the course of their work, many Dallas law enforcement officers and firefighters were exposed to the virus, and several tested positive for it. Through the process, the Hermans would be there to clean and disinfect environments where the exposed person had been—including the hotel rooms they quarantined in. It’s just one of many examples of private-public partnerships that helped to keep Texans safe and healthy in the heart of the pandemic.



CEO, Baylor Scott & White Health

Owner, ABC Home & Commercial Services



Jim Hinton is the CEO of Baylor Scott & White Health, Texas’ largest not-for-profit health system. Since joining the system in 2017, he has focused leaders on building toward a consumer-centric digital future—work that has paid dividends during the pandemic.

In 2017, the Austin Chamber of Commerce named Bobby Jenkins Austinite of the Year—and Jenkins has certainly kept up his track record of exceptional leadership in 2020. For nearly 40 years, he has led ABC Home & Commercial Services, which offers everything from pest control to pool services, and its now 850+ employees. (Most Central Texans know ABC’s anteater-witha-magnifying-glass logo like an old friend.) Jenkins is also a prolific advisor and mentor who’s served on the boards of the Alzheimer’s Association, United Way, RecognizeGood, Caritas of Austin, and several other organizations.

In March, the system converted its MyBSWHealth app into a “virtual front door” for services, adding access to a free, online COVID-19 screening tool, eVisits, and drive-through specimen collection sites. In the first eight months, the system provided over 265,000 free screenings and 65,000 eVisits—including 6,000 in a single day. To promote care for those recovering at home, it launched adult and pediatric COVID-19 remote monitoring within MyBSWHealth. In recent weeks, Safe Care was introduced to educate consumers about precautions implemented in healthcare facilities and the importance of routine care and chronic condition management. Under Hinton’s leadership, the system’s longstanding employee emergency assistance fund grew by more than $2.6 million to meet the needs of frontline caregivers experiencing hardship during the pandemic. The system has also enrolled thousands of patients in more than two dozen COVID-19 research studies.

In May, as COVID-19 threw countless Central Texans into uncertainty and loss, ABC stepped in to help with a new program, Project Help Our Neighbors. Under this initiative, the company pledged to donate a portion of sales to local food banks through June 2020, resulting in $82,380 in donations— providing nearly 330,000 meals—across Texas.




Cofounder & CEO, OneDay

Dallas In 2020, many Texans grew tired of the inside of their homes. While many were lucky enough to have jobs that allowed us to work from home, the grinding monotony still took (and may be taking) its toll. Feeling that WFH burnout, Clint Lee, cofounder and CEO of video technology company OneDay, relocated for a few weeks with his family and worked from a remote cabin in Colorado. After leaving refreshed, Lee was immediately inspired to share this experience with his team—so he launched OneDay’s “New Digs” program. Each month, New Digs now offers four OneDay employees and their families the chance to work from an Airbnb or vacation rental in the location of their choosing. “As business leaders we must find ways to ensure our people are supported, even when they don’t see each other every day,” says Lee. “While our New Digs program can’t solve all the stress and anxiety caused by the pandemic and all its side effects, it is something we can offer right now to support our employees and prioritize mental health for our team members.”

WARBURG LEE CEO, Alen Air Purifiers


Since COVID began, there’s been an upsurge of interest in air purifiers and filters. But rather than just capitalizing on increased demand, Alen Air Purifiers saw an opportunity to serve healthcare workers and first responders who were suddenly on the frontlines of a global pandemic. Founded by Warburg Lee and led by Andy Graham as CEO, Alen makes purifiers that are known for effectively removing particles and germs from the air. When logistic and regulatory roadblocks hampered purifier donations, Alen found a creative solution to another breathing-related problem: shortages of personal protective equipment (PPE). Alen staff and volunteers deconstructed purifier filters to harvest high-grade HEPA material to donate. Alen then partnered with local volunteer sewing group “Sew Sisters” to create upwards of 1,300 homemade masks offering N99-grade protection. These masks helped protect local nurses at St. David’s and Seton hospitals, as well as area firefighters and hospice caregivers. Lee has founded three profitable companies in the past fifteen years and has championed clean-air technologies since 2005. His team’s demonstrated care for the community certainly factors into Alen’s ongoing success.

Johnson City

Jola and Emmanuel Olanipekun opened a new healthcare staffing business, ATC Healthcare of Central Dallas, at a precarious time: March 2020. Opening at the onset of the COVID-19 pandemic, the new business owners were determined to make it work and experienced an incredibly strong start staffing hospitals and other medical centers with essential healthcare personnel at a critical time. Within months, they wanted to expand their business and purchased an existing ATC Healthcare location serving North Dallas. The North Dallas location opened in 2017.

In its 80-year history, Pedernales Electric Cooperative has never faced challenges like it did in 2020. But under the leadership of Julie Caruthers Parsley, PEC — the largest electric cooperative in the nation — continued to provide safe, reliable electric service from the onset of the pandemic, all while experiencing record growth.

Texas CEO Magazine Q4 2020

Since she stepped into leadership of the Houston Hispanic Chamber of Commerce in 2007, Dr. Laura Murillo has been an energetic advocate of Hispanic entrepreneurs in the region. Her commitment and visibility have earned her broad respect in the community, including a designation as “Most Admired Nonprofit CEO” by Houston Business Journal in 2018. As Houston’s Hispanic community — the largest ethnic group in the region — suffers disproportionate negative effects from the pandemic’s fallout, Dr. Murillo has only redoubled efforts to empower them. She has not only led the chamber’s efforts to create a robust set of COVID-19 resources (including a comprehensive report on COVID’s effects on Hispanic entrepreneurs, researched in partnership with the Hobby School of Public Affairs); she has also been an ever-present voice in the COVID era. Whether leading the chamber daily, writing op-eds for the Houston Chronicle, or broadcasting calls with the mayor, Dr. Murillo offers a compelling example of everything a chamber of commerce, and a community leader, can be.


CEO, The Beck Group

CEO, Pedernales Electric Cooperative





Owners, ATC Healthcare of Central Dallas

“Launching our business during COVID has been a unique experience. We’re honored to help out our community with critical healthcare staffing needs right now,” said Emmanuel. The entrepreneurial duo brings a dynamic set of skills to their new business — Emmanuel is an experienced businessman and Jola is an accomplished nurse who previously worked as an RN at Baylor Scott & White Health in Plano.

President & CEO, Houston Hispanic Chamber of Commerce



On the front lines of the pandemic, the Olanipekuns have played a vital role in staffing area hospitals and medical facilities throughout the pandemic since opening in March 2020.


Founder, Alen Air Purifiers

In late February, Parsley saw the impact COVID-19 could have on PEC’s operations and immediately began meeting regularly with her executive team and other leaders to review PEC’s existing emergency pandemic plan. By March 16, PEC had activated its Emergency Operations Plan, which included the unprecedented measure of closing district offices to member interactions and instituting remote work where possible. Media and internal communications were distributed, signage was posted, and new guidelines were enacted for in-office employees and those in the field. By acting quickly and assembling a team of experts around a bold, decisive plan, Caruthers made PEC a true leader in the field, sprinting ahead of other businesses and cooperatives in the steps that would later be widely adopted — providing a model for those organizations to follow.

Dallas Fred Perpall took over as CEO of the architecture and construction firm The Beck Group in 2013. But Perpall, a registered architect since 2003, extends his leadership well beyond the 108-yearold company: He also serves as chairman of the Dallas Citizens Council. And in June, he was appointed by Mayor Eric Johnson to Dallas’ COVID Economic Recovery Task Force. Through 2020, Perpall has been a guiding voice not just through the chaos of COVID but also through the United States’ overdue re-examination of racial injustice in our country. Even as he’s steered The Beck Group and its 1,100 employees, he’s worked closely with Dallas Regional Chamber chair John Olajide, with whom he strategizes on a near-daily basis, to provide active and ongoing support to the Dallas business community. That includes helping the council and chamber raise $3 million for the Revive Dallas Small Business Relief Fund, benefitting minority- and women-owned small businesses. And he’s argued unflinchingly—as he did long before 2020—about the need for public and private entities to address the persisting wealth, health, and educational disparities between North and South Dallas.




President & CEO, Texas Children’s Hospital


CEO, Paso del Norte Community Foundation

Owner, Rocket Banners


El Paso


Under the leadership of Mark A. Wallace since 1989, Texas Children’s Hospital has consistently ranked among the best children’s hospitals in the nation. During the pandemic, Texas Children’s 16,000-strong workforce proved themselves, like so many frontline healthcare workers, to be among the true heroes of this turbulent chapter in US history.

Through her leadership of Paso del Norte Community Foundation—which includes the Paso del Norte Health Foundation, Fundación Paso del Norte para la Salud y Bienestar, and El Paso Giving Day—Tracy Yellen has overseen a suite of funds and resources aimed at meeting the needs of those most affected by the COVID-19 pandemic.

Wallace and the rest of the hospital’s executive team certainly demonstrated their appreciation, even as circumstances called for belt tightening during the spring. Sixty of Texas Children’s executives took a 20 percent pay cut in April, even as Wallace announced a special thank-you bonus to all fulland part-time staff in the same month. “Leaders lead in a bull market, and leaders lead in a bear market,” said Wallace at the time. “Leadership looks different in a bear market.” Despite the obstacles, the hospital has forged ahead, announcing an Austin expansion in May and ranking number one in cardiology and heart surgery by US News & World Report for the fourth consecutive year in June.

By early April, the foundations had put together a comprehensive COVID-19 Information Hub (epcovid19.org) to provide a centralized place for information on everything from virus testing to food insecurity to mental health. Yellen has been a prominent, informative voice in her community, getting the word out about the foundation’s COVIDrelated funds and letting people know how they can create their own. One example: the El Paso Food and Beverage Workers Fund, established by Salt + Honey Bakery Café owner Maggie Asfahani. The Health Foundation has further invested in nonprofit organizations to support their recovery, preparedness, and transformation. Thanks to Yellen and the PDN Community Foundation and Health Foundation, giving and applying to funds is easy— ensuring assistance is available to El Pasoans in need.

Austinites know the sign well by now: bold persimmon capitals reading “OPEN FOR TAKE OUT.” In the early days of the pandemic, these 3’ x 2’ posters sprung up outside numerous local restaurants, many of which were (and still are) struggling for survival. It wasn’t an opportunistic salesforce that drove the proliferation of the signs, but the quick and generous thinking of the team at Rocket Banners, led by owner David Zuefeldt. When SXSW was called off in March, Rocket Banners found itself holding more sign-making material than it could use. Rocket Banners designer Evan Farias quickly created a trio of signs (“Open for Take Out,” “Open for Dine In,” and “Now Open for Business”) and the team used the extra materials to print hundreds of copies, which they began dropping off at local restaurants — for free, before the restaurants could even ask. “We’re just cranking them out; it’s easy for us,” Zuefeldt told Community Impact in April, when they’d already given out around 750 of the signs. “As long as people need them, we’ll keep making them.” Today, they’ve added a 12” decal to their giveaway (“Keep Your Space— Protect Your Face”), and banners are still available 24/7 on a table outside their office’s back door.


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THE HIDDEN SECRET OF High-Performing Companies

How a Consistent Management System Changes Everything “Average leaders have quotes. Good leaders have a plan. Exceptional leaders have a system.” —Urban Meyer

At MGR360, we say that great managers are worth their weight in gold. And like every valuable resource, great managers are also scarce. But great managers don’t have to be a rarity at your company. You just have to know how to grow them. By far the most effective way to grow great managers within an organization is to implement a management system. That means identifying the core behaviors and processes that define great people management—then codifying them into a clear, easy-to-use playbook. With a system in place, you know that managers across the organization are following a consistent pattern that leads to management success. The usual attempts at installing management systems amount to a few tactical trainings from HR, usually themed around assessment and pay. But a real management system is much more robust. It includes tools, guidelines, and processes for: • Goal setting • 1-on-1s and feedback • Employee development • Performance reviews • Weekly meetings • Hiring and firing When a company doesn’t offer a strong management system, poor management festers and the overall culture is chaotic and incoherent. But with a system, every manager, from the C-suite to the frontline, understands the core duties of people management and speaks the same language.


Implementing a real management system has a whole host of benefits, ranging from interpersonal to organization-wide.


Most people become managers without realizing exactly what they’re signing up for—especially the trickier aspects of managing, leading, and coaching other people. With a clear system to follow, they understand the essential activities expected from managers at all levels. And

they have tools and guidance to perform those activities with confidence, incorporating their own strengths and style to the job.


A management system is the #1 driver of culture in the organization. If you don’t have a system at all, the culture is likely to be weak and chaotic, each manager “doing their own thing” with their team. But with a companywide management system, you have the proactive consistency that marks all high-performance cultures.


When an employee works under a bad or ineffective boss, they get a raw deal. While their colleague on a different team might have a great situation—a boss who sets clear goals, runs great meetings, and encourages their professional growth—this unfortunate employee may suffer under a manager who does none of those things. And as W. Edwards Deming said, “A bad system will beat a good person every time.” A good ADVERTISEMENT

system, on the other hand, allows everyone to make their greatest contribution.


If you’re ready to empower your managers with consistent, proven tools for success, MGR360 is here to help. We’ve used our decades of executive management experience to create a management system that works for any modern organization. Through the end of the year, we’re offering Texas CEOs a 40% discount on our Enterprise Management System offering. When you choose to work with us, you get customized, hands-on training for your executives, managers, and even your board of directors, and a system that produces tangible results you can see immediately across the organization. — Alicia Thrasher, CEO and cofounder, MGR360

Want to learn more about the system? Ready to start? Just email hello@mgr360.com.

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WWW.GEOPOLITICALFUTURES.COM/TEXASCEOMAG And, when you subscribe, you’ll receive a free bonus report, “China 2020: Economics, Pandemics, Military, and Trade.”



Texas CEO Magazine Q4 2020






In late 2008, the CEOs of the big three automakers flew from Detroit to Washington. They were on a mission to secure federal funds and prevent the collapse of their industry, but all three made the trip in private jets — a fact that drove an instant frenzy of media outrage. Article after article decried these “fat cats” for hopping around in private aircraft while seeking loans from the government. For Sam Starling, whose family has been in the aviation business for over half a century, that moment marked a watershed in public opinion on private flight. In the years after 2008, private aircraft became a symbol of elite waste. President Obama himself regularly criticized tax breaks for private jet owners, once mentioning “corporate jets” six times in an hourlong news conference. But in the past six months, Starling has seen a rapid shift in perceptions. In the fallout of a pandemic, travelers are prioritizing their health — and for many, that means avoiding crammed commercial flights. JetPro Texas, the aviation dealer outside Waco where Starling is a partner, is seeing demand skyrocket. In the light of a global pandemic, private jets are increasingly seen as a way to prioritize health and safety in getting from one place to another. If you’re an executive who’s interested in jet ownership — whether out of safety, convenience, or business benefit — you probably have some questions: How much does it cost? What should I know going in? Should I lease or buy? In this conversation, Starling explains how executives can avoid costly mistakes as they get into private air travel, and shares some of the latest flight innovations he’s tracking. Tell us a little bit about how you got into the business. I was born in the business. I say I had no choice. I was born in Kansas, where my dad owned Midwest Piper, a Piper dealer selling against Beechcraft and Cessna. He beat those two out when he sold Pizza Hut their first turbine-powered airplane. He grew up on Edgecliff Terrace in Austin, on the river, and later wanted to get back to Texas, so we moved to Marble Falls and have been around ever since. He owned the FBO at Robert Mueller Municipal Airport for some time. Aviation is a highly competitive business. What do you think has made you and JetPro successful in it? Depth of knowledge. We’re not just a broker or a pilot; we do it all. I fly. I stay current flying singlepilot on [Cessna] Citations and have 13 other ratings in various jets, all the way up to the [Dassault] Falcon 900 and [Bombardier] Challengers. Our Director of Maintenance came over with Hawker from England. We know our game. Anybody can sell someone an airplane, but it’s the technical aspect that sets good operators apart. 26

Texas CEO Magazine Q4 2020

What innovations are you excited about coming down the pike in aviation? In aviation, innovation moves to application extraordinarily slowly. But we are starting to see some pretty cool stuff. Electric is coming, though it’s still a good way off. I’ve got some friends in the battery industry, and the power is not quite there yet. But I’m excited. A lot of innovation right now is around safety. Back in the 1960s, everybody had a V-tail Bonanza, also known as the “doctor killer.” We want to stay away from anything like that again in modern business aviation. Garmin came out with an auto-land function. A passenger can actually push the button from the back of the airplane, and the airplane lands at the nearest suitable airport, depending on weather and terrain and everything else. And it talks to air traffic control while it does it. That’s here and it’s certified. The commercial aircraft business has gotten much safer, to the point that we haven’t had a major US domestic crash in several years. It sounds like private aviation is following that curve as well. Absolutely. There are always anomaly crashes, unfortunately. Business aviation is by nature extremely safe because we’re riskaverse. We don’t fly airplanes; we fly people. Is having a twin-engine plane as opposed to a single-engine plane a big safety advantage? One hundred percent. Our whole industry is redundancy driven. I know that from experience. On my daughter’s eighth birthday, at about 8:30 in the morning, I put a brand-new under-warranty Cessna Caravan in a cornfield about four miles from our airport and wound up making the news, of course. The engine came apart internally. It was a known manufacturer’s defect, but we were within the compliance window. It was a beautiful blue day, and that incident didn’t even get the tires on the airplane dirty. But it really solidified our company’s single-engine operating specifications. How about two pilots versus one? Absolutely. We’ve had some clients who make it mandatory that they have two pilots and two engines at all times. The cheapest insurance a CEO or flight department can buy is a second pilot. There’s also a lot of innovation around single-pilot craft, but you have to be careful. I take a special training course every year in the Cessna Citation family to fly two-pilot Citations on a single-pilot waiver from the FAA. And I use it very judiciously. If we’re running an airplane to maintenance or something simple, we’ll run a single pilot. But any time we have passengers, we’re going to weigh our options of operating with two pilots. For many CEOs, time is the most valuable commodity, and that leads them to look into private aviation. How should a CEO start thinking about flying private? Step one should be to sit down with a reputable aviation professional and have a long and honest conversation about your travel needs and budget. Today, there’s so many different options, with jet cards, charter, and aircraft ownership or partnership. Charter is an entry-level way into private aviation; it costs more per hour, but it’s on-demand. No matter which route you go, I advise people to go sample some

I ADVISE PEOPLE TO GO SAMPLE SOME AIRCRAFT AND REALLY THINK ABOUT HOW YOU’RE GOING TO USE THE PLANE. DIFFERENT AIRPLANES FIT DIFFERENT MISSIONS. aircraft and really think about how you’re going to use the plane. Different airplanes fit different missions. So, sit down with several people, independent sources if you can find them, and get a good handle on your travel needs and budget expectations. If you’re listening to just the charter broker, he’s going to sell you on charter. If you’re listening to the jet card sales guy, he’s going to sell you a jet card. If you’re listening to the aircraft sales guy, he’s going to sell you an airplane. Aircraft sales is the last unregulated bastion of retail enterprise in America, so you need to seek wise professionals who respect their clients. If you’re talking to someone and it doesn’t feel right, it’s probably not. And never, never fail to get a second opinion. I take calls like that on a fairly regular basis—“I got your name from so-and-so. Here’s what I’m planning to do, am I okay?” Sometimes the answer is yes. And sometimes the answer is “Let’s sit down and talk.”

What are some of the top questions I should ask a professional? What variables go into the decision of charter versus ownership, type of aircraft, and so on? The first thing is where you are going. What are your top five or 10 city pairs? Second, how many people are flying, and what are we carrying? Next, frequency. Are we flying three times a month or two times a year? This affects things greatly, depending on your appetite for capital investment versus hourly operating costs. At less than 100 or 150 hours a year, it’s going to be hard to justify setting up aircraft management and a flight department.

If you do have an airplane at your disposal, it’s pretty easy to find ways to improve the company’s bottom line and your and your employees’ quality of life. You might decide it’s worth it to take the airplane to that meeting in Houston and be home for dinner, or to ensure that your team is back in the office at 8:00 a.m. the morning after a meeting getting work done. Sure, it costs several thousand dollars, but the employees will be happier, and you’re happier because they’re back in the office. It may not totally pay for itself monetarily, but it pays off in other ways.

If it’s purely business use and it’s a hard write-off on the bottom line, that hourly range stretches up. If it’s a company with an extraordinary gain this year, preowned aircraft are now a 100 percent write-off in the first year they were purchased with a fiveyear recapture. Of course, there’s a massive asterisk there—please contact your local tax consultant. We do not give tax advice.

The last question is, do you want to hire your own crew or do you want to have a managed aircraft? An aircraft management company is a great way to help mitigate costs without going to charter, because now you don’t have to have separate payroll for pilots. You don’t have HR issues. The insurance rates are usually better. It’s a bridge between a singleTexasCEOMagazine.com


source flight department and having aircraft on a charter certificate. If you want the same two pilots all the time, they’re going to need days off for family events and so on. You may want to look at a good local management group that’ll have your interests at heart and take care of it. It’s also important to remember that an airplane is a depreciating asset. Don’t let anybody tell you that you can buy an airplane and make money selling it or operating it. If I decide to charter a plane, what’s the hourly rate, typically? For a turboprop, it’s going to be between $1,200 to $2,300 an hour. Light jets are going to be from $2,000 an hour, and it’s off to the races from there. A newer Falcon can run $6,000 to $7,000 an hour on charter rate all the way up over $10,0000 an hour for the ultra-long-range class. Several years ago, it seemed like pilots were cheap and easy to find. Now, they’re becoming more expensive and harder to find. Is that correct? It is. Pilots are the fastest thing to make or break aircraft ownership. They can either make it a joy or they can make you a failed aircraft owner. We intercede a lot to help navigate the pilot staffing and management problems that come up after sale. Skilled labor is getting tighter across the board, as I’m sure your readers will attest. The pilot pipeline is at a trickle for new kids coming out of school. Being a pilot is hard. I’ve lectured at Baylor’s Aviation Sciences program several times, and I always pull the capstone kids that I’m talking to aside and ask what their plans are. In the last three years, about a quarter of them are planning to go straight to fly freight for Amazon or one of their suppliers. Most of them are going to the airlines, and the airlines are recruiting with an annuity—if you’re a 23-year-old kid, you know you’ll have made this much money when you retire at 60. That’s a compelling argument for a lot of young guys and girls. At JetPro, we’re having to adapt and do our best to retain our corporate pilots. Pilot staffing is difficult right now, and the cost is going up. A good captain on a Citation CJ2+ is now going to make well over $100,000 a year. But a good pilot is valuable. It’s interesting—our pilots get to know a lot about the lead passenger or aircraft owner. With that proximity, they learn a good deal about that person’s business assistant, spouse, and private life. The trust that develops is about more than aircraft safety and operation. It’s also “Do I trust this guy to not say the wrong thing in front of this big client and make a fool out of me by extension?” Any parting thoughts? With election jitters and other global events we’re seeing now, it’s going to be an interesting year or two for us in the aviation space. But the difference right now from what we’ve seen previously is how insulated and healthy most Texas enterprises are. At JetPro, we track our phone calls geographically, and I can tell you that inbound Texas phone calls are far outstripping inbound calls from other parts of the country. And as a Texas guy, I’m proud of that. It just proves that aviation is becoming more central to a lot of people’s lives. 28

Texas CEO Magazine Q4 2020

QUESTIONS TO ANSWER BEFORE CHOOSING HOW YOU FLY PRIVATE Whether you’re considering a jet card, chartering, or partial or full airplane ownership, Sam Starling recommends being prepared to answer these questions—as they will determine your best option. WHERE ARE YOU GOING? List your top five or 10 city pairs. Are you primarily hopping around Texas, or are Chicago, Los Angeles, and New York City in the mix? Those two scenarios will call for different types of aircraft. HOW MANY PEOPLE AND HOW MUCH CARGO? Is it usually just you and an assistant or spouse traveling, or do you need room for the kids, a couple of dogs, and all your golf equipment? You want a solution that doesn’t keep you cramped or limit who can travel. HOW OFTEN ARE YOU FLYING? It’s hard to justify aircraft management and hiring a flight department if you’re only flying once a month. It’s typically at 100 to 150 hours per year that you want to move from the hourly operating costs of a jet card or charter solution to the capital investment of partial or full aircraft ownership. WILL THE AIRCRAFT BE FOR BUSINESS OR PERSONAL USE? In some cases, purchase of an aircraft may have certain tax benefits for the company or give your business a competitive advantage. It’s also worth thinking about the benefit of saved time and increased quality of life, whether it’s helping keep your employees engaged, allowing you to be with your family more often, or giving you pride of ownership. DO YOU WANT TO HIRE YOUR OWN FLIGHT CREW? Some people want to have the same crew every time and would prefer to hire their own pilots and other staff. Others take advantage of aircraft management companies, which may reduce costs, eliminate HR issues, and lower insurance costs.



March 13, 2021

Dripping Springs, Texas BENEFITING:

Join us at a private shooting club and break some clays alongside the real Texas Rangers. Participants will divide into teams and shoot tournament style. The winning team will receive a prize and a lifetime’s worth of bragging rights.


After the tournament is over, we’ll put away the firearms and enjoy some cocktails, beer, and barbecue. Come network, enjoy meeting some really interesting people, and have fun. If you have questions or are interested in bulk rates or sponsorships, email us at info@texasceomagazine.com and we’ll respond promptly. All participants must sign liability waivers before the event.

For tickets visit



NEW BUSINESS BOOKS THIS FALL “I just sit in my office and read all day,” Warren Buffett said once. This is a bit of Buffett’s trademark modesty to be sure, but nevertheless, most of the best leaders of our time have also been avid readers. Business and leadership guides, business memoirs, popular history books — and even novels — often contain gems of insight that can transform the way a reader leads and lives. Here are some recent and forthcoming titles to check out this fall, covering everything from cryptocurrency to company culture.

No Rules Rules Netflix and the Culture of Reinvention Reed Hastings & Erin Meyer September 2020 Penguin Press 320 pages

You’ve probably seen Netflix’s legendary “culture deck” (if not, Google it). The bold, unorthodox approach to culture outlined in the deck is given a full exploration in No Rules Rules, coauthored by Netflix cofounder and CEO Reed Hastings and INSEAD’s Erin Meyer, who previously authored The Culture Map. Learn how principles like radical employee freedom and valuing innovation over efficiency have led to the runaway success of the streaming service none of us can do without.


Texas CEO Magazine Q4 2020

How to Lead

Wisdom from the World’s Greatest CEOs, Founders, and Game Changers David M. Rubenstein September 2020 Simon & Schuster 448 pages

Rubenstein, cofounder and co-executive chairman of The Carlyle Group and a respected philanthropist, has had extensive conversations with some of the most notable leaders of our time — from Phil Knight and Jeff Bezos to Oprah Winfrey and the late Ruth Bader Ginsburg. How to Lead mines those conversations for gold, presenting a compendium of fascinating leadership lessons. The book is “like sitting in an armchair and listening to the masters reveal their secrets,” says Steve Jobs author Walter Isaacson.

Digital Goddess The Unfiltered Lessons of a Female Entrepreneur Victoria Montgomery Brown October 2020 HarperCollins Leadership 272 pages

Female founders currently receive a paltry 2.2 percent of all US venture capital. Plenty of other statistics — not to mention the day-to-day experiences of women at work — point to a persistent gender equity gap in the professional world. Victoria Montgomery Brown, founder of Big Think, knows those obstacles well. Her funny, frank new book shares the hard-won lessons of her career so far. Brown, who’s been called the “anti-Elizabeth Holmes” for her fearless transparency with investors, is a reliable source of wisdom for entrepreneurial women at any stage of their career.

Well Aware Master the Nine Cybersecurity Habits to Protect Your Future George Finney October 2020 Greenleaf Book Group Press 224 pages


Not a week goes by without fresh headlines about major cybersecurity breaches — phishing attacks, SQL injection attacks, malware, and more. And with so many employees still working remotely, cybersecurity is more critical than ever. In Well Aware, 20-year cybersecurity pro George Finney explains that, at its root, hacking isn’t a technology problem; it’s a people problem. His nine habits, if implemented, will keep your organization guarded from cyberattacks. Grab a copy for yourself and your CIO.

The 5 Disciplines of Inclusive Leaders Unleashing the Power of All of Us Andrés T. Tapia and Alina Polonskaia

Mission Metamorphosis Leadership for a Humane World Robin R. Ganzert, PhD October 2020 Greenleaf Book Group Press 176 pages

Robin R. Ganzert, PhD, is president and CEO of American Humane, a renowned nonprofit focused on animal safety and welfare. When Ganzert took over the historic organization, founded in 1877, it was struggling; but her leadership transformed it into a top-rated charity. Temple Grandin, hero of the animal rights movement, calls the book a “nononsense, practical guide on managing a non-profit so that it achieves its mission, gets things done, and avoids wasting money on excessive administrative costs.’’

The Company I Keep My Life in Beauty Leonard Lauder November 2020 Harper Business 432 pages

October 2020 Berrett-Koehler Publishers 216 pages Leveraging Korn Ferry’s repository of 3 million leadership assessments, internationally recognized diversity experts Andrés T. Tapia and Alina Polonskaia explore the core qualities of inclusive leaders — and show how today’s leaders can master the five disciplines of inclusion. If you’re wondering whether your organization is doing an effective job of building a strong, diverse workforce for the future, this guidebook is an excellent place to start.

As former CEO of the iconic beauty empire known as Estée Lauder Companies — and eldest son of its original founders — Leonard Lauder was known unofficially as the Chief Teaching Officer. He is also famous for his “blue notes,” missives of praise or inquiry written on distinctive blue stationery. These facts speak to the personal touch of Lauder’s leadership style, which is on full display in The Company I Keep. Lauder tells the engrossing stories of his 60-year tenure — of battles with Revlon, of the employees who became integral to the enterprise, and of growing a mom-andpop brand into a global powerhouse.

Good Guys How Men Can Be Better Allies for Women in the Workplace David G. Smith, W. Brad Johnson October 2020 Harvard Business Review Press 272 pages Gender equity in the workplace isn’t just women’s problem. In Good Guys, David G. Smith (associate professor of sociology at the United States Naval War College) and W. Brad Johnson (professor of psychology at the United States Naval Academy) — both experts on gender in the workplace — show how men can be strong allies to the women they work with. Their approach combines research and compelling personal accounts, opening men’s eyes to how they can empower and support their women colleagues.

Kings of Crypto One Startup’s Quest to Take Cryptocurrency Out of Silicon Valley and Onto Wall Street Jeff John Roberts December 2020 Harvard Business Review Press 256 pages There’s nothing like a fast-paced, journalistic account of the rise — and ensuing travails — of an ambitious startup, and that’s exactly what Fortune staff writer Jeff John Roberts delivers in Kings of Crypto. Roberts digs deep into the story of Coinbase, the Silicon Valley cryptocurrency exchange that’s still working to bring cryptocurrencies like Bitcoin into the mainstream. Peopled with visionaries, hackers, and the hyper-wealthy, Kings of Crypto combines a dramatic narrative with an education in the past, present, and future of the cryptocurrency market.




What happens when the CEO and CMO don’t operate from a shared strategy? Holly Tsourides

As business leaders, most of us can tell in an instant if a team is fully aligned— and when it is not. When a team lacks strategic alignment, it’s obvious: • Priorities are fuzzy. • Communication breaks down. • There are more questions than answers. • Momentum is impeded. • Financial performance suffers. • Culture is negatively affected. • Growth stalls.



en t:

That said, those teams that establish and maintain alignment capture lightning in a bottle. Everyone is chasing the same goals. Everyone is rowing in the same direction. Growth skyrockets. These teams have created alignment as defined by a Harvard Business Review article by Oxford University’s Jonathan Trevor and Barry Varcoe, who describe it as “a tightly managed enterprise value chain that connects an enterprise’s purpose (what we do and why we do it) to its business strategy (what we are trying to win at to fulfill our purpose), organizational capability (what we need to be good at to win), resource architecture (what makes us good), and, finally, management systems (what delivers the winning performance we need).”1 While misalignments can arise


nearly anywhere throughout the organization, statistics show that one C-suite relationship appears to go sideways more often than others: the partnership between the CEO and CMO. For example, a global survey by the Fournaise Marketing Group revealed that 80 percent of CEOs don’t trust or are unimpressed with their CMOs—even though these same CEOs expressed overwhelming trust in CFOs and CIOs.2 Duke University also conducted a study and found that 64 percent of CEOs have no marketing experience and therefore lack a deep understanding of this discipline.3 That leads us to a final frightening statistic: CMOs have the highest turnover rate among C-suite executives among large US companies. According to analysis by Korn Ferry, on average CMOs are in their position for just 3.5 years, while CEOs average 6.9 years; CFOs, 4.7 years; and CIOs, 4.6 years.4 Simply put—lack of trust and understanding, plus constant churn in the CMO position just

increases the divide between marketing leaders and their C-suite counterparts. So, the question is, how does one establish executive alignment between these two key executive roles?


To establish and maintain a fully aligned partnership between the CEO and CMO, a number of things must be in place. First and foremost, these two leaders must agree on the pillars outlined in the previously mentioned definition of alignment: Purpose: The CEO and CMO must not only align on the organization’s higher-level purpose, but on the purpose of marketing as well. Is it to build a powerful brand? Establish and develop growth engines? Own the endto-end customer experience? Whatever it is, alignment on marketing’s role in the organization is essential for shared success. According to Matt Preschern, chief marketing officer at Forcepoint, “Some CEOs, particularly in consumer brands, may say that they need their brand to be the most powerful brand in the world. In B2B, they often say it’s all about sales and sale enablement. As a CMO, you have to find that out and align yourself to it. Not every CEO is the same.” Strategy: Clearly defining the company’s go-to-market strategy and business priorities is next. These two leaders must be in lockstep when it comes to where the company is going, the steps that must be taken to get there, and the timeline for reaching the desired destination. According to C-suite advisor Martin Roll, “Both the CEO and the CMO should have a strong involvement in charting the growth path of the organization and its strategic priorities. The CEO, by the nature of the role, will have a stronger role to TexasCEOMagazine.com


play in this. Thus, to a larger extent, the onus lies on him or her to give the CMO a seat at this strategic table which will also help to fuel innovation as part of the business agenda.” Capabilities: This step in the alignment process is absolutely critical: The CEO must clearly articulate what is expected from marketing and how he or she would like the CMO to engage with and serve other areas of the business. What must marketing do to support sales, product development, and other customer-facing parts of the business? Only when these capabilities are clearly defined can the CMO build a team that will be successful and meet the expectations of the CEO. Resources/Systems: As marketing has become more digitally driven and technologically advanced, this pillar has increased in importance. CEOs and CMOs must align on the systems that are required for marketing to be successful and produce the business outcomes that matter to the C-suite. This is essential to ensure that the CMO is well positioned to deliver the metrics and results the CEO expects from marketing. In fact, according to Kirk Borne, Principal Data Scientist at Booz Allen Hamilton, “As digital marketing becomes the central hub for business offerings, technology applications, customer experience management, social media engagement, and financial risk management, the CMO role will grow into one of the most sought-after and trusted advisors in the C-suite.”7


While these pillars are essential to establishing alignment, the CEO and CMO must also commit to building and maintaining a collaborative relationship. You may be saying to yourself, “Duh, that is why the CMO is on the C-suite team.” Well, CMOs are not engaging with the CEO or 34

Texas CEO Magazine Q4 2020

C-suite as much as you would think. According to Deloitte research, only 17 percent of CxOs report having collaborated with CMOs over the past 12 months. For companies to be successful in the long term, this must change. Bain & Company says CMOs must actively contribute to strategic discussions—by demonstrating ownership of key competencies, speaking the common language of the C-suite, and collaborating effectively with their C-suite peers.8 Fostering a highly collaborative relationship falls on both the CMO’s and the CEO’s shoulders and involves maintaining a shared vision. Tariq Shaukat, Google Cloud’s president of industry products and solutions, sums it up well: “I think the most important aspect of a successful CMO–CEO relationship is mutual respect and having a common view of the world.” Similarly, seasoned marketing executive Joe Tripodi believes that CMO–CEO success starts with spending time together and having the hard discussions up front. He should know. Joe was appointed the top marketing job at Mastercard in 1989 and since then has served as the CMO of Seagram’s, the Bank of New York, Allstate, Coca-Cola, and Subway. Joe says, “As the CMO, you need to have an up-front conversation before you take the job. How are you going to measure success? If the CMO should be the champion for growth, will he or she have the right levers or the influence over those levers? . . . Can you agree on what is needed to be successful? If not, you are being set up to fail.”9

SUCCESS IS MEASURED IN YEARS AND DECADES, NOT IN MONTHS CEO–CMO teams that have figured out the recipe for success have also stopped the CMO carousel. They have built strong, long-lasting relationships over time. One dynamic duo that has done just that is Tim Cook and Phil

Schiller at Apple. They put in the time and work required to maintain a fully aligned relationship for decades. In fact, when Tim was appointed CEO at Apple, he asked Phil to lead marketing and offered him $60 million to stay in that position for five years. Today, after watching Phil lead marketing at Apple for more than 30 years, Tim says, “Phil has helped make Apple the company it is today and his contributions are broad, vast, and run deep.”10 Tim and Phil’s partnership has had an undeniable impact on the business over the years. When this article was written, Apple’s stock was at an all-time high, and its market value surpassed $2 trillion dollars — and while a healthy relationship between CEO and CMO alone does not account for that success, it surely played a critical part. Don’t take CEO-CMO alignment for granted. Make it a priority. Invest in it. When you do, it will be sure to pay dividends for years to come. Holly Tsourides is an outcome-driven C-suite executive with more than 20 years of experience focused on strategy and innovation in sales, marketing, and product leadership roles. Prior to launching Sunny75, a RecTech company for outdoor enthusiasts, she served as CMO at technology companies Alkami Technology and Authentix, Inc.

1 Jonathan Trevor and Barry Varcoe, “How Aligned Is Your Organization?,” Harvard Business Review, February 7, 2020. 2 Fournaise Marketing Group, 2012 Global Marketing Effectiveness Program. 3 The CMO Survey, Duke University’s Fuqua School of Business, February 2019.

Korn Ferry, “Age and Tenure in the C-Suite,” January 21, 2020.


Nadia Cameron, “CMO Interview: What It Takes to Align with Your CEO,” CMO, September 21, 2017.


6 Martin Roll, “CEO & CMO—Evolving Relationship in the New Marketing Age,” MartinRoll.com, April 2015. 7 Kimberly A. Whitler, “CEOs, CMOs, and Executive Recruiters Make Predictions for Marketing Leaders in 2016,” Forbes.com, November 15, 2015. 8 Diana O’Brien, Jennifer Veenstra, and Timothy Murphy, “The Makings of a More Confident CMO,” Deloitte Insights, 2019. 9 Daniel McGinn, “Reflections of a Six-Time CMO,” Harvard Business Review, July–August 2017.

Press release, “Phil Schiller Advances to Apple Fellow,” August 4, 2020.



IF YOU WANT YOU HAVE TO CHANGE TO CHANGE THE CULTURE, THE STORIES. With everything going on in the world today, a lot of leaders are taking a hard look at corporate culture. Why? Because what is happening out there influences what is happening inside your company. Increased stress, health concerns, remote working conditions, social distancing — are all changing how your employees think, work, and go about their daily lives.

James O’Gara

Simply put, we are all going through significant change and it is directly impacting your culture, employee morale, and engagement. In fact, according to research conducted by Gallup in May of this year, almost 50 percent of workers are “not engaged” — they are psychologically unattached to their work and company. These employees put time, but not energy or passion, into their work.

So, how can you improve culture and engage employees in these challenging times? Well, leadership consultant Peter Bregman says, “If you want to change the culture, you have to change the stories.” Think about that. It makes a lot of sense. Just ask yourself: • What stories are circulating throughout your company today? • Are they stories about everything that is wrong in the world? • Or, are they positive, uplifting stories? Stories that remind employees their work truly matters? That what they are doing on a daily basis makes a difference in the lives of others? TexasCEOMagazine.com


Leaders at William Arthur, a division of Crane Stationery, wanted to know what stories were shaping their culture. More specifically, they wanted to understand the emotional connection employees had with their customers. The leadership team conducted an employee survey that revealed that behind-the-scenes employees who did not frequently interact with customers didn’t feel a connection with the customer. They lacked the direct contact individuals need to empathize with a customer’s needs. Based on this insight, the leadership team made the decision to invest in, and start capturing and sharing, real customer experience stories on a consistent basis. Those stories, they realized, would make a tangible difference in employee engagement and customer empathy. William Arthur is not alone. Companies like Microsoft, IBM, Boeing, Nike, CocaCola, Bayer, SAP, and many others are training their leaders to capitalize on how storytelling can influence, motivate, and inspire others in business settings. In fact, Shane Snow, the author of Dream Teams: Working Together Without Falling Apart, believes that sharing authentic stories will also become a competitive advantage in the future. “The defining characteristic among successful companies will be the ability to not just spew content, but to craft compelling stories,” he writes. How can customer stories change culture and improve employee engagement? Well, according to HR expert Susan Heathfield, “Stories are powerful forces in shaping and strengthening your work culture. What your employees share with each other and talk about frequently becomes imprinted on the organizational mind.” Leadership strategist Christine Comaford agrees and believes that customer stories can make a difference because, “Employee engagement comes from feeling good, from passion for the company, from meaningful work, from attaching part of one’s identity with their job. And this comes down to some neurotransmitters and hormones. As leaders when we intentionally help the brains of our employees to generate dopamine, 36

Texas CEO Magazine Q4 2020

serotonin, and oxytocin we create good feelings for the organization.” That’s what makes customer stories so powerful. They blend facts and emotions to truly engage and inspire employees. Shawn Callahan, author of Putting Stories to Work: Mastering Business Storytelling, puts it simply: “Stories create cultures.” • When was the last time you shared a story that connected the work your team does to customer success and happiness? • How often does that happen across your organization during daily work activities between leaders and team members? It doesn’t matter if your company sells lifesaving healthcare services or tennis shoes. Your culture is built on the stories that employees share, and there are customer stories out there that can bring greater meaning to the work your team is doing on a daily basis. What kind of stories? • “Why you want to work here” stories • “What we care about and value” stories • “How we delight our customers” stories • “Why our customers love us” stories What if you were asked to tell such a story today? Would you have a compelling one to share? If not, it’s time to get serious about securing real, authentic customer stories that you and your entire leadership team can share. According to marketing strategist Gina Rau, “The key to sharing great stories is, of course, to capture them. There’s gold in those stories and they need to be told—but first they need to be revealed.” James O’Gara is the CEO and founder of StoryDimensions, an OnMessage company. StoryDimensions offers a SaaS sales enablement solution that enables B2B companies to capture, develop, and share real customer stories at scale. He is also the author of 40+ Ways to Increase Organizational Clarity, Alignment, and Performance.


CULTURE THROUGH STORIES Here are four simple steps you can follow to start capturing customer stories that can dramatically improve corporate culture and employee engagement. 1. SECURE EXECUTIVE COMMITMENT The initiative must have executive support and leadership involvement. Storytelling and sharing real customer stories must become a part of how the company communicates. 2. ESTABLISH CLEAR OWNERSHIP An individual or team (insourced or outsourced) must own customer identification, data collection, story development, and activation. 3. ENSURE STRATEGIC ALIGNMENT Customer stories must align with clearly defined culture and customer experience goals across the organization. 4. IMPLEMENT A SYSTEMATIC PROCESS The entire process must be documented and repeatable. It must be designed to produce a consistent stream of real customer stories (multiple stories each month) that leaders can share.



Back to the Basics of Business Performance A time of crisis is the right time to double-down on the fundamentals of your business. You can now use Khorus to do so—entirely free of charge. Since March 2020, nearly every business in the United States has faced unprecedented adversity. Due to the fallout of the deadly COVID-19 pandemic—including the shutting down of entire sectors of the economy— many businesses have closed. Many more will close. This tragic period of lost lives and lost livelihoods is an extremely difficult time to be a leader.

measuring what’s most important across every division of the organization. For each department, ask: What is our mission? Whom do we serve, and how do we serve them? Ask your head of marketing: What is a good marketing department? What does it do, and how do you measure that? Ask the head of every other department—from finance to HR—the same.

Over the past few months, you’ve probably taken several important steps as a CEO: You’ve determined whether this is an existential crisis to your business, preserved cash as much as possible, and done your best to communicate candidly to your employees, customers, and shareholders.

By the end of this exercise, you will know precisely what each department needs to focus on, and how this aligns with company priorities. Have each department share its priorities broadly, particularly the few key metrics by which it measures success. Doing so will create a fresh sense of alignment across the entire organization. Everyone will understand what matters most for themselves and each of their peers.

But a time of adversity is also a critical time for CEOs to reexamine the fundamentals of their business. Recessions, downturns, and other setbacks can become opportunities to redefine the essentials of success—for your company, and for yourself as a CEO. In many ways, the current economic situation is different from previous recessions. But as you work to preserve and grow your company through whatever comes next, we at Khorus encourage you to use this opportunity to return to the fundamentals of your business using a simple framework: Align, Engage, Predict. Align Every company should have clear shared priorities. But to the company facing adversity, clear shared priorities are an absolutely non-negotiable requirement. As you feel out this new reality in 2020 and beyond, you must align your entire team around a crystal-clear game plan. That starts with reexamining the mission and vision of the company to make sure these still capture the essence of the business, and to ensure that you haven’t missed a fundamental change in the market. From there, it’s time to begin

Engage Next, the executive team and CEO must engage the entire organization around the newly refreshed mission, vision, and game plan. The primary tool here is consistent, abundant communication. To remain engaged even as they feel uncertain about the future, the entire workforce needs to hear from the CEO consistently about the top-level priorities of the company. And each manager in the company should work with employees to set specific, near-term goals that allow each person to engage in the broader success of the company. The Engage step also demands transparency. You may not be able to promise that you will never lay people off, but you can promise to be honest with them about how the business is performing. If you consistently communicate about the successes and the struggles in the business, people will not be shocked or feel betrayed should something like a layoff happen. This type of transparency is key to keeping people engaged in the mission.

Predict Finally, the CEO needs to constantly keep their eyes on the road ahead. That is never truer than in a period of adversity, when circumstances can change rapidly. Each week, the CEO must revisit the business fundamentals with executives, asking each to predict whether key metrics will be hit. Asking people to predict an outcome— rating the likelihood of meeting a certain revenue number, launch date, or other measurement—results in far more insight than asking for historical data. As CEO, your concern is not what’s already happened, but whether the organization will predictably meet its commitments. — This core process of Align, Engage, Predict powers Khorus—an enterprise CEO platform that functions as the CEO’s central system for running the business. As COVID-19 ravages lives and the economy, we have decided to make Khorus free to CEOs at companies of all sizes, from here on out. This is not some watereddown version of Khorus, either, but our full-featured enterprise-class software—no strings attached. You will be able to: • align every member of the team around corporate priorities, • engage them with goals of their own, and • have everyone predict key outcomes each week. In these difficult times, every company should be focused on aligning, engaging, and predicting the performance of their organization. They will now be able to do that free of charge.

Visit khorus.com today to get started. No contracts. No credit card. Fully featured.






Feature If you’re an executive, you’ve probably got a Patrick Lencioni book on your shelf (or in your e-reader). Lencioni’s works, which include The Five Dysfunctions of a Team and Death by Meeting, have sold over six million copies worldwide — and it’s easy to see why. Each is a marvel of simplicity, embedding sharp, practical ideas about leadership and management into fictional narratives that even the most harried CEO can finish in a day or two. After early-career stints at Bain and Oracle, Lencioni founded his consulting firm, The Table Group, in 1997. His first book, The Five Temptations of a CEO, came out the following year. Despite the success he’s seen since then, Lencioni and his work are worlds away from the faddish bluster of the stereotypical leadership guru. Lencioni has, in fact, referred to himself as a “reluctant guru.” Reading his work and listening to him talk, the impression is of someone devoted to improving the people side of business — no gimmicks or secret formulas. The approach resonates: The Table Group is a thriving firm, bringing organizational-health practices to clients like Chick-fil-A, Southwest Airlines, Nordstrom, and many more. And, of course, Lencioni’s books are still selling. That includes his latest, The Motive: Why So Many Leaders Abdicate Their Most Important Responsibilities. Through the story of two rival CEOs, Lencioni digs deeper into the psyche of the leader than ever before, asking readers to consider why they are leading at all: Are you a CEO because of the rewards the position brings? Or is there something deeper driving you? Lencioni recently sat down with Texas CEO Magazine owner Joel Trammell to talk about the message behind his latest book, why he’s changing his mind on virtual work, and which Texas CEOs he’s seen doing a notably good job through the chaos of 2020. At the end of The Motive, you write that it’s the shortest and simplest book you’ve written, but maybe the most important. Let’s start there. Why is this book so important? It’s one thing to think about how to be a leader. It’s another thing to ask yourself why you chose to become a leader. If you get that question wrong, none of the other

stuff makes sense. Our initial motive for becoming a leader is what informs whether we’re willing to do the hardest parts of our jobs. When you work with a new leader, how do you pull their motive out of them? That’s a pretty deep question, right? The problem

is that a person’s leadership motive

is not black and white, and it is not always the same over time. People who are currently leading for the wrong reason can change and do it the right way. And people who are leading for the right reason can slide back into a lesser motive if they take their eyes off the ball. When talking with a CEO, I want to understand whether they are primarily motivated by reward. Reward-centric leadership is not what you want in a CEO; it’s the idea that they worked hard all through their career and now get to have a pleasant and enjoyable time as a leader, without any of the discomfort that comes with the job. Rather than just ask the question “What is your motive?,” I point out the things that most leaders abdicate if they are reward-centered. I ask the leader, “Do you tend to avoid, delegate, or abdicate any of these five things, which are largely uncomfortable?” Even really well-intentioned leaders will look at the list and say, “Crap. I don’t do those things. I think my motive isn’t where it needs to be.” Let’s dig into some of those things that people tend to avoid. The obvious one that comes up with almost every leader is having difficult conversations, and you write about that in the book. No one wants to have a difficult conversation, but that may be the most important conversation to have.

Nobody went into business so they could have uncomfortable, awkward conversations with people. And all of us can relate to wanting to avoid those. The problem is that if the leader of an organization is not having those conversations, then nobody else will. The purpose of our job is not to entertain ourselves or enjoy ourselves. First and foremost, it’s to do what our organization needs in order to be successful. That doesn’t mean the TexasCEOMagazine.com


DURING TIMES LIKE THIS, NO ORGANIZATION IS GOING TO BE LEFT UNSCATHED. THEY’RE EITHER GOING TO GET BETTER OR THEY’RE GOING TO GET WORSE. job isn’t at times enjoyable, but we, as leaders, have to be the first to step up to do the uglier parts of our job. Nobody else can do them if we don’t. I often hear a leader say something like “Well, I can’t just go tell that person they did a terrible job,” or “I would tell them that, but . . .” Every time I hear that, I cringe and know that’s a conversation that was missed. And once you miss the first conversation you should have had, then the second one builds on it. After the third or fourth, there’s this scab you can’t just tear off anymore, because there will be serious bleeding at that point. That’s

right. We have to realize two things. First of all, when we say, “I don’t want to do that” or “I’m too busy” or whatever else, it’s an excuse. Second, we have to realize that avoiding or abdicating that thing is sometimes an act of selfishness that we’re disguising as an act of caring. In other words, when we say, “I don’t want that person to feel bad, so I’m not going to go talk to them about that,” what we’re really saying is, “I don’t want them to blame 40

Texas CEO Magazine Q4 2020

me for feeling bad. I don’t want to have to deal with them.” But avoiding that conversation is in the leader’s best interest, not in the other person’s. I’m as guilty of this as anybody. I’ve learned it the hard way over time. If you avoid a conversation about an issue, that issue is going to come back to haunt that person later — a project or a performance review or, heck, even a personal relationship will go wrong. If we’d only said to them, “Hey, it doesn’t work when you act this way or when you do this,” we could have done them a great service in their career and in their life. When we don’t, we’re essentially saying, “I don’t really care about you that much.” Difficult conversations are, at the end of the day, an act of love. That’s a great point. Another thing you say that reward-centric leaders avoid is developing the leadership team, doing that team-building work. Why do CEOs see that as so difficult? Sometimes leaders will say, “I don’t have time to do this

touchy-feely stuff of ‘team building’ or ‘developing teamwork.’ I’m going to hire a consultant to do it.” Or they’ll say, “I’m going to let HR take that,” or “We’re going to all go golfing and that’ll be our team building.” Building your team is one of the most critical parts of a CEO’s role, and it makes everything else easier if we do it well. But there’s often emotion involved in that part of the job. It’s not easily predictable. And it can be uncomfortable, because you have to get other people to work with one another and confront one another when needed. So a lot of CEOs just bow out of that responsibility. They say, “Well, I brought in that consulting firm to do a half-day session with hugging and trust falls, so I think we’re fine.” That’s not what this is. I know your team at Table Group does a lot of team-building work within executive teams. What are realistic expectations for that kind of work? How fast do you see results? If a CEO commits to this, they

Feature will see tangible, meaningful goodness in days and weeks. Not months and years. Literally. So, while it obviously takes ongoing work, putting the concerted effort into building the team over a couple of days can really change things. You can see real benefits quickly. When we work with executive teams, we make sure that the work we do has a practical outcome. If the team is aligned, work will be more enjoyable and they are going to get more done in less time with fewer mistakes. Then working as a team just becomes a matter of discipline. If you’re prepared to stick with it, the benefits stay. So many leaders sign up for these things, but they don’t plan on actually following up and doing anything. They can go through a program for a year and not see a difference. Let’s talk about meetings. You wrote a whole book on them, of course. I don’t think anybody wants bad meetings, but what do CEOs do to sabotage themselves in that area? The first thing they do is

convince themselves that it’s okay to admit that they don’t like meetings. They decide it’s fine to treat meetings as just something to get through — when, in reality, meetings are the central activity of a CEO. If I were evaluating whether Dak Prescott was a good quarterback, I’d watch his game. If I were evaluating whether my son’s teacher was a good teacher, I’d watch him in the classroom. If I were evaluating whether a CEO is a good CEO, I’d watch her during meetings. If those meetings are not focused, if they’re not intense, if they don’t lead to good decisions, and if people are not engaged, I would say that person’s not doing their job well. And yet so many CEOs will say, “Yeah, I hate meetings. They drive me crazy. But we have them anyway. We just try

to make them end on time and get out of there so we can do real work.” Well, that’s not a great approach, because the real work of a CEO is to run fantastic meetings. You talk about constantly repeating key messages to employees. I think some CEOs are scared they’re going to be the old guy who walks around and tells the same five stories. Right? Exactly. They feel like they’re going to insult their audience, or they’re going to bore them, or that it’s redundant and they’re wasting their time. That’s not how it works. Gary Kelly at Southwest Airlines, who’s a friend of mine and just a dear man and a great leader — that guy knows that his primary job is to be the CRO in the organization, the Chief Reminding Officer. He is constantly finding new ways to remind people of the fundamentals: why they’re in business, what they do, and how to do it well.

The best companies have leaders who are constantly repeating themselves and reinforcing things, just like the best parents do. I like to say that if you’re a CEO and people can’t do a good impression of you when you’re not around, you’re probably not communicating enough. And yet, most of us don’t really want that. We want to just move on to the next topic.

to be managed. The executive vice president of the most sophisticated worldwide multibillion-dollar organization needs to be managed — maybe differently than a line employee, but they still need to be managed. Too many CEOs say, “Well, I’m just going to hire experienced executives who are adults, and they won’t need me to manage them.” Then they’ll excuse themselves and say, “Well, I’m not a micromanager, and I trust my people.” What I always say is, “Hey, managing people is just sitting down with each of the people on your team to make sure they know what they need to do, helping them understand if they’re succeeding or not, and then providing whatever coaching they need if they’re not on target. That’s what management is. If we don’t like doing that, whether we find it tedious or we’re tired of doing it, then we’re probably not being a CEO for the right reason.”

Let’s talk about one more thing you say that reward-centric leaders avoid, which is managing subordinates as individuals. In my experience, CEOs tend to think, “Heck, these are all execs. They’re senior people. I

When people become CEO for the wrong reason, it’s usually not just to gain money or power or fame. A lot of them do it because they think it’s going to be fun and enjoyable. That leads them to punt on the parts of the job that are not that enjoyable but that need to be done. The truth of the matter is, the CEO’s job isn’t supposed to be the most fun job in the company. It’s supposed to be the most important one, which means you have to be willing to do the dirty work when it needs to be done.

shouldn’t have to manage them.” Exactly. The CEO became the CEO because he or she was a really good leader and a good manager. When they first got promoted to management, they were one of the best managers. They managed and managed and managed. Then they get promoted to CEO and they go, “Finally, I don’t have to do it anymore!” But no, everyone needs

I often see CEOs who confuse management with training. So they’re reluctant to manage an executive because they think it’s the same as teaching the executive a skill. The example I’ve used is that Bill Belichick coached Tom Brady even though Belichick never played a down in the NFL and certainly never played quarterback. But people sometimes think, “How could I manage my chief TexasCEOMagazine.com


legal officer? I’ve never been a lawyer!”

Yes, that’s another problem. So many people grew up thinking, “Let’s find the most competent individual contributor or specialist and turn them into a manager.” That’s not recognizing that management is its own genius. When it comes to the Xs and Os, Bill Belichick is a genius. He knew that his job was to coach Brady. The funny thing is, he never stopped coaching Brady. Even when Brady was famous, he would treat him like a player. He had no problem lighting up Tom Brady if he did something wrong, because he knew that was his job. I think most people would go, “You don’t need to coach Tom Brady anymore.” Well, actually you do, because he’s a player, and players need coaches. If we stop coaching people because we think they’ve hit a level where they don’t need it, well, they’re probably going to need it soon. Your name is synonymous with organizational health. How do you think the last six months of human health issues have impacted organizational health?

I talk about this a lot lately. During times like this, no organization is going to be left unscathed. They’re either going to get better or they’re going to get worse. Some organizations said, “During this time, we are going to focus on getting rid of any politics or confusion or lack of clarity in our organization. That’s how we’re going to spend our time, so that when things come back, we’ll come back stronger.” Other organizations have sat around complaining or waiting for things to get resolved. By the time things turn around — and I think things are starting to — they’re going to be all the worse for it. The question is whether the organization is going to intentionally get better and separate itself from the pack, or whether it’s 42

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going to drift with the current and find itself way behind. What do you think about the role of virtual work in this crisis? I’ve had employees who could have gone and worked from Alaska for two years without a significant impact in their job, but that was because we already had a relationship. Seems to me, assimilating new team members in the virtual world is a lot more difficult than it is in the physical world. Do you agree with that?

I do agree with that, but I don’t think that virtual work is as detrimental as I used to. Heading into this shutdown, I was a pretty loud critic of people who tried to justify virtual work just for the sake of virtual work. I would have told you it’s only 30 percent effective. Today, I think it’s about 80 percent effective. I’ve seen teams who, by being intentional about it, have actually gotten closer and improved their behaviors after going virtual. Even as a former critic of virtual work, I can see that there are actually a few advantages. One is that you’re dealing with one another from your home environment, and that tends to reinforce people’s humanity and allow them to deal with one another in a more human way. When you see somebody’s child or dog or husband or wife, or when you see them sitting in their living room from time to time, you’re reminded that this is a human being. When we see that, we tend to be a little bit more vulnerable and more gracious with one another. All other things being equal, I would much rather have people in person. But teams that use technology well are actually finding ways to grow, and they’re going to come out of this stronger. This issue of Texas CEO Magazine honors exceptional leadership on the part of Texas CEOs. You get to see a lot of great

companies and great leaders. Any you’d like to point out who you think have done a great job during this difficult stretch we’ve been in? There are many.

Brian Tyler, the CEO at McKesson, is fantastic. When the pandemic started, they were right in the middle of all of it, being in healthcare. Brian doubleddown on building stronger personal relationships with his team over Zoom and other technology, because he knew that was going to be critical to keeping them positive and invested. I think they’re doing a really good job in a very difficult time. Gary Kelly at Southwest is another one. This is not the first time Southwest has been through a rough period — there was 9/11, of course. But Southwest just finds a way to keep their people rallied, to keep them feeling like they’re a part of the company. They talk to employees and tell them the truth. Brian and Gary are both being remarkably human through these challenges. They’re engaging with their people and confronting things in a very real way. There’s something about that that instills trust and confidence in people. There are many more CEOs out there doing the same, and most of them are not well-known. Final question. What’s next for Lencioni?

I’m more engaged right now than I’ve ever been. The shutdown led my business to innovate and question some things. We’re about to come out with a few new things that we think will have a profound impact on consultants and managers and employees. And because of the shutdown, we stopped doing some things that we used to do. Our podcast, At the Table with Patrick Lencioni, also really took off. I hate to use the word pivot, but we are trying some new things that we’re excited about. I haven’t been this engaged in 10 years.



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Austin’s Teenage Lemonade CEO Now celebrating more than 10 years in “buzzness” (as Mikaila puts it), Me & the Bees Lemonade is available across the United States.

Kids selling lemonade has long been a trope in American culture: big smiles, plastic cups, hand-lettered signage. But Mikaila Ulmer has been bringing a full-fledged entrepreneurial spirit to the beverage business since Kindergarten. Now 15 years old, Mikaila took a special lemonade recipe from a Kindergarten fair idea to a national lemonade brand, now available in 40 states. Mikaila’s story begins with bee stings and a bit of serendipity. At four and half, Mikaila entered the Acton Children’s Business Fair—but she didn’t have a product to sell yet. Like so many great product ideas, hers was born by synthesizing personal experiences into something new. First light bulb: Mikaila was stung by two bees in the same week. Understandably now afraid of flying insects, she was encouraged by her parents to learn more about bees before writing them off. It worked: Mikaila became fascinated by bees’ vital role as pollinators, and concerned by their dwindling numbers. Whatever her entrepreneurial product was, she wanted it to benefit bees. Second light bulb: Around the same time, Mikaila’s great-grandmother sent her a tattered cookbook that dated back to the 1940s. Inside, Mikaila stumbled upon the recipe for Great Granny Helen’s beloved flaxseed lemonade. What if she used honey from bees instead of sugar in the recipe? It was the beginning of what would become Me & the Bees Lemonade. Mikaila’s subsequent journey includes a stop on Shark Tank (where she received an investment from Daymond John) and an invitation to the Obama White House. And on top of it all, she’s now a published author. Her new book, Bee Fearless: Dream Like a Kid — part memoir and part business advice — is available now. This teenage Texas CEO took time to tell us more about her business, balancing school and entrepreneurship, and some of the best business advice she’s received so far.


Texas CEO Magazine Q4 2020

[ENTREPRENEURSHIP] What motivated you to turn lemonade into a business at such a young age? It was all about helping the bees and finding a way to save them year-round. I realized that the more lemonade I sold, the more bees I could help. So, when a local pizza shop offered to carry the product if we could find a way to bottle it, I was so excited about the opportunity. When I was presented with the challenge of going from a simple lemonade stand to bottling my lemonade for local Austin stores for greater distribution, I realized that there would be a lot more sales of it to help with my mission of donating to charities that help the bees. We are now celebrating more than 10 years in “buzzness,” and I have been donating a percentage of the profits to local and international organizations fighting hard to save the bees since the beginning. And, I also founded the Healthy Hive Foundation to make an even greater impact. What makes Me & the Bees lemonade special in the beverage market? It’s a social company. I truly believe being a purpose-based brand in the beverage market is a key differentiator; “Buy a bottle, save a bee” is our motto.


Consumers can enjoy a greattasting, better-for-you, ready-todrink beverage and feel great about supporting our mission.

world. I really try to focus on school first and then Me & the Bees. It’s great having an amazing team so we can get everything done. Say another kid is thinking about trying out entrepreneurship. What would you tell them to be aware of? Follow your purpose with passion and go for it. Always know your numbers, and give, save, spend—in that order. And, learn from failures to make your next attempt better. Finally, one expression I like to use as an alternative to “make lemonade out of lemons” is “don’t be discouraged by life’s little stings, get back up and spread your wings.”

Also, our lemonade flavors are “fun and functional,” meaning they contain ingredients that support health and wellbeing. In addition to honey, we add flaxseed, which is certainly unique for lemonade. Flaxseed is a source of omega-3 fatty acids and antioxidants. Also, Me & the Bees has reduced the grams of sugar, as well as overall calories, in all five of our flavors. And, my business is a family-owned minority business, based in Austin, Texas. Even though it started as my lemonade stand, it now offers our lemonades at 1,500 points of distribution in 40 states! At your age, you’re running a business and going to school. How do you manage to do that? Honestly, striking a balance is always a challenge. For example, I often have to decline amazing opportunities to meet or share my story with people around the

What’s ahead for you and Me & the Bees? On the business side, finding additional distribution points for our lemonades as we scale and grow, as I want to be in all 50 states and America’s favorite lemonade! With the experience under our belts and topnotch operational processes in place, we are currently looking for more investors to help get us there faster. And I want to always keep learning and share my learnings so others can also be successful. And for me personally, the thing I’m most excited about right now is the publication of my first book, Bee Fearless: Dream Like a Kid, which debuted in August. I hope it inspires the next generation of changemakers.



for our lemonades as we scale and grow. And we’re also looking for more investors to help get us there faster.


COFOUNDER & CEO OF WHOLE FOODS MARKET What’s the biggest challenge you foresee down the road for yourself as a teenage business leader? We’re going to have to embrace that challenge of getting into all 50 states within a year. That means we will have to work hard to secure additional distribution points


Texas CEO Magazine Q4 2020

As I enter my junior year of high school, there’s a lot more schoolwork than ever before, and soon I will have to think about college. Again, therein lies the challenge of keeping everything in balance. And lastly, the biggest challenge of all is to figure out how to really make significant progress to help save and protect the bees and other pollinators. With all the persistent pesticides used in conventional farming, it’s hard to prompt change in policies to prohibit pesticides like neonicotinoids. So, there are lots of challenges near and short term, but the way I approach those adversities will be by finding a way to face them head-on and turn them into motivation to succeed. What’s your personal favorite flavor of Me & the Bees lemonade? Well, I love them all, but I especially love Prickly Pear Lemonade, as it’s a Texas favorite, and it tastes amazing as a popsicle. Our Classic Lemonade is the homage to my Great Granny Helen’s recipe that inspired me to start my lemonade stand when I was four. It strikes just the right sweet and tart balance. Other people’s favorite is our Ginger Lemonade, with the kick from organic ginger. We also do a version of an Arnold Palmer and Mint Lemonade, so enough variation to please everyone. Where can people try these flavors if they haven’t yet? It’s sold at H-E-B, Whole Foods Market, World Market across the state, and at Kroger in Houston. We also distribute it to several restaurants and convenience stores. We have a store locator you can use on our site. And if it’s not available at your local store, you can always order it at meandthebees.com.


“I’ve been so fortunate to get a lot of great advice over the years,”


says Mikaila.

Here are four of her favorites:

“No matter how old you are, you always have something to learn. And no matter how old you are, you always have something to teach.”

“Be the person in the room who always has a solution, not a problem. It sets you apart and you’ll be known as the person with solutions.”

“When you have a big voice, make sure that you give others a voice behind you. You’re not only growing yourself but helping others grow and giving your expertise to others.”

“Being nervous and getting butterflies before something big just means you care about it. Take deep breaths.”







Texas CEO Magazine Q4 2020



Photos courtesy of The Center for Generational Kinetics



Every time a new generation arises, the established generations start to chatter: What are these young people going to be like as workers, as consumers, as members of society? What are their unique traits? And what about them annoys the heck out of us? Right now, these newcomers are Generation Z, born roughly between 1997 and 2015. What’s often missing from conversations about any generation is robust research and data. Enter Jason Dorsey and Dr. Denise Villa, whose new book, Zconomy: How Gen Z Will Change the Future of Business―and What to Do About It, was released in September. In its pages, Dorsey and Villa, who lead The Center for Generational Kinetics, based in Austin, draw upon more than 60 generational studies they have led, plus their hands-on work with over 500 organizations around the globe. Their findings reveal exactly what business leaders need to know as they hire, sell to, and develop Gen Z. In this conversation, Denise and Jason spoke to us about some of the most interesting findings reported in the book, including a few that may surprise you. You may feel like you just figured out Millennials, but it’s already time to start learning about the mindset, outlook, and preferences of the next generation.


Texas CEO Magazine Q4 2020

Let’s start with one thing that might surprise Gen X or Boomer readers about Gen Z. What don’t these older generations normally think about? JASON: The first thing is an experience Gen Z didn’t have, which is living through the September 11th attacks. The oldest Gen Zer would’ve been only a few years old then. That’s a huge, huge difference between Gen Z and Millennials. For Millennials, 9/11 was a key event. For Gen Z, it’s history — they learned about it in school or saw it on YouTube. In the United States particularly, the memory of 9/11 is a primary delineation between Millennials and Gen Z. Another thing about Gen Z is that they’ve always known smartphones. Much of their engagement with entertainment, news, money, banking, dating, and education has always been through a handheld device. They’ve always had social media, too, and we’ve seen how that can be positive and negative. With social media, Gen Z has new sources of information, the ability to find like-minded people, to stay in touch with family and friends, and even to create whole new businesses as influencers. But also, certain dangers come with it. There certainly is a whole set of technology-related concerns that comes with raising Gen Z. JASON: Yes. One thing that’s less obvious about Gen Z is who their parents are. Their parents are Generation X, not Baby Boomers. That’s a big deal because parenting is often the greatest driver of generational characteristics. In line with that, we see that Gen X is raising their kids differently than Baby Boomers did. In fact, in the book, we talk about how Gen X tells us, “We don't want our kids to end up like Millennials.” I love that. For five years now, Denise and I have been doing our State of Gen Z national study. Another surprising thing we’ve seen is that Gen Z is much more practical with their money than Millennials. They tend to seek out more value for their money, whether that’s through discounts or coupons or shopping at thrift stores. Many of them also have emergency savings accounts. In one study we did, the number-two perk Gen Zers wanted from an employer was benefits—retirement-plan matching and so forth. That’s really shocking, given how young they are. In some ways, Gen Z almost looks like a throwback generation. Many of their characteristics look more like Baby Boomers’ than Millennials’. And many of them tell us they don't want to end up like Millennials. In the book, we talk about the potential for Gen Z to leapfrog some Millennials in terms of long-term success because they are predisposed to some of these behaviors, like saving and seeking out value when they spend. Not wanting to get in as much debt does sound a lot like a Baby Boomer attitude. Very few Boomers had debt after college, but with Millennials there was an explosion of college debt. JASON: Yeah, we’re seeing some real conflict between Millennials and Gen Zers there. COVID-19 has only accelerated it. In our latest studies, Gen Z says they want to graduate college with as little debt as possible. They're trying to be much more cost-efficient in getting their education, which is a completely different mindset from Millennials like myself, who were told to get into the best college you can and worry about the debt later. Obviously, that didn’t work out too well for Millennials. Gen Z has the benefit of learning from that.


With COVID, we're also seeing Gen Z worry about overpaying for virtual or hybrid college — they don’t want to pay full price without getting the full experience. I think we’ll see more pricing pressures come into play there. At the same time, Gen Zers are also taking more classes online, at community college and elsewhere, so they can start college with more credits and reduce the debt they have to get into. It's a fascinating time — you have a generation that is trying to get more value for their money at the same time that college costs continue to rise. It's why we’ve seen so much conflict play out over the past several months between students and colleges. Gen Z is very conscious of the cost, so they want rebates, discounts, and other concessions because COVID has disrupted the typical college experience. This pandemic has been one of the most significant events in anyone’s lifetime, but how is having that experience as young people going to affect Gen Z culturally and economically? DENISE: This is going to be a huge generational marker for Gen Z, especially for older members of Gen Z, ages 18 to 24. They're going to be graduating into a workforce that has the biggest explosion of unemployment we've seen since the Great Depression. They're likely going to be hit a lot harder than the younger part of the generation, who are still young children right now.

Because of the pandemic, the older set of Gen Z isn’t going to have the high school and college experience they set out to have — no memories of a typical senior prom and graduation ceremony. And in Texas, of course, things like homecoming games are going to be very different. Having those experiences taken away will impact how they view coming-of-age milestones, think about traveling the world, manage their finances, and consider career options. JASON: That’s right. What’s not talked about in the news is that the impact of COVID on Gen Z varies by the age of the Gen Zer. The closer you are to those key life transitions — high school to college, college to workforce, and so forth — the more immediate and negative impact the pandemic will have. Gen Zers making that transition now are entering a tough situation; we predict they’ll have potentially 5 to 10 years of diminished earnings ahead. They’re often not getting the jobs they wanted, and they’re not able to network as effectively. In fact, in our most recent study, Gen Z was the leading generation to lose their job or have their earnings reduced. On the flip side, to Denise’s point, younger members of Gen Z stand to gain tremendous unexpected benefits from this, such as well-developed online learning and online collaboration. My daughter is nine, and she just turned in her final report using Google Classroom. She built it in Google Slides, included a video, and submitted it without even telling us. She’s nine! Kids her age are learning these new skills, and they have plenty of runway before those key transitions into higher education and the workforce. TexasCEOMagazine.com


Millennials obviously had kids later, got married later, settled down later. Do you think Gen Z will continue that tradition? JASON: We do, though we’ll still need to wait and see. In general, in our research studies, Gen Z tells us they still want to get married, have kids, and buy a house. Part of the reason Millennials delayed those things is that they were much more risk-averse than Gen X and Boomers and felt they had more time to figure things out. We expect the same from Gen Z. I think the wild card will be in five to 10 years, as Gen Z looks at where Millennials are. Will they decide they too want to wait to have children and buy a home, or will they swing back the other way? We've already seen them change course when it comes to saving and finances. But we’re unsure if they will diverge when it comes to settling down. That will be important to watch. Gen Z is already growing as a percentage of the workforce. If I'm trying to hire a Gen Zer, what should I know? JASON: When we talk about Gen Z entering the workforce, we like to think about the employee lifecycle. First comes recruiting. If you want to recruit Gen Z, you’re going to want to allow them to apply for the job on a mobile device. The easier you make it for them to complete the application and initial steps on a mobile device, the more applicants from Gen Z you'll get. Beyond that, Gen Zers have very specific things they're looking for when they apply for a job — in particular job stability, scheduling flexibility, and, as I mentioned earlier, good benefits. Many Gen Zers also tell us they would prefer to work for a larger company because they perceive those jobs and companies to be more stable. I don’t know whether those jobs are truly more stable, but that's certainly Gen Z’s perception. But for Gen Zers of all ages, there’s also the social and emotional impact of COVID-19. This pandemic has created tremendous vulnerability for the generation, much in the way that 9/11 impacted Millennials. But in some ways, the effects of COVID-19 are even broader and more extreme. Every day they’re hearing about mortality rates and death counts. That’s an experience young adults haven’t had since mortality counts were posted on TV during Vietnam. Gen Z is seeing celebrities die, people they know die, and hearing daily about hospital occupancy and testing positivity. These things play out in a very public way, amplified by social media and political polarization.

Next, the onboarding process is incredibly important — for Gen Z, it’s got to be more mobile-driven. One company offering this type of solution is Enboarder, which has its US headquarters in Austin. They do all your onboarding by text messaging — it’s really, really interesting. That experience allows the new hire to feel engaged and welcomed, and it doesn’t cost the employer much. Gen Z also wants to see what your organization’s mission is beyond money and what social causes you support that align with their priorities. They want to see people who look like them in the makeup of your company, and they want to access videos that show what it's really like to work there.

DENISE: Generation-defining moments like this change what is normal very quickly. If you’re 18 years old now, it might already start to feel normal to not be able to go see friends, not go on dates, not get a summer job, miss college orientation, or not get an internship. The uncertainty of when those experiences will come back only heightens the impact. There is no clear end date.

In terms of training, you see similar things to onboarding. Gen Z expects training that’s on-demand, interactive, video-driven, and accessible on a mobile device. Several companies are offering great solutions on this, including another one based in Austin called Schoox. These solutions are especially important as we move to a deskless workforce, with employees moving around a lot. That’s many of the jobs Gen Z is working in right now, from retail to hospitality to even healthcare. Enabling them to get the training they need in a consistent, trackable, measurable way is critical. And all this stuff is very inexpensive to implement right now.

Gen Z will always carry the experience of this pandemic with them. It will inform everything from their money habits to home buying to marriage to whether and when they decide to have kids. For the generation after Gen Z, who are two, three, four years old right now, they don’t know what’s going on with COVID. This will be, to them, much like 9/11 is for Gen Z. 52

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Gen Z also tells us consistently that they want talent development. Now, interestingly, we're not talking about the traditional Gen X

or Baby Boomer concept of “certification.” What Gen Z means by “talent development” is skills like problem-solving, interpersonal communication, and so on. Moving to the last stage of the lifecycle, what do Gen Zers want in terms of engagement and retention? For one, we find that Gen Z needs frequent communication. It doesn’t have to be anything elaborate — it could be a text message or Slack. Even more than Millennials, they need what we call “quick-hit feedback,” something that regularly lets them know you value them as part of the team. Particularly with remote work, younger employees tell us that if they're not getting communication from their boss, they worry that their job is on the line. We’re not just talking about praise or trophies — we’re talking about meaningful communication around alignment. That ties into something else Gen Zers require for continued engagement, which is understanding how their role fits within the greater organization. This is often undervalued. When you're an entry-level Gen Z employee, you may not have a big title, but what you do is still incredibly important. In fact, you may have more interactions with customers or clients than older workers of different generations. Showing Gen Zers how they fit in the organization is incredibly, incredibly important. By the way, everything I just listed, the things Gen Z wants across the employee lifecycle, helps move a company forward. None of this is just coddling a new generation for its own sake. Each of those things helps deliver bottom-line results. And when other generations are exposed to these things, they often want the same things — they just didn’t realize it. In fact, we have some companies tell us that they love Gen Z employees because of everything they bring. In many ways, this generation is going to be a huge asset to the American workforce, particularly as we seek to rebound long-term from the pandemic. Do you think that remote work is here to stay, and that work travel is over? With Gen Z being so accustomed to smartphones and other technology, will in-person interaction matter less? DENISE: We do think that business is going to be done differently going forward. Business travel, for one, has likely changed forever. For years, people have found different ways to communicate with the people they are selling to, and COVID-19 has only accelerated that. While there will always be some need and unique value for in-person meetings, for having that one-on-one chat time, it’s probably going to be further along in the sales and relationship-building cycle. Online platforms have largely done away with the need for that initial “Let me fly out and meet you” scenario, especially if companies are not willing to let non-employees have access to their workplace to meet in-person. We expect this will continue throughout the pandemic and potentially afterward for some time. What will be most interesting to watch is whether or not standard internal meetings, such as quarterly meetings or annual events, come back. As a professional speaker at meetings, I sure hope they do! JASON: Many companies have gotten really good at having effective internal meetings using technology. But like Denise

was saying, for external meetings, we do hear from people that they want some level of in-person interaction with potential vendors, prospects, and customers. People have adapted sales and marketing, doing more webinars, virtual conferences, and so forth. However, we continually hear that they still want some faceto-face interaction when it’s safe and meaningful. We do think there's going to be less pressure to bring back in-person internal meetings or to require people to work back at an office full-time for knowledge-based jobs. We think it’s likely that hybrid work solutions are here to stay, with a mix of in-person and remote, along with better technology integration. If I run a business that wants to sell to Gen Z, what's the difference compared to selling to Millennials? JASON: Two or three things jump out to me. In our latest studies, friends and family are still the number-one influence on Gen Z buyers. Still, digital media is number two — in particular social media, and specifically platforms like TikTok, Snapchat, Instagram, and YouTube. Many brands are still trying to figure out how to work with those platforms. We do see the role of influencers becoming even more important with Gen Z — much more important than even with Millennials. Gen Z has always known influencers; they don't have a negative conception of them because they’re so used to them. In fact, many in Gen Z tell us that they would love to become influencers! We also see a big push from Gen Z consumers to see a company's commitment to social causes. For the last few years, the most important social cause we heard about from Gen Z was climate change — they wanted to know the companies they bought from were doing something about it. The second most important issue we heard about was social justice. Those two have flip-flopped this year, but both of them are very important for companies to keep in mind. The final thing to remember is that, again, Gen Z is very practical with their money. Many companies are wise to message about products or services that are a good buy or that are going to last. For a long time, people said that young people want experiences over things. That was certainly the case with Millennials, but one surprising finding of our most recent study is that Gen Z actually prefers products over experiences. It's the first time we’ve had a generation say, “No, no, I actually think that physical products last longer than experiences. You might have five Instagram photos from your trip, but I still have that item I bought.” DENISE: We’ve also seen that Gen Z is looking for honesty from brands. The Millennial generation demanded honesty, but now Gen Z even more so expects full transparency in how the company acts and what causes it supports. The other thing that’s really important to Gen Z is diversity and inclusion. That includes not only diversity in ethnicity and race but also representation in terms of gender identification. Overall, Gen Z looks for companies that can speak credibly to every single one of them. When they interact with a company, they want to feel the company is talking just to them, one on one. TexasCEOMagazine.com


JASON: Related to that, one interesting thing we found in our recent study with WP Engine is that Gen Z was the most willing of any generation to give their personal data in exchange for a better digital experience.

generations and then were driven down to the youngest. So, as companies position for long-term growth, they need to understand what Gen Z thinks is normal so they can ride out that wave as it travels across generations.

What else should Texas CEOs know about Gen Z? JASON: First, that Gen Z is actually the most similar generation of any around the world right now, and that's primarily due to cheap mobile technology. That’s different from older generations, where there were significant differences across countries, states, and regions. For companies trying to grow outside of Texas, Gen Z is a great way to get a foothold into other markets around the world. Because they are the most similar, you can use similar but geographically appropriate messages and tactics to appeal to them.

Third and finally, I would say that Gen Z over-indexes in terms of its online influence with other consumers. If you can win them as fans and advocates, they have a much broader impact online than other generations, thanks to the frequency and velocity of digital engagement. Gen Z can help so many brands, both legacy and new, grow faster as the brand aligns with their predispositions.

The second thing is something I alluded to before: For the first time ever, trends, particularly technology trends, are starting with the youngest generation and rippling up to the oldest generation. If you want to understand what Millennials, Gen X, and Boomers are going to do in the future, look at what Gen Z is doing right now. We've seen that play out so many times. Younger generations moved many older people from Facebook to Instagram, and now you have adults joining TikTok. That’s different from the past, when trends often started with the older and more affluent

DENISE: Right. And related to that, many brands still don't take online reviews as seriously as they should. That’s a mistake, because Gen Z, more so than any other generation, really depends on the Internet as a tool to make purchases. Seeing a few positive remarks about a brand isn’t enough for them; they actually go and dig for a diverse set of ratings and reviews for products and services, especially for first-time purchases. In one study, we found that when a Gen Zer makes a major purchase, they look at more than 15 reviews, positive and negative, before buying. So, I would encourage brands of all types to pay even more attention than usual to what’s being said about them online. Gen Z really uses that as a tool for deciding what to buy and what not to buy at this critical time when they’re forming their brand loyalty.


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Texas CEO Magazine Q4 2020

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At the Intersection of Art & Business The longstanding tension between art and commerce isn’t going anywhere soon. But plenty of people find the gold at that very intersection. Case in point: Evan Beard, managing director of Fine Art Services for Bank of America Private Bank. In our interview with Evan, which starts on the following page, you'll get a look behind the curtain at how the bank aids fine-art collectors in planning out their collections, buying and selling at auction, and even using artworks as collateral for lending. After that (p. 59), we speak with Howard Rachofsky, the renowned Dallas art collector and patron who is also a client of Bank of America’s Fine Art Services division. He gives us a narrative of his transformation from hedge funder to art appreciator to world-class collector. Special thanks and appreciation to Ken Womack, Rachael Wyatt, and Julia Ehrenfeld for their assistance in helping make these interviews possible.



Mortgaging Your Monet


Where does the inherent value of art come from? As managing director of Fine Art Services for Bank of America Private Bank, Evan Beard hasn’t quite solved this philosophical quandary. But that hasn’t stopped him from pioneering a group at Bank of America centered around art’s power to help his clients thrive, culturally and financially. There’s no question that art ownership can pay off monetarily. When Claude Monet’s Meules—a seminal work of Impressionism—sold at Sotheby’s last year, it pulled an eye-popping $110.7 million. That’s more than 44 times what the painting last sold for in 1986, and quite a return for the seller. Any old layperson can be stunned by Monet’s brilliant daubs of color in Meules, the sensuous sunlight peeking over the shoulder of squat purplish haystacks. But dealing with such artworks as an asset class is a trickier proposition. Even sophisticated art patrons and cultural institutions often need help maximizing the potential held in the paintings on their walls and the sculptures on their lawns. That’s precisely where Beard comes in. 56

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Beard was working as a consultant to the private bank within Bank of America when, four years ago, the idea of an art division first hit. “My objective as a consultant was to figure out how to differentiate the bank as a brand,” says Beard, “and to figure out how to do that in a way that drove revenue growth.” One resulting concept was a unified business focused on the art market. Soon, Beard was hired on by Bank of America, tasked with pulling together the bank’s existing art offerings into one coordinated unit, styled as an investment banking group catering specifically to the art market. Four years on, Bank of America Private Bank’s art division offers a full suite of services for assisting clients as they navigate the sometimes puzzling art world. As Beard discusses in the following interview, the strategies his group employs aren’t necessarily new (Rembrandt, for example, used his paintings as collateral). What is new is the evolving relationship between art and finance—felt not just in New York but in Texas too.

Feature Let’s start with what Bank of America Private Bank's art division actually does. What do clients come to you for, typically?

Sure. The art services group at Bank of America Private Bank emphasizes four areas. The first is art lending. Led by our head of art lending, John Arena, we’ve helped collectors unlock billions from their art collections. By taking advantage of those credit structures, our clients can use their collections as collateral to unlock capital for a whole variety of uses, all while keeping the art on the wall. We’ve done some really interesting things in art lending. For example, we took capital out of an art collection so the owner of a major league sports team could pay a signing bonus for a star athlete. In another case, we helped finance the expansion of a hip-hop artist’s enterprise using his art collection. Other times, people are looking to finance real estate projects or private equity funds. And in some cases they use the line to buy even more art. One of the more interesting deals we did was enabling a collector to use his art line to back a third-party guarantee on a picture coming up at auction. The fierce bidding made it one of the most valuable ever sold, so our client didn’t walk away with the picture. But by guaranteeing the picture with his art line, he walked away with millions, pocketing a spread above his guarantee level and the hammer price. The second area we work in is art planning, led by our head of art planning, Ramsay Slugg. Ramsay sits in Fort Worth, where, as you know, there is a thriving art scene. Through that group, we work with collectors on the longer-term disposition of their art collection. We assist with everything from cross-border tax planning

to philanthropic advice to entity structuring to estate planning. We can even advise on the process of building and structuring a private museum. Our third area is consignment services. Led by our New York–based specialists Drew Watson and Dana Prussian, we oversee the negotiation and sales process for clients selling art and objects at auction. Through our official relationships with the auction houses, we negotiate guarantees and help clients save on consignment fees.

ART-SECURED LENDING THEN APPEARS IN THE DUTCH GOLDEN AGE, WHEN ARTISTS LIKE REMBRANDT AND JAN LIEVENS WOULD USE THEIR ART AS COLLATERAL. And finally we have an institution endowments group and manage about 100 museum endowments across the country. Our team of consultants, led by Dianne Bailey, advises institutions on everything from strategic planning to board best practices to deaccessioning advice. Through those four areas, we’re trying to be relevant to the collector through the entire collecting journey—from the moment they start to collect to when their collection is sitting in a museum.

For the typical collector, how new is the idea of using something like an art services group? In a sense, art’s

relationship with banking dates to the Renaissance when dynasties like the Medici would fund art projects to stay in the good graces of the church. Artsecured lending then appears in the Dutch Golden Age, when artists like Rembrandt and Jan Lievens would use their art as collateral to merchants to fund their studios. But only in this generation has the global art market ecosystem evolved to a degree that global financial institutions focus on the art market as an industry in its own right, rather than simply a lifestyle hobby of their clients. Collectors now have an array of options, both on the financing side and on the philanthropic and wealthplanning side. That’s fairly new to the art world. Some people cringe at this convergence of art and finance; others find it useful. Either way, it's a reality. With this concept being somewhat new, how difficult is it to make people aware of what you do and what their options are?

Part of our focus these last few years has indeed been educating collectors on what options are out there. But collectors tend to be a school of fish, congregating at art fairs and auctions, so word travels fast. The word is out and we’ve seen a real shift in how collectors manage their collections. It’s still appreciated as art, but now managed more as a capital asset. New York is clearly the center of the US art world, but have you seen more activity happening in states like Texas?

Absolutely. I live in New York, but it's been fun to watch Texas’ cultural scene grow by leaps and bounds lately. In the minds of many Americans, Texas' is rooted in certain industries— oil, natural gas, farming. But Austin, TexasCEOMagazine.com


Dallas, and Houston have become key drivers in the arts and culture space. Texas has some of the deepest and most well-endowed art institutions globally and a very sophisticated and adventurous collector base. In the past generation or so, the Texas model of close collaboration between collector and institutional curator has actually changed how museums interact with their patrons. Take the Dallas Museum of Art for instance; the institution collects in concert with several of the local collectors who have made long-term bequests to the institution. They’ve created a model where collectors now curate their own collection to fill long-term gaps and enhance the collection of the local institution for the benefit of future generations. This model might have been criticized years ago; now it’s every museum’s great ambition, particularly in rapidly growing collector scenes like Miami and Los Angeles. How has COVID-19 and the current economic climate impacted the art market? It’s had an effect, clearly, but

it’s affected some segments of the art market more than others. In the 2009 crisis we saw the art market pull back by almost 50 percent on the supply side, but demand also sunk because there was a liquidity squeeze at the high end, driving prices lower. The current crisis has primarily hit Main Street. This time around prices at auction have been stable, partly due to a monetary response—the drop in interest rates, the expansion of the Fed's balance sheet—that has stabilized capital markets and thus demand 58

Texas CEO Magazine Q4 2020

at the high end. So the masterpiece market is holding very firm, because there's plenty of liquidity. We brought a single-owner collection to auction during the depths of COVID and we questioned whether demand would materialize. Luckily Sotheby's did a tremendous job pulling off a digital hybrid sale that drove robust bidding for several female artists, including Louise Bourgeois, Joan Mitchell, Helen Frankenthaler, and Lee Krasner. It demonstrates that freshto-market works by great artists can pretty much survive a nuclear winter. The sector of the art market that has been dramatically hurt by this crisis is the middle tier at auction and in the primary gallery segment. In the age of social distancing, art exhibitions and gallery showings have become logistically challenging and basically every art fair globally has been cancelled this year. Prices in the primary dealer market will adjust downward and take some time to come back. It’s a good time to support those gallerists and artists. What personally drew you to this work? Do you collect art yourself? I’m drawn to the New York school. My very small collection is focused on art that evokes New York City in some way.

As for how I came to work in this field, it was in a roundabout way. I went to the US Naval Academy and became a naval intelligence officer, with most of my focus on the Middle East. But even then I was fascinated by the economic and social structure of certain markets. While working in naval intelligence, I would go to these cities, from Dubai to London, and I'd always pop into the local museum, art gallery, or auction house. I never could quite rationalize what drove the value of the objects. For whatever reason, I felt led to explore whether the market was irrational, or whether there were rational economic laws in place. So I got out of the navy and went to Oxford University, where I focused a bit on behavioral economics, partly to explore the behavior behind luxury assets like art. Today, the most interesting and fun part of the role is definitely the living-room discussions I get to have with collectors, surrounded by some of the great private art collections of our generation. It’s like being in the early 20th century and sitting among those great collections of the Morgans and the Fricks and the Huntingtons—now on display in the National Gallery, the Metropolitan, and their own respective museums. I get to see these great collections, talk about them, and understand how they were put together. I get to understand the philosophy and the biography behind each collection. And now, in this financialized age, I also get to work with the collector to unlock capital from the collection so they can do big things on the business side.



Photos courtesy of The Rachofsky House


The Collector TexasCEOMagazine.com


Howard Rachofsky


Texas CEO Magazine Q4 2020

Howard and Cindy Rachofsky live in no ordinary house. It is more “an investigation into all of the possibilities of house,” in the words of its designer, the modernist architect Richard Meier. The Rachofsky House — a three-story, 10,000-squarefoot white cube in the Preston Hollow neighborhood of Dallas — is home to one of the most celebrated collections of contemporary art in Texas. But it’s very much a work of contemporary art in its own right, wrestling with tensions between communal and intimate space and natural and constructed environments. Early in his career, Howard Rachofsky could hardly have imagined his name on such a structure, nor being the mind, along with his wife, behind the 1,300 artworks rotated throughout the house and its surrounding lawns. The son of a Dallas pawnshop owner, Rachofsky went to the Wharton School before returning to Texas for a career as a hedge fund manager. He started out with no real knowledge of art; in his time as a college student in Pennsylvania, not once did he visit the celebrated Philadelphia Museum of Art, less than two miles away. And his entrée into art collecting took place years later, when he bought a few Picasso and Matisse prints for his apartment walls. Nevertheless, a slow, inexorable fascination with fine art took hold of Rachofsky over the 1980s and 1990s — to the point that art collecting is now a full-time pursuit. In this conversation, Rachofsky explains his evolution into a top Texas art collector, the difference between collecting and accumulating, and why CEOs should care about visual arts.


The Rachofsky House

What was your first exposure to fine art? Were you exposed to a lot of art as a child? Not at all. My first exposure was relatively late in life. I just didn't have a connection or an interest. I didn't take art history in college and didn’t have any real experience with visual arts until I graduated from law school in the early 1970s. Sadly, in retrospect, I would have become a much wiser collector had I learned more earlier. Shortly after graduating law school in Austin and moving back to Dallas, I was introduced to an art dealer named Ralph Kahn who ran the Contemporary Gallery in the Quadrangle. That meeting was more serendipity than anything else, and I fell under his spell a bit. For whatever reason, it was at that point that fine art touched a nerve with me. I began going to Ralph’s gallery once every six weeks or so to buy a little something, have conversations with him. In those days, I had few financial resources and very limited knowledge, so the initial collecting was mostly contemporary and

modern master prints. I wouldn't even call myself a collector back in the seventies. I was more an accumulator of a few things to put on the walls of an apartment. I had no sense it would evolve into what it ultimately became. How did you transition from decorating and accumulating into collecting contemporary art? Through a series of random events I was introduced to a dealer named Ann Freedman in New York. Whenever I was there, I started dropping into the Knoedler Gallery, where she was director. She was really my second important point of contact in the art world, and by the early 1980s, I was becoming more and more interested. I spent most of my time working, but my diversion became going to the gallery to talk about art. I bought some really nice artworks from Ann, though interestingly enough, almost none remain in the collection today. Over four decades, taste changes. By the late 1980s, I had more resources and was collecting more. And by then I was also under the influence of two new people

— a collector from Dallas and her former college roommate, who was a substantial collector in New York. They were both gadflies of a sort who spent their time going to all sorts of art galleries, 24/7. For better or worse, they took me under their wing and dragged me around to galleries. I’d say that was my first real immersion in the art world. How did the Rachofsky House come about? I was introduced to the architect Richard Meier, a major modernist architect from New York, in the 1980s, and I commissioned him to build a house. It would be the first Richard Meier house west of the Mississippi. That house was completed in 1996. By then, I’d acquired a good deal of art, and now had a place to properly display it. In the process of working with Richard, I was introduced to a young man named Allan Schwartzman, who came recommended as an advisor, someone to help me build a true art collection. I date the beginning of my meaningful art collecting to that introduction. At the TexasCEOMagazine.com


time, Allan was primarily a writer and art historian, and I became his first formal client in 1997. He and I continue to have an active working relationship, which is frighteningly almost 25 years old at this point. Allan has really been the intellectual and spiritual guide of The Rachofsky Collection. He taught me a lot. I've gotten my degree in art history through Allan. Is there any relationship between your former career as a hedge fund manager and your interest in art? Those seem like two very different pursuits. After I graduated from law school in 1970, I came back to Dallas and quickly found that I was not a good fit for the practice of law. I had a background in securities trading, and it became pretty clear I needed to move in that direction — I was sitting in a law office spending 50 percent of my time trading stocks. For decades after that, I spent 99 percent of my time focusing on my job as a hedge fund manager and 1 percent thinking about art. But by 2003 I'd been in the securities business for three decades, and I realized


Texas CEO Magazine Q4 2020

it was time to move on from the stress and strain of that business. I was in my mid-fifties then. Because I was already immersed in collecting, I decided to do it full-time. I wouldn’t say it’s a profession, but it’s certainly beyond an avocation. Maybe it’s more accurately called an obsession or an addiction. Nonetheless, to this day most of my time is spent on developing the collection and exploring the arena of art. What led you to focus on contemporary art specifically? I’m drawn to the relevance and intellectual side of contemporary art. It’s not just beautiful pictures. Some of it is abstract; some of it contains narrative and deals with ideas. Contemporary art challenges your notions of what is interesting or valuable in art, and you begin to develop a vocabulary around how to describe that. I found that really energizing and fun from the beginning. Then, working with Allan catalyzed it into something more substantial. One of the interesting phenomena in the world of contemporary art collecting

is that it can become more like trophy hunting than what I call true collecting — especially when you have a type-A person and unlimited resources. True collecting isn’t just picking up a single painting by Gerhard Richter or Andy Warhol or Mark Rothko or another high-profile name. True collectors find as much interest in works of modest scale and expense when those works fit a larger narrative or style or theme. You can put trophies on the wall, but that doesn't necessarily make you a collector. People are, of course, still making those high-dollar purchases. There are two ways to measure art: by aesthetic value and by dollars and cents. When a collector spends $50 million or $100 million on a work of art, that's news. It’s not necessarily the wisest decision, but if you have unlimited resources, which a lot of the bigger collectors do, those purchases are interesting opportunities. Of course, that’s just the very top in terms of wealth, the top one-tenth of the top one-tenth of the 1 percent — a few hundred people around the world, vying for the top spot.

Feature But the art world is a much bigger place than that. Museums have become better at putting on programming that encourages modest collectors to get started. That permeates through society. You also see social movements influencing the art world, much as they influence politics and popular culture. In the past five or so years, we’ve seen the feminist and Black Lives Matter movements surface in the art world in a very powerful way. Visual culture is deeply connected to what’s going on in our society.


How have you seen the art scene in Texas evolve over the years? When I started out, I didn't know a lot of the players. But as I became more involved I developed a respect for the formidable people who built meaningful collections in Texas. There are three or four who are the lions of that. There’s John and Dominique de Menil of the Menil Collection in Houston, which was very avant-garde — and still feels that way. There's Anne Marion, a great collector from Fort Worth, who passed away recently. She was really the spirit behind the Modern Art Museum of Fort Worth. And then there's Ray and Patsy Nasher, who were great collectors of sculpture in Dallas. I had the pleasure of knowing Ray for the last 15 or 20 years of his life as I became more engaged.

What advice do you have for art collectors who are just beginning their journey? They can certainly get started a lot quicker and smarter than I did. It’s hard in the world at the current moment, but you need to go look at this stuff in person and see what inspires you — be it color, be it form, be it figurative art, be it abstract art. I’m a firm believer that you need to be in the physical presence of the work to get the full benefit. Museums, of course, are great resources for getting that experience. I encourage people to make museums part of any travel experience. Private collectors tend to still be very private and don’t want you to know what they have, but museums are a great repository of work available to the public. As you see different exhibitions, you develop your own preferences and judgments. That’s the first step.

These are the sorts of people who influenced me at the time. The Texas scene was relatively isolated back then, and still is, relative to places like LA and New York and London and Paris. It's also still relatively modest in terms of scale, but there are more museums and more collections and more people interested in them. When I started getting engaged in art, you could have measured the contemporary art world by a thousand people — not very many in a planet of billions. Over time, millions more have become engaged, and I think Texas mirrors that. I don't think the Texas art scene is unique in the sense that we’re doing things others aren’t, but Texas is now becoming more part of the global art scene, even if, as I mentioned, we’re still somewhat isolated.

If you find you do want to engage in collecting, you can begin with works of modest scale and expense, subject to your budget. If you decide to really immerse yourself, it’s wise to get professional advisory help just like you would from an attorney or an accountant. An art advisor can narrow your focus and help you get your arms around what inspires and interests you. You don't have to wander in the darkness for 20 years like I did. Luckily for us, Texas has some very good museums. Do you have a favorite? I know you’re supposed to say, as my aunt used to say about her nephews and nieces, “My favorite is the one I’m with at the moment.” But I have to say the Dallas Museum of Art. I'm a past trustee there, and I'm close to the people there. I'm also

a big fan of the Nasher; it's a marvelous boutique. The Menil Collection in Houston is one of my favorite institutions, as is Dia Art Foundation in New York; I serve on the board there. Dia’s museum in Beacon, New York, is the ultimate in museum experiences. The aesthetic and the setting are so marvelous. The Fort Worth museums are great too, of course. The Kimbell is a jewel box of great historical work. The Modern [Art Museum of Fort Worth] and the Amon Carter Museum [of American Art] are wonderful places as well. We have plenty of museums around the state where you can immerse yourself in the visual arts. Wherever you happen to be, go in and take a look — once they reopen, that is. You’re a client of the art services division at Bank of America. What has that experience been like? I'm grateful for the experience. They do a crackerjack job. The financing services specifically have allowed me the flexibility to buy and sell works and build out a collection that has its own personality. At the end of the day, that’s what most collectors want. They want their collection not only to reflect what's happening at a particular point in time, but also their own personalities and instincts and desires and expectations. The art services portion of banking has matured into a very refined way to get counsel and financing for engagement in the art world. Anything else you’d like to say to Texas CEOs? I’d just like to point out that visual culture is important, even from a business and corporate perspective. I think that’s good for CEOs to keep in mind. Visual culture may not seem like it's as important as supporting other causes — and I certainly don’t want to belittle those causes — but supporting culture is part of being a good citizen of the community. That’s encompassed in the CEO’s job, along with making money for shareholders and providing employment to your workforce. There are many ways to support local cultural institutions, and when you do so, you’re supporting the very evolution of civilization. TexasCEOMagazine.com



h g o G n a Vincent V Ebonique Boyd

Today, the works of Vincent Van Gogh regularly sell for tens of millions of dollars at auction. But do you know the price of a Van Gogh painting while he was alive? Van Gogh sold just one painting in his lifetime. The Red Vineyard, painted in 1888, earned him 400 francs (about $12,000 USD in 2020). That work was bought by Anna Boch, an heiress and fellow artist who assembled one of the most important collections of Impressionist painting in Europe at the time, housed primarily in her Brussels home. As a collector, Anna Boch was ahead of the curve. Though Van Gogh would die in relative obscurity, she recognized his genius early on, not only purchasing The Red Vineyard but actively promoting his work as well. Broadly, the other paintings Boch chose for her collection also increased in prestige as time passed, now hanging in some of the most prestigious museums in the world, including the Royal Museums of Fine Arts of Belgium, the Musée d’Orsay in Paris, and the Pushkin Museum in Moscow (the current home of The Red Vineyard). If you are starting or expanding your fine art collection, it’s critical to be able, like Anna Boch, to identify the contemporary artists who are destined to become their generation’s Van Gogh. And to do that, you will need to develop what has been called your “aesthetic quotient” (AQ) — the ability to appreciate and evaluate visual art of all types. 64

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Developing AQ is something anyone can do, even if you don’t have a background in fine art, and even if you don’t have a huge budget. Once you’ve refined your AQ, you can begin to build an excellent collection and separate yourself from those who buy merely for decoration or status-seeking. If you are early in your journey as a collector, here are some ways to get started.

THE FIRST STEP IS LEARNING The first step in collecting art is not buying but learning. Anna Boch developed her AQ by studying directly under some of the most renowned European artists of her time. But it’s not a requirement to learn to create art yourself. Simply visiting museums and galleries in your area, talking to gallerists and fellow collectors, and reading widely about contemporary art will give you the groundwork needed to select pieces for your collection by great up-and-coming artists.




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DEVELOP YOUR VISION Every successful collector, from Paul Mellon to Herbert and Dorothy Vogel, has a unique, cohesive vision for the art they seek out, often rooted in a certain period or style. As you learn more about contemporary art, pay attention to what moves you personally — and what doesn’t. The more art you experience in person, the more you will be able to discern which pieces fit your growing vision of a collection and which emerging artists are making art that fits that vision.

BECOME A FAN—AND PROMOTER Contemporary collectors often become artists’ biggest fans. The Vogels, for example, have been known to keep files of articles, reviews, announcements, and letters related to the artists they bought. A collector attempting to create a quality collection should feel comfortable doing similarly, and understand that the investment in fine art goes much further than the buy itself. When attempting to identify a contemporary artist whose work may stand the test of the time, learn about who the artist’s current advocates are. And once you have purchased your first few pieces, be willing to become the artist’s most prominent advocate yourself. By actively promoting the artists you collect, you can contribute to how future collectors and art appreciators see their work. Van Gogh’s current legacy, for example, is owed to the people who were uniquely passionate about sharing his work. That includes Anna Boch and, most notably, his sister-in-law, Johanna Bonger, who organized exhibitions of his work with prominent art dealers during his life and published his letters after his death. These actions helped propel him to his current level of fame.

UNDERSTAND YOUR ROLE AS A COMMUNITY STANDARD BEARER Finally, as you seek out the next great artist for your collection, remember that collecting art isn’t just for you — it ultimately benefits the whole community. The best collectors are on a mission to enrich the lives and develop the AQ of the people around them. One such example is noted art patron and collector Robert Gilmor Jr. of Baltimore (1774–1848), who explicitly stated his aim of encouraging others to appreciate fine art. In a letter, Gilmor said that his collection aimed to stimulate “my countrymen to cultivate a taste for the Fine Arts.” He is one of several collectors of his time who set out with a clear ambition to educate the American masses on fine art. • • • To have a chance at selecting a piece by your generation’s Vincent Van Gogh, you’ll need to develop your AQ, do your research, and have a strong desire to promote and share the work you bought. When you do that, you will at the very least have a collection you are entirely happy with — and you may even find that you have a painting by the next Van Gogh sitting above your mantelpiece. Ebonique Boyd is the founder and CEO of Budget Collector, a company dedicated to helping the middle class invest in fine art. The company is set to release the first artificial intelligence mobile art advisor by October 2020. To learn more, go to budgetcollector.org. Credit: “The Red Vineyard" by George M. Groutas is licensed with CC BY 2.0. To view a copy of this license, visit https://creativecommons.org/licenses/by/2.0/


Credit: “File:Anna Boch 010.JPG" by JoJan is licensed with CC BY 3.0. To view a copy of this license, visit https://creativecommons.org/licenses/by/3.0







It May Not Be What You Think Ilana Zivkovich

As a founder, CEO, and executive coach, I work with leaders every day. Every single one of them has something in common: They want to create a high-performing team. There are lots of ways to go about accomplishing this, but in my experience, one factor rises above all others. No, it isn’t how thorough their strategic planning has been, or which project management methodology they select, or even how “talented” each individual team member is in their respective role. These factors are all important, but the one that surmounts them all, the glue that makes all of the other performance improvements both possible and sustainable? It’s the degree of psychological safety on the team. According to Amy Edmondson, a Harvard Business School professor and leading expert in psychological safety, and Zhike Lei, the term “describes perceptions of the consequences of taking interpersonal risks in a particular context such as a workplace.”1 It’s the culture and environment that either allows, supports, and creates open sharing of ideas and positive risk taking within a team, or pushes them away. “Team psychological safety involves but goes beyond interpersonal trust,” writes Edmondson. “It describes a team climate characterized by interpersonal trust and mutual respect in which people are comfortable being themselves.”2

That sounds like a nice idea, but does it actually affect team performance? To answer that question, we can turn to the biggest data company we all know and use on a daily basis: Google. Several years ago, Google created Project Aristotle, a two-year study of over 180 teams, to learn what makes some excel—and others struggle. Google found that psychological safety was one of the five dynamics that separated high-performing teams within the company from the rest. In fact, in ranking these five dynamics, Project Aristotle researchers ultimately determined that psychological safety was the most foundational. Simply put, without psychological safety, your team will not perform at its highest capacity. Think for a moment about your current team, or about past teams you’ve been a part of. Would you feel comfortable making a mistake in front of your colleagues? What about raising a new or controversial idea? How comfortable are people asking questions about topics they don’t understand? How does the team handle conflict between individuals? How likely are teammates to support each other, help each other out, or receive feedback from each other? In an environment where there is a low level of psychological safety, people often worry they could be punished, ostracized, or embarrassed. This (often subconscious) fear and distrust exists around commonly agreed “failure points” such as making a mistake, as well as around more nuanced examples of vulnerability, such as sharing new ideas, asking difficult questions, and disagreeing with a teammate. Psychologically safe teams foster a shared sense of confidence that empowers people to take risks and tackle challenges knowing there is room to learn and grow, even if that process involves failure. This creates the growth that is pivotal to a team's — and a business’s — sustained success. TexasCEOMagazine.com


As a leader, you can help create the psychological safety that drives highperforming teams. It starts with demonstrating and encouraging the behaviors you wish to see. Here are three simple ways you can display psychological safety and thereby fuel performance on your team.

1. ENGAGE IN HEALTHY CONFLICT. The best decisions are not made by a team of yes-people. Agreeing for the sake of harmony rarely results in the type of critical thinking and problem solving that will ultimately serve your business best. Role-model and reward professional, solution-focused disagreements. No fighting, no personal attacks. Listen for the wisdom in the views of the opposing side and incorporate that wisdom into eventual solutions. Check your ego and the natural defensiveness it creates, and be truly curious about other viewpoints. Don’t be afraid to be controversial, as long as you remain respectful and focused on the solution. Leaning into conflict in a healthy manner encourages team members to speak up, challenge themselves and each other, and ultimately co-create solutions that stick.

2. BUILD TRUST. Without trust, your team won’t feel safe. Research shows that trust is earned through small acts of reliability and kindness over time. “Small acts” include things like remembering the names of your colleagues’ spouses and kids, asking about how a vacation went (and actually listening when the person tells you about how wonderful it was), and grabbing an extra chair when the last entrant to a meeting finds him- or herself without a place to sit. On top of these “small acts,” work on exhibiting consistency, collaboration, and respect. As you do, the trust quotient on your team (and the performance it allows) will skyrocket. 3. LEADER, KNOW THYSELF. Self-awareness is a primary building block of psychological safety. Unless you understand how your character shows up in your work style — including how you react when colleagues and employees show vulnerability — you’re unlikely to lead a team that feels secure around each other. Stay in tune with your natural reactions as they arise. When a situation becomes escalated, remember to respond rather than react. *** The benefits of psychological safety are clear: Teams are happier, more creative, and ultimately more effective in their efforts when they feel safe around each other. The results-focused leader recognizes this, and develops a healthy conflict style, builds trust, and practices selfawareness. The added bonus? Committing to psychological safety not only grows the performance of your team — it gives you, the leader, a more secure and fulfilling experience at work as well. Ilana Zivkovich is the founder and CEO of Werq, an executive and team performance coaching firm headquartered in Austin, Texas. An experienced executive leader and Certified Executive Coach, Zivkovich and her team help leaders align their people, processes, and strategy so that businesses can achieve exceptional results. Along with being a Certified Executive Coach, Ilana holds a master’s degree in social work from the University of Texas at Austin and serves on multiple nonprofit boards and councils. 1 Amy C. Edmondson and Zhike Lei, “Psychological Safety: The History, Renaissance, and Future of an Interpersonal Construct,” Annual Review of Organizational Psychology and Organizational Behavior, Vol. 1:23-43 (March 2014). 2 Amy C. Edmondson, “Psychological Safety and Learning Behavior in Work Teams,” Administrative Science Quarterly, Vol. 44, No. 2 (June 1999).




featuring Dr. Bernard L. Weinstein ABOUT THIS EVENT

Texas CEO Magazine is focused on bringing you information and insights that are useful to you as an executive leader in Texas. In Q4, our featured forecasting expert is Dr. Bernard L. Weinstein, an economist and top expert on energy markets in Texas. He will be speaking on how COVID-19 and related challenges have impacted energy markets and will share his thoughts on what we can expect in the coming months. Dr. Weinstein is the associate director of the Maguire Energy Institute at Southern Methodist University’s Cox School of Business, where he is also an adjunct professor of Business Economics. From 1989 to 2009, he was director of the Center for Economic Development and Research at the University of North Texas, where he is now an Emeritus Professor of Applied Economics.


Tue, November 10, 2020 NOON – 1:00 PM CST


URL will be sent to ticket holders.

Dr. Weinstein earned his PhD in economics from Columbia University in 1973. He’s spent his career teaching economics, working for government agencies such as the Federal Trade Commission, doing research for organizations such as the Tax Foundation in Washington, DC, and consulting for major companies ranging from AT&T to the American Petroleum Institute. He’s written many books, monographs, and articles, and had opinion pieces published in publications such as the New York Times, the Wall Street Journal, and more. We are pleased to feature Dr. Weinstein as our speaker for our online economic forecasting event in Q4, and we hope you’ll join us to hear his insights. Tickets to this event are free, thanks to our generous sponsor: Texas Mutual Insurance Company.



A Global Forecasting Session with Dr. George Friedman SPONSORED BY

“This is a wonderful time to be talking about the future,” said international strategist Dr. George Friedman, “because the present ain’t that great.” This statement kicked off Dr. Friedman’s online forecasting session with Texas CEO Magazine on September 29, 2020. Over the following hour, he discussed the tumultuous times we find ourselves in—and what may lie ahead. If you’ve read Dr. Friedman’s books, including his latest, The Storm Before the Calm, you know that he takes a unique, cyclical view of United States history. Dr. Friedman describes two primary cycles that have been operating since the country’s founding: The first is the institutional cycle, which sees major revisions to the structural institutions of the country every 80 years, from the founding to the Civil War to WWII to now. The second is the socioeconomic cycle: 10 years of chaos every 50 years, spurred by new technologies and economic structures. And what’s special about 2020 is that, for the first time ever, we’re entering a time where the crux of each of these cycles is occurring simultaneously. 70

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PAST 2020 What does the institutional (80 year) cycle look like today? For Dr. Friedman, today's institutional changes center on the problem of expertise. In the decades after WWII, experts rose to prominence, developing ingenious solutions to increasingly specialized problems. But with every advance we made, these experts became more siloed, working in isolation on more and more complex issues. This resulted in a growing web of knowledge and rules that eventually began to override common sense. “The experts cannot anticipate the problems

that citizens have,” said Dr. Friedman. That is echoed in governmental structures, which have become unmanageable precisely because they lack a layer of common sense. Said Dr. Friedman: “The experts don’t know how to work with each other, so we get 15,000 pages of regulations on healthcare. . . . This is a crisis.” Dr. Friedman noted that the institutional crisis is usually solved with war: Revolutionary, Civil, World War II. But today, “we’re not having a war—we just don’t know how to be the world’s leading power.” What about the socioeconomic (50 year) cycle that’s also coming to a head in the 2020s? For Dr. Friedman, it manifests itself in a crisis of innovation. The microchip, now 50 years old, has matured. New developments around it are incremental, not the breakthroughs we saw before. Something new has to come along now, said Dr. Friedman, and it probably will. But right now, the socioeconomic situation has “become unsustainable, and therefore we’re having social unrest”—including around race, which Dr. Friedman described as the “original sin of the United States.” COVID is certainly an exacerbating issue, said Friedman, but assuming we get it controlled within a year, it will likely be just another hurdle we jumped, like so many others. Throughout the session, Dr. Friedman had plenty of other bits of wisdom to share:

ON COVID’S IMPACT ON UNIVERSITIES: “The university will collapse. It’s untenable. The universities are living on cash flow, and there isn’t going

to be cash flowing. We’re going to transform our entire education system. We were going to do it anyway, but certainly COVID did speed it up.”

ON EMERGING TECHNOLOGIES “The best investments look the most preposterous. Technology is driven by society’s needs. When we started to build factories in cities, we had to be able to work in those cities nights; so electricity was implemented by Edison. When we got the automobile, we had to change land-use patterns and build the suburbs. When data had to be organized, the microchip did that. What’s the problem now? The basic problem is demographic: We’re living longer and longer, and Millennials are having fewer and fewer babies. In about 20 years, people over the age of 70 will outnumber those below the age of 40. . . . Where do I think the investment will be? In all sorts of medicine that we’re not thinking about now.”

ON THE STATE OF THE ENERGY INDUSTRY IN TEXAS: “Texans have learned to deal with the boom and bust. One of the things to look at is diversifying in minerals off of oil. The world will always need minerals. Texas, I suspect, is full of minerals, and it would be nice not to have Houston wide open to decline in oil prices.”

ON WHY HE MOVED TO TEXAS 20 YEARS AGO: “When I moved here, I picked Texas for a reason. It was wide open, it was informal, it was the place to be. Coming to Texas was a no-brainer for me, and I’ve never regretted it for a day.” TexasCEOMagazine.com



La Azteca’s “Frida Earrings”

After two years of studying Industrial Technology at what is now Northern Arizona University in the early 1960s, David Busey decided it was time to go out and see the world. “I spent a couple of years in Australia, and later, in the early seventies, traveled down the coast of Southeast Asia to Bali, where I developed a strong interest in antiquities and sculptural art,” says Busey. “Later, after a couple months in the Greek islands, I decided to settle in Switzerland and apprentice as a goldsmith and jewelry designer, a trade that I practiced there for several years.” In the mid-1970s, Busey returned to the United States and opened his first jewelry shop at the Kona Village Resort, an exclusive hideaway on the Big Island coast of Hawaii. He later built and opened up “Connoisseur’s Gallery,” showcasing his jewelry work for the grand opening of the Mauna Lani Bay resort, in addition to creating custom 1st place awards—crafted from 18-karat gold—for the Invitational and Pro-Am golf tournaments at the nearby Mauna Kea Beach Hotel. Busey’s last hotel shop, El Dorado Gold, was at the Eldorado Hotel in Santa Fe, New Mexico; he designed and built the shop for the hotel’s grand opening in 1986.

“Since I was born in New Mexico, it felt like home after my international travels. I was fascinated by the First Nation silver design motif, and showcased some of the area’s top artists’ work in my shop. It was also at that time that a close friend, photographer Brett Weston, introduced me to the legend of Frida Kahlo, whom he had met during his youth in Mexico City, along with her husband, Diego Rivera. I had no idea at that time that Frida would become a global fashion icon. I soon became fascinated with her jewelry collection, which inspired my own design interpretations.” When David and his wife, Susana, looked at starting a family, they wanted a smalltown environment in which to raise their children. So, they moved to the West Texas town of Alpine, where David’s mother was born and where his aunt, Hallie Stillwell, was a ranching icon and Great Dame of Texas. Nestled in downtown Alpine, David and Susana’s fine jewelry shop, La Azteca, has an inviting atmosphere that reflects the visual romance of old Mexico, as well as Santa Fe at its classical best. At La Azteca, the Buseys sell high-quality vintage Mexican silver pieces along with original silver designs, including a selection of “Frida” earrings, which have become the shop’s specialty. “Our handmade sterling silver chandelier earrings in the Spanish Colonial style are often referred to as ‘Frida’ earrings,” says Busey, “because they are associated with Kahlo’s artistry and style. She collected vintage antique earrings from a village in Oaxaca that were originally made by silversmiths and goldsmiths brought over from Spain. They were made of fine wire construction (filigrana), beads, and hand-forged repoussé figures of birds, fish, and other animals.” “Today, fashion and art coexist,” says Busey. Nowhere is that more apparent than in the displays of La Azteca, which today offers a selection of jewelry reflecting Busey’s distinct vision and influences—from Frida to antique sculpture and beyond. Visit laaztecajewels.com to see more of David Busey’s designs. Those who wish to acquire unique, collectible pieces of wearable art are invited to call the store directly at (432) 837-1882. David will help each customer find just the right items.


WILL WE BE WHEN TEXAS TURNS 200? Texas 2036 is taking a data-driven approach to ensuring the state’s future prosperity Texas 2036 board members

In our previous issue (“Rebooting the Texas Economy”), expert after expert conveyed optimism for Texas’ post-COVID economic rebound. Our underlying strengths as a state — from tax code to regulatory environment to workforce — remain intact. Even in the midst of a global pandemic, economic developers report that many businesses are looking to relocate headquarters to the Lone Star State. But if you ask Tom Luce, Texans would be wise to keep a close eye on our state’s future as we approach its 200th birthday, in 2036. Luce — a former lawyer and 74

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a civic leader with five gubernatorial appointments under his belt — sees a few red flags on the horizon. For one, by the Texas bicentennial in 2036, we’ll add 10 million more Texans to our current population of 29 million. And that’s going to require 8 million more jobs to keep pace — that’s like adding the equivalent of the total number of jobs in the DFW and Houston metro areas in just 16 years. At the same time, 71 percent of jobs are expected to require some higher education by 2036, though only 28 percent of eighth graders today complete a postsecondary degree or certificate within six years of

graduation. Other warning signs about Texas’ future range from our poor health outcomes to highway gridlock to low broadband access in rural areas. Clearly, our impending growth comes packaged with opportunities and challenges. Luce argues that staying ahead of this curve will be vital to Texas’ future. Hence his latest venture, Texas 2036, a nonpartisan nonprofit with a mission to offer data and research to the business, political, and community leaders who are shaping the state’s future. Led by former US Secretary of Education


Margaret Spellings, Texas 2036 has already compiled an impressive clearinghouse of data sets at Texas2036. org. It’s both a playground for data nerds — with interactive maps and dashboards galore — and a rich source of insight. One example: Texas 2036’s COVID-19 Dashboard, which captures and presents health and economic data — including hospital capacity, unemployment information, CARES Act funding, mobility information, consumer spending data, and more — for the state and hundreds of individual counties. For Texas CEOs, knowledge is power. That includes understanding the fundamental issues that face our state, and knowing where we’re excelling and where improvement is needed. Here’s a sample of data points from Texas 2036 — each of which may impact your business’s future, and many of which should influence your decision making today. For much more, visit Texas2036.org.



One of Texas’ greatest assets is our large and diverse population. Today, Hispanic, Black, and Asian Texans represent a majority of our state’s population — and by 2036, they will constitute nearly two-thirds of all Texans.

In 2020, workers who had earned a college degree were twice as likely to retain or find a job during the pandemic. However, Texas’ future workforce is not set up for success — only one-third of Texas high school graduates earn a college degree or credential within six years of high school. But 71 percent of jobs are expected to require one by 2036.

AGE Texas is becoming both older and younger: 40 percent of our state’s population in 2036 is expected to be over 65 or under 18, which will drive health and education costs.

IMMIGRATION Nearly half of the state’s workers are nonnative Texans, which shows how important domestic and international migration have been to our economy.

POPULATION GROWTH More than 29 million people live in Texas today. By 2036, when Texas turns 200, nearly 10 million more Texans will call our state home, increasing the population of urban areas by 33 percent.


READING PROFICIENCY Since 2007, Texas has fallen from 33rd among states in 4th grade reading proficiency to 45th. Fewer than one-third of Texas fourth graders read on grade level.




Tom Luce and Margaret Spellings



Last year, Texas had more than 14 million workers. By 2036, we’ll need to add nearly 8 million more jobs, or the equivalent of the Dallas and Houston economies, to keep Texas’ economy growing and support our population growth.

More than 1 million Texans — most living in rural areas — lack access to necessary broadband infrastructure to support remote learning, telemedicine, and e-commerce. The lack of broadband connectivity in rural Texas creates an estimated loss of $6.2 billion in potential annual sales and 22,000 potential jobs.

HEALTHCARE SPENDING Public and private healthcare spending in Texas has increased 4 percent annually over 10 years. However, health outcomes in Texas are among the worst in the nation in areas like diabetes, cardiovascular deaths, maternal mortality, and infectious diseases.

HEALTHCARE ACCESS Texas has the nation’s highest overall uninsured rate for adults and children. And even health insurance doesn’t ensure access to care: 63 Texas counties do not have a hospital, and 35 counties do not have even a primary care physician. 76

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ANALYTIC CAPABILITY State agencies don’t have the tools or personnel to properly use data to serve taxpayers, solve problems, and save the state money. Fewer than 20 percent of state agencies report significant progress in areas like data analytics, data management, and data governance. During the pandemic, this lack of data infrastructure has forced the state to rely on fax machines and outdated systems, slowing public health information, while call centers have crashed as millions of Texans requested unemployment checks.







4 DEAL STORIES What Potential Buyers of Your Business Are Looking For Joel Trammell

In the career of a business owner or CEO, exiting a company is a major event. I know this because, over 30 years of serving as CEO of both public and private companies, I have been involved in eight of these transactions. Each was its own journey. Part of that journey is ensuring that you get maximum value for the business. To do that, you must understand exactly what buyers are looking for when they evaluate a business for acquisition. At its core, every deal is a story about the acquirer’s future. When you present a deal to someone, you are telling them how your business will allow them to grow and how they will earn a return on the cost of purchase.

THE 4 DEAL STORIES: WHAT BUYERS LOOK FOR If every deal is a story, we can point to four types of stories that resonate particularly well with buyers. To get maximum value for your business in a sale, you must understand these stories and how they relate to your own business. Once you understand them, you will be able to build a unique vision of the buyer’s future as an owner of your business.

HIGH GROWTH Every stakeholder wants to see growth in a company, and that includes potential acquirers. If you can show that your company is gaining customers and revenue fast, you will catch the attention of buyers. TexasCEOMagazine.com


Though high growth is the hook of this story, it is not the whole plot. The high-growth story should also take into account operating margin. For example, growth is often easiest in early-stage companies, where you may see growth rates of 100 percent or more—but those companies are often losing money, meaning they have a negative operating margin. As companies mature, their growth rate typically decreases as their operating margin increases. You want to strike a balance between these two. Wall Street types have developed a tool to help with this, the Rule of 40. This rule states that if you take your annual growth rate, add it to your operating margin, and arrive at a number higher than 40 percent, then you have a highly valuable business. Be prepared for potential buyers to do this calculation as they evaluate your high-growth story. If we apply the Rule of 40 to a mature organization that is growing at 50 percent annually but is just breaking even, we see that this is still a valuable business. On the other hand, if your business is not growing at all, you will need very high operating margins for a buyer to give you a high valuation.

PREDICTABLE REVENUE The second deal story you might lead with is predictable revenue. Typically, the more predictable revenue is, the higher the value ascribed to it. In the software world, potential buyers love to see recurring monthly payments because of how predictable that revenue appears to be. However, as with the high-growth story, there is another factor to consider in this one: Just because a customer pays your company on a monthly basis doesn't necessarily mean that they are going to continue to pay your company in the future. This means you must also look at churn—the number of customers dropping off each month or year. For example, a newspaper may have a recurring monthly subscription model, but it may also not be very valuable if the number of subscribers decreases every month. In telling a predictable-revenue deal story, you want to look for recurring revenue that is “sticky.” What are recurring sources of revenue that people are unlikely to switch off, whether because there is no other option to your product or service, because the cost of other providers is so much higher, or because the pain of switching is too great? Salesforce.com is famous for being in this position. Once a company is tracking all of its deals in Salesforce, it is very difficult for them to switch to another CRM provider. Thus, Salesforce has the type of sticky revenue that makes for a good deal story. If your model is not subscription-based, you may want to look for ways to make your revenue more predictable. Is there 78

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a maintenance option you can put in place on a recurring basis, for example? Anything that drives more predictability in your revenue will increase the value of your business.

DIVERSIFIED RISK The third type of deal story buyers are looking for is diversified risk. They want to see that your company is diversified—that it does not hinge on one eventuality that could cause major trouble. There are typically two types of risk that buyers want to see diversified: risk around (1) customers and (2) key employees. What does this look like on the customer side? Typically, buyers would love to see no single customer representing more than 5 or 10 percent of your business. If more than 25 percent of your revenue is coming from a single customer, buyers will typically begin to be concerned. When you get to one customer representing 50 percent of your revenue, the situation becomes a red flag for buyers. You can also look at customer diversification from an industry perspective. Buyers will be pleased if they see your revenue coming from a wide range of sectors. That way, if the oil and gas industry takes a hit, for example, your business is still OK, because a relatively small portion of your income comes from there. On the other hand, if most of your revenue is dependent on government spending (which is notably unpredictable) this will be considered a significant risk by buyers. On the employee side, buyers want to see that there is no key employee or set of key employees that the business could not do without. This might be employees who created the intellectual property or who have roles that would be very hard to fill; should they leave or have something happen to them, the business would lose a great deal of value.

SIZE The final deal story is about size. Generally, bigger is better. Bigger organizations have more value. If you're at less than $1 million in revenue, that will likely be a concern for buyers. From an institutional perspective, there are a lot more buyers for a $10 million business than for a $1 million business. That means that consolidating with your competitors and building up a bigger presence does more than increase the absolute profit of your business. It also increases the valuation you may obtain once you sell the business. • • • In constructing your own deal story, consider these four stories. Which one fits your business best? How can you tell that story in the most compelling way? And how can you weave in the other sub-stories to ensure that buyers remain interested? Making this effort on the front end greatly increases your chances of getting maximum value for the business you worked so hard to build.







Each week on Ask a CEO, we explore a challenge of one of the least understood jobs in business—that of the CEO. Some topics we’ve covered: • THE CEO AS CHIEF STORYTELLER • VULNERABILITY AND THE CEO • ARE PERSONALITY ASSESSMENTS WORTHWHILE? • THE TRICKY ART OF CHANGE MANAGEMENT

Do you have a topic you’d like to hear discussed? Or a question about an issue you’re facing? Let us know at ask@texasceomagazine.com. SUBSCRIBE NOW on Apple Podcasts or Google Podcasts.





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Tom Nolan, President at Kendra Scott, Interviewed by YTexas CEO Ed Curtis

When the pandemic first hit, it was clear to me that some businesses— the ones that were succeeding—had either prepared for this scenario or quickly found a way to adapt to it. As businesses owners, we are always curious as to how and why some get there, while others do not. When I was asked to interview a leader at a company that has risen to the top during this crisis, I didn't need to look too far. If you were like me, you were searching for the industry leaders whose example we could follow through the COVID pandemic. Companies like H-E-B and Amazon were prepared—Amazon with a business model that feeds on the need for on-demand delivery, H-E-B with an extremely efficient supply chain ready to handle a crisis like this. Others, like retail operations, were not afforded a business model nor a supply chain model that could change on a dime. However, there were outliers in the retail space who found a way to adapt and overcome. One of those happened to be Kendra Scott. During the early days of the pandemic, I would always see them in the headlines. Whether it was their curbside service or their commitment to philanthropy, it seemed as if they had planned for this. Well, yes and no. While they had long been looking at supply chain efficiency and online experiences for customers, the pandemic was a surprise to them, just like the rest of us. At the end of the day, Kendra Scott’s success came down to one simple thing: culture. When they had to rally the troops, everyone marched in line. Were they prepared operationally? Yes. Were they investing in future technology? Yes. But what stood out to me in this interview with Kendra Scott president Tom Nolan is that their culture, and loyal customers, are what made it look easy. —Ed Curtis 82

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Let’s start with how Kendra Scott as a team and brand has weathered the pandemic. Things seem to be going well. What do you credit that to? Our business has reacted remarkably well through this, to the level of being something of an outlier. I’m very proud of that. I would say that two primary aspects of our organization have aided us. The first is our intense focus on the customer. The customer is our boss, and she drives every decision we make. One of the big obstacles, and priorities, of this pandemic has been preserving the customer experience and maintaining high customer engagement. That will continue to be a priority as we come out of it. I have never been a part of a company — as a board member or an operator or an employee or a customer — that has the connection we have with our customers. It’s unlike anything I’ve ever seen before. It is multigenerational, it’s rooted in our pillars of family, fashion, and philanthropy, and it’s part of our connection with local communities. Some brands say they prioritize the customer but they don’t act that way. We say it and then we do it. Customer expectations are a hell of a lot higher now than ever before, but I think this time is a great opportunity for brands to grow their connection to customers. Kendra Scott customers have certainly pointed the way for our brand as we dealt with the challenges of this year. The other factor that’s helped through 2020 is our speed. Kendra and I both move fast, and so does the organization. We’ve been unafraid to make swift decisions, and that’s served us well. For example, we caught supply chain issues coming out of Asia on the early side of things. Months before the pandemic got here, we were talking to our suppliers to make sure we had options in case things got messy. Jumping on that fast put us in a really good place on the supply chain. We started having conversations about diversifying our supplier network at the turn of 2020. Speed is important to our supply chain too. The faster we can get product turned around, the better. In our business, you have hits — an earring or a necklace or a bracelet that catches fire, so to speak, with customers. Suddenly, everyone wants it. The ability to get back into those products faster at a strong margin is critical. That’s where our discussions in early 2020 were. Then, as we saw the pandemic starting, the discussions evolved into talking about diversification of country origin. I like the saying that Noah built the Ark before it started raining. We followed the news and stayed prepared. When we look back on this time, we’ll see that there were a lot of winners and a lot of losers. I think we’ll see that the companies,

big or small, who were fast and agile and who stayed close to their customers — they are ultimately going to be the winners. Those two tenets helped us navigate this crisis really, really well. We let the pandemic galvanize us. When something unexpected like that happens, you have two ways to react: You can run and hide from it, or you can meet it head-on. When you meet it headon, the experience really pulls a team together in a way that is unlike being pulled together during good times. Even though we’re unable to be together, I haven’t felt more connected to our team and customers and the business than I do right now. Since the pandemic began, have you moved any manufacturing back home, to Texas or the United States? We are exploring that, and were even before this happened. It brings the supply chain closer to you, and it’s faster. The labor is more expensive, but because we’re in the fashion industry, we want to make sure we’re delivering relevant, timely, affordable products. I think there are places in Texas that have the capacity to do what we do — we just want to make sure it’s at the quality level we expect. We’ve been vetting it for a while, but COVID has accelerated that. We can’t easily get on a plane, but we can easily drive to a factory in our state. What did the first weeks of the pandemic hitting the United States look like in Kendra Scott stores? We definitely got ahead of COVID-19 on the retail side of things as well. First and foremost, we wanted to ensure the safety of our customers and employees. We moved quickly on delivering the customer experience via virtual and augmented reality on the website. We also set up touchless payment and branded floor decals to help people socially distance. We had BOPIS — that stands for Buy Online, Pickup In Store, or curbside — on the horizon for summer 2021,

but we pulled that forward. It’s that speed and agility I mentioned. On curbside, we went from strategy to implementation in all our 108 stores in less than two weeks. Once it went live, we turned all our retail stores into distribution centers. Were measures like turning stores into distribution centers something you decided on the fly, or was that a contingency plan you had in place before COVID? H-E-B, for example, will tell you that they had many of the protocols they executed in place before COVID. We didn’t have many of those things in place before we started executing them, but some of it was in line with our strategic plan on the horizon. We had already identified the technology partners we were going to utilize to do it. It was just a matter of bandwidth allocation. What were some of those technology partners? We just implemented a new POS system on Oracle and we use Manhattan to help us out with curbside pickup and shipping from stores. We’ve got a great technology team and a great retail team, and they made our Ship from Store program, the precursor to curbside pickup, a priority. We literally got it done in nine days from start to finish across our full network. It was a feat. But we knew it was critical, and a lot of that has to do, again, with the customer being the center of our universe. Even before COVID, people’s buying behaviors were changing. My daughters buy things and interact with brands very differently than I do. We’ve been thinking about those changing habits for a long time, because again, the customer is our boss. If she wants it in a different way, we move in that direction. We just sped it up because of COVID. Currently, curbside makes up about 20 percent of our retail business. It’s painless, it’s effective, it’s easy, and we can deliver that same smile and make somebody feel good by meeting them at their car just like we do in the store. Do you think that Kendra Scott’s devoted fanbase helped you transition so quickly? You’ve got lots of repeat customers who are waiting for the next design to come out. We have an amazing customer base, but I would argue that any business could do what we did. I’ve worked at big and small companies, and the only thing preventing people from taking steps like we took is the lack of will. It’s just a matter of problem solving and having the confidence and courage to take risks — and instilling that confidence and courage in your team. Once you do that, there’s really nothing that’s impossible. What does the future hold for Kendra Scott and the industry at large? You mentioned augmented and virtual reality — will that increasingly be a part of the brand experience? I had this conversation with our CFO this morning on my way into work: Anyone who claims to know what the future looks like is nuts, and that’s more true today than a year ago. That said, I do think that AR/VR is going to play a large role in the future, and it’s already a part of our customers’ experience. She’s voted that she likes it and wants more of it. TexasCEOMagazine.com


I think this is going to burgeon a new industry, potentially accelerated by COVID. My kids play augmented reality video games and it’s crazy how real it is. AR/VR can take you away without you having to go away physically. There are also ways for brands to integrate themselves into that reality, the same way that companies integrated themselves into sitcoms like Seinfeld back in the 90s. I think we’ll see more of that. Lately, I’ve been forced to not be on the go all the time, and found myself at home asking my kids questions about how they consume things. How does my 12-year-old see the world? What does she think about politics? What does she think about TikTok? How she consumes media and thinks about brands is remarkable. If you ask the right questions and if you’re willing to listen to a different point of view, there are a lot of great lessons to learn, and a lot of indications of what the future may hold. With augmented reality, could you get to the point where you can see what a piece of jewelry looks like on your arm or match it against a blouse? You can already do much of that on our website today, with our new Virtual Try-on Program. You can see what a certain pair of earrings looks like on your face, for example. We’ve had that live for a few months now, and it’s been really successful. The hardest part will be to replicate the feel and weight and scale of a piece of jewelry, but there are technologies that can do it right now. Part of it is gaming the market and either agreeing to be the guinea pig for a technology company or waiting until the technology comes down to a reasonable price. However we’re getting it done, AR/VR is really important because of its role in the customer experience. For the 17 years we’ve been around, our business model has been rooted in interaction and the experience. Our brand has always been very experiential. We will of course maintain that focus, even if consumer behavior changes permanently after COVID. We want to be ready for the new normal. Do you think post-COVID buying habits will change how many stores you have open? That’s hard to answer. I have always been bullish on retail and I still am. I think people are starving for interaction, and we’re replicating that interaction as best we can, but we never can fully. Our brand is rooted in experience, so we’ll always have customers who yearn for that physicality and interaction. A really large portion of our customer base loves coming into our stores. They have relationships with the people there; they want to have a glass of champagne. I don’t think that is ever going to change for us, but the mechanism in how we deliver that experience will. In fact, the real estate market may open up a lot more opportunities for additional retail space in the near future. We’ve managed our balance sheet really well; the first thing we made sure of — and the 100th thing we made sure of — was our liquidity position going into this. We wanted to be in the driver’s seat and be able to take advantage of opportunities, and retail space is one of them. We’ll be looking at reimagining our retail portfolio and taking advantage of new efficiencies. If there are opportunities to open more stores and it makes sense economically and allows us to deliver an experience to the customer more quickly, then we’ll take them. 84

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How long have you been president of Kendra Scott, and what is it like being a male leader within a predominantly female industry? It’s been over a year since I took on the president role, but I started out here as a member of the board of directors in 2013, when Kendra brought in her first institutional investor. They had an open board seat and I was fortunate to be the person they chose to do that. It’s been a great ride. I officially came on as chief revenue officer and chief marketing officer, and then it evolved into this role. I look at it as if I’m Kendra’s business partner. We have a great relationship, more than a partner – a close friend and a sister to me. She’s a force of nature and a great leader and an amazing businessperson, and more importantly an amazing human being. I really love working with and for her. As far as the gender side of your question, this company does look very different from places I’ve worked in the past. Previously, I was in businesses that were traditionally male-dominated. I was in the golf industry for a long time, and then I was at Condé Nast, which was a little more female. I also worked at Ralph Lauren, then started my own company before coming here full-time. It’s been a remarkable experience. If you asked me earlier in my career whether I saw myself running a women’s jewelry business, I would’ve said no. I didn’t know anything about jewelry before getting here. I now see the world in a way I never would have imagined. But I try not to take myself too seriously. Actually, the person who ribs me the most is my boss. She’s relentless, like a good sister would be. She likes to poke fun at me at every single opportunity imaginable, usually fashion-related. It’s pretty lighthearted and fun here — all in all, working at Kendra Scott has made me a better leader and I hope a better person. When I started here, our company was maybe 98 percent female and it’s 95 percent female now. It’s great, to be honest. I’ve learned so much more here in my time working with and for women — these dynamic, strong moms and sisters and daughters. It’s 100 percent made me a better father to my daughters, and I know it’s made me a better leader too. My emotional intelligence has increased, and I see the world differently. I admire the challenge that women leaders had to go through to get to where they are. I don’t mean to be sappy about it, but it’s been a great gift and I’m thankful for it. Kendra and I are so aligned on vision and execution and how we see the world and think about things. We both grew up without much, so I think we’re appreciative of everything we have. I try not to take things for granted. One thing neither of us takes for granted is our remarkable workforce and culture. I honestly hate losing people, but I love when people go do other things and better themselves. It’s a culture unlike anything I’ve seen before. I’ve been a part of some great company cultures before, but this one has its own unique heartbeat. We wouldn’t be here without the thousands of amazing people who make up our workforce. I’m so thankful for the talent we have here and the culture we’ve built. Kendra’s very protective of that, including in choosing partners and investors. She makes sure that they understand the vision and are aligned with how she sees the world and runs the business.



FOOT Anonymous

Every once in a while, if you are lucky, life gives you a wake-up call. A situation out of the ordinary. A lesson that, at first, maybe you can’t quite put your finger on. But when you do recognize your wake-up call, you most likely won’t forget it. If you are smart, you will learn from it, and make sure it doesn’t happen again. Fortunately, my wake-up call was not a life-or-death situation. However, it’s one I certainly won’t forget. In fact, I reflect on it often—so much that I agreed to write about it for Texas CEO Magazine. My wake-up call came during a rather routine event. It was a situation where I was forced to put the shoe on the other foot, so to speak. I was attending a formal event as my wife’s guest. My wife works for a company with mostly women in leadership roles, all of whom brought dates or husbands to their annual gala. I was, like most men in the room, the plus-one. To give you some backstory, when my wife and I first met, she was a professional money manager. After we married and had our first child, she left her career to spend more time with the children. After about five years, she re-entered the workforce and quickly advanced to a leadership position within her current company. Meanwhile, my career had been in commercial banking— and the makeup of the events we attended for my job was usually very different from the gala in question. At the companies I worked at, men held most of the leadership roles. My wife was always supportive of me and joined me for nearly every event, even though at times I felt she

wasn’t entirely present. She was always a good sport, but was never one to want to hobnob all night. At times, I felt like something was wrong—but I couldn’t put my finger on it. After I attended her company’s annual gala, I figured it out. Shortly after we arrived, I began to notice something. We would approach a group of my wife’s coworkers, mostly women, and she would begin engaging with them. I was quickly introduced as her husband, then their conversation would go back to work stuff, then move on to personal chit-chat. Eventually, my wife would grab my hand and then we were on to the next group. Before long, I’d nearly ripped through my two drink tickets. What became clear to me was that I—the husband at a womandominated event—was an afterthought. No one intended to make me feel that way; it was just part of the drill. When I asked about when we would leave, my wife would say something like, “Go ahead and talk to the husbands.” Sound familiar? I had no idea who these guys were, and they looked just as lost as me. After a while, it became kind of comical. We husbands were getting dragged around all night. This was my wake-up call. For most of my career, I’d dragged my wife around events dominated by the male leaders at the companies I worked for. But when the shoe was on the other foot, it didn’t feel too comfortable. We all have good intentions, but sometimes we get caught up in the moment and forget the ones who support us. Next time you are at an event, go the extra mile for your guest—regardless of the gender dynamics of the particular gathering. My wife and I now nudge each other, with a grin, when the other gets caught in the moment at an event and loses track of the other’s engagement. The good news? We enjoy these events now more than ever—even if there’s no open bar. TexasCEOMagazine.com




Restarting the economy following the economic damage inflicted by the COVID-19 crisis is a huge challenge. Small and medium enterprises (SMEs) in particular face existential risk if they can’t regain previous levels of revenue and profit in a short period of time. Large enterprises harness strategic partnerships as a powerful growth driver. For example, in a 2018 healthcare partnership, giants Amazon, Berkshire Hathaway, and JPMorgan Chase began pooling resources to remove waste and improve patient experience. If giant corporations choose to accelerate business by creating a strategic partnership that combines resources, surely partnering is even more critical for small and medium enterprises. 86

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A 2020 PwC survey and analysis conducted before the pandemic revealed these surprising results, as reported on Forbes.com: Forty-nine percent of executives said they were planning a new strategic alliance or JV [joint venture] in the next year to help drive corporate growth and/or profitability. That percentage was more than planned new M&A activity (42 percent), outsourcing (21 percent), or a business sale or market exit (16 percent). That was then—the pandemic could overwhelm all of those issues.1

[LEADERSHIP] My key takeaway from these experiences is this: A company that knows how to partner has a distinct advantage over its competitors. When it lacks internally what it needs to pursue a high-impact opportunity, it can continue to grow rapidly if its leadership knows when and how to partner.

OBSTACLES TO PARTNERING If strategic partnerships can accelerate growth, why are many CEOs reluctant to pursue them? Maybe they have perceptions about partnering that are inaccurate:

WHAT IS A “SELF-FUELING” PARTNERSHIP? To succeed in partnering, CEOs need proven processes to guide them. I developed the Self-Fueling Partnerships (SFP) methodology based on decades of building successful business relationships that generated significant incremental revenue. It’s easily comprehended and executed, and it can equip a new generation of business leaders with an intuitive feel for acquiring growth-generating resources that will enable them to accelerate beyond organic growth. When I first began building partnerships for a billion-dollar tech company, we avoided what we saw as meaningless “strategic alliances” that started and ended with a press release. We laughingly called them Barney announcements: “I love you, you love me . . .” We were at least partially right: If a strategic partnership doesn’t achieve tangible growth, it's a waste of time.

The importance of partnering continues after the advent of COVID-19 as well: In a recent article on surviving and thriving post-COVID-19, corporate strategy advisor McKinsey & Company identified “fostering value creation through partnering” as one of the top three factors that will most impact growth and scalability in coming out of the current crisis.2 Since beginning to build successful strategic partnerships in 1990, I’ve continued to employ partnering as a critical business tool for every company I've helped since. Example outcomes from applying partnering include $65 million in incremental firstyear revenue generation, new product launches with first-year revenue in the millions of dollars, and a $200 million acquisition.

CEOs who approve “press announcement partnerships” often attribute their disappointing lack of results to partnering in general, rather than to poor execution. It’s better to take a more intentional approach: Only consider partnering when you’re (1) faced with a high-impact threat or opportunity and (2) lack the ability to respond strongly.

Only consider partnering when you’re faced with a high-impact threat or opportunity and lack the ability to respond strongly



When you need to fill resource gaps faster (e.g., new technologies and products, broader distribution, increased staffing), leverage the existing assets of other companies. The key to creating a successful partnership is to identify the target company’s need for the value that you can deliver them. Deliberately seek out companies with complementary needs to form a “self-fueling partnership.”

DEFINITION: SELF-FUELING PARTNERSHIP A Self-Fueling Partnership is a relationship intentionally structured so that a positive result for the first party drives it to take actions that produce positive results for the second party, and vice versa.

When Partner A takes actions to benefit Partner B, and that causes Partner B to take actions that benefit Partner A, the relationship becomes “self-fueling.” It grows with far less pushing from behind than more common partnerships. Of course, effective execution to reach mutually desired outcomes is still required, but the level of management effort is substantially reduced. To create a self-fueling partnership requires a deliberate approach to partnering.

THE SELF-FUELING PARTNERSHIP METHODOLOGY If you’re new to partnering, where should you start? The SelfFueling Partnerships methodology comprises four major phases—Assess, Approach, Align, and Accelerate—each with several clear steps.

(external positives), and Threats (external negatives). Look at its ability to respond with its current resources to the threat or opportunity most critical to protecting and growing your business. If the ability to respond is weak and you need to act quickly, finding a partner with the needed resources can accelerate your response time. 3. Identify Candidates. In exchange for filling resource gaps, you must offer a partner significant value. While that may sound simple, it takes market knowledge and careful research to discern which companies could benefit the most from your help. Brainstorm a long list of enterprises (suggested target is 20) that offer access to customers, new technology, or other resources critical to accelerating your company’s growth. 4. Target the Best. Select the partner you help the most, rather than prioritizing based only on your own needs. Creating a highly successful partnership depends on allying yourself with a company that values the benefits received from your company so much that their initial and ongoing enthusiasm will result in a significant positive impact on accelerating the growth of your enterprise. The other three stages build upon the Assess phase. After choosing the right partner, take deliberate steps to approach them and find an internal champion, develop a shared vision, and design and execute a partnership agreement (the Approach phase). Careful planning in the form of welldefined projects with assigned responsibilities ensures readiness to launch the partnership (the Align phase). Then it’s time for the launch, which involves close collaboration between the partners as each executes their part of the plan (the Accelerate phase). Finally, ongoing care and feeding through regular communication and evaluation ensures that benefits from the relationship continue to flow to each party.


The first phase, Assess, consists of four steps, with each one critical to success: 1. Positioning. It’s impossible to evaluate your worth to a partner without a clear, crisp understanding of how your own company fits into the business ecosystem. Identify who you serve within what types of organizations, which market category best describes your offerings, why people buy your offerings, who competes with you and their weaknesses, and what your key differentiators are. 2. SWOT Analysis. Ascertain your company’s Strengths (internal positives), Weaknesses (internal negatives), Opportunities 88

Texas CEO Magazine Q4 2020

If you and your company are new to partnering, or if you’d like a fresh perspective, check out a new resource I’ve founded called Partnering Source (partneringsource.com). Accepting a free membership brings you a regular newsletter with tips, tricks, and ideas and information from the latest articles. You’ll also become a member of its Partnering Forum, where you can ask questions and get answers from partnering experts.

Bob Barker is chief strategy officer, cofounder, and director of Cybernance Corporation, a cyber risk governance platform based on the NIST Cybersecurity Framework. He has been interviewed by and quoted in the Wall Street Journal and Forbes, and he has written for numerous industry publications, including Westlaw Journal, Directorship (National Association of Corporate Directors), and Information Management.

1 Kate Vitasek, “The Increasing Need for Strategic Alliances,” Forbes.com, March 28, 2020. 2 Kevin Sneader and Bob Sternfels, “From Surviving to Thriving: Reimagining the Post COVID-19 Return,” McKinsey.com, May 1, 2020.



RECESSION Jeremy Horpedahl, PhD

One of the most visible signs of the COVID-19 recession has been the massive harm to restaurants and bars. We see it as we drive around town: Restaurants are closed, doing curbside service only, or have radically altered their layout to make their spaces safer.

We can also see the harm to restaurants in the economic data. Back in the depths of the shutdowns and labor market contraction in April, fully one-third of all job losses in Texas were centered on the “food services and drinking places” industry, as the Bureau of Labor Statistics calls these establishments. Pre-pandemic, this industry accounted for 8.7 percent of all nonfarm jobs in Texas. In total, over 450,000 restaurant and bar workers were out of work, out of about 1.1 million before the pandemic. Relative to the size of the restaurant and bar industry, workers at these businesses were hit four times as hard as the average worker. While everything is bigger in Texas, these figures are closely comparable to national data, where restaurants and bars accounted for 7.9 percent of employment before the pandemic, and about 28 percent of job losses through April. Within the restaurant and bar industry, bars and restaurants that depend primarily on dining room service were hit much harder. Fast food restaurants, for example, were already well-equipped to provide drivethrough service. A quick recap of the timeline and rules in case you need a refresher:

• March 31: Governor Abbott issues a general stay-at-home order.

• May 1: Restaurants allowed to open at 25% capacity with new distancing and health requirements.

• May 18: Restaurant capacity expanded to 50%; bars could open at 25%.

• Early June: Restaurant and bar capacity further expanded to 50% and later 75% for restaurants.

• June 26: Restaurant capacity reduced back to 50% and bars closed again.

• September 17: Restaurant capacity expanded back to 75%.

We can further see the impact on restaurants if we use the Opportunity Insights Economic Tracker, produced by a group of researchers at Harvard and Brown Universities. In April, spending at restaurants and hotels in Texas had declined by about 60 percent (unfortunately, the tool does not give restaurant spending separately from hotel spending). Overall spending was down about 30 percent, which means that the accommodations industry was hit twice as hard as the overall economy. Using this data to look at consumer spending, you’ll see that total spending in Texas at the end of August was about 5 percent above what it had been in the first two and a half months of 2020. However, restaurant

and hotel spending is still down about 14 percent. Where’s the money? At the grocery store. Spending there is up about 20 percent from prepandemic levels. As restaurants have been allowed to reopen, the labor market has started to recover. Around 286,000 workers returned to restaurants in July, according to Bureau of Labor Statistics data for Texas in that month, the latest available. But that still means that over 166,000 former restaurant and bar workers are out of work or have moved out of that industry. What is the best way to mount a full recovery? First, we might look at why some people are still staying away from restaurants: Is it because of their own fear of catching the coronavirus or is it because of the external restrictions put on restaurants? There are clues in the economic data. Since late June, restaurants in Texas have only been able to operate at 50 percent capacity, and employees and customers must follow health guidelines such as wearing masks and social distancing. Operating at 50 percent capacity would seem to mean that you would need 50 percent fewer workers and have 50 percent less revenue. And yet, total employment in the industry is only down about 15 percent — and that includes bars, which are completely shut down. In other words, through the techniques of curbside pickup, delivery, outdoor dining, and other innovations, restaurants have not taken anywhere near a 50 percent hit. This does not mean that fully removing the capacity constraints will produce a full recovery — and it may be unsafe to do so — but it does suggest that the primary factor in current losses is imposed constraint by the state government, not people staying home out of fear (though, certainly, that has an impact too). So what should be done? Essentially, Texas is faced with a tradeoff familiar to other states and countries throughout the pandemic: the economy versus health concerns. Reopening restaurants at full capacity may pose additional health concerns, possibly leading to further spread of the virus. But reopening restaurants and other businesses will also put people back to work and get us closer to a normal economy. Navigating that balance is difficult and will require some kind of tradeoff in either direction, no matter what course is taken. In my view, it’s best to acknowledge these potential tradeoffs honestly, then try to make the best decisions for all concerned. Jeremy Horpedahl, PhD, is an Assistant Professor of Economics at the University of Central Arkansas and a research scholar at the Arkansas Center for Research in Economics. His research has been published in Public Choice, Econ Journal Watch, Constitutional Political Economy, the Journal of Private Enterprise, and the Atlantic Economic Journal. He resides in Conway, Arkansas, but loves to visit Texas.



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ECONOMIST Megan de Linde Leonard, PhD

Harry Truman famously said he wanted a onehanded economist—one who wouldn’t constantly alternate between “on one hand . . .” and “on the other hand . . .”). It is certainly true that we economists are a group that is very insistent on weighing both costs and benefits of any particular decision. In our field, the willingness to consider costs even when you believe the benefits to be overwhelming (and vice versa) is vitally important. This seems to me to be a dying art in our increasingly polarized society, and never more so than in the time of COVID-19. As a brief (and fraught) example, let’s consider mask wearing. In public discourse, I hear one side consider only costs: Masks are uncomfortable, they make social interactions more difficult, they come with monetary costs, they limit personal freedom, and so on. Meanwhile, another side considers only the benefits of mask wearing: They protect others from infection, they slow the spread of COVID-19, etc. In reality, of course, there are both benefits and costs to wearing masks in our daily lives. To make good decisions, we need to get as much information as we can about both and then weigh them dispassionately. In most cases, this is very hard work. It is much, much easier to default to “I’m on Team Red and my team says X” or “I’m on Team Blue and my team says Y.” Unfortunately, if I identify strongly with my “team,” it also means that this decision is now a part of my identity and I become even less willing to listen to evidence regarding the cost or benefit of the other side. In my view, this has become particularly unfortunate as we talk about another COVIDrelated issue: the merits of continued school closures. As a parent, I was recently asked to decide whether to send my kids back to school. This required me to weigh the very real costs and benefits of either choice. There are a lot of benefits to sending kids back to school. Kids are tired of being at home. Being with kids their own age is good for them, and it would certainly make it easier for their parents to work. In-person

instruction is almost certainly more effective than the hastily assembled plan for online instruction (although it can be hard to make the decision based on this factor, because many parents were asked to decide without information about what the virtual option would actually look like). What about the costs of sending kids back to school? There is generally one large cost: the possibility that someone will become infected with COVID-19. Unfortunately, the probabilities of this are very difficult to ascertain. How effectively will the school be able to distance? Will people wear masks consistently and properly? How many students will choose to return? How fast are test results returned in the area? How will contact tracing be performed? Given the uncertainties, going back to school seems very risky. Yet on the other hand, we could dive even deeper into the costs of virtual schooling, looking beyond the cost to individual families to see the huge potential societal costs. For example, in many cases only families privileged enough to have an at-home parent will be able to do online schooling reasonably well without an effect on their livelihood. A family may manage two full-time working parents and school responsibilities, but likely with decreased quality of both, and only if one or both parents have flexible jobs that can be done from home. I’m also afraid for what continued virtual teaching will do for female labor force participation—because, let’s face it, it will be largely moms who drop out of the labor force to accommodate this option. That will in turn have a long-term impact on the gender wage gap. I’m also worried about families living close to or in poverty. Many people will be forced to leave children home alone so that they can go to work. And many of these will be kids who

were already at risk and who need quality, in-person instruction, free breakfast and lunch, and the other benefits of being physically present at school. Children for whom English is a second language will be at risk of falling behind their peers without the English-speaking environment that school provides. Ultimately, I can’t see any way in which continued school closures don’t increase racial wage gaps. The costs of online education extend to colleges as well, where the virus risk is probably worse than K–12. Unfortunately, not only does going remote mean that students miss out on much of what makes college such a transformative experience; it also deeply impacts the revenue stream of institutions. Closed dorms, shuttered dining facilities, and cancelled athletic seasons put stress on institutions already strained by changing demographics. I fear that this will be the end of most, if not all, small private colleges, which have much to commend them. We are in the midst of a great experiment. It is very likely that history will conclude that opening schools during COVID-19 was either a grand victory or a foolish risk. Whichever the outcome, I hope that you will remember that no decision is without cost, just as no decision is without benefit (why else would we bother to weigh them?). My urge to readers is not to make one decision or the other, but to bring the spirit of the twohanded economist to such debates. Rules of thumb, such as deciding by party line, make decisions simple, but they are no substitute for carefully weighing costs and benefits. Megan de Linde Leonard, PhD, is a Professor and Chair of the department of Economics and Business at Hendrix College. She received her PhD in Economics from Texas A&M University with a focus on Labor Economics. Dr. Leonard serves as the faculty representative to the Hendrix Board of Trustees, co-leads the college’s assessment and accreditation operations, and attempts to wrangle four children from the ages of one to 15.



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TEXAS Craft Beer Theo Kosub

No matter where you are in Texas, you’ve got a great craft brewery nearby. Here are some we’ll be hitting up for locally produced beer this fall — even if it has to be to-go. Near the turn of the millennium, when Y2K fears were just subsiding, I made it to the life milestone of official drinking age. Back then, the number of craft brewers in Texas could probably be counted on two hands. Fastforward two decades and there are nearly 350 craft breweries operating across the Lone Star State. The number of beer styles, the methods of purchasing them, and the amount of locally available brewing ingredients have all exploded. It has never been a better time to be a craft brew enthusiast, as high-quality, creative, and local brews are ubiquitous. According to the Brewers Association, Texas craft breweries produced 1.18 million barrels in 2019. Now more than ever, your local craft brewer appreciates support. The pandemic has caused numerous layoffs and many taprooms are struggling as they operate at less than 50 percent capacity. In fact, according to the Texas Craft Brewers Guild, two in three brewers say they may not make it to January 2021 if the current shutdown does not abate or new economic relief options are not put forward. This hits home for me, as the only brewery in my town of Buda—Two Wheel Brewing Company—recently shut its doors for good. There is good news, however. Most local breweries currently offer limited-capacity taproom seating and, of course, beer pickup. And as we leave fall and its rich, seasonal Märzen-style (Oktoberfest) beers, there is reason to get excited for your local offerings of spiced winter ales, cozy stouts, and zesty ciders. It’s nice to branch out with a seasonal style you’ve never heard of or to sample a micro-brew that piques your interest because of what it’s brewed with. Choices abound, so get out there and taste some of what local craft brewers work so hard to bring to you. A Love Struck Hefe from Ranger Creek Brewery & Distilling


Texas CEO Magazine Q4 2020

Here are some top-tier craft breweries throughout Texas to get you started.




Established in 2012, this brewery’s mascot is the purple martin and its motto is “Made in Texas by Texans.” Just east of downtown Fort Worth on the banks of the Trinity River, you can enjoy one of the year-round varieties or a taproom-only release.

Located near the heart of downtown Dallas in the Design District, this unique tri-level warehouse has a lot to offer for thirsty taproom enthusiasts. As you sip one of their beers, check out the story behind their logo. Hint: It’s as carefully crafted as their beers.

RECOMMENDED: The Salty Lady Gose, Martin House Pils

RECOMMENDED: Velvet Hammer Imperial Red Ale, Golden Opportunity Kölsch

Rahr & Sons was founded on the south side of downtown Fort Worth by a family rich in German brewing experience and tradition. Grab a delicious brew and enjoy generations of beer craft. Fun fact: Rahr Malting Co. produces and supplies malt and industry-related brewing supplies to breweries across the United States.


UNIQUE: Best Maid Sour Pickle Beer


UNIQUE: Wintervention Strong Spiced Winter Ale


RECOMMENDED: Rahr’s Blonde Helles Lager, Winter Warmer Dark Ale UNIQUE: Paleta de Mango Chile Beer




Started in 2009, Four Corners Brewing Company is located in the Cedars district of downtown Dallas. Its founders took inspiration from neighborhood roots and created a place where local flavor could intersect with craft brewing. The brewer offers a quenching selection of year-round and seasonal styles.

Take in the eclectic mix of tech dreams and family scenes while you sip on a carefully crafted Pinthouse beer at one of three locations. Better yet, order up a delicious pizza to go with those suds. Their in-house mainstays and seasonal selections are supplemented by a huge selection of Texas-brewed “guest” taps.

Get out of the city and into the relaxing country setting that is Jester King Brewery. Friendly staff and plenty of space make good companions for tasting an open fermentation ale or sourstyle beer. Stock up on limited editions; they are sought after and go quickly.

RECOMMENDED: El Grito Lager, El Chingón IPA

RECOMMENDED: Burro’s Breakfast Mexican Lager, Electric Jellyfish IPA

UNIQUE: La Lechuza S’more Stout

UNIQUE: Ancho Grande Chocolate Porter




RECOMMENDED: No Whalez Here Witbier, Bughaven Open Fermented Ale UNIQUE: Encendía Ale






4th Tap is a small, worker-owned brewery based in Austin’s 78758 beer district. Founded by a coalition of Austin natives and friends transplanted from Houston, San Antonio, and Corpus Christi, 4th Tap prioritizes its neighborhood community, offering picnic-table seating and carefully crafted brews to North Austinites.

Since 1997, this European-style brewery has focused on crafting world-class German-style lagers and ales. With one crisp sip, it’s easy to see why Live Oak has won regional and national acclaim. Try a Rauchbier (smoke beer) to get a taste of the old-world technique of roasting malt over an open fire.

Founded in 2008, this craft brewer embodies the city it calls home. While enjoying your brew, ponder the fact that Freetail was a pioneer in direct breweryto-customer sales. With a brewpub on the north side and a taproom near downtown, you have several options for enjoying these brews, or look for beer cans emblazoned with their bright red bat logo in stores.


RECOMMENDED: Highland Scoundrel Scotch Ale, Kung Fu Robot IPA


RECOMMENDED: Oaktoberfest, HefeWeizen


RECOMMENDED: Conserveza American Blonde Ale, Bat Outta Helles German-Style Lager

UNIQUE: Supernaut Neapolitan Stout

UNIQUE: Grodziskie




Visit the taproom for the handcrafted brews, leave with high-quality spirits. Established in 2010, this brewer and distiller offers a bounty of Texas original beers and spirits. Ranger Creek’s tasty lager proudly proclaims the city it calls home.

Located just east of downtown San Antonio, Alamo Beer Company was founded in the late 1990s. The brewer hit its stride a few years after being founded with its Original Golden Ale. The number of styles it makes continues to expand, but its focus on independence remains. Remember the Alamo!

Texas’ oldest craft brewer and patron saint of breweries, Saint Arnold Brewing Company is a must-visit. Their first keg shipped in the mid-90s, but they are stronger than ever with an expansive selection of choices. My own overall favorite Saint Arnold brew, Lawnmower Kölsch, has quenched my thirst numerous times after yard work.


RECOMMENDED: Sunday Morning Coming Down Coffee Ale, Imperial Brown Ale UNIQUE: Strawberry Milk Stout


Texas CEO Magazine Q4 2020


RECOMMENDED: Texas Norther IPA, Luna Blanca Belgian White UNIQUE: Fiestaval Watermelon Lager

UNIQUE: La Muerta Imperial Stout


RECOMMENDED: Santo Black Kölsch, Spring Bock UNIQUE: Christmas Ale, Bishop’s Barrel Series




Founded in 2011, this iconic brewer was purchased by Anheuser-Busch InBev in 2016. Its huge popularity and large selection helped make Karbach one of the fastest-growing breweries in the country. Visit the biergarten or restaurant to sample some of the seasonal selections and year-round favorites.

This craft brewer’s main goal is creativity in all brews it produces. A visit to the three-story building known as BuffBrew, just north of downtown, lets you immediately know that you are in for a wild adventure of the taste buds. With over 70 brews in the last seven years, Buffalo Bayou is continuously pushing the limits of what is possible, from tank to tap.

Situated on seven acres just outside of Conroe, this relaxed setting has a lot to offer the beer enthusiast. With over 25 selections on tap, it’s simply too good to ignore. There’s something for everyone to try or experiment with.

RECOMMENDED: 1836 Copper Ale, Dreamsicle Ale

UNIQUE: Timaeus: Tetrahedron Stout


RECOMMENDED: Hopadillo IPA, Coastal Conservation Ale UNIQUE: Yule Shoot Your Eye Out Red Ale



RECOMMENDED: Waimea IPA, Banana Stand Stout

UNIQUE: Black Raz Sweet Stout




Halfway between downtown Corpus and Mustang Island, you’ll find this craft brewer. With origins in late 2010, the husband and wife duo behind this operation embrace the beach lifestyle. While you taste their craft, enjoy the gulf breeze and take in the gentle seas.

A Blanco original and craft brew leader since 1996, Real Ale’s future is brighter than ever. Water from the Blanco River is used to craft a wide selection of brews, but you won’t find any of their products outside of Texas. Making quality beer has always been more important than chasing growth for growth’s sake for this fiercely independent brewery.

A relative newcomer to the Texas Hill Country, this craft brewer is turning out gold-medal-winning beers. Next time you visit Enchanted Rock for a hike or Fredericksburg for a wine jaunt, a visit to the biergarten and restaurant is a must. Their unfiltered Kölsch is thirst-quenching and unique.

RECOMMENDED: Devil’s Backbone Tripel, Vámonos Gose

RECOMMENDED: Amber Altbier, Oktoberfest

UNIQUE: Black Quad Quadrupel, Sisyphus Barleywine Ale

UNIQUE: Kölsch (unfiltered)


RECOMMENDED: Corpus Christi Blonde Ale, Choppy Waters IPA UNIQUE: Hard Kombucha








This craft brewer opened its doors in 2012 with a focus on delivering the best product to thirsty Texans. Located in New Braunfels near the confluence of the Comal and Guadalupe Rivers, there is something special for everyone. At this taproom, ist das Leben schön — “It’s the beautiful life.”

Beer first flowed from Spoetzl Brewery—the home of Shiner Bock—over 100 years ago, in 1909. Its founder, Kosmos Spoetzl, might not recognize the vast selection of Texas craft brews available today, but he would appreciate the strong independence of many brewers. Visit the iconic brewery and take in some of Shiner’s new styles.

Located in El Paso, this brewer takes its inspiration from the red glow of the nearby Franklin Mountains. A stone’s throw from the border, there is refreshment to be had at the DeadBeach Tavern. Clever beer names only enhance their quality brews.

RECOMMENDED: Texas Honey Ale, Scotch Ale

RECOMMENDED: Bohemian Black Lager, Weisse 'N' Easy Wheat

UNIQUE: Mexican Cake Stout

UNIQUE: Ruby Redbird, Texas Heat Wave Variety Packs




RECOMMENDED: Abuela Stout, Heartbreaker Sour UNIQUE: Supa Freik Sour Red Ale


www.tuppsbrewery.com A family business based out of McKinney, TUPPS Brewery was founded in May of 2015. The brewery has seen incredible growth over the last few years and is now one of the top 15 craft breweries in the state. As a result, TUPPS is moving to a new facility in downtown McKinney, in partnership with the City of McKinney, to help revitalize the east side of downtown. TUPPS beer can be found at all major retailers across Dallas, Fort Worth, Austin, and San Antonio, with Houston distribution beginning upon completion of the new facility. RECOMMENDED: Neon Shades Sour, Full Grown Man-Child Stout UNIQUE: Fluffy Creamy Yogurt Ale 98

Texas CEO Magazine Q4 2020

Theo Kosub was born and raised in San Antonio. An avid Bobcat fan, he received both his undergraduate and graduate degrees from Texas State University in San Marcos. Theo currently works as a strategic planner in the transportation sector. He enjoys spending time with his family, going on outdoor adventures, gardening, and tasting delicious brews.