Author Archives: SMS

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As a leader, be careful saying “I didn’t approve that.”

I would use that sentence if you want any (or several) of the following outcomes.

  1. A long line outside your office of things you need to “approve”.  No one likes to be undercut by a boss that says “I didn’t approve that.”  The best way to avoid that situation is to ask your boss to approve everything.
  2. You want to spend your time in the weeds and find micromanaging small decisions to be rewarding, impactful, and value creating.
  3. Creating an organization that is autocratic and not scalable.  See the part above about needing to approve everything and being in the weeds.
  4. Creating a closed and unquestioning culture.  Because the words, “X approved this” will be equated to don’t bother questioning this decision, even if it’s unclear if “X” actually approved it or there are other aspects of the decision that should be considered.
  5. To make decision making political.  You teach employees that to get to the desired decision, all you need to do is convince “X’ that it is a good decision.  No consensus building required. Actually, it is a game best played in private since a group setting might accidentally offer up a counterpoint that would work against your desired outcome.
  6. Demonstrating to your employees that they are not empowered and you don’t trust their judgement.  This has the additional benefit of driving employees who like to feel empowered and make decisions out of your business.  Yay, talk about win-win.

So, the next your team brings you something you weren’t aware of, I highly encourage you to shout “I didn’t approve that” in an emotional outburst. Sarcasm included at no additional cost…

Rules of the Game

Reading Time: < 1 minute

If you are the quarterback for a football team, telling the referee that you do not understand the rules really is not going to get you very far.

If you are the head of sales, you should have a basic understanding of the revenue recognition rules that affect your team and products. 

It is that simple.  

No. Excuses.

Influential Reads – October 2021

Reading Time: 2 minutes

October 2021

“There is a meaningful opportunity in the dispersion of HQ, education, and healthcare.”  – No Mercy, No Malice

Finished the book, That Wild Country, by Mark Kenyon.  Enjoyed learning about the history of U.S. public lands.  More on that to come…I am a bit behind in my writing.

Here are my most influential reads – in no particular order:

  1. This Market Makes No Sense – “The only thing I know for sure is there is a lot of money sloshing around in just about everything these days — stocks, bonds, savings accounts, start-ups, crypto, NFTs, collectibles and housing — and that makes this a difficult market to analyze.”
  2. I Collect Cashflows – “I like to collect the cashflows of the best businesses in the world. I pile them up high in my accounts, adding to them when values fall, automatically buying more when dividends and distributions are paid out.”
  3. Foreign Stocks’ Lost Decade – “Across the board, U.S. companies outperformed their overseas counterparts in every sector.”
  4. David Tepper shuns stock market – “Sometimes there’s times to make money…sometimes there’s times not to lose money.”  SMS: I ran into David Tepper in the hallway of my business school once. Tepper had just made a large donation and the school was being renamed and they were holding a celebration at our Friday Beers.  I had a buddy visiting from NYC who had just turned down a job with Appaloosa and had said on the way there, “I hope I don’t run into David Tepper”. And first thing, we ran into him.  I had a mortified look on my face and David Tepper made some off hand remark about that, that I am sure he doesn’t recall at all.  When I started to write that, I felt that would be a better story than it turned out to be.  Longer too.
  5. Understanding the Monty Hall Problem – “Here’s the general idea: The more you know, the better your decision.”
  6. Colin Powell’s 13 rules for how to lead – “It ain’t as bad as you think. It will look better in the morning. Leaving the office at night with a winning attitude affects more than you alone; it also conveys that attitude to your followers.”
  7. A Pastor Embraces Slowness – “She forwarded all work calls to voicemail and put in place a rule saying she must wait 24 hours before replying to any message that either made her upset or elated.” SMS: Great rule.  I wish Outlook would let me put more than a two hour delay on my emails.
  8. Carcinogens – “Measurements of the impact are all over the map, but we know fraud is pervasive. By one estimate, 88% of digital ad clicks are fake.” SMS: Makes me feel even less good about my company’s digital advertising spend.
  9. Why You Should Stop Reading News – “To be completely cured of newspapers, spend a year reading the previous week’s newspapers.” SMS: Yes, yes, I know.
  10. How the Bobos Broke America () – “A third rebellion is led by people who are doing well financially but who feel culturally humiliated—the boubour rebellion.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site last month:

  1. Financial Model vs. Operating Model
  2. Family Adventure: Solarmere Loop Trail
  3. EBITDA Is Not A Good Proxy For Cash Flow
  4. Operating Model Tips
  5. Excel Template: Football Field Chart

Updated stats through October:

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Photo by Clem Onojeghuo on Unsplash

Not Music To My Ears: How Not To Recruit A CFO

Reading Time: 2 minutes

I took a call from an executive recruiter the other day.

I’ve talked to this recruiter a few times previously.  He knows my background a bit (we talk about cycling – which I prefer to talk about vs. ASC 606).  Which is more than I can say for quite a few recruiters who reach out to me.

The opportunity was not of interest – mostly due to geography.  It was in the technology space.  But located in Arkansas.  Little Rock to be exact.  Bentonville might have made me pause.  But, Little Rock.  Nope, sorry.  But I digress.

During the conversation, the recruiter said something like “the company is looking for a CFO who will work with the Head of Sales.  The last CFO saw things a little too black and white.”

That’s a statement that should never be made in public.  Certainly not within earshot of an auditor.  Even if the CFO was a total asshole.  Reading between the lines.  The company had a CFO.  The CFO and Head of Sales had a disagreement. The CFO is gone.  

Not music to my ears.

What might the CFO and Head of Sales have disagreed on?

Recurring revenue model software companies are being valued entirely on a multiple of recurring revenue.  And not a small multiple.  Very lofty multiples. Could even be double digits.  Big double digits.  Here’s some insight into my opinion on all that (the NOT talking my book edition). 

So, obviously, managers of these businesses are highly incentivized to do everything they can to grow recurring revenue in the short term.

 “Money makes people do strange things” – me  

That was maybe my best answer to an interview question ever.  I suck at interviewing.  I offer no advice there.

Based on my own experience, the Head of Sales is highly incentivized to grow revenue.  An almost singular goal.  The compensation plan for the Head of Sales is likely entirely based on revenue.  They probably have some options / MIUs too (see the valuation discussion above).

But, the last time I checked, my Head of Sales is not going to sign the audit attestation letter.  So upside based solely on revenue.  Very limited downside.  What could go wrong?

The CFO wants to ensure the company is in compliance with accounting rules – among other things.  Which could be an opposing goal to booking revenue – if you care about not manipulating revenue or committing fraud.  As an aside, the CFO likely has a lot of options / MIUs too (ruh, roh). 

If I was on the board of that company, I would be…uncomfortable.  Yeah, that’s a nice way to put it.

Gear Review: True Temper Snow Shovel

Reading Time: 2 minutes

Sometimes the right tool makes all the difference.

If you live in a snowy climate and you are looking for an upgrade to those common, cheap plastic snow shovels that last about a season, get the True Temper Industrial Grade Snow Pusher.

This is the right tool for quickly moving snow around.  Especially the wet heavy snow that the snow blower cannot handle.  Or maybe that light 1 – 2” where it might be faster than actually getting the snow blower out in the first place.

In the 30” size (it comes in 24″ and 36″ as well), the Pusher makes short work of the sidewalk and steps in one back and forth pass.

Also, as the name implies, it is not really a shovel.  I actually don’t believe in “shoveling” snow.  I am lazy.  It is way more efficient to push snow, than lift snow.  Think snow plow. So the end of this tool looks a lot more like a snow plow blade, than a shovel.

After a bit of research, I snagged mine, in store at Home Depot toward the start of the season last year.  Totally worth it.

Influential Reads – September 2021

Reading Time: 2 minutes

“A man got to have a code.”  – Omar Little

Seriously?  Look at the chart on the right.  Talk about recency bias.  

Folks are in for a rude surprise at some point in the future if they thought September was a rough stretch.  That’s not a prediction of a near term melt down.  It is simply an observation about investor behavior and memory.

Finally finished Principles by Ray Dalio.  More to come here, but in short, I tried to read this book about 24 months ago and was just not in the right headspace apparently.  This time around, I really enjoyed it.  But it took some time and effort, in a good way.

Here are my most influential reads – in no particular order:

  1. Boxes, trucks and bikes – “However, there’s also another way to split this, that I think is becoming increasingly important – instead of looking at the product category and the buying journey, look at the logistics model. “
  2. Business History with Gary Hoover – “The whole history of business and the economy is a story of one technological disruption after the other.”
  3. When Over-Ordering is More Than Hoarding – “So that customer who is ordering a lot more right now than they historically have is not doing it to “hoard.” They’re probably doing it just to manage inventory properly.”  See this as well.
  4. Put These Charts on Your Wall – “The market doesn’t have to do anything, least of all what you think it should do.”
  5. How To Escape Your Financial Cocoon – “Transient events constitute our experiences. Viewing them as permanent compounds our problems.”
  6. Worry About Yourself – “Somewhere along the way I think people forgot that we’re only in the market to make money…If others want to blow themselves up trading recklessly, let them.”
  7. 5 Ways to Build Resilience and Conquer Adversity – “Resilience is the ability to create positive adaptations to negative events.  It’s the ability to take things like anger and sadness and make them useful and productive.”
  8. The fraught future of recycling – “Despite the heavy machinery and increased automation involved, the process is still extremely dependent on humans.”
  9. Distribution and Demand – “Whereas AT&T competes for customers in a zero sum game, content is best leveraged by reaching as many customers across as many distributors as possible”
  10. The Intel Opportunity – “Massive demand, limited suppliers, huge barriers to entry. It’s a good time to be a manufacturing company. It is, potentially, a good time to be Intel.”
  11. A Tunguska sized airburst destroyed Tall el-Hammam – “We present evidence that in ~ 1650 BCE (~ 3600 years ago), a cosmic airburst destroyed Tall el-Hammam, a Middle-Bronze-Age city in the southern Jordan Valley northeast of the Dead Sea.”  SMS here: Talk about wrong place, wrong time…

One more than normal because I could not decide.  My blog, my rules…

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site last month:

  1. Financial Model vs. Operating Model
  2. EBITDA Is Not A Good Proxy For Cash Flow
  3. Family Adventure: Grand Teton #3
  4. Operating Model Tips
  5. Excel Template: Football Field Chart

Updated stats through September:

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Family Adventure: Camping In Grand Teton National Park #3

Reading Time: 4 minutes

We always go camping for my daughter’s birthday in early September.

And we were back in Grand Teton National Park for our third camping trip in the park, and fifth trip to the vicinity this year (one ski trip and one camping on the Driggs side).

See our prior camping trips to GTNP here: Grand Teton National Park #1 and #2

We had a little more time this trip.  We were there from Thursday evening through Tuesday. So, that gave us a bit more time to explore.  We also, I think, were just generally in a more laid back mood.  We had no major hikes or destinations in mind.  The crowd was decidedly older and maybe more mellow given that school was back in session for families with kids.

Day #1

We drove in kind of late.  But gorgeous drive in.  Saw a bison herd pretty close to the road near Elk Ranch Flats.

We reserved a site at the Lizard Creek campground, which is the northernmost campground in Grand Teton National Park. We liked Signal Mountain Campground a bit better, although this was a good spot. I’d recommend a site closer to the middle of the campground – we were very exposed to the wind.

Not much water in Jackson Lake was kind of a let down:

Day #2

In the vein of a more relaxed trip, Day #2 turned into a spontaneous trip up to Yellowstone N.P.  I had loosely planned to venture into the south end of the park.  But we actually ended up driving up to West Thumb.  We had seen this area during our winter trip (incredible) back in 2017 and it was cool to see it in the summer.

On the drive back to our campground, in the John D. Rockefeller, Jr. Memorial Parkway stretch, we had this siting:

#bearsiting #poopedmypants

Day #3

Happy Birthday kiddo!

We celebrated our daughter’s birthday.  Then, we drove north again into the John D. Rockefeller, Jr. Memorial Parkway area.  We did a short hike to a natural hot spring – there are two – and we went to Polecat Hot Springs.  Totally worth it.

Then another short hike over to the river.

It’s that time of year, and the elk are bugling.  Amazing.

Day #4

We hiked this day.  About nine miles.  A really nice, pretty flat hike, to BearPaw Lake.  

Very nice hike.  I’d rate it easy.  Left from the northern end of Jenny Lake, which is a pretty popular trailhead, but the hike itself was not heavily trafficked.  Hiked right up to the base of Mt. Moran.  If you rate your hikes partly on how few other hikers you see, this is a good one to check out.

Watch out for this guy:

Day #5

Packed up camp and on the way to our new site, sited a black wolf.  First wolf siting.  Lots of #poopedmypants moments on this trip.

Found a great little campground in the Bridger-Teton National Forest at Atherton Creek.  Great location.  Well maintained campground with a host.  I’d consider camping here instead of in the park.

And then we did some touristy things.

And learned some stuff about geology.

And skipped rocks.

Day #6

And then home, until the next time.

All members of the party accounted for…

Check out a few prior adventures:

The Subtle Art of Not Giving A F*ck

Reading Time: 3 minutes

“In my life, I have given a fuck about many things. I have also not given a fuck about many things. And like the road not taken, it was the fucks not given that made all the difference.” – The Subtle Art of Not Giving A F*ck

This is meant to be more of a book report, than a review.  In particular, I want to highlight three key take-aways from the book, The Subtle Art of Not Giving A F*ck: The Counterintuitive Approach to Living A Good Life by Mark Manson, that I found impactful.  This also serves as a way for me to recall influential points in the book.

The title is certainly catchy.  Maybe a bit gimmicky.  The content of the book turned out to be a little different than I was anticipating.  Not in a bad way.  It just was.  And a lot of the themes are ones that I have encountered elsewhere – not to say they are not relevant or important or presented with a unique perspective here.

Three take-aways from the book:

  1. Not Giving A F*ck

This is the theme of deciding what is important and not important in your life. You should care about things that advance your goals and priorities, and care significantly less about those things that do not.  As I have written previously, the harder part and the part I still need to work on is what are those goals.

Again, a bit gimmicky. But the heuristic of saying to yourself “I have no more f*cks to give here” is certainly memorable and helpful.  It has helped me in more than one meeting.

“Most of us struggle throughout our lives by giving too many fucks in situations where fucks do not deserve to be given. We give too many fucks about the rude gas station attendant who gave us our change in nickels. We give too many fucks when a show we liked was canceled on TV. We give too many fucks when our coworkers don’t bother asking us about our awesome weekend.”

“The idea of not giving a fuck is a simple way of reorienting our expectations for life and choosing what is important and what is not. Developing this ability leads to something I like to think of as a kind of ‘practical enlightenment.’ “

  1. Most Things Are Unimportant

Most of our lives are pretty small and unimportant in the grand scheme of things.  We would prefer not to think about this too much.  I would also add that our view of the world tends to be pretty limited and incomplete.

“All day, every day, we are flooded with the truly extraordinary. The best of the best. The worst of the worst. The greatest physical feats. The funniest jokes. The most upsetting news. The scariest threats. Nonstop. Our lives today are filled with information from the extremes of the bell curve of human experience, because in the media business that’s what gets eyeballs, and eyeballs bring dollars. That’s the bottom line. Yet the vast majority of life resides in the humdrum middle. The vast majority of life is unextraordinary, indeed quite average.”

“It’s these dynamics that plague us now. We are so materially well off, yet so psychologically tormented in so many low-level and shallow ways.”

  1. Problems & Negative Experiences = Meaning

This is a theme that I have encountered more and more in my recent reading.  And I wholeheartedly agree with the idea.  Problems are a feature, not a bug.  I stole that from somewhere.  

I really enjoy solving problems.  Even better.  I really enjoy solving problems on teams with people I respect.  This has been a good self-learning for me as I try to set some goals.

“The desire for more positive experience is itself a negative experience. And, paradoxically, the acceptance of one’s negative experience is itself a positive experience.”

“Being open with your insecurities paradoxically makes you more confident and charismatic around others. The pain of honest confrontation is what generates the greatest trust and respect in your relationships. Suffering through your fears and anxieties is what allows you to build courage and perseverance. Seriously, I could keep going, but you get the point. Everything worthwhile in life is won through surmounting the associated negative experience.”

“Problems never stop; they merely get exchanged and/or upgraded. Happiness comes from solving problems.”

“True happiness occurs only when you find the problems you enjoy having and enjoy solving.”

A few other recent book reviews:

  1. Superforecasting: The Art and Science of Prediction
  2. Essentialism: The Disciplined Pursuit of Less
  3. Fortune’s Formula
  4. The Hard Thing About Hard Things
  5. The Conscious Parent


Reading Time: < 1 minute

A quick thought here.

Recently, there have been a number of articles comparing the performance of those investors who left a portion of their portfolio in “safer” assets coming out of the Great Financial Crisis (GFC) versus those who took a more aggressive posture and were mostly or all in equities.  I will pick on this one:

Go To Extremes

I get it.  If you look at asset performance over the last ten years or so, the returns of U.S. equities look fantastic.  Holding anything but U.S. equities has been dilutive to portfolio performance.

Be careful though just focusing on the results of the last decade and making the leap that holding mostly U.S. equities was a good decision. Or that should be your strategy going forward.  That would be called “resulting”.

Resulting” is a poker term that refers to our habit of judging a decision based solely on the outcome it produced. – Thinking In Bets by Annie Duke

A good outcome is not necessarily the result of a good decision.  And vice versa.

Influential Reads – August 2021

Reading Time: 3 minutes

“No one values inflation protection because inflation has declined for 42 years.”  – Barrons

There are a lot of things going on right now that seem normal, because they have been going on for so long, no one remembers otherwise.  I’m not saying the market is going to crash imminently.  I am saying that it seems like most people cannot remember the last time that happened, that didn’t turn into a BTFD moment three days later.  And if the market does correct for more than three days, you will see fewer articles advising investors to be 100% in stocks.  Somebody smart once said, “But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” (  Oh wait, no one thinks that was a smart thing to say anymore.  At some point in the future, the risk will be an important part of risk adjusted returns again.

I added two more books to the list this month, but GoodReads is informing me that I am four books behind schedule of reaching my goal of 30 for the year.  However, GoodReads has never seen me binge read Carl Hiaasen.

Lots of articles again this month.  Maybe not a good thing.  The news is not so positive these days, so probably should spend a bit less time there.

Here are my most influential reads – in no particular order:

  1. Get Ready for a Shift Away From U.S. Stocks – “We’ve already had 12% dollar depreciation since last April. And investors are way too exposed to the U.S. Our valuations versus every other asset class on Earth, with the exception of North Asia, are incredibly extreme, and the dollar’s overvalued.”
  2. How To Be Successful – “In a world where almost no one takes a truly long-term view, the market richly rewards those who do.”
  3. Advice to Grads: Be Warriors, Not Wokesters – “Be a highly skilled, devastatingly strong warrior who exerts their power by example and leaves their weapon in its sheath. Forgiveness is strength. Demonstrate it, every day. Be a warrior, not a wokester.”
  4. Give Your Brain Some Breathing Room – “I suggest the following compromise: check in on the news for 45 minutes, once a day, preferably in the morning.”
  5. The Most Important Number in Personal Finance – “The reason I prefer the LWR to something like income or net worth is that it controls for both the stock and the flows in your personal finances.  Your net worth is a stock (i.e. a snapshot of your accumulated wealth) while your income is a flow (i.e. a measure of how your wealth is changing through time).  They are both great, but limited.  ” Stephen here: This was an informative exercise.
  6. Howard Marks on economic growth in a ‘low return world’ – “We’re in an asset bubble. It’s everything. It’s not particular to high-yield bonds, or to bonds, or stocks. It’s real estate, it’s private equity, it’s everything. “
  7. Is valuing SaaS stocks a special form of the Petersburg Paradox? – “But the point is for individual stocks, there can be handful of stocks that can be valued at multiples so high that defies any logic, and still be able to beat the benchmark. The Petersburg Paradox is perhaps indeed the perfect description for such companies.”  Stephen here: But my guess is that most of the companies are not the companies that defy the logic.  Amazon twenty years ago. Yes. Every SaaS business out there today. No.
  8. Companies and Families Are Loading Up on Debt. It Could Be a Dangerous Trend – “What’s also surprising is that the BNPL model goes against perceptions that consumers are flush with savings, fostered by uninterrupted income for those who continued working during the pandemic and government stimulus payments to those not so fortunate, combined with the spending constraints during lockdowns.” Stephen here: There. Is. So. Much. Money. Every. Where.
  9. An Oral History of Adam Sandler, Pickup Basketball Legend – “Literally, it looked like he had them clothes since the 1990s, like literally the 1990s. “
  10. Wildfires prompt air quality alerts across the West – “If people have whole-home air-conditioning, installing high-efficiency filters and running the system can filter smoke that’s gotten inside.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site:

  1. Financial Model vs. Operating Model
  2. EBITDA Is Not A Good Proxy For Cash Flow
  3. Family Mission: Solamere Loop Trail
  4. Excel Template: Football Field Chart
  5. Operating Model Tips

Updated stats through August: