Smart CEO Fort Worth by Design2Pro

CYBERSECURITY WARS What does it take to win?

SHAKE WITH SHANE!

STOPPING IN-HOUSE FRAUD How to protect your business

H. PAUL DORMAN:

FAILING

Celeb tune-sharing start-up

MONSTERS OF MAIN STREET

Are Silicon Vally monopolies killing small business creation?

RETIREMENT Entrepreneur H. Paul Dorman just wonâ&#x20AC;&#x2122;t quit making advances in health care

NOVEMBER 2017

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Contents 15

Welcome to the Fort Worth SmartCEO magazine

Want to jam with Cam? Shake with Shane? Former NFL player and Fort Worth native Jason Fox launching app for music lovers to share play lists with friends, celebs

Who will win the cybersecurity wars? It’s not necessarily the guys with the best digital defenses

Protectionism v. Globalism Vibrant international markets like Fort Worth must still be global

15 Bitcoin: New Money or Digital Beanie Baby?

The State of the Texas Economy: Despite the lingering effects of Hurricane Harvey, the Texas economy will be a growth leader once again

The State of Fort Worth Education: “If we’re going to continue to be great — a great place to raise families and to build neighborhoods — we must invest in our students today”

Fort Worth is “Where the West Begins”

Tremaine Mapp: “Don’t accept what people have told you and let that define what you want to do in life.”

Monsters of Main Street: Are Silicon Valley’s monopolies killing small business creation?

Failing Retirement Entrepreneur H. Paul Dorman just won’t to quit making advances in health care

MILLENNIAL MANES New barbershop’s old style attracts customers of all ages

FORT WORTH BY THE NUMBERS

Protect Your Company. Protect Your Employees A common-sense approach to mitigate the risk of internal and external fraud in a small business

49 56

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Smart CEO • Fort Worth

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Richard Connor

Welcome to the Fort Worth SmartCEO magazine

e launched our magazine FWB CEO in June/July 2015 with Tom Buxton on the cover. Under the leadership of Editor Paul Harral, the magazine was an immediate hit with readers and advertisers. Other media locally and nationally are still taking stories Harral wrote himself or assigned and turning them into their own. Recently Pam Minick, local entrepreneur and everyone’s favorite cowgirl with her own show on RFD television featured John Peter Smith CEO Robert Earley and his prized Clydesdales. She told us the idea for the show was based on a story in the Winter 2015 edition of CEO under the catchy headline CEE-EYE-EEE-EYE-OHH by longtime Fort Worth health reporter Carolyn Poirot. We learned a lot from launching that magazine. Most importantly we learned we liked the niche and the venue for other types of business reporting. Our enthusiasm sent us looking for way to grow that business. You are holding the culmination of that quest to grow. We bought a national magazine company, Smart

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CEO, with publications and events in six areas: New York, Long Island, North Jersey, Philadelphia, Baltimore and the Washington. We added two more cities to the roster: Fort Worth and Dallas. More cities and publications will be added this year. So, we are transforming Fort Worth Business CEO into Smart CEO-Fort Worth. It gives us a local magazine but with national reach. We have employees in sales and marketing and editorial across the country. Smart CEO is a dynamic events company and we will be adding digital components that will keep our nationwide readers constantly connected. Local entrepreneur Paul Dorman is featured on the cover in an extensive story about how he went about becoming a major force in healthcare and is perhaps poised to make major changes in the treatment of cancer. In addition, you’ll meet Trelaine M. Mapp, who fled the cold of Michigan to move to Arlington and launch a new career as a design/build contractor. We’ll give you tips about how to mitigate the risk of internal and external fraud in a small business in an article by Fort Worth CPA Rachel Glasser We will help you understand who the winners will be in the cybersecurity wars and give you insights into the future of the Texas economy and a new innovation support initiative here in Fort Worth: Rising Tide. Finally, we’ll introduce you to Edward Ramirez and Francisco Castaneda who opened the throwback District Barbershop. We hope you enjoy this new product. And we look forward to hearing your thoughts and suggestions.

Smart CEO • Fort Worth

INNOVATION

Want to jam with Cam? Shake with Shane? Former NFL player and Fort Worth native Jason Fox launching app for music lovers to share play lists with friends, celebs BY Kerri Panchuk

Fort Worth native and former NFL star Jason Fox wants people to be able to share playlists with celebs and athletes with his EarBuds app (pictured). Photo courtesy of EarBuds Music Photo courtesy of EarBuds

efore gracing the football field as an offensive tackle in the NFL, and before becoming CEO of social media start-up EarBuds Music, Jason Fox was a normal high school teenager in Fort Worth, exchanging CDs with friends in a quest to find the latest and greatest music. Like many athletes, Fox says that his love of music remained an integral part of his life through an athletic career that included stints with the Detroit Lions and the Miami Dolphins. From pre-game nerves to victory celebrations, music has been a soothing balm or energizing stimulant for Fox throughout his life, both inside and outside of sports.

Fox remembers locker rooms filled with famous NFL players — many of who calmed their pre-game jitters by listening to their favorite playlists and shared their music and artist recommendations with teammates. During those moments, Fox had a thought: What would happen if sports fans could see at any given moment what was playing in, for example, Cam Newton’s ear buds right before a big game? Fox hopes to answer that question with his social media start-up, appropriately named EarBuds. With the EarBuds app, users will be able to directly access the real-time playlists of friends, family, and favorite celebrities and athletes. In its pre-launch phase, EarBuds is inviting music fans nationwide to test out its platform (the site is collecting email addresses of people interested in participating in the upcoming test phase). Fox’s goal is to make music a social experience again. Ironically, while the Internet has provided more options for music aficionados to listen to songs online, Fox says it’s a long way from his high school days when it was easy to meet a friend in the hallways to share CDs. “I think people shared music more in high school than they do now,” Fox says. “People were always passing around CDs.” This allowed Fox as a teenager to stay on top of new bands and genres of music. But many of those friendly exchanges died with the Internet, Fox says. While music is more instantaneous and readily available today, the ability to know what your friends, your co-workers, your family, or your favorite celebrity or athlete is listening these days is diminished, Fox believes. “Now everybody has their own streaming service,” says Fox. “And they rely on the music that they already have in their library, or on algorithms.” But he has noticed these services and apps don’t always lead to new discoveries or the type of man-on-the-street discussions that used to tip Fox off to up-and-coming bands and genres of music. If being a music fan means communicating in real time with other music lovers, the Internet has yet to satisfy this part of the musical experience, he says. EarBuds (http://www.earbudsmusic.com/) is asking users to sign up and become beta testers for the app. The site is in the pre-launch stage soliciting app testers. Fox is eager to help music fans discover new music in [Continued on p. 10]

NOVEMBER 2017

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Earbuds cofounders Jason Fox (left) and Brice Wells

real time by sharing songs and lists with friends and celebs. By signing up, beta testers will be able to view in real time the playlists of all the other participants. Fox, by way of his time in the NFL, says he already has plenty of famous athletes interested in exploring the app in the future. “EarBuds will give you the ability to connect with anyone — celebrities and friends — and you can listen with them in real time,” Fox explains. “It gives you the ability to share your playlist. So, if someone is in California, and the other person is in Texas, they can both still share the same moment or the same experience with you by listening to your live playlist.” Like most social media apps, users will be able to comment on the music posted, share feedback, and “like” songs. Earbuds users will be able to launch any playlist that they have, whether it is saved on Spotify, Apple Music, or most other providers, and share their music with friends. For Fox, he is following the path of many former NFL players by launching his own company, but his motivation comes from his own personal desire to improve the music-sharing capabilities of the Internet. EarBuds is more than a post-NFL career choice; it’s a passion Fox

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has harbored since his youth in Fort Worth. “It isn’t just about running my own company,” he says. “It was really about what I saw as a gap in the market. When I was growing up, music was such a huge part of my life. “As I moved up in the NFL, I would see guys sharing music with their fans through Instagram and Twitter; and they would get feedback through responses.” Yet, Fox believes that the Internet still doesn’t offer a platform that encourages human engagement in the process of sharing music. “It came to fruition when in my last year playing, I saw Cam Newton warming up with a stadium packed with Carolina fans, and thought here is a guy with a huge social media following,” Fox says. That’s when the idea hit Fox. He thought to himself, when Cam is dancing on the sidelines, prepping, or celebrating, how many people would love to listen to what is playing in his headphones at those moments? If you’d like to test the app, simply log into the Earbuds webpage (http://www.earbudsmusic.com/). And sign up with your email address. As a tester, you will soon be able to begin sampling the music of other participants, and watch how the app develops in real time. If Earbuds works, fans will soon be able to dance along with Cam!

Smart CEO • Fort Worth

INNOVATION

Who will win the cybersecurity wars? It’s not necessarily the guys with the best digital defenses By Kerri Panchuk

on’t victory in the cybersecurity war go to whoever has the best technology? If the digital cyber-defenses of the US government or a company can outsmart the cyber attacks of domestic or foreign hackers, we’re safe, right? Not necessarily. according to Bo Birdwell and Dowell Stackpole. These two cybersecurity pros have created Cyber Forward, a North Texas-based company built around what they believe is the critical component in cybersecurity systems: the human factor “What is unique is we do have this whole organizational view of information security that really starts at a much higher level,” explains Stackpole, Cyber Forward cofounder. “That is understanding what information you have, categorizing the information, and making sure the people who handle the information are properly trained.” Stackpole and his fellow co-founder, Cyber Forward President Bo Birdwell, have a history of leveraging their education and skills to protect both the government and private sector from cyberattacks. Stackpole is an engineer who retired from Bass Companies in Fort Worth as chief information security officer. Birdwell, meanwhile, led teams of cyber operators at both the U.S. Department of Defense and the Citi Smart CEO • Fort Worth

Security Operations Center. But it’s Birdwell’s time as a cybersecurity expert at the U.S. Air Force that’s at the heart of his company’s first mission. “We are passionate about protecting American lives,” explains Birdwell. Birdwell knows from firsthand experience that protecting American lives is not just the federal government’s job, but it is also that of the contractors and subcontractors the government employs to carry out its security mission. Birdwell and Stackpole also want to protect American businesses. “America is being bled dry through intellectual property leaking out of the country,” says Birdwell. “We started our company for clients trying to protect controlled unclassified information, which is information that is not classified but should not be in the public domain. The easiest way to get sensitive information from the government is by going against the contractor or subcontractor.” With North Texas home to numerous defense contractors and subcontractors, Cyber Forward is anticipating a last-minute rush from businesses trying to comply with the imminent implementation of amendments to the Defense Federal Acquisition Regulation Supplement (known as DFARS). Specifically, the worry keeping defense contractors up at night is a new rule that requires all contractors and subcontractors handling certain Department of Defense (DoD) data to comply with prescribed cybersecurity measures by December 31, 2017. The rule, which is outlined in Title 48, Section 252.204-7012 of the Code of Federal Regulations, forces contractors and subcontractors working with the DoD to comply with security standards set out in the [Continued on p. 12] NOVEMBER 2017

[Continued from p. 11]

National Institute of Standards and Technology Special Publication 800-171. With this change, Cyber Forward expects defense contractors and subcontractors to begin searching for compliance help. “If they realize they are not ready, then there are not enough cyber workers to get them ready by January,” Stackpole says. “We expect growth once the word is out.” While Cyber Forward’s founders say full-scale enforcement of the regulation could take a year or two, the result of non-compliance may eventually cost DoD contractors and subcontractors government work. So what makes Cyber Forward’s strategy different from other technology companies working in the space? “What we have found is that many people and organizations miss the forest for the trees,” says Birdwell. “You need technical solutions for this work, but it’s not where you are going to succeed. It does not matter how strong your system is if someone clicks on a link and bypasses your security.” Cyber Forward is focused on analyzing the totality of a company’s cybersecurity plan by offering consulting, training, auditing, and blue prints to ensure clients build holistic solutions that focus on people, systems, and proper data classification. “We can do this as a trusted agent, or we can train people to do it for themselves,” Birdwell says. Though defense contractors remain a prime customer for Cyber Forward, any entity with sensitive data to protect is a potential client — from law firms to medical providers and small companies without access to cyber operators. At the present moment, Birdwell and Stackpole remain committed to building a North Texas company that is focused on cybersecurity’s future, and this future is looking as boundless and endless as cyber space itself.

NOVEMBER 2017

Smart CEO • Fort Worth

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POLICY

Protectionism v. Globalism Vibrant international markets like Fort Worth must still be global

nternational trade is a hot topic everywhere, especially in places like Fort Worth where many companies do a lot of international business. The representatives of three big Fort Worthbased companies doing international business think the pendulum against international agreements and trade will swing back again when everyone realizes that the economy really is global. Speaking at the Fort Worth Mayor’s International Luncheon on Wednesday, Nov. 1, Mayor Betsy Price was joined by: Raanan Horowitz, president and CEO of Elbit Systems of America Maria Mejia, senior vp and CFO of Ulterra Phil White, founder of Cervelo Cycles of Toronto, Canada Mayor White posed the following question: What is the future of international business in light of the nationalist movement with Brexit, the redo of NAFTA? HOROWITZ: Short-term, you have disruptions and discussion about things like border attacks and the tariffs and treaties, I think it can have a negative effect. You mentioned, Betsy, the amount of trade we do here from Texas and other places and we don’t want to disrupt that. I think in the long-run, my belief is that a lot of those things cannot counter the macro market forces and businesses like us, or any businesses, are looking for strong markets, vibrant markets.

NOVEMBER 2017

Fort Worth Mayor Betsy Price (Photo courtesy of Fort Worth Chamber of Commerce)

Texas and the DFW Metroplex is a vibrant and growing market. So, in the end, those metro dynamics market forces of trade, supply and demand, I think [those are] going to overcome the short-term tendencies of protectionism and barriers to trade. MEJIA: This is probably going to lead to companies like us bringing more product back to the U.S. and maybe manufacturing more in the U.S. But, it may generate also some counter tariffs for countries that we do quite a lot of business with. If we become national, and we start putting up barriers, they’re going to put up barriers. You’re not going to pull back from the market where you are successful, but we will find a way to do business. I think international trade treaties are a critical part of our success. WHITE: The world is changed since we started. I think the challenge now is not to say that the problem is what we’re going to do about the Chinese; the problem is how are we going to take care of those workers who have been displaced out of their former manufacturing jobs. I think that’s the real challenge that maybe, as a government, that’s what we should be focusing on. I’m a free trader. We built a business on a global model. We said we couldn’t survive just on the local model. We had to go global to make it work. (The Mayor’s International Luncheon was put on by the Fort Worth Chamber of Commerce. The sponsor was Frost. This article is a shortened version of a piece that ran in the Fort Worth Business Journal Nov. 3.)

Smart CEO • Fort Worth

INNOVATION

Bitcoin: New currency or digital Beanie Baby? by Michael Mayes

y Warner’s great mass delusion of the late 90’s began simply with a $2.50 plush toy. Other than their miniature size and cute names, the beanbag animals weren’t particularly innovative, but their timing with the rise of eBay propelled the Ty Warner company to $1.4 billion in annual sales in the three years between 1997-1999. But the world of speculative bubbles — be it the value of antiques, metals, pork bellies, tulips, or plush toys — is a human one. Behavioral economists, 2017 Nobel economist Richard Thaler, tell us bubbles are not driven not by some invisible hand, but rather by the shared hands of the irrationally exuberant. We innately want to believe price-appreciation patterns will continue forever when we see them take off.

Enter Bitcoin.

Little understood by most people, Bitcoin is a worldwide cryptocurrency and digital payment system. Smart CEO • Fort Worth

When it appeared, it was seen as the first decentralized digital currency because it works without a central repository or administrator. No one knows exactly who invented it because it came from someone or a group of people call themselves Satoshi Nakamototo (who has or have never been identified). It was released as opensource software in 2009. In the last year, Bitcoin’s value has risen 861%, up more than $6,000, on speculation certainly bordering on mania. There are hundreds of other virtual currencies trying to be what Bitcoin is, boasting additional features or capacity, but pacing far below Bitcoin’s market cap of $113 billion. As of mid-November 2017, the entire cryptocurrency market is valued at $198 billion. But Bitcoin is no beanie baby. It could even be the closest thing to a world currency since the Roman Empire. It is perhaps best described as the reinvention of money for a digital age. Economist William Jevons wrote way back in 1919, “Money’s a matter of functions four: a medium, a measure, a standard, a store.” Bitcoin is a digital version of all of those things. It is a medium of exchange (for other goods and services); it is a measurement (of the market value of goods, services or transactions); it is a standard [Continued on p. 16] NOVEMBER 2017

[Continued from p. 15]

(a method of deferred payment, a way to settle debt); and perhaps most importantly today, it is a store of value (it can be saved, retrieved, and exchanged at a later time). Blockchain technology is the cryptography-driven software solution that keeps it secure and honest and transparent. A decentralized ledger of accounts, shared by everyone on the internet, makes every transaction public. A private key, far more complex than a pin number, keeps it secure. But unlike the information your bank captures, such as what and where you spend money, digital currencies use cryptography to keep who, what, and where private and secure. Why should my bank know I’m making an unwise choice of buying a hamburger with the last $5 in my account? What if they reviewed my alcohol purchases when deciding on a loan? Cryptocurrency and blockchain technology are here to stay, but the meteoric rise in speculative value will eventually slow. Whether speculating on the future value for collectibles, tulips, the stock market (now on a record run), or in a new digital currency, humans often succumb to the excitement and intoxication that something is too good to pass up. We become mesmerized and lose our natural suspicion that something may actually be too good to be true.

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Unlike the Ty toys which long since disappeared, Bitcoin might instead be like the invention of the teddy bear in 1902 which is now a ubiquitous part of our society. The jury is still out whether Bitcoin and other cryptocurrencies are like Barbie and Cabbage Patch dolls. (Frankly, Barbie and Hummel have done far better than Splashy the Whale.) Other initial coin offerings (ICOs) brought to you by Floyd “Money-Always-Wins” Mayweather or Paris “That’s Hot” Hilton — but lacking any technological breakthrough — have the potential to land in the digital dustbin. Since ICOs are created without the strict regulation of an IPO, some cryptocurrencies are more sketchy on real value and could probably disappear along with people’s money. But the vast scope and value of cryptocurrencies now moves it beyond comparison to any mania. The cryptocurrency market has a collective market cap larger than Goldman Sachs ($94.55 billion) and Morgan Stanley ($91.87 billion) combined. Bitcoin is a train, and participants are the passengers. The train may wreck, passengers may get off in droves, but another train will take its place because the future is digital. In the end, faith in Bitcoin’s value and largescale participation in its exchange will determine if it’s the new money or Allegro, the Ballerina Duck.

Smart CEO • Fort Worth

ECONOMY

Ray Perryman

The State of the Texas Economy: Despite the lingering effects of Hurricane Harvey, the Texas economy will be a growth leader once again

he Texas economy added about 256,100 new jobs over the past year. The number would have been even higher except for the effects of Hurricane Harvey, and the Lone Star State is set for relatively strong growth in the future. Almost all major industrial sectors are expanding, and that trend is likely to continue. The U.S. economy is performing quite well, with job gains at a relatively strong pace and falling unemployment. The stock market is up, consumer confidence is fairly high, and inflation remains in check. There are challenges to be dealt with, both domestic and international, but the underlying pattern is generally improving. In fact, the Federal Reserve has decided the economy is strong enough to take the next step toward normalization of monetary policy, which is important for longterm prosperity. The health of the national business complex is clearly of benefit to Texas. On the downside, the disruption caused by Hurricane Harvey will affect the performance of the Texas econo-

M. Ray Perryman is president and CEO of The Perryman Group (perrymangroup.com). He also is Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.

my and, in particular, the Gulf Coast areas. Some communities were devastated by the wind and flooding rains, and are still recovering. In the short term, some industries will see an increase in activity (such as construction), but the long-term effects are decidedly negative. The Perryman Group estimates that Hurricane Harvey will cause losses to the U.S. economy over the next few years of $151.1 billion in real gross domestic product (constant 2009 dollars), $100.0 billion in real personal income, and 1.1 million person-years of employment. The bulk of the impact falls on Texas and Louisiana, with Texas seeing losses projected at $114.9 billion in real gross state product, $76.1 billion in real personal income, and 804,100 job years. A full recovery for the economy is expected over time and many business operations are already back to normal, though the human costs and emotional toll of the massive storm will remain with us much longer. As was the case in September, some of the economic data will show job losses due to the storm’s effects. In fact, the jobs numbers and other statistics over the next few months will likely be highly volatile, particularly for the areas directly affected by Harvey. Even so, these twists and turns are not indicative of underlying performance. Another contributing factor to the state’s economic expansion is recovery in energy. The rig count is averaging nearly 200 higher than a year ago. According to Baker Hughes, the Texas count for October averaged 443, compared to an average of 250 for October 2016. This additional activity is not only beneficial to the economies of major production regions such as the Permian Basin, but also to businesses across the state. The strength of the Texas economy will help as the we continue to deal with the aftermath of Hurricane [Continued on p. 20]

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Smart CEO • Fort Worth

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Hurrican Harvey’s economic impact: Hurricane Harvey will cause losses to the U.S. economy over the next few years of $151.1 billion in real gross domestic product (constant 2009 dollars), $100.0 billion in real personal income, and 1.1 million person-years of employment. The bulk of the impact falls on Texas and Louisiana, with Texas seeing losses projected at $114.9 billion in real gross state product, $76.1 billion in real personal income, and 804,100 job years. — The Perryman Group

[Continued from p. 18]

Harvey and whatever other challenges come our way. The state has been recognized by Business Facilities Magazine (Best Business Climate, Best Infrastructure, Installed Wind Power Capacity Leader, Wind Power Installations, and Exports Leaders) and Chief Executive magazine (where a survey of CEOs placed Texas at the top for business climate for the 13th consecutive year). Texas has also won Site Selection Magazine’s Governor’s Cup (which goes to the state with

the most major corporate location and expansion projects) five years in a row. Looking ahead, it will take time for the Gulf Coast region to return to normal after Harvey. From an economic perspective, longterm economic performance is unlikely to be harmed for the state or for the greater Houston area, though communities sustaining major wind damage (such as Rockport and Port Aransas) may struggle to recover. All in all, though, the Texas economy will likely continue to be a growth leader in the years to come.

Good economic portent: Oil rig count The rig count is averaging nearly 200 higher than a year ago. According to Baker Hughes, the Texas count for October averaged 443, compared to an average of 250 for October 2016. This additional activity is not only beneficial to the economies of major production regions such as the Permian Basin, but also to businesses across the state. — The Perryman Group

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Smart CEO • Fort Worth

EDUCATION

Kent Scribner

The State of Fort Worth Education: “If we’re going to continue to be great — a great place to raise families and to build neighborhoods — we must invest in our students today”

ort Worth Independent School District (ISD) Superintendent Kent Scribner told the audience at the Fort Worth Chamber of Commerce’s State of Education luncheon Oct. 13 that the state of Fort Worth’s schools is in a very good place. Here are lightly edited highlights and comments from his address: Fort Worth ISD is no longer focused on high school graduation as the goal. Our [greater] goal is to prepare all students for success in college, career, and community leadership. Fort Worth is striving to attract business, entrepreneurs, talents of all kinds to one of America’s fastest-growing cities, and if we’re going to continue to be great — a great place to raise families and to build neighborhoods — we must invest in our students today. Fort Worth ISD is in a very good place. Our board has adopted the Lone Star governance belief that student outcomes will not change until adult behaviors change. Our board of trustees has narrowed the focus in the district not to dozens of goals and initiatives but to three basic tenants — early literacy, middle years’ math, and college and career readiness. We know that third grade in American education is where we stop teaching students how to read and then

NOVEMBER 2017

teach through reading. We know it’s extremely important that we build a base, a foundation if you will, for students to be successful. So, third grade reading is our focus and that’s not just about instruction of third-grade teachers, that’s about all of the support staff, the support areas between birth and third grade. Middle years’ math is also important because we all know in education that freshman algebra really is a benchmark. [The] percentage of students who fail freshman algebra typically matches the dropout rates in a high school. Then finally, college and career readiness. We know that in North Texas that 66 percent of the jobs that earn a family-sustaining wage required at least a two-year degree, certification or licensure, or a four-year degree. Things are absolutely heading in the right direction. We have 143 schools in Fort Worth, and four years ago we had 28 schools that were underperforming. Today, as we move forward, we went from 28 schools to 13 … to single digits next year on our way to zero underperforming schools. We know that third grade reading in any city — in Dallas, in Houston to Chicago and Los Angeles — correlate with the college graduation rates. In the city of Fort Worth, only 31 percent of our adults hold a fouryear college degree. We want to change that. In order to do that, we have to increase our thirdgrade reading levels. Two years ago, we were 29 percent; we’re on our way to 34 percent. We’ve leapfrogged San Antonio and Dallas on our way to the 40s next year and beyond. Hopefully, eventually, with the help of the leaders in our community to “100 by ‘25” — an initiative whereby our goal is that 100 percent of our students will be reading at grade level in the third grade by 2025. We know that from birth until 18 years old, a student [Continued on p. 24] Smart CEO • Fort Worth

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[Continued from p. 22]

will spend only 15 percent of their life in a school building. So, since we know that they’re spending 85 percent of their lives elsewhere, we must all, as a community with a collective-impact perspective, pull the rope in the same direction around early literacy. After school programs, summer school programs, Sunday school, libraries in the city, a community center all focused on literacy, that will be the only way we can change that trajectory toward 100 by ‘25. Also, new this year is a focus on community volunteers participating in supporting us in this initiative. Our campuses have been training and all of our elementaries will be welcoming you to come and volunteer in our classrooms. Let’s talk about mathematics. We’ve seen some growth there as well. The number of students passing freshman algebra last year was 77 percent. That increased this year to 83 percent. That’s something we want to get into the 90s. Two years ago, our students were earning $36 million dollars in merit scholarships. That number has more than doubled today to $65 million. The 2013 bond program is 90 percent complete today and will be 100 percent by the end of the 2017-2018 school year. The centerpiece of that bond is the I.M. Terrell Academy for Visual and Performing Arts and STEM. This will be a college preparatory high school that literally will be the envy of any high school in the region. College preparatory students can take specialized courses in VPA and STEM in addition to the core humanities curriculum. Scribner, who earned a Ph.D. in educational leadership and policy studies from Arizona State University, was hired by the Fort Worth ISD Board of Education in October 2015. Compiled by Paul K. Harral

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Smart CEO • Fort Worth

Leader.

Chip Davis B.S., General Business, ’72; M.Ed., ’73

Chairman of the Board, National Farm Life Insurance As a student, Jerry “Chip” Davis quarterbacked the Tarleton Texans in football, gaining experience in teambuilding and leadership from Athletic Director and Coach Lloyd Taylor. Knowing the power of education, he continued after his bachelor’s degree to earn a master’s while coaching. As a professional, Davis entered the worlds of finance and insurance, forging a strong team environment and demonstrating his leadership skills in advancing to Chairman of the Board of the National Farm Life Insurance Company in Fort Worth. Recognized throughout the industry, Davis won the 2016 American Council of Life Insurers’ Forum 500 Distinguished Service Award, serves as President of the Tarleton State University Foundation, Inc. Board and received the Tarleton Distinguished Alumnus award in 1995.

Tarleton Texans – Today’s Leaders

Smart CEO • Fort Worth

www.tarleton.edu

NOVEMBER 2017

BIG IDEA

Fort Worth is “Where the West Begins” By Kevin Grace, MBA

he Fort Worth Stockyards embody the Western heritage of the area. It’s an incredible part of the city, and in 1917 the Stockyards were the most important horse and mule market in the world. Now, thousands of cattle are sold by satellite. The rich heritage and historical perception created over hundreds of years sometimes prevents a full understanding of what the area has to offer in the 21st century. Some people are unable to reconcile the city’s historical image with a city brimming with innovation and opportunity. Today’s Fort Worth is a super-connected community, with more than 820,000 estimated Facebook users. Given that the city’s population is 854,113 based on the 2016 census: that’s 96% of the city who are connected! Beyond being connected, Fort Worth has multiple, rich layers of culture and creativity that offer attractive opportunities for the business community. Consider: Facebook chose Fort Worth for a 2.5 million square feet data center that will become one of the largest in the world A recent $2.7 billion acquisition of a Fort Worth founded start-up, ZS Pharma The new 300-acre American Airlines campus that’s currently under construction

Rising Tide Initiative

The Rising Tide Initiative is a non-profit that has been working with the community to empower entrepreneurs. Here are just two visions of the future of Forth Worth: Kevin Grace is Chief Executive Officer at AME, and Managing Partner at Catalyst Partners. This article originally appeared on Kevin’s LinkedIn page.

NOVEMBER 2017

What is your perspective on the state of the Fort Worth entrepreneurial ecosystem? “Overall, my general thought is that it’s the byproduct of a lot of smart people working in a lot of smart jobs and having ideas they are pursuing. Contrast that to Austin, where start-ups are a huge part of the economy. I get the impression that Fort Worth is still focused on traditional businesses, which isn’t bad at all — just different.” — Chip Hanna, Dando Advisors Which ecosystem do you think exemplifies the closest to what you would like to see in our local ecosystem? “About five years ago, Kansas City declared itself ‘America’s Most Entrepreneurial City’ and it has been hustling to live up to that claim ever since. Their community is always doing something organic and innovative to build their community. After Google Fiber arrived in 2011, they built an entire “start-up village” around the first neighborhood to get the fastest internet in the world. They recently broke the world record for the largest number of people co-working in the same place. I think FW could learn a great deal from the way KC embraces, nurtures and champions its start-ups.” — Cameron Cushman, previously Senior Advisor to Kaufmann Foundation The characteristics of the Fort Worth region create an opportunity for entrepreneurs and businesses.

Median Age Advantage

Fort Worth is getting younger. That’s enticing from an entrepreneurial perspective. Dallas is aware of the advantages of attracting Millennials. In fact, this is one of the primary goals for the “Say Yes to Dallas” campaign. Fort Worth should be taking advantage of this strength. It creates the possibility that people within our community who already desire STEM careers will contribute reciprocally. Young entrepreneurs have the highest intentions to start a business, with 30.5% saying they intend to start one. The chamber is re-imagining how they can offer support to the small business and entrepreneurial community. As part of the new five-year strategy, \ Fort Worth [Continued on p. 27] Smart CEO • Fort Worth

[Continued from p. 26]

is positioning itself as an international city in addition to providing entrepreneurial support. In the next four years, the city is aiming to achieve top 20 status in national entrepreneur rankings in at least one category.

UNT Health Science Center

UNT Health Science Center and TECH Fort Worth have worked closely together to provide resources and guidance to biotechnology ventures through an Acceleration Lab, including access to laboratory space, administrative support, and research expertise. Companies benefitting from these resources include ZS Pharma and Encore Vision, both Fort Worth start-ups acquired by Big Pharma. UNT Health Science Center has also established a drug safety project with Texas Health Resources, launched the nation’s largest study of cognitive disease in Mexican-Americans, and worked with Texas Christian University to open a new medical school that could create hundreds of new residency slots in North Texas. A new research building is scheduled for completion next year that will house the medical school, as well as UNTHSC’s pharmacy college and eye research institute. UTA Research Center UTA is advancing towards a Tier 1 status, graduating more than 200 Ph.Ds and increasing research expenditures by nearly 9 percent. UTA has developed a strong innovation pipeline, with more than 100 patents issued over the last five years and more than 25 technologies licensed to outside companies. Some 60 faculty and students are currently working on start-ups and more than 20 start-up companies are developing around UTA. “UTA is committed to developing an environment and culture that eliminates obstacles to innovation and entrepreneurship so that results of research and creative activity can be moved from our studios and laboratories

Smart CEO • Fort Worth

into the economy for the benefit of society,” UTA President Vistasp Karbhari said.

Timely Initiative

The Rising Tide initiative has been thriving since its launch at the Fort Worth Science and History Museum. The team has spent the year touring and interacting with various organizations contributing to the ecosystem. It has heightened our excitement about the opportunity that the area has to start and sustain new entrepreneurs. We have a passion for adding value to the local community in the form of new, successful businesses. Rising Tide focuses on people, culture, and software that fill in the gaps in the entrepreneurial and innovation ecosystem. To increase the odds of success, we’re collaborating to close the gaps that exist between support organizations. Entrepreneurs will be guided to resources that best serve their needs. If we can learn to serve the needs of the builders, we will all have a little more opportunity.

Interested? Check out our happy hour

If you are curious about Rising Tide or would like to get involved, check-out out the happy hour hosted by Catalyst Partners every Thursday at 5 PM at HG Sply Co. Also, check out our Facebook page (https://www.facebook.com/risingtideinitiative/) for details on our next big event in November for collaborating with the areas best and brightest entrepreneurs. We’re encouraging a culture of collaboration that is friendly and focused. We’re excited to announce that a new interactive experience will available for free to serve the needs of the community. In the next 30 days, entrepreneurs and organizations will start connecting in a new way. IT STARTED WITH ONE DISCUSSION, GREW TO HUNDREDS AND NOW HAS REACHED THOUSANDS NATIONWIDE.

NOVEMBER 2017

“Driving home the importance of safety? That’s the boss’s job.”

“When it comes to protecting my drivers, I don’t take shortcuts. I expect them to drive safely, and they expect me to make sure they do. It’s part of my job—the most important part. The fact is, occupational driving incidents are the leading cause of worker fatalities in Texas. That’s why I train my people and why I use Texas Mutual. They’ve got information, videos, flyers, training tools and it’s all just a click away. They help me protect my business by protecting the people who make it work.” Want to make your drivers safer in a minute or less? Download our free video series 60 Seconds to Safe Driving at worksafetexas.com/driversafety. © 2017 Texas Mutual Insurance Company

PROFILE

Tremaine Mapp: “Don’t accept what people have told you and let that define what you want to do in life.”

By Paul K. Harral pharral@bizpress.net

relaine M. Mapp remembers it well. He and his infant daughter came to Arlington to visit his wife, an engineer for General Motors who was doing temporary duty at GM’s Arlington plant working on the Cadillac Escalade. Marisha Mapp was spending weeks at a time away from their home in Auburn Hills, Michigan, right outside of Detroit. “She told me, ‘You know you should come down here and spend some time.’ We had just had our daughter. We came down here for a weekend and it was in November,” said Mapp, owner and CEO of Source Building Group, said. “The temperature was about 67-70 degrees. In November.” By way of contrast, the November temperatures at Detroit’s Metropolitan Wayne County Airport range

from 31 degrees to 55 degrees – and everyone who lives around the Great Lakes knows Gordon Lightfoot’s “Witch of November” is just getting started. But it wasn’t just the weather. It was also the economy. Mapp was happy in his job at Turner Construction, an international construction services company. But then in 1999, Turner CEO Tom Leppert — a former Dallas mayor — started the process of moving the corporate headquarters to Dallas (at least in name). GM really wanted Marisha Mapp in Arlington, and Trelaine Mapp saw it as an opportunity to move to a better climate and into a more robust economic area. He convinced Turner to transfer him to North Texas in 2001. Mapp graduated from Drexel University in Philadelphia with a degree in architectural engineering. He met his wife, Marisha, also an engineer with a degree from the University of Pittsburgh, at a student engineering conference in Raleigh, North Carolina. “We were part of a leadership group that oversaw student engineering chapters across the nation,” he said. They have two children, daughter Aniysa, a junior at Oklahoma State University, and son Amari, a sophomore at Trinity High School in Euless. Marisha Mapp later worked for Bell Helicopter and now is a quality engineer for Parker Hannifin in Fort Worth. And while Trelaine Mapp found that he was most happy working on construction management projects in the field, he thought he needed more experience on the business side of the business. That led him to leave Turner in 2007, on good terms, he said, which would be important in the next phase of his life. That’s when, as he says, “the spark of being an entrepreneur started to ignite.” He would go on to work for the Warrior Group, a minority- and woman-owned construction business, founded in 1997 in Dallas, and another, smaller firm before launching his own business in 2012 — a construction management at risk firm that immediately lost money. “When I started Source, I thought I’d saved up enough money to at least spend about six months to a year starting a company,” he said. He spent four months writing a business plan. He showed it to some people, [Continued on p. 30]

Smart CEO • Fort Worth

NOVEMBER 2017

His parents, Earl Conner Jr. and Athena Conner, still live in Philadelphia. They were blue-collar workers, he including Leppert. says, and they encouraged him to avoid bad influences “Tom looked at the plan and said, and get an education to open up the world. ‘You got some big goals, but you “But I really didn’t have any entrepreneurs around me need to come to reality on certain to groom me, to advise me, to really be, I would say, that things.’ So, I updated my plan and mentor to grow as an entrepreneur,” Mapp said. Even it was more realistic, but I thought when he left Turner, it wasn’t to step out on his own but 2016 Revenue: $4.5 Million I saved enough money and I didn’t to join a smaller firm to make more of an impact with Number of employees: 6 because stuff doesn’t happen as automore responsibility. matically as I thought,” Mapp said. The chamber program is important because there are Market Segment Focus: Commercial The lesson was immediate and opportunities for minority and woman owned businessconstruction management/general es when much larger firms are contracting in the following markets: Ed- painful. “I took on a bidding on contracts that contain ucation, healthcare, aviation, municipal The wind in the wires made small project governmental incentives. Those and select private projects. in Mockingcontracts generally require some a tattle-tale sound and a Website: sourcebuild.net bird Station in percentage of minority particiwave broke over the railDallas and lost pation to level the playing field ing. And ev’ry man knew, money. I was pretty distraught,” between the major companies as the captain did, too Mapp said. It was the only deand smaller ones struggling to get ‘twas the witch of Novemsign-build project he’s ever done. started. “It was a small project; it was only While he was consulting for ber come stealin.’ worth about $50,000.” the chamber, American Airlines – Wreck of the Edmund FitzBut after that sobering expewas completing its merger with gerald, Gordon Lightfoot rience, he thought about going U.S. Airways and was planning back to corporate America. “You to build an integrated operations know, get a salary, have a nice management position, center in Fort Worth. and just take vacations twice a year, and be done with Holder Construction out of Atlanta had the contract it.” and needed help finding Fort Worth area companies to Then Dee Jennings, president and CEO of the Fort satisfy the participation requirements. Mapp knew the Worth Metropolitan Black Chamber of Commerce contact at Holder from years back. called. Jennings was working on construction initiatives “We facilitated a couple of workshops, but at the same for minority contractors and asked whether Mapp was time, it was a little self-serving,” Mapp admits. “I said, interested in consulting. ‘You know what? I’m just starting my firm.’” He part“I said, ‘Absolutely.’ I didn’t have any money, you nered with another minority firm — 3i out of Dallas know.” owned by former Detroit Pistons basketball player and Baylor University Athletic Hall of Famer Mike Williams — to be a sub-contractor. “Holder Construction was the construction manager at risk and mentored us on the project, Mapp said. “We have a mentor-protégé relationship with them. That project right there was about $7.8 million and we were contracted under Holder to deliver this two-story, 175,000-square-foot facility that was overall probably about $80 million to American Airlines. “That was the first major project, and I hired my first employee,” he said. That was Etonya Senigaur, and she’s still with him as senior project engineer. “I was used to the Turner way, but Holder was extremely efficient in how they delivered the work,” he said. “She and I would be out there weekly. Through that experience, Holder really looked at us, Source Building Group, and looked at my interest in helping them as a win-win, good relationship. That project, I Source Building Group Inc. is a full-service construction management at risk and general contracting company with headquarters in Fort Worth, focused on quality, safety and sustainable construction methods that impact the environment in the most positive way.

[Continued from p. 29]

[Continued on p. 35]

NOVEMBER 2017

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[Continued from p. 30]

would say put us on the map.” After that, Mapp worked in partnership with North Texas Ductworks on a Love Field/Dallas Aviation Group Headquarters project. Hensel Phelps Construction Co. was construction manager on the renovation project. There were a couple of smaller projects. “But then I also got the opportunity to team with my old firm, Turner, on Fort Worth ISD’s I.M. Terrell STEM project. We also, about a year and a half ago, won a project to deliver the new University of Texas Law School in Dallas. “So, it’s just interesting how things come full-circle,” Mapp said. “You know, maintain those relationships. Because the guys that I came up with in Turner, they were young guys back then, but now, they’re running the office. And they’re still buddies of mine. “I tell people a lot in this business that I’ve learned people want to do business with people who they know, who they like and who they trust. Period,” Mapp said. “And if those three things can be fulfilled and sustained, your repeat work as firm will increase.” Source Building Group is still a young firm, he says, but he’s seeing results from his efforts to build trust. “If folks can know that the person who sits at the head of the table is going to be truly invested in the project, that you’re going to be accountable, they value that tremendously,” he said. “Especially when you go through the challenges.” So relationships are important, but so is education. Mapp grew up in West Philadelphia. The neighborhood high school was Overbrook High School, the same high school that Wilt Chamberlain and Will Smith attended. But he didn’t go there even though there were family members and friends there. He went to academically challenging Roxborough High School, which accepted him because he had good grades and was a good student. “I actually took a bus, a train, and another bus for four years to Roxborough,” he said. He speaks of negative influences that “interjected themselves into our neighborhood and seeing some friends just kind of be diverted with that type of attention. I knew I didn’t want to go that route.” That’s wisdom beyond a teenager’s normal ability to see the future. And his parents didn’t want him to go that route, either. “It was kind of a combination of things,” he said. “Well, Number 1, God. We were strong in faith. But also, Number 2, my parents … daily would reinforce within us, ‘Don’t be like them down the street.’ Or, ‘Don’t be like your friend here,’ or ‘Don’t be like your cousin here because they’re doing this and they’re gonna wind up six-feet under or in jail.’ ” They encouraged him and his siblings to control Smart CEO • Fort Worth

their activities and surroundings to set themselves up for success. “Because that way, no one will be able to control you. No one will be able to dictate what you do,” Mapp said. He would tell young minority people in Fort Worth the same thing. “I would stress, especially to a lot of our youth who are underserved, don’t give up,” Mapp said. “Don’t let challenges and obstacles define who they are and what they do. Because, more often not, at that age, especially when they’re young, they just turn to those negative influences that just truly divert them and set them up negatively for life. Don’t let your situation and obstacles define your destiny. Don’t let that happen.” Maybe it’s just one parent in the household, some[Continued on p. 36] NOVEMBER 2017

[Continued from p. 35]

times maybe there’s no parent in the household. “You don’t have much, money wise; you don’t have much house wise, your situation is dire,” Mapp said. But there are resources available to help people work through their challenges if they seek them. And Mapp says complacency is as debilitating as other bad influences like drugs and crime. “Let’s just push the drugs and the illegal stuff aside,” Mapp said. “Complacency is a problem. … Don’t accept what people have told you and let that define what you want to do in life. If you have a passion, whether it’s career, or just in life, pursue it. Don’t let complacency define you.” He talks about an uncle who was six years older who went to college late, but he would always tell Mapp that From left: Michael McQuern, superintendent; Natalie Woods, project engineer; Trelaine Mapp, president and CEO; Etonya Senigaur, senior project engineer; and Dane Lacero, assistant superintendent Credit: Paul K. Harral

NOVEMBER 2017

he had to take a step back and go to school because it would help him in his career. Other family members also led the way to higher education. Mapp, now 46, knew at an early age that he had a purpose and that there was a path to it. “I didn’t know what the path was,” he said. “But I knew that if I played my cards right, education wise, even with the people I surround myself with, there will be something special in the future. I knew that. In fact, I still feel that way.” At the core is a strong work ethic. “You’ll fall, but you gotta get back up,” Mapp said. “And there’s going to be some tough nights. I had a lot of them, probably will have some more. But you learn from them and you get back up.” For those unfamiliar, construction management at risk means that the contractor has guaranteed a maximum price for a specific project. “They call it at risk because the price that you give them, you’re responsible for the value,” Mapp said. “If it goes over, it comes out of your pocket.” The term general contractor has evolved over the [Continued on p. 39]

Smart CEO • Fort Worth

MINORITY LEADERS IN BUSINESS AWARDS

Thursday, Dec. 14

11:30 a.m. Registration • 12:00 p.m. Luncheon and Awards Fort Worth Club – Top of the Town

Join the Fort Worth Business Press as we recognize Tarrant County’s top minority leaders in business and the community. Honorees will be chosen based on professional achievements, community contributions, philanthropy and other milestones and awards.

2017 HONOREES

2017 Lifetime Achievement Award

2017 Legend Award

John & Sons Printing

Commissioner Precinct 1

John Hernandez

James N. Austin Jr.

Shay Dial Johnson

Benson Varghese

Yolanda Harper

Larry Kemp

Wyntress B. Ware

Alejandro Ralph House

Arturo Martinez

Robert Sturns

Austin Company Commercial Real Estate Alpha Discovery Group LLC The House Group

Goodwill Industries of Fort Worth Kemp and Sons General Services Inc. Tarrant County College District

Roy C. Brooks

Varghese Summersett PLLC Ware & Associates, Inc. City of Fort Worth

Sau Le Hudecek

Joseph DeLeon

Texas Health Harris Methodist Hospital Southwest Fort Worth

Richard Casarez, P.E. Oncor Electric Delivery

Sylvia Alcala

J Anthony Group, LLC

Jerrel James Salon

To purchase tickets, go to www.FortWorthBusiness.com/tickets Single Tickets: $250 • Nonprofit Tickets: $175

Tables (seating 10): $2,500 • Nonprofit Tables (seating 10): $1,750

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[Continued from p. 36]

years, he said. At one time, a general contractor did everything. “They had in-house labor, they poured the concrete, they had the carpenters, you know. Really the only work that they didn’t do that they would possibly outsource was specialty work, like electrical, mechanical, plumbing, stuff like that. Everything else, they did themselves. “Those are the days when you had true craftsmen working for a general contractor,” Mapp said. “That term general contractor, now, has evolved into just being a construction manager, and you sub out everything. Some firms, the bigger firms, still do their own concrete, still do their own carpentry, but the general contractor is really a construction manager.”

Smart CEO • Fort Worth

Mapp says growing up he had a passion for art — drawing buildings, shapes of buildings, different perspective of buildings — but also a passion for math. “So throughout high school, I knew I wanted to go into engineering,” he said. “Initially it was electrical engineering. But I said, ‘You know what? That’s for the smart people, I’ll just stick with architectural engineering or architecture.’” His degree is in architectural engineering. He was clearly wrong about the smart part. Drexel University is also where he learned while working in a co-op program with an in-house architect for Philadelphia International Airport that he loved being in the field. So the world lost an electrical engineer, but it gained a builder.

NOVEMBER 2017

POLICY

Monsters of Main Street: Are Silicon Valley’s monopolies killing small business creation? By Mike Wendy

f you’ve stumbled into your office’s storage room lately, you may have seen relics from your technological past — telephone directories, calculators, atlases, calendars, flip-phones, tape drives, cassette recorders, big cameras, three-hole punch gadgets, manila folders, and pencil sharpeners. What you are seeing is Silicon Valley’s effect on our economy. Has it been a positive effect, or has it crippled your growth and the growth of other small and midsized businesses? Maybe it’s how you view your storage room that provides the answer. Do you see all that old stuff, and believe that it has been replaced by new products and processes that are built and controlled by a small handful of organizations operating without the same oversight imposed on you and other small and mid-sized companies? Or, does all that stuff reveal the ascendency of the new economy where better products and processes are allowed to grow unchecked to the point of monopoly, but it’s OK because no one is preventing yet another innovator from disrupting these temporary monopolies? Either way, all those tools in storage are there for a reason. Unregulated, freewheeling, risk-taking Silicon Valley made them disappear, replacing them with devices, apps and digital services, among other things, that Americans have adopted with abandon. For the better part of two decades, we have undergone an extreme transformation. Cheap, powerful and ubiquitous computing technology, married with broadband and the commercially developed World

Mike Wendy, founder and director of Media Freedom (a watchdog of the so-called digital watchdogs), has been in the tech policy space since 1994, focusing primarily on telecommunications and IT industry-related issues that have emerged over that time. Before Media Freedom, Mike was VP of Press and External Affairs at The Progress and Freedom Foundation Smart CEO • Fort Worth

Wide Web, have made individuals and businesses more productive, connected, and innovative than ever before. Or so the story goes. A growing chorus of policymakers, industry players and average citizens are crying foul. As they see it, Silicon Valley’s largest companies — such as Google, Apple, Facebook and Amazon (often referred to as GAFA) — hold too much sway over the way we live and do business. And this, plus their ever-growing, algorithms, global reach, and ability to manipulate, all are seen by some as an existential threat to our economy and society. Why? At any given time in the marketplace, three of the top 10 companies by market cap are #2 Google, #5 Amazon, and #6 Facebook, with a combined value of more than $1.4 trillion dollars. Their size and continued success appear to be a product of their dominance. In the United States, Google’s market share for “Search” is nearly 90 percent. Forty-five percent of Americans obtain their daily news from Facebook, according to the Pew Research Center. Just over 40 percent of all U.S. online retail sales go through Amazon, according to Slice Intelligence. Meantime, Google and Facebook get their hands on 60 percent of all digital ad dollars, according to eMarketer. And, of the 77 percent of Americans who own a smartphone, Google’s Android dominates that important market segment with a 56 percent share, according to Pew Research Center. If you’re online — and that means 88 percent of all adult Americans — you simply can’t avoid these behemoths. “People like the technology and the benefits from it, but they’re not blind to the fact these companies are monopolies,” says Scott Cleland, president of Precursor, LLC, a consultancy specializing in “internetization” (the automation of the world’s economy and society around all things internet). In Cleland’s view, Google has cornered the information market; Facebook the social market; and Amazon the e-commerce world. “When you have that, what is the market discipline [Continued on p. 42] NOVEMBER 2017

[Continued from p. 41]

to ensure that it continues to work for consumers?” he asks. Hal Singer, telecommunications analyst and principal at Economists Inc., an economics consulting firm, harbors similar concerns. “Seems like the tech platforms have [only] bolstered their dominance in the last decade,” he says. He believes this undermines an important check on the marketplace — innovation. Singer points to recent accounts from start-up executives who claim that if they can’t explain why their apps are immune from being appropriated by Facebook, they won’t get funding. This gauntlet — which is not shocking to Silicon Valley veterans — “is a huge threat to edge innovation,” Singer notes. How can the next platform emerge if it can be snuffed-out stillborn? But not all concur with this picture. “The barriers to entry are not that great,” says Gary Shapiro, CEO of the Consumer Technology Association. “Maintaining a monopoly is really hard to hold on to — if they screw up, competition is there to check it.” Echoing Shapiro, Graham Owens, a legal fellow from industry think-tank TechFreedom, believes creating a successful software company is as close as a single, good idea. Consequently, “access to the markets is greater than it’s ever been than in any other major industry.” As an example, he points out that the minute Uber was kicked out of Austin, Texas, it took just a week before competitors emerged to replace it. The simple ideas coming out of Silicon Valley play an integral role in our economy. Shapiro claims that the tech sector contributes up to 10 percent to the GDP, or nearly $3 trillion. It also employs a lot of people, supporting nearly 15 million jobs nationwide. Confirming this, a recent Business Software Alliance study shows that the software industry alone supports over 10 million jobs, and contributes more than $1.1 trillion to the GDP. The industry has been propelled not just by giving consumers what they desire now. It gives them what they don’t even know they desire yet. “Ten years ago, no one knew they wanted smartphones or iPhones,” notes Jonathan Hauenschild, director of the Communications and Technology Task Force for the American Legislative Exchange Council. “But then, Apple released the first iPhone, [and now] consumers cannot live without their smartphones.” Tools like these are no longer luxuries but necessities, making us more productive per work hour and thus more prosperous. And while it’s true that gains in productivity have been sluggish since the Great Recession, no one denies that technological advances — such as [Continued on p. 45]

NOVEMBER 2017

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Beyond monopoly, Silicon Valley’s unregulated impact on businesses & lives can be disturbing • ACQUISITION AND USE OF YOUR PRIVATE DATA: Consumers have little choice but to “willingly” trade their most private information to Silicon Valley for its “free” services. Other surveillance tools to which we do not give our explicit consent — such as “street view,” satellite imagery and facial recognition — collect data on our public selves, too. All that information gets placed into the Silicon Valley companies’ “black boxes,” and then it gets diced, spliced, and shipped off to an opaque underbelly of so-called “surveillance capitalists,” companies looking to monetize your data. Virtually none of that activity is subject to direct government oversight or required to be transparent. Sure, most of this data is legitimately employed to sell you life-bettering goods and services. But, it can also be used more nefariously, too — such as to deny you a loan or to keep you from getting hired or to set you up for fraud or other criminal activity. You may have the latest cyber security to protect your laptop or desktop, but because of the surveillance economy, using the

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Web can still be like leaving your front door unlocked for anyone to come in and pillage your belongings. • FAKE NEWS: Sixty-two percent of Americans get their news from social media. But is it real? News reports show Facebook and Google, among others, profited from the trafficking of “propaganda” and “fake news” on their platforms. Many believe that activity had a distorting, if not deleterious, effect on the 2016 Presidential vote. The reluctance to police their “news” properties undermines not only the information appearing in their networks, but also the millions of Americans who depend on it to inform themselves about important matters of the day. • FREE SPEECH LIMITATIONS: Silicon Valley has long-chided regulators to be especially wary of “gatekeeping” Internet Service Providers (ISPs) whom they claim would quickly censor speech to their commercial advantage when given the opportunity to do so. After the Charlottesville, VA, clashes, we saw a different story emerge. It was Silicon Valley that was quick to turn off “undesirable” content and voices to

protect their brands, not the ISPs. This has caused great consternation among free speech advocates who fear their speech may be shut-off and their access arbitrarily denied when the inevitable next controversy ignites social media. It limits, not boosts, diversity of viewpoint and expression. • LOCAL EMPLOYMENT DEPRESSION: Main Street America has been particularly hard-hit by the Valley. It has to contend with Amazon, which can make profits on razor-thin margins via massive global volume and inexpensive, hyper-efficient distribution techniques. Jobs are getting slammed as a result. A recent story in MarketWatch reports that “Amazon and other online sellers have decimated some sectors of the retail industry,” and this, it concludes, has caused employment at department stores to drop by 250,000 (or 14 percent) since 2012. As our affinity to shop online grows, Amazon’s dominance grows, too. Expect more such job loss in the retail sector (and elsewhere) to come.

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those coming from Silicon Valley — remain some of the key drivers in increasing wealth. The European Union’s (EU) antitrust investigation The EU has been at the forefront of conducting a multi-year antirust investigation of Google Shopping, which resulted in a $2.7 billion fine and the soon-tobe break-up of its Shopping line from the rest of its search business. Google “abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors,” EU Competition Commissioner Margrethe Vestager said in a statement in June. Ouch. “Google, Amazon, and Facebook are a lot like railroads. We rely on them — in essence — to carry our goods and ideas from one person to another,” says Barry Lynn, executive director of the Open Markets Institute in Washington D.C. “The problem is that we don’t regulate these corporations the same way we regulated railroads and other essential services in the past,” Lynn says. He and a growing list of others are calling on the U.S. government to use its antitrust laws to bring Silicon Valley’s most powerful players to heel. But there’s a hitch: For more than four decades, U.S. antitrust enforcement has focused on finding actual

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consumer harm to act to curb bad behavior. That’s hard to show when Silicon Valley’s companies continually deliver more output at lower prices to increasing numbers of consumers. Some, like Cleland, believe that Silicon Valley can be dealt with directly by breaking up the “American Keiretsu” cartels he sees ruling the roost. (A keiretsu is a network of manufacturers, supply chain partners, distributors and financiers who are financially independent but work closely together to ensure each other’s success.) Others, such as Singer, have called for the creation of a new, case-by-case tribunal housed at the Federal Communications Commission or Federal Trade Commission, which would use a non-discrimination standard — not consumer harm — to address competitive malfeasance. Lynn would like to see a more prophylactic, “traditional” approach to antitrust enforcement akin to the EU model — one which seeks to neutralize the discriminatory dealing of the platforms and stop the buildup of vertical enterprises. “Today, absent these traditional regulations, these platform monopolists enjoy a de facto license to manip[Continued on p. 47]

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ulate the flow of goods and ideas between citizen and citizen in America, in ways that are bad for our economy and our politics,” Lynn adds. Shapiro disagrees: “We should work to lower barriers to entry, not break up companies by government action.” Shapiro says the ambiguity in the EU’s prophylactic approach is especially problematic. Companies should know why exactly they are on the hook. This lack of clarity only stifles the competitive entry, innovation, and growth needed to discipline the market, he says. “Look at the result in the EU,” Shapiro says. “The U.S. has 100 ‘unicorns.’ Europe, nothing.” Hauenschild says antitrust enforcement is in-ept, too. “Those calling for such regulation right now seem to be confusing ‘monopoly’ with ‘market share,” Hauenschild says. But, “Google, Facebook and Amazon are as large as they are because they offer services that the people want.” Hauenschild doesn’t rule out antitrust enforcement when companies use their position to abuse consumers, but he believes the dynamic marketplace provides the best check to prevent actual, not imagined, consumer harm. Google, Amazon and others all have able competitors, which are just a click away. So, has Silicon Valley harmed or helped the economy? Some observers say the critics of Silicon Valley are just scared of the future. Smart CEO • Fort Worth

“We can’t fear the future,” TechFreedom’s Owens said. “Tomorrow’s coming. We hope it does. Technologies like artificial intelligence and autonomous driving are scary to some. Cars were scary to people with horses and buggies. I think history tells us that innovations are good. Markets have adapted. Horse and buggy manufacturers might have gone out of business, but they were replaced by taxis.” But the business people and others who question the unfettered, unregulated environment of Silicon Valley do not fear change. They are not fighting innovation. They say this fight is about inequity, monopoly, and an unfair playing field.

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Smart CEO â&#x20AC;¢ Fort Worth

COVER STORY

Failing Retirement Entrepreneur H. Paul Dorman just won’t to quit making advances in health care By Paul K. Harral pharral@bizpress.net

aul Dorman would have been successful at anything he wanted to do. That’s just the way he’s put together. But as with many people, it was a nudge by a school teacher that started him on the path to what by any measure is an astounding business career and great financial wealth, and has him poised on the brink of developing a revolutionary breakthrough in the treatment of cancer. It also led to his being named the Fort Worth Business Hall of Fame’s 2017 Executive of the Year. The award is presented annually by Texas Wesleyan University, the Fort Worth Chamber of Commerce and the Fort Worth Business Press. It promotes business as a “challenging and dynamic profession” and proceeds benefit the Thomas H. Law scholarship program at Texas Wesleyan. Dorman is best known in Fort Worth as chairman and CEO of DFB Pharmaceuticals, a holding company that over the last 20 years has invested, developed and operated multiple pharmaceutical businesses. Founded in 1990, DFB and its principals have realized more than $1.5 billion in value through startups, strategic acquisition and sale of companies and technologies, internal product development, brand optimization and operations in the health care industry. Dorman is also the person who agreed to pay the first year’s tuition for the inaugural class at the soon-to-open Fort Worth TCU and UNTHSC medical School, a joint venture between Texas Christian University and the University of North Texas Health Science Center. The first class is expected to enroll in 2019. Those who know or know of Paul Dorman know where he ended up. But they may not know how the journey began.

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It started 80 years ago in the oil-patch town of Kilgore, 150 miles east of Fort Worth on Interstate 20. The East Texas oil field was discovered Oct. 5, 1930, and made Kilgore into a boom town. Elmer Dorman was a machinist and met and married his wife, Bea, in Kilgore. Paul came along about a year later. But the family left Kilgore for jobs in different oil patches that took them to Wichita Falls, New Orleans, and Brookhaven, Mississippi — where Paul Dorman would graduate from Brookhaven High School — and then back to New Orleans. The move back to New Orleans influenced where he would go to for college and post-graduate work — Tulane University for a bachelor’s degree in mechanical engineering and Loyola University for a law degree. In those days in the oil fields, young men pretty much finished high school and then did whatever it was their daddy was doing, and Dorman’s father had just been given the opportunity to move into a management position. Then Paul’s high school chemistry teacher, Mrs. L.W. Marsalis, asked whether he planned on college. “I told her I didn’t think so, I wasn’t real sure. She made a strong statement that she felt like I should go to college, that it would be significantly important for me to do that,” Dorman said. “That resonated with me.” He doubts she would have remembered the conversation even a few hours later but to have an adult he respected say something like that was significant. And a lifelong lesson. “As an adult, you never want to underestimate your comments to young people. It can really be very impactful on their life, and you may not even be aware to the degree to which it is,” Dorman says now. The summer after he graduated, his father, who by now was superintendent of a very large machine shop in New Orleans doing work for offshore drilling companies, gave him a job “down there on the mouth of the Mississippi River, working with a welder.” “Every day, I was on this little project, this engineer would come out of his air-conditioned office to see what we were doing and telling us one thing or the other and then go back in the air-conditioned office,” Dorman said. “By the third month, I really realized it wasn’t how much you made in life, it’s what you had to do to make [Continued on p. 51] NOVEMBER 2017

Dorman gives back: Donates first-year tuition for first class of med students Paul Dorman is generous with the money he has made over the years.

In April, Dr. Stuart Flynn, founding dean of the new Fort Worth medical school, announced at a Leadership Fort Worth event that Dorman had donated the first year’s tuition for the inaugural medical school class. Flynn estimated the value of that gift at more than $3 million. For Dorman, the donation is partially paying it forward, giving back to a community he loves and furthering the science that has been the foundation of his success. He refers to his early life, when a business owner created a job for him that allowed him to finish his education and launch his career. That’s the pay-it-forward part.

“I think that the medical school is going to be a great thing for Fort Worth,” Dorman said.

“A lot of the doctors that come here are going to stay here. They’re going to fall in love with the area like I have. I could live anywhere; I want to live here.” There’s a growing need for doctors in Fort Worth. “We’ve always kind of had a shortage,” he says. “That’s another reason I think it’s beneficial to Fort Worth and the community, and it’s also in an area that’s involved with the pharmaceutical medical area.” That’s the give-back-to-the-community part. There’s no shortage of students who want to be doctors and medical schools have many more applications than they have slots for students.

“But we want to have the best students, we want to have the medical school recognized as graduating top doctors,” Dorman said.

He recognizes that it is a start-up medical school with no reputation yet. The inaugural class is expected to enroll in 2019. “So why would you come to the new medical school here if you had a shot at going to Baylor or wherever? Well the difference could be if you could get in here without having to pay tuition,” he said. That’s the furthering-the-science part. Those motives actually all work together. “It’s a way of supporting the medical school that serves the community, the students, and allows students to help themselves,” Dorman said. Paul K. Harral

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money in life,” Dorman said, “and I decided I wanted to reconsider because I liked what he was doing more than what I was doing.” The first year at Tulane, Dorman’s father took care of expenses, but then his father bought a small machine shop back in Brookhaven, Mississippi, and Dorman knew his dad was going struggle for a few years to get that business going. For the next three years, Dorman worked in the evening and went to engineering school during the day. The owner of the company that hired him — his father had been a superintendent there — moved some daytime duties around so he could work and go to school. “It was far more meaningful than anybody loaning me the money or whatever to get the opportunity,” Dorman said. “I worked full time, 48 hours a week, while I was going to engineering school.” You may reasonably wonder how a degree in mechanical engineering would lead to a stunning career in health care, and the answer would be: circuitously. He went to work as an engineer — “and did very well in that regard” — but realized that he wanted to be more than just an engineer. So he started school again, but reversed his schedule, working in the daytime and taking classes at night toward an MBA. Then he saw an ad for a job back in New Orleans working for Boeing and Chrysler on the guidance systems in the Saturn V rocket used in the NASA moon landing program. As he recalls it, he applied on a Wednesday, got a call on Monday and the following Monday was on his way back to New Orleans. “I was a single guy so you could do those things,” Dorman said. “Load up the car and go. It wasn’t a real big deal.” Part of the attraction of the new job was tuition reimbursement, and he started taking courses toward a master’s or doctorate in engineering, but he realized that he would wind up in a lab somewhere or teaching and he didn’t want to do that. “As far as working on an MBA, I had two or three courses in accounting and that’s about all I wanted,” Dorman said. “I knew how to read a balance sheet but I just didn’t get excited about numbers and balance sheets and so forth. But certainly from a business standpoint, I learned a lot that was important later on in life for me.” But it still wasn’t the fulfillment he was looking for. But the law? That was interesting, and that became a focus. One reason he liked it was for the listening skills he gained. “You really learned to listen and understand both sides of an issue, because as a lawyer you never know if you’re, particularly back then, if you’re going to be representing the plaintiff or the defendant,” Dorman said.

In the meantime, he tired of government work and switched to what he described as “a pretty good sized little company” in a design engineering job. “I did well,” he says. “I did a couple things that we got some patents on for that little company.” But law was still “my whole purpose that time.” The week he graduated from Loyola the company — Edwards Engineering — decided to open a branch in Atlanta and offered him the job to start it. That was my first real entrepreneurial kind of a business assignment at that point, because there I went over and I hired accounting staff, I hired three or four salesmen, and we started doing projects. … Most of it was custom design equipment for the industry to improve automation and this type of thing. So I did well at that, and that was my first kind of a business entrepreneurial type of thing.” The company had some patents on equipment for the sugar industry and worked all over the world, including the Caribbean and India. “In fact, even while I was going to law school, there would be times where I would have to run off to somewhere in the Caribbean for a few days … to oversee the installation of some of the equipment, and then I’d go back. I can remember one night I got in on the plane about 5 o’clock, went straight to class and took my exam. In law school, you just do finals. They don’t have anything else in between, so it put a little pressure on you, but it was good. It was a discipline thing.” In Atlanta, he developed a mutual business relationship with another company and part of that was an incentive program to grow the business that included a certain percent of the profits. And then one year he made more than the president of the company. The president wasn’t happy about that and said the agreement needed to change. Dorman argued that he had delivered as agreed and the company had gotten its fair share. “He said, ‘Well I just can’t have an employee making more than I do.’ So that’s when I decided, well, I’m going to start working for a big company, a national company, because they don’t do that kind of thing,” Dorman said. He never did get around to taking the bar exam. And he began moving to the health care industry. He had worked with the pharmaceutical company Baxter for about a year when Johnson & Johnson recruited him. “Johnson & Johnson was a perfect company for me to learn the large corporate role. It’s a decentralized company in that each company has its own management, its own board of directors, and reports into the parent,” Dorman said. “They operated about 130, 140 companies back then, all decentralized. So I learned a business structure and philosophy.” [Continued on p. 53] Fort Worth • NOVEMBER 2017

Funding life-saving drug research more important than retirement By Paul K. Harral pharral@bizpress.net When Paul Dorman sold Healthpoint to Smith & Nephew, he kept the office building, leasing most of the space to the new owner but reserving space for his core company, DFB Pharmaceuticals, which was poised to announce a new venture that may lead to a significant breakthrough in the treatment of cancer. On Sept. 12, DFB Pharmaceuticals announced a cooperative venture with CritiTech and US Biotest to form a new company called NanOlogy to develop an advanced form of cancer treatment using nanoparticles injected directly into tumors. The concept is simple although the chemistry and technology is complex. What NanOlogy is setting out to develop is a unique way to deliver chemotherapy directly to tumors without the often-severe side effects of traditional treatment. Cancer-fighting drugs themselves are toxic to the human body as is the chemical solvent used to thin the treatment enough for it to be injected through the blood vessel system. In 2002, Dorman bought a company called Phyton Biotech, which manufactured paclitaxel, the active ingredient in one of the leading anti-cancer drugs made from the bark of the yew tree. Then he learned that engineers at the

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University of Kansas had developed a proprietary process for making nanoparticles. They needed a way to test their process and turned to Phyton, which had the proper manufacturing processes available at a plant in Canada. What evolved was a joint venture to create nanoparticle paclitaxel that could be injected directly into tumors using saline. The advantages — if the process proves out in clinical trials — is that the cancer-fighting drug remains in the body at the therapeutic level for as much as a month rather than the few hours of traditional therapy. And the process is less toxic. In rapid series of announcements, NanOlogy announced clinical trials of nanoparticle paclitaxel for ovarian, prostate and pancreatic cancers, pancreatic cysts, cutaneous metastases, and pre-clinical work for lung cancer, breast cancer, and bladder cancer. “In essence, currently a drug is injected once a week into the vein and some of it goes into the tumor and resides there for about eight hours, killing those cells that are dividing in that eight-hour period. With our technology, we go directly into the tumor. All the injected drug resides in the tumor for 24 hours a day for over 30 days, constantly killing cancer cells as they divide,” Dorman told the Fort Worth Business Press. The NanOlogy nanoparticle tech-

nology platform is based on a patented production process that reduces the size of paclitaxel and docetaxel – another anti-cancer drug – active pharmaceutical ingredient crystals by up to 400 times into patented, stable, naked nanoparticles with exponentially increased surface area and unique geometry, the company said in the news release. Other products in or scheduled for clinical trials include SOR007 (nanoparticle paclitaxel) ointment developed by NanOlogy and affiliate DFB Soria for potential skin cancers and an inhaled version of NanoPac for treatment of lung cancer. Dorman told the Fort Worth Business Press that he was ready to enjoy retirement after the sale of Healthpoint, but the potential of the nanoparticle therapy was more important than that. “I made a decision that I just couldn’t live with myself if I had something that had the potential to make a major impact on cancer, and I didn’t do it,” Dorman said. “It’s just something I just have to explore. “I really feel we’ve been given the opportunity to make a real serious impact here. You don’t have that kind of opportunity very often in life to make that kind of impact on other people’s lives. If we are wrong, then the potential impact was worth the effort.” Portions of this article previously appeared in the Fort Worth Business Press. Smart CEO • Fort Worth

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At Johnson & Johnson, he moved from engineering into management as head of engineering and production, and then added marketing and sales as well. And then he became part of the board of directors. Johnson & Johnson made a board-level decision to move manufacturing offshore, and Dorman drew the assignment of closing four plants in the United States that were his responsibility and starting up five plants along the U.S.-Mexico border — four maquiladora plants in Mexico and one on the U.S. side. The North American Free Trade Agreement (NAFTA) came into force in 1994, eliminating most tariff and non-tariff barriers to trade and investment among Canada, the United States and Mexico, leading to new American-owned assembly plants in Mexico. But those moves also shifted jobs out of the United States, creating much criticism of NAFTA despite the lower cost of goods produced outside the country.

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While still working for Johnson & Johnson, as a personal investment he bought three small companies out of bankruptcy that were providing services or equipment to the maquiladora plants. “I wouldn’t let any of the sales people call on any of the J & J companies, so I avoided any conflict of interest.” Dorman said. Those three companies would serve as the vehicle to his more ambitious future businesses. It was a learning experience because he found it was important to understand exactly why each business was in bankruptcy. “If I’m going to invest personal money into it, I don’t want something that wasn’t going to work,” he said. The first business was a distribution company. The owner was a former truck driver who grew the business very quickly. “He grew the receivables and he grew the inventory and even though he was making profit every month, [Continued on p. 54]

Paul Dorman with a favorite painting by German artist August Sieger in the meeting room at his Fort Worth office. Photo credit: Nealie Sanchez/ Fort Worth Business Press Nealie Sanchez/ Fort Worth Business Press

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he created a tremendous cash flow problem and didn’t quite understand with making a profit why he was going broke,” Dorman said. “I bought it out of bankruptcy and kept him on it, because he knew the business, he just didn’t understand how to run the business.” He bought a business in Albuquerque that was facing similar problems. The third purchase was an opportunity provided by the banker involved in the purchase of the first two businesses. That business had been seriously mismanMrs. L.W. Marsalis, the teacher who aged and the bank had taken over encouraged Paul Dorman to go on to the inventory. college. The bank worked out an arrangePhoto credit: Courtesy Brookhaven High ment with Dorman on an earn-out School that allowed the bank to not have to write off the loan. “It was a win-win thing for them, but out of that I started understanding financial things from the banking standpoint,” Dorman said. Things were going fine at J&J; his stock options had helped him gather the money to buy the side busi“As an adult, you never want to underestimate your comments to young people. It can really be very impactful on their life, and you may not even be aware to the degree to which it is.”

nesses, and his responsibilities in terms of people and budget had grown. “But I was having more fun with these three little companies that I had put together, because I was making every decision, working on the weekends in the office, that kind of thing, just handling most of it by telephone during the week,” Dorman said. He gave notice to Johnson & Johnson, hung around until it found his replacement, helped pass the baton “and then went off on my own.” He grew his companies and sold them to a publicly traded company called Air Gas, a supplier of gases such as oxygen and acetylene to hospitals on the one hand and machine shops on the other. “And really with that, that was my first time I could retire, but decided not to,” Dorman said. But more importantly, he said, that’s when he learned that Alcon Laboratories in Fort Worth had a plant for sale in San Antonio that made topical pharmaceutical products. Among other products, the plant made hypoallergenic products, but Dorman wasn’t interested in that for several reasons. One was because sales in that product line were proportional to advertising. “I didn’t want to get into something where I had to have those kinds of deep pockets, because I’d lose out eventually against some of the bigger players,” Dorman said. But he did know someone who might be interested who operated health food stores in malls. He brokered that deal for Alcon, got a finder’s fee out of it, and that freed the San Antonio plant, which became Dermatological Products of Texas or DPT. It was the plant that interested him because he thought it was underutilized. Alcon had started making products for third-party pharmaceutical companies, vitamins and capsules that sold under the client’s name. “Even the largest of pharmaceutical companies were farming those kinds of products out to a very large extent,” he said, and they were less difficult to make than topical products. “You do a tablet, once you compress it, or put it in a capsule, it stays there.” But creams, ointments, gels and liquids separate if not done correctly. A plant making tablets and the like was a business he would buy — the plant was doing about $18 million in sales as a third-party business — but the real lure was something else. “The thing that was really keen to me was that it had a small research group, because some of [the client] companies were smaller and needed help to formulate these products,” Dorman said. “It had about a seven- or eight-person R&D staff that went with the deal, so that’s what I bought.” Using the research and development group, he started making his own products with a Fort Worth start-up he named Healthpoint. He didn’t want to compete with [Continued on p. 55]

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DPT’s customers, but none of them were making products for the hospital market. And that became his target. People who are bedridden for a long time are prone to develop bedsores for a variety of reasons — irritation from the bedsheets, infections because of urinary and fecal incontinence, attendants not changing the bed sheets or the patient’s bed clothes often enough. “Interesting enough, the only wound care products they had at that time were bandages. Nobody had pharmaceutical products for wound care,” he said. Healthpoint started looking for pharmaceuticals for the skin ulcers. The research group went on to develop a line of wound care products over a few years and the company continued to grow. Smart CEO • Fort Worth

“Healthpoint was one person, two people, three people — I was one of the three first people in there — and when we sold it I had well over 2,000 employees. About the size of the company I was running at J&J,” Dorman said. By then, he was comfortable enough to start his own dermatology business called Coria Laboratories. “I ended up selling the derm business and then Healthpoint and then finally the DPT business,” he said. And that was his second chance to retire. And he didn’t take the opportunity that time either, as his work toward new cancer treatments makes clear. (This article previously appeared in the 2017 Business Hall of Fame program.)

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INNOVATION

MILLENNIAL MANES New barbershop’s old style attracts customers of all ages By Linda Kessler lkessler@bizpress.net

ow many people would drive 30 miles just to get a haircut? Will F. and his son, who hail from Godley, Texas, do exactly that to get a cut at District Barbershop at 954 W. Rosedale in Fort Worth. “There’s a reason why my son and I drive almost an hour to get our haircut every few weeks — District barbershop gives the BEST haircuts for boys and men!” wrote Will on Yelp. “They aren’t for everybody, but if you’re someone who loves a higher-quality haircut, done by

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a professional, at a very reasonable price, while in a nostalgic setting reminiscent of the good ol’ days, this is your place.” It also doesn’t hurt that patrons are offered a free beer the minute they walk in the door. “Upon arrival, I was offered a beer while I waited — which was awesome,” wrote CJ S., an Independence, MO pilot laying over for a day. Or that they treat you like an old friend. “On my first visit, I was greeted by all the barbers and receptionist like I was an old school friend,” wrote Ted R. from Midland. “The atmosphere and ambiance of this location made me feel like I was back home with friends just hanging out.” The District Barbershop, squeezed into just under 500 square feet, is a barely one-year-old full-service traditional barbershop specializing in classic cuts, fades and hot towel and hot lather shaves. The salon chairs are [Continued on p. 57]

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1940s-1960s originals from Chicago’s Emil J. Paidar Co. Each is a slightly different style, weighing in at 200-370 pounds and upholstered with red or black leather. A small fridge of canned craft beer from Fort Worth’s Rahr & Sons Brewing Co. sits beneath shelves featuring various products for sale. Hair pomades, clays, and gels from local Hurst-based 18.21 Man Made and California’s Layrite and Suavecito dot the shelves. A brand of organic beard oils and washes by Fort Worth’s The Rustic Beardsman sits beside them. Community, customer-service, and supporting locals are the three pillars of business for District Barbershop owners Edward Ramirez, 41, and Francisco Castaneda, 25, and their five staff barbers. While they acknowledge their modern amenities, such as online scheduling, Castaneda and Ramirez have taken a lot of inspiration for their shop from what they learned at Williams Barber College, from the traditional hot shaves and lathers to forming a real connection with the clients. While some shops have moved to shave gels and away from the hot towel shaves to expedite the process, Ramirez says it’s important to take your time and do it right. “Just try your best and take as much care of [the cusSmart CEO • Fort Worth

tomer] as possible. We see these people out in the street and there’s a connection,” Ramirez said. “We know these people’s families, their kids. It’s so much more than just coming in for a haircut, or coming in for a quick trim. They know when they come in, we pick up right where we left off.” “It almost seems like they never left,” Castaneda added. As to where the desire for a more traditional-style cut experience instead of what modern salons offer came from, Ramirez says it all began with the hipsters in about 2013 or 2014 when “everybody thought they lived in Portland,” and everybody needed a beard trim, rather than a clean shave. The traditional barber shop experience continues to gain in popularity. The pair estimate that about three of every 10 customers have never been to District before and just sort of stumbled across it driving by or looking for a shop online. They think their atmosphere makes everyone feel welcome, and hopefully transform those newbies into regulars. “A lot of the people, they love it immediately when they come in and everybody’s joking,” Castaneda said. “You’re able to come in and hang out with the guys and not feel excluded from everybody. Once you sit in that

The co-owner of District Barbershop, Edward Ramirez, cuts the hair of 24-year-old Game Stop supervisor Garrett Eylar. Eylar visits the District Barbershop, known for its traditional cuts and shaves every two weeks. Paul K. Harral

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District Barbershop Est. Jan. 2016

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chair or sit in that waiting area, everybody’s talking.” District sees people of all ages and back(817) 420-9552 grounds come in for a cut. While Ramirez does www.districtbarbershop.com a lot of children’s cuts, he also has a lot of clients in their mid-30s and over 40. Castaneda, on the other hand, cuts for a lot of high schoolers and young adults in their early and mid-20s. Ramirez said District isn’t just a young or old man’s shop, it’s for anyone and everyone. Surprisingly, he added, a lot of children have their first hair cut at District. “What I really enjoy is when the 3- or 4-year-olds come in. They look in the mirror, they start smiling,” Ramirez said. “It’s weird to see a 3-year-old appreciate a haircut, but when they start smiling, that’s what it’s all about right there.” Castaneda says that through District, he’s not only District Barbershop been a part of the community, but he’s experienced selfco-owner Francisco growth and he’s leaving a legacy for his son. Castaneda gives “Being my own boss helped me better myself and 21-year-old help my lifestyle a little better. It made me mature a lot landscaper Jesus faster,” Castaneda said. “I like it because now I can pass Trejo a traditional that down to my son and he can see it. You’re never too trim. young to start something.” Paul K. Harral 905 W. Rosedale St.

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OVERPERFORMING AND OUTGROWING The pair feel that District is over-performing on their expectations. Originally, Ramirez thought it would take District a year to grow from the four barbers they started with to their goal of six. Instead, they hit six barbers by January, only four months after opening. Now they have seven. Though District Barbershop has only been open at its current location since September 2016, it’s already bursting at the seams. The pair had hoped the location would work for their business for two years, but by January, Ramirez and Castaneda were looking for new real estate. In June 2017, the business owners signed a lease with an apartment complex called South 400 Apartments at 400 S. Jennings Ave. The base of the complex allows for two retail spaces and District is taking one of them. Castaneda and Ramirez hired the same crew of independent contractors to do the construction on their new location that completed their current location. They said they feel that the independent workers go above and beyond the call, working late hours and doing whatever it takes, adding, “we just didn’t get that [Continued on p. 59]

Smart CEO • Fort Worth

[Continued from p. 58]

vibe from some of the larger companies.” Construction will begin as soon as the city approves their permits. Though they can promise no official opening date at this time, Castaneda and Ramirez hope to move over to the Jennings location in December. “You always have an idea of your dream location, or your dream shop. The Rosedale location, it was just enough to get by. We wanted it to look good and make it functional, but we knew we weren’t going to be there long,” Ramirez said. “This next location’s going to be our flagship, we’ll be there for at least five years.” The new space will be about three times as big as the current Rosedale location, allowing District Barbershop to upgrade from its current six chairs to 11 chairs. On day one, the seven barbers District currently has will be joined by two more due to client demand. The goal is to expand filling 11 chairs, with the opportunity to have up to 13 barbers. In their design plans right now, Castaneda and Ramirez are leaving a half wall open with no chairs because of the ebb and flow of barbers as they come in, get experience and move on. “I tell the barbers all the time, ‘Hey this is not forever for you. This is just your stepping stone. This is your starting point,’” Ramirez said. “We encourage these guys to really just build, build, build. Get as much experience about the business side of things, also the customer side of things. Then just take all your knowledge and go open your own shop. “That’s what I had a lot of people do with me when I Smart CEO • Fort Worth

first started,” he said. “I couldn’t have been, if you want to call it successful, or as competent as quickly, if it wasn’t for those people.”

THE MEN BEHIND THE CLIPPERS

Francisco Castaneda, 25, is a Fort Worth native with a 2 1/2-year-old son, Julian. Castaneda’s been in the barbering industry for almost three years. Edward Ramirez, 41, was also born and raised in Cowtown and has three children — Rafa, 22, Alyssa, 15, and Alex, 3 — with his wife, Amy. After spending two decades as a freelance photographer being in charge of his trade, Ramirez knew he wanted to continue being his own boss. He decided to go to barber school intending to open his own barbershop. The pair met at Fort Worth’s William’s Barber College on 11th street. “It’s an old-school barber school. They teach you the traditional way of cutting hair. It builds a great foundation,” Ramirez said. After they graduated, the pair went their separate ways before ending up working at the same shop, Fort Worth Barber Shop. Fort Worth Barber Shop hadn’t even opened yet when it reached out to Castaneda. At the time, Castaneda was expecting the birth of his son and felt he needed to take some time before entering into a brand-new shop, something often considered a risky move. Meanwhile, Ramirez reached out to the shop owners via social media and secured himself a spot. Four [Continued on p. 60] NOVEMBER 2017

[Continued from p. 59]

Community, customer-service and supporting local are the three pillars of business for District Barbershop owners Edward Ramirez and Francisco Castaneda. The pair stands together inside their shop on a busy Friday afternoon. Paul K. Harral

months in, when the shop had an established track record and clientele, Ramirez told Castaneda he had to come back. The recent graduates worked at Fort Worth Barber Shop for five months more before, once again, they separated. Ramirez was leaving the shop setting for a suite setting at Salon Spa Galleria, where each barber had his own room where he conducted his business at his leisure. From his work at the Fort Worth Barber Shop, Ramirez had clients follow him to his suite. After working at the suite for three months, he touched base with Castaneda, saying, “‘Hey, you ought to look at this suite thing. They’ve got a really good deal going on. It’s kind of in the middle between renting a chair in a shop and owning your own shop.” When Castaneda joined Ramirez at Salon Spa Galleria, the two were neighbors in the suite. Passing clients back and forth because they were both so heavily booked, they worked there for six months before they decided they could partner and open a barber shop of their own. “It’s not like we met up in barber school and had this plan to open a shop together,” Ramirez said. “It just kind of worked. But I think that was key for that six months or so, to work next to each other and have our own separate businesses.”

“It was better that we started off on our own so we know what’s at stake,” Castaneda added. Neither of the men has any formal business education, though both of them have learned hands-on throughout their barbering experience, taking the good and leaving the bad from each shop where they worked and the people they worked with. Before going to barber school, Ramirez was a freelance photographer for 20 years, where he picked up some basic business knowledge from the studios he worked with. Ramirez eventually ended up attending business seminars and learning some skills that way. Though, he says, “a lot of it just comes from paying for your own mistakes and learning the hard way.” When in doubt, in need of advice or looking for motivation both Ramirez and Castaneda have people they reach out or look up to. For Ramirez that person is his wife, Amy, but Castaneda has someone different in mind. “I actually look up to Edward [Ramirez]. I never told him but I actually do. He’s helped me out a lot,” Castaneda said. “When we weren’t in class, Edward gave me a lot of insights on what he was trying to do, what he was doing. He asked questions of what I was doing [and] it made me realize what to look at and what not to look at. “He was willing to give me some advice when he took off after barber school,” he said. “I took that information, I ran with it, [and] ever since then it’s been good. [Ramirez] is pretty much the only guy I ever had to look up to.”

CLIPPING, TRIMMING AND COMMUNITY

Once the two knew they wanted to leave the suites of Salon Spa Galleria to open their own business, they started pooling their money and discussing location. They found out Melt was leaving its Rosedale location and with a good portion of their clients being from the area, they knew that was the place to be. When coming up with the name for their new beard trimming and hair cutting establishment, they sought inspiration from their new home. All their lives the area had been known as the medical district and when they told a friend that was the new location, he recommended “Hospital District Barber Shop.” “We were kind of like. ‘Let’s just cut everything else and let’s just call it District,’” Castaneda said. “We can invite all the districts, you know, everybody’s more than welcome in to this shop, rather than just pay our alms to the hospitals.” “And that was it,” Ramirez chimed in. “It seems like it just set in perfect,” Castaneda said. And so, District Barbershop was born. The business was officially formed in January 2016, but the name didn’t come into play until May and it wasn’t until September that they moved into the new building and the doors opened for business.

NOVEMBER 2017

Smart CEO • Fort Worth

DATA DUMP SECTION

FORT WORTH BY THE NUMBERS: Dallas-Fort Worth-Arlington, TX Metro Area is the 4th largest metropolitan statistical area in the nation with a combined population of 7.1M people and a median age of 34.7.

DEMOGRAPHICS & EMPLOYMENT • Population: 854,113 • Population in 2010: 744,973 • City Rank by Population: 16th • Growth 2010-2016: 14.7% • Growth Ranking: #16 • Media age: 32.6 • Median household income: $55,888 (2015) • Employment: 394,364 • Growth: 5.29% • Average male salary: $63,602 • Average female salary: $44,187 • City Government Employees: 6.826 • City employees per 1000 Residents: 7.7

Smart CEO • Fort Worth

• Employment by industries: Healthcare and social assistance: 12.6% Manufacturing: 11.1% Retail trade: 10.7% Accommodation & food service: 8% Construction: 7.7% Transportation & warehousing: 7.4% Professional, scientific, tech services: 5.4% Admin, support, waste management: 5% Finance & insurance: 4.6% • Cost of housing: 23% lower than national avg. • Media property value: $136,700 • Increase in value: $3,724 • Home ownership: 57.5% • National home ownership: 63%

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COST OF LIVING • Cost of living index 8% higher than Texas average • Cost of living 4% lower than national average • Home price Fort Worth average: $122,100 • Home price national average: $175,700 • Mortgage payment Fort Worth avg: $895.60 • Mortgage payment national avg.: $1,133.23 • Apartment rent Fort Worth avg.: $878 • Apartment rent national avg.: $920 • Electricity costs/mo. Fort Worth avg.: $167.30 • Electricity costs/mo. national avg.: $163.81

SAMPLE GOODS & SERVICES

MARITAL STATUS • Married: 49.3% • Never married: 33% • Divorced: 10.3% • Separated: 5.4% • Widowed: 2.1%

NOVEMBER 2017

• Haircut in Fort Worth: $20.20 • Haircut national avg.: $15.56 • Beauty salon visit in Fort Worth: $53.87 • Beauty salon visit national avg.: $36.11 • Movie in Fort Worth: $10.48 • Movie national avg.: $10.13 • Milk in Fort Worth: $1.66 • Milk national average: $2.06 • Doctor visit in Fort Worth: $102.94 • Doctor visit national avg.: $107.44 • Bowling game in Fort Worth: $9.19 • Bowling game national avg.: $4.74

Smart CEO • Fort Worth

TRANSPORTATION

HEALTH & SAFETY

• Car ownership: 2/household • Commute time: 25.8 min. average • Commute time US: 25.2 min. • Commute alone: 81.6% • Carpool: 11.9% • Work at home: 3.08%

• Murder rate: 7.7 per 100k people • National murder rate: 5.3 per 100k people • Robbery rate: 136.8 per 100k people • National robbery rate: 102.8 per 100k people • Violent crime rate: 526 per 100k people • National violent crime rate: 386 per 100k people • Rape rate: 58.6 per 100k people • National rape rate: 40.4 per 100k people • Burglary rate: 624.1 per 100k people • National burglary rate: 468.9 per 100k people

EDUCATION

• High School graduation rate: 80.8% • High school graduates of persons age 25+: 80.8% • Bachelor’s degree or higher: 27.3% • Public school student-teacher ratio: 16:1 • Texas public school student-teacher ratio: 14:1 • Avg. Fort Worth public school test scores: 39% higher than national avg. • Private schools: 46 • Post-secondary schools: 18

WEATHER:

• Highest monthly average in August: 85 degrees • Lowest monthly average in December: 46 degrees • Most monthly precipitation: March (4.3 inches) • Air quality compared to national avg.: 8% worse

SOURCES: The American Community Survey (ACS) conducted by the US Census and sent to a portion of the population every year; NOAA (National Oceanic and Atmospheric); the Environmental Protection Agency; the FBI’s uniform crime reports for the year of 2016; the Council for Community and Economic Research (C2ER) for the fourth quarter of 2016; the National Center for Education Statistics Smart CEO • Fort Worth

NOVEMBER 2017

INNOVATION

By Rachel Glasser

Protect Your Company. Protect Your Employees A common-sense approach to mitigate the risk of internal and external fraud in a small business

ssess your internal controls to better protect your company and your employees. Small businesses are often susceptible to fraud when too much reliance is placed on long-term or key employees. An important distinction of fraud is that it is an intentional act. Too often, small businesses lack the proper controls to deter fraud from either internal or external sources. By understanding risks and adding controls to mitigate them, you can help deter and prevent fraud.

COMMON FACTORS IN FRAUD

Three factors are often present when fraud occurs: pressure, opportunity and rationalization — referred to as the fraud triangle. Pressure: An employee experiences personal financial needs that may or may not be apparent to others. Some examples of personal financial crises can include excessive debts, a spouse losing a job, medical bills, and children’s education expenses. Sales and performance Rachel Glasser is an audit supervisor with Stovall, Grandey & Allen LLP, a certified public accounting firm in Fort Worth. She is vice chairman of the Communication Committee for the Fort Worth Chapter, Texas Society of CPAs.

NOVEMBER 2017

goals may cause pressures at work. Opportunity: Weak controls create an environment where an employee can misappropriate funds or assets, and the fraud goes undetected. Employees responsible for cash, bookkeeping, bank deposits and reconciliations are particularly at risk because they have access to assets and can hide theft through fictitious journal entries. Rationalization: An employee justifies fraudulent actions by way of entitlement. Often the employee may feel unappreciated or overworked, and thinks he deserves more compensation.

SPECIFIC CONTROL RISKS

Misappropriation of Assets: Misappropriation of assets occurs when employees steal tangible company property. Assets could be cash, inventory, computer equipment or office equipment. Management Override: Managers are often able to make adjustments to accounts or instruct employees to perform a task in a particular manner. Without a checks and balances system, managers can be in a power position to bypass internal controls. Improper Revenue Recognition: Employees may be inclined to inflate earnings by recording false sales if their salaries or bonuses are based on performance. Collusion: Collusion occurs when two or more people work together to circumvent controls meant to prevent fraud.

CONTROLS TO MITIGATE RISK

Internal controls are important to any company. They help protect not only your company but also your employees. If controls are working properly, an employee is better protected from temptation. Appropriate controls vary depending on the size and complexity of [Continued on p. 65] Smart CEO • Fort Worth

[Continued from p. 64]

the company’s operations. The following are some basic controls: Tone at the Top: Management’s communication of expectations regarding employee conduct and a code of ethics is critical to creating a fiscally sound operating environment. Management should create an open-door policy that invites employees to share concerns. Many companies have an anonymous hotline that employees can use to report suspicious activity. Dual Control: Tangible assets can be protected with security measures that require two people to access those assets. Dual control is often achieved by installing locks that require two keys or combinations that require two codes. For dual control to be effective, a single person cannot have access to both sets of keys or both portions of a combination. Segregation of Duties: Segregation of duties among employees is a key control to help minimize opportunities for fraud. When a task critical to the safekeeping of assets or accuracy of financial information requires more than one person to complete it, the risk of fraud is mitigated. The three main areas of segregation are authority or power to approve, custody, and recording or reconciliation. Cross Training: Fraud is often ongoing once it starts because the perpetrator must act to ensure that the misappropriation remains buried. Employees should be cross-trained for job rotations and required to take vacations. These policies allow one employee to assume another’s responsibilities, during which time suspicious transactions may be identified. Technology: Controls have changed based on advancements in technology. When designed properly, system control parameters can be set to allow employees certain privileges restricted to their assigned duties. For technology controls to be effective, procedures must be implemented to update access when employees change positions or are terminated.

own. When the bank called to confirm the wire request, the bank representative spoke with the hacker pretending to be the bank customer. Detection: In both scenarios, the owner noticed the transaction on the bank statement and contacted the bank to dispute the debit. Effect: Losses were between $5,000 and $20,000 per transaction. Factors: Weak controls created an opportunity for the hacker to take advantage of the company using wire transactions. Pressure and rationalization specifically relate to the hacker. Preventive Controls: Set up pass codes or key phrases with the bank that must be provided to conduct transfers. Do not send or retain these key phrases in emails or electronic devices that can be hacked. Train employees to question wire transfers made to people or banks that are outside the normal course of business operations. 2. INTERNAL THREAT: In this scenario, the bookkeeper worked with the company for more than eight years and had access to company cash, was responsible for preparing expense checks, made bank deposits, recorded all journal entries, reconciled bank statements, and executed payroll. The owner was not always in the office, so a signature stamp was given to the bookkeeper to sign checks prepared for vendors or employee expense reimbursements. The bookkeeper wrote personal checks and signed them using the signature stamp. These checks were recorded as if written to a vendor, and the amounts were buried in various expense accounts. In addition, the bookkeeper had taken a 401(k) loan. Rather than making the loan payments through payroll deductions, the bookkeeper used company funds. [Continued on p. 66]

CASE STUDIES OF FRAUD

1. EXTERNAL THREAT: In this scenario, the company owner’s email was hacked. The hacker had access to past wire instruction emails that the owner had sent to the bookkeeper. The bookkeeper was responsible for submitting the wire requests to the bank. When the hacker scripted a fraudulent wire request using the owner’s email, the bookkeeper thought it was legitimate and sent the instructions to the bank. The bank called the bookkeeper to verify the transfer request. The bookkeeper confirmed the wire, and the funds were sent. In another scenario involving wire fraud, the hacker sent a wire request to the bank through a hacked email account. This hacker went a step further and redirected all calls from the account owner’s phone number to his Smart CEO • Fort Worth

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[Continued from p. 65]

Detection: The owner randomly reviewed a bank statement, which was atypical, and noted several checks payable to the bookkeeper. After a new bookkeeper was hired, management discovered the 401(k) fraud when payroll deductions did not reconcile to remittances. Effect: About $30,000 in identified fraudulent transactions were made over three years. Factors: A significant change in the bookkeeper’s lifestyle triggered financial pressures. Weak controls in the company created the opportunity. The fraud started small and the bookkeeper rationalized it by the thought of just borrowing enough to get by and paying it back in time. Preventive Controls: Enhance segregation of duties by creating a hierarchy of custody, approval and recording functions. Require physical signatures of au-

NOVEMBER 2017

thority on checks. Have an independent review of bank statements and account reconciliations. Review payroll to verify that it reconciles and look for fluctuations between pay periods. 3. INTERNAL THREAT: A significant amount of a company’s sales were paid in cash. The cash was placed directly into the company’s vault. Standard practice required a weekly cash deposit at the bank. Multiple people knew the vault’s combination. When the theft was discovered, the company was unable to identify who was responsible. Detection: At the end of the week, cash was missing from the vault. Effect: About $8,000 was identified in cash discrepancies. Factors: Weak controls created an opportunity to steal cash. Since the culprit was unidentified, pressures and rationalized justifications remain unknown. Preventive Controls: Require dual control over easily liquid assets.

THE BOTTOM LINE

Effective controls can be achieved regardless of the size of your company. Despite the sophistication and complexity of controls, you may not be able to guarantee that fraud will never occur, especially since numerous internal and external threats exist. However, you can certainly make fraud a challenge through risk mitigation. In the audit industry, we are taught to approach an audit with professional skepticism. This is not to say we start an audit with prejudice and expect to find weaknesses or fraud, but rather we are open to the possibility that something may not be “kosher.” By applying a similar professional skepticism to your own operations, you can evaluate the work of employees, regardless of their tenure, with an open mind. If you have concerns regarding segregation of duties or other controls in your company, contact a certified public accountant who can perform an internal analysis and recommend enhancements that will allow you to better protect your company and employees.

Smart CEO • Fort Worth

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