Texas CEO Magazine - Q2 2021 by txceomag

Q2 2021

WACO Today & Tomorrow

City Manager Bradley Ford and Mayor Dillon Meek on Bringing Smart Growth to the City

DR. LINDA

LIVINGSTONE on Taking Baylor University to Tier 1

THE $15 MINIMUM WAGE: Is It a Good Idea?

DR. M. RAY

PERRYMAN’S Economic Forecast for the Waco Area

Great CO M PA N I E S know the A R T of WO R K P L AC E S A F E T Y.

Sylvia Orozco Executive Director | Mexic-Arte Museum

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FEATURES

16 LEADING THE

Q2 2021 Publisher Lauren Daugherty Editor Aaron Hierholzer

FUTURE OF SPACE CITY, USA

59 BUSH AND

A Conversation with Arturo Machuca, Director of Ellington Airport and the Houston Spaceport

BAKER: THE STORY OF TWO “TEXAS TITANS”

TO TIER 1

SAR A HANNA

26 TAKING BAYLOR

A Conversation with Bestselling Author Charles Denyer

PR A ISE FOR

TEX AS TITA NS

“Charles Denyer provides a riveting look at the endearing friendship Americans who together between two great changed the world. Well-wr itten, captivating, and engaging, Texas Titans highly examines two of the most consequential statesme the 20th century and n of how their lives were inextrica bly linked personally, politically, and in public service.” — The Right Honorab

le Brian Mulroney, Former

“George H.W. Bush and James A. Baker, III were the best of friends; two for six decades, worked men who, together to make the country and the world Texas Titans offers readers a better place. a well-deserved and inspiring of these two men, their portrait of the lives mutual respect and shared loyalty to our nation.” — Dick Cheney, th

40 ON A MISSION

46 Vice President of the

United States of America

“George Bush and Jim Baker had what many consider the most consequ friendship and partners ential hip in the history of America n politics. Texas Titans captures the true meaning of this extraordinary relationship.” — Dan Quayle, th 44 Vice President of the

United States of America

“One of the great honors of my life was having a front-row seat to the friendship between George legendar y H.W. Bush and James A. Baker, III. With Texas Charles Denyer captures Titans, the essence of a friendsh ip that changed the world.” — Jean Becker, Chief of Staff to Former President

George H.W. Bush (19

TO DISRUPT E-COMMERCE Cover design by Michael Kellner Cover photography by David Hume Kennerly

Cambridge Klein Publishers Austin, TX 78738 info @ cambridge klein.org

A Conversation with Omair Tariq, Cofounder & CEO of Cart.com

H.W. Bush

TEXAS TITANS G E O R G E H . W. B U S H A ND JAMES A. BAKER , III : A F R I E N D S H I P FORGED IN POWER

CHAR LES DENY ER

94–2018)

“Texas Titans tells the story of smart, patriotic, and effective a deep, multi-decade friendship between two loving, leaders . . . of how they trusted and supported and how each one’s success each other helped the other. When Dad spoke of the importa faith, family, and friends, nce of Jimmy Baker was at the top of the friends list.” — Neil Bush, Son of George

CHARLES DENYER

CHARL ES DENYE R was in Washing ton on 9/11 when terrorists attacked the Pentagon . The events of that day and seeing how the nation responded inspired a new mission for Denyer. Since 2001, he’s worked with hundreds of organizat ions throughout the globe in helping them obtain a true competitive advantag e with cybersecurity, data privacy, and regulator y compliance, while also providing essential national security and advisory services to some of the world’s most recognized brands. He consults regularly with top political and business leaders througho ut the world, including former vice presidents of the United States, White House chiefs of staff, secretaries of State and Defense, ambassadors, high-rank ing intelligen ce officials, CEOs, entrepren eurs, and others. His time with these transform ational figures and the insights they’ve shared have afforded Charles a front-row seat into many of the world’s most consequential events of the past five decades, and what lies ahead. Learn more at charlesde nyer.com

Prime Minister of Canada

G E O R G E H . W. B U S H A ND JAMES A. BAKER , III : A F R I E N D S H I P FORGED IN POWER

A Conversation with Dr. Linda A. Livingstone, President of Baylor University

foreword by

vice president dick cheney

$29.99

he friendship between George H. W. Bush and James A. Baker, III began over fifty years ago on the tennis courts of the Houston Country Club in the early sixties. Their complementary skills and teamwork honed on the court served them well in their political careers for decades to come. Both men’s résumés are legendar y, serving their country in many key positions , from ambassadorships to Cabinet positions and much more. Both experienc ed political setbacks early on, yet their victories far outweighed their losses. Though Bush conceded his bid for the 1980 GOP nomination, he ultimately became Reagan’s running mate and America’s 43rd vice president. Baker became President Reagan’s chief of staff, and eight years later, ran a masterfu l president ial campaign for Bush, catapultin g his best friend to the White House in 1988. During Bush’s single term as president, the world underwent a series of cataclysmic events — the Tiananmen Square Massacre, the invasion of Panama, the re-unifica tion of Germany, the Persian Gulf War, and the collapse of the Soviet Union. As these developm ents unfolded, President Bush turned to his trusted friend and political ally, Jim Baker. Their foreign-policy achievem ents during Bush’s single term were consequential, but due to a less-than-stellar economy and a third-par ty candidate siphoning off crucial Republican votes, he lost his re-election bid in 1992. Bush and Baker returned to their beloved hometown of Houston, Texas. Eight years later, Baker helped Bush’s eldest son, Texas governor George W. Bush, win the Florida recount — and the presidency. This is a story of two of the most significant statesmen of the past half-century, a story of a friendship forged in power between George H.W. Bush and James A. Baker, III.

72 BRINGING SMART

GROWTH TO WACO, TEXAS

A Conversation with Waco’s Mayor, Dillon Meek, and City Manager, Bradley Ford

Texas CEO Magazine Q2 2021

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

Dale Belman, PhD Gordon Daugherty Jason Dorsey Jeremy Horpedahl, PhD Cindy Lo Lindsay Maresh Matt McLeod Jonathan Meer, PhD James F. O’Gara M. Ray Perryman, PhD Anthony Shaw Joel Trammell Paul J. Wolfson, PhD Ellen Wood Ilana Zivkovich To subscribe to the print or digital edition of Texas CEO Magazine, please visit our website: www.texasceomagazine.com and click subscribe. POSTMASTER Please send address changes to: The American CEO, LLC dba Texas CEO Magazine 8012 Bee Caves Road Austin, TX 78746 © 2021 The American CEO, LLC dba Texas CEO Magazine. All rights reserved. The Content in this issue may not be reproduced, distributed, or otherwise used without the prior written consent of the American CEO, LLC. The various contributors own their respective Content that is published in this magazine. The beliefs, content, comments, opinions, statements and viewpoints (collectively, the “Content”) published in this issue are those of the respective contributors and we do not necessarily agree, endorse, support or verify such Content. The Content presented in this issue is for informational purposes only and is not advice of any kind. Your use of the Content is at your own risk. The Content is provided on an “AS IS” basis, without any warranties of any kind, either express or implied. Neither The American CEO, LLC nor any person associated with us makes any warranty or representation with respect to the completeness, reliability, quality, or accuracy of the Content. Without limiting the foregoing, The American CEO, LLC does not represent or warrant that the Content will be accurate, reliable, error-free, that errors will be corrected, or that the Content will otherwise meet your needs or expectations. The American CEO, LLC disclaims all warranties of any kind, whether express or implied, statutory or otherwise, including but not limited to any warranties of merchantability, non-infringement and fitness for particular purpose. The foregoing does not affect any warranties which cannot be excluded or limited under applicable law.

INSIDE 7

LETTER FROM THE CEO + PUBLISHER

Lauren Daugherty

A Conversation with Patrick Brandt, Cofounder & President of Shiftsmart

WACO:

ECONOMIC DIVERSITY WITH A PUNCH!

GETTING SHIFT DONE

MAKING SPACE FOR A GROWING WACO

M. Ray Perryman, PhD

A Conversation with Chris Martin, President of Ideal Self Storage

STARTING A BUSINESS DOES NOT MAKE YOU A CEO Anthony Shaw

PARENTAL LEAVE & THE CEO:

SET YOURSELF AND YOUR BUSINESS UP FOR A SUCCESSFUL ABSENCE Ilana Zivkovich

AUSTIN:

AN ECONOMIC ROCKET SHIP Ellen Wood

A MURAL RENAISSANCE IN WEST TEXAS Texas CEO Magazine

STARTUP SUCCESS: NEGOTIATING VALUATION Gordon Daugherty

WHY YOUR BOARD OF DIRECTORS SHOULD INCLUDE MULTIPLE GENERATIONS

WAKING UP WACO

Matt McLeod

EVENT STRATEGY IN 2021 & BEYOND Cindy Lo

A HARVEST OF RESILIENCE: THE COVID-ERA PERSEVERANCE OF TWO DRIPPING SPRINGS WINERIES Lindsay Maresh

WHAT YOU NEED TO KNOW ABOUT TEXAS GUN LAWS Texas CEO Magazine

THE DIGITAL TRANSFORMERS

A Conversation with Bresatech’s William Martin and Matt Bomberger

THE FEDERAL MINIMUM WAGE: WHAT ARE THE COSTS AND BENEFITS?

Paul J. Wolfson, PhD, Dale Belman, PhD, Jonathan Meer, PhD

SHOULD WE BE WORRIED ABOUT THE NATIONAL DEBT? Jeremy Horpedahl, PhD

GREAT CEOS ARE CONSISTENT, PERSISTENT COMMUNICATORS James F. O’Gara

6 CAN’T-MISS ATTRACTIONS IN WACO, TEXAS Texas CEO Magazine

BUSINESS FORECASTS:

CLOUDY WITH A CHANCE OF FUTILITY Joel Trammell

ENERGY & EMPATHY

A Conversation with Jordan Jayson, CEO of U.S. Energy

Jason Dorsey

TexasCEOMagazine.com

Letter from the CEO + PUBLISHER Several years ago, when my husband and I told friends that we were excited to move to Waco, Texas, we received a mixture of shocked looks, awkward silence, and laughter. People thought it was odd that we were excited to move to Waco. Fast-forward several years, and Waco is seen very differently. Now, our city has become a tourism hotspot, not just for Texans, but for visitors from across the country. Now when I talk with non-Wacoans about our city, I get a variety of enthusiastic responses: “I’ve always wanted to go there!” “It looks so pretty on TV!” “I visited there last year and it was so fun!” This was completely unimaginable a few years ago. How did this transformation happen in such a short period of time? Well, several pieces in this issue of Texas CEO Magazine will dive into that. While our last issue examined Texas’ vibrant major metros and how they increasingly draw in people and businesses, this time we’ve devoted space to Waco, one of the smaller cities that are no less important in the fabric of our state and whose story should be an inspiration and encouragement to cities working to improve their brand and build their economy. On p. 53, one of Waco’s top Realtors discusses the city’s recent expansion, with particular insight into the local real estate market. On p. 8, Waco economist Dr. Ray Perryman describes how Chip and Joanna Gaines’ Fixer Upper success was the spark in a region already primed for explosive growth. We’ll also hear from Baylor University president Dr. Linda Livingstone, who’s committed to partnering with the Waco community and taking the school to research preeminence, as well as from Chris Martin, a local

I’M CONFIDENT THAT WACO IS GOING TO CONTINUE GROWING AND BLOSSOMING IN THE COMING YEARS. entrepreneur who’s built a family-owned self-storage business into a thriving regional enterprise. And if you are visiting Waco in the near future, or passing through, I encourage you to check out the tourism recommendations on p. 96. I’m confident that Waco is going to continue growing and blossoming in the coming years. So are the city’s mayor and city manager, who explain Waco’s multi-pronged approach to economic development beginning on p. 72. Of course, in addition to this spotlight on Waco’s recent trajectory, we also have our usual lineup of Texas experts tackling questions that matter to chief executives: How should CEOs think about parental leave (p. 13)? Does starting a company automatically make you a CEO (p. 10)? And how does generational diversity make a board of directors stronger (p. 36)? As always, please reach out to us with your reactions, ideas, and suggestions for future topics. Best wishes to you and your team as you continue to move past COVID-era challenges.

Lauren Daugherty

CEO & Publisher Texas CEO Magazine TexasCEOMagazine.com

WACO:

ECONOMIC DIVERSITY WITH A PUNCH!

How Chip and Joanna Gaines’ empire was the spark in a region already primed for explosive growth.

Since its roots as a river-bridge crossing for cattle on the Chisholm Trail, Waco has enjoyed a long and colorful history. Recently, Waco has become perhaps most known as the home to Magnolia, founded by HGTV’s Fixer Upper stars (and so much more), Chip and Joanna Gaines. The family of businesses has grown from pop-ups and a little shop on Bosque Boulevard in the 2000s to the Magnolia Market at the Silos, which launched in late 2015 and features a home goods store, bakery, food trucks (including one for its nearby Magnolia Table restaurant), 8

Texas CEO Magazine Q2 2021

M. Ray Perryman, PhD

coffee shop, furniture showroom, curated shops, and a Wiffle ball field. While Magnolia is far from the only positive development in the Waco area, it is a remarkable example of a successful economic catalyst for a city. It’s not uncommon for an area to have all the elements normally associated with growth but to require a stimulus to pique interest and activity from investors. Waco already had many natural advantages, including its central location relative to the major metropolitan areas of Texas and its multiple

local educational institutions (including Baylor University, McLennan Community College, and Texas State Technical College) for workforce preparation and training. The area had also been aggressively seeking to encourage development in its downtown for years. Magnolia was the spark that took things to a new level. Waco enjoys a diverse economic base, with no single industry dominating the local business complex. Major employment sectors in Waco include manufacturing as well as education and health services, both

of which have a higher concentration of local employment than Texas as a whole. Advanced manufacturing, aerospace and defense, supply chain management, healthcare, and professional and financial services are considered target industries for the area. With Magnolia’s ubiquitous national presence, the area’s healthy, yet unspectacular, traditional economy was able to garner much more attention. Waves of tourists have benefitted businesses throughout the Waco area. According to the Convention and Visitors Bureau, tourism increased from 789,140 in 2015 to 2,093,627 in 2016, the first full year of operation at the Silos. In the following years, the city received around 2.5 million visitors each year prior to the disruption caused by the pandemic in 2020. As with other major destinations, tourism took a big hit in 2020, and the numbers thus far for 2021 are disappointing, likely due to the lingering COVID crisis and a record winter freeze. But as spring brings warmer weather and a somewhat less restrictive environment, activity is already picking up once again.

789,140:

TOURIST VISITS TO WACO IN 2015

2,093,627: TOURIST VISITS TO WACO IN 2016, THE FIRST FULL YEAR OF OPERATION AT THE SILOS

Overall, Magnolia has been a catalyst to focus commercial attention on an area with great development potential, and the growth and activity in Waco has been the result. Economic expansion entails new and expanding businesses and additional opportunities, but is impossible without an adequate workforce. It is important that communities find the “sweet spot” of being a city where businesses want to locate and employees want to live. In recent years, Waco has become an attractive

(and affordable) place as well as a dynamic location for new and expanding businesses. Real estate activity has remained vibrant throughout the pandemic, and available single-family housing dipped below one month’s inventory in January. Building permits for single-family residences totaled 654 in 2020, a 5 percent increase from the previous year. Non-residential construction permits totaled $570 million in 2020, approximately $200 million above 2019 totals. In order to keep up with expected population and business growth, the Texas Department of Transportation is expanding the major highway through Waco by adding four lanes in each direction to I-35 over the next three years. Meanwhile, the City has made many infrastructure enhancements. New businesses are increasingly choosing Waco as a destination. One of the more notable locations is Amazon, which is building a 700,000-square-foot fulfillment center that will create up to 1,000 new jobs starting at $15 per hour with benefits. Additional projects, such as a large entertainment-based development that will include a Topgolf, Cinemark, and Main Event, are expected to bring in another 1,000 jobs for the local economy in the coming years. Other companies that have recently announced plans to bring operations to the Waco area include Uzin Utz North America, Hello Bello, Tecovas, Envases Group, Aspen Custom Trailers, and Laminate Technologies. Work is underway on a large riverfront development project, a mixed-use development that will consist of shops, restaurants, apartments, a hotel, a music venue, and space for the downtown farmer’s market. Another highly anticipated downtown addition will be a new AC Hotel by Marriott that will contain 182 rooms, a 17,000-squarefoot conference space, a restaurant and bar, and a parking garage with public parking spaces. A major destination project with medical and tourism venues is also promising, as are several redevelopment initiatives. While across the nation local economies suffered in 2020 due to the pandemic, Waco has come a long way in recovering from the lows experienced during last

March and April. After losing over 11,000 jobs through the beginning of 2020, the metropolitan statistical area (MSA) ended the year with only 300 fewer net jobs than December 2019. Though the unemployment rate ended the year at 5.9 percent compared to 3.0 percent the previous year, this largely reflects expansion in the civilian labor force of both the employed and those seeking work. The Perryman Group’s most recent forecast for the Waco MSA, which comprises McLennan and Falls Counties, projects that real gross product will grow by $2.4 billion from 2020 through 2025 to reach $14.5 billion, a 3.60 percent annual growth rate. Employment is forecast to expand by nearly 14,600 over the period, a 2.22 percent annual growth rate. The largest gains are expected in the services sector (which includes education, health, accommodation, and food services), which is projected to add 9,400 jobs through 2025, 65 percent of new job gains over the 5-year period. The Waco area’s broad base of businesses and favorable attributes position it well for economic gains. Spurred on by the momentum that Waco has been enjoying from Magnolia, increased activity is likely to continue, and the outlook for the future is bright.

PERRYMAN GROUP FORECASTING

$2.4 billion: EXPECTED REAL GROSS PRODUCT GROWTH 2020–2025

14,600:

EXPECTED EMPLOYMENT GROWTH 2020–2025

Dr. M. Ray Perryman is president and CEO of The Perryman Group (perrymangroup.com), an economic and financial analysis firm that has served the needs of over 2,500 clients over the past four decades, including more than half of the Fortune 100, two-thirds of the Global 25, and ten US cabinet departments.

TexasCEOMagazine.com

STARTING A BUSINESS

DOES NOT MAKE YOU A CEO Anthony Shaw

In 2019, the total startup failure rate was 90 percent, and about 21.5 percent of startups fail in the first year alone.1 Are you truly a CEO if you started a company that has not yet turned a profit? The answer: no— you just have an expensive hobby. I have always struggled with entrepreneurs who announce unsupported greatness with platitudes of confirmation bias and naïve arrogance. 10

Texas CEO Magazine Q2 2021

“I am CEO of (insert company).” “When we capture just .000001 percent of the market share, we will all be quadzillionaires.” “Just ask my friend Joe. He agrees that everyone wants my product/service.” Like many entrepreneurs, I have started a handful of companies, and it’s easy to get over-excited, but in my experience, the typical startup has a half-cracked idea, no proof of concept, and is devoid of any near-term customers.

No, your friends and family do not count, and that’s okay! As the saying goes, you only have to be right once. When I started Progeneration Energy, I was determined to earn each and every professional title as I grew. My first position with Progeneration was as a “project professional.” Since day one, I have set milestones to account for every one of my title changes. Goals such as sales, profitability, and

IT IS ESSENTIAL TO REMEMBER THAT SUCCESS CAN BE AS SIMPLE AS SURVIVAL—AND SURVIVAL HAS NOTHING TO DO WITH YOUR TITLE.

growth of my team members have ensured that my focus remains on the task of growing Progeneration Energy rather than on my title. When trying to get a new company off the ground, the initial excitement can overshadow the cold truth that entrepreneurship is messy, vague, and—depending on your perception— extremely high-risk. You end up feeling like you have to have all the answers because you are the CEO of this new company, but it’s OK if you don’t. By focusing on the task at hand, and not on creating the perception that you are King of the Mountain, a new entrepreneur can create professional and emotional wiggle room. In fact, I was once almost thrown out of a boardroom during a pitch because I “didn’t know my numbers,” even though I had graduated from an extremely prestigious MBA program. There was a lot of one-sided yelling. At the time, I was just a wide-eyed recent MBA graduate, trying to understand basic theoretical but crucial concepts like “project cash flow strategy” and “capital deployment time horizon,” but I hadn’t learned them as they relate to the real-world execution of business. It did not help that I was pitching a good friend who has extreme entrepreneurship success. It was a lesson needed. I was not a president, CEO, or King of the Mountain then, and despite some of my success, I am not so sure I am now. Since then, my company and I have grown significantly. For the past eight years, I have been told it is time for

me to change my title, and people are often shocked when I tell them that yes, I founded the company, but no, we do not have a CEO. Once I explain my reasoning, people typically react with an intrigued understanding. It’s not a common approach. People are used to seeing a founder with the title of CEO/president/founder, but I think it’s overall a positive thing to see an entrepreneur put aside their ego and commit to growing with their company. Additionally, it is essential to remember that success can be as simple as survival—and survival has nothing to do with your title. I once asked an extremely qualified applicant why he didn’t start his own business. His answer: payroll. Surviving is being able to take care of your employees, make payroll, and pay your bills. The grit and perseverance it takes to make those three things happen make your work mean something. It can be easy for an entrepreneur to fail and simply file for bankruptcy to avoid paying back investors, but you should commit to refusing to fail because your investors took a chance on you, and you owe it to them to prove them right. Being able to serve others, make a difference in the world, and pay back those who invested time and resources into your venture means something, and that is good enough for me. While I am unsure whether my most recent title change—to President of Progeneration Energy—is deserved, I am thankful for all my investors, customers, colleagues, and support system. I continue to be committed to the relentless task of “earning it.”

Anthony Shaw is an accomplished entrepreneur, a former Naval non-commissioned officer, and an MBA graduate from the Fuqua School of Business at Duke University. While at Duke, he chose to start his own company in less than three months—something he was told would be impossible. He even began his first entrepreneurial venture at 17, and his latest venture, Progeneration Energy, an alternative energy solutions company with over $68.2 million in project completion, also boasts a perfect safety record.

Sean Bryant, “How Many Startups Fail and Why?,” Investopedia, November 9, 2020.

TexasCEOMagazine.com

Photo by Susan Potter Photography

THERE ARE MANY “RIGHT” WAYS TO DO PARENTAL LEAVE. AS A LEADER, YOU’RE USED TO BEING IN CONTROL, TAKING ACTION, AND MAKING DECISIONS.

Texas CEO Magazine Q2 2021

PARENTAL LEAVE & THE CEO:

SET YOURSELF AND YOUR BUSINESS UP FOR A SUCCESSFUL ABSENCE Ilana Zivkovich My four-year-old daughter recently told me that she “didn’t want to be a mommy” when she grew up. When asked why, her response was matterof-fact in that irrationally confident, four-year-old way. “Because I want to be an animal doctor.” Despite having two working parents, and knowing that “mommy owns her company and is her own boss,” somewhere along the way our daughter got the idea that she would have to choose just one— parenthood or professional pursuits. Though the push and pull between kids and work is real, many CEOs have chosen both. We raise families and build businesses, often at the same time. Rarely is this balancing act more delicate than when welcoming a new baby into the mix. In many sectors of the American workplace, parental leave is not an assumed or simple practice. Working mothers are often met with pressure and guilt around maternity leave. And 76 percent of men are expected back to work a week after a birth or adoption.1

While these challenges hold true across the workforce, it can be particularly difficult when applied to a company’s highest office. How do we, the CEOs—the vision casters, decision makers, and organizational leaders—pursue parental leave? What do we need to do to carve out the space needed while also creating a dynamic in which we (and those who rely on us) can feel confident? Fortunately, as a leader, you have the ability to help normalize the concept of leave, set a positive and empowering example for your workforce, and make your time away successful for both your business and your personal life. The task of handling parental leave as CEO may feel daunting at the outset, but isn’t that true of all the business initiatives we lead? Through my years as an executive coach I’ve worked with hundreds of high-performing leaders, many of whom are devoted parents. Through supporting their experiences, and through having navigated two parental leaves personally—one very recently—here are some best practices to make parental leave a success.

1. Expect—and accept— the unexpected. Whether it’s your first child or your fifth, your world can shift in an instant around the time of a birth or adoption. The best-laid plans may dramatically change. Your child could come early. You could have a colicky baby. Your partner may experience significant postpartum challenges. Your business brain will want everything planned and accounted for—but be prepared to release some of that control. 2. Start planning early. You can never start planning too early for your parental leave. Begin with getting clear on your priorities. Be ruthlessly realistic with yourself and those around you. What are your non-negotiables? What does your ideal look like (recognizing that there is no one-size-fits-all solution and no “correct” form of leave)? Get specific. Talk to other working parents and CEOs about the challenges they faced, and begin processing how those things may look in your TexasCEOMagazine.com

Transparency is a huge helper in this reassessment stage, so encourage your team to be boldly candid with you—and do the same for them. Seek to own the reality of the situation, whatever it is.

reality. Sleep? Time with other children? Crucial business decisions? Identify goals and boundaries you want in place during your leave to give yourself and your team guideposts to plan around. With big-picture priorities and boundaries identified, you can start to create a plan for your leave: o How much time are you going to want to take off? o What does that time look like? Will you be completely offline, or will some team members have special access to you? o Do you still want to be involved/ aware of certain projects? What does that look like? Once you have clarity on what you hope your leave will look like, you can reverse-engineer how to make it happen. 3. Create systems to support your time away. Think through each key business process that you are typically involved in, and make sure that process can function clearly and effectively in your absence. Commit your plans to writing. Create or revise standard operating procedures as needed. Make sure decision-making authority is clear. Hire, train, or simply empower your existing people to make this all possible. Your goal is to make 14

Texas CEO Magazine Q2 2021

yourself as irrelevant as possible for the short term. (You may be pleasantly delighted with what this makes possible upon your return as well!) 4. Communicate your leave plans thoroughly. Think through who is vital to the success of your business. What relationships and/or business functions will be impacted by your time out—staff, partners, the board, key accounts, strategic alliances, vendors, etc.? Once you have clarity on your priorities and plans, be proactive in communicating with all identified stakeholders so they know what to expect and can (hopefully) be supportive of both you and your business as you take the time to welcome your newest addition. 5. When you return, reevaluate, and maintain flexibility. Stay present, honest, adaptable, and communicative as you transition back. You may want to consider a “phased in” return, where you don’t come back all at once. However you come back to work, check in with yourself first. Do the plans you crafted before your leave still feel like the right ones? If not, what needs to shift? Check in with your teams: How are they feeling/doing? What support do they need, and what support are you realistically able to give? Take the pulse on the systems and processes you put in place. How are they functioning?

My own recent return to work required a lot of reassessment and flexibility. When COVID reared its head shortly after the birth of my daughter, our childcare plans shifted suddenly. Instead of coming back full throttle, I trickled back in. I began taking key meetings, but always with an expectation of audio only, no video, so I could multitask with the baby. At the start of each meeting I let colleagues know that my new favorite coworker (my newborn) would be joining us, and may, at the very last minute, decide the meeting time was untenable (see: crying unstoppably). In those cases, the meeting got pushed. Everyone in my professional orbit was amazingly supportive through this time. With clarity and a little flexibility, we were able to prioritize and work effectively within the shifting realities of my parental leave. In sum, parental leave can be whatever you want it to be. There are many “right” ways to do it. As a leader, you’re used to being in control, taking action, and making decisions. Letting go for an extended period of time may make you feel uneasy. But you can use the same executive skills that you apply to your business to ensure your leave is just as successful. The key is thoughtful preparation, clarity of expectations, and a healthy dose of compassionate, tuned-in flexibility. Ilana Zivkovich is the founder and CEO of Werq, an executive and team performance coaching firm headquartered in Austin, Texas. An experienced executive leader and Certified Executive Coach, Zivkovich, along with her team, helps leaders align their people, processes, and strategy so that businesses can achieve exceptional results. Ilana holds a master’s degree in social work from the University of Texas at Austin and serves on multiple nonprofit boards and councils. Visit werqpeople.com for more information. 1 Kathy Gurchiek, “Availability, Use of Paternity Leave Remains Rare in US,” SHRM, August 16, 2019.

AUSTIN: An Economic Rocket Ship How an economic development plan created almost 20 years ago still informs the Texas capital’s success. Ellen Wood Whether you measure by corporate relocations, COVID recovery, job opportunities, or simple quality of life, the Austin of today is an economic powerhouse. What you may not realize is that the city enjoys this status thanks in large part to Opportunity Austin, a series of economic development plans put in place in the early 2000s. Several decades ago, Austin’s economy was anchored by just a couple of major employers—the state government and the University of Texas. But in the 1980s and ’90s, the city’s economic base began to expand and diversify, particularly in the realm of tech. The computer research consortium MCC chose Austin as home base in 1983. IBM, which had opened a plant in Austin in 1967, shifted from hardware manufacturing to software and grew its Austin employment by many thousands. The chip-manufacturing consortium SEMATECH began operating out of Austin, further cementing the city’s standing as a technology haven. Meanwhile, capital began to flow into technology companies from firms like Austin Ventures, founded in 1984. And with the successful IPO of Tivoli in 1995, many new ideas came to market and the tech startup movement took early flight. When tech crashed in the early 2000s, the Austin economy suffered significantly with it. Despite all the progress of previous years, Austin still did not have the diversity of industry and infrastructure to weather the hit well. During this crash, a group of leaders stepped up and said, “Enough is enough.” These motivated and visionary individuals came together and recognized that something different was needed to improve Austin’s

resilience in the face of the current techdriven crisis and those likely to come. They assessed the Austin economy, categorized the assets, identified the weaknesses, set aspirational yet achievable goals for growth, and began the hard work of raising the private funding to make a real plan happen. At the time, the Austin Chamber of Commerce had recently hired a new CEO, Mike Rollins, who brought deep experience in economic development from his work in Nashville. The Chamber board, working with elected officials and the broader business community, engaged an outside expert, Market Street Services, to help the community identify its opportunities and develop a roadmap to evolve Austin into the powerhouse it is today. This was largely accomplished via Opportunity Austin, a comprehensive strategic plan for Austin’s economic development, rolled out in 2003. Today, Opportunity Austin remains an influential framework. Every five years, the plan is updated—we are currently on Opportunity Austin 4.0. With input from community leaders and partner organizations, the Austin Chamber expands on the progress of the preceding plan and responds to changes as necessary to continue positioning the city as the mecca it has become. Numerous significant initiatives have been part of Opportunity Austin plans, ranging from the recommendation to promote the entrepreneurial ecosystem by partnering with Capital Factory, to the creation of a major medical school (which became the Dell Medical School), to contributing significant energy and funding toward improving the educational outcomes for Austin youth and their path to well-paying employment.

During the three and a half Opportunity Austin initiatives to date, more than 450,000 jobs have been created and more than 1,000 companies have either expanded here or moved to the region. Since inception, hundreds of investors have committed approximately $70 million, with more than 90 percent of it privately funded. Clearly, the business community takes investing in this region seriously. The relatively softer hit that Austin and Central Texas took during the Great Recession of 2009 was a clear testament to Opportunity Austin. The region experienced the same pain as the nation during this timeframe but was largely recognized as a region that was last to go into and first to emerge from the crisis. More recently, we have seen again how much better Austin businesses have fared during the COVID-19 pandemic than comparable cities across the nation. Economic development, like gardening, requires constant nurturing and attention. Thanks to the personal commitment of local business leaders such as Gary Farmer, who has chaired Opportunity Austin since inception, along with a dedicated community of individuals and organizations, ranging from the governor’s office to local government to the business community, Austin has evolved into the success story it is today. The foundation this diverse but aligned group has put in place over the past twenty years now forms the bedrock for Austin to build upon in the current recovery—and to support its growth into the future. Ellen Wood is the CEO of the financial consulting firm vcfo, founded in 1996 and headquartered in Austin. vcfo is celebrating its 25th year serving over 5,000 clients nationwide, providing an integrated suite of finance, HR, and recruiting support. Ellen and vcfo are very active in the community, and vcfo has been an investor in Opportunity Austin since its inception.

LEADING

OF SPACE

Last December, Houston Spaceport, the nation’s 10th spaceport to be commercially licensed, wrapped up its phase 1 development. The 150acre, $21 million buildout included streets, water, electrical power, fiber optics, and communications facilities. Located in Ellington Airport, the spaceport is rapidly developing into a hub of the aerospace and aviation

community—and contributing significantly to the economic development of the region. Arturo Machuca, director of Ellington Airport and the Houston Spaceport, sees his work at the spaceport as not only making Houston a real leader in the path to commercial spaceflight, but also as bringing companies together to foster innovation and new business opportunities.

Feature

THE FUTURE CITY, USA

Was it always your dream to run an airport? Were you the kid running around with toy planes when you were young?

No question about it. By the time I was 12 years old, I knew that aviation was what I wanted to do. At that age, I was invited to an airport on a school trip. We didn’t have jetways back then; they just took us out in the ramp. There was a 727 parked out there, and when they invited us on, I was the first kid jumping up those

stairs. As soon as I saw the cockpit, I thought, “Man, this is what I want to do.” My real career in aviation started in 1981, so it’s been 40 years. A lot of people want to be in aviation. What was your big break? My big

break was the decision I made in college to apply to a sales and marketing role at Mexicana Airlines. Sure enough, I was lucky enough to get hired on. All of a sudden you

couldn’t catch me. Every weekend I was flying. From there, I got deep into the business of commercial airlines. Twenty-one years later, in August of 2001, just a couple of weeks before 9/11, a good friend of mine invited me to come work for the Houston Airport System, doing what we call air service development. Basically, I went around inviting airlines around the world to fly to Houston.

About three years later, I took a detour into private aviation, building FBOs [fixed-base operators], and I got to see how the 1 percent flies. That experience helped me understand both customer service and new types of business opportunities. But then in 2009, once again my friend here at the Houston Airport System called me up and said they had an opportunity. This time it was overall business development for the Houston Airport System—Bush, Hobby, and Ellington. In 2012, I got the opportunity to work for Ellington, looking at the feasibility of transforming a general aviation airport into a spaceport.

Federal Aviation Administration, the State of Texas, the City of Houston, and others, we determined that it was doable.

When I heard about that opportunity, I knew I had to do it. It was a challenge I wanted to be a part of. At first, many of our colleagues thought this project might not happen. But working in partnership with our own teammates, the

Most CEOs know what an airport is like, but what’s going on at a

Texas CEO Magazine Q2 2021

It took us about a year and nine months to have Ellington licensed as the 10th commercial spaceport in the nation. That might sound like an easy task, but we did it in record time. The closest to touching that record was five years. I’ll tell you what—it took the dedication and support of many people at the federal, state, county, and city level. We turned what used to be seen as the past of Houston into the future of Houston.

commercial spaceport like the one you run at Ellington? We are

the only truly urban spaceport in the world! We are right here in Clear Lake City, three miles due north of Johnson

Feature very short distances, and that’s exactly where we are right now with commercial spaceflight. As technology develops, we will be able to use spaceflight to get from one point in the world to another. Many companies are already working on using spacecraft as transportation for passengers, cargo, satellite deployment, and more. Those are the companies we’re bringing to the Houston Spaceport. Speaking of that, what are some of the exciting things going on at the spaceport right now? What types of tenants are already there? The Houston Spaceport’s strategy is different

from most other spaceports. We have a broader vision that invites many people in the aviation and aerospace industry to take advantage of the assets of the fourthlargest city in the US—including our human resources and the universities producing the professionals who will push commercial spaceflight into the mainstream. We’re inviting companies, innovators, and visionaries to establish their operations here so they can do their part to support the development of commercial spaceflight. We’re particularly excited to welcome the world’s first commercial space station builder, Axiom Space, to Houston Spaceport. Axiom plans to build a 14acre headquarters campus here, where they’ll train private astronauts and begin production of their Axiom Station, the commercial space station that will replace the International Space Station in low-Earth orbit.

Space Center. We have all the necessary infrastructure, from runways to safety processes, to operate as a commercial spaceport and host horizontal operations. Those are the operations companies like Virgin Galactic are testing in the Mojave, where you have a plane under jet power transporting the spacecraft out to the Gulf of Mexico, flying to an altitude of about 45,000 feet. At 45,000 feet they release the spacecraft. It ignites its rockets and off to space it goes. We’re confident that in the future we’ll be doing those types of operations here. These types of launches are truly the beginning of commercial spaceflight. I like to invite people to think about the stretch of time between the Wright brothers’ first flight and when we had commercial aviation. At the beginning, aircraft were only able to fly

We also have companies already here that are doing really exhilarating work. One is Trumbull Unmanned, which is building and operating UAS [unmanned aerial systems, or drones]. They have a contract with ExxonMobil to do data collection and inspections. Another is Intuitive Machines, which has been aligned with the Houston Spaceport since its inception. They have grown from a startup into a company that’s about 150 individuals strong. Last year, Intuitive Machines responded to an RFP by NASA for its Commercial Lunar Payload Services program. In May of 2019, they got the great news that they had been selected as one of the companies to build an unmanned lunar lander. As we speak, right here at Houston Spaceport, these guys are testing and finalizing the Nova-C, the nearly 13-foot lunar lander that will deliver cargo to the Moon as soon as the fall of 2021. It’s amazing. That’s a tremendous success not just for the Houston Spaceport but for the City of Houston. Other areas of concentration for us include high-tech development, unmanned aviation—what some call drones— and deployment of microsatellites from the Houston Spaceport. We’re also looking at turning this place into TexasCEOMagazine.com

a source of workforce training for aerospace. In 2019, we completed a deal with a local university, San Jacinto College, to open up its EDGE Center here at the Houston Spaceport. That opened in January 2020, with a mission of training people for careers in aerospace. Their curriculum allows younger students to get training in avionics and composites and welding and exotic materials and much more. As they ramp up the program, San Jacinto is giving out scholarships to jump-start industry training here in Houston. That’s very important to our community. What other skills will people need for the future of aviation and aerospace? Higher education and advanced technical

skills are going to be the catalysts for transitioning from a government-driven space program to a commercial-driven space program. We want to support the workforce of the future at the Houston Spaceport because, just in the Houston region, the aerospace and aviation industry has a deficit of around 1,800 positions that go unfilled or are filled by unqualified candidates because of a lack of adequate training. The top academic institutions in our area agree. There is a real need to prepare the workforce for the challenges and opportunities the commercial aerospace industry presents. We recently completed a feasibility study with the major universities in our region, including Texas A&M, Rice University, Texas Southern University, University of Houston Clear Lake, and others, and they all agree that there is a substantial need to have an aerospace and aviation training hub. What better place to have an academic aerospace facility than at the Houston Spaceport? In addition to San Jacinto’s EDGE Center, we have a close working relationship with these higher education organizations. It only makes sense to continue to expand with the commercial aerospace industry and secure the jobs of the future right here in Texas. What was your experience of leading Houston Spaceport and Ellington Airport through COVID-19? How do operations look different today compared to March 2020? We all saw the

tremendous blow COVID-19 dealt to the commercial air travel industry. Commercial airports and airlines are still recovering from the effects of the pandemic, but at Ellington Airport, five branches of the US military and NASA account for most of the aircraft operations. In 2020, although we saw a decrease in general aviation activity, we saw an increase in military operations. Overall, we only had an 11 percent reduction in aircraft operations in 2020 compared to 2019. On the other hand, the Houston Spaceport continued its momentum throughout 2020. We’ve been really fortunate. 20

Texas CEO Magazine Q2 2021

In general, the commercial aerospace industry, even NASA, did not suffer the same dire shortcomings that the aviation sector felt throughout this pandemic. A good example of that is SpaceX sending the first commercial crew to the ISS in the middle of the COVID-19 outbreak. We’ve seen a big push from the public and private sectors to advance commercial spaceflight. Since the last administration, there was a certain urgency to advance a commercial space program and we continue to experience that vision under President Biden. Another truly significant factor for us was the completion of Phase 1 of development of the spaceport in late 2020. With the infrastructure in place, we are getting more attention. As I mentioned, Axiom Space announced plans to build their headquarters here. Venus Aerospace is a California startup that moved to Houston to develop their technology of hypersonic flight, and I can say that there are other large business opportunities in the pipeline. We hope we can make some announcements soon. The Houston Spaceport is open for business and we’re excited for the things to come. How do you see the Houston Spaceport fitting into the broader economic development goals of the Houston area? Have you seen other spaceports becoming economic development centers in their local regions? Houston Spaceport is unique

among the other federally licensed spaceports. Our great city can boast of having the only true urban spaceport in the world, and its vision is also unique—to bring together a cluster of aviation and aerospace enterprises that will support the future of commercial spaceflight. Houston is already home to over 500 aviation- and aerospacerelated firms and institutions, so we’re very well positioned to become a center for collaboration and innovation and lead the nation on the commercial aerospace front. Our vision is fundamentally tied to the growth of the Houston economy. Axiom Space’s development, for example, is estimated to bring more than a thousand jobs to Houston. As we become home to new and other aerospace companies, Houston will reap the benefits of the jobs, technology, and innovation that will follow. Currently, most if not all other US spaceports rely on growing operations such as launches and landings. The Houston Spaceport business model is not necessarily dependent on spaceflight operations at the moment. Although horizontal launches and landings will one day happen at Houston Spaceport, we are focused on creating an ecosystem that allows companies to develop the technology that will make commercial spaceflight a part of our everyday lives. As the industry matures, we are taking advantage of all the other assets our city and its spaceport have to offer.

A MURAL RENAISSANCE

Poco a Poquito, Stylle Read

IN WEST TEXAS

RATHER THAN A RIVALRY BETWEEN THE ART COMMUNITIES OF MARFA AND ALPINE, THEY HAVE EVOLVED A SYNERGY THAT ENHANCES THE WHOLE REGION. West Texas offers visitors many charms, from Big Bend National Park to McDonald Observatory to the esoteric charm of Marfa.

Lately, these long-established draws have been joined by a flourishing arts scene in the small but fascinating town of Alpine. Alpine is notable for its high-quality murals, representing the type of rich, expressive public art rarely found in small communities. While the late Donald Judd’s minimalism gives the nearby Marfa art scene a veneer of sophistication and international appeal, the murals and galleries of Alpine are reflecting the more localized, art-related pulse of Brewster County and Big Bend. But don’t take that to mean there’s a competition between the two camps, says local jewelry designer David Busey, who serves on the

City of Alpine’s Beautification and Environmental Board. “Rather than a rivalry between the art communities of Marfa and Alpine, there has evolved a marketable synergy that enhances the whole region as an attraction,” says Busey. “In that respect, Alpine has lately gotten more attention. Texas Monthly and Texas Highways have both featured stories about Alpine, describing it as a ‘thriving arts colony’ that offers an enjoyable and ‘accessible art experience.’” Art in Alpine has a long history, beginning with the Department of Drawing and Domestic Arts at Sul Ross Normal College (today known as Sul Ross University), established in 1917. The school, which graces TexasCEOMagazine.com

Glass Mountains View of Twin Sisters, Juliana Johnson

Several of the colony’s artists would find national prominence under the Works Progress Administration murals program of the 1930s, including Gonzalez and Woeltz, the latter of whom won a hotly contested post office mural competition in Amarillo in 1940. “Before coming to Sul Ross,” says Bones, “Gonzalez and Las Pulquerias, Stylle Read

Woeltz traveled to Mexico to study the great muralist Diego Rivera. At Sul Ross, they each worked on a number of large works that are in the collection of the Museum of the Big Bend. The summer Art Colony continued until 1950, with some of the most prominent Texas regionalist artists coming to the high desert country of the Big Bend to teach studio work and plein air techniques.”

Flying Shaman, Kerry Awn

In recent decades, other artists have picked up on the mural theme, resulting in a contemporary mural renaissance. This new wave includes murals by prominent Texas artists like Stylle Read and Cristina a picturesque hill on the eastern side of Alpine, held an Art Colony all the way back in 1932. Developed and led by Texas artists and muralists Xavier Gonzalez (1898– 1993) and Julius Woeltz (1911–1956), the Art Colony centered around two six-week courses offered to enrolled Sul Ross students as well as outside artists. Mary Bones, director of the Museum of the Big Bend on the Sul Ross University campus, says that the colony “was a very successful and popular offering for the college.” 22

Texas CEO Magazine Q2 2021

Sosa Noriega. “Here in Alpine, it’s really exciting to see the different individuals who picked up on the concept and ran with it, particularly in the alley between Fifth and Sixth [Streets] in our historic downtown district,” Alpine’s Tourism Director, Chris Ruggia, says. “That more recent activity has expanded not just the number but the variety of the works of so many local artists. It’s very exciting and has given visitors so much more opportunity to spend time exploring.”

Alpine’s current Alley Art scene was a creation of many local artists, including Liz Sibley, Carolyn Mangrem, and Nancy Whitlock. Whitlock even created a walking tour featuring all the town’s murals, navigated by a handy brochure. As she created the tour, she wanted to make sure visitors got to see all the murals, not just the ones in the main alley. “The story behind the fascinating murals on the south side of town is equally interesting but less known,” says Whitlock. Over the years, several businesses in what was once considered the “Hispanic side of town” began to feature mural art on their exterior walls, and according to Whitlock, they also contribute to the “beautiful bounty of murals in Alpine.” Says Whitlock, “I created a mural map because I felt that the tourists coming into my gallery weren’t getting to see all the best Alpine had to offer. What surprised me was the outpouring of interest people had in the concept of an illustrated map. And amazingly, the number of murals I myself was aware of grew as I walked around Alpine for the project.” Gallery owners like Keri Blackman of the Kiowa Gallery have also been instrumental in Alpine’s evolving art scene. Blackman and friends were responsible for sponsoring several original Stylle Read murals, for example. Blackman also founded Artwalk—at the time known as Gallery Night—in 1994, a major annual November event that showcases Alpine’s artistic talent. The Alpine Downtown Association, founded in 2016, and the City of Alpine have recently promoted another annual mural-related event, Harvest Moon Weekend. In September of 2018, the first Harvest Moon Weekend took place, celebrating the end of a long hot summer with music and art under—what else?—a harvest moon. Last year’s festival featured a large mural in progress by the Sul Ross Art Club, painted under the direction of Carol Fairlie, the university’s Professor of Art. The mural celebrates the original Sul Ross Art

Texas Rangers, Stylle Read

Colony developed by Gonzalez, Woeltz, and other prominent regional artists. Alpine’s resurgent art scene has helped lure visitors to Alpine, largely from nearby cities like Midland, Odessa, and El Paso. But many come from far and wide. “The Alpine Downtown Association has used the arts as a key draw to the area, and it has worked quite well,” says the association’s president, Jim Street. “We created the slogan ‘Heart of the Arts’ for one event and it has kind of stuck as a slogan for Alpine in general. Our most successful event to date has been the Harvest Moon fest. Man with Guitar

We dedicated one of our first murals, by local artist Pauline Hernandez, during the first Harvest Moon celebration.” Busey predicts that the present mural movement will be an “essential link” between Alpine’s artistic legacy and a marketable visual identity that makes it a sought-out destination for visitors. He notes that this is similar to what’s happened in Taos, New Mexico, where a unique arts history has distinguished the town as an important cultural destination. “The Museum of the Sul Ross Art Colony Landscape

Big Bend is already a prime visitor attraction,” says Busey, “and Alpine’s associated mural movement could be an important visually related feature that will see Alpine also recognized for its historical relevance, from the days of the Art Colony to today.” TexasCEOMagazine.com

WHAT CEOS NEED TO KNOW ABOUT

Good CEOs spend a lot of time thinking about their company’s culture–the shared values and norms that guide people at work. Culture affects everything your team members do, including how they keep themselves and each other safe on the job.

Why is it so critical to have a positive safety culture at your organization? Because it can lead to: • • • • • • •

Lower workers’ compensation costs Lower insurance premiums Increased employee retention A more engaged workforce Better recruiting Fewer lost work days No OSHA fines or smaller chance of hearing from OSHA

What exactly is a safety culture?

A safety culture is the way safety is perceived, valued, prioritized, and integrated in all activities in the workplace. It reflects the commitment to safety at all levels. Your employees’ perception of your company’s safety culture is influenced by: • actions, or lack thereof, toward correcting unsafe behavior, • employee training and motivation, and • management and employee attitudes. Put simply, a safety culture is a set of core values and behaviors that emphasize safety as an overriding priority. If a company has a positive safety culture, then it is more likely to have a good safety record. A safety culture stems from more than just a safety program, though. There’s a common misconception that if you have a safety program in place, then your safety culture is in check, but that’s not always the case. A safety program is a plan that outlines how the company will address hazard prevention and control. But a safety culture is a safety-first commitment that influences all actions at a company.

FIVE STAGES OF A SAFETY CULTURE As the CEO and leadership build a commitment to safety, the safety culture typically goes through five stages: emerging, reactive, analytical, proactive, and cultural. As you read about each stage, ask yourself: Where does our company currently stand?

1. Emerging: “We don’t care as long as we aren’t caught.” In the emerging stage, safety is focused on technical and procedural solutions to comply with regulations. Safety is not seen as a key business risk. The safety department, if it exists, is perceived as primarily responsible for compliance, not as a resource for the whole workforce. Many accidents are seen as unavoidable, and most employees, including management, are not interested in safety and don’t see its value.

2. Reactive: “Safety is important; we do a lot every time we have an accident.” In the reactive stage, safety is seen as a business risk. Management time and effort are devoted to accident prevention. Attention to hazards is directly related to incidents after they occur. Like the emerging stage, the focus is on adherence with rules, procedures, and engineering controls, not worker behavior. Accidents are seen as preventable, and management believes the majority of accidents can be attributed to workers’ unsafe behavior. Safety performance is measured with lagging indicators, which are past performance statistics such as injury rates, and safety incentives are based on reducing lost-time incidents. Management becomes involved in health and safety only if accidents increase. In this stage, employees may be disciplined for unsafe behavior. Accident rates are near the industry average.

BUILDING A POSITIVE SAFETY CULTURE

CARING FOR TEXAS FOR MORE THAN 25 YEARS

3. Analytical: “We have systems in place to manage all hazards.” In this stage, accident rates are low and may have reached a plateau. Management recognizes that employee involvement is essential for safety improvement, and management has buy-in from employees to reduce safety hazards. Workplace accidents are understood to be a result of many factors rather than one worker’s actions. Safety performance is actively monitored. Data is used to prevent future incidents.

4. Proactive: “Safety leadership and values drive our continuous improvement.”

As the leader of the workers’ compensation market, Texas Mutual is committed to building a stronger, safer Texas. We offer workers’ compensation insurance that protects employers, their businesses, and their employees from the consequences of an on-the-job injury or illness. Don’t “go bare”—protect your employees and business with the company that does workers’ compensation bigger and better than anyone else. Whether you work in oil and gas, restaurants, construction, healthcare, auto repair, or any other industry, we’re here to help.

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The majority of staff is convinced that health and safety is important. Management knows that a wide range of factors lead to accidents and devote resources to analyze root causes. Management puts significant effort into proactive measures to prevent accidents, and safety performance is actively monitored using all data available. The company promotes a healthy lifestyle, and non-work accidents are also monitored.

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5. Cultural: “Safety is how we do everything around here.”

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When a company reaches this level of safety culture, safety is a top priority. The company has sustained a significant period without a recordable accident or high-potential incident, but there is no feeling of complacency. There is a wide range of indicators to monitor performance, but it is not performance driven. All employees are actively involved in the safety program and share the belief that health and safety is a critical aspect of their job. There is also group acceptance that prevention of all injuries, including non-work injuries, is important. The company invests considerable effort in promoting health and safety at work and at home. • • • No matter where your company stands currently, a positive safety culture isn’t built overnight. It’s something an organization has to develop and maintain. It takes time and commitment from management. But once it’s in place, your employees, leadership team, board, shareholders, and customers will all rest assured that safety is a priority at all levels, influencing the moment-to-moment decisions each team member makes.

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TAKING BAYLOR TO TIER 1

Feature

A CONVERSATION WITH

DR. LINDA A. LIVINGSTONE, President of Baylor University

As the 15th president of Baylor University, Dr. Linda Livingstone is steering the institution toward some high goals. Among them is Baylor’s recognition as a Research 1/Tier 1 university. That R1/T1 status would mean that Baylor, with its committed Christian mission, would be designated by the Carnegie Classification of Institutions of Higher Education as a doctoral-granting institution with the “highest research activity.” We caught up with Dr. Livingstone about why that goal matters. She also discusses Baylor’s economic development efforts in the Waco area and how the school—and surrounding community—has changed in the 15 years she was away.

Can you tell us about the career steps that brought you to become president of Baylor University? Now that’s a

big question! I was at Baylor as a faculty member right out of my PhD program, from 1991 to 2002. I loved being here. I eventually left to be dean of the business school at Pepperdine and then at George Washington University. When I initially left Baylor, I thought, “Well, there might be an opportunity to come back.” But I certainly never thought it would be as president.

A lot of us at Baylor talk about feeling called to come back here. When this opportunity opened up after I’d been away for 15 years, it felt like a good fit, given where Baylor was and the experiences I had while I was away. My family and I are thrilled to be back. As an institution, we’ve certainly had some interesting challenges since I’ve been back, some anticipated and some not. But we’re making great progress and loving the partnership we have with the City of Waco and McLennan County.

What stands out to you as the biggest change at Baylor in the 15 years you were away?

When my family and I first considered coming back to Baylor, and to Waco more broadly, one of the things people told us is that people vacation in Waco now. They come to the Silos and they visit the museums and the mammoth site and so on. When we were here originally, you did not plan to vacation in Waco. The city itself had changed dramatically. Baylor itself made a tremendous effort in that time to grow the quality of its TexasCEOMagazine.com

research endeavor, the size of the student body, and the quality of the educational experience. The campus had transformed physically as well, with the athletic complex along the river, the sciences building, the business school building, and several new residence halls. All of that was very attractive to us as we decided to come back to Baylor. How would you define Baylor’s role in the larger Waco community? Baylor is

obviously one of the largest institutions in the city, in terms of employment and as an economic driver. But we work very hard, even over the last five to 10 years, before I came, at figuring out how to work with the community more. How do we integrate ourselves into Waco, beyond employing people and spending a lot of money? We are working with the community to enhance economic development, to support the health system, to address diversity and equity issues, and to improve the educational system beyond Baylor. We view ourselves as an integrated and complementary part of the broader growth of the city.

three years ago, when we restructured how we interact with the Waco and McLennan County communities. The initiative really focuses on five different areas. First, economic development. How do we spur economic business growth in the community? Part of that can certainly tie to our aspiration to be a Research 1 institution. As we do more research, some of it could be commercializable. There are also educational components of economic development that we can impact as well.

IT’S BEEN GREAT TO SEE THE GROWTH OF WOMEN IN LEADERSHIP AT UNIVERSITIES.

Baylor started the Solid Gold Neighbor initiative to further its community engagement. Can you tell us about that project?

Sure. The Solid Gold Neighbor initiative began about 28

Texas CEO Magazine Q2 2021

The second area is strengthening local educational institutions. We certainly want to be strong, but it’s important that TSTC [Texas State Technical College] and MCC [McLennan Community College] are strong too, along with our local school systems, public and private. So we look at how Baylor can help with literacy, the college-to-career pipeline, and so on. The third area is health. We have a huge footprint in health at Baylor. Solid Gold Neighbor asks, How do we provide more support for community health and food insecurity efforts within the community?

Feature The fourth area the initiative looks at is cultural wealth: How do we work to create access and equity across the community, in partnership with the city and the county? And then finally, how do we contribute to the ongoing growth and development of the community, including arts and entertainment? So it’s a five-pronged approach that we’ve built some very specific initiatives around. We think they will make a long-term difference in Waco. I’ve been unbelievably impressed with the leadership in the city and the county and how we’ve worked together through some pretty difficult times over the last couple of years. Baylor has a primary goal of achieving R1/T1 status. Can you tell us about that journey and the progress being made?

Shortly after I arrived [in 2017], we worked on a new strategic plan for Baylor called Illuminate that was very aspirational. We really looked at what we wanted to be as we go forward. The university had already been on a pathway of increasing its research profile and efforts, so aiming to be R1/T1 was the next step. Our aspiration is to be among the top-tier universities and research institutions in the country, while continuing to strengthen our unambiguously Christian mission. We want to ensure that the educational experience we provide— both undergraduate and graduate—is transformational. That’s been the core of Baylor since its founding. We want to really grow research expenditures and our research faculty’s profile. We want to develop additional doctoral programs that enrich the undergraduate

experience, and to create research that helps solve difficult problems. We’ve made progress on that in the last three years. Even in the midst of the pandemic, we’ve been unbelievably pleased to see our efforts to become a Research 1 university paying off. How will all of this impact Waco and the Texas economy at large? We believe it has a huge impact. First of all, we’re

putting out fabulous graduates, many of whom will stay in Texas and contribute as excellent employees in health, education, business, and so on. Second, R1 universities are great economic drivers. They produce research that solves problems, and solving problems creates opportunity to turn that research into commercializable ventures. We believe that our growing research footprint has a multiplier effect in the community and beyond. The more R1 universities Texas has, the better it is for the state. It brings in dollars and creates intellectual property that enriches the state broadly. You were hired after a challenging time in Baylor’s history, and of course the COVID era has been difficult. What has it been like leading through those challenges? I came in

knowing about the sexual assault issues that happened before I got here, but when the pandemic hit, we had a challenge that no one had ever dealt with before. You learn a lot dealing with these challenges. One lesson from the pandemic was knowing what you know and what you don’t know. If you need expertise you don’t currently have on your team, you need to find it. In addition to our on-campus experts in public health and communicable

diseases, we’ve used outside resources that have been unbelievably valuable in addressing the pandemic. In difficult circumstances, it’s also critical to build a leadership team that you trust and that works well together, all the way across campus. As we dealt with the sexual assault issues and the pandemic, we really integrated solutions across our campus in a collaborative way. The campus has really bought into what we’re doing. Solutions are much more effective when the broader community is involved in them. The other thing I’ve learned through these situations is how important it is as a leader to provide hope to the community—to let people know that we are strong and resilient and will get through this. It’s about giving people hope that they will be stronger and better on the other side of it. We have learned from these experiences, and that will make us a better university. Even in 2021, there are not very many female university presidents, though there has been some progress. Can you comment on that topic? It’s been great to see the growth of women in leadership

at universities. Texas A&M just appointed a woman to be their new president, for example. I look at it as, Who is the right person to lead an institution at a particular time? I’m pleased to see that more and more women are moving through the ranks.

We need diversity of leadership within our institutions. I’m on a number of national boards in the education world, and I’ve seen dramatic changes in the last five to 10 years that I think will make those institutions stronger. You’ve been a businesswoman, an academic, a senior leader at multiple business schools, and now the president at a prestigious university. Do you have any go-to favorite leadership books or resources? I recently read a couple of great books by

Tod Bolsinger. He’s a faculty member at Fuller Seminary. The first was called Canoeing the Mountains, and it talks about how to lead when you’re facing challenges you didn’t expect—how you adapt and change in those situations. He wrote a follow-up called Tempered Resilience, about how to be a resilient leader in challenging times. My leadership team read those books together. They have some really great leadership insights. We’re a faith-based institution, and Bolsinger writes from a faith perspective. He includes biblical insights as well as leadership and resilience insights that I find really valuable. I would certainly recommend those two to anyone. See Baylor University’s strategic vision at baylor.edu/illuminate.

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This spring, Texas CEO Magazine is launching a new podcast: Scholar and CEO. Each month, veteran CEO Joel Trammell will sit down with a leading voice from academia. Together, they will discuss the latest research into an area of business or leadership—and examine how real-world CEOs can apply it for real-world results.

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STARTUP SUCCESS:

A STARTUP FUNDRAISING SERIES

NEGOTIATING VALUATION Gordon Daugherty

Texas CEO Magazine Q2 2021

[ENTREPRENEURSHIP]

As a startup founder, you care a lot about the dollar value placed on your company. So it’s natural that negotiating that value with investors is typically a fraught process. For example, founders often get so concerned with the amount of dilution they’re going to experience as a result of taking on new funding that they focus almost exclusively on getting the highest valuation possible. I’ve even seen founders practically fall on their swords in order to eke out a $7.7 million valuation instead of the investor’s proposed $7.5 million. Come on! Really? Let’s take a look at a more reasonable approach to valuation. We’ll see how investors think about valuing a startup, and how you can think like them to negotiate effectively.

HOW INVESTORS THINK ABOUT VALUATION Investors use a combination of art and science to determine the “right” valuation for your startup in a given round of funding. If you find yourself discussing valuation, it is mostly a good sign. That’s because investors don’t focus too much on valuation until they’ve learned enough to decide whether they have some interest in investing in the first place. If they determine they have interest, much of the information they discovered during their evaluation goes into an assessment of a reasonable valuation. It’s probably obvious that each investor has their own approach to assessing valuation. This is especially the case with angel investors. But when it comes to institutional investors, family offices, and highly disciplined angels, I’ve found there is a common sequence of events that typically occurs behind the curtain. DEFINITION: Dilution — Dilution is the result of an activity that causes a shareholder’s equity to be reduced (diluted). Since equity is calculated by dividing the shareholder’s quantity of shares by the total shares issued into the company, the most common cause of dilution is issuing additional shares into the company. Why might this happen? Here are a couple of examples: • Raising money via an equity round of funding • Issuing previously unissued shares into the company to make room for a cofounder or to create a stock option pool In all cases, the number of issued shares increases, and this causes each of the previous shareholders’ equity positions to be diluted.

1. Comparables

Active investors see tons of deals. This means that, after completing their initial evaluation, they are able to pattern-match your opportunity with several others. They have an ability to look at various aspects of your business plan and strategy and then magically match it up with prior deals they invested in, ones they decided to decline, and ones they lost to other lead investors. They are essentially identifying other deals like yours and their associated valuation. This evaluation of comparables gives them a general starting point for valuation. “Deals like yours” means other companies with similar levels of traction, similar team skills and track record, and similar market size. It might also mean companies in the same industry or with the same business model. These are the key attributes of your business plan and business opportunity, so it’s logical they also serve as the basis for identifying similar prior investments and their associated valuation.

2. Adjustments

Since the pattern-matching exercise surely didn’t result in an exact match to other recent deals they felt had a fair valuation, the investor will make some adjustments. During their initial evaluation, they likely discovered some things that especially impressed them or especially concerned them. These become additions or subtractions from their starting valuation. Maybe you have a superstar on the founding team or have already landed a significant strategic partnership. Those would serve as valuation boosters. Or maybe you had a recent pivot that’s not yet proven or an excessively high churn rate. Those would be valuation subtractors. DEFINITION: Valuation — Your valuation is simply the implied value of your company. And since the value of your company is only what someone else is willing to agree it’s worth, the valuation is most easily determined during fundraising events, an acquisition, or an IPO. During these activities, you and the investing parties must agree how much equity they will get for their investment. Because of this, you are effectively setting the value (valuation) of your company. And since the injection of new capital into your company immediately increases the value of the company, you will hear the terms “pre-money valuation” and “post-money valuation.” The only difference is that the post-money valuation includes the cash that was invested into the company.

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3. Target equity test

Many institutional investors have a target percentage of equity in your company that they need to get when they invest. Some investors have a fairly strict and narrow equity target, whereas others have a more flexible and general rule of thumb. If their target is 18 to 22 percent and their valuation assessment to this point would result in them only getting 15 percent, they will likely reduce their proposed valuation to get their equity back into the target range. You might be wondering why they can’t just invest more money to reach their target. They can; you just have to convince them to do that instead.

4. Potential exit returns

Early-stage investors take much more risk than those who invest during later stages. As a result, they often make investment decisions based on the likelihood of getting at least a tenfold return (you might hear investors refer to it as a 10X return). So, the next step in their process involves running various exit scenarios. With this, they are trying to answer a very specific question: What valuation would you need to be acquired for (or go public for) in order to give them a tenfold return? To run this calculation, they also need to make some assumptions about the number of future rounds of funding you will need to raise and how much dilution they will experience from each. But the formula is based on simple algebra that you will see in figure below.

Using the assumptions in this scenario, the company needs to exit at a valuation in the range of $200 million in order for the investor to get a tenfold return on their investment. Now the investor’s assessment is clearer. What are the odds your company can successfully grow to the point of attracting an acquirer willing to pay $200 million? Hopefully, you now understand why professional investors seek businesses that can grow to the point of being able to exit for hundreds of millions of dollars and not just tens of millions. You additionally should conclude that the investor will be thinking about the evolution of the company all the way to an exit and not just through the next round of funding. You must be of this same mindset.

TIME TO NEGOTIATE Since the valuation you’re able to negotiate is such a key aspect of your funding round, why not go ahead and go through the same steps the investors go through? Find other recently funded companies that look like you—similar funding, amount of traction, stage, market size, experience among the founding team, and so on. What sort of valuations were they able to negotiate? What positive and negative adjustments can you identify as likely? What sort of future exit will you need in order for your prospective investor to get a tenfold return with the valuation you’re hoping for? You’ve got the formula. Run various scenario calculations before the investor does.

Anchoring the desired valuation If we assume two future rounds of dilutive funding, the formula would look like the following figure.

Regarding dilution, my personal rule of thumb is to expect 25 to 35 percent dilution with each real round of funding. Equity rounds of funding are typically real rounds, but bridge rounds—a smaller round to keep things going between real rounds—aren’t. Bridges usually dilute less than average if they are truly just to bridge a gap. Let’s run the exit return calculation for an investor whose $2 million investment yields them 20 percent initial equity, and let’s assume two more rounds of funding that are each 30 percent dilutive before an eventual exit. Perhaps this is an investor in your Series A round, and they assume you will need to raise both a Series B and Series C in the future before becoming profitable and sustainable. The calculation is as follows: (10 * $2 million) ÷ (0.2 * 0.7 * 0.7) = $204 million 34

Texas CEO Magazine Q2 2021

During any negotiation in which the price is not already known, the two negotiating parties have a choice of who utters a suggested amount first. Which is the best approach to take? Well, you can find lots of articles and books on negotiation that explain the pros and cons of anchoring the conversation. The first suggested or offered figure creates a cognitive bias that causes the other party to more heavily rely on that initial piece of offered information. If the buyer goes first, they usually suggest a lower number than they are actually willing to pay. If, instead, the seller starts the negotiation, they will do so with a number higher than they are truly willing to accept.

Don’t assume you can be the one to first anchor the conversation at an $8 million valuation in hopes that negotiating down to $4.5 million will leave the investor feeling like they got a great deal. Your mention of a valuation You will notice that the initial equity that seems ridiculously high can amount is expressed in decimal form quickly terminate the investor’s (20% = 0.2). The dilution factors are also expressed in decimal form, but we have evaluation. You’ve got to at least to determine the inverse percentage be within a reasonable range. first. That is why 30 percent dilution is expressed as 0.7. This is the same concept as trying to figure out how much a $60 pair of shoes will cost with a 10 percent discount. We multiply $60 * 0.9 to get the discounted price of $54.

I don’t have a single recommendation in regard to who mentions valuation first, because every situation is different. I do

[ENTREPRENEURSHIP] believe you should decide on a range of valuations you think is reasonable and would be acceptable to you and your key stakeholders. And if you did your homework during the planning phases of your fundraising campaign by having penalty-free conversations with investors before officially launching the campaign, you should have gained some valuable insights about the acceptable valuation range.

After the term sheet from a lead investor Let’s say a prospective lead investor gives you a term sheet that includes reasonable terms in general but the valuation is measurably lower than you expected and also below the range you and your key stakeholders previously agreed would be acceptable. Now what?

Your first and most significant negotiating tool comes from having alternatives. Many negotiating articles and books talk about the importance of understanding what’s called your BATNA (best alternative to a negotiated agreement). Do you have any other term sheets for a similar amount of funding? If not, are others likely to come soon? Are there alternative forms of funding available, such as grants or venture debt? Must you raise money now, or do you have an option to execute for at least a few more months before needing fresh funding? If you don’t have other active investor prospects but do have some runway left, you could put your head down and execute like crazy while fixing some of the things that prevented you from getting the valuation you needed. Or maybe you’ve got some exciting milestone accomplishment coming soon that you can achieve first to help justify your desired valuation. If you don’t have one or more of these alternatives available, you are pretty much at the mercy of the single investor proposing a term sheet, and you’ll need to use additional negotiating tools. Your second negotiating tool comes from decoding the investor’s evaluation of your company and debating anything that genuinely doesn’t seem valid. Most likely, this involves finding out the concerns they had (valuation subtractors) and trying to convince them they shouldn’t be as concerned. You will also want to make sure they are giving you credit for things you feel are deserved (valuation boosters).

Investors have alternatives too

It is possible that your desired valuation is completely reasonable, but it is a competitive market. Active investors have lots of alternatives. They might be considering other investments that have similar potential to yours but at a lower valuation. Your valuation is not assessed in isolation but, rather, among a list of opportunities the investor is considering.

There’s a time to stop arguing

You are only worth what investors will agree you are worth. Additionally, your mission is not to find the absolute highest valuation you can get from a single investor. Instead, you need

to find a valuation that lets you efficiently close your full round of funding so you can get back to running your business. If you find yourself arguing about valuation with all or most of the prospective investors, I’m sorry to say it, but your valuation is too high. You aren’t worth as much as you thought. But if you are forced to reduce your valuation, it is not the end of the world. Find a good investment partner that can help you grow a great company. They are far more valuable than a mediocre one that will give you a slightly higher valuation. Your mission is to optimize for growth, not dilution.

DEBATING IS A GOOD SIGN If you reach the point of debating or negotiating valuation for your funding round, congratulations! You’ve made it a long way. That’s because, as I mentioned, investors don’t usually put much emphasis on valuation until they’ve decided they are legitimately interested in your opportunity. You don’t take a new car out for a test-drive if you hate the style or it’s missing features you consider critical. But lots of fish wiggle off the fundraising hook during the valuation negotiation step. It is a very important term to both parties, because it often carries the biggest long-term economic leverage for both. Active investors, both angel and institutional, are savvy pattern matchers, and that can be a good thing or a bad thing for you. If the comparables they identify yield a favorable starting point for your valuation, great. But if you are so unique that they can’t really think of a similar company, it might be hard for them to figure out what a reasonable valuation is. They take some comfort in having comparables as a starting point for their evaluation. It is easy to get excited about the prospect of a nice, high valuation. But your mission is not to spend every last bit of time and energy to eke out every last bit of valuation. Time kills deals, and the longer you’re on the fundraising trail, the longer your company is without your complete operational focus. If you find yourself arguing the valuation with every investor, your desired valuation is wrong. If, on the other hand, you have multiple highly interested investors, you probably have something to work with. Just don’t try to get too fancy playing your poker hand. Instead, identify the investors who can best help you continue to grow a great company, get the funding round closed, and put your focus back on creating that great company. The only equity percentage that matters is the one you have when you eventually exit. And if you’ve built a great company by then, the super-huge exit multiplied by almost any equity percentage is still a huge number. Gordon Daugherty is a seasoned business executive, entrepreneur, startup advisor, investor, and the bestselling author of Startup Success: Funding the Early Stages of Your Venture. A proud native Texan, Gordon graduated from Baylor University. He has vast experience with early-stage fundraising from both sides of the table, making more than 200 investments and raising more than $80 million in growth and venture capital as a company executive, fund manager, board director, and active advisor.

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WHY Your Board of Directors Should Include Multiple Generations How many generations are represented on your board? And what might be missing if your board skews heavily toward just one? Jason Dorsey I first joined a board of directors ten years ago—and what a journey it has been. Since that time, I’ve served on five corporate boards and worked as a generational advisor to dozens more around the world. I’ve worked with boards of organizations ranging from companies with massive market caps to global private equity firms to third-generation family-owned businesses to numerous venture-backed startups. Being in so many different boardrooms—virtually and in person—has helped me develop a new perspective on the factors that add value in board-level conversations, especially coming out of this pandemic. The first board of directors I joined was a tiny startup with offices in Europe and Austin. I helped their CEO raise their first round of institutional money and introduced them to both of their primary channel partners. Watching the company grow from a bold vision in a PowerPoint presentation to a leader in their marketplace, serving clients in over 100 countries with more than 15,000,000 users, has been incredibly inspiring. The first public company board I joined was a wholly different experience. But I remember that first board meeting just as vividly as the one at the startup. In both cases, the mission was the same: accelerate growth. Which we did. The public company ended up being acquired for $11 billion. In both the startup and public company, I was the youngest person on the board of directors and brought not only a different perspective but added an entirely new generation to the board, too. 36

Texas CEO Magazine Q2 2021

Serving on and advising such a diverse variety of boards of directors— from technology and hospitality to retail and manufacturing—I’ve found one truth to be universal: Boards of directors need more generational diversity. They need it now more than ever as both Millennials and Gen Z are remaking workforces and shifting buying patterns. These generations represent not only the organization’s future but its present, too. This is particularly true as businesses across Texas work to come out of the pandemic with strength and innovation. At some organizations, change is already taking place on boards and in boardroom conversations. I’ve seen boards move environmental, social, and governance (ESG) issues to the forefront as well as making strides to increase long-overdue gender, racial, and ethnic diversity. However, a lot less attention has been paid to the value, benefits, and results that can be unlocked when a board of directors intentionally adds members from different generations. Generational diversity in boards is particularly important now, as the largest generation of employees in the workforce is Millennials. Yet often at board meetings, I am the only Millennial in the room—and sometimes the only non-Baby Boomer! At the same time, Generation Z, the generation after Millennials, is now the key driver of consumer trends, technology adoption, and emerging workplace expectations. Yet neither generation is often invited to even present in a boardroom, let alone serve on company boards or provide their expert perspective. I believe this is a missed opportunity and should be fixed. Doing so benefits every generation, not just the emerging ones.

The

Generations Generation Z Born 1996 - 2015 Influential tech:

Snapchat, TikTok

Millennials

Born 1977 - 1995 Influential tech:

Internet, iPhone

Generation X Born 1965 - 1976 Influential tech:

Personal Computer, Cell Phones

Boomers

Born 1946 - 1964 Influential tech:

Color TV, Landing on the Moon

Adding generational diversity to a board helps to future-proof your business by naturally creating diversity of thought. After all, how can a company with a board comprised of only one generation best understand, adapt, and unlock the potential of other generations that are not represented? Adding different generations to boards brings a mix of different technology norms, generation-defining moments, and life stages. This is particularly important if a company employs multiple generations or sells and markets to them. I’ve also found that it isn’t just established, legacy companies that can benefit from adding board members of different generations— startups can, too. The experience, relationships, and perspective gained when a venture-backed company has board members representing older, more experienced generations can be equally as valuable as when a 100-year-old company adds a board member who does not remember a time before Facebook. I’ve seen this firsthand in many companies—including ones where I am no longer the youngest person in the board meetings! If strategically adding more generations to your boardroom will give you a natural advantage, where do you get started? Start by looking beyond the averages that are often touted, such as the average age or tenure of board members, but instead ask: How many different generations are represented on the board currently? If there are not at least three different generations represented, I believe that the CEO, board, and shareholders should prioritize reaching that very attainable goal. Does it have to happen overnight? Of course not. But if it’s not a goal, it won’t happen at all. Boards still need to make sure that each member brings the expertise and contribution necessary to provide value that meets the organization’s, shareholders’, and stakeholders’ needs and vision for the future. But taking the first step is important. Expanding the candidate pool to include more generations also opens the door to increasing other types of diversity that add tremendous value at the board level—and sets a powerful example throughout the organization. In this unprecedented period of time, boards of directors are navigating rapid technology changes, dramatic shifts in consumer behavior, and digitization of traditional businesses—whether they wanted to or not. Adding a multigenerational viewpoint brings new strengths, expertise, and relationships to boards of all types and, I believe, makes every other generation of board member more valuable, too. The next time you think about expanding your board of directors, or if a board seat opens up, consider looking outside of the generations already represented around the boardroom table. You might find exactly who you’re looking for and future-proof your company at the same time. Jason Dorsey works with CEOs and leaders to solve generational challenges and drive growth. He is a global keynote speaker, researcher, and strategic advisor. Jason has served on public and private company boards, cofounded The Center for Generational Kinetics, and received over 1,000 standing ovations. He is the coauthor of the bestselling book Zconomy: How Gen Z Will Change the Future of Business—and What to Do About It. Learn more at JasonDorsey.com.

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Texas Capital Bank President and CEO Rob C. Holmes: “We’re Defined by Our Clients” In the early days of his career, Rob C. Holmes gained a reputation as a “client banker”—and the label stuck. It has followed him from his first job at Texas Commerce Bank through various leadership roles at JPMorgan Chase & Co. and, now, to Texas Capital Bank. “Nobody gets into banking to sit in an internal conference room,” Holmes likes to say. “People get into banking to interact with clients, and to help them succeed. That’s the fun part of the job.” Texas Capital Bank, a subsidiary of Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), is a commercial bank that provides personalized financial services to businesses. Holmes joined as president and chief executive officer of both Texas Capital Bank, N.A., and Texas Capital Bancshares, Inc., in January 2021. Since then, he’s worked to guide the Dallas-based bank toward improved scale, better efficiency and increased offerings—while keeping client experience squarely at the forefront. “We’re defined by our clients,” Holmes says. “We recognize that everybody at Texas Capital Bank— every function and every role—is only here because there’s a client on the other side of the transaction.” Texas Capital Bank, founded in 1998, has historically focused on

banking for middle-market businesses. But with Holmes at the helm, the company is evolving quickly into a wholesale banking platform designed to service a wide range of clients—from small, local companies to complex, national businesses. The bank is currently developing products, services and talent in order to fully expand into the corporate segment. To facilitate these efforts, Julia Harman, formerly of Truist Financial Corporation, joined Texas Capital Bank in April as the company’s first Head of Corporate Banking. Holmes sees tremendous runway ahead, particularly in the state of Texas. “I accepted the role at Texas Capital Bank because I think there’s a great need for a Texas flagship bank that focuses on Texas companies, institutions and communities,” he says. “And that’s our focus—to help Texas businesses succeed and prosper. It’s the mandate for why we exist.” Holmes started his career at the end of the 1980s banking crisis. He worked first as a middle-market banker, facilitating several significant client deals before moving into corporate banking. Over a 31-year tenure with JPMorgan Chase, he gained a wealth of experience in areas including treasury services, lending, risk, and investment banking. From 2005 to 2010, he served as co-head of Retail

Investment Banking and Head of Investment Banking, South Region. During his time at JPMorgan Chase, Holmes helped build the company’s investment bank from the bottom into one of the best in the world. “It took a group of hungry, dedicated individuals to compete against better platforms and to eventually win the hearts and minds of clients to gain scale and shares to succeed,” Holmes remembers. “I think my experiences allow me to understand what great looks like.” Just prior to joining Texas Capital Bank, Holmes served 10 years as Global Head of Corporate Client Banking and Specialized Industries at JPMorgan Chase. In this role, he facilitated treasury, credit and investment banking solutions to corporate clients across the United States, as well as in 22 countries abroad. For Holmes, coming to Texas Capital Bank after a long career with a global banking leader felt a bit like coming home. He was born and raised in Dallas, earning his bachelor’s in economics at the University of Texas at Austin and his MBA at Southern Methodist University. Due to an entrepreneurial family history, Holmes also has a deep-seated appreciation for the hard work and innovation that goes into building a business in Texas.

His grandfather was a supermarket entrepreneur who co-founded Cullum Companies, Inc., the retailer behind successful brands like Tom Thumb and Page Drug Stores. Holmes’s father served as general counsel at Cullum Companies until they sold the business in the late 1980s, and Holmes’s grandfather was inducted into the Texas Business Hall of Fame in 1994. Through his family history, Holmes has seen first-hand the impact a business can have on its community, and he understands the important role that a best-in-class bank can play in helping a company grow. At Texas Capital Bank, he’s working to develop the bank’s suite of product and service offerings, and to provide additional and strengthened solutions that can be tailored to better fit clients’ needs. He aims to expand the company’s talent bench by hiring bankers with extensive, specialized experience, and to

build broader, deeper industry verticals. And, in a state where technology is booming, Holmes is excited to develop the bank’s digital processes and invest in systems that will better serve clients. “We want to be there, to be the solution for our clients—whether it’s treasury solutions, foreign exchange or liability management,” Holmes says. “We want to provide whatever products and services they need to succeed. To do that, we’ll plan, invest and develop processes and client journeys with the client experience always in mind. We’ll make it simple, fast and intuitive.” In addition to bringing new executive talent to Texas Capital Bank and working to expand client offerings, Holmes made news in March when Texas Capital Bank completed a creditrisk transfer deal in the warehouse lending space, the first of its kind for a U.S. regional bank. This innovative

transaction, in combination with the recently closed preferred stock capital raise, provides increased credit protection and considerably enhances the bank’s regulatory capital ratios – all with the goal of better serving clients. Texas Capital Bank has a strong legacy of best-in-class client service, a stable of experienced bankers adept at handling complex deals, and a passion for innovation. Looking to the future, Holmes is excited to build upon this important legacy as he guides Texas Capital Bank to better serving clients in his home state and beyond. “Texas Capital Bank is big enough to make a difference with our clients, but small enough to be agile, accessible and responsive,” Holmes says. “Now and going forward, we aim to be important participants in the communities in which we serve and trusted partners for the clients with whom we bank.”

www.texascapitalbank.com

ON A MISSION TO DISRUPT E-COMMERCE

CART.COM CEO AND COFOUNDER OMAIR TARIQ ON EXITING TO HOME DEPOT, DEMOCRATIZING E-COMMERCE, AND PUTTING TEXAS ON THE ENTREPRENEURSHIP MAP In the early years of his career, Omair Tariq got a full education in building, scaling, and exiting a business. As one of the initial employees of Blinds.com, Tariq was instrumental in growing the brand to the point that it caught the eye of Home Depot, who acquired it in 2014 for an undisclosed sum. Tariq stayed on the Home Depot team for several years after, but recently he’s heard the call of entrepreneurship once again. Last year, he left Home Depot and founded Cart.com with fellow entrepreneur Jim Jacobsen. The new venture provides brands with end-to-end e-commerce software and services, on a model that shakes up the current ecosystem. As Tariq tells us in this interview, he believes that a business’s value begins with its vision—and that not enough entrepreneurs are thinking big enough in that department. 40

Texas CEO Magazine Q2 2021

Feature

IF YOU’RE AN ENTREPRENEUR, WHAT GETS YOU OUT OF BED IS A NEED TO BUILD SOMETHING GREAT.

and analysis] function, optimizing marketing, being data-driven. We hired a talent pool that knew how to disrupt the e-commerce space. All of that enabled the organization to then exit to Home Depot in 2014. That’s the kind of exit that every entrepreneur dreams of. How did it feel going through that? Honestly, it was scary and exciting at the same time, kind of like a rollercoaster. Home Depot wasn’t the only company trying to acquire us. There was a lot of attention toward what we were building.

It was about four to five months from when Home Depot approached us to closing the transaction. The whole due diligence process for a public company is intense. We had to align on the right post-acquisition strategy and really think about how our technology could catalyze Home Depot’s growth trajectory. We got to work with some really sharp people on Home Depot’s strategic business development team. Together, the two teams executed an extremely successful M&A transaction. Something like 80 percent of M&As fail, but we actually grew the business by a factor of four in the coming years. It’s a story to be written in case studies. How much do you think the name Blinds.com contributed to

You were the 36th employee at Blinds.com and helped grow that brand and exit to Home Depot. What was that experience like? I joined the Blinds.com team in a finance function. At

the time, it was really small but had an amazing culture. When I started we were at 36 employees, and over the next five years the business grew by a factor of six or seven. Working with our CEO, Jay Steinfeld, and other people on the team showed me how to scale businesses really fast in a way that doesn’t implode the culture. That experience taught me so much. I got to experience the scaling-up process across every function: acquisitions, raising money, hiring people, setting up organizational goals, setting up the entire FP&A [financial planning

the venture’s success? It’s hard to quantify the value of a domain name like that, but I don’t think it necessarily helped us get acquired. I think the domain name helped us become a category killer, though the success wouldn’t have happened if the rest of the pieces were not in place. People get this wrong about e-commerce a lot. They say, “Hey, I have a great domain name and a cool website, so this will be a huge business.” That’s almost never how it works. You have to optimize marketing, merchandising, conversion, post-transaction, customer service, photography, visuals on the website. It’s that entire ecosystem and the end-toend journey that determines how successful a business becomes. If you do have those pieces in place, a domain name like Blinds.com becomes a game changer. What was your next step after Home Depot? After the

transaction in 2014, I stayed on the HomeDepot.com leadership team for another six years. Most recently I was the Chief Operating Officer of their configurables business out of Houston. I was leading a very large team and a very large P&L. I eventually left Home Depot in the fall of 2020 and started Cart.com in September. As you were thinking about your next venture, I’m sure you had many different thoughts and ideas. What made you choose to TexasCEOMagazine.com

pursue Cart.com? I saw a few things happening that upset me. One was seeing brands and retailers trying to go digital and most of them failing at it. When I double-clicked on why they weren’t successful, it was because they only had three options, none of which met their real need.

The first option was selling their product through a marketplace where they don’t get any of the customer data and the marketplace takes 20 or 30 percent of their revenue. These brands get in bed with the devil. Though they take advantage of the traffic that comes to those marketplaces, they are unable to have a relationship with their end customer. They’re no longer brands; they’re just product companies. Option number two was building their own end-to-end e-commerce infrastructure and value chain, as bigger companies like Home Depot or Wayfair or Target have done. But that requires a tremendous amount of capital investment and infrastructure. And even if you have the capital, it’s really hard to do. You have to hire the best e-commerce and digital talent. If you’re not already a digital-first company, a lot of the e-commerce talent doesn’t want to come work for you. It’s a chicken-and-egg thing.

turnkey solution that owns the entire e-commerce value chain. It’s a very daunting task, and that’s probably why nobody’s doing it, except for one company—Amazon. Jim Jacobsen, my cofounder, and I felt we could do it. Jim, in his past life at RTIC Outdoors and a couple of other places, had scaled brands to $200, $300 million in sales. He did a lot of the same stuff I’d done at Blinds.com, along a parallel track, also in Houston. As part of that journey, he had built the entire e-commerce value chain, from the factory floor to the customer’s door. Plus, I’d gone through the same journey at Blinds.com and I saw Home Depot do it. We realized that these bigger, successful brands end up building the end-to-end e-commerce value chain for themselves but don’t open it up to the rest of the world. Jim and I said, “Hey, let’s go build it, like we did in the past. But instead of building it for ourselves, let’s build it for the rest of the world.” That led to us starting Cart.com in September of 2020.

I THINK TEXAS WILL SURPRISE THE ENTIRE WORLD IN WHAT IT’S CAPABLE OF.

Option number three was buying an out-of-the-box website on Shopify or BigCommerce or Magento. Those are really good solutions when you’re growing your e-commerce business to the first couple of million dollars. The challenge is that none of these website platforms provide an end-toend e-commerce ecosystem. They provide different apps for marketing and logistics and customer service, but they’re built by different companies and don’t all talk to each other. Their code bases are different. But to be successful in e-commerce, you have to have an end-to-end, fully holistic e-commerce infrastructure. Those brands were having to pay for a tremendous amount of custom integration. Even if they have figured out custom integrations for all those apps, each one is taking X percent of their margin as they compete with Home Depot or Walmart or Amazon, who don’t have to pay that margin to 20 different apps. That set of options sets companies up for failure. Nobody was in these brands’ corner. There was no one-stop, 42

Texas CEO Magazine Q2 2021

So we believe we’re solving a $1 trillion problem, and more importantly, in some cases enabling certain brands to survive. There aren’t a lot of good options to go digital in the way we enable these brands to go digital. You’re currently a mentor with Capital Factory. How did you get

involved with them? I’ve been a mentor there for a few years. As I was going through my journey at Home Depot, I realized how blessed I was to become so wellrounded in a short period of time. I had this unique experience of taking a business from a few million dollars to hundreds of millions of dollars, and then becoming part of an organization where a few billion dollars were going to many, many billions. So going from one to 10, and then 10 to 100. I wanted to just give back, and for me that means building more entrepreneurs and enabling more people to become successful.

I started mentoring startups in a very unorganized and unstructured way. I would just show up at startup incubators like Station Houston and offer to help. I’d been part of one of the biggest consumer exits here in Texas, and I knew what we did and the mistakes we made. I always enjoy sharing that with up-and-coming entrepreneurs, and talking to them to discover what they’re doing. I would even say that

Feature that was the reason I went back into building a company—I saw how much fun they were having as entrepreneurs. Later, Capitol Factory reached out to me because there aren’t a lot of e-commerce companies that have exited to a Fortune 100 company. That enabled me to get onto their network of entrepreneurs and help them out. Since we started Cart.com, I’ve gotten less deliberate about mentoring, because we’re grinding 19 hours a day, building something from scratch. But I enjoy doing it. Is there a particular nugget of advice you typically give to entrepreneurs? Sure. I like to talk about the three ingredients it takes to build a successful business. Marc Lore, who built Jet.com, talks about these three as well. You’ve got to have a compelling vision. You’ve got to have capital to execute the vision. And then you’ve got to have the talent to use the capital to execute the vision. If you have these three things in place, it’s hard to stop you.

My other advice for entrepreneurs is to think bigger and be willing to take on the big guys. They’ve got to get out of bed and say, “I’m solving a problem that nobody’s willing to solve.” That’s what ultimately results in great companies. It all starts with the vision. Because of how many startups there are, entrepreneurs have gotten more conservative about their ideas and haven’t gone as big as maybe they should on the vision. And that’s okay; they’ve still built very successful companies, but I think the world needs more people like Elon Musk and Jeff Bezos and Steve Jobs. At the end of the day, that’s how you change the world. If you’re an entrepreneur, what gets you out of bed is a need to build something great. When you have a vision that’s larger than life, the capital and talent part becomes really easy. A lot of entrepreneurs think, “If I have too big of a vision, I won’t ever get the capital.” Really, it’s the other way around. At Cart.com, we’ve put a big vision out there. We really want to democratize e-commerce. Since September 2020, we’ve gone from just Jim and I to about 68 people. We’ve raised a significant amount of capital and acquired five companies. We’ve put together a leadership team from the best companies in the world, from Facebook and Google and Uber and Wayfair and Home Depot. We wouldn’t have been able to do that if we didn’t have a vision of disrupting a $1 trillion industry. But because we have that vision, we got the capital and the talent very early in our journey. What are your thoughts on angel investing? Good, bad, neither?

I’m a big proponent of angel investing. They really are angels for a lot of these startups. They come in at the

last minute and they’re not as stringent as institutional investors. Institutional investing has become very framework-oriented; if you don’t fit their framework of investing, they don’t invest in you. But investing is so much more than just frameworks. A structured approach to investing can be useful, but at the end of the day, you’re investing in people. The entirety of a startup’s value is in the people leading it. If they’re building something that is outside your wheelhouse, instead focus on the characteristics of the leaders. Bet on them. Because ultimately, it’s people who build great companies. A lot of angels are ex-entrepreneurs or ex-CEOs of large companies. They’ve been there and done that and they can relate to the pains of having to raise capital from institutional investors. So I highly encourage entrepreneurs to reach out to angel investors in the early stages, when you don’t have a real business. These angels can sometimes prop up your business and give you structural ideas that help you succeed in the long-term. A lot of great companies are built because of what angels are doing. What are your thoughts on the startup scene in Texas? How has it evolved during your time and where do you see it going? I’ll be honest. A decade ago I would have never thought that Texas was the place to build technology and consumer startups. I thought Blinds.com was a purple squirrel here in Texas, in the middle of oil and gas country. Today, it’s very different. Places like Capital Factory are enabling these startup ecosystems, and an increasing number of venture capital and institutional investors are moving down to Texas. We’ve got a lot of great entrepreneurs and a lot of great talent.

I think Texas will surprise the entire world in what it’s capable of. We have always been perceived as the oil and gas state with some healthcare and NASA. People never think of Texas the way they think of California when it comes to startups and entrepreneurship. I think that’s about to change in a massive way in the next decade. I wouldn’t be surprised if we start leapfrogging the Silicon Valleys and New Yorks of the world. We’ve got the right mix here. We’ve got a very favorable tax system. We’ve got great academic institutions, between Rice and the University of Texas and the University of Houston and many others. We’ve got great talent coming out of those academic institutions and a lot of people who made money in oil and gas who now want to diversify into other industries. If you’re a Texas entrepreneur, as long as you have that compelling vision, you’re going to be able to get the capital for it. TexasCEOMagazine.com

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Texas CEO Magazine Q2 2021

THIS WAY, A PERSON CAN GO TO SCHOOL FULL-TIME AND PICK UP PART-TIME WORK ACROSS MULTIPLE JOBS IF THEY WANT.

GETTING

SHIFT DONE

Shiftsmart president Patrick Brandt on the rise of shift work and his ingenious COVID-era nonprofit initiative

As a recent issue of this magazine documented, countless Texas companies stepped up and did incredible things during the COVID-19 pandemic. Among them is Dallas-based Shiftsmart, a technology company that helps employers and workers flexibly coordinate shift work. In the midst of skyrocketing unemployment and statewide lockdowns, Shiftsmart cofounder and president Patrick Brandt hatched an idea, along with tech investor Anurag Jain. What if Shiftsmart, with its foothold in the world of retail and hospitality, began a nonprofit initiative that paid laid-off and furloughed workers to pick up shifts at the North Texas Food Bank? That germ of an idea exploded into a huge success. Today, Get Shift Done has provided workers with over a million hours of skilled shifts—and provided more than 60 million meals to families experiencing food insecurity. Get Shift Done was launched with the help of founding supporters that include Access Healthcare, Communities Foundation of Texas, Mark Cuban, Craig and Kathryn Hall, Lyda Hill Philanthropies, Margot Perot and family, Sarah and Ross Perot Jr. Foundation, Katherine Perot Reeves and Eric Reeves, United Way of Metropolitan Dallas, and Shiftsmart itself, who were soon joined by national supporters Capital One and When I Work. In March, almost a year after its founding, Get Shift Done was named the #1 most innovative nonprofit of 2021 by Fast Company. Following is our conversation with Brandt, who discusses the dynamics of modern shift work as well as the ongoing story of Get Shift Done. TexasCEOMagazine.com

Let’s start at the beginning. How was Shiftsmart founded? Aakash Kumar left Google to start Shiftsmart in 2015 in San Francisco, although he graduated from the University of Texas. Pavan Patel, our CTO, and I joined a few months later as cofounders. The origin of the company was unique for me, as I had been a CEO of software and Internet companies for roughly 20 years and was now joining Aakash, nearly 20 years younger than me. I had always been the young one, and then suddenly, I am the old guy pontificating wisdom my mentors shared with me 20 years prior! What was the core concept behind Shiftsmart? Shiftsmart was born out of the idea that the relationship between the labor force and employers has been asymmetric. People who work on an hourly or project basis have been stuck in a pretty rigid paradigm. You apply for the job, and if you get it, the employer sets your schedule. And if you work more than one job, it’s up to you to figure out how to manage it all and get your shifts covered. 46

Texas CEO Magazine Q2 2021

With Shiftsmart, we wanted to allow employers and workers to manage shifts more symmetrically. The platform is designed, first and foremost, to help workers work more fluidly across employers and have more choice in their careers and schedules. When we started the company, we knew it was important to be worker-centric, and we are glad that the platform brings a lot of benefit to employers, too. In our platform, people can sign up on their own, or they can be signed up by an existing employer or a staffing company. It’s free for the worker. They then put in their preferences, qualifications, and availability. You can think of it like a baseball card. The worker can then find shifts that fit their schedules and skills and juggle shifts across employers. This way, a person can go to school full-time and pick up part-time work across multiple jobs if they want. Maybe they’ve got to take care of their kids during the day and they want to pick up shifts at night or on weekends. Or maybe it’s the opposite. Either way, they can

find work that fits their skills and schedule. We believe that this creates a healthier, more reliable, and more transparent ecosystem. At the same time, the employer can use the platform to find workers who meet their needs and see ratings and reliability scores for people. Through that process, we’re able to create the optimal match— the best worker for the employer at the best time and best shift for the worker. There’s clearly been an uptick in the gig economy in recent years. Is there a difference between gig workers and shift workers? There is. You have the self-employed gig worker—the rideshare driver, the delivery person, etc.—and you also have employees of companies or staffing agencies who work in shifts. What’s unique about Shiftsmart is that we’re helping both types of worker and both types of employer. So if you run a nursing home facility, for example, you can use the platform to do a better job of scheduling nurses and offering them flex schedules.

A lot of factors have driven the increase in gig work. Part of it is policy changes—for example, overtime rules and the Affordable Care Act, with its cap of 29 hours for part-time work. Part of it is generational changes. And there are of course technology changes as well. In 2016, Uber issued 1.5 million paychecks. By then, Uber had only been around seven years but it was already the third-largest issuer of paychecks, behind McDonald’s and Walmart. People were attracted to the ability to work the hours they wanted and when they wanted. At Shiftsmart, we began to describe this new group of people who were reinventing their approach to work as micro-entrepreneurs. The micro-entrepreneur has much more choice about when and where they’re going to work. That creates a higher-quality labor force in general, so it’s not just serving the worker, but also the employer. The Biden administration has discussed various policy changes related to the gig economy. How do you anticipate new regulations affecting what you do? We’ve dealt with policy changes since we started the company and they vary from state to state. State regulations are different from federal ones; and overtime rules, 1099 rules, and so on are different from one state to the next. Staying abreast of regulations during any administration is always in the forefront for us. We are dedicated to staying informed and compliant with everything, and that’s a constant and ever-changing responsibility. We do think that the current labor policy doesn’t necessarily meet what the labor force needs and wants. With the rise of Millennials and Gen Z and so many people now working from home, there’s a missing category. Right now, you’re either a full-time worker with a W-2 or you are a contractor and receive a 1099. Policy will eventually catch up to what the labor force wants. We will always follow changes and continue to place people working in situations that fit their unique needs. What effects has COVID had on shift and gig work? I think COVID-19 has been an accelerator to the change that was already happening in the labor market. Before COVID-19, we’d already seen where it was going—that there was going to be a lot more

micro-entrepreneurship, as we expected. More people working multiple shifts, with different employers and having a lot more choice.

highly affected industries. Almost overnight, people were being furloughed and laid off; this was before shelter-in-place was ordered in Texas.

During COVID-19, a few industries were hit hard—hospitality and retail in particular—and the shift that we predicted in the workforce sped up. We went from about 90,000 workers on our platform at the beginning of 2020 to 400,000 workers in more than 50 countries on our platform at the end of the year. It took us four years to get the first 90,000, but only nine months to get the next 300,000.

I distinctly remember that Friday, March 13, when we received the shutdown orders and Texas was in a full-on state of emergency. The outlook for our customer base was not good. That weekend I had a conversation with one of my outside board members and good friend, Anurag Jain, who, at the time, was board chairman of North Texas Food Bank. We decided, “Look, we’ve got to do something.” So many workers became suddenly unemployed and stimulus checks weren’t available yet.

In March and April [of 2020], with lots of people getting laid off, we were very fortunate to have this platform that we could scale rapidly to respond to the changing needs of workers and employers. Because of our technology, we were able to manage the growth on the platform without having to dramatically increase our corporate staff. We were able to meet the needs of many different types of customers. When physical call centers were shut down because of COVID-19, we mobilized flexible call centers that became a rapid growth category for us. We set up call centers for political polling, for the census, and for the SBA’s [Small Business Administration’s] PPP [Paycheck Protection Program]. The SBA’s call centers were getting 10 to 20 times the normal call volume as people tried to get help. The wait times were often over an hour. Fortunately, we could step in with 10,000 hours of agent time and help them with their staffing needs and eliminate wait times. We’ve also created call centers for vaccine scheduling and staffed vaccine distribution sites. As a result, we were able to keep a lot of people working throughout COVID-19. When it comes to the labor force, that ability to flex and have choice—that’s going to become increasingly valuable to people going forward. We also think employers are going to want more opportunity to very quickly flex their workforce up and down. How did the Get Shift Done initiative get started? Just like everyone else, those first days of the pandemic really tested us. It’s one thing to say “We are worker-centric,” and it’s another to execute that through something like 2020. Our customer base includes a lot of people in hospitality, retail, and other

Anurag saw that the food bank’s volunteers were cancelling or stopped signing up for shifts due to safety concerns. We decided that weekend to create GetShiftDone.org, a concept that would take out-of-work, displaced employees from the hospitality sector and assign them volunteer shifts in North Texas food banks, and pay them a living wage for their work. The two of us and our companies seed-funded it, and then we raised a few million dollars locally. On March 19, Get Shift Done staffed our first shifts in the North Texas Food Bank. As workers were arriving that day, Shiftsmart’s founder and CEO, Aakash Kumar, had his laptop out in the food bank’s warehouse managing our platform and registering new workers and scheduling additional shifts. At the time, we thought it was going to be a 10- or 12-week program but the news spread fast among other food banks and among the retail and hospitality industry. After just 90 days, our workers provided more than 10 million meals for the community. Soon, other regions asked us to bring the model to them. It had been such a success that we raised more money and expanded across the country. Today, we’ve raised over $15 million of private funding, provided over 60 million meals, and registered over 28,000 workers. Get Shift Done is in 12 regions, including six of the largest metropolitan areas in Texas. The initiative certainly lasted longer than expected and reached more communities than we ever imagined. It was an honor to help both workers and families who needed food and a basic income. TexasCEOMagazine.com

MAKING SPACE FOR A GROWING WACO

Native Wacoan Chris Martin, president of Ideal Self Storage, sees changes in his industry—but he doesn’t think Central Texans are giving up extra space to store their stuff anytime soon. 48

Texas CEO Magazine Q2 2021

According to the Self-Storage Almanac, there are nearly 50,000 self-storage facilities in the United States today. As Chris Martin notes in this conversation, that’s significantly more locations than McDonald’s and Starbucks have in this country combined. A great big portion of those facilities are in Texas, and they include native Wacoan Chris Martin’s Ideal Self Storage. Given his industry, Martin has a finger on the pulse of Waco and Central Texas more broadly—who’s moving in, who’s moving out, where they’re going to or coming from. No surprise that he’s seen a growing wave of transplants into the area, all of whom he’s happy to give space in one of his facilities, located in Waco, Gatesville, Mexia, Corsicana, Ennis, and Belton. Martin spoke to us about the ongoing shifts in his industry, the recent blossoming of Waco, and why—even post–Marie Kondo—people are still keeping so much stuff in storage.

How did you get started in the selfstorage industry? In my senior year of high school, I was a manager at a self-storage facility. When I would come back to Waco from college to visit my parents, I’d see that business growing and growing. Later, in 2008, I started dabbling in real estate and distressed assets. I procured my first distressed Kmart in 2010 and converted it into a climate-controlled self-storage facility. That was my liftoff point. I’m now sitting at eight selfstorage facilities, six of them converted from big-box retail stores or factories. We try to repurpose dilapidated buildings that are sitting there like a black eye on a town or city. They look bad and attract crime. We clean them up and turn them into a place where people can store their valued belongings. Your properties are centered around Waco and other smaller cities in Central Texas. Do you have a strategy on where you open new locations? I’m not afraid of the smaller markets. I feel like I can compete better on a smaller scale versus going against the larger private equity groups and capital groups that have been attracted to the industry since the last recession [of 2008]. The REITs [real estate investment trusts] are heavily involved in self-storage now, and they focus on the primary markets. I’m still the little guy in the secondary and tertiary markets. There is definitely a massive amount of new

supply coming. As of today, there is over 500,000 square feet of product being built in central Waco, with more being planned. The biggest threat to self-storage is more self-storage and overbuilding a market. This happened to Killeen a decade ago, and several projects were foreclosed on. How do you feel about private equity being so active in the industry recently? It’s a double-edged sword. It’s like a lot of other industries—there’s so much consolidation, and the mom and pops are having a hard time competing against the big guys. When I first entered the industry, most of the self-storage facilities in the country were owned by mom and pop. Now we’re around 55 percent. So there’s been a lot of consolidation. But at the same time, the whole industry is expanding. Another interesting number I heard recently is that there are more self-storage facilities in the country than there are Starbucks and McDonald’s combined. Most people don’t really pay attention to them, but if you start looking out for self-storage businesses, you can see how it’s a multibillion-dollar business. We Americans love our stuff, right? That’s right. Do you think it’s going to keep going that way, or will Americans want to get rid of some of their stuff sooner or later? I’m a big proponent of minimalism, but I don’t see a big trend in people getting rid of their

belongings. I see construction costs going up and people having smaller houses. At the same time, you can finance anything now, so people can afford to buy more things. Not to mention Amazon.com, which makes things just show up at your door overnight. Plus, around 35 percent of our business is commercial customers, everything from furniture suppliers to small distribution and drop-ship outfits. One of our customers receives giant pallets of breast pumps, then uses the storage space to split the pallets into individual boxes and ship them off to people. Other businesses use units for document and record storage. Rent per square foot for a lot of those businesses is driving up, and especially with COVID, lots of people are realizing they don’t need an office. For some, a storage facility can fill that gap. You’re a lifelong Wacoan. What changes have you seen here, and what do you think is driving them? One of the biggest driving factors in the growth around here is just our geographic location. We’re only a hundred miles to Dallas and a hundred miles to Austin, and the cost of living is much cheaper than Travis County, Dallas County, Tarrant County, and so on. So we obviously have a lot of people relocating here. There’s a lot of undeveloped potential. It’s interesting to see downtown Waco go through a regentrification process similar to some of those larger cities. And it’s poised TexasCEOMagazine.com

for big industry. A lot of industrial projects are coming down the pipeline to facilitate larger businesses that will end up right here in McLennan County. Through our software system at Ideal Self Storage, I can tell that a lot of people are moving here. I can see where the customer is moving and where they moved from—you’d be shocked at the influx of people coming to Central Texas. I’ll see people who are moving here from California, Idaho, or wherever, probably paying two times what somebody here thought their property was worth. Then you see the people who are selling these properties, often Baby Boomers, saying, “Absolutely, you can pay me that for my home. I’ll just get three storage units, buy a really nice motor home, retire and see the country.” I see that scenario over and over. As Waco continues to grow, what do you anticipate being the main changes to lifestyle and quality of living? Being a native Wacoan, it’s never taken more than 10 minutes to drive anywhere I need to go. I think we may have some infrastructure challenges ahead, though. Right now, Hewitt Drive is completely different from when I went to Midway High School. It’s absolutely exploded, and I don’t know that we’re ready for that kind of influx of people. The road systems are expanding to accommodate, but I think we will also see growth toward more rural areas. Downtown Waco is great, but that’s not all Waco is about. The entire area gives people a lot of opportunities. It’s big enough to not know everybody, but also close enough that you still feel like you have a community. You currently serve on the board of directors of the Texas Self Storage Association. What has that experience been like? I was blessed to join the board of directors three years into my self-storage career. Two years ago, I served as president, moving up the chain from secretary to treasurer to vice president to that role. That experience has been instrumental in helping me learn the industry and give back. It’s been very interesting to work with lobbyists and stay in the know on what’s going on in Texas in general. We try to really support our members across the state. Self-storage is different from any other industry I’ve been a part of. Very rarely do you talk to somebody who’s in direct competition with you. I can talk to another facility owner in Longview, Texas, and share ideas and opinions and not be worried about it. It’s been a good way to give back. When I first joined the board, I didn’t realize how huge the Texas association was. I think that’s largely attributed to our executive director, Ginny Sutton. When I went to the national conference, I realized that Texas’ conference is almost as large or larger than the national one. So the value proposition for our membership is huge compared to other state associations. What advice do you have for other CEOs and presidents, especially those early in their leadership journey? Pick the business you love and can do your best in, stay focused, and never stop learning. Never think you know it all. Find those mentors in the industry. Once you do that, you will see growth happen faster. And then don’t forget to look back and help out the next generation. You mentioned that you’re building this into a family business. Are you doing things to develop the entrepreneurial spirit in your kids? Absolutely. My kids have come to work with me plenty of times. They’ve seen what the buildings look like before and during construction, and what they look like after. They help me do lock checks. I don’t know whether they will want to be in the self-storage industry, but I’d love to pave a path for them to continue the legacy or pass it on if they want.

IS IT TIME FOR A NEW BUSINESS HEADSHOT? The Answer Is Probably Yes...

Stop for a second and think about your LinkedIn profile photo. Let me guess—it falls in one of these categories: • Ancient photo. If your photo was taken back when Netflix was still shipping DVDs, it’s time for an update. You don’t want to show up to a coffee meeting or Zoom call and have people think, Wait, that’s what he looks like? • Cropped candid. You know the types: Their profile photo looks like it was snapped by a tipsy friend at a gala, then cropped to about 16 pixels to remove everyone else. You might’ve been looking good that night, but this isn’t the right image for your business brand. • No photo. That weird gray placeholder does not say “I’m a professional” to most people visiting your profile. • Professional, up-to-date headshot. If this is you, congratulations. You’ve made a small investment with a big payoff: a headshot that’s polished yet authentically you.

Why does having a great headshot matter for executives? Because no matter what you look like, a polished, professional photo is a critical part of your brand. Whether it’s on LinkedIn, on your company’s Staff page, or in the pages of your favorite local business magazine, a great headshot captures the essence of you. And today, your online presence matters more than ever, because your headshot represents a significant percentage of the impressions you make each day. At Mayfield Fine Photography, we specialize in professional photos that help you put your best face forward, even when you can’t be there in person. We make the process painless—even fun. If your business headshot needs an upgrade, let the Mayfields capture you at your latest and greatest.

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Texas CEO Magazine Q2 2021

WAKING UP

WACO

A remarkable renaissance is taking place in this once-sleepy city.

Photo: Brigham Mayfield

Matt McLeod

TexasCEOMagazine.com

faculty publications in major journals; a multibillion-dollar endowment; countless Big 12 and national championship titles, and even a Heisman Trophy winner. Baylor has arrived, and with it, so has the City of Waco.

In a discussion regarding Amazon’s meteoric success, CEO Jeff Bezos once remarked, “What’s dangerous is not to evolve.” That simple, straightforward insight is especially germane to the City of Waco’s recent renaissance. For so long, sleepy Waco, Texas, was just a pit stop along I-35, in between the bigger, brighter cities: Dallas and Austin. Home to equally dormant Baylor University and its Baylor Bears, Waco seemed to tread water, existing peacefully, if not at times notoriously, but hardly seeking growth, change, or evolution. That changed in 2001, when the Baylor University Board of Regents undertook an ambitious plan called Baylor 2012. The plan aimed to remake the university, evolving it from a well-regarded but often overlooked regional university into an academic and athletic powerhouse revered on the national stage. Two decades later, the results are no less than awe-inspiring: $400 million spent on facilities, including a new law school, a new sciences building, and McLane Stadium (a crown jewel perched prominently on the I-35 corridor); $45 million spent on the Baylor Research and Innovation Collaborative; 24 doctoral programs available to postgraduate students and quadrupled 54

Texas CEO Magazine Q2 2021

Perfectly located with easy access to one of the nation’s most traveled interstates, Waco has long been ripe for growth. Low cost of living, no state income tax, abundant access to healthcare (Waco benefits from two large healthcare systems, plus a VA hospital), and cheap housing offered excellent opportunities to entrepreneurs and large corporations alike. However, for the longest time, people just didn’t move to Waco. The city seemed to discourage growth. Rumors pervaded claiming the powers that be particularly opposed chain restaurants. (As a kid, when news broke that Chili’s was moving to Waco, the first chain to open its doors in the city, it was cause for immediate and extraordinary celebration.) In general, growth opportunities seemed wanting while obstacles to that growth seemed abundant. People and companies just didn’t move to Waco.

BAYLOR HAS ARRIVED, AND WITH IT, SO HAS THE CITY OF WACO. Then, hand in hand with Baylor University’s evolution, Waco woke up. The Chamber of Commerce began

working hand in hand with businesses that were eyeing Waco’s ideal location and low cost of real estate. City planners and the City Council evolved their thinking, and the tax climate became an incentive to companies considering relocation to—or creation of satellite locations in—Waco. Within just a few years, Waco began to see growth in sectors like advanced manufacturing, aerospace and defense, supply chain management, and professional services. During the same time, Waco’s healthcare systems merged with larger systems, advancing compensation to the top percentiles and thus attracting physicians, nurses, administrators, and more. Baylor University, the largest employer in the region, brought scholars, development officers, coaches, and staff from around the world in their quest for growth. As Waco began to grow, restaurants began to open, gyms moved in, movie theaters were built, and a tourism industry, built from the success of an HGTV show, emerged overnight. Waco arrived. As a local who had moved to Waco just before the beginning of Kindergarten, this was fascinating to see. Once upon a time, because my parents were not graduates of Baylor University and because we didn’t attend a Baptist church, we were seen as outsiders. Now, today, during a jaunt down to BJ’s, a California-based brewhouse and restaurant, you can strike up a conversation with a SpaceX employee who moved to Waco from California, an engineer from Tennessee who’s building Waco’s new Amazon distribution center, an attorney from Ohio working at franchise giant Neighborly, a neurosurgeon from Arizona who was recruited by a local healthcare system, or a tourist from Wisconsin who just had to see what Waco was all about. In a short time, Waco has emerged as an exceptional midsize city—not too big, not too small, but just right. In my business, managing a real estate brokerage and residential design and construction management company,

these changes are readily apparent. As people move to Waco, they bring with them perspectives shaped by the markets they’re moving from. Their needs, preferences, and budgets are distinctly different from traditional homebuyers in Waco. In the past, the white-collar rental was a foreign concept, because people rarely moved to Waco. Most residents were born in Waco, matriculated in Waco, likely attended Baylor or graduated from nearby universities in College Station, Austin, or Lubbock, married here, and began raising their family here. Housing was abundant and cheap. People knew the market well because of their long tenure in the area, so they simply purchased a home. Rental markets were reserved for those needing public assistance or those who couldn’t muster the down payment for a home.

prowess in football, basketball, tennis, softball, baseball, and even equestrian events, are moving to Waco in droves. Whether they’re seeking proximity to their children and grandchildren, wishing to participate in Baylor activities, seeking an income tax–free climate, or are drawn to the low cost of living and access to healthcare (which has led USAA to continually rate Waco as one of the best places for military retirees to live), they find Waco particularly enticing.

represents many of the benefits of bigger cities but without any of the tradeoffs. Free of traffic, congestion, political upheaval, and high cost of living, Waco has become the spot for residents seeking a midsize city. For better or worse, COVID has had little effect on our local economy or way of life. For the most part, restaurants and bars remained open, groceries were plentiful, and most businesses stayed open, undeterred by the shutdown mandates other cities and states experienced. When joining these realities with job market growth across multiple sectors, it’s easy to see what makes Waco so alluring to so many people. In turn, as more people from across the globe move to Waco, the city continues its renaissance. Wacoans now enjoy yoga studios, premium diaper manufacturing, Topgolf, sushi bars, rocket building, breweries, March Madness, doula services, jet engine installation, heavy equipment manufacturing, tourism, scholarly expertise across many disciplines, and a nationwide positive perception of their city.

FREE OF TRAFFIC, CONGESTION, POLITICAL UPHEAVAL, AND HIGH COST OF LIVING, WACO HAS BECOME THE SPOT FOR RESIDENTS SEEKING A MIDSIZE CITY.

Today, that market too has evolved. With the development of Waco’s job market came an influx of white-collar professionals unfamiliar with the area, both in terms of its stability and its preferred neighborhoods. While they learned the area and overcame their fears of traditional volatility—which they may have experienced in the markets they moved from—they sought to rent homes in better neighborhoods with nicer finish-out and better amenities.

The market for homebuyers has shifted even more dramatically. Because Waco is positioned between two large cities and only three hours from Houston, many people consider Waco solely because of its central location. Baby Boomers, many of whom are Baylor University alumni and are particularly excited about their team’s

In turn, homes are selling briskly and for higher numbers than many longtime residents can fathom. Smaller homes, condos, and historical homes, all once negatively regarded, are hot commodities: They’re unique, super rare, and limited in supply. Whereas just a decade ago the market seemed to demand a single, homogenous product, now the sky’s the limit if you’re seeking to build or remodel a high-end property. What was once classified as “too far out” is now well within the search area for home buyers accustomed to hours of their days spent sitting in traffic. Waco’s real estate market has fundamentally changed and now

As the pace of Waco’s evolution accelerates, so does the growth and prominence of our once-sleepy city. Waco is a bustling midsize city in the heart of Texas whose time has finally arrived. It’s an outstanding place to live, visit, and grow a business. Matt McLeod is the president and founder of The McLeod Company, a real estate and construction management firm located in Waco. He is the #1 selling individual Realtor in Waco, and started his career as a real estate investor while studying at Baylor University.

TexasCEOMagazine.com

EVENT STRATEGY in

2021 & Beyond

COVID fundamentally transformed the event industry. But it’s not too late for CEOs to create a new event engagement strategy for their businesses. Cindy Lo

From one CEO to another, let’s get real for a moment—2020 tested all of us, and our businesses. As an event strategist, I saw one group particularly struggle: businesses whose marketing and sales budgets rely primarily on in-person events. If you fall into that category, how did you respond? Did you sit and wait things out, or did you lean in and learn how to engage digitally?

As 2020 played out, I saw three distinct types of CEO response to the sudden impossibility of in-person events:

1. THE SWIFTIES

No, I don’t mean Taylor Swift groupies. Rather, these were CEOs who decided abruptly at the beginning of the pandemic to cancel all their in-person obligations for 2020 and 2021. The Swifties only participated in virtual events when obligated to (e.g., when 56

Texas CEO Magazine Q2 2021

a sponsorship or partnership was already paid for). They didn’t leverage the emerging virtual landscape, and used most of 2020 to figure out what they were going to do in 2021.

reins and engage proactively in virtual and smaller, safe in-person events (this is an evolving topic as vaccine distribution continues).

If you’re in this group, you likely missed some real opportunities to grow your business last year. But it isn’t too late to get on the bandwagon for the remainder of 2021. Read on for ideas on how to take the

These CEOs adopted a wait-and-see approach to events during COVID. They stood by until fall before doing any of their own virtual engagement— and often surprised themselves with the success they had. Even though

2. THE OBSERVERS

their direction may have been a bit fuzzy at times, they still had a lot more success than failure. In 2021, the Observers are now trying to figure out how to get the same effect but often struggling to tell the story well and figuring out when is the right time to strike; they are still reacting to what the pandemic throws their way. Though the Observers fared better than the Swifties, they must also take initiative now to continue their momentum. It isn’t too late for the Observers to pull their digital programs together for the second half of 2021, but they cannot wait much longer.

3. THE INNOVATORS

As soon as COVID arrived, the Innovators leaned in, pivoting as fast as they could to reimagine events in a virtual world. They invested just as much in digital engagement as they had planned to invest in inperson events. They weren’t perfect by any means; but they were willing to make mistakes and adapt. These innovators saw larger audiences in 2020 than ever before, and they’re definitely trying to figure out what they want to do next. They are convinced that digital is here to stay, and they’re committed to making the most of the future. (I’ll share a few ideas below on how to do that.) As CEOs, we all need to take control of the narrative around post-COVID changes. We can’t sit and wait for things to go back to where they were in 2019. We must leave that behind and expect that events—as well as all sales and marketing engagement—are forever changed. Helping to build that new world of engagement right now will pay dividends later, even as more people get on planes to go to live events or drive to a regional smaller event. Events that used to reach hundreds of in-person attendees have the opportunity to reach thousands virtually now that so many physical boundaries and monetary challenges have been removed. These new-style events also

have the opportunity to produce fresh, valuable content that can be leveraged for marketing and social media campaigns. Whether in-person, hybrid, or 100 percent digital, events are here to stay. Let’s look at a few best practices for executing, sponsoring, and supporting them going forward. 1. Use event data to drive decisions. With the rise of virtual events, we now have more accurate data to use in decision making. We know how long an individual stays online for the event, how engaged they are with other attendees, whether they actually looked at the provided files, and much more. Do not waste this valuable data. If your marketing and events team is not collecting, reviewing, and acting on event data, stop what you’re doing and make this an initiative. 2. Do not skimp on event budgets. Invest in your virtual events just as you would in an inperson event. This is a critical chance to connect with new clientele, to reinforce your brand, and to test what you can accomplish with virtual events. Our best clients understand the thought and resources that go into virtual events, and they usually have strong opinions on what they like and don’t like about them. If this is your first time budgeting for a virtual event, visit bit.ly/ PricingDigitalEvents—you’ll see our firsthand experiences helping clients with this, and you can download a detailed budget comparison with real data. (This is proprietary information, but we’re sharing it with you because it is important for all of us to be able to move beyond this together, and having real data will help all of us.) 3. Invest time in getting to know your new prospects. This is an obvious point, but I don’t see CEOs and their marketing teams investing enough of the necessary resources

to do it right. Let’s say you just received 20 times the attendees at your virtual event than you did at your last in-person conference. What are you going to do with those new contacts? Are you just adding them to your e-newsletter distribution or CRM? That is not effective. There are so many social media platforms out there that you can use to get to know your new contacts, from Instagram to Clubhouse to Twitter to LinkedIn. Find out what they are passionate about and connect with them where they are. If you are just now pivoting to virtual events, it’s not too late to get a lot out of it. But it will take investment—not just of finances but also of human resources. Attend a few virtual events so you can get the lay of the land and see what’s actually happening outside of your bubble. Soon you will start to understand what a good virtual event looks and feels like compared to a weak one. And if you have limited resources, lean on a trusted agency that knows events and can offer the support you need to engage in a new reality. As the vaccine continues to grow in distribution in the US, we are predicting smaller regional events to take place later this year, and then in 2022, larger conferences and trade shows will return with pent-up demand. The best time to pivot on virtual events was the spring of 2020. But the second-best time is now. Take control of the narrative around your events— and be prepared to weather another tumultuous, but opportunity-filled, year. Cindy Lo started RED VELVET 18 years ago as part of her career pivot post-9/11. RED VELVET is a boutique creative events and experiences agency helping global brands ideate, design, and execute their vision. During this pandemic, Cindy has pivoted the RED VELVET team to own the virtual and hybrid world. She is a recent author of Behind the Red Velvet Curtain. Cindy calls Austin, Texas, home with her husband of 16 years, their two children, and Darwin, their French bulldog.

TexasCEOMagazine.com

BUILD YOUR CEO BRAND CEO EVENT SERIES: THE ERA OF THOUGHT LEADERSHIP MARKETING

Start taking yourself—and your CEO brand—seriously with this free four-part summer event. You may not think of yourself as a “thought leader” or “influencer” right now, but the quality, visibility, and differentiation of your brand will determine many future opportunities, for yourself and your business. Over these four events, the award-winning marketing experts at Zilker Media—joined by top Texas CEOs— will walk you through thought leadership marketing and how to craft an influential brand as a CEO.

ALL EVENTS BEGIN AT 11 a.m. CT TUESDAY, JUNE 1

TUESDAY, JUNE 8

The Modern Business Influencer: The Power of Thought Leadership for Texas CEOs

A Deep Dive on Today’s Media Landscape: Mass Media versus Micromedia

Paige Velasquez Budde, CEO of Zilker Media & Rusty Shelton, Founder & Chairman of Zilker Media

Panel hosted by Wes Fang, Chief Strategy Officer of Zilker Media, featuring top Texas business podcast hosts

TUESDAY, JUNE 15

Social Media Strategies to Build Your Influence Online

Panel hosted by Nichole Williamson, Brand Strategy Director of Zilker Media, featuring top Texas CEOs who have leveraged social media to grow their businesses

TUESDAY, JUNE 22

Garnering Media as a Thought Leader in Your Industry: PR Tips and Strategies

Shelby Janner, Publicity Director of Zilker Media & Rusty Shelton, Founder & Chairman of Zilker Media

PRESENTED BY

Zilker Media is an award-winning public relations and digital marketing agency that specializes in building people-driven brands for thought leaders and the companies they lead. For a decade, they have built brands for some of the world’s top C-suite executives, companies, bestselling authors, speakers, and healthcare professionals. The Zilker Media team leads workshops with organizations such as Harvard Medical School, Entrepreneurs’ Organization, Young Presidents’ Organization, Women Presidents’ Organization, and Forbes Books.

TEXASCEOMAGAZINE.COM/BUILDYOURBRAND. SEE YOU THERE!

Feature

BUSH & BAKER: THE STORY OF TWO

“TEXAS TITANS”

TexasCEOMagazine.com

A CONVERSATION WITH

CHARLES DENYER

SAR A HANNA

In Texas Titans, Charles Denyer tells the story of the longstanding friendship and political partnership of George Herbert Walker Bush and James Addison Baker, III. It was an alliance that began on a Houston tennis court in the 1960s and ended with Bush’s passing in 2018, with Baker at his side. In the intervening decades, these two statesmen drew on each other’s strengths to rise to the heights of power and lead through some of the most turbulent years the United States—and the world—has ever seen. Bush would take the Oval Office, of course, while Baker would become a tireless campaigner and serve as Secretary of State, Secretary of the Treasury, and Bush’s chief of staff. Denyer’s book examines the TEX AS TITANS full scope of Bush and Baker’s relationship, from their worldshifting achievements to the more intimate and personal side of their friendship. In this conversation between Denyer and Texas CEO Magazine owner Joel Trammell, the author discusses his reason for writing the book, the Texas legacies of both Bush and Baker, and Baker’s piece of advice to Bush that would end up cementing his family’s dynasty. PR A ISE FO R

Honorable Brian Mulro

ney, Former Prime

Minister of Canada

“George H.W. Bush and James A. Baker , III were the best of for six decades, worke friends; two men who, d together to make the country and the Texas Titans offers world a better place readers a well-deserve . d and inspiring portra of these two men, their it of the lives mutual respect and shared loyalt y to our — Dick Cheney, 46 th nation.” Vice Presid ent of the United States

of America

“George Bush and Jim Baker had what many consider the friendship and partn most consequential ership in the histor y of American politi captures the true mean cs. Texas Titans ing of this extraordina ry relationship.” — Dan Quayle, th 44 Vice President of the

United States of Ameri

“One of the great honor s of my life was havin friendship between g a front-row seat to George H.W. Bush the legendary and James A. Baker Charles Denyer captu , III. With Texas Titan res the essence of a s, friendship that chang — Jean Becker, Chief ed the world.” of Staff to Former Presid

ent George H.W. Bush (

1994–2018)

“Texas Titans tells the story of a deep, multi -decade friendship smart, patriotic, and between two loving effective leaders . . , . of how they truste and how each one’s d and supported each success helped the other other. When Dad spoke faith, family, and friend of the importance s, Jimmy Baker was of at the top of the friend s list.” — Neil Bush, Son

of George H.W. Bush

Cover design by Michael Kellner Cover photography by David Hume Kennerl y

CHARLES DENYER

CHA RLES DEN YER was in Washi ngton on 9/11 when terrorists attacked the Pentag on. The events of that day and seeing how the nation responded inspired a new mission for Denye r. Since 2001, he’s worked with hundreds of organi zations throughout the globe in helping them obtain a true competitive advan tage with cybersecurit y, data privac y, and regulatory compl iance, while also provid ing essent ial national securi ty and advisory servic es to some of the world ’s most recognized brands. He consu lts regula rly with top politic al and business leaders throug hout the world, includ ing former vice presidents of the United States , White House chiefs of staff, secret aries of State and Defense, ambassadors , high-ranking intelli gence officia ls, CEOs, entrep reneurs, and others . His time with these transfo rmational figures and the insights they’ve shared have afforded Charl es a front-row seat into many of the world ’s most consequentia l events of the past five decade s, and what lies ahead. Learn more at charle sdenyer.com

G E O R G E H . W. B U S H AND JAMES A. BA K E R , III : A F R I E N D S HIP FORGED IN PO WER

“Charles Denyer provid es a riveting look at the endearing friend Americans who togeth ship between two great er changed the world . Well-written, captiv engaging, Texas Titan ating, and highly s examines two of the most consequential the 20th century and statesmen of how their lives were inextricably linked personally, politically, and in public service.” — The Right

TEXAS TITANS G E O R G E H . W. B U S H AND JAMES A. BA K E R , III : A F R I E N D S HIP FORGED IN PO WER CH

ARL ES DEN YER

forewo rd by

vice presid ent dick cheney

Cambridge Klein Publishers Austin, TX 78738 info @ cambridgeklei n.org

Let’s start with your impetus for writing this book. What was it? First and

foremost, the fact that the story had never been told. Why not tell a great story about a lifelong friendship and political partnership that was forged in power? Bush and Baker became the best of friends and remained the best of friends for 60 years. And I find it interesting that nobody around the state of Texas spoke much about it. 60

Texas CEO Magazine Q2 2021

It’s a fascinating relationship, if you consider where these men started. One, Baker, is a blue-blooded Texan. The other, Bush, is East Coast gentry, who looked awkward in a pair of cowboy boots and incongruous with anything that had to do with Texas. But they came together and formed an inseparable personal and political bond, and they rode it all the way to the White House.

he friend ship betwe e Bush and James A. Bak fifty years ago on the te Houston Country Club in the ea complementary skills and team the court served them well in careers for decades to come. Both men’s résum és are leg their count ry in many key p ambassadorships to Cabinet posit more. Both experi enced political on, yet their victori es far outweigh Though Bush conced ed his bid GOP nomination, he ultimately be running mate and America’s 43rd Baker became Presid ent Reaga n’s and eight years later, ran a masterfu campaign for Bush, catapulting his the White House in 1988. During Bush’s single term as p world under went a series of catacly — the Tiananmen Square Massacre, of Panama, the re-uni fication of G Persian Gulf War, and the collapse o Union. As these develo pments unfolde Bush turned to his trusted friend an ally, Jim Baker. Their foreign-policy ac during Bush’s single term were consequ due to a less-than-stel lar economy and a t candidate siphoning off crucial Republ he lost his re-election bid in 1992. Bush returned to their belove d hometown of Texas. Eight years later, Baker helped Bu son, Texas govern or George W. Bush, Florida recount — and the presidency. story of two of the most significant state the past half-century, a story of a friendshi in power between George H.W. Bush an A. Baker, III.

During the very consequential period of Bush’s one term as president, they were side by side. Most people know Bush’s story, but he was never one who liked to talk about himself. What were some of the surprising parts of his background?

One thing people tend to overlook is how hard Bush worked and how tough of a guy he was. A lot of

Feature people think that, well, Reagan needed a running mate so he just chose Bush as vice president because he was there; after that, Bush’s presidency was nothing more than a third term as a Reagan’s number-two. That’s not really true. At the beginning of the 1980 presidential primaries against Ronald Reagan, Bush was—as James Baker said—an asterisk in the polls. No one even knew who he was. But Bush worked his butt off and defeated Reagan in the Iowa caucuses, completely blindsided him. Because of that, they had a pretty good fight for the nomination. Reagan had to work to get it. And ultimately Reagan won, but Bush was a fighter. The later idea that he didn’t have the guts, arising after his 1992 loss to Bill Clinton, is completely false. He was a tough, resourceful guy. Years ago, I had a run-in with one of Bush’s attributes that I think put him in great stead with people. I was in the military at the time, and the executive officer asked me to make a phone call through the secure line in his office. As I’m sitting at his desk, I see a handwritten note from George Bush that said,

almost as interesting and powerful career as Bush. There

are some who would argue that Baker was even more impactful. If you look at some of the truly consequential statesmen in modern political history, Baker is right up there with Cheney, Gorbachev, Reagan—and Bush too obviously. He ran or cochaired five consecutive presidential campaigns from 1976 to 1992. He was chief of staff to the president of the United States, arguably the second-most powerful job in Washington. He served as US Secretary of State and US Secretary of the Treasury, arguably two of the loftiest cabinet positions. More than that, he was able to get things done when he held those positions. In each of those roles, he performed more than admirably. He was what I call a campaign gunslinger turned political operative. Whatever job you gave Baker, he excelled at it—an amazing politician and an amazing man.

IF YOU LOOK AT SOME OF THE TRULY CONSEQUENTIAL STATESMEN IN MODERN POLITICAL HISTORY, BAKER IS RIGHT UP THERE WITH CHENEY, GORBACHEV, REAGAN—AND BUSH TOO OBVIOUSLY.

It’s interesting, people who run campaigns inevitably make a bunch of enemies. It’s a short lifespan. You run one campaign, maybe you’re successful and maybe you get to run

"Hey, Max. Appreciate everything

the second one. But then you’re out,

you’ve done," and so on. Bush was

because you’ve aggravated so many

vice president at the time, and this officer had been his naval attaché. That was a very famous trait of George

Bush. In fact, I was speaking with two very wellknown Houstonians two nights ago at dinner who said he rode his way to the White House on personal messages. He wrote me a number of personal notes over the years; I’d sent him my first two books and got the notes in return. They were very personal, not simply “Thanks for the book.” There were some good, funny stories in them. I know a number of campaign people who worked for him as far back as 1964 who received notes in the mail too. I have to think that man wrote thousands of them in his political career. It touched a lot of people and spoke to his humility. For people who aren’t presidential aficionados, James Baker is almost unknown, or a footnote in history. But he had an

people. What Baker did, running five consecutive campaigns in a party that always has internal squabbles, is amazing. It is. People always ask me, “What do you think are the greatest accomplishments of these two gentlemen?” For Baker, that’s certainly one, but I might have to say his overseeing of the Florida recount in 2000, when he served as George W. Bush’s chief legal advisor. The way he managed that 37-day debacle and strategically pulled it off—there would not be a President George W. Bush if it weren’t for James Baker’s abilities.

As for the elder President Bush’s greatest accomplishment, I’d point to his international coalition and all the fires he put out around the world in his time as president. He managed tumultuous events over that 48-month period of a kind that no president since Franklin Roosevelt TexasCEOMagazine.com

has had to deal with. Unfortunately, he only had one term, which isn’t the way you want it to end. What do you think it was that brought Bush and Baker together? Did they have much in common at first? They met on the tennis

court at the Houston Country Club in the 1960s. At the time, they both had young families and were both very aggressive, hard-charging men, very into business. Baker was climbing the corporate ladder in the litigation world in Houston. Bush was seeing success as well with his offshore oil company. They just seemed to click. I think Baker looked at Bush with admiration, and Bush at Baker with respect.

HE COULD PUT ON A HICKEY FREEMAN SUIT WITH HIS COWBOY BOOTS AND CHEW RED MAN TOBACCO AND STILL DAZZLE THEM. THAT WAS THE MAGIC OF BAKER.

And of course they were both Texan, even if Bush wasn’t born one. Mimi Swartz at Texas Monthly wrote an article a number of years ago called “The Texanhood of George H. W. Bush” that talked about that tension between Bush’s East Coast roots and Texan image. To me, being a Texan isn’t a birthright; it’s an attitude—what you think and how you feel. Over time, Bush developed that attitude of a Texan: giving, loyal, caring. And if you look at Bush’s political career, he did a lot of things for Texas. He brought the G7 summit to Houston in 1990. He brought the Republican National Convention in 1992. So is he a Texan? In my opinion, yes, by his attitude. As you said, Baker served in many different roles over his career, and I know you talked to him extensively for this project. What did he think his biggest contribution was?

When you talk to these men of power, there’s a certain amount of modesty. You have to extract it from them. I think he’s very proud of the fact that during the 1980 campaign, he told Bush, “Hey, you’ve got to bail. You’re hurting your chances to be the vice president if you continue to run against Reagan,” which was true. And if it weren’t for Reagan picking George H. W. Bush as vice president, there would not have been a James Baker, Secretary of State, or a James Baker, Secretary of the Treasury, or a James Baker, Chief of Staff. There 62

Texas CEO Magazine Q2 2021

would not have been a George Herbert Walker Bush as president, or a George W. Bush as president. That single moment, where he told his best friend, “Get the hell out of the race; it’s going to save you in the long run”—that defining moment really created the Bush legacy. Most of Bush and Baker’s work was done at the national level, and they weren’t appreciated as much in Texas. Do you think people don’t talk about them as much as they should here? It’s

interesting. When you talk about Bush and Baker, Houstonians are quick to claim them. They’ll tell you, “They’re not Dallas people. They’re not Austin people. They’re ours.” My comment back to them is, “Well, that’s true, but they’re Texans first and Houstonians second.” But you’re correct, most of their accomplishments were on the national and international level. The one time Baker ran for office in Texas, in 1978 against Mark White for attorney general, he lost. Bush ran twice for US Senate in Texas, and lost both times. They did not have a good batting average in Texas state politics. Now, when you move to the national level, it’s completely different. There, Baker could run circles around the East Coast gentry. He could put on a Hickey Freeman suit with his cowboy boots and chew Red Man tobacco and still dazzle them. That was the magic of Baker.

When George W. Bush first ran for president in 1994, it was almost a joke, right? The attitude was “Junior’s going to ruin Dad’s reputation in Texas.” How much did Baker get involved in W’s career? For a very long time, he didn’t.

From the time George W. decided to run for governor all the way until the Florida election dispute of 2000, his relationship with Baker was no more than cordial. They were family friends, but there was not an intimate relationship there. Then George W. had to tap Baker to save his shot at the presidency. Baker understood why. He basically said, “Where else was George W. Bush going to turn? I had run five consecutive presidential campaigns. I’d been Secretary of State. I’d been chief of staff. I’d been Secretary of the Treasury. I’m the guy they had to come to.” Interestingly enough, their relationship

Feature since that has been cool. Part of that was the Iraq War, where Baker was at odds with a lot of what happened. He put out the Iraq Study Group report, which I don’t think President George W. Bush looked too favorably on. In researching this book, did anything about Baker surprise you? Are his public image and private image very different?

I think they’re probably quite similar. Baker is a private person. You’re not going to find him out and about in Houston social circles or living in the biggest home with fancy new cars. One of the things he said is, “I’m not going to go home to Houston after my stint as Secretary of State and sit on a bunch of boards.” He prefers his private time with his wife, his family, and his ranch in Wyoming. He could sit on any board or give any speech or show up to any social function he wanted to, but that’s not him. Right. You always sense that part of him wanted to go back to the ranch and fade out of the limelight, but he continually got pulled back in. He did.

were still the best of friends. They still saw each other regularly. Baker was with Bush on Bush’s very last day. Bush said to Baker, “Where are we going today?” and Baker said, “You’re going to heaven.” Bush replied, “Great. That’s where I want to go.” His last words were to his son, George W.: “I love you.” And then he passed on. Bush and Baker’s friendship is really an incredible story. I don’t know if we’ll ever see a political partnership between two people like that again. You have political ideologues, such as Rumsfeld and Cheney, who take the knees out from under you if you cross them. You also have political marriages, such as Bill and Hillary. This one was different. This one spanned six decades and saw the highs and lows of both men, personally and politically. It’s a really dynamic story. Many Houstonians know it, but outside of Houston, people really don’t.

DICK CHENEY TOLD ME SOMETHING YEARS AGO THAT I NEVER FORGOT. HE SAID, “CHARLES, THERE’S NOT A WORLD LEADER WHO WOULDN’T TAKE JIMMY BAKER’S PHONE CALL.”

We already talked about his biggest accomplishment, but I’ll tell you what his biggest frustration was: the 1992 presidential campaign, when they lost to Bill Clinton. That one really hurt. Baker came back to run the campaign, but he had only 10 to 12 weeks to do the unimaginable. He’s very quick to put the blame on, as Baker calls him, “a little guy up north” named H. Ross Perot. There’s no doubt: Without Perot in the race, Bush would have won reelection. There’s been animosity there, dating back to the Reagan presidency. Perot never looked upon Bush as a true Texan. Perot was much wealthier than Bush and could have easily afforded the luxuries of a home on Kennebunkport, Maine [where the Bushes have a summer home]. But Perot looked at himself as a regular guy. He shopped at Men’s Wearhouse. He dined in the mess hall of all of his companies. He felt Bush was trying to portray an image as being above all that. How did Bush and Baker’s relationship evolve after Bush lost the presidency in 1992? Well after the White House, they

And Baker’s still doing well physically? Yes. I call him 90

years young. He’s still fully there. He’s a tough guy. He just continues to look forward in life and not backward. Obviously, Bush has his presidential library. Where are Baker’s papers?

He’s got the Baker Institute at Rice University, which was founded in 1993. It’s been a phenomenal success. It’s beginning to rank up there with the bluest of the blue-chip think tanks. The amount of money they’ve been able to raise and the people they’ve been able to bring in to speak—from Mikhail Gorbachev to President Obama to Yasser Arafat—it’s phenomenal. And it’s because of the Baker magic. Dick Cheney told me something years ago that I never forgot. He said, “Charles, there’s not a world leader who wouldn’t take Jimmy Baker’s phone call.” In 2008, immediately after the election, while Obama was president-elect, one of the very first people he went to see to get a true understanding of the entire globe was Baker. He went down to Houston and Baker laid it all out for the incoming president: Eastern Europe, China, Africa. That’s a testament to who he is. TexasCEOMagazine.com

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A HARVEST OF

RESILIENCE Two Dripping Springs wineries demonstrate how Texas business owners persevere, through pandemics, winter storms, and more. Lindsay Maresh

Tom Parmeson, Owner of Parmeson Wines

The grapevine is one of the hardiest plants alive. It can live 120 years or more and survive droughts, extreme temperatures, and even many wildfires. In fact, the recent massive wildfires in California wine country had little impact on the wine industry,1 except for tourism. The grapevine is resilient, predictable, and steadfast, even in some of the harshest environments. But nothing prepared wineries for COVID-19. While the vines still produce, tasting rooms have been forced to shutter. Only recently have wineries in Texas been allowed to reopen, but with plenty of requirements to keep people safe. Wineries have rallied, coming up with creative ways to draw people in without putting them at risk. 1

Liz Thach, “The Amazing Resilience of Wine Grape Vineyards,” Wine Economics and Policy, Vol. 7, Iss. 1, pp. 1–2.

Then, just as wineries were hitting their stride at the beginning of 2021, with owners investing thousands of dollars into new operating models to support safer tourism, February’s winter storm hit Texas hard, forcing them to close once again for a couple of weekends. To say the past year has been rough on Texas wineries is an understatement. But with all of the challenges have come fruit— the realization that wineries can be as resilient as the grapevines that serve as their foundations.

The Birth of Dripping Springs Wine Country Nate Pruitt was born in California. He experimented with making wine and beer for years, and when he moved to Texas in 2003 and visited wineries in Fredericksburg and Spicewood with his wife, Angie, he decided it was time to follow his dream of building his own winery. “After making wine for most of my adult life, I was ready to take the leap,” says Pruitt. “Behind California, Texas is the second most trafficked state for wine. I loved Dripping Springs because of the people and the location: close proximity to Austin, on a major corridor in Texas wine country, and plenty of land. It was the perfect place to live and start a winery.” 66

Texas CEO Magazine Q2 2021

Pruitt created Bell Springs Winery in 2010, the first winery in Dripping Springs, just off of Highway 290. At the time, the only other alcohol establishment in town was a distillery, Dripping Springs Vodka. Today, there are at least 50 wineries in the area, plus several distilleries and breweries. With Hays County being dry until 2005 and so many wineries an hour west, getting the attention of tourists and Austinites looking for a unique day trip should have been a challenge. But remarkably, Bell Springs Winery experienced organic growth without much effort. “People just started showing up,” Pruitt says. “The first year, we did 300 cases and stopped selling certain bottles just so we had enough for people to taste. But as you start to grow, it’s easy to move too fast and get in over your head. Expenses can get out of control quickly. “Winemaking is capital intensive and seasonal. The more wine you make, the bigger your equipment needs to be, and you can only produce during a certain time of year. Beer is different. You can make beer 365 days a year. I chose early on to not get investors, start small, and go direct-to-consumer. I can control growth, make as much or as little wine as I want, and add equipment on demand. I decided not to hire a big staff, but instead to grow incrementally, keeping it simple and layering in new ideas over time.”

About four years in, Bell Springs Winery was at a point where Pruitt could increase production due to strong tasting room sales and a growing wine club. He also increased his product line, adding different varietals, as well as a brewery, food options, and live music with local talent. And then COVID-19 hit.

Risks and Resilience While there’s no sugarcoating the impact the pandemic has had on tourism, many of the area wineries took a creative approach to survival. They used the downtime to find ways to modify their operating models, reinvent themselves entirely, or try out new ideas. “The hardest thing for wineries is that Texas laws didn’t know what to do with us,” says Pruitt. “We got lumped in with bars. The Texas Alcoholic Beverage Commission [TABC] told us if we switched to being a restaurant, we could reopen. We worked through making that happen, pivoting completely to a restaurant model, but then the government told us and TABC that we couldn’t do that. After all the investment and effort, we got lumped in with everyone else and were shut down completely. But TABC came through and got us reopened again under the COVID restaurant guidelines, and now, most wineries can operate with COVID procedures in place and food.”

Bell Springs Winery

THE HARDEST THING FOR WINERIES IS THAT TEXAS LAWS DIDN’T KNOW WHAT TO DO WITH US.

But even with the reopening, wineries have suffered incredible losses. Sales have dropped dramatically, and they are limited in the number of days they can be open because of staffing. Many of their employees had to find other work during the shutdown. Winery tourism companies shut down as well. There was no way to know when or how many people would show up. “At Bell Springs, we decided we had to make changes if we wanted to survive,” says Pruitt. “We moved from allowing people to drop in to requiring reservations for any wine tasting. Even though this reduces our numbers, it allows us to keep the experience more intimate. Now, people enjoy wine flights outdoors under the oak trees and sky instead of inside at a crowded bar. If someone wants to book an indoor room for a private wine tasting party, they still can for a certain number of people, and the server can

talk with them about each wine. We couldn’t really do that before, but it gives us greater flexibility and allows our guests to customize their experience.” Bell Springs Winery and others in the area have also developed virtual wine tastings, where the winery ships participants wine ahead of time and then hosts a webinar. As people become more comfortable venturing further from home, the Dripping Springs wineries will be there, just 30 minutes away from the middle of Austin but feeling far from the hustle and bustle of the big city. The premise of Bell Springs Winery and many other local wineries is to give visitors a relaxing experience, where they can stay all day or hop from winery to winery and take home wine and great memories. “The Dripping Springs Visitors Bureau does a great job promoting tourism,” says Pruitt. TexasCEOMagazine.com

“There are a lot of wineries, breweries, and distilleries in the area now, and we all thrive off of each other. Each one of us offers a slightly different vibe for guests to experience, and there are plenty of tourists to go around.”

vineyard and winery in Sonoma,” says Parmeson. “Things didn’t work out the way I’d hoped, and we’ve had a lot to overcome, but it’s all just part of it. I love this community and am doing all I can to offer people a safe, positive experience.”

Just down the road from Bell Springs Winery is Parmeson Wines, owned by a Houstonian-turned-Californian from Sonoma, Tom Parmeson. Parmeson Wines was open only two weekends before COVID shut them down. Just as they were beginning to reopen, the winter storm closed them again. Now, Parmeson is looking forward to the busy spring season, with plenty of lessons learned from the wildfires his property endured in California and from COVID and the Texas winter storm.

Like Nate Pruitt, Parmeson moved from indoor wine tasting to outdoor wine flights, with reservations required for any indoor private tastings. “For many wineries, wine tastings have been indoors, but COVID made us rethink things. We had to move operations outdoors, but we see now how much better that is for guests,” he says. “Instead of walking into a tasting room that’s 10 people deep, you can order what you want to try and enjoy yourself outside without crowds.”

“I had all kinds of plans for Parmeson Wines when I moved to Texas from my

The outdoor approach will come with risks, Mother Nature being the biggest

Bell Springs Winery’s ample outdoor space allows for safe wine tasting during COVID-19

Texas CEO Magazine Q2 2021

threat, but both Pruitt and Parmeson have indoor or covered space to accommodate small groups should the weather turn. There was nothing they could do with the most recent winter storm, but Central Texas isn’t known for its winters. Summers bring heat, and the giant trees and country breeze make it feel much cooler, especially when sipping a nicely chilled rosé or frosty craft brew. As COVID restrictions lift, wineries have more options, but most plan to keep many of their modifications in place. Much like grapevines, the resilience of Texas wineries is remarkable. Those that have adapted to all that nature has to throw at them are finding they are stronger than they imagined. The past year has not been kind in some sense, but it has also given wineries time to reflect, reimagine, and experiment.

Nate Pruitt, owner of Bell Springs Winery, and family

The Winemakers’

PICKS

We asked these two Dripping Springs winery owners which of their wines they are most excited about right now.

BELL SPRINGS 2018 ALICANTE BOUSCHET “My favorite Bell Springs variety right now is our Alicante Bouschet of Reddy Vineyards in the Texas High Plains. It’s a lesser-known wine and the first time we’ve made it at Bell Springs.” WHAT IT TASTES LIKE: “It’s dark and smoky while being light and fruity at the same time. There are notes of blueberry and dark chocolate with a touch of pepper.” PAIRS WELL WITH: “The spiciness would go well with BBQ or a ragout or just sitting by a fire on a cool evening.” —Nate Pruitt, owner, Bell Springs Winery

PARMESON 2018 PINOT NOIR “My current favorite is probably our pinot noir, which comes from Jack Hill Vineyard in western Sonoma County.”

“I think we’ve all learned that you can’t always predict the future,” says Pruitt. “Texas wineries are booming, and I don’t see anything changing that. All of us are just trying to give people a unique experience they will remember, especially when we’ve

all been through so much this year. COVID and the winter storm showed us how important it is to enjoy the simple things, like sitting out in the country with friends and a glass of wine or beer, listening to live music, and letting the day just melt away.”

WHAT IT TASTES LIKE: “It has a complex flavor profile that ranges from black cherries and vanilla to leather and cedar.” PAIRS WELL WITH: “Its elegance and earthiness pair beautifully with heartier dishes, such as braised duck, beef bourguignon, roasted lamb, mushroom risotto, and truffle mac and cheese.” —Tom Parmeson, owner, Parmeson Wines

Lindsay Maresh is the owner of Maresh Communications and the Head of Content at Zilker Partners. With more than 20 years of professional writing experience, she helps companies and entrepreneurs find the right words to tell their story in a concise, engaging way to build their brands.

TexasCEOMagazine.com

Chris Chmura, CEO, Chmura Economics & Analytics

Why Labor Market Intelligence from Chmura Economics & Analytics Is Your Competitive Advantage in the Lone Star State As a CEO, what are the three things that keep you up at night? It’s probably safe to say that workforce issues are near the top of the list. Before you can come up with solutions, you need to understand the problem. Why does my company have issues with finding the right people in the numbers I need to staff my operation? Are the salaries we’re paying competitive? Are there enough people in the workforce with the skills I need to expand my business? Where can you find premier labor market intelligence that goes beyond government sources, that drills down to the census block level, and that is backed by economists who can respond to your questions in a matter of minutes?

Your answer is JobsEQ by Chmura Economics & Analytics Having served hundreds of clients in the Lone Star State, JobsEQ provides both public and private sector organizations the labor market intelligence they need to carefully plan business growth. Whether it’s occupation, wage, or industry trends, skill gaps in the local labor market, or occupational areas where your local educational institutions need to increase graduates, JobsEQ can provide what you need in a matter of seconds.

Who is Chmura Economics & Analytics? Chmura Economics & Analytics was founded by Dr. Christine (Chris) Chmura in 1998. As a teenager, Chris loved charting and following stock prices and hung those charts on her bedroom walls. After obtaining her master’s degree, Chris went to work for the Federal Reserve Bank of Richmond as a regional economist. While obtaining her doctorate, Chris was promoted to and became the chief economist for Crestar Bank and became a sought-after speaker and thought leader across the nation. She is known as a premier expert on the labor markets, underpinned by her collection and analysis of government-sourced industry and labor data. She has been quoted in the Wall Street Journal, Reuters, and Bloomberg.

custom regions down to the census block level and tell your story with clear, colorful maps and charts. You also get occupation and industry forecasts for as long as 10 years, both at a baseline level and a separate forecast considering the effects of COVID-19.

Real-Time Intelligence, Resume Forensics, and Employer Data With JobsEQ’s Real-Time Intelligence Job Postings, you can keep up with the daily changes in the local labor market by seeing who is posting jobs, the skills extracted from millions of online resumes, and lists of local employers with their contact information— all allowing you to put your plans into action.

But Chmura is not just about software . . . Chmura has a full team of consultants who are experts in economic and fiscal impact studies, COVID-19 impact, industry and labor market analyses, strategic planning, competitor benchmarking, and economic forecasts. From local economic development agencies to multinational corporations to the top levels of government, Chmura has the expertise to provide your organization with premier research that puts you ahead of the competition.

Chmura and Texas . . .

Crestar was acquired by SunTrust Bank in 1998. Rather than relocate to Atlanta, Chris forged out on her own and formed Chmura Economics & Analytics. She immediately began providing consulting services back to SunTrust (now Truist) and soon realized she had a great deal of content to deliver; she then began looking to hire other economists, statisticians, mathematicians, data scientists, and developers. Working with these highly regarded professionals, Chris developed exceptional modeling and creative work products.

Like some of you, we weren’t born in Texas but we got here as fast as we could. We understand what makes this place special. Our office in the DFW region is staffed by Texans who understand your unique workforce needs. Visit our website at www.chmura.com and learn more about why Chmura Economics & Analytics is the answer to your questions about labor market intelligence. Schedule a demo of our cutting-edge JobsEQ software or talk to a Chmura economist about the unique needs of your company.

Chris also believed it was critical that the company have expertise in a variety of industries, so Leslie Peterson was hired in 2002 as President and Chief Strategy Officer. Leslie spent 11 years at Eastman Kodak/Eastman Chemical and brought a background in consultative sales and research to the company. Together, Chris and Leslie developed a proprietary analytic software tool, JobsEQ, which has multiple patents and is now used by hundreds of clients, including site selectors, workforce boards, and corporate, education, economic development, and government organizations.

Chmura . . . helping people succeed, companies grow, and communities thrive.

With JobsEQ, Chmura clients get a cloud-based software that walks them through the steps needed to answer their labor market questions. You can create

Managing Director, TX

Mark Hays Mark.hays@chmura.com 918-408-7632 • chmura.com

BRINGING

SMART

GROWTH TO

WACO, TEXAS

Feature

MAYOR DILLON MEEK AND CITY MANAGER BRADLEY FORD GIVE US AN INSIDE LOOK AT CITY GOVERNMENT IN WACO, FROM ECONOMIC DEVELOPMENT TO WINTER STORM MANAGEMENT.

Like a lot of people, Dillon Meek and Bradley Ford are bullish on the future of Waco. As mayor and city manager, respectively, of one of the fastest-growing cities in Texas, Meek and Ford have operated as a team since fall of 2020 to continue Waco’s momentum in a smart way. For them, growth is good— but it needs to happen in a way that serves everyone in the community, and without overwhelming the city’s infrastructure. We talked to Meek and Ford about what their jobs entail, how they think about continuing Waco’s post–Fixer Upper revitalization, and how, early in their tenures, they managed last February’s catastrophic winter storm.

Photo: Brigham Mayfield

Starting off, can you explain the roles of the mayor and city manager in Waco?

THIS EMERGENCY WAS UNIQUE BECAUSE IT WAS STATEWIDE. WE KNEW THE CAVALRY WASN’T COMING.

BRADLEY FORD: It’s similar to the board chair and CEO roles that Texas CEOs will be familiar with. Much like a board, the six people on City Council oversee policy and big-picture strategy, and are led by the mayor, who in this analogy is the board chair. As city manager, my role is to implement and execute on the strategy, much like a CEO in the business world. Together, we’re accountable to 140,000 Wacoans. DILLON MEEK: Right. The mayor convenes the meetings of City Council, which sets the priorities and policies and budget for the city. We have a public interfacing role, and act as a conduit between city operations and Wacoans. The scope of what Bradley is responsible for operationally as the city manager is significant. He and his team manage all of the city’s business, which includes economic development, public health, streets, trash services, water infrastructure, emergency management, museums, even a zoo and more. TexasCEOMagazine.com

Photo: Brigham Mayfield

FORD: In an emergency, things do have to shift a bit. The mayor becomes that front-facing voice. Mayor Meek did a tremendous job at that during the winter storm in February. Under Texas law, he’s got a role in an emergency and takes on a more involved leadership role. What was the experience of leading through the winter storm like?

MEEK: I first want to commend our city staff, who worked around the clock to keep the city safe. It’s because of their dedication and preparedness that Waco fared as well as we did. Like a lot of cities, we had multiple issues going on during the storm. The first was water supply concerns. We lost power to one of our two treatment facilities, then we started to have system malfunctions at the other one due to the excessively low temperatures. We all had to conserve water to keep from going on a boilwater notice and, together, were able to achieve that goal. Many cities in Texas were not able to avoid that. 74

Texas CEO Magazine Q2 2021

It was also important to us to keep the water on so the fire department could fight fires. The Waco way is to have a plan A, a plan B, and a Plan C. We were already thinking through a plan to pump water from the Brazos River to fight fires if the water did go off. Unfortunately, some locations in Texas struggled to fight fires during the worst of the event due to the loss of water pressure or supply.

TEXAS IS A PROBUSINESS STATE, AND WACO IS A PRO-BUSINESS CITY.

We had 40,000 residents in Waco without electricity— the City of Waco does not have direct control or authority over electricity—so going on a citywide boil notice could have been a real public health concern. If you can’t boil water on your electric stove and can’t get to the grocery story because the roads are frozen, you’re really in trouble. But this community came together to conserve water and check for leaks on their property, and that allowed Wacoans to have drinkable water throughout. We did have to valve off a few neighborhoods. One of our

Feature city staff members had the idea to call Coca-Cola, which has a facility here, for help. They graciously donated more than 125 pallets of Dasani water that we quickly distributed to those neighborhoods and other community members in need. Our teams were working around the clock, sanding roads, creating warming shelters with local churches, ensuring that people knew about how they could get and give help. Coming together to serve one another was a really triumphant moment for our community. FORD: The business community stepping up was a big piece of the solution, too, from the Coca-Cola donation to restaurants that served free meals at warming shelters. That’s what Waco is about. At our request, Waco’s top water-using businesses curtailed usage during the worst of the winter crisis. They put the community’s interest above their bottom line. This emergency was unique because it was statewide, so we couldn’t draw resources from elsewhere. We knew the cavalry wasn’t coming. We had to work with what we had. The citizens, the business community, and the government really came together. Did the winter storm change how you think about preparing the city for future emergencies?

FORD: Like every thoughtful city in Texas, we are looking at what we could have done better. Our review team is looking at lessons we can learn. MEEK: Right. Our response wasn’t perfect. When you go through an emergency, you do see opportunities for improvement. How could we have communicated better internally? Could we have had different resources available ahead of time? I think our report will tell us we did an A- job and what we could have done to get an A+. We’ll keep sharpening up and be even better for the next disaster. FORD: We partner with McLennan County to co-fund an emergency management office. That team is always sharpening our approach. This week for example, we did exercises with the Corps of Engineers. They think about things like, “What happens if there’s a dam failure upstream on the Brazos River?” Clearly, Waco has experienced significant growth in recent years. What factors do you think are driving that growth?

MEEK: A lot of the growth is because of our geographic location. The Texas population is growing at a rate of

nearly 800 to 1,300 per day. A lot of people moving to Texas are going to the big metros, but Waco being on I-35, halfway between DFW and Austin, is attracting plenty of them. Waco is also more affordable than some larger urban areas, and there’s a rich quality of life here. It’s a very rich community in terms of its values. It’s in the air—people in Waco know that something exciting is happening here. When you drive through downtown, you see all of the new development, entrepreneurs starting vibrant businesses, new boutiques and restaurants popping up, hotels being built, our Brazos riverfront development going vertical, and Magnolia expanding. And I think people are excited about playing a role in the direction of the culture and the economy. It’s still a small enough city that you can have a real impact. Businesses are interested in coming to Texas as well. Texas is a pro-business state, and Waco is a pro-business city. Last year was a record-breaking economic development year for us. We have 1,500 confirmed jobs coming here, with many more in the pipeline. These are jobs that pay livable wages with 401(k)s and health benefits. It’s a real opportunity to build up our middle class. Our City Council and staff are excited about upskilling the workforce in partnership with educational institutions, foundations, and nonprofits. We want to make sure Wacoans have the technical and soft skills they need to get these jobs. We want to build out a financially secure city. Through those jobs coming in, there’s a real opportunity to address financial security issues that have been a problem in Waco for years. I don’t know of a time in recent history when Waco has had this much opportunity for the type of economic growth that allows everyone to attain prosperity. Growing in a smart way, where everyone has the opportunity for success, will take some strategy from the city, but we’re up for the challenge. We’re really committed to attracting and supporting entrepreneurs and small business as well. We want our economic development plan to be diversified and not too focused on one sector of the economy. FORD: We feel like Waco is punching above its weight class. Last year, we had over $400 million in industrial investment, our best year on record. We think we’re going to do better this year. We want to TexasCEOMagazine.com

GROWTH IN GREATER WACO, BY THE NUMBERS The Greater Waco Chamber of Commerce closely tracks growth in Waco and McLennan County. Here are a few of the results achieved in 2020.

ANNOUNCED PROJECTS (8 new business attractions and 3 existing business expansions)

1,548 NEW JOBS ANNOUNCED

403,000,000 IN NEW INDUSTRIAL CAPITAL INVESTMENT ANNOUNCED

3,290,000 SQUARE FEET OF NEW AND ABSORBED REAL ESTATE FOR THE MARKET (including 2.69 million square feet of new construction)

Kristina Collins, Senior Vice President of Economic Development at the Chamber, notes that these far outpace the typical measures of a successful year: 500 new jobs, $100 million in capital investment, and 500,000 square feet of real estate activity. 76

Texas CEO Magazine Q2 2021

Photo: Brigham Mayfield

Feature drive that sector forward without leaving out small business. We made some big gains there last year by creating new programs to support small business. We funded small business COVID-19 recovery and also partnered with Startup Waco to create a Community Investment Fund to help unbanked startup businesses. On calls with bond rating agencies, we no longer have to educate them on Waco. They know Amazon’s coming. They know Topgolf is building its new prototype here. They know about Chip and Joanna. As far as partners to the city, I’d also highlight the work going on with the Waco Independent School District. They’re playing a key role in reenergizing the core of Waco. They’re making a sizable investment in their facilities and bringing quality programming into the district. That will help with short-term job gains and the generational change that’s going to happen down the road. Obviously, schools drive decisions about where people want to move.

MEEK: There’s a dignity and decency here. It’s a values-first community. Magnolia was an incredible booster shot to Waco’s image. Fixer Upper literally showed a nice Waco family in a beautiful Waco home on TV week after week. That said, there are so many people in this community who have been part of Waco’s growth and image, whether that’s by starting up a new business, volunteering for a nonprofit, helping kick-start a farmer’s market, and so much more. Through all these efforts, Waco’s brand is going to be exposed more and more. We’re excited about branding Waco in a more professional way and putting a marketing strategy together. I’ve joked about putting billboards up on some of the busiest highways in other cities saying, “If you lived in Waco, you’d be home by now. Average commute time, 10 minutes.” The next billboard would say, “And you could live in a house like this, with the average price per square foot of Waco homes.” But while this might be what piques some folks’ interest, the real reason people want to call Waco home is because of the values shared by the people here and the vibrant quality of life offered.

I WANT TO BE ABLE TO LOOK EVERY RESIDENT IN WACO IN THE EYE AND SAY, “IF YOU WANT TO BE IN THE MIDDLE CLASS, YOU TRULY HAVE THAT OPPORTUNITY.”

We also have a great police department. This March, we had our new police chief start, Dr. Sheryl Victorian out of Houston. I think she’s going to bring a lot of new ideas to the table. Five years ago, Waco may not have had the chance to hire talent like Dr. Sheryl Victorian. But Waco’s momentum has changed. She came here to visit the Silos, so she knew about Waco before she got recruited into the role.

MEEK: Baylor has been an incredible partner to the city as well. I’m a Baylor alum for undergrad and law school, so I feel deeply connected to them. But even putting on my city hat, I can say that with Baylor we’ve realized a lot of interesting opportunities, including on economic development and programs where students can get into the community and apply their education in a lab-like setting. We’re seeing lots of Baylor students who are excited to stay and start their business here. How would you summarize that feeling in the air, that thing that’s drawing people to Waco?

FORD: Today, lots of jobs can be done from anywhere in the state. Part of the branding effort is to communicate Waco’s value to households that have options on where to live. Over time, economic development is becoming more about attracting talent than any other consideration such as cheap land. As CEOs know, the game is all about talent now. We’re always asking the question, How do we tell people about the full-service amenities and quality of life in Waco? MEEK: I’ll add again that Waco is a businessfriendly city. Lots of companies and CEOs across the state are examining expansion or relocation opportunities here. Waco is hungry for that new investment. We’re always available for conversations about how we can make this a good home for these TexasCEOMagazine.com

companies. If someone is interested in exploring Waco for business expansion or relocation, reach out to us and see what incentive packages are available. When a region is growing this fast, it’s common for people to worry about how infrastructure will handle it. How do you think about that challenge?

FORD: We’re growing and that’s good, but it has to be smart growth. We have to have good infrastructure planning to anticipate all of it. Fortunately, city government is committed to long-term strategic planning so the infrastructure does keep up, whether it’s streets or other capital improvements. When you’re expanding a major road or repairing a waterline, you don’t just snap your fingers and do it—it’s a two- to three-year process. We rely on our capitalimprovement programming to plan those things out and make sure we’ve got the budget. In any given year, we invest $40 to $50 million in water and sewer system improvements. On streets, we’re up to $28 million per year. We need to keep growing to support those improvements. If you’re not growing, you can’t invest in your infrastructure. MEEK: A few years back, Ray Perryman, a brilliant economist here in Texas, did a study on projected population and economic growth in Waco. We were able to build out robust plans based on those projections. We also have a 25-year city planning document called the City Plan that came out five years ago. So we’re able to be data-driven and operate from a strategic mission that’s already been identified. That’s really helpful. There are generations of leaders in Waco who have created the atmosphere for the success we’re benefiting from now, from economic development to infrastructure. We’re thankful for the strategic planning that has gone on before. FORD: Without the long-range thinking in terms of our water systems, for example, we never would have made it through the winter storm without a boil-water notice. We have two major water plants instead of a single plant that wouldn’t have been able to push water from one end of the town to the other. Without us being ahead of the game in infrastructure, we would have been sitting without water for five to seven days. Bradley, how is Waco different from some of the other cities you’ve worked in?

FORD: The number-one thing that’s different in Waco is how many partners we have around the table. We have a great group of leaders in business and education and 78

Texas CEO Magazine Q2 2021

other governmental entities. Our success in this region this year is certainly shared with McLennan County, who helped us significantly on COVID-19 response and vaccine distribution as well as on economic development. In other communities, partners like the County aren’t necessarily so strong. It caught me by surprise three and a half years ago when I joined the City of Waco. You mentioned financial security issues and poverty. In Waco, you’ve seen more upper- and middle-class people move outside the city limits, to McGregor and Woodway and so on. What does that mean for the center of Waco?

MEEK: We are continuing to improve how we invest in the downtown core of Waco and the surrounding neighborhoods and looking at ways to incentivize commercial growth there. We want people who have lived in their neighborhoods for generations to have the opportunity to participate in revitalization even as we bring in new friends and families. I think we have an opportunity to really see some organic prosperity here in Waco, including downtown, and to see families who traditionally live paycheck to paycheck obtain financial security. I want to be able to look every resident in Waco in the eye and say, “If you want to be in the middle class, you truly have that opportunity.” My hope is that this community will continue to come to know one another, not live in their little corners but build robust relationships with a variety of people. We’re taking real steps toward that. Can you both talk about the philosophy you bring to governance and leadership?

FORD: It’s having a servant’s heart. That’s the top thing that keeps me putting crazy energy into this job. I know we’re benefiting people. That keeps me getting up in the morning. MEEK: I would agree with that. Both of us feel called to the roles we’re in. We recognize that what we’re doing impacts the lives of people. We have an opportunity to bring jobs to this community that will hopefully break the shackles of generational poverty—and to help keep water running through people’s sinks. One thing I fight for is awareness of my strengths and weaknesses. I hope I’ve been able to put a team around me that can accentuate the strengths and help with the weaknesses. What I love about this city team specifically is that it’s made up of smart and good people doing the best they can to make the city—and each other—better.

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WHAT YOU NEED

Texas Gun

2020 saw a remarkable surge in gun ownership in Texas, with the FBI reporting over 2.3 million firearm background checks in the state. That number far exceeds Texas’ previous record of 1.7 firearm background checks in a year, which occurred in 2016. With all those additional firearms in Texans’ hands, we reached out to Austin gun store owner and safety expert Michael Cargill. Cargill is not only a passionate Second Amendment activist; he’s also an outspoken advocate of safe and legal firearm ownership. From his South Austin store, he and his team help people from all walks of life—from doctors and lawyers to schoolteachers and housewives—whether they need to get trained, get licensed, or purchase a firearm. Cargill generously shared his time to lead a recent virtual event, “Texas Gun Laws: What You Don’t Know—but Should.” He discussed the ins and outs of Texas firearm legislation, present and past, including what it means for business owners. Here are some key takeaways from the event, with a selection from the lively Q&A.

WHEN LICENSES AREN’T REQUIRED In Texas, it’s legal to carry a handgun without a license under certain circumstances. For example, you do not need a license to possess a handgun: • At your home and the surrounding property. It’s perfectly legal to carry a handgun, concealed or in the open, here. • On your premises or a premises under your control. A person who may legally posses a handgun may posses a handgun on that person’s premises or premises that person controls. • In your vehicle, as long as the handgun is concealed. Said Cargill, “Concealed means you can’t see it through ordinary observation. It could be under a towel, or in a box that says Glock on it.” 80

Texas CEO Magazine Q2 2021

• During an activity like hunting, a handgun class, or at the gun range. • And in other places, including, said Cargill, “a watercraft, a travel trailer, camping trailer, truck camper, motor home, or a horse trailer with living quarters.”

is now known as a “license to carry” (LTC) a handgun, and it applies to both open and concealed carry. If you want to carry a handgun openly in your vehicle, you’ll also need an LTC and a holster that attaches to your belt or shoulder (remember: that doesn’t apply if the handgun is concealed in your vehicle).

What about long guns, like rifles, shotguns, AR-15s, and AK-47s? You can generally carry these, open or concealed, without a license. “I can walk down the street with my rifle,” said Cargill. People often ask him why they never see people with rifle racks on the back of their trucks anymore. It’s nothing to do with changes in the law, Cargill always tells them: “It’s because people are afraid someone’s going to break into their vehicle and steal their gun.”

THE HISTORY OF GUN CONTROL IN TEXAS

WHEN LICENSES ARE REQUIRED

plantation without the owner’s permission.

Once you take a handgun off of premises under your control, you will need a license. Cargill notes that what we used to call a “concealed handgun license” (CHL)

In its early days, Texas’ only gun control legislation was intended to keep firearms from Native American and Black populations. White people had no real restrictions on their right to own and carry firearms. After the Civil War, race-neutral laws were passed that nevertheless intended to keep firearms from Black Americans, such as an 1866 law that prevented anyone from carrying guns onto a

Around 1869, Cargill noted, a new debate began that now affected the white population. Everyone had rifles at the time, but people

TO KNOW ABOUT

Laws were concerned about pistols, many blaming them for a spate of homicides. Thus began the separation between laws governing long guns and handguns that remains in force today. In 1870, Texas banned the carrying of pistols in public. That law remained in force until 1995, when legislators passed a law allowing concealed carrying of handguns.

SETTING YOUR BUSINESS’S FIREARM RULES Today, as a business owner, you may want to prevent people from bringing firearms onto your premises. How do you legally go about that? For long guns, the process is pretty simple, said Cargill. You can either give people verbal notice, or make your own simple sign that says “no firearms allowed.” But if you want to prohibit LTC holders from carrying a handgun onto your premises, you’ll need to post one or both of these official signs: • 30.06 sign: Notice of a prohibition from carrying a concealed handgun onto the premises of a business. • 30.07 sign: Notice of a prohibition from openly carrying a handgun onto the premises of a business. So, if you want to prohibit handguns altogether, just post both signs. Or, noted Cargill, you—or a representative of the business—can also give people verbal notice, which carries a lot of weight under Texas law. “Let’s say you don’t have a sign posted, but you notice someone carrying a firearm and ask them to leave,” said Cargill. “If they refuse, that is criminal trespass and they can be charged with a

class A misdemeanor, punishable by up to one year in jail. They can also lose their license to carry a handgun for seven years.”

Q&A

THE WITH MICHAEL CARGILL Q: Are you obligated to show an officer your concealed permit when pulled over if you do not actually have the weapon with you at the moment? A: No. However, it’s always wise to show the officer your handgun license anyway, because when officers run your driver’s license, the fact that you have a handgun license will pop up in the system. If the handgun is not on or about your person, you don’t have to present your handgun license. If the handgun is on or about your person, you are required to show the officer your license. Q: What information do you have to provide a law enforcement officer if you are carrying a long gun and are stopped for questioning? A: You don’t have to provide them with any information at all, because carrying a long gun is totally legal in Texas. All you have to do is identify yourself if they are conducting an investigation. Just make sure you’re not pointing the firearm at anyone or using threatening language. Q: If I want to sell a gun to a friend who is legally able to possess a firearm, am I required to make notifications to any government entities? A: In Texas, you don’t have to inform the government that you’re doing a sale.

If it’s someone you fully trust—you’re sure they’re not prohibited from gun ownership—you do not need to tell anyone. But if it’s someone you don’t know, it’s smart to go into the gun store and transfer the firearm. That way, the gun store can have them fill out the correct form and do a federal background check on them. Q: Say I’m carrying in my purse. Does a business have the right to search my purse upon entering or leaving? A: A business can refuse to allow you entry unless you do whatever they want you to do. So while you don’t have to let someone search your purse, the business can deny you entry unless they search your purse. If you don’t want them to, you can then choose to take your business elsewhere. Q: What US states, if any, recognize the Texas LTC? A: About 32 different states recognize the Texas LTC. You’re good in places like New Mexico, Arizona, Oklahoma, Louisiana, Mississippi, Alabama, Georgia, Florida, South Carolina, North Carolina. But you’ll want to watch out for places like California, New York, New Jersey, Connecticut, Massachusetts, Maryland, Washington State, Oregon, Illinois, and Minnesota. Gun laws are very different there and you’ll need to do your research before traveling with a firearm.

The opinions expressed in this article are solely the opinions and statements of the person expressing them and do not necessarily reflect the opinions or statements of Texas CEO Magazine or its affiliates. Texas CEO Magazine and its affiliates are not responsible or liable to anyone for any content, opinions, or statements in this article. The information provided is for informational or entertainment purposes only. Reader should check the various legal requirements in their areas related to gun ownership. TexasCEOMagazine.com

THE DIGITAL

TRANSFORMERS William Martin (left) and Matt Bomberger of Plano-based Bresatech on what it’s like to take their clients on a digital transformation journey.

Texas CEO Magazine Q2 2021

Buzzwords like innovation and digital transformation get thrown around a lot these days. But what do they mean for real CEOs leading real organizations? And why do these concepts matter? Bresatech, based in Plano but global in scope, isn’t interested in offering a one-size-fitsall solution for digitally enhancing businesses. As CEO William Martin and senior VP of global sales and operations Matt Bomberger tell us in the conversation below, they prefer to start with where the client wants to go, then discover how optimizing the business digitally can get them there. That often involves upgrading legacy, manual systems to automated, digital processes that help the business move faster and smarter. We asked Martin and Bomberger about the company’s recent growth trajectory, the vision of Bresatech owner Jessey Lee (also a cast member on Netflix’s recent reality show Bling Empire), and the strategic priorities that drove their recent expansion into Austin.

Can you tell us how Bresatech got started? MARTIN: Sure. Our owner, Jessey Lee, has been involved in many different industries, including furniture, real estate, and liquor. I’ve known Jessey for about seven years, and back in 2016, he came up with the idea of launching a tech company. But we wanted to find a niche we could excel in. We started thinking about digital transformation and intelligent automation and how these can really be the foundation of a company’s strategy. At the time, I was an executive at Pegasystems, a software company that’s now one of our key partners. I came over to serve as president and CEO of Bresatech. Matt drives our sales and operations globally. One of the things that’s unique about Bresatech is that we’re privately owned by one investor, Jessey. In a lot of cases, companies like us are owned by private equity firms or there’s a conglomeration of ownership. In our case, Jessey made an investment of seed money, and we’re driving to a point where we will be completely self-sustained. Let’s talk more about digital transformation and intelligent automation. What exactly do those

concepts mean? MARTIN: Before they engaged with us, a lot of our clients were still running the business on legacy systems, many of them manual. We take them on a digital transformation journey. So we help them shift to a more automated, intelligent, and digitally enhanced way of running the business. That journey involves people, processes, and technology. When we start work with a client, we don’t have a prescribed method for digital transformation. In that way, we’re built differently from most implementation companies. Typically, they come in with their suitcase and say, “Here’s the playbook for digital transformation.” Instead, we listen to the client, find out where they want to take the business, then create a plan. And we don’t use a bunch of IT-speak. Sometimes it’s transforming rudimentary legacy workflows, sun-setting old systems, and getting on the cloud. Other times it’s about moving into new markets or securing the right talent. BOMBERGER: We’re really helping to modernize the entire business. The innovative technology we implement transforms how they operate. Has COVID-19 changed how people think about digital transformation?

BOMBERGER: It definitely has, especially around teams working virtually. Having strong digital business processes can help that situation tremendously. Before the pandemic, many businesses never dreamed they could be 100 percent remote. Now they’re saying, “You know what? We don’t need this expensive commercial space.” That was already happening before the pandemic, but it’s been accelerated. People are seeing they can take money saved by not having a big office footprint and put it back into the business. It’s a great way to help our clients see into the future. The other big benefit is that you open yourself to a lot of talent when you run a distributed business. One of our clients had previously never allowed people to work remotely. When we went to help them hire the right talent, we could only look in the Dallas-Fort Worth marketplace. Now that they have opened up to a more distributed or federated model, we can help them pull talent from anywhere to move their business forward. In your materials you talk about having a decentralized structure at Bresatech too. Why is that? BOMBERGER: We have an office in Plano, and a new office in Austin, too, but our team members work everywhere from California to Connecticut, Florida TexasCEOMagazine.com

to Washington. Currently, we have over 55 people supporting three different divisions—Pega, NetSuite, and our Innovation Solutions business—and we’re massively distributed. Pre-pandemic, our team members were flying into client sites to do their work, and that was all well and good. Now they’re not flying in, and that translates to a cost savings for the client.

They do financial services, insurance, healthcare—every vertical under the sun—but their public sector business was fairly new when we got into it. Now, it’s grown like crazy. We feel that we are their go-to for public sector business at the state level, especially in Texas.

MARTIN: We do a lot of work in the public sector, especially at the state level in Texas and Vermont. We opened up an office in Austin a few months back because we wanted to be close to the state agencies there. Previously, our state clients were less open to distributed work. But when COVID happened, offices shut down and they had to adapt. We were fortunate that our business is cloud-based. To say that is one thing, but to be good at working as a distributed team, with distributed clients, is another. We’ve really gotten crisp about how that model works. And our clients have really gotten comfortable with virtual delivery of our technical and business output. In fact, many still may want us to work on that model when COVID subsides. We’ve worked hard on measuring the productivity of people and resources while they’re remote—for ourselves and for our clients. Our clients are very interested in how to measure the productivity of distributed teams. I think you’re going to hear a lot more about that measurement piece over the next year. It’s something we help our clients do with Pega. Can you talk about your partnerships with Pega and NetSuite? MARTIN: When Jessey and I started the company, we had a first-mover advantage by becoming premier partners with both Pega and NetSuite. I came from Pega, so obviously I have relationships there. Pega is heading toward $5 billion in topline revenue by 2025, and we want to be with them on that journey. We think they’re the market leader in business process management. 84

Texas CEO Magazine Q2 2021

Jessey Lee, Chairman & Founder of Bresatech

We’re now a Pega Premier Consulting Partner and we’re investing as much in them as they’re investing in us. They have totally embraced the partner strategy, whether it’s with Big Five firms like Accenture or Deloitte or boutique partners like us. I’m passionate about our Pega relationship. It’s our largest revenue engine in the company right now. We’ve got some big expansions coming on that side of the business in the next three to six months, bringing on new states and new business, including within Texas. BOMBERGER: When William and Jessey brought me on board, the first thing they asked me to do was help build a NetSuite practice. Pegasystems is an enterprisewide solution usually leveraged by large organizations, while NetSuite is more of a small to mid-market business play, so that partnership is a great solution for our clients in that category. If a company is doing from $2 million to $200 million in revenue and is in hyper-growth mode, they may have started their business using spreadsheets or QuickBooks. NetSuite is a good ERP solution that lets

them scale beyond those tools and have more transparency into their business. A small business owner can use it and say, “Now I can run my business like the big boys.” NetSuite is owned by Oracle, so they have a much bigger enterprise behind them. It takes a lot of the risk out of digital transformation for a small to mid-market company. When we built this practice, we did what we’d done before by taking William from Pega to be our practice director. We pulled our NetSuite practice director straight from NetSuite, where she continues to have strong relationships. We very quickly built a practice around her that now includes 18 people and more than 75 years of NetSuite experience. We went from making no money in that practice to roughly $2 million in year one, and we’re going to double that this next year. That practice focuses heavily on retail. To have clients go through the transformation process and say, “Thank you, this is one of the best experiences we’ve had”—that’s very satisfying. Now they can run their business from one place and get rid of all their smaller, separate systems. What happens in the third area you talked about, Innovation Solutions? BOMBERGER: The Pega and NetSuite practices are very specific to those platforms. But our Innovation Solutions practice isn’t tied to a certain technology. It’s completely agnostic. There, we help clients unlock the potential of their investment in any kind of software asset. A lot of companies have these software packages just sitting on the shelf, or they’re only leveraging the asset 20 percent. We sit down and talk about their three- to five-year roadmap and what we can do to take their company forward. Essentially, we’re helping them solve business problems from a technology standpoint. We also do executive search through our Innovation Solutions practice. We’ve helped a lot of our clients find

great people, especially in Texas. As you know, Texas is a magnet for people and companies on the East and West Coasts. These companies can’t get out of California and New York fast enough. So we do things like work with the Dallas Regional Chamber on talking to clients about why DallasFort Worth is the place to be. It sounds like Bresatech was able to grow even through COVID-19. How did you manage that? MARTIN: In the middle of the pandemic, we doubled down on our investment in growth. While everybody else was cutting, we went full force and hired a lot of great talent that was on the street. As I mentioned, we’re lucky that our business is cloud-based and that our clients quickly acclimated to working with us on a distributed model. We also really built out our own operations last year, despite the pandemic. We needed a chassis behind this thing, because we knew our business was going to take off. It’s tough to hire talent and build a foundation when you’re moving fast. When the race cars are going around the track, it’s hard to change the tires. So we made those investments early, and I’m glad we did. Our Pega, NetSuite, and Innovation Solutions businesses are all exploding now—in a good way. What’s next for Bresatech? MARTIN: Well, our Austin office is now opened. We also have an office in Singapore as the foundation of our global business. We want to have everything set up so we can hit the ground running when we’re ready to do more business in Asia-Pacific and Europe. Jessey’s other businesses are global, so he spends a lot of time in Asia. That will be a natural progression for us. We’re going to continue to invest heavily in Texas. Texas is the epicenter of our state-level and Pega business. We’re also going to move into Florida;

Pega wants us to leverage the model we’ve worked out in Austin at the state capitol in Tallahassee. We’re also being positioned by Pega for federal work—usually the domain of the Big Five firms—because of the excellent work we’ve done at the state level. We’re looking at the VA. There’s a lot of business process automation that could be done there. We’re also looking at getting involved with the FDA, the IRS, and the census. The backend of the census online was all Pega, for example.

MARTIN: I also think it’s important to say that we’re in this for the long haul. I wouldn’t have come to Bresatech, and I don’t think Matt would have either, if the goal was to get something up and running, show mass amounts of profitability, and then sell. This is a legacy business, which is a very different approach. Most of our competitors are looking to sell in three to five years. Jessey is fully behind this thing, as are all the executives we work with at Pega and NetSuite. Pega is a billion-dollar company; they’re not going to bet on a partner who’s going to be gone in two years. They want a team with the right skills, the right leadership, the right

I WOULDN’T HAVE COME TO BRESATECH, AND I DON’T THINK MATT WOULD HAVE EITHER, IF THE GOAL WAS TO GET SOMETHING UP AND RUNNING, SHOW MASS AMOUNTS OF PROFITABILITY, AND THEN SELL.

strategy. Ours is not a short-term play. It’s a long-term play, and that’s different from many startups and other VCowned or private-equity firms. Again, we’re built differently—in a lot of ways. BOMBERGER: Bresatech was founded on white-glove experience. That’s how we treat our clients and each other. A lot of companies pay lip service to that, but really they’re trying to sell, sell, sell, and they don’t worry about what the delivery looks like. We want to build a long-term relationship with our clients and be part of their success. We want to be there for them in the good times and in the bad times, even if it’s two o’clock in the morning when something’s blown up. When we won the contract with the State of Vermont, we had less than 10 people. It was a David-versus-Goliath type scenario. There were a lot of big

BOMBERGER: We’re looking at Houston as another market to open within Texas. We’ve got a great relationship with [US Congresswoman] Lizzie Fletcher down there. There’s just a tremendous amount of oil and gas now. We’ve got a huge group of folks in the Denver area too, so that’s probably the next marketplace for us to put a banner up in.

players battling to win this five-year, $6 million contract, but this little 10-person company got it. And within six months, we had a very happy client. Because we turned it around for Vermont, we really got Pega’s attention. Many of our large competitors are doing so many things, they can’t focus as much as we do. Our approach is unique, and we take a lot of pride in that. TexasCEOMagazine.com

ENERGY &

EMPATHY

U.S. Energy CEO Jordan Jayson on the power of empathy, his pandemic playbook, and what drew his firm from New York to DFW.

Texas CEO Magazine Q2 2021

Jordan Jayson spent 10 years managing portfolios and trading on behalf of clients—first on Wall Street and then in London—prior to transitioning into U.S. Energy Development Corporation, which was founded by his parents in 1980. Jayson brought with him a respect for disciplined investing, which has served U.S. Energy’s clients well. Today, the firm provides direct energy investment opportunities to individual investors and institutions alike. Throughout its 40-year history, U.S. Energy has invested in, operated, and/or drilled more than 2,400 wells across the US and Canada. Jayson stepped in as CEO of the firm in 2014. Since that time he has had to manage the loss of his parents—the company’s founders—and two collapses in oil prices. We asked him about his leadership journey so far, and how a sense of empathy guides him in work and life.

Shakespeare once said, “What’s in a name?” I think there’s a lot in the name U.S. Energy. It’s very timeless. What was the origin? My mother and father founded the company under that name in 1980 in Buffalo, New York, but the company operated many years prior. Around late 1975, my father stepped off an Allegheny Airlines flight while they were taking the old name down and putting up the new name, USAir [later US Airways]. He said, “Wow, that’s an interesting name for an airline.” He called up his attorney and said, “Is ‘U.S. Energy’ available?” And thus the story began. Over the past 40 years, we’ve really strengthened that brand and continue to build upon it. We’ve had to deal with various trademark rules and regulations to retain brand strength, but it’s served the company well. The name meant a lot to my mom and dad and I think they would be proud of the tradition we have carried on. The name has also been strategically important because of how inclusive it is. We don’t think of ourselves as just an upstream oil and gas company. We look at investing in asset classes ranging from solar farms to chemical companies to filling stations. We’re constantly thinking about how we want to evolve. The name U.S. Energy allows us the flexibility to invest anywhere within the energy industry. We can look upstream, midstream, or downstream and decide where we want to be in three, five, or ten years.

How much do you invest in green energy, renewables, and so on? ESG [environmental, social, and governance] has been a core focus of ours for several years. Over the past 12 years that I’ve been with U.S. Energy, we have looked at renewable projects on an annual basis and have made some small investments. We’re looking to expand our renewable investments over the next several years, including solar projects here in Texas. U.S. Energy relocated from Buffalo to Dallas-Fort Worth. How did you end up coming here? My parents, who were owner-operators of the firm, passed away in 2014 within a very short timeframe of one another. At that point we had acquired numerous assets in Texas and Oklahoma, and some assets in New Mexico. We ultimately felt that moving to DFW was the best choice for our families and the company. We wanted a similar-sized city to Buffalo. I really enjoyed the spirit and culture of Fort Worth. And it’s really cool to be part of an economy that’s growing this robustly. As you drive around Texas, there are cranes everywhere. I can’t remember the last time I saw a new building going up in Buffalo. What is it like being a second-generation CEO? That’s a unique experience. It has its challenges. There was the cultural transition of the company from two owner-operators to the second generation. It took a lot of help from people and a lot of communication. My parents were great communicators,

but I’ve tried to add more structure around how I communicate with the team. We now have quarterly town halls, for example. I’m very sensitive to the fact that we have employees who have been here for over 20 years. Each person who has stepped into U.S. Energy, whether it was me or my parents leading at the time, helped get us where we are today. At town halls, I’m very thoughtful about thanking not just our current employees but the hundreds of other employees who helped us get here. Keeping that continuity is very important to me. It was also a very quick transition. My parents passed away about nine months after I was promoted to CEO. We went from two people who both worked 12 to 15 hours a day in the business to just me in the role. Plus, the company was in crisis mode due to commodity prices; in a year, we saw oil drop from $100 a barrel to $35 a barrel. It was a real trial by fire. Luckily, having a great team in place and a trusted external network I could consult for advice, we were able to navigate that period together. I’m a big fan of reaching out and leveraging your network in times of crisis. I called other leaders to say, “This is what I’m going through. What tips do you have?” I made myself very vulnerable to people. They knew I authentically cared about the success of this business and wanted to see it evolve and grow. Those networks TexasCEOMagazine.com

whether it’s a teammate, a joint venture partner, an outside attorney, or anyone. How you treat people is a reflection of your firm. We have over 25,000 investors; if one of them calls up and isn’t pleasant, my job isn’t to push back. It’s to be empathetic, to be aware that they could be going through something I’m not aware of. It’s my job to listen and see how I can be of help.

embraced me. I listened and absorbed, and then implemented the things that seemed most applicable to the situation. I’m glad that early on I recognized I needed help and opened myself to it. As CEOs, we will always need help as we come across different situations and as circumstances evolve. It would be nice if we all had a roadmap, but it’s a unique journey for everyone. We have to embrace it and enjoy it. What was your and U.S. Energy’s experience through the COVID-19 pandemic? The energy sector certainly didn’t have it easy in 2020. 2020 marked U.S. Energy’s 40th anniversary. Given the timing, we navigated that milestone versus celebrating it. Fortunately, we had a playbook to follow from the previous crisis. Over 2014 and 2015, when I stepped up as a first-time CEO as oil prices plummeted, we had to rightsize our balance sheet and reduce compensation to remain solvent. But we learned a lot. As 2020 became rough, we pulled out those lessons from 2015. Instead of waiting six to nine months to take action, we pulled certain levers within a month of COVID. The executive management team immediately agreed to reduce their wages, along with other costs, so we could remain solvent. I give great credit to them, our board of directors, and everyone at U.S. Energy. What we’d been through before really made us into an aggregation of resilient people. We were able to pull together quickly, without any drama, for the longevity of the company. Fortunately, we’ve now restored wages to what they were pre-COVID. 88

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Can you tell readers about a specific leadership lesson you learned over the most recent challenge? I will say that one of my greatest mistakes was that at times I tried to overly build consensus within the firm. Through my leadership evolution, I’ve learned that sometimes it’s OK to make decisions without having everybody on board. And you’re never going to make everyone happy, but you need to make progress. In most circumstances, you’re not going to have 100 percent consensus, but you still need to take action, especially during periods like 2015 or 2020. Do you have any other advice for current or aspiring CEOs in Texas? I really encourage people to embrace continuing education. I go to a class every year related to leadership or something more technical around oil and gas. I think it’s important to balance the technical side with the human side in ongoing learning. A program that changed my life was Harvard Business School’s Owner/ President Management [OPM] program. You join a group of 150 CEOs from all over the world for three weeks in a dorm-like setting. You sit there until eleven at night talking about situations in your company and how you want to grow. I didn’t even know this OPM program existed until I moved to Texas—then all of a sudden I ran into a few CEOs who had attended. It changed my leadership journey, and more importantly benefited the firm as well. There’s one word in particular that guides me on the human side of being a CEO: empathy. You need to be able to let your guard down and empathize with people,

We talk a lot about empathy at company town halls. We really try to embrace it on a daily basis, as a company and a leadership team. This includes when it feels like you’re being attacked. As a company in the oil and gas industry, you can sometimes feel like there’s a target on your back. It’s just the nature of doing business and the nature of being in energy. If someone challenges us on the industry we’re in, we listen. It’s not an argument. We listen and try and understand where they’re coming from, what their concerns are, and then we navigate that.

THE 4-MINUTE VIDEO THAT CHANGED MY LIFE For Jordan Jayson, empathy has always been a guide to leadership. While visiting the Cleveland Clinic with his parents, Jayson first saw the clinic’s video, “Empathy: The Human Connection to Patient Care.” It now has over 5.6 million views on YouTube. “It’s just four minutes, but it changed my life,” says Jayson. “It really asks you to think, ‘Hey, before I yell at this person, let me think about whether there’s something going on in their life.’ We watched that video several times as a management team and as a company. It’s gut-wrenching, but it drives home a point about stepping into others’ shoes.” View the video at TexasCEOMagazine.com/empathy.

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THE FEDERAL MINIMUM WAGE: WHAT ARE THE COSTS AND BENEFITS?

We asked the experts for their perspective on this polarizing topic. 2021 has seen a resurgent discussion of the minimum wage across the United States. In January, lawmakers introduced the Raise the Wage Act of 2021. In March, an amendment to COVID-19 relief efforts that would have raised the federal minimum wage to $15 an hour failed—but only narrowly. Since 2009, the minimum wage has remained fixed at $7.25. Some argue that more than doubling that rate, to $15, could lift millions out of poverty. But others, including many in the business community, warn that such a significant jump in the minimum wage would have detrimental effects, from weakened overall employment numbers to higher consumer prices. For insight on this issue, we asked the experts what they thought. Paul J. Wolfson and Dale Belman looked at over 200 academic papers on the minimum wage for their book, What Does the Minimum Wage Do?, which won Princeton University’s William G. Bowen Award for the Outstanding Book on Labor and Public Policy. Meanwhile, Texas A&M’s Jonathan Meer contributed to minimum wage literature with a 2013 paper titled “Effects of the Minimum Wage on Employment Dynamics.” He has written on the topic for City Journal and other outlets. Here’s what they had to say.

PAUL J. WOLFSON Tuck School of Business at Dartmouth College

DALE BELMAN

School of Human Resources & Labor Relations at Michigan State University After both an exhaustive survey of the research literature on the minimum wage and a formal meta-analysis of the employment results, the evidence suggests that moderate increases in the minimum wage are an effective way to raise wages in the lower part of the wage distribution. We also conclude that it has little or no effect on employment, measured as the 90

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number of jobs, the number of people working, or the number of hours. This is what one seeks in a policy tool: solid benefits with small costs. There is strong evidence that the minimum wage boosts the earnings of the lowest-wage workers, and it may boost the earnings of those earning moderately higher hourly wages. In almost every wage study, the effect is more marked for women, who are more likely than men to be in low-wage positions. More than one study has reported lower rates of turnover in low-wage jobs after minimum wage increases. This suggests that following increases in the minimum

wage, jobs become harder to find, costs associated with turnover decline, and previously employed workers are sufficiently productive, at least afterward, that employers are not inclined to fire them. Decisive evidence that training or benefits decrease to offset the higher minimum wage does not exist. Current research cannot address whether these results would hold for large increases in the minimum wage, since none have occurred in over a generation. Our suspicion is that large increases could touch off the disemployment effects that are largely absent for moderate increases. Is an increase from $7.25 to

$15, more than 100 percent and bigger than any since World War II, large? Certainly, but it is worth noting that the average minimum wage across states is $9.45; using this as the base, the increase is 59 percent, substantially less than 100 percent. This line of thought suggests that were disemployment effects to occur, they would likely vary considerably: largest in the South and parts of the Midwest and Mountain West, negligible to nonexistent on the West Coast and in the Northeast. Increases in the minimum wage are not the only policy needed to address issues of low income in the United States. As many others have argued, programs such as the earned income tax credit and food stamps play a critical role in placing a floor under incomes and consumption, and minimum wage policy complements rather than substitutes for such programs. The minimum wage is a useful tool for policy and, as with most policy tools, must be used wisely and in coordination with other policies to achieve the desired end. The minimum wage increases considered in our research have been moderate, so our conclusions must be premised on moderate increases. Under such conditions, there is little evidence of negative labor market effects. Moderate increases to the minimum wage can then, as originally intended, be used to improve the conditions of those working in the least remunerative sectors of the labor market. While not a standalone solution to the issues of low-wage work, it is a useful instrument of policy that has low social costs and clear benefits. Paul J. Wolfson, PhD, a research fellow at the Tuck School of Business, Dartmouth College, has studied the minimum wage for more than 25 years. Since coauthoring What Does the Minimum Wage Do? (Upjohn Institute for Employment Research, 2014) with Dale Belman, he and Belman have published an examination of which demographic groups are most likely to be affected by the minimum wage, and a formal analysis of research on the employment consequences of the minimum wage.

Dale Belman, PhD, is a professor in the School of Human Resources & Labor Relations at Michigan State University. His research focuses on the effects of unions and of labor market regulation and the construction industry. His book with Paul J. Wolfson, What Does the Minimum Wage Do?, reviews the prior fifteen years of research on the effect of the minimum wage on employment, hours, earnings, and other outcomes.

JONATHAN MEER Department of Economics at Texas A&M University

While a popular policy, the minimum wage often gives business leaders concern regarding potential effects on the labor market. The focus is usually on the number of jobs that might be eliminated through higher mandated wages, and there is far from a consensus in the contentious economics literature on the subject. But those who actually have to think about hiring, compensation, and benefits know that there’s much more to a job than just its wage compensation. Counting up the number of people who are employed and their wage rates is much easier than examining other margins of adjustment that may crop up in response to higher minimum wages. But work hours, job satisfaction, nonwage benefits, and flexibility, among many others, are crucial for understanding the full impact of this policy. Employers are likely to adjust these other aspects before they change the way they do business. It’s costly to do so—a restaurant can’t switch to counter service overnight, for example—and higher labor costs inevitably push businesses to find ways to absorb and reduce them. Moreover, proposals to raise the minimum wage to $15 an hour and eliminate the tip credit for restaurant workers are far outside of the American experience. Currently, the minimum wage affects only a small proportion of the labor force. But according to the Bureau of Labor Statistics, about 40 percent of all workers in Texas earn $15 an hour or

less. To some, this gargantuan bite on the labor force means the overall effects are uncertain. But the uncertainty doesn’t lie in whether the effects on employment will be positive or negative—the question is just how negative the effects will be. Once employers run out of those other levers to absorb labor costs, often making workers worse off in ways that aren’t generally visible to researchers, they will either lay off workers or find themselves unable to stay in business. The minimum wage is also a strange policy from a philosophical perspective. There is no doubt that many people are struggling to get by. Enhancing economic mobility and alleviating poverty are rarely controversial. But why is it the responsibility of employers to ensure the overall well-being of their employees’ families? It flies in the face of notions of equal pay for equal work: Should a single mother be paid more than a married one, since she likely has greater need? Should raises be tied to changes in life circumstances rather than value to the organization? Ensuring a basic standard of living should be a shared societal responsibility, not an additional cost foisted on the employer who is already relieving poverty through a job offer—leaving aside that this cost makes the job offer less likely. Coupled with the inevitable negative impacts of the minimum wage for at least some workers—most likely those who are already marginalized—it’s clear that the minimum wage is the wrong tool for an important job. It makes for an easy slogan, but it’s not a real solution. Jonathan Meer, PhD, is the Mary Julia and George R. Jordan Professor of Public Policy at Texas A&M University. He did his undergraduate work at Princeton University and earned his PhD from Stanford University. His research focuses on altruism, the economics of education, and the minimum wage. He teaches an online principles of microeconomics course that reaches over 2,500 students per year.

TexasCEOMagazine.com

SHOULD

BE WORRIED ABOUT

THE NATIONAL DEBT? Jeremy Horpedahl, PhD As we rang in the New Year last December, the total national debt owed by the US federal government stood at a record $27.75 trillion. A portion of that debt is held by governmental entities such as the Social Security trust funds, but even the debt held by the public (which includes US investors, foreign governments, and our Federal Reserve system) was also at a record $21.63 trillion. Just as importantly, these figures both increased dramatically by about $4.5 trillion in 2020, due to both the decreased tax revenue from the recession and the increased government spending to fight the recession and pandemic. But what do these large numbers mean? Should we be worried about them? And why does the federal government issue debt every year? Let’s start with the last question first. Governments have long used the issuing of debt as one among several tools to raise revenue to support current operations and capital investments. While tax revenue has long been the dominant source of revenue for governments, the issuing of debt provides a tempting supplement to tax revenue. The year 2020 will likely turn out to be unusual once we have the full data, but in recent years tax revenue was only enough to cover 75 to 90 percent of federal spending. The rest came by issuing debt. 92

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Investors are willing to loan the federal government funds because they are confident that the government will pay these back. How confident are they? For most of the past year, the federal government has been able to borrow money from the public at less than 2 percent interest on 30-year debt. Not only is that below the rate of price inflation, but it’s also a lower rate than well-established corporations could borrow at in 2020 (between 2 and 2.5 percent), and a lower rate than you can get to take out a 30-year mortgage on your home (2.5 to 3.5 percent for most of 2020). Investors trust the government more than they do corporations or homeowners to repay debt as promised. As with many questions about government activity, the easy answer to why the federal government borrows money is: because it can. But just because we can do something, should we do it? The economic answer to that question is different from the political one. The economic answer involves a simple calculation: Is the rate of return on whatever the government spends the borrowed money on greater than the interest rate it pays? Certainly, some of the new government spending in the past year has had a rate of return greater than 2 percent. For example, the federal government

subsidizing the production of and then purchasing millions of doses of the new vaccines has an enormous social rate of return. Other spending might as well, such as spending on COVID testing and protective equipment for healthcare workers. But some of the spending probably has a very low rate of return. For example, between the CARES Act in March 2020 and the Coronavirus Response and Relief Supplemental Appropriations Act in December 2020, Congress allocated about $350 billion for “relief checks” to most US households. These were not assistance to the unemployed or to impacted businesses, but merely checks to all Americans below a certain income threshold. These checks can’t be justified under normal anti-recession stimulus spending: There was no economy to

stimulate, since businesses were closed or limited by government orders or simply by individuals worried about going out in public. The rate of return on these relief checks was probably close to zero. Another concern is that even for worthy projects with high rates of return, the debt must eventually be paid back. New debt could be issued in the future to roll over the old debt, but we don’t know what interest rates will look like in the future. The challenge is that interest payments as a percent of the federal budget are likely to rise sharply in the future. In recent years they have been at a manageable level: around 5 percent of the federal budget. But the larger the share of the budget devoted to paying debt, the less slack there is in the budget. Other spending can

be cut when the next recession comes—it may be politically challenging, but it can be done. But interest payments are the last thing a government can cut. If they do miss payments on interest, the result is sovereign default, greatly curtailing the ability of the government to borrow for necessary spending in the future. While the US federal government has never defaulted on its debt, multiple European countries experienced defaults or near defaults in the 2007–2009 financial crisis. And dozens of US states have defaulted in the past—the last was Arkansas during the Great Depression, but there were multiple waves of state defaults in the 1840s, 1860s, and 1870s. Some of these defaults led to constitutional reforms in the states that curtailed future excessive borrowing—a nice silver lining.

Perhaps the federal government should consider some limits on what it can borrow funds to cover, as many states now have. Limits that states have adopted include only borrowing for long-term investments, such as school or infrastructure construction, but not borrowing simply to balance the general budget. Rather than waiting for the next debt crisis to come along and then reacting, we can look to history for good rules about how to avoid debt crises right now. Jeremy Horpedahl, PhD, is an Assistant Professor of Economics at the University of Central Arkansas and a research scholar at the Arkansas Center for Research in Economics. His research has been published in Public Choice, Econ Journal Watch, Constitutional Political Economy, the Journal of Private Enterprise, and the Atlantic Economic Journal. He resides in Conway, Arkansas, but loves to visit Texas.

TexasCEOMagazine.com

GREAT CEOS

ARE CONSISTENT, PERSISTENT COMMUNICATORS James F. O’Gara

Successful CEOs and C-suite executives never underestimate the power and influence their message can have on the business. They realize that a crystalclear message that generates strategically aligned decisions and actions is what separates high-performing companies from the also-rans.

However, many CEOs underestimate what it takes to formulate a message employees truly embrace and the work required to convert that message into desired business results. Great CEO communicators don’t make this mistake. 94

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They spend a significant amount of time working with experts to formulate their message. They get outside counsel to ensure that the message is relevant and resonates with stakeholders up and down the organization. They also put control mechanisms in place to ensure the message does not get diluted as it filters its way through the organization and into the customer experience. One of the great CEO communicators was the late Jack Welch, former CEO of General Electric. Like him or hate him, he knew how to convert a message into action. In Jacked Up, an account of Welch’s leadership at GE, the author describes how Welch took the time to review every senior-level presentation his leadership team delivered. Some would say he did this because he was a control freak. However, great CEO communicators see the genius in this disciplined action.

Welch put this process in place to make sure his message was understood by leaders, translated correctly, and delivered consistently up and down the organization. Great CEO communicators realize this is just one of many control mechanisms they must put in place if they want the message to manifest itself into desired business outcomes. As MIT research fellow Michael Schrage once wrote in Harvard Business Review, “Understanding the importance of being understood is what makes great CEOs great communicators.”1 However, in today’s always-on, noisy, and hyperconnected business world, being heard (much less understood) has become extremely challenging for CEOs. That’s why CEOs must be extremely intentional about formulating and managing their message. To do this, they need to get outside counsel, put rigorous processes in place, and follow a disciplined cadence. Is this a priority for you? Let’s see. What’s your message around the company’s . . .

In the article referenced earlier, Schrage went on to say:

if people can’t constructively enhance and advance the CEO’s essential message inside the enterprise and out, then something is profoundly wrong with either the people, the message, or the CEO. Are your strategic initiatives being communicated in a consistent, comprehensive, and effective manner? If not, does the blame lie on your people? Your message? Or the fact that you have not yet put all the pieces in place for you to become a great CEO communicator? 1 Michael Schrage, “Great CEOs See the Importance of Being Understood,” Harvard Business Review, December 16, 2016.

> Business priorities in the current fiscal year? > Primary market or customer opportunities? > Latest organizational change initiative? > Recent merger or acquisition? > Vision, mission, values, and culture? If none of these are relevant, pick one of your top initiatives. What message are you delivering to ensure its success? Do leaders understand the message? Are they translating it correctly and consistently? Is that message driving desired actions from frontline employees? Is your message positively impacting business results?

This article is an excerpt from James F. O’Gara’s book, 40+ Ways to Increase Organizational Clarity, Alignment and Performance. James is also the CEO and founder of OnMessage, a strategic B2B communications consultancy based in Dallas. OnMessage specializes in translating go-to-market strategies into compelling stories that accelerate growth.

TexasCEOMagazine.com

CAN’T-MISS ATTRACTIONS IN WACO, TEXAS

If you’re planning a visit to Waco—or simply passing through on I-35—don’t miss these attractions and local restaurants. Waco has a lot to offer, but these are some of our favorites.

WACO MAMMOTH TEXAS RANGER HALL NATIONAL MONUMENT

Long ago, mammoths roamed Central Texas. At this site, now designated as a National Monument by the National Park System, you can see an enclosed archeological site that holds the remains of several Columbian mammoths from the Ice Age. These mammoths made up a “nursery herd,” consisting of several adult females and ten juvenile mammoths killed simultaneously in a natural disaster about 66,000 years ago.

OF FAME AND MUSEUM Waco is home to a state-designated museum that preserves the history, artifacts, and archives of the legendary Texas Rangers. The museum houses a worldclass collection of firearms, art, and historical documents and is working on expanding its facilities significantly in the next few years. This museum draws visitors from around the world who want to learn more about North America’s oldest state law enforcement agency.

THE DR PEPPER MUSEUM & FREE ENTERPRISE INSTITUTE Another icon of Texas culture is Dr Pepper, which was formulated in Waco by a pharmacist in the 1880s. The Dr Pepper Museum is located in downtown Waco in the beautiful, original Dr Pepper bottling plant building that opened in 1906. The museum includes three floors of exhibits, a gift shop, and a soda fountain (free soda is included with admission!). Try a flight of sodas, make your own soda, or even schedule a “paranormal tour” to hear about the otherworldly phenomena experienced by museum staff and investigators over the years.

Texas CEO Magazine Q2 2021

DI CAMPLI’S ITALIAN RISTORANTE

Photo: Brigham Mayfield

With culinary skills honed at a prestigious school in the Abruzzo region of Italy, Massimo Di Campli was the wine manager of a fine restaurant in the Cayman Islands when he met and fell in love with a woman from Waco. Di Campli had spent his career at restaurants in Europe and the Middle East and dreamed of opening his own one day. When he and his wife married and moved to Waco, he made that dream come true with Di Campli’s Italian Ristorante. Di Campli’s offers excellent traditional Italian food at a reasonable price, with both outdoor and indoor seating and exceptional service.

Photo: Brigham Mayfield

Texans love barbecue, and Wacoans love Guess Family Barbecue. This restaurant started as a food truck and quickly earned a devoted following. The owner and genius behind it all has been covered multiple times by Texas Monthly. Order their “old school” barbecue by the pound, or try a variety of specialty sandwiches and sides.

If you love high-quality interior Mexican food, you’ll love Hecho in Waco, located downtown, one block from the Dr Pepper Museum and about three blocks from Magnolia. Hecho in Waco is a family-owned local favorite with both outdoor and indoor seating. Their specialty is authentic Mexican food, but if you’re craving Tex-Mex, they have a few offerings for you too.

Photo: Brigham Mayfield

GUESS FAMILY BARBECUE

HECHO IN WACO

TexasCEOMagazine.com

BUSINESS FORECASTS: Cloudy with a Chance of Futility Joel Trammell

Nobel Prize-winning economist Ken Arrow started his career as a weather officer in the US Army Air Forces during World War II. He worked with a group responsible for preparing long-range weather forecasts for military leaders. As a trained statistician, he began to wonder if the forecasts were accurate. After examining the old forecasts, he determined that the one-month predictions were no better than random chance. Based on this conclusion, Ken sent a message to the commanding general asking to discontinue the practice. Here’s the response he received: “The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.” Like the general, CEOs need forecasts, but many are under the delusion that their current methods are valid. Every CEO wants to be rational by using data to run the business and make decisions. The problem is that data is not always helpful in predicting what is likely to happen in the future.

THE DATA CHALLENGE By definition, data is historical. It is a backward look at what has happened. I have seen many CEOs who obsess over the data but never develop a system to turn it 98

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into a forecast. Other CEOs who are flush with data may be overconfident in their ability to calculate the future of everything.

developed a process that allowed them to predict new license revenue accurately more than 90 percent of the time.

In addition, some CEOs are too rooted in the past. They only ask, “How well did we do?” not “How well did we perform against our predictions?” The best ones ask, “How good are our forecasts?”

This excellence in forecasting gave me a crystal ball of sorts to understand how to lead the company into the future— and led to 31 consecutive quarters of double-digit revenue growth.

PREDICTIVE METRICS FACILITATE GOOD FORECASTS

COLLECT PREDICTIVE METRICS FROM ALL EMPLOYEES

Setting up predictive metrics is a critical first step. However, most metrics reflect past performance. Revenue, for instance, shows how many deals the sales team closed or how well frontline staff pitched a new service—last quarter. It provides no information about what might happen next quarter. The ability to predict future business performance is one characteristic of a good metric. For example, the best predictive metric for sales in my opinion is the accuracy of revenue forecasts. Accurate revenue predictions measure how well the sales team understands the sales process and can use it to predictably maximize revenue. For instance, at one of my former companies our final sales numbers were almost always within 5 percent of what reps had forecast each quarter. Predicting the future is hard, but over time the sales team

CEOs need to collect forward-looking, relevant information from every department—not just sales. Very few CEOs require this, but those who do grow their own predictive capabilities, along with their employees’. These CEOs ask their executives, managers, and individual contributors to predict key outcomes at the beginning of each quarter. They then check in regularly with people: Is the forecast still accurate? What’s the likelihood we will meet the target? And then, at the end of the quarter, they—like Ken Arrow—compare actual performance to forecasted performance to ensure the organization is on track. Training the organization to make good predictions can give CEOs a huge competitive advantage—you’re literally one step ahead in overseeing the business’s performance. No one’s invented a working crystal ball yet, but until that day, a predictive and predictable workforce is the closest a CEO can get.

7 Benefits a High-Performing Website Brings to Your Business Many CEOs consider a high-performing website to be their business’s most important asset. The website isn’t just the first place where people experience your brand — it’s where they go to learn what you do, to purchase (or experience) your products and services, to get help from your team, and even to look for their next job. Now more than ever, it’s not “just a website.” It’s a tool that gives your business several distinct benefits.

Workhorse [SMB] is now offering an eBook that shows how to achieve the above 7 benefits.

A HIGH-PERFORMING WEBSITE PROVIDES THESE 7 IMPORTANT BENEFITS 1. Provide a Cornerstone Brand Experience 2. Generate More Leads 3. Recruit Team Members 4. Provide Important Customer Service 5. Generate More Referrals 6. Streamline Operations & Cut Costs 7. Build Marketing and Consumer Insights For CEOs striving to maintain or grow their business—especially in this time of uncertainty—these benefits are critical to success. Building a high-performing website requires a distinct approach, a team of experts, consideration of technologies, and an understanding of budgets, timelines, marketing goals, operational goals, brand strategy, and more. Workhorse [SMB] was founded on the principle of bringing affordable, high-performing websites and marketing to small businesses. Located in Austin, Texas, Workhorse [SMB] has helped more than 300 businesses create websites that drive results.

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