Business
South Bay Accent magazine
Banking on John Dean
by Matt Jones
The tech investment game was on. The silicon chips were on the table. And John Dean was banking on himself. He bet the house.
Having just rescued Pacific First Bank, Dean rode into Santa Clara as a hired gun, a.k.a. the new CEO of Silicon Valley Bank (SVB), to save the bank from bad-credit desperados. He would have to gamble everything--home, career, reputation--on his keen eye for deals in the entrepreneur's game. His SVB predecessors at the table had left Dean with a poor hand to win back the pot.
Although SVB was a legend in the late '80s as one of the country's fastest growing small banks, it was too aggressive in making new construction loans just before the economy tanked., and a recession paralyzed real estate development. By 1992, as the property rush was waning, SVB was panning for fool's gold. Nearly half of its investment portfolio was locked up in faulty real estate funding. Speculators moved on to other get-rich-quick schemes. SVB was becoming an investor's ghost town.
That's when John Dean arrived. "I've always liked the role of the guy in the white hat," Dean says today, twelve years later, "so I was ready for the responsibility."
The volatile Valley
SVB's predicament was not so extraordinary, when you consider the cataclysmic changes the Valley has experienced in the last dozen years. The early '90s dot.com market had frenzied investors handing big bills to entrepreneurs with sexy IPOs like loopy conventioneers over-tipping Hooters waitresses. When the Internet market inevitably flopped in March 2000, venture capitalists were left holding bogus receipts, with a lot of explaining to do on their expense accounts.
Also during the decade small "boutique" banks proliferated, flashing capital and fancy portfolios. But big banks hogged their turf, then bought up the "little-banks-that-could," including the Montgomery and Robbie Stevens institutions, frustrating innovation. Local manufacturers then cranked out tried-and-true chips, software, and PCs by the pallet-load, resulting in a 21 st century glut of gizmos and lack of liquidity. Today, Valley business leaders who aren't scrooging profit margins from downsized staffs are hedging the Valley's future in unprecedented export production.
A few Valley stalwarts, however, have remained at the helm of its VC groups, banks, and CEO class. Leaders like Mike Moritz of Sequoia Capital, one of the first professional investors in nascent start-ups Yahoo and Google, and Brad Koenig of Goldman Sachs, perhaps the Valley's all-time big spender on IPOs, have paved the way for leaders who still have stamina for the twists and turns. One of them, prized for his determination and foresight, is Dean.
Over the years, Dean has become something of a weathervane for the Valley's winds of change. Some peers even base their business plans on his industry forecasts. Dean remains vital in the industry through investing in funds-of-funds, venture capital funds, and start-up tech firms in Silicon Valley and Hawaii. Dean also speaks regularly at tech and investment conferences, supports nonprofit business education programs, and leads entrepreneur foundations.
Dean's fearless leaps of logic (some say faith) have always been his nature. He has had his knocks; but Dean hasn't just learned from his mistakes, he has taught others how to avoid dumb decisions. Tina Fitch, CEO of EzRez, a travel industry tech start-up says, "John Dean provided us with invaluable feedback and guidance from his practical experience on human resource issues, contractual terms, partner negotiations, and finances." And the CEO of software launch H5-Technologies, Nicolas Economou, concurs. "Like many recent early-stage start-ups in the Valley, we hit bottom in 2002, suffering crippling investor default," he says. "But John Dean's clear reasoning helped us avoid endless, unproductive circular thinking; he has the startling ability to identify what truly matters."
Having often defied convention and worked wonders in saving and rebuilding Valley companies, Dean was sure back in 1992 that he would be the solution for SVB's problems.
The Feds move in
That long hot summer, as the recession continued to dry up many of the bank's clients, the vultures were circling. Investment industry regulators began buzzing around SVB's books, examining loan performance while inconveniencing officers and restricting progress. But no one in the bank or among its investigators could determine what caused the shortfall or what to do about a recovery. Until Dean.
"We were under a federal 'Cease and Desist Order,'" recalls Blake Baldwin, the bank's new head of the real estate division when Dean arrived. "The FDIC threatened to shut us down, and have its regulators run the bank. We were pulling our hair out trying to solve the problems." But months of gloom were about to clear.
"When John appeared, he understood the nature of our problem immediately," Baldwin says. "And John had enthusiasm for our prospects; he began to restore our confidence."
With Dean playing his cards, SVB had hope. More than merely feeling lucky, SVB believed it had an ace. And Dean was upping the ante on the emerging tech business. Putting up much of his own assets in shaky SVB stock, he would play with the house's money, going for broke investing in companies revolutionizing computer chips, software, and the Internet.
Baldwin was one of several executives to interview Dean. He remembers warning Dean about the bank's stunning $30 million deficit. And Dean snickered. "I was a little surprised at first," Baldwin says, "but I soon realized John was smiling with confidence. He had done his homework on us. He knew all about our 'little real estate problem,' as he called it."
Baldwin also notes that Dean showed a flair for the dramatic. "John said he liked our past success, saw our future potential, and was eager for the challenge to work in Silicon Valley. He told me he had already turned down a CEO job offer from a much larger bank (with 10,000 employees) just to talk with us. He added that he had recently solved another bank's $500 million problem, so he was sure to get us back on track. I felt we had no choice but to trust him."
Before "chasing the money" during the real estate bonanza, SVB had been a slow-and-steady local bank with a balance of investments in a portfolio of commercial, tech, and real estate clients. Tilting in the '80s toward real estate funding had cost the bank much of its other businesses. SVB officials were woozy with the sway of great gain followed by great loss. The bank seemed only interested in stability. Dean's solution? Swing the pendulum again--this time throwing all the weight over to the tech clients. It was a bold move only a seasoned risk-taker like Dean could suggest.
The bank rescue
"My biggest challenge in turning around SVB for the '90s--growing assets, market cap, and employees-was creating a viable infrastructure," Dean recalls. "I had supported a much larger institution through a start-up program of smaller bank franchises (and gained $5 billion in assets), but building up SVB was surprisingly frustrating. Their growth perspective was penny wise and dollar foolish." Dean was persistent, however. "I can't blame SVB for being cautious during its financial crisis, but I wanted to give them a quick exit strategy from the former plan and current mess, and rededicate the bank to a rapid-growth tech investment strategy."
For some, that meant their own exit from the bank, voluntary or otherwise. "I left because I couldn't see being around for another big-idea, little-action investment disaster," says one middle manager in the maligned real estate group. "Even though I hung in through the rough times," says another disparaged member of the group, "I was fired because of my association with the old regime."
But Dean's plan--or the luck of the draw--was perfect timing. In repositioning staff, departments, and investment goals, Dean had prepared SVB for the coming Internet Revolution of 1995--and its hungry entrepreneurs. Each twenty-something e-biz wiz needed weaning from a bank that could spoon him gobs of venture capital. As an eager and astute incubator of emerging tech companies, Dean soon made SVB the small bank leader in taking deposits, making loans, acquiring stock options, and guiding the highest-potential new tech businesses. (In his seven-year tenure, Dean would fulfill his promise in seeing SVB grow its assets from $935 million to $5.5 billion, employees from 235 to more than 1,000, and market cap from $63 million to $3 billion plus.)
Resurgence in the Valley
Dean sees a resurgence in Silicon Valley tech business. "There's exciting invention and determined entrepreneurs emerging from the long-suppressed Bay Area market," he notes. "Investors and career builders alike are glad to see lots of recent funding activity, solid new management teams, good financial resources, and legitimate data--not speculation--pointing to the Silicon Valley recovery." Dean cites as evidence the good movement of software development firms escalating from product rollouts to successful companies. "Venture capital firms are freeing up fresh funds, too," he adds. "I encourage people to consider the market again for some viable new tech stocks; the market's not great, but it is getting better."
Should people nab NASDAQ now? "I don't see quite the hyperactivity of the tech heyday in the late '90s," Dean says, "but today's pace is good for sustained growth and market balance." Dean suggests people plan their investments over a long period of time (choosing index funds and bond portfolios)--and avoid reliance on the high end of the market. "Invest your nest egg wisely but deliberately," he urges, "and diversify your portfolio."
As for the hot-button issue of the economy, the increased offshoring of domestic jobs that could drag our recovery, Dean believes the U.S. should pressure foreign countries to grant better access to their markets "so their consumers will buy more of our manufactured goods." And the federal government should also "negotiate more favorable exchange rates," he adds.
But early-stage companies are offering hope. "There's a gap right now in the marketplace," Dean says, "for small but focused companies to succeed with as little as a $1 to $2 million investment of their start-up." Dean is optimistic that the worst is over. "The market correction has cleared out most of the bad business plans left in the pipeline and made room for the better ones coming along."
Top growth industries
Dean points out the three areas of greatest growth potential. Each has a red flag waving on its fast track, but for Dean these are the industries worth the small investment risk.
Internet. "Surprisingly," Dean says, "this space is making a comeback." With the dot.bombs a fading memory, the wiser survivors are part of innovative--and well-funded--online businesses (many are tied to existing corporations as "click and mortars"). While still making up a small fraction of total retail sales, the boost in sales for the e-Bays and Amazons is impressive. And, as they say, invest where you shop.
Security. "This is a no-brainer," Dean says. The Patriot Act has everyone hopping; from transportation to corporation, software companies are designing hundreds of profitable new protection systems. Take a sneak peek.
Biotech. Genetic research leads the way among cutting-edge bio studies. Successful new biotech companies are providing scientists with tools for "faster, more accurate, more reliable, more consistent assessments and recommendations," Dean says. There's something missing in your DNA if you overlook this industry for investing.
Dean's legacy as a banking services risk-taker, rescuer, and relationship-builder has served him well throughout his career. He's a realist, too. So you can take him at his word when he's pointing out the next financial steps for an individual, a company, or the market. But always humble about his success, Dean admits you can only play the cards you're dealt. It's clear Dean's still got the hot hand.
South Bay Accent magazine Career Coach, Roy Blitzer Do tell the mail carrier you're looking for work. Don't tell the job recruiter your old boss takes two-hour lunches. Do ask for career advice--and use it. Don't demand a "bring your pet to work day" clause in your next job negotiation. You'll follow these axioms if you listen to the man who goes by "Dr."Business (he does have an MBA, however), Wolf 's "distant cousin," professor, or, more often than not, Roy Blitzer, trusted career coach. Thinking ahead Roy has been happily sharing insightful career transition advice with Silicon Valley job seekers for more than 25 years. And if a few of his ideas sound like quirks--Roy's input usually works. Ask any of the hundreds of clients who cite much of their success to his tutelage. Or try his job search tips yourself (see below). If you earn a new job offer, the second happiest person will be Roy. An Executive and Management Consultant for Spherion Consulting in Cupertino, Roy regularly dispenses expert guidance for out-placed workers--with candid feedback often the approach of psychologists and clergy. "I am successful in my field because I've made a lifelong commitment to personal satisfaction in my career," Roy says, "and so I encourage--even proselytize--my clients to appreciate the same." While Roy adeptly advises senior managers, speaks to industry gatherings, and has chaired the Palo Alto Human Relations Commission, he values educating professionals at all levels. Early in his career at Syntex, Roy led seminars to train administrators (then often called secretaries) in understanding how to grow in a job, become productive, and feel good about their potential. "So much feedback for clients begins with my asking, 'Have you thought of this ...?,'" Roy says, "because, given the tools to act, most job seekers will respond with three good ideas for every one I suggest." Roy reminds his more ambitious clients that while it's important to maintain a proactive job search schedule, the process should not favor worker bees. Occasionally, clients will report to him on minor activities "just to please the coach." This can be a sign that the job search is off track. The goal, Roy asserts, is not about putting in time but identifying doable jobs--ones that energize you. The kind where it's 5:30 p.m. and you're still at your desk, thinking ahead. You might wonder, what's the drive? Workaholic? Type-A? "I love what I do, I make no excuses. I work hard and play hard. I wish such passion for everyone," Roy says. Play includes trips with his wife and two daughters to lots of out-of-the-way European locales. He also enjoys the occasional banter involving Wolf Blitzer, his very distant relative, the renowned CNN broadcaster. "I get the news about Wolf from time to time, including family members who have met him early in his career as a reporter for the Jerusalem Post. I'm not hit upon for career advice, however. I think he's doing a pretty good job on his own." Professional perspectives For someone with his own distinguished career in employment counseling, Roy, as you must imagine, has seen lots of client successes--and the wrong turns--over the years. "Of course I'm happy to tell you about the job search stories that ended well," he says, "but I'm sure you're just as eager to learn from the ones that became nightmares." Treat everyone with respect and attention, Roy says, and they'll confide in you about job leads. Roy recalls coaching Don Lawton, a "40-something" former IT executive struggling to re-start his career. Downsized from his VP of Internet Services role with Techtron Systems, Don's company offered him sessions with a Spherion career coach--Roy. "I wasn't going to use the coaching, I was just going to pocket the cash," he says. When searching Internet job boards and routing resumes failed to produce real job opportunities, Don took a month's "vacation." "I gave it a good push, then shut it down," he says. It was time to talk to Roy. "Roy had me pegged right away," Don says. Roy realized that Don's problem wasn't losing a job, it was losing a network. "Don was proud of his work," Roy says, "but attention to details isolated him from much client contact. And he wasn't aware about the circles of peers, friends, and strangers who could help him." "Nose to the grindstone," Don notes. "That was me. Working with Roy was a great way to get back on everyone's radar." Roy helped him set up a five-part PR campaign. Don talked to leaders of career-help organizations, peers in "success teams," clients in info interviews, speakers at seminars, and recruiters at job fairs. "I did land one part-time job," Don notes. "I subbed as a stand-up comic on open-mike nights at a San Jose comedy club." Don pushed himself outside his comfort zone, Roy remarks, "and after a month, you'd think he was running for office. He was that persistent in getting job referrals." Not all contacts panned out--one tip led to his old job!--but one paid off. A former client had seen Don's comedy gig, and later ran into him at a seminar. The two struck up a conversation, and Don learned about a new Web management job in his client's company. The client walked Don's resume into the hiring manager's office and put in a good word. Six weeks later, Don landed the job--no joke. Roy also cites it's important to apply quality job standards at all times. "Do your best work, and often someone helpful will notice," he says. In Linda Cairo's case, the person who noticed turned out to be the one who had laid her off. Linda, a Senior Ad Executive with a Palo Alto agency, Sprite Ideas, had been let go when her company failed to land a big must-have account. But she was expected to put a red bow on one last untidy project. Linda was annoyed, and wanted to spike the job. But she remembered the advice of her career coach, "Never fire yourself." She had met with Roy a couple of times (on the advice of a peer shepherding her career) for his coaching on professional poise. "Linda was very talented," Roy recalls. "She just needed to take her job less personally. We worked on turning her alarm into her action." Roy suggested Linda complete the lame-duck duty in record time and with award-winning creativity. "What the heck," Linda says, "I gave it everything I had to finish a sneaker ad for a TV spot in two weeks. I wasn't even paid. But I was determined to go out on my creative terms." The CEO got the picture. Suddenly noticing Linda's initiative, stamina, and perfectionism, he asked his HR how she could have been axed. Numbers weren't an excuse. Linda was invited back like the prodigal daughter. And the sneaker ad? Nike is now the company's top account. "Believe in your abilities, and you'll always do well, whatever the circumstances," Roy asserts. "Regrettably," Roy says, "not all my stories involve rags-to-riches outcomes. There are the blunders, too. But they're the steps we learn to avoid." Take the case of the man who got into a loud, personal argument with his daughter's soccer league referee. What do you think were his chances when a week later he interviewed for a job with the same person? Or consider the fate of the impatient woman who went into a price complaint meltdown with a clerk in the supermarket line: she discovered too late that the HR recruiter who had met with her earlier was standing within earshot. Ouch. "Maintain your emotional perspective," Roy advises,"because some job appraisals are made in the unlikeliest places." Job search do's and don'ts Let's have a look, then, at Roy's list of job search dos and don'ts. "I have a few, tried and true," he says. "And the successes or failures that go along." According to Roy, do tell everyone about the kind of job you're looking for (what makes you tick); prioritize your time and stick to a job campaign (be accountable to others--especially your accountant); ask for job advice and tell others how it worked out; set realistic search goals and expectations; and avoid a radical career shift in the current down market (it's not the time to take on that surfing instructor gig). On the other hand (we know this won't be you), don't ... tell others inappropriate info (gossip) about former employers (Networking 101: what goes around, comes around); rely on prospecting Internet job postings (Roy calls it Internet-itis); negotiate marginal (trivial) sign-on terms in a buyer's job market; talk too much in interviews (you may talk yourself out of a job); or assume a job offer is final unless it's in writing (let the ink dry before you book your two-week paid vacation). In his personal vision of vocation, Roy, a.k.a. "Dr Business," dreams of taking his Bay Area TV show and "going national, like Dr. Phil." If he continues following his own advice, who's to say he won't soon succeed? His truisms of job excellence remain strong. Be loyal to your skills, interests, and values. Balance your personal and professional goals. Continually assess your career direction, needs, and joys. And when you want a little extra special advice, ask someone like Roy, a coach's coach, to help you help yourself. The job hunter: Roy's tips for the jungle We all like shortcuts. And while finding your way in today's job jungle can be challenging, you do have Roy's guide to help lead the way. "The best path," Roy asserts, "is the one you make on your own." Consider the following a head start.
by Matt Jones
South Bay Accent magazine
Changing Fortunes
by Matt Jones
