November Views from Banff
(Originally released November 2022)
As we head into the final two months of the year, it’s starting to feel like, after 1-2 months of treading water, more boards, investors, and leadership are making decisions about what the year(s) ahead will look like and are starting to implement plans against those. As always, we want to share what we are hearing and seeing. Here are some updates from last month
Boards, CEOs, and CFOs
Looking Back: There were 12 S&P 500 CEO transitions in Q3 of 2022, the highest number in a third quarter since 2016. This brings the total number of 2022 transitions year-to-date to 43, just five short of total 2021 levels. Q3 CEO transitions by the numbers: 66% of new CEOs were internal promotions, 25% were external hires, and one was an insider-outsider (2-step) appointment. 50% of new CEOs were COO/Presidents immediately prior to their appointment to CEO, 33% were Division CEOs, and the remaining 17% were CFOs. (Spencer Stuart)
Looking Forward: Speaking to the top CEO search consultants over the past two weeks, they are about to launch a big group of new CEO searches. We expect a great deal of activity and change yet to come. PE should also start to get more active, with similar follow-on activity.
The PE-Backed CFO: True Search saw open searches for PE CFOs more than double YoY. All CFO searches are +30% YoY, PE CFO searches are +111% YoY. This aligns with what we are seeing, with PE firms desperate for great CFOs.
Value (and Risk) of Concentrated Networks: Search firm Mogul presented data showing that today’s Fortune 500 boards are predominantly white (78%) and male (69%) and led by chairs who are also white (91%) and male (82%). Of the roughly 30% of seats held by women, white women hold 75%.
Directors still tend to recruit from within their networks, reinforcing existing imbalances. Many appointees already sit on other boards, which explains why 746 people control 30% of the more than 5,400 available Fortune 500 board seats.
Among all directors, Black men and Black women command the second-highest share of Fortune 500 board seats at 7% and 5%, respectively. Latinx and Hispanic, Asian, Indian, and Middle Eastern executives are still barely represented. The researchers did not find any Indigenous Americans on a Fortune 500 board.
Funding, Compensation, and Hiring
Global venture funding fell to the lowest levels since Q2’20 (according to CB Insights), down 34% versus the prior quarter. Just 25 unicorns (startups valued at $1B+) were born in Q3. The top 10 investors in venture changed dramatically; in fact, 2021’s number one most active investor fell out of the top 10 altogether.
Investors are increasingly being asked to do an inside raise off of the last valuation as a bridge. The monies that they are being asked for are mostly only extending run rate through 2023.
HR and Recruiting Trends from a Lightspeed study of 190 startups show that inflation is not likely to prompt salary increases. In the face of 8% inflation, 59% of companies are unlikely or undecided on raising salaries to match. Equity approaches remain the same despite market instability, with 67% of companies having not changed their equity approach despite market turmoil in 2022.
The last “who’s hiring” post in Hacker News was the lowest it's been in years.
What We Are Reading
A lesson from QB Josh Allen and hoops legend Kara Lawson on handling hard well, per Collaborative.
From one of our work friends: an HBR article on the power of work friends and how having a best friend at work is strongly linked to business outcomes.
Related notes from Stanford Professor Erik Brynjolfsson’s study on social networks: “Your casual acquaintance might be more helpful in advancing your career than your best friend. We broaden our horizons when we reach out to those we don’t know as well. People with whom you have weaker ties are more likely to have information or connections that are useful and relevant.”
FTP's quarterly newsletter is always a great breakdown of what is happening in the fintech space, as well as interviews with several members of the Banff community.
The New Yorker examines how coaching done well may be the most effective intervention designed for human performance.
Final Thoughts
On talent/role misalignment: “Judge a fish by its ability to climb a tree and it will spend its whole life believing that it is stupid.” -Unknown (often attributed to Albert Einstein)
On passion: “If you don’t love what you do day-in and day-out, there’s no sustainability to it.” -Unknown
On planning: “Thinking in decades avoids a lot of bad behavior. If you think about relationships lasting decades, you'll often handle the current moment differently. This works for friends, co-workers, partners, suppliers, and customers.” -Toby Coppel
On money: “Are you driven or are you being dragged?” -Unknown
On finding founders: "Look for founders who are both left and right brain - creative but deeply analytical, fiercely competitive and dreamers." -VC Investor
On attitude: “If you can’t get out of it, get into it.” -Unknown
On ego: “If your ego is bigger than our company’s mission, you don’t belong here.” -Reese Witherspoon
On outlook: ”Cynics sound smart, but optimists get rich.” -Unknown
On the abstract: "A life's journey is about 'finding your cubism'". -A Banff Friend
On leadership: ”Define reality, give hope.” -Ken Chenault
- The Banff Advisors Team
