Posts Tagged 'Finance'

August 3, 2007

Is Your Company Ethical?

Thanks to my financial brethren at Enron, Worldcom, Barings, BCCI and all the companies currently embroiled in the stock back-dating scandals, I have sit through an ethics seminar every other year to maintain my status as a certified public accountant.

In my position as Chief Financial Officer, ethics and integrity are of paramount importance and as a company, we work hard to hire staff with these characteristics. Keeping that in mind, a survey was taken in 2005 by Deloitte and Touche of American youth between the ages of 13 and 18 in which they were asked the question, “If your boss told you to do something you thought was unethical, would you do it anyway”? An astounding (at least to me) 53% of the kids said they would do what their boss asked them to do.

As a technology company with a work force that gets ever younger as kids become more and more technologically savvy, that is frightening statistic. However, what it points out is the need for us to set the behavioral standards and to train our staff in what those standards are.

What are those standards? For every company those will differ somewhat but a recent survey points out the types of unethical behavior every company faces on a daily basis. In 2005, the American Management Association’s Human Resources Institute asked companies why their employees behaved unethically. The top five reasons:

  1. Pressure to meet unrealistic business objectives
  2. Desire to further one’s career
  3. Desire to protect one’s livelihood
  4. Working with a cynical, demoralized environment
  5. Ignorance that the act was unethical

We have all faced having to make decisions in light of one or more of those five reasons at some point in our lives. How we have reacted to those situations has helped define each of us as we moved through our careers.

How will you know what the ethical choice is when you are trying to make a decision? Let me leave you with one final quote from Potter Stewart, former U.S. Supreme Court Justice on his definition of ethics:

Ethics is knowing the difference between what you have a right to do and what is the right thing to do.

Are you doing the right thing? And are you demonstrating that to your peers and those you lead? The world is watching.

-Mike

July 9, 2007

Profit: A "Win-Win" Arrangement

Remember the "low-carb" diet craze a few years back? Some members of my family jumped on the bandwagon and I can remember seeing a lot of low-carb items in stores; low-carb milk, pasta, bread, chocolate, etc. Today you just don’t see as many of these products anymore. Look at the dates of the articles above and try finding some of the products in the links above – they’re long gone.

Why? Assuming these products really worked as advertised, when the low-carb craze was over, the cost of producing these products became higher than the revenue that the market was willing to pay for them. Maybe the market rejected them because they didn’t work. Whatever the case, mathematically, when costs are higher than revenue, there is no profit. Consequently, companies stopped offering these money-losing products. No profit is a "lose-lose" situation. Neither the companies nor the consumers who want the discontinued products benefit when there’s no profit.

The same goes for the hosting industry. If the cost of providing hardware, software, power, cooling, and bandwidth ever rises higher than what the market demand will pay, this offering will exit the marketplace. Personally I don’t think that will ever happen. Because there is an opportunity for profit in the hosting business, we and other providers will continue to inject our offerings into the marketplace. And due to the cost of these offerings, we won’t be offering dozens of processing cores, unlimited RAM, unlimited bandwidth and multiple terabytes of storage capacity for ten bucks a month.

Thankfully, SoftLayer doesn’t have to deliver all of that to achieve a top notch customer experience (as of yet anyway). But simply providing the list above is only part of the equation. As I mentioned in my last post, treating your customers "right" and building long-term relationships is critical to maximizing profit. Therefore, we do our best to price our offerings at value points that make both our customers and our investors happy. The resulting profit ensures that we continue in business and that we keep our server fleet refreshed. Profit keeps us around and motivates us to provide our customers with an excellent customer experience.

Thus, for SoftLayer and our customers, profit is a "win-win" situation.

-Gary

Categories: 
June 4, 2007

Why Finance Guys Don't Blog

Q4UY don’t finance guys blog much? If j00 post “IAAA” and talk of KPIs, EVA, and other TLAs, readers think listening to this llama is a CWOT and say “CYAL8R”. CMIIW but hosting demand r0x0rs. The SMB market sk00lz all else but there are other factors. I’ll mention just a couple here:

I’ll call one the “middle school” factor. I have a 13 year-old boy. He and his classmates are absolutely addicted to Internet chatting. He’ll open six or more windows at once and at least four of them are girls who are also chatting with IDK, their BFFs AFAIK. They will ROTFLOL for hours even if OMG, PAW. It’s NBD to them.

I doubt that as these kids grow up they’ll give up the chat habit, and the n00bs that come along will only add to the ranks. Thus, another driver of internet fundamentals grows seemingly forever and demands more servers to relay the ever growing messages.


I’ll call the other factor the “mullet factor”. I knew our CEO back in the 80’s and he sported quite the mullet, I can assure you (see image to the left for proof).

Punch in the word “mullet” into Google and in .05 seconds you’ll get links to about 3.8 million web sites somehow related to mullets. w00t! A few are related to the fish, but most have to do with the hairstyle. YKW, these websites have to live on a server somewhere. Strange websites like this only seem to proliferate over time. AWHFY?

-Gary

May 30, 2007

Mike Jones?

Yes, Mike Jones is my real name.

I am the least liked guy in the whole company. I am the one who has to say no. No to the fully enclosed domed cubicles with sliding doors and skylights. No to the quad processor quad core desktop PCs. No to 6 flat screen 30 inch monitors for each developer (3 is plenty). No to the recumbent Herman Miller massage desk chairs. No to the offices large enough to fly more than 3 RC toys at any one time. No to the “must haves” outside the budget. In short, I am the evil CFO. Some have even called me Iron Fist.

In spite of my constant no’s, we have built an amazing culture of innovation by saying "yes", a lot more often than saying "no" over the last two years.
Here are some of the things we've said yes to:

  • Yes to 10 of us starting the company when no one believed we had a prayer of surviving.
  • Yes to outside investment.
  • Yes to going ahead with the idea of a private network.
  • Yes to building out data center space not knowing when or if we would ever see that first customer.
  • Yes to not taking salary the first year to get the business started.
  • Yes to investing in programmers to build a portal that gives customers what they want.
  • Yes to spending extra money on infrastructure to allow us to build server farms on a scale never seen before.
  • Yes to the API project.
  • Yes to giving our developers time to be creative and come up with new ideas.
  • Yes to Muenster Fest!! (Lavosby or Samf can explain in a future blog)


In the future, I hope to be able to share more with you from a financial standpoint about how we make this business work.

-The Real Mike Jones (CFO, SoftLayer)

p.s. To put the rumors to rest, this is not me. In fact, none of these are either.

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