But on that point, right, it’s hard to know
the person that well because they are not yet in that situation,
how do you kind of assess to see what this person is
going to steer the ship in the right direction?
Right, we test them up.
We test them up with some very simple things. We use time.
This is part of what we do in terms of due diligence.
So, we use this methodology in terms of testing of the CEO.
So, we go in, we actually talk to the CEO and tell them
okay, what do you see the risk coming along,
how do you see what your market is, what your industry is doing,
what kind of competitors are you facing and what they are actually doing.
So, if you know about what your competitors are
doing and not just reading from the newspaper, then I can
get a good sense in terms of, okay, you are actually doing
some investigative work, you are actually much more aware
and open-minded in terms of what's happening outside in the world
what’s changing. And we will be asking about things
that are totally different but related to their consumer audiences as well.
(To test if they know …) To test how
they understand the customers. Because the customers change every day
and the customers today you will have may not be the ones you have tomorrow.
Even though you have like a 20-year old customer today
tomorrow they will become like 30-year olds
and they will have a totally different mentality.
So, we will be testing and say, okay, what’s gonna to happen if you
go … keep on continuously doing this, do you actually
talk to the customers. One of the simplest question I ask
is when was the last time you actually talk to a customer.
(That's a good question.) That’s a very good question
(Do they often fail?)
Most of them failed. Most of them always have.
And it's not just start-up companies, even listed blue-chip companies,
I ask the same questions. And then most of them fail.
Because CEOs will, most of them, be the old style
CEOs will think that "Oh, I don't need to talk to actual customers.
I’m not the sales.
Just have my own people to do my work.’"
(And in a way, they become complacent.)
Yes, they become very complacent and
that's actually a very wrong mentality because sometimes
if you just rely on people. I talk to a lot of CEOs and they
say, okay, "my business is not working". I say, okay,
"Are you actually talking to the business, the customers themselves".
And they say "no". I say "go down and talk to them"’
and then suddenly they have their own business coming back.
And they realise that, okay, if you rely on their own sales agents
or their sales people, it doesn't get the same effect
as a CEO going down and talking to the customers. Because
Because the customers will be feeling the same way and say
"okay, I'm a very good customer. Why am I not taken care of?"
(Yes.) So, it's like, especially when we do luxury businesses
as well. So, we work with a lot of luxury businesses and
luxury brands and in some cases some of the start-up they
work with high-net-worth individuals and they also have to
talk to customers who are not paying like peanuts but they
actually paying a lot of money. They want them to pay a lot of money,
but they don't talk to the actual customers themselves.
And so I tell them "okay, do you actually understand the customers?"
So, that's one of the ways that we do diligence
and testing out whether you actually really understand
what’s the driving force, what’s the motivation behind
someone purchasing, pulling out money from their own wallet,
and giving you that money to solve a particular problem at
a particular time. Because from that on, if that CEO or if
that company can tell me in one line those answers
(They are really getting it.) and then I know they’re really getting it
So, which means that they know what is going to happen later on.
If even if the market, we can't predict what’s
the market happening, but we can have very good educated guesses.
So, it's like what is happening in China in terms of
political situation that affects a lot in terms of the
retail, the consumer, luxury brand businesses that one very
good example in terms of 20 years ago, 10 years ago,
everyone is talking about luxury start-up company going in and
say I want to do and build a luxury business.
And then if they don't know what's happening, the government's suddenly
anti-corruption, anti-graft policies coming along, catching
all the people from overseas, catching it back coming back
to China, putting them in prison. So, no one is gonna buy
like luxury items any more. They have to switch to something elso
So, of course, people do switch. But whether you're
switching early on anticipating it and getting more time to
prepare or hits you at the very end and you're not prepared.
So, either you flop down on the floor or you keep on moving.
