On-Demand: The Realities of Running a Business During a Pandemic (Part 2)

Anil Shrivastava:Thank you Nkrumah. First of all I want to thank EisnerAmper and Nkrumah for having me on the panel. I'm really looking forward to learning a lot from the other panelists and from the questions in the audience. I spent 15 years at Bain & Company. When I left, I was a partner in charge of all private equity diligence over the New York office, and also a partner in the healthcare group. I left to go to private equity at Vestar Capital where I was a partner in the Healthcare Group. In 2012, I joined Sagard Capital, which is a small middle market public equities hedge fund that essentially invests in an activist manner, but we try to be collaborative with our companies and work with our management teams and CEOs to have change happen. Right now we're in the middle of raising capital for a new fund called 325 Capital.

Nkrumah Pierre: Awesome Anil. Glad to have you and thank you so much. Next, David, the floor is yours.

David Hannaford:Good afternoon, I'm Dave Hannaford. I'm the CFO for The Inception Company. Early in my career I had some large public accounting experience so I'm a CPA. The bulk of my career since then, I've been CFO with real estate and architectural and engineering firms. About a year and a half ago I made a fairly large change as far as industry sectors and joined The Inception Company. We are a virtual engagement type company. We evolved from being founded about 15 years ago from a traditional meeting planning business catering largely to large pharmaceutical clients and started to develop virtual meeting type platforms. Started off with web conferencing platforms. That evolved into simulcasting the onsite live events that we were hosting.

In the last two years we launched what really is our growth model called Pando. Pando is very interesting. It allows for 60 on-screen participants and about 5,000 audio participants to participate in an event at one time. We refer to these as events as opposed to short meetings because they emanate from a broadcast studio we have here in Fairfield, New Jersey, and they are orchestrated by a professional moderator or speaker. And they tend to be typically a full day event, but they range from perhaps a half day event to multi-day events. Thank you.

Nkrumah Pierre:Thank you Dave. Next, Mitchell. The floor is yours. Thank you.

Mitch Kleinhandler:Thanks Nkrumah. I'm Mitch Kleinhandler. I'm a managing partner at Differential Ventures. We're a seed fund based in New York City. We invest in early stage enterprise tech companies focused around data, AI and machine learning. Prior to Differential, I was a venture partner at Scout Ventures, which is another seed fund based in Manhattan. And prior to that, I was a serial entrepreneur, founded 10 companies over a 40-year period all in the telecom and media space. Most of them are pure startups, a few of them were consolidation and roll up platforms and I lived twice in Europe. Once in Central Europe and once in Western Europe running some of my businesses.

Nkrumah Pierre:Mitch, thank you so much. And last but not least, my colleague, our friend, John Pennett.

John Pennett: Thanks Nkrumah. I'm John Pennett everyone. I head up the Technology and Life Sciences practice here at EisnerAmper. It's my privilege to be here with the other panelists today, looking forward to the conversation. A lot of our practice over the last couple of years has been focused on helping entrepreneurs really achieve their dreams and their vision. We're doing that by helping them get real good quality information on a real time basis, whether that through outsourced tax work and eventually helping them through M&A and do due diligence transactions all the way up into their public company setting. So, it's been a lot of fun. Personally, I get to serve on a couple of advisory boards for some entrepreneurship groups, which is a lot of fun to work with the entrepreneurs and see them go through that growth cycle. Thanks Nkrumah, back to you.

Nkrumah Pierre:Thanks John. It is time to get this party started. We're going to jump right into the panel. I'll kick off the first question. The first question is, what's your business/market outlook for the next six to 12 months? Again, what is your business/market outlook for the next six to 12 months. I'll start with Anil.

Anil Shrivastava:Thanks Nkrumah. You know, my business is right now raising capital. One of the questions that was for the panel is on what the fundraising landscape looks like. The last six months has been one of the most interesting times I've ever had in talking to allocators. The allocators we talk to most are obviously large estate pension plans, but also endowments and foundations and before the crisis hit, they were already looking for yield. The current estimates on equity yield was going to be something like 4% to 5%. That's after a number of years of incredible yield, where people were able to pay very little money for an index fund and get upwards or over a 10% yield.

That era had seemingly ended by the end of 2019. People were continuing to look at private equity, continuing to look at private lending as places to get 8%, 9%, 10% percent yield net. Obviously, the crisis when it hit caused a lot of those allocators to rethink so many things about what was happening. One, the allocators who were promising to give us money who were going to go ahead and fire other managers in order to give us the money that they were going to fire from. So if they had 100 million in another manager that they were going to fire and give us 100 million, well it turns out that by the end of March, that 100 million had to become 70 million. So, they initially had to stop and pause for a moment in terms of resetting where they were going to put the money.

That put them into a bigger pause, and that pause over the next six to 12 months is likely to continue in part because the yield landscape has changed so much that people are doing more work to figure out where they think yield is. Whether that it's going to be again in emerging markets, whether that's going to be in small cap, whether that's going to be in equities versus private lending, et cetera. There has been an immediate question over this last month and over the next couple of months of never waste a crisis thinking, which is, can we take advantage of issues that companies will have, whether they're private or public and place capital somewhere on the balance sheet to take advantage. I think people have given up on a V-shape for many industries but even if it's a U-shape or a W-shape of some kind, ultimately at the end of that these longer term capital allocators are thinking about how to do that.

 Private lending, high yield lending they've raised, I counted to myself 17 billion over the last month or two. We are seeing allocators come back after having done that review, but I still expect the next six weeks wants to be one, for us at least in terms of fundraising, to be a review and an analysis of why the asset class itself is worth considering as they think about the landscape of yield and where yield will be. And second, to demonstrate that we are the right party to be managing for them in that asset class and what uniquely are we going to do, especially different than an index fund.

One of the things that's fascinating to me, there's been such a massive push to index funds by allocators, and in some ways they were [riding 00:11:38] bare metal market. That was all right when the market was returning so well but now that we have more volatility, more dispersion in valuations, more dispersion in how yields might look between the top five companies for example in the S&P 500 and all the rest, that you need someone to potentially allocate. Now, active managers didn't do so well the last couple of quarters frankly. People were saying active managers, this is their time to demonstrate what they're going to do. I think a lot of people got caught with their pants down, whether you were active or not active, so the burden of proof has become high. So, my expectation for our business over the next six to 12 months is going to be one of significant amount of credibility building and work. We think that the fundraising environment has now delayed us by about nine months to a year.

Nkrumah Pierre:Anil, thank you for that overview and for the insight. Keeping on the trend of raising capital and investing in companies, I wanted to give the question to Mitch and hear about the companies you've been investing in from a VC standpoint.

Mitch Kleinhandler:Yeah. Most of our companies are really early stage. We're in 12 different companies. Three or four of them are pre-product, the rest are post-product. They already have product-market fit, they all have revenue. We've been counseling all of our companies to basically redo their budgets, redo their management plans because of the unknown factor of what business is going to be over the next six to 12 months. I mean, I wish this was a year from now and then Nkrumah asked me the question, then I could have hindsight and really answer this perfectly. But we think it's going to be a pretty tough environment.

We also have two companies that are Series B companies. They have revenue of anywhere from five to $20 million. What they've experienced is several contracts being canceled and losing substantial amounts of revenue. But at the same time, they have a really strong pipeline and their expectation is that come six months from now or nine months from now, they will be back as to where they were pre-COVID. So for us, it's cautious optimism from the business perspective. I'm also an advisor to a company that has probably seven or $8 million a month of recurring revenue. It's a consolidation and roll up platform and a major investor's mid-market PE fund. They've just been given the go ahead to buy some additional companies to expand their revenue. I guess it's just cautious optimism as to what's going to be going on over the next six months.

Nkrumah Pierre:Thank you Mitch. Next I'd like to hear from David just very quickly. I mean, in the current environment that we're in, everyone's on video calls. The word Zoom went from being a noun to a verb. It's just an interesting environment, so I'd love to hear what you're seeing from your perspective.

David Hannaford:Yeah, it certainly is an interesting environment. Given the fact that we're in the virtual meeting business, I'd hate to say it, but it's really been beneficial for us. What has changed though quite a bit is that I mentioned the company was founded on some traditional meeting type of services, literally face-to-face and for the next six months, we are optimistic, but we're also realistic thinking that those revenue streams will be virtually zero. Overall though, our revenue forecast has not changed much, but the components of it have changed. We were expecting and still expect about a 40% growth rate in 2020 from last year and in 2021 and 2022, 25% to 30%.

When the virus hit, we took a very hard look at our revenue forecast by what we call revenue type, revised our forecast and overall, we actually had a decrease in our gross revenue. But because our virtual meeting planning sectors are a much higher profit margin than their traditional lines, we actually increased our projected EBITDA because our gross profit was higher, because of the different mix of our revenue streams. The other interesting thing for us has been that it certainly solidified our client base with large pharma clients. It's growing even more with professional services companies. We have a very large contract with one of the large accounting firms for instance that sees the benefit of being able to deliver training to a large amount of people or hold a partner meeting without having to fly people to the location and not only the costs of all the travel, but people have a lot of downtime from work getting to and from.

Those new customers that have come in, while originally I think their intent was they needed some way around the restrictions to have an event or a large, lengthy meeting, now they really see the benefit that hey, why not just continue to do this? So, we expect overall it to be very, very helpful to us. Obviously unfortunate for some businesses, but it has just really fit into what was already our growth model. I'll just leave off that the key for us is, we need to be able to expand our capacity because we are limited to the amount of events we can hold in a studio on a given year. So, the key for us is to be able to grow that capacity by looking for outside debt.

Nkrumah Pierre:Got it. Well said Dave, thank you. John, we'd love to hear what you're seeing from a tech life sciences perspective with regard to your clients.

John Pennett:Yeah, thanks. David had some really good points there. Companies are having to reinvent themselves in this new environment. I'll just tell a quick story here for a second. One of our consulting clients is a biotech company. They were struggling a little bit to raise money and so as part of the conversations, we were talking about the dreaded audit or going concern language. And one of the members of the board said, "We're a biotech company and we're not able to enroll any patients in our clinical trial. It's the only thing we have to do right now. So not only are we not a going concern, we're not even a concern. We actually have no business right now, we have nothing to do." In their case, they decided to put themselves into a turtle shell and just sink to the bottom of the river, and are going to wait for the spring to come out when they can enroll patients again.

Other companies have taken different tactics depending on their business and their business models. Can they do something different? Can they serve the same types of products to their clients in a different manner? Is that going to be accepted? So, I think it's really forced a lot of companies to really think about their business model, how they serve it to their customers and I think you'll see winners and losers in that game. I think it's interesting, conversations I've had with some venture capitalists and private equity folks in thinking about where to deploy and how to help support their clients.

I think one of the really interesting questions that they have to think about is, do I support a company who does not have a way to thrive in this environment so I need to really prop them up? Or, do I give the money to the companies who have reinvented themselves and are thriving, or at least moving towards thriving in this environment? So, which one of those are going to be the winners and the losers long term? I think it's been very interesting to see how companies have changed their models, changed their sourcing and how they execute those things. And it'll continue to evolve over the course of time, so you'll see new models coming out. Companies are going to morph quickly I think.

Nkrumah Pierre: John, well said. Thank you. Moving to question number two. We touched on this earlier, but if you'd like to add anything in addition I'd love to hear from you. How has COVID-19 impacted your business? I.E ability to raise capital, possible M&A opportunities, acquisition opportunities. I'll repeat the question. How has COVID-19 impacted your business? I.E, your ability to raise capital and/or M&A opportunities? David, I'd like to start with you.

David Hannaford:Sure. Well, again interesting. Before the virus hit, we were fairly far along with several prospective lenders. In the first stage, we would like to raise debt and then a second stage after we built a company of more is to do more of an equity raise or perhaps a major transaction. But when everything, the world stopped literally, the market had its rapid decline, the lenders told us they were very interested, but they literally just needed to regroup. They needed to see where the market was headed. Largely they didn't really lose confidence in us, but they said as some of the other panelists have mentioned, they needed to see what was happening with their current portfolio of companies. How they were going to come out of it, what impact it might have on their portfolio overall.

So I would say about three or four weeks ago, there tended to be more of a tendency, people saw a window of getting back to normal as to whatever that is at some point. So we reinvigorated those discussions in a large way, and ultimately we ended up having our choice of several different proposals, debt proposals that we can choose from. When I say choose from, we needed to make sure it fit us, how much debt versus equity? We didn't want to get too much debt, too little, finding the happy medium. For us it ended up being very beneficial to be able to choose from these different proposals that were in front of us.

Nkrumah Pierre:Dave, that's good news. Best of luck with that and if you need any accounting help, you can let us know.

David Hannaford:Right, absolutely.

Nkrumah Pierre:Awesome. Mitch, would love to hear from you next.

Mitch Kleinhandler:Yeah. One of our objectives over the last two or three months with our portfolio companies is making sure that they have at least 18 months of runway. Fortunately, most of our investments are only like 12 to 15 months old. In some cases we've done inside rounds with other VCs that were already in the deal and in some cases, we've gone to venture debt for some of our portfolio companies that have a good revenue stream. It's been either the typical venture debt where we borrow money and interest rates are pretty high and going to pay it back.

The other type of venture debt that we've seen, and one of our portfolio companies just seriously considering using it is where the lender takes a percentage of your revenue over a specific timeframe until they're paid back. Since this is a little bit more uncertain from their perspective, the hurdle rate for them tends to be a lot higher. But, it's a creative way of doing financing and it's for companies that are basically growth oriented companies. I've done Series B and Series Cs. That's what our short term goal is with our companies. We've also been talking to them about what they're going to need to achieve over the next six to 12 months to raise their next round of capital. Over the last two or three weeks, we've been really super focused on that with most of our portfolio companies.

From a firm perspective, we have been negotiating to do our second fund, which is basically with two captive corporate service companies. I guess the luck of the draw, our first fundraising meetings were March 1st. We were having two in Manhattan and I think one in New York, and then we were going to have another one in Boston, all the first week in March. All four meetings were canceled. We even offered to do Zoom meetings. And these are captive corporations who basically are underwriting this. It's $50 million fund. We've just been talking to them over I guess the last week and they've all agree to that they'd like to start up the fundraising. So, our expectation is that by August we'll be back in fundraising mode for our second fund, which we're all excited about. But also bated breath because at the end of the day, we really don't know whether it's actually going to be happening. So from an early stage tech, I think we're no different than a lot of the other seed and growth funds in the United States.

Nkrumah Pierre:Thank you Mitch and best of luck with the new fund. Fingers crossed of coursed. Anil, I know you touched on this earlier with regards to the allocators and some of the headwinds you're facing. If you'd like to add anything else, we'd love to hear from you.

Anil Shrivastava:Sure. Maybe I answered your second question as the first question, so apologies Nkrumah there. But on allocators, one thing which is interesting for me is allocators which have direct requirements to support the institution which they're allocating for. If they were an endowment, that would be the college. If it's the foundation, it's the foundation's grant making job. Typically, an endowment for example would expect to use 4% of the endowment per year to help fund operations that the college. What we've heard is that many colleges or institutions are asking for a much greater amount of cash. Many colleges expect to face a cash crunch over the next year or two, and so the endowments are now trying to think about setting aside 8% to 10% to help them out. Now, that just puts even more cash crunch that they need to liquidate in various investments they've had out there and again, makes the hurdle for new allocations a little higher.

I do want to quickly respond a little bit to the first question you had asked me. I have been talking to a lot of CEOs and management teams and boards of the companies that we're thinking of investing in and I do observe two fundamental things. One is that there still is 19.55 million people out of work in the country and even after the May bounce, about 15 million of them are temporarily laid off. However, I think what we see is a move to make much of those layoffs more permanent globally. There's big announcements from BP, from some the energy companies, obviously Chevron with oil price, but even companies like IBM have announced big layoffs. So, some of that temporarily laid off workers I think could end up being more permanent.

We're at 13.5% unemployment right now. Some people expect optimistically that that'll come back or come back in a V, but this brings me to my second point and it's a little bit something John had mentioned. That people talk about a new normal, the old normal, getting back to normal. Some of that I believe is pandemic fatigue as opposed to actual analysis. I think the answer is nothing is normal and people are using this as an opportunity. It's an opportunity to fundamentally change their businesses. Whether that is taking job cuts and making them more permanent, job cuts they may have thought about doing for a long time but never had the guts to do it. This has been an opportunity for them to do it. Fundamentally revamping supply chains.

The thing which I see from companies that are being more successful than less successful is they're really thinking of this as a natural experiment, a laboratory to test things out. Whether that's work at home versus having real estate, fundamentally changing their supply chain, thinking about new ways to go to market. The companies which are doing it well are experimenting on purpose, and not by accident. They're thinking very deeply about what they want their companies to look like five years from now, learning from this experience and testing things out. Whether it's from recruiting, onboarding, laying off, firing, doing without this, or outsourcing or whatever it might be, but doing it on purpose.

I think there's a little bit of a ready or not here I come that's going to happen in M&A because valuations and uncertainty, companies which have cash have this opportunity. But I think we're over the phase one of this, which was, phase one was all about safety of employees and cash. Phase two is nothing is normal, everything is up for grabs. Let's think about what we're going to be in three years. Households are going to be hurt for the next 18 months or more, 24 months, maybe even longer. And unfortunately, that's hitting a lot of lower paid workers more because people often fire in terms of order of seniority and the lesser senior people tend to be minorities, tend to be women, tend to be lower wage income earners. I think we're seeing some of that come out in the protests now. But yeah, this is a massive natural experiment taking place and the bet the best people are doing it explicitly, and on purpose.

Nkrumah Pierre:Anil, so many great points there. I think we could have a separate panel just on each of those points that you raised. And of course, the other part of that is when you look at capital markets, it almost has no rhyme or reason, right? We see what's going on overall in the economy, but the capital markets are roaring and no one can figure it out.

Anil Shrivastava:What I've understood from the capital markets, at least the companies that we're following and the stock prices that I'm seeing is there is a fundamental disconnect. I wouldn't call it a disconnect. There's a bifurcation between the retail and professional investor. I think there's something like $5 trillion sitting in cash by professional investors. Warren Buffett famously hasn't bought any stocks this year so far. You can take it for what it is. I do believe there is some bifurcation. Q1 earnings results came in. They didn't look so bad, but of course Q1 only had really COVID in March. I think when Q2 results start rolling in, we may see a more negative tone in the market and late summer.

Nkrumah Pierre:Agreed, thank you. John, would love to hear your thoughts. I know we've covered a lot, but we'd love to hear any additional thoughts from you.

John Pennett:Yeah, maybe I'll just go a slightly different direction, which is, this is conference season for a lot of industry groups traditionally. You have the large gatherings at the nice warm locations and things like that. Thousands of people come and there's days of paneling, and networking, and wining and dining and things like that. Of course all those have ceased in the physical form, but they still exist in the virtual form. The companies that are participating are actually better prepared, they're more focused on exactly what they need and they're probably being a little bit smarter in terms of their targeting as opposed to scattershot.

So there's still a tremendous amount of activity and desire, but I think it's maybe helped to Anil's point a little bit there is to say, "Let's really focus on where we're going to have impact and where it's going to be meaningful, and put our efforts into those areas to push forward." So, maybe you get to explore new types of partners, new types of financing, different ways of looking at things. But still a good deal of activity and I'm obviously, pleasantly surprised that there's stronger preparedness and better messaging.

Nkrumah Pierre:Thank you John. I can't wait till we can get back to wining and dining and seeing each other in person. I look forward to those days so thank you. I'd also like to say to the audience, feel free to submit your questions. We're going to get to the Q&A portion of the panel, so feel free to use the widget on ON24 and submit questions. I'll be going through the questions as well. Of course we can't answer all of them, but I'll try to comb through the questions and provide them to the panelists.

Before we get there to those questions from the audience, one quick question for the panel right now. How are you addressing your return to work plan? Have you created an internal task force? The question is, how are you addressing your return to work plan and how, sorry, have you created an internal task force? Of course as we know throughout the country, especially in New York City or in New York, we've hit phase one right and we were impacted the worst with regard to the US. So, we're starting to see different parts of the country open back up. I wanted to know from each of you, if you do have a return to work plan. I'll start with John Pennett, of course, my colleague. Would love to hear your thoughts on that.

John Pennett:Yeah. We probably don't have a leadership meeting in the firm of any variety without this being probably the first topic on the agenda so it has gotten a lot of attention. We have some of our top folks in the organization working on this. Our chargé d'affaires is leading our task force, developing a playbook that people can execute against to determine when and if they want to return to work, and how, and safety precautions, and alternating weeks so that you have less points of contact and things like that. So, we've put an awful lot of effort into it. We have offices around the country. We have some folks who are more working teams, some of us work more remotely so it's going to be different answers for different folks, but it has gotten the attention at the highest level.

I think it was Anil who had mentioned earlier on, what is this going to mean for real estate? It's going to mean a lot for us. How we go to the office, where we spend our money, where we spend our time. As a firm, we were quite fortunate that we've invested a lot of money over the last few years in technology to help us work remotely. We did part of that because we have offices in London, we have an office in Tel Aviv, we have an office in India, and they all do work for the same clients that we are serving here in New York, and in California and Florida, et cetera so we actually had to do this.

So from the work perspective, we've been fine and that's been operating really quite nicely. The human interaction and the on the job training and mentoring and things like that of course have suffered. We've been trying to do touch in points on a regular basis with our teams. That's part of the rolling back to work program so that we can figure out who needs to be in touch with who and how those activities can continue again. So it's been a significant effort, but also with the eye towards some people's individual view and comfort level.

Nkrumah Pierre:Thank you John. Anil?

Anil Shrivastava:Sure. You know, what's interesting is in public investing, I think we're a small team. I don't think we expect to grow the firm. Our last firm was about 10 or 11 people. We don't expect to grow the firm more than 11, 12 people if we're lucky to get past the next six months I mentioned on allocation. But, it used to be that you would imagine a hedge fund, you'd imagine three or four people in a room with a bunch of Bloomberg terminals all yelling profanity at each other most of the time. I think what we now understand, we've really built our whole system around being away from each other, interacting with allocators over the screen. Aside from investing in some big screens, we really had some of that infrastructure in place. Microsoft, Google Docs, all these things work well collaboratively online, and it's made us think that perhaps we can go back to work. Maybe we can have a team member who lives in California, maybe we can have a team member who lives in Texas and these are people we know, these are people we trust.

The onboarding, we're a little worried about onboarding new people because we won't be able to instill a culture, so we're looking at people who we've worked with in the past that if they live in California, that's okay. One of the challenges we will have is that diligence in companies has always been one of going to the company and [diligencing 00:39:59]. That's one of the areas that we're thinking about. Fascinatingly, it's been easier to get management team meetings than it was before in a sense because when we used to visit, the management team would have to worry about, what kind of lunch should they order? They don't have to worry about that anymore and what used to be a half day meeting can just take place at 3:30 to 4:30, and people are available and they're willing to do meetings. In fact, meeting management teams hasn't been so bad, but we're still trying to figure out how we're going to diligence physical places once we get opened up again. That's the only part we're working through.

Nkrumah Pierre:Anil, you raise a great point. From a sales business development standpoint from my point of view, I mean, it's wild how available people are. I feel like if you're in sales BD, if you can't get a meeting now, good luck in the future because now it's definitely a much easier time because people just, they're at home, they're at their computers. Also, the openness to do a virtual call or video call. I can't tell you the last time that I ever had a FaceTime call with a client or a prospective client, and now it's encouraged, people want to see each other. It's really an amazing thing. Next I'd like to go to Mitch. Mitch, we'd love to hear your thoughts.

Mitch Kleinhandler:Yeah, we're a small shop. We're a [inaudible 00:41:28] person team and we have an ebb and flow of maybe two or three interns, and a lot of our business was always virtual. We have companies that we've invested in that are in Israel, Toronto, Montreal. We have one company that's in London, so we've always been used to Zoom. I would say pre-COVID, at least one-third of my meetings were Zoom meetings. The rest were either in our office, or typical millennial coffee shop type of meetings. I personally miss the one-on-one contact. So, I'm looking forward to when the new norm becomes the next norm, that we'll be able to get back to that.

 From a firm perspective, it's really not an issue for us. We closed two investments actually in March and early April, obviously they started December, January, so those folks we had met several times face-to-face. We're issuing a term sheet on a new investment next week and we've had I think, 12 Zoom calls with different members of the management team because we want to make sure that we got to know them the best way we could. We found out after a couple of Zoom meetings they became a lot more relaxed. We've also decided not to issue term sheets on two deals, again, based on the fact that we dragged out making a decision, spending as much time as we could on Zoom. So I think that going forward we'll still use Zoom, but we'd like to get back to the face-to-face type of meetings for our industry.

When I was an entrepreneur, I always used zero-based budgeting which means every year when we did our management plan for the following year, we had to justify all of our expenses. Not me, but the people who worked for me, and also for myself, and I thought that was a good way to approach business. So I think the new norm should be for any company of any size, to basically think of themselves as, we're doing zero-based budgeting management. And, how can we change our business that will make us more efficient, more effective and be able to try to save some money? I think that there's all sorts of ways of approaching it, but I think that's a good way to approach it going forward.

Nkrumah Pierre:Mitch, thank you. Dave before we get to you I just wanted to say to the audience, the next phase is going to be Q&A. We have about 15 minutes left to address those questions so please if you can, if you have any questions, feel free to use the widget at the bottom of your screen, it says Q&A. You can add a question and I'll get to it. Dave, to you.

David Hannaford:Sure. A lot of good points made and I agree with Michael, I miss the day-to-day interaction with people. It is difficult to always be on remote meetings. As helpful as they are, it is nice to communicate one-on-one. We have a task force with our company and we've always had a number of remote employees with flexible work schedules, so really hasn't been a huge change from that regard. I think what's going to be interesting is that even once restrictions are lifted, I do think that there will be certainly even more tendency that people say, "Hey, I was able to do my work from home," and I expect to still see a lot of that post restrictions. We did a poll of our employees a couple weeks ago so that the feelings may have changed, but a few weeks ago, about half and half of our employees said once restrictions were lifted, whether or not they were comfortable to come back to work. I thought that was interesting that there was a large amount of people that still said they weren't uncomfortable.

Keeping in mind there, I don't have the numbers. But even if some employees were comfortable about coming back to work, I'm aware of a number of employees that live with, or taking care of an elderly family member or someone that's higher risk. So while they personally might be okay to come back to work, we respect their feelings that in the future, they may be hesitant to come back to the office because they might spread it to someone that is higher risk at home.

 I'll just touch on a couple quick things. We need to, and we have tried to have bi-weekly company meetings and a mix of business and fun. We have an internal what we call Spirit Committee that tries to keep people in the mix with emails, or funny jokes, or funny quotes of the day through email. Obviously that doesn't replace a company event where people can interact, but we have had Zoom cocktail hours on Friday afternoons.

 And just a real quick thing, we had started to look at renovating our Pennsylvania office pre-COVID. We're going to go ahead with that, but we're taking a fresher look at the layout of the space, realizing hey, do we need as many desks as we thought we did? And even if we do, are they set up in such a way that will facilitate the remote work or hoteling type arrangements like you see in a lot of large public accounting firms? So we're certainly looking at what that means about coming back to normal, which sounds like it's pretty consistent throughout the panelists' comments they made themselves as well.

Nkrumah Pierre:Dave, great points. So, we're going to transition to our Q&A. I'm just going to wait for some of the questions to roll in. As the questions roll in I just wanted to say, to touch on a few of the points you made Dave. It's interesting, right? As a salesperson, a business developer in this environment as you know, I can't do what I used to do, right? Host the events, have the dinners, have the lunches. But finally as parts of the country opening up, golf has become a thing that you can actually do, and we're actually going to be playing soon. You can be socially distant when you can play golf. It's just interesting how the golf outings have picked up. Not necessarily outings, but when you can play golf with a couple of people.

But, one thing that I think is going to still continue are the video meetings, are the virtual meetings because they're just so efficient, right? You can say, "I have 35 minutes to do X, Y, and Z," and within 35 minutes, the Zoom ends and everyone goes back to what they were doing. So, I think we're going to see just my take or my outlook, I think it's going to be a mixed bag where people say, "You know what, we can do that meeting with five or six people virtually." Everyone stays in their home, and then we can be super-efficient and go through all the checklist. Then after that if it's super, super important, if we feel we must be in person, we can have that lunch outside or that golf events with three or four other people. So, super interesting times.

All righty, I'm going to check out the questions. Give me one second. It's funny, I don't see any questions in the widget, which is not a bad thing because we have more questions that we can go to. I don't see any questions in the widget, so I'm going to go to a question that I had prepared for us. Hopefully a couple of questions will populate, but another question for the group is just the people challenge.

I think Dave, you had mentioned out of sight out of mind, and how do you keep your staff and employees motivated in a time like now? You mentioned the virtual happy hours, you mentioned the funny jokes via email. But as we all know, that doesn't necessarily resonate as if we're face-to-face. So Dave I'll kick it back to you and then go through the panelists, but how are you keeping your people motivated?

David Hannaford: Sure. Well as I had mentioned company wide, we have these bi-weekly meetings that our president and CEO basically orchestrate, but I'll break it down into my own little finance group, the accounting group, trying to keep those people motivated and trying to just stay in touch with them. Everybody uses email. We're using it constantly even if they're in the next office, we all know that. So while I continue to use email and thank God we have it, I actually go out of my way now to talk on the old fashioned phone to people as much as I can just to hear their voice. You know, how you doing? What's going on?

I do think it has impact to be able to communicate via phone than constantly over email so until we can come back to work and see one another, that's perhaps not going to change anytime soon. I do think that there is a big part of when people again are not communicating and they're doing their day-to-day, if you do stay in touch with them more constantly, I do think their efficiency, including my own frankly, does go up because you realize, "Hey, there's other people out there." That's what I've been trying to do and it seems to be working fairly well, at least for the time being.

Nkrumah Pierre:Thanks Dave. I'll leave this open ended. If anyone else would like to chime in, just feel free to unmute and state your opinion.

Mitch Kleinhandler:Yeah, this is Mitchell. I think part of the new norm is going to be more telephone and more Zoom contact with your coworkers. If I have a call with a portfolio company, sometimes I'll get on a couple of minutes earlier than I normally would and my partner will get on earlier and we'll just shoot the breeze for, two or three minutes and when the call is done, we usually leave at least 10 or 15 minutes in between Zoom calls. So I find that we're spending more time talking to each other, which I think is important.

Then when we go out to our network, I try to do at least one call a day, either using my iPhone or Zoom with people in my network. So whether it's another VC, an entrepreneur who, not one of our portfolio companies, one of our professionals in our network, whether it be Eisner or another law firm. So, we try to keep in touch with them as much as possible and I think really that's a lot of hard work. I think it's really important going forward, regardless of what happens over the next six to 12 months, is to maintain contact with your coworkers and other people in your network as much as possible.

Nkrumah Pierre:Absolutely. Anyone else?

John Pennett:Yeah, I'll just add in real quickly. I think the last point there about thinking about who's in your network and how to reach out to them is a really good way to look at your contacts and see, "Who have I not touched base with in a while?" It's opportunities for us in our business. We don't win every client that we ever get to meet us and turn them into a new client, but a good chance to go back and take a second look. Things have changed, we have more offerings now and different services that we can bring to bear so that's been very positive. And I think just with the work interaction, I think it's been interesting. We have a whole slew of different things we've done to try to be social in nature.

I was on a scavenger hunt and trivia game on Friday with some folks in mind group and I was called out twice. Once for the scavenger hunt, they asked for a copy of a magazine. I happened to have the AARP magazine right in front of me so I hold it up in front of my camera and they were all laughing at me and I reminded them it wasn't mine, it was my wife's, but that was okay. On the trivia question, almost all of the trivia questions related to reality shows which I don't watch any of them. So I was like, "Aren't there anything appropriate for people over the age of 30 who might actually do something other than watch reality TV?" And the answer was, "No, you should be watching these things," so I was like, "Oh, okay." So I learned some things. I'm watching the wrong things on TV.

Nkrumah Pierre:I don't know what that AARP comment meant. It might come back and bite you. I'm just saying John, I'm just saying. Would anyone like to add before we go to the Q&A?

Anil Shrivastava:Yeah, this is Anil. Let me just quickly say a couple things. One, when people ask for social, easygoing moments where we can interact, the most important reason for it in my opinion is so that you can reduce enough formality between layers of the organization that people can speak more honestly with each other, because they've been in a situation with each other which is fundamentally less formal. The reason for those interactions is that in my opinion, and it's really important to make sure that everyone has a reasonable, I've seen this senior person enough in an easygoing situation that I feel comfortable asking them a question or telling them something's wrong.

But, I think the number one way to keep people motivated at a distance is for them to fundamentally feel that they have a meaningful job that they're doing, which is highly needed to keep the organization going. The most dangerous thing is when you have somebody at a distance who's sitting there not sure, "I missed a couple meetings, nobody seemed to care. I didn't make it on that big Zoom thing, that didn't really matter. I was asked to do this report, no one called me back to ask to see to look at it, " and you're sitting there by yourself thinking of things to do.

I think that's when it becomes very demotivating, especially when there's the potential risk at various corporations that actually we may not need all 100 people that we have on the payroll nine months to a year from now. Which are the 10 which are not going to be here? So for us, what we have done is very clearly lay out significant deliverables for each person and have very specific deadlines for people to get back. That has been very motivating. I think people feel like they're really helping to build something because if they're not there and they're not doing it, we cannot move forward.

Nkrumah Pierre: Anil, you're totally right. I mean, we're seeing it at EisnerAmper from the standpoint of, we're seeing more people step up. Even on the business development team for example, there are folks who never did podcasts, folks who never wrote a blog before and now we're seeing one to remain relevant, two to obviously add value. We're seeing folks become a lot more active. And to your point, it's great to get people to the platform, but it's up to them quite frankly to step up to the plate and also take the initiative. We have less than a minute left so we're not going to get to the question, but quick lightning round. 15 to 20 seconds, final words from each of you. Anil I'll start with you. 15, 20 seconds, final point.

Anil Shrivastava:I think it's very important not to succumb to pandemic fatigue and just do things because its summertime and you want to go out. I think it's very important to be explicit, definite and intentional with the concept of what's going to happen in the next 18 months for you.

Nkrumah Pierre:Awesome, thank you. Dave?

David Hannaford:Well, I would say my words of wisdom or an old adage all of us have heard 100 times, but I think it really resonates. Keep reinventing yourself and your company to survive.

Nkrumah Pierre:Love it. Mitchell?

Mitch Kleinhandler:I would second the reinvent yourself and your company. I've done that numerous times. I think that's really important. I just can't wait to get out of my house and get back to my office, go to the gym, breathe fresh air, sit at a bar and have a drink. That's what I'm focused on for the next six weeks.

Nkrumah Pierre:Awesome Mitch. John?

John Pennett: I would say be positive, embrace change and love your family and friends, and love the opportunities you have to get together with them and embrace those moments.

Nkrumah Pierre:Absolutely. And I'll say quickly, don't take your relationships for granted. Add value as much as you can. I mean, each of you on this call are friends. John you’re a colleague, also a friend. Dave, Mitch and Anil, you guys are friends of mine as well and thank you for doing this panel. Add value as much as you can, reinvent yourself as much as you can and like the folks said, be positive, be upbeat, add value. So, I want to first off thank each of our panelists for spending the time with us today, and also thank each of you in the audience for spending time with us.

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