As part of my series about the “How to Navigate and Succeed in the Modern World of Finance,” I had the pleasure of interviewing J. Christopher Mizer, President & CEO of Vivaris Capital.
J. Christopher Mizer has over 25 years of extensive experience in alternative asset investing and value creation as an entrepreneur and financial expert. Mizer is the President and Chief Executive Officer of Vivaris Capital. He founded Vivaris Capital in June of 1998. Vivaris Capital (formerly Lake Erie Capital) invests in and acquires middle-market businesses in a broad range of industries that are leaders in their market niches. Vivaris also sponsors transactions in the technology and life sciences industries. Mizer serves as the chairman of each of the portfolio companies and guides key strategic decisions and their execution. He has also served as the operating president on an interim basis when companies are going through periods of ownership succession and new management team members are being assembled. Prior to Vivaris Capital, he served as Vice President of Key Corp. Capital Markets and Senior Accountant with Ernst & Young. He earned the Bachelor of Science and Master of Science (biology), Bachelor of Arts (economics), and Master of Business Administration (accounting and finance) degrees from Case Western Reserve University.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I went to college with the intention of being a physician. Many doctors at that time were struggling to manage their practices, so I decided to do a joint degree in business as well as biology. After completing the pre-med classes, I began taking graduate-level classes in the medical school and working in the university’s hospital system. I realized after spending some time working around doctors, that it was very different from the idealized vision I had of being a sage scientist. At some point I realized that I was passionate about creating business opportunities, leading people, and solving problems, so then I flip-flopped things and entered the finance industry.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
One of the first companies I ever bought was a healthcare business. I bought it from the co-founder of the business and we ended up backing the Vice President of Sales and Marketing, who was effectively managing the business day-to-day. Before buying the business, we heard that there were a lot of opportunities within the industry so we were eager to go to work and grow the business. However, we started to experience major challenges once we promoted the number two person to President. After the promotion, he got what I call “Boss-itis.” This individual went from being a high performer and a great contributor to the team to regularly coming in late, leaving early and investing a lot of extra time in his personal matters — which started to interfere with his performance. Not only that, but he lost the respect of his team members.
I worked hard to try and mentor and develop him in this new leadership role, which, of course, didn’t work. We hung on to him for too long and we eventually had to let him go. I made the “classic rookie mistake” of not fully vetting the person and understanding how they were going to perform in a new role, independently of how they performed in the past.
We brought in a new President and CEO to replace him. We also expanded the sales and marketing function dramatically. The new team grew sales by about 400 percent, increased our product offerings from 100 to more than 6,000 SKUs, and received more than 25 patents. Ultimately, I sold the business for seven times more than our initial investment in less than five years.
I learned from this experience the importance of really taking the time to find the right person for the role. After collaborating with various HR leaders, business mentors and successful entrepreneurs, I began to leverage the process of human engineering to create organizational charts and put in place systems and people that most effectively fill different business functions within a company in order to achieve growth within the business. I now live by the following quote: “I’d rather have the job go vacant for a year then hire the wrong person for a day.”
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
Throughout my career, I have always studied the guys who were successful in finance. I’ve read everything by and about the most successful financiers of my generation, including Warren Buffet, Ray Dalio, Henry Kravis, Larry Tisch, Stephen Schwarzman, George Soros, David Rubensten, Mike Milken, and many more. I’ve read a lot of biographies by these people and hundreds of books on investing, finance, and entrepreneurship. From everything that I’ve read and learned or experienced personally, I found there to be a handful of major themes:
1. Markets overreact and underreact which creates opportunities to deploy capital when the stars align.
2. There is a real systematic process for creating value in a business based on profitable growth and strategic value.
3. The most important question to answer is WHO and not WHAT. A lot of people spend time on strategy and numbers, but you have to be able to execute and create value.
Some of my favorite books are Good to Great by Jim Collins and Alchemy of Finance by George Soros, and The Snowball by Alice Schroeder.
Are you working on any exciting new projects now at Vivaris Capital? How do you think that will help people?
Yes, we are working on several exciting new projects at Vivaris Capital.
- VICAN: We just launched our new structured financial product called VICAN to help investors protect their principal while diversifying their investments. VICAN is an innovative, structured financial product that gives investors access to institutional quality, growth equity investments while securing the principal. We do this by combining a private equity investment with investment-grade securities that mature to return the face amount invested regardless of the performance of the portfolio company. We’ve created the VICAN structured financial product so we could offer access to alternative asset investments to individual investors, family offices, and smaller institutions, as alternative assets are among the best performing investments historically, on average, providing better valuations and higher growth than publicly traded companies and bonds. Learn more about our VICAN structured financial product in this video. We’re also gearing up to publish our new book called The Loss Averse Investor in October, which outlines how investors can benefit from investing with VICAN — particularly during the current state of the market.
- United Cancer Centers Capital Raising Efforts: We are currently leveraging the VICAN structure to raise capital for United Cancer Centers, Inc. (“UCC”). UCC is the first institutional healthcare system in the U.S. offering integrative cancer care under the recently enacted Right to Try legislation. Right to Try gives patients access to potentially life-saving therapies that have cleared a Phase I clinical trial for safety but have not yet received FDA approval. UCC’s mission is to redefine the concept of informed decision-making for cancer patients by providing access to a wider array of both FDA-approved and investigational treatment options. We’ve also partnered with Entoro Capital, a technology-enabled global investment bank and broker-dealer, to raise capital for UCC. By partnering with Entoro, we have access to a diverse global investor base and a technologically advanced investor portal that safely and securely streamlines the entire investment process with maximum efficiency, end-to-end security, and seamless execution.
- AI and Fintech: We are sponsoring an artificial intelligence company called AIMACHINE. It integrates the available AI, ML, and neural network-based heuristics along with proprietary technology in a cloud-based deployment. Something like 99% of all data that is collected is never analyzed and used for decision-making. We have learned that there are incredible insights in the data which allow you to have a better fit with customer preferences, drive efficiencies, and locate creative solutions. We believe that AI is going to get embedded into many services and create massive value through automation and disruption.
Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
Throughout my investment banking career, I saw a lot of companies plateau. When I started out, I wanted to unleash the potential that was trapped inside these businesses, to create value for their customers, employees, and shareholders and to help them blossom to make the transition to the next level as a growth company. I viewed that as a process of deploying our capital, elevating the management team, and implementing systems to realize those aspirations.
I also saw many companies that had a lot of opportunities to drive growth organically and I had a toolkit for creating opportunities and processes that would set these companies up for success.
When I moved to San Diego, I switched my focus to working with companies in the healthcare and life sciences industries. I saw so many brilliant life scientists who didn’t have the business experience to translate what they were doing into successful companies. I also saw companies that had great inventions that couldn’t bring the products to market. Given what I was seeing in this market, I started to apply my experience in helping companies grow to the healthcare and science sector, bridging the gap between science and management. I saw an opportunity geographically and saw that there was a missing link which called for the exact skillset that I had.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
My mantra is “We want our companies to be the best places for the best people to do their best work.”
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
I approach my business from the standpoint of building authentic relationships and from those come good opportunities. It takes a handful of really good people that do alot of good things in the business world. I see around 500 to 1,000 deals a year typically and they primarily come from people whom I know personally. These deals come from my personal relationships that I am always working on cultivating.
We are now looking to broaden our investor base, but we still want to prioritize the focus on building relationships through being a trusted partner. That said, we want to grow through referrals, rather than the traditional lead gen funnels.
In finance, if you are working in the consumer space, you have to do a lot more business development. For example, finance professionals at Charles Schwab or Geico have to build customer interest through traditional consumer marketing channels. What we do at Vivaris Capital is more institutional. We need a couple of dozen new investors, such as family offices, to build relationships with in order to grow and hit our yearly financial goals.
If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
The answer depends on how much capital is needed and how the capital will be deployed. In general, I believe that CEOs are better off bootstrapping for as long as they can so they can keep getting traction and building a higher valuation. When they get to the point of needing the capital, I recommend looking for value-added investors with whom to partner.
We’ve been quite successful in bringing in outside capital from strategic partners. They bring an easier structure in terms of governance as well as add value in areas of such as technology, customers and distribution relationships, and may ultimately lead to a successful exit.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
Valuation is part art, part science. The science part is based on the company’s financial analysis, including historical earnings and projections for future performance, as well as comparable transactions and valuation metrics of other companies. The scientific approach heavily depends on the assumptions that are made about how similar the company that’s being evaluated is to other companies. The art part of the process involves predicting the future, understanding what’s going to be valuable to potential acquirers or investors that’s non-financial, such as technology, patents, brands, and defensive positions.
In order to get the optimal business evaluation, you have to look at what your company can bring to another company ultimately and look at your business through their eyes. For example, a competitor might want to acquire your business because they can reduce the combined overhead and increase their pricing in the marketplace. A company in an adjacent market may want to acquire the business to shore up their own market position.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?
Andrew Grove, the former CEO of Intel and the author of many books including, “Only The Paranoid Survive,” in which he talked about the process of transforming Intel from a commodity chip company to a world-class leader. The first question he asked was if someone else came into the business and was truly objective, what would they do? This is the lens that my business partner and I use in our companies. We all can at times get attached to plans, strategies and people that may no longer serve the business in the way that they did at the beginning of their time at the company. Taking a purely rational look at the business lets its leaders see the hard decisions that they need to make in order to grow. When we buy an existing business that’s in a place of standstill, we work hard to develop a second layer of management, who often bring a lot of great ideas to the table. We ask them powerful questions, let them share their ideas and perspectives, and create a culture that embraces a manageable level of risk. We empower them. We unleash their pent-up ideas and energy. As a result, we’ve seen miracles happen quite quickly.
Additionally, when we get stuck, we typically have a focused brainstorming session around an issue. We use the IDEO Design Thinking Method to help us free up people’s thinking and remove any biases and constraints that can keep them stuck. We’ve resolved many issues and developed a lot of opportunities using this process.
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
Most businesses don’t do a great job of financial engineering. In our experience, it’s one of the best ways to create value for shareholders. CEOs and CFOs tend to see their capital structured as fixed rather than fluid. It takes a different kind of thinking to avoid this mindset. Private equity professionals tend to be successful in this area because they know how to deploy capital in a more optimal way but it takes a certain amount of discipline and creativity to put that into practice. I would encourage all CEOs to build relationships with world-class investors and mentors and learn from their mistakes and their wins to help them grow in this area.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
- Have mastery over accounting, finance and analytical tools: If you don’t have a CPA or a CFA, you probably don’t have the depth of technical skills that you will need to succeed in the finance industry.
- Read A LOT and keep up with the current events daily: I have been fortunate enough to meet Warren Buffet a few times during my career through one of my mentors. One of the things that Warren said to me one time that really stuck is that he reads around 5 hours per day. I took that to heart early in my career and would read 4 books and 25 newspapers or magazines each week. It really helped me to get up the learning curve when I didn’t have as much real-world experience as other people. Now, I try to find subject matter experts and talk to them, in addition to reading books and consuming news.
- Have outstanding communication skills: In the finance industry you are dealing with extremely important issues that are complicated and you are trying to motivate a lot of people who are supporting your initiatives, so having outstanding communication skills is a crucial skill set to have. By nature I am introverted, but I’ve worked really hard to put myself in situations that would have me further develop my communication skills. I have taken acting classes in college to get over my fear of stage fright. I’ve put myself into situations that were very relatively safe to practice speaking extemporaneously. Now I find that I can orchestrate the conversation and know people’s styles, giving people the chance to say what they want to say and ultimately create a game plan with action items based on this strategy. I needed to get comfortable presenting my ideas and then eventually I grew into the role of a confident and effective communicator.
- Be confident in your decisions, disciplined in execution and flexible when needing to pivot: I am a perfectionist by nature and can at times get stuck in analysis paralysis. At one point in my career, I worked on a project for Colin Powel for his non-profit, America’s Promise Alliance. I remember him saying that it’s important to get enough information so you get the decision 70 percent right, implement the decision aggressively and when you see that it’s not working, change and pivot quickly. I went from trying to have everything planned out in advance and being able to foresee everything to having a plan, a back-up plan and measurable milestones to gauge success or failure quickly. I am comfortable implementing my plan but I am also comfortable not getting stuck if the plan isn’t working and pivoting to the next idea.
- Be very resilient emotionally: Business in general, and finance in particular, is a roller coaster ride filled with high highs and low lows. I had a partner years ago, and he and I closed a big deal together that had a successful outcome. He said to me, “Make sure you go home and celebrate because today is a good day but a lot of days in this business are just plain hard.” It takes passion and a mission to keep going in the finance industry and to put in the 17th and 18th hour in the day, while weathering through the peaks and valleys to keep making forward progress.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
You have to have a real passion for what you do and a higher purpose than making money. Money is a means to an end, not the end in and of itself. Connect your business and your career to things in the community or issues in which you have a personal stake. Burnout can have major negative consequences on your personal health and your relationships if you’re not consciously avoiding it.
To avoid burnout, focus on all areas in your life that are important and use your business as a way to enrich those areas and not to avoid them.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I’m really intrigued by Bhutan and their idea of Gross Domestic Happiness, rather than Gross Domestic Product. After all, money is just a proxy for something else. We think that if we have more money, we will have more satisfaction from life. This is ridiculous, obviously. Research shows that after basic human needs are satisfied, including some measure of economic security, more stuff doesn’t change how people feel very much or for very long. We all know individuals that don’t make a lot of money who are blissed out. We probably know just as many wealthy people who are profoundly sad, addicted, or dour. Imagine if we had a common vocabulary to describe the many aspects of happiness and what drives it. Instead of bragging to our buddies about net worth, we could have open, honest, vulnerable conversations about self-worth. “Guys, my emotional support stock is down this week. I’m going to double up at the open tomorrow morning.”
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