My Failed Initiatives: Coaching a Financial Report Business

Gideon Gartner on Failed InitiativesIn mid 2003, I suggested to my stepson that he apply his entrepreneurial interest and talent to a project we called Topline Analysis, LLC.  This was a new and rather structured report format which I designed, specifically to publicize small public firms to those Wall Street “buy-side” investment firms which invested in listed companies but received virtually no research “coverage” from  the relatively large Wall Street “sell-side” banks . There were hundreds of such publicly traded SMB firms which were disadvantaged by lacking sell-side analyst coverage.

Our idea was to describe the firm in both graphic and written form, including  its past and projected  growth, broken down by as many growth categories as possible (both graphically and with as much detailed  commentary as possible).  Topline would offer such newly written and timely reports, at a relatively reasonable price and with what I thought was an innovative design, to serve these small firms sometimes called micro-caps but very often much larger, most of which lacked any sell-side analyst coverage.

The design: at first, the focus for Topline would be to emphasize ‘top-line growth’ estimates, derived from our expectations that  the CEO’s would confirm the firm’s revenue categories,  its rough  growth prospects  and potential future trends,  hopefully offering comments such as, ‘Europe accounts for about 24% of our business today, and based on our increased investment in sales we expect that next year it will grow  by more than 10%”. We might then ask the CEO whether he thinks  10% annual growth could be maintained over the next five years? ‘Well, it might decline somewhat in our third year, but assuming no collapse in the European economies, we’d come close’.

We’d attempt to address other growth drivers: geography, product class,  line of business, and client type; future revenue sources about which any CEO should have some concept, even if not explicit. But our graphics would suggest the firm’s  growth make-up and trends, followed by asking a few questions about overall profiability expectations.

Even while serving nine years at Hutton and Oppenheimer, I had never seen a Wall Street report which pursued such a generalized rather than specific tack, and felt this might  be a minor but useful  innovation for these firms which desperately needed investors to at least recognize their existence; they needed publicity, and hand-outs written by third-parties would only help.

My stepson created a beautifully structured document but unfortunately I pushed selling it via salespeople who would first contact the CFO, and if not available, mention my name which would likely be recognized,  be trained to briefly explain  what our differentiation was all about. But sales was our Waterloo, we hired one salesperson who floundered and in early 2004 we ceased operations due to little visibility of future growth, plus conflicts with other activities which took precedence, e.g.  independent views and too little cash. I had delegated much too much.


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