Vanderbilt Business

Category: Lessons Learned

  • Second Act

    The following is adapted from a speech given at the graduation ceremony for the Executive MBA Class of 2011.

    My name is Alex Nicholson, and I’m 63 years old. A year and a half ago, I began a new job as a trading partner in a startup hedge fund. It’s the best job I’ve ever held—the best boss, the best environment and the most fun work. For the first time, I wake up early and can’t wait to go to work. I invest my own money in the fund, so I’m an owner as well as an employee. It’s also the most remunerative work I’ve ever done. I attribute my newfound success largely to the Vanderbilt Executive MBA program, but my path has been a circuitous one.

    Alex Nicholson, who was the oldest in his Executive MBA class, credits the program for helping him reinvent his career.
    Alex Nicholson, who was the oldest in his Executive MBA class, credits the program for helping him reinvent his career.

    I was a late arrival to the business world. I was born and raised in Nashville and earned degrees in philosophy and law at Stanford. But after 20 years in California and unfulfilling stints in education research at Stanford and in corporate law in San Francisco, I returned to Nashville to reinvent myself. The family business, Nicholson’s Hi-Fi, which sold audio-video systems and had been successful since 1946, was encountering difficulties in 1987 and needed help. At age 38, I decided to join my father in the business.

    Nicholson’s Hi-Fi grew and prospered in the 1990s, designing and installing home theaters, lighting control systems and home automation systems in Nashville’s finest residences. One day in 1998, after I had taken over the company from my father, it struck me that I didn’t know what the hell I was doing running a business with 25 employees and $3.5 million in annual sales. I had had no business education and only minimal on-the-job training. I was managing by the seat of my pants and unsure of every major decision.

    I met with Tom Hambury, Owen’s Director of Executive Programs at the time, to ask whether I could benefit from the Executive MBA program. I expected him to say no, that the program was intended for rising midcareer employees at large corporations, who could use the degree to earn promotions and raises. Tom startled me when he responded, “The Vanderbilt Executive MBA is a lock-step, generalist program without specialization. Corporate employees, who are specialists, benefit greatly from the program. However, small-business owners, who have to be generalists, benefit most of all because they need every course in the curriculum.”

    Tom was right. To run my business, I needed to learn accounting, human resources, strategy, economics, negotiation, finance, organizational behavior, operations, marketing, leadership, entrepreneurship, and statistics. And so, at age 50, the oldest in my class, I entered Owen in the fall of 1999. I looked forward to getting to know the beautiful Vanderbilt campus, but I ended up sitting in the same building, in the same classroom, in the same exact seat every class for two years. But I loved every part of the Executive MBA program—the professors, the classes, the reading, the students and the teamwork—everything that I had disliked about law school.

    “After I had taken over the company from my father, it struck me that I didn’t know what the hell I was doing. I had had no business education and only minimal on-the-job training. I was managing by the seat of my pants and unsure of every major decision.”

    —Alex Nicholson

    Luke Froeb, the William C. Oehmig Associate Professor in Free Enterprise and Entrepreneurship, taught me where wealth comes from and convinced me to align my political interests with my economic interests. Ray Friedman, the Brownlee O. Currey Professor of Management and Associate Dean of Faculty and Research, taught me to negotiate from a broader perspective so that both sides could come out ahead. Germain Böer, Professor of Accounting and Director of the Owen Entrepreneurship Center, taught me how to start a new company, which made me glad my father had already done it, and I didn’t have to.

    My favorite course at Owen, however, was the finance class taught by Bill Christie, the Frances Hampton Currey Professor of Finance and Professor of Law. Before Bill’s class, I didn’t even know what finance was. When I started to read the textbook over the semester break, I couldn’t put the book down. All of a sudden, the big picture of business made sense—companies, projects, debt and equity, dividends and buy-backs, the stock market. My favorite topic was options—puts and calls, profit and loss graphs, synthetic stock positions and real options.

    But finance and options had little to do with Nicholson’s Hi-Fi. My purpose at Owen was to learn so that I could help my family business. I tried my best to share with my associates what I had learned. I found that task was much harder than anything I ever did at Vanderbilt. So I went back to the basics: I hired a coach to work on team building, which I considered the most fundamental lesson from Owen. We went on expensive overnight retreats, talked freely to each other and kept careful notes about our commitments to accountability.

    None of it worked. I found out that the general manager disliked the salesmen because they could earn more than he could; the salesmen distrusted the technicians to install their systems correctly; and the technicians bullied each other and refused to follow directions from the general manager. Owen had elevated me to a higher plane of business consciousness, but I was unable to raise my company along with me.

    After my graduation, the housing boom brought an onslaught of new competition in our industry—from the Internet, from big-box stores, and from local installers without the overhead expense of a retail store. Our revenue plateaued and by 2005 was starting to decline. The company that had supported our family so well for six decades now needed cash infusions from the family to cover its expenses. Soon I was $2 million in debt and unable to see a way out.

    I finally realized that I had to let go of the idea of keeping the family business afloat. Remembering my interest in finance, I started taking classes in stock and options trading, which I enjoyed tremendously. In 2006 I sold our warehouse and started reducing my debt. In 2007 I sold the business operations to a Birmingham, Ala. audio-video company that wanted to open a Nashville branch. I made sure that all my employees had positions with the buyer and that all my customers’ jobs in progress were completed. Then I started trading options full-time for my own account. In late 2010 I sold my final parcel of real estate—the retail store, which had stood empty for four years—and paid off the remaining debt.

    My solo options-trading career was successful, but my returns were inconsistent, and I felt unfulfilled. My wife, Laurie, encouraged me to find a real job—and get out of the house—while trading options on the side, so I went back to Owen to confer with Debbie Clapper, Associate Director of Executive and Alumni Career Services. She helped me redo my resume, which had been dormant for 25 years, and sent me job postings from Owen every day.

    Then early last year, a friend of mine contacted me about a new fund she was starting. The best options trader I’ve ever known, she left the corporate world in 2007 to follow her passion: a charity she founded called Just Hope International, which provides infrastructure projects in the poorest parts of the world. While supporting herself and her charity by trading options, she started a closed hedge fund to allow her former business associates to invest with her.

    When we met to discuss her new fund, she offered me the opportunity to invest. As I was about to ask if she needed another trader, she asked me first if I would be interested in working at the fund. Fortunately I had the requisite professional degree and a current resume. During the third interview, I knew she was going to make me an offer. Forgetting everything that Ray Friedman had taught me about negotiation, I jumped directly to my bottom line and said, “This is my ideal job. I know there is no money right now. I’ll work for free until the company can pay me.” She beamed with joy and said, “What a blessing you are to do this for us! But it may be a year or two before we’re profitable.”

    Our company, Hope Investments LLC, based in Brentwood, Tenn., trades options and futures on the broad-based stock indices. We have been profitable since the first month and have now paid off our startup costs. A large share of our profit goes to support Just Hope International, the charity for which we are named. There are three partners, including myself, but no additional staff. My boss and other partner also serve as the president and executive director, respectively, of the charity. They are both now working to buy land in Sierra Leone, the poorest country in Africa, so that a self-supporting farm, orphanage, school, church and health clinic can be built there.

    The opportunity at Hope Investments has enabled me not only to do well financially but to find a moral direction in my work. For that I have Vanderbilt to thank. Even though my original purpose in attending Owen was never realized, the Executive MBA program was the best educational experience I’ve ever had. Owen has given me the intellectual foundation to support a lifetime of continued learning in the business world. And when my perfect business opportunity came along, my education gave me the confidence to seize the moment—a moment that forever changed my life.

  • 25 Years of Perspective

    25 Years of Perspective

    Neil Ramsey on podiumThis piece is adapted from a speech that Neil Ramsey delivered during Owen’s Alumni Weekend in April. 

    Looking back at my graduation 25 years ago from Owen, I’m amazed at how much my perspective has changed. Perhaps I could have learned most of what I’m going to describe here by reading, but there’s no way that knowledge would mean anything to me today without the experiences to back it up.

    So what have I learned since graduating from Owen?

    I’ve learned that most of the lessons my parents taught me were the keys to a happy life. When my dad used to tell me that I would grow up to be exactly the kind of person that I was as a boy, he was right. Ralph Waldo Emerson said, “The only person you are destined to be is the person you decide to be.”

    I’ve learned that how I handle my problems is a lot more important than avoiding the inevitable problems that pop up. Unfortunately I haven’t fully learned what Teddy Roosevelt said best: “Nine-tenths of wisdom is being wise in time.”

    I’ve learned that it is okay to say what you think, but it is better to do it tactfully. I did not understand this when I was younger. I felt that if what I was saying was true and I meant no harm, it was okay to say it. It took many hurt feelings to learn this one, and I’m still working to be more considerate in my delivery.

    I’ve also learned, as a friend of mine said 20 years ago, that “there are no throw-away comments.” The irony of this quote is that when I recently reminded him of the comment a couple of weeks ago, he was surprised I had remembered it. Everything you say and do can touch people in a positive or negative way, and you may never even know it.

    I’ve learned to go as far as I can to show people I love what they mean to me. If you find yourself wanting to record your feelings in words, do it.

    I’ve learned that substance may be all that matters, but you may not be listen-ed to if you do not pay attention to form. Substance without form serves little purpose.

    I’ve learned that having ambitions is much more important than being ambitious. I’m one-tenth as ambitious today as I was 10 years ago, but my ambitions are 10 times greater.

    I’ve learned that perseverance is the key to success. Accumulated knowledge and experiences are our most valuable assets.

    I’ve learned that you can change the way the world treats you simply by opening your heart, looking for good, and showing more kindness and patience. I haven’t mastered this, but I am better than I used to be, and the world treats me better because of it.

    I’ve learned that I would rather be respected than liked. I would prefer both, but given the choice, I’d pick respect.

    I’ve learned that the need for my parents’ approval never goes away.

    I’ve learned that I could not be successful in my own business until I decided I was just another employee with specific responsibilities.

    I’ve learned that my favorite people are very smart, have a good sense of humor, and don’t take themselves too seriously.

    I’ve learned to demand much less of most people but demand much more from the people who can handle it.

    I’ve learned that my greatest comfort comes from watching my kids find their own way. Nothing makes me prouder than when someone I really respect says something nice about one of my kids.

    I’ve learned that nothing makes me happier than having a special moment with one of my children when it is completely obvious they love and appreciate me.

    I’ve learned that I should have no faith in objects, little faith in institutions, faith in people I care about, a lot of faith in myself, and complete faith in God.

    I’ve learned that one of my biggest sources of frustration and angst is the guilt associated with unreturned phone calls.

    I’ve learned that having money is much more important for mental freedom than I ever imagined. I live scared. That is my motivation.

    I’ve learned that intelligence can’t be measured accurately. I think maybe intelligence is like what Supreme Court Justice Potter Stewart said about pornography: “I don’t know how to define it, but I sure know it when I see it.”

    I’ve learned that intellect and talent sometimes don’t translate from one field or endeavor to another. As an undergraduate, I had very good grades, but the two courses I did poorly in were economics and an engineering science “calculator” module. At Owen I had a difficult time in Professor Blanton’s computer course and Professor Blackburn’s stats course. Now here I am running a statistics-based, research-oriented quantitative hedge fund utilizing econometric models. In my business we always have to say “past performance may not be indicative of future performance.” I guess there’s a reason for that.

    I’ve learned not to compete head-to-head with people smarter than me. I try to compete where my strengths are unique.

    My wife has been trying to teach me for 25 years that when people seem odd or mean, they are probably just going through something tough. I am beginning to get this one.

    I’ve learned that the world would be a much safer place if we all lived below our means.

    Along these lines, I’ve learned not to laugh at old men with no hair on their ankles. I am now one of those old men. This is a pretty minor issue but shows that we should be more understanding and compassionate.

    I’ve learned that the world would be a much safer place if we all lived below our means.

    I’ve learned that inexperienced geniuses are dangerous.

    I’ve learned that “value” is very difficult to surmise.

    I’ve learned that the stock market is a tricky place to make money.

    I’ve learned that most people and almost all politicians take the benefits of economic activity for granted. They forget that this is the core of morality and self-worth and opportunity for society.

    I’ve learned that most arguments between people could have been avoided with some initial definitions and that all of the Ten Commandments make sense.

    I’ve learned that making things as simple as they should be is very difficult. As Einstein said, “Make everything as simple as possible, but not simpler.”

    I’ve learned that perseverance is the key to success. Accumulated knowledge and experiences are our most valuable assets. One of my favorite quotes is from Winston Churchill. He said, “When you are going through hell, keep going.” Conversely I’ve learned that if what I’m doing is not working, I better do something else. Separating hindsight from new insight gained from a setback is the key to perseverance.

    I’ve learned that answers and new opportunities wondrously appear when I seem to need them.

    I’ve learned that I should be striving more for goodness than greatness.

    I’ve learned that when something hurts me or angers me, it’s not a good idea to get philosophical and accept it too quickly. And more importantly, it’s even worse to lose control of my emotions and do damage.

    I’ve learned that we have no  idea what tomorrow will bring.

    While I have no idea what I will learn in the next 25 years, I’m guessing that I will not learn some of the simplest and most basic lessons well enough:

    Take care of my family.

    Connect to other people.

    Treat people kindly.

    Be thankful for what I have.

    Recognize that my current situation is just a snapshot.