March 9, 2006

Start-up due diligence: First looks, Siam Cement, and working shoes?

Filed under: Start-up First Aid — Administrator @ 5:49 pm

I think I’m becoming an expert at decoding embedded meanings in “first looks” which are really two second glances from people I meet for the first time.

For example, yesterday, I flew in from Hong Kong to meet with a bunch of Beijing based companies; at one of the start-ups, I was introduced to a new member of the team (a returnee). After we exchanged name cards and got the pleasantries out of the way, I noticed he glanced down at my shoes, grimaced, and returned his eyes to his colleague who was gabbing on about something.

I regarded his first look for a moment and realized it wasn’t the typical glance I’m accustom to (“he looks a lot like Tom Cruise”); in fact, this was the holy grail of first looks, it was the illusive “shoe first look” – that quick calculation used to measure an individual’s worth by the shoes he wears.

Moments later, as we were walking into the meeting room, I snuck a peak of his shoes and realized he was gliding down the hall in a pair of expensive fine Italian leather jobs – very fashionable, very European.

This brought me back to a conversation my ex-girlfriend had with me one day while in b-school, “…the world judges a man on two things, his watch and his shoes…” She is bright lady, so I took her advice and bought some nice business shoes; the problem was, by the time I actually had a reason to wear them, I was back in Asia; and as a rule I refuse to wear nice leather business shoes when I’m out in the streets in China.

I know I sound crazy but there is a very valuable lesson (and reason) that I learned dating back to my first job in Hong Kong; and thus, I beg a little patience as I fumble my way through this explanation.

It was 1995/96, and Asia was, well, rocking financially; I was 22 years old, a Hong Kong rookie, having just relocated from Tianjin, PRC, and over the moon about landing my first banking position as an equity analyst/sales-trader. About a week into my job, my British boss came to me, grinning, and said:

Boss: “Congratulations! We are sending you down to Thailand for two months to learn about the market…”

Me: “Where is Thailand?”

Boss: “…Americans. Right, lace up your wingtips, dry clean your suit, and get on that plane…”

Me: “Seriously, Tom, where is Thailand…”

Forty-eight hours later, I’m zooming through the streets of Bangkok, in the blazing heat, in the back of a tuk-tuk, a three wheeled motorcycle with a passenger carriage, wearing a nicely tailored, professionally dry cleaned, charcoal grey suit and shining black Italian leather shoes. I was looking good, feeling great, and ready for my first company visit with Siam Cement.

Calculator in one hand, note book in the other, I stepped out of the tuk-tuk and into a puddle of mud. Ah, crap! Mud was everywhere – outside my shoes, inside my shoes, and on my face (it was a big puddle). I think my level of embarrassment was up there with unknowingly walking into a meeting with bird shit your head.

After the meeting, the MD of Siam Cement took me out for drinks. As we were walking out the door, heading to the bar, I noticed he was wearing working business shoes which are not boots, but not dress shoes either, perhaps Doc Martens are the best description of them. I didn’t say anything but remember thinking, “dude, this guy is MD of Siam Cement and is wearing a suit with Doc Martens, what is up with that?”

A couple drinks into the session I got up enough courage to ask him, “Why aren’t you wearing nice shoes” (I was young, a little tipsy, and working for a British firm, it was a fair question). He regarded me for a minute, looked at my shoes, and grimaced (same same look as I note above). The MD took a sip of his drink, turned to me and said,

“Why would you want to destroy a nice pair of shoes walking around in that crap outside in the streets just to look professional? Real life, success in business, isn’t about nice Italian leather it is about taking stock in your surroundings and adapting to those surroundings. My employees earn a couple dollars a day, what impression do I give off if I walk around the office or project site in shoes worth more money then their annual salary? It is a mindset, I want to remind myself I’m not finished, I’m not retired, I still have work to do. By the way, nice shoes but mud isn’t your color…”

I thought that made a lot sense and shared his insights with my boss, who in turn “recommended” I clean up my shoes, dry clean the suit and prepare for my next meeting; which I dutifully did, however I never forgot what that MD from Siam Cement said.

Now, when I’m doing my due diligence on new investees, when I remember, I try and check-out (not a “first look” though) their shoes to see if they are “style shoes” or “working shoes”. I like to see start-up guys wearing working shoes. I like the symbolism, that gritty, scrappy working shoe mindset. And, this is why I wear my working business shoes in China.

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