Global Cash Flow

Some fourteen years ago I wrote an article for the Silver Fox Advisor’s Newsletter which was titled “Global Cash Flow”. At the time Global Cash Flow was a well-used buzzword in the Banking Industry as the 2008 real estate crisis was unfolding.

Today the phrase Global Cash Flow remains extremely important in the financial industry as lenders analyze the ability of borrowers to be able to make their debt payments, not only on the loan that is being underwritten at the time but on all the borrower’s business as well as personal debt.

Why is Global Cash Flow important to a lender? Because conventional lenders (financial institutions) are typically cash-flow lenders not collateral lenders. Cash flow lenders want to be paid back from a borrower’s cash flow, not by having to rely on taking back collateral and selling it.

What does “Global Cash Flow” mean, and how does it affect you and your banking relationship?

Let’s start by defining the term “Global Cash Flow”. We all know what “Cash” is, and “Cash Flow” is the movement of money into and out of a company. When more comes in than goes out, it is said to be a positive cash flow. A negative cash flow is when more goes out than comes in. Webster defines “Global” as “of, relating to, or applying to a whole”. Thus, when added all together, one could conclude that “Global Cash Flow” means Cash moving into and out of a company’s whole span of ownership or common bond [e.g., the company’s owner(s), subsidiaries, related companies, and common ownership entities (foreign and/or domestic).  In fact, throw in everything else related to the company and its owner(s)!].

Now, for the second part of the question: “How does “Global Cash Flow” affect you and your banking relationship”? This needs to be looked at from two points of view.

First of all, if you presently have an open credit facility with a bank and are providing financial statements, as part of a reporting covenant in a loan agreement, then do not be surprised if you are asked to also provide financial statements and tax returns for that real estate holding company you and your spouse own that has some rental properties in it or perhaps your son’s or daughter’s college condo. Or, you may be asked to provide the financial statement and tax returns on your spouse’s professional practice, that may be totally unrelated to the borrowing entity, but the spouse is a guarantor on the credit facility, so your overall “Global Cash Flow” coming in or going out may be affected. If this requested information is not provided and the bank’s credit analysts cannot prove you have cash flow to cover your debt payment(s) by at least a 1.25 or even a higher ratio like 1.35, then there is a good chance your loan will be classified, even if you are making your monthly payments on time. If your loan does become classified, then you banker will become your newest problem employee. You will get calls from your banker asking you numerous questions because he or she has to complete an “Action Plan” to get your loan upgraded to a “Pass Credit” status. This could take a while (6 months or a year). If it looks as if the upgrade process could take longer, you may be directed to do the difficult task of  “Moving Your Loan” to another lender. I truly do not think that most bankers even realize what they are saying when they issue that edict to you. If all the banks are playing from the same handbook, how it is possible to move your loan?

The second situation comes into play if you are looking for a new loan. You will be asked to provide all the borrowing entities’ financials and tax returns as well as the guarantors’ personal financials and tax returns. But oh wait! The credit analysts spot that you or one of the guarantors is receiving rental property income that was reported on a Schedule E form. The sirens start to blare and phone calls and e-mails begin to fly. The banker will tell you to produce copies of the financial statements and tax returns for that real estate entity you own. Once you provide that information, you will likely get another request. Can we also get copies of all the documents on the loans outstanding in that real estate entity? You provide those copies, and then guess what? We also need this, and then that, and it seems endless, all provided in order to work up the “Global Cash Flow”.  If that magical 1.25 or 1.35 debt service coverage cannot be achieved, you will likely not get the new loan.

Do not take any of this personally, or you may take up drinking. Also, do not think you are in the driver’s seat because you have a good loan to collateral value. In today’s environment that is a given, or you will not even be afforded the opportunity to provide the financial information. It is all about cash flow.

One thing that makes all of this so difficult to understand is if the bankers and the regulators would take a minute and think about what they are doing, they just might think about adding a step to the process. All this “Global Cash Flow” analysis that is being done is based on historical data. I know that history repeats itself, but let’s be a little creative and pro-active and do some forecasting of revenues and expenses and get to see how much is going to actually be available to make future payments.

Written by Richard T. Hendee, a Silver Fox Advisors

Silver Fox Advisors Announces New Member Dan Elliott

HOUSTON, TX (June 12, 2023) – Today the Silver Fox Advisors announced its newest Silver Fox Advisor. “Dan Elliott was recently voted in as a Silver Fox Advisor Member and will be welcomed into the organization at the organization’s next Membership Meeting,” announced Joseph Tung, President of the Silver Fox Advisors. Tung added, “As the Managing Director of Sunbelt Business Sales & Acquisitions, Dan has been helping Houston area businesses for more than 20 years, and he has a tremendous amount of business selling and acquisition experience as well as expertise that will be of great value to the Houston area businesses to whom the Silver Fox Advisors provide their services. Mr. Elliott has received the professional designations of Certified Business Intermediary (CBI) and Master Merger & Acquisitions Intermediary (MMAI).”

Silver Fox Advisors are proven business leaders who advise, coach, consult, and mentor business owners and leaders, CEO Roundtables, and entrepreneurship programs.

Silver Fox Advisors have been sharing their knowledge, experience, skills and wisdom since 1986. For more information visit:

Power Consumers in Texas and the US Faced the Impacts of Natural Gas Price volatility, Weather Issues, and Demand Uncertainty in 2022.

A winter of price discontent becomes a season of uncertainty

As Texas and the United States approached the fourth quarter of 2022, there was every reason to believe that power consumers were facing a winter of discontent over prices. The country had just sweated through one of the hottest summers on record, demand was surging while output was declining, and domestically produced liquefied natural gas was being shipped to Europe as Russia’s invasion of Ukraine disrupted global energy markets. So it was no surprise that conventional wisdom concluded prices that were already surging in 2022 would show no sign of letting up entering 2023.

So much for conventional wisdom.

Benchmark Henry Hub natural gas prices – a major driver of electricity costs, especially in Texas– have plunged. Storage levels in both the United States and Europe have grown and now provide a comfortable supply cushion. Despite a December freeze, moderate winter temperatures – January got off to its warmest start in almost 15 years, analysts said – have kept demand in check.

Does that mean the record natural gas price swings that defined 2022 have evaporated? Not at all. “It’s looking really volatile here to start the year,” said one analyst. And there are expectations that power prices in Texas may climb even higher this winter. So the state’s businesses and organizations should consider collaborating with an energy procurement partner to help them navigate the uncertainty, save money, and keep their operations productive and efficient.

Record high gas prices marked 2022

The wholesale Henry Hub natural gas spot price averaged about $6.45 per million British thermal units last year, according to the Energy Information Administration, the highest annual mark since 2008 and 53 percent higher than in 2021. On a daily basis, prices were all over the map, ranging from a peak in August of $9.85 per million British thermal units to a low of $3.46 per million Btu in November. But they started creeping up in December as heating demands grew.

The price performance was both consistent with and in contrast to EIA’s previous outlook. In early 2022, the agency forecast that Henry Hub natural gas prices would average about $9 per million British thermal units in the fourth quarter of 2022 before retreating to roughly $6 in 2023 as production recovered. It scaled back those estimates in October, to about $6 per Btu in the fourth quarter of 2022 and holding that level in Q1 of 2023. Still, that was sharply higher than the $3.32/MMBtu in 2021 and $1.86/MMBtu in 2020.

The higher-price expectations weren’t without reason. Prices had begun to creep higher in early 2021, when a brutal winter storm battered Texas and Oklahoma, causing a spike in February. They kept rising through October as the economy strengthened and caused an increase in demand, which hit an annual high of 2.97 billion cubic feet per day. The cold weather extended into spring 2022, pushing prices even higher, leading to below-normal injections of gas into storage in advance of the approaching heating season, and gas already in storage had been withdrawn to meet winter demand. Drillers were raising production, but available supply was still lagging.

Demand was showing no signed of abating, either. In January 2023, EIA said it expected consumption of natural gas settle at an average of 88.7 bcf/d EIA last year – a new high and up 6 percent from 2021 – and that power sector usage would average 33.3 bcf/d, another record and 8 percent over 2021. Meanwhile, the agency noted that in 2022, liquified natural gas exports continued to climb and storage inventories were at historic lows.

High prices don’t materialize, but volatility still reigns

But as the United States entered a new year, the market had begun to shift dramatically. From mid-December 2022 to mid-January 2023, prices plunged 48 percent and, according to Rystad Energy, demand could hit record lows if abnormally high winter temperatures continue. On top of that, production is poised to outstrip demand: EIA projected natural gas output will grow 2.4 percent this year, to a daily a record daily average of 100.3 billion cubic feet per day, while demand remains basically flat. Others, including East Daley Analytics and RBN Energy, forecast an even higher output increase.

The falling costs of natural gas, combined in part with the expansion of new renewable energy, were projected to drop wholesale U.S power prices by 10 to 15 percent this year – though customers likely won’t see benefits in 2023. On top of that, storage, which had fallen to 12 to 13 percent below the trailing five-year average, was on the upswing in both the United States and Europe. In the EU, it was at 83 percent of capacity, up sharply from the year-ago level of 51 percent. In the United States, inventories rose by 11 billion cubic feet in mid-January – the Wall Street Journal called that “unheard of” – bringing domestic stockpiles to just 1.4 percent under the five-year average and “erasing any doubt that there will be enough of the fuel to get through the winter.”

Price volatility is not likely to abate in 2023, but isn’t expected to reach the record levels of last year. “It’s looking really volatile here to start the year,” said Steve Blair of Marex North America. “We have a lot of factors at play – production, LNG – but ultimately weather will rule.” He added: “If we get more Arctic blasts, the direction of prices could change quickly. If we don’t, and production holds up, we could see new tests to the downside.” For its part, EIA forecast Henry Hub prices will rise about $5 in late January and stay around there for the last three quarters of the year behind falling temperatures and the restart of operations at the Freeport LNG terminal. But it, too, hedged all bets, saying there is a possibility of lower prices.

State of Play In Texas

Despite the plunging cost of natural gas, power prices in Texas are high and, said an economist with the Federal Reserve Bank of Dallas, could go even higher this winter. Part of this is due to the state’s reliance on gas-fired power – 44 percent of generation compared with 37 percent nationally. Exports are expected to jump with the start of the Freeport facility, and three other Gulf Coast terminals are being built. “Those exports,” the Fed’s Jesse Thompson said, “are likely to keep pressuring higher the amount Texans will pay for heat and power through the winter.”

Additionally, there are the ongoing effects of Winter Storm Uri, which knocked out electricity for 5.2 million homes and businesses in 2021 – the large majority of them in Texas. The state’s power customers are still picking up the cost for the grid’s collapse after the legislature approved about $7 billion in ratepayer-backed bonds to deal with the financial repercussions of the disaster.

Also related to the storm, the Electric Reliability Council of Texas has since been managing grid operations more conservatively. ERCOT now wants plants to be online and available when needed. That translates to paying generators a set price to operate, no matter what the conditions. The result? “Conservative operations add costs,” a top energy lawyer told The Texas Tribune.

Your Market Ally

It goes without saying that in a market like this, where the only certainty is uncertainty, businesses and organizations can use an ally. Albireo Energy is your partner in not only managing price and supply volatility, but also in finding opportunities that others might not see.

Albireo Energy is the largest independent smart buildings provider in the United States, and its energy procurement division is a Top 10 utility management firm in its own right, handling over 30,000 commercial and industrial accounts.

We have helped customers country get deals that have them paying less than half of the local utility default service rates, and have helped secure those rates for the longer term. Thousands of businesses have enjoyed lower energy costs by enrolling their electric and natural gas accounts with us. We group these accounts together into large energy aggregations, and those businesses get the same purchasing power as major energy users. Enrolling is simple and effective and provides a long-term solution for your energy purchasing while delivering the peace of mind that comes with knowing your energy expenses are being professionally managed.

For larger businesses, Albireo’s proprietary reverse auction software, supplier management portal, and market-leading supplier network drive sophisticated and proven results. That’s why heavy users such as data centers and blue chip global brands trust Albireo to help them navigate the complexity and risk of energy purchasing.

Any organization that is feeling the pain of high energy bills, or is concerned about where prices will go next, should reach out to Albireo Energy to see what our business-class service can achieve for them. Through intelligent buying patterns, you can enjoy the advantages of structured and longer-term purchases. And even if you are locked into good rates, you can still benefit from an account review. Even beyond matters of rates, Albireo employs thousands of professionals who can help your buildings reduce usage and improve comfort and efficiency through leading-edge technology.

If any conclusion can be drawn from the market today it’s this: No one really knows what will happen next, and price volatility is not going away. But you can still be prepared. Albireo Energy is here to help you do it.

Dallas Morning News – Electric bills are likely to keep climbing, Dallas Fed economist says
Energy Information Administration – Average Cost of wholesale U.S. natural gas in 20922 highest since 2008
Energy Information Administration – U.S. natural gas consumption forecast to increase in all sectors in 2022
Energy Information Administration – Short Term Energy Outlook
Energy Information Administration – Natural Gas Weekly Update
Financial Post – More oil and gas volatility in 2023 to keep producers focused on shareholder returns
Natural Gas Intelligence – Average Henry Hub Natural Gas Spot Price Shoots to 14-Year High in 2022
Natural Gas Intelligence – Volatility Laces 223 Natural Gas Price Outlook Amid Robust Production, Demand Uncertainty
Natural Gas Intelligence – Henry Hub Natural Gas in Q$ Likely to Average $9, with Brent $98, EIA Says
Natural Gas Intelligence – EIA slashes Natural Gas Price Forecast, But Potential Remains for Winter Spikes
Natural Gas Intelligence – Henry Hub Natural Gas in 4Q Likely to Average $9, with Brent $98, Says EIA
Reuters – U..S. natgas price volatility hit record highs in 2022
Reuters – U.S. natgas output, demand hit record highs in 2022
Texas Tribune – Texans face skyrocketing home energy bills as the state exports more natural gas than ever
Wall Street Journal – Made in the U.S.A.: Natural gas prices
Wall Street Journal – It’s Basically Spring for the Natural Gas Market

H-E-B’s Scott McClelland sits down for an exclusive interview with ABC13

HOUSTON, Texas (KTRK) — When it comes to what we eat and drink, Texans are pretty particular, and a Texas-based grocery store has made it their mission to find out just what we like, depending on where we live and shop.

Now the man who has overseen H-E-B stores for more than 30 years is stepping down.

More importantly, this interview demonstrates some amazing leadership tools, tips, and ideas.

Case Study: The nybl Story

Every small growth company has a unique story to tell including lessons learned. 

The insights from their story and lessons learned help drive their company forward into the next phase of their journey.

For others who are orchestrating their own growth, these insights can be invaluable to help them in their journey.

Overall, my 4 Stage Growth Model for Small Companies provides a useful conceptual framework in assessing your current position and planning for your next stage.

My blog entitled Achieving the Take-Off Stage in Small Business describes moving from the Growth Stage to Take-Off with some mentoring advice.

It is particularly challenging to move into this Take-Off Stage. So, I felt hearing the story of one who has done it would be beneficial for those pursuing this leap.

One of my clients has been receptive in sharing his company’s story, and he has also become a mentor for young entrepreneurs.  

I want to introduce you to Noor Alnahhas.

Our relationship began in January 2017.  Noor was one of three principals in a software development company.  The other two principals were technically focused while Noor provided the business perspective.  He had graduated from the Wolff Entrepreneurship Center at the University of Houston Bauer College of Business.

Silver Fox Advisors CEO Roundtable

While the entity had been operating for a number of years, it had no definitive vision or substantive plans for the future which was quite concerning to Noor. 

I suggested that he join my CEO Roundtable where he could get insights on planning from other CEOs of small growing companies.

At the time, each member was utilizing the EOS (Entrepreneur Operating System) framework to explain to other roundtable members their future plans. Noor found the EOS framework from Gino Wickman’s book TRACTION Get A Grip on Your Business most helpful in pulling together his thoughts for the business.

 It also became clear that the leadership structure of the company was not going to get them where they needed to go.

Silver Fox Advisors Fox Den

As the plans took shape, my suggestion was for him to participate in a Fox Den where the Silver Fox Advisors provide a review of the business plan and challenges. 

Generally, there are four advisors with a moderator to coordinate the session.  The plans and issues are provided in advance, so the session provides focused advice.

Noor felt this was extremely helpful because the advisors did not have a built-in bias as do personal friends, investors, and so forth.  They were frank and straight forward in their commentary and assessments. Just what he wanted and needed.

Advisor Role

I have been an advisor and mentor to Noor for some five years now.

Two main aspects of our discussions have been strategy and leadership.  One of my reasons for developing the 4 Stage Growth Model for small companies was to provide a framework for clients like Noor.  It has been an integral part of their planning.

Similarly, the Leadership Personal Profile has been a tool to help leaders understand themselves better and where they need to develop further.  Noor has been a champion of the profile. 

Here are some insights into his profile that will help you understand the nybl story.

Part of Noor’s personal vision is to build companies, chase opportunities, and work with people he enjoys being around. 

One of his key values is finding the positive as he believes negativity achieves nothing.

His perspective on life is there is no such thing as luck, just opportunity meeting preparedness.  If you fall three times, you just have to get up 4 times so that every failure is a step toward success.

His character statement starts with “I am a fun, friendly, and honest person who will do whatever it takes to deliver on my commitments/promises. 

He recognizes that he needs to think more before acting and listen more than talking.

As you can see, Noor is a high achiever.  He strategically looks for the solution in every challenge pondering new and out of the box ideas if that solves the challenge. His leadership brand is chief of dreaming stuff up.

 Over this period, Noor has relocated to the Middle East and has now become the CEO of the reformulated company named nybl.  Here is the nybl story in Noor’s own words.

Noor Telling nybl Story

“Nybl, its structure, strategy and subsequent success are all the result of the lessons learned over many years of doing the wrong thing. But these lessons came much later than the events that brought them about, and I only learned these lessons when I got external, unbiased feedback, mentoring and support – which came from the CEO Roundtable, Mentoring from Lane, and the Fox Den feedback.

The difficulty with achieving moderate success is the complacency it can lead to. The previous enterprise I was a member of had fallen into the moderate success complacency rut. While I was not satisfied, some of my partners were and this was a significant concern for me. This lack of satisfaction drove me to find a source of advice, mentoring and help to get out of the rut, and achieve my personal goals and ambitions.

During my undergraduate studies at the University of Houston, I had the privilege to work with Ralph D’Onofrio, a member of the Silver Fox Advisors, in mentor roundtables setup as part of the Entrepreneurship program in the Wolff Center for Entrepreneurship. I remembered the valuable lessons I learned from Ralph (which I still use today). I set out searching for a way to find a similar source of help. After finding several very expensive roundtable and communities – I went back to the original source at the Silver Foxes and discovered the CEO roundtables. It was exactly what I was looking for, and best of all, it was free. I sent in my application, and after a few interviews I was placed into a group led by Lane Sloan.

The roundtable had a group of CEOs from diverse industries and business types, but it was quickly clear that we all faced similar challenges. I learned from everyone’s experiences and challenges. I shared my challenges, thoughts and ideas and I got incredible feedback, suggestions, advice, and thoughts shared from the CEOs in my roundtable. While the CEO Roundtable provided an immense value, I realized that I needed more one-on-one mentorship. This is where journey with Lane begins.

Lane’s approach on mentoring me was strategic in and of itself. First, we identified my personal strengths and weaknesses, which helped us both understand where I was and what I needed to do to improve. He then helped me map out my personal purpose so we could both understand my personal drivers and motivators. From there we worked together to define where the company was currently in the 4-stage growth model, and where we wanted to go. And finally, he combined all of these to develop a complete strategy. Short term, long term, personal and business. It’s been an incredible adventure. I learned things about myself I never knew. But most importantly this entire process was the jet fuel to our nybl Rocketship.

I’ll go into the values and importance of each of the steps Lane took, but I must point out the most important one of all: being a guiding north star. Building a sustainable, profitable and scalable business is one of the most challenging things I have ever done. If it were easy, everyone would do it. It’s stressful, all-consuming, and at times downright demotivating. It takes a ridiculous level of commitment and belief in your concept to battle through all of that. The problem is sometimes, you might just have a bad idea. This is what I believe is the most difficult part of being an entrepreneur: you must believe, without a shadow of a doubt, that the impossible task you are setting out to accomplish is achievable even when no one also has been able to achieve it. So, at what point do you give up if it’s not working? Or, how do you know to continue your perseverance at the most difficult times? How do you know if your idea is actually a good one? You need someone like Lane. A trustworthy, experienced, mentor, advisor, friend to tell you, without any agenda or bias, if your idea sucks and it’s time to throw in the towel or if what you have is really something and you should keep fighting for.

People will be happy to share their opinions. Why “you’re crazy” and “you should just get a job” because that’s the only world they know. Or, how it’s irresponsible to “put all your eggs in one basket”. Your true friends and family may be supportive even when they shouldn’t be because they believe that’s how they should help, by being your support system. With Lane as my mentor, I didn’t worry about intent, agenda or bias. When I was doing something wrong, he would point it out. When I chased shiny objects that were diverting my attention from the vision, he told me to focus. When things were going great, he cheered me on. But, most important of all: when it was difficult, stressful, and reaching a point where I could easily give up, he would explain where he saw opportunity. He didn’t tell me what to do, or why to do it. He allowed me to peer through his lenses, see my journey from his perspective and realize, that if what I was doing didn’t make sense, he would have told me. That is the most valuable insight I got from Lane. It allowed me to hustle and work harder. To believe, even when everything seemed impossible, and to get through the most difficult times. Throughout the rest of this article you will come to see the incredible mentorship, advice, and value Lane’s coaching provided, but there is no doubt that being a guiding north star is one of the greatest values of all . So, find your Lane Sloan. It will change your life.

Our adventure began with identifying my strengths and weaknesses as an individual, and as a leader in my organization. The interesting part was the reasoning behind this exercise. Contrary to the usual approach, it was not to “work on my weaknesses”. Lane had a great approach: if you improve your weaknesses, and don’t build on your strengths, you end up being average. Instead, focus on your strengths to turn them into superpowers and compliment your weaknesses with those who have them as strengths. That creates 2 superstars instead of one average individual. Based on the outcome of my Strengthsfinder test, we devised a plan on how to augment my weaknesses using my team and build on my strengths. This was the first step, and it allowed us both to know where I should and should not spend my time. This exercise also taught me one of the most valuable lessons – when and what to delegate to my colleagues, who were better than me at their strengths, my weaknesses.

The second step of the process was my personal purpose. This was life changing for me. Prior to defining my personal purpose, I constantly faced internal battles of work / life balance and making decisions related to the mix of business and personal. As an entrepreneur, that line is very blurry. But, after being brutally honest with Lane and myself during the Personal Purpose exercise, everything became crystal clear. I had, without even knowing, created a prioritization hierarchy for everything in my life by simply defining what I wanted to achieve – my personal purpose – in all aspects of my life. Now, this may sound daunting, but the exercise is very well thought out and takes approximately 2 hours with a great coach taking you through it. These 2 hours were the best I ever invested in myself. Understanding my personal purpose also created goals, targets, and milestones for my personal life. I always had a business plan, timelines and milestones for work, but never applied the same level of thought and planning into my personal life. Defining personal purpose makes every decision, whether personal or business, a simple decision. It either fits and delivers on your personal purpose or doesn’t. THIS CHANGES EVERYTHING!  

Once we had defined my own strengths and weaknesses, and my personal purposes we now moved on to the business.

The process for the business was similar. We began with an audit like approach – defining where the business sat in the 4-stage growth model. If you’re not familiar with it, the 4 Stage Growth Model, as it is defined by Lane, categorizes businesses based on their growth stages, and helps in building a strategy to move from one stage to the next. It is important to identify where you stand, in order to identify where your focus needs to be now, and where it should be in the future. The Four stages are Development, Growth, Take-off and Expansion. Through this analysis we identified that nybl was at a critical point: moving out of the growth stage, and into the take-off stage. But, we were still acting like a company in the growth stage. Our organization was not ready for take-off. We did not have the proper processes, systems, organizational strategy, and internal leadership that take-off requires. As a leader, I had to take responsibility for the position we were in. Most of it stemmed from my lack of developing my internal team into leaders of their own. This is, by far, the most important quality of a leader – to build their team into independent leaders capable of carrying the mission and vision forward on their own with guidance.

“if you don’t know where you are going, any road will get you there”

  • Lewis Carroll

Before working on our short-term strategy, we first mapped out the long-term strategy. Once that was complete, we knew where we were going, and could devise the short-term strategies that would take us from one milestone to the next – our path to success.

This began in January of 2020. The original 7, as I like to call us (the 6 co-founders and our founding investor) sat down for 5 days to decide where we wanted to go. We emerged with a vision. A company built to transform data into intelligence, and a long-term strategy to be a camel, not a unicorn. A sustainable, profitable company that will be much, much larger than a unicorn, and not mythical! To become the largest technology innovator in the Middle East generating human, technological, and economical value in the Middle East and exporting them to the rest of the world. That was our plan for nybl.

Now it was time to get to work.

Now that we had this Big Hairy Audacious Goal in mind, we set out to map the path to get us there, one milestone at a time. The first milestone was to prepare our company for the take-off that was we were on the verge of. This was a gargantuan task in and of itself. It meant hours of discussions, planning, strategizing, re-planning, re-strategizing and more discussions. We worked on everything, beginning with the organization. We mapped out the current team, their strengths, and weaknesses and where they could become superstars of their own. We identified the gaps, and weaknesses that no one had strengths to fill, and set out a plan on how to build a world changing organization.

Every hour of conversation with Lane turned into tens of hours of work with the team. Lane and I met on a weekly basis, sometimes twice a week when the progress permitted. The company began to take on a life of its own. Mind you, this process began during COVID, right when we all got locked down. At a time when we had no clue how we were going to even make payroll at the end of the month. But, having a clear vision of where we were going and what we wanted to achieve gave us the energy and motivation to power through the most difficult times. It enabled us to take one rejection after another from investors (we were not ready for them at the time). We took every rejection as a learning opportunity: how could we have done better? Where did our messaging fail? What did we do wrong? How can we improve in the next round? We learned. We improved. Most importantly, we continued to build the foundations for expansion.

We emerged from lockdown with an incredible plan. One that paved the way to the company we are today. In the past 12 months, we’ve grown from an 8 person “start-up” to a truly global scale-up with 40+ people all over the world working with more cohesion than organizations running for years. This was not luck. It was preparedness meeting opportunity. It was the hard work put in to focus on the foundations to enable sustainable growth. Most importantly it was thanks to the invaluable coaching from Lane Sloan, the support from our initial investors and my incredible co-founders. We owe everything to this group of people. An incredible handful of people who believed in our vision and supported us every step of the way. Shriprakash, Ayman, Rawan, Rashad, Mohammed, Essam, Saleh, Karim, my Father Nasser Alnahhas and of course Hugo. Of course, my co-founders and the entire nybl team – thank you all!

Our Growth stage organization had become a take-off organization. Individual members were now leaders. Each with their own path, milestones, and responsibilities as part of the rocket ship we called nybl, barreling through space. As the saying goes, we were here to kick ass and chew bubble gum, and we were all out of bubble gum J 

2021 was our transformational year. We began the year with a major theme: getting our house in order. This meant organizational, structural, legal, financial, and most important of all, people. All part of the 4-stage growth model, to be ready for expansion.

We began this transformation with our people culture. It is my belief that every single company in the world is a people company. Regardless of the product or service a company delivers, it is the people of that company that manufacture the product or deliver the service. Together with our newly appointed Chief People Officer (Reem Osman, our savior) we built an organization destined for success. We made it our goal to be the best place in the world to work. If our people loved working at nybl, their output would be stupendous. And it is! 

We brought on a CFO (Shoutout to Hans and Kristian from Finstrat Management). Through their fractional accounting & finance service we built a financial structure fit for multinationals. We had solid financial metrics, we planned, we budgeted, we forecasted, we analyzed and repeated. Over, and over until we had it right.

We built our team out with the structure for expansion, and a focus on culture. Software developers, data scientists, industry experts, product champions. This focus on our people enabled us to develop world changing technology, and this technology yielded incredible products. These products brought business and as a result we signed multiple long-term, global contracts during 2021 to set the stage to move nybl from take-off to expansion in one year. And what an incredible year it has been.

We entered 2021 with 14 people. As I write this today, we enter 2022 40 strong and growing. Our biggest competitors are now our partners, and our journey is just beginning. 2022 marks the year we shift from take-off to expansion.

 And we’re not going to just expand, we’re going to explode. We explode with an arsenal of tools including our culture, technology, strategy, and a vision and a mission. Lane and I continue our sessions on a regular basis. Each time, analyzing our strategy, making pivots and adjustments where necessary, and working on each step towards our giant goal.

Our milestone for the year is to become a Billion-dollar company (yes, with a B). Not through valuation from investors, but by sheer volume of business, technology, and innovation. It is our first critical milestone in our journey to becoming a camel. It’s an incredibly challenging milestone. One that is exciting, motivating, and fun! So much fun, I sometimes forget it’s work.

Peter Drucker says “culture eats strategy for breakfast”. I’d like to add my own twist to his quote: great culture combined with great strategy eats whatever it wants. That is the essence, the secret sauce to nybl. Incredible culture, with incredible strategy. I wish I could say we thought of that all on our own. But we owe our success to our team, our investors and to every person and organization that supported us along the way.

To The Dubai Future Foundation, and The Dubai Future Accelerators: Thank you for believing in a handful of people with nothing more than a vision.

To Smart Dubai Government, Dubai Health Authority and ADNOC: Thank you for giving us the opportunity to prove ourselves when no one else would give us the time of day.

To our investors and board of advisors: Without your unwavering support we could not have survived the difficult times. Thank you for your belief in a vision and mission greater than all of us.

To the nybl team: Without each and every one of you Rockstars, none of this would be possible.

To the original 7, my ride or die co-founders: This is the result of your dedication and belief. Our Journey is just beginning, and the dream is becoming a reality.

To my Mother, My Father, my Wife, and my beautiful Daughters: I love you. Thank you for the support and for being my light during the darkest of days.

And of course, to Lane Sloan: Thank you for taking on a scrappy entrepreneur who wouldn’t give up and imparting the most valuable of your assets: your time, and your knowledge. You are a gift, a treasure.” 

My Remarks

When I asked Noor to write the nybl story, I was interested to see what he would say.  This is not really a typical case analysis with detailed financials and particular steps along the way.  It is all about his learning and feelings that led nybl to fulfilling the Take-off Stage.

You feel the energy and passion that Noor has in the business.  It for sure has been a challenge.  Today, as Noor said he does not see this as a job or work rather instead an exhilarating fun experience that he looks forward to every day.

Results make a difference: the huge revenue growth, investors coming to him, unsolicited people wanting to join the company, next generation culture, inspired employees, an incredible hiring system, leaders emerging at every level, an adaptive growing organization, a well-structured financial system, linked operational processes, reputation growing faster than marketing and so on.  All this contained in the strategy and forward plans. The key elements in taking off.

Noor’s incredibly lofty goal of becoming a billion-dollar company may appear unrealistic to you, but Noor believes it.  He has done the research on similar companies in the artificial intelligence space and their position. Reaching take off requires lofty goals so I am careful not to dampen his enthusiasm.  He is willing to put the aspiration in print!

Finally, you may feel Noor is taking an early victory lap by thanking everyone who has been a part of nybl reaching Take-off.  This is only one stage in the nybl journey ahead.  Yet, it is crucial one.  For Noor, the present position is a relief in many respects seeing the company take off and his thanks to the many contributors is genuine.  He has been overly kind to me.

Throughout this blog, you should get a reasonable picture of Noor.  Foremost, he is an incredible learner and listener.  Second, Noor does not accept defeat.  His leadership growth has been extremely fun to watch.  And I believe leadership is the key to achieving the Take-off Stage.

Silver Fox Advisors Award Winner

On Thursday, December 9th, Silver Fox Advisors awarded its second annual A. “Butch” Madrazo Award which is given to a Silver Fox that best demonstrates the attributes Butch demonstrated every day.

Butch Madrazo was a Silver Fox Advisor from the mid-1990s until his death in August 2020.  Butch was always welcoming and counseled new members. He brought a certain light-heartedness to any room he was in.  The attitude he projected when providing support made everyone feel resilient and always put a smile on our faces.  The inscription on the award reads “Awarded in recognition of fellowship among, engagement with, and commitment to fellow members.” Butch was a true friend and outstanding colleague.

The first award was issued to Joseph Tung in December of 2020.  This year the award went to Rich Hall for his outstanding service to the Silver Fox Advisors. Rich is the founder and owner of the Rich Hall Group. He also serves as Chairman of the Membership Committee for Silver Fox Advisors.   Congratulations to Rich Hall!

Pictured: Doug Thorpe, President, Rich Hall, Award Winner, and Donnie Roberts, Chairman

Understanding the Energy Quagmire

Every time there is a severe weather event like Hurricane Ida, it is blamed on global warming labeled climate change.  One would think we never had bad weather in the past.

Actually, Hurricane Camille in 1969 had the highest wind speed at landfall at an estimated 190 mph when it hit the Mississippi coast.

Don’t get me wrong.  The data is very clear that the earth is warming.  And an increase in carbon dioxide has been one of the major factors with our use of fossil fuels to provide us energy. 

Not surprising, there are organizations like Bad Carbon that want to keep all the “fossils” in the ground.  On a more balanced side, the Paris Accord is all about limiting the rise in temperature through limiting greenhouse emissions (GHG).

Climate Change

In 2018, the Intergovernmental Panel on Climate Change advocated global GHG needed to fall to zero within the next three decades.  A number of nations and major companies have set targets to reach net-zero by 2050; in other words, balancing any emissions by absorbing an equivalent amount from the atmosphere.

Ecology landscape – climate change concept, desert invasion

These are much more aggressive positions than when I was chairing the Greater Houston Partnership’s (GHP)Energy Collaborative Committee around 15 years ago.  At that time, the Energy Collaborative Committee was promoting a more balanced energy equation. 

There is no doubt renewable energy has some distinct advantages with their lack of carbon dioxide generation. But to be brutally honest, back then we had a hard time seeing renewables as a total substitute for fossil fuels.

We were actually quite proud of the wind electricity generation in West Texas.  The Lone Star State has for some time been the biggest wind producer of electricity in the United States.  Iowa is a distant second.

We were even successful at the GHP in getting Vestas, a wind turbine manufacturer, to set up an office in Houston.

Wind is not a cure all.

The biggest issue with wind is its intermittency as you may know.  The wind is not always blowing, and it blows stronger at night than in the day when the power is most needed.

green meadow with Wind turbines generating electricity

That raises the need for the ability to store power or to offset when the wind is not blowing with another energy source.

Natural gas combined cycle power plants have been a good solution with quick start-up capabilities and with an abundant new supply source from shale gas. And thankfully there are significant advances in energy storage, but more technological advances are needed.

The other big issue is location.  West Texas, as an example, is not a high population center.  That means you need to build transmission lines to major population centers like Houston, Dallas-Fort Worth, Austin, and San Antonio.  Texas has done that spending some $7 billion which has supported West Texas wind renewable developments.

It’s not that straight forward across the country.  The stronger wind capability goes up the middle of the United States.  That is why Iowa, Oklahoma, Kansas, Illinois, Minnesota, Colorado, and North Dakota are in the top ten list of wind power generation.  Unfortunately, many of the big population centers are on the east and west coast.

Besides building the required transmission lines as Texas has done, there is also a loss of power from the transmission.  With the networks in place from the 2015 to 2019, the EIA estimated a 5% loss in transmission for wind.

Like any source of energy, there are various specific issues. Big wind turbines are not what everyone wants to see, visual pollution. These giant blades spinning up to 180 mph are estimated to kill a half-million birds a year according to the US Fish and Wildlife Service

The case for Solar

Solar sounds very promising with the energy radiating from the sun.  Capturing that energy has always been one of the key technology challenges. The most efficient solar cells approach 30%, but solar panels are generally in the 20 % efficiency range.

Thus, a solar farm of 1 megawatt powers around 200 homes and can take 4 to 5 acres in geographical space requirements.  For solar to power the electricity needs of the United States, estimates that requires roughly 14,000,000 acres or 22,000 square miles about the size of the Mojave desert.  That is a lot of land.

One of the largest utility sized solar farms in the world is in India covering 14,000 acres generating 2,245 megawatts.  In comparison, Egypt built a natural gas combined cycle power plant in 2018 with a total of 14.4 gigawatts of power generation with 12 power blocks each having 1,200 megawatts of capacity. It supplies up to 40 million people with reliable energy.

Solar panel

Like wind, intermittency is a big issue for solar. There is no generation at night which varies by the seasons depending on location.  Time of day also makes a difference. Cloud cover during the day is a real impediment as well. Thus, energy storage is again key with this intermittency.

The sunbelt makes the most sense for solar. Thus, like wind, the high potential solar locations do not always match up to population centers in the United States. Here in Texas, the best solar capability is also in West Texas away from the population centers.  Cloudy days here in Houston are not helpful for solar.

One attractive feature of solar comes from its flexibility to be installed on rooftops. Solar panels on roofs have been around for about 40 years now reaching over 2 million installations in the United States. The pace of installations has increased significantly these last several years. I’ve seen estimates that by 2024, 2.5 percent of residential homes in the United States will have solar panels.  Why not more?  There are many factors that come into play beyond location, costs, and financing, such as roof size, shading, tilt, construction, grid hook-up, local/federal incentives, rentals, and so forth.

Customer demands

The big question remains how much electricity generation can wind and solar provide that will satisfy consumer needs? 

Today, together these two renewables provide only about 5% of the energy consumed in the United States. The technical practicality seems more challenging as developers have already pursued some of the best locations for solar and wind farms.

To really address carbon dioxide emissions, then electric-powered vehicles are important of course.  That has another set of issues that need to be overcome beyond generating electricity such as charging stations across the country.

Those developing plans to achieve net-zero emissions by 2050 foresee trillions of dollars of investment.  Money that could be spent elsewhere more productively if the concerns were not so great.

Thus, the really big question is the consequences of climate change.  How catastrophic will it be for mankind?

Since the 1960s, there have been many doomsday predictions from climate change; however, none to date have materialized.  From another angle, if you look at the National Weather Service data on weather-related deaths here in the United States, there is nothing to be alarmed on trends towards doomsday. All this raises questions on how much do we really know about the consequences?

To step back for a moment, how did I decide to write this blog?

I was contacted by the IPAA’s (Independent Petroleum Association of America) leader for the Energy Workforce Energy Education Center. She wanted me to do a video presentation on Energy Economics and Geopolitics for the students in the high school petroleum academies having done similar presentations over a decade ago.

I wanted to get myself more current on the state of affairs with climate change.

Using the faithful internet, my searches found many websites that seemed rather biased and lacking detail but making large generalizations.

After searching for more detail, to my surprise some people who explored the data were debating the catastrophic consequences based on the data as opposed to any biased opinions.

I particularly found interesting Steven Koonin’s book published this year entitled Unsettled.  What climate science tells us, what it doesn’t, and why it matters.

One expert’s ideas

What got my attention was his background serving as the Undersecretary for Science in the US Department of Energy under President Obama along with numerous other impressive roles.

Initially, a strong advocate, over time Koonin has examined the data from assessment reports and studies, and now raises some serious questions.

He states in his book, “It’s clear that media, politicians, and often the assessment reports themselves blatantly misrepresent what the science says about climate and catastrophes.”

Koonin is not a denier.  He outlines our global warming and the impact of carbon dioxide.

For him, the key question centers not on whether warming is occurring but on the catastrophic impact projected. Thus, he specifically addresses my question on the consequences of climate change.

A big learning for me, Koonin points out the climate and weather are quite different. Weather bounces around from day to day.  Climate has a long horizon of 10 to 30 years and more.

He explains you should not use any one weather event to diagnose climate change and complains this is done so often in the press misguiding the public.

Koonin goes into reasonable depth on key assessment reports and in each case raises good issues about their implications.

What about the long term?

In analyzing different long term climate horizons in the data, he concludes that most types of extreme weather events don’t show significant change. Wow.

You also hear a lot about rising sea levels which is often represented as potentially catastrophic.  After his careful look at the data, he concludes that we are contributing to sea level rise, but scant evidence it is significant much less disastrous.

Nevertheless, the big concern is not just today but directed towards the future if we keep emitting high levels of CO2 emissions.

To project the future, computer climate simulation models are used with a scientific aura of validity.

Koonin is well versed in modeling and able to explain how these simulation models work.

They attempt to mimic reality based on physical laws and weather observations.

As you can imagine, they are incredibly complex using a grid structure to simulate our global climate environment.

A simulation run on the most powerful computers can take a couple of months.

The world is enormous in size with 123 billion acres, of which 37 billion acres are land. To get a finer sub grid structure which could be very helpful simply overwhelms todays computing capability and would take years to process.

As a result, these models are tuned by the researcher’s judgment because the models can be a poor description of the real world.

Obviously, Koonin forewarns over-tuning can cook the books.

His key point is that these models tend to disagree with one another, and the compromise has been to average their results. That seems a bit weak.

Moreover, newer more sophisticated models actually generate more uncertainty.

A big red flag for Koonin is the models can’t reproduce all the past.

Others raise similar points.  Now you see why I called this blog Energy Quagmire; technical practicality of mostly all renewables and questions on the consequences of global warming have got us in a bog.

The more we focus on objectivity, the quicker we can get out of this bog.

Foremost, let’s clearly address the issues that people like Koonin raise on assessing the climate data and projected consequences.

We also need more thoughtful balance of the risks and rewards of pursuing different courses. Let’s get more serious dialogue on other energy sources such as nuclear and green hydrogen.

Let’s discuss the advances in usage of fossil fuels to reduce carbon dioxide emissions. Let’s fully understand the opportunities of CO2 sequestration and similar removal technologies. Let’s consider the more complex issues and tradeoffs of economic security and national security along with environmental security. And let’s be careful in the overhyping wind and solar as our only energy sources for the future with a little pragmatism.

CEO Education Series – Part 3

Increasing Profits and Understanding Costs

Join us on Wednesday, May 19 as another panel of Silver Fox Advisors take on the subject of cost accounting.

Every business has costs to operate, produce goods and services, and ‘keep the lights on.’ But are you identifying and managing those costs effectively?

Your ultimate profitability will be impacted by the proper control of operating costs.

While there are many different ways to allocate costs to multiple lines of business, you need a framework to capture those costs, analyze them, then decide on how you want to apply them to your business accounting.

Our panel of experts will tackle these and other topics during a FREE virtual workshop.

You must register in advance.

When: Wed May 19, 10:00-11:30 CT

Where: Virtual Workshop

CEO Education Series – A Business Plan . . . Your Guide to Success

Owning a business is work. But to what end?

As Stephen R. Covey famously said, “we must begin with the end in mind.”

Having a business plan can get you to that proper end result. Now is all planning perfect? Likely not. But if you want to grow and manage your business with a good outcome, you have to have a plan; a business plan.

Join us on April 13 as four of our Silver Fox Advisors share their experiences and views on drawing up the right business plan. It’s not as hard or daunting as you might think.

We’re sharing tips, hacks, and ideas for getting a good business plan in place.

Live webinar, Tuesday April 13th at 10:30 AM CT/ 11:30 AM ET

The panelists are:

Dick Hendee, Bill Herman, Herb Kalman, and Gary Henderson

Rapid Chaotic Change Requires Leadership Agility

Understanding Change

It is undeniable that change is accelerating and becoming more chaotic.  Leaders need to understand this change.  What is driving the change?  What are the implications on your leadership?

Technology is driving the change. I have put together a model to help you understand this change and high-level implications on your leadership. After exploring the model, we will highlight key thoughts on leadership agility to deal with this rapid and chaotic change in today’s business world.

Industrial Revolution

We are all familiar with the industrial revolution starting back in the mid-1700s.  New technology in the form of machines changed the manufacturing process of goods.  Machines substituted for human labor.

It brought about new forms of business enterprise because this change was mass production.  Organizations had to evolve to deal with the larger volume of transactions.

It was a new world.

Management by Exception

Back in the 1960s when I was taking organizational behavior courses the buzz word was “management by exception.”  You probably heard of “If it ain’t broke, don’t fix it.”

The assembly line was key to production.  You had to keep it going.

Change was not rampant.

Therefore, the focus was on control.

To lead these massive organizations with their hierarchies, the management style was traditionally autocratic.

Information Revolution

The technology of automation from the Industrial Revolution paved the wave for a transformation change in information processes with the advent of computers.  Software programs did the work of repetitive clerical type roles and more.

I joined Shell Oil in 1970 as one of those programmers to create this new software.

The new buzz word was “Change is the Constant.”

The rigidity of large bureaucratic organizations was being significantly impacted by the delayering and restructuring brought on by this information processing revolution.

More decisions had to be made to cope with the constant change.

Knowledge became more important with these constantly changing dynamics.

It made sense to have others participate in the decision-making process. 

Thus, the management style shifted more toward Participative.

Companies needed to keep up and not get lost in the change from their competitors.

The focus turned to adaption.

Second Wave of the Information Revolution

By 1965, an M.I.T. scientist developed a way of sending information from one computer to another that he called “packet switching.”

This has continued to evolve into today’s multi-faceted internet world.

It is not just social media.

You can type anything into your browser and get a voluminous amount of information in seconds.

This has been a big driver of the acceleration of change which creates instability.

Molecular Revolution

The hybrid DNA-RNA was created around 1960 as part of the early beginnings of the Biotechnology Revolution.

At the turn of the century, the world had advanced to the sequencing of the human genome.

On a similar front, the theory of manipulating atoms was around 1960.

Some twenty years later, the scanning tunneling microscope was developed that could see individual atoms.

Nanotechnology is real.

Together this has all led to the manipulation of cells and atoms.

Chaotic Change

Today, this Molecular Revolution has come to the forefront.

It is transforming the very fundamentals of living systems and materials.

In short, the molecular revolution is another key driver underpinning the chaos.

Fundamental Reprogramming

The ability to fundamentally reprogram things is opening people’s minds not constrained by traditional boundaries.

Management styles are shifting to visionaries.

Instead of being whipsawed by accelerating and chaotic change, visionaries are creating the future.

Ramifications on your Leadership Style

There are practical ramifications of today’s changing dynamics for every leader.

Those in fast cycle industries have been in this chaos for some time.

Slow cycle industries have sped up.

Life spans for companies have shortened.

Technology and imaginative minds are driving more technology and transformations that lead to even faster change and more chaos.

Leaders must be more agile and flexible to cope and prosper, but how do you do that?

What competencies and skills are needed to be an agile leader?

There has been some very thoughtful research on this question.  In this blog, I can only give you highlights and direct you to some of the better resources (in my opinion).

Leadership Agility

In 2007, Bill Joiner & Stephen Josephs wrote the book LEADERSHIP AGILITY Five Levels of Mastery For Anticipating and Initiating Change.

It is a rather sophisticated approach based on their notion of a Leadership Agility Compass outlining four competencies: Context Setting Agility, Stakeholder Agility, Creative Agility, and Self Leadership Agility. 

Using the compass, they then take you through their five levels of agility development: Expert, Achiever, Catalyst, Co-creator, and Synergist.

It has a lot of content. If you are really trying to enhance your leadership agility, it is worth a read.

Learning Agility

Korn Ferry has also done a lot of research on leadership agility outlined in their paper on The Organizational X Factor: Learning Agility.

They describe learning agility as made up of five factors: Self Awareness, Mental Agility, People Agility, Change Agility, and Results Agility. 

You can see some similar ideas to Joiner and Josephs’ Leadership Compass.

I like their addition of Results Agility described as delivering results in first time situations.

The authors, Mary Knight and Natalie Wong, contend that Learning Agility is a top predictor of high potential people. Companies with highly agile executives have 25% higher profit margins than their peers.

Core, Edge and Agility

Agility competencies are important.

It is also important to have a perspective in thinking about the context of this change in your day-to-day world. 

What is central to how the world should work for you to what are the dramatic implications of changing technologies?

In this respect, Lee, Hecht, and Harrison, a global leader in talent development, wrote an interesting paper on Core, Edge, and Agility.

My Silver Fox Advisor colleague, Doug Thorpe, has condensed their ideas and his own in an article on his website in 2018 entitled Leaders: There’s a New Way to Understand Change | Business Advisor, Mentor and Executive Coach | Doug Thorpe

It is certainly worth your read with the idea that agility helps manage the forces of what’s core and what is on the edge.

Set Direction Not Destination

Agility has certainly become a popular topic for organizational consultants in this 21st century.

 One concept I like from McKinsey’s March 2018 article of Leading with inner agility is “set direction not destination.”

This brings us back to my model introduced at the beginning of this blog on understanding change.

You not only have to have agility competencies, and a framework of thinking about agility as we have just discussed.

You also need to be the visionary highlighted in the model.

Ultimately, the management style of significance in this world of accelerating and chaotic change is a visionary leader.

Set directions with the agility to adjust destinations.

To paraphrase Jack Welch, control your own destiny or someone else will.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.