How to Elicit Maximum Information in Minimum Time from Management and Industry Sources

Straight from the Horse’s Mouth: How to Elicit Maximum Information in Minimum Time from Management and Industry Sources David Teten Teten Advisors, LLC www.Teten.com info @ teten.com 1-347-853-7397 New York, NY © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/pmarkham/3151973688/

David Teten Biography • Currently: independent investment banker (Teten Advisors, www.Teten.com), specializing in advising private equity and VC funds on: accelerating deal flow, portfolio company executive optimization, corporate training, and due diligence • Managing Director, Evalueserve, thru September 2008. 2,500-person research firm. • Founder and CEO, Circle of Experts (investment research firm), sold to Evalueserve • Founder and CEO, Teten Executive Recruiting, sold to Accolo, #42 on 2007 Inc. 500 • Founder and CEO, GoldNames, domain name investment bank, based in Israel • Technology M&A, Bear Stearns • Lead author, The Virtual Handshake: Opening Doors and Closing Deals Online (TheVirtualHandshake.com) • Harvard MBA, Yale BA • Contact: info @ teten.com © Teten Advisors, LLC 2008. More at www.Teten.com.

Past Audiences for Presentations on Elicitation • Association for Corporate Growth Due Diligence Symposium (Jersey City, NJ) • IRC Alternative Investment Summit (London, UK) • Canadian Hedge Watch World Hedge Funds Summit (Toronto, Canada) • Harvard Club Private Equity Roundtable (New York, NY) • Harvard Business School Alumni Club of London (London, UK) • Euromoney Hedge Fund Start-Up Forum & Hedge Fund Business Development Forum (New York, NY) • Wharton Club of Northern California (Menlo Park, CA) • Franklin Templeton (San Mateo, CA) • Bulge-bracket investment banks, hedge funds, and private equity funds © Teten Advisors, LLC 2008. More at www.Teten.com.

Legal Notice Copyright © 2009 Teten Advisors, LLC ALL RIGHTS RESERVED. Reproduction of any portion of this document is not permitted without the written consent of Teten Advisors, LLC. This means that you or your company cannot copy and paste this Intellectual Property (IP) information onto your Web site, or republish it in any other form, in print or electronically, without written approval. If you wish to purchase the IP licensing or syndication rights, please contact info@teten.com. © Teten Advisors, LLC 2008. More at www.Teten.com.

Straight from the Horse’s Mouth: How to Elicit Maximum Information in Minimum Time • Introduction • Investor (Elicitor) • Source (Interviewee) • Conversation • Your Questions • Conclusion © Teten Advisors, LLC 2008. More at www.Teten.com.

Introduction Investor Source Conversation Questions Conclusion First Rule of Intelligence When money changes hands, so does information. © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/rene_ehrhardt/2488059144/ . Confidential, John Nolan, p.28.

Introduction Investor Source Conversation Questions Conclusion The Sources and the Forces Corporate Competitor Alumni Supplier New Entrants Management Investor Buyers Government Academics © Teten Advisors, LLC 2008. More at www.Teten.com. based on Competitive Strategy: Techniques for Analyzing Industries and Competitors, Michael Porter.

Introduction Investor Source Conversation Questions Conclusion Ethics of Intelligence Gathering Who could evaluate you You Your boss Wall Street Journal Bloggers © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/23912576@N05/2962194797/sizes/l/

Introduction Investor Source Conversation Questions Conclusion Definition of Elicitation An interview process with 3 characteristics: • Planned • Conversational • Interviewee is not coerced © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/23912576@N05/2962194797/sizes/l/

Introduction Investor Source Conversation Questions Conclusion Ethics of Intelligence Gathering General rules Elicitors should not do anything they wouldn’t want to read in the papers. Paid sources should not talk about their current employer (unless it’s their job to do so). © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/adwentures/19187477/

Introduction Investor Source Conversation Questions Conclusion Interview vs. Interrogation Interview Elicitation Interrogation Timing Stage 1 Stage 2 Stage 3 Purpose General Specific Learn truth information information Tone Question & Dialogue Lightly accusatory, answer with active persuasion Structure Flexible Follows pre-set Highly structured depending on structure responses Interviewer Detailed notes Minimal notes None, until after Notes truth is verified © Teten Advisors, LLC 2008. More at www.Teten.com. based on Criminal Interrogation and Confessions,Fred Inbau, John Reid, Joseph Buckley, and Brian Jayne

Introduction Investor Source Conversation Questions Conclusion Lie Detection • “To be perfectly honest” • Ducking © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/jae_yong/2423239358/

Introduction Investor Source Conversation Questions Conclusion Why Elicitors Don't Like Questions © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/paulkehrer/2353373164/sizes/l/

Introduction Investor Source Conversation Questions Conclusion A friend • Friendly, good at building rapport and trust • Keeps confidences • Wants to build on-going relationship • No ego © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/fmc550uz/3349486618/sizes/m/ . Based on Confidential, John Nolan, p.12-14.

Introduction Investor Source Conversation Questions Conclusion Interpersonal Skills • Sensitive to cultural differences • Creative • Persistent • Diverse background © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/chrissuderman/248876814/

Introduction Investor Source Conversation Questions Conclusion Technical Skills • Strategic planner • Listens well • Flexible • Great memory © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/esparta/187132368/. Based on Confidential, John Nolan, p.12-14.

Introduction Investor Source Conversation Questions Conclusion Your Stance • Well-prepared… but not THE expert • A peer • A customer • A friend • Open about what you know and don’t know © Teten Advisors, LLC 2008. More at www.Teten.com. http://upload.wikimedia.org/wikipedia/commons/7/7e/Nursing_students.jpg

Introduction Investor Source Conversation Questions Conclusion Information-Gathering Structure © Teten Advisors, LLC 2008. More at www.Teten.com. ftp://ftp.software.ibm.com/annualreport/2008/2008_ibm_annual.pdf

Introduction Investor Source Conversation Questions Conclusion Expert’s Habits © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/soldiersmediacenter/2595593506/ based on Confidential, John Nolan, p.44-53.

Introduction Investor Source Conversation Questions Conclusion Expert’s Needs (Human Needs) • Need for recognition • Need to complain • Need to gossip • Need to correct others © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/kaibara/3496249511/ . based on Confidential, John Nolan, p.12-14.

Introduction Investor Source Conversation Questions Conclusion The Conversational Hourglass small talk key questions closing © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/conskeptical/354951028/sizes/l/ . Confidential, John Nolan, p. 28

Introduction Investor Source Conversation Questions Conclusion First Impression: Orient Interviewee • Grateful/honour your expert: “I’m happy to have the chance to speak with such a prominent expert in this field…” • Mention your research is specifically person’s area of expertise • Verify pronunciation • Verify length of interview © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/kanzeon_zen_center/183801709/

Introduction Investor Source Conversation Questions Conclusion First Impression: Build Rapport • Thick case file • Enthusiastic • Identify commonalities • Prove you can provide information © Teten Advisors, LLC 2008. More at www.Teten.com. http://lh6.ggpht.com/_CygM1KfxoOg/Sg-gB8mTY-I/AAAAAAAAJSQ/sk9sWwlbfvM/

Introduction Investor Source Conversation Questions Conclusion Conversation Starters • Quotation of reported facts • Provocative statement • Erroneous statement • Oblique reference © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/keithallison/2415655444/ Based on Confidential, by John Nolan (p.54-95)

Introduction Investor Source Conversation Questions Conclusion Conversation Enablers • Quid pro quo • Bracketing • Write it down…later • Emphasis on confidentiality © Teten Advisors, LLC 2008. More at www.Teten.com. http://commons.wikimedia.org/wiki/File:Bundesarchiv_B_145_Bild-F029893-0020,_Bonn,_Bundeskanzler_Kiesinger_gibt_Interview.jpg

Introduction Investor Source Conversation Questions Conclusion Provoking Debate • Curiosity • Criticism • Disbelief • Mention common behavior patterns, but avoid direct accusations • Rationalizations © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/rnw/3045760046/

Introduction Investor Source Conversation Questions Conclusion Signs of a Good Question • A pause • An answer that surprises you • A quotable answer © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/erikcharlton/2303709058/ . Based in part on: The Art of the Interview, Martin Perlich, 61

Introduction Investor Source Conversation Questions Conclusion Clichés to Avoid Like the Plague • “So, what do you think are prospects for the industry?” • “How good a firm are they?” © Teten Advisors, LLC 2008. More at www.Teten.com. www.flickr.com/photos/markhillary/370268513/sizes/l/ . Based partly on: Interviewing: Principles and Practices, Charles Stewart and William Cash, Jr., pp. 48-55.

Introduction Investor Source Conversation Questions Conclusion Open-Ended Questions © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/tambako/2533704894/

Introduction Investor Source Conversation Questions Conclusion Probes • Silent Probe: “Uh-huh” • Nudging Probe: “I see.” “Please go on.” © Teten Advisors, LLC 2008. More at www.Teten.com. www.flickr.com/photos/dammit_jack/163689329/sizes/l/ . Based partly on: Interviewing: Principles and Practices, Charles Stewart and William Cash, Jr., pp. 48-55.

Introduction Investor Source Conversation Questions Conclusion Echos • Restatement: • Q: “How do you feel about the new car mileage standards?” • A: “I think they’re terrible for the industry.” • Q: “In what way do you think the new car mileage standards will be terrible for the industry?” • Mirror: “So if I understand you correctly, you think that the new car mileage standards will reduce SUV sales by 7% next year.” © Teten Advisors, LLC 2008. More at www.Teten.com. http://farm1.static.flickr.com/87/239657074_1b93039b0e.jpg?v=1158161536

Introduction Investor Source Conversation Questions Conclusion Consensus Opinion Questions © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/genemoo/2055111796/

Introduction Investor Source Conversation Questions Conclusion Conditional Questions • “What will you do once you achieve 12% margins?” © Teten Advisors, LLC 2008. More at www.Teten.com. http://farm3.static.flickr.com/2360/2403249501_a57876dcb8.jpg?v=0

Introduction Investor Source Conversation Questions Conclusion Comparisons • “Which company has the most productive manufacturing facilities?” © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/bizmac/3455657376/

Introduction Investor Source Conversation Questions Conclusion Quantitative Questions • “On a scale of 1 to 10, how would you rank their marketing team?” © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/bergie/997085301/

Introduction Investor Source Conversation Questions Conclusion Triangulation • “What percentage of total widget sales come from outside the US?” • Later, “What are total non-US widget revenues?” • Ask about past statements © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/bhenak/2664680892/

Introduction Investor Source Conversation Questions Conclusion Behavioral Interviewing © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/bensonkua/2743081060/sizes/l/

Introduction Investor Source Conversation Questions Conclusion Questions You Want to Ask …but not be associated with • “How do you respond to the critics who say…” © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/ihardlyflickr/2598713149/sizes/l/

Introduction Investor Source Conversation Questions Conclusion Clearinghouse Questions • “Is there anything I should ask that I did not ask?” • “If you were in my shoes, what questions would you have asked?” • “What risks concern you?” © Teten Advisors, LLC 2008. More at www.Teten.com. http://www.flickr.com/photos/1-11/1465073808/

Introduction Investor Source Conversation Questions Conclusion Any questions ? Slides at www.Teten.com/research . Free book download at TheVirtualHandshake.com © Teten Advisors, LLC 2008. More at www.Teten.com.

Introduction Investor Source Conversation Questions Conclusion A Smooth Exit • Quid pro quo • Profuse thanks • Ask for referral • Specify time for regular follow-up: monthly, quarterly http://upload.wikimedia.org/wikipedia/commons/f/f0/Players-leave-Tunnel-BSP-playoff-final-08.jpg © Teten Advisors, LLC 2008. More at www.Teten.com.

Introduction Investor Source Conversation Questions Conclusion Further Reading • The Virtual Handshake: Opening Doors and Closing Deals Online, David Teten and Scott Allen • Confidential: Business Secrets—Getting Theirs, Keeping Yours, John Nolan • Influence: The Psychology of Persuasion, Robert Cialdini • Practical Aspects of Interview and Interrogation, David Zulawski and Douglas Wicklander • Criminal Interrogation and Confessions, Fred Inbau, John Reid, Joseph Buckley, and Brian Jaynem © Teten Advisors, LLC 2008. More at www.Teten.com.

How to Elicit Maximum Information in Minimum Time from Management and Industry Sources

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