SCI Exclusives: From Large-Caps to Startups with Tech Veteran Caroline Tsay
This is the second in a new series of live interviews (SCI Exclusives) undertaken by Small-Cap Institute’s (SCI) editorial advisory board member, Amanda Gerut, where SCI will be spending time together with renowned investors, capital markets experts, and seasoned small-cap leaders. Though a larger selection of videos from these interviews are archived and available for members, we will occasionally publish excerpts – together with some commentary – for the benefit of non-members.
Long before turning 40, Caroline Tsay* had multiple large-cap senior operating roles in technology, and has also served on the boards of iconic American companies such as The Coca-Cola Company and Morningstar. Now, nearly four years into running a software company she co-founded, there are few executives in the country who share her unique perspective about the large-cap – small-cap divide. SCI couldn’t be happier to share some of Caroline’s thoughts.
On what small-cap executives/directors can learn from large-caps
Smaller, high-growth companies often make the mistake of eschewing processes and tools that are foundational to how teams can work most effectively together. Product management, project management, collaboration, and communication tools are just as critical in smaller companies. So, too, is having clear company goals and objectives. Listen carefully to what Caroline says about the need to manage and communicate with investors.
Is corporate governance really one-size-fits-all
Attend any corporate governance continuing education program in the U.S. and you’ll likely be told that governance is essentially the same whether you’re governing a Fortune 50 company or a startup. Unfortunately, few of those boardroom “experts” have ever actually been involved in small, high-growth companies, so they’re unaware that governance most definitely is not one-size-fits-all. Caroline’s thoughts on the relevance of large-cap boardroom formality and how it relates to small company boardrooms are poignant.
Hiring people for startups is very different
Just as governing smaller companies is much different than governing enterprises, hiring employees is also different, according to Caroline. Listen in particular to her thoughts about the importance of a prospective employee’s passion for the company’s mission, as well as their need for the type of job “certainty” that’s more common in larger companies.
Prioritizing, when budgets are much smaller
Diminutive operating budgets naturally force smaller companies to focus upon sources of prospective revenue; these companies can ill afford even minor capital allocation mistakes. At Caroline’s software startup, sales, marketing, customer acquisition/retention, and product development are prioritized over long-range planning. Caroline’s comments about customers and their happiness are instructive for all small-cap officers and directors.
What small-cap board members can learn from their large-cap colleagues
Caroline discusses several large-cap governance best practices that she believes are critical to small-cap boardroom success: (1) ethics/compliance; (2) capital allocation oversight; (3) diversity; and (4) CEO succession planning.
Takeaways
Caroline Tsay is among a handful of executives who can speak authoritatively about the practical differences between operating and governing large-cap companies and small, high-growth companies. Since most small-cap officers and directors don’t have the benefit of Caroline’s large-cap experience, understanding which large-cap best practices they should consider incorporating into their businesses is invaluable.
* Caroline Tsay is CEO/Co-founder of Compute Software, a cloud decisions software company that helps enterprises run optimally on the cloud. Prior to Compute Software, Caroline was Vice President and General Manager of Software at Hewlett Packard Enterprise from 2013 to 2016. She previously held product leadership positions at Yahoo! across the e-commerce, search, and advertising businesses. Before Yahoo!, she spent three years at IBM Global Services as a Senior Consultant in Supply Chain and CRM. Caroline serves as an independent board director for The Coca-Cola Company (NYSE: KO) and Morningstar (NASDAQ: MORN). She has been recognized as Silicon Valley Business Journal’s 40 Under 40 and The National Diversity Council’s Top 50 Most Powerful Women in Technology. She holds an M.S. in Management Science and Engineering and a B.S. in Computer Science, both from Stanford University.