E99: CFO Services, Equity Research and the Path to Launching Your Own Boutique IB
About
In this episode, Douglas Rogers shares his long and winding path after graduating from Cornell in 1996. We learn about his stint as a broker-dealer, his time as an associate portfolio manager for ultra-high net worth individuals, as well as what happened when he founded his own advisory firm only a few years out of school. Listen to hear where there were pitfalls, the lessons he learned and why after several stints at senior positions at boutique IBs ...he has decided to become CEO again with the launch of Semi Cap Equity Partners.
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WSO Podcast (Episode 99) Transcript:
Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me as I talk to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. In this episode, Douglas Rogers shares his long and winding path after graduating from Cornell in Nineteen Ninety Six. We learn about his stint as a broker dealer, his time as an associate portfolio manager for ultra high net worth individuals, as well as what happened when he founded his own advisory firm only a few years out of school. Listen to here where there were pitfalls, the lessons he learned and why. After several stints at senior positions at boutique Gibbs, he's decided to become CEO again with the launch of Semi Cap Equity Partners. Enjoy. Douglas, thanks so much for joining the Wall Street Voices podcast.
Douglas Rogers: [00:01:07] Thank you, Patrick. It's great to be here.
Patrick (CEO of WSO): [00:01:09] So to be awesome if you could give the listeners a short summary of your bio?
Douglas Rogers: [00:01:13] Absolutely. I'll try. I've certainly taken a differentiated path. So, you know, I started out my career after a after a short break from college back in 96, I started out my career with Morgan Stanley, Dean Witter and retail brokerage. I had really exceptional brokerage training. It was one of the best on the street at that time, but I really wasn't fit for just a phone call. So which is really what the job was at that time. So I very rapidly transitioned into a fee based asset management with a small boutique asset manager based across the Bay of San Francisco and really enjoyed the work that really taught me. I think I'm really an exceptional grounding or exceptional skill sets in portfolio construction and and research and securities analysis.We had a great client base, mostly high net worth individuals, some pension and plans, et cetera. And but that really also taught me the value of working closely and collaboratively collaboratively with clients to achieve certain financial objectives. And but there were some twists and turns with that company as well. When I first got there, my manager was, you know, certainly getting up there in years and had some health issues, which
Were which were I was going to find out which we're impacting the business as everybody else in the office moved within a week of me starting and left me alone with with a very old but fairly successful asset manager. And at the time, I didn't understand what the implications of that was, but I certainly do now.
Douglas Rogers: [00:02:46] And so fast forward, I actually ended up running a vast majority of the portfolio, everything from research and trading to having meetings with the schwab accounts that that we were that we were involved with and meeting with Abby Joseph Cohen, the senior economist at Goldman Sachs at the time and our prime broker and all sorts of all sorts of things. But I was also stuffing envelopes and doing billings and running around and answering phones. So it was really all encompassing. It was all an all encompassing business.And so you
Patrick (CEO of WSO): [00:03:21] Would be called like an associate portfolio manager then or that was like the title back then. Basically, you're doing everything. Absolutely.
Douglas Rogers: [00:03:27] Absolutely, absolutely. And that really taught me, I think, you know, a very broad spectrum of skills, which was wonderful. But but the health issues of the manager really were starting to impact the business. And at the time, this was before
Patrick (CEO of WSO): [00:03:40] People taking or people taking their money out because it was known that there were health issues. Or was it the performance of the the,
Douglas Rogers: [00:03:47] Uh, it was that he couldn't remain focused and he was starting to act very unprofessionally in the role and that was impacting the clients more so than the actual performance. It was really the day to day workflow that was getting significantly impacted in the road, and it was just the environment wasn't very healthy
anymore, and we was absent most of the time and would show up. And I think a lot of people have had this type of management experience manager experience where he shows up from time to time in a huff and is really short of breath and short of mind space and very terse around everybody else and then just storms out. And so nothing constructive actually gets done. So it's really just they come in, they build a fire and they leave and you're left with the fire in the middle of the office and you wonder why you're doing it. But at the time, this is the
Patrick (CEO of WSO): [00:04:42] Late nineties, right?
Douglas Rogers: [00:04:43] Yeah, this was late nineties, and it was just at the time where fee based asset management and rap fees right one percent, two percent of assets under management where that was exploding. So I had the brilliant idea where I thought it was brilliant at the time. I had the brilliant idea that I could do this as an actual firm. I mean, I had set up all of our technology. I was running all the technology and the
trading and the research, and I maintaining all the prime brokerage relationships. So I thought, Well, hell, I could actually make a business out of this and do this for others. All the breakaway brokers that were coming off the street at that time and going into fee based, I thought this would be a brilliant business model. And so I actually lit out on my own impetuously, far too young with no capital and started my own thing. And I founded a company called Managed Source Financial Group or at the time managed source research. And the original intent of managed source research was to provide this
kind of turnkey operational business for breakaway brokers that were leading the street and setting themselves up. And I could obviously implement the entire operating and an execution platform and strategy.
Patrick (CEO of WSO): [00:06:00] How is it structured, the business model? Did you charge them like a consulting fee? Was it like a retainer, how did you? I'm sure you went through many iterations that the business model and how you were doing that and the pricing and all that. But I'm just curious. Never.
Douglas Rogers: [00:06:12] Never even got there. My friend never even got there. If you recall, one of my last sentiments was that I left with impetuously and too young with no capital. So it was really demand pull. So actually, I printed up some, some business cards for myself and I ran down to it was a money show, I think a week later, which was it might still be around, but one of those retail oriented financial conferences and I ran down to a money show to drum up some initial interest. And I actually had matriculated into the CFA program at the time, and I had become a very strong writer because my educational background had very strong English departments. And so I was a good writer and a good a good head for business, and the original demand pull was for equity research product. So actually, we never provided that turnkey solution, which we started out to provide. And we actually started writing research. So back in. This is in nineteen ninety eight going into nineteen ninety nine. The company was established and became
an independent equity research and business valuation firm.
Patrick (CEO of WSO): [00:07:23] And just give and give the listeners just to give the listeners a little more perspective. You graduated from Cornell with a BA in history, so nothing about finance. Nothing. So, but you know, a great, probably an incredible writer, like you said, because of that, that education. So what prompted you to even go to Morgan Stanley to start out and what prompted you was finance on the on the radar ever? Like, how did you even? Well, you know,
Douglas Rogers: [00:07:47] I yeah, my official major was in in history, but I was I was studying history and economics, and I was always very strong in math and economics. Was it was really easy for me, and I was always kind of enamoured with the stock market, which coming out of, you know, the eighties everybody was, I was, you know, born in the seventies, a product of the eighties and everybody wanted to be barbarians at the gate. Right? So, you know, so I was always fascinated with that. And quite frankly, I actually was looking at initially, I was looking to try to get into management consulting or something along those lines where I guess I perceived a lot of prestige and similar backgrounds to mine. But a friend of mine, you know, said he was working at working in brokerage and he'd been he'd been very successful. He was much
couple of years older than me, maybe a decade older than me, and he said he could get me an interview. So that's really how it happened. Got it. And obviously, you know, once you go through that sort of that sort of training and you get all of your securities licenses, then obviously it made sense to really just to stay, to try to stay close to that, that line of business. And so my career just progressed from there.
Patrick (CEO of WSO): [00:09:00] So you had, you know, how about you basically had a year? Yeah, you basically had a year there where you were picking up the phone dialing for dollars and then you jump to this, this kind of odd situation where you're with an older PM or whatever you're running the entire business with everyone leaves right when you arrive and then you kind of jump out on your own. And so it quickly pivots to an equity research shop. Am I following so far? Yes, that is correct. Ok, so you're doing that and then tell me how that evolves. So it starts with zero dollars revenue in ninety eight ninety nine. How? Who's your first customer? What how does it grow? Is it rocky ?Is it your off to the off to the races?
Douglas Rogers: [00:09:41] How does it work? No, it was definitely rocky. You know, obviously securities work or anything in this industry is always rocky, which is why it generally is a business of scale for sure to layer in the different revenue streams. But it was somewhat rocky. You know, at the time, there was strong demand for corporate sponsored research, which is the small public companies that really were orphaned from the street or just were seeking to get their message out or get more focus on them would pay directly to research firms for equity research product. This was very common at the time. There were more
Patrick (CEO of WSO): [00:10:18] To me that seems like a very big conflict of interest. But OK, continue.
Douglas Rogers: [00:10:22] Well, of course we're, you know, we haven't gotten to the research, the research settlement issues, which was kind of it's kind of strange. But yes, there were, you know, there were a lot of conflicts in the industry. But at the time, right, that was, you know, that was a check. And it got us. It got us started out, you know?
Patrick (CEO of WSO): [00:10:38] And what a check would look like. It was like a twenty thousand dollars check for like a report, a ten thousand dollar check, five thousand.
Douglas Rogers: [00:10:45] Yeah, there were usually about it was usually some sort of some sort of annual fee. So you can you see you do your work consistently and they would range from anywhere from, you know, fifteen to thirty thousand a year, OK? And also and then alongside. We started to launch the fully kind of independent equity research product as well, so we were writing on both. And we would clearly delineate which was which. And we were, you know, we were producing both reports of our own construction and our own ideation and working for working for clients. And it was that client side that actually got me back into, I think, a mindset that was similar to that kind of fee based asset management or I started working with the executives very, very closely and they started to bring me into to more expansive roles. For example, some of them would have me start drafting some of their securities filings for them because they realized that I had that kind of, you know, that that skill for writing in that particular style. I mean, when you read a securities filing, it's kind of a, you know, if when might, should, would, could, will be the greatest thing, but maybe not the sort of style. And it's very particular. And I just it just kind of rolled out of me. So I was I started, I started getting closer to my corporate clients. I started writing and drafting. Some of their securities filings tend to use 10Ks as one. Things like that and found that I really had a knack for it and that that continued to progress through the years into business valuations, fairness, opinions. These are all fee based, fee based projects and fee based kind of research centric products. And ultimately, it progressed later on. The final or final iteration of what we did in managed stores was full CFO for higher services,
And we were brought on typically by private companies that were in the, you know, pursuing a public listing of some sort, whether it be through merger or through direct registration. And you know, we would come on in a as a as a CFO for higher capacity, and I would handle everything from some of their some of their accounting cleanup requirements all the way through PCAOB audit and the obviously constructing and writing the S-1 filing and integrating the financials, et cetera.
Patrick (CEO of WSO): [00:13:12] So when you say I was it you and a team or is it mostly you doing the heavy lifting with like a support team around you?
Douglas Rogers: [00:13:17] It was at that point it was mostly me. We did grow to a point of about 10 or 12 employees in the middle section. So I kind of fast forwarded from late 90s into the
Patrick (CEO of WSO): [00:13:30] Early, Oh, that's fine. So you're doing more interim CFO services in that. I mean, that lasted this for 14 years almost.
Douglas Rogers: [00:13:38] Yes, there was a there was a big push. So there was a big section in there from 2000, let's say, 2002 to through to about 2007, where the global research settlement coming out of the dotcom era bust or the dotcom bust really opened up the opportunity for independent equity research providers. And that's where I saw the significant opportunity in the equity research product to take it fully independent from the standpoint of obviously no upfront compensation of any kind. And we started to integrate our product with Reuters and techs and all of the independent providers we considered ourselves up there with like a solar product at the time. And and I anticipated
Xbrl coming down the pipe and automation and automatic data delivery. So I developed a team in india to do a lot of our data mining and construction of our portfolio models, which we would use as the base layer for our financials. Then I had a CSA as a director of research, come in and finalize the research, and we were able to very efficiently get a significant amount of research product out into the market. Hundreds of reports under coverage, vast majority in technology and health care. What were they? What were the what were the
Patrick (CEO of WSO): [00:15:00] Unit economics in something like that or running this type of business?
Douglas Rogers: [00:15:03] This is why we transitioned into the CFO services. The economics were horrible. There were no economics that ended up happening in Syria very seriously. We invested very heavily. I raised some capital.
Patrick (CEO of WSO): [00:15:16] Where did you think? What did you think was going to happen like you were going to get? These were going to be private reports that that all these hedge funds would come pay you for to have access for or something?
Douglas Rogers: [00:15:24] Yeah, we had to. We had two models. First of all was there was the kind of direct subscription model which there are still a few firms like a new constructs. For example, a firm that I met back then of really stayed committed to it and built a good practice, right? Shameless, shameless pitch. He's actually doing excellent work. New Constructs has had some similar concepts about how to draw in automated data to simplify and streamline the production. But no, so we were looking at our own direct output of selling subscriptions to the research and selling the research directly through our website and then selling it through our independent. Equity research partners, which included, again, Reuters multiplex, I think I think, one of the large. I don't want to misspeak, I think it was a Citigroup, I can't recall there were a couple, we had a couple of large providers that we were starting to output our research to. We then also started to contract with small broker dealers that didn't have research products so we could outsource and black label the research for them or sell our research for soft dollar participation through their channels
Douglas Rogers: [00:16:29] Into the institutional realm. Got it. So all of these things were areas of opportunity for revenue for revenue generation, and we were kind of putting them all into play.
Patrick (CEO of WSO): [00:16:40] Got it. And so then what was the what would you say is the peak? And then why did you in 2012, after a 14 year run, what kind of made you kind of have that transition to go and embed some banking side on another firm?
Douglas Rogers: [00:16:55] Well, because you know, let's put it this way we had, you
Patrick (CEO of WSO): [00:16:58] Know, maybe had 12 at the peak or whatever, 12 employees. Yeah, I mean, we had no revenue or something.
Douglas Rogers: [00:17:04] That's really why we had a couple of. Let's just let's just give one example the Reuters poll tax. So Reuters started to generate its own research product and then highlight its own research above all of the. And of course, the institution started to realize the research and their analytics were proprietary, so everybody started to regenerate and redevelop their own proprietary research. And I remember getting one check from Reuters after we'd already had, you know, I spent thousands on press releases about research coverage and more thousands on people and production. And we had hundreds of reports on Reuters. And I remember getting a check for like for like thirty five dollars. And that was it. And when I saw that Jack, I said, you know this, this industry is transitioning back to where it was, and at that same moment, I was starting to get requests just from my network for Hey, could you be our CFO? And the economics there were very strong. And so, you know, it was it was very clear to see that this that this product set was going to have to either move in one or other of a different direction.
Patrick (CEO of WSO): [00:18:27] Was it tough when you kind of made that realization? Was it like a tough transition for you? I can imagine. Like, you've put so much blood, sweat and tears in this thing for over a decade and then to be like, OK, now time to move on. Or are you just nonchalant about it?
Douglas Rogers: [00:18:41] I'll tell you that one was very easy. That was probably the easiest transition that I made in my career because I wasn't swimming upstream. I built notoriety for myself. There was enough material out there that there was a decent brand at the time and people were starting to end, call and request that sort of that sort of that sort of committed role as a as a CFO for hire or something like that. So that was actually very easy because the economics were there, the demand was there
Patrick (CEO of WSO): [00:19:10] And you just scaled down the team. So it just really became you. Yes, exactly that. The idea. So instead of all these reports you're putting out and building up your name, it was more now, but you just kind of becoming a hired gun. Correct. Go and do this. And that was that what Merriman Capital was is that how I should think of that? Or what was that the next stage? Or was that still at managed course?
Douglas Rogers: [00:19:32] The transition between those two was after the Great Recession.
Patrick (CEO of WSO): [00:19:37] Ok? Right?
Douglas Rogers: [00:19:38] So what really happened? It was really funny. Patrick I, the CFO services business, was going exceptionally well. I did start to see some of those same factors that had plagued research coming into the market, meaning there were a couple of very well capitalized kind of larger CFO for higher types of businesses coming into play. But we were so differentiated and focused on the securities work. And whereas the well marketed Cfo for hire was really a bookkeeping function, getting paid 100 bucks an hour and we were charging, you know, ten thousand a month minimum. So it was very differentiated product, but I was I was seeing some of that evolve. And so really what I wanted to do to progress with the business and yes, I did pull it back to just me to incubate this and develop it. And it got to the point where I hit my my limit of about four or five separate clients at a single time, making some good and making really good solid revenue. And so from that point, I wanted to push the business back to really core securities functionality. I saw the tremendous value in having proprietary funds, for example, that could take advantage of the companies that we were already working for. So one small piece about managed sources I maintained, or I registered us as a registered investment advisor to maintain basic levels of registration and compliance. Reality, things like that. And so I really wanted to have the business move back to institutional securities work. And what that was going to look like was proprietary
funds and assets under management to take advantage of the registered investment advisory side of the business. And the hope was that we could have some basically merchant banking capability that could serve the corporate clients on the CFO services side. So you're
Patrick (CEO of WSO): [00:21:38] Saying almost as if so as you were getting brought in for these corporate clients, mostly private companies to either prep them for an IPO, you know, for going public or whatnot, you also wanted to have as part of your business the ability to make investment yourself in these private companies. Is that what you're saying or in other kind of other?
Douglas Rogers: [00:21:56] So almost all of them were obviously looking for capital. They needed extra capital to go public. They needed extra capital for operations. And what I saw is the opportunity to have proprietary funds and merchant banking capability under the investment advisory side that could make capital available as basically bridge loans initially. For some of these, for some of these companies where once the work was completed and once they were sufficiently capitalized, it would be hopefully low risk capital. That would be a strong return on that, that investment
Patrick (CEO of WSO): [00:22:28] And to facilitate it. Did you make a lot of investments like that through your private network funding, funding it that way or through?
Douglas Rogers: [00:22:36] Well, that product was going to market in 2007. Ok, so now that was going to market in 2007. And so but but even transitioning further, you know, the rest of the model was to then push it even further and start to get back to having trading capabilities, having research capabilities and trying to bring things together from these kind of pockets of opportunity that I've leaped from point to point through the long gestation of basically
Patrick (CEO of WSO): [00:23:09] Trying to get to scale so we can take advantage of a lot of some of the synergies across the different divisions basically...
Douglas Rogers: [00:23:15] Right? And really, it was the intent was you're correct to get to scale and have a research centric or a data centric institutional financial services firm to start build it from that point. From these relationships with, you know, with these corporate executives that I had, that I built up extensively and attorneys and accountants, you'll see all of that is investment banking work. That's, you know, the groundwork for the investment banking role is being built through all of this. Those corporate relationships are what they're everything in investment banking. And so I had those in spades. I've been developing them for years and doing close work with CEOs and CFOs, et cetera. So. So that was the idea was to cater more to there to the corporate clients, institutional or financial needs and to really push the business in that direction. And of course, I didn't get a chance to have that funded as the world fell apart once again seven years after it fell apart before two thousand eight. Yep, and that was the transition back to Merriman is that we were down. Me and my wife had had been down in L.A. for a couple of for a number of years in Los Angeles, for a number of years with the practice and she's originally from the Bay Area and technology was booming the Bay area economy again. So we actually made the determination that, you know, it's time to move back to the bay. And I was really craving that opportunity to still bring all of these core skills back together, but in a very, you know, in a registered data center, securities based business. And so we did that. And John Merriman is a gentleman that I've known for many years through actually personal association. And I knew him as a fighter and a builder and somebody that, you know, certainly wouldn't go down without a fight. And his business had been through some transition and some challenges as as many people know, and they're out in the public domain and he fought through them. And when I sat down with him and caught up, it was very clear that he had a significant side of the business that could benefit from my work. And I was obviously really craving getting back in and having a trade desk available to myself, having, you know, distribution capabilities and capital markets capabilities. So it really was a perfect opportunity at that time to start to really bring everything together from the past 15 years or so, for sure.
Patrick (CEO of WSO): [00:25:37] So you had a chat with him, said, you know, I'm interested in moving back up to S.F. You make the jump. What's it like when you your first day or your first month? Was it a surprise? Is it weird not running your own shop anymore or was it? Was it refreshing?
Douglas Rogers: [00:25:53] Oh, it was totally weird. It was totally weird. But it was extremely refreshing for a while, you know, because obviously you don't have to do any of those things that you had to do. The ED reports, right? Yeah. Right. And. You know, all the administrative function was taken off of me, so I could really just focus on work and clients, which I completely adored. And so actually it was.
Patrick (CEO of WSO): [00:26:17] What was your what was the most of the work that you were doing for a moment when you get and this is 2012 or 2015 correct that you were there? So yes,
Douglas Rogers: [00:26:25] At the time. So again, he'd gone through some, some regulatory and other challenges that really impacted the business and really shattered big portions of the business. Yeah, I think eight or nine, twenty eight or nine. And so he was really in rebuilding mode. So the really first the first thing to do was one, and this is going to shock a lot of people. Since I ran a registered investment advisory for all those years, I actually lost all of my securities license. So at least on the on the on the stock side, so the seven, the sixty three, sixty five, thirty one, all of those and twenty four had gone by the wayside. And so I endeavored on two fronts. One was it was all about prospect. So it's all about prospecting and rebuilding the business and building it into a capital markets business. As I envisioned it with john's full support, which was which was excellent at the beginning and obviously getting all of my all of my licenses back. So I spent an enormous amount of time studying at nights and weekends, and I literally tied myself to a desk and prospected corporate executives of public companies for eight to 12 hours every single day. There were days, Patrick, where I was. I was back to back on calls for eight nine 10 calls back to back.
Patrick (CEO of WSO): [00:27:40] It was just insane. And did you in terms of capital markets? So what specifically types of like did you end up getting landing any of these clients? Was it more most of the stuff you were doing more around the trade trading desk and managing those clients that were already in house? So it was
Douglas Rogers: [00:27:58] It was multivariate. It was actually extremely successful. I was able to successfully catalyze a significant portion of the business. So we brought a lot of these clients, and most of them were both domestic and international public companies that had been a little bit orphaned by the street but had had needs for capital, had needs for stronger trading, had senior executives with concentrated positions and
Patrick (CEO of WSO): [00:28:26] Market caps of what like 20 million to one hundred million type
Douglas Rogers: [00:28:30] Typekit. Yeah, I'd say, you know, 50 to two hundred fifty two. Ok, right. So definitely on the smaller scale, definitely more micro capitalized and small cap companies. But that was really where the opportunity for rebuilding was, that he'd lost a lot of his research functionality. And but there was still strong trading there. And, you know, I really had what I needed to deliver. And so I focused more on the corporate services initially with these clients. And again, you know, opening the, you know, getting their 401 K open and helping to get some trades on some trades together for them, that would benefit the their 401k accounts or handling of the 10B five plans for some of the for some of the senior executives giving them giving them strategy advice, hooking them up with conferences, all sorts of different things. So there was both a consultative side of the service provision, as well as a very strong security side, right? And catalyzing the trading and getting back into offerings and and issuances of securities was really the ultimate goal. And so obviously, getting involved with them to help them with can be five plans, security plans.
Patrick (CEO of WSO): [00:29:41] And what's a 10 b five plan? Sorry, I'm not. I wasn't in the security 10b five was that
Douglas Rogers: [00:29:47] Sorry attendee five plan is when a senior executive, usually an affiliate or insider, has a large position in stock and wants to start selling some of that, usually for standard asset allocation. And the best way to do it is to use what's called a 10 b five plan, which is a fully disclosed plan so that so that the tinvestment community knows it's coming and see what parameters are set and that it doesn't. It doesn't. It doesn't and get misconstrued, as you know, the CEO selling. So you put you put a fully disclosed plan in place and then all the all of the stock goes where it goes across our desk. So it was able to generate revenue on the desk and really get our clients back involved with multiple points of value through the firm. And I became and I proved to be very, very adept at at cross-selling all of these different features and functionalities because of my work, both as an operator and understanding the workflow of myself, but also working closely with the executives. As a consultant for so many years, I kind of knew what they needed and what was on their mind and and I knew, you know?
Patrick (CEO of WSO): [00:31:00] So what changed deliver? What changed after three years, you know, so like, you're there for three years, sounds like it's going really well. What? What prompt? Kind of the move.
Douglas Rogers: [00:31:09] Well, I think
Patrick (CEO of WSO): [00:31:11] Initially that your first place was the easiest transition, was this one of the hard transitions?
Douglas Rogers: [00:31:16] No, this was, you know, this was a fairly easy transition as well because obviously I had a bit of a personal friendship with the CEO and knew him for many years. So and actually, he had some great staff there. He really did at the time. There were just some wonderful people there, so it made it fairly easy. And of course, I put my head down and, you know, and busted my butt. So people respect you when you do that, when you come in and you work your butt off and you show results, then they generally respect you. Yeah. And and so I had the support of my colleagues and a wonderful office, and it was a really nice transition. But, you know, Merriman Capital is no longer around. So there were obviously some continued challenges at the kind of kind of, I guess, systemic or intrinsic to the business that were never fully overcome.
Patrick (CEO of WSO): [00:32:03] You know what, those specifically or what, what
Douglas Rogers: [00:32:07] Financial
Patrick (CEO of WSO): [00:32:08] Financial specifically was. There's just too much overhead to for the revenue being generated through.
Douglas Rogers: [00:32:14] But for some reason, Patrick, there was a lack of focus. Ok? And this is really where, you know, you know, just kind of basic business parameters start to, you know, start to show themselves. And even though it's a broker dealer or an investment bank, it doesn't mean it's somehow immune to standard business practices. So, yeah, there was too much overhead and not enough, not enough focus on high margin or maximizing margins, I should say, around any single source of revenue. Right then, as the as the financial challenges mounted because of that diffusion of work in that in that lack of real margin,
Patrick (CEO of WSO): [00:32:59] Did you feel like you could have helped with that or do you feel like it was out of your hands?
Douglas Rogers: [00:33:04] It was so obvious, but it was out of my hands. It was obvious to most of us.
Patrick (CEO of WSO): [00:33:07] Why was why was it out of your hands? Because you weren't the boss that now at this time around or because.
Douglas Rogers: [00:33:12] Because yes, that was really part of it. And and there were some peculiarities at the board and the management level with people that weren't really from brokerage, but
Patrick (CEO of WSO): [00:33:21] Like he was your friend. Did you have any like sit down like stern talks like you really need to change direction here? Why are we investing here? I know there's a lot of revenue, but this is no margin
Douglas Rogers: [00:33:31] Type of, you know, you know, from time to time, but they really didn't seem to have much sticking power, staying power because, you know, and I don't know how much of this is appropriate for disclosure, but you know, but the truth was it just, you know, there was a lack of focus there and there were a lot of new ideas that they were trying to put into market, but none of them were properly capitalised. Most of them didn't fully sync with the standard or the core business, and thus you started spending money on things that weren't furthering the core businesses where you had the bulk of your revenue coming in and just in that breaks down. It doesn't matter whether I'm selling H-back, right? You know, equipment or renting trucks or doing securities, that's just that is a bad business model. It breaks down.
Patrick (CEO of WSO): [00:34:18] Where would you focus? Where was most of the revenue coming in from? When you when you were there, your three years there?
Douglas Rogers: [00:34:23] So. Well, that's the thing is the most of the revenue was still coming in through my division and through trading. Got it. And so I had, you know, 65, nearly 70 corporate clients. They were all asking for issuances and offerings. But we didn't rebuild a capital markets group or a real distribution desk, which is where, you know, the founder actually originally came from as one of the best capital markets guys ever. Yeah. And so that was really bizarre. And instead, they were building platforms for automated distributions that they thought would work and all sorts of things. And so it was really strange that they got so far away from the core business model that everyone knew work and that they still had some real strength where they could have had strength with and went down all these different paths. And I can only say that, you know, when, when, when finances falter at any business. You become really beholden to your investors. And, you know, if your investors are not from your from your business and your business is highly regulated and highly defined, and your revenues are highly defined by that regulation or by those regulatory boundaries, then you can have some conflicts of strategy. And that's really what presented itself is, I think at
Patrick (CEO of WSO): [00:35:42] The board level it got kind of ugly and yeah,
Douglas Rogers: [00:35:45] It was just kind of going all over the place, and I think it was really to try to keep certain people happy, but they didn't really matter. And you know, unfortunately, it's just, I think, a very common it's a very common scenario in the middle market firms where with without a core focus and or without real domain expertise in one or a couple of things that are centered around our specific functionality within the financial community, you very quickly get off track and you really have no cushion to sustain yourself through any shocks.
Patrick (CEO of WSO): [00:36:17] Right? Ok, so things didn't work so well. Long story short, things didn't work out. And so when did it? When was it clear that your job was disappearing or was it? Were you given a long head's up? You see the writing on the wall. When did you start looking
Douglas Rogers: [00:36:33] For your next? Well, I mean, you know, obviously we started tracking, you know, there was a public company, so it was very easy to track the, you know, to track the financials. And of course, the, you know, the interoffice politics is very clear that there were some things that just things weren't getting done. We weren't getting resources anymore for the core business. But I've really established myself very, very well, and I started to run all of the offerings for the clients because again, we really didn't have that functionality being rebuilt. So by default, I started doing all the offerings as well, and then compliance pulled me aside and said, Guess what? You're a banker. Take your test.
Patrick (CEO of WSO): [00:37:09] Take your what?
Douglas Rogers: [00:37:11] Take your test. Yeah. So I said and I said, Hallelujah, you are right. When do you when can you sign me up? Yeah. So I was actually ecstatic at that because the more credentials you have, the bigger the kind of moat you have built around you. So I was happy to do that because I was serving that functionality and I was starting to do debt and equity offerings on behalf of the clients that I was serving amongst all of the other functionality. And it was really time to bring it all together in the investment banking role. So I, you know, I took my series seventy nine test, changed my title and and really and really spearheaded the investment banking portion, which is really what my focus has remained to this day. And so it really didn't matter at that point, Patrick, what was going on with the firm or what direction they wanted to take it? My career was progressing at that point, right? I had established myself. I had a trajectory and I was making the best out of it. And so I had. And although I, you know, I had started looking at other firms and other shops, you know, really, this was the time to focus on what firms could really benefit me as a banker to move forward. And and so that's why we really progressed from there. And I just kind of left, you know, resigned myself to allowing, you know, the Merriman Capital to kind of go whichever pathway it wanted to go, OK.
Patrick (CEO of WSO): [00:38:42] And so tell me exactly how like, how it what was it like in terms of like the final meeting or the that that meeting where it was like, OK, this is it where you resigned? Or they said, that's it. Was it?
Douglas Rogers: [00:38:56] It was, um, it was peculiar. I mean, there was more that I'm really not at liberty to share that that's fine for maybe caused some.
Patrick (CEO of WSO): [00:39:05] I mean, I know what I got. I got fired early on in my private equity career and I can tell you it came as a complete shock to me. It sounds like you saw the writing on the wall, so it's easier.
Douglas Rogers: [00:39:13] Well, there were some. There were some very strange peculiarities at that shop and there present a lot of middle market shops and things that just aren't quite appropriate about how they organize with employees, how they structure compensation. And mine was fairly straightforward and actually extremely attractive compared to what everybody else is being brought in. Because the other problem was as the economics eroded, they kind of continued to try to bring people in, but in with parameters that didn't really support. A lifestyle. And so there was there began to be a lot of stress within the organization because people were polarized and, you know, and not really being led in a cohesive fashion, not being supported in a cohesive fashion. And many of us have experienced that ourselves. And it's an unfortunate how many outgrowth of companies and stress,
Patrick (CEO of WSO): [00:40:14] How many people were there at the peak or when you were there. What was the most in terms of employees?
Douglas Rogers: [00:40:19] See, when I got there, we were at about when I got there, we were still at about 40 or nearly 50 people. There was still an office in New York and some New York and San Francisco. And so there was about 50 people, down from about 250. When I left, we probably were down to somewhere between 20 to 30. I can't recall which, but somewhere in there.
Patrick (CEO of WSO): [00:40:40] Fair enough. So you were kind of starting to look around and you wanted to stay in the San Francisco area. And so you have all this experience in semiconductors, research software technology that that you just looking at kind of smaller firms that specialize in that vertical or what was the what were the criteria
Douglas Rogers: [00:41:00] For. So, you know, there were there were a couple of things, you know, one I obviously wanted to stay focused on or at least stay focused on investment banking, if I could, but at least be putting that to work, as that was really something that just brought together all of the skills that I developed throughout the years. And quite frankly, and most people will be shocked to hear this. But I absolutely adore the work
Speaker3: [00:41:22] As
Douglas Rogers: [00:41:23] As zany and neurotic and dysfunctional as it can be at times. I absolutely love it. I love the energy of it. I love the technicalities of it. I love the compliance regiment. I love every facet of it. It really is. It's really fun. I enjoy it.
Speaker3: [00:41:40] So I
Douglas Rogers: [00:41:42] Certainly knew that I wanted to continue to progress along those lines or make that a big part of the portfolio. But I really wanted to make the jump
Patrick (CEO of WSO): [00:41:49] To a big firm. When you said investment banking, you primarily mean mostly equity offerings and debt offerings like that side of because you had already started doing that right at Marymount. So you were looking for another place where you could continue developing that or continue executing on those types of deals.
Douglas Rogers: [00:42:03] Correct. And but more and more so expanding, expanding into the financial advisory role, which actually drew more from my earlier experiences of being close advisors to management as
Patrick (CEO of WSO): [00:42:15] A CFO, interim CFO, right?
Douglas Rogers: [00:42:17] Right. So I'm really looking to scale everything right. I want to firm a bigger scale so that we'll be seen and hired for those you know, for financial advisory roles, which I already was, seeing strong demand and good rapport with clients in that regard and then doing some of that work where I could also have more of a formal capital markets desk that could distribute securities and obviously really fulfil more of the role in a more well-rounded way that that requires a bigger firm.
Sure. So how did
Patrick (CEO of WSO): [00:42:47] You how did you how did you get in touch with the people who ended up bringing you in?
Douglas Rogers: [00:42:52] And I actually I actually made. So I started reaching out through my network and and had a lot of conversations with firms that. We're just felt like I was having a conversation with the firm I was at, and actually it was really about that time, maybe a little earlier, Patrick, that I realized that the vast majority of the middle market firms are really just shades of gray of each other. Each one has maybe something a little bit better here, a little bit better there. But overall, they're kind of all
The same thing. And so it's a really I really wanted to make a shift and I was able to find somebody who really believed in me over at Stiefel. Uh, a gentleman named Doug Heskey, brother Doug was in the asset management side of the business and a really warm and wonderful person. He saw the potential in me to come over to a firm like Stifel and use my skills of cross-selling to significantly
Douglas Rogers: [00:43:53] Enhance the offering at the firm and also help him with his division extract more value from the high net worth individuals and the corporate clients that they already catered to as asset managers, but didn't really have a way to bring that business out of them, right? Because of regulatory restrictions and just lack of expertise. And so he really went above and beyond the call of duty to help me get oriented with the firm and put me through a series of interviews and interactions, extending all the way back to the corporate offices in New York and in Baltimore. And this
Patrick (CEO of WSO): [00:44:32] Is this with Stifel or this is with another firm he knew like,
Douglas Rogers: [00:44:34] Yeah, this was masterful. Meet all of their all of their senior institutional staff, including their head of capital markets, Thomas Mulroy, who was also president of the firm and president of the international. An absolutely
Douglas Rogers: [00:44:46] Stellar guy. Not there anymore, but stellar guy. Yeah.
And I was absolutely ecstatic. I mean, these guys had huge offices at one Montgomery Street, right? It's yeah, they had twenty five billion in assets under management. This was the real deal. And even though I wasn't going in it as an investment banker, it didn't matter because I knew that all I had to do was get in and develop one thing right. And then obviously, then I'd have the interaction with the bankers and they would be able to see my credentials and my experience.
Patrick (CEO of WSO): [00:45:17] But tell me, what were they bringing you? What were they bringing you in as if not an investment banker? What given he
Douglas Rogers: [00:45:22] Was going to bring me, he was intending to bring me into the asset management division under his in his group. Got it. The pair me with he was, you wanted to pair me with one of his, his most effective and highest producing brokers who had a considerable number of corporate clients. And so that was the connection. And if you know Stiefel, it all. Stifel is very focused on trying to cross-sell through the bank to increase performance. They have a bank, right? They are a lending institution as well as an investment bank. So it really was just a nice, perfect fit and I was ecstatic about it.
Patrick (CEO of WSO): [00:45:59] So tell me, did its start, how did it evolve?
Douglas Rogers: [00:46:03] And so, you know, I went through all of this interview process and all of this, all this wonderful, wonderful stuff. And then the interaction got quiet and you know, I knew that there was certainly an element of trying to sell this to the higher ups. It really hadn't been a hybrid like that in that sort of function, but things were changing there, so we knew there was some interest. But really, what ended up happening is that unfortunately, the individual that they were hoping to pair me with to attack the corporate clientele for them, unfortunately had been doing some things that perhaps he shouldn't have. And and he was let go. And that really, you know, that that kind of set things a bit adrift.
Patrick (CEO of WSO): [00:46:51] Right. So they weren't sure what to do with you because they needed him for you to be effective.
Douglas Rogers: [00:46:56] Exactly. Well, it wasn't. And it wasn't just that it was actually something of a regulatory nature, so it really impacted the prestige of the group and unfortunately, my sponsor, if you will, and was also was also relieved of his situation.
Patrick (CEO of WSO): [00:47:11] Wow. So this is a pretty dramatic year. You're ecstatic thinking you're going to be joining this great outfit and
Douglas Rogers: [00:47:17] I'm waiting for my offer.
Patrick (CEO of WSO): [00:47:19] You're waiting for your offer halfway out the door at Marymount. If not, you're not. You're not already out the door. Yeah. And I assume you own a home at this point in San Francisco are you're renting
Douglas Rogers: [00:47:31] And you're thinking to yourself,
Patrick (CEO of WSO): [00:47:33] This is it. I'm going to stay in S.F. or you're thinking I would to New York. What was the plan?
Douglas Rogers: [00:47:38] Well, I just thought, you know, man, this is going to be fantastic. This is, you know, this is the ticket. This is this is what I've worked for and this is what I've struggled for. And this is what I put myself through all those years of pain and pay and things like that for. So yeah, I was really looking forward to it.
Patrick (CEO of WSO): [00:47:50] So, so when it went quiet, what did you do?
Douglas Rogers: : [00:47:54] Well, you know, I continued my efforts in the background with other with other people and so there were some other irons in the fire and those continued to progress. And you know, I, you know, unfortunately, once a firm starts to really slide down a certain path and slide downward. I like to put it this way, Patrick, and this happens for every business. You know, whenever, whenever a firm. Whenever a company has to save itself from some financial pending doom, right, you have to do what is to give something up. Right. You have to give up a little bit of the ownership, you have to give up a little bit of your soul to make it work. So you basically start, you know, you start stepping and start walking down the staircase. And unfortunately, in Mermans case, you know, they had continuously stepped down a number of times and done some, some capital raises and it just was continuing down that path. And so obviously, we have certain capital requirements in brokerage and investment banking. So I knew that it was unsustainable. So it wasn't like I could just go back forever. A transition was coming for all of us, whether we liked it or not. So I had to continue my pursuit. And so that's really and that's when I got close to the benchmark company.
Patrick (CEO of WSO): [00:49:09] Mm-hmm. And tell me about your you were there for around three years. Is that
Douglas Rogers: [00:49:14] Right? Yeah, I was there for there, for a little over three years and
Patrick (CEO of WSO): [00:49:18] To about 15 to 18, just for the context. Yeah, OK.
Douglas Rogers: [00:49:23] Yep. And what benchmark had or what represented that time was, yeah, there were another middle market firm, but they were really focused on banking and they just brought in a head of banking that had led one of the top middle market banking shops for many years as its CEO. So it was more of an administrative guy, not just like a big, big talker. And so I was impressed with that. And they had a capital markets desk, but dedicated capital markets desk. But more than that, and for people that know investment banking, they know this is valuable. They have some extraordinary analysts for whatever reasons and particularly technology analysts. And so, so even though stifel had been kind of my hopes there had been dashed because of that, that that issue that had arisen in that that group. Um, this looked like a really, really positive, positive step forward as well, because I would at least get those components that I felt was lacking from the practice of Merryman and be able to really focus as a as a managing director of investment banking on that, expansive banking opportunity.
Patrick (CEO of WSO): [00:50:33] So, OK, so tell me a little bit about like your day to day there. So when you first arrived, what was what were the resources given to you? How were you expected to build your business? You know? Was it like just start calling on any corporate entity you have or was it were they like, Hey, here are the people who've done offerings with us in the past. If they want to do a secondary, see if they want to have any more debt, like what was the was there any sort of guidance? Or they expect you as an MD to just bring in your own business and you're going to cut it that it was.
Douglas Rogers: [00:51:01] Unfortunately, as is the case with most middle market firms, it was the latter. Yeah, I mean, it was like my first day
Patrick (CEO of WSO): [00:51:08] As I guess your computer or just here's your desk.
Douglas Rogers: [00:51:11] Not even oh my god. At first I had to bring my own computer. It took them six weeks to get a computer together. For me, my lord, it was unbelievable. Like, it's like I joined a rickshaw. Yeah, and so I was really all up to us. It was really all up to me.
Patrick (CEO of WSO): [00:51:26] And but were you given any analysts, any associates, anything, any support?
Douglas Rogers: [00:51:31] No, I was given nothing. I was given nothing and
Douglas Rogers: [00:51:35] I knew that going in. But there was some time pressure to get out of Merriman as I, of course.
Patrick (CEO of WSO): [00:51:40] Yeah, I understand. I understand what you had to move, but can you tell me a little bit about? Like knowing that they know you're married and probably everyone knows married men struggling, so. Did it hurt you in negotiations in terms of was there any negotiations in terms of like you're coming in at an MD level, right? And you say, my guess is pay, there is largely there'll be some sort of base, but it's pretty small. And then there's a huge upside component if you're bringing in a lot of business or doing a lot of offerings, is that accurate? Yeah, that is,
Douglas Rogers: [00:52:11] You know, so it's, you know, a
Patrick (CEO of WSO): [00:52:13] Firm like bench, you mind like, yeah, give me some ranges so that the listeners can understand what it means to kind of be at a senior position at one of these middle market firms.
Douglas Rogers: [00:52:22] So unfortunately, there is a layer of the middle market of which benchmark is part of that. That really has no set compensation. And the vast majority of it is variable comp and the vast majority of the firms in that category are like that or quickly trying to move towards that.
Patrick (CEO of WSO): [00:52:43] And so tell me a little bit about what that what that upside can potentially look like in a good year or how somebody would think about going to negotiate if they're going to go try to do this and be kind of eat what they kill.
Douglas Rogers: [00:52:56] So sure, your negotiation center around things like your office situation, your benefits and health care costs and of course, the percentage of
the percentage of the fees that you're due to receive on your transaction.
Patrick (CEO of WSO): [00:53:14] Right. So in terms of ranges, are we talking like let's say you bring in a million dollars in fees for the firm? Are we talking in one year? Are we saying that they'd pay you like 30 percent of that, plus your health care plus your give you your office? Are we saying like, is it more like 60, 70 percent? They pay you?
Douglas Rogers: [00:53:33] And so they're they present to you 50 percent? Essentially, that is that is the approximate pretty approximate range.
Patrick (CEO of WSO): [00:53:41] So around 50 percent of the fees you're bringing in are yours, but they're giving you a platform, the name. The analysts like the right to give you that.
Douglas Rogers: [00:53:49] And because I was coming from a salaried or a salary plus bonus role at Merryman and we had we had good benefits there as well, you know, I was really able to focus the negotiations on making sure that those more intangible items or I'd say the we're taking care of the peripheral items where we're negotiating a very, very attractive fashion. But yeah, it was it was it was a real big challenge.
Patrick (CEO of WSO): [00:54:17] And so did you just were you nervous about it going to pure, pure, pure commission versus salary bonus? Or did you feel a confident enough that you had you'd been doing this long enough that you knew, Hey, I'm going to close enough to pay to do well,
Douglas Rogers: [00:54:33] See if I'm talking to you. It's one answer. If I'm talking to my wife, it's a totally different.
Patrick (CEO of WSO): [00:54:37] So tell me both.
Douglas Rogers: [00:54:40] I, you know, I am a little of both. Obviously, it was not what I wanted. It was not optimal and it's not what I was looking for, and I knew that it was going to affect my approach to the market. It was going to affect what types of clients I approached, and I say, What really works? Why?
Patrick (CEO of WSO): [00:54:59] Why do you say that? Um.
Douglas Rogers: [00:55:03] You don't have time to dig in and focus on the strongest opportunities or ones that you really believe in. So you really do have to focus more on things that you think are immediately actionable, basically clients that you see some sort of stress, right? And that gives you white faith as a small provider. But it also you also know that management is motivated to get something done if you can bring value. And so but those are typically not durable businesses, and they're not necessarily great for the long term. But, you know, but when you're
Patrick (CEO of WSO): [00:55:40] When you're on commission, you need to get some, you need to get the offerings and bring in fees.
Douglas Rogers: [00:55:45] Exactly. And no matter what you know, no matter what investment banking and the reason it is not optimal and not appropriate to compensate anyone like this is because of that. You end up putting people in
Douglas Rogers: [00:55:54] A position where they have to go after business, which is non durable and not necessarily optimal and not necessarily of any interest. The vast majority of investors. And so that doesn't help you build your business, but also
it you know It. It means you really can't. You haven't aligned compensation with objectives, right? And that's objectives with the individual or the or the firm. So tell me kind of helter skelter.
Patrick (CEO of WSO): [00:56:20] And when you were in your arranging these offerings, tell me what exactly it's for the listeners. Tell me exactly what that even means. So like, just give me an example. So like, let's say we have a private debt offering. So let's say you're. Can you give me an example of one you did when you were there where you found this company or how you even found it, how you screen for these companies, how you even got in touch with them? Or is it all just your Rolodex? You're just immediately start calling people, you know?
Douglas Rogers: [00:56:45] Mhm. That's a little harder. I mean, I really I really have to say I'm extremely prolific and I'm really quite good at it.
Patrick (CEO of WSO): [00:56:55] So you're really quite good, I'm sorry, you're really quite good at what
Douglas Rogers: [00:56:59] I'm really quite good at prospecting and development. And so.
Patrick (CEO of WSO): [00:57:05] So you don't want to share your secret sauce or are you saying that what's hard about it? I guess the process. What are the tools you're using? Let's start there.
Douglas Rogers: 00:57:14] So I guess, you know, a lot of this still goes back to, you know, everything that I had done for decades before was really, you know, yes, I would do screening right. I would tap my network aggressively and still do to this day and obviously reach out to my reach out to everybody that I knew. And I use email very effectively, and I use the phone very effectively to call my contacts and let them know what we're doing as to, you know, to get referral business and to find opportunity. But I do absolutely do a screening in my role and I'll screen through, you know, S&P Cap IQ, FactSet, what have you? For companies that are in the space that I want to focus on and that seem to have some sort of financial stress where I think I can have, I think I can uncover a solution or help them make some incremental gains. And then how are you
Patrick (CEO of WSO): [00:58:02] Making it through? How are you going to pass the gatekeepers to talk?
Douglas Rogers: [00:58:06] Oh, that's easy. That's easy when you're me.
Patrick (CEO of WSO): [00:58:11] So why is it easy if it's you and what? Because you're able to do that?
Douglas Rogers: [00:58:16] You know, I was the CEO for many years. And, you know, even though the size of the firm wasn't such that people would think that I'm, you know, Jamie Dynan or anything like that. The truth is, it really is a differentiated viewpoint, and I really got accustomed to working with CEOs and CFOs in a very fluid fashion. They don't scare me which bankers
Douglas Rogers: [00:58:36] I'll tell you. We're terrified of their clients. It's hilarious. It's really funny. I mean, they're terrified. I am not. There is always another client around the next door. Clients come, clients go, I don't care. I usually have four or five transactions going at any given time, whereas your average banker does maybe one or two a year if they're lucky and they sit around and wait for it. I'm very proactive. I attack my market and because of the passion that I have for the business, that's what drives me. So I want to go out there every day and find a new solution or a new opportunity. But I don't mind
Patrick (CEO of WSO): [00:59:09] How do you want it around? But like for the people that are cold, how do you go around this? Like so yeah, I get it. You have a pretty good.
Douglas Rogers: [00:59:15] I'm very respectful of them and their time. It's that simple. So I'll do something like, you know, I'm very adept at getting contact information and I'll just reach out to. The other thing is, I know who I work. For most bankers, going up to all the bulge bracket, most bankers don't know who they work for. Everybody thinks they work for the CEO. You do not work for the CEO. That's the ego. That's the ego, the investment banker and all investment bankers. The relationship is maintained and managed, and all output function is controlled by the CFO. And I was what a CFO for hire. So my so that I've always leveraged that and that has become very, very important to me. Is that common experience of going through the PCAOB audit, for example, of answering open items of drafting my management's discussion and analysis? That's where we connect. You know, we've done the same thing, and he's really doing
Patrick (CEO of WSO): [01:00:18] A lot of these are just cold emails. You're blasting out 50 cold emails a day. Linkedin messages, what have you. Anything you can to just try and.
Douglas Rogers: [01:00:26] Yeah, I actually try. I try to be a little bit more narrow than that. So I don't use LinkedIn or anything like that. Yeah, I have obviously just to get a basic connection from time to time. But no, I try to send a personal email, and it's usually something very simple. You know, may I have a couple of minutes to learn about your business? And that's truthfully what I'm after. The first thing I got to do is I've got to find out what you need and who you are, and I've got to, you know, have a conversation. And with the CFOs, and once they realize that I haven't that operational background and some common experience, they're usually very accepting of that. And they're usually very welcoming. And if you kind of give them the floor and you know and just ask for a basic, hey, you know, can you tell me about your business? They're usually very open to it. And so that's really how I started. But I just usually have kind of a knack for it, and I I can respect their workflow. I know what's on their mind generally, and it's very easy for me to talk to them because I've been through some of the same rigors. Fair. Ok.
Patrick (CEO of WSO): [01:01:30] So, yeah, tell me what happened, so what's next? So you're there? It sounds like you did really well.
Douglas Rogers: [01:01:37] Yeah, it was. It was. It was very challenging at first, but that's where that's where my focus on semiconductors and technology, hardware and IT hardware really started to emerge. We had two of the best
Douglas Rogers: [01:01:52] Analysts in the industry for these two spaces one the gentleman named Gary Mobley. Gary Mobley is known for specific coverage in in semiconductor space, which is very rare. He's now at Wells Fargo as one of their senior analysts and our other our other analysts that Mark Miller at a Nobel Prize in Physics for his work at NASA in the 80s and some very highly respected individuals. And it just so happened that my transactional success started to emerge in their in their universes. And both of these guys cover some of the more prestigious and prominent companies in that space. So I saw that that is my opportunity, for example, Patrick, as to back to Stifel, right? I knew that the future lies in the bigger companies, and I knew that, you know, following my analyst religiously and using that open door to develop those relationships with the larger companies and the billion dollar and more market cap category was where the durable future lie. And so really, that's where I focus. Although it was once again very, very difficult to get into business and very rocky for the first, say, a year and a half. You know, once I was able to develop some of those transactions and close some transactions, and once I made enough and spent enough time with these executives, then it started to. Then it really started to emerge and unfold from there.
Patrick (CEO of WSO): [01:03:23] It's great. So tell me kind of what you've been up to in the last few years? Well, last year, so,
Douglas Rogers: [01:03:29] So after I left, I was still really focused on making the same sort of shift back to a very large firm. And various opportunities develop. It's a very, very long road and was very interesting and unique about kind of the managing director of investment banking role at a large firm is that they come for you if you can't go after the job. Um, you know, they eventually reach out to executives that are in their coverage universes, and that's how the referrals start. So you kind of have to just keep putting your feelers out there. You've got to you've got to maintain. Your work with your clients and maintain your. Visibility with them and ultimately, eventually somebody looking and they, you know, they come and ask for an interview or for an introduction. And so, so and so that happened with, you know, another middle market firm that was looking and lost their long time San Francisco based managing director. And you know, unfortunately, it was once again a firm that I really had had excluded from my list because they didn't have physical footprint in San Francisco, which I believe is a strong success factor. If you're going to be competitive in your market, you have to be present in your market. And so I saw some challenges ahead, but I was really anxious to get back in the workforce. And that's where I, you know, I decided to go back and help
Craig-hallum Capital Group out. And they also had some really excellent analysts in their coverage, really overlaid very beautifully with my coverage universe. So I spent some time working with them and I think doubled their coverage in this space within about seven and about seven weeks. But it was like I mentioned earlier, it was a lot of the same.
Patrick (CEO of WSO): [01:05:14] So you're now doing your own thing.
Douglas Rogers: [01:05:16] And so that's correct. And so I realized, listen, you know,
Patrick (CEO of WSO): [01:05:20] It's time, it's time you're going, you're CEO again.
Douglas Rogers: [01:05:24] Exactly. And you know, I really wanted to have that focus emerge and I really wanted to remain focused on that. And I saw all of the opportunities to create something that delivered with the clients were actually demanding. Because during this evolution, Patrick, I really started to see that the clients across the board were really, really gravitating towards that CFO and operational background. They saw it as being, you know, extremely valuable in the overall strategic development and the strategy calls and strategic work that we were doing. And I was starting to get calls from clients who were and this started at the end of Benchmark who were asking to hire me as kind of confidential financial advisors to oversee the work of other large firms. So ironic, you know, Credit Suisse won't. Credit Suisse doesn't want to talk to me. However, what they don't know I've been supervising their offerings and the questions that some management teams have been asking of their bankers were written by this guy. Yeah, very interesting, huh? So, you know, it's and you know, I'll never I'll never forget that that particular engagement, it was it was a Sunday morning, 7:30. I got a call from a CFO who I'd been courting for years long time, Cowen client and everybody else covered by everybody on the street. And I pick up the
Douglas Rogers: [01:06:53] Phone, of course, because that's also my background.
I'm never off. I'm, you know, I still have that mentality. I'm never also. And if he's calling me at seven 30 on a Sunday, there's something up. Yeah, so pick up the phone, he says. Look, we've got this thing, you know, we desperately need to recapitalize some of our credit situation. We're getting a lot of offers from different, different places. You've always you've always struck me. And he said this, I'll never forget, he said, you've always struck me. As someone who would tell me the truth, I said absolutely. He said to what I'd like to do is I'd like to bring you in as our confidential adviser working with me in the board to analyze and assess all of these different options and make clear recommendations to us. And I said, absolutely no problem. Let me get an engagement agreement together, he said. Sure, send it over to me. And as soon as I did, he called me right back and he said, said, Look, man, this is great. He said, this is great, but you know, I don't know that I was really clear. I was really hoping to just hire you. Is there any way I can hire you and not benchmark? And that's what I went. It's time. And I said, of course I said no. And of course, that flowed through the firm as it's supposed to, as it's supposed to. It was very successful. That firm at that time, that company at the time was trading at ninety eight cents. The work that we did together then unlock significant value. The company today. This is only a year and a half later, trades at thirty seven dollars and nearly four billion in market cap. Wow. So very successful. That was a very successful engagement and really represented what I saw as kind of a coming back together of, OK, you know, my clients, my clients really do respect me that in that role and rely on me in that role. And I think I am prepared to lead the way again or try to at least try
Patrick (CEO of WSO): [01:08:41] Exciting. It's exciting. So you know, you've set up shop, it's called Semi Cap Equity Partners is the name of your firm. Correct. Correct. So I'm sure a lot of the listeners, if there want to be in San Francisco or they want maybe an internship, maybe at some point, or you'll need some analysts at some point to know where to look.
Douglas Rogers: [01:09:03] I would absolutely welcome it. You know, another part of this, Patrick, is that, you know, I'm really frustrated by or I was very frustrated by the volatility and the variability of these firms because of what is essentially poor management. I'm sorry if you don't have a focus, if you don't lead your members, if it's your if you're the head of banking or maybe the founder and it's your initials on every single banking deal that's currently active in the space, you're not providing leadership. There is no proper leadership. There is no proper financial structure to these organizations. Compensation is an absolute disaster. And these are very simple things to correct. So a very big portion of what Semi Cap Equity Partners is all about is trying to trying to create a business and build a business that is specifically catered to the needs and the demand of the clients, while then also organizing it in the most. Practical, logical, efficient and appropriate and professionally appropriate ways, and that means proper compensation people for people, that means a focus, a business that's known for something, which is why I chose the admittedly somewhat kooky Name. I don't want health care. Don't bring me health care. Semi capture
Patrick (CEO of WSO): [01:10:20] Semi cap. You're very clear what you what? You guys are specialized.
Douglas Rogers: [01:10:23] Exactly. Yeah. So we can be known for something. We can deliver real value to clients and real mindshare value, but they know we know something. This is all we do. It's all we focus on. You know, I don't care about micro filtration bubbles anymore. That's enough, right? So that's a really key thing. And that is where margin comes from. And ultimately, yes, although we're starting from there, we're starting with, you know, with a small team and a small group, we have very large aspirations. And the goal and the objective is to have all of those key institutional functions present, including research and trading. Of course, because and again, where a lot of these firms just simply don't put it together is that they're all part of the same margin pool, right? We all we and by not having focus and by being diffuse, that's why they always suffer financially.
Patrick (CEO of WSO): [01:11:19] So what is first? What's your focus first in terms of what are you setting up? What's kind of what's kind of the initial thing? Is it more just you're going to be?
Patrick (CEO of WSO): [01:11:29] More kind of like a one off kind of consultants, kind of the CFO role. Or do you see yourself kind of quickly trying to build up and scale your team?
Douglas Rogers: [01:11:40] We're on the ladder. We're very aggressively trying to scale the team. We already have engagements on both on the financial advisory, you know, for M&A style work as well as on the as well as on the capital markets and distribution side. We're currently embroiled in a couple of distributions. So, you know, the sooner that I can that I can grow the business and grow the talent pool, the more opportunity that we can process in, the quicker we can process it. And that's the other fundamental piece here in services, and this is something that's missed. And maybe I said it earlier. I'm not sure the services people are your product, people are your inventory. Most people don't understand that. And just like if I manufacture a product and have to start my supply chain and put my money into building the product and inventory before I can go to Amazon or to Neiman Marcus and sell it right, it's the same thing with people and services. That's why the credentials matter. That's why your experience matters. And so I'm here to bring together the experiences and the credentials that are relevant to my clients. Our first VP as both a CPA and a CFA. Because accountancy is everything that we do, it's the core underpinning of the public company CFOs World, right? So if I have that on staff, I can give better counsel to them. I can give better product. So I'm very, very committed to people very, very committed to clients in that way. And I really do recognize that it's the people that were selling, it's their abilities and skill. So the more great people I can have compensated properly in a in a function, in a functional, cohesive package where everybody's working on the same thing, my traders are trading the right names. My analysts are analyzing the right names and my bankers have the relationships with all the same names. Then we are providing a cohesive package and a comprehensive package and thereby hopefully we've seen the results in the margin, the margin profile of the firm being significantly greater than most. And so that's really what we're building and all around that core focus on semi's it and IT hardware.
Patrick (CEO of WSO): [01:13:54] It's exciting. It's exciting. I think I'll definitely be watching and see seeing what happened.
Douglas Rogers: [01:14:01] Well, actually with your help, actually, you know, this is this is being associated with Wall Street. Oasis is brilliant, right? I love what you've built. You've got one of the largest communities. I think it provides education, it provides access. And so those are things that I gravitate towards and I feel are part of our makeup as well. So actually, I'm elated to be here. I thank you for putting me on the platform and I hope that I can do some great work for you and for your candidates and for your community members as well.
Patrick (CEO of WSO): [01:14:34] Great. Thanks so much, Douglas. I appreciate you sharing all your stories and with the community, and let's stay in touch.
Douglas Rogers: [01:14:41] My pleasure. Patrick, thank you very much, and I look forward to speaking with you again soon.
Patrick (CEO of WSO): [01:14:44] And thanks to you, my listeners at Wall Street Oasis, if you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street, Oasis Dotcom and till next time.
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