"The greatest lesson I learned is there is a cost to doing nothing."
Mike Davis is the founding partner of Olive Tree Ridge, a multi-strategy asset management firm and investment bank on a mission to bridge the gender and immigrant wealth gap. Mike began his career in consulting before becoming a serial entrepreneur, starting up 13+ companies primarily in the financial services and e-commerce sectors. Mike holds an M.B.A. from INSEAD and a B.S. in Computer Engineering from Purdue University.
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Table of Contents
We are thrilled to have you join us today, welcome to ValiantCEO Magazine’s exclusive interview! Let’s start off with a little introduction. Tell our readers a bit about yourself and your company.
Mike Davis: I am the founding partner of Olive Tree Ridge (OTR), a multi-strategy asset management firm and investment bank on a mission to bridge the gender and immigrant wealth gap. I’m incredibly passionate about the work I do.
Women and immigrants often face barriers when it comes to accessing the capital they need to scale their businesses. OTR’s mission is to bridge this gap and dismantle systemic inequality, providing women and immigrants access to the capital and capital markets they need to grow their businesses.
In addition to the work I do at OTR, I am a dedicated husband and father to three sons.
2020 and 2021 threw a lot of curve balls into business on a global scale. Based on the experience gleaned in the past couple years, how can businesses thrive in 2022? What lessons have you learned?
Mike Davis: That is a great question. The greatest lesson I learned is there is a cost to doing nothing. If you think about the COVID-19 pandemic, a lot of people thought they could batten down the hatches, hold their breath and then we would eventually get through it. But, as we’ve seen, the pandemic is lasting longer than initially expected, due to the rise of variants, slow uptake of vaccines, other challenges in distributing vaccines, etc. Doing nothing has proved to be an impractical strategy.
Even the invasion of Ukraine by Russian forces shows doing nothing is not an option. Burying your head in the sand and saying it does not impact you or your business is impossible. Sometimes, particularly as a small business owner, it can be difficult to recognize the impact you may have on an event so massive.
I would like to challenge businesses to rethink their stance and recognize there is a cost to doing nothing. If taken by many, even the tiniest nudge in the right direction or the smallest actions will build momentum and create a huge impact.
The pandemic seems to keep on disrupting the economy, what should businesses focus on in 2022? What advice would you share?
Mike Davis: The pandemic isn’t the only factor disrupting the economy. If you take a step back, it’s clear there’s a lot at play here: wars, natural disasters, civil unrest, inflation, rising interest rates, etc. Rather than thinking about disruption as an exception, think about it as just another eventuality that needs to be addressed.
As leaders, it’s time to start adding contingency plans to our standard operating procedures. For example, supply chain resiliency has proven to be of utmost importance. Everywhere you look, there are examples of companies that could stand to learn or change a few things, But, there are also examples of companies doing it really well.
It’s also not just the large, more established companies doing it well. There are startups leading the charge, too. I have a great example of this. While everyone was talking about supply chain disruptions in the beginning phases of the pandemic – from declining revenues to lack of customers – one of my clients managed to actually build up additional manufacturing capabilities. She did this not only in the USA, where her business is based, but also in India and China.
As supply dropped everywhere, this client saw the opportunity to create a three-pronged manufacturing strategy in different locations. This was something she couldn’t afford to do pre-pandemic, due to cost. However, by taking advantage of the market conditions, she secured great partnerships and grew her business in the middle of the pandemic. With disruption core to her business strategy, her standard operating procedures, her supply chain, her manufacturing process and her sales process for shipping and receiving products were all built with resilience in mind.
How has the pandemic changed your industry and how have you adapted?
Mike Davis: I’m in the financial services industry, specifically in investment banking and asset management. In investment banking, the effects of the pandemic are a mesh of different variables. Initially, the market was jittery and we observed markets behaving in unprecedented ways. Traditionally, equity markets and bond markets move inversely with each other. However, in the early days of the pandemic, the bond markets and the equity markets moved in the same direction. That was unprecedented. We had ever seen that before.
In asset management investing, the pandemic has forced investors to rethink how they evaluate their edge conditions and stress scenarios. At OTR, we focus on early-stage investing. I think the pandemic ushered in an opportunity for newcomers and startups to fill white space for new solutions and innovation. It’s a time to explore sustainable business models, viable revenue streams and new ways of engaging with the end customer.
On the other hand, fast forward to today, people are looking at supply chain bottlenecks and other surface-level issues triggered by the pandemic, as well as the Russian-Ukraine War. Indeed, these very obvious issues are important to note. However, what I believe to be of greater note are the second-order effects of these disruptions, which will have longer-lasting effects. The tightening of underwriting requirements by debt providers is one example of a longer-lasting second-order effect. Independent of whether rates return to previous (lower) levels, underwriting requirements will remain tight for a long time to come.
What advice do you wish you received when the pandemic started and what do you intend on improving in 2022?
Mike Davis: I wish I had received the advice to think bigger when it came to investing in woman and immigrant owned businesses. Initially, OTR deployed a single strategy (majority-control buyout) of women- and immigrant-owned $1-$5 million EBITDA businesses on a deal by deal basis. Looking back now and comparing our initial approach (single-strategy) to our current approach (multiple concurrent strategies), I wish we had expanded our strategies quicker.
When I talk to women-owned operators, I always ask them how they would go about increasing their revenues by one order of magnitude. I wish I asked myself that question and put those thoughts into action at the beginning of the pandemic rather than sticking with our single strategy approach..
My goal for the next year is to reach more women and immigrants facing barriers and improve the range of tools OTR makes available to this group, making it easier for them to access markets.
Online business surged higher than ever, B2B, B2C, online shopping, virtual meetings, remote work, Zoom medical consultations, what are your expectations for 2022?
Mike Davis: I don’t have a crystal ball so I can’t really be 100% percent sure about other industries but as it pertains to asset management and investment banking, I think 2022 is going to be very precarious. I believe the days of directly investing in startups will be increasingly difficult to substantiate. Investors, both retail and institutional, will need to have a full-time focus on macro and micro-economic variables in order to discern great investment opportunities.
The days of the skilled investment manager are coming. It’s easy to think you have the Midas touch in a long bull market run. However, investors are going to want investment professionals at the helm in a bear market, especially when facing strong headwinds. Looking further into 2023, it will be interesting to watch the widening gap between direct-invested and self-directed portfolio versus manager-directed portfolio returns.
How many hours a day do you spend in front of a screen?
Mike Davis: More than I should. Probably 15 hours a day.
The majority of executives use stories to persuade and communicate in the workplace. Can you share with our readers examples of how you implement that in your business to communicate effectively with your team?
Mike Davis: Storytelling is a very powerful tool and it’s important for two reasons.
First, storytelling helps newcomers to the OTR platform understand why we exist. It communicates the mission, vision and values driving us. The story of OTR is about removing barriers for women and immigrants. The reason I decided to focus on this story is I, myself, am an immigrant to this country. My mom was a driving force behind a lot of fundamentals I would say afforded me my career trajectory and personal trajectory.
Research also shows, rather tells through stories, some of the observations I have intuited through my own lived experience and the lived experiences of other immigrants and women I know. For example, studies have found female-founded businesses are more structurally resilient, have happier employees and provide superior customer service. These insights tell stories of empowerment.
I can tell these stories in different ways and different lengths but it always circles back to women having an incredible innate ability to use their IQ and EQ more fluidly than men do. The remarkable efficiency of women is one of the reasons we hire returning-to-work moms for roles requiring an extreme level of precision.
Business is all about overcoming obstacles and creating opportunities for growth. What do you see as the real challenge right now?
Mike Davis: There’s a lot of strife in the world. I attribute much of our woes today to systemic inequality and feelings of inequality. When that feeling of unfairness is reinforced by systemic structures and constructs, it leads to hopelessness. As one of the greatest obstacles of our time, we’re going to need to spend a lot of time, creativity, innovation and love capital to overcome this. People don’t feel loved. They feel like they’re never going to succeed and they may think, “This is how it’s going to be regardless of my actions.” Systemic inequality is the real challenge and everything else is just a symptom.
Corporate social responsibility (CSR) is the language most companies are using right now. But I think it’s more than a responsibility. Social responsibility is like giving back to the community after earning profits. Business as a force for good, however, is when the business’s primary goal is to direct their resources towards a cause. If all businesses did this, we would be looking at a totally different social landscape right now. Supporting our communities should be less out of a sense of responsibility and more out of a sense of purpose.
In 2022, what are you most interested in learning about? Crypto, NFTs, online marketing, or any other skill sets? Please share your motivations.
Mike Davis: I would like to learn about how we can derisk the typical barriers women and immigrants face when looking for funding from traditional capital providers. What is preventing traditional capital sources and traditional structures from helping to remove these barriers? If I better understand what needs to be true for these traditional capital providers to participate, OTR can then do more to signal, “Come on in, the water is fine.”
A record 4.4 million Americans left their jobs in September in 2021, accelerating a trend that has become known as the Great Resignation. 47% of people plan to leave their job during 2022. Most are leaving because of their boss or their company culture. 82% of people feel unheard, undervalued and misunderstood in the workplace. Do you think leaders see the data and think “that’s not me – I’m not that boss they don’t want to work for? What changes do you think need to happen?
Mike Davis: I’m not sure I know of any corporate leaders that believe that these trends are not impacting their organizations right now. It is happening at all levels at different percentages, plus or minus some degree of variation.
One reason might be many corporations are insisting employees need to return to the office. Employees now prefer flexibility. If corporations continue to ignore their employees on what they want and need, they will lose employees eventually. Employers need to listen (and accommodate) their employees’ reasonable wants and needs.
On a lighter note, if you had the ability to pick any business superpower, what would it be and how would you put it into practice?
Mike Davis: Any business superpower? I think it would be superior listening. The second one would be understanding. And the third one would be the ability to ask different or more precise follow up questions. With these three superpowers, I can solve anything.
What does “success” in 2022 mean to you? It could be on a personal or business level, please share your vision.
Mike Davis: Well, on a personal front, I’m really hoping my son will be potty trained soon. On the business front, I’d love to bring a few more strategies to market in our asset management business. In our investment banking business, I’d love to help even more women and immigrant operators access capital markets to grow their incredible businesses.
Jed Morley, VIP Contributor to ValiantCEO and the host of this interview would like to thank Mike Davis for taking the time to do this interview and share his knowledge and experience with our readers.
If you would like to get in touch with Mike Davis or his company, you can do it through his – Linkedin Page
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