Nick Araco, Jr. | Building Networks from Scratch and Connecting in a Virtual World

John Corcoran 6:47

Yeah, that is one of the hardest types of businesses to start because how do you start a party no one wants to come to a party unless a party is happening. And so like just getting it off the ground. is incredibly hard. And you just did it again, by the way, which we’ll get to, with the CHRO. Alliance as well. So you’re doing it again. So give us some insight into how you get something like that off the ground. 

Nick Araco, Jr. 7:11

Well, there are two critical components to that. Number one, I advise any entrepreneur don’t play the game of build it and they’ll come, do not fool yourself that there’s a risk it is dangerous. Yeah. So from the beginning, we said, we’re not going to do that we’re going to build it with so I actually identified seven finance leaders with diverse backgrounds, both personally and professionally, are all in the seat of the CFO, whose only connection was that these were people coming to me with problems and seeking support or solutions. I brought them together physically, I introduced them to each other and I treated them like a focus group. gave them a little bit of food now called a break. The break kind of comfort level down but I asked them to Some very pointed questions. Why do you come to me? And they said, more often than not you connect us to a qualified peer challenge or validate the confidence in our decision making. There’s no greater source of confidence building or competency building. And to talk about here. My second question was, well, does anybody do that for you consistently, in an efficient and effective way? And they said, No. And my third question, I said, if we build that together, will you build it with me? And will you come along for a ride? And will you invite others to be a part of it? Will you become part of the DNA or fabric? And so I’ve had this mantra of build it with, not build it for. And second, you need three critical components or you’re going to build it with them. Use these ears more than anything. Here’s the heart and the mind and then the mouth. No one else provides them a place where they’re the athletes, not the spectators, where they are the winners, not the watchers, give them a place where they can have a voice and speak without being spoken to. And once you hear that, make it educating, make it engaging. And because we’ve focused on first with a CFO, Alliance finance leaders from middle market and emerging enterprises, don’t assume they have the horsepower to implement what they’ve learned, hold them accountable by saying, Hey, we can also provide you some help. So there’s where our business strategy took shape and hold, let’s educate, engage with the network’s and let’s find and bring to them solutions they can use.

John Corcoran 9:40

That’s, that’s an interesting one. I was gonna ask you about that because you’ve got a fairly large team of people that are working with you now, some of whom are in business development or in marketing. So how do you know there are some networks for different markets where it’s just a network, it’s that We’re just going to bring you together, you’re going to connect with one another. But it seems like what you’re saying is that you also help with the implementation. So how do you draw the line? How do you determine how much we’re going to do for you without becoming a full fledged agency or without the membership kind of taking all of your team’s time in a way that you’re not compensated? Well,

Nick Araco, Jr. 10:22

I think thank you for asking. I think it also goes back to the fact that you have to have those ears of ears open, which means you need to be prompting them with the right questions like consistently. So when it came to determining what they needed help with. They told us what they needed help with consistent benchmarking, through surveys, through other tools and assessments, if we can help them identify areas of need and or measurable impact to the top line, bottom line is shareholder value. And we said in addition to educating and giving And you bring that to light, letting you know by benchmarking that your peers are also facing those issues or how they face those issues. We also solicit and also provide you with some solutions and support. It’s not a fine line, right? saying, Hey, listen, now that you know, we, at minimum, we can create some accountability that you will take action upon it. And if you need help taking that action, we’re here. Right? So, you know, it’s it’s, it’s an interesting model of both benchmarking, best practice sharing, and then solutions.

Unknown Speaker 11:37

Now, did you start it in Philadelphia?

Nick Araco, Jr. 11:40

So we began a pilot of the CFL alliance in Philadelphia. And we did treat it as a pilot for one year, first of all, using our ears and our minds to say, after a year’s time, what have we learned? And what are your people telling us? And what can we apply to scale from there, we expand it and now Our network encompasses most of the major markets across North America. And because of our online platforms, and the movement and culture around connectivity being able to be accessed and utilized via technology like this, and otherwise, we have members across the North American around the globe.

John Corcoran 12:18

And so it’s a different world now that we have different technologies and stuff like that I imagined the way you would build it today would be different than the way you did back then. But how did you expand to new markets? What was the strategy? Oh,

Nick Araco, Jr. 12:31

so I believe in both ad models or aggregator models. So the last thing I wanted to do was to go into a new market and say, I’m going to replace something that’s already working. Instead, we did our due diligence, we had put a lead team in place to say if we’re going to go into a new market, what other networks exist, what other industry partners, academic partners, organic, or market based networking groups are Education and Engagement where the focus exists. And we reached out to them and said we create a both end equation, we will take all of you do well. And we’ll come into your market and do one thing. Well, that complements what you do well, and that is we’re going to create the place where dialogue and discussion are the center of the reason why we’ll bring them together. And what we found were that other groups, other traditional associations, or peer groups, or media companies, or educators who we’re bringing them together for other reasons said you know what, that’s a really nice compliment. It’s a really nice compliment to have you come in and do just that because we said we will highlight what you do. The part of it is we took this model of both and not either or, and look, not everybody embraced it. Some probably still viewed us as competition, but if you know, we can’t please everyone, the majority said We’d like this. And we have strong relationships today with media companies like cranes and American city business journals, with academic partners at the business schools wanting different business schools across North America, and from other associations and groups like the AICPA and FBI and others who say, listen, we love what you do, but we’re going to do something very unique.

John Corcoran 14:23

Yeah. And so you mentioned, you know, dialogue and discussion encouraging those sorts of things. How did you go about doing that? You know, because I think a lot of times when people hear about a network or they hear about a community, they think, okay, you know, it’s going to be a networking event, I’m going to be in a room just with drinks, how do you avoid that type of scenario? And how do you make it different and how do you actually what are the strategies that you use in order to encourage that dialogue and

Nick Araco, Jr. 14:53

If we can do it with you, John, one of the things that interests me so much to you is that I learned from people like you. No, I wanted people to be excited by and stimulated by questions now. Well, it should come up with questions coming from people that are qualified to understand what in this case of CFO Alliance would finance leaders and CFOs do. But if I could create a framework, a template, where the that would stimulate dialogue, and capture and catalog that dialogue, and the best practices and the resources that were mentioned, and the content created and share it with a broader group, it would make it unique, we make it extremely valuable, and we’ll make it different from what else is out there. So we’ve never done a podium. We’ve never done a panel. We’ve never done a week at it’s always been a facilitated dialogue. And by the way, the knock on finance leaders, I don’t think it’s true in 2020. But back when we began this was that we’re picking a group that’s not the most fun So by nature, that’s not one two typically are one to articulate and or openly discuss debate to set something. And we said, No, this is meant for you. If that is your greatest source of competency building and competence building, this network is right for you. And that doesn’t mean we are forcing them outside the norm. But we certainly like to press them outside their comfort zone of both understanding as well as communication. There is where the company really took shape. Because when we started asking the finance leaders, why do you keep asking for more? Why do you embrace this network? what they’ve said is that, yes, everything we talked about is driven by Enterprise Performance. So we don’t talk about things like it that are esoteric, the Office of the CFO, you know, where we say if we can’t measure it, we don’t want to talk about it. If that measurement doesn’t somehow tie to enterprise top line, bottom line and shareholder value, performance, we’re not going to talk about it. But they also said, “ More inherently, you’re helping me achieve the next level, you’re helping my enterprise achieve the next level through this type of focus, better dialogue and exchange.

John Corcoran 17:10

So that’s an interesting distinction. You know, there are other communities out there that explicitly will talk about the business, but they also talk about the personal so is what you’re saying. You don’t don’t talk about the personal, don’t talk about it so it’s like a family issue or something. That’s not the venue.

Nick Araco, Jr. 17:27

Yeah, no, it’s not looked at during the crisis of 2020. It’s interesting to see our members of our networks let their hair down and you get to see them in a different environment, and came off of a meeting with a group of CFOs where one of the CFOs said, Listen, I gotta apologize. I have three dogs who loved the sound of traffic and they’re gonna be barking throughout. And, and, you know, it’s not that they’re not authentic and they’re not real and then it’s not that they’re not letting us in the what drives their passion and spirit personally, but we made a conscious decision to say we want you to To get, be able to tie and attribute what you learn in our networks, what you advise, counsel and decide in your respective leadership role, and we want you to track the performance and the results, both individually and enterprise wide. If we can help you perform at a higher level, and achieve the next level, we’re gonna, we’ve done good and made good on our promise.

John Corcoran 18:23

So one of the challenges when you build a community like this, you said 10,000 members, which is amazing, incredible, is to keep the quality high and prevent bad seeds from coming in. So tell me about imagining you’ve had some bad seeds. What do you do when you have someone who you need to kick out of the community?

Nick Araco, Jr. 18:43

Yeah, I mean, look, I think part of it is that we’re very transparent

Unknown Speaker 18:48

with the

Nick Araco, Jr. 18:51

code of conduct and rules of the game, and the value we’re trying to provide to them. And so this network isn’t for everyone. So if they believe that they can get what they need in another way, shape or form, then more power to them, go do it. reputations are built on what you contribute to this network now what you take, if you truly, truly embrace that in love that, that I’m going to spend time building my reputation based upon what I share, and sometimes that sharing is vulnerability, and I don’t have an answer, and I am conflicted. And I need help, then this network is for you. During this crisis, we’ve heard I keep coming because I know that I’m not alone. And it gives me at least that sense of validation that you know, I’m seeking an answer and so somebody else Hmm.

John Corcoran 19:48

How do you instill that you know your values and teach people the right strategies, kind of the right way to deliver value within The network. How do you take someone who they’ve been a CFO for 30 years? And they’ve done things a certain way? How do you kind of deliberately send that culture but also set the tone or the example for how people can be a valuable member of that community and contributor?

Nick Araco, Jr. 20:20

You know, I think that the majority of our members come to us with some trigger of our understanding of self awareness that the rules of the game in communicating and leading a workforce and enterprise a client experience in 2020 have changed. And that both the substance in the form of what they say and do is being evaluated needs constant reinforcement and some sense of purpose behind it. They think that they’re coming to us in various stages of that self awareness, that what got them to that seat, or that position may not be solely what keeps them there. That role needs to continue to advance and evolve, and so do they. And so most of them believe that they are defining not just the CFO role of today, but blazing a path for what it will mean to be a CFO, five years from now, because it looks different today than it did five years ago. And it will probably look different five years from now. It’s a sense of responsibility and purpose, and we draw out from them. And there’s to your point, John, where some may say, That’s not right for me. And we say that’s okay. Yeah.

John Corcoran 21:31

Yeah, you got it. Yeah, I have to draw that line in the sand, so to speak. I want to ask you about the CFO CHRO. Alliance. So what was it like launching that today? And how did you approach that idea after 10 years, 11 years of having CFO Alliance, and essentially a redo in a completely new field? What was that like?

Nick Araco, Jr. 21:55

Yeah, well, first of all, we anchored on everything that we’ve been hearing from the CFO Alliance. for a decade, which is people move the needle on top line, bottom line and shareholder value performance in every enterprise, and it’s becoming increasingly complex, and an increasingly critical component of enterprise and shareholder value and performance. So the data once again, we didn’t build and they’ll come. I can tell you that if you popped into 90% of our CFO Alliance peer advisory group meetings in 2018, and 2019, that may have been about strategy or risk management or technology, or finance or capital markets, guess what we ended up talking about 90% of the time, people.

Unknown Speaker 22:42

So they told us that if we could

Nick Araco, Jr. 22:48

enhance the performance of one critical area of the enterprise and one critical C suite leader that they need to better partner with the overwhelming majority Our members said, the human resource leader, we saw the correlation and the changing and evolution of the role. I mean, think about it. John, you remember for a decade to a decade and a half ago, the CFO was viewed as the numbers guy, the person who hid behind the door and slipped the numbers under the door, who was stuck in Excel spreadsheets, and calculations and formulas. That is not the case for today. And not on HR, it’s too soft. It’s 250. feely, it’s not strategic. It’s not a boardroom discussion. It needs to become more financially focused. And I’ll tell you, the HR leaders today said, Yes, all of that is true where we are at that going forward. So number one, we relied on the finance community to say we need a separate connected network for HR leaders. We got together with a group of HR leaders who said we are financially focused, we understand the limitations of today and we want to change that. And we also heard and talked to other groups that do great things. You can’t lift HR leaders but don’t have that financial focus, a financial competency or that track record of that comes with building a connected network, like we did with the CFO Alliance. We also had begun to acquire human capital performance groups in executive coaching and Career Services in sales and leadership training in diversity, equity and inclusion training. So we had some horsepower that was lifting performance. And we said, why not create a network with a group of CHRO is for the CHRO’s separate but connected to the CFO Alliance? And then we asked them, How do you want this to work? No surprise, they said we want the same thing that’s driving that CFO network, by dialogue and discussion being at the center of what why we come together, vetted velvet rope, so it’s the right people gathered, and reputations build on what you contribute and share even if it’s not I don’t know or I need help with vs. And is it completely without regard to Geography Now that we’re kind of in this virtual world it is now. Now we went we said let’s go after the minute middle market and emerging human capital performance leaders. So, Chief people officer in, you know, 100 employee fast growing tech company is of great interest to us. So is the CHRO of 2000 employee mid-market enterprise with a family leadership team bide both have definitive needs both on the same challenges that come with the fact that they are defining and driving the performance of those Enterprise’s greatest asset which is their people? Yeah. And they’re not surrounded by all of the resources that come with being in a global 2000 Enterprise.

John Corcoran 25:46

How do you deal with the challenge where you know a lot of times you hear this from when people get into a networker community or something like that, and everyone wants to be with someone else who’s just a Little bit further ahead of them? But it’s Matt, I think this is fascinating. It’s mathematically impossible for everyone to be in that type of situation. Like, the fact is that you know, someone’s going to be someone in the room is going to have the most revenue or the most number of employees or whatever. So how do you address that particular objection? Because I’m sure you hear it all the time.

Nick Araco, Jr. 26:21

Well, and I think that you look, we used to manually have to sort all of this in this day and age to make sure we’re putting the right mix of people together by industry, by size, by culture, by business life cycle by market, right all of the factors you outlined, create diversity of experience, diversity of thought, but also diversity of need. Right? If you can’t put a 10 person company who just got their Series B round with the hundred year old widget manufacturer that has a third generation family owner and a manufacturing plant that is considering outsourcing in China right Gotta have some logic to it. Now, I will tell you when we started, it was a manual process, right of saying, how do we matchmake always solicit feedback to I will tell you, some of the most compelling consistent feedback we get is the groups who put together and bring together diversity of thought, which is what I want. I don’t want a room full of thousand employee widget manufacturers telling you the same thing I already know. Hmm. So part of it is if you qualify their motivations and intentions, their own responsibility levels. Last thing you want to talk to if you have a budget, decision board authority is to talk to somebody who doesn’t, right? So you got to have a certain vetting. But diversity of perspective has been one of our greatest sources of compliment, and I think reason people come back.

John Corcoran 27:51

Yeah, and and what’s the ideal size for these peer to peer types of,

Nick Araco, Jr. 27:56

you know, I’ll tell you we’re a partner to something called the National Center for the middle market. Which is housed at the School of Business at The Ohio State University. So I love the fact that I can through our partnership rely on their definition of our target audience, or target audience, their definition of middle market, or US based enterprises with annual revenues from 10 million to a billion. That is why SWOT is and that’s not to say there aren’t tranches, but think about the logic. but less than 10 million enterprises have three different types in it. The sophisticated investor backed hockey stick, like companies that have a lot of spotlight on them. The lifestyle businesses that don’t typically have a CFO or CHRO. Yeah, or, you know, kind of that I’m almost there mid market enterprise, I need to boost the billion dollar plus a whole host of resources and solutions in front of them. But yes, that has a wide swath, but that’s our core focus that we’ve been targeting we go after.

John Corcoran 28:56

And now when you bring people together in a group, like a peer to peer type of group how many people like that? How many actual people in the room is ideal for maximum, you know, comfort and also shareability and engagement?

Nick Araco, Jr. 29:11

Yeah, so, with this, we still bring people together. And we’ll post COVID-19 when appropriate when health and safety is deemed it acceptable to bring people together face to face. But when we do we break them into groups of eight at a time. But what do we do by eight? Why? Why is eight and I’m gonna be candid, five is too small antennas too much, okay? You know, the logic. I want that diversity of thought I want that debate and I want that tension that naturally comes with a group dynamic. What’s interesting though, is that in a physical say I’m interested in a virtual group meeting prior to our call, dad’s 64. Finance leaders dial in and then We broke them into eight groups of eight into breakout rooms, virtual breakout rooms, and we brought them back to share highlights with the entire group of 64 about what they talked about. We do the same thing physically in rooms that start in one big room for networking and coffee or some interaction, some social, and then we break them into groups, and then they share with the group at large what they talked about in their, in their private groups.

John Corcoran 30:25

Yeah, interesting. Well, this has been great, Nick, I want to wrap things up with the question I always ask, which is, let’s pretend we’re at an awards banquet, much like the Oscars or the Emmys and you’re receiving an award for lifetime achievement for everything that you’ve done up until this point. And what we all want to know is who do you think and isn’t a family and friends of course, you know, who are the mentors who are the peers, business partners who do acknowledge, you know, I have

Nick Araco, Jr. 30:47

to tell you, I can name names, but I want to tell you the one common trait in the names I’ll mention is that they personality wise or 180s of me, which is my time suggestion is to surround yourself with people whose strengths complimentary weaknesses. So the people that have helped me are mentors, someone like Mike Dubin, who was my boss at RSM and was a board for RSM and a respected leader in the accounting tax and consulting world. And in the mid market space, my mouth in mind work asked if you can do all that. And here was a man who, who would take a pause and you’d see the wheels turning what came out, didn’t come out with the same passion, enthusiasm. What was certain demonstrators certainly demonstrated understanding very high intellect and very high connection and passion for what he’s doing so that those people like Mike, like my business partner, Greg wood, who helped co found CFO Alliance, I was part of a team next when people meet them, they’re like, I don’t see the connection. You seem so different. And instead I said, that’s the whole point. We have a passion for this, but we’re different. So you Those two in particular would be people I’d thank because I like to think that they bring out a side to me that’s not natural for me. And I think that that’s what’s helped us build these networks because everyone is wired differently.

John Corcoran 32:12

That’s great. So next CFO Alliance CHRO Alliance, where can people go to learn more about all of those and you and connect with you?

Nick Araco, Jr. 32:20

Cool. Well, we have two platforms. We’ve achieved next comm which will be a bizarre hub. And then we have a spoke on where the network’s meet, and we’re all of that kind of dialogue and content takes place. So find out more about us. That’s great. All right, Nick. Thanks so much. Thank you, John, it was a pleasure.

Outro 32:42

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