Kevin Heaton is a strategic advisor, dynamic speaker and well-respected thought leader who works with family-held organizations and family offices to unravel the complexities of decision-making in times of change. As a Family CFO who understands the cycles of wealth, the dynamics of family change and resultant behaviors, Kevin’s expertise is in developing and implementing focused tactics to protect and manage private assets through the objective application of information tools, infrastructure support and investment strategies. Mr. Heaton is the founder, CEO and principal of i3, LLC, and has grown the organization into a team of professionals who provide high-wealth family clients with access to relevant information to make informed decisions, the infrastructure to actively manage their assets and investment opportunities to (re)invest their capital. Prior to founding i3, LLC, Mr. Heaton was CFO of a home services investment company, and grew revenues from $2 million dollars to $30 million dollars in only two years. Kevin was also responsible for developing the US presence of Bucephale Asset Management, a Swiss-based, $250 million-dollar hedge fund. Mr. Heaton began his career as an investment advisor at Merrill Lynch for five years after attending the Citadel in Charleston, SC. As an accomplished speaker and presenter, Kevin’s talks give in-depth analyses of his own experiences in family office asset management making even the most complex asset strategies clear with concrete action plans.
Thank you so much for joining us! Can you tell us the story about what brought you to this specific career path?
Ifyou asked me today to machine a pin for a piston or a firing mechanism, I probably could. My muscle memory is strong, honed over many hours of working in my grandfather’s machine shop business…(I can also sweep a mean floor and stock inventory). Informally founded in 1955 by my grandfather John W Heaton, a proud Navy veteran, the business began as a contracted vendor to Owens Corning Fiberglass.
What was once a small, backyard-based, one-man machine shop became a thriving family business that survives today.
In my grandfather’s mind, everyone in the family — his four sons — had a position in the business: my dad was the machinist after completing technical school, and other roles such as finance and accounting, sales, and management of the family’s real estate interests were delegated. A fourth son was working out of state after college.
I mention all of this because it’s why I founded my company i3: Through my observations and experiences as the third-generation of the family business, I learned that being a family business creates complex financial and behavioral dynamics within the family system.
When critical questions as to family business employment, fit and role are left unanswered, fracture points will form within both the business and the family. In my family’s case, additional variables were added to an already complicated formula: the death of a sibling, marriages late in life, multiple offspring, aging founders, a second generation that felt unable to create an exit strategy, a new family member wishing to join — these variables added pressure to a weakened foundation and ultimately resulted in the collapse of a long marriage, siblings estranged for years, and once crowded holiday gatherings attended by few.
The complex questions continued unanswered, and the business, while viable, idled for more than six years during a generational transition. While the business was surviving, it wasn’t thriving.
I however, was. I was enjoying a successful career in Wealth Management at Merrill Lynch in Columbia, SC. It was at this point, and after a couple of unsuccessful family reorganizations, that my father purchased one hundred percent of the business and began to run it with my brother. I had been out in the world, had gained valuable business experience, and assumed I would jump in to the C-suite. We all know what happens when we assume. Difficult to hear from my father at the time, but in hindsight a profoundly keen insight, was his statement to me of, “Kevin, this business is not for you; you need to stick with what you are doing.”
This created an uncomfortable but not unusual competitive period between my brother and me. Finances, the affections of my father, and my desire to contribute to the family’s financial success were serious pain points. It’s only now that I’m able to see how important both of our roles were (and are) for the family and my brother helped me see that. My role was ‘making it outside of the family’, and his role was — and continues to be — successfully managing the family enterprise.
I continued to develop at Merrill Lynch, drawing on my personal experience to assist high-wealth families manage financial assets. After a time, I transitioned to an operations role onshoring a hedge fund of funds out of Geneva, Switzerland. I subsequently returned to South Carolina to become the CFO of a home services company seeking funding to perform a consolidation in the industry and go public. We grew revenues from $2 million in 2005 to $30 million by 2007. I’m proud of my business success in all roles I’ve undertaken.
In 2007, I founded i3, LLC, a Private Asset Management and Family CFO Consulting Services firm for high-wealth families. I built i3 on a clear methodology based upon my family experience, both internal and external; access to information, an infrastructure to support and manage complex needs, and investment options for capital placement. I built i3 to be the Family CFO, an objective, experienced voice in crisis and calm. I founded the company on the core belief that “The transfer of wealth is a gift, not an entitlement.”
Since 2007, we have become trusted Family CFO experts who consider the complex dynamics of family change, and work to provide next-generation thought leadership on our subject of expertise….of course, if you need a pin machined or a floor swept….
Can you share one of the major challenges you encountered when first leading the company? What lesson did you learn from that?
The challenge of a funding network was a big one early on. I was sitting in a conference room on a top floor of the Morgan Stanley Conference Center in New York. There were six of us, invited to discuss a commercial real estate project and potential capital sources.
Moving to my right around the table were grads from MIT, Columbia, Princeton, Michigan State, Yale, and then me. Each one in-turn discussed their extensive networks and sources and relationships they could bring to the project. I was last and simply did not have their network, their database of alumni contacts, or prestige formal business school experience.
But I was invited to sit at that table for a reason.
For me, the lesson is in how we educate ourselves and build our networks can vary, but there is real value in an individual’s ability to pursue knowledge through their own endeavor.
What are some of the factors that you believe led to your eventual success?
Well, I am tenacious so there’s that. I also believe that there is almost always a negotiation strategy that works for everyone, if the people at the table are willing to be honest, creative and focused on the fiscal wisdom of whatever transactional decision is being made. You also cannot negotiate a deal you are not willing to walk away from.
At the highest level, vision, focus, confidence and the ability to create clarity and put ideas into actionable plans are my greatest strengths as a CEO.
What are your “5 Things I Wish Someone Told Me Before I Became CEO”? Please share a story or example for each.
1: The Loud Loneliness of Leadership:
Being a CEO comes with attention: As a CEO there is always a good deal of activity around you; your board, advisors, your team, clients, vendors, community…it is a long, vocal and active list.
But after all is said and done — after all information has been gathered and evaluated — CEOs are faced with looking in the mirror and deciding.
In the “loudness” of all those around you, a leader must be able to make a decision that can leave them literally and figuratively alone. I use the phrase “loud loneliness” to describe it. The lesson is not if the decision is popular or unpopular, but whether and when it will be understood and knowing that it may never be understood. A leader has to see the future; what are the results for the future, not necessarily what is desired today and lead people to trust in the decision made. That can be a loud and lonely place.
2: No is Not a Negative; the art of saying no the right way
The theory made popular by leaders like Warren Buffett and Mark Cuban is “managing the no” or knowing definitively to what invitations you’ll say yes.
Some CEOs say ‘yes’ too often and are then spread too thin leaving them unable to focus on their decisions. As an example, at any given time there are a number of banks that ask for a meeting; they want to talk about what we’re doing now and what we’re doing next. If I attended every lunch, dinner, event and meeting, I would lose significant productivity in travel time alone. The purpose of a meeting is to make decisions and act on those decisions.
Say no with respectful intent.
3: Find Space to Think
In 1965, Gordon E. Moore — co-founder of Intel, theorized that the number of transistors on a microchip would double every two years while the cost of computers would halve. He expected we would see increased speed and capability with ever-lowering costs and that growth would be exponential.
This became known as Moore’s Law or exponential doubling. Moore’s Law as it relates to transistors may be winding down, but the reality of the speed of change and expanse of knowledge has not. The ability to think and to think well is more critical than ever.
I recently engaged a marketing person, early in her career, to work at one of our companies. One day she had a challenge and was unclear on what direction to take. I told her to take a couple of hours and walk on the beach and think. I know she was surprised; she had come from an environment that was very stressful and did not encourage independent thought.
I explained that I set time aside every day specifically to think. I don’t want to be disturbed, I don’t look at text messages — I think.
I look at reframing conversations and applying new forms or insights to a current position based on past experiences and new insights. I work to focus on creating new pathways of thought and new approaches to critical decision-making.
4: The ‘Why?’ of It
When we first formed i3 in 2007, we engaged (and still work with) a coach for our next generation leadership team (and me). In those early days, we struggled with some of the same issues as our client families face, and so we focused on clarifying our mission as a company. Our coach stepped us back from that and instead asked me to define why I wanted to be the CEO of i3. Today, we often discuss this topic, the ‘Why?’ of it. For any CEO, I would ask: “Why are you a CEO?”
I wish someone would have asked me why I wanted to be a CEO early on. I can articulate it today, but for many CEOs, the answer to the ‘Why?’ is often indicative of their organizational leadership ability and effectiveness. Some individuals want to be CEOs for the money, the power, the celebrity. Others are deeply motivated by their belief in a product or service.
I am the CEO of i3 because I want to make a difference in a family’s ability to manage and grow private assets without the stress that can fracture families; I want to bring the family and their wealth into harmony. I’m clear on that and am much more effective because of it.
5: Timing Really is Everything
It is said that one of the things attributed to Coach Dabo Swinney’s success at Clemson University is that he has his team mature at the right time in the season. Their training schedules, their eating schedules, their practice schedules and other disciplines are designed to enable the team to peak when they need to peak.
Whether it relates to employees, whether it relates to contracts, whether it relates to advancing team members, hiring staff, bringing on new business, introducing new products and services; understanding the importance of timing is critical for the CEO.
At its core, timing is about faith. As a CEO, you know about preparedness, commitment, flat-out hard work and follow-through. At some point in time, there is a juncture where all of these things come together; when faith’s best buddy luck is in the house…and that is timing.
There are two things that create success: the people that you’re involved with and how they support you (because no one ever does it alone) and timing, and all you can do to be ready for the right people at the right time is to prepare. And even then, there are no guarantees.
Even Michael Jordan will tell you that there were any number of other players with his talent when he came up. He however, was prepared and the timing was right. When the timing is off? You move on and keep working until it’s right.
What advice would you give to your colleagues to help them to thrive and not “burn out”?
First, develop great people.
Internally, our organization takes pride in helping early career professionals grow. We are committed to growing great leaders that thrive and do not burn out through emphasis on the four pillars of health: mental, physical, emotional and spiritual.
We support whatever form that may take with each individual and encourage them to think and document their own thoughts on management, our industry and business approach, and their own leadership journey. We coach them that asking questions and gaining confidence in creating answers is what leads to confidence in critical decision-making.
Companies succeed or fail through leadership. Unique vision, points of view, critical industry knowledge and innovative thinking are communicated from senior leadership, creating the core of the company culture. Great employees are constantly evolving and improving based upon leadership that does the same, and leadership is accountable to the employees and shareholders or other leadership alike to articulate and actualize their clear points of view. Developing great leaders and allowing them to thrive creates opportunities for the C-suite to think creatively and strategically. It creates time.
Second, balance in all things is the goal, but it is balance that is unique to each leader. We each of us carve out time in unique ways.
As an example, when I was first starting the firm I was also the stay-at-home parent for our first born daughter, and I was working 80 hours a week, usually from the car. My eldest was with me all of the time when she wasn’t in school, and, with the full knowledge of my clients, was a silent party to a ton of conference calls from her car seat, conference room chair. Our deal was that she could go anywhere with me, but when a work call came in, she had to be calm. We loved spending time together and still do.
She’s 12 now, and she has superior conference call etiquette and is definitely the boss of me, at least of my heart. We also discuss situations she sees in the news or hears about in school, and I hear her echoing back strategies for problem solving that I may have discussed years ago, while she sat in that car seat. The way I grew up in a machine shop, I like to think that she has grown up in an “ideas shop.” I believe it serves her well. But more important, this is balance for us, for my family, and it works.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
There are a number but most memorably, when I was 20 years-old and just starting out at Merrill Lynch in the mailroom, a woman name Mary Kennemur walked in and changed my future. Mary was one of only seven national Managing Directors for Merrill Lynch. She pointed at me and said: “Every year I pick out someone to mentor and you’re it. Follow me,” and I did literally and figuratively. I had no idea at the time the powerhouse that Mary was. Aside from being an incredibly successful businessperson, she was a volunteer and a humanitarian, and lived by the motto, “To whom much is given, much is expected.”
Mary passed away in 2012 but left a legacy of business wisdom and philanthropy. She gave wholeheartedly to her community, serving on not only the Board of Directors and as Midlands Campaign Chair for the Girl Scouts of South Carolina, but also on the boards of the University of South Carolina, the South Carolina Chamber of Commerce, and the United Way of the Midlands. She was the first woman to be named to the South Carolina Retirement Systems Investment Panel and was a member of the Governor’s School for Science and Mathematics. Mary also served as former executive director of the Business Partnership Foundation at the Moore School of Business and in 1998, she established the Mary M. Kennemur Scholarship at Moore School.
What are some of the goals you still have and are working to accomplish, both personally and professionally?
Nineteen years ago, I typed up a card of sorts and wrapped it in tape and put it in my wallet and every wallet since. On one side is a quote by the poet e.e. cummings:
“To be nobody-but-yourself — in a world which is doing its best, night and day, to make you everybody else — means to fight the hardest battle which any human being can fight; and never stop fighting”
On the reverse side are five goals:
- To be a Winner
- To marry a beautiful and loving woman
- To build a successful company
- To successfully hold public office
- To always be pursuant of knowledge
I’m not sure how I defined “Winner” back then, but I know I’m a winner at the end of each day along with my two children and beautiful spouse — a highly skilled HR professional in her own right — supporting the company’s growth into the successful firm it is today.
I’m always in pursuit of knowledge, so I guess that leaves one item unchecked…for now.
What do you hope to leave as your lasting legacy?
First, if my clients say: “I don’t know how much we paid him but ultimately, he led us to find some harmony within our family,” I will have done good work.
Second, I’d like to think that the people that have worked for and with me believe that they are in some way better for it, that they learned something and by making them better it made their family better.
Last, I want my own family, my children, to become aware of the tremendous impact for good that they can have on the world. Be aware of who you are and do the very best you can with what you have.
You are a person of great influence. If you could start a movement that would enhance people’s lives in some way, what would it be? You never know what your idea can trigger!
Anything that focuses on education and meeting the student in the way they need to be met. We have so many opportunities to self-educate today; I would like to help those who feel that traditional education has let them down to explore the myriad of ways to access subjects of interest and put learning into practice… and I think Mary Kennemur would approve.
How can our readers follow you on social media?
Twitter Personal: https://twitter.com/jkevinheaton
Twitter Company: https://twitter.com/i3Resources
LinkedIn Personal: https://www.linkedin.com/in/kevheaton
LinkedIn Company: https://www.linkedin.com/company/i3resources/
Company Website: http://i3resources.com