The 2 Words You Need to Eliminate From Your Vocabulary Right Now if You Want to Meet Your Goals

I hear so many entrepreneurs, marketing managers, even vice presidents and CEO say things like, “I hope we get that new account, I hope we hit our sales goal, I hope we make our budget.”

The first question that comes to my mind is, “What are you hoping for? Make it happen.”

When someone says the words, “I hope,” a red light goes off in my mind letting me know they don’t have a plan. They are hoping for an outcome because they aren’t sure of how they’re going to get there–and hoping is always easier than digging into the work.

There’s a famous quote by Stephen Ambrose that says, “Where there is a will, there’s a way.” He’s also known for his quote, “Plan your work and work your plan.” The first time I heard this advice was when Ross Perot was running for President in 1992. As an independent candidate, winning was an uphill battle–and yet he still won 18.9 percent of the popular vote. His no-nonsense business approach to running the country was something that resonated with me for years.

In every one of my companies, I work hard to remove “I hope” statements from our culture, and focus more on cultivating an environment where “Here’s how” statements can lead the way. In order to do that, I’ve had to really nurture employees and fellow leadership team members to not just think or talk about executing, but to actually dig their heels in and get things done. 

The key to creating a culture of “does” and not “wishers” is to measure as many things as possible within your business. Not to the point where people are spending more time filling out excel spreadsheets than they are making productive strides forward, but enough to know whether you’re in “hope” territory or on the path to success. As the old saying goes, “What gets measured, gets done.”

I share a wide variety of examples in my book, All In. One very clear measure-for-success example is something I’m currently experiencing with my most recent company, LendingOne. In our industry, there are many other private lenders and competitors, so we’ve continuously had to ask how to get real estate investors to call us. If we were to just send out advertisements, invest in some marketing and hope for them to call, we’d be doing ourselves a great disservice. That’s not a business strategy, because most of the time you end up sitting around, waiting.

Instead, we’ve had to build very clear systems to build leads. We go so far as to monitor and measure daily and weekly performance against our sales plan. If something doesn’t seem to be working, we change our plan. And sometimes, even if things aren’t working, we fix it anyway–because we want to know if there’s an even better way of doing things.

Most businesses love the planning part. They love brainstorming all the things they “could” do. Some make it to the execution phase, where those plans are beginning to materialize and generate some sort of movement forward for the business. But the truth is, most businesses fail at the third part, which comes down to measuring their own success–and then iterating from there. 

Without measurement, your efforts are no better than shooting in the dark. You don’t know what’s working, what isn’t, and by how much. You don’t know what’s worked in the past, and it becomes tremendously difficult to make assumptions of what would work better moving forward. 

Putting a plan in place and “hoping” for an outcome isn’t a strategy. It’s an excuse.

Jeff Bezos Has a Bulletproof Hiring Strategy That All Comes Down to 3 Profound Questions

If you’re an entrepreneur, there’s also a good chance you’ve hired someone who you later had to let go for similar reasons. 

So the questions remain:

Why do the wrong people so frequently end up in the wrong positions? Is the hiring process broken? What’s going on? 

For some jobs, it’s not as important. non-intensive skill requirements often have a high turnover rate by their very nature, so hiring the perfect employee becomes less of a priority. But when extensive training is required, or valuable information is being passed on, you want to make sure it’s going to someone who is truly right for the job. 

So, how do we make that happen? 

Like many questions of the digital age, this one can be answered (succinctly, if not definitively) by looking through the lens of Amazon, one of the global economy’s most powerful forces, and its leader, Jeff Bezos.

Let’s start by rewinding a bit: 

Bezos got a lot of his inspiration and instruction on hiring from his experience with investment-management firm D.E. Shaw, where recruits were often asked seemingly random questions like, “how many fax machines are there in the United States?” 

Why? The goal wasn’t to get precise answers but to identify the candidates who had the best problem-solving skills.

Moving on to Amazon, in 1998, Bezos brought it full circle, and explained exactly how he selects new hires in a letter to shareholders, challenging hiring executives to consider 3  questions about the candidate: 

  1. Will this person raise the average level of effectiveness of the group they’re entering?
  2. Will you admire this person?
  3. Along what dimension might this person be a superstar? 

This sort of approach might be more common today than it used to be, but there’s certainly no doubt that businesses continue to under-utilize the entire interview process as a way of finding employees who identify most with the company’s core needs and values, while simultaneously challenging your hiring executives to think about the candidate’s true potential in a way they most likely did not. 

Storytime: I know of one small-town movie rental store that’s still in business, despite over 95% of similar businesses closing down in the last 10 years. Their resilience is multi-faceted, without a doubt, but one thing about them stands out to me: their paper application consists of questions like

  1. What is your favorite movie? 
  2. What is the Fermi paradox?
  3. Calculate the area of this triangle.

Is it peculiar? Sure. But there’s more to it than eccentricity — there’s a clear attempt to employ only the people whom the management has determined are most likely to fit in with their business, and this type of outside-the-box thinking is a big part of Bezos’ and Amazon’s success. 

Whether it’s during the interview or after, the lesson here is to peel the layers back even further about a candidate’s potential, and challenge yourself to gauge their long-term fit & impact. During the interview, if you ask candidates those same, tired questions, ‘what are your strengths,’ or ‘what are your goals for the next five years,’ a huge opportunity is missed to ask them much more telling questions — questions that will let us know whether they are going to be dead weight or visionaries inside our organization. Which do you want?

Talking About Your Failures Will Make Coworkers Like You More, According to Harvard Research

How do feel when you look at someone else’s perfectly curated Instagram feed? Does it make you seethe with jealousy?

Those feelings are not limited to social media. They can be just as pronounced in the workplace. When you’re in a meeting, you probably don’t enjoy listening to a colleague’s recounting their tales of unfettered professional success.

And yet, if you want to take on more responsibility, you have to convince your bosses that you can get the job done. Is there a way to do it without making your coworkers want to bring you down a peg?

Alison Wood Brooks, an assistant professor at Harvard Business School, recently published a working paper that studied 1,546 people and formalized two kinds of envy: malicious and benign. Malicious envy projects an image of perfection that makes others want to tear you down. Benign envy provides new insights into success and failure and makes others want to pull themselves up.

Here are four ways to avoid malicious envy and begin cultivating benign envy.

1. Don’t brag in public.

There are times in the workplace when you have to list your accomplishments. That time comes before your employer decides whether to you give you more money and responsibility or urge you to seek employment elsewhere. If you list your accomplishments in public conversations in front of coworkers, you are sure to elicit malicious envy.

Keep such conversations between you and your manager. And when you have those private conversations, be open to questions about challenges you encountered and how you overcame them — managers can hurt you if you make them feel malicious envy.

2. Highlight your struggles. 

The Harvard working paper begins with an excellent anecdote: the story of a Johannes Haushofer, a Princeton professor who wanted to help a colleague who had not achieved a career goal. Haushofer posted a “CV of failures” on his professional website, which ended up receiving more attention that his entire body of work.

There are two takeaways from this story: for every success, there are far more failed attempts; and by admitting your failures, you bring yourself closer to other people, making you a better colleague.

In a few weeks I will start teaching again at Babson College. At the beginning of my first class, I introduce myself to students — starting off with an anecdote about how I failed in my career aspirations to be a poet, a concert pianist, an architect, and a CEO. I do this so they’ll know there’s nothing wrong with struggling to find the right career and they should not be afraid to ask me for advice if they feel the need.

3. Emphasize what you learned from failure and success.

Benign envy comes from talking openly about your failures and successes. Others appreciate learning about why you failed, and it makes them more willing to listen to a success story.

Max Levchin, one of the founders of what became PayPal, loved to write operating systems. He built one for the Palm Pilot, but that company cratered. Then he built an operating system for a digital wallet, which mostly failed — except for the part that let people pay electronically for eBay-bought goods. After six months of customer demands to develop that, Levchin gave in, and the rest is history.

In Levchin’s case, the takeaway is to do work that you love to do and do well — but to turn that into a successful business, you must also give customers what they want. If you’ve failed, tell others what you learned from it. And if you’ve succeeded, let them know why.

4. Be honest about the role of luck.

Luck plays a huge role in success, and most people are very reluctant to admit it. If it weren’t for luck, you would expect John Paulson, the hedge fund manager who made $4 billion betting against subprime mortgages in 2007, to keep making billions every year. In fact, by January 2018, one of his funds had lost 70 percent of its value in the previous four years and investors were asking for their money back, according to Bloomberg.

I like to point out that the best investment I ever made was based on pure luck. I put money into a startup that was acquired by a public company. That company was in turn acquired by another public company for stock — much of which I held onto. In the last several years the shares are up ninefold. I could not have planned that lucky outcome.

You’re in danger of making bad decisions if you think that your prior success makes you smarter than everyone else. To boost your odds of future success, you need to be humble enough to admit you don’t know everything and get the answers.

Talking About Your Failures Will Make Coworkers Like You More, According to Harvard Research

How do feel when you look at someone else’s perfectly curated Instagram feed? Does it make you seethe with jealousy?

Those feelings are not limited to social media. They can be just as pronounced in the workplace. When you’re in a meeting, you probably don’t enjoy listening to a colleague’s recounting their tales of unfettered professional success.

And yet, if you want to take on more responsibility, you have to convince your bosses that you can get the job done. Is there a way to do it without making your coworkers want to bring you down a peg?

Alison Wood Brooks, an assistant professor at Harvard Business School, recently published a working paper that studied 1,546 people and formalized two kinds of envy: malicious and benign. Malicious envy projects an image of perfection that makes others want to tear you down. Benign envy provides new insights into success and failure and makes others want to pull themselves up.

Here are four ways to avoid malicious envy and begin cultivating benign envy.

1. Don’t brag in public.

There are times in the workplace when you have to list your accomplishments. That time comes before your employer decides whether to you give you more money and responsibility or urge you to seek employment elsewhere. If you list your accomplishments in public conversations in front of coworkers, you are sure to elicit malicious envy.

Keep such conversations between you and your manager. And when you have those private conversations, be open to questions about challenges you encountered and how you overcame them — managers can hurt you if you make them feel malicious envy.

2. Highlight your struggles. 

The Harvard working paper begins with an excellent anecdote: the story of a Johannes Haushofer, a Princeton professor who wanted to help a colleague who had not achieved a career goal. Haushofer posted a “CV of failures” on his professional website, which ended up receiving more attention that his entire body of work.

There are two takeaways from this story: for every success, there are far more failed attempts; and by admitting your failures, you bring yourself closer to other people, making you a better colleague.

In a few weeks I will start teaching again at Babson College. At the beginning of my first class, I introduce myself to students — starting off with an anecdote about how I failed in my career aspirations to be a poet, a concert pianist, an architect, and a CEO. I do this so they’ll know there’s nothing wrong with struggling to find the right career and they should not be afraid to ask me for advice if they feel the need.

3. Emphasize what you learned from failure and success.

Benign envy comes from talking openly about your failures and successes. Others appreciate learning about why you failed, and it makes them more willing to listen to a success story.

Max Levchin, one of the founders of what became PayPal, loved to write operating systems. He built one for the Palm Pilot, but that company cratered. Then he built an operating system for a digital wallet, which mostly failed — except for the part that let people pay electronically for eBay-bought goods. After six months of customer demands to develop that, Levchin gave in, and the rest is history.

In Levchin’s case, the takeaway is to do work that you love to do and do well — but to turn that into a successful business, you must also give customers what they want. If you’ve failed, tell others what you learned from it. And if you’ve succeeded, let them know why.

4. Be honest about the role of luck.

Luck plays a huge role in success, and most people are very reluctant to admit it. If it weren’t for luck, you would expect John Paulson, the hedge fund manager who made $4 billion betting against subprime mortgages in 2007, to keep making billions every year. In fact, by January 2018, one of his funds had lost 70 percent of its value in the previous four years and investors were asking for their money back, according to Bloomberg.

I like to point out that the best investment I ever made was based on pure luck. I put money into a startup that was acquired by a public company. That company was in turn acquired by another public company for stock — much of which I held onto. In the last several years the shares are up ninefold. I could not have planned that lucky outcome.

You’re in danger of making bad decisions if you think that your prior success makes you smarter than everyone else. To boost your odds of future success, you need to be humble enough to admit you don’t know everything and get the answers.

Top 6 Career Myths That Make People Miserable

I end up hearing a lot of people complain about their jobs (in general) and specifically about how their career expectations haven’t been met. In almost every case, the complainer has a false belief that is creating the discrepancy between expectation and reality. Here are the most common:

Myth 1: If I skip my vacation, I’ll get a promotion.

Skipping vacation sounds like a great way to impress the boss, but statistically it hasthe opposite effect. According to a recent study of vacation usage, “only 23 percent of those who forfeited their days were promoted in the last year, compared to 27 percent of “non-forfeiters.” 

Rather than skip your vacation, schedule it ahead, and then resist the urge to “check in.” Your ability to separate yourself from work tells your boss that you’re independent and not in the slightest doubt of your value to the firm. 

Myth 2: If I work really hard, I’ll get a raise.

Most people interpret “carrot and stick” as using reward and punishment to motivate. In the original story, though, the carrot was tied to one end of the stick and the other end of the stick was tied to the donkey’s harness. The donkey never gets the carrot. Get it?

The way to get a raise is create more value for the firm, and then documenting that you created that value. But even before that, get a commitment from your boss that if you exceed your goals you’ll get an appropriate raise.  

Myth 3: If I help others, they’ll help me in return.

While humans theoretically value reciprocity, at work you’ll find that often “no good deed goes unrewarded.” If you’re too helpful, you can become a dumping ground where everyone throws tasks they’d rather not do themselves.

This isn’t to say you shouldn’t be helpful, but that it’s wise to temper your helpfulness with a little bit of cynicism. Try negotiating beforehand what the other person will do for you, before you do a favor.

Myth 4: If I’m more accessible, people will value me more.

Just because you’ve got a phone in your pocket and a computer on your desk doesn’t mean you should allow anybody and everybody to monopolize your time based on their convenience.

One of the great truths of marketing is that people place a higher value on resources that are scarce than identical resources that are plentiful. Making yourself available all the time is great way to say “my time isn’t worth much.”

Myth 5: If I turn down a project, my boss won’t like me.

Look, the top priority in your relationship with your boss isn’t to be liked but to be respected. If you accept donkey-work or extra projects when you’re already running at 100%, the boss may be pleased but will secretly think “what a chump!”

As with all work situations, your argumentative watchword should be “what’s best for the team?” It’s almost never good for the team or the company to utilize a high-priced resource (you) to do a low level task.  

Myth 6: If I provide more information, customers will buy.

Contrary to all the biz-blab about the “information economy,” information isn’t valuable. (Everyone has too much already.) What’s valuable is the right information at the right time. And the right time to provide information is when the customer asks for it.

As an aside, this particular myth is responsible for the 90% of marketing campaigns (especially email marketing) that fall flat. Look, the customers are only interested in themselves. So if you’re not talking about them you’re boring them.

The Incredible McDonald's With Butlers, a String Quartet and Reservations Required

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

One way of achieving this noble goal is to appear, well, more noble.

If your experience is more pleasurable, the quaint thought process goes, you’ll want to spend more money.

Last week, however, McDonald’s climbed the mountain to veritable poshness.

Naturally, this happened in the home of posh, the (Dis)United Kingdom.

Here was a McDonald’s with white-gloved butlers. It also enjoyed fancy tableware and candelabra. Red velvet abounded.

And of course you needed a reservation.

This attempt at taste was inspired by a snooty British TV personality named Mark Vandelli.

Here he is in this Haute McDonald’s.

Please believe me, he really is snooty.

Why was McDonald’s pushing the boat out so far toward an exotic island of luxury?

Though this was a one-night-only affair, it isn’t even the first time a McDonald’s has required reservations.

This is merely the latest drift toward competing with the likes of Shake Shack, where quality of food and customer experience are rather significant.

But will there ever come a day when you have to make a reservation to get your Big Mac?

That would, indeed, be a very strange day.

Now's The Time To Scoop Stellar As Its Platform Sees Momentum

Not even Stellar Lumens (XLM-USD) has been spared the suffering cryptocurrencies have experienced in 2018. The fifth largest cryptocurrency has lost over 72% of its value since January.

However, like we have seen in the past, certain developments can breathe life back to a coin, and for this reason, we have every reason to believe XLM could rally soon. Below we will look at reasons why now might be the right time to invest in Stellar Lumens.

Global adoption plans

News of a special team being set up to help the cryptocurrency platform achieve global adoption has spurred XLM to overtake EOS in the 5th position in coin market cap.

The team will be made up of Shift Markets that has partnered with Lightyear.io. Commenting on this partnership, Ian McAfee, Shift’s CEO, said it was an exciting partnership for the platform as many of its clients would love to have Stellar Lumens trading on the exchange.

He praised Stellar for its commitment to providing financial technologies that cost less in developing countries, and this made it perfect for Shift’s market.

He added that the exchange aimed to increase the liquidity of Stellar Lumens and its usage for both major fiat currencies and exotic fiat currencies.

The news also had the Director of Sales and Partnerships at Lightyear.io, Paul Arnautoff, excited, and he said by partnering with Shift Markets, they would help expand the utility and the reach of the Stellar’s blockchain network.

He also added that Stellar’s customers would now be lucky to have access to an increasing number of liquidity providers in new and emerging markets, thanks to Shift’s market technology and customer base.

The Projects

As teams work on expanding Stellar’s international reach and adoption, the innovation surrounding Stellar remains strong. And its standing as a platform will be valued on what is being built on top of Stellar; the projects utilizing the platform and providing value for XLM-USD holders.

So what’s going on with Stellar projects? Well, we should start with the biggest one: KIN. While KIN has said it won’t run exclusively on Stellar, it will run part of its operation on the chain. And in Stellar, KIN, the coin of the now-infamous mega-ICO, sees a potentially better platform than Ethereum. KIN aims to be an in-app coin for the app generations; a mobile payment solution that can facilitate micro-transactions at no cost. And it’s a creation by the team behind Kik, the popular messaging app with millions of daily users. This could help KIN, and its Stellar blockchain usage, be one of the first widely adopted in-app currencies.

From KIN, a coin corresponding to an app with millions of daily average users, we see Stellar’s partner list that includes IBM, a noticeably mainstream company for the ever-crazy crypto markets. IBM has been partnered with Stellar for some time, but it has also illuminated the power of a platform that is now looking at breaking into a lot: African payment processing, real estate, and peer-to-peer lending. The diversity should signal some interest in just how far-ranging this platform can go.

Though far-reaching the likely long-term potential for success of these partners seems, we can revisit the IBM partnership, which gave a boost to Stellar a few weeks ago as IBM announced it was exploring a stablecoin based on, you guessed it, Stellar’s blockchain. What’s the big deal with stablecoins? Well, it can be pegged to a dollar, allowing a blockchain-based asset to use this technology (quicker speed, lower cost) without the volatility that we’re seeing in coins like Bitcoin and Stellar.

And if international monetary systems are of interest to you, then Stellar’s recent certification might interest you.

Stellar Received Sharia Certification

The coin received a huge boost in July after a document was published which indicated that the Stellar network had received the Cryptoverse’s very first Sharia Certification from the Shariyah Review Bureau (SRB).

This was after the agency which is licensed by the Central Bank of Bahrain took a look at the properties and applications of Stellar and ascertained that they were Sharia compliant. SRB then came up with guidelines which would see Sharia-compliant applications of the Stellar platform utilized in Islamic financial institutions.

According to the document, the certification would help Stellar grow its ecosystem in areas where compliance with Islamic financing laws was required.

“What does this certification mean for the Stellar ecosystem? In partnership with SRB, this certification will help grow the Stellar ecosystem in regions where financial services require compliance with Islamic financing principles. For example, Islamic financial institutions in the Gulf Cooperation Council (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) and parts of Southeast Asia (e.g. Indonesia and Malaysia) will now be able to integrate Stellar technology in their Sharia-compliant product and service offerings. This is a big advancement for the Stellar network given that these regions are endpoints of popular foreign worker remittance corridors.”

At that time, the news saw XLM outperform the other altcoins and gain over 20% in a 24-hour trading period to trade at $0.27.

Since then, the coin’s price has sunk, but the members of the Stellar Development Foundation continue to meet with global financial institutions to show the benefits of Stellar’s platform. And now that it can pitch to institutions with a Sharia-compliant chain, it opens the door to more financial products and services. That 20% rise may not have been a fluke, but a real tell of optimism that Stellar’s blockchain can be a part of a diverse and innovative future.

Price Movement

XLM one-year trading chart

Stellar achieved its highest price back on January 4th when the coin traded at $0.93. Since then, XLM has lost over 72% of its value, and it’s currently trading at $0.21. However, as we have seen with these new developments, all of which point to global adoption, at least we can expect the coin to surpass its highest price very soon.

I understand that the crypto’s recent moves have investors skittish, but this was always a high-risk market – big upswings and big nosedives. For those interested in the possibility of blockchain platforms, these nosedives are times to scoop up coins at discounted prices. And there’s enough good news surrounding Stellar (we didn’t even talk about the much covered Coinbase announcement) that the current price might just be the steal you’re looking for in crypto.

The page above lists the market that XLM-USD is traded on. If you’re interested in trading in XLM, our recommendation is to use Binance or Bittrex using whatever trading pair you’re comfortable with (USDT-USD, ETH-USD, or BTC-USD).

Disclosure: I am/we are long XLM-USD.

Business relationship disclosure: This article was written in collaboration with a researcher. No one involved has any relationship with the Stellar team.

Still Not Much Momentum At Accuray

Small-cap oncology system manufacturer Accuray (ARAY) reported a decent fiscal fourth quarter, but it’s hard to see much momentum in the business or any real sign that this company is becoming a more disruptive force within the radiation oncology market. Although I continue to give management high marks for improving the underlying efficiency of the business and cleaning up the balance sheet, I just don’t see signs that Accuray is really gaining on Varian (VAR) (or even Elekta (OTCPK:EKTAY)) in any meaningful way, and I don’t see anything on the horizon that would drive a sudden shift in sentiment among customers.

Valuation remains undemanding, and I still believe the acquisition of Accuray by a Chinese or Japanese company is conceivable, but med-tech stocks most often trade on the basis of revenue growth and it looks like Accuray has a long row to hoe to generate enough revenue growth to get investors excited about the shares.

Like Many Quarters, Some Good And Some Bad In Fiscal Q4

Accuray reported stronger than expected revenue in the fourth quarter, with 2% growth driving a 5% beat. Outperformance was driven entirely by the service business (up 15% and about 13% above expectations), with product revenue down 10% and in line with expectations.

Although a higher than expected mix of service revenue did compress gross margin somewhat (and service margin declined 160bp year over year), product margin improved nicely (up over 600bp on an adjusted basis), helped by a richer mix of CyberKnife systems. Adjusted EBITDA declined 25% in the quarter, while operating income rose 10% and the company posted a minor miss at the operating line, but a small beat at the EPS line.

Orders were once again a source of disappointment. Gross orders rose 12%, missing expectations by around 10% despite what management characterized as “strong performance” in CyberKnife and a 26% improvement in orders from Asia. Net order performance was far worse, up 2% and almost 25% short of expectations as the company saw a significant increase in order cancellations – something that had been running at a fairly slow and steady pace.

Characterizing the orders, Accuray management said that 20% were replacement orders, 20% were competitive take-aways in established vaults and 60% were in new vaults. Although the company appears to be winning more business than it loses upon replacements, the pace of replacement orders has still been weaker than expected a couple of years ago.

Looking Back, This Wasn’t An Especially Great Year

I believe this is a reasonable time to look back at the guidance management gave a year ago for this fiscal year and see how things stack up.

On the revenue line, management exceeded initial expectations by a couple of percentage points relative to the midpoint of guidance and managed to exceed the high end of the initial guidance range. This came about from better-than-expected service revenue performance, though, as product revenue growth of 2% came in below the 5% to 10% growth guidance, with weaker sales to China tagged as the primary culprit.

Management met the gross margin target, but missed the adjusted EBITDA guidance range of $25 million to $30 million by a wide margin ($17 million reported), with the company electing during the year to spend more on developing the business (particularly R&D).

Gross order growth of 2% also missed guidance of 5%.

Looking Ahead

Management provided guidance of 4% to 8% product revenue growth for this next fiscal year, and overall revenue growth of about 4% at the midpoint – a level of growth that frankly doesn’t compare all that favorably to Varian or Elekta for a company that is supposed to be a share-gainer. Management is also no longer giving order guidance. While management claims this is due in part to its decision to focus more resources and attention on driving multi-system orders, which will be more volatile, I don’t view less guidance as a net positive, particularly from a company that has struggled to hit its own targets. I’d also note that the EBITDA guidance provided for the year ahead is lower than where expectations were going into the quarter.

Where’s The Spark?

I’m finding it harder to sustain the argument that Accuray has enough upside to be worth further patience, as the company just isn’t making the expected progress. While regulatory issues have held back sales in China and management claims to be “continuing to make progress” on finding a Chinese JV partner, the execution on the opportunity in China just hasn’t been there.

Likewise with the overall execution on Accuray’s opportunities in the market. Accuray has been unable to convince clinicians that CyberKnife or the Tomo platform offer meaningful treatment/outcome advantages over rival systems (particularly Varian). What’s more, while Accuray’s partnership with RaySearch (OTCPK:RSLBF) has helped it improve an area that was significantly deficient compared to Varian and Elekta (treatment planning software), the company has struggled to make a compelling “here’s why you should go with us” case that resonates with hospital purchasing managers.

And now there’s the added news that the company’s CFO of roughly three years is leaving to join a private med-tech. There was no couching this decision in terms of wanting to relocate to a particular geographic area or wanting to get back to a particular industry segment (the med-tech in question is a urology company), and I think investors should ask why the CFO would want to leave if great things were just around the corner.

To be sure, I’m not saying that Accuray is hopeless or that it cannot/will not continue to show improving margins and some level of ongoing product growth. Radixact has seen decent commercial interest and I still believe the Onrad system has potential in markets like China and Japan. Along those lines, I could also see Accuray having some possible acquisition appeal to a Chinese or Japanese acquirer, and I think Accuray’s small size and insignificant market share would help the deal approval process.

The Opportunity

After incorporating fourth quarter performance and guidance, I’m still looking for long-term revenue growth in the neighborhood of 3%. Although Elekta continues to struggle in the market, Varian seems to be benefitting the most from that. I do expect Accuray to be cash flow positive and generate better FCF margins in the coming years as the company slowly builds operating leverage on a growing revenue base. The biggest upside to those numbers, aside from some sort of unexpected shift among key opinion leaders that CyberKnife is must-have/must-use technology, would be more clarity in China and stronger sales execution in what should be a sizable long-term market opportunity for the company.

The Bottom Line

Accuray is not at all expensive, and I believe fair value remains between $4.50 and $5.50. Although announcing multiple multi-system wins could get some excitement back in the shares, as could the announcement of a meaningful partnership in China, the valuation argument is hampered by the reality that med-tech, and particularly small-cap med-tech, stock performance is typically driven by revenue growth and Accuray just isn’t likely to produce a lot of that. Consequently, investors need to at least appreciate the risk of this becoming/remaining a value trap and understand that it’s going to take time for the story to work.

Disclosure: I am/we are long ARAY.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Healthiest Healthcare REITs

The U.S. Census Bureau categorizes Baby Boomers as individuals born between 1946 and 1964, and the effects of having to care for such a large group will be felt in many areas.

By 2029, when the last round of Boomers reaches retirement age, the number of Americans 65 or older will climb to more than 71 million, up from about 41 million in 2011, a 73 percent increase, according to Census Bureau estimates.

As Ventas CEO Debra Cafaro points out, “we know that the silver wave of the over 75 population will experience a net gain of 70 million individuals between 2020 and 2035, boarding well for our business and giving us confidence in the future while we manage through current operating condition.”

According to CBRE’s 2018 U.S. Real Estate Market Outlook, the aging U.S. population will be a significant tailwind for medical office demand in the years ahead.

We expect demand for medical office buildings to grow, fueled by a shift away from the delivery of patient services on hospital campuses, the adoption of new technology, the aging population, healthcare job growth, tight market conditions and the relative recession-resistance of these properties,” said Andrea Cross, Americas head of office research, CBRE.

The medical office market has performed well in recent years, registering a lower peak vacancy rate than traditional office properties during the 2008 recession and showing a steady decline in vacancy during the recovery. Net absorption has outpaced new supply in 24 of the past 29 quarters, with particularly large imbalances since 2015.

Gross asking rents have been stable, reflecting consistent user demand and long lease terms that limit tenant turnover. New medical space completions have also been low relative to pre-recession levels, and the amount of space under construction has decreased slightly from the Q2 2016 peak. Chris Bodnar, vice chairman, Healthcare, CBRE Capital Markets, explains:

“Investment trends reflect strong medical-office market fundamentals and a broadening pool of interested investors. While uncertainty about healthcare policy poses a risk to the medical office market, favorable demographic trends point to continued strong healthcare demand, regardless of any policy changes.”

The core business of healthcare is inherently driven by demand for patient care, providing a stable foundation to support investment in the sector. The need for more facilities and services to manage the chronic illnesses of this aging population will be a major driver for growth.

Despite the controversy around these and future changes to reimbursement, healthcare is a required service that will continue to need real estate assets, and REITs provide an excellent vehicle for healthcare providers to become more efficient by partnering with “healthy” capitalized companies.

(Photo Source)

The Healthiest Healthcare REITs

So, shoulders back, chin up, deep breath… here’s a handful of hearty and healthy healthcare REITs:

HEALTHY HEALTHCARE REIT #1: Ventas Inc. (NYSE:VTR)

The Big WHY: Champion, diversified healthcare REIT with deliberately constructed portfolio of more than 1,200 assets

Feathers in its Cap: Focused on high-quality real estate well located in attractive markets (with high barriers to entry). Partners with top operators in each asset class – sector leaders, well-positioned for growth. Properties in U.S., Canada, United Kingdom. Portfolio: Senior Housing 62%, Medical Office 20%, Life Science 7%, Health Systems 5%, IRFs/LTACs 2%, Skilled Nursing 1%.

Downsides: Though skilled nursing triple net is 1% of NOI, VTR experienced continued decline in Genesis’s (NYSE:GEN) performance given ongoing industry SNF headwinds.

Performance YTD: 1.2%.

Alpha Insider Management Update: The company’s investments across the healthcare real estate spectrum provide sustainable, growing cash flow during strong economic cycles and resilience during downturns.

Bottom Line: VTR has the absolutely best credit profile and balance sheet. Its net debt-to-EBITDA ratio now stands at an excellent 5.3x and debt-to-assets is also robust at 36%. Substantial dry powder ($3.1 billion on credit facility) for any M&A. Successful history of dividend performance, and growth profile, current yield 5.38%. Payout ratio 78% on FFO. STRONG BUY (as in “buy, and hold onto this one!”)

HEALTHY HEALTHCARE REIT #2: LTC Properties, Inc. (NYSE:LTC)

The Big WHY: Triple net leases primarily in senior housing and healthcare properties via joint ventures, sale-leaseback transactions, mortgage financing, preferred equity, mezzanine lending.

Feathers in its Cap: In business over 25 years. Enterprise value as of June 30 over $2.1 billion. Holds 199 investments in nearly balanced capital allocation: assisted living communities (102, includes independent living & memory care communities), skilled nursing centers (96), and behavioral healthcare hospital. Located in 28 states. Funds From Operations (FFO): $29.6 million for Q2-18, compared with $31.4 million Q2-17 (per diluted common share $0.75 and $0.79).

Downsides: Decreases in Q2-18 results mostly due to defaulted master lease on cash basis in third quarter 2017 and reduction in rental income related to properties sold the past year.

Performance YTD: 6.2%.

Alpha Insider Management Update: Sold portfolio of six assisted living and memory care communities at a net gain of $48.3 million. Completed acquisition of two memory care communities in Texas for $25.2 million with 10-year master lease and 7.25% initial cash yield. Entered into partnership for properties in Medford, OR, and opened new facility in Illinois. New unsecured credit agreement has the opportunity to increase to $1.0 billion.

Bottom Line: Rated as a STRONG BUY. Dividend payout ratio of 76%, yielding 5.09%.

HEALTHY HEALTHCARE REIT #3: Healthcare Trust of America, Inc. (NYSE:HTA)

The Big WHY: Largest dedicated owner and operator of 450 medical office buildings (MOBs) in the U.S. (33 states), across more than 24 million square feet. Over $7 billion invested.

Feathers in its Cap: Provides real estate infrastructure for integrated delivery of healthcare services in highly desirable locations, targeted to build critical mass in 20-25 leading gateway markets generally with leading university and medical institutions, to support a strong, long-term demand for quality medical office space. Q2-18 FFO increased 55.8% to $84.4 million (Q2-17 comparison), or per diluted share +33.3%, to $0.40. During Q2-18, new and renewed leases on approximately 1.0 million square feet (4.2% of portfolio). Tenant retention rate of 86%. Occupancy rate of 90.9%. The company just increased its dividend by 1.6% (payable October 5).

Downsides: MOB is out of favor with institutions, yet sector rotation can provide attractive opportunities for intelligent REIT investors.

Performance YTD: -1.0%.

Alpha Insider Management Update: (“BBB” balance sheet) Announced new development in key gateway market (Miami), and commenced two redevelopments, including on-campus MOB in Raleigh, NC. Sell agreements: Greenville, South Carolina MOB portfolio, $294.3 million. Total leverage 31.8% (debt less cash and cash equivalents to total capitalization). Total liquidity end of quarter $1.0 billion. During Q2, paid down $96.0 million on $286.0 million promissory note in Duke acquisition.

Bottom Line: Founded in 2006 and NYSE-listed in 2012, HTA’s returns have outperformed those of the S&P 500 and US REIT indices. 75% payout ratio, dividend 4.28%. STRONG BUY.

HEALTHY HEALTHCARE REIT #4: Welltower Inc. (NYSE:WELL)

The Big WHY: The operating environment for seniors housing remains challenging, but the benefit of owning a premier major urban market-focused portfolio is attractive. WELL’s operating portfolio continues to show the resiliency expected from the premier operators in top markets and submarkets.

Feathers in its Cap: The REIT’s Q2-18 closing balance sheet position was strong with $215 million of cash and equivalents and $2.5 billion of capacity under the primary unsecured credit facility. The leverage metrics were at robust levels, with net debt-to-adjusted EBITDA of 5.4x and net debt-to-undepreciated book capitalization ratio of 35.6%, while the adjusted fixed charge cover ratio remained strong at 3.5x. WELL increased the normalized FFO range to $3.99-4.06 per share from $3.95-4.05 per share prior.

Downsides: QCP, and partnering with ProMedica is a pretty unique transaction that provides integration and complexity risk.

Performance YTD: 5.9%.

Alpha Insider Management Update: Strong balance sheet with investment grade credit ratings from Moody’s (Baa1), Standard & Poor’s (BBB+), and Fitch (BBB+).

Bottom Line: 5.33% dividend yield, and we are updating from a HOLD to a BUY.

HEALTHY HEALTHCARE REIT #5: Physicians Realty Trust (NYSE:DOC)

The Big WHY: The most important factor in accessing the quality of a medical office building is the health system affiliation, credit quality to tenant, age of the building, occupancy, market share as a tenant, average remaining lease term, size of the building, and the client services and mix of services in the facility. Around 88% of DOC’s growth space is on campus and/or affiliated with a healthcare system.

Feathers in its Cap: DOC’s disciplined approach to investments continues to improve portfolio metrics, narrowing the gap with competitors at an aggressive pace. For example, the company has just 4.4% of leases expiring through 2022 (the peer average is 11.8%).

Downsides: Same as HTA – institutional investors have rotated out of the MOB sector. Also, DOC has yet to increase its dividend.

Performance YTD: -1.4%.

Alpha Insider Management Update: The REIT’s balance sheet metrics remain strong, with debt-to-firm value of 34% and net debt-to-EBITDA of 5.5x. DOC is extremely well-positioned in the rising rate environment. 99% of debt is at a fixed interest rate or is completely hedged, with no significant maturities until 2023.

Bottom Line: DOC’s dividend yields 5.36%, and it’s a STRONG BUY.

(Source: F.A.S.T. Graphs)

Note: We will be providing a detailed SWAN (sleep well at night) research report in the upcoming (September) edition of the Forbes Real Estate Investor.

Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors, if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).

Disclosure: I am/we are long ACC, AVB, BHR, BPY, BRX, BXMT, CCI, CHCT, CIO, CLDT, CONE, CORR, CTRE, CXP, CUBE, DEA, DLR, DOC, EPR, EQIX, ESS, EXR, FRT, GEO, GMRE, GPT, HASI, HT, HTA, INN, IRET, IRM, JCAP, KIM, KREF, KRG, LADR, LAND, LMRK, LTC, MNR, NNN, NXRT, O, OFC, OHI, OUT, PEB, PEI, PK, PSB, PTTTS, QTS, REG, RHP, ROIC, SBRA, SKT, SPG, SRC, STAG, STOR, TCO, TRTX, UBA, UMH, UNIT, VER, VICI, VNO, VNQ, VTR, WPC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Despite Not Winning a Championship in a Decade, Tiger Woods Shows Exactly How to Adopt a Winner's Mindset

Top performers such as LeBron James, Jeff Bezos, Elon Musk, and Tiger Woods have a way of captivating our attention no matter what they’re doing. This concept was on full display recently as Tiger Woods was close to winning another major at the PGA Championship.

Normally winning championships and Tiger Woods are synonymous with each other, but Tiger Woods hasn’t won a major in a decade. In fact, he’s been fairly irrelevant from a perspective of actual contention.

Nevertheless, seeing Woods recent resurgence over the last two major championships reminded me of why he’s still one of sports biggest stars. In fact, if you peel back some layers, you’ll see that Tiger Woods is teaching us about mental toughness and how to adopt a winners mindset with these four principles.

1. Being yourself is more than enough.

In today’s world (especially on Instagram), it seems that there are a plethora of individuals who seemingly have it all. In fitness, it’s the perfectly sculpted body that is on display. In business, it’s another story of someone making six-figures in 3 months. And at the beginning of his journey, Woods was a mythical figure who couldn’t do any wrong.

As we all know, this period of seeming invincibility came to a screeching halt with multiple incidents. Woods plummeted down and struggled massively in both life and his sport. But, this very fall from grace made Woods more relatable to everyone.

I make mistakes each day. Many of you reading this make plenty of mistakes on a daily basis. And now, we saw that Tiger Woods even makes mistakes.

Just as Tiger owned up to his mistakes, it’s imperative that you own up to your mistakes when you make them. While the initial inclination is to feel you’ll lose business, trust, or connection–the opposite will happen.

You’ll garner more respect because you’re being authentic and truthful.

2. Be willing to admit your mistakes.

If Tiger continued to deny all of those past mistakes and deflect them onto everyone else, he wouldn’t have earned back the public’s trust and support.

Looking at the Tiger Woods situation reminds me of a lesson I was told as a teenager which stated that “It can take years to build a strong and powerful reputation, but all of that can be wiped away with one irrational decision.”

However, he also reminded me of the second part of the equation, “People are forgiving even to those who make the biggest of mistakes if they feel they’ve learned their lesson and are truly sincere with their apologies.”

Just as the human life is fragile, our reputations and businesses are fragile. Mistakes are bound to happen, but how will you respond? Anything other than taking extreme ownership of the situation isn’t good enough.

If you’re sulking in your mistakes and not dealing well with the scrutiny, take solace in the fact that the world loves comeback stories. A good second act and redemption arc are more than possible.

But people will only give you the chance of rewriting the script if you’re completely transparent and upfront with what you did.

3. Sometimes taking steps back is the only way to go forward.

If you look at the world from a purely superficial standpoint, you may be inclined to think that success is a straight line projection upward. However, achieving success is anything but a linear climb upward. Instead, success is filled with many dips and setbacks along the trek upward.

Between injuries and missing the cut at 15 of the previous 18 majors, Woods efforts to climb back to the top is teaching us that the journey is anything but pretty. During this time, Woods had to make some changes to his game which may have been tough to adjust to in the short run, but will provide big dividends in the long run.

As you go about your journey, don’t be afraid to take steps back in the short term because often times, that’s a necessary action needed to ensure a more fruitful future.