About
Lois Scott is a senior finance executive, entrepreneur and civic leader. She presently serves on the boards of the Federal Home Loan Bank of Chicago, Kroll Bond Rating Agency, and Enwave Energy. She has previously served on the board of MBIA Inc., Sunrise Transportation, and was Vice Chair of the Chicago Stock Exchange until its sale to the New York Stock Exchange in July 2018.
She has served on the advisory board of numerous companies, including Verizon Smart Communities. Civically, Lois is Chair of the Advisory Council for Milken Institute’s Program for Excellence and Equity in Public Finance, Investment Committee Chair of Leadership Greater Chicago, co-founder of the Municipal CFO Forum, a founding board member of Retirement Security Initiative, founding board member of Equable and is well known as one of the founders of Women in Public Finance.
From 2011-2015, Lois served as the Chief Financial Officer for the City of Chicago, where she had financial oversight of essential City services as well as O’Hare Airport, Midway Airport, the City’s public-private infrastructure partnership contracts, and water and wastewater systems serving more than 5 million people.
Lois brought corporate-style investor relations and enhanced disclosure to municipal government, launching the City’s annual investor conference in 2011. She served as trustee for public pension funds with assets of $7 billion and a $3 billion deferred compensation plan.
A frequent speaker on the financial sustainability of state and local government, she also served as special advisor to the Clinton Global Initiative on infrastructure.
From 2002-2011, Lois was CEO of a national financial advisory firm with offices in New York, Chicago, Houston, Newark, Columbus and Anchorage that worked with large governments, nonprofits and corporate clients on financial strategy and capital market transactions.
Prior to that, she served as President and Vice Chair of a technology company that provided a family of services to school systems across the U.S. Lois also helped launch Homeboyz Interactive in Chicago, a pioneering social enterprise that worked with gang-influenced youth, translating their street experiences into career success in the technology industry.
In 1997, Lois was selected to serve as one of 15 White House Fellows and tasked with advising President Clinton’s administration on the financial crisis in Southeast Asia. She later chaired the Management Committee of the Export-Import Bank of the United States, responsible for management issues affecting the 450-person, $800 million organization.
She is also a partner in The 51 Fund, a private equity firm that invests in feature films by women directors. She executive produced “Shayda,” winner of the Audience Award for World Cinema at Sundance Film Festival in 2023, “Cusp,” winner of a Special Jury Prize at Sundance Film Festival in 2021, and numerous other films.
Lois holds an MBA in Finance from Cornell Johnson Graduate School of Management and a BS/MBA in Economics and Finance from Cornell University.
Summary:
What could a career on Wall Steet possibly teach you about creativity, innovation and ownership?
How can you translate the moves of high finance into eminently practical lessons for your entrepreneurial venture?
What’s the single surprising thing that is at the heart of all the financial forces you’ll have to contend with in your business? (Hint: it has nothing to do with spreadsheets)
In this episode, Lois Scott, former Wall Street banker, corporate director, investor and entrepreneur, talks about her fascinating journey from Wall Street and helping at-risk youth rebuild their lives, all the way to reinventing film-making so independent women directors get the funding they need and much more.
Episode Highlights
- How finance can do good in the world
- What a Wall Street career can teach you about entrepreneurship
- The single biggest secret to greater self confidence
- How to use every career experience to build an unbeatable skill portfolio
- How being entrepreneurial can multiply your network access
- How to use career challenges to discover new skills and opportunities
- How to take smart personal risks to improve your chances of success
- The surprising secret of finance no one tells you, and how it matters to your venture
- The secret to building power networks in business
- The five languages of finance every entrepreneur must master
- Why personal brand building is a must for entrepreneurial success
- How to wow investors in fundraising
- The five big must-haves for entrepreneurs to succeed
Links and Resources
The 51 Fund: Private equity fund Lois co-founded that is dedicated to financing narrative and documentary feature films directed by female filmmakers
Interview Transcript
Shubha Chakravarthy: Good afternoon, Lois. Thanks for joining us today on Invisible Ink. We’re really excited to have you!
Lois Scott: I’m excited to be here. Thanks for inviting me to join you.
Shubha Chakravarthy: So, you have had a pretty stellar career in finance. Can you just give us a brief story about where you started and where you ended up?
Lois Scott: It’s a long career, so I don’t know if I can be too brief, but I started in finance mostly because I was really good at numbers and finance in college and I was privileged enough to go to Cornell for my MBA.
I was finishing my MBA at 21 and excited about what was possible, not knowing a thing about the business world. So, I ended up starting my career in banking and the group that sounded most attractive to me was a group called Health Education and Municipalities.
My dad was a doctor, so I thought I knew a little bit about healthcare. The only thing I had ever done was go to colleges, so education seemed like it was something I might know. When it came to municipalities, my mom ran our local town, so I figured that in the entire world of business, those might be three topics I actually knew a tiny little bit about.
What I learned was that was actually the beginning and the seeds of my career in the public finance industry, which I have done for many years. From public finance I was fortunate enough to be named a White House fellow where I went to Washington for a couple years and I ended up as chairing the management committee for the Export Import Bank of the United States.
When I came back, I was a changed person and I really wanted to make a difference with what I was doing. So, rather than going back to the Wall Street world, I decided to try my hand at entrepreneurship.
I started an education technology company. I worked in the non-profit space with Homeboyz, a group of former gang-influenced young people and then ultimately started my own finance firm, which I had for about a dozen years before I was asked to become the CFO of the City of Chicago, which I did from 2011 to 2015.
It was the first term for Rahm Emmanuel when he was Mayor of the city of Chicago. When I left that I was also very different than when I began, and I decided to spend my time serving on corporate boards.
I’ve served on a half dozen or so corporate boards since that time when I started in 2015. I think we are going to talk about it a little bit, a part of what I’ve also done is create an investment fund to invest in films by female directors. So, that’s a short career arc of what I’ve been doing.
Shubha Chakravarthy: It is absolutely fascinating. We could spend hours on each one of those stints but let me maybe zoom in on a couple that I found very fascinating.
So, you went in public finance, so for those of our listeners who are not familiar with what public finance is, what is a high-level intro?
Lois Scott: Public finance is the investment banking work done on behalf of units of government, schools, universities, and healthcare clients, and the non-profit sector.
I’ve always operated my career at the intersection between policy and trying to do good in the world and finance, which is a core skill that I have. So, it is at that intersection that public finance operates.
Shubha Chakravarthy: You mentioned at a couple different junctures that you did a stint and then you were changed.
Were there two or three that pop out in your mind that were fundamental in this transformation? Two or three insights? Two or three changes? Two or three inflection points?
Lois Scott: Yes. I think as we each age we get more confident and listen more carefully to our hearts and there are moments in everybody’s careers where that speaks more loudly to you. At some of these points where you’ve made a career shift or a shift in direction, it brings you in greater contact with your true desires.
So, at each of those points, I really had to stop and evaluate, “What do I want to do with the days I’ve been given on this planet?” Someday we are all going to be sitting in a rocking chair and look back and say, “What did I do that I’m really proud of? What did I do that made a difference in the world?”
So, when I’m dead and gone, I will leave my little footprint somewhere and hopefully make it easier for somebody else to carry on their journey. So, those were the inflection points when I had time to make a new start.
For example, when I was selected as a White House fellow, it was a very different world than the world I had lived in. The White House Fellows program is not particularly well known around the country, but it should be.
It is a federal law that mid-career Americans serve their government at the highest levels of service, and so you will be placed somewhere into the administration. It’s not a political situation, but I was definitely taken out of my comfort zone and plopped into something I had never considered.
At my first day on the job, I was asked to talk about the liquidity crisis in Southeast Asia. I knew nothing about international finance and yet you swim your way through.
So, those moments in life your head is opened, and your mind is filled with new ideas and different challenges, and it changes you. I think everything we do in life changes us. You just put yourself in the path of the changes that you want to see in your life and those will happen.
Shubha Chakravarthy: Is there one theme now that is paramount in the work you are doing today?
Lois Scott: What is really driving me right now and everything I do is that I want to have a disproportionate impact. The number of days I have left to work are fewer than the ones I have behind me.
I want to make sure that each of the days I spend is on something impactful, which is what took me to the film industry because we are manufacturing images of what women can and should be and presenting them throughout the world on a nonstop 24/7 basis.
We are being fed images of what women can and should do. I wanted to make an impact and change some of that narrative. So, that’s a big driving force for me right now. Impact.
Shubha Chakravarthy: Thanks for walking us through that. So, going back to the investment banking business, I think these were the early days when there were probably few women in the investment banking business.
What were some big learnings or discoveries when you entered that world that you think would be relevant to founders and entrepreneurs today?
Lois Scott: To say that there were a few women would be an understatement. I was named a partner of a Wall Street firm when I was about 29, and I think that there had been two other women to do that. So, it was a very challenging and an exciting time.
I think the key takeaways I had in investment banking is the tremendous value on your personal performance. There is not a company that you can hide behind. There’s not somebody else. You are on the line 24/7 in that world.
If you are doing a billion-dollar financing, you can’t spill coffee on the numbers. If you have a prospectus that is going to be mailed to 10,000 potential investors, it has got to be flawless. I think that the precision and the value of your personal performance were huge.
Work ethic is also something I’m very proud of. I think it really stems from my career in investment banking. I was of the generation that had boxes of Cheerios and cots in the office because we worked literally around the clock that way.
While that is not for everybody and it is not the only path to success, it was a way for me to test my boundaries and test what I thought I could.
That core work ethic resides in me to this day. I also think investment banking and finance is far more entrepreneurial than people realize.
In my career, I had to eat what I killed. If I wanted a good pay check, it was because I produced ideas and I produced a winning presentation to potential clients that they said, “You know what? That is the direction we want to go. We believe in your vision and help us out with this.”
So, it was very entrepreneurial. When I then did entrepreneurial things later, including now, I had a lot to draw upon from the investment banking days.
But probably the most important I learned was the value of being confident. I think this is a whole topic that is under-discussed with women.
Investment bankers routinely have to walk in and tell companies and tell company executives how to sell their company, package their company, or take out massive amounts of debt and replace it with equity. These are big and bold ideas. It might not be brain surgery, but the stakes are very high for the decisions.
So, you had to think really hard about what you want to present, how to present it, how to build the confidence, and I think it is that confidence and that the recognition that your ideas mattered, that was a wonderful take away from my years in investment banking.
Shubha Chakravarthy: That’s awesome. Were there a few learnings that you think can be portable or transferable to other entrepreneurs in terms of what helped you build that internal confidence?
Lois Scott: I think internal confidence comes by doing the hard work of becoming the expert on whatever you are working on. I think that all entrepreneurs end up being experts in whatever their domain is.
The difference with some is that they know how to package it and talk about it, and to present, and share that confidence with others, because people love that. They want your confidence. They value that. They love to be around confident people with ideas and vision.
I swam in that. I swam within a bunch of investment bankers who did that on a daily basis. Some were extremely good at it.
So, I think it is taking the time to be that expert to value your expertise, but then also the tougher work of learning how to communicate that expertise with confidence and excitement, and it is infectious when you see it.
Shubha Chakravarthy: It sounds like you developed a lot of entrepreneurial chops just by virtue of being an investment banker. Then you mentioned that you went on to found a bunch of different entrepreneurial ventures.
Can you talk us through a few of those ventures and the driving inspiration behind them?
Lois Scott: Well, there have been a lot. There have been a handful, in the for-profit private company space, and then several in the non-profit or the civic world.
I value them equally. They each taught me something and I don’t think I could have been as good in one area if I wasn’t also focusing on the other.
In the business world after I left as a White House fellow, I co-founded a company called Edventures, which is an educational technology company. Our vision was to put the internet and put the world in the pockets of every child going to school.
That was in 1999 or 2000 timeframe, so it was far before the internet or cell phones were as ubiquitous as young people have today. But it was the foundings of that.
I saw a need. I was raised in small town not the fancy part with white picket fences, but the tougher part of small town America. I wanted the people that I knew and had respected throughout my life to have those same resources that you see in urban environments.
So, this venture was a way to do that.
As part of it, we did some of our work through a non-profit entity called Homeboyz, which was a social venture to work with drug and alcohol influenced young people and show them paths to careers in technology.
Homeboyz trained young people in web design and graphic design. This was back in the late nineties or the early 2000s at a time when those people were not behind the curve.
Everybody was learning it anew. So, I ended up working for Homeboyz, for a couple of years and guided that organization and I really loved my experience there. I learned a lot from former gang leaders.
I also founded in the for-profit space, my finance company, which I had for about a dozen years, Scott Balice Strategies, which provided financial advisory services and financing to corporate entities and non-profits and governments around the country with offices all over the world, those which are for-profit, but in the non-profit space, I have a lot of things that are very precious to me.
When I was a younger woman in the public finance field in investment banking, there weren’t a whole lot of women around.
I knew a couple nationwide, and we decided to throw a conference together and literally we did it over cocktails and the four of us launched Women in Public Finance and now 20 something years, I would honestly say with 2000 members and chapters all across the country, that we have completely changed the face of that industry.
Now, it is considered that it is a woman power dominated field in finance, and I really do think it is because we had the courage to actually just get together and say, “Hey, are you experiencing this?” Or “Hey, can I help you do that?” It has really survived and blossomed. I’m really proud and excited about that work.
When I was CFO at the City of Chicago, I didn’t know a lot of CFOs and there certainly weren’t people to talk to about really gnarly finance issues. Trust me that mayors are not exactly keen on talking about finance all day long.
I felt a void in who I could talk to about some of the challenges I was facing. So, I went to Rahm Emanuel, and I said, “I’m going to put together this association of the CFOs for America’s biggest cities.” He said, “God speed!” and we did that in 2011 and we invited the CFOs of the top 30 cities in the country.
I’m proud to say that just last week I returned from an event where the CFO forum now, 12 years later, is still going strong and the CFOs across America get together and have a place to talk about that. So, I’m excited about what that has done.
Of course, the film fund that we are going to be talking about.
Shubha Chakravarthy: Awesome. You mentioned that you had learned quite a few things from former gang members. Are there a couple that stand out that you wouldn’t have expected?
Lois Scott: These young people have so much talent and yes it got misdirected along the way, but boy are they bright people! They have a different way of looking at the world and tremendous skills. If we could just find a way to package it in a way that’s more accessible to the mainstream because they have so much to offer.
I was blown away sometimes by their intellect and by their managerial ability. Some of the folks that had been in the system really knew how to manage extremely well. They don’t miss deadlines.
They’re not late with things because the consequences in their world are very significant. So, they taught me a tremendous amount.
I also learned a lot from the women that were in the program and how different it was for the young men and the young women we were working with. The young women typically would have children already at young ages 19, 20, 21, somewhere.
How fragile their lives were because of the children who they loved very much but there was always the challenge of childcare, and they were always as reliable as the least reliable link in their chain.
That taught me a lot about the realities of working women. So, I learned a lot from that experience.
Shubha Chakravarthy: Fantastic, thank you. Other than the specific learnings, was there something new that you discovered either about the nature of the journey or what you needed to have in you as an entrepreneur from these entrepreneurial forays that you didn’t have in a kind of a more corporate career?
Lois Scott: One thing I definitely learned is when you see a need or you feel a need, other people probably feel that same need, and if you reach out collectively, you can make something wonderful.
Don’t ever feel trapped by feeling alone. Reach out and you’ll be surprised at how many other people are sharing that same journey.
You and I have spoken about some of the fabric of helping women entrepreneurs in general, and it is reaching out and the courage to reach out and say, “Hey, has anybody ever gone through this? Let’s do something. Let’s create something together.”
I think that’s really powerful. I also think it’s incredibly important who you spend time with in life. Who are the people you will learn from and grow from?
We all will become more like the people we spend time with and if the people you spend time with are dynamic and pressing their own boundaries and trying new things, you will as well.
If you prefer to stay in safe places and not take risks, then you might feel safer sometimes, but over time, I think you might end up feeling a little less confident.
It is through taking risks and showing that it is not so bad, that the downside is not so scary, that you gain your confidence. You gain your sea legs and you’ve got to reach out and accept that risk in life because that is the magic powder that will take you forward.
Shubha Chakravarthy: You talk about taking risks. Is there one moment or one instance in your entrepreneurial career that stands out as particularly tough, that pushed you to the limit where you discovered something you didn’t know or were forced to dig in deeper than you ever had before?
Lois Scott: I think there were many moments when I became CFO at the city of Chicago. I don’t have a CFO background. Rahm Emanuel believed in me and really encouraged me to take the job. It was not something I ever put on my bucket list for life and the issues that state and local governments are significant and deeply meaningful.
You are ground zero for people’s lives and people’s businesses. You have got to provide the lubricant so the economy can work. Mistakes in that realm have massive consequences. Some of the challenges we faced with the city of Chicago were pensions, revenues, tax policy, dealing with disaffected youth, dealing with police issues, and dealing with shootings.
There were lots of moments in that job where you had to stop and assess the risk that we were taking and the consequences of what your actions would be. Also, the government sector teaches you something different than the business sector does.
I compare it to the difference between playing chess and playing checkers. In the business world, there is generally an agreed upon outcome that is a right or wrong answer, and that’s often the best financial outcome or the best rate of return, it is often framed in financial terms.
In government, what I learned is that there are a myriad of agendas. What is the right decision for the environment? What is the right decision for equity? What is the right decision for finance? What is the right decision for the business world versus your residents? What is right for young parts of your community or the older parts of the community?
It is much more multifaceted, and it really was like playing chess over the world of business requirements was more every outcome.
There were definitely moments in that career that were filled with risk and challenges and did not have a lot of resources to lean upon to make those decisions. That is why I started the CFO forum and relied upon them just as peers to reach out and to help through ideas.
Shubha Chakravarthy: What I really like about your experience is that you have multiple views and windows into this core concept of creating something from scratch, essentially.
Do you have any observations in terms of how finance folks think and how people make decisions within the finance industry that could be instructive to folks who are not as familiar with finance or the financial mindset?
Lois Scott: I do, but I think you are going to be surprised by my answer.
I think finance has very little to do with numbers. I think finance has everything to do with psychology. Confidence is what drives the financial world. Investment banking, as well as all factors in finance, there needs to be a trust that is created.
There needs to be a confidence in the plan that is presented, and there needs to be an accountability and a sense of responsibility from the business seeking the financing. I think that the numbers will flow from all of that, but without those essential ingredients and the psychology the money will never flow to the companies.
Finance very much trades in those soft things. They don’t want you to know that. I don’t think it is talked about. You are not going to read a Harvard Business School study in finance about the psychology of capital formation, but I think it is very much part of every decision made in the finance world.
Shubha Chakravarthy: You are right. I didn’t expect that. You talked about the psychology of capital formation.
If you had to give a little cheat sheet or a code to somebody who wants to develop that, would there be a few tips you would give them in terms of developing that?
Lois Scott: My best advice would be to become comfortable with risk. Make it your friend, do the hard work.
Step two would be do the hard work to be the expert and to have the answers when asked.
Then three, do the training. Do the work on your personal way of presenting and communicating what you want to achieve.
Too often we think that the idea itself will sell, but it is really all about the person and how it is being sold to the person on the receiving end. That’s really important.
Shubha Chakravarthy: Are there things you have seen just off the top of your head or have done that have helped you deliver that confidence or deliver that extra “oomph” that others could pick up?
Lois Scott: You know, it’s funny. I will tell you a short story. At one of my companies, we were in the middle of raising a significant amount of capital from venture capital investors, and I was having a bad headache that day.
I mean, everything was going fine with the business, but I was having just an awful headache. I came in and I was rubbing my forehead, literally. The company almost stopped in its track. Like, “Oh my gosh, the meetings must have been terrible.”
I learned the lesson that your body language and your face matter a whole lot. I know everybody has heard that and we are taught that body language and your facial expression is important or whatever, but it wasn’t until that moment that I realized it is really not okay to have a headache and rub your forehead in an office where people can watch you.
So, that was one little thing, just to be aware of how you present yourself.
I think the other thing is to be aware of how you value the other person in the meeting. If you are meeting with bankers, are you sharing value back? What value are you presenting to them? Are you giving them a wonderful opportunity?
Get it on the ground floor of a new business model. Are you saying, “Oh, you know, I understand you are experts in this particular type of finance. Can I introduce you to someone?”
Always be aware of life being relationships and not being so afraid of offering something back and bringing value to the meeting as opposed to just taking value from meetings.
Shubha Chakravarthy: Outstanding advice. Thank you. Moving on, the finance, I love what you said about the psychological aspects being important, but there is also the hard numbers based aspect of finance that is important, especially for an entrepreneur.
Are there a few core elements or building blocks that you think would be critical for an entrepreneur to do her homework and to master, regardless of whether she’s a CFO or not?
Lois Scott: Absolutely! First and foremost, and I’ve said this to my daughter since she was about eight years old – make sure you understand the time value of money.
To say that you are going to get a great return for investors in 20 years is really not an investment proposition, that is asking for a grant. So, making sure you understand what the time value of money and compound interest is all about is number one. That is critically important.
Number two is understanding how companies are valued. Understand what a pre-money valuation is and how it is derived. Understand a post money valuation of how it is derived.
Number three, understand the basic return metrics that are the language of finance. Know for a fact what an internal rate of return is versus a return on investment. Understand what a rate of return in general is.
Those are the basic languages that finance needs to speak with you. They are not difficult to learn. Anybody can learn them. I’ve taught them to my daughter when she was young, you can learn them. I think those would be the three primary things that everybody should master.
After that, I would say, make sure you know how to do financial forecasts and sensitivity analysis. Every business person needs to have a business plan. There need to be numbers attached to that in detail, and there needs to be as much focus on the revenues of that as the expenses.
I cannot tell you how many entrepreneurs say to me that they are exactly on budget. They haven’t spent a penny anymore because we can manage the expenses. The difficult part of being an entrepreneur is you cannot manage the revenues.
So, you need to de-risk the revenues and be able to demonstrate how you are going to deliver the revenues in the business plan.
Then the sensitivity analysis – if you are three months late in getting that next client with a big client or the patent or whatever you might be working towards, recognize and do the math in a sensitivity analysis to model all that out.
You cannot give a banker or a financing partner reams of data, but they can look at sensitivity charts. You must know the two or three main economic drivers of your business model.
If you don’t know those, go back to your business model, and work harder on it because you must know what the major things that will affect the outcomes of your financing of your business are and then do the sensitivity.
If it’s the interest rate, do an interest rate from 2%, 4%, 6%, 8%, 10%. Create a graph and show to the investors. “This is how our situation will change with changes and interest rates.”
If it is labor costs, do the sensitivity of $15 an hour, 20, 30, a hundred dollars an hour, and show how that sensitivity affects the IRR, the return on investment, and the business outcomes for your company. Those are the five I would like to mention.
Shubha Chakravarthy: I love those five in particular. What I want to drill down for a second is de-risking the revenue model.
What have you seen work and how should an entrepreneur think about the risk factors of a revenue model to begin with, and then think about how you de-risk those elements?
Lois Scott: Well, I’ll tell you a little bit. As I was starting my financial advisory company from nothing, it was like a chair and a phone. I knew what sectors I wanted to be known for. I was very clear on that.
But just because you hang out a shingle and have good ideas and can write a nice letter or have a good meeting, doesn’t mean they’ll give you business. So, I had to do some things like build my own success.
I knew what names would have prominence in the industry and I offered to work for them and get a referenceable client without pay. That everybody can do. But at that time, I was able to do that not for all clients, but to get the first two or three.
Then I had referenceable clients that the role would say, “Can I give them a call and ask how you did?” So, I put myself way out there to build my own success and to build a track record of success that other people could look to.
As I entered into new parts of the market, I would try that strategy again. Maybe I was going to go into a different type of healthcare client or a different type of a company or an industry.
I would work with the thought leaders and try to get any part of the business, no matter how small so I could get a referenceable client, build a relationship, and have something to show for what I wanted to achieve. That definitely helped me.
Other businesses can perhaps do pilot programs, can do sampling programs, et cetera. I think there are lots of ways and it is very industry specific, I think.
Shubha Chakravarthy: I love that. One thing I want to hit on is the industry. You mentioned how important the industry is. If somebody doesn’t come from a finance background, can you drill down a little bit on what are the specific aspects of your financial outcomes that the industry affects, and how would an entrepreneur become familiar with these specific impacts and their role in how her business ends up doing, if that makes sense?
Lois Scott: I’ll give you a personal example. I have a sister who is one of the world’s leading experts in rare earth metals and other materials I don’t even quite understand.
But, in order to build their business and really perpetuate their expertise in that field, they have conferences where they bring together people and experts from all over the world on this topic, and they’ll present what is happening with supply chain and where child labor issues might be, et cetera.
So, they claim the space. They claim the space and declare that they are experts and pull together their expertise for the benefit of the industry.
So, that might not be how they get most of their revenues, but it certainly expertises them. So, the next time somebody has a question and wants a consulting contract around this, they know who to call and they know what expertise they will bring.
So, I think that’s how an industry, in that case, it is a very highly technical industry. It is not the most approachable, but they really are the experts and they had to do something out of their norm by doing these conferences in order to build their brand value.
Shubha Chakravarthy: Great. I love the brand aspect of it. There is another piece, which is many times, the critical variables or assumptions that impact your financial models are industry specific.
So, whether that’s a cost of acquisition or margins, and if you are a woman, and especially if you don’t have access to these insider networks, it is hard to know where to get that.
Do you have any tips or insights on how an entrepreneur can get smarter about those assumptions because they are going to have a critical outsize impact on if your venture is going to be attractive, and on how you are going to exercise those levers to maximize your returns?
Lois Scott: Well, I think we live in a time where information is more readily available than any time in history. So, sitting down and researching for a while can turn up, maybe not the answers to what you are looking for, but the people who might know the answers and through LinkedIn and other tools the ability to network to people with expertise has never been greater.
I’m always amazed how willing people are to help to explain and to educate. So, it is one of those confidence issues, right? Trust yourself enough to reach out and ask the questions because you can bring them expertise too. You might be able to help them.
Never be afraid to ask for guidance and expertise from people in the industry, from people surrounding the industry, from the network of bankers, attorneys, and accountants that might be touching that field.
It is a matter of two to three degrees we can get the expertise we need. So, use your networks. Be respectful of networks and be generous in how you respond when you are asked. But definitely network to get the information you need.
There is no single source. There are lots of inputs and lots of opinions and so I encourage you to use your networks to reach out and get those opinions and get viewpoints because everybody in finance has a slightly different way of looking at things.
So, reach out, learn, and then synthesize and do what is right for your company.
Shubha Chakravarthy: Excellent. I’m going to move gears slightly. You’ve talked about confidence a lot. You’ve talked about psychological issues a lot with respect to finance, and you’ve been very heavily involved with women your entire career.
Can you speak a little bit about what you have observed when it comes to women and dealing with finance, especially in an entrepreneurial role?
Lois Scott: Yes. I’ve observed that in general women are more risk averse than they really should be. I think women can do extraordinary things and do extraordinary things and yet somehow, whether it is the fear of making mistakes, fear of taking on a risk and failing, stop a lot of women.
I find that unfortunate. I would love to see more mistakes made by women. I would love to see more failures. Some of the best advice, a friend gave to my daughter was to fail early. Fail early and learn from it. Learn how to pick yourself back up and keep going.
But what I have observed is that many women don’t like to take risks and are afraid of risks for whatever reason.
I have always been very comfortable with taking risks. I think it is because I had a family who believed in me and always nurtured my ideas. But I think that is the one area I would encourage women to be a little bolder. Be bolder and be stronger.
In every business room you enter, enter it with the same energy you would give to your best friend and the honesty and the energy and the boldness of your ideas.
Do that same thing in the business meeting. Don’t hold back. Be who you were meant to be, and I think outcomes will change.
Shubha Chakravarthy: I like that. I want to push on one aspect of that, which is that I think there is a lot of research out there that shows that women are held to a different standard when they go looking for capital.
This point around taking risks, making mistakes, there is a potential that it can backfire in terms of showing up as incompetence rather than an increased appetite for risk.
Do you have any observations on that, and if so, if it is a risk, what counsel would you offer to counteract that influence?
Lois Scott: Yes, you are right. I think there is a lot to that. I’m finding that as I’m working in the film industry that there is a difference. There are bigger barriers, yes.
But I find most women working twice as hard and that can overcome a lot of doubting Thomases. So, when you encounter that, you just have to roll up your sleeves and work harder.
A couple years ago, I started working in the area of film finance because I was exposed to a woman director-writer who talked to me about the condition of women in Hollywood, which I thought was very nice, and I saw films for most of my career as something pleasant but not substantive.
Like I’m a finance person. I was an investment banker. I did the hard stuff, and she very gently helped me see that film is how we present who we are and our humanity to the world.
The year that Jaws, the film came out, the fear of sharks became the number one fear in the world, and it has never fallen out of the top three. That just blows my mind. It had never been on anybody’s radar, and yet through visual images, we changed how people see themselves and their fears, and that just blew my mind.
Contrast that to The Hunger Games. The year that The Hunger Games came out, women in archery went through the roof. It literally changes people’s wiring and their belief in what’s possible.
So, I decided that I needed to make a difference with this. So, I started investing in film. You might have recalled, I don’t have a background in film finance, so I myself have learned the obstacles and seen first-hand that how hard it is for women in this industry.
We are seeing it every day despite the fact that when a film is directed by a woman, it makes a higher rate of return. When it is written by a woman, it makes a higher rate of return than the average film.
When the lead actor is a woman, it has a higher rate of return, and yet Hollywood is not making films from those voices. In fact, through history, it has been a single digit percentage of the films you have ever seen are from a woman director.
It is really a crisis. Then we perpetuate images of shrinking violence, of risk averse people, whatever. We are perpetuating these images of what it means to be a woman and what it means to be a woman entrepreneur. We need to change that. We really need to change the dialogue.
So, what I want to do is manufacture a generation of women that show that women know how to make money in film. So, Hollywood can no longer say, “Ah, you know, we can’t find them.” So, that’s what I’ve been working on.
But you are absolutely right and I’m seeing and it living first hand right now that you can have a complete huge budget failure and be a male director and get a three film deal coming right out of it.
But if a woman fails, it’s like, “See, it validates what we said about women directors.” So, I’m about to change that.
But you are absolutely right and I hope to change that narrative with impact through film and through everything else I’m doing so that women are free to take more risks that we are not judged for failures the same that we have historically been judged and that we show the world what we can do.
Shubha Chakravarthy: That’s a fantastic segue. I want to hear all about the film venture fund that you’ve started.
So, we heard a little bit about maybe the why. Can you tell us a little bit more about its objective, what the work is, and what kind of directors you are looking to finance?
Lois Scott: Sure. It is interesting. We believe with every cell of our being that women can make great films. That is undisputed. What we want to show is that women can make money in film and that women are business people, not hobbyists.
Too often women led businesses are considered a hobby or not really something that they have to make a living at. It seems like a sidekick to a career. So, we really want to show that these are serious business women that know how to do this stuff. The films we are doing so far have been able to produce a great return for investors and with that we are going to put points on the board.
We certainly wanted to go bigger to start but the powers that be in the investing world wanted us to put more points on the boards than other non-women directors would do. But we are working on that every day to prove that women know how to make money in film and we are getting a lot of success in the films we are doing.
So, what are we trying to accomplish artistically, with our films?
We’ll do documentaries. We’ll do feature. But we really want to elevate the dialogue. It can be a horror film, it can be a comedy, it can be a documentary, but we want it to be two things.
We want it to be a film that people leave or finish watching and want to still talk about whatever that might be, that they want to still talk about it and chew on it and get other people’s opinions and keep it going.
The second thing is that we want it to be a film that changes the dialogue and that advances the dialogue. We don’t want to do the third remake of the same film we did two years ago. We want to continue moving things forward, pushing forward with all kinds of language and imagery and discussion and dialogue about who women can be.
I was talking to a writer-director recently and she said, I want to show that women can do and that we had the agency to choose failure. I’m like, “Okay, well that is very interesting. That would be new and different.” So, we are trying to advance the dialogue and leave the world with something to talk about.
I’m amazed, you know, my husband goes to the movies, and he loves the thrillers and the suspense things, and it is not really my genre. I’ll watch them with him, but he goes to the movie and 90% of the time he’s like, “It was made for me. I loved it.”
I don’t think women have been fed the same kind of excitement. Yes, we’ve all found them, but not in the mainstream. We’ve had to go looking for stuff. So, I want there to be a body of work that women get excited about because we have given them something to talk about, the dialogue and about the film.
Shubha Chakravarthy: Excellent. So, it sounds like a twofold objective, right?
One is about clearly the artistic impact and making these movies more of the mainstream, but you also talked about making movies that actually make money.
Can you talk a little bit about how you approach that aspect of your work?
Lois Scott: Yes. When we look at a film, the first thing is that we have to all light up. There are five of us in the film fund. All of us have to light up and love the artistry and love the concept. Love the story.
Then we dive into the finances. We go through every single item. Most importantly, we focus on the revenue possibility. Who is the audience for the film? I’m amazed how many films we’ll see, and it’s like, “This is a really interesting story, but who is the audience for this?” It might be really tiny, and that is not going to pay a multimillion dollar budget back.
So, we focus on audience. We focus on investing in a slate of films across different genres to de-risk the portfolio. So, if we have one disaster or one film that just never get finds its value, the other films will offset that.
So, we always do it as part of an organized slate. I also think we do it by where we come into the financing, whether we do it early or whether we come in at the end when they are looking for finishing money.
We diversify across when we are going to invest, what risk things we need to know. So, we have spent a great deal of time on who the audience is and de-risking where we are. It is a strategy that’s proven quite effective.
I have to say, as a finance person, I come to this as an outsider, but I’ve had the privilege of getting to know some heavyweights in the industry. Some of the questions that I think are basic are not questions that are asked in the film.
They will ask about the artist’s vision or who do they think is going to play the critical roles. I will be asking, “What do we think this can sell for? Who do we think the major buyers are? What if this doesn’t sell, what is the aftermarket? Is there a scrap value? How do we reduce the overall budget? What kind of tax incentives can we use if we finance it in a different state, can it reduce the cost?”
So, we focus a lot on those types of issues. I don’t think that is the first part of the conversation most films have, and so I think we are changing how people talk about the projects as well.
Shubha Chakravarthy: That is fascinating. So, it is almost a couple things? One is that you are bringing a portfolio view to financing movies, which I don’t think I’ve ever heard of. This whole concept of diversifying risk and putting together a different, anti-portfolio movie, so to speak? Whether it is a slate or whether it is a bunch of different movies. That was the first different thing I heard.
The second thing I heard obviously was this point around it being new to the industry, that they don’t look at a de-risking or a financial lens first.
Do you think there is opportunity beyond what you are doing with the film fund to rationalize how movies are made in general and to bring this more risk return oriented view to filmmaking in general?
Lois Scott: I think that it is done behind the scenes without the filmmakers being present. I think that the streamers go into their closets and do their own work to figure out where they want to be, but the industry remains in flux as the streamers have really become the dominant force out there and each one invests for different reasons, typically, to build a specific audience value.
So, I hope so. I think it is the right way of looking at stuff, but the industry remains in flux a little bit with the control really in the hands of a few number of streamers. So, we are watching and seeing how that is going to build out.
Shubha Chakravarthy: This brings us to the question of women seeking capital. Generalizing what you talked about for the film industry and for your film fund more broadly, what advice and counsel would you give women who are seeking outside capital to increase their chances of a favorable outcome, as well as chances of favorable terms on which to get that financing?
Lois Scott: Well, as much as you love your company and you love your idea, love your numbers and your business case even more.
Know precisely what the planned IRR is and be able to say, “And if we don’t have this level of revenues by June, here is what our strategy will be.”
The value that a finance team will look at in your company will not just be about the business plan as presented, but their assessment of your ability to adapt once things don’t go as planned, and the adaptation is rarely about expense control and really focused on what other ways have you thought through to protect your revenue stream and reduce the risks to the revenue.
So, focus there. Walk in with confidence, with excitement and know your numbers. Know them better than anybody in that room will know those numbers.
Know the numbers of the comparison companies, of the other companies you’ve looked at and studied and might have different valuations. Know what you think the company is worth and then go for it.
Shubha Chakravarthy: Great. To the extent that you’ve seen or worked with women who may have felt a natural trepidation or any kind of fear to towards numbers.
Do you have tips or things that have worked to help them overcome that fear so that they can go ahead and master all the things you have just outlined for us?
Lois Scott: I would say that numbers are different from math. So, knowing your numbers and knowing what your revenue targets are is not trigonometry. It is understanding what the market is and it is understanding what your product or your service is going to be.
So, it is really not about get over the fact that there are numbers associated with it, it is not higher-level math. It is knowing the details of what you want to build.
If you don’t know what the numbers are and can’t enunciate what you think your revenues will be and your dream, then go back and study a little more, because that’s really a starting point.
So, the numbers are only adding and subtracting. The models are quite easy to work through. It is like, “How much do you think you are going to need to pay that person to do that job?” Put that down on a piece of paper.
“How much do you think it is going to cost you to acquire the supplies?” It is not higher-level math. You guys can all do that.
I’m a hundred percent confident everyone that can do that.
Shubha Chakravarthy: Fantastic. So, if you had to summarize all of this and say you are talking to a woman entrepreneur, you want her to succeed, from the financial lens, what are the five things you would recommend she do from Monday morning?
Lois Scott: Number one, know your business inside and out. Know it with tremendous clarity and be able to talk about it.
Number two, reach out. Reach out to other people, male or female, about their experience. Learn from them. Really do the work of networking or reaching out.
Number three, take the time to practice your communications. You will be communicating and selling to bankers, to potential clients and customers. So, take the time to really master communications. Everybody can do it. It’s a process. You can learn it, we all do.
Four, learn the basics of finance, the five issues I talked about earlier.
Fifth, reach out to people who will support you no matter what because they are the people that are going to build your confidence. That is ultimately what this is all about.
Shubha Chakravarthy: Fantastic. Is there any question that I should have asked you, Lois, but I didn’t?
Lois Scott: That was a pretty healthy list. I think no, I don’t think so.
Shubha Chakravarthy: This has been an incredible conversation. I’ve learned a lot and I know that listeners will learn a lot as well.
I really want to say thank you for taking the time and for chatting with us and sharing all of your valuable insights.
Lois Scott: I’d like to say thanks to you, for lifting this topic as well, because women and entrepreneurs should be in the same sentence all the time and you are trying to provide, the fabric that pulls us all together.
So, thank you for what you are doing!
