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Evolving in the International Finance, Banking and Music businesses. Lessons from Jon Pedersen

Jon Pedersen

Jon Pedersen is a corporate finance professional with around 30 years of experience in finance, technology, and operations. He has worked in banking media & entertainment, and is now the CFO of HealthPlanOne, a growing company in the Medical distribution sector.

Highlights:

Jon Pederson’s journey

Jon’s advice to be successful in international business

Blunders to avoid in international business

Cultural problems to avoid

Advice to younger people

Jon Pedersen Bio

Jon Pedersen is a corporate finance professional with around 30 years of experience in finance, technology, and operations. He has worked in banking media & entertainment, and is now the CFO of HealthPlanOne, a growing company in the Medical distribution sector.

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Full Transcript

Hello everyone, and welcome to Global Gurus, where every Friday we explore stories of international business and speak with industry leaders operating around the world. I’m your host, Phillip Auerbach of Auerbach International. Thank you for joining us.

If you’re tuning in for the first time, we start each podcast with a running segment called Faux Pas Fridays, where we explore a funny blooper or mistranslation that does not quite convey the professional image that your organization wants to project. So, given the problems in Ukraine right now from the Russians, I thought one from the Soviet times would be most appropriate. A sign in a Moscow hotel said, “There will be a Moscow exhibition this Tuesday of art by 15,000 Soviet painters and sculptors. These were executed over the past two years.”

So, today’s guest is John Peterson, a corporate finance professional with 30 years of experience in finance, technology, and operations. He has worked in the fields of banking, media, and entertainment and is now the CFO of Health Plan 1, a growing company in the Medicare distribution sector. And through his various ventures, he has done business in 150 countries, primarily in Europe and Asia, but I’m sure he can elaborate on that. Welcome John. I’m delighted for you to be here.

Well, thanks for having me, Philip. Good to be here.

Before we dive in, perhaps you could tell us a bit more about your background, how you grew up, and how you gained your global experience.

Sure thing. I mean, I was born in the Midwest. I never really thought about the global scale much as a child. We moved to the East Coast when I was a teenager. My dad got a job in Connecticut, and then, once I got out of college, I got an accounting degree from the University of Connecticut. I had the opportunity to work in New York City for Goldman Sachs, and I thought, you know, this is a pretty far-flung idea coming from where I came from and the thought process of being that close to Wall Street and being that close to New York City, I felt that it was probably worth taking a shot at, even though my roots, you know, were much more humble than that. And so, I took the shot, and I think it opened up my career in a variety of different ways. And I think it changed my life, because it kind of expanded my view of, I think, what the art of the possible was. I think when you kind of grow up in sometimes small places or small towns or whatever, you don’t always get to see everything you can, and I think I got lucky from the standpoint that I was able to expand my horizons. 

That’s great I also, Uhm, I grew up in Philadelphia, but I moved… my parents moved us when I was in 11th grade to a small town about 40 miles outside of Philadelphia. And that expanded my view in a different way of what small-town life is like, so it was great to have that reverse experience as well. 

I know you’ve been in various ventures and companies and perhaps launched different products or services. Can you tell us which was the most successful and what you did to achieve it? Make it so.

Yeah, I’ve been principally on the support side. So, I grew up as an accountant and I’ve been on the accounting and finance side as an accountant, controller, or Chief Financial Officer. And so, mostly what I’ve been able to do has been providing high-level support to whatever businesses that I’ve helped, you know, organize, or run, and that can take many different forms. Sometimes it’s legal, accounting, or regulatory work; sometimes it’s tax work. Sometimes it is deal work on M&A deals or selling companies or buying companies or going through bankruptcies as I did at iHeart Media. You know, very, very different kinds of things inside the accounting and finance realm. And so, I think what I’ve been most successful at in terms of adaptability is not just the green-eyed shade accountant or the finance person, but I look at these roles as requiring you to be an athlete and knowledgeable. There’s this kind of triangle of operations, technology, and finance, and you have to be knowledgeable in all three of those things and be able to move between those philosophies, and in terms of where you’re going to spend your time. So I believe that every job I’ve had, and even every major situation I’ve dealt with in my career, has required a slightly different set of tools in my tool belt.

And so, What I’ve learned, aside from anything you know specifically, is that having a diverse set of tools is essential. As a result, you can meet the challenge no matter what it is or where it is.

Yeah, that’s interesting and sort of leads into another question I want to get to in a moment, but since you’ve been very involved with finance for most of your career, you can’t afford to make major mistakes, unlike in marketing, for example, which often involves experimenting to see which version works.

So, could you tell us about a major business blunder, either your own or one you’ve heard about in international business and what lessons our audience should learn from it.

Yeah, it’s interesting. You know, one of the things that I saw at Goldman was that Goldman had a very interesting way of looking at the world and every time something would go wrong somewhere, they were generally the group that would come in and buy it on the cheap.

And I think what I’ve seen a lot of blunders in the world is that the markets sometimes overreact to system shocks or other things. People panic, people get out, and then the well-capitalized people come in and buy low, and they’re able to kind of weather the storm and make a lot of money off other people’s mistakes or their fear in that regard.

I think that even with what’s going on in the Ukraine and Russia right now, regardless of what happens to the ruble today and what happens to the Russian stock market once it opens up again, in ten or 20 years from now, or even five years from now, or a year from now, there will be some sort of recovery, right?

And so, I think asset prices move, and I think sometimes people panic. You can see the same thing in 2008, you know, with the global crisis. You know, I was at West LB at the time. We were doing a lot of securitization vehicles, even though a lot of these gigantic securitization vehicles were mortgage-backed. The world collapsed primarily due to fear, as did the majority of the mortgages you are familiar with. They paid off a lot better than most of these vehicles, and they paid them off a lot better than anybody ever expected them to but I always thought about this. If your car is worth $40,000., that might be great, but what if you had to sell in the next five minutes? Well then, it’s not worth $40,000, unless you happen to be at a car auction.

But asset prices and the way people behave, there’s generally a lot of panics and when they’re stressed in the system, you get a lot of really disconnected outcomes and so I’ve seen both the good and the bad of those sorts of things. Even when I was at Goldman, now and then there would be some sort of catastrophic trading loss of 50 or $100 million here or there, which seems like not a lot of money today, but back in the late 90s, it could have been. Generally, somebody would get boxed in with a position and everybody on the street knew they had it and then let them trade out of it.

And so when you see those kinds of things, I think they’re really interesting, but ultimately, patience wins the day in a lot of cases, and most of the time, you can recover.

Unless there’s been some sort of structural change in a business, I mean it’s not profitable to make asbestos anymore, right, but but sometimes these up and down shocks, create some really interesting behavior, some good, some bad.

Yeah, it’s very true. And as you said, the 2008 financial crisis was pretty devastating, but the world recovered from it pretty quickly.

Right, you touched on it when you were talking about it previously with me, and we’ve talked about sorts of successes and difficulties in business. What do you think a person needs to learn or to experience to thrive in doing international business?

We’ve already talked about some, but perhaps you can elaborate.

I think some of it has to come down to the company I work for now and when I was at iHeartMedia, those are the most domestically-based businesses. And so, while there are fewer complications, this is one of the things to consider when expanding into international business. Because of this, you have to take some additional things into account. Tax rules are going to be different. You have transfer pricing. Even the way your entities interact with each other. You can do some really interesting things on the tax or transfer pricing front.

You can also make some terrible mistakes in terms of capital allocation and how to get money in and out of countries, and those are the sorts of things that you kind of take for granted. If you’re living, working, and doing business only in the US, it’s much simpler, and I think, aside from the mechanics of all of those pieces, you also have to get into the cultural aspect.

Next, given the fact that it’s easier to do business as an American than in some countries, it’s much more difficult to do business in other countries. Also, depending on what sort of business you’re doing and whether you’re transacting with somebody in another country or whether you’re setting up operations inside another country, there’s a lot of things to think about, and I’ve done everything from, you know, having subsidiaries in various European, Asian, and South American countries, as well as setting up IPO operations or offshore operations in India, and having done some of those sorts of things as well, and they each present their own challenges and you have to be open-minded and a student of tax law, culture and everything across the board to make sure you are well equipped for might come.

Yeah, and you were mentioning quite a lot of cultural issues since you’ve done business in 150 countries. Of course, the tax laws and the financial rules and so forth are pretty fixed with the country. But where people can get in trouble, of course, is primarily on cultural issues. Can you give us some examples of how cultural difficulty might have jeopardized or doomed a venture that you were working on? Or, if not one of yours, perhaps one that you’ve heard of?

Yeah, I know that you know, doing a lot of work around when I was at Goldman, I spent a lot of time with our Asian businesses and, spending some time in Asia and spending quite a bit of time on not video chats back then, it was always conference calls in the middle of the night, but I was really trying to move the ball forward on a lot of things because I was there at Goldman during the IPO process, and so I was trying to change the way the business operated partially as part of the IPO process.

Even trying to make changes and deal with certain things as an American and a young American, I was in my 20s at the time as well, and so I did not have the right level of maturity in some cases or the experience of understanding Asian culture. There were times when I was a little bit of a bull in the china shop, so to speak. and really kind of rubbed some people the wrong way. And had it not been for, I think a couple of people in our agent offices that were either American or European or even Asian people that had spent a lot of time in the States, to pull me aside and say, “Listen, we know that you’re trying to implement some new technology, implement some new infrastructure, get people to buy in. And there’s a way to do that here and you’re not doing it properly,” right, and so kind of having that counsel from super helpful people. So, it’s one of those things where you’re never really trying to be disrespectful, but sometimes if you don’t understand what’s respectful and disrespectful in somebody else’s culture you can stub your toe, and then put yourself in a spot unintentionally, but it’s really important to understand.

You mentioned that a lot of your experience was when you were younger, and you know you encountered these difficulties in India as well, but in all of Asia, especially in Asia, seniority is valued and youth is sort of devalued, and that’s both in the languages as well as in the culture.

There’s very high respect for older people, and you know you have to defer to them even if they’re wrong. Did you encounter any of those difficulties specifically, and how did you adjust to them?

I could sense that part of the issue, especially in my early time in Asia, was partially due to my age, where I was kind of a brash American, but it’s a young brash American, and I didn’t probably have the capital or the personal capital to kind of get through when I needed to get done. I do know that as my career went on and I became more senior, I know we did some business in India when I was with Warner Music Group.

Given that I had probably started getting a gray hair or two in those days, going over there as a senior executive versus a junior executive, you get treated very, very, very differently, right? So, with the understanding that if I was Warner Music’s senior vice president and controller, I’m an important person. And so walking around there, site visits and other things dealing with some of our business process outsourcing. We had done that out there, and it was a very, very different feeling coming from that, having a little bit of that seniority in that capital. I guess, for lack of a better term, it certainly does change the game, and so part of what you have to be is self-aware to understand when you have that power or that cachet, or when you don’t, and understand the dynamics of all the things you’re trying to get through, I think. I think I will look at it in a way of love. It’s like game theory to some extent, right, because in every culture, every business situation, there’s a set of rules and then there’s this desired outcome.

So in some ways, you’re playing a game and you need to make sure you understand the rules of the game that you’re in, and so you make sure that you achieve the desired outcome, and that can be very, very different depending on which group of people will know what situation you’re dealing with, and I think you have to be cognizant of that. You can’t be like the proverbial construction worker or everything is a nail and you’re the hammer, right? It’s like it can’t be that it’s not that simple. You have to make sure that you have some nuances and understand the situation. That you’re in for sure.

Now there’s an expression in various Asian languages, the equivalent of “basically the nail that sticks up gets hammered down,” which means more conforming, of course, but to build upon what you said, you called yourself a young, brash American. Was it hard to get people to buy into the changes you needed to make or wanted to make?

Well, that was trying to find the right people locally, and then, in most larger companies, you’re going to have some people no matter where you are in the world that have gone to school in America or Europe or whatever, or somebody that can kind of help you through the cultural or the language barriers, and I think, sometimes, being able to go out, in Tokyo and eat sushi in and kind of show that you want to…

Blend in?

Blend in or even just participate in their culture to show that you respect their culture, because you don’t want to go to, hey, let’s go to Japan and go to a steakhouse, right? It’s like  when I go to India, I eat Indian food. When I go, I try to go local because I think it’s important. I think it’s respectful. And I think you get it, and they appreciate it, right? When you’re trying to show that you respect them and you’re not just there for business, but that you want to be there in a larger sense, and I think that it’s been helpful, yeah.

That sounds great. You’re right. I have experienced that myself. What would you tell your past self if you had the chance to give your past self some current advice?

I would say that if you have an opportunity to take a rotation where you can work overseas for an extended period, I know that that doesn’t work for everybody, but I think that I spent a lot of time overseas. I did some really interesting things, but I think I missed the opportunity to potentially live in London for a year or in Düsseldorf for a year, live in Asia for a year, and I think that you have had those experiences. That would have been valuable for me from a business perspective. I believe that the more you know about the world, the better off you are. 

I know that when my kids were in middle and high school, I sent them on several different international three-week trips here and there, because I just think that understanding the world as it is and not as you might think it might be, I think is important because I just think that the world, given technology, continues to get smaller and smaller, but yet, people, on a day-to-day basis, you can think that you know people, but until you really kind of spend time in places and eat in their restaurants, and talk to people and kind of understand who people are, you don’t fundamentally understand them.

And I think sometimes we live in this Twitter world where everything is 140 characters or whatever else, and you know that everything is snippets, and I think you miss out if you don’t spend that time to really kind of understand and a little bit more broadly and deeply, I think you miss out on some of that. And I think that’s where you get some of that great enrichment because I think some of the time I did spend overseas I valued.

Yeah, you mentioned Twitter and so forth. You know, the United States is an instant culture: instant fast food, instant answers to everything. And an e-mail message or an ad has to be, has to resonate within 3 seconds and so forth, and what I think you’re also alluding to or referring to is that in most parts of the world, relationships are key.

And building those relationships, and one does it over meals and over just ongoing conversations and very often, well, in many cases, you can’t do business until people trust you, and they can’t, they don’t trust you until you have developed that relationship.

So, Americans tend to just … you used the word brash. It’s wonderful. Americans tend to just rush in and say hello, how are you? My name is this… Which of our products do you want? Which of our products are you most interested in? And that’s not the way it works.

Yeah, I thought that came through a lot when I worked at WestLB, which was, you know, one of the longest German banks that had a US branch, and so, working for the US branch and being CFO of the US broker-dealer, we had a business that we were responsible to report into Dusseldorf, and I spent a lot of time in Dusseldorf and being in a company that was based in Dusseldorf.

Being headquartered in Germany is very, very different than being a company that’s headquartered in New York that has an office in Germany. Those two offices will act very differently. And I know that New Yorkers are frequently frustrated by the speed with which decisions are made or made in Germany. But yeah, the Germans have generally been a lot more thoughtful and deliberate about the way they do things and also a lot more conservative, quite frankly. 

And in terms of gaining some respect, I believe you may have studied German at some point in your life as well. I think I read in your background that I’d studied German for six years or so, and although I’m not an expert at it by any means, I remember sitting in offices in Düsseldorf with people talking over me because they figured I couldn’t understand them.

And now and then I would raise my hand and say something like, “I can’t, I can’t engage in this conversation in German, because my German is not so good, but I think like, but I can’t. I know what you know. I know what you’re talking about, and you probably shouldn’t. And so, sometimes those language things can be a little bit funny.

But I think the fact that I even understood what they were saying gave them a little bit of a break. They respected that to some extent because I kind of chimed in and It’s like, OK, this guy understands German, so he’s not, he’s not a complete Neanderthal, right?

That’s wonderful. I guess there’s also the experience of when you’re in another country and the locals assume you don’t know the language and you’re in an elevator and they talk about you. You know that Americans wear such funny clothes or, you know, and say something negative, and you can then pop it into the language’s saying, “Oh, thank you very much for that delightful compliment” or whatever it is.

Yes, yes, exactly.

I’m curious if there are any countries where you’ve worked that seem to be more difficult than others.

I believe from my experience, Japan was particularly difficult. Just mostly cultural and you know, just trying to kind of get things done at the speed that you want to get them done and having to kind of navigate around, especially on the banking side of things, they just behaved very, very differently and so that I think was difficult for me. 

And in Germany, you know, I thought it was pretty difficult to kind of maneuver with a German parent company, whereas when I was doing other business in Germany where I was working for an American parent, it was not that difficult to do business in Germany. What I learned through that process is that I don’t think I ever want to work in the US for a foreign-headquartered company. If you want to work in Europe, you’d want to work for a US-based company just because the dynamics are a little bit different. It’s like a different set of math that you have to deal with on a day-to-day basis. And so, I think sometimes it’s the country and sometimes it’s this actual business circumstance. That you’re there, and what you’re there to do. 

And so, I think that you can’t kind of pigeonhole or stereotype any particular country as being a certain way because, depending on what you’re trying to do there and whom you’re trying to do it with, you have a very, very distinct set of behaviors that are there and that you need to kind of exhibit to be able to get things done. And so, I think it’s really about being able to read the room and understand where you are, what you’re trying to accomplish, and with whom you’re attempting to accomplish it for me in any situation.

 I think that, in some regards, it’s like doing business in New York City versus doing business in Memphis, right? It’s like, I know we say this is one country, but this isn’t one country either. It’s like a whole bunch of little countries. They’re all part of America. So, I believe that that translates to a variety of situations. I think you just have to be open and understanding and understand the circumstances or where you’re in it to maximize whatever you’re doing.

Very true, very true. Now before we close, is there anything further you’d like to share with us? Or perhaps tell us a bit about life outside of work. What else do you like to do?

Well, I did a couple of things. I think I would say one is that the interesting thing about the world is that, we as a US-centric people believe that the best ideas come from the United States, but I believe that even when I was in the music business, the world was trying to build the best streaming platform, and the Swedish with Daniel Ek and Spotify crushed everyone, right? And I don’t think most Americans realize that Spotify is a Silicon Valley company that was born in Europe, and I think you can understand why I think that there are a lot of great companies and great businesses that come from all over, and I think that for me, it’s really interesting and enriching to have been a part of a lot of the things that I’ve seen over the years.

But I think what you know when you look at the outside part of your life is that you want your work life to be as interesting and fulfilling as possible. But at the end of the day, for most people, we’re doing what we do to make money. To do the other things in our life that we want to do, hopefully, if we’ve got that balance right. And so, you know, I have two young adult children, I spend a lot of time on You know, going to sporting events or concerts, being absent from COVID issues or whatever.

A lot of travel, and a lot of golf, spending my life trying to use it. You know, the things that I’ve been able to do well in business to enhance the personal lives of others, you know, my wife, my family, my kids, and so we can all enjoy all the great things that the world has to offer.

And I believe that having traveled extensively and having had my children, wife, and everyone else travels extensively teach me, we feel that we’re kind of outdoor cats, right, you know, and we’re not, we’re not homebodies. We want to get out and experience the world, and I think that that’s one of the things that you know, coming from where I came from, seeing all the countries I’ve been to, all the trips and travels, and everything else that I’ve done, I never imagined as a child that that’s what my life would be like.

And I think the ability to kind of get into big companies and do international travel and international business changed the way I saw the world, and I can then hand that down to my children as well. And I think that they’re more well-rounded and better off because of that as well. And so, for me, I always tell people to take advantage of the opportunities that they can, because as great as America is and I love it here, I just think it’s interesting to see how the rest of the world lives. And I think that there’s a lot that we can all learn from each other.

Yeah, very, very true. Well, thank you so much for your incredible insights. You’ve certainly covered a huge gamut of issues dealing with international business and culture and different methods and so forth. And it’s delightful to hear from and be with someone who has such a broad background and broad experience.

So, this has been an interview with John Peterson, and I’m Philip Auerbach. Please return next week for another installment of Global Gurus and their stories about international business.

Thanks for having me, Phillip.

Thank you.

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