When she joined Ventas in 1999, Debra Cafaro found herself at the head of a business on the verge of financial collapse. Just 10 years later, the company was named the most successful publicly traded company in the first decade of the new millennium. In the past 19 years, she oversaw and implemented a strategy that brought the company’s market capitalisation from $200 million to over $24 billion.
Unlike many more famous CEOs and major business leaders, Cafaro didn’t rely on some major disruptive insight, or a particular revolutionary product to drive her success. Rather, she built Ventas’ stunning success through her astute leadership skills and the management of Ventas’ consistent, unstoppable growth.
Saving Ventas
In 1999, Cafaro was brought on as the new CEO of Ventas specifically to rescue the company from impending collapse. The business she found herself leading was drowning in debt, and facing a whistleblower scandal over Medicare fraud. For a company that was heavily reliant on Medicare payments for much of its revenue, this turned out to be particularly problematic. Cafaro, however, was not deterred. In her first few years, she restructured the business’ debt, settled the whistleblower suit with the US Department of Justice, and lead a restructuring effort designed to put Ventas’ bankrupt primary tenant, Vencor, back on its feet.
In 2002, Ventas initiated its new growth strategy and began to expand. Over the next several years, the company acquired a number of competitors of various sizes, consolidating the healthcare real estate industry significantly. By 2007, Cafaro had grown the company’s assets to over 500 properties. Just four years later that number would grow to 1400, and by 2014 Ventas began to expand into the UK market.
Cafaro’s secret to long term success
Since 2000, and now going for over 18 years, Ventas has consistently maintained an annual growth rate above 27 per cent. This rapid and consistent growth has made the company a safe and lucrative business to invest in, providing incredibly steady returns to shareholders. That investor confidence, in turn, has kept the business well-funded, strong, and able to continue its growth.
In reference to this steady growth, Cafaro stresses the importance of preventing the business from “blowing up.” Most entrepreneurs work toward and hope for their business’ major disruptive event, where they break into public consciousness and balloon into a giant like Google, Uber, or Airbnb did in the 2000s. It’s worth noting, however, that Ventas was named the most successful publicly traded company of the same decade that gave us the majority of these world famous Silicon Valley startup giants that many entrepreneurs strive to emulate.
By pursuing steady growth over rapid disruption and global dominance, Cafaro has been able to create immense shareholder value for decades, with no signs of slowing. What this means is that Ventas can provide something that startups so often can’t offer investors: reliability.
As a result, Cafaro has been widely recognised as one of the world’s top businesspeople. Among many other awards and recognitions, she has been ranked among the top 50 CEOs in the world for 3 years in a row by Harvard Business Review, named as one of the World’s Top 100 Most Powerful Women by Forbes, and one of the Top 50 Women in Business by the Financial Times.
What SMEs can learn
Every small business owner wants to make it big. Growth, ideally disruptive growth, is the most common goal. Debra Cafaro shows us that this isn’t always the best way, and that it can be just as important to control that growth as it is to plan and drive it in the first place.
The angel investors that often fund the launch of major explosive startups stand to benefit very greatly from sudden and massive growth. This tends to work very well for a few years, but causes problems in the longer term. After all, the larger a business is, the more it needs to grow to maintain its proportional annual growth. Eventually, it simply runs out of room, where even modest proportional growth would require creating more value than some national economies. At this point, investors have more to gain by backing smaller businesses whose growth phase is ahead of them. Cafaro’s approach, on the other hand, has promised steady future returns for new investors at every stage.
There are many great business leaders for business owners to emulate, but Cafaro offers us a unique insight in this respect. Her focus on serving shareholders reliably in the long term elevated Ventas from near-collapse, and has served to underpin the business’ financial security ever since.
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