Planning, Startups, Stories

The Emperor's New Social Venture?

Very interesting post last week from Steve King, in Small Business Labs. He's looking at Ethos, Starbucks' branded water linked to investing in clean water where it's needed in so many places in the world. Here's the kicker, but don't settle for this little excerpt, read the post: 

As I sat in Starbucks, I realized my issue with Ethos is they may be doing too well financially relative to the good they are doing.  They also may be doing too well relative to their positioning.  Ethos positions itself as a mission-based social service organization, and their website makes them look like a non-profit.  I have a hard time reconciling this positioning with their pricing and my back of the napkin calculations of their profitability.

I give Steve a lot of credit for looking behind the curtain. So often there are questions we fail to ask.

Are you Just Putting Out Fires?

Ask a room full of people how many of them use to-do lists regularly. Then ask those who do how many of them actually complete everything on the list. Almost nobody does. So you have to do the right things.

Urgent and important are different concepts. You have to deal with urgent things, but don't let them drown the important things.

I've been outside USA for a couple of weeks now, and even outside Internet range for a bit, so I missed Managing Urgencies from Seth Godin, about planning vs. putting out fires. This is really excellent:

Add up enough urgencies and you don't get a fire, you get a career. A career putting out fires never leads to the goal you had in mind all along.

I guess the trick is to make the long-term items even more urgent than today's emergencies. Break them into steps and give them deadlines. Measure your people on what they did today in support of where you need to be next month.

If you work in an urgent-only culture, the only solution is to make the right things urgent.

The lesson: plan.

Pop Quiz: Name This Business

Here is a business formula that (shudder) apparently, or so I was told by somebody I have reason to believe, made a "Fast Freddy" type a lot of money.

1. Establish a website selling digital cameras and related equipment.
2. Advertise major brand name cameras, popular models, at impossibly low prices.
3. Price crawler websites will find those prices and feature that website.
4. Develop bundles with cases and batteries and other add-ons that make the sale profitable, despite the low price of the key item.
5. Make your website not work right when people try to order only the impossibly low-cost item by itself. Make it work fine when they order the item along with higher-margin add-ons.
6. Train telephone answerers to simply hang up on callers trying to order just the impossibly low-price item.
7. Change your business name and website name every three or four months when the bad customer feedback catches up with you.

A few years ago I taught a University of Oregon undergraduate working his way through school doing website programming. He had done most of it for the same business, although the business; legal entity changed every three months.

I met him walking by a couple years later. The "Fast Freddy" had sold his business for several million dollars.

Go West? Are We Looking at a Pacific Future?

I found a fascinating interview with Richard Florida on BNET. He's the author of Who's Your City, about what he calls a "spiky" economy and how that affects different regions. Judging by the interview, I'll be looking forward to reading the book. 

Who's Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life by Richard Florida Read more about this book...

From what I gather (and I apologize, this is without having read the book, just following the links), his idea relates to fundamental economic drivers aligning themselves regionally. I guess the easiest way to see this quickly is the following regional summary:

If you ask me, the “megaregions” that will have the best go in the future — not just out of this recession, but in the long-term — are going to be the Pacific-facing megas. They are the three clusters on North America’s west coast — Cascadia, NorCal, and SoCal — as well as Shanghai and the major Australian metros. The geographic middle of the United States will have no global growth centers, and while New York will remain a global financial center, you generally won’t even see growth in the northeast. I predict a shifting out to the left coast. We’re looking at a Pacific future.

Having grown up in the San Francisco Bay area, and then moved to Eugene OR, I think I've seen in my lifetime how what he's calling NorCal and Cascadia have grown, and have been seemingly quicker to grow. Real estate values seemed, to me at least, to hold up better during recessions. Here is more from that interview:

BNET: Does this trough represent a buying opportunity in one of those regions?
Florida: If I were investing in real estate, I’d buy in the San Francisco Bay Area, in the core or in areas just on the periphery that are cheaper but attractive for weekend homes. There are two parts to that strategy. I think the whole cost of gas issue is overblown. Most people who are creative class workers would prefer cheaper gas, but it’s the time-cost that gets them. No one can afford to spend two hours commuting. So the core will carry a higher and higher premium. 

The second is that the San Francisco region is buoyed by earned wealth like few others. In the Bay Area and Silicon Valley, wages constitute about 80 percent of wealth. Compare that to southern Florida, where only about 20 percent of the wealth is derived from wages. The economy is mostly transferred wealth, whether it’s snowbirds buying condos or capital flight from Latin America. NorCal’s wealth is real wealth. 

BNET: But in the last downturn, when the markets crashed and business spending and investment capital collapsed in 2001, the Bay Area was one of the hardest hit regional economies because of its concentration in tech and telecom.
Florida: And look how it’s come back. It’s just like the Wharton School’s Joseph Gyourko says. He doesn’t say that “superstar cities” like San Jose and San Francisco stay up all the time. His point is that they crash but they come roaring back. I don’t think Phoenix and Las Vegas, which enjoyed so much growth during the recent housing boom, will come roaring back. Places that aren’t on the global grid will just get pummeled.

It makes me wonder how regions have linked to growth in the past. Were the big cities of the U.S. industrial boom -- Detroit as the auto industry grew up, for example, and Pittsburgh with the steel industry -- associated with growth and creativity a century ago? 

It also makes me wonder how long these trends last. Is the huge difference in real estate between the San Francisco peninsula and Silicon Valley, compared to most of the United States, a factor that slows growth in those expensive areas, or simply a reflection of their relation to the new growth industries of the last generation or so? 

Could there also be a quality of life factor? I believe that in the generation or so after the second world war, California attracted a lot of people for quality of life reasons. My parents, for example, moved to California in 1954, long before there was a Silicon Valley or a high-tech industry there. It was a matter of weather, proximity to outdoor activities, and other factors like those two. I was way too young to know then or remember now, but I wonder if real estate wasn't also cheaper then, compared to the more crowded areas of the East; and if the same factors would play the same today, when economic factors are so much different.

And a final thought, also quoting from the BNET interview:

BNET: What is the main message you’d like people to take away from your book?
Florida: My goal in writing “Who’s Your City” was to force people to think about this: To what degree is place a driver of your standard of living? Real people don’t think about this at all. Real people think about, “I gotta get a job, I want to find a boyfriend or girlfriend.”

And, finally, here's where this started: 

Who's Your City: How Creative-Class Cities Will Beat the Recession on BNET

The Satellite Dish Effect

Marrakesh, Morocco. I was there last week. Very much a different world from what I'm used to. I don't think I was there long enough or in a context to make many valid observations, but I do want to share this detail: I saw satellite dishes and television antennae everywhere. That was also in neighborhoods that otherwise looked old and relatively poor.

I mention it because I think there's probably significance to it. How fast the world changes. How much the images from one place are available to all other places. How much people who might seem to be very distant from major media are still able to connect.

Question: is this bringing the world together, or is it a divisive catalyst of change?

Using the Blog Platform for Writing a Book

A week or so ago I finished a complete non-fiction book draft using a password-protected blog as the writing platform. I used my TypePad account, but it could have just as easily been in WordPress. I don't know the other platforms that well.

I'd cite the blog for you and reference it, but it's password protected until the publisher, Entrepreneur Press, decides whether or not we should just open it up. That's a marketing question, theirs to decide, not mine.

The draft is about 80,000 words for The Plan-As-You-Go Business Plan, to be published by Entrepreneur Press and due out next fall.

Why? What were the pros and cons? The draft is done now, so I've been coming back up for air, thinking about it.

1. The major advantage was access to the draft, to read, revise, and write more, from any computer with a network connection. I've been doing a lot of traveling lately, so that was important.
2. I didn't have to keep track of which copy was the latest, going through the hassle of not overwriting my work as I transferred Word *.doc files from one computer to another. The latest was always posted there.
3. I found a way to make the structure work. The book is divided into six sections, each of which has 5-15 chapters. I made sections and chapters categories in the blog. It was easy to move things from classification to classification, as I changed my mind. (I do write following an outline, but as I write, the outline changes.)
4. It was easy to order the appearance of the chapters by managing the dates posted. TypePad gave me the option of having the oldest post appear first, and then the rest in date order from oldest to newest, which was easy to deal with. Between the posting date and the categories, structure was easy to see and manage. Of course you realize you don't actually post in order or deal with real dates posted; you set the date, artificially, with each post.
5. I was able to back up frequently during the process using TypePad's export blog feature. I saved those exports just in case of disaster.
6. I used amazon.com's S3 facility to save the illustrations in one place and refer to them uniformly as I did the draft.

The biggest disadvantage was having to get the whole thing into Microsoft Word, and printed up (the manuscript was 400 pages) to send to the publisher. I had somebody to help with that. It took her two full days of work.

Answering a Complaint: Arguing About Education

Answering a complaint: no I really don't think you need a business degree to start a company. I don't have any hard evidence that people who have degrees are more successful than people who don't -- although I have to admit I'd like to have that evidence. I do have very good evidence that people with degrees are more educated, on average, than those without. An education is good. Maybe it's not a direct line to more money, but it's still good. The opposite of education is ignorance.

The complaint was that I post too much about education. Don't I know, the critic asked, that lots of people start companies and become wildly successful without having degrees?  It seemed angry. There was some name-calling I edited out.

So, when a teenager in email says he's going to inherit a family company "so I don't have to get an education," I wince. I shudder. I answer "please, give yourself a break, get that education while you're young and it's easy, you'll be so glad you did." And I don't apologize for that.

I'd like to think my thread on education has been fairly consistent, and that my posts on the topic show pretty much the same opinions here.

Seriously, don't you agree with me? Do you really think any teenager is better off without more school?

Of course there are special cases. Hardship cases. Can't afford more school, have to work. And I wouldn't want to be insensitive to those exceptions. But the rule is, at least through college, if you have a choice, get the education. You'll be way better off. And not necessarily wealthier or more successful; not necessarily more likely to start and grow a company; just plain better off.

Quote from a bumper sticker: "If you think education is expensive, try ignorance."

I'm not saying you have to. I'm not even sure that you'll end up wealthier if you do, on average (although it would surprise me if that weren't generally true). I'm just saying you're going to be better off.

And I am saying, strongly, that it isn't about money. I hate it when people argue for or against education by comparing what it costs to the income differential it supposedly generates. I object to the line of argument that education pays for itself, because that puts the whole thing on a different level. Some things are good -- health, relationships, integrity, a clear conscience, and education, among them -- whether or not somebody can show that there's a provable monetary value.

I had a cynical older friend, who had the same MBA degree I have, and had it before me, who always referred to it as "a union card." He said it meant nothing except "you get to bill more." He was a good guy, a good friend, and I enjoyed his healthy cynicism. But I also liked what I learned in the classes.  And I've used it a lot since.

So at least I've also practiced what I preach. I studied what I was interested in, what I wanted to learn. I won't run through that here, my bio is there if you want it, but I followed the advice of a wise person who suggested, "choose your major as if you were going to die on the day you graduate." That was almost 40 years ago, and I still think he was right.

I've also remained consistent with that idea when advising my own children. The five of them have five undergrad degrees and two grad degrees among them, none of them in business. They made their own choices, but when they asked me, I always said "business is a trade. Get an education first, a general education, and then, if you want, you can learn  business."

So there. That's my opinion. I might be wrong.

Life Imitates Art Imitating Life

My daughter Megan sent me this link the other day, about parallels between the West Wing Matt Santos character and Barak Obama. Click the link please if you don't see the video

Warning and disclaimer: it's pro Barak Obama. Megan and I watched most of the West Wing shows together, and we were rooting for Santos (although TV elections are nicer than real life, because the other guy, played by Alan Alda, would have made a real good candidate too). I'm not doing politics on this blog as a rule, but this was hard to resist. It's not propaganda or diatribe, just an interesting piece of journalism tracking the similarities back to writers. And it's an interesting twist in the end, towards the point of who is imitating whom. 

   

The Mistake Bank

I was emailed a couple of days ago by John Caddell, of The Mistake Bank, which seems like an interesting idea, and one that everybody can use.

Apparently I'm soon to be a depositor in the mistake bank, because John's email was about getting permission to use one of my "dumb mistake" posts on this blog. Specifically, my post A Stupid Mistake. A True Story, about one of the dumb things I did once. 

I haven't asked John yet whether he noticed that "business mistakes" is one of my categories on this blog. That might be asking for trouble. I don't want to win any competition for most mistakes.

I did, however, decide to join the site. It's a Ning social network, so it was easy to join. And I think mistakes are second only to stories as valuable learning tools, and hey, come to think of it, most mistakes are told in stories.

The Mistake Bankis so brand new that it really lacks critical mass, but I joined and I hope you do. I already know way too much about my own mistakes. I'd like to read about yours.

Entrepreneurship Week at Stanford

One of the highlights of Entrepreneurship Week at Stanford is the documentary on the previous year's Entrepreneurship Week.  If by any chance you can't see the YouTube direct, click here for the link.