Archive for the ‘Entrepreneurship’ Category

Is Entrepreneurship The New Degree?

June 5, 2012

I saw this clip of Alan Patricof and started wondering how the increase in entrepreneurship will influence the job market and hiring in the future. Historically… well a century ago… building a business was the norm for most people to earn a living. Granted the businesses were different, but earning a living was a family affair or that of a small group of people building a small company (a blacksmith for example). That isn’t to say that higher education didn’t exist, it just wasn’t the norm for most people. It wasn’t really required as anyone could build a great business and those that built great businesses were known as good people to work with. People learned from their most infuential failures and carefully refined their business models based on learning from these failures.

http://plus.cnbc.com/rssvideosearch/action/player/id/3000076777/code/cnbcplayershare

I wondered as Alan talked about all of the incubators and the startup fever that has taken over the nation (for the second time in 20 years) if entrepreneurship was more valuable than a degree. As a father and someone who believes that higher education is beneficial, I struggle with this thought. I know I would be proud of my boys if they built successful or failed startups, but would they do this instead of obtaining a degree?

What do you think?

Reducing Payroll Costs Closer to Home

April 25, 2009

I have been slowly following a series of cost reductions that seem to touch a lot of people I know (yes myself included). We have all heard the stories on the news about automotive workers, home builders, and financial industry types losing jobs and not having anywhere to go. These seem so distant though (despite my brother-in-law being laid off from GM and my sister-in-law, his wife, being laid off from Expedia). Yeah there are some home builders here putting people out of work, there was WaMu, there is Russell. We don’t have much in the way of auto workers around here though. We’ve got a fair amount of airplane and boat makers instead that seem to be less impacted. We clearly aren’t as bad off as other areas hit harder by the declines in these sectors.  Michigan has the highest unemployment rate at 12.6%, which is drastically different than Seattle’s unemployment rate of 8.7% (ranking it 191st on the list of major metropolitan areas). So what are the entities around here doing to reduce their costs if they aren’t closing up shop or laying off people? Surely the value of goods here in Seattle can’t be higher than the value of the goods elsewhere.

Organizations around here do seem to be reducing their costs. My friend Nathan has some great advice on reducing costs of running your business and the importance of cash flow. Other organizations out there (companies, nonprofits, government agencies) are all showing an interest in preserving cash too. Besides the great ideas for reducing operating costs that Nathan has, there are the payroll costs that usually take up a bulk of the costs. Obviously the fastest method to reduce the cost on people was to get rid of the dead weight these organizations were  carrying around for unnessessary projects or simply in an inneffective workforce. These are the numbers that we track on a grand scale. This is also what we hear the most of… “My friend lost their job”. The Bureau of Labor Statistics (BLS) is the agency that tracks these numbers. Their report for Washington State has things like, construction jobs being down 12.4%, Education and Health Services, Other Services, and Government as having an increase in jobs (1.3%, .3%, & 1.2% respectively), and a total of only a 4% drop in the last twelve months…

What do all these rises and drops in wages mean to the value of the goods we are buying and selling? Looking further at the data, the rise in the average hourly wage at a national level is roughly $5 over the last 10 years, that’s $.50/year. With an average hourly wage of $13.27 in January of 1999 and $18.43 in January of 2009. This doesn’t even include the rest of the real cost of hiring employees. Clearly we as employees cost more money these days (even if the output we are making is worth less due to decreased demand). The result? A paycut…. Of course!

The average paycut seems to be 5-10% (reflecting that on the hourly wages, 5% of $18.43, puts us back at the hourly wages of August 2007 – 10% puts back to the hourly wages of March 2006). With these kinds of cuts should we be looking to value our assets at these levels? The stock Market is much lower than the ’06 levels, the current value of the Dow is at 1998 levels. Should we be looking at wages from these levels? I sure hope not, that’s more of a 25% paycut…

So if we aren’t going to lay off a bunch of people, but we need to make our companies operate at the levels of 2006 and 2007, and perhaps even 1998. There needs to be methods for doing so, paycuts, benefit reductions, and furloughs seem to be popular choices. A few that I have heard about recently are summarized below. What about you? Are you an employee or a business owner? Are you part of a cost reduction? If you are an entrepreneur – are you paying yourself less?

Some non-layoff measures I’ve heard of lately (local and not so local):

Paycuts:

EMC Corporation – 5% accross the board for 2009, perhaps re-instated in 2010, then again maybe not. Executive staff took a previous paycut.

Siemens Business Services – Managers & directors took a paycut

Denali Advanced Integration – 5-20% paycut depending on level and margin contribution. Raises and bonuses frozen.

Microsoft – lowering the amount they are paying vendors by 10%, removing cost of living adjustments this year.

401(k) reductions:

EMC Corporation – no 401k matching

Chase (wamu) – no 401k matching

Furloughs:

Siemens Business Services – 5 days mandatory

USBank – US Bank’s furloughs were voluntary.

King County – 10 mandatory days (everyone takes them at the same time), Cost of Living Adjustments still happening (so more base pay, plus a few days off w/o pay)

Planned Parenthood – 5  mandatory days (take them at your convenience)

Add more in the comments or email and I’ll add them to the list…

Twitter will be replaced

March 23, 2009

Yeah, yeah, I know everyone is talking about how sexy twitter is getting. It’s the place to be right now. If you aren’t on twitter – then you need to get with the program….

blah, blah, blah

My mom is on twitter, my wife is on twitter, my company is on twitter, mostly everyone I know is on twitter. This is all good for twitter, it makes twitter useful. In fact, it has inspired twitter to go look at selling, make some improvements, and look at making money again. Have a look at Read Write Web’s latest post regarding the proliferation of twitter. This thing is definitely going mainstream (hint: if you are mainstream – go create an account)!!

A couple years ago, we were at the same cross roads with blogs and blogging. We may be a little earlier in the cycle with twitter, but I would also pose that our culture is more accepting of these tools, so it’s still the right time to make the prediction. When we were at this cross roads last time, I wrote a nice little prediction blog post. Dated December 18th, 2006 – My 2007 Prediction: Blogs Will Be Replaced garnered a bunch of people telling me I was wrong, telling me that blogs were growing in proliferation and would be the ultimate supremacy for brand management, community interaction, etc. Yes – blogs didn’t disapear. Yes – blogs are great community interaction tools. Yes – Dave Winer is still blogging (despite his promise). Yes – the concept of blogging is great for news reporting, signaling, and information disimenation….

But Blogs were replaced – they were replaced by twitter and to some degree facebook. As marketing departments took over blogs and corporate employees (such as Microsoft PMs) began getting blog posts added to their annual and quarterly goals, the early adopters, the people who made blogging popular, the crowd that tested, evangelized, and vetted the technology moved on. Sure the bloggers still blog a bit (I still blog at this blog) – but along with everyone else (including Dave Winer), I spend a lot more time on twitter – twitter has replaced my excitement for blogging the same as it has for most bloggers who started earlier in this decade with the new cool thing called blogging.

So the question is – what will replacae twitter? Like my earlier blog post about blogging being replaced, I don’t know the answer. I do know that an opportunity exists for a few entrepreneurs. There is the space of helping people get onto twitter (some entrepreneurial consultants have started this already – but there is room for more). There is also the space of creating the next thing for all of us early adopters of social/community interactive/writing/commenting tools to use.

We need to go somewhere – our current tool has been taken over by the mainstream and thus will be replaced.

The Seattle 2.0 Awards: Recognizing the Best from Seattle

March 10, 2009

I was recently contacted by Seattle 2.0 to be a judge for a new award activity. I was intruiged by the idea and quickly signed up. Of course I was asked to post about the event and help spread the word (the word is below)…

Before I get there, I wanted to comment on the interesting observation about all of these tech awards and demo events that are getting more and more popular in the tech community. It is obvious that they all are introspective and exclusive to the tech community. It is less obvious that this lack of publicity is a contributing factor to a decline in enginuity from US born/raised citizens.

Everywhere we look these days we see studies of US engineering capabilities declining, US business enginuity declining, modern innovation from the US declining, and all of the people with extra money dumping some of that money into the school system to prevent these declines. In fact a story today about the gates foundation putting in another $7.2M into the Seattle School system. Amazing that we can continue to dump money into our school systems as well as start trying things like standardized testing and charter schools etc – yet we still turn around and spend the real money the billions per year congratulating actors, singers, etc on their acheivements for capturing the largest audience with their art. This with no thought in mind that the amount of money spent and the audience captured for these ceremonies is what inspires teenagers to drop out of school to join a band, throw up a YouTube video and strike it rich. The message is that we value entertainers and artists far more than ethical business people and truly innovative creations (no wonder when we grow up and try business after a failed garage band we resort to creative accounting & lending – creativity makes money).

I am not saying that art and entertainment is not valuable. I certainly appreciate art, listen to music, and watch movies!! I am saying that national and global awards seem to be missing the attention to things like the Nobel Prize – um where is the red carpet, prime time show for those awards – the Pulitzer Prize – do your kids even know what this prize is for – or even more local events that pay tribute to the amazing startup technologists or product designer. Ok, maybe the Seattle 2.0 awards aren’t a replacement for the Nobel Prize or the Emmy’s – but it’s recognition like this – recognition of true acheivement that our younger generation is lacking. There is no reason to pursue great acheivement from a young age, no public role models, no cultural norm of appreciation for acheivers. Yet our schools continue to try and give our kids the tools for great acheivement. These kids aren’t in acting classes, they aren’t in batting practice, they aren’t in singing class – they are in classes to learn math, science, etc – so why don’t we at least give them a few roads to use these tools.

Yes, it is hard to force someone down a road with those tools, but showing them where the roads are is THE biggest step in the right direction. So why don’t you show your kids the roads they could travel with the tools they are learning in school, why don’t you let them make heros out of smart people with ambition, why not take the time to bring your kids to an award ceremony where hard work is recognized. Show them that acheivement at innovation and passionate pursuit is valuable….

Why not take them to the Seattle 2.0 award ceremony this year?

Re-posted from the Seattle 2.0 blog:

Startup life is hard. Startup life during a down economy is harder.  Entrepreneurs don’t found, join, invest in, or work with a startup to make their lives easier. They do it to make meaning. They do it to change the world. They do it to fulfill an inexplicable desire to make things better, faster, smarter and easier.

    Today, I am proud to announce the first annual Seattle 2.0 Awards – a series of awards to recognize the people and companies who make the Seattle startup community happen.
 
    We have a great website to the awards, and you can start nominating your favorite individuals and companies as of today for the next 2 weeks. After that, a panel of 30 of the most influential CEOs, founders, investors, service providers, journalists and bloggers in Seattle will select the top 3 on each category. Then we’ll open for public voting until late April.
 
    Join us as Seattle 2.0 hosts the awards ceremony at Pacific Science Center on the evening of May 7 with food, drinks, and a chance to spend time with the people you care about in the startup community.  There will be a startup showcase and master of ceremonies, Renay San Miguel (King 5/NWCN), will be announcing the winners in each category.
 
    As always, we are very open to ideas and feedback on how to make this award prestigious, the event pleasurable and the overall idea a success so that we can keep honoring the best of the best every year.  Registration for the event will open shortly.
 
    A special thanks to our early sponsors: Kismet Communications, Fenwick & West and Sampa, and our media partner Mashable.

Startups, small businesses, and definitions – oh my

December 1, 2008

I was recently commenting on a nPost’s blog about What Defines a Startup and ran out of room for an effective comment so wanted to expand on it here.

 
First let me re-cap the basics of nPost’s blog entry…

 
Nathan poses the question, what defines a startup and offers a few thoughts about what might define a startup. Things like:

  1. Having been around for less than 5 years?
  2. The number of employees it has?  If so, how many would that be?
  3. Whether they are bootstrapped, a sidestartup or funded?
  4. Their growth rate?  If so, how quickly do they need to be growing? 10% a year? 500% a year?
  5. A scalable business?  Can a lifestyle company be defined as a startup?
  6. A product company?  How about a professional services firm, are they a startup?
  7. Simply “I know one when I see one!”

A good discussion follows in the comments about these seven suggestions and a number of additional suggestions that are along the same line. Eric Koester has a similar post on his blog, My High Tech Startup. More opinions about how much money a company has, how long the company has been around, or how it is funded as effective measures of startups.

I pose that none of these general properties of a business define a startup. Properties like amount of cash, where the cash came from, how many employees, what the growth rate is, what the potential total market share is, etc are all properties that any kind of business can have. Whether it is a services business, a retail business, or a manufacturing business, a multi-national conglomerate, a national chain, or… a startup, any company can have any combination of these properties.

If we look past the generic properties of the business and into the core we can easily recognize a startup. If we look at the core of a business we see two basic things:

  1. What a company has to offer (product, service, etc)
  2. How a company will make money with that offering

When we look at traditional businesses – consulting firms, web design firms, data center hosting firms, coffee shops, etc, etc. What comes to mind is a well known offering and a well known way the company plans to make money with those offerings. These types of companies can meet nearly all of the generic properties listed above, it just depends on how it’s being run, what the goals of management are, etc.
Any type of business owner can build these traditional companies; they can be built as business lines for well-established companies, as new ventures (locally or worldwide), as lifestyle businesses, or be as any other kind of new business scenario. The fact that they are a traditional company does not necessarily make them less fun, less interesting, or in some way less cool, or as Eric puts it – less sexy. That is all up to management.

 
If we look at a startup though, we see something different. We see a company that has something different from the traditional companies above. These different companies, these startups have been around for a long time; however, they only seem to be abundant during large societal advances (such as the industrial revolution, the internet revolution, etc). The properties of the startups that we relate to (high risk, high reward, generally VC funded, generally small teams, generally dynamic in nature) are all a byproduct of the fact that the business the startup is in, is bringing something new to the world. Bringing a new product to the world and offering it in a way that will make them money in a new way. This is hard to do with a business that has properties different than those we generally associate with a startups (most banks won’t give loans to unproven ideas, large teams make the flexibility hard, etc).

It doesn’t matter if that new product is new to the world, new to a segment, so long as it is new. If it is a net new product on the market (not a new shoe design, but a new product) AND is being produced to make the creating company money in a new way, then the company definitively falls into the category of startup.
For tech companies, the examples are easy to dig up…

 
Web 1.0 companies like; homegrocer.com, pets.com, and eToys all fall into this category – new product (offering groceries, pets, and toys for sale online) – new business model (no store front, just a web front w/inventories managed in various ways). Yes I know pets.com didn’t sell pets, but maybe they should have.

 

Of course, these companies failed, they didn’t quite get the right mix of product and business model (which is another property we associate with startups – high failure rate). There are others that did get the mix right – amazon.com for one, was able to stay flexible and fluid until it could find a way to make this online sales thing work with a business model that made money. Others like paypal and ebay all found the right mix of product offering and business model that worked. These were all startups and are now in established markets with products and business models that aren’t new, so they are no longer a startup.

 
Fast forward to 2008, companies like Amazon are continuing to build startups within their existing companies; Amazon Web Services is definitely a startup – new product offering, new business model. Facebook is definitely a startup – new product offering, new business model – time will tell if it will truly be successful, but it’s definitely a startup. There are lots of other startups around with new products, new business models. More are cropping up in clean tech, bio tech, and continuing to pop up in other areas as well. Look at the iPod and the online music store – incremental innovation over the walkman (new product) and a new way to buy music (new business model)… voila – another startup within an existing company.

 
On the other hand there are lots of companies that are high tech companies that are not startups. There are lots of young companies that have products or business models that are well known and at least moderately understood. They are simply trying to execute better or with different goals than other companies who have done it before. Some of these companies are even in funky spaces, have long working hours, and the look and feel of a startup (VC funded or bootstrapped, under 20 employees, work out of a loft in pioneer square, etc); however, they are building a business that has been built before – which means – not a startup. A small business, a high growth company, call them something else (something other than a startup).

 
If you are looking for a good measure to evaluate your status of startup against, take a look at the case studies at the major B-Schools, take a look at the existing companies that are out there, take a look at your competitors, and take a look at what business models and products are the hot topic these days. If you fall into one of these categories – if your product and business fall into an existing group – you are not a startup. On the other hand, if you are innovating with your products and your business model, well – welcome to the club!!

 
I’m sure there are lots of other opinions about this, Wikipedia has some random definitions that I think need updating as I’m sure all of you do.