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Why Cheering for the Leafs Is … Unnatural
Posted on
Sunday 18 April 2010
In Ottawa, Calgary, Edmonton, Vancouver and Montreal
Back in 2004, I wrote this essay on how a sports team can positively
impact a City’s development. I approached the subject by looking at an
unusual phenomenon: the presence of significant numbers of Toronto Maple
Leaf fans who are resident in other Canadian NHL cities.
Now as the Sens faceoff against the Stanley Cup Champion Pittsburgh
Penguins in Game 3 here in Ottawa tonight, I thought it might be time to
revisit the subject and finally get the essay on this blog. This is
what I wrote then:
Introduction
On the night of October 8th, 1992, Cyril Leeder, Randy Sexton and I
went down to Gate 1 at the Ottawa Civic Centre to greet fans coming to
the first Ottawa Senators game of the modern era. We wanted to shake as
many hands as we could and thank the fans for their steadfast support in
that crazy process: the NHL’s Plan of Sixth Expansion, which had
finally ended with that opening night game, the Sens versus the Montreal
Canadiens and a 5 to 3 Sens win BTW.
It had been a wild five-year Odyssey: Bringing Back the Senators, a
team that hadn’t played in the NHL since 1933. Even on opening day, the
everything-that-can-go-wrong-will-go-wrong nature of the campaign
continued. Rick Anderson, our media and PR guru, was still in Toronto at
3 pm trying to get the Minister of Consumer and Corporate Affairs to
sign our liquor license. Harold Ballard’s mother had told Harold that he
should never permit alcohol to be served at Maple Leaf Gardens and so,
while there was alcohol at CFL football games and MLB baseball games,
hockey games (read MLG) was dry.
We changed that but not until Rick got back to Ottawa and, under
police escort from the airport, got our liquor license posted in the
Civic Centre by 5:25 pm. The gates opened at 5:30 pm. It seemed that
everything about the Bring Back the Senators Campaign required a miracle
to make it happen. How it all came together well, to paraphrase
Shakespeare in Love: “It’s a mystery.”
Back at Gate 1, I noticed that probably a third of the people we were
greeting were wearing their Canadiens jerseys. This wasn’t a surprise:
we already knew that we would have to work hard for a long time to
convert Montreal fans and fans of the other Original Six teams to become
Sens fans. In fact, our plan was to concentrate our efforts on the next
generation of fans rather than trying to convert earlier generations of
hockey fans.
It was a good plan and I must say it has worked extraordinarily well:
those kids who were 8 to 12 in 1992 and are 26 to 30 now are
ticket-buying Sens fanatics by and large. I knew this was going to work
by 1998 when the Principal at my son, Matthew’s Public School had a Sens
Appreciation day and he called to tell me that at the Assembly that
morning, they counted 594 out of 597 students in attendance had some
kind of Sens memorabilia: a hat, a pin, a t-shirt, a jersey, a flag,
whatever.
I asked the Canadien fans that I met on that Opening Night to put
aside their fervor for their favorite team for just one day and cheer
for Ottawa and I must say that most of them good naturedly agreed (at
least to my face).
What prompted me, however, to write this essay was the treatment of
Sens star and Captain Daniel Alfredsson a couple of weeks ago (Thursday
February 5th versus Toronto) when he was booed in his own hometown at
the Corel Centre (now Scotiabank Place) by Leaf fans, many of whom live
here in Ottawa. I thought to myself: “This can’t be right? To boo your
home team, your good-guy captain, in a place where you live, where you
bring up your family, where you earn your living, it’s … unnatural.”
Think about Calder Cup (1995/96) winning Daniel Alfredsson: he’s
played his whole career in Ottawa. He comes from afar (Goteborg, Sweden)
but has always represented our City in a way that can only be described
as exemplary. He is the leading scorer on the team. He plays hard every
night, he doesn’t hold out on existing contracts.
Alfie’s Bobblehead
When Daniel won the Calder as rookie of the year, he said publicly
that he was proud to play for the then sad-sack Senators and that he
would not be the last Senator to win a major NHL award: now that took
guts on a last place (four out of the first five years) team. When the
team was in financial trouble in 2003, did the wheels fall off the bus?
No, they just won the President’s trophy and came within a goal of going
to the Stanley Cup Finals is all. Now that my friends is leadership.
And what was his sin, at least in the eyes of Ottawa-based Leaf fans?
Gosh, that he made fun of Leaf Captain Mats Sundin’s stick throwing
incident. He didn’t throw his stick, just smiled and pretended to. It
was funny for goodness sake. But to Ottawa-based Leaf fans, it was cause
for booing Alfie in his own rink. And that makes me sick.
Reasons Why
Does it bother fans in other Canadian cities: in Calgary, Edmonton,
Vancouver, even Montreal, that their homegrown Leaf fans come out in
such numbers to cheer for the opposition? It must.
Blind Loyalty
So why do they do it? What prompts someone to cheer against their home team? Well, here is my list of why I think they do it:
1. The Stockholm Syndrome
2. The Inferiority Complex
3. Feelings of Inadequacy
4. Money and Power
5. Inability to Learn
In the 1970s, Patricia Hearst was captured in San Francisco by the
Symbionese Liberation Army, a rag tag group of largely ineffective
terrorists. They kept Patti in a cupboard or closet for weeks; they
berated her as a representative of the Running Dog, Imperialist Pig,
Military-Industrial Complex, they semi-starved her, they sleep-deprived
her. And the result? They got her to believe in their cause, they
brainwashed her and she participated in some unsavory things like
robbing banks for them.
Now I am not comparing the Toronto Maple Leafs to the SLA but there
is no doubt that Toronto is by far the most important city in Canada;
every Canadian who wants a loan for their house, their business,
whatever, their application goes through Toronto. Toronto is the real
deal: it is an important centre on a world-wide basis for investment,
finance, manufacturing and much more. It is the only city in Canada that
has real American-style wealth.
But they are also the school yard bully we all remember from our
childhood. And at least some fans in NHL cities outside of TO have come
to identify with them. If someone keeps telling you that they are the
best, some of us are going to believe it.
I know that in 1987 when I was trying to decide what Terrace
Investments Ltd. (the original parent company of the Sens) might do
next, I didn’t have to look very far. I asked myself (this is called
cross-sectional analysis), what does Toronto have that we don’t have?
Some of the answers I came up with included: they have a zoo (I am
not too interested in animals), they have a FEC (a Family Entertainment
Centre, AKA Paramount Canada’s Wonderland, something that is still on my
list for Ottawa BTW) and … they have a NHL team. That was my Eureka
moment: I thought that the NHL might be getting ready for another round
of expansion and that Ottawa might enter into that competition and might
win it too.
So at least for me, the feeling that we were somehow ‘inferior’ to TO
was put to a productive use. But sometimes when people feel ‘inferior’
or ‘inadequate’, they may prefer to identify with the ‘overlords’ rather
than, say, try to make things better for the ‘underlings. It’s
predictable but unnatural, at least in my view.
Money is power; TO has lots of money, American-style money. Just look
at kilometre after kilometre of incredible houses in places like
Oakville and you can get a feel for how much real money and power there
are in Toronto. People are attracted to money and power, no doubt about
that. It wasn’t too long ago that Sports Writers were saying that maybe
the only NHL team in Canada that can survive long term is Toronto’s.
With the recent rise in the C$ plus some changes in ownership and the
NHL’s way of doing business, they don’t (as Howard Dean would say) say
that anymore.
But it is understandable that if your home team is thought to be
about to disappear, you might abandon ship or decide not to climb
aboard.
Lastly, my feeling is that the Sens have done not only a good job at
converting young fans, they have done quite well in converting
Ottawa-based Detroit, Boston, Rangers, Canadien and Chicago (Cyril
Leeder’s favorite team growing up) fans too. But for some reason, it
seems Toronto fans are unrepentant and irredeemable. Now why is that?
I tell my students at Carleton University that what will keep them
young, all their lives, is their ability to learn new things. My
mother-in-law, Cora MacMillan is a good-looking, hip elder that everyone
in her circle of friends looks to for guidance, counsel and assistance.
What makes her so young? Her quest to learn new things; her
understanding that she doesn’t know everything and there is much still
to be learned at any age.
You can be old at 30. Once you say to yourself, “I know everything, no one can teach me anything new” that’s it, you’re old.
Maybe Ottawa-based Leaf fans can’t learn anything new? They certainly are fanatic enough.
In the early days of our team, we claimed, under the terms of our
Expansion Agreement with the NHL, exclusive mid-week broadcasting rights
in our Franchise Territory (the boundaries of the Corporation of the
City of Ottawa plus 50 miles).
Montreal and Toronto were obviously affected by this: they had been broadcasting their games into Ottawa for many years.
We did a deal with Ronald Corey, then President of the Canadiens, to
permit reciprocal rights: Montreal could broadcast their mid-week games
into Ottawa at no cost but Ottawa could broadcast Sens games into
Montreal, again at no cost. This obviously favored the 1992/93 eventual
Stanley Cup Champion Canadiens who, you would have to say, would have
had a lot more fans in Ottawa than the Sens would have had in Montreal,
n’est-ce pas? Whatever.
Well, do you think the Leafs would do the same deal? No way. They not
only refused a deal on reciprocal rights, their broadcaster (not to
mention any names but I’ll give you a hint: it was a ‘global’
enterprise), backed by the Leafs said they would ignore the Franchise
Agreement and continue to broadcast their games into Ottawa, so there.
One might say this was a bully tactic. Their broadcaster used the excuse
that they couldn’t break their over-the-air broadcast signal, so it was
just a little technical glitch but overwhelming in its complexity.
Sure.
With the help of the NHL, this tactic amounted to zip: they did have
to break their transmission so instead of Leaf fans in Ottawa watching
their team, they got The Mating Habits of African Beetles and
other such interesting documentaries throughout the Season. You can
imagine the furor that caused amongst Ottawa-based Leaf fans.
Of course, we got blamed for it: Toronto-dominated media interests
never seemed to be able to point out that Montreal games were still on
the air and that hockey fans in general were benefiting by the approach
taken by those two clubs.
To give you some idea of why this is still sticking in my craw a
dozen years later, we received a call at Terrace offices that greatly
upset my colleagues and me: it was from an Ottawa-based Leaf fan who
said: “Do you hear this, Mr. Firestone? That’s the sound of me breaking
my shotgun. If you don’t put my Leafs back on TV, I am going to come
down there and shoot you and any of your staff that get in my way.”
Impact
So, like, why would anyone care whether Ottawa residents cheer for
the Leafs? Well, I do and it isn’t just because this is one of the
fiercest rivalries in sports. It isn’t just because they pick on my
favorite player. It isn’t because the Leafs keep eliminating us from the
Playoffs. It isn’t even because I think that the result of any
particular NHL game really amounts to much in and of itself.
Remember the passions aroused by the 1972 Canada-Russia hockey
series? I had an acquaintance, a Canadian, who was cheering for the
Ruskies. I couldn’t believe it, but he could see the beauty of their
play, their skill with the puck, their incredible teamwork. All I could
see was that these representatives of the Evil Empire were putting it to
“our guys”. I am somewhat more sympathetic to his view today than I was
then although I am darned glad Canada eventually won.
No the real reason why I care and the reason I wrote this, is that at
least to me, Ottawa-based Leaf fans are fouling their own nest. And
Naturalists will tell you that any species that tends to do that is
acting against its own self-interest and that this is an unnatural act.
I learned this when I was 14 in Grade 12: we had a great group of
kids that partied together every weekend, every Saturday night for a
year. At some point, I got mad at the group and I thought: “I’ll show
them; I won’t go to the party this weekend and, boy, will they ever miss
me.” All day Monday I waited for someone at School to tell me how lousy
the party was because of my absence. Finally, I couldn’t stand it any
longer and I asked how the party went. “Great.” “Did you miss me?” “Huh,
I thought you were there. Weren’t you there?”
My absence was so unimportant they didn’t even realize I wasn’t
there, for goodness sake. I never did that again; the only person who
suffered from my action was me. And as an adult, I have found this
behavior surprisingly common: persons who act against their own
self-interest in the belief that they can hurt others. It rarely works
and, if it does, what did you actually gain? A Pyrrhic victory, at best.
There is no doubt that for most of us, the person who is the biggest
impediment to achieving our goals is right there in the mirror. Want to
be more successful in life? Start by raising your expectations of
yourself.
I consulted for a 50/50 partnership a few years back between two
Ottawa women who were in the rapid copy business. The business wasn’t
doing well and the two women couldn’t agree on how to fix it, so one of
them, exercising the Wisdom of Solomon, made an offer I thought
had promise. She would buy her partner’s interest in the business for
$40,000 or she would sell her half for $2. She told me that she didn’t
want to be in the business with her partner for even one more day and
she felt that if her partner continued to run the business it would go
broke anyway, so her half was worth $2 if her partner ran with it and
$40,000 if she bet on herself.
The only problem was that the original idea for the business was her
partner’s and this person had invested her ego in the business (never a
good idea). She rejected both offers; the business went broke and both women lost in excess of $85,000 each because they had to make good on personal guarantees to their Bank and their Landlord.
The other party was prepared to bring down the business, incur huge
personal losses because she couldn’t stand the thought of the business
succeeding without her and because she couldn’t stand her partner and
wanted to hurt her. She ended up hurting herself three times over
though: she lost $85,000 plus the $40,000 she could have gotten for her
half of the business plus she damaged her credit rating which will make
any future endeavors more difficult for her. Is this rational? No. But
it happens all the time and humans would be better off if they stopped
doing this to themselves and to their acquaintances too.
(I never recommend partnerships but if there is going to be one,
someone has to own 51% and have final say over the business. Every
business needs one controlling mind to have even a shot at success.)
So it is my view that Ottawa-based Leaf fans are, in fact, rooting
against their own self-interest. This is the City where they work, where
they earn a living, where they bring up their kids, which they share
with their colleagues and clients and suppliers and employees and fellow
human beings.
Do you have any idea how many people rely on the Sens? I realize that
coming from the Founder of the team, this is a bit (OK, a lot) self
serving but the number is MUCH bigger than you might think.
Sure there are the facts that after a Sens win, people are in a
better mood (except for Ottawa-based Leaf fans, that is) and that people
in a better mood spend more. And yes there is the fact that pubs,
restaurants and bars are way busier game days.
But these are peanuts compared to the real impact of having a NHL
team here. A VC friend told me last year that Ottawa is on the radar
screen for most US-based funds because we have a great foundation of
companies and people here. But he also said that before the Sens came to
town, no one in the US had ever heard of us and that VCs look to invest
not only in first tier ideas and people but cities that are also top
tier. VCs, like any of us I suppose, tend to be a bit lazy; they simply
use the criteria that the NFL, NHL, MLB and NBA have established to
determine what constitutes a Tier 1 town in NA. And, hey, we’re on that
list. It’s a privilege.
Tier 1 cities, the thinking goes, can not only start new ventures
with top talent, they can keep and attract a critical mass of top
talent.
Ottawa has received billions and billions in VC money and there are
thousands of people working here at good quality jobs, as a result.
When Corel Corporation was looking in the mid-1990s at buying the
naming rights for the Ottawa Palladium, I am sure that the fact that
there were 85 million mentions of the name every year on every major
television and radio station in NA and around the world and in every
major print publication too was a huge factor. At a CPM (Cost per
Thousand) of $20 (per thousand pairs of eyeballs), that alone is worth
$1.7 million a year. With the incredible upsurge of the Internet since
then, I can only imagine what the naming rights are worth today.
When there was a discussion (at least in the media) about moving the
Sens to Portland or some other US destination last year, some
commentators said that a NHL team’s economic impact on its community is
overstated. I don’t think that is true here.
They mentioned that if someone didn’t spend the $25 or $60 or $150
going to a Sens game, they would spend it anyway on something else in
Ottawa, like going to a movie. Well, I hate to mention it but more than
half of the admission price for every movie you go to see is immediately
exported out of this community and back to the Hollywood studio that
produced and distributed that film. And I am sure that most VCs aren’t
impressed much by the fact that, yes, Ottawa does, in fact, have a bunch
of movies theatres. Every hick town in NA has at least one.
I believe that most Ottawans see themselves as Tier 1; they would
rather spend 100s of dollars flying to NYC or, gosh, Toronto to see a
first class play than see Monster Trucks or the Rodeo at home. So don’t
give me that baloney that if we didn’t spend our money on first rate
hockey we would just spend it here on something else that matters just as much. Hooey.
No one loves the Sens more than I do but if I lived in
Calgary, Edmonton, Montreal, Vancouver or even Toronto, I would hope the
home team does well because it helps the community which nurtures us.
Dr Bruce M Firestone, B Eng (Civil), M Eng-Sci, PhD; Founder, Ottawa
Senators; Executive Director, Exploriem.org/LearnByDoing.ca; Author,
Quantum Entity Trilogy, Entrepreneurs Handbook II, Urban Nirvana and the
Peradventures of Maddy Henderson; Entrepreneurship Ambassador, Telfer
School of Management, University of Ottawa; Real Estate Broker, Century
21 Explorer Realty Inc, 900 Morrison Drive, Suite 206, Ottawa, Canada
K2H 8K7 Tel.: 613.566.3436 x 200 Fax: 613.566.3442
Follow Prof Bruce on Twitter @ProfBruce and @Quantum_Entity and read his blogs at www.EQJournal.org and www.dramatispersonae.org.
You can find his works at www.brucemfirestone.com and also at LearnByDoing.ca.
You can engage with him on Facebook via https://www.facebook.com/QuantumEntityTrilogy and https://www.facebook.com/Exploriem as well as via LinkedIn at https://www.linkedin.com/in/profbruce.
His real estate interests are summarized at www.ottawarealestatenews.com and www.thelandstore.org.
YouTube channels include https://www.youtube.com/user/ProfBruce and https://www.youtube.com/user/quantumentitytrilogy.
You can also send the first four chapters of Quantum Entity Trilogy to your friends for free from: https://www.eqjournal.org/?p=3993
Prof Bruce’s current motto is: “Making Each Day Count”
P.S. Here is a note from Jeffrey Kyle, Vice-President of Marketing for the Sens on the subject of converting Leaf fans:
“Bruce,
I have witnessed this first hand over the past 13 years. One of the
keys that I see is the impact that kids have on their parents. As you
know, kids are more influenced by their peers than they are by their
parents. I see first hand that parents who are Leaf fans will try to
influence their kids (buy them a Leafs T-shirt) but inevitably the kid
becomes a Sens fan because of his or her peers and also other factors
like local team coverage in the media. As a result (and I see this
first hand from neighbours), it tempers their parents (usually just the
father’s) loyalty to the Leafs so much so that many times the parent
becomes a fan of both teams (and then, hopefully, at some point he or
she decides to make the full switch). It is difficult to try to sway
your child with your own personal preferences, and as you know from
being a parent, you will do just about anything for your kids.
All this to say, my focus for the past two years has been to ensure
we are getting all the young kids to be Senators fans. Through our
minor hockey programs (Future Sens, Minor Hockey Month, Bell Skills
First Challenge, Senators Hockey Day in the Capital, Coaching Clinics,
etc.), School Programs (Read to Succeed, Spelling with Spezza, Show your
Sens Spirit during playoffs), we need to ensure the “Generation Sens”
are as rabid and loyal as the Leafs fans we don’t like.
In addition, I believe that people in Ottawa are somewhat afraid to
show they are behind something. That’s why last playoffs we introduced
the car flags as a way for people to see just how many of their fellow
Ottawans are Sens supporters. There is comfort in numbers and the more
we can show people that it’s alright to be a Sens fan and be proud of
it, the better.
By doing this, we’ll impact the fractured adult hockey fans in our
community and ensure that future business owners and consumers in our
City support the home team for many generations to come.
All the best!
Jeff”
Prof Bruce @ 8:51 am
Filed under:
Development Economics and Entrepreneurship
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Livable Cities and Neo-Urbanism
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Posted on
Sunday 18 April 2010
The unofficial motto of the US Marine Corps is “show some adaptability”.
You see the enemy has an uncanny knack of changing strategy when the
battle actually begins—they don’t just sit at their last reported
position waiting for Marines to come kill them.
Same thing in entrepreneurship—when you come into contact with the
markets, everything you thought you knew about your enterprise and your
battle plan (aka, your business plan) will evolve and change. That is
why I am such a big believer in goal setting and less inclined to spend
much time creating detailed plans—you need to be flexible in how you set
about achieving your goals and you must be open to new opportunities
that will appear along the way—things you could never figure out or
discover in a bunker away from the action.
So I created this Venn diagram to help you visualize these relationships.
Preparedness is not just about biz planning; it is everything else
you do in your life to get ready for business: education, sports, social
interaction, spirituality, adventure, fitness, experimentation, family,
romance, playing, learning, thinking, sleeping, reading, writing,
leading, following, fighting, mastering your emotions, managing,
cajoling, joking around, horsing around, persuading, selling, conniving,
working, negotiating, investing, losing, winning, being sad, being
happy, …
Successful entrepreneurs have done a lot of preparing, they show a
lot of adaptability and they embrace the market early and often. They
know they don’t want to be like a French General (circa the 1930s): busy
preparing for the last War.
Prof Bruce
Ps. the French example comes from the construction of the Maginot
Line in the period before WWII. The Line of fortifications was supposed
to slow down any attack from Germany and allow the French time to
mobilize their armed forces. Of course, the German Wehrmacht paid no
attention to the French forts—they bypassed them in a successful
blitzkrieg that led to the establishment of Vichy France. Since then, it
has become go-to example of what not to do in both military
preparations for the next war and for the launch of an entrepreneurial
startup.
Pps. Disaster planning can also suffer from too much advance
planning. I am sure FEMA had many written plans but probably none that
anticipated a near complete failure of the dikes protecting New Orleans.
Disasters tend to surprise you and bureaucracies tend to prepare to
fight the last one they faced.
FEMA reaction to Hurricane Katrina was slow, unimaginative and inept.
Compare FEMA’s response to the Australian National Government’s
response to Cyclone Tracy (which completely destroyed the City of Darwin
on Christmas Day 1974). The Aussies evacuated the entire population of
Darwin by nationalizing aircraft to form an air bridge out of the City
for the survivors. They moved 30,000 people in about ten days.
It is much harder to move people by air than by land; New Orleans
still had a land bridge to safety yet FEMA took weeks to transport
people stranded at the Super Dome. George Bush’s appointee to head FEMA,
Michael Brown, now a radio talk show host in the mid west, seemed not
to grasp the scope and nature of the emergency and certainly provided
poor leadership, which, frankly, is a charitable characterization of his
management abilities in that situation.
Imaginative and competent leadership and collective action are
essential to a successful rescue effort and recovery from disaster. I am
sure there would have been at least 300 yellow school buses within 300
miles of the Super Dome. Why didn’t ‘Brownie’ (as Bush called him)
nationalize the fleet? He could have evacuated (according to my
calculations) all 20,000 people taking refuge at the Super Dome in less
than a week. See below.
Yellow School Bus Evacuation of the Super Dome after Katrina
Estimate of Number of People to be Evacuated from Super Dome 20000
Average Number of People per Yellow School Bus 30
Number of Trips Required 666.6666667
Yellow School Buses Nationalized 300
Round Trip 10 hours
Load Time 0.5 hours
Headway 0.25 hours
Load Points 3
Number of Buses per Day 96
Number of People Evacuated 2880
Number of Days to Evacuate Super Dome 6.94
E&OE
Prof Bruce @ 7:22 am
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My Experience at the Nicol Entrepreneurial Award
Posted on
Saturday 17 April 2010
by Student Entrepreneur Siavosh Noruziaan [Guest Blog]
Recently, one of my students, Siavosh Noruziaan, became only the
second ever student entrepreneur from the University of Ottawa to be
selected and to compete in the Nicol Entrepreneurial Award national
finals. I asked Siavosh to write about his experiences which he did. See
below.
Before he could even compete in the national finals, he had to place
among the top five entries in the U of O Biz Model Competition and then
he had to win the Telfer School of Management Wes Nicol Competition
outright.
Siavosh is a fiery, fearless young person with a strong drive and a
background in both engineering and business. Here is his story:
“All Ottawa U students have to work as hard as they can to get into
the Nicol Entrepreneurial Award. You just have to! The experience was
amazing. Now I’m writing this the evening after the competition, while
sitting in a cubicle. I’m already missing the experience.
I was able to feel what it was like to be in a room filled with
successful entrepreneurs, people who build multi-million dollar
companies. You can’t just buy that type of experience. I’ve taken a bit
of time to write about the event. Hopefully it’ll inspire you to work
hard and compete in the local competitions at the University of Ottawa’s
Telfer School of Management and at Carleton’s Sprott School and the
national finals. Once you get there, make sure you win!
My experience:
The experience was truly an inspiration. The judges, the activities,
the competitors, the guest speaker and Mr. Wes Nicol himself all sparked
new thoughts in me.
First of all, the judges were all highly accomplished. Dr. Denzil
Doyle, chairman of Doyletech, is a huge contributor to Ottawa’s tech
industry. I merely spoke to him for a few minutes, but I could quickly
sense that this was a man of great stature and wisdom. He advised me to
stay in school, to get as much as education as possible and not to over
plan my life. I’m definitely going to reflect on his words for the next
few days.
The greatest activity was having dinner at the Rideau Club in
downtown Ottawa. It’s a private club where Canadian Prime Ministers
have been members. One is only allowed to attend the club if they are a
guest of a member. Mr. Wes Nicol invited all the competitors and their
mentors to the club for a private dinner. It was very humbling event.
Prof Bruce always says that there are roughly 500 people in Ottawa who
actually make things happen. It was really cool seeing where they wine
and dine. It also made me want to work harder to sit amongst their
ranks.
The guest speaker, Mr. Richard L’Abbe, co-founder of Med-Eng, said
something really inspiring. He said that he’s been blown up 19 times!
Yes, Med-Eng builds bomb suits and Richard believes so much in his
product that he personally wore the suits during demonstrations. Hearing
that made me think that to be a truly entrepreneur you have to stand by
your product. In Richard’s case, he backed his product with his life.
That’s how he built Med-Eng into a company worth hundreds of millions.
Finally, my one on one conversation with Mr. Nicol was great. He
pulled me aside at the end of the competition and shared some wisdom. He
spoke of being honest in business and giving back once you’ve achieved
success. I couldn’t help but feel his sincerity while standing in the
Chateau Laurier. Mr. Nicol spends hundreds of thousands each year to
help student entrepreneurs. I won’t forget that moment. You just have to
give back.
My successes:
My greatest strength is my ability to present with passion. After the
competition, many people congratulated me on my work. A wealthy
business owner from Alberta even offered me a job. He said, “You got it
kid, you just don’t realize it yet.”
When I was talking to Mr. Nicol during the closing reception, he said
that, if he could, he’d back me not my idea. The feedback was great:
I’ll be tweaking a few things.
Future improvements: I think I had too much material in my
presentation and didn’t speak slow enough for the judges to fully grasp
my concepts. Nevertheless, they all recognized my passion and all felt
that I would be a success in the future.
My Competition:
It was a great competition. I quickly gained respect for all my
competitors, their ideas and their past experiences. Many of them have
been self-employed. Eric Warnke bought an internet café in his second
year of university and now plans on setting up hotspots all over Canada.
Kyle Seamon has been self employed since age 14 with his own lawn care
company. He’s now building an online student community that enables them
to connect, share and collaborate. I got all their contact info and
feel like I made a few friends.
Advice:
To be successful at Nicol Entrepreneurial Award you need to be
passionate. Judges want to see people who have the tenacity and energy
to get the plan underway. After the competition each of the judges met
with one of the competitors to give one on one feedback. Mine said that
all the judges were impressed when I said “I’m 21 years old, I don’t
have all the answers. I’ll figure out the answers when the situation
calls for it.”
They also want to see a well thought out plan. Marty and Nico from
Perfect Patch had determined the exact piece of land they intended to
buy to build their strawberry farm. They justified their decision based
on the zoning of the land and the fact that it was close to a major
highway. When asked about bank financing, they knew the amount of down
payment required and also added that the government gave farmers better
tax advantages for their land.
Judges also want to see a knowledgeable entrepreneur. Robert
Roulston, founder of Second Nature Aquatics, plans on building a captive
fish breeding tank. Robert has a degree in biology and another in
mechanical engineering. His biology degree was useful for fish breeding
and his mechanical engineering degree was used to design a patentable
fish tank. I think all three of these attributes are vital to be
success at the Nicol competitions. The entrepreneur who exhibits the
greatest mix of these characteristics will win the award.
I know you can do it. Use my advice build a solid detailed plan that you have some experience with and go for it and go hard!”
Siavosh Noruziaan, Empire Deck and Fence, Ottawa, Canada. March 2010.
Prof Bruce @ 11:44 am
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Rules? There are no rules in entrepreneurship.
Moon, Mars, Earth, Asteroid Plan
Posted on
Saturday 17 April 2010
President Obama’s recent speech about US intentions in space
was uncharacteristically weak and unfocused, indeed, poorly expressed.
His over-arching goal about humans in Mars orbit by the ‘mid 2030s’ was
hardly an inspiring call to the barricades. He ineptly attempted to
recall President Kennedy’s words “and to return them safely to Earth”.
His timeline was too vague and his goals far too modest. Most
importantly, he did not appear to understand that the US, and other
space-faring nations, will never have a space program that is sustainable if it is not economically sustainable too.
Economic sustainability of space exploration and development is not
based, and can never be based, on ever increasing national subsidies of
NASA, CSA, RFSA, ESA, CNSA and other national space agencies. Economic
sustainability implies that space exploration and development will be
based on a combination of public and private initiative guided by the
principles of trade for mutual benefit as well as research, discovery
and innovation for potential profit: these will help to create a stable,
space-based economy that, in symbiosis with Earth’s, is the only way to
avoid a space program that stumbles from pillar to post and (at least
in the case of the US) has proven to be unreliable in every way that
counts: getting people and material to and from space safely and
providing a reliable, steady flow of benefits to Earth-based and
space-based assets.
The most fundamental question is not “what is the technology we
intend to develop for space exploration” or what “the next destination
should be” – it’s why we should go at all. There are 2-dimensions to
this ‘why’ question: a. Why would we want to leave Earth in the first
place and b. Why, when we get wherever we’re going, we’re going there!
OK, let’s try to answer the first question: Why should we leave the Earth?
i. Because it’s there.
ii. Don’t put all our eggs in one basket/the Earth is fragile.
iii. It’s a voyage of discovery.
iii. There are spin-offs from space tech for science, environment, energy, medicine, health and more.
iv. For reasons we don’t yet know but will discover in the process, on the way and when we’re there.
OK, now answer the question: Why, when we get wherever we’re going, we’re going there?
i. We need at least one totally compelling reason to be there – such
as to colonize the place, to find answers that involve healing and
health, to exploit resources, to develop energy production or for some
other purpose or idea that we have yet to conceptualize.
If, the other day, President Obama had instead asked for volunteers
to sign up to be the first colonists on the Moon or Mars, I imagine he
would have had quite a different reaction than the ‘ho-hum, heard that
before’ outcome his speech, in fact, generated.
What type of reaction would Mr. Obama have had instead if he had
announced that recent experiments have shown that living in a low
gravity environment slowed cancer growth to a crawl in humans or
prolonged life for elders by 25 years? That they could boogie like
teenagers again in their new Lunar or Martian habitat? What if the
President had asked people to sign up for a new retirement home to be
opened next to Copernicus, on a sunny ridge with fabulous views of the
crater and wonderful blue-Earth rises on the horizon?
I suspect that Mr. Obama’s new venture would attract a great deal of
investor interest not to mention the 100,000 or so well-to-do, go-go
elders that might be tempted to put their hard-earned money down in the
form of rent deposits!
I wrote a somewhat tongue-in-cheek essay on this called “Moonshot
Redux” – the thesis was based on the thought experiment: what if zero
gravity or low gravity allowed elders to “live forever”? That, of
course, would be a powerful motivator. You can read about it at: https://www.eqjournalblog.com/?p=864 and you can see the You Tube video we made out of this at: https://www.youtube.com/watch?v=9crQK3ReJHY.
The point I am getting at, is that you have to answer the second part
of the ‘why’ question: what exactly are we going to do when we get
there that will create a stable, sustainable space-based
economy. It isn’t good enough to just get there. The US already did
that: they got to the Lunar surface a few times but had no real plan on
why, when they got there, they were there.
“Did you hear the one about the new restaurant on the Moon? Great food but no atmosphere,” Anon.
Clearly it would be a huge leap of faith to decide to actually
colonize the moon (which happily shares the nice, warm orbital niche
around the Sun with Earth) but this goal, together with a space elevator
to and from the lunar surface, would galvanize not just
US/Russian/Chinese/ Japanese/Indian/Canadian/European space programs, it
would encourage private space transportation and development. It would
almost certainly also result in Martian exploration and colonization as
well as industrial exploitation of the asteroid belt. President Obama’s
recently announced policy – go to an asteroid or Mars, once or perhaps a
few times – will not work in terms of sustainable space exploration and development.
To better understand this, just look at European and Spanish opening
up of the New World – for silver, sugar cane, for timber and military
purposes combined with colonization efforts. Lunar/Mars/Asteroid
expeditions must be tied to economic, environmental, energy,
technological, social, trade, territorial, colonial and other factors
for it to be sustainable.
Prof Bruce
Prof Bruce @ 9:03 am
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Development Economics and Entrepreneurship
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New Economic Policy for Ottawa
Posted on
Saturday 17 April 2010
City-states like Ottawa-Gatineau compete with others for
attention, power, people, money and resources. Recently, the Conference
Board of Canada predicted that Ottawa will lose 10,000 civil services
jobs (over the next three years) as the GOC (Government of Canada) cuts
back in the face of a significant national deficit. While this is not a
cause for panic (Ottawa-Gatineau did create 4,700 jobs in March 2010
after all and > 20,000 jobs in the first three months of the year),
it is a cause for concern.
Canada has a long history of collective action, neither wholly
relying on governments to bail us out or create opportunity nor relying
exclusively on the private sector. This ‘middle way’ is, at times, slow
to react to issues and can be frustratingly obscure and impenetrable
but, on the other hand, it works. For example, Canada created, via
public and private partnership, CPR, our national railroad in the 19th
Century, and TCPL (Trans Canada Pipelines) in the 20th to help tie this
vast northern shelf nation together. We have a home-grown
telecommunications and broadcasting industry as well as a top notch
banking system because we asserted our national will that this should be
so. Without that expression of national intent, these industries would
be entirely branch plant ones. Canada does not want that: once you lose
all your head offices, you lose the best jobs, most of your research and
innovation and almost all control over your own destiny. Want to
experience real frustration? Just take on a JOB where you feel powerless
and ineffectual. Early heart attack anyone?
To combat the intense competitive national and international
pressures that Ottawa-Gatineau faces, we need a plan and leadership. We
need action by private industry, by NGOs, Not-For-Profits, Universities
and Colleges, Economic Development Agencies, Incubators, the Charitable
sector and Tourism agencies. We need municipal councils on board,
Provincial support and even Federal assistance. But above all else, we
need leadership at the political level. One can never underestimate the
power of the levers that a Mayor or Premier or Prime Minister can pull
on to change the course of local (and national) history. This is a
factor that often gets overlooked by economists and development
specialists: the power of political leaders to galvanize, lead and
organize cohesive, concerted action by large groups of disparate
individuals and organizations to achieve great things, ensemble.
Want to put a human on the Moon, complete the Manhattan Project,
discover the Americas, run a railroad over the Rocky Mountains, heat
homes in eastern Canada during tough Canadian winters with oil and gas
produced in the west, have national standards and insurance for medical
care? Then you need tough, visionary political leadership and courage.
I sketched out (below) a few ideas on what Ottawa-Gatineau might be
able to organize itself to do. You’ve heard the expression: “God only
helps those that help themselves.” Well, that means that our City-State
should not rest on its laurels nor wait for the calvary (in the form of
Ontario, Québec or Canada) to ride over the hill and rescue us. This
isn’t a ‘plan’ or the ‘plan’ but it’s a start on developing one. Let me
know your ideas. Find me on Twitter (@ProfBruce) and add your thoughts
or just leave a comment below.
The real question I believe is whether Ottawa will have the local
political leadership capable of seizing the day. Ottawa is a blessed
place with a stable economy and a decent environment, great recreational
and cultural facilities, fine educational institutions, low crime and
reasonable housing and living costs (try Vancouver with an average home
price of $1 million if you don’t like Ottawa’s average of $340,000.)
In any event, here is my list of a few things we could do together to make this city-state even better:
New Economic Policy for Ottawa
Government and Infrastructure
• Reduce time to obtain approval of projects
• New bridge to Quebec
• Legalize work from home with up to 3 employees
• Permit “granny flats”
• Develop Rockcliffe Air Base lands
• Disaster preparedness plan
Technology
• Make Ottawa the City of Entrepreneurs
• Build this brand
• Fund startups with up to $15,000 in early stage funding through OCRI/incubators/others
• Establish OC67 – Ottawa Committee of 67 to mentor, research, teach and support startups
• More financial support for OCRI/tech incubators
Real Estate
• Density bonus for residential development; to be added to commercial office and retail—encourage multi use projects
• Pre-designate sites for 1,000,000+ sq. ft. development of
labs/offices/industrial projects (MCFs) so they’re ready to go and
Ottawa is able to react to these opportunities as they arise
• Complete Carp airport development
• Create new mega industrial park with piped water and sewer from Village of Carp to Stittsville
• Create 3 more industrial parks: near Walkley Road and HWY 417/Barrhaven/Kanata-Stittsville
• Upzone residential property along major arteries to permit CO/CC and residential uses
• Implement conservation sub-division design and allow small bore sewers in rural villages
Education
• High School for the Technological Arts
• Professorship of Entrepreneurship
Environment
• Introduce light rail transit
• More solar farms
• More local production and consumption
• Tree’d City – plant 1.3 million trees in Ottawa-Gatineau (one for each citizen)
• Establish conservation land trust
• Connect conservation lands and retain wilderness
Arts
• More funding, as well more predictable funding, for arts and festivals
• Develop a mural arts program
Tourism
• New casino in Ottawa
• Ottawa Botanical Garden
• Wayfinding signs for Ottawa
• Allow access to Ottawa’s waterways with more active components such as
restaurants/arts studios/boutiques/cafes/sports facilities
Prof Bruce
Prof Bruce @ 7:31 am
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Selling is the Teeth End of Business—
Posted on
Saturday 10 April 2010
A Few Pointers so You can Become a Top Salesperson
“Whether you believe you can, or whether you believe you can’t, you’re
absolutely right,” Henry Ford.
I often get asked what is the surest way to increase sales; people are looking for a magic bullet.
I actually believe there is a ‘magic marketing button’: a
button that an enterprise can push that makes the phone ring or the
website traffic counter turn. But sales is almost always a long, tough
slog. Even mighty IBM, which sells more than $85 billion worth of
products and services a year, sells to one client at a time.
You will note that I differentiate between sales and marketing.
Marketing is a process that builds your brand, creates trust and opens
the door for sales. Sales is a separate process that harvests leads
generated by marketing. If you can not efficiently connect your
enterprise with potential clients and customers through a cost-effective
marketing process, your enterprise is doomed. But also if your sales
process is flawed and you are not turning enough of those leads into
receivables and revenues you are kaput.
Here is a laundry list of things you can do to improve your selling success:
1. Selling is the teeth end of a business (as opposed to the tail end).
2. There are dozens of JOBS in sales for every one in marketing.
3. When downsizing hits, they never lay off the sales dept; they lay off marketing though.
4. A salesperson is really his own or her own boss.
5. You should treat your company as if it was a supplier to your own
sales business; they do things for you like keeping the lights on,
running the office infrastructure, providing services to you such as
accounting, invoicing, phones, Internet and so forth; imagine how great
it is that you never have to worry about back office functions,
inventory and production—you just go out there and sell.
6. A salesperson should try to get at least part of his/her compensation
in the form of commission income—so there is no upper limit to your
earnings.
7. Sales can be and should be a very creative biz.
8. Every salesperson should have their own biz model.
9. You should develop your own brand and an independent list of contacts
that you maintain separate from your company, in case you leave.
10. A salesperson should try to be an independent contractor instead of
an employee—for tax optimization as well as increased independence.
11. The best place to look for new biz is from your existing client list.
12. Get close to the customer early and often.
13. Be in the solution selling business.
14. Get on the same side of the table as your client—become a trusted
advisor. Give them options like: ‘you can buy Product A or B from
Supplier X or Y’. If they don’t like either then they are saying ‘no’ to
the products and suppliers, not to you.
15. Help your clients sell their products and services—find them
customers and they will never forget you. If they sell more, you’ll sell
more as well (to them), right?
16. Be alert to ‘bundling’ opportunities—getting your clients to resell
products and services from other clients of yours so they can realize
near infinite margins by marking up these products and services. This is
a double win for you: you’re helping some of your clients become
resellers and others to sell more by developing new sales channels for
them. Seeing potential relationships amongst your client base can also
lead to co-marketing and co-branding opportunities where they share, for
example, advertising costs or promo product costs. So when one firm
gives out a promotional product, say, they are promoting a second or
third company in their ‘watershed’. If you help your clients sell more,
you will sell more. (See above.) Also think about whether you could add
more products and services (from outsiders) to your own offerings/become
a reseller yourself with higher margins to boot. Remember you ‘own’ a
sales or distribution channel that you have developed yourself over a
period of years and at great effort; what else can you push through this
channel?
17. Find other ways to promote your clients—for example, nominate them for an award and, again, they’ll never forget you.
18. Develop a compelling sales and value proposition—be able to show how
by purchasing your products and services, the client will see either a
decrease in their costs, an increase in their revenues or some
combination of both that is much greater than the cost of your products
and services; i.e., buying from you is a negative cost for them.
19. Turn selling into buying. (Please refer to the postscript at the
bottom of this blog post for more on this important subject.)
“I am the world’s worst salesman, therefore, I must make it easy for people to buy,” Discount Retailer F. W. Woolworth.
20. Set monthly goals and achieve them but don’t over plan—be open to new opportunities as they arise.
21. Digitize all information and be able to find it on your
computer—become a master file clerk so you can control the information
flow: from order to delivery and beyond!
22. Always volunteer to write up the deal.
23. He/she who holds the pen, wields the power.
24. When you don’t feel like going to work, go anyway. Showing up is
half the battle—it takes years to develop a great business. Never get
too high or too low.
25. If you get in financial trouble, ask your clients for help.
“You can stand me up at the gates of hell but I won’t back down. No I won’t back down,” Tom Petty
26. Ask for referrals and for testimonials. Put them on your personal website.
27. Make every presentation a conversation rather than a 1-way speech.
‘Selling is telling’: get good at story telling. Be spell binding!
28. Sometimes the best answer to a client objection is silence—let them answer their own question.
29. Ask for the deal!
30. Never take ‘no’ for an answer.
31. But a ‘no’ is better than a ‘maybe’. Obviously, ‘yes’ is best.
32. Remember, he/she who has the gold, rules.
33. You are never too busy to return a sales call.
34. Under promise and over deliver.
35. Keep the great clients, dump the rest.
36. ABC, Always Be Closing.
37. Execute—great ideas are nice but you have to be able to pay attention to detail. Check, check, check everything.
38. Learn some NLP, Neuro Linguistic Programming so you can be ‘sympatico’ with your clients.
39. Develop your niche and then be great at it.
40. Show some appreciation to your clients.
41. When a client is saying ‘yes’, get your deal signed and then leave (politely).
42. Don’t forget the contracts!
43. Keep in touch with clients.
“Selling isn’t about taking advantage of people, it is about communicating and informing them,” Mark Cuban, Owner, Dallas Mavericks.
44. Put your clients in touch with each other so they can do business together too.
45. Keep track of all your client contacts and all of your clients’
clients (and clients’ suppliers) contacts so you become an invaluable
part of their ecosystem.
46. Make a daily list of goals.
47. Write a blog.
48. Get a Twitter account.
49. Be on Facebook and Linkedin.
50. Develop a few of your own websites.
51. Have an up to date CV. Send potential clients a link to your online
CV so they know who they are dealing with before you even meet with
them. Send clients a link to a blog post you wrote that is relevant and
helpful to them. Ask them to follow you on Twitter and elsewhere!
52. Put some videos up on YouTube.
53. Control your costs and keep overheads down.
54. Do some homework on new customers before you make any sales
presentations or even contact them and always practice your
presentations in advance.
55. Remember face to face is still the best way to sell. Second best is
telephone. Email and social media are a distant third and fourth.
56. Develop a newsletter.
57. Work with people and clients that have a good heart and that you can trust.
Upon seeing his very first web page, Lou Gerstner, former CEO of IBM, asked: “Where’s the ‘buy’ button?”
58. Protect your reputation.
59. Do some volunteer work.
60. Speak at conferences and address groups when you are asked.
61. Be up to date with tech and the Internet and all the web 2.0 tools and cloud tools you can get—many for free.
62. Never drink and think. Get some regular exercise; it’s about
lifetime fitness not peak fitness. Find something you like to do and
that you can keep doing for decades.
63. Be positive and surround yourself with positive people.
“Remember people like to buy from people they like and trust,”
Professor Bruce M. Firestone, Founder, Ottawa Senators;
Entrepreneur-in-Residence, Tellfer School of Management, University of
Ottawa; Executive Director, Exploriem.org.
64. Learn from your competitors.
65. Develop leverage for yourself—hire an assistant.
66. Embrace co-opetition: you focus on your core competencies/refer the rest to others.
67. Always tell the truth—the smart truth.
68. Set your prices carefully—pricing is an art.
69. If something isn’t working, change it or dump it.
70. The world is a tough competitive place but the harder you work, the luckier you’ll get.
71. Find a ‘magic marketing button’—something that when you push it,
your phone rings. If you can’t acquire new clients in a cost effective
way, you’re sunk.
72. Follow the fastest (least effort) route to revenue.
73. Pursue only those goals that are consistent with your overall objectives.
74. Park your ego at the door—don’t get mad at clients and don’t do
anything that you’ll later regret. Resist the Seven Deadly Sins and
you’ll do better in every facet of your life. Plus show some humility.
Never put anything in an email (or anywhere else) that you would not
want on the front page of your local newspaper.
75. Get and follow your mentor’s advice.
76. If appropriate, follow a global mandate from the get go—Canada is
too small a market to be the primary focus. Not only should you go after
every geography, you also want to go after every vertical.
77. Network with everyone—peers, subordinates, suppliers, customers, superiors, competitors.
78. Create positive outcomes out of each meeting and keep them short: one hour or less.
79. Become a great communicator in person and in writing—remember practice, practice, practice makes you better at these things.
80. The three most important things to remember are: SELL, SELL, SELL.
Prof Bruce with assistance from students Riley Whitlock, Jordan Demeo and Tyler Steeves, Ottawa Canada. April 2010.
Postscript: you can download a copy of a speech I gave called: “Turn Selling Into Buying“.
It is a word doc. This will assist you in further developing the
concept of helping people to buy from you as opposed to trying to sell
to them. You will, thus, become a ‘trusted advisor’ which will embed you
in their enterprise ecosystem, the ultimate goal of any salesperson.
Repeat orders, development of specific new products and services, larger
average order sizes and greater market share should all happen as a
result.
Prof Bruce @ 3:31 pm
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Pre-selling, Finding New Clients, Keeping Existing Ones
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Rules? There are no rules in entrepreneurship.
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Value Differentiation and ‘Pixie Dust’
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Posted on
Saturday 10 April 2010
After 28 years of trying to: a) understand the NIMBY (Not In
My Backyard) mindset and b) trying to cope with the effects of this on
urban design and development, I have summarized a lifetime of research
and experience in this Venn Diagram:
Prof Bruce
Prof Bruce @ 7:43 am
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People Who Think They Can be Entrepreneurs
Posted on
Wednesday 7 April 2010
Recently, I worked with a couple of guys who had in front of
them, in my view, a great opportunity to buy a small food company, all
they needed to do to finalize the deal was sign one last piece of paper.
But when they ‘found out’ that it wasn’t a ‘sure thing’, they balked.
Venn Diagram/People who Think They are Entrepreneurs Versus Those that Actually are
For an equity investment of ~ $25k between the two of them (plus
assumption of some debt), they were looking at an upside of creating a
biz that might one day (in, say, five to seven years) be worth as much
as $1.2 million. Now for most people, maybe all people, saving your way
to $1.2 million is hard, perahps even impossible. But you might be
surprised at how many people can invest their way to wealth by way of
‘forced savings’ (other people paying off their debt through sales or
rent), gaining leverage through finance (using OPM, Other People’s
Money), sound HR policies (talented employees provide them with leverage
for their time and brains: they give them ‘longer arms’) and asset
growth (through inflation)*.
(* Leverage in business comes primarily from eight sources: great HR,
using OPM, forced savings, innovation, capital equipment, location,
branding & inflation. Test your biz model: ask yourself do you have
great HR, use OPM, benefit from forced savings, innovate, have a great
location/brand/capital equipment & benefit from inflation? If so,
you are probably maximizing your leverage.
For example, leverage using OPM is increased when the project’s or
business’ rate of return is higher than money you borrowed. Or when you
use bootstrap capital (say, trade credit, where a supplier gives you
credit at low interest or no interest to buy from them or a customer
gives you a deposit on an order on which you pay no interest), you are
leveraging your own efforts and capital with theirs. Obviously, if you
are in an industry that is experiencing price inflation, you are again
benefiting without putting in any effort of your own, i.e., more ‘free’
positive leverage for you. That is why it is almost always better to
enter into buoyant sectors where ‘all boats are rising’.)
Having said all of this, of course it’s also true that they might
lose all or part of their investment if things don’t work out. But these
were all things that fall under the heading of “what I can control”. So
their upside (one that they could plan their way to) was $1.2 million
and their downside (usually one you can’t and don’t plan your way to)
was $25,000.
I estimated that the expected value of their investment was:
EV (Investment) = -$25,000 x 1.0 + $1,200,000 x .75 = $875,000 where
the probability of success is around 75% for this type of business.
Seemed like a ‘no brainer’ to me. I was amazed when they turtled.
They were so focused on the possibility of failure (about 25%) that even
the smallest chance of losing their initial investment drew an intake
of breath and a turn down of a near-perfect setup. So I drew up this
Venn Diagram in their ‘honour’. You can see it at: https://twitpic.com/1dw194/full.
These are folks in their late 30s, each of them have homes that are
fully paid for plus they have cash and near cash assets of more than
$300,000 between them so losing $25k would be bad but not the end of
their world as they know it.
Now let’s look at this in terms of a pure investment scenario: they
invest $25,000 at time zero and it yields an expected value of $875,000
in, say, year six when they sell it. Let’s assume that there are no
cashflows in the intervening years. Thus, we can calculate their IRR
(Internal Rate of Return) as follows:
People Who Think They can be Entrepreneurs: IRR
Initial Investment ($25,000)
Sale Price $1,200,000
Probability of Success 75%
Expected Value of Success $875,000
Year
0 ($25,000)
1
2
3
4
5
6 $875,000
IRR 3400% p.a.
This points out, in the clearest terms imaginable, why it is so hard
to save your way to wealth and easier to invest your way there: their
IRR on this investment is 3,400% p.a. Try that with a savings bond, GIC
(Guaranteed Investment Certificate) or T-bill which typically pay around
3% p.a., circa 2010.
To be an entrepreneur you need to have the entrepreneur’s skill set (see: https://www.eqjournalblog.com/?p=1274) and, above all, the mental stance
of an entrepreneur. Otherwise, you are doomed to a life in a
Dilbertville cubicle working your guts out for someone else in a JOB
(also known as Journey of the Broke).
Fraidy Cat Investors Look Like This on the Inside
Most people think they can be entrepreneurs, if they really wanted
to. Truth is, there aren’t very many people cut out for the life of an
entrepreneur. After all, you need some guts to be one.
Prof Bruce
Postcript: To some extent, their failure was mine. If there is one
thing I do best, it is to give would-be entrepreneurs the confidence
that they are on the right track, or not. I have a pretty good ‘map of
the way the world works’ and I can usually tell when a biz model makes
sense and when it is likely to succeed or not. That confidence is
transmitted from me to them and it works: from more than 90 startups out
of our program at Exploriem.org and Telfer (and before that at Sprott),
85% are still going.
Postscript 2: If you think you want to become an entrepreneur, test your ECQ, Entrepreneurialist Culture Quotient at: https://dramatispersonae.org/ECQTest/ECQ(ns)TestAuto.htm and see if you can meet the standards of becoming an ‘impeccable warrior’: https://www.eqjournalblog.com/?p=742.
Postscript 3: I recently met with an ED of a local not-for-profit who
is looking to create a new event that would be of interest to their
sponsors, partners, beneficiaries and other stakeholders. Their ED, a
man in his 40s, called me, uncertain about what to do.
I felt it was a good example of the difference between the mental
stance of an entrepreneur (me) and someone who has been a bureaucrat all
his career.
He had found very strong initial support amongst his group and
ecosystem for bringing in a high profile public speaker but he could not
get a presenting sponsor to commit to the event without first getting
the OK from the speaker. Meanwhile, the speaker would not commit until
she learned who the presenting sponsor was going to be.
It’s the classic chicken and egg scenario. Except that bringing this
particular speaker to Ottawa right now is particularly timely, would
find a willing audience and is likely to attract new sponsors to the
charity.
Entrepreneurs almost always make decisions with imperfect information
weighing the probability of success. In this case, I estimated the
probability of financial success for the event at around 90%.
I advised that the resources of the Charity would not be unduly taxed
and that it could afford the risk and underwrite the event themselves
even if a presenting sponsor could not be found.
This increases the risk of financial failure since they would now be
entirely reliant on ticket sales to recover costs and, indeed, establish
a bi-annual (every two year) event as a fundraiser for them. But, on
balance, the risk-reward curve looks right.
To his credit, the ED gave the go-ahead and a new, exciting event is going to be announced soon.
Prof Bruce @ 2:17 pm
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Tuesday 6 April 2010
After meeting with Wesley Clover executives, Andrew Fisher
and Greg Vanclief together with my Telfer School of Management
colleagues Barb Orser, Tyler Chamberlin, Mark Freel and Alain Doucet
last week, I left with a feeling that I had just experienced a
‘Bizzarro’ moment. For those of you who have never heard of Bizzaro,
he’s a character from the Superman comic series (circa 1958) who did
everything backwards. It’s also a place where they do everything in
reverse.
Unlike most VCs (in fact, according to Andrew Fisher, there are no
VCs anywhere who do this except maybe for Cisco’s internal incubator),
WC sources ideas from its more than 3,000,000 enterprise clients and
suppliers and then they recruit top student entrepreneurs to form
engineering and business teams to solve and commercialize those real
world problems.
So instead of waiting for proposals and ideas to come to them from
outside their huge watershed (which includes clients, customers and
suppliers of March Networks, Mitel, Dragon Wave, Bridgewater Systems and
many other companies in their diverse portfolio plus their strategic
partners like Telus, SaskTel and Vodaphone), they generate them
internally. In that way, they avoid hearing from entrepreneurs with
cockamamie ideas like you often see on Dragon’s Den, say. Also, they
stay on point—their focus is relentlessly within their areas of
expertise.
And they have a pretty good track record: before Newbridge (another
(former) member of the Wesley Clover watershed) was sold to
Alcatel-Lucent, it spawned 35 independent companies, of which 34 were
successful, a phenomenal success rate. These spinoffs returned $900
million to Newbridge’s Treasury alone plus more to the entrepreneurs who
were responsible for these startups.
So the model works.
What WC is looking for are top engineering and business students
straight out of University or College who want to be intrapreneurs,
people who can work within their system in teams and have the same skill
set as entrepreneurs do* but don’t necessarily like the risk profile of
the go-it-alone entrepreneur.
(* The entrepreneur’s skill set includes: taking initiative, not
needing a lot of direction, innovative, doing everything in parallel,
finding launch clients, knowing how to build cashflow, understanding the
value of a client and customer, using self-capitalization, being able
to sell, knowing how to use guerrilla marketing and social marketing to
build the brand and capture market share, not afraid to try new things,
knowing how to build a sustainable business model with a lot of ‘pixie
dust’ in it, setting goals and achieving them, dynamic with high energy,
can create a business plan yet be ready to change it when the market
moves in sudden and unexpected directions.)
The philosophy of the whole cluster comes directly from the Chairman
of the Board, Sir Terence Matthews. Terry insists that every startup
follows the same set of ten principles:
1. Form an early (and lasting) attachment to the customer.
2. Follow the fastest (least effort) route to revenue.
3. Pursue only those goals that are consistent with the overall objectives of the enterprise.
4. Stay team focused—superstars must park their egos at the door.
5. Follow your mentor’s advice.
6. Create a great biz first and cool tech second.
7. Keep your costs down.
8. Leverage the investment with government grants and OPM, Other People’s Money.
9. Follow a global mandate from the get go—Canada is too small a market to be the primary focus.
10. Not only should you go after every geography, you also want to go after every vertical.
When a team proudly reports to the Chairman that they met their
quarterly sales goals, Terry ‘berates’ them for not having doubled or
trebled it. They leave quite chastened.
WC’s track record over the last 30 years is that for every $1
invested, they have returned 13. Student entrepreneurs get paid a wage
to work in the system and they decide themselves how much of their pay
package they want to invest in the shares of their own startup—keeping
in mind that $1 less they take home today could be worth $13 some day.
What WC is looking for in their student entrepreneurs includes:
a) hard working/strong work ethic;
b) did they come from a large family and have to scrap for what they got with lots of brothers and sisters in the mix;
c) how much did their parents do for them—were they ‘helicopter
parents’—and how much did they do for themselves from an early age;
d) how are their communications skills—can they communicate and get along in teams;
e) do they have some humility about them/can they learn;
f) can they network with everyone—peers, subordinates, suppliers, customers, superiors;
g) can they create positive outcomes out of each meeting;
h) can they sell.
Every person who enters the WC system must spend six months cold calling and generating leads. Are they tough enough to last?
Every core team member is interviewed by Sir Terry—can they survive his scrutiny?
WC is focused on telecom and wireless but they are also interested in
some new areas like digital media, animation, film (Brookstreet
Pictures has a slate of four horror films they are producing), mobile
apps for the iPhone, network-based, real time content and software.
Right now WC has six startups in the fold here in Ottawa with a new
office to be opened soon in China. They would like to have a closer
relationship with Ottawa-area Universities and Colleges and they want
more top students referred into their programs. But they also want some
indication from the academic community that they can help equip the next
generation of entrepreneurs with the skill set that they need to lead
global-spanning enterprises including strategic selling and business
communications, areas the Ontario education system tends to overlook.
Professor Bruce M. Firestone, Entrepreneur-in-Residence, Telfer
School of Management, University of Ottawa, Founder, Ottawa Senators,
Executive Director, Exploriem.org, Broker, Partners Advantage GMAC.
Blog: www.eqjournal.org Twitter: www.Twitter.com/ProfBruce
This article first appeared in OBJ, Ottawa Business Journal: https://www.obj.ca/Opinion/Bruce-Firestone/2010-04-06/article-990630/Terry%2526rsquo%253Bs-10-commandments/1
Prof Bruce @ 4:46 pm
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Sir Terence Matthews’ Ten Guiding Principles
Posted on
Tuesday 6 April 2010
For a Successful Launch of your Next Startup
Sir Terence Matthews, founder and guiding light behind such
enterprises as March Networks, Mitel, Newbridge, Dragon Wave,
Bridgewater Systems and many other companies, insists that every startup
follows the same set of ten principles*:
(* These are called ‘Terryisms‘ within the Matthews watershed of companies.)
1. Form an early (and lasting) attachment to the customer.
2. Follow the fastest (least effort) route to revenue.
3. Pursue only those goals that are consistent with the overall objectives of the enterprise.
4. Stay team focused—superstars must park their egos at the door.
5. Follow your mentor’s advice.
6. Create a great biz first and cool tech second.
7. Keep your costs down.
8. Leverage the investment with government grants and OPM, Other People’s Money.
9. Follow a global mandate from the get go—Canada is too small a market to be the primary focus.
10. Not only should you go after every geography, you also want to go after every vertical.
When a team proudly reports to Terry that they met their quarterly
sales goals, Matthews ‘berates’ them for not having doubled or trebled
it. They leave quite chastened.
Whatever, the formula seems to work: every dollar invested in this group of companies over the last 30 years, has returned $13.
Prof Bruce
Prof Bruce @ 4:34 pm
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Posted on
Saturday 20 March 2010
When student entrepreneurs are looking for mentors, they are
often referred by well-meaning friends or relatives to the usual
suspects: bankers, accountants and lawyers. There is only one problem
with that—most of these folks don’t know very much about
entrepreneurship.
I prefer to refer them to what I can only call unconventional
mentors—people who know the value of building real cashflow, having real
clients and customers, controlling costs, being able to do everything
in parallel, finding launch clients, self-capitalizing, using guerrilla
marketing, social marketing and networking to get their message out,
being creative and innovative, not afraid to adopt best practices from
outside the organization or wherever they find it, can turn on a dime if
something isn’t working, don’t need a lot of direction and are self
motivated and passionate about what they do, take initiative, can
differentiate themselves from their competitors, can sell their ideas,
products and services and know how to lead.
They come from many different industries and backgrounds and not of all them went to University!
A mentor (the right one) can add a lot of value with very little investment in terms of time. Here are a couple of examples:
Empire Fence and Deck—had planned to give out $25,000 in
‘Empire’ money to homebuilders to give to their clients (homeowners) as
they see fit so that the latter could buy Empire products with free
money. In return, Empire would get the heads-up every time the builder
was close to the landscape stage of delivery so Empire could be the
first at the door to ask the new homeowner if they would like some help
with construction of new fencing or decking.
The Banker might ask: “What’s the impact on your bottom line from all these giveaways?”
The Accountant might say: “You’ll have to treat all these Empire ‘dollars’ as a liability on your balance sheet.”
Finally, the Lawyer would add: “We can help you create the legal
language for both the contract with the builders who receive Empire
Money and limit your liability with respect to how it’s used by the
homeowner.”
The unconventional mentor (moi) might ask instead: “What’s your gross margin, Siavosh*?”
(*Siavosh Noruziaan is the Founder of Empire Deck and Fence.)
And Siavosh might answer: “About 50%.”
“So why don’t you do this instead: offer the builders $25,000 in
Empire Money which they can pass on as they see fit to any homeowner and
the homeowner can use it to pay for up to half of any deck or fence they order from Empire?
That way if a homeowner orders a $2,000 fence, say, from you, they
can use $1,000 in free Empire money to pay for part of it but the rest
they have to pay in the currency of Canada. Now you don’t make any money
from this order but you don’t lose any either—your suppliers get paid,
your labourers get paid, your foreman gets paid with cash from the
client.
You still get great leverage from Empire Money but you aren’t going to go broke giving it out as a promotional tool.”
A small change like this can make a BIG difference on the bottom
line as well as the growth rate of a business plus its sustainability
too.
OTG Electronics—are planning to introduce a new USB Key
that can mate with other USB Keys and exchange data. The USB Key has an
extra docking port and a LCD screen plus tiny joy stick so that the user
can select just what data will be transferred from one USB Key to
another. They also have Bluetooth capability and will retail for about
20% more than ordinary USB Keys.
They need $160,000 to build prototypes and roll them out in the marketplace.
The Banker might say: “We can’t lend you any money because as student entrepreneurs you don’t have any collateral. Sorry.”
The Accountant might say: “If you can find some investors, come back
and I would be glad to provide you with a quote to do your financial
statements. I think audited statements would be best.”
The Lawyer might add: “I can help you draft up a Shareholders Agreement when you find your Angels.”
An unconventional mentor (moi) might suggest instead: “Why don’t you bootstrap OTG, Chloe?”
Chloe might respond: “We thought of bringing in either Angel
Investors or VCs but it takes a long time to do that, we would have to
give up a lot of ownership and we don’t think any of them would be
really interested in us at this stage.”
“Chloe, I agree with that. Most student entrepreneurs think that
equity is free. It isn’t. If people are investing in your business it’s
because they want a return and, in my experience, that’s at least 20%
per annum. Have you considered going the debt route?”
“We already got turned down by our Account Manager at the Bank—our only ‘assets’ are our student loans!”
“Let me see that prototype again… You know what? I think that there
might be an opportunity for you guys to use bootstrap capital here.”
“Bootstrap capital, what’s that?” asked Chloe.
“Well, one way to look at it is this: debt is usually cheaper and
quicker to raise than equity and bootstrap capital is usually cheaper
and quicker than both! I see a big opportunity for you to get these
things sponsored.”
“Who would want to sponsor USB Keys?” Chloe queried.
“First of all, you have some free real estate on the flip side. Maybe
a Nike Swoosh would look good there or Under Armor’s logo. Second of
all, you have a LCD screen, blue tooth and two types of mating that go
on—these USB Keys either go into a laptop or a PC or into each other.
That’s an opportunity to have data go the other way and display on the
LCD. It could be sponsored messages—in fact, you could turn USB Keys
into a platform!”
“Gee that’s a whole new set of revenue streams for us,” exclaimed Chloe.
“Right. Now you just have to go out there and pre-sell 15 sponsors a
full year of exclusive advertising on your new platform at $10k each.
That nets you $150,000. Then sell the naming rights (the other side
remember) for $50k for five years and you have $200k!”
“Nice, I like it. What I like even better is that we still own 100%
of the company and we have no debt. This capital costs us NOTHING.
Thanks, Prof Bruce!”
An ounce of unconventional mentoring, a lifetime of returns!
Prof Bruce
Prof Bruce @ 5:37 pm
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Posted on
Monday 15 March 2010
I have written extensively here and elsewhere on
self-capitalization or bootstrap financing. It occurred to me though
that self-capitalization might, in fact, be considered a new form of
financing.
Think of it this way—financings have been done forever using two
basic types of capital: equity and debt. It didn’t occur to me that
self-capitalization could be something new until I asked the question:
“What is cheaper—debt or equity?” (see: https://www.eqjournalblog.com/?p=64 for the answer) with a follow up question: “What is cheaper than debt and equity?”
The latter question is answered in ‘Don’t Trade in Your Old Suit (Yet)’ which can be found at: https://www.eqjournalblog.com/?p=752.
In simple terms, debt is usually cheaper than equity and bootstrap
capital is usually cheaper than both. It was this discovery that led me
to believe that self-capital is a completely new form or different form
of capital.
Self-capital could be supplier credit, say, or deposits or retainers
from clients. Supplier credit or trade credit is often extended to
startups without cost (that is, without interest or other fees usually
associated with financings) because, if the startup is successful, the
supplier has helped to create a new client for itself, often a very
loyal new client.
Clients will also often extend credit to a new enterprise (in the
form of deposits/retainers/progress payments) without cost because
again, if the startup is successful, the client has helped to create a
new supplier for itself, often a very loyal new supplier.
Self-capitalization methods are tremendously varied (see for example: https://www.eqjournalblog.com/?p=45).
It also subsumes sweat equity which is, of course, a form of human
capital—capital contributed by the Founders of a startup in the form of
labour.
So financial capital should be broken down in your business models
and plans into three categories: debt, equity and self capital.
Prof Bruce
Prof Bruce @ 11:17 am
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