https://www.eqjournal.org/?paged=31
Posted on
Monday 13 April 2009
This blog entry is for Lostaways and, if you don’t know what that is, please don’t read any further.
Time travel is interesting to Hollywood writers because it always
ends in a paradox. If Marty McFly never goes back to 1955, does Chuck
Berry ever pen “Johnny B. Goode”? Marty hears Chuck’s tune, learns how
to play it in 1985 and goes back to 1955 where he plays it at his Dad’s
high school graduation. One of Chuck’s relatives is there also
performing, hears Marty play it, likes it and gets Chuck on the phone to
listen to ‘his’ tune, which Chuck then writes. Who actually wrote the
tune?
Well, in a recent episode of LOST, Sayid Jarrah goes back to 1974 in
order to kill evildoer, Benjamin Linus. Sayid shoots the young Ben to
prevent all the cruel things that Ben will do later on as an adult. But
Ben, the kid, is an innocent.
Can Sayid change the past? In fact, he only wounds Ben. Then Kate and
Sawyer can’t bear to see an innocent child die so they take him to the
mysterious Richard who takes him to the Island’s wizard (Jacob) to heal
him. But nothing in life is free—Ben must pay with his soul.
So did Ben become evil because Sayid shot him or did Ben’s evil doing cause Sayid to shoot him? Who is responsible?
One way to look at time travel is that these characters all live in a
Möbius strip universe—a two dimensional universe that has only one
side. It twists (once) and loops back on itself so the answer is that
there is no paradox: they follow each other endlessly on a loop with no
cause or effect. It just is.
Prof Bruce
ps. if this is an accurate description of time travel, it also
answers the question– can you change the past? The answer is: “No.” If
you exist in a Mobius Strip universe, you follow exactly the same path
forever; it has no beginning and no end. So Sayid was going to shoot the
young Ben because adult Ben was evil, the adult Ben was evil because
Sayid shot him as a child and this can not be changed.
pps. Time travel would also be the best way to get around the local
galaxy or even nearby galaxies that are/will intersect with our general
position. Just pop yourself out of time (either forward or backward) for
a bit and then pop yourself back in and low and behold you are millions
of light years away from Earth. (As suggested by Andrew Firestone,
Canberra, Australia, May 2010.)
Prof Bruce @ 3:02 pm
Filed under:
and
Writing, Research and Experimentation
Posted on
Monday 13 April 2009
Whatever the City does with Lansdowne Park, I hope there is private sector participation in its redevelopment.
When the Sens were at the Civic Centre, the City offered to build 16 boxes at a cost of $12 million or $750,000 per suite.
Instead, we asked the City if we could have a bash at it—the Sens
would build them and when it was time to leave, the suites would be left
behind for the benefit of other users, especially the Civic Centre’s
other main tenant—the Ottawa 67s.
Well, the Sens and their contractor, PCL, built 42 boxes at a cost of
$3.2 million or $76,000 per box including full F, F&E (Furniture,
Fitup and Equipment). That’s a factor of 9.8 times more efficient than
the City’s price. Now that is a lot.
As a result, it took the Sens 1.2 seasons to recover the costs of
construction through suite leases. It would have taken them 7.7 years if
the City had built them. But the Sens were only in the Civic Centre for
3.5 years so the costs would NEVER have been recovered.
Governments seem to better at governing, making policy, enforcing it,
taxing, redistributing and so forth but bad at the doing of a thing or
the running and operating of a thing. Leave that to the private sector
and overall welfare will increase, in all probability.
Prof Bruce
Ps. If you want to see the spreadsheet for the Civic Centre project, you can download it in .xls format at: https://tinyurl.com/cm6umt.
Prof Bruce @ 2:20 pm
Filed under:
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Development Economics and Entrepreneurship
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Property Taxes/Municipal Taxes and Fees
Posted on
Monday 13 April 2009
I know practically nothing about investing in the stock
market, other than what my father told me—it is primarily a vehicle for
insiders to make money.
But if you are going to invest in the markets, there may be a few
things you can do to help yourself do better than you would if you
simply took your money to a casino (where the house always wins) or
stuck it in your mattress. A Doctor I know invests in the top 20 mutual
funds and he changes the mix (i.e., changes the basket of funds as some
float to the top and others fall out of the top 20) two to four times a
year. That is his formula and he swears by it. Maybe it works, maybe it
doesn’t. I would be concerned about the costs of churning your portfolio
that often—the transaction costs and the tax implications.
BusinessWeek (April 6, 2009) printed a one page article that seems to me more promising. I summarize their findings here:
1. They follow the John Neff investment program and also Warren Buffett.
2. They first looked at the ratio of price to earnings divided by their 12 month growth rate.
3. Then they looked for growth in profits and sales of at least 7% over the past three years.
4. Then they screened for companies that had positive free cashflow over the past year.
5. Next, they needed to see operating margins higher than the median for their industries.
6. They looked for strong brands and strong franchises.
7. They looked for firms with less debt than the median for their industries.
8. They looked for companies where growth was accelerating. (Their three
year growth rate was higher than their seven year rate.)
9. They looked for companies with a minimum ROE (Return on Equity) of 14%.
10. They looked for projected growth rates of 10% or more.
This left them with a list of eight firms: Coca Cola, Apple,
Fastenal, Intuitive Surgical, Microsoft, Noble Corp. and Precision
Castparts. These were distilled from their 2009 list of 50 Top
Performers.
What this tells you is:
• look for companies that can grow from within;
• that means they fund growth from earnings and don’t have to borrow money or issue stock to grow or invest;
• this is similar to bootstrap entrepreneurs, of course, applied on a massive scale compared with the typical entrepreneur.
A couple of things that are missing from the BW analysis includes: a)
Warren Buffett likes to invest in firms that pay dividends (this gives
his firm, Berkshire Hathaway, some cashflow and he may reinvest those
dividends in that stock or others) and b) he does not like to churn his
portfolio. The reason is he does not believe in paying more transaction
costs that he needs to and he doesn’t want to pay the IRS any taxes. If
he doesn’t sell and book a gain, there are no capital gains taxes to be
paid…
What all of this should tell you is that it is no joke to want to be a
successful investor in the markets. It requires as much learning and
study and research as most other professions. And you can’t just execute
a strategy and walk away—you need to be on top of this the way you are
in your real, day-to-day job.
It is not for the faint hearted or the lazy person.
Prof Bruce
Prof Bruce @ 10:02 am
Filed under:
and
Posted on
Monday 13 April 2009
For people in planning and development in Ottawa, they have
to know or will certainly come to know a great deal about the OMB
(Ontario Municipal Board). Ottawa is one of the jurisdictions in Ontario
that sends the most appeals to the Board. Why that is, I don’t really
know but I suspect it has something to do with the highly educated
population here, many of whom have very secure jobs and have enough
spare time to want to participate in the planning process and,
sometimes, to meddle.
Some of the appeals are meant to derail or delay a competitor. Some
are done out of spite. Some are based on NIMBY behaviour. And a few have
merit. In more than 25 years of working in the development industry in
Ottawa, I have never launched an OMB appeal against a neighbour or a
competitor. I prefer to work things out by negotiation.
However, don’t expect the reverse to be true. One neighbour of ours
appealed the location of the ingress/egress for a small plaza we planned
to construct. It took eight months to get before an OMB Panel Member
and the neighbour (who was also a competitor) showed up drunk. The
Hearing lasted less than 20 minutes. We won. His only objective was to
delay our building and it worked.
It costs someone like that NOTHING to appeal a planning decision to
the Board. He doesn’t hire a planner, a lawyer, traffic consultants or
other specialists. He represents himself. We, on the other hand, have to
take the matter seriously and do all of that—spending $30,000 and eight
months getting ready for a 20 minute Hearing. Plus there is the cost of
an eight month construction delay.
In any event, here is a basic primer on the OMB process in Ontario, circa 2009:
1. A Staff report goes to a Committee of Council or the Committee of
Adjustment (COA) for discussion, public input and possible approval.
2. If approved, a decision of a Committee of Council (but not a decision
of the COA) goes to full City Council for approval within two weeks.
3. If approved by Council or the COA, any person or public body may appeal the decision to the OMB.
4. Note, if Council or the COA does NOT approve the report or fails to
make a decision, that too can be appealed to the OMB. (This is often
what developers do when Council and Staff or the COA try to kill a
project by delay when they don’t like something.)
5. In most cases, appeals must be made to the OMB no later than 20 days
after the day the council/planning board or approval authority (e.g.,
COA) gives its notice of decision on the planning proposal.
6. If the OMB decides that the appeal is frivolous, vexatious or made
only for the purpose of delay, the Board can dismiss the appeal.
7. The Ontario Municipal Board may dismiss all or part of an appeal
without holding a hearing if an appellant did not make an oral or
written submission indicating an objection before the decision of
Council was rendered, and, in the opinion of the Board, the appellant
does not provide a reasonable explanation for having failed to make a
submission.
8. Most OMB appeals are first heard in mediation to see if matters can be resolved by negotiation.
9. Failing this, a hearing date is scheduled.
10. Note an OMB Decision can itself be appealed if a party thinks that
the OMB decision made an error in law. They can, within 15 days of the
decision, ask Divisional Court if they can appeal. Some decisions of the
Board are not subject to review or appeal.
The Board is faster than it was ten years ago—the time for an appeal
can be as little as six months or as much as 18 months but most are now
being resolved in less than a year.
Prof Bruce
Prof Bruce @ 9:37 am
Filed under:
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Development Economics and Entrepreneurship
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Pre-selling, Finding New Clients, Keeping Existing Ones
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Posted on
Friday 10 April 2009
I spend a lot of my time devising with my consulting
clients, students and those that I mentor, value propositions that
involve negative costs.
That means that when someone buys a product or service from you, you
can demonstrate (usually using a spreadsheet) how that the purchase
price of the goods or services they are buying from you represent a
negative cost to their business or to them.
If you truly understand your clients or customer’s businesses or
personal needs, you should be able to demonstrate in a very clear and
concise way how this happens to be true.
A small not-for-profit is demonstrating how this can work outside the sphere of sales—in PR, for example.
They are using an online eBay- based auction to not only raise needed
funds for their organization but to create national and international
awareness of their mission.
Their costs break down this way:
a. Unique URL and website design: $3,000;
b. Cost of acquiring goods and services for auction from sponsors and celebrities: ZERO (they are donated);
c. Cost of hiring a part time PR specialist to arrange for media releases and interviews: $2,500;
d. Cost of hiring a social media expert: $2,000;
e. Cost for live event to close auction, food and beverage: ZERO (it is sponsored);
f. Cost for live event to close auction, hall: ZERO (it is donated);
g. Cost for tech equipment and lighting for event: $1,800;
h. Cost for event producer: $1,700;
i. Contingencies: $2,500.
So the total cost of the event is around $13,500 and they expect to
raise $90,000 which is about right—if you run a charity or a NGO or a
not-for-profit, you should aim for this type of efficiency—your cost of
funds should be about 15%. Of course, we all hear about stories where
charities are getting less than 50% from their fundraisers. This should
be unacceptable.
But here’s the neat thing about this: this organization will get an
incredible national and international boost to their image form earned
media (media interviews) and social media chatter and its cost will be
negative—a negative $76,500 to be precise.
Prof Bruce
Prof Bruce @ 3:46 pm
Filed under:
and
Posted on
Wednesday 8 April 2009
In the field of entrepreneurship, there are many times when
you are faced with making a decision fraught with danger and
uncertainty.
For a recent example, I turn to a young client of mine who has to
choose between a possible face value for a return on her investments in
the amount of $278,000 sometime in the next two or three years versus a
certain return today of just $28,000.
It looks like a no brainer—why would she exchange $28,000 today for $278,000 over the next two or three years?
The answer lies in a triple play—the mixture of discount rates, probabilities and expected values.
Alternative A—Stay the Course—means she and her partner will have to
wait for two properties to sell before she gets any money. Her partner
is in charge of selling those properties and she thinks she can get that
done within two years—one property will take two years to sell and the
other will take one year. She has a discount rate of 9%, so a $250,000
gain, two years out is worth about $210,000 today and a second gain of
$28,000, one year out, is worth around $25,700 today.
This isn’t too bad and if the discount rate was the only factor
coming into her decision making process, she would definitely be better
off waiting for these events to happen.
But there are two more factors she has to take into account—a. the
properties might not sell (or they might not sell for as much) and b.
her partner and her creditors might act in a way that is contrary to her
best interests and attempt to keep all of the gains for themselves. In
other words, she doesn’t trust the partner or her creditors even though
she feels she is entitled to half the net proceeds from these two sales.
She assigns a probability for the larger of these sales happening
within two years at 50% and the probability of its distribution by her
partner and her creditors at 25%. For the smaller property, she thinks
it is 90% likely to sell within a year and, again, the probability of
its distribution by her partner and her creditors is 25%.
Thus, the expected value of these transactions in today’s dollars is
$32,600 and her half share is worth $16,300—a far cry from the nominal
face value of $278,000 for the whole enchilada.
What if she instead made a deal with her partner and her creditors—to
take over the smaller property and give up her rights to the larger
one? She would be trading a $278,000 potential (total) gain for $28,000
today. But since the probability of a sale becomes 100% if her partner
agrees and because it happens today instead of a year or two from now,
the expected value of her position is $28,000—nearly twice what it would
be if she ‘stayed the course’.
Here is the spreadsheet I used to calculate the above:
Alternative Description Projects X and Y
A Property 1
Stay the Course $250,000.00
Time to receipt of cash 2 years
Discount Rate 9%
Probability of sale 50%
Probability of Distribution 25%
Discounted Value $210,420.00
Expected Value $ 26,302.50
Property 2
Stay the Course $28,000
Time to receipt of cash 1 year
Discount Rate 9%
Probability of sale 90%
Probability of Distribution 25%
Discounted Value $ 25,688.07
Expected Value $ 6,300.00
Total Expected Value $ 32,602.50
Your Share $ 16,301.25 50%
Face Value $278,000.00
B Property 2
Bail out Now $ 28,000.00
Time to receipt of cash 0 years
Discount Rate 9%
Probability of sale 100%
Probability of Distribution 100%
Discounted Value $ 28,000.00
Total Expected Value $ 28,000.00
Your Share $ 28,000.00 100%
Face Value $ 28,000.00
(You can download the spreadsheet in .xls format here: https://www.ottawarealestatenews.ca/DecisionMakingModel50_50Partnership.xls.)
This shows how probability and expected value can make a seemingly
insane decision to give up a shot at a large gain for a much smaller
one, eminently reasonable.
Prof Bruce
Prof Bruce @ 2:14 pm
Filed under:
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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’
Posted on
Monday 6 April 2009
As I get older, I have come to gain more respect for
enterprises that generate recurring revenue. As an entrepreneur, one who
tends to live by his wits, the concept of having an enterprise that
produces predictable revenues looks pretty appealing.
This happens (mostly) because the enterprise has control over some
type of factor of production—for a restaurant, that might be its
location, its menu or its franchise. For a tech company like, say, a
domain name registrar, it is a client base that has to renew their
domains each year and the fact that it is a pain to transfer domains
from one registrar to another. For IBM, it might be their services
revenues and for a software company like say Intuit, it might be the
annual updates their users need for its tax preparation software.
Whatever it is, if you build a business and it has recurring revenue,
that is a big plus because: a) it gives you a stable base to build off
of, b) you can take some risks in developing new products or services
and still have a business if it doesn’t work and c) you are able to make
at least some type of reasonable prediction about future revenues and,
hence, you can have some control over costs and your own destiny.
It is also one way to build a business that will survive you as the
Founder. If you are the engine of your business, as you would be in,
say, the consulting business or the real estate agency business or the
hair dressing business or the registered massage therapy business, when
you leave, the business pretty much stops. As a result, these businesses
have very little residual value and are hard to sell when you leave or
retire.
So when building your business model give some extra thought to this.
When Mozilla.org first built and released their open source Firefox
browser, there couldn’t have been much thought given to this. They kind
of begged for donations and looked for free worker bees in the tech
community to assist in its development.
But today, you can see Yahoo’s search bar embedded in each Firefox
Browser download. I would guess that Mozilla raises a ton of money from
that—something for each download of the browser and something for each
search originated through its toolbar. That is regular income and would
make Mozilla’s life a lot easier.
There is nothing wrong with this—if you want to do good works, you
need to raise some funding, why not this way? One of the arguments
against this particular initiative is that I have noticed it is harder
to install Google’s search bar in my updated Firefox. If this is
Mozilla’s doing abetted by Yahoo that kind of defeats the purpose of OS.
Prof Bruce
Prof Bruce @ 7:00 am
Filed under:
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Rules? There are no rules in entrepreneurship.
Posted on
Friday 3 April 2009
I can’t tell my clients what to do but I certainly am seeing two main types of clients emerge in this recession:
a. Larger companies that are frightened by these dour economic times;
b. SMEEs that are undaunted and quite sanguine about their prospects.
Now I deal principally in the real estate market and I can tell you
that clients who are buying now are setting the stage for future growth.
However, no one can time the markets exactly.
Last year, I thought the r.e. markets had reached their peak and I
practically begged some of my Seller clients to sell. Some did, some
didn’t. The ones that didn’t are selling today for 20% less than a year
ago in Ottawa and much less elsewhere.
But for every Seller there is a Buyer and what this recession means is that there will be an enormous transfer of wealth: from Sellers to Buyers.
There is one thing we know, markets go down but they also go up. And when they do, the new Buyers will become wealthier.
It is easy to say: “Buy Low/Sell High” but much tougher to do. A
transaction cratered today because one of the Wall Street Bankers
involved nixed the deal. But had the deal proceeded, the Buyer would
have done very well indeed, in my opinion.
You need a strong stomach and steady nerves to buy when everyone else is selling.
There is another rule about buying: buy before the bottom of the market.
For example, if you are buying a home today in Florida that cost
$850,000 to build two years ago but you are getting it for $350,000, do
you really care if the bottom is $325,000 when the market in South
Florida is likely to bounce back to cost in two or three years? I would
say “no”.
If in 2012, you sell the place for $850,000, you won’t even remember
that you MIGHT have been able to buy it for $325k instead of $350k and,
if you did remember, you wouldn’t care.
But let me tell you something else: you can’t actually buy it for
$325,000. If you try to time the markets exactly, you will lose because
by the time the market has actually reached bottom, the PSYCHOLOGY of
the market has already changed and Sellers will now hold out for higher
prices. So you may end up paying much more, say, $450,000 for that home
by the time you grab hold of it at what you thought was the bottom of
the market.
So you always want to buy BEFORE the market reaches bottom (in my
view, this applies to not only the res r.e. market but all other types
of real estate as well as other markets) and sell BEFORE the market
reaches its peak.
The ‘losses’ from not timing the markets exactly are fictitious and
they exist only in the Twilight Zone: you can not actually reach for
those extra returns, they are unattainable due to market psychology.
Dr. Bruce
Prof Bruce @ 2:27 pm
Filed under:
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Posted on
Friday 3 April 2009
I recently wrote to a young friend of mine (a techie) on
some things he might do to get a new and better JOB. It applies, in my
view, to just about anyone in any field, whether you have a JOB or just
got laid off. Here is what I said:
“Bill (not his real name)—I recommend to all my friends that they have:
1. a PWS (Personal Web Site);
2. a Blog;
3. a few You Tube videos;
4. a Twitter account.
Most people won’t be hired today just on the basis of a CV or a
portfolio. When an employer looks at just your CV or portfolio, that is a
static picture of you. Your Blog, any You Tube videos you create and
your Twitter account allow an employer a much deeper insight into you as
a person and your potential as an employee. Many employers now tell me
that won’t consider hiring any one who does not have a blog, PWS, etc.
Guess what? I have all of the above. Start a Twitter account, Bill and follow me and I will follow you. Find me at: https://twitter.com/ProfBruce. My blog is at: https://www.eqjournalblog.com/. My PWS is at: https://dramatispersonae.org/. My CV is at: https://www.dramatispersonae.org/ShortFormResumeParsed.htm. I am also on Facebook. And you can find videos I have done on You Tube by simply typing ‘Bruce Firestone’ in the search bar.
I use these tools for teaching but they also help me acquire new
clients in real estate and consulting. I also control about 20 websites,
I built them myself (it shows) but still over time they have become an
extension of my brain and another ‘home and office’ for me—but in the
metaverse (cyberspace) instead of RL (Real Life). I can reach most of my
critical data online too from anywhere there is an Internet connection.
Best of luck, Bruce
Prof Bruce @ 1:45 pm
Filed under:
and
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Writing, Research and Experimentation
Posted on
Saturday 28 March 2009
The Difference between Getting RICH and Being WEALTHY
(The Value Created by Long Term Control over a Sustainable Competitive
Advantage, Factor of Production, Franchise, Location or Concession)
I read a few years ago (in October 2004 in fact) that Ottawa-base QNX
Software Systems was sold to Harman International for $138 million USD.
I know that some of my students and clients read it too and they have
been thinking to build something and sell it for A LOT OF MONEY. The
only problem is that most of them might not have read to page 2 of the
Ottawa Citizen article (October 28, 2004) which said: “For Mr. Dodge, 50
and his partner Gordon Bell, 49, the deal marks a vindication for their
effort to build a profitable company without venture capital* over 24 years.” (The emphasis is mine.)
(* The teaching and research that I do at the Telfer School of
Management focuses on the great majority of firms that never have access
to VC funding. It is my view, that many VC-funded firms are just large
companies with no clients, no customers and no cashflow. We focus on
bootstrapped enterprises that have real customers, real clients, real
cashflow and, hence, real staying power. Coincidentally, most of the
founders of these organizations also end up owning their enterprises for
a very long time. On the other hand, in many cases, when you accept VC
money, you become an employee and (usually) a temporary one at that.)
I am not saying that you should never sell your business but what I am saying is that it takes time to build a great business.
People who build and sell quickly are known as flippers. Most of them flip until they flop.
If you have built a successful business, you have climbed Mount
Everest, twice. You have managed to capture lightning in a bottle.
It is so hard to build a successful business, it takes so long to do
it*, you use up so much of your lifetime storehouse of luck doing it,
that you should think very carefully before you sell it. Successful
entrepreneurs often think: “Well, I did it once, I can do it again and
again.” Bad news, people, often you can’t.
(* Terry Matthews has built many fine businesses—he once told me that
it takes him 7 to 12 years to build a great business. If it takes Sir
Terence 12 years to do it, it will probably take you and me a lot
longer…)
If you have built a great business, why sell it? What exactly will
you do next? Start again? Why go through all the heartache and risk
again when you already have a fine business you built yourself?
I didn’t feel that an article on Building and Holding onto your
business (and, by the way, helping to creditor proof yourself at the
same time; see: https://www.dramatispersonae.org/CreditorProofing.htm) would be complete without mentioning the trap that so many entrepreneurs fall into. It’s called hubris.
One of the best ways to get out of creditor hell is never to get into
it in the first place. One of the ways to do that is to not sell your
successful business. In almost all cases, a successful business will
sustain you and your family and your employees and your suppliers and
your other stakeholders far, far better than cash in the Bank.
Let me tell you a story, this one about Sean (not his real name).
Sean was a by the bootstrap kind of guy and he had one great thing going
for him: he had oodles of charm. He was a born salesperson and in the
game of entrepreneurship, if you can’t sell, you’re out of the game
before you can begin. (The three most important things in
entrepreneurship are: SALES, SALES, SALES.)
Well, one day about fifteen years ago, Sean found himself working in
the fish department for a large supermarket chain; he was wearing one of
those hair net things and he was developing arthritis in his hands from
the cold and ice he was constantly exposed to. He and his spouse,
Freda, had their first child (of what would eventually be a clan with
three kids).
Sean did not have a lot of education but he could sell. Sean thought: “I can do better than this.”
The next day he went out and bought himself his first computer (never
having even booted one up before) and started an advertising and
promotion business in his basement with nothing other than guts, charm
and a high school diploma. (I have changed his industry too to protect
his identity. I apologize to my readers.)
I met Sean one day, about two years after he started working out of
his basement, and he convinced me to move the Senators entire
advertising and promotion account over to his company. He was that good.
I certainly asked him about his bona fides. Could he produce the
volume we needed? How was his Quality Assurance program? Yadda, yadda,
yadda.
I didn’t know until years later that this was his big break; it
allowed him to finally move his business out of his basement, buy more
equipment, hire more, better people, etc. But when he told me (years
later), we laughed about it together and I was doubly glad: glad that he
was a success and glad that he didn’t let us down.
A few years later, Sean called me out of the blue. He had an offer to
buy his business from a larger competitor for TWO MILLION DOLLARS IN
CASH. I told him to slow down and think about it a bit more. I asked him
a few questions. How much are you taking out of the business? “Oh,
about $200 to $250k a year,” he said. How much do you pay Freda to do
your books? “Ah, about another $60k.” Do you have any company cars?
“Yeah, reckon so: two of them in fact.”
In total, Sean and his family were getting about $300,000 a year from
the Company, year in year out: it was a sustainable number.
Then I asked him: “Is your company profitable?” He proudly stated:
“It sure is! We make about another $250,000 to $275,000 a year but we
plow that back into the business to buy more equipment, do more staff
training and things like that.”
“So Sean, who do you think benefits from the increase in your
retained earnings?” “Huh?” “Well, who does that extra $250,000 to
$275,000 actually belong to?”
The answer is, of course, the shareholders—Sean, Freda and their three kids.
So Sean and his famdamily get about $300k in cash and another $250k
in increase in value of the corporation each year. That’s $550k a year,
year in, year out.
I asked Sean, do you know what interest rates are on term deposits
right now? No. Well, they are about 2.7% p.a., which means that even if
this sale was tax free, your income from your two million dollars is
going to be 54,000 bucks a year and every year inflation is going to eat
away your principal. Now why would you give up $550,000 a year and a
business you love and built yourself for that? And can you live on
$54,000 a year? “No way,” he said. What will you do in couple of years
then? “I guess I would have to start up the business again after my
non-compete agreement runs out.”
But this time, he will have zero customers and be fighting a much
larger, entrenched super-competitor that he had himself made much
tougher to compete against.
You see where I am going?
Sean did not sell his business in the end.
Let me quote actor and comedian Chris Rock:
“Shaq (Shaquille O’Neal who plays in the NBA) is rich but the man who signs Shaq’s pay check is wealthy.”
Chris Rock got it exactly right. You can get rich by winning the
lottery, becoming a NBA Super Star, speculating, asset flipping,
gambling, picking the right parents or prospecting for gold, diamonds,
nickel, whatever, but you can’t become wealthy doing any of these things
(and often you don’t become rich either.)
Wealth derives from control over a factor of production, a license, a franchise, a territory, a concession*,
some IP (Intellectual Property like the hidden formula for Coca Cola or
the 11 secret herbs and spices that the Colonel uses to make fried
chicken), a competitive advantage, a comparative advantage, property
ownership (Location, Location, Location): anything that creates a
sustainable, repeatable and renewable income stream; it is your ‘pixie
dust’ (see: https://www.dramatispersonae.org/PixieDustDefinition.htm)–
the magic that really makes your business work.
(* What was the grant by the Crown of exclusive fur trapping and
trading rights to the Hudson Bay Company in Rupert’s Land (all the
lands, all 3.9 million square kilometres of it, that drained into
Hudson’s Bay) in 1670 worth to that firm? Well, they became one of the
longest-lived corporations ever known: in continuous operation to this
day. Their great wealth and economic and political reach was based not
only on their fur trading rights concession but also on their control of
significant real estate assets. They own some of the most valuable
sites in many Canadian cities. )
Long term wealth is often based on these types of privileges gained
through political maneuvering. The Fred Harvey Company controlled the
Mule Train concession to the bottom of the Grand Canyon for many years
which was an enduring source of monopoly profits for them. My wife and I
had an opportunity to take a couple of mules down to Phantom Ranch and
stay overnight there in one of the most memorable trips of a lifetime.
The Canyon is a sacred place but the only company with the right to
take visitors down to ‘Shangri-la’ by mule was the Fred Harvey Company.
Waiting times for a place on the mule train is over one year. Think
about it: no competition by fiat (i.e., by dictat or edict of the
National Park Service), long waiting times, total price setting control,
a seller’s market, what more could you want?
If you are the Emperor of Japan, head of the House of Windsor (aka,
the Queen of England) or head of the Holy Roman Catholic Church (aka,
the Pope), you have a different type of concession but ones that have
proven to be hugely long lasting. But maybe they aren’t quite so
different after all: their fortunes are largely based on real estate as
well as hereditary or faith based positions of power.
The Queen of England is a huge rentier (basically, a landlord with
residential and commercial properties as well as broad acres for lease);
the value of the Emperor’s estate in downtown Tokyo (the Imperial
Palace) is incalculable and the Church has developed one of the greatest
portfolios of property on the planet by colonizing some of the best
sites in every city and town where the Church was represented.
Astutely, they almost never sell their property, calculating,
correctly, that land leases of 49 or even 99 years were the right way to
produce income for an institution with a time horizon measured in
millennia. They can enjoy income from their properties without having to
give up long term control over their lands. After the completion of a
land lease, the property reverts back to the Church and the process
begins all over again: perfect inflation protection and, since they are
tax exempt too (in most instances), the Church has one of the most
stable financial platforms imaginable.
In my view, the Queen seriously eroded the long term stability of the
House of Windsor in the last decade of the 20th Century by voluntarily
giving up the Crown’s tax-exempt status in an attempt to appease her
critics. It was very democratic of her but certainly will have adverse
consequences for her heirs.
There is also no better business to be in than the Government
business: they keep all the best businesses for themselves. For example,
there is no higher margin business than the Casino or lottery business
and governments everywhere seem to either keep the business and operate
it themselves (as most Provinces do in Canada) or regulate it and tax it
heavily.
They dole out other choice concessions to their friends or
influential people who can help them get re-elected. If their costs go
up, they simply increase their prices (aka, taxes) and, if you don’t pay
the higher prices (taxes): a) you have no where else to go for service
anyway (e.g., for your water and sewer connection) and b) they can force
you to pay either by taking away your property or your liberty or both.
Governments also love the liquor business too: again, either they
control it and operate it themselves or they simply control it and hand
out concessions to private operators and tax them to the max.
Yesterday’s bootlegger is today’s protected oligopolist.
Just how important are these types of ‘concessions’? Well, look at
what the professions do. Professional Associations (for Architects,
Engineers, Lawyers, Accountants, Doctors, Physio Therapists, Dentists,
Nurses, even Real Estate Agents) are based on the tradition of guilds
made up of artisans who band together to: a) raise prices and b)
restrict or otherwise raise barriers to entry for newcomers. They always
cover their tracks (it’s called political cover) by claiming that they
are raising standards to protect the consumer and the public interest
which no doubt they are doing, at least, in part. Not to be too
facetious about it but self-interest appears to be a top consideration
for these organizations. Unions (like, say, the NHL, MLB and NBA Players
Associations) perform much the same function for their members.
In Canada, the Canadian Radio, Television and Telecommunications
Commission, the CRTC, was formed to dole out concessions to industry
players in what has historically been one of the most profitable sectors
of the Canadian economy. There is no question that the regulator and
the regulated have formed a pair bond that is mutually beneficial and
serves to keep out competition. When profits in the industry are
threatened, broadcasters can run to the Commission (as they have done in
the current recession) and ask for more concessions (in the most recent
hearings, they asked the CRTC to order cable customers to not only pay
their cable operator but also the networks. So far the Commission has
refused (for once) to go along but the canny players in Canada’s cozy
mass media have a long record of eventually getting what they want.)
The Commission’s so-called mission is to protect Can-Con (Canadian
Content, aka Canadian Culture) but there seems no doubt that the
regulator of Canadian airwaves has been captured by the major firms that
are ‘regulated’ by the Commission. The proof is that when new licenses
are issued, they almost invariably go to established players. New
entrants need not apply. The final proof is just turn on any Canadian TV
network in prime time so you can watch Friends and Fresh Prince reruns, Everybody Loves Raymond, Lost, American Idol, Dancing with the Stars, Survivor and a ton of other US originated programming.
Now let’s just look at some numbers that will demonstrate the difference between being rich and being wealthy.
Say someone controlled the early Beatles catalogue (say, someone like
Michael Jackson). Mr. Jackson is reputed to have bought the catalogue
in 1985 for $47m (and he lost his friendship with Paul McCartney in the
process.) By 1993, MJ’s company was reportedly earning $30m from it
(albeit, MJ had added other songs by other artists by that time but
let’s ignore this for the moment) and the catalogue was then estimated
to be worth $300m. This yields a cap rate (capitalization rate: NOI/SP,
Net Operating Income divided by Selling Price) of 10, which is pretty
typical for this type of privately held asset. No one knows what kind of
income stream he got from the catalogue by 2004 but it had a rumored
value of $1 billion. MJ still owned 50% of it, the balance was owned by
Sony.
With a cap rate of 10 and given that MJ owned half of the catalogue,
we can guess that MJ got $50m a year in income from his ownership. Plus
the Beatles were making a huge comeback in 2004. (My then 14 year old
daughter, Jessica, only wanted Beatles CDs for her birthday and knows
just about every word to every tune the Beatles ever recorded.) So it
wouldn’t surprise me if MJ’s income was going up every year from this
source. This is called wealth.
However, let’s say that MJ was in need of some quick cash and sold his interest to Sony for $500m. Now MJ would be rich (for a while) from selling his interest in the catalogue but he would no longer be wealthy
because he has lost the ability to renew his wealth every year by
producing an income stream from control over this particular factor of
production.
But what’s that you say? He could invest the proceeds in T-Bills,
Muni Bonds and GICs (Guaranteed Investment Certificates). Sure he could,
but they produce puny 2.7% to 4% rates of return. If MJ paid $100m in
taxes, he would be left with $400m, which would give him an income
stream of $10.8m to $16m a year with no inflation protection. I mean if
MJ were to continue to control the catalogue, he could always increase
the price (aka royalty) paid for each tune if inflation takes off and
starts to bite into his revenue stream. But even ignoring inflation, why
would MJ trade an income stream of $50m a year that makes him wealthy
to become a remittance man getting $10.8m to $16m a year? MJ had already
turned down offers to sell; presumably he understands the Chris Rock
difference between becoming rich and being wealthy*.
(* Somehow I doubt that Lisa Marie Presley had the benefit of the
same advice. In December 2004, it was announced that Lisa had sold her
father’s image and name as well as 85% of Elvis Presley Enterprises Inc.
to Robert Sillerman-controlled SFX Entertainment for a reported $100
million, which included some stock in a new SFX controlled business. So
not only does Lisa no longer own, control and direct a valuable
franchise (her father’s estate, which brought in $45 million last year),
she didn’t even get all her compensation in the form of CASH. As any
entrepreneur knows, cash is KING. (Pardon the pun, Elvis). Now compare
that with J.K. Rowling’s absolute and tight control over her creation
(the Harry Potter series): not only the publishing rights but
also the film rights and other media rights as well. It has made her the
richest woman in the U.K., worth more the Queen.
Did you know that many, maybe most, lottery winners blow their entire
wad in less than five years? By that point, their spouses have left
them, they are alienated from their old friends, they have got a whole
new set of ‘friends’, who are only around while the money lasts and they
don’t even have their old job to go back to. Many of them have picked
up nasty habits along the way like taking drugs. It’s absolutely amazing
how many of them end up in bankruptcy. They are much worse off for
their ‘good fortune’.
People are meant to work. They are built for it. If you have built a
good business, control a great concession, own a valuable franchise,
possess a ‘secret’ formula, whatever, hang on to it, fight for it: it is
your security against creditor phone calls in the middle of the night
asking you: “Mr. Jones, when can we expect payment?”
(Speaking of Jones, Jerry Jones, owner and GM of the Dallas Cowboys,
who fired coach Wade Phillips during the 2010 season, when asked about
hiring a start candidate, said that not one of these Super Bowl
winning coaches had ever gone on to win one with another team. I think
Jerry is leery of hiring someone based on their past accomplishments and
I think he is right.
It is so hard to put together the talent, the coaching staff and the
game plan to produce a Super Bowl-winning season, that maybe these
former superstar coaches can’t duplicate their past successes. Super
Bowl-winning teams have to have healthy players and, in a mega violent
sport like the NFL, there is also a lot of luck involved.
I suspect that putting together a winning business model and a
skilled team to make a startup successful might be a lot like the NFL:
hard to do twice.
Mark Zuckerberg, when asked why he didn’t sell Facebook despite
offers that started out in the millions and has since gone to $15
billion, said simply that he might never have such a good idea again.
Zuckerberg had a clear vision of Facebook right from the start as a
platform and utility that put FB and himself as CEO at the heart of the
next important wave of change on the Internet– the social web. And why,
when the value of his company is going up at a geometric rate, should he
sell? You must always ask the question: if I sell what is the rate of
return on my alternative investments? If it’s less than what you are
seeing with your current enterprise, hold onto it.)
I was doing some work recently with a hugely successful real estate
agent. He is a salesperson for a large brokerage and is vying for one of
the top national spots in terms of sales volume. He has developed a
team approach to selling residential real estate and sold more than 120
homes last year.
I was surprised to learn (and it surprises me that after a great deal
of experience with the real estate industry that I didn’t already know
this) that he has developed a long term and sustainable
competitive advantage. Remember, this is an industry that has no minimum
educational requirements, not even a high school diploma is required to
get your license. After successfully completing a three phase course in
Ontario, virtually anyone can become a real estate agent. So the
‘barrier’ to entry is pretty low. (If you can’t be a real estate agent,
you can always be a homebuilder. If there is absolutely nothing else you
know how to do, not even sell real estate or used cars, then just pick
up a hammer and saw and become a builder.)
There are more than 40,000 real estate agents in Canada (more
properly called ‘sales representatives’; technically, ‘agency’ is a term
reserved for the relationship between the broker and the client). Many
of them are very hard working and smart people. How in the world would
anyone ever develop a sustainable, competitive advantage in such an
industry?
Well, first of all, John (not his real name) treats his position as a
salesperson as if it were a stand alone business. It is my personal
belief that every salesperson in every industry should consider himself
or herself as a quasi-independent entrepreneur.
John has a business model (see: https://www.dramatispersonae.org/GTBR/GettingTheBusinessModelRight.htm)
for himself and his team of sales assistants. He views his broker as
one of his suppliers: the broker supplies John and his team with office
space, holds his license, manages the trust accounts, pays the phone
bill and keeps the lights on. He doesn’t really expect much more from
his broker although he counts on the firm (which is a nationally known
company) to burnish its reputation so at a minimum his association with
the firm is not a net negative.
Trust in this business is hard earned, important to his success and
easily lost. But what freedom: you don’t have to worry about keeping the
lights on, paying the phone bill or what have you; you just get to
concentrate on your own core competency (i.e., selling) and there is no
upper limit on what you can make. If more people thought this way and
they treated their sales as a personal business for life (PB4L, see: https://www.dramatispersonae.org/PersonalBusinessesThoughtExperiment.htm), then we would have a lot more high performers and happier sales reps.
As a supplier, the Broker represents John’s major COGS (Cost of Goods
Sold), taking a 30% to 10% bite out of his commissions (the percentage
that goes to the Broker decreases as John passes certain sales
thresholds.) John is responsible for his own marketing and sales,
personnel selection and HR policies as these relate to his own team.
By thinking strategically about himself as a separate business unit,
John and his team have experienced tremendous sales growth. But all of
this would not have been possible without a bit more ‘pixie dust’: John
has spent the last 15 years ‘farming’ a specific geographic area; he now
controls more than 30% of all listings and sales in ‘his’ area.
I realize this is an old real estate trick; i.e., concentrating your
marketing effort in one target area. In the real estate business,
listings are everything. You have to list to last. If you control a
listing, then buyers or buyers’ agents have to come to you. Eventually,
if you control enough listings within a designated area (probably around
15 to 20% at a minimum), you become the market maker: sellers
have to come to you to get their properties listed and sold because you
have so many buyers coming to your (already) listed properties that if a
property isn’t just right for Harriet and Albert Smith, you probably
have another one that is just perfect for them.
John has so many of his signs in his designated area that: a) it
discourages other agents from trying to set up (poach) in that
neighborhood and b) people who want to list and sell would think twice
before listing with anyone else. The awful thought in the minds of
potential buyers if it wasn’t listed with John’s team might be: “What’s
wrong with this house?” And that is the kiss of death in residential
real estate. Perception is everything.
It turns out that farming a neighborhood and becoming its market
maker are sustainable competitive advantages in an industry that really
shouldn’t have one given its fundamentals. So think about it: it took
John 15 years of incredibly hard work to get to this position. He sells
over $30 million worth of homes a year. He does this with an average
house price still in the $200,000s as compared with other agents in
larger, wealthier markets such as Toronto where average home prices are
in the $700,000s or higher and he still manages to make it into the top
1% of agents in his firm. Now if decides to cash in his chips and sell
his PB4L, what would he get for it? Well, nada, nothing. That’s why it’s
called a Personal Business for Life.
Prof Bruce
Postscript: John could, of course, explore a way to perhaps pass on
the value he has created. He could take his broker exams and set up his
own shop. In that way, his clients’ loyalty would be to the Brokerage
(his Brokerage) and not necessarily to John. So when it comes time to
sell, John has (maybe) something to actually sell: the Brokerage’s
client list and existing listings. But there are obvious problems with
this approach: a) the clients may not port over to a new, unknown and
untested Broker-of-Record and b) maybe after John retires, the clients
that have followed him to the new enterprise might drift away because
they followed John and like and prefer working with him. I am not sure
that there is any simple solution to this problem because surely one of
the objectives of entrepreneurship is to create something that has a
life beyond your own; in that way, you would have created something that
can make money for you ‘while you are lying on a beach’.
For real estate salespersons and entrepreneurs, this remains a
challenge that requires more thought. What John has created, so far, is a
PB4L that remunerates him richly. This is only half the equation in
entrepreneurship. He and I haven’t (yet) solved the other half and,
unless we do, what he has done is basically create a J.O.B. for himself,
albeit, a highly paid one. Whatever John does though, he should clearly
and doggedly keep what he has so dearly created: Build and Hold, Friend.
Postscript 2: Here is a letter written by Frank Sinatra in 1990
talking about how hard it was to work his way to the top of his industry
and why, when you get there, count your blessings and be grateful for
your success and that you have a following. It’s worth reading because
the same is so often true for entrepreneurs: when you get to the top of
the heap, remember what got you there in the first place.
Copyright. Dr. Bruce M. Firestone, Entrepreneur-in-Residence, Telfer
School of Management, University of Ottawa; Founder, Ottawa Senators;
Broker, Partners Advantage GMAC Real Estate, Brokerage; Executive
Director, Exploriem.org. Ottawa, Canada. March 2009. Entrepreneurship
and Development. Email: bruce.firestone@century21.ca Blog:
www.eqjournalblog.com Twitter: https://twitter.com/ProfBruce
Prof Bruce @ 11:54 am
Filed under:
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Bootstrap Entrepreneurs– Case Studies
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How to (Not) Get Elected Student President
Posted on
Wednesday 25 March 2009
Guest Blog by Tyler Steeves, University of Ottawa Student and Former Candidate for Students’ Union President
(I asked Tyler to write about his experiences while running for
student president in 2009 because it is a lot like selling a product
(himself) using GM, Guerrilla Marketing, techniques…)
Hi Bruce,
First of all, yes, the winning guy got 700 more votes than I did in
the end, but there were some things I could have done differently.
My posters looked really good, but the name was not large enough, and
it was in CAPITAL LETTERS, Vs. Capital Letters. As someone who knows
marketing like you do, I’m sure you would have already known that it’s a
lot harder to read. I would have made the name larger on the poster
too.
I also would have printed more handouts on smaller paper. Wolfe, (the
winner) made handouts a quarter of the size of mine which allowed him to
have four times as many handouts; I only had 660, he would have had
2640, a substantial difference.
Wolfe told me he did 120 classroom presentations. Since, the campaign
period is only 12 days long and there are only 8 slots per day, that
means he did every possible classroom presentation, and for 24 of them
got two done in one slot. This is only something that I started to do
near the end.
I got up to three presentations done in one slot. However, I started more slowly.
BTW, Wolfe also didn’t have classes. But I did.
So I could have done better had I first of all scheduled all of the
classes I was going to hit up. Secondly, I should have created a task
force of classroom presenters and trained them how to do a good class
presentation.
I should have gotten a friend who is a TA to open up a classroom podium and let people practice, for example.
Fortunately, I had a great video: check out Tylersteeves.ca and you
can see it. Anyone could play my video in a class so that they wouldn’t
have had to do much talking, but rather let the video do it for them.
This would have allowed people who would not be comfortable doing a
class presentation to do one.
This is the only real way to significantly boost the number of classrooms visited since one person can not do them all.
I also would have gotten more people putting my name on chalkboards,
its free advertising (!) that people are exposed to for up to 3 hours at
a time.
Next, I would have attended meetings with special interest groups,
specifically as many of the larger student associations as possible.
These groups generally vote in a block. I did not focus enough on
interest groups on campus, and they are key sources of large numbers of
voters.
I had a great team behind me, but by the end many were in the middle of
midterms and were very busy. Also, several of my executive team members
were traveling on weekends and not as available as they might of otherwise have been.
I would make sure to check next time before putting them at the core of my team.
Our team was pretty inexperienced; none of us had been involved in a
campaign before, so we made some rookie mistakes. We had to take down a
banner and it never got put back up. The writing on our banners was not
LARGE enough. Our posters were not ideally placed.
I would focus next time on concentration—the first day, you are only
allowed 100 posters, I would have focused exclusively on doors with
those 100. The next day, you are allowed another 150. We let crucial
days slip by before we put the rest up. They ALL need to be put up as
soon as they are allowed. I also would have gotten my posters in
residence sooner.
Some of the jobs that I assigned to people were not relevant to the
campaign and some things that I needed quite badly, I did not take into
proper account. I needed someone to run around and put up random
posters, make sure other candidates were following the rules, and do
small errands which otherwise take up precious time.
I also would have checked up on some of my team more. I intended to
empower certain team members, but they got so busy, and I believe that I wasn’t on top of this.
We talked about doing a lot of great things that never got done.
A realistic timeline for the campaign was crucial and we didn’t have
that. Everyone should know, what is going on when, from the beginning.
Ambiguity cost us in this one.
Also, making sure that people are put in the right positions with
respect to their skill set is vital. I tried to do this, but slipped up
in two cases.
I didn’t know what jobs we really needed to do until too late. I
overlooked simple things (the importance of creating Banners and posters
EARLY) and spent way too much mental energy on pipe dreams that never
materialized (snow sculptures, mini-rallies, free hot-chocolate) all of
which were good ideas but I needed to focus on the simple things first.
I would have been more concrete with my platform and less vague too. I
should have put forward the things that I actually wanted to do, not
just generalizations.
All of this makes it seem like the campaign was a total disaster,
which is far from the truth. We had a great team overall, our video was
brilliant (and we helped it go viral over Facebook through the use of
comments, and many different people posting it).
We had a good image, our posters looked great and there weren’t any
colossal errors. However, it is the little things that make the
difference in something like this. Although, we had volunteers showing
the video in their classrooms and writing on chalkboards, we could
definitely have had more.
This election was within our grasp, but we were fighting an uphill
battle. Wolfe has been on the SFUO for two years, and has had that long
to get his name out there. Everyone knows him.
I had two weeks and people did start to listen. With everything that I
learned I know that I could win if we had another campaign, but it sure
would have been great to get it on the first try, oh well.
Thanks for the interest. It feels good to write down some of the
things I’ve learned through this process. I feel like this has been
pretty long, so I’ll keep it at this for now.
Cheers,
Tyler Steeves
Prof Bruce @ 2:09 pm
Filed under:
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Pre-selling, Finding New Clients, Keeping Existing Ones
and
Rules? There are no rules in entrepreneurship.
Posted on
Tuesday 24 March 2009
I heard a good story from one of my colleagues yesterday
about how his kids developed a new enterprise on their own. They went
house to house in their neighborhood and signed up every second or third
homeowner to their new program to save the planet.
For two bucks a month, the two kids would collect used batteries for
recycling. Few turned them down– the value proposition/biz model is
terrific: a) you are not supposed to throw your batteries in the garbage
where they will decompose in land fill sites releasing huge amounts of
toxins*, b) most people would like to recycle their batteries properly
but are not aware of how to do this, c) the kids are cute, d) it only
costs two bucks, e) you will notice that they get paid like snow plow
operators: it’s take or pay. If it doesn’t snow, your operator still
collects. In effect, you are paying a stand-by fee.
The kids’ business model is a good one because the kids have a
REGULAR revenue stream. Even if a household has zero batteries to
recycle in any one month, the kids still get their two bucks. In fact,
most homeowners aren’t going to pay two bucks a month– they’ll just give
the kids 24 bucks for the year in cash or by cheque. So another nice
feature to their biz model is that they are likely to have a negative
cash conversion cycle– i.e., they will get paid BEFORE they actually
deliver the service…
So if they sign up 100 homes, they can make $100 each per month. Not bad for 10 and 12 year olds.
Prof Bruce
(With thanks to Keith Hawn for the story.)
* There are many different types of batteries and they are all more
or less harmful to the environment. Lead-acid batteries are very common
but you also have in wide use: Lithium-Manganese Dioxide, Lithium-Carbon
Monofluoride, Lithium-Thionyl, Nickel-Metal Hydride, Nickel-Cadmium,
Nickel-Metal Hydride, Alkaline-Manganese and many others. There are
plenty of Mercury Batteries (particularly high energy batteries and very
reliable) used in World War II still releasing mercury and mercuric
oxygen to the environment.
It seems to me that of the billions of dollars being spent on Bank
bailouts today, a useful thing to do with a small fraction of government
bailout money would be to do more R & D in the battery field to
produce a high energy density battery that powers everything from
laptops to cars safely and efficiently. Safety means: a) their
manufacture, use and disposal doesn’t harm the planet and b) they don’t
overheat or explode in your lap or under you in your car.
I have never understood why we can’t produce a small fuel cell that
sits inside your laptop and, when it needs recharging, you pour in a bit
of alcohol and, presto, it runs for another couple of weeks and
produces only water vapour…
Prof Bruce @ 6:28 am
Filed under:
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Pre-selling, Finding New Clients, Keeping Existing Ones
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