EQ Journal Archive 37

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The Ten Most Important Things for a Startup to Do

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Posted on
Saturday 1 March 2008

What are the Ten Most Important Things You need to do
to Create a Successful Startup?

By Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., PhD.,
Entrepreneur-in-Residence, Telfer School of Management, University of Ottawa
March 1st, 2008

(Prepared for the First Annual Entrepreneurship Seminar sponsored by The Entrepreneurs’ Club, Telfer School of Management)

Well, there are certainly a lot more than ten things you need to do
to create a successful startup but for the sake of brevity today, I will
limit myself to ten. Here is my list:

1. Select the right idea for your next startup;
2. Create business models for the 21st Century that produce great
results so that the harder you work, the more money you make and so you
can compete effectively with hard charging entrepreneurs from China,
India and other Tigers by having a business model that can not be easily
duplicated or dislodged and gives you a lasting, sustainable
competitive advantage and concession or franchise.
3. Add differentiated value, innovation and ‘pixie dust’ to your business models;
4. Create a compelling value proposition and learn how to clearly demonstrate it to customers and clients;
5. Self-capitalize (bootstrap) the new enterprise so that you end up owning it and not a VC firm or other investors or partners;
6. Use smart marketing (guerrilla marketing and social marketing) so you can acquire customers and clients cost effectively;
7. Mass customize products and services using the Internet so that, for
the first time in history, you can get custom outputs from standard
inputs as well as reverse out some of the work to your clients,
customers and suppliers using the Internet so that you create a scalable
enterprise that can produce more value than if you had a JOB;
8. Find pre-launch and launch customers and sell, sell, sell (as Ben
Affleck said in the film Boiler Room: “ABC—always be closing);
9. Execute expertly, show leadership and become a trusted member of your community and business ecology;
10. Make your own rules and set and achieve your goals!

Select the Right Idea

If you ask me, the big idea is LESS important than good execution
which obviously includes staff training. Most of my students think that
the big, NEVER BEFORE TRIED, idea is more important but there are lots
of companies that do very well with good execution of fairly mundane
things.

I am pretty sure that the only thing that is in infinite supply is
ideas; numbers, for example, represent an idea and they are infinite.
There are probably more than 25 million smart Americans in their
basements at any one time trying to come up with the next bid idea
(like, say, Google). They are generating a huge volume of new ideas;
that tends to suggest, in economic terms, a surplus of ideas while the
skills to implement them are in much shorter supply and, hence, the
latter will generally attract a higher price.

The market for new ideas, such as it is, tends to put a low price on
them (just try to sell your BIG IDEA at a business model stage and you
will see: a) how hard it is to do that and b) just how little you will
get for it). Obviously, a startup that combines some type of innovation
with good execution is better off than one with just sound execution.
Fred Smith, when he started Fed/Ex, brought the hub and spoke system to
the overnight package delivery business, essentially creating that
industry.

Before that, it was thought to be an impossible challenge—if you had
60 cities as both origins and destinations in your US network that would
have meant that you have 1,770 unique pairs of cities ((60 x 59)/2) and
you would need to make 3,540 overnight flights to connect them all, an
obvious impossibility. If you had instead five hub airports within easy
trucking distance, you would have ten unique pairs of cities and, hence,
could get by with just 20 overnight flights to connect continental USA …

However, most successful startups do not create new industries or are
not necessarily first movers. Google wasn’t the first search engine;
however, they did bring significant innovation to the table including:
neutral search rankings, search rankings that reflected traffic loads on
and links to a site, paid search links and auctioning off of paid
search links. GradeAStudent.com, now GradeATechs.com, was not the first
at home computer repair service but their execution was good and they
used a back end system (GASnet) to automate their appointments and their
billing systems.

Create Business Models for the 21st Century

Digg.com’s founder, Kevin Rose made $60 million in 18 months. Kevin was just 29 years of age so there is still time for you!

While I think great execution is really important, having some type
of innovation in your business model can help you create a sustainable
advantage; i.e., you need to have some type of ‘pixie dust’ or
differentiated value in your organization’s business model. This creates
a franchise or concession for you that is hard for others to copy.

Let’s return to the Digg.com model. What makes it different? What is its differentiated value?

1. It is a new model for a newspaper uniquely adapted to the Internet.
2. It is not simply the online version of the New York Times or some classified advertising page transferred to the Internet.
3. It is a digital community made up of a fairly homogenous demographic: 80% are male, mainly young techie readers.
4. Readers are also contributors.
5. Readers dig up interesting stories from all over the web and post
brief synopses to the site and links to them whereupon other readers
vote on them—the most popular ascend the page.
6. The site harnesses the competitive instincts of the readers/contributors to compete to see whose story will lead.
7. The site works because of its homogeneous demographic—contributors only post stories that will be of interest to the group.
8. The site is dynamic—leading stories change by the minute or hour.
9. Digg.com’s cost for headline writers = ZERO.
10. Digg.com’s cost for journalists = ZERO.
11. Digg.com’s cost for editors = ZERO.
12. Digg.com’s cost for distribution = ZERO (at least, the marginal cost is practically zero).

This is a lot of pixie dust. I think Digg.com is important for
another reason—I believe that it is important for communities that are
working together to be reading the same things, to share a common
culture. If you think about it for a moment, many of the communications
you have in a given day are made much easier by possessing a common
culture; you don’t have to explain where you are coming from and the
context of what you are saying in every conversation you have.

Now the innovative nature of Digg.com would be pretty useless without
good execution so creativity is a necessary condition for the kind of
success Mr. Rose has had but not a sufficient condition.

Add Differentiated Value, Innovation and ‘Pixie Dust’

To build sustainable business models, you need to have control over
some type of ‘factor of production’. When my wife and I took the mule
train to the bottom of the Grand Canyon to visit Phantom Ranch, I
realized how valuable the concession was to operate the service. First
of all, it’s a monopoly service. Second of all, it operates in one of
the seven wonders of the world, a sacred place. Thirdly, there is
practically unlimited demand– you need to book ahead many months or you
won’t be going.

How would you like to control the bridge from Windsor to Detroit
which in the first 11 months of 2005 carried 8.9 million vehicles and is
one of North America’s most congested choke points? And every one of
those vehicles paid a toll to Manuel Moroun’s company. Now it appears
that Mr. Maroun has negotiated a 90 year agreement with the Wayne County
Port Authority to build another bridge. The Port Authority is rumored
to get a 2.5% royalty. Sheesh. That means that Mr. Maroun gets 97.5%.
Seems like a pretty good deal for him.

Business models that work need to have some kind of differentiator;
some type of ‘pixie dust’, the magic that makes a business work. For a
National Football League franchise, it is the right to operate an
exclusive franchise within a defined geographic area and exploit all the
revenue rights within that area– tickets, merchandise, suite rentals,
sponsorship, signage, parking, etc. and to share in national television
revenues.

Most entrepreneurs who don’t have some type of value differentiator
either can’t build sustainable businesses or the ones that they do build
produce no more value for them than if they just went out and got a
JOB.

The role of an entrepreneur, in my view, is to build a business that
creates more value than that and which can take on a life of its own–
i.e., it can survive the passing from the scene of its founder or can
make money for its owner while she/he is lying on a beach. The latter is
the preferred option, obviously.

A spa, for example, might have some pixie dust because of its high
end location or because it has some highly sought after hair stylists or
because it has some sophisticated software that runs its appointment
calendar and inventory of products and reverses out some of the work to
its clients (e.g., they can self book online).

A friend of mine, Rob Hall, runs Pool.com, a business that
revolutionized the backordering of domain names. Instead of paying $60
to backorder a domain name that may never delete, Pool.com allows you to
register your backorder FOR FREE. You only pay if Pool.com is
successful in getting the name for you. Guess which site gets most of
the backorders now? (BTW, over 5,000 dot-COMs delete every day).

Pixie dust/value differentiation– think about it, see how you can add
some to your business and watch your revenues and margins grow.

Create a Compelling Value Proposition

Demonstrating your value proposition from your client’s point of view
is a powerful tool in sales and I don’t care if you are selling vacuum
cleaners, architecture services or hockey tickets. Clients and customers
don’t really care what cool technology you are using or incorporating
in your product or service or what, in general terms, it can do. What
they want to know is, what can it (you) do for me? And usually, that
means, what can it (you) do for my bottom line?

Recently, I ran into Yoga Specialist, Heather Moore, at Mountain Goat
Yoga Centre in Kanata. Heather is in her first year of training Ottawa
Senators players who are trying Yoga for the first time and I wanted to
know how it was going. She told me that the European players, especially
her Russian players, were really into it. They were seated at the front
of the class. Some of her North American players tolerated it and some
thought Yoga training is for sissies.

She thinks things will go better when they get their own Yoga mats
with their names on it (she admitted that she wasn’t the biggest hockey
fan before and didn’t know all their names). Knowing their names will
mean she can call out recalcitrant players and encourage others.

For my macho readers who don’t know this, Yoga uses your own weight
to improve your flexibility and core strength and, at advanced levels,
is hellishly hard. It makes sure oxygen gets to all parts of the body
and promotes faster healing. It gets stress levels down and, if you
don’t think stress levels are high for professional athletes, you don’t
know much about sports. How would you like your on-the-job performance
rating done every day and on the front page of your local newspaper too?

More core strength, more flexibility, greater agility, better
balance, faster healing and lower stress levels are sure to be good for
hockey players. They need tremendous levels of dexterity to play in the
National League. They need strength too but not brute strength like NFL
players do. Long lean muscles will beat muscle mass in the NHL.

It turns out that, in all probability, a very small investment in
Yoga training will result in very large benefits for the Sens by
reducing the number of player days lost to injury. Check out the
spreadsheet
(https://www.dramatispersonae.org/ValuePropositionOttawaSenatorsMountainGoatYogaCentre.xls)
I did on this which I have uploaded to my server in .xls format so
that you can download it and save it as a spreadsheet and fool around
with it yourself on your PC.

(For an investment of just over $7,000 in Heather’s Yoga instruction
fees, the Sens reduced team injury costs by over $350,000 in the
2006/2007 Season according to my rough calculations… a pretty dram good
ROI.)

See if you can adapt it for your product or service or create one
like it from scratch. Try to show how one single customer or client
benefits in terms of cold, hard cash by using your products or services…

There are other benefits too for the Sens. For example, if the team
earns more points during the regular season and, as a result, attracts
more fans, revenues will increase. Further, if the team has, say, one
more home playoff game as a result of a stronger, healthier team then
benefits from Yoga training climb astronomically.

And lastly, hockey players are human beings so reduced injury means reduced human suffering, and that is a good thing…

Self-capitalize (Bootstrap) the New Enterprise

I have felt for a long time that VCs are heading in the wrong
direction; they should NOT fund startups. Rather, they should wait until
startups have proven themselves in the marketplace. It’s kind of like
watching for tall shoots in a field of grass. Those are the ones they
should fund. It’s better for VCs, better for the national economy and,
interestingly, better for startups too.
It’s better for VCs because they will fund more winners and fewer losers
and generate better returns for their investors. This, in turn, will
attract more capital to the industry which is good for innovation
overall. It’s better for the national economy since careful rationing of
scarce capital will provide higher overall growth rates. And finally,
it’s better for startups, in my opinion, to focus on: a) building a
sound business model, b) self (bootstrap) capitalization, c) using smart
(guerrilla) marketing to capture customers inexpensively and d)
generating real cashflow from real clients and customers.

The founders of these businesses will find it much faster and much
less frustrating to find customers first rather than spending nine
months or more hoping to attract VC funding or going after government
grants. They will also get help from clients in other ways such as
designing the final product or service. It’s like a war plan—as soon as
your contemplated business model comes into contact with customers, it
will change; they will force changes that YOU CAN NOT PLAN FOR.

Finally, the founders of these businesses will get to keep more of
the equity in their businesses if they do a deal with a VC firm later
when their business is more mature and, frankly, they are more mature.
Nothing gives you more leverage in negotiations with VCs than the fact
that you have enough cashflow to fund the business without them.

Is lack of access to capital really the main barrier to entry for
most entrepreneurs? I believe that the stated lack of access to capital
by many would-be entrepreneurs is more of an excuse than anything else.
Here is my (absolutely unscientific) bar chart of what I think are the
main sources of capital for startups. (I leave it to a future grad
student to prove it or disprove it.)

Home Equity Loans
*************************************************
Soft Capital #
***********************************************
Supplier Credit
********************************************
Consulting
*****************************************
Pre-sales/Launch Clients
*************************************
Credit Cards
*********************************
Deposits, Retainers ##
******************************
Receivables Factoring
****************************
Financial Leasing
*************************
Partners/Debentures
*********************
Trading/Speculating/Reselling
*****************
Strategic Investors/Partners###
***************
Banks
***********
VCs
*******
Government Grants/Tax Credits
******
Angel Capital
****
Franchising
***
Accretive Buying/Selling
**
ESOPS####
**
Sponsorships
**
Patents and Royalties
**
Collectibles Sales
*
Business Competitions
*
# Mom, Dad, Rich Uncle Buck, co-guarantors
## Plus Progress Payments and Draws
### Investment by competitors, near competitors, future clients and future suppliers
### Employee Stock Ownership Plans

This is just my experience talking—who knows I may be wrong but most
entrepreneurs are, by definition, people without money. Again, in my
experience, people with money are not entrepreneurs, they are called
‘old money’ and old money anywhere, tends not to do very much—it sits
around collecting coupons not starting high-risk new enterprises.

I always laugh when my students in entrepreneurship at the Telfer
School of Management at the University of Ottawa go to a bank for the
first time and ask for a loan to star a business—Canadian banks only
want to lend to people with collateral; i.e., people who already have
money. It took 2006 Novel Peace Prize winner Muhammad Yunus of the
Grameen Bank to realize that a bank’s real job is to lend money to
people who need it—a completely novel thought, it turns out.

Dr. Yunus also realized that the way out of poverty for the vast
majority of people on this planet is to become (at least at first) micro
entrepreneurs. In fact, Grameen Bank lends on a priority basis to
people who have the greatest need and the least money! And you know
what? Their loan loss ratio is tiny and they make a profit too.

If Canadian Banks had their way, they would probably do zero small
business lending. It takes very few bank resources to approve a home
mortgage, give out a credit card or make an auto loan. Banks think
nothing of approving a $350,000 home mortgage—if your credit score (your
Beacon Score) is high enough—in minutes. But go to the bank for a small
business loan of $350,000 and you will find that: a) they need a
massive amount of data from you and b) they need an expensive
infrastructure in terms of on-the-ground bank managers, loan officers
and back office types to approve your loan application. I believe if it
weren’t for the fact that successive Finance Ministers lean on the
Chartered Banks in Canada, they would choose to turn down every small
business loan request.

If your business has real cashflow and real customers and clients,
you are on a much more even footing with respect to negotiating a fair
agreement with VCs, if that is what you choose to do. Finally, it is
much more efficient for Canada if VCs fund more mature companies that
are at a stage where large capital injections are: a) less risky, b)
more inclined to be put to wise use by (now) experienced entrepreneurs.

So if you plan to start a business and you don’t want to give up
control and a ton of equity to VCs and Vulture funds, learn everything
you can about self capitalization—you are going to need it.

Use Smart Marketing (Guerrilla Marketing and Social Marketing)

You have to give credit to KFC for some terrific Guerrilla Marketing.
I realize that GM is all about ‘substituting brains for money’ in the
marketing wars but KFC used brains AND money in this.

To tackle households that are zapping their ads using TiVO or their
PVRs, KFC ran an ad with a hidden message that could only be deciphered
if you play it back in slow mo. If you could figure it out, you could
then go to KFC’s website and get a coupon for a free sandwich. The
traffic on their site went up by 40%. (Business Week, April 17, 2006).

So they got people to watch their commercial (over and over again),
boosted traffic on their website AND in their stores. I still think this
example meets the test of what is (and is not) GM since you could look
at it this way: How much money would they have had to spend in
conventional marketing to get this kind of boost in terms of CPM
(thousand pairs of eyeballs on their marketing message) and customers in
their stores?

There is another form of GM that is taking hold today too—a huge expansion of social marketing.
In the past, most GM has been about some kind of stunt that attracts the
attention of the established media—they hear of a neat story and it
then gets a lot of play on the local or national news, in the local
newspaper or gets you a few interviews on radio. This is called ‘earned
media’. Nothing wrong with that—you can certainly do a lot more with
earned media than a ton of paid advertising.

But social marketing is playing a much bigger role in helping
startups grab attention and market share. A former student of mine, Ryan
Anderson, now Director of Communications at FuelIndustries.com, gave a
wonderful lecture on the power of social marketing. Ryan uses the term
‘Social Startup’ to designate an enterprise that uses social marketing
to get traction in its marketplace. This is not to be confused with a
Social Enterprise; the latter can be a not-for-profit, a charity or a
NGO (Non Governmental Organization) that performs good works. They too
can use social marketing to further their goals but social marketing
also applies to for-profit businesses.

You can read more about social marketing on Ryan’s blog at: https://www.ryananderson.ca/.
In simple terms, the Internet has changed the media equation—instead of
limited bandwidth (a few TV channels, a few newspapers and a handful of
radio stations in most local markets a generation ago), today we have
1,000s of bloggers, 10,000s of Facebook or MySpace profiles, hundreds
of TV channels just in a small city like Ottawa.

Social marketing allows you to disintermediate the established
media—to go around them to talk directly to and with your customers. I
build my own PWSs (Personal Web Sites (it shows)) but at least I
disintermediate the techies—I can communicate directly with my students,
clients, friends. I don’t allow much two way traffic because I am so
time pressed but social marketing means that you should.

An example, Ryan gave in his lecture demonstrates the power of social
marketing—a small South African winery (BTW, it makes good wines,
otherwise this wouldn’t work and, in fact, would probably result in
reverse marketing if the wines actually sucked) sent a case of their
wines to an influential blogger in California and told him they wanted
to sponsor 100 Geek Dinners in Santa Clara County—no strings attached.
They didn’t have to blog about the company or their wines, they just
wanted people to try them.

He wrote about the offer on his blog and the winery sent out 100
cases of their wines. Even though they didn’t ask for it, they got huge
exposure on blogs everywhere in Nocal.
Their sales went up by a factor of six (!) in less than two years. The
total cost for the campaign—around $40,000. That represents less than
half a second of the cost of a 2008 Super Bowl ad. But even assuming
that the NFL and its broadcaster would give you a 30 second Stupid Bowl
ad for $40,000 (trust me they won’t), would it have resulted in a 500%
climb in sales? I doubt it.

Social marketing (in this case, harnessing the power of the
blogosphere) is about engaging your customers in a dialogue, having a
two-way authentic conversation with them and listening to them
and making changes as you learn from the conversation. Ryan told us
another quote: “If people talked to people, the way that marketers talk
to people, they would punch you in the face!”

(Note: Ryan said that he doesn’t hire anyone who doesn’t have their
own blog. He told our class that a CV is fine but it is pretty static. A
Blog that you have been keeping for a few years tells him a whole lot
more about you. Are you smart, creative, hard working, have good values,
etc. You can get a free blog and set up one for yourself in less than a
minute, so do it! I use WordPress.org but you can find many sites that
will help you with this.)

Mass Customize Products and Services Using the Internet

Nothing has shaken our world like the Internet revolution that has
taken root in a massive way since 1994. The Internet revolution is
continuing at a fantastic pace-the changes are still happening but they
are occurring with less hype since 2001and more substance-below the
waterline, so to speak.

Jack Welch said that in his 40 years at GE nothing matched the
Internet in terms of its technical or technological impact and Jack saw a
lot during his career as a CEO.

Professor John Callahan, at Carleton University’s Sprott School of
Business and his research partner, Mr. Scott Mackenzie, have created an
important contribution to understanding the impact that the Internet is
having on how we conduct business-their curve shows that it is now
possible for the first time in history to get custom outputs from
standard inputs and processes.

What this means is that we have transitioned from the days of an
artisan or guild worker (now called a ‘consultant’) who produced one off
creations to order (made to measure suits, for example) through to mass
produced products (Henry Ford’s automobile assembly line) and now to
made to order, custom products from standard processes and inputs (like
the way Dell’s web site allows each client to customize their PCs to
their specifications using only standard Dell inputs and processes).

By reversing out the design work to the customer, Dell has created a
powerful position in the marketplace and become one of the largest PC
makers on the planet.

The internet is all about automation and reversing out the work.
Doesn’t apply to me and my business, you say? Well, it turns out that
most of us have the ability to move up the value chain by using some of
the revolutionary aspects of the Internet in our businesses
Let me give you another example. We have a number of home builders who
are figuring out that they are soon going to be in the web site
operating business and not the home construction business at all.

Today, with all due respect, the home building business is still
largely a craft based endeavour which, if it were compared to the
computer industry, would still produce five function calculators that
look like primitive World War II vintage Turing machines (used for
breaking Japanese and German codes)—big, clunky and expensive.

Ultimately, a home builder’s web site will allow consumers to
‘goggle’ in to the site in three dimensions, to choose the model that
they want, the lot that they want and then to load up their shopping
carts with the features they desire. As they make changes to their
design and add and subtract amenities, the calculator will tally and
show them their costs.
Visa and MasterCard are moving upstream—their credit cards will be used
for everything including buying a new car or buying a home. There is a
small but fast growing market for power cards that carry credit limits
in the hundreds of thousands of dollars.

But this home buying e-commerce transaction using a credit card is
only the tip of the iceberg. In all probability, it is the e-business
applications that will have the most dramatic impacts on home building.
Pre-authorized suppliers and sub-trades will log on to the builder’s web
site to estimate the volume of work required and to bid on it.

Scheduling, based on just-in-time delivery, will be net based.
Payments will flow business to business via e-payments. Municipal
inspectors will log on to see when they are required for inspections.
Municipalities will recognize that home builders are their clients. The
number of separate subcontractors and trades will fall from 25 or 30
today to perhaps just 8 or 9.
If former Russian President, Boris Yeltsin in his early days as a
construction boss in Sverdlovsk (1,000 miles east of Moscow) could build
five storey, wood frame apartment buildings in five days (albeit with a
huge crew), surely we can learn to build houses in 45 days or less at
higher levels of quality, with fewer defects, higher margins for the
industry and lower prices for consumers.

The home builder will become a web site operator. Legal closings,
land registry documentation, mortgage financings … all will be web
enabled. And what does this do to profitability? There is no doubt that
efficiency will climb, productivity will increase and in every instance
where this has occurred, more wealth is created for all to share.

Americans are early adopters of technology and none is more earth
shattering than their embrace of the internet. As a result, the Internet
is eating an enormous hole in the world’s economy. After all, it does
not matter how little someone is paid in the third world, the Internet
can do it faster and cheaper.

Old-line industries are going through incredible re-engineering.

A national advertiser who wanted to launch a national billboard
advertising campaign just five years ago went through a six to twelve
month process. They drew up a campaign theme, got the creative done by
an agency, had the agency contract billboard locations with up to 25
regional billboard companies, sent the artwork out to all of them by
courier, received back the proofs from all 25 for approval, made the
necessary changes to get consistency in the artwork, sent them back,
checked them again, signed off finally. The images were then often hand
painted on huge strips and, at last, a crew went on site and glued them
to the board.

Today, billboard companies put their inventory of available billboard
locations on their web sites and agencies can book and pay for that
inventory on line. Agencies then can download their artwork over high
speed lines and, as billboard companies merge and become national and as
they move towards replacing conventional billboards with high
definition video boards, an agency can place a national campaign in a
matter of hours or days. It does not matter how little a third world
labourer is paid; the web can do it faster and cheaper.

Harnessing the Internet effectively means:

a. you can ‘make money while lying on a beach’—i.e., your enterprise can run without you being there every second to manage it;
b. the enterprise is scaleable—outputs grow non-linearly with
inputs—i.e., more hours worked will produce way more money for you;
c. you have reversed out the work—let your suppliers and customers do the work for you like, say, dig.com does;
d. you can mass customize products and services for clients in a cost effective manner;
e. you can connect with new clients and customers in a cost effective manner using things like social marketing!

The entire global economy has to move up the food chain and the only
way to do this is to invest in education, medical care and social order,
which happen to have been Canada’s priorities for the last 50 years. We
have it right, now we just need to execute the plan.

Find Pre-launch and Launch Customers and Sell, Sell, Sell

Business Week published (Seton Hall University, Stillman School of
Business study, August 25, 2003) their take on why most businesses fail.
I’ll bet you that their top five reasons (too much debt, inadequate
leadership, poor planning, failure to change and inexperienced
management) are in fact related to number six on their list: not enough
revenue.

To me, a business that does not generate enough revenue is probably
(by far) the biggest cause of business failure. Perhaps, they are not
generating enough revenue because of inadequate leadership, poor
planning, failure to change and inexperienced management, which also
means they can’t meet their debt obligations. In other words, they may
not be interpreting their stats in quite the right way in as much as
their independent variables are not truly independent and, hence, their
take on causation might be wrong.

What are the three most important things for a startup to focus on?
SALES, SALES, SALES. The focus on sales is also an important requirement
for established businesses. I mean how long do you think mighty IBM
would last if it didn’t collect its receivables? IBM sells around $85
billion worth of goods and services a year (one customer at a time, btw)
so that means around $7 billion a month. If they don’t collect for two
months that means that they would have a cashflow shortfall of $14
billion so my guess is that even IBM would be in serious trouble in less
than 60 days.

Today, if you have enough revenue, you will get financing, not the
other way round. This is the lesson of the false boom of the late 1990s
when VCs and others financed startups with interesting business models
but no revenue prospects. This has never worked, in any age.
If you have enough revenue, you can meet the cashflow demands of debt
servicing costs so a focus on revenue growth is vital. One needs to not
only generate the revenue but collect it too. This seems self-evident
but a lot of startups don’t do billing, invoicing and collections very
well and many don’t do selling or pre-selling very well either.

In my experience, the number one reason for failure is the absence of
buoyant revenues. I mean how many businesses have you heard of folding
if their revenue numbers are going up and up?

Remember the Golden Rule: “He/she who has the gold, rules.” Put
another way: “Cash is King (or Queen).” If you have real customers and
real clients and real cashflow, you have POWER.
Another thing you have to do is find launch clients. As soon as you come
into contact with a real customer, you business model is likely to
change (for the better). Clients who plunk down their money (this is
called a deposit), give you additional confidence that you are on the
right track.

NHL hockey fans in Ottawa gave us $22 million in cash (deposits on
season tickets and sponsorships (signage, media rights, pouring rights,
product rights, etc.)) for the expansion Senators in December 1990, some
22 months before the first game was played (in October 1992)!

Execute Expertly, Show Leadership and become a Trusted Member of your Community and Business Ecology

Jack Welch and Suzy Welch in a Business Week article (Feb. 4, 2008)
state that a CEO (and a prospective President of the US in this an
election year in the US) need five basic leadership skills:

1. They need to be authentic and, hence, trusted;
2. That have to have vision and be able to communicate that;
3. They have to be able to hire great people and sometimes fire them too;
4. They need to be able to bounce back from a setback;
5. They need to be able to “see around corners”; to notice changes in their markets pretty much before anyone else does.

They also mention another requirement which I would put under the category of management rather than leadership:

6. They have to be able to execute.

These are pretty good guidelines. I would think that they also apply to entrepreneurs but I think entrepreneurs need a few more:

a. They need to be able to sell;
b. They need to be able to control costs;
c. They need to be able to make up their own rules as they go along;
d. They need to be creative in many of the things they do;
e. They have to bring a sense of urgency to each day;
f. They don’t take ‘no’ for an answer;
g. They need to buck the system and be comfortable doing it;
h. They have to be self reliant;
i. They need to be able to deal with risk and uncertainty;
j. They have to be able to set and achive goals but be flexible enough to change their plan in an instant;
k. They need to be able to borrow best practices from wherever they find them;
l. They need to know when it is time to give up on a business and start something else;
m. They need to be able to work long hours and to be effective during that time;
n. They have to set priorities;
o. They have to see their whole business ecosystem as part of their TEAM;
p. They have to understand human psychology: the psyche of their
employees, their clients, their suppliers and they have to be better
poker players than they are chess players- they need to be sympatico;
q. They need to be humble, learn from their mistakes and never make the same mistake twice;
r. They never try to go back and revisit something that didn’t work already once- they just move on;
s. They can cope with high levels of stress.
I am sure there are a ton more characteristics of successful
entrepreneurs but this a pretty good list to start with. If you get 70
or higher on our ECQ Test, you probably have what it takes to be an
entrepreneur.

Take the Test: https://www.dramatispersonae.org/ECQTest/ECQ(ns)TestAuto.htm.

There is nothing more important for you and your career than your
ethics and your reputation.. When I was just starting out in business in
1982, a wealthy lawyer by the name of Kent Plumley (he made a lot of
his money as an early stage investor in Mitel and later in Newbridge)
told me: “Bruce, the number one thing you have to remember is: protect
your reputation.”

I thought that was easy for Kent to say, given that he was sitting on
millions. But as I grew older I realized he was right. Do you know why?

Well, here is how it works:

1. You work hard (for years) to establish a reputation for good work, high ethical standards and trustworthiness.
2. Trust creates an environment for you where clients will send you more and more of their work.
3. Trust creates an environment where your clients will refer other clients to you.
4. Trust gives you breathing room when you do make a mistaken—people
will cut you a lot of slack even then because they trust you.
5. Trust creates a personal brand for you individually, independent of your law firm or accounting practice.
6. If you change firms, your clients will follow you because they trust you and have confidence in you.
7. Trust creates a brand and a brand creates a marketing opportunity and
you can turn that market into sales or as my wife, Dawn likes to call
it ‘IGA money’, money you can touch, feel and spend.

One of the best recent examples I have seen of this process at work
is the current marketing for Clarica. Their television ads are done with
a sense of humor and have made a lasting impact on the marketplace I am
sure. But why would Clarica have invested hundreds of millions of
dollars in a marketing campaign like this? It is instructive to find out
why.

First, let me ask you another question. How many of you have wanted
to get up off the couch after watching one of their commercials and
place a call to a Clarica agent to buy some life insurance? I don’t
think there is even a call-to-action at the end of theses commercials;
selling life insurance is not like selling K-Tel slicers and dicers:
“Call now; operators are standing by to take your order at
1-800-555-5555!” Well selling legal and accounting services isn’t like
that either (or at least, mostly, they’re not. You have to ignore the
later night commercials by lawyers asking if you have recently been
injured an accident.)

So why does Clarica do it? If you look at the diagram above, they
market through a marketing process to build their reputation and brand. A
good reputation and solid brand creates trust in Clarica in the minds
of the public. So when a life insurance salesperson sits down with John
and Sally Smith in their living room to sell them life insurance, John
might say: “Oh, I have heard of you!” John and Sally already trust the
salesperson before their meeting ever takes place.

They trust Clarica a heck of a lot more than they trust, say, the
Pirate Insurance Company of Kinakuta, who they have never heard of
before and who hasn’t spent a ton of money creating their brand and a
reputation.

Note that Clarica doesn’t sell a thing through their marketing; they
have established a separate sales process (having thousands of life
insurance agents out there, making meetings and actually doing the
selling.) Lawyers and accountants can learn a lot from this example I
think.

Note that a sale, any sale, actually gets completed because of
trust—the client trusts you and, therefore, they are willing to buy from
you. That’s the real secret to selling—creating trust. Remember, people
like to buy from people they like and trust.

When I was starting out, one of the real estate lawyers who helped me
also helped herself. We noticed that whenever we were closing on a
property, another developer always seemed to be in the same area,
sniffing around. It wasn’t long before we figured out there was a leak
in the law office we were using at the time and, with the help of the
senior partner, we set about trying to prove it. Unfortunately, it
turned out to be the case. It was a devastating blow to the firm and the
lawyer involved was summarily dismissed. She was never a significant
player after that in the real estate business in Ottawa.

I don’t care what city you practice in a small city like Ottawa, a
mega city like NYC or a city like Buenos Aires, the Paris of South
America. Every city is controlled by a small number of business and
political leaders. In Ottawa, the number of real movers in tech or real
estate or any other major economic engine probably numbers no more than
500. In NYC, it’s more but probably not more than 1,500. So it’s a small
number really.

What that means is that if you muck up your reputation, you probably have to move. Better to keep it in the first place, right?

Make Your Own Rules and Set and Achieve Your Goals
One of the hardest things for my students to learn is that there are no
rules in the field of entrepreneurship. By that I don’t mean that you go
outside the Law; I am not talking about those kinds of rules. You
always obey the Law and protect your reputation; the latter is the most
important thing you own BTW.

But how many times have you heard: ‘We don’t do it that way because
it isn’t done like that and, anyway, no one else does it that way
either’? Entrepreneurs are constantly asking BIG questions and thinking
of ways to do things differently. It is usually this kind of creativity
in EXECUTION that creates the most value for entrepreneurs. Fred Smith’s
brilliant insight that he could develop an overnight package service
(Fed/Ex) by reducing a 50 by 50 matrix of origins and destinations (with
its impossible requirement for 2,500 overnight flights) to a handful of
flights by developing a hub and spoke system was responsible for one of
the great startup success stories of the late 20th Century.

Let me give you another example.

Gino Rossetti from Detroit asked the owners of the Detroit Pistons on
a visit to Joe Louis Arena: ‘How come the people who pay the most
(i.e., suite holders) are the furthest away from the floor?’ Joe Louis
only has one ring of suites, which are located at the nosebleed level.
The answer was that all arenas are built that way; it’s just the way
it’s done. Gino whipped out his sketch pad and said: ‘What if we had two
lower rings of suites– the first one just 12 rows from the action on
the court?’

That single insight revolutionized arena design and economics. It not
only increased the number of suites in these buildings, but people also
paid more (a lot more) for private suites close to the floor or ice
surface. Plus it gave the ownership committed revenues (because they
signed 5 and 10 year deals with leaseholders) and it gave them the
ability to finance new arenas on a commercial basis. Additionally, it
created the opportunity to bring all the seat holders closer to the
action because the balconies created by the lower rings of suites could
be stacked closer to the arena level much as in an Opera House with
rings of private boxes.

Less volume in the building creates a less expensive but more
intimate structure which benefits not only the fans of major league
sports but concert goers too. So Gino gave the world not only a much
higher revenue-generating sports facility but there a qualitative
improvement too.

Students often ask me how prices for new products or services are
arrived at. They seem to feel that there is some form of government
control or other, officially approved, algorithm that generates a price.
I tell them the story of Butch Cassidy (in the film BUTCH CASSIDY AND
THE SUNDANCE KID) when he was challenged for the leadership of the gang
in a knife fight. Butch says: “Before we fight, I have to explain the
rules.” His opponent, a giant of a man, says: ‘Rules, in a KNIFE FIGHT?’
Butch then walks up to him and kicks him in a vulnerable spot and then
stomps him into the ground saying; “Rules? There are no rules in a knife
fight.’

Pricing is a bit like that. In a competitive marketplace, you can
charge whatever you like. It may be above your cost (often way above,
in, say, the marketplace for baseball players), at your cost or even
below cost (these are called loss-leaders; e.g., selling below cost milk
to get folks into your supermarket. Ever notice how the milk is always
furthest from the door in every store– that’s to get you to impulse buy
when you are walking through the facility.)

Rules? There are no rules in entrepreneurship; you get to make up
your own. You just have to hope the set of rules you choose, works;
i.e., they underpin a viable business model.

Lastly, I am not a big believer in detailed planning. I am a big
believer in having great business models as you know from reading this
essay but plans, well, they are usually out of date shortly after you
finish writing them.

Good Generals know that war plans are out of date the moment you make
contact with the enemy. Your enemy is not just going to sit there with
large KILL ME signs taped to their backsides. They are going to move and
react to what you are doing so if your troops can’t show some
adaptability in the field, they are likely to wind up dead.

Entrepreneurship is like that. Your competitors want to kill you;
don’t kid yourself about that. They want to buy you out by taking your
customers away from you, one at a time. As Tom Cruise said in Jerry
McGuire: “We live in a cynical world. A cynical world. And we work in a
business of tough competitors.”

One way to counteract that is to set goals for yourself and your
team, both near term goals (like monthly sales targets) and longer term
goals (we will get x% of the market by year’s end). Tell your goals to
your staff, put them up where everyone can see them—democratize
information!

Also, get rid of negative language. Never say: “I’ll try.” Say and think to yourself: “Ill do it.”
Humans are uniquely able to visualize, self actualize and internalize
goals. If you can see yourself doing something, your chances of doing it
are much improved. When I was 11, I was the youngest member of our
gymnastics team but I had a hard time doing one particular flip off the
springboard and over the high horse. Our gym teacher, a tough task
master by the name of Major Anderson told me on a Thursday that if I
couldn’t do it by the following Tuesday, I was off the team. I
practically cried when he told me that.

I practiced and practiced but could never get it right. I knew on
Monday I was cooked but that night, I had a powerful dream—I saw myself
hammering that springboard and doing a perfect flip. The next day I went
into gym class and a couple of the guys were sniggering as I lined up
to attempt the flip. I executed it perfectly and made the team.

Dr. Bruce

Prof Bruce @ 12:12 pm

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Truth/Smart Truth

Posted on
Monday 11 February 2008

A friend of mine, a litigation specialist, once told me that
you need to tell the ‘smart truth’, especially in court cases.
Obviously, you need to tell the truth but he insisted that you had to be
smart about it.

I had no idea what he was talking about. I knew that litigation was
tricky and that lawyers who do this for a living can think around
corners and can usually outwit and outlast most witnesses. They often
ask you the same questions at different times, for example, in different
ways, waiting for you to answer differently and, hence, to catch you in
an inconsistency. Once you have been caught in an inconsistency, your
credibility as a witness goes down the toilet.

So I knew this and also not to volunteer too much. Don’t elaborate on
your answers and, in fact, just repeat yourself as often as you need to
without changing or adding to your previous answers.

But the ‘smart truth’ was something different. One of the best
examples of this comes from the marketing department of the Coca Cola
Company—they invented a Coke vending machine that would raise prices
whenever the temperature climbed. They proudly sent out a media release
to that effect and got tarred and feathered in the press over this.
Consumer reaction: “Geez, just when we need as drink, the darn Coca Cola
Company goes and raises the price.”

How should they have worded their release? They should have said that they had invented a machine that would lower the
price of a soda when temperature falls. The message is the same but its
impact on the marketplace is vastly different. Coke never introduced
these machines.

When I was on the stand in front of the Ontario Municipal Board
defending the land use plan for what is now the home arena for the
Ottawa Senators, I was afraid that the lawyer representing the Ontario
government, Tom Lederer, would ask me: “Doesn’t the plan for West
Terrace (the lands around the Palladium, now called Scotiabank Place)
look a lot like downtown and, if so, why isn’t the arena downtown?”

I could see him heading in that direction and, at the time and under
pressure after three and a half days on the stand, I didn’t really have a
very good answer.

The truth is: “Yes.” But the smart truth is: “No.” How can both be
honest answers? Fortunately for me (and Ottawa hockey fans), Mr. Lederer
never asked me that question. I had nightmares about it for weeks after
the hearing (which we eventually won). But one night, about two months
later, I woke up at 3 am, laughing. I had the answer.

The smart truth is: “No, the plans for West Terrace are nothing like
downtown because, if we put the arena downtown in, say, the Glebe, we
would be putting the facility into an already established community
where thousands of people already live. Our plan at West Terrace is to
build the arena first so people who eventually come to live around it or
work there have self selected for that area—they have chosen that
lifestyle.”

Recently, a friend of mine, Steve Silver, gave me a book: Moshe
Kranc’s Guide To Management (Devora Publishing, 2004). There is a good
story in it (pp. 226-227) that contains elements of Guerrilla
Marketing*, the Who Pays Who conundrum and Smart Truth.

Theodore Roosevelt’s 1912 campaign printed three million pamphlets
that accidentally contained a photo of the future President whose
copyright was owned by Moffet Studios. Unfortunately, they had not asked
Moffet for permission to use the photo before the print run was
completed and there was concern that the campaign could be asked for up
to $1 per copy—a cost they could not afford. Instead, Teddy Roosevelt’s
campaign manager sent Moffet a telegram saying, in essence, how much
Moffet would pay them for the privilege of having their photo
distributed in Mr. Roosevelt’s literature. It would be good promotion
for them… This is another example of the use of smart truth.

It also raises the question of Who Pays Whom that is certainly
relevant in today’s economy. A big dustup a few years ago between Time
Warner’s cable system and ABC (owned by the Disney Company) illustrates
that this is a non trivial problem and opportunity.

Should ABC pay Time Warner because Time Warner owns and controls the
connection to the home and, unless ABC pays Time Warner, they can’t get
access or should Time Warner pay ABC because ABC has the content that
people in those homes want to (and pay to) see? The answer is: “It
depends and, sometimes, it depends (as it did with Mr. Roosevelt’s
campaign) on how the question is asked.”

(* Also, as a side note, Mr. Roosevelt’s campaign was using an old
form of guerrilla marketing—the handbill. The handbill is, literally, a
pamphlet that is transmitted from hand to hand and can be a very cost
effective and savvy way to market your product or service.)

(** It is also a demonstration of the power of asymmetrical
information. Had Moffet known that three million pamphlets had already
been printed, I would imagine the negotiations might have turned out
quite differently. Many people and organizations make a living out of
asymmetrical information. Why do most lawyers pay for and use the Lexis
Nexis legal data base instead of compiling the information themselves or
perhaps better maintaining their law libraries? The information at
source (legal decisions) are, by their very nature, public documents and
‘free’. Why do land speculators typically do so well if they are
patient? They typically have more information about the direction of
city growth than sitting landowners do and get there before the big
developers do. It is timing, speed and information that they rely on…)

Dr. Bruce M. Firestone, Ottawa, Canada. February 2007.

Prof Bruce @ 9:50 am

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The World’s Greatest Website—Bruce’s Ten Rules

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Posted on
Sunday 3 February 2008

Maybe not the world’s greatest website but certainly the
single most valuable page is Google’s homepage. If you dropped in
tomorrow to www.Google.com
and the only thing you saw was the search bar, you probably wouldn’t
even notice that the words on the page had disappeared. And for 99% of
users that probably wouldn’t much matter either.

For engineers, machines with no moving parts are the sine qua non of design. Take for example one possible design for the Clock of the Long Now.
If you have a long enough pendulum, the earth’s rotation will cause it
to move in a predictable orbit—which is, of course, what a watch does.
So as long as the earth keeps rotating, you have a way to mark time.
(This is, by the way, a non, trivial problem—just try to think of a way
to power a clock without human intervention over a period of time
measured in millennia let alone geologic time.)

Well, I believe that the ultimate website has the fewest possible
elements and, apparently, I am not alone. There is the urban legend of
the emailer who wrote to Google at irregular intervals with cryptic
messages like 33 or 40 or 49. No one at Google could figure out the code
until one day they realized that 49 meant the number of words on
Google’s Home Page—and they also understood that they were getting lazy.
More words meant moving further away from the ideal Internet machine.

So Bruce’s Rule # 1:

Keep it Simple.

The next time a web designer tells you that he or she can make your
site look as good as Yahoo’s (just count the number of words on that
home page!) tell him or her: “It’s OK, I’ll configure it myself.”

Bruce’s Rule # 2:

Do it yourself—disintermediate the techies.

When I am wearing my other academic hat (as an urbanist), one of my
favourite authors is James Howard Kunstler. He has a website like
mine—simple, not very design intensive, one he can add to himself at 3
in the morning if he wants to and one that dedicated readers can use if
they put their minds to it. It’s basically a dump of James’ mind—see https://www.kunstler.com/.

If you need to tell a techie to change this or that, it really
destroys a lot of the value of the site. It removes immediacy since it
takes too long to make changes. If you are the CEO of a large company,
you need to have your own PWS (Personal Web Site) and pull your direct
reports and others to your site so they can know your mind. Mass emails
to your workers doesn’t work worth a darn—most of them don’t even open
your emails and, if they do, most of those don’t read them. By contrast,
people who voluntarily come to your website are very interested and
need to know what you are thinking.

I had 45 minutes instruction from a colleague more than a decade ago
on how to do the basics—link pages, add photos, use FTP software to move
pages to our server. The rest I self taught. If I can do it in my 40s
and 50s, you can too. No excuses.

Bruce’s Rule # 3:

Go directly to the working interface.

I hate sites that you land on and then you have to click through an
intro page (“skip into”, what a moronic thing to do to your audience),
then through a PR page to finally maybe get to where you need to go.

The Internet is not a beauty contest—it’s about getting work done and the killer app is the browser.

So if you need to do a search, just get to the search bar! Have a
look at my friend Rob Hall’s webpage for his domain name registrar—www.domainsatcost.ca. There is no doubt where you put in the words to figure out whether mygreatcompany.ca or mygreatcompany.com
is available. I learned from Rob that the call to action has to be
‘above the fold’ just like a newspaper story—as soon as you log on to
DAC, there is the search bar (on the top half of the page) to start the
process of registering the domain name for your next great company.

Bruce’s Rule # 4:

Don’t spend a lot.

I have about 20 websites—I have actually never counted. I do them all
(almost all) by myself (I know—it shows. I am engineer not a designer.)
My friend and former student, Dan Cardamore, maintains my server for
free and I use a low cost registrar (not the cheapest but pretty low
cost and a really great tool for managing the domains and the DNS
(Domain Name System) that actually allows websites to resolve when you
type in their addresses). So other than paying for my domain names
(about 10 bucks each per annum and I have about 30 or so), my websites
cost me zero.

Also, there are a ton of sites out there that, for a cost, say they
will either: a) send you a lot of traffic (so you can make money from
utilities like Google’s ad sense); b) raise your Search Engine rank
(this is called, SEO, Search Engine Optimization) or c) show you how to
spend your advertising and marketing dollars wisely if you decide to
place text ads for your business with Google or another search engine…

My advice is: DIY, Do It Yourself. Most of my websites are
interconnected; that is they link to each other and, over the years,
more and more sites link to mine. This raises my Search Engine rankings a
lot. Recently, I put in the name of my former place of work into a
major search engine and most of the search results directed folks to one
of my websites: this was unintentional, I assure you, but it shows you
the power of interconnectedness.

(Most Search Engine algorithms are trade secrets but it’s not hard to
figure out what the key variables are: obviously total traffic coming
to the site but also how many sites link to your site (not the other way
round) and keywords you use in your source documents and on the site.
Put your keywords in the “Properties” description of each page of your
website. For example, if you have a plumbing website, you need to
carefully describe each page in the “Title” and “Properties” source code
so that when people type in ‘leaky faucet’, search engines can find
your website.

Now a lot of websites put on their pages and in their source code a
thousand keywords, some of which have really nothing to do with their
sites. Again, this is a kind of fraud: DON’T DO IT. If someone is
looking for help with a leaky faucet, don’t redirect them to your
Technology Consulting firm. This is just reverse marketing and
undermines the original ethic of the Internet as a place of freedom and
respect for other netizens…

Also, remember that search engines’ spiders can find practically
anything. If you have a webpage that you want to keep private, even if
it has no links to anything else on the Internet and no links from
anywhere on the Internet to the page, the spiders will find it. If you
have, for example, client confidential material you want clients to see
but no one else, those pages must be in a secure, password protected
space.)

One thing for sure, don’t try to engage in any kind of ‘click fraud’;
inflating your hit numbers. Not only is this unethical and possibly
illegal, it will get you kicked out of Google’s ad sense network and
your revenues will drop to zero. And they will NEVER let you back in.

You certainly can exchange links with all your pals on the web: this
is called a partners’ page and it can help with your search engine rank.
I only do this sporadically and only if it is actually relevant to my
site but this is one way to raise your profile and start generating
traffic, if that is your goal.

(For a more complete and technical explanation, please see: Optimizing for Google and Google Maps (https://www.eqjournalblog.com/?p=705) By Steve Hampton, Guest Contributor, Search Marketing Specialist – BIGLocal.ca)

A Charitable Foundation received an expensive proposal from their
advertising agency (they have fancy names today like ‘creative agency’
or ‘social marketing specialist’ but many of them are really
shamateurs). The proposal was little more than adding some pretty
pictures and a content management system. I really dislike CMS for
anything other than the most ordinary, every day, basic and repeatable
updates. Beyond that, they are, for the most part, pretty useless. Here
is the full story about what they actually decided to do instead: https://www.eqjournalblog.com/?p=1949.

Bruce’s Rule # 5:

Own your own websites and all your IP.

I wish the Internet was where it is today when I was 20. I would have
collected all my IP over my lifetime on my own server. Maybe so I can
make money from it (although I don’t allow any overt advertising on my
websites that I maintain for my students) while “I am lying on a beach”
or maybe so I can pass on any wisdom I may have gained to my five kids
or to others who may have some interest in what I have learned.

One thing for sure, you at least want to keep your email contact list
somewhere where your previous employer can’t insist that it belongs to
the Company! That would suck if you lose your contact list just because
you change jobs.

I also wonder about people who are developing their Twitter or FB
accounts with their company’s brand in their user name. I mean if you
work from CNN and your Twitter handle is @MrFamousCNN and you decide to
leave for Fox, you probably don’t want that name any longer.

(Twitter has recognized this problem: you can now change names and
bring your follow and follower lists with you but why risk losing your
audience. My Twitter handle is @ProfBruce and even after I retire from
the University, I am sure I will be ‘Prof Bruce’ until the day I die and
then some.)

Bruce’s Rule # 6:

Use others’ utilities.

Sheesh, why reinvent the wheel? If you want an e-commerce platform,
for example, don’t create your own. For a few cents per transaction,
there are tons of folks out there who will let you white label theirs.

Reinventing the wheel: that’s the kind of thing that Governments
do—like the GOC did when they set up the long gun control registry. You
can buy a perfectly good d-base system from SAP or Oracle to keep track
of a few measly million items dirt cheap—a couple of million or so ought
to do it. But, oh no, the Government of Canada had to have the Rolls
Royce—a proprietary system of their own. That cost Canadians over $1.2
billion (yes, BILLION) for a system that doesn’t work properly.

How dumb is that. Do you know how much time and money SAP and Oracle
have invested in their products to make hardened data base products?
Billions and billions and many, many years of really smart people putting their full time efforts into it.

And you can rent that for a song!

Think about Google’s ad sense or ProjectWonderful.com,
started by former student, Ryan North. You can add that to your website
for free and, if you get decent traffic, they will send you money,
maybe a lot of money. Or you could go to your local pizza joint and try
to sell them a display ad on your site yourself. That takes a lot of
time. Don’t even think about trying to create your own advertising
utility—are you crazy?

Bruce’s Rule # 7:

Faces count.

For me, the Internet is like an alternate universe where I live part
of my life. So do lots of other people. Next time you look at a
newspaper or magazine, check out the ads carefully. Notice how you stop
at ads that have faces associated with them.

Same for the Internet. My personal history is online at: https://www.dramatispersonae.org/ShortFormResumeParsed.htm.
There is my mug shot looking out at you, hopefully winning you over
with my nice smile. (Actually, they should never take photos of anyone
over 50—somehow the Indians were right—you fade as you get older and the
more photos of you, I think, the faster you go!)

Bruce’s Rule # 8:

Reverse out the work.

The Internet allows us for the first time ever to create scaleable
enterprises out of service businesses, construction businesses and
products businesses.

Let your suppliers and your clients find each other through the intermediary of your site. Lava Life does
just that. Do you think that there are a ton of clerks somewhere poring
over your CV trying to match you up with the perfect date? Nope. You
are doing all the work. They make the money, you do the work.

Bruce’s Rule # 9:

Mass customize.

Again, the Internet allows you to make your customers do all the
work. Go onto Dell’s website and you can customize a PC built exactly
for you to your specs. When you do this millions of times, it is called
mass customization and this is the first time in history that this is
possible (on a scaleable, efficient basis).

[Ed. note: At this stage, you should read if you already haven’t: Nine Things that You Can Do for the First Time In Recorded History Because of the Internet, https://www.eqjournalblog.com/?p=1609. It will describe in more detail what you can do with the back end of your ws to create some really exciting opportunities.)

Bruce’s Rule # 10:

Democratize information.

I can’t believe the number of people who hoard information. I don’t
get it. Builders never seem to want to let people know exactly what they
are charging for a home, a lot or potential upgrades. Ever heard of
secret shoppers? Every builder knows what his or her competitors are
doing. Sheesh, they have their employees buy homes from their
competitors. They have their contracts, their pricing, their upgrades,
their scheduling, everything.

I run a really simple real estate site—www.OttawaRealEstateNews.com and www.OttawaRealEstateNews.ca.
This is really primitive. It’s just a laundry list of stuff that is
available. I always put prices on it. If I am selling a $3 million
development site, I don’t want folks who are looking for a $150,000
hobby farm to call me and be disappointed—it saves them time and me
embarrassment.

Talking about democracy—James Howard Kunstler puts his traffic
counter on his site for everyone to see. I do that too. I only count
unique visitors—not page views, that just inflates your numbers but
doesn’t really tell you much.

Well, those are my ten rules. I am sure there are many more that could be added but, it’s a start!

Prof Bruce

Prof Bruce @ 12:25 pm

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Creativity and Value

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Customer Service

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Internet– the Internet is Eating a Hole in the Global

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Leadership Skills

Posted on
Saturday 2 February 2008

Jack Welch and Suzy Welch in a Business Week article (Feb.
4, 2008) state that a CEO (and a prospective President of the US in this
an election year in the US) need five basic leadership skills:

They also mention another requirement which I would put under the category of management rather than leadership:

6. They have to be able to execute.

These are pretty good guidelines. I would think that they also apply to entrepreneurs but I think entrepreneurs need a few more:

I am sure there are a ton more characteristics of successful
entrepreneurs but this a pretty good list to start with. If you get 70
or higher on our ECQ Test, you probably have what it takes to be an
entrepreneur.

TAKE THE TEST.

Dr. Bruce

Prof Bruce @ 8:14 pm

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Creativity and Value

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Pre-selling, Finding New Clients, Keeping Existing Ones

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Test your entrepreneurship skills – online quizzes

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Posted on
Saturday 2 February 2008

It has been bugging me lately (I watched Mission to Mars
with Gary Sinise and Don Cheadle recently) that spacecraft are being
shown in films with astronaut habitats producing artificial gravity by
spinning some part of the craft around its own axis with no regard to
the mechanics of the thing.

Think about what happens to a helicopter when its tail rotor gets
shot off or it stops functioning for some reason; the body of the
aircraft starts to rotate in the opposite direction to the main rotor.
The results aren’t pretty.

This happens because of the transfer of angular momentum from the spinning rotor to the rest of the craft.

Now let’s suppose we wanted the mission to Mars to succeed. We would
need to have a smaller mass rotating in the opposite direction to
exactly offset the angular momentum of the rotating crew cabin. (The
alternative would be to have thrusters firing constantly to offset
angular momentum, an unthinkable drain on fuel.) The calculations are
simple:

L = I x ω

Where,
L is Angular Momentum,
I is the Moment of Inertia,
And ω is the angular velocity.

Now,

I = m x r**2

Where,
m is the mass of the object rotating around its own axis
And r is the radius to the centre of the mass.

Now we have:

L = m x r**2 x ω.

If the mass we have spinning in the opposite direction is 1/10th the
mass of the main astronaut compartment (essentially, it’s a flywheel
spinning in the opposite direction with sufficient angular momentum to
exactly offset the angular momentum of the crew quarters) and it has say
1/10th the radius, then we have:

L1 – L2 = 0

(m1)(ω1)(r1)**2 – (m1/10)( ω2)(r1/10)**2 = 0

This gives:

ω2 = 1,000 x ω1.

That means we need a flywheel spinning at one heck of a speed to keep
the vehicle from becoming uncontrollable but the energy requirements of
the flywheel, in terms of accelerating it to its required speed and
maintaining it there would be fairly small compared to alternate means
of controlling spin.

Of course, if you wanted to have larger crew quarters, you could just
have two cylinders for them- spinning in opposite directions obviously.

Dr. Bruce

Prof Bruce @ 7:35 pm

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What is the Biggest Industry in the World?

Posted on
Saturday 2 February 2008

What do you think is the biggest industry in the world:

a. Autos and the Oil Industry
b. Real Estate Development (New Home, Office, Retail, Industrial and
Insitutuional construction but excluding infrastructure spending)
c. The IT industry
d. Gambling (Legal and Illegal)
e. Drugs (Legal and Illegal)
f. Agriculture and the Food industry

I would say that by far the biggest industry is b, Real Estate
Development (New Home, Office, Retail, Industrial and Institutional
construction but excluding infrastructure spending).

Business Week (Feb. 4th, 2008) states that Autos and Gasoline are
each $1.5 trillion dollar a year businesses. Now that is BIG. And
certainly, the oil industry is at the time of this writing, a hugely
profitable business. Exxon alone is recording PROFITS in excess of $40
billion a year. (See what I wrote on that: “If I were King of Exxon“.

If we were talking about profitability, the highest profit industry
would not be oil or even drugs (legal or illegal) but government
controlled casinos and lotteries.

But I think the biggest industry by far on an annual volume basis is
the real estate development business. I did a spreadsheet comparing the
global oil and auto industry to the development industry. I made a
number of assumptions:

1. That the rest of the world creates new homes at about the same
rate as Canada does (obviously, the developing world is turning out new
homes much faster than aging Western nations and Japan);
2. That the average price for a home is about 70% of what a Canadian home is priced at;
3. That non residential construction is 90% of the volume of residential construction.

You can download the spreadsheet from our server and play around with the assumptions yourself (https://www.old.dramatispersonae.org/EnterpriseOfTheCity/HomePage/WhatIsTheBiggestIndustryInTheWorld.xls).
But it turns out that it practically doesn’t matter how you change the
assumptions, real estate is a lot bigger. By my calculations, we get:

Oil and autos: $3,000,000,000,000 USD per annum (BW Feb. 4, 2008);
Real Estate Construction: $10,174,500,000,000 USD per annum.

That is why about 60% of the richest people on this planet have most
of their money in real estate in one form or another– it doesn’t run
away from you and they are not making any more land…unless you count
what they are doing in places like Hong Kong and Bahrain where they are
filling in the ocean to create an airport or a tourist mecca.

Prof Bruce

Prof Bruce @ 10:56 am

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Home Building

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Why Invest in Real Estate

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Investing in Real Estate with Little to No Money Down

Posted on
Thursday 31 January 2008

A True Story! (Part 1 of 2)
Guest Column by Moe McIlwain, Realtor, Keller Williams Ottawa

Investing in real estate is usually sound and can help you achieve
wealth in your lifetime. I should know: I am a young Real Estate Sales
Representative and I believe in what I sell.

The fact is real estate investment is a relatively simple business, if you buy it
right; you usually come out on top. They say you make money in real estate when you buy, not when you sell!

Before I got into Real Estate Sales, I always wanted to be an
investor. The fact is, like most of the public, my belief was: you have
to have money to make money. My true life story goes on to show that
this is a limiting belief that has hindered and will
continue to hinder generations to come.

My first property hasn’t been easy to get (this is a long story, so
brace yourself). My hunger started from a young age, in my teens, but my
true focus in a six month span got me the best first home purchase I
could imagine.

In September 2006, I made a deal on a two-bedroom apartment condo on a
Rent to Own basis (because I had a down payment of just $1000. I signed
a ten month lease with an option to buy after the lease. I was lucky
that I didn’t have the down payment because the condo was a bad
investment. So I never exercised the option and baled.

Still, I was hungry to find my next ‘purchase’ and I did, thank God: a
triplex which was a terrific buy and which I was able to find even
before my lease was up!

I was looking at investments in a different way. I had studied with
Dr. Bruce M. Firestone at Carleton University’s School of Architecture
(an awesome and inspiring course called ‘City Planning and
Organization’). By attending the course, reading books, listening to CDs
and picking the brains of other investors, I really learned a lot.
Within six months, my dream became a reality!

While bored at the office, a fellow Realtor friend of mine was there; we call him the
“King of Vanier” and I decided to pick his brain. “What do you think of
this triplex at 123 Maurier Avenue (not the real address)?”

He replied: “It’s ok, if you want to live in shot-gun alley!” After
laughing, he said I know a property on Honesty Road that looks good; let
me tell you about it. This property was out of my price range, but he
knew the owner, the realtor and showed me what past properties had sold
for. These properties were sold 15%-20% below asking price. He said
“Whenever you want to see it let me know, we’ll go together.” I booked
the appointment ten minutes later.

The unit was outdated and dirty, but in an area that is gentrifying
and close to many amenities. The rents were low, which was great,
because that meant I could add value by cleaning it up and renting it
for more and, of course, it would be worth more. (As income grows so
does value!)

After two quick showings, I put an offer in. I knew it was the one.
We ended up agreeing on a price that was 20% below market value! The
owner was happy to cash out and I was
happy to buy in. All we had to do was wait until closing…but now the drama begun.

I understood my situation was different because I had been
self-employed for only about a year, so I had to have a private lender.
Banks only lend money to people who don’t need it (i.e., those with lots
of collateral and good JOBs). But I was introduced to a
mortgage broker who was supposed to get deals done at low rates but it turned out, he was a slime ball.

My instincts told me not to trust him but I went with him anyway to
save money. The process was unprofessional to say the least. I was
promised a low rate, which I got but with high upfront fees. One week
before my closing date, I got a call saying: “The lender wants you to
owner occupy a unit in the building on closing!” But I had already told
them I was not going to occupy it and, furthermore, under the Tenant
Protection Act, I was not in a position to occupy it.

Shift forward to closing day—they took away the mortgage commitment.

I was homeless and on the hook for $252,000!

There was no way I could get the mortgage with just 5% down (which is
what I was supposedly approved for). I had been lied to, I should have
listened to my
instincts (always follow your instincts! And I should have remembered
what Bruce told me: “Trust is the Number 1 thing in business and life.”

…to be continued

Prof Bruce @ 2:49 pm

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More About Self Capitalization

Posted on
Thursday 24 January 2008

What is Bootstrap Capital and Why do Entrepreneurs Really Need it?
Is lack of access to capital really the main barrier to entry for most
entrepreneurs? I believe that the stated lack of access to capital by
many would-be entrepreneurs is more of an excuse than anything else.
Here is my (absolutely unscientific) bar chart of what I think are the
main sources of capital for startups. (I leave it to a future grad
student to prove it or disprove it.)

# Mom, Dad, Rich Uncle Buck, co-guarantors
## Plus Progress Payments and Draws
### Investment by competitors, near competitors, future clients and future suppliers
### Employee Stock Ownership Plans

Other students will tell me that they want VC funding. I believe that
most startups have about as much chance of attracting VC funding as
they have of winning the annual Ottawa Hospital Lottery and probably
less. First of all, most business startups don’t have the growth
prospects to attract VC funding. Secondly, most startups are in industry
sectors that don’t appeal to VC funds anyway. Thirdly, most startups
should be much further along in their development before they go after
VC funding, if they ever do. If your business has real cashflow and real
customers and clients, you are on a much more even footing with respect
to negotiating a fair agreement with VCs, if that is what you choose to
do. Finally, it is much more efficient for Canada if VCs fund more
mature companies that are at a stage where large capital injections are:
a) less risky, b) more inclined to be put to wise use by (now)
experienced entrepreneurs.

So if you plan to start a business and you don’t want to give up
control and a ton of equity to VCs and Vulture funds, learn everything
you can about self capitalization—you are going to need it.

Dr. Bruce

Prof Bruce @ 1:15 pm

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Pre-selling, Finding New Clients, Keeping Existing Ones

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Game Theory and Entrepreneurship

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Why Businesses Fail

2 Comments

Posted on
Monday 14 January 2008

A simple example of applying game theory to entrepreneurship comes to mind:

A few years ago, I was having a difference of opinion with a Realtor
by the name of Roger Alvares (not his real name), a good guy. We
couldn’t figure out if he was owed $40,000 in commissions or $50,000.

After about a half hour of analysis with our then CFO (Cyril Leeder),
myself and Roger, I said: “To heck with this Roger, let’s flip a coin
for the difference.” We did and resolved the matter in less than 30
seconds. For entrepreneurs, time is better spent on productive things
and almost never on disputes. That’s why I so seldom engage in any kind
of litigation—that is a soul destroying, time sucker that only lawyers
win. Read THE BONFIRE OF THE VANITIES by Tom Wolfe if you want to
understand how litigation can ruin your life.

I am not afraid of anything, I think, except lawyers. Was it Mark
Twain who said (and I paraphrase): “If a man should try to steal my
watch, I shall fight him unto death but if a lawyer should sue me for
it, I would gladly take it off and give it to him and count myself lucky
to have got off so lightly.”

Obviously, flipping a coin is pretty simple gaming—results are either
heads or tails. There are many more interesting applications of game
theory (the prisoners’ dilemma comes to mind). But the idea is that
sometimes life is so complicated and there are so many grey areas that a
logical answer can not be resolved from the facts. In fact, markets
move in mysterious ways and anyone who tells you they have perfected an
algorithm that can accurately predict market changes is probably the
same person who has also invented a perpetual motion machine.

So you resolve matters through other approaches including gaming,
instinct and sometimes just plain guesswork. The army has found that the
best thing to do when you are ambushed is to attack the ambush. If you
just hunker down, you all end up dead.

Prince Charles on getting his first Naval command was tested by his
crew. They thought he was a rather wet-behind-the-ears Royal and set out
to undermine him. He resolved to answer every even numbered question
with a ‘yes’ and every odd numbered question with a ‘no’, at least for
the first couple of weeks while on board. His crew were impressed with
the young officer’s decisiveness and the balance of his time at sea went
quite well.

Entrepreneurs are often better off making a decision, any decision than over-analyzing things.

Dr. Bruce

Postscript: In entrepreneurship, we always talk about optimization
instead of maximization. Our role as entrepreneurs is to try for optimal
results. That sometimes leaves something on the table for the person on
the other side of the negotiating table; Cyril Leeder told me that if
you leave something on the table for a customer, he or she will come
back to you again and again and spend that money that you left on the
table for them with… you!

So if you are using game theory to maximize results, temper that with
a contextual setting. Winning once doesn’t really do you any good if
you lose that customer (or supplier forever).

I remember we used to patronize a little country general store; we
would buy bread, milk, cheese, popsicles for the kids and gas there
every week during the summer. We probably spent an average of $70 a week
there. One cold winter’s day, I stopped for some gas. After filling up,
my car wouldn’t start. I asked the owner if he could wheel his truck
into place and give me a boost. He refused saying: “Gee, Bruce, what if I
gave you a boost and later on when I have to go home, my truck won’t
start?” He didn’t lose a $70 customer, he lost a ten year, $2,500 a year
customer; i.e., he lost $25,000 that day plus everyone else I talked
to. (It turns out that he also cheated the local kids out of their candy
money too. It wasn’t long before he closed his store…)

BMF

Prof Bruce @ 5:27 pm

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Why Businesses Fail

Entrepreneurship as a Career Choice

Posted on
Saturday 1 December 2007

November 29, 2007

(Prepared for: The Small Business Policy Branch (SBPB) of Industry
Canada for the Youth Entrepreneurship Forum, National Arts Centre,
Ottawa, Canada)

(By: Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., PhD.,
Entrepreneur-in-Residence, Telfer School of Management, University of
Ottawa, Founder, Ottawa Senators)

Question: Why do people choose to become entrepreneurs?
a. They want to make more money.
b. They have no other alternatives.
c. They want to work fewer hours.
d. They want to have flexible work hours.
e. They believe they can create more interesting work for themselves than others can create for them.

I believe the answer for most entrepreneurs is e. In my experience as
a mentor and teacher of entrepreneurs (and intrapreneurs) and as an
entrepreneur myself, I see this countless times—entrepreneurs are like
artists (who, by the way, are also entrepreneurs), they do what they do
because they are driven to create new enterprises, new services and
products, new business models. They want to innovate and change the
world.

Would I have been able to work on interesting projects like the Bring
Back the Senators campaign of 1987 -1992 if I had remained working for
Supply and Services Canada (in their Bureau of management Consulting) in
1982? What about the more than 1,200 home sites we created in Ottawa,
the dozens of office buildings and shopping plazas we built not to
mention the planning and eventual construction of Scotiabank Place?

One day soon, Scotiabank Place will have a context when lands
currently owned by great Ottawa companies like Minto and Taggart and,
new on the scene firms, like Mattamy Homes, complete their projects in
the Kanata West Concept Plan area. It is the ability to have vision and
drive and to be innovative that pushes most entrepreneurs to do what
they do.

Question: How could we get more young Canadians to consider entrepreneurship as a career choice?
Many young Canadians seem disillusioned with High School. Why is that?

My wife and I have five children—four of whom went to the Canterbury
School for the Arts in Ottawa. Two were in the Drama Program, one in
Creative Writing and one in the Dance Program. If you ever have the
opportunity to visit Canterbury, do!

You will find a student body full of energy and life—they not only do
the full curriculum that every other Ontario High Schooler does, they
spend many extra hours every week on their art. Now I have asked myself
why we can’t have more Canterburys. How about a High School for the
Technological Arts or a High School for Entrepreneurship.

In a town like Ottawa with its strong technology industry, I would
guess that there would be several thousand applications every year for a
High School for the Technological Arts; they would have to go through
the same audition process that Canterbury students have to got through
to get in…

We need more High Schools for the trades too. Canada needs more
skilled craftspeople and, guess what; some of the strongest
entrepreneurs come from a trades background.

Many of my students ask me about mentoring, is it important for their
future success and I always give a qualified answer. Mentored
businesses do much, much better if they have the right mentor. The next
question is always who they should go to for direction—their banker,
their lawyer or their accountant and, with all due respect to these
professions, I always tell them: none of the above.

Of course, everyone knows of the story of how the US auto industry
ran into terrible difficulties in the 1980s and, in one particular
company, every board meeting seemed to require another round of
cuts—jobs and plants had to go. At each meeting, the accounting
department pressed for more plant closures until finally, one day, the
engineers on the board got fed up and said: “Imagine how much money we
would save if we closed all the plants.”

Again with apologies, bankers, accountants and lawyers are not, by nature, very entrepreneurial.

Let me tell you a story about a friend of mine, Peter Patafie. Peter
is the youngest person to ever work at the Chateau Laurier Hotel—he went
to work there in the kitchen at the age of 12 because his family needed
him to. Obviously, Peter understands the value of hard work.

Later on, he worked for a company that sold moving and packing
supplies and he asked them to pay him only commission. The owner felt
that was a particularly good deal for the company—if Peter didn’t sell
anything, he wouldn’t be paid anything. However, Peter had confidence in
himself until one day the company fired him because he was making too
much money!

By then he was middle aged with a family to support and a mortgage to
pay and no prospects. But he had drive and courage and ambition and a
desire to work hard but he had more than that—he knew he could innovate
in an industry where that was rare. One singular insight enabled Peter’s
new company (Patafie’s Moving Supplies and Rentals) to capture 97% of
the moving companies in his market area (that’s a better market
penetration than Microsoft’s OS!)

Peter went to each moving company and asked a simple question: “What
if instead of delivering moving and packing supplies (you know the
cardboard boxes, wardrobe boxes and other stuff you need to move) to
your warehouse, I delivered them to your customers? That way, all your
salespeople who now are selling moves and then having to go back
afterwards and personally deliver boxes and stuff to their customers
won’t have to do that and will have more time to sell more moves which
is where they and you make most of your money.”

Well, no one had thought to do that but Peter was able to unclutter
their premises, make their salespeople more productive and build a very
successful business in less than 10 years.

Now, by the way, Peter makes an excellent mentor and he has been part
of the mentoring program at the Telfer School and any young
entrepreneur that can get a few minutes of Peter’s time would be well
served, in my view. Peter would tell you that he doesn’t have the formal
education of a banker, lawyer or accountant but as a mentor, Peter is
special.

Question: So why don’t more Canadians become entrepreneurs?
I think that many young Canadians are concerned about the risk profile
of being an entrepreneur. They know that to be successful it takes a
large time commitment and it is a total mind and body work out that
tends to be quite stressful.

The Dalai Lama says not to worry about things. If something is going
on and you can do nothing about it, don’t worry about it then. If
something is going on and you can do something about it, don’t worry
about it, do it.

But I think people know intuitively that there is another condition
that applies—particularly to entrepreneurs. That is, when you are not
sure if there is something you can do about it; that is where the worry
lies. In the field of entrepreneurship, you are constantly operating on
less than perfect information—is the client going to sign that contract,
is my supplier going to come through on time, can I collect my
receivables fast enough to make the next payroll, is the Board of
Governors of the National Hockey League going to choose Ottawa and Tampa
or Milwaukee, St. Petersburg, Seattle, Portland, Hamilton or Houston?

Now that is a worrisome thought and quite stressful too.

So I would list (in no particular order) the following reasons why most people would choose not to become entrepreneurs:

· Risk profile
· Worry
· Stress
· Lack of a predictable income and benefits
· Humongous hours of work
· Fear of success
· Fear of failure
· Fear of trying
· Lack of initiative
· Lack of leadership skills
· Lack of a supportive social network
· Lack of experience
· Lack of a good idea
· Etc.

You will notice that I did not say that lack of access to financial
resources is one of the main causes of a dearth of young entrepreneurs
in Canada. That is because I don’t think it is one of the main reasons, I
think it is an excuse instead.

Sure, survey after survey says that SMEEs (Small and Medium Sized
Enterprises) in Canada feel that the banks don’t love them (true) but so
what. If you list the top sources of startup capital for new
enterprises, banks would not be in the top five, I would guess. So when a
young person tells me that he or she can’t start a business because
they don’t have five million dollars in VC funding or one hundred
thousand dollars in bank lines of credit, I view that as an excuse not a
reason.

So if you look at my list above, what is the number one thing that I believe we can do to help young Canadians enter the field?

FIND THEM UNCONVENTIONAL MENTORS THAT REALLY, REALLY KNOW WHAT THEY ARE DOING.

This will take away some of the fear and give them confidence that
they can do it… It is probably the number one thing I do for people—give
them confidence to just go ahead and do it. (Note also that I don’t say
go ahead and try. Trying is for losers. Entrepreneurship is all about
succeeding, completing, finishing, winning.)

But terrific mentoring also does one more thing that is very, very important, not just for the entrepreneur but for Canada too:

It helps them to GTBMR (Get The Business Model Right).

I teach business modeling and (I realize I am being a bit biased
here) I think business models are far more important than business
plans. The best business plan ever written needed to be changed the day
after it was finalized because of some type of change in the competitive
landscape. Business models on the other hand describe the engine of the
business and it was here that Mr. Patafie understood that he would not
only have to serve his clients but his clients’ clients too. (That is,
he would be paid by the moving companies but deliver the packing
supplies to homeowners about to move—the homeowners are the customers of
the moving companies but an incredibly important part of Peter’s
business model and the business eco system in which his business exists.
By analyzing his business model and understanding his ecosystem, he
captured 97% of the market.)
Sam Palmisano, Chair of IBM, in an interview with BusinessWeek (April
3rd, 2006), put a great deal of emphasis on the importance of Business
Model innovation. Mr. Palmisano is quoted in the article as saying:

…with product innovation, it’s a certainty that your competition is
shortly going to copy what you have done. With business-model
innovation, though, if you can come up with a unique way of doing
things, it’s much tougher to react to.

A good mentor will help folks get the business model right so the
harder they work, the more money they will make rather than the
alternative.

Let me give you an example. A few years ago, four young persons came
to me after completing their Entrepreneurialist Culture course with me.
They had five ideas for business startups. As they went through their
ideas, I could feel myself sinking further and further down in my chair
as each idea was worse than the one before it. I mean I like to
encourage students and future entrepreneurs but these were bad ideas.

I don’t remember the first three but I sure do recall number four—it
was to build a silent alarm clock. No, I said to them, that probably
won’t work either.

Well they were pretty discouraged by this point and didn’t even want
to tell me idea number five but I encouraged them and they did. They
said it probably wasn’t going to work because someone was already doing
it…

They wanted to start an at home or at work, computer/network repair
and maintenance service. If you couldn’t get your PC to work or connect
to your printer or network or you had a virus running around on your
system, they would come to your home or place of business at a
pre-arranged time and guarantee that they would fix it.

I asked them if they had any idea how big this market is—there are
about 600 million PCs in North America alone and, probably, at any one
time, around 30% of those don’t work to their capacity—that is a
potential market of 180 million PCs a day. I told them that so what if
there was already competition. If it was a bad idea, they wouldn’t have
any competition but why would that matter, it’s a bad idea. This was a
good idea—all they would have to do is out-execute and out-innovate
their competition. The result has been a very successful business now
known as GradeATechs.com.

Question: So is entrepreneurship really more risky?
Yes and no.

Real job security comes from what you have between your ears—your
education, your experience, your map of the way the world works, your
creativity, your drive, etc. A friend of mine spent 30 years in the GOC
(Government of Canada) doing post project reviews and when he left the
GOC in the downsizing of the early Chrétien years (this was the mid
1990s when Canada was running a Federal deficit of over $42 billion a
year and was perhaps within 18 months of national bankruptcy), he asked
me, what do I do now?

I told him to start a business—he was then in his 50s and had very
little experience that would likely be relevant to a private sector
employer. He decided against that and wrote up 500 CVs and sent them out
to 500 separate companies. Six months later he had not had one response
and certainly no job interviews and his severance package was running
out.

He asked me again, what do I do? I suggested he buy a franchise
mainly because I thought he needed the structure of an established
system to work within. He did indeed buy a franchise—in fact, he bought
an existing sandwich shop that was losing money. But we devised some
simple marketing* and within six months the shop was making money; his
first year he took home about $32,000, less than a third what he made at
the GOC. But by year two, he was into it—he was doing his own HR,
banking, training, marketing, accounting and so forth and by year three
he was making over $120,000. He bought a second shop a few years later
and he tells me he loves it—he makes over $150,000 a year, and, as long
as he keeps a good relationship with the master franchisor, he can do
this until he drops dead. No one will ever tap him on the shoulder again
and tell him he is not wanted, get out.

(* He printed up thousands of dollar off coupons and distributed them
at nearby offices and shopping plazas between 10:30 am and 11:30 am and
then ran back to the shop and served them sandwiches by noon. He also
took huge platters of neatly cut sandwiches into high tech offices and,
amazingly, talked his way past security desks and distributed both
sandwiches and dollar off coupons to hungry employees.)

So I am not sure if your risk profile is really much higher if you
are an entrepreneur instead of an employee, it may only seem that way.

Question: Is there a role for intrapreneurs in the Canadian economy?

Yes, absolutely.

No one has the time to baby-sit anyone any more. If you can’t make 90
to 95% of the decisions you need to make day to day in your JOB by
yourself, no one will want you as an employee for very long. You need to
make the right decisions nearly all the time, the tolerance for error
has never been lower and you also need to know which decisions you
should not make yourself and refer them on.

Ok, quick now who gets the green light on his or her pet project and who gets the promotion—Duncan or Julie?

Duncan has this great idea for a new product or service, it will take two years of R & D plus $10 million to develop.

Julie has this great idea for a new product or service, it will take
two years of R & D plus $10 million to develop but she has three
pre-launch clients who will each put up $2.5 million of R & D funds
and take the first six months of production.

Well, Duncan is likely to be told to go back and do a business plan,
then run it up the approvals chain and, finally, it gets to the Board
level where it may or may not be green lighted.

Julie’s project probably get s approved at a much lower level, much faster and she gets the promotion obviously.

So for those who are truly not comfortable with the risk profile or
stress of being an entrepreneur, they can still apply the skills of an
entrepreneur within a large organization and you can be sure that she or
he will personally benefit from that, so will the company and so will
the Canadian economy.

Entrepreneurs and intrapreneurs tend to use scarce resources
efficiently and effectively and this is good for all including the
environment.

We built 42 private suites at the City-owned Civic Centre when the
Ottawa Senators played there for three and half years before moving to
Scotiabank Place. Our contractor, PCL, built them for $3.1 million
including full F, F & E (Furniture, Fit up and Equipment). That
works out to about $75,000 per suite. The suites are still there and now
are enjoyed by the patrons of the Junior A team that plays out of the
Civic Centre, the Jeff Hunt led Ottawa 67s.

The City of Ottawa had volunteered to build some suites for us—16 of
them for around $12 million. That works out to around $750,000 per
suite, ten times more than what the private sector could do. It seems to
me that governments are good at policy but generally bad at the doing
of things. So leave the doing to entrepreneurs—again if we make better
use of our resources, use less materials, use less labour and so forth,
that’s also got to be better for the environment too.

“An entrepreneur (or intrapreneur) is someone who can produce two
dollars of revenue for every dollar that any fool could generate,” Dr.
Bruce M. Firestone.

“An entrepreneur is like an engineer, he can do for a dollar what any
fool can do for two,” I am paraphrasing a former Dean of Engineering,
McGill University, circa 1967.

Question: So what are the barriers to entry?
Let’s return to the question of access to capital. As you heard above, I
believe that the stated lack of access to capital by many would-be
entrepreneurs is more of an excuse than anything else.

Here is my absolutely unscientific bar chart of what I think are the
main sources of capital for startups. (I leave it to a future grad
student to prove it or disprove it.)

Home Equity Loans
*************************************************
Soft Capital #
***********************************************
Supplier Credit
********************************************
Consulting
*****************************************
Pre-sales/Launch Clients
*************************************
Credit Cards
*********************************
Deposits, Retainers ## …
******************************
Receivables Factoring
****************************
Financial Leasing
*************************
Partners/Debentures
*********************
Trading/Speculating/Reselling
*****************
Strategic Investor/Partner
***************
Banks
***********
VCs
*******
Government Grants/Tax Credits
******
Angel Capital
****
Franchising
***
Accretive Buying/Selling
**
ESOPS###
**
Sponsorships
**
Patents and Royalties
**
Collectibles Sales
*
Business Competitions
*

# Mom, Dad, Rich Uncle Buck, co-guarantors
## Plus Progress Payments and Draws
### Employee Stock Ownership Plans

I always laugh when my students first go to a bank and ask for a
loan—Canadian banks only want to lend to people with collateral; i.e.,
people who already have money. It took 2006 Novel Peace Prize winner
Muhammad Yunus of the Grameen Bank to realize that a bank’s real job is
to lend money to people who need it—a completely novel thought, it turns
out.

Question: How big is the entrepreneurship opportunity in Canada?

Huge. There is an incredible shortage of young entrepreneurs in this country, in my view.

In my industry (real estate), I look around at the development
community and they are almost all middle aged. They will be leaving the
scene soon.

For a young person with gumption, the opportunity in Ottawa and
Canada is vast. Not only because his or her competition is going to be
dying off soon, but because the real estate industry is one of the most
conservative, resistant-to-change industries anywhere and a young person
with an ounce of creativity will do a Patafie on the competition—they
will stomp them.

Since 2000, I have been trying to get the real estate industry to
intricate the Internet into their operations, pretty much with zero
success. To give just one example, if the industry were to put their
design centres online, they could improve the efficiency of that part of
their businesses by a factor of ten or more.

When you buy a new home, once you have signed the Agreement of
Purchase and Sale, you may think you are done—far from it. You then have
to go to the Builder’s design centre and pick out your carpet, your
lighting fixtures, your plumbing fixtures, your tile, your cabinets and a
100 other things. It can easily take 30 hours to do it all—your time
and the time of the design centre experts too is tied up on endless
discussions of carpet weights and hardwood flooring.

Why not put all of this online and invite your customers to use your
online physics engine—add those green granite counter tops to your list
of selections and watch the online cash register change. If you go over
your budget, no worries, just take some stuff out of the shopping cart
and substitute less expensive things. Knock yourself out—play with the
system for 50 hours, whatever. Then simply print out your list of
selections and take them into the design centre or just email them.

Builders are afraid that their competition will find out their
pricing for things but, guess what, they already know. Ever heard of
secret shoppers? Every developer knows what the other builders are doing
in every detail. I would let anyone, even my non-customers, use my
website. The more visitors the site has, the more your suppliers will
want to be on the site—suppliers might even pay to be featured on the
site and you may turn some of those people who are just fooling around
on your site into real home buyers. Imagine turning the design centre
into a profit centre.

Question: What are the ten most important things that an entrepreneur should do?
Who really knows? There are 100s of things a real entrepreneur does and,
maybe they are like Wayne Gretzky, they do it but have a hard time
explaining to others what it is exactly they do. But anyway, here is my
list of ten things an entrepreneur should do:

1. Get the business model right*.
2. Innovate and add differentiated value*.
3. Self capitalize**. Use bootstrap capital.
4. Use smart marketing**. Be a guerrilla marketer.
5. Execute very, very well*. Check, check and check.
6. Crunch their costs**. Be efficient.
7. Sell, Sell, Sell** (to clients, suppliers, employees, banks, etc.)
8. Lead by example**.
9. Use the Internet** (reverse out the work to clients and suppliers,
mass customize your products or services, create a scaleable enterprise,
become part of a business ecosystem.)
10. Remember that Cash Is King*. (Collect early and pay late.)

(*Underpinning these ten things that entrepreneurs have to do to be
successful is that they must also exercise good judgment and have a
terrific map of the way the world works. The latter allows them to
perform what Einstein called ‘thought experiments’. You can travel to
the planet Mars in your mind faster than light and all good
entrepreneurs can test ideas in their minds against their map of the way
the world works and make a pretty good guess about whether something
will actually work in the real world.

When I was starting out as an entrepreneur in 1982, I was told by a
respected businessperson that if I could be right 51% of the time and
wrong 49% of the time I would be doing pretty well. That turned out to
be terrible advice—as a young entrepreneur, you have to be right almost
all the time or you will kill your company in a hurry. Ever wonder why
CEOs of large firms are paid so much? It’s because if your CEO has bad
judgment, he or she can kill your company in a hurry.

Mighty IBM sells more than $85 billion worth of products and services
every year one customer at a time. What would happen to IBM if they
forgot one simple thing—to collect their receivables? Well, they sell
more than $20 billion worth of stuff every quarter and probably have to
pay out at least $15 billion of that to suppliers, employees, etc. So if
they somehow forgot to collect their receivables for just 90 days, they
could be $15 billion in the hole.

Now if the CEO has good judgment, it can make all the difference in
the world. When Lou Gerstner first got to IBM, he was shown all kinds of
gee-whiz technology. He was previously a soup guy, so the engineers at
IBM thought he would be blown away. On seeing his first ever website, he
asked: “Hey guys, where’s the BUY button?” He resisted all attempts by
Wall Street to breakup IBM, shifted the company into higher margin
services like tech outsourcing and did just about all the right things.
He asked the sales department to produce a list of IBM’s top customers.
“Why?” he was asked, “because I am going to visit them.” “Well, the CEO
of IBM doesn’t do that,” they responded. “This one does,” he replied.
The result was he created billions in value for IBM shareholders and
other stakeholders.

* Also, entrepreneurs must be creative and have a keen understanding
of human psychology—you can’t sell your ideas to your employees or
anyone else unless you understand what makes people tick. You can’t lead
by example either. And, of course, you need to be a creative problem
solver in the face of inevitable difficulties.)

Question: Is Canada a good place for entrepreneurs to start up a new enterprise?
Yes, definitely.

Suppliers and customers are very supportive of new businesses in
Canada that have all or most of the above 10 qualities. If you are
innovating and adding value, your customers and clients want you to
succeed because they need you. Your suppliers want you to succeed
because, well, they want to be part of your ecosystem and sell you more
of their services and products.

Question: What can Universities do?
A lot more.

I think that Business Schools and Faculties of Engineering should get
together and start entrepreneurship programs that draw on the strengths
of both departments. That is what I am trying to encourage at the
University of Ottawa—that the Telfer School of Business and the FOE
jointly start an Entrepreneurship Concentration or Option that not only
welcomes students from Business and Engineering but from other faculties
as well.

When I first started teaching entrepreneurship, I expected students
to enroll from business and engineering but when students started
showing up from architecture and the arts, I was surprised but shouldn’t
have been. For many artists, death is a career move—they create a lot
of value for their communities and for collectors but have a difficult
time capturing much of that value for themselves. As they explained to
me rather succinctly, they wanted to get rich while they are still
alive.

Universities need to be places that promote research in the much
under-researched area of entrepreneurship, especially self-capitalized
enterprises; they need to collaborate more with industry; they need to
encourage startups; they need to make sure they teach entrepreneurial
skills to intrapreneurs; they need to focus less on VC-funded startups
(a tiny fraction of all startups) and more on self-funded ones (which
are largely ignored).

Question: What is the proper role for VCs?
I think their role should reflect the tall poppy syndrome.

I believe that enterprises that are somewhat capital starved are
hardier than those that are beneficiaries of VC funding too early. Those
are just big businesses with no clients and no revenues.

If early stage companies are focused on getting real clients and real
cashflow, they will create better, more innovative products and
services.

VCs should stand back and wait for the tall poppies to show up in the
field and then go forth and provide them with mezzanine financing to
grow even faster.

This will be better for VCs and better for the Canadian economy as
the VCs will make wiser use of scarce capital and so will the
entrepreneurs who receive funding—they will be better able to handle it
and use it wisely.

Also, entrepreneurs who have real cashflow will be in a much better
position to negotiate from a position of relative strength and with more
equal knowledge when matched up with sharp VCs. They will end up owning
more of their company’s equity and this too will probably be good for
their firms, their stakeholders and for themselves and for Canada.

Question: Why is entrepreneurship important?
I wonder what the City of Ottawa would look like if your removed a few
entrepreneurs from the scene? Say we remove Terry Matthews (Mitel,
Newbridge/Alcatel, March Networks, etc.), Mike Potter (Cognos), Irving
Greenberg (Minto and the newly named Irving Greenberg Great Canadian
Theatre Company building), Mike Cowpland (Mitel, Corel), John Doran
(Domicile Developments), even Bruce Firestone (the Ottawa Senators). I
would think that Ottawa would be a much less interesting place with
fewer jobs and even more of a small town than it is.

Richard Florida, one of today’s leading urbanists, said that
diversity and strength in terms of a city’s economy is, in part
dependent on a strong arts community. A vital arts community makes the
city a more interesting place to live; it then attracts more creative
people, who then start more new enterprises, which brings forth more
cultural attractions and a virtuous cycle is arrived at. This is an
important part of making our city-states competitive in the 21st
Century.

Canada also has a strong tradition of tolerance; our communities tend
to get along. When two Canadians have an argument (a relative rarity),
the most likely outcome is that they might use harsh words. In much of
the world, they are likely to kill each other. This is a not
inconsequential national advantage for Canada in our ability to
encourage, attract and keep both entrepreneurs and artists.

Question: What are some other things that we might do to encourage entrepreneurship and intrapreneurship?
Here is a laundry list of some things that we might do:

A) Approach the UN with the idea of creating an Entrepreneur’s Day,
celebrating their role in creating more interesting cities, alleviating
poverty, making efficient use of capital, benefiting the environment, …

B) Create a National Foundation for Entrepreneurship—seed funding,
royalty collection, commercialization of Canadian technologies, …

C) Create a national mentoring program made up of both volunteer and paid mentors.

D) Create centres of excellence for the study of and promotion of
entrepreneurship and intrapreneurship both at the University/College
level and at the High School level.

E) Create a monitored wiki website for the pooling of knowledge, experience and research in the field of entrepreneurship.

F) Create a Million Dollar Home Page for a single national reference site for entrepreneurship tools, support, research, etc.

G) Create a Social Networking site for entrepreneurs and intrapreneurs to communicate and to collaborate.

H) Create incubator centres in association with centres of excellence to help grow startups.

I) Create micro businesses similar to Carleton University’s School of
Architecture’s Design Clinic that provides an outlet for
entrepreneurial energies for students while at University or College or
High School.

J) Reach out internationally to assist entrepreneurs around the world with Canadian know how in the field of entrepreneurship.

K) Help every person who wants one to create and hold onto a personal
business for life that will support themselves and their families—after
all, the moral imperative underlying entrepreneurship is to first take
care of yourself and your family so as not to become a burden on society
and then to reach out and help your fellow human.

https://www.dramatispersonae.org/BootstrapCapitalSources.html

https://www.dramatispersonae.org/GuerrillaMarketingAndFinance/BootstrapCapital.htm

https://www.dramatispersonae.org/GuerrillaMarketingAndFinance/GuerrillaMarketing.htm

https://www.dramatispersonae.org/GuerrillaMarketingAndFinance/GuerrillaMarketingExamples.htm

https://www.dramatispersonae.org/GuerrillaMarketingAndFinance/PresellingEthics.htm

https://www.dramatispersonae.org/EntrepreneurialistCultureFrontPage.htm

https://www.dramatispersonae.org/

Prof Bruce @ 5:19 pm

Filed under:

Development Economics and Entrepreneurship

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Livable Cities and Neo-Urbanism

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Guerrilla Marketing

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Micro Capital Lending

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Pre-selling, Finding New Clients, Keeping Existing Ones

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What should an Undergrad Entrepreneurship Program at a University look like?

and

Work/Life Balance

196 Comments

Posted on
Saturday 1 December 2007

Here is my take on what a decent undergrad program in
entrepreneurship and intrapreneurship might look like at a Canadian
University, circa 2009. I also include at the end, a laundry list of
things that the University might do alone or in conjunction with other
Universities across Canada to promote entrepreneurship as a career
choice.

Note, I believe it is just as important for people who don’t like the
risk profile of becoming an entrepreneur to learn and bring these
skills to a JOB. No one has time anymore to babysit you on the job: if
you don’t take the initiative in your job, if you need to be told what
to do five times a day, if you can’t find launch or pre-launch clients
for your next project or do the 101 things that entrepreneurs need to do
to be successful, you probably won’t get that next promotion and you
sure won’t be the next CEO.

December 10, 2008

(DRAFT)
University of Ottawa Telfer School of Management Entrepreneurship Concentration

1. The aim of both the graduate and undergraduate program should be
to put the University of Ottawa in the top 5 worldwide in terms of
entrepreneurship education, experience and research. The goal would be
to compete successfully with Babson College, Boulder, Northeastern,
Strathclyde (Hunter Centre) and the University of Lund and attract top
students from across Canada and around the world.

2. This initiative should be a named Concentration and the University should try to raise a minimum of $2.5 million for it.

3. There should be a leading academic that takes up the position of
Professor of Entrepreneurship—which should be a joint appointment of the
Telfer School and the Faculty of Engineering. It may also include the
Medical School, Science and Environmental Science as well as the Faculty
of Arts—artists, bio-scientists, environmental scientists and others
can benefit from entrepreneurial and intrapreneurial research, education
and experience.

4. It should include a required practicum to compete with the top
programs in the US and elsewhere. A term in a SMEE with a case study or
research thesis would be an acceptable alternative for students not
comfortable with a practicum.

5. Students from engineering and business as well as other disciplines would be encouraged to participate in the concentration.

6. Intrapreneur training would be an important part of the program as
the Concentration equips students who will not be entrepreneurs with
entrepreneurial skills to be applied within established organizations.
Such organizations are not just for-profit businesses but also NGOs,
charities, not-for-profit corporations, crown corporations, governmental
departments and so forth.

7. This Concentration or Option could prepare students for graduate
studies within the Institute for Entrepreneurship and Innovation.

8. The Concentration would focus on non VC-funded ventures and
enterprises, which form the bulk of new startups in Canada and around
the world. This would not preclude the teaching of or research in the
field of Angel-funded or VC-funded startups but that would not be the
main focus of the new undergraduate Concentration or Option.

9. Suggested courses and practicum would include:

A) NEW VENTURE CREATION: CASE STUDY BASED.
B) CREATING INNOVATIVE BUSINESS MODELS FOR NEW ENTERPRISE FORMATION.
C) ENTREPRENEURIALIST CULTURE.
D) ACCESSING CAPITAL, SELF CAPITALIZATION AND EQUITY VALUATION.
E) DIGITAL MARKETING, SOCIAL MARKETING AND GUERRILLA MARKETING.
F) HOW TO SELL, NEGOTIATE AND POPULATE YOUR MARKET.
G) e-BUSINESS, e-LOGISTICS AND e-PROJECT PLANNING USING CRITICAL PATH
AND OTHER METHODOLOGIES: INTEGRATING THE INTERNET INTO YOUR BUSINESS
PROCESSES.
H) MANAGEMENT OF FAST GROWING, SMALL AND MEDIUM SIZED COMPANIES IN THE
NEW ECONOMY (Note this includes tech companies but is not exclusively
tech).
I) SOCIAL ENTERPRISE: STARTING AND MANAGING A SOCIAL ENTERPRISE (NGOs,
CHARITIES, NOT-FOR-PROFITS), EFFECTIVE BUSINESS MODELS FOR SUSTAINABLE,
EFFICIENT AND EFFECTIVE SOCIAL ENTERPRISES.
J) BUSINESS LAW AND INTELLECTUAL PROPERTY LAW.
K) ENGINEERING LAW AND INTELLECTUAL PROPERTY LAW.
L) Choice of: WORK TERM IN/CASE STUDY OF A SMALL OR MEDIUM SIZED
ENTERPRISE OR IMPLEMENTATION OF NEW BUSINESS MODEL IN A MENTORED
PRACTICUM PROGRAM.

10. Create a student and staff exchange program with top Universities
specializing in entrepreneurship education, research and experience.

11. Continue with an annual Elevator Pitch Competition.

12. Continue with an annual Business Model Competition.

13. Compete in the annual UOttawa Wes Nicol Business Plan Competition.

14. Aim to place one team from UOttawa in the annual National Wes Nicol Business Plan Competition.

15. Continue with the Faculty of Engineering’s Entrepreneurship and Innovation Endowment Fund Business Plan Competition.

16. Establish an Entrepreneurship Clinic (similar to
Carleton University’s School of Architecture’s Design
Clinic)—implementing and operating on campus businesses (e.g., parking
meter signs, mural arts program, EQ Journal, etc.) Also, build a Student Management Consulting Clinic (SMCC) staffed by both Telfer School of Management students and Faculty of Engineering students. Build a relationship between ACE Canada and Sife, Students in Free Enterprise
and the SMCC. ACE and Sife will assist the SMCC in the following ways:
a. Finding consulting work through their national and local sponsors:
they will give SMCC a list of mentors who can help in this regard. b.
Learn from students on other campuses who are also running student
management consulting clinics and have been doing so for awhile; you can
learn what works and doesn’t not only in terms of the type of offerings
but also the type of marketing that results in consulting assignments.
c. You can learn how to make the SMCC sustainable: how to transfer
knowledge on to your student successors so the SMCC doesn’t die out. d.
When students put “Sife Team Member” on their CVs, it will assist them
in finding jobs. e. They will have an online job bank for Sife students
as well.

17. Strengthen the already successful Entrepreneurs’ Club.

18. Further build the Career Centre.

19. Create a resource website for all entrepreneurship activity,
teaching, research and support including bursaries and scholarships,
mentoring and tracking of graduates and their enterprises (a la Million
Dollar Home Page).

20. Develop a mentoring and unconventional mentoring program.

21. Build on the Faculty of Engineering’s Speaker series.

22. Develop an annual Bootstrap Awards program to reward the best
startups, the cleverest guerrilla marketing, the most unique source of
bootstrap capital, the greatest new idea for adding differentiated
value, the best new business model, etc.

23. Develop “The Entrepreneurs Handbook”.

24. Develop Tools for entrepreneurs including: Measuring
Pre-Disposition to Entrepreneurship (the ECQ Test), Online Business
Model Generator, Differentiated Value and Business Model Scoring,
Sources of Bootstrap Capital, Measuring Cash Conversion Cycles, Methods
of Guerrilla Marketing, Measuring the Effectiveness of Guerrilla
Marketing, GM Research Methods.

25. Develop a monitored entrepreneurship wiki for research as well as entrepreneurship tools and resources.

26. Develop an entrepreneurship blog and social networking site for entrepreneurs.

27. Track Entrepreneurship Graduates. (Provide Graduates with UOttawa Entrepreneurship Concentration email addresses for life.)

28. Mini-Offices—develop relationships with executive offices for UOttawa startups.

29. Foundation for Entrepreneurship—support for startups and receipt of royalties from startups.

30. Establish a national program to bring entrepreneurship experience
to young people across Canada—for example, the proposed Christie Lake
Kids program to have kids sell saplings in the Spring and leaf bags in
the Fall.

31. Establish a national Entrepreneurs’ Week to celebrate
entrepreneurs and disseminate entrepreneurship research. Conduct a
national campaign on mainstream media and on the Internet to promote
entrepreneurship as a career choice. For example, do a national one day
competition (with prizes) to produce video case studies of real world
businesses. Produce a national archive and resource of video case
studies. Post them to the entrepreneurship website and to YouTube.
Students today learn best perhaps using data rich videos. Tell the
story, set the scene, describe the cast of characters, define the
problem and some possible solutions then stop. Class discussion ensues.
Then show what happened and provide an epilogue on the efficacy of what
they did right … and wrong.

32. Require High Schools to teach business courses as a pre-requisite for entry to business schools.

33. Work with local school boards to establish High Schools for the
Technological Arts and for Entrepreneurship similar to Canterbury High
School for the Arts.

34. Create a National Foundation for Entrepreneurship—seed funding,
royalty collection, commercialization of Canadian technologies, …

35. Create centres of excellence for the study of and promotion of
entrepreneurship and intrapreneurship both at the University/College
level and at the High School level.

36. Create a national mentoring program made up of both volunteer and paid mentors.

37. Reach out internationally to assist entrepreneurs around the world with Canadian know how in the field of entrepreneurship.

38. Establish “UN Day of the Entrepreneur”—celebrate the
contributions of entrepreneurs and intrapreneurs to economic
development, personal freedom and knowledge.

39. Video lecturers and speakers and put them on You Tube and other websites.

40. Every student to have his or her own blog and personal website.

41, Train students to make written, oral and video presentations
based on their own work in business modeling and business planning.

42. Create a FAQ of student questions and faculty answers.

43. Start a ‘REACH OUT’ challenge: students have to create a good quality question and get it answered by a well known expert.

44. Help every person who wants one to create and hold onto a
personal business for life that will support themselves and their
families—after all, the moral imperative underlying entrepreneurship is
to first take care of yourself and your family so as not to become a
burden on society and then to reach out and help your fellow human.

Dr. Bruce M. Firestone, Entrepreneur-in-Residence, Telfer School of Management, University of Ottawa.

Prof Bruce @ 4:47 pm

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