Business opportunity #2

(1) Passion

I describe my passions as deal making, leading, managing, motivating, team building, boating, jogging, biking, reading, politics, finance, BC’s southern Gulf Islands, business and Vancouver.

My passions as described by my personal board of directors: “big picture”, politics, drive my own vision (not someone else’s), control, client facing, see things work, instinct, not bigco, managing.

• Deal making: 2
• Leading: 3
• Managing: 3
• Motivating: 3
• Team building: 3
• Boating, jogging, biking, reading, politics, finance: 3
• BC’s Southern Gulf Islands: 3
• Business: 2
• Vancouver: 3
• Big picture: 3
• Drive my own vision: 3
• Control: 2
• Client facing: 3
• See things work: 2
• Instinct: 3
• Not bigco: 3

This opportunity allows me to directly pursue one of my personal passions.  It gets me immersed into something I love and I can see the track to growth.  However, its growth is probably limited.  The income potential is lower in this and the business could very well become a lifestyle, which isn’t really what I’m looking for.

(2) Skill

As identified by my personal board of directors: people, strategy, advising, relationships, goal driven, process oriented, structured, execution, sales, presentation and verbal skills.

• People: 3
• Strategy: 3
• Advising: 1
• Relationships: 3
• Goal driven: 3
• Process oriented: 3
• Structured: 3
• Execution: 3
• Sales: 3
• Presentation/communication: 2
• Verbal: 1

I have no doubt that I could execute on this business plan and do a great job.  I’m quite confident that I could build this company into a market leader over the course of time.  But, like all opportunities, it has its drawbacks.  I wouldn’t be totally free to drive my own vision because I’m looking at doing it with a partner.

(3) Economic engine.

This opportunity has the potential to become a bit of a lifestyle business by generating a nice income, but not much more than that.  I’m not a believer in building up a company for the purpose of selling it, rather I think one should build a business to be the best in its market.  The rest takes care of itself.  I get concerned that after taking a financial risk and building this business up that the equity wouldn’t be worth very much.  When I look at other businesses in this space that seems to be the trend.  Now, I could always break free of that but the tides would be running against me.

• Economic prospects: 2

Mentor lesson #3: push yourself beyond your limits

I’m going through the process of determining what I’m going to do next.  There are three business opportunities that I’m reviewing and all three come with pluses and minus.  See this entry for an analysis of the first one: Business Opportunity #1

There are personal and professional considerations that matter for each business.  I’m a big believer in mentorship and in seeking advice from people who know me, including my strengths and weaknesses, and understand where I want to go.  I also believe that it’s important to seek advice from people are have been or are where I want to be.

Fortunately, there are some great people around me.  Last week I went over to a friend and mentor’s house for a glass of wine and some advice specific to one business I’m considering.

After a fairly wide ranging and comprehensive discussion, he left me with this nugget:

“If you choose this business opportunity I think you’re choosing the comfortable route.  You know you can do it and do it well, however, the upside is limited.  Push yourself beyond your comfort zone and do more.”

I think he nailed it and this is why this is my third entry into my Mentor Lesson series.

Serious fun

My director of business development at PCWorks (who I credit with helping take the company from about $15,000 in monthly revenue to around $150,000) used to have a turn of phrase, “serious fun”.

I always liked it because it reminded the team that we were involved in building a startup business, which was serious.  But it also reminded us that we needed to have fun in the process.

That company was a really tough one for me.  I had invested all of my available capital before it started to turn the post.  I was stressed because it took almost two years to make a profit and I was the only source of funds.  Let me say that it really is a reality check when your personal bank account is very close to being dry and your company still isn’t making money.

Fortunately it turned around in the end, and while I didn’t make money on that company I did get most (not all) of the investment back.  Even though it was rough at times, I’d like to think we had some fun.  Whether it was first person games played through our office’s network, going to my family’s place in the Gulf Islands, going River Rafting or just hanging out over brunch on the weekend – we never really lost sight of the fact that we needed a bit of levity.

This video was forwarded by Sarah McNeill of McNeill Nakamoto (www.mcnak.com) and I think it’s just terrific.  Kudos to this team for having serious fun.

Enjoy:

Guest and customer service

Here’s a link to Barry Moltz’s recent blog entry on customer service compared between North America and Asia: http://ow.ly/Y2dT.  My response is there too.

Myths of a startup

I think this post http://gigaom.com/2010/01/17/5-myths-that-can-kill-a-startup/#comment-997615 about five myths of early stage companies is terrific.

Business opportunity #1

As I go through the process of considering my next business (this has been a long process, I sold my last business nine years ago) I find myself thinking long and hard about what I want to do, what I can do and what will provide a return.

There are three businesses that I’m currently considering.  The filter I’m using to assess all three is based on Jim Collins’ Hedgehog.

(1) What do I want to do (passion).

(2) What am I good at (skill).

(3) What can provide me with an adequate return (economic engine).

Essentially, he argues that great businesses only focus on those opportunities where passion, skill and ability to generate profits cross.  I think the Hedgehog can be used for individuals too.

I’m going to post a three part series that run through an analysis of each of these opportunities framed using the Hedgehog (1 not at all, 3 totally).  I’m not yet at a stage where I want to publicly broadcast details on these opportunities, but if you’re interested in learning more then send me a message.  I’m more than happy to talk offline.

Opportunity S

(1) Passion

I describe my passions as deal making, leading, managing, motivating, team building, boating, jogging, biking, reading, politics, finance, BC’s southern Gulf Islands, business and Vancouver.

My passions as described by my personal board of directors: “big picture”, politics, drive my own vision (not someone else’s), control, client facing, see things work, instinct, not bigco, managing.

• Deal making: 1
• Leading: 3
• Managing: 3
• Motivating: 3
• Team building: 3
• Boating, jogging, biking, reading, politics, finance: 1
• BC’s Southern Gulf Islands: 1
• Business: 3
• Vancouver: 3
• Big picture: 3
• Drive my own vision: 3
• Control: 3
• Client facing: 2
• See things work: 2
• Instinct: 3
• Not bigco: 3

This opportunity would certainly provide me with an opportunity to once again lead and build a team, drive my own vision, follow my instinct (I think there’s an opportunity here) and make deals with suppliers.  If successful it would provide me with time to pursue the “other” passions – boating etc.

(2) Skill

As identified by my personal board of directors: people, strategy, advising, relationships, goal driven, process oriented, structured, execution, sales, presentation and verbal skills.

• People: 2
• Strategy: 3
• Advising: 1
• Relationships: 1
• Goal driven: 3
• Process oriented: 3
• Structured: 3
• Execution: 3
• Sales: 2
• Presentation/communication: 1
• Verbal: 1

(3) Economic engine.

This opportunity is an online store that is very focused on a single market niche.  The market is large, the margins are good.  If volume were achieved then the business would be very profitable.  There is competition and I don’t see a “game changing” component.  It would add convenience and provide an easy place for consumers to go for esoteric versions of the product.

Really profitable online opportunities are game changing.  For example, Amazon changed the entire way we buy books and has become a great company.  This opportunity doesn’t have that game changing component, so can it be really lucrative?

• Economic prospects: 2

Student entrepreneurship

The University of British Columbia, Simon Fraser University, the University of Victoria and other BC based post-secondary institutions are hotbeds for entrepreneurship.

Dating back more than fifty years, some of BC’s local entrepreneur success stories originated from the university environment.

Jimmy Pattison started curbing cars while at UBC.  Brian Scudamore started hauling junk while at UBC.  Peter Armstrong started giving sightseeing tours while at UBC.  Anthony and Andrew Sukow started Advanced Economic Research Systems while at UVic.  There are many more examples.

Useful capital is one thing companies need, but there are two key things entrepreneurs must seek out.

(1) Mentorship – someone with domain expertise and a verifiable track record.  I was 23 when I started my first company and grew it to 40 employees and y second company grew to 12 employees.  I was surrounded by staff, but I struggled to make big decisions and made myriad mistakes.  Had I had effective mentoring I would have made good decisions great and bad decisions better.

(2) Effective relationships – entrepreneurs can’t do it alone and you never know when a relationship is going to pay dividends.  Had I not made a great effort to establish connections while building my second company, I wouldn’t have made two very key hires and, undoubtedly, would have had trouble selling it.

The free market thinker in me thinks that if a student entrepreneur is going to be successful they will figure these things out on their own.  They’ll find a commercially viable opportunity, build the right relationships, find effective mentors and raise appropriate capital.

But the entrepreneur in me who has been beat up (particularly in my second company) likes the idea of giving a helping hand, particularly in the early days.  So, I’ve been helping out a team which is establishing a program in entrepreneurship for my alma mater – UBC.  It will include mentorship, opportunities for relationship building and very early stage pre/pre seed capital.

I will write more on this another time.

In the interim check out this Financial Post article (http://www.financialpost.com/small-business/business-solutions/story.html?id=2403106) on Canada’s current venture capital market.  It features a take on this climate by Danny Robinson, co-founder of Bootup Labs and a successful entrepreneur in his own right.

Bootup is doing some very interesting things in Vancouver and it’s worth checking them out.

East and West

It has been very popular amongst the media to bash the west and to predict the demise of the United States.

I’m generally a believer that just because the east (ie China) is rising doesn’t mean America is going the way of Rome.

Americans are tremendously resilient, entrepreneurial and determined. America and the west have stable systems of government, property rights, financial sophistication (which has been strengthened by experience with the recent sub-prime debacle) and freedom.

America will be back stronger, richer, smarter and well positioned to continue its leadership position economically, politically and militarily.

I hope you enjoy this Niall Ferguson opinion which appears in the Finanical Times.

http://www.ft.com/cms/s/0/ac26eb9a-f30a-11de-a888-00144feab49a.html?nclick_check=1

Mentor lesson #2: do what you love

Fifteen years ago my dad sent me to a long time client of his for some career and life advice.  I had just graduated from university and was trying to figure out what to do with my life.

I remember that day and that advice vividly.  I owned a white Volkswagen Jetta, was wearing a green golf shirt, khaki pants, boat shoes and met in his office in Washington state.  His green Mercedes S500 was in his parking lot and he referred to it as being “ugly as sin, but drives like a dream.”

We spent two hours together and I remember one piece of advice as though it was delivered to me only a few minutes ago.  It was, “do what you love and all else will follow.”

I haven’t always followed this advice, but when I have I’ve been happier, more successful and have just felt normal.

I came across this video of Steve Jobs delivering the commencement address to a Stanford graduating class.  One of his messages, “follow your heart, it knows what you want to become”, reminded me of my mentor’s 1994 lesson.

See the video below.  It’s well worth fifteen minutes.

Gold

I host a monthly investment discussion group.  It’s composed of a group of professionals who have invested assets outside of their primary home, take an interest in their investments and make decisions related to them.  We range in age from our early thirties to our late forties.

Last evening we discussed gold, the gold standard, fiat currency, the recent run up in gold prices and, most importantly, given how gold is priced and where we think it goes from here.

What influences the price of gold?  Supply and demand.

Supply comes from mines, government sales and old gold scrap (people selling jewelry etc.).  Demand comes from jewelry purchases, industrial and dental, bar, coin and retail investment and investment vehicles like exchange traded funds.

From Q1 2008 to Q3 2009 total supply increased by 17% and total demand decreased by -8%.  All other things being equal, this should mean that the price of gold will go down.

What is the case for an increase in the price of gold?

Big countries like China and India purchasing gold from the IMF.  While this doesn’t increase the supply of gold, it does increase demand and Joe Retail Investor may run into gold thinking that this move will cause a jump in gold prices.  Trying to time the market (which is impossible in my view) and buy on the recent dip in prices.  Worries about Obama’s massive fiscal deficits and the impact on the US dollar with the inevitable run up in inflation.

What is the case for gold going down?

Interest rates remaining unchanged until 2011 will reduce the potential for big inflation in 2010 and reduce demand for gold as a hedge against inflation.  The slow recovery of the US economy will reduce demand for gold as the ultimate safe haven and will stabilize the US dollar (gold prices run inversely to the greenback).

More generally, although gold has had an exceptional run over 2009, historically it provides pretty dismal returns.  From 1983 to its peak in 2009 gold returned 180% where US Treasuries return 1089% and the S&P 500 returned 2182%.

Our group predicted where we think gold prices will be when we meet again this time next month: $1300, $1050, $1300, $1100 and $1240.