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January 19, 2009

Launch a Business During a Recession?

1+714.673.8578     www.mixnerstrategy.com

Criteria of a web start-up with possibilities:

  1. High quality start-ups have better than average success rate right now. There is no number two (Maney, 27).

Why are "hard times" start-ups more likely to succeed?

  1. During hard times, they're more likely to be more purposeful.
  2. A well managed start-up attracts more attention during a down-turn. It actually has less competition.
  3. History shows hard times are a fine time to begin. HP started in 1939 (Maney, 28). Microsoft launched in 1975 - one of the worst environments ever (Maney, 28). Same for Cisco in 1984 (Maney, 28). After 2001 how about this list: LinkedIn, MySpace, Six Apart, Vonage, Wikipedia (Maney, 28)?

My read on the situation?

  • Be a high quality start-up.
  • Companies with good management have a better chance. If you've done it before and succeeded, money, obviously, is easier to get.
  • Disruptive technologies will help you succeed (Mixner). A disruptive strategy can be a very big deal.
  • So will a very experienced management team.
  • If you need to raise money, figure out how to sell something early on.
  • Then make some profits.
  • More profits? Better odds of VC or Angel funding.
  • Aren't experienced? Work very hard to attract an A list advisory board.
  • Then attract management that will come on board when you are funded, or before.
  • Then brag about both the board, and the management.

Need to confirm your target for a new product? Have a look at Practical Marketing's hot-off-the-press survey.

Maney, Kevin. Best of Times. Conde Nast Portfolio. 9 February 2009. Page 27. http://www.portfolio.com/news-markets/national-news/portfolio/2009/01/07/New-Economy-Needs-Innovation

Mixner, Jack. Disruptive Technology: Smaller Companies Have an Edge. http://mixnerstrategy.com/blog/2008/09/disruptive_technology_smaller.html

Practical Marketing. Growth Sectors for 2009. http://freshisgood.blogspot.com/2009/01/growth-sectors-for-2009.html

Posted by jackmixner at 06:29 PM |

January 16, 2009

Applying Bogle's "Enough"

1+714,673.8579     www.mixnerstrategy.com

John Bogle is founder of Vanguard Group of Mutual Funds. He is hyping a book lately. The book is descriptive, not prescriptive. In Six Lessons he's usefully prescriptive:

  1. Don't just own stocks. Allocate across the spectrum.
  2. Forecasts don't do a very good job of forecasting.
  3. Superior funds eventually falter.
  4. Own the market in some type of index fund.
  5. Alternative investments are risky. If you don't understand them, don't get involved.
  6. Innovations are great - for someone else. Innovators win, not you.

Bogle's heart is in the right place. His advice is too.

Bogle, John C. Six Lessons for Investors. New York Times. 8 January 2009. A15. 

Bogle, John C. Enough. True Measures of Money, Business, and Life. John Wiley & Sons, Inc. 2009.

Posted by jackmixner at 02:38 PM |

Applying Gladwell's "Outliers"

1+714.673.8578     www.mixnerstrategy.com

Gladwell takes the time to view things from a different point of view.

  • EXPERIENCE.     There is no such thing as a hockey natural. The best players just happened to be born early in the year (Gladwell, 15).
  • PRACTICE.     The Beatles were successful because they spent hours and hours playing in clubs in Hamburg. The practice allowed them to perfect their sound (Gladwell, 35).
  • PRACTICAL INTELLIGENCE.      Geniuses don't normally produce for society unless they are shepparded along - or know how to sheppard themselves along (Gladwell, 91).
  • LEGACY.     Southerners are more likely to take offense because of their Scottish heritage (Gladwell, 161).
  • SURVIVAL.     Certain villages in Asian countries had to continuously work 360 days a year in order to survive and prosper. Certain villages in Belgium took the winter off. It ends up that the Asians are better at math because they are more persistent. It's cultural.

On first read, I didn't like some of Gladwell's observations. They felt, let's see, racist, perhaps, or observant of things that I am not comfortable with. When you are done reading the book, however, you realize you could have been Bill Gates, if only - if only - you had had ten thousand hours to fiddle with a computer program before you were twenty. You'd be rich and famous, as well. [Interesting side-bar: Gates isn't the richest person in history. John D. Rockefeller had $318.3 billion dollars; Cleopatra had $95.8; Gates had $58 billion at the peak (Gladwell, 56).]

All this is nice. It certainly can cause you to be envious if you allow it to. However, how do we help folks succeed better.

  • Want to be better at math? Work more hours practicing math. If you have kids, encouraging them to turn off the TV and turn on to studying makes a lot of sense.
  • Driving your kid all over the place to practices and events makes sense, especially during the summer. Languishing in front of the TV keeps a kid's IQ level. Practicing all summer in all sorts of ways makes him smarter (Gladwell, 258).

The facts are known. We can choose to do nothing or we can shake things up. Provide opportunity to all kids to do stuff at the opportune times and they perform better. The crucial word here is "all". Everyone, if they got a chance, would perform better. Regular kids and smart kids. Regular kids and physically perfect kids. Give them more advantages and they perform better.

Don't waste kids. Give them opportunities.

Don't waste employees. Don't let them languish. Give them opportunities to completely engage over their full work experience, get better performance. It's simple.

Gladwell, Malcolm. Outliers. The Story of Success. Little, Brown and Company. 2008.

Posted by jackmixner at 02:08 PM |

January 02, 2009

The Virtuous Leader

www.mixnerstrategy.com

Machiavelli claimed virtue was nice and all, but he couldn't think of any examples of successful rulers of his day who acquired their reign because of their virtue. No, all his examples achieved their power by way of fortune, usually inherited fortune, or the support of some foreign ruler (Skinner, 24). He assumes that all leaders are focused primarily on receiving the fruits of fortune, material wealth. Secondarily, he points out that the goal of leadership is the "double glory" of a successful princedom, a princedom strengthened by "good laws, good arms and good examples (Skinner, 30)." But Machiavelli admits that the world is basically not good and that any leader who focuses his efforts on being good - on virtue - will not last long (Skinner, 37). A high success, a virtuous success, is impossible to attain. The successful prince will not be guided by virtue but by necessity (Skinner, 38). He acquires power that is "not good" and understands when to "use it and when not to use it". Go with the flow. Do what is necessary. Adapt to the times, even if what you have to do is not right.

Is Machiavelli right? What about in today's business environment? John Bogle makes the case that it is time for a change.

John Bogle attended Princeton. His thesis described a mutual fund system characterized by low fees, benevolent management, forward thinking and stewardship. After a series of difficult maneuvers with the management of funds he started out with, Mr. Bogle was able to start the Vanguard Funds (some might call his maneuvers Machiavellian, but that is another topic) and to split the new fund off from the older Wellington Funds. The focus of Vanguard funds from the start was simple, low cost funds (Bogle, 15). The fund, initially called First Index Investment Trust and later called the Vanguard 500 fund, essentially mimics in its holdings the Stand & Poor's (S&P) 500 Stock Index. The idea - a totally new one, a truly disruptive strategy for its time - is that you buy every one of the stocks in the index and hold them. If people buy more shares in the fund, the managers just buy more stocks, but always in the same ration. Why? When you do it this way, expenses are greatly reduced because trading fees are greatly reduced. You buy the pool of stocks and hold them. You don't know which ones will go up or down, but the net result always will parallel the S&P 500. This was an admirable goal, as most funds were targeted at beating the S&P 500, but most never were able to. Their fees for trading and management were too high.

Bogle makes points that are worth discussing. They support his thesis that too much money is made managing and trading with no thought to the customers need for a fair return without exorbitant fees. We have all come to realize in the recent bust that managers – and CEOs for that matter – were worried more about their bonus checks than their stockholders. They focused their efforts on the stock price, necessitating a short term focus, and not the future worth of their companies based upon sound business decisions. Commitment to the material things in life misses the more important commitment to what is right. Bogle points out that Benjamin Franklin was offered a patent on his stove. Refusing it, Franklin explained that his invention was free for everyone to use. He wasn't worried about his return on invention, but rather is his return on investment for his fellow man. Everyone's life was improved by his invention; that was good. When you read more about Franklin, you realize that he was one of the richest men of his time, and the most respected at the Courts of Europe. He played a diplomatic role in fostering the eventual success of the American Revolution. Now it would be nice to say that he was a perfect embodiment of the enlightenment. Let's just say that he was human, but he remembered his humanness and gave as much as he got, an attitude that Bogle feels that is forgotten in today's society.

Bogle questions the three attributes of success usually known as wealth, fame, and power (Bogle, 213). Successful people are "ill-measured" by "mere dollars", "public accolades", and "control over others". He mentions all the "dedicated souls" who "earn our respect because they serve our society knowing that accumulating great wealth is almost out of the question, that great fame is rare, and that great power-at  least temporal power-is conspicuous by its absence (Bogle, 218)." He quotes Helen Keller, "I long to accomplish a great and noble task, but is my chief duty to accomplish humble tasks as though they were great and noble (Bogle, 220)."

Machiavelli says, basically, it is all right to break the rules, especially if you do so to reach your ends. Bogle says that the ends aren't your ends, they're society's. Character and courage don't count for much if they are all about you, instead of us.

There is another point of view here. Ronald Reagan saw how to mix Machiavelli and Bogel in an interesting way. “Reagan believed in work and wealth, and he had no trouble whatsoever with the thought that an excessive pursuit of material pleasure might jeopardize the political principle of civic virtue or the religious principles of charity and benevolence. In always looking ahead, Reagan left behind both the worry of liberals and the wisdom of the conservatives (Diggins[1], 16-17).” Honestly, I hadn’t expected to end up quoting research about Reagan here, but when you consider two Reagan wins, one against inflation early in his term and the other, later, during the dismantling of the Russian “empire,” if you squint your eyes a bit, you can see that Reagan’s point-of-view may prove useful to us again, especially as we tackle one of the toughest periods in recent economic history.

Bogle, John C. Enough. True Measures of Money, Business, and Life. John Wiley & Sons, Inc. 2009.

Diggins, John Patrick. Ronald Reagan. Fate, Freedom, and the Making of History. W. W. Norton & Company. 2007.

 Skinner, Quentin. Machiavelli. Hill and Wang. 1981.

Posted by jackmixner at 04:49 PM |