Blogmatic

I have written about passion being a key driver for entrepreneur a number of times; Passion the poison pill, Entrepreneurial Characteristics, The 3P of Entrepreneurship and Stupid Passion. I am also a regular reader of Ben Casnocha blog and he recently had a post “Can Making Money Be the Main Driver for Entrepreneurs?” There was an excellent comment by one of his readers that I wanted to share with everyone:

All money and no passion = sell the business at a premium (say 5 years revenues) before it zags.
All passion and no money = find a co-investor to share the risk before you go belly up.
Lots of passion and lots of money = buyout competition before it becomes a threat.

Something to think about.

Cheers,
Ian Graham

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There are all kinds of stories circulating in the media about how low the wireless adoption rate is in Canada. The assumption is that this is a bad thing and reflects poorly on our wireless service providers; Bell, Rogers, Telus and the others.

In a few words, ill conceived fluff.

That’s right fluff. Of course there is a lower percentage of wireless penetration in Canada when compared to other countries, particularly those in Europe. This is mainly due to geography. Just checked Statistics Canada and approximately 20% of the Canadian population are rural. When we say rural in Canada this really means rural and rural means no access to wireless cell phone service.

Let’s do a little Blogmatic math. The total addressable market in Canada for wireless cell phone service is 80% (26.4M people) of the population or those that live in urban and suburban areas. According to the media the wireless penetration rate in Canada is anywhere from 62% to 67% (65% * 33M = 21.45M people). Therefore when you factor in geography the actual Canadian wireless market penetration rate is 81.25% which is comparable to other industrialized countries.

Comparing Canada to the EU is not an Apples to Apples comparison more like apples to oranges. However, comparing Canada to Australia may yield some interesting results.

Cheers,
Ian Graham

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There is a very cool idea called Vencorp being championed by Sean Wise of Wise Mentor Capital. I had previously seen reference to Vencorp on Startup North and there is a recent article in Profit Magazine that gives a more detailed overview of the venture.

What I like about this approach to funding start-ups is that it takes into consideration that starting a business today is less capital intensive and the fund also leverages the wisdom of crowds to determine which companies receive funding. Rather than have a fixed board or serial entrepreneur judging the merits of a proposal the Vencorp community vote on a monthly basis to determine which start-ups are fund worthy. To become a member of the Vencorp community all one has to do is sign up and membership is free. There are incentives and points awarded to community members based on their track record of contribution and success. Community members can use points for various items  within the Vencorp site.

I really like this idea and wish them success. This is a very timely initiative that addresses the needs of the start-up community and provides a merit based system for awards. Vencorp is providing an innovative service to entrepreneurs, start-ups and the community at large. Perhaps a matching contribution from the provincial government could be leveraged to deliver some much needed value to the start-up community. Personally I would much rather see all levels of government supporting initiatives like Vencorp with matching funds than building bureacratic boondoggles.

Cheers,
Ian Graham

PS, also posted on TCF blog but thought this is such a great idea I would double dip.

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Had an interesting conversation with a local entrepreneur this morning. One topic of keen personal interest that came up was how outdated the current VC funding model has become and is it in fact an anachronism to a bye gone time, much like the Jurassic period is to the dinosaur. The funding environment has changed significantly since the bubble burst; however, the VC funding model has remained relatively, at least from my perspective, the same. My simplistic take is that the Jurassic VC funding model (Series A to X) is built on funding companies that will reach the $100M revenue in five years homerun.

The problem with this model is that the number of companies capable of reaching $100M in revenue within 5 years is miniscule. Of the 300 – 400 companies I have meet in the past two years there is maybe one that would be $100M in 5 years. This adds some more fodder to the Funding Paradox series of posts. I have, however, met plenty of companies that would and/or could be $20M to $50M companies within 5 – 7 years. Therefore alternatives to the VC funding model would seem to make a whole lot of sense if you are serious about building a strong local economy. I have chatted about this in previous posts and will bring it up again; Mini-Financing makes a whole lot of sense.

What is Mini-Financing?

Mini-Financing is akin to micro-financing with a bigger payload suitable to starting a team based business. The loans would ideally be a convertible debenture in the $250k to $500k range targeting growth companies. The funds would be managed by a volunteer board that made selections based on merit. More dreaming and pondering to come soon.

Cheers,
Ian Graham

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How can hard work be a competitive advantage?

“The harder I work the luckier I get.” – Samuel Goldwyn

I think the quote above says it all. If you work hard it makes it more challenging for your competitors to accomplish the same goal. If it was too easy anyone could do it. Every roadblock you face and overcome is another bump in the road for the competition.

In very simplistic terms, if it is hard work for you then it is going to be hard work for anyone that tries to follow you. The more bumps and obstacles that you have overcome the greater the barrier to entry you will have created. There is a saying in weight lifting; “no pain, no gain.” The same is true in business if you start a pain free business then anyone else can do the same. When you find yourself faced with significant challenges in your business think of it as being on the right track an opportunity to distance yourself from the competition.

Cheers,
Ian Graham

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I read in the Ottawa Citizen yesterday that the defence for the Momin Kawaja terror trial has staked their case on the following premise; the defendant didn’t realize he was making electronic detonator devices for the fertilizer bombs to be used in UK terror bombings. In fact he thought the detonators were going to be used by the Afghan insurgents to kill coalition forces in Afghanistan.

I don’t get it; somehow supporting terrorist causes in Afghanistan is better, makes you innocent or less of a terrorist than plotting to kill civilians in the UK. Either way a terrorist is a terrorist whether plotting to kill innocent civilians or supporting terrorist organizations that is at war with our country.

I hope that the prosecution has its act together and is able to present a solid case. Although with the only other convicted terrorist (Inderjit Singh Reyat ) in the country granted bail I am concerned about our countries ability and conviction to combat terrorism through the left leaning legal system.

Cheers,
Ian Graham

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In building any business you want to think about how to develop your competitive advantage. Many businesses particularly knowledge based tend to use technology as the key differentiator. Basically when you are building your business you will want to think of how to raise the bar and make it more challenging for competitors to enter the market. If you are building a business where there are no barriers to entry or few low effort barriers to entry then you may want to think about how defensible your business idea is and how you will be able to create a sustainable business in the face of competition.

There are a few key competitive advantage builders that anyone can apply to any business.  Here is my short list of ways to build competitive advantage.

Hard work
Relationships
Intelligence

I will dedicate a post to each of these topics over the next week or two.

Cheers,
Ian Graham

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In very simplistic terms there are essentially two starting positions when you enter negotiations; high – low and fair. High-low negotiations takes sort of an adversarial approach, basically ask for the absolute most you can and your negotiatee asks for the absolute least they can. The starting positions are very far apart but eventually you come to an agreement. The fair approach is much different where you start with something “reasonable” and expect a counter offer that is close to your starting position.

High-low negotiations is, as mentioned, adversarial and both parties are trying to wring whatever concessions they can out of the other party. The starting positions are far apart and your goal is to have the outcome as close to your starting position as possible. There is usually a winner and loser in high-low negotiations and it is less about finding common ground and more about being the winner. As you can probably tell I am not a big fan of this style of negotiation.

Fair negotiations is more about coming to a reasonable agreement that suites the needs of both parties. The starting positions are relatively close and it is more about finding common ground and less about winners and losers. Generally speaking if you start an arrangement based on a fair negotiation style this forms fertile ground for the future relationship.

It is important (and usually obvious) which style of negotiations your potential partner, service provider or customer has chosen. Keep this in mind as negotiations progress and be sure to counter with the same negotiating position. If the person you are negotiating with is a customer then the high-low style is understandable; however, if the person you are negotiating is a potential partner and they open with high-low beware. How you start your relationship with someone in business is often an indicator of the sort of ongoing relationship you will have.

High-low or fair, know your style and that of the prospect and be sure to counter in the same way.

Cheers,
Ian Graham

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There is a saying that “God gave you to ears and one mouth for a reason.” That reason would be you should spend twice as much time listening as you do talking. This is particularly important early on in the relationship process. I had blogged about this before and as fate will have it I’ll probably blog about it again. Anyway, … here we go.

I was approached by someone to discuss how we might work together and I am always open to such discussions. So we start the meeting and this person immediately pulls out their marketing collateral and proceeds to explain all of the wonderful things that they do and how great they are. This continues for most of the meeting and my only input is a nod, a yes and the odd um hmm. Not much of a chance to get a word in edge wise. After the feature spew stops and I start to speak the person listens for about a minute and then indicates that time is up and they have to move on to their next meeting.

How motivated do you think I am to do business with this person? (Not very)

What sort of agreement is possible if they have absolutely no clue how we can come to some common ground and only have a one sided understanding of the relationship? (Low probability)

Here are some suggestions for a productive start to that first meeting.

1) Exchange some pleasantries first. Talk about normal stuff to see if you have some common interests. When in doubt and in Canada, the weather is always a great conversation starter.

2) Ask questions:

a. Tell me about your company.
b. What is your role at the company?
c. What sort of agreement would interest you and your company?
d. How do you see our two companies working together?

3) Listen.

4) Then respond.

5) Repeat steps 2, 3 and 4 as necessary.

There is a great saying by that master of the metaphor Stephen Covey “First seek to understand, then seek to be understood.”

Cheers,
Ian Graham

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In my world a handshake is worth just as much as a written agreement. Ottawa is a small town and invariably everyone knows someone you know, particularly in tech. Therefore if you have a handshake agreement with someone it is your reputation that is on the line. Basically once you have came to an agreement and shaken hands you have a binding agreement.

In building my partner network for theCodeFactory every single agreement was sealed with a handshake. For some of my partners that is the extent of the agreement we have in place coupled with a mutual understanding of the terms. For other agreements that are a bit more complex we do ink a formal contract afterwards to make sure everything is clearly understood. Bottom line is in a small town you need to honour the terms of your agreement whether that be with a handshake or taking a bit of extra time to ink a formal deal to make sure everything is clearly understood.

Your hand shake should be your bond. With trust as the essential ingredient in inter-personal relations it is important that you continue to build your reputation as someone that is trustworthy.

Cheers,
Ian Graham

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