Podcasts: GIBS MBA Entrepreneurship Case Studies

I have created podcasts of two of the case studies for the Entrepreneurship course on the GIBS MBA. These can be downloaded onto a media device and listened to as a supplement to reading the case.

Go Coffee Case Study:
http://ia340926.us.archive.org/0/items/GregFisherGoCoffee/Go_Coffee.mp3

Bootstrapping BIZWIZ Case Study:
http://ia340921.us.archive.org/2/items/GregFisherBootstrappingBIZWIZ_0/Bootstrapping_BIZWIZ.mp3
I hope that you find this useful.

Trends to Take Note Of

On a recent 6 week tour across the USA, I paid close attention to the media and business fraternity to see if I could pick up on some of the major global trends emanating from with the worlds largest economy. After 6 weeks of reading the Wall Street Journal, NY Times and watching CNN and CNBC I picked up on some clearly evident trends that are going to have a major impact in 2007.

1. The Rise and Rise of Private Equity
As the traditional equity market cools off a little and investors yearn for higher and higher returns in more exciting investment vehicles, private equity has become the investment of choice. For investors, private equity offers good returns for solid investments in existing companies with solid track records. Most of these companies can get access to debt and with lots of debt and a small, well leveraged equity investment; the company can offer excellent returns over a 3 - 5 year time horizon. Businessmen like it because they are able to run their business in private. They are not subject to the public scrutiny that public companies face and they are able to just get on with the job of running the business without appeasing the media and analysts at every turn. 2006 was a mammoth year for the raising and investing of private equity funds in the USA and some of that money is now flowing to SA - Brait raised a fund in the USA and Edcon in being bought out by US Private Equity Players. Over time private equity will become a sought after asset class across the world and I predict that this will be followed by an increase of flows into venture capital once again (many people are over the bubble bursting hangover of the turn of the century and ready to explore the riskier asset classes once again)

2. Web 2.0 - It's an Individuals Game
Web 2.0 is fueled by Google, YouTube, MySpace and other sites that enable individuals to continually contribute to the web and express themselves in creative and interesting ways from videos to pod casts to blogs. Initially everybody thought the web was about facilitating transactions but slowly people are realizing that the web is about expression, it’s about empowerment and it’s about social networking. People are willing to share so much of themselves on the web and the more they share the more info marketers have to market appropriate products to them and the more the web becomes part of their everyday existence. Business people and venture capitalists are realizing if they can work out how to monetize this new trend of putting your life on the web, then they have a winning formula. Google worked out how to turn internet search into a profitable exercise, they have now purchased YouTube for 1.6 billion and need to work out how to turn online publishing (video; audio and text) into a profitable activity. To reinforce that that this trend is taking root, time magazine named you (an me and everyone else) their person of the year http://www.time.com/time/magazine/article/0,9171,1569514,00.html

3. Executive Pay - Make it Stop
The media and broader investing public are no longer going to put up with exorbitant CEO pay packages - especially when CEOs and other executives are under performing. There has been a huge backlash to the re-pricing of options to make them more attractive, the payment of huge severance packages for CEOs asked to leave and the inappropriate use of company assets for personal use. Bob Nardelli (Home Depot CEO) was the final nail in the coffin after weeks and weeks of bickering and complaining that CEOs are getting paid way too much for underperformance. I expect that directors deciding pay packages are going to have to be more accountable when options are re-priced and severance packages are declared. The media have declared war on the upper echelons of US business and they are now clearly in the spotlight for being overpaid.

Book Review – The Art of the Start by Guy Kawasaki

The Art of the Start is a practical, easy to read, easy to digest book about how to launch a new business. The book is written by Guy Kawasaki, now a Silicon Valley venture capitalist who got his early career experience working for Steve Jobs at Apple Computer Inc. At Apple, Kawasaki evangelized the new Macintosh Computer and turned ordinary customers into fanatics. As founder and CEO of Garage Technology Ventures, he has formulated and tested his ideas and philosophies on real-world start-ups.

The Art of the Start is a well structured book with many valuable, easy to implement tips that will assist and inspire an entrepreneur. Each chapters starts with a GIST (Great Ideas for Starting Things). The GIST sums up the essence of the chapter in a few points or a single paragraph. This is wonderful when referring back to the book a few months after reading it or for getting an idea of where each chapter is going before you read it.

The key entrepreneurial issues addressed in the book are:
· Positioning – Entrepreneurs must answer the critical questions of: why you want to start a business, why customers should patronize my business and why good people should want to work for my business.
· Pitching – Successful entrepreneurs sell their ideas to others by getting a fast start, explaining their relevance and staying out of the detail.
· Business Planning – Although very few people ever read an entire business plan, writing the business plan is still important as it forces a team to work together and formalize their intention. There are some components of the business plan that investors, recruits, and potential board members are really interested in and Kawasaki explains what should be included in these sections.
· Bootstrapping – One of an entrepreneurs real battles is surviving the critical, capital deprived early days of any start-ups existence. According to Kawasaki they need to pick the right business model, make cash king and immediately get to market.
· Recruiting – Recruiting employees for a hot start up is described as one of the most enjoyable tasks of an entrepreneur. In the process of recruiting, entrepreneurs should focus on three factors: (1) Can the candidate do what you need? (2) Does the candidate believe in the meaning that you are going to make? (3) Does the candidate have the strengths you need? (as oppose to the weaknesses you are trying to avoid).
· Raising Capital – VC’s want to know: Are you building something meaningful, long lasting and valuable to society? Kawasaki experience in the VC industry empowers him to make some insightful and useful comments about what funders really look for in a business idea.
· Partnering – According to Kawasaki a good partnership as should accelerate cash flow, increase revenue and reduce costs. Partnerships must exist for valid business reasons.
· Branding – Branding a start up is tough. Entrepreneurs need to focus on creating something that is contagious and infects people with enthusiasm. Branding is about community building.

Some of these topics are more relevant than others for the South African entrepreneur. South Africa’s underdeveloped venture capital industry means that the raising capital and pitching are not that relevant in our context but the discussion on bootstrapping and positioning in highly pertinent in the South African environment. South African entrepreneurs need to be positioning themselves to meet the needs of a defined market and in most instances they need to operate with minimal resources in a competitive environment so efficient bootstrapping is essential.

South Africa needs a flurry of entrepreneurial activity and books such as this will empower people with the knowledge, insight and motivation to launch and grow new businesses and there by create jobs and grow the economy.

Check out Guy Kawasaki's website (http://www.guykawasaki.com/) and blog (http://blog.guykawasaki.com/)

Book Review - The Long Tail by Chris Anderson

Different types of books serve different purposes, some books tell great stories that motivate and inspire us, other books give practical “how to” advice, others enable us to escape to a world miles away from reality, while others help us make sense of a world that we otherwise wouldn’t understand. I love books that fall into the last category. Some of the recent “classics” in this category include The Tipping Point (Malcolm Gladwell), The Wisdom of Crowds (James Surowiecki) and The World is Flat (Tomas Friedman).

The Long Tail is a brilliant book written with similar wisdom and research as these “classics”. In the Long Tail, Chris Andersen (Editor in chief of Wired magazine and author of the Long Tail) explains how the internet is creating distinct shifts in economics and culture. The internet provides consumers with more choice and better search capabilities across different products enabling them to make buying decisions that link closely to their specific interests and needs. This ultimately means that for certain niche products there is an increase in both supply and demand. The internet creates more consumer choice, therefore the demand curve for goods is flattening meaning there is less demand the traditionally popular items (e.g. Brittany Spears and Wilber Smith) and more demand for traditionally less popular items (e.g. Nikolaus Von Knorring, a Swedish soft rock artist and Saltwater Fly Tying, a book by Frank Wentink) creating a long tail on the demand curve. The author uses a number of different and interesting examples to illustrate this phenomenon. In the case of books, a traditional bookstore (e.g. Exclusive Books in South Africa) will typically stock up to 150000 titles in its largest store. This means that consumers must find what they want in amongst those 150000 titles if they are to buy a book. At the same time it is pretty difficult to search books in a bookstore because you physically need to browse through titles on the shelf. The result of this is that certain “blockbuster” books are pushed and less popular books with a niche focus are ignored. The internet changes this equation completely. Firstly, Amazon.com offers the consumer access to 4.5 million book titles and enables them to search for very specific themes and topics in amongst those 4.5 million titles. This means that titles that were previously ignored are being purchased by individuals with very specific interests. In my own case I recently found a book on amazon.com entitled “Researching Entrepreneurship” written by a Professor from Brisbane. 15 years ago I would probably never have even known that this title existed whereas now I was able to purchase it and search other titles purchased by people with the same interest. This concept is exaggerated in the world of music because digital music is not only stored and marketed on the internet, but online music it is highly searchable and is downloadable meaning that you don’t even need to rely on a courier service to deliver the end product.

As we look to the future the Long Tail concept has important implications for:
Movies and DVD’s with a shift from the traditional DVD store and cinema to Netflix and online movie downloads;
Newspapers and magazines with a shift away from paper toward online publishing and blogs;
Travel with a shift away from travel agents towards self service via the internet.
The Long Tail phenomenon is happening and is becoming more and more important as bandwidth increases and more and more products and marketed and sold via the internet.

Check out the authors website at: http://www.thelongtail.com/