The Art of War

Cover via Amazon

Lately I've been reading the book The 36 Secret Strategies of the Martial Arts (basically the same 36 principles of the Art of War) and am intrigued by the fact that these principles are being applied time and again in modern day business.

One of the strategies is translated into "Sacrifice the Peach to Secure the Plum".  Applied to business, an example may be that you give up a small market segment to your competitors and in order to secure your position in the more profitable market segment. 

The strategy states that leaders lacking talent may be easily distracted by a limited loss (think of those that fail once and just somehow can't suck it up and get back on their feet again); the right question to ask when you incur a loss is: in what way can the loss be linked to future gain?

Business is War.  Why else would they rank the "winners" on different lists and categories?  YOU are fighting everyday, to secure that new account (from that other sales agent), to get products to market (faster than your competitors), to increase your market share (at your competitor's expense).  Sometimes you just can't play nice (but you always have to play fair, no nasty tricks people!)

Hiring Salespeople

We've put up our ads on Monster and other channels in a search for additional salespeople.  (I figured after a post about getting fired I should give my readers some hope and talk about hiring)

My advisors and I have chatted about the types of salespeople we are hoping to attract and what types of compensation packages we would be looking at.  We have received our first flow of resumes and have decided to schedule interviews with about 20% of the applicants.  Taking a look at the base salaries that they require, it triggered me to think about one conversation that I had with one of my advisors where we were wondering if some of these high-paid salespeople could justify their high base salaries of $80,000 to $120,000 per year.

Doing some simple math, since PeerFX bases it's pricing model on service fees, these reps that are aiming to get paid a base salary of $80K to $120K should be delivering at least double that to earn their keep with the company right?

OK. so that means they need to be generating at least $160K in gross revenues for the company.  Our service fees are 0.5% so that means they need to have a customer portfolio of $16M in completed transactions.  Great.  If somebody has the ability to bring business like that to us I would be VERY willing to pay them that base salary.

Back of a napkin math - justify your value before your throw up a random number for your desired base salary.  Thank you very much.

You're Fired

The theory that founders usually get fired as the company finds a scalable model and product it in the market has come up quite a few times in conversation.

I've been asked before whether I worry about this day coming.  I say I worry about this day not coming.  When it does, it means my baby has found a sustainable, repeatable, profitable model that will grow into a large company.  Beyond the startup phase, beyond the early revenue phase, to a growth and expansionary phase. 

I can't predict the future and foresee whether my board at that time will replace me or not, but if we can agree that someone with a different skill set more suitable for managing the company in its new phase, then I don't want to stand in the way of my company's opportunities. 

Anyway, I still believe that the whole "firing the founder" theory is...a theory.  We will see what happens when the day comes for the board to evaluate whether I'm still suitable to keep running the company - my goal now is to improve myself for the better everyday, so that when this day comes, I will be prepared :)

In the meantime, let's keep working and get to that point.

Why Google may not be Making a HUGE Mistake Leaving China

Image via Wikipedia

Over the past week there have been many articles popping up on forbes.com rss feeds and other blogs that I follow that say it's a HUGE mistake for Google to leave China.

The main focus seem to revolve around the 1.3 billion people that are in China making up the potential userbase for Google. The articles also reference the large amount of growth in internet usage in China and that it's projected to keep increasing.

My thoughts.  SO WHAT?  Google management may be thinking that it's not the right timing for them to continue expanding in the China market right now, with the government regulations and hackers amongst other issues that they have run into in this market.  Why are the writers making it sound like they are leaving China forever?  They almost sound like they have read and know of Google's management direction. 

Plus, focusing on the huge population in China as the main reason why Google shoudn't leave the market is silly.  That's pretty much the same as entrepreneurs that pitch: "if we only got 1% of this market, then we'll be rich."

If Google does end up leaving the China market temporarily, I think they are taking the time to regroup their market re-entrance strategy and will come back stronger than before.

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What is an Angel Investor?

Image via Wikipedia

Taking a short break from work to write about this thought.

Just skimmed through my Google Reader posts and read a post on What is The Definition of an Angel Investor?  I am pondering the same thing after I read the author's opinion on what he thinks it is. 

PeerFX is in the midst of positioning ourselves for expansion capital right now and I thought we were looking for angels to invest.  After reading the post and seeing the quantitative definition of an angel being an investor that invests $25,000 as seed capital into at least one company each year, I wasn't sure our investment round is in the angel realm anymore.

We are definitely looking for something in the 6 figure category, and if $25,000 is considered a regular-sized investment, and $50,000 is already considered a super angel, then I think I need to jump out of the angel investment category.  So, what's the next step up?

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The Value of Marketing

Image by Matt Hamm via Flickr

So you've built a better mousetrap.  It's going to revolutionize the lifestyles of millions of customers.

Do you assume that customers are going to beat a path to your door? Most if not all of you are smart enough to say no.  So how do you bridge the gap between your product and making your potential customers aware of your product?

Here are a couple answers that I think I would get: Social media (facebook, twitter, linkedin, etc.), online partners/affiliates, blogging, hiring a PR firm to get media coverage...

All of that falls under some sort of marketing - which in my opinion is any venue you use to make you customers aware, trial, evaluate and buy your product.  So everyone says that it's hard to quantify the impact and/or value of marketing.  I can quantify it for you right now, it's the sales dollars that you record in your top line.  Without marketing, how else will customers find out about your product?  Some people say they use trade promotions, well in that case you're marketing to the intermediaries by giving them a discount - still marketing.

That was easy.

Time to Starvation

Lately I've been thinking about what I should cover in my presentation for the Enterprize business conference.  I am speaking on the topic of implementation and as I was on the elliptical earlier this morning, I realized that one main factor why I've made it until today with PeerFX is due to having the time to starvation variable in my favor.

Time to Starvation: the time you have to build your business before a) your friends and family stop lending you money b) your parents kick you out of the house c) you go crazy from working on the project by yourself (time is well spent searching for an AWESOME co-founder) d) you personal financial situation is classified as "dire", at which point you have to go find a stable job with a steady income stream.

Yes - I just made that up.  In my opinion, this factor plays a HUGE part in whether the founders can pull through the initial period of building something tangible and finding funding.  I just attached a name to the variable that's all. 

I'm excited about this presentation and will post more details about my presentation topics soon.  So far here's what I have as the outline of my presentation:

Before you can think about implementing your business plan, what factors have to be in place?  There are factors such as Time to Starvation, Crazy Employees, Free Money, and Making Connections Count.

After you have all of this, how do you ensure that you execute well?  See what Florence has to share on building her business over the past 2 years and what has learned about execution.  It took 14 months until Beta, and 18 months before they started generating revenue.  Now the business has transacted over a million dollars with growing partnerships across Canada.  Find out why it took so long, and what it took to get there. 

Definitely looking forward to doing this!

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Google Mixes Live and Online Advertising

Image by edans via Flickr

Thank you to my brother Albert for the news.  I rarely see my brother so excited about anything related to business but here he was bubbling about this new thing Google's doing. 

You know those Google maps that show you a live street view?  Well yes...they're planning on selling ad space on those live buildings that you see on Google maps.  This means that the advertisement banner doesn't go on the REAL building...it goes on the virtual building, and because so many people use Google maps, they can actually profit off of this opportunity.

Supposedly they're filing a patent for this and some details still need to be worked out; do the real buildings get a cut of the virtual banner that is being placed on the virtual building on Google maps?

Interesting to see how this pans out but yes - definitely a great idea for Google, and maybe for advertisers as well - since they get hold of a captive audience that will most likely be in the area (or else they wouldn't be searching for the area on the map right?)

Blogging on an Elliptical

Oh here we go. I was curious about why all these bloggers that I follow write their posts while on the elliptical. I guess it's a certain lifestyle? I have to admit I'm trying pretty hard not to fall off right now.

If I can master this then it means I can blog while I'm staying healthy - pretty efficient combo if you ask me.

Now that I'm 100% again with enough sleep, I'm going to make good on my new year's resolution to go to the gym 3 times a week.

I only have one body, so I'm going to take good care of it.

Back to working out!

Miscommunication - when non-decision makers drive a project

it's kind of like playing the Game of Telephone.

When the direct decision maker isn't involved in the process of an entire project, and only views the finished product that his subordinates communicated to a contracted team, there is a lot of room for miscommunication.

Specifically, the finished product isn't perceived to be a great product by the decision maker.  What does this mean?  A waste of everyone's time and resources. 

What does this mean?  

If you're the project manager, make sure you involve the decision maker from the beginning and get their interests on the table.  Their subordinates should then be involved in the implementation of the project to ensure it reflects the interests of their manager.

If you're the decision maker, if you want to ensure you don't waste your company's resources, your subordinates' time (and also money spent on their salaries), and deadlines are met, then outline your interests right off the bat.  Give specific examples of how you envision the end product to look like.  You can't expect people to read your mind.

The above is from personal experience and it was a lesson for myself to minimize the miscommunication between all parties in future projects that I participate in. 

Avatar in IMAX - Dream Big. Or Don't Dream at All.

Image via Wikipedia

It took many years and reportedly over $237 million to create the movie Avatar. 

I spent close to three hours in the movie theatre tonight watching the movie.  I have to say that the detail to the creatures in the movie are phenomenal.  I am curious about the amount of time and creativity it took to design the details of a Na'vi's body.  Their skin sparkles, they have four fingers but it wasn't like any other animation film I have seen.  Remember Final Fantasy the movie?  Seeing Avatar tells me we've come a long way because of James Cameron the visionary. 

Dream Big.  James Cameron began conjuring up this plans for Avatar well before the technology to build it was available.  He could have given up and said maybe he would revisit the plan later; but he wrote the scriptment for the Avatar in 1994 and continued to refine the technology to tell the story that he envisioned with computer generated characters.  It took many years, but the result was a film that took the world by storm, within three weeks of its release it has grossed $1.3 billion dollars, taking the place of the second highest grossing movie of all time worldwide. 

I reflect on this and say to all entrepreneurs out there that ideas that are revolutionary should sound crazy at first.  When James Cameron thought of having computer-generated characters controlled by humans located in a remote location, technology wasn't ready, but he persisted and planned ahead, for aspiring entrepreneurs who think they have an idea that can't be done...we've been shown that where there's a will, there's a way. 

Excerpt from Bill Burnham's Post - Consumerization of Enterprise VC

Had to repost this here since this is exactly what I was talking about earlier today when my friend asked if I was looking for VC money.

Bill summarizes it nicely with the following paragraphs - Sometimes the "call me when you got traction" line is an indirect no but it definitely is frustrating for entrepreneurs - if I got business lined up then not sure why I would want to involve VCs.

Shrewd or Lazy?
Given all this, the position that VCs are increasingly taking in the space, that of  “come back when you a have a product and customers” is highly frustrating for enterprise entrepreneurs.   Should an enterprise site be fortunate enough to build out its entire infrastructure and then recruit a bunch of customers to its platform, the question really becomes: What in the world do I need a damn VC for when the hard part of the startup is over?!?   Granted, expansion capital will still have a role, but by asking enterprise entrepreneurs to go build and operate fully functioning businesses before they will even consider making an investment, VC’s are establishing an awfully high Ask, one that has some of the same implications as it does in the consumer space, namely it makes angel investors the king makers and creates a selection bias in the expansion stages towards “small ball” investments.
Personally, my problem with VCs doing this is that I don’t think it has the same rational basis as it does in the consumer space.   VCs all know that you can’t just wing it with an enterprise business.  They know that enterprise customers care about financial viability, customer service, and infrastructure and that all those things take money.   The only thing I can come up with is that the consumer space is training VCs to be lazy investors.   Why go out and do a lot of work to understand a company’s target market, gauge potential customer interest and assess the competitive landscape, when you can just declare success a crap shoot, go golfing and tell someone “call me when you have traction”.  I understand the attraction of such a stance, but whereas it has some basis in consumer Internet because it’s arguably anyone’s guess what big trend is going to hit the tween set next, within enterprise IT, there is usually a very objective set of demonstrated market needs and you know that companies will pay for products that cost effectively meet those needs.  I guess what I am saying is that applying the same set of investment criteria to enterprise IT startups as you apply to consumer Internet startups strikes me as intellectually lazy and the anti-thesis of true venture capital. 

My Body Says Stop + New Look for PeerFX

I love hanging out at Chapters/any bookstore to get a sneak peek at some new books.  I picked up The Secret the last time I was there and read a couple pages to see if it's any good.  I remember reading something along the lines of you attract everything that happens to you in life.

WELL, that being said, my body is clearing telling me that I need some rest. After my attempt at a vacation in Hong Kong and Japan, where I spent half of my time working and the rest with family, traveling, etc. my body was ready for a crash.  It kind of hit the blue screen of death (for all you Windows users ;)  )

Things are still moving along quite well with the new look for PeerFX up on the site now - go check it out and leave your comments here so we can continue to improve our site.  A note though - we see that the resolution is a bit wonky on some browsers where the page loads unusually large.  Again, for my mac it works fine :)  I love my mac.

Time to rest up and fight again tomorrow!