SOPHISTICATED FINANCE

1 Year Anniversary

June 18th is the one year anniversary of this blog. During the first year I had 168 posts, or about one every other day. The most popular post with over 1100 readers was an article on the Microsoft acquisition of Yahoo and why I did not think it made good strategic sense for Microsoft. The most popular topic has been the use of Excel in financial modeling, which brings 20-50 readers per day through Google to the blog.

The best part of blogging for me has been the posts on academic papers on capital markets, economic development and venture capital. I feel very productive when I write them and they get read by a lot of the subscribers to this blog on the same day I post them.

The most enjoyable part of blogging has been meeting some very intelligent, well rounded readers. Tyler and Kendall come immediately to mind. They also have their own blogs, here and here, and I recommend you check them out.

What have I learned in the first year of blogging? I have a natural talent for picking post titles that Google search likes. No need for SEO (search engine optimization). I have also learned from several readers that providing critical comments is not enough and that positive recommendations are much more appreciated. I still need to work on this but I think I am getting better. Quite a few people have said the blog is funny, which I think is a good thing. Can't take that finance stuff too seriously!

I have not had a Google search hit from "Hooters' girl qualifications" in over two months but "Deutsche Bank brothels" still brings a few readers each week.. If you missed the original post on Hooters it is here.

I am very interested to hear from readers on topics that they would like to see discussed, especially in the area of Excel, modeling or business start up. Thanks for following me this year as I learned to blog.

Audacious Goals

One of the common themes in venture capital is that you need a big, audacious vision to build a big company. When I built a billion dollar company in Indonesia the goal was "to be the Wal-Mart of Indonesia" or "to build 1000 stores", all of this in country with annual per capita income of US$ 600. Microsoft and Google both had big, audacious goals. Microsoft's goal was "to put a computer in every home". Google's goal was "to organize the world's information". None of these goals appeared realistic at the outset, but they definitely qualified as audacious and are well on their way to being realized in less than 20 or 30 years.

Lots of companies have visions but only the audacious goals inspire people by their special nature. These goals all put every one in the company on a journey. We may not know where we are going but it is going to be something "special". It is that mystery that moves us to join the project, to believe it can be realized and to put in super-human effort to achieve it. Not everybody needs to drink this Kool-Aid but the top people all should be addicted.

Large, resource rich countries like the U.S. or China also need audacious goals to give their populations a direction and something for the many to believe in. In my lifetime the U.S. has had two audacious goals:

1. to defeat communism
2. to put a man on the moon

"To defeat communism" was probably established by President Eisenhower.  It was a big, audacious goal that asked everyone to sacrifice to preserve our democracy, which had just been put at risk by Hitler and was then threatened again. In May 1961 President Kennedy made his audacious speech that we "need to put a man on the moon...and return him safely...within a decade". Both of these goals were achieved, although it took until 1989 for President Eisenhower's "defeat of communism" to be achieved.

Since 1989 the U.S. has had no audacious goals. We have become a country largely of self-interested politicians and citizens. Why has this happened? In part the reason is that no President since Father Bush has had any moral authority. Clinton squandered any moral authority he may have had and President Bush appears to not consider morality in his decision making or to think in terms of larger, national goals. Furthermore, the national dialog has focused on issues with no sense of a journey or a cause to take pride in or be motivated by. Despite people's keen interest in gay rights, abortion or gun control, none of these issues "move" a large part of the population to go on a journey which is moral and worthy of extraordinary efforts to achieve it.

The popularity of the Internet and Web 2.0 may also be making it difficult for the U.S. to find an audacious new goal. With these technologies commonly available, everyone is a spokesman and people are increasingly following the output of more and more minor functionaries (yes-there is a certain irony here). Consequently, it becomes more and more challenging for an audacious goal to be communicated and accepted by the general population. Never the less, the U.S. must adopt a new, larger goal that galvanizes the population. Failure to do so will leave this country at risk from countries with the ability to move their populations, achieve audacious goals and command the world's respect.

There are two reasons to be optimistic about the U.S. despite the 19 year hiatus in establishing a new goal:

1. Both Presidential candidates appear to have a moral compass albeit formed through very different circumstances and both are inclined to look at the bigger picture
2. Cleantech, alternative energy, or "green" America is the most obvious issue since World War II around which this country could come together to achieve a moral, audacious goal

Now all we need is for a President to recognize the need for such a goal, to articulate it and for this country to come together around the goal. Maybe there are other candidates for this goal but we can not succeed as a country without such a goal.

ICE

A story on NPR this morning reminded me of this helpful tip which I have used for several years. ICE stands for In Case of Emergency. In the contacts list on your cell phone you should add a contact called ICE. In this listing add the contact information for your emergency contact in the event of an accident or medical emergency. Paramedics and first responders are increasingly being trained to check cell phones for an ICE contact. May save your life.

Learning

I have become convinced (for many years) that to be successful one must be a lifelong learner. It does not matter the discipline, the profession or your own starting level of education. The discipline of constantly searching to expand your knowledge in a subject or subjects just makes life richer and more rewarding. Two activities that have proven fruitful in my efforts to expand my knowledge have been teaching and blogging.

When I started teaching at Florida International University and giving workshops there I thought of it as a form of community service. I was giving back some of what I have learned about business working around the world. What I discovered was that it was an incredible source of learning for me. Being forced to clearly articulate your thoughts on a subject forces one to understand the subject better and in more depth. Fortunately I do not have the pressure to publish academic articles so I can take my learning where ever it leads me.

Brad Feld has a great new post up talking about how much he has learned from blogging. I share Brad's view that writing about a subject enhances the learning process. He also makes the very good point that you will not understand Web 2.0 until you really use the technology to generate meaningful content.

I have noticed over the years that the intensity of my efforts to learn has high and low points. The better the quality of people I am working with, the more I make the effort to learn. The less productive my efforts at work, the more I make the effort to learn. When I am working really hard on a good, productive project I tend to do less learning. This is a mistake. Whenever you fall into a period where you are not learning, there is a strong tendency for it to continue and become the norm. From teaching and blogging I have learned that there are certain activities that encourage learning. If you have not yet found an activity that leads you to learn, you should start looking for it today. For those who would respond "I learn every day", I would point out that we are talking here about profound, in depth understanding that exercises the mind. Everybody learns things by coincidental effort. I am encouraging that deliberate, purposeful effort devoted to expanding your understanding of a subject.

Miscellanea

Just a few quick thoughts on a rainy afternoon in South Florida.

1. My daughter graduated from college this weekend. Nice event and the first break of the year. Commencement theme was "giving back". Compassion is a much underrated concept.
2. President Bush told the Saudi's last week that they should lower oil prices or it would lead to increased U.S. investment in alternative energies. How we ever elected this guy to a second term is beyond me. Hopefully he plans to travel abroad for the remainder of his term and thereby not have to make any important decisions.
3. U.S. blogging appears to have hit some sort of pre-summer doldrums. Every third post involves Microsoft, Yahoo, Facebook and Google in some sort of combination. None of these combinations make much strategic sense to me and the posts are increasingly uninteresting. I wish people would just stop blogging on this subject.
4. North Korea has just made its first test call for its new cellular phone network. I wonder what the roaming rates will be for calls from North Korea back to the world. Should be a lucrative new source of income for the dictatorship. Expect an opening in tourism there soon in order to drive up roaming minutes (which are settled in USD).
5. If you are looking for a good, free anti-virus program, take a look at AVG. Anti-virus, anti-spyware, scanning of emails and downloads, etc.
6. A company that I worked with in Japan years ago just reported they are the fifth most visited website in Japan with 22 million visitors per month. I believe they are also the largest ISP. Company is called Nifty Corporation.
7. If anybody has contacts that may lead to a chef in training position in NYC, please email me.
8. If anybody knows of a good controller looking for a job in South Florida, please let me know.
9. My client 10Q is filed so I don't have to worry about that madness for another 90 days and my blogging productivity should pick up.

Thank You Coral Gables

I want to thank Cary Smith and Michael Johnson of the Coral Gables Municipal Works Department for their assistance last Thursday. I would have posted this sooner but a certain client demanded a new business plan on a 24 hour turnaround.

As I have mentioned before, I lack manual dexterity. On Thursday I dropped my car keys, not an uncommon occurrence for me. This time, however, they fell through a sewer grate into the black abyss. This conveniently happened 90 minutes before a meeting with a prospect. What was I to do?

First I called my wife to get another set of car keys. She, being much smarter than me, suggested that I call the sewer department to see if they could help. Great idea! So I called the Miami-Dade Water and Sewer Department. Not a number I have memorized, so I called Verizon 411. After three tries, the operator finally understood "Miami-Dade". I called Miami-Dade and chose "emergencies" from the menu. (The only other choice was billing which did not seem appropriate.) Click, click, click and I hear a ringing and then nothing. I have run call centers so I know that occasionally calls get dropped. Repeat procedure above and the call is dropped again. I hope that nobody had a real water emergency in Miami on Thursday because the emergency call center phone system at Water and Sewer was not working at 2pm EDT. Surprising they do not have a back up system or an over flow to another municipal call center.

As I pondered my dilemma I realized that I was not in Miami. Technically, I was in the municipality of Coral Gables, one of many municipalities that encompass greater Miami. So I called the Coral Gables Police non-emergency number (Verizon did better this time.) CGPD answered on the first ring and a nice lady, without laughing at my problem, suggested I call the Municipal Works Department. She had that number at her finger tips and in less than one minute I was dialing the Municipal Works Department. At Municipal Works another nice lady answered the phone on the first ring, and after hearing my problem, said she would check to see if they had a truck that could help. About 90 seconds later she confirmed that a truck was being dispatched to help me. I asked for an ETA (estimated time of arrival) but she said she did not have that info.

A small concern started to creep into my mind. How long before the truck arrives and should I re-schedule my prospect meeting at 4pm? I should be more optimistic. Two trucks showed up in about seven minutes. One truck had the men to help me, Messrs. Smith and Johnson, and the second truck was a pumper truck in case the water was so deep in the sewer that the men could not reach the keys.  After carefully determining the depth of the water in the sewer, Mr. Smith climbed down in the sewer and retrieved my keys. Complete professionalism and total elapsed time of not more than ten minutes.

I made my 4pm meeting with time to spare and felt good all afternoon. The escapade with the keys had taken my mind off the business plan I needed to write and the pleasant people, management and response of the Municipal Works Department in Coral Gables to my small problem were exemplary. Thank you again.

Note to self: do not take out keys over sewer grates; electronic key still worked after sewer visit

Sophisticated Finance Excel

In a temporary period of delusion, I actually thought about starting a second blog--Sophisticated Finance Excel. Hundreds of people have visited this blog through Google searches for "startup model", "excel model", "debt schedule" and "headcount plan". My post Startup Excel Model is the second most popular post ever on this blog. Based on my students, I imagine that a lot of people need practical guidance to build financial models. (Did I mention my workshop this Friday that will cover building financial plans in Excel? ;)

A post on The Extreme Presentation Blog saved me from the foolish idea of starting a second blog. The Extreme Presentation Blog is an excellent blog I read regularly on presentation and design. Their post Presentation Wisdom-Search Engine talks about a new feature from Google--custom search. Custom search allows anybody to create their own search engine that only searches the websites and blogs you include in the searchable sites list. The folks at Extreme Presentation created a custom search engine called Presentation Wisdom that searches only ten very good sites on presentation and design.

I am now pleased to announce the Sophisticated Finance Excel custom search engine. This search engine is devoted to Excel and financial modeling. Today it searches only three blogs. The other two blogs I have mentioned here several times before--Juice Analytics and Microsoft Excel. I can add additional blogs and websites to the searchable site list. If you have a good site for Excel or financial modeling send me an email and I will consider adding it. On the home page for Sophisticated Finance Excel Google provides the code to embed this search engine in other blogs. A directory of Google custom search engines is here. The number of custom search engines is small today but it will grow quickly.

Yesterday I discussed ad widgets. Today I have a branded search engine. Next I'll be thinking about starting the Sophisticated Finance social network on Ning.com. (Hmmm, maybe that delusional state is returning.) Quite amazing the number of branding opportunities available through Web 2.0.

Note: Sophisticated Finance Excel has Google ads which I can not eliminate without paying Google an annual fee or claiming to be a university or government agency. My apologies for helping Google to cover the very high marginal cost of hosting my custom search engine, which must be about two cents per month. I do not endorse any company or person that may be cited in an ad.

Financial Model Excel Workshop

The Pino Global Entrepreneurship Center at FIU hosts a series of workshops twice a year for entrepreneurs and early stage companies. The workshops are open to anybody looking to hone their skills in entrepreneurship and the admission fee goes to the Pino Center. Further information is available here or one can call Lauren Suarez at 305-348-7625.

This Friday, March 14th, I will be presenting an eight hour workshop on building financial plans for business plans. I am going to change the format this time and split the program. The morning session will focus on using a well defined business model as the foundation for a financial plan. The afternoon session involves a case study where we will build the financial plan in Excel.

For more understanding of a business model, please review this post.

Meeting with Barack Obama

I enjoy reading blogs in part because they expose me to the writings and analysis of a wide range of regular people who do not have hidden agendas or ratings concerns. The quality of the analytical thinking typically surpasses most other sources I have, with the exception of my university associates. Three bloggers that I particularly enjoy are Brad Feld, Nic Brisbourne and Marc Andreessen. Brad Feld is a VC and writes a lot about Web 2.0 and his portfolio companies, which have included Feedburner, NewsGator and Lijit. I use all three of these products and they are excellent. Nic Brisbourne is a VC based in London and his analytical posts on technology are consistently excellent. Marc Andreessen is the Founder of Ning and previously founded two companies that reached $1 billion in annual revenue.  Andreessen probably writes on the widest range of subjects, which brings us to today's post.

Yesterday Andreessen posted on a private, face to face meeting he had with Barack Obama (and endorses him for President). The post addresses several concerns many people have about Obama and includes these four points:

1. Obama is a listener, which makes him different from most politicians who can not get past their need for ego gratification. I have met fewer politicians than Andreessen, but I have not met a lot of politicians that specialized in listening.
2. Obama is world class smart. Andressen is definitely qualified to classify the level of Obama's intelligence and I will grant that there are no dumb guys/gals as the Editor of the Harvard Law Review (Obama, not Andreessen).
3. Obama has foreign relations experience based on his position on the Senate Foreign Relations Committee. This argument, which is Obama's, is a bit weak and is similar to saying that consultants should be able to run companies.
4. Obama has executive experience based on the well managed campaign he has run for President. This argument is equivalent to saying that an excellent project manager can be CEO and I find it weak.

Andressen and my position on the political spectrum are probably not that different. He probably describes himself a long the lines of a fiscally conservative Democrat and I call myself a liberal Republican. We probably have the same positions on all the key issues. I believe that we both represent the view of main stream America-- we both want advancement on social issues combined with prudent fiscal management and an ethical approach to keeping the country safe. Perhaps most importantly, we are willing to make sacrifices to balance these goals. Unfortunately, neither the Democrats nor the Republicans have the courage to take this mainstream position. Increasingly our elections are being shaped by the extreme elements in the population at the expense of the mainstream view, which does not seem to warrant the politicians' attention.

So, who am I going to vote for in the Presidential election? Today I am leaning toward McCain over Obama. I believe he has integrity and is closer to the mainstream view of what the country needs, but I worry about his views on abortion. Obama is world class smart and has a vision, which I find very attractive, but I worry about his views on foreign policy. Who would I have no reservations about voting for? Colin Powell immediately comes to mind. Kind of sad when the best candidate does not run.

Note: If Hilary Clinton somehow miraculously gets the Democratic nomination, I would probably still prefer McCain.

Change the World

When I worked in Indonesia we built a company with US$1 billion in annual revenues, but the accomplishment that I am most proud of is that we created 29,000 jobs for our employees. We were the largest private sector employer in the country and the salaries we paid fed and clothed hundreds of thousands of people in a very poor country.(At the time Indonesia had official unemployment of 25 percent and unofficially it probably approached 35-45 percent.)

Today in Gaping Void, a blog that uses cartoons to explain a wide range of business issues, Hugh McLeod tells the story of how a doodle (below) of his generated a lively discussion at Microsoft UK and became an unofficial mascot of the company. Obviously, the implication is to change the world "for the better", but I sometimes think Microsoft needs this part explained. How many for profit companies can you point to where you can confidently say they are changing the world for the better?

I used to admire Intel until the nonsense with OLPC where Intel rescinded its offer to provide $18 million in funding for third world PCs. I used to admire Citibank until their recent horrific problems in the home mortgage market. (If Citi had applied some analysis to the underlying mortgages, they would have realized the low credit standards being used by the packagers and turned off their funding.) I used to admire Merck until their problems with Vytorin and other drugs.

For a company to claim that they are changing the world for the better I think they have to treat their employees well and develop them, believe in integrity, be a market leader (how ever you want to define the market), have decent financial performance and operate on a large scale. These are the necessary conditions (because first you have to take care of your own employees and protect their jobs), but the most important condition is that one must do something to make people's lives better. Salesforce.com is a great company, but I don't think they make very many lives "better". Kellogg's is a great company but it is debatable whether they make many lives better. Johnson & Johnson is a great company and they make lives better--every day.

I am not advocating that everybody start a medical products company. Nokia is a great company that makes the world better. There are many different kinds of businesses that can make the world better. When you consider starting a business, ask yourself whether this company will make the world better. If the answer is "no", maybe you should reconsider the new venture or maybe you should start it in Africa or Indonesia. The process of reconsidering the venture in a bigger context may lead you to some interesting conclusions that improve your plan, and maybe you will make the world a better place.

International Entrepreneurship

I have worked in many, many countries and the number continues to grow. Much of my business experience has been gained in the third world markets of Asia and Latin America. My interest in things international was spawned in part by the Cuban Missile Crisis in 1962, when I discovered that the world extended beyond the small town in upstate New York where I grew up and Little League baseball. The fact that my father was born in South Africa was probably also a contributing factor.

A recent post, Startup Excel Model, has proven quite popular, in part because it was highlighted in a blog called Startup Cube. In addition to a really cool name (I like the mix of business and database), this is a Russian language blog that covers entrepreneurship amongst other topics (according to one of my Russian speaking students). Given that I have benefited so much from my international experience, and most of us read blogs in English about American thinking on business and entrepreneurship, I want to extend an invitation to the readers of Startup Cube to send me their thoughts on entrepreneurship, startups, new business ideas, etc. and the difference in perspective on these subjects between Americans and Russians. Submissions in Russian, English or any other major European language will be fine. I will get the submissions translated and post them here. (My email is rhhfla1at yahoo.com )

Maybe this is a bit of a wacky idea, but it's Monday morning so hopefully you will cut me a little slack. If this works maybe the readers in La Paz will follow up with a similar submission.

Loyal Readers

Through the Feedjit widget on this blog (lower left column) I have been able to identify some loyal readers in far away places--India, Singapore, the Middle East and La Paz, Bolivia. Especially noteworthy are my readers in Moscow  who have translated occasional posts into Russian for their own blog  (with attribution). Thank you.

For those of you who I can not identify from Feedjit, thanks for reading.

A special note should be made of the people in the U.S. armed forces who read this blog from overseas. This post is for you. I see you every night on my blog. Be safe! You are not alone.

Suharto

I worked in Indonesia from 1984-99 and lived there the last eight years. During that entire time, and for a period of 32 years ending in 1998, Indonesia was ruled by the dictator Suharto. While much is written of the corruption during the Suharto regime and his family's accumulation of a fortune totaling in the billions of U. S. Dollars, there are some lessons to be learned from how he governed:

1. Indonesia is the largest Muslim country in the world, yet Suharto, a Muslim himself, fervently suppressed the Islamic fundamentalist movement in Indonesia. He realized the inherently destabilizing effect of fundamentalism in Indonesia and the negative effect it would have on social and economic progress. Lesson: Fundamentalism (in any religion) is inherently destabilizing
2. Suharto was very concerned about the increasing influence of China in Southeast Asia, in part because he had overthrown a Communist regime supported by the Chinese government, but also because he realized early on the economic and military threat that China posed in the region. Lesson: Beware of China
3. Suharto is one of the few dictators in history who focused on economic growth and greatly improved the living standards of his people (from African poverty levels at the beginning of his regime to conditions where a middle class started to emerge by 1992). Lesson: Successful economic management sustains governments
   

While it could be correctly argued that all of these lessons were self-serving and in Suharto's best interest, I do not think we should take away from their merit because we learned them from a dictator. The other lesson I learned in Indonesia was never do business with the dictator. I worked in Indonesia for 15 years with Hari Darmawan, the founder of Matahari, the largest department store chain in the country. Hari steadfastly believed that one never did business with Suharto's family and we succeeded because we never relied on government largess or preferential deals. Matahari became a US$ 1 billion company and survived the Asian Financial Crisis of 1997 in tact and financially sound because we were self-sufficient. Many of Suharto's cronies met with financial ruin in 1997.

I never met Suharto but I did have one dealing with him, albeit indirectly. A foreign employee and friend of mine had a heart attack in Indonesia and was taken to the new state-of-the art heart hospital in Jakarta. We learned that Suharto personally was following the status of my friend's case. Turned out the first seven foreigners taken to the hospital had all died (contaminated distilled water that only affected foreigners), and Suharto wanted to know if recent changes at the hospital were working. Suharto's inquiries, of course, prompted an unheard of level of service for my friend. My friend made a full recovery, paid a bill that was 20 percent of the cost of a U.S. bill for similar treatment and sent Suharto a thank you card for his interest in his case.

Less there be any confusion, I do not endorse dictators, but there are lessons that can be learned from them and some times they even do some good--as my friend would attest.

Suharto died January 27.

Pino Spring Entrepreneurship Workshops

The Pino Global Entrepreneurship Center at FIU has planned a series of upcoming workshops for startup and early stage entrepreneurs. Details are below.

I will be presenting on Friday, March 14 and covering financial modeling for business planning. A video and the slides from my last presentation are here. All of the workshops are open to the community at large and the proceeds benefit Pino.

My Workshop Video

My workshop in October on "Financial Modeling for Business Plans" for the Pino Global Entrepreneurship Center was recorded by WPBT Channel 2 in Palm Beach, FL. The station has a website, uVu, where they feature videos of local interest and focus on lectures and performances. My colleagues at Pino selected my workshop as the video to give the community a better understanding of the resources available through FIU and Pino in the area of entrepreneurship. The video starts here and continues here. (uVu does not yet permit the videos to be embedded in blogs, but the plan is to have this functionality available soon.)

The woman who introduces me in Part 1 of the video is Colleen Post, a Founder and the Assistant Director of the Pino Global Entrepreneurship Center. Colleen is also an Adjunct Professor at FIU and does a workshop several times each year on "Developing a Business Plan".

Presentation slides are below

Joining Board at FIU Pino Entrepreneurship Center

I have just been invited and joined the Board of the Pino Entrepreneurship Center at FIU. The new Board Chairman is Mike Tomas of the The ASTRI Group, who succeeds Jonathon Kislak of Antares Capital Corporation. Mike has been actively involved in early stage investing in South Florida for many years after a distinguished career in telecommunications in Latin America. Mike is a high energy, strategic thinker who I am sure will refine the focus of the Pino Entrepreneurship Center and take it to a new level of national recognition.

I have known Mike for several years and look forward to working with him, the other Board members and the staff to make the Pino Entrepreneurship Center one of the leading academic organizations of its kind in this country.

Christmas Presents

With Thanksgiving turkey eaten and digested we must now address the daunting task of picking Christmas presents. It would have been completely consistent with Christian teachings if the tradition had been to give gifts to enemies, but that would have been too easy. Instead, we give gifts to friends, family and the most harrowing of all--spouses. (How a Muslim man can find the courage to pick Lebaran gifts for up to four wives impresses me. As a co-worker once said "there is no technology invented that can measure that risk".)

Having now clearly indicated that the following gifts are not intended for spouses, I would propose these alternatives for friends and family:

1. Clear and to the Point by Stephen M. Kosslyn. This book is a truly excellent treatise on how to present information visually and particularly well suited for business executives, graphic designers, website developers and college students. I reviewed it here.
2. Against the Gods by Peter L. Bernstein. This book is a history of probability and risk. The author makes an interesting case that modern business could not emerge until we discovered probability. The book is suitable for gamblers, history buffs, mathematicians and people that like to name drop relatively obscure historical intellectuals. I did not blog about this book (also great reading on your Caribbean vacation this winter).
3. A Kickplay game. Kickplay allows you to personalize a game by adding your own pictures and music and play it online for free. A great gift for computer students, gamers, children and your boss (who you do not want to spend money on). Try personalizing the game below. I reviewed Kickplay  here.

I'll be back with more suggestions as Christmas gets closer, but you thoughtful types need to get shopping now.

Sunshine State Venture Challenge

I have just returned from the Sunshine State Venture Challenge, which is the annual State of Florida university business plan competition. I was a judge and had a chance to meet Dan Rua who also judged. Dan is the Managing Partner in the Florida VC firm Inflexion Partners and his blog is called Florida Venture Blog. Inflexion is the one VC firm in Florida that consistently looks at and funds seed stage companies (and other early stage companies).

Some observations from the competition:

1. The winning plan in my section of the competition was a proprietary technology product developed by an engineering student, the same as last year. I believe he was the only student in the competition who was an engineering student and several funding sources approached him to have further discussions. Looks like we need to encourage more engineering students to enter their school business plan competitions.
2. The student plans did a very good job of defining the customer need and the concept of the solution, but plans consistently did not fully explain the business model. (A business model is defined here.) While revenue models and pricing were reasonably well developed by the students, sales and distribution strategy was frequently glossed over. To demonstrate the point, one student asked me what the difference was between "marketing" and "sales and distribution strategy". (I'll come back to this question in a future post.) It appears that statewide we may need to expand the business school curriculum to include courses on sales and distribution or business models.
3. For the third time this year I saw a student business plan for a used textbook exchange using a website. This concept never wins for a variety of reasons (weak plans to drive site traffic, Amazon and women will not meet to exchange books with strangers--to name a few). This business idea needs to be given a proper funeral or we need a student to take a completely new approach.

All in all it was a great time and very enjoyable. Hopefully they will invite me to judge again next year.

Humor

Periodically I check the Google searches that bring readers to my blog. Today's best search was "qualifications Hooter girl". This was too funny not to post. HUTM may be dead but it is not forgotten (at least at Google).

Someone translated some of my posts into Russian on a blog. As soon as I get a Russian language Google search for Hooters I am going to approach Hooters to advertise on this blog :)

HUTM Goes Viral

You may recall that in my last post I introduced the Hacker Universal Theory of Management (HUTM). This theory propsed that maybe management should just focus on the growth drivers. Over the last few days this post went viral on the Internet with hundreds of re-postings and even a translation into Hindi (Indian language). I have received over 100 emails from readers including 6 from marketing professors around the world. Almost universally, the marketing professors criticized the theory because there is no role for branding in HUTM. I am still thinking about this critical point and I am considering to add an Appendix to HUTM to fully explain the role of marketing, branding and advertising in growing your startup. (It will take a lot of thinking to explain how marketing relates to growth drivers but I'll ask my students for help. They all like marketing.)

The most interesting email came from Hooters, purveyors of fine foods. (Yes--there is a picture of a Hooter's girl but you have to read further.) The senior executive from Hooters pointed out that all great theories have to have a pronounceable acronym. He suggested that HUTM be pronounced "hoot 'em". He went on to say that if I could accept this pronunciation as the official pronunciation (and sign certain short legal agreements) Hooters would be prepared to sponsor a nationwide speaking tour for me to present the HUTM theory. I started seeing posters of me with a beautiful Hooters girl and on the poster it says "Grow your Business" "Learn about the Theory of Hoot 'em". I was also most appreciative of their generous financial offer.

After carefully considering the Hooters' offer I have decided that I must turn it down. While Hooters is large enough to be able to spend money on building restaurant traffic, I decided that the nationwide tour was inconsistent with the principles of HUTM ,for the following reasons:

1. The tour might spawn an increase in restaurant startups, an incredibly poor choice for a startup given that there are no differential advantages
2. The tour would explicitly be an endorsement of marketing which I have now decided does not warrant an appendix in HUTM
3. As a Hooters' contractor I would be exposed to hundreds of frivolous sexual harassment lawsuits from beautiful Hooters' girls across the country, the defense of which would drain critical resources from further developing HUTM into a book (every theory really needs a book.. to sell at speaking engagements)
4. Lastly, I would probably have to give up teaching at FIU, which frequently inspires me to do some serious thinking about issues like "growth"; the University or the State of Florida must have a regulation prohibiting professors from associating with establishments that serve liquor

Now, if you believe that any of the above material is true, I own a bridge between Sumatra and Java (Indonesia) that I am selling for the bargain price of US$ 3 million or best offer. For the record, I did not receive any offer from Hooters and all of this post I made up. But--it was fun to spoof "universal theories", acronyms, marketing professors, speaking tours, etc. etc.

By the way, there is no picture of a Hooters' girl. I have to manage my brand image on the Internet ... in case Harvard calls to publish HUTM as a book.