WadeArmstrong.comtag:wadearmstrong.com,2009://12009-05-13T05:40:19ZBorn in Baltimore. Grew up in the big city. Came out West to college at Pomona. Web since 1995; writer since even earlier. Strategic communications consultant, dot-com software project manager, entrepreneur and Web designer. Getting my MBA. Love cooking, photography, organization, the Web. Overall sunny outlook, matching sunny location in Los Angeles. Writing about technology, about business, about entrepreneurship, about individual productivity, and occasional other interesting things.Movable Type 3.37Getting Productive on the Mactag:wadearmstrong.com,2009://1.4032009-05-13T04:46:05Z2009-05-13T05:40:19ZI’m a big systems guy: I think that, if you’re doing something repeatable and everyday, you should make it into a system that makes it easy to do over and over again without actually having to think much. I had...
I'm a big systems guy: I think that, if you're doing something repeatable and everyday, you should make it into a system that makes it easy to do over and over again without actually having to think much. I had such a system "on my PC":http://wadearmstrong.com/archives/productivity/easy_gtd_with_outlook_and_the_palm_treo.php. Remarkably, despite the plethora of pretty brilliant task- and information-management applications on the Mac, it's only now that I think I've gotten an equal-quality system on the Mac.
The key was actually something unexpected: the "MacHeist bundle":http://www.macheist.com/ was expanded to include "Delicious Library":http://delicious-monster.com/, which I'd coveted ever since I lent a special edition DVD to a friend and forgot which friend it was and never got the DVD, which cost about twice as much as a copy of Delicious Library, back. Since the MacHeist bundle had Delicious Library at slightly under retail cost, I went ahead and bought the whole thing. Little did I expect that what I perceived as an entirely un-needed bonus application would be just what the doctor ordered.
That application is "The Hit List":http://www.potionfactory.com/thehitlist/. I really only installed it because I didn't want to lose the registration code I'd bought. However, it does have a very clever tutorial that's hidden as the sample data in your to-do list, and I couldn't resist that kind of clever.
The Hit List quickly showed itself to be just what I needed in a task manager. I'd used "OmniFocus":http://www.omnigroup.com/applications/omnifocus/ for the last year and a half, and had really enjoyed the idea of having a reliable repository for all of my to-do info that was also a great brainstorming tool. However, OmniFocus just isn't a good day-to-day tool; it's difficult to use it to get a clear idea of what you *need* to do today, as opposed to what you *can* do next. Working on my own, I, to be honest, rarely have time to get ahead, so what I usually find myself working on is what I *need* to do today.
That's where The Hit List comes in. It's got a great Today feature that lets you see what you need to do today, what you've already done today, and what's coming up. It also has reasonably clever smart folders that let you selectively gather tasks; I use these to review what I've done and what's coming up every week. These smart folders are either more powerful or at least more intuitive than OmniFocus's views.
The Hit List also has a flexible tagging system that both supports whatever you're likely to need to track and allows you to keep track of activities in contexts, if you use those. I like THL's either/or approach to contexts vs. tags/categories, as opposed to OmniFocus's strong emphasis on contexts, because I often find myself having a set of tasks that can be done anywhere, and should be done now, more urgently than any single-site tasks.
I can't say enough about THL's support for recurring events. The developer "talked at length":http://www.potionfactory.com/blog/2009/03/10/better-software-through-less-ui about how he figured out the UI for recurring events, and it works awfully well. OmniFocus, in contrast, does recurring events very badly, which makes it hard to keep track of important tasks like paying bills, taking out the garbage,[1] etc. THL handles real life like that even better, although OmniFocus scores for its ability to make one task only appear if another is completed.
THL also has great tools to get information in. They've shamelessly cloned OmniFocus's quick input window, which appears anytime you need it based on a customizable keystroke. Loyal THL users have also built a number of great tools to help capture information, such as "one to create tasks from Web pages":http://blog.rollingcode.org/2009/3/URL-Handler-and-Bookmarklet-for-The-Hit-List. By combining the brilliant (if poorly-named) "MailActOn":http://www.indev.ca/MailActOn.html with "this Applescript":http://the-hit-list-users.googlegroups.com/web/Applescript+which+copies+selected+Mail+message+to+THL+(with+added+Growl).scpt, you can easily add a task straight from Mail. (I also like to use MailActOn to file the e-mails for which I've created a task in a special folder that I sweep weekly, to ensure that I've processed and completed their task.) That should cover 80-90% of the way most users have tasks arrive on their doorstep.
In sum, The Hit List is a great little program that adds immensely to my productivity. Like most good Mac apps, it relies on other programs on the computer to complement it -- in this case, I use Mail, iCal, Address Book, and "Yojimbo":http://www.barebones.com/products/Yojimbo/ to approach the functionality that Outlook[2] has on the PC. But each component is either free or relatively inexpensive, and each is also really, really good at what it does. And that's a hard combination not to like!
fn1. Just as important: bringing in the garbage!
fn2. Or "Entourage":http://www.microsoft.com/mac/products/entourage2008/default.mspx or "Daylite":http://marketcircle.com/daylite/index.html on the Mac.
What's the Best State for Small Business Taxes?tag:wadearmstrong.com,2009://1.4022009-04-18T08:29:23Z2009-04-18T08:43:16ZIt’s tax season, and I’m as interested in how much the government is taking out of my pocket as the next guy. So I was intrigued to learn of a new small business-focused ranking of state tax burdens from Wall...
It's tax season, and I'm as interested in how much the government is taking out of my pocket as the next guy. So I was intrigued to learn of a new "small business-focused ranking of state tax burdens":http://www.sbecouncil.org/businesstaxindex2009/ from "_Wall Street Journal_ Small Business reporter Kelly Spors":http://twitter.com/WSJSmallBiz. Now, I've started two businesses in famously high-tax California, and I've never found taxes to be a big enough problem that any of my time was justified in thinking about them rather than running the other parts of the business. But I know that a lot of businesses that have been around longer and are in more of a sustaining than a growth mode have real concerns about tax burdens, so I was looking forward to reading and learning from this report. Unfortunately, the ranking is comically sloppy.
2. r2 is a common measure of correlation. While we all know that correlation doesn't imply causation, it's still a good hint that one thing causes another (or that they're both caused by something else). Even better, a lack of correlation almost always means you don't have causation. r2 answers the question "what percentage of the change in one thing is explained by the change in another thing?" Values of r2 range from 1 - meaning that 100% of the change in one thing is explained by the change in another thing - to 0 - meaning that none of the change in one thing is explained by the change in another thing - to -1 - meaning that as another thing changes, one thing changes in *the opposite direction*.
So, using r2, how much of state small business success does the Tax System score explain? Using measures "from the Small Business Administration":http://www.sba.gov/advo/research/data.html,[2] I found that, at their best, the Tax System scores predicted 0.08% of the difference in number of small businesses between states. In the statistics business, they call that totally unrelated.
On a lark, I also looked at the "US News rankings of state schools":http://colleges.usnews.rankingsandreviews.com/college/national-top-public and saw how well those predicted the difference in number of small businesses between states. School rank was actually pretty strongly correlated - it explained about 50.5% of the difference in small business success between states. So, quality of the best public university in the state is more than 600 times as good a predictor of small business success than is the SBEC Tax System.[3]
h3. Problems With the Math Behind the Ranking
Digging deeper in the rankings, it's not surprising that they aren't highly correlated with small business success. The rankings are built by adding a bunch of things together that shouldn't be added together - they're basically adding apples and oranges and saying that you come out on the other side with a strawberry. They look at the percentage tax you pay at the personal and business level on income and capital gains, which is a rate per *dollar*. They add on the tax you pay for gas and diesel, which is a rate you pay per *gallon*. They then add on measures of the presence or absence of certain other kinds of taxes - a 1 if the state has it and a 0 if they don't. Remember high school chemistry or physics, where the teacher kept on yelling at you if you don't keep track of your units? That's what happened here - the rankings are in something like true/false dollar-gallons per year. It's important to watch your units; after all, 7 dollars is a lot nicer to have than 7 pesos.
The SBEC also fails to take into account the relative importance of the various taxes. For instance, they give states 1 point for having an inheritance tax, and then score unemployment taxes on a per-dollar rate, so that that an unemployment tax rate of 2% gets you 2 points. Well, last I knew, you pay that inheritance tax just once, on the value of the estate at just one point in time,[4] but you pay that unemployment tax every time you cut a paycheck.
h3. So What's the Best State for Startup Taxes?
According to the SBEC, the highest state tax rate is California's 10.5%. Let's assume, as a very worst case scenario, and without any evidence, that there is a direct, linear relationship between tax rate and chance of failure - so this 10.5% tax rate increases your chance of failure by 10.5%. A few states have a 0% personal tax rate, so if you had an LLC or S Corporation that paid no minimum taxes and moved from California to, say, Alaska, you'd at most increase your chance of success by about 12%.[5] Will giving up your existing personal network decrease your chance of success by more? Probably. Will giving up the market knowledge that you have from working in the market do the same? Probably. For startups, the best state is the state you're in, the state where you already have the resources and contacts. Getting the business off the ground, not minimizing taxes, is job 1.
fn1. The SBEC's favored policies are "here":http://www.sbecouncil.org/join/
fn2. There's a small catch here - the SBEC released Tax System rankings in 2008 and 2009 only, while the SBA's data only goes up to 2006. I used the 2009 SBEC and 2006 SBA data for my comparisons here, which should be reasonable as it's unlikely any state completely changed its tax mix in the interim.
fn3. If you want to check my math, download it "here":http://wadearmstrong.com/SBATaxes.xls
fn4. And, technically, you don't pay the inheritance tax - your kids do. You get to pick whether or not you like them enough to care.
fn4. That is, being in California reduces your chances from the standard indexed 100% to 89.5%, and moving to Alaska increases them back to 100%.
]]>
Stimulus for Startupstag:wadearmstrong.com,2009://1.4012009-02-06T03:13:32Z2009-02-06T03:15:35ZWashington’s all a-flutter over what the stimulus package to help us get out of this economic slump. Is it tax cuts? Infrastructure projects? Bank bailouts? Startups are a unique breed, and need unique tools to drive growth. Specifically, they need...
Washington's all a-flutter over what the stimulus package to help us get out of this economic slump. Is it tax cuts? Infrastructure projects? Bank bailouts? Startups are a unique breed, and need unique tools to drive growth. Specifically, they need cash. Up front.
h3. What Can Startups Do For Me?
Startups don't have multi-year product development cycles, and they're not run by people who are so afraid of making mistakes that they never try anything new. Startups are about generating revenue _right now_, and that means that any new cash is immediately spent on a capital investment that will either bring down costs or on new employees to make and sell new products. That means immediate growth, over the course of a few months rather than the few years that someone like GM can offer.
h3. Tax Cuts vs. Cash Up Front
One of the biggest debates in Washington is whether spending or tax cuts are a more effective stimulus. For startups, spending trumps tax cuts. First of all, startups are always cash-poor, and many can't afford to take on new projects without having more money right now. But, more importantly, the returns on any new project financed with stimulus cash dwarf the money that could be saved in taxes. Let's take an example:
My imaginary company FantastiCo makes red widgets. Right now, it makes $100,000 in profit every year. Since FantastiCo is an LLC, all of that $100,000 flows to the owner as ordinary income and is taxed at my rate of 28%. So, I get to keep $72,000 at the end of the year. If we cut my marginal rate to 25%, I only get $3,000 more - and that in a year from now. Suppose we give me that $3,000 in cash now, what can I do?
* I can hire a commission-only salesperson to increase sales, offering a $3,000 bonus for meeting quota. That's immediate marginal new sales for FantastiCo, plus a new job!
* I can buy a fancy color laser printer, turning out all of my marketing materials in-house instead of using Kinko's. That will cut my per-page cost from $0.10-$3.00, depending on the service, to about $0.05. Depending on what I'm printing, I can reach breakeven fast and start to invest more of FantastiCo's revenues.
* I could buy a ton of advertising space online, either search advertising or banner ads. Assuming a 2% conversion rate and a $2 cost per click, I'll get 1500 clicks and 30 conversions. If I make just $100 per conversion I'll break even.
h3. The SBA and Cash Up Front
Now, $3,000 would be nice. But there's a way to get more. The Small Business Administration's 7(a) loan program guarantees loans made to startups and other small businesses, and has a "default rate of somewhat under 7%":http://money.cnn.com/2007/11/01/smbusiness/Senate_grill_SBA.fsb/index.htm. Now, if we budgeted that $3,000 for loan guarantees instead of cash breaks, the SBA could make a new, guaranteed $43,000 loan to every startup that comes asking - the cost will be the same. Since I'm currently paying $28,000 in taxes, that's the equivalent of a 100% tax cut plus a 53% refund. That means that the SBA can, for the same cost as a 3% tax cut, offer every small business a guaranteed loan equal to 153% of their previous year's taxes. Even if I doubled my profit every year, it would take me until 2014 to make more on that 3% tax cut then on just one year of that 153% loan program.
And what can I do with that $43,000? A lot more than with just $3,000:
* I can pay to add a top-tier salesman who expects a mix of base and commission, with probably much more of a top-line impact on sales.
* I can make a larger capital investment, including many small manufacturing tools or, for "my company":http://dinetothrive.com, a vacuum-sealing tool that would allow us to cook, freeze, and ship an entirely different set of foods that we can't currently handle.
* A real PR campaign, keeping a couple of PR contractors employed for a full year - that's headcount directly into the national economy.
For a startup that makes meaningful investments in projects like these, rather than the marginal investments described earlier, increasing sales by 100% or more isn't just optimistic - it's standard. Startups grow fast partially because they're small to start with, and you see fast, hockey-stick growth patterns with virtually every successful startup.
For years there have been questions about whether or not "the SBA":http://www.inc.com/magazine/20070501/features-does-the-sba-still-matter.html "matters":http://www.entrepreneur.com/magazine/entrepreneur/2006/july/160130.html. The SBA made valiant efforts to help after 9/11 and Katrina, but they didn't really affect the wider economy. This loan program would. It's time to give startups the cash they need.
Video's Main Course?tag:wadearmstrong.com,2009://1.3872009-01-22T19:21:16Z2009-01-22T19:22:23ZLast Saturday, my girlfriend and I got some takeout, brought it home, and watched a DVD from Netflix. Kind of a rare event, actually - these days, it’s more about Tivo and delivery; a craving for Pinkberry brought us out...
Last Saturday, my girlfriend and I got some takeout, brought it home, and watched a DVD from Netflix. Kind of a rare event, actually - these days, it's more about Tivo and delivery; a craving for "Pinkberry":http://pinkberry.com brought us out for the takeout from the Asian place next door. It occurred to us that, ten years ago, movie and takeout would've been a typical weekend evening for almost everyone - how much business must the restaurants in the same strip malls as Blockbuster have done? And how much has Netflix killed these restaurants?
It seems like every successful product has an ecosystem pop up around it, as we heard endlessly about the auto industry as it asked for a bailout. I'd never thought about the video rental ecosystem before, but a trip to pick up takeout at a local joint sure brought back the memories. How many meals did you have at a place that was near the local Blockbuster or independent video joint? How many times did you pick up coffee or donuts from a place nearby when you dropped off the video the next morning?
And, most of all, what happened to those stores after you stopped driving out to get that movie? For a donut or coffee shop that depends on traffic passing by to bring customers, the big markups - "400% or more on donuts":http://www.lvbusinesspress.com/articles/2005/08/22/news/news05.txt - may offset the drop in customers, but, for a full-service restaurant that also offers take-out, the typical 4-8% profit margin doesn't leave a lot of room to lose customers. Did restaurants pay the price too when video rental went out of style?
If local restaurants that depended on take-out traffic did close, who picked up the now-unsatisfied demand? The candidates, and the evidence we should see for them, are:
* The same restaurants, now offering delivery, offering convenience to match the Netflix you already have - if so, then we would probably see a big increase in free delivery offers matching the growth of Netflix and on-demand.
* Other restaurants specializing in delivery only, like pizza, which would be convenient if you already had Netflix at home - if so, then the total number of franchisees should increase as the total number of Blockbuster locations decreases. We might also see new chains, like Papa John's, grow matching Netflix.
* Fast casual restaurants, offering fun, quick dining with reasonable-quality food, like Applebee's, if people decided to go out rather than stay in - if so, then we should also be able to see an increase in franchisees as Blockbuster locations decrease.
* Fast food, picked up on the way home from work - if so, then drive-through volume should increase as Blockbuster traffic decreases.
We saw growth in the last three categories over the last few years. It's generally accepted that overall economic growth, combined with busier lives in which people didn't have time to shop and cook, contributed to this growth. Could it be that the decline of video rentals was a key factor too?
We Mean Business: Wagvilletag:wadearmstrong.com,2008://1.3782008-12-03T05:48:07Z2008-12-03T05:49:17ZWagville is a Los Angeles doggie boarding and day care facility founded and run by Harvard grad and former lawyer Julie Shine. Like the other WMB subjects, Wagville isn’t making enough money. We quickly learn that: The company does little...
"Wagville":http://wagville.com is a Los Angeles doggie boarding and day care facility founded and run by Harvard grad and former lawyer "Julie Shine":http://www.linkedin.com/ppl/webprofile?id=18152133. Like the other WMB subjects, Wagville isn't making enough money. We quickly learn that:
* The company does little to no retail business, despite having a large (and cluttered) storefront
* Check-in takes minutes on a slow system
* There are no facilities for people, just for the dogs
* Employees are unmotivated and ill-tempered
* Julie cannot motivate staff and may be a micromanager
* There are 27 employees in a business that's caring for no more than 60 dogs at any time, and the costs add up - in one month, Wagville did $90,000 in sales but had $65,000 in payroll and so couldn't make a profit
* Julie is focused on providing a service to dogs, not on making profit
* Julie is carrying crushing credit card debt in order to keep the place running
h3. Their Solution
The team moves aggressively to make over the facilities, and designer Peter Gurski redesigns the front of house to better serve the paying customers - the people. With a new seating lounge in the lobby, inventory moved from the cluttered sales area to a storage room (converted from a doggy lounge!), and even an uncluttered office for Julie, it looks a nicer place. Tech maven Katie Linendoll helps punch things up with new self-serve check-in kiosks and a laptop for Julie. Unfortunately, she also slaps in the digital menu and the digital photo display that she gives to everyone. Our host, Bill Rancic, tries to have a little come-to-Jesus with Julie, to get her to prioritize serving the paying customers and earning a profit. Rancic also tries to inspire the staff into contributing meaningfully, offering a commission program to encourage retail sales and even browbeating the man whose job is to scoop up all the poop and who clearly has a limited grasp of the English language.
h3. My Recommendation
The biggest problem is the founder, Julie. It's not that she's wrong for the company - her love of dogs is clearly real and meaningful - it's that she seems to be poorly-matched to day-to-day management. Rancic was on-target to try to get her to think about profit, but she really needs to be exposed to how every organization needs to bring in more than it spends, even non-profits. She also needs to think about whether or not this is the right position for her. It seems that she lacks management experience, and is coming off negatively to her staff. She also seems inflexible - a bad trait in an entrepreneur. In fact, she seems more of a small business owner than an entrepreneur: she's created a job for herself, not a business (and she's clearly happy to do that job, working with the dogs rather than managing). This makes me ask if she should bring in a manager from a pet store or vet's office with some experience in the area. In fact, with money as tight as it is, she should consider taking her Berkeley JD and getting a job as a lawyer again, participating in strategic planning for Wagville and coming in on weekends to spend time with the staff, customers, and, most of all, the dogs, rather than avoiding doing a job she's bad at all week long.
I have to really disagree with Rancic's focus on increasing revenue through retail sales. While the numbers seem compelling - he said a 10% increase in retail could make Wagville profitable - retail is a tough business. Is 10% a realistic number, given that big chains like Petco almost certainly have lower prices on everything? And what will Wagville's customers really want to buy? It strikes me that a focus on regular but small impulse sales, like a special treat or a new small toy to make up for leaving your dog for a weekend, is likely to pay off, but when will Wagville's customers choose to pay more for everyday food, outfits, or equipment like leashes and bowls? No effort to increase sales will succeed if the product mix is wrong. And getting rid of some highly-valued boarding facilities - the doggie lounge they turned into a storage facility - in order to provide more room for retail sales, which don't make a ton of money and aren't the focus of Wagville, seems like a silly idea.
Instead, I'd concentrate on upselling services they already offer, like grooming and night boarding. Why not sell the concept of a "date night" where you don't need to worry about your dog, featuring pick-up and drop-off? Would they get more overnight customers that way? How about periodic baths and trims, on a set schedule, for regular boarders? Baths and grooming could be sold at a discount if bought up-front with bulk boarding purchases. I'd also look to get more boarders by partnering with vets and pet stores that don't have the facilities to provide boarding. Wagville could offer discounts to customers referred by these places and even refer customers back - something they can't do if Wagville is a retail-focused organization.
Wagville should also consider raising its prices. They have 60 dogs around at most times and Rancic even mentions a month in which they grossed $90,000, so they're doing some business. Could they raise rates 10%? Many companies undercharge, and Wagville's facilities are clearly super-premium, so I suspect their customers would see value even at a higher rate.
Finally, I'd like to see a real breakdown of headcount. If monthly payroll is really at the $65,000 level, some quick math suggests to me that they have at least 7 staff in the facility at all times - even at night. Could they cut down some? There's premium care, and then there's people who aren't doing much, and Julie needs to figure out the line and be clear about it. For instance, they probably don't need someone sleeping with the dogs at night, because dogs are probably about as happy sleeping with other dogs as they are with strangers, and, either way, the dogs get a nice, comfy bed to sleep in.
h3. More Thoughts on the Show
I was really happy to see another show that wasn't about a restaurant. I even found Linendoll less annoying than in the past. And we saw her configuring computers - she's not just a pretty face! But some problems continue; for instance, it's time to quit with the digital monitors. Are monitors actually cheaper than chalkboards or pre-printed plastic? The monitor solution has become too cookie-cutter and automatic, and just cheapens the idea of the Dell makeovers.
My TV producer girlfriend is also particularly (and justifiably) annoyed by the camerawork. The cameraman is fine when he's locked onto a tripod, but, when he's working handheld, he's all over the place. This isn't The Shield - the style here should match the host, and Bill Rancic is a button-down man.
And we've seen some disdain towards poorly-motivated hourly workers in a number of shows. Why was Wagville's poop-scooper unmotivated? Probably because he scoops poop for a living! But someone's got to scoop all that from 60 dogs! They probably doesn't pay him enough to care or to have a good attitude, and, guess what, if he got really involved, he probably wouldn't have time to scoop poop anymore. Let's appreciate the poop scoopers for the poop they scoop.
We Mean Business: Poka Dotttag:wadearmstrong.com,2008://1.3662008-11-13T19:35:23Z2008-11-13T19:36:25ZFor some reason, Tivo didn’t pick up a We Mean Business episode this week, so I’m reaching back to earlier in the season, before I started my recaps. The team visited Poka Dott, a party supply store north of Los...
For some reason, Tivo didn't pick up a We Mean Business episode this week, so I'm reaching back to earlier in the season, before I started my recaps. The team visited "Poka Dott":http://www.pokadott.com/, a party supply store north of Los Angeles. Poka Dott is deep in the red and just falling deeper, and, worse, owner Stephanie hasn't told her husband how much she's losing. Major problems they uncover include:
* Too much merchandise in the store means a lot of money is tied up in inventory
* Too much merchandise in the store means that customers can't find what they're looking for
* Disorganized and poorly-merchandised displays don't highlight products and make it hard for customers to find what they're looking for
* Outdated point-of-sales system is clunky
* Too many employees means high cost of operations compared to sales possible in the store
* The store's signs are hard-to-see from the street
* Store is unknown in the area and gets little traffic
h3. Their Solution
Bill Rancic aggressively tackles the inventory problem, and he and Designer Peter Gurski convince Stephanie to retire some of her "favorite stuff" that she bought as inventory and instead highlight products that can move. Gurski really shows his stuff, giving the store a facelift inside to make it seem more accessible to the ordinary customer and show product in a good light. Gurski also gets some good big signs on the outside to show that the place is a party store. Rancic also tries to convince Stephanie to fire some of her staff so that the cost of keeping the store open isn't so high. But the biggest thing the team does is when Rancic makes Stephanie sit down with her husband and reveal the extent of Poka Dott's losses to him. Her husband does just what I would do in that circumstance - keep a blank face and let onto nothing, because who wants to fight on TV; I bet he's quite the poker player, but I'm sure he can't have been happy learning of the money the business is hemorrhaging. While they seem to both take the losses seriously, in the end Stephanie is unwilling to let any of her staff go - she's hired her friends, it seems, and is unwilling to fire them, even if it leaves her unable to pay her own mortgage.
h3. My Recommendation
The team is right on target here - Poka Dott carries too many items and merchandises them poorly. Gurski's store makeover is just what they need, and the better inventory control that Linendoll brings should help keep Stephanie under control, but it's clear that she really wants to buy the things she loves. It would've been fun to see an exercise in which they bring by a few of her target customers - a mom with a birthday party, and a party planner throwing an event like a Bar Mitzvah, for example - and have Stephanie shop with them. That could help Stephanie learn what her customers actually want, and make for a couple of minutes of entertaining TV, too. Whatever happens, she needs to learn to stock what will sell, which is not always what she wants.
While it makes for bad TV, I'd again look to direct mail marketing here - she should send catalogs to party planners in the area. Perhaps Linendoll could show her how to create a catalog on her computer and mention that she can buy a list of party planners in Southern California and mail it to them. And to stick to another old saw, I'd love to see some sort of Web site service as a partner here (maybe GoDaddy?) so that Linendoll can talk about making sales online and using online search advertising. (Poka Dott has an online store but it's not very good and apparently not advertised from what I can see.)
Fundamentally, nothing will make the business work if Stephanie doesn't decrease her employee headcount. Until things get busy this really is a store she can operate herself, 10 hours a day for 6 days a week - that's just what an entrepreneur has to do. A trusted friend can be trained on the register to run the place once a month and on special days like birthdays to give Stephanie some family time. Some graphs might've made for good TV here, with Rancic showing Stephanie and her husband how long they could keep making their mortgage payments with just Stephanie working, with 1 employee, and so forth. (Graphs aren't inherently bad TV - Deal or No Deal is fundamentally just people talking over a chart! It all depends on what you show, who's saying what, and how quickly you get out of the segment.)
h3. More Thoughts on the Show
While it's clear that the team hasn't yet reached its stride in this early episode, I am much more compelled by their response to Poka Dott than to some of their other makeovers. We've seen far too many restaurants, in which they're competing with the superbly-done Kitchen Nightmares, featuring Gordon Ramsay, who knows a lot more about the food industry than anyone on the We Mean Business team. One main exception to the caterers and bakers was the "Jazyhair Hair Salon":http://wadearmstrong.com/archives/entrepreneurship/we_mean_business_jazyhair.php, where, again We Mean Business is competing with the savvy and well-produced Tabatha's Salon Takeovers. I'd love to see more retail companies like Poka Dott; the We Mean Business team really had something to add here that nobody else could've duplicated.
We Mean Business: Berry Elegancetag:wadearmstrong.com,2008://1.3602008-11-06T01:57:14Z2008-11-06T01:58:15ZThis week, the We Mean Business team takes on Berry Elegance, a store that makes berries and other desserts dipped in chocolate. Berry Elegance is stalled, with sales falling short and the two owners in disagreement on how to run...
This week, the We Mean Business team takes on "Berry Elegance":http://berryelegance.com/, a store that makes berries and other desserts dipped in chocolate. Berry Elegance is stalled, with sales falling short and the two owners in disagreement on how to run the business.
It quickly becomes clear that the problems are:
* Location offers few opportunities for walk-ins
* Average sale per customer is small - just a few dollars
* In-store merchandising is unattractive and unclear
* The point-of-sales system is truly abysmal
* One owner, Todd, acts like a dictator
* The other owner, Amy, is rarely in the store
h3. Their Solution
The team really tackles the problems with verve this week. Peter Gurski redesigns the store to bring a much more Godiva Chocolates-type vibe, with clean organization of the space and luxurious colors. Bill Rancic gets Todd to reconsider how difficult he's being, and gets tough with Amy to try to get her to commit time to the store. Unfortunately, it seems he's not so successful; this single mother wants to spend even less time at work and more time with her son. Rancic also aggressively tackles the low per-customer sale by setting up the owners with event and wedding planners who can make bulk orders multiple times a year. Katie Linendoll finally contributes by setting up a good point-of-sales system - although it is made over-complex by bar-coding everything - and inventory-tracking with QuickBooks, and, best of all, a laptop that Amy can take home so that she can get her work done around her son.
h3. My Recommendation
First of all, I'm very worried about Berry Elegance's location. In a strip mall on Ventura Boulevard in Studio City, just north of Los Angeles, they're not likely to get a lot of walk-ins. They'd be better off in a location with a ton of foot traffic, like a mall. Berry Elegance seems to be the kind of shop that does very well in a small stall in a mall, with a lot of people walking past every day, ready to spend a couple of bucks on a treat. I realize that the store probably can't get out of its lease, but more foot traffic would probably make a big difference.
I also am concerned that Rancic's come-to-Jesus talk with Amy didn't make her more invested in the business. She seems to feel that having her own business will give her more time with her son, which will be true once her business is successful but isn't until then. Todd and Amy need to split up the tasks they do so that Amy can find some that she can take home - advertising, sales calls (which she seems to be suited to), and maybe even some bookkeeping can be done at home. That way, she could spend 15-20 hours at the store and the rest with her son. This could've been a fun on-screen conversation.
Linendoll did a much better job this time, but I'm not sure they needed a fancy point-of-sales system. How many items do they really sell? (It's not that many.) While having computerized inventory is handy, here's a place where sweat can substitute for cash for a start-up. A store like Berry Elegance should buy the simplest register that they can and update inventory by hand daily or weekly, at a cost of a few hours of the owners' (free!) time. I'm also not sure what she's getting at with the big flat-screens with slideshows that she puts up in every episode; rather than a $2-$3000 flat-screen, why not buy a "Fotoflot":http://fotoflot.com at the same size for only $235? For a business owner who's not getting it free from Dell, that's much nicer to the cash flow. Frankly, the biggest tech investment Berry Elegance needs to make is in a Web site and online advertising. "Red Envelope":http://redenvelope.com/, a top corporate gifts site, is associated with "Shari's Berries":http://www.berries.com/, a store just like Berry Elegance. Can Berry Elegance find a good partner online? Can Berry Elegance learn anything from the design of Shari's Berries Web site?
Finally, Berry Elegance needs to continue to advertise to get volume orders. Corporate gifts are an obvious idea, and a direct mail campaign, with coupons to try some free berries, to area businesses should pay off well. They should send their mailers to receptionists and administrative assistants, who rarely get mail addressed directly to them and who are the ones who really make the gift decisions at most companies. Gurski could've pitched in on the design of a mailer in a fun 20-30 second montage.
h3. More Thoughts on the Show
I was impressed with this episode. Bill Rancic showed a lot more charisma than he had before, and really appeared to be the star of the show. The moment of change also finally didn't include any whining from the We Mean Business team, although Linendoll continues to look down her nose at the show's subjects. The camerawork is still jerky and filled with excessive motion, although it's better than before. It seems like the show really is starting to come together.
We Mean Business: Out Back Cateringtag:wadearmstrong.com,2008://1.3552008-10-29T01:37:20Z2008-10-29T01:38:19ZThis week’s We Mean Business follows the makeover of Out Back catering, a Southern California catering company that serves down-home food at parties. Out Back has been successful for two decades but has recently seen its bookings and revenue drop....
This week's _We Mean Business_ follows the makeover of "Out Back catering":http://outbackcatering.com/default.html, a Southern California catering company that serves down-home food at parties. Out Back has been successful for two decades but has recently seen its bookings and revenue drop. With the founder's daughter interested in taking a bigger role at the company, our heroes wade in to see what they can do to turn the business around.
The show circles around a while trying to find the problems, and discovers a few meaningful ones early on:
* The office is hard-to-find and, inside, the customer meeting area is cluttered and unprofessional
* The company is using outdated advertising methods
* The phone system is broken and hangs up on people
However, the parochial attitude of our hosts also comes out when they focus on things that appear to be problems but probably aren't:
* The owner doesn't know how many employees he has; probably this is because he has a long list of servers and prep cooks who he can call upon to work his events, but doesn't have on payroll.
* The company runs on DOS-based computers, which may be "archaic" but I bet still works; any new equipment should be sold on the business benefits it brings, not because floppy disks are old and uncool.
* Tech guru "Katie Linendoll":http://katielinendoll.com/ -- whose "Google listing":http://www.google.com/search?q=katie+linendoll by the way reads "image2. image1. image5. image4. image3. copyright." -- has a tantrum because the employees aren't paying enough attention to her and watch a turtle instead.
h3. Their Solution
Designer "Peter Gurski":http://www.linkedin.com/ppl/webprofile?id=20140621 makes over the outside and inside of the office by painting the building a great red-and-white check, just like the tablecloths Out Back uses. He also makes the interior easier-to-clean and organizes it to be nice for the customers who come by to learn more and sign contracts. He even makes a new logo and Rancic brings by great new shirts that everyone can wear - although I'm sad that they called the company Outback catering, rather than Out Back, because it really is a different thing. (And who knows how Outback Steakhouse will feel about Outback Catering?)
Linendoll finally pulls her weight by setting up a great VoIP phone system with all the bells and whistles and laptops with 3G wireless cards that can help people working on the road get online from anywhere. The rest is a little more Dell and Intel shilling, but at least there's real tech value this time.
Everything culminates in a grand re-opening picnic that seems to get new business.
h3. What I Would Recommend
As Rancic notes early on, Out Back just waits for customers to call - they don't have much modern marketing. The only thing they run is a 15-year-old Yellow Pages ad, which probably worked great years ago when most people found caterers by looking in the Yellow Pages. Today, the equivalent is a search engine ad using a service like "Google AdWords":http://adwords.google.com/. In 15 seconds, Rancic could've mentioned this idea, and perhaps Linendoll could even have mentioned that the new Dell computers came with a copy of QuickBooks, which includes tools to help manage an AdWords account.
Another good marketing strategy for Out Back would be cold-calling area businesses to get corporate catering opportunities. Out Back should also be sending print or e-newsletters to its existing customer base to keep in touch - they could even run stories about good party ideas, to get their customers thinking about having an event. Out Back could even send reminders and coupons to its past customers for events like birthdays and holidays and try and get that business for this year too. It would've taken Rancic 20 seconds to talk about these ideas.
The founder's daughter, who seems to want to be more involved, does a great job on the phone in this episode and also seems interested in doing new things. She'd be a great person to put on these jobs. Meanwhile, the founder does a great job face-to-face, talking about his company at an event. He should be getting out there, going to the larger events Out Back works and talking to new potential customers. Rancic already almost said this, he should just make it clear.
Finally, the company needs a new "Web site":http://outbackcatering.com/default.html. The old one doesn't have good photography, has limited menus, and doesn't let the user book an event or even fill out a form to get a call-back. It's a pity Dell doesn't sell small-business sites but perhaps a new partner like Yahoo, which also offers a store component, could pay for inclusion on the show and could provide adequate sites with e-commerce and, here, event booking. Linendoll likes to show off photos on big screens, she could easily show off a new site built with Yahoo's tools.
Clearly, this company's problem comes down to marketing and only marketing. Hopefully things will turn around for them! These new methods should help.
h3. Harping on the Format Again
The disdain our team feels for the Outback owner and staff is palpable in this episode. In fact, it really made the first 5 minutes of the show difficult to watch. I wonder if part of the problem is that the show is a half hour, whereas competing shows are an hour long. While a _Tabatha's Salon Takeover_ or _Tim Gunn's Guide to Style_ has 20 minutes to create a crisis and tension, _We Mean Business_ has only 5-7. Is this show overplaying its hand and showing too many negative moments, too quickly, in an attempt to create drama? Or are the stars really that snotty?
We Mean Business: Jazyhairtag:wadearmstrong.com,2008://1.3542008-10-16T05:58:28Z2008-10-16T06:00:21Z
There's a fun new show on A&E - _We Mean Business_ a small business makeover show. With all the successful personal and home style makeover shows out there, it's nice to see one just for entrepreneurs. Since I had so much fun blogging about _American Inventor_ here a few years ago, I'm going to weekly summarize the latest _We Mean Business_ episode - and throw in an idea or two about what I think the entrepreneur *really* should do to make over their business.
h3. Briefly, the Show Format
_We Mean Business_ is hosted by Apprentice Season 1 winner "Bill Rancic":http://billrancic.com/, who brings his sidekicks - designer "Peter Gurski":http://www.linkedin.com/ppl/webprofile?action=gwp&id=20140621&authToken=rkX4&authType=name&trk=ppro_geturl&lnk=sign_in and "tech wizard" "Katie Linendoll":http://katielinendoll.com/biophotos.html. Every week, our three musketeers take on a new entrepreneur with a new struggling business, promising to turn things around in just 48 hours. Each of the musketeers fixes a specific part of the business - Rancic takes on finance and strategy, Gurski gives the company a makeover, and Linendoll shows how using technology can help.
h3. This Week's Episode
This week, _We Mean Business_ takes on "Jazyhair Salon":http://www.jazyhair.com/, just up the road from me in Sherman Oaks in Los Angeles's famous San Fernando Valley (of Valley Girl fame). Owner Jasmine Bell is deep in debt and not making money - they just don't have enough clients. She wants Jazyhair to be a beautiful, upscale salon, but she doesn't have either the high-end experience or a wide range of services.
The show starts, as always, with the "what's the problem here?" segment. The owner is defensive about criticism,[1] sure she knows best, and sure her salon is luxurious. The salon is filled with empty stations - without hairstylists to rent these chairs, they generate no income.
Rancic takes Bell out to a premium salon to learn what the standard of customer service is for her target audience. He and Gurski also strong-arm her into adding manicure and makeup stations to replace empty hairstyling chairs.
Gurski overhauls the salon's logo into something more contemporary and redecorates the location, greatly improving the look of the place. Unfortunately, the "more visible" logo is actually *smaller* than the original, making me worry if it's visible from the street.
Linendoll suggests putting the portfolios of every stylist on computers and making the whole salon wireless, with laptops at every station, for the customers who sit around for longer services such as color and weaves. Unfortunately, all we hear about are the brand names of the laptops and other things that Jazyhair gets (all Dell, by the way). We don't learn what they really do - and, in fact, all we see of the portfolio catalog are a few photos being scanned in and then the staff browsing them in Windows - not even a specialized application.
h3. What I Would Recommend
I was concerned that they pushed the idea to replace empty hairstyling chairs with makeup and manicure stations. While an empty salon does nobody any good, how many chairs does Bell need to have in operation to break even? If she needs the 10 chairs she started out with, and not the 7 chairs she ended up with, then she either needs to keep those chairs or somehow get more revenue from each customer. It would've been great to do a quick overview - with a graphic showing revenue per seat or something like that - to explain the economics of how many chairs it was worth having. Why can't we talk about the number of customers per day we need?
And speaking of the number of customers, Jasmine needs to understand how to market her salon. She should look into direct mail, because it's easy and surprisingly cheap to buy a list of potential customers, described by demographic values, and to send them a postcard. Jasmine could easily send one to everyone within a mile who meets the target income level, for instance, or to offices in high-end commercial space in the area. It is probably also inexpensive to advertise in several local magazines. At the end of the day, it's all about how many people she can get in the door, and, to do that, she needs to get the word out!
h3. And a Few Thoughts on the Show Itself
Right off the bat, the tech segment was a total flop - just Dell Dell Dell Dell. It seemed more of an ad than anything of value. I don't know if Linendoll knows her stuff, but she comes off only as a shill. A better approach would have been to find a local Value Added Reseller (VAR), a technology specialist who sells hardware and software and provides support for it. VARs can be great partners for small businesses, because most VARs specialize in a small range of industries. A good VAR knows all of the tools out there and can help an entrepreneur buy the right products and lean how to use them. What VAR wouldn't set everything up for free for 30 seconds on-camera to talk about how the technology matches with what Rancic and crew are doing, and mention the name of their company? For the products they got, Jasmine will probably make just as much money by selling them on eBay.
Linendoll wasn't the only weak player; Rancic was simply overpowered by Jasmine. He's not an aggressive extrovert a la Gordon Ramsay, and he doesn't need to be . A good parallel to Rancic is Tim Gunn, of Project Runway and Tim Gunn's Guide to Style. Smart and able to connect on a personal level, just like Rancic, Gunn doesn't own the room when he steps in. So he's paired with a perky, aggressive co-host who can do that job for him. Linendoll is certainly that perky and aggressive, and Gurski is aggressive and funny, so there's the talent there; they just need to be more equals and less Rancic's staff. That should increase the energy post-haste.
There are also some production weaknesses, possibly because the show is so new. Sound is frequently awful, on the level one would expect from a cheap consumer camcorder. That means a lot of statements are re-recorded in the studio and then edited into the final product; it's easy to tell where that's done and disconcerting to hear. The camerawork can be jerky at times. The overall effect is very "reality" but not as much "professional" as the producers might want.
Nonetheless, _We Mean Business_ is a ton of fun. I look forward to the rest of the season, and hope you all watch it too!
fn1. It's worth noting that these shows are cut for drama and not to be as accurate as possible at all times. Was Bell actually defensive throughout the whole process? Who knows! But that's the footage the editors, producers, and director decided to use. Heck would you want to watch a show in which everyone was reasonable all the time?
Good News: Bailout Voted Downtag:wadearmstrong.com,2008://1.3532008-09-30T03:12:48Z2008-09-30T20:38:48ZSo they voted down the bailout. Thank goodness! The last-offered plan was a bad one that would be expensive and not solve any problems over the long term. Let’s hope that there’s room for fast response to the crisis with...
So they voted down the bailout. Thank goodness! The last-offered plan was a bad one that would be expensive and not solve any problems over the long term. Let's hope that there's room for fast response to the crisis with a good, equitable, and market-based idea this time.
h3. What's Everybody So Worried About?
For the benefit of those readers who do not have Masters in Finance - fewer than you'd expect - I offer the following summary, which is almost completely not accurate but also not entirely wrong:
Banks are required to have a certain level of reserves - cash on hand - to loan money. In the US, banks need to have about 5% of the money they loan, by law. Investment banks and other non-bank lenders[1], and even mutual funds and money market funds, don't have the same requirement but they do have to keep enough cash on hand to cover what they expect investors will sell.
But cash isn't a good investment to hold - if you have inflation, then cash loses value every day, if only just a little. So most banks, etc., hold things that are supposed to be as good as cash - easily-valued stuff, like treasury bills or bonds that can be sold very quickly. Unfortunately a lot of these bonds and other securities are actually based on mortgages - and so now nobody knows what they're worth. So they're not like cash, so lenders can't lend. At the same time lot of organizations need a lot of cash to cover their immense losses in mortgage-backed securities. The result is what some have described as clogged financial plumbing. The question is: how serious is the clog, and how to unclog it?
h3. Paying Too Much for Too Little
The $700B was earmarked to enable the Treasury, directed by Secretary Paulson, to buy these mortgage-backed securities from the banks that hold them. Paulson made it clear that he planned to start spending his money straight away, immediately buying up the securities.
But why aren't the securities being sold? Just because they can't be precisely valued doesn't mean they're inherently unsellable - hard-to-value things are sold all the time. There *is* some price at which these securities will sell, just the holders aren't currently ready to go that low. But why should the government, in a free-market state, pay more than market price for these securities?
h3. Meet the New Bubble, Same as the Old Bubble
In the ordinary course of events, the lenders would just go bankrupt. This is painful for everyone. Managers are punished by humiliation; shareholders, who have supported management in their investments,[2] and who would have been the ones to reap the rewards of those investments, are punished by losing their investments; debtholders, who have loaned money even knowing their risks, are punished by losing a lot of the money they invested. People who make bad business choices are punished under the current system - which is as it should be. In fact, a lot of bad decisions are actual crimes - see, for instance, Enron. This reduces the incentive for making morally-dubious choices, such as refusing to repay a debt owed, stealing money, diverting money for one's own use, etc.
But, under the bailout plan, the punishments of bankruptcy would be removed. Our bailed-out lenders would not go bankrupt; executives would not be humiliated; investors will not lose their investments; debtholders will be repaid. Just they will all get the taxpayers money instead of the lender's.
So what does a reasonable executive of a lender do in the future? They take the risky investment, knowing it will either pay off well or their company will be bailed out if the investment fails. Do we really want to go through this bailout in the future, as well? Certainly not - so lender bankruptcy needs to be included in any solution to our liquidity problem.
h3. Economic vs. Financial Distress
The plaintive wail from the financial sector seems to be: if we don't fix this problem, it's the Great Depression all over again. But is it? The Great Depression had a major finance component - the famous stockbrokers diving from high windows after the crash - but it also had its roots in a global economic slowdown, with massive job losses and decline in demand from countries around the world.
Surprisingly enough, consumer demand has been consistent in the US, even to the point of driving a substantial portion of our domestic growth over the past decade. Exports are growing. While current job losses ought to be worrying anyone, the economy's fundamentals, to borrow a term from the McCain campaign, are fine.[3] Even better, economies around the world are growing. We aren't set up for another Great Depression here, no matter what happens to the financial sector, so long as the effect on the rest of the economy isn't that bad.
h3. Balance Sheet vs. Statement of Cash Flows
And that's the problem. Pundits go on about how many bad debts finance companies have on their balance sheets, but the problem isn't on the balance sheets of American companies - that is, the accounting measure of what the company owns and owes - but on these companies Statements of Cash Flows - the accounting report of where a company's cash goes.
And a lot of companies need cash. For instance, if GM makes a car, they have to pay for the parts and the labor involved in making that car pretty quickly, but that car may well sit on the dealer's lot for months before it's sold and cash comes into the company. They rely on finance companies to provide them with cash to pay for the parts and labor before they take your cash. If that source of cash dries up, then companies like GM can end up bankrupt, just because they can't afford to pay for their inputs during the time before they get cash from selling their products. So the finance companies' balance sheets may look bad, but it's really the statements of cash flow of ordinary companies that we need to worry about.
h3. So, Where's the Cash?
The Fannie Mae/Freddie Mac bailout was designed to save the cash flow by putting a stop to the drop in value of the mortgage-backed securities. That failed. The new rescue was designed to do the same thing. Again, this is just throwing good money after bad. To prevent an economic problem from replacing the current finance problem, we need to focus on the economic consequences. Many corporations, cities, and other organizations need to access short-term capital markets to survive; let's not work on saving sick finance companies that need to go, let's concentrate on saving healthy entities that wouldn't be in trouble if the finance companies weren't in trouble.
So, instead of spending $700B on bad loans, let's spend the money to guarantee - for a short time only, say, 30-60 days - good loans to good companies, so long as they're made to companies conforming to simple criteria and are made meeting other simple criteria of rate, payment options, and the like. Have Fannie and Freddie -- they're bailed out now, remember -- back for the same time any mortgage re-worked into a type that's affordable for the homeowner, with the caveat that there may be a lot of 50-year mortgages now. That would prevent an immediate collapse and provide time in which the finance industry could work itself out. And there's an incentive for strong finance companies to step in - with the new loans guaranteed, there's plenty of opportunity for profit there.
fn1. Investment Banks aren't regulated the same way banks are in the US. In fact, investment banks are not particularly regulated - it's mostly the securities (stocks, bonds, futures) they trade that are regulated. But derivatives - of which we've heard so much - are pretty much unregulated.
fn2. In theory, since shareholders can vote out management; in reality, many have valid concerns that shareholders are unable to influence management unless they're very rich and very patient or outrageously numerous.
fn3. Or something not entirely unlike fine.
What I Learned About Sales from a Timesharetag:wadearmstrong.com,2008://1.3522008-06-13T00:19:01Z2008-06-13T00:47:42ZI’ve been gone for a while; mostly it was too much work, launching a whole marketing campaign. But some of it was fun — I went to the Hawaiian island of Kauai on a good week’s vacation, paid for substantially...
I've been gone for a while; mostly it was too much work, launching a whole marketing campaign. But some of it was fun -- I went to the Hawaiian island of Kauai on a good week's vacation, paid for substantially by attending a timeshare presentation. Now that was an education on sales.
I have to assume that timeshares sell pretty darned well. With the big hotels playing in the sector, the standard sales presentations must have a solid conversion rate, despite the high price tag. And I'm always interested in learning sales tips, given how important sales is for my company. While I would have been surprised had we decided to buy (not out of the question, but unlikely), I figured I'd at least learn some good sales tricks.
!http://juniorbird.smugmug.com/photos/303651459_49o4W-M.jpg!
That said, I was not impressed with the presentation I received. The salesman made a number of mistakes, and the presentation structure itself was flawed. Fortunately, there were clear takeaways.
h3. Sales Mistakes
h4. Don't argue with the customer
When I suggested that there was a downside to paying for future vacations with current dollars, the salesman bristled and argued with me about the time value of money. A losing argument, as part of the standard MBA curriculum is a semester on the many ways to look at the value of a flow of money over time. I didn't feel like explaining NPV or any of the principles behind hedging to the salesman, and he didn't seem to want to learn; so we spent 20 minutes with him getting increasingly heated and me trying to change the subject. Not fun or convincing. Never assume that you can convince via argument in a sales situation, because your customer may know more than you. (Experienced negotiators may suggest that his aggressive behavior was a power play, which is of course possible, but that strikes me as a bad strategy against all but the weakest customers.)
!http://juniorbird.smugmug.com/photos/305730709_cLWRT-M.jpg!
h4. Don't get caught in a lie
After the presentation, we drove up to the lovely Waimea Canyon to see the island. While I understand that the salesman was uncomfortable with us leaving his property, if we enjoyed our drive -- only 2-3 hours roundtrip -- then we were more likely to be sold on Kauai. Rather than turning this into an opportunity, the salesman decided to scare us with stories of the sharp drop-off alongside the road, and how few guardrails there were along the canyon drive. Of course, the canyon drive was beautiful and very safe, with trees and guardrails around all the difficult parts. We loved the drive -- and thought the whole time about how we'd just been lied to.
!http://juniorbird.smugmug.com/photos/305734398_5SGYZ-M.jpg!
h4. Don't flim-flam
In sales, there's lying and there's flim-flam -- the tall tales that salesmen seem to be happy to tell. One of the most common is the third-party story, in which you assert that some trusted third party thinks that your product is a good deal, for just the reason that the customer is doubting it. In my case, my financial doubts were supposed to be allayed by a story about a risk management guru from Merrill Lynch who'd just bought a timeshare. Likely, this was old-fashioned flim-flammery: there was no such person. If there was, he should've given me a name, because consumers today need more specifics to build trust. I certainly assumed there was no such risk management customer.
!http://juniorbird.smugmug.com/photos/305728928_BMJYD-M.jpg!
h4. Don't hide who you are
Our presenter was an ex-military guy, which might've made his wooden bearing and aggression more palatable -- both I and my girlfriend have family in the military (and I'm pretty wooden, while she's quite aggressive). But he only mentioned his service once, offhandedly, and made no real effort to introduce himself to us as a person. A salesman is always better off being a person, with all his or her flaws, than a sales Cylon. A lot of sales books recommend telling the customer about yourself, if only to model the level of openness you want them to show to you; our salesman should've taken that lesson himself.
!http://juniorbird.smugmug.com/photos/302242187_B6TUc-M.jpg!
h3. Presentation Mistakes
h4. Don't sit behind a desk when you have a sunny beach just out the door
Seriously, it was a 90-minute presentation in a sales location with a beach 20 feet out the door, and the timeshare property 15 feet in the other direction. Why were we in a dark room behind a desk? Why did it take us an hour -- plus several specific objections that we couldn't even think about the deal without seeing what we were dealing about -- before we were taken to see a room. I remember when I did marketing for a premium apartment property that our salespeople always took people on a tour first -- to make them fall in love. We never even had that chance. Give your customer something to fall in love with, then play logic.
!http://juniorbird.smugmug.com/photos/302240084_dJ8Q3-M.jpg!
h4. Don't hide the price tag
Again, it took us about 70 minutes into the presentation to hear the price. There are two schools to telling the price: the one that says to hide it to not scare the customer, and the one that says to tell it to pre-qualify the customer. I'm in the latter group, because every salesperson's time is valuable -- the time you spend with one bad lead could just as easily be spent with a good one. Chuck the bad ones out quick.
!http://juniorbird.smugmug.com/photos/305724714_JbuqT-M.jpg!
All of this is fascinating to me, as we're now formalizing our sales process (that may be our incredible sales ace summer intern's job, actually). I figure, if we can be beating a top hotel chain at the sales game, then we must be headed in the right direction.
Can ABC Compete With Tivo By Making a Worse Product?tag:wadearmstrong.com,2008://1.3512008-02-28T05:35:25Z2008-03-01T05:41:25ZBloggers like Marc Andreessen, John Gruber, and TechDirt have heaped scorn upon ABC’s decidedly feature-retro on-demand service. With ads you can’t skip, ABC’s offering gets rid of what everybody seems to agree is the most wonderful feature of the DVR....
Bloggers like "Marc Andreessen":http://blog.pmarca.com/2008/02/abc-thinks-your.html, "John Gruber":http://daringfireball.net/linked/2008/february#mon-25-tivo, and "TechDirt":http://techdirt.com/articles/20080224/231143340.shtml have heaped scorn upon "ABC's decidedly feature-retro on-demand service":http://www.nytimes.com/2008/02/25/business/media/25abc.html?_r=1&ex=1361682000&en=23079907c62f6977&ei=5090&partner=rssuserland&emc=rss&oref=slogin. With ads you can't skip, ABC's offering gets rid of what everybody seems to agree is the most wonderful feature of the DVR. Is ABC stupid or brilliant? I'm almost tempted to argue the former -- this could be a clever business move.
So why would those people pay for a fancy commercial-skipping DVR? In _The Innovator's Dilemma_, Clayton Christensen suggests that most disruptive products -- those that break up existing ways of doing things and take over the world -- are cheap products that give _overserved_ consumers _less_ than they'd gotten before. Less of the things they didn't value, anyway.
Suppose Tivo is just too much for many consumers? ABC's offering could then be the lower-cost, feature-right offering that these people who don't care about skipping commercials could want. Of course, the catch is that these people aren't watching the commercials anyway, so preventing commercial skip will make no difference in the end. However, that prevention will satisfy ABC's existing business model, so at least nobody in a corner office will feel uncomfortable with it. That's good business, at least until the advertisers catch on!]]>
<![CDATA[Yahoosoft — Where does that $45B Number Come From?]]>tag:wadearmstrong.com,2008://1.3502008-02-02T19:05:40Z2008-02-02T19:14:10ZMicrosoft’s proposal to acquire Yahoo for $45 billion is both unexpected and widely-foreseen. Pundits have, for some time now, suggested that might be a reasonable course of action. But the purchase price is clearly aggressive, at $31/share for a stock...
Microsoft's proposal to acquire Yahoo for $45 billion is both unexpected and widely-foreseen. Pundits have, for some time now, "suggested that might be a reasonable course of action":http://watchmojo.com/web/blog/index.php/2007/04/18/yhoo-let-one-rip-and-everyone-in-the-room-heard-it/. But the purchase price is clearly aggressive, at $31/share for a stock that had closed at under $19 the day before. In fact, as "Jupiter's Michael Gartenberg puts it":http://weblogs.jupiterresearch.com/analysts/gartenberg/archives/2008/02/dear_yahoo_shar.html, this proposal looks more like Microsoft is saying "Dear Yahoo Shareholder: How would you like to get Yahoo's share price from six months ago back, tomorrow?" Where's the logic behind this price?
Easy GTD with Outlook and the Palm Treotag:wadearmstrong.com,2008://1.3492008-01-25T23:17:11Z2008-01-25T23:21:48ZAlmost no matter what you want to do with it, it’s tough to bend Outlook to your whims. This goes double if you follow the precepts of Getting Things Done. There’s the high-powered but somewhat obtuse GTD Outlook Add-in of...
Almost no matter what you want to do with it, it's tough to bend Outlook to your whims. This goes double if you follow the precepts of "Getting Things Done":http://amazon.com/exec/obidos/ASIN/0142000280/ref=nosim/wadearmstrong-20. There's the high-powered but somewhat obtuse "GTD Outlook Add-in":http://gtdsupport.netcentrics.com/buy/indexd.php of course, but that loses a lot of fidelity once you go to the ubiquitous smartphone. Because I can't be separated from my Treo, I set up my system to be low-fi, while still providing a reliable inbox and review set-up.
h3. Inbox
The first step, of course, is to get all of your info into Outlook -- that's the only way you'll trust it. I use "a series of keyboard commands":http://wadearmstrong.com/archives/productivity/boost_your_windows_productivity_with_launchy_and_autohotkey.php to capture all of my to-dos, contacts, and appointments instantaneously.
h3. Tasks vs. Appointments, and The Dashboard
David Allen makes a good point in Getting Things Done -- Appointments are for things that must happen at a specific time, tasks for things that can happen anytime. I find that adding one small wrinkle into this very sound approach really lets me take advantage of what Outlook offers: I have tasks associated with dates, too.
It makes sense to associate some tasks with dates -- take out the garbage on Thursday if pick-up is on Friday, pay Sales Tax on the 15th if the Board of Equalization expects it by the 20th -- so, some tasks get dates. But they don't get alarms, because, if you have to do them at a specific time, then they're appointments, not tasks.[1]
Dated tasks don't fall by the wayside, even without alarms. That's because Outlook provides a great dashboard for daily work: the Calendar. In the Calendar view, I turn on the TaskPad, and set TaskPad View for Active Tasks for Selected Days. By right-clicking on the TaskPad column headers, I set a Custom View that only shows with Due Dates that exist, and tasks that don't have the @Waiting or @Holding categories that I use to mark tasks that aren't active.[2]
!/images/outlookgtd/dashboard.gif!
The result? Every day, I can drop right into the Calendar and see what I have to do that particular day. If I get all that done, it's over to the Task view (more on that later). Most people live in the Inbox, but, if you're doing GTD right then that's empty! Living in the calendar helps make this compelling.
h3. The Power of Notes
Now, most tasks come from projects. I've tried a variety of ways to plan and track projects, but none has worked so well for me as just keeping them in the Notes. I have a template I use for every project:
!/images/outlookgtd/project.gif!
Note that every project has clear objectives -- always useful for focusing thought. Every project also has tasks. If the task has a "+" next to it, then that's a sign that task is actually a separate project, broken out in another note. While the exceedingly basic Notes tool in Outlook doesn't provide any linking or outlining tools, outlining projects like this is surprisingly effective -- and, best of all, makes it easy to create new projects and edit existing projects on my Treo.
!/images/outlookgtd/projects.gif!
By prefacing every project note with the word "Project:", I'm able to filter my notes to show only project plans, not other notes I've taken.
h3. Categories & Contexts
I like to break down my tasks, contacts, and appointments by category, so that I can know what part of my time goes to Sales, Marketing, Finance, HR, etc. Outlook is totally freeform with its categories so I use them for both categories and contexts. Contexts are simply categories named with the standard GTD-style "@"prefix. Setting the Tasks view to group tasks by category lets me view tasks by context or by category. I additionally get a lot of mileage by coloring each category distinctly -- although Outlook is very weak at this, with the limited set of colors it offers compared to similar tools on the Mac.
!/images/outlookgtd/tasksincontexts.gif!
Outlook lets you assign multiple categories to a task -- use that. As an added bonus, my Treo supports multiple categories to a task too, so I can use each category as a view to find the right task to do when I'm on the road. However, since the Treo doesn't support more than 12 categories altogether, I can't have a single category for each project. Instead, I preface the name of the task with the name of the project. That's not as convenient as a link inside the task, but it does link the task to the project in my mind.
h3. Filtering Tasks
The key to making the Tasks view work is to filter what it shows into useful views. Outlook fortunately has very powerful, if somewhat obtuse, filters.
!/images/outlookgtd/tasksfilter.gif!
This shows a basic filter that I use: All Active tasks. As I said in the Dashboard section, the calendar is for dated tasks; the Task view shows only undated tasks. So I make sure that all of the views there hide tasks with Due Dates. Then I have a lot of ways to break it down from there. Since I assign multiple categories to each task, I can filter my view in multiple ways. Hide @Holding and @Waiting tasks, or view them; hide personal (@Home) tasks; even see only the Sales tasks that I can do @Office. This way, when I finish my daily tasks and look into my Task list to pick something to do, I can break down my view to show me only what's relevant right now.
h3. The Review
The place where filtering really shines is in the Weekly Review. I filter my tasks to show me what I completed in the last week, to see if there are follow-ups I missed; to review @Waiting and @Holding tasks; and even to look at tasks that have been sitting on my to-do list for a long time, to double check if they're worth doing.
That's a little peek into my GTD world, and how Outlook helps me work with my Treo. Hopefully some of these simple techniques will help you too.
fn1. Obviously, I think of tasks as "do sometime during the day" activities, and appointments as "do a specific time in the day" activities. What about recurring tasks? Some day-related activities -- for instance, take out the Garbage every Thursday -- recur on a specific day; those, you can set a recurrence on a specific day for (Outlook has pretty powerful tools for this). But many other tasks -- grocery shopping -- don't have to be done on specific days. For these, set the task to recur a certain amount of time after completion of the previous task. For instance, I set my plant-watering task to recur every two days after I finished the task the last time. That way, if I get behind and don't water the plants, I don't have several incomplete watering tasks; there's just the one, and, when I check it off, it appears again two days from now, just when my plants need another drink.
fn2. @Waiting means it's waiting on someone else, @Holding means I've put off the task -- a worthwhile distinction to make. Of course, I have to sweep both in my weekly review.
Macworld 2008 and Apple's Strategytag:wadearmstrong.com,2008://1.3432008-01-18T07:20:58Z2008-01-18T07:26:08ZThere’s nothing like a Steve Jobs keynote address for a Mac fan like me. For a lot of years in the ’90s, the Macworld keynote was just a list of products; but, since Apple’s turn-of-the-century rebirth, it’s been a window...
There's nothing like a Steve Jobs keynote address for a Mac fan like me. For a lot of years in the '90s, the Macworld keynote was just a list of products; but, since Apple's turn-of-the-century rebirth, it's been a window on the company's emerging strategy. In Macworld after Macworld, Apple has revealed products that represented long bets -- the iPod, the iTunes Music Store, Apple TV, iWork -- and, if you look at Macworld with the same strategic eye as Jobs, there's indications of the future there.
h3. Channel Fever
If Jobs has learned anything from Apple's dominance of digital music, it's the power of controlling the sales channel. The iPod drives iTunes Music Store purchases drives Jobs's vision of how the industry should work. Jobs clearly wants to do the same thing for movies. Thus, the Apple TV and the newest generation of Apple TV, and thus iTunes movie rentals. This play has nothing to do with a Microsoftian concept of dominance of the living room; Apple won't own the space in the entertainment center next to the TV, they'll own the way into the TV.
The strategy behind this is compelling. Apple has played a key role in basically destroying the existing music industry with iTunes; for a well-capitalized, technically-skilled emerging player in an industry, like Apple in music, disruption is a good thing, almost regardless of where that disruption leads. If Apple can disrupt TV's ad-based model and movies' DVD-based model, then, as the owner of the emerging channel to the consumer, Apple will be in a position to build a new industry in which it can dominate.
This is why it's ok for the Apple TV to be feature-light and developing, and for iTunes to offer movies that may expire too soon: the journey of a thousand miles always has to begin with that one step.
h3. What Long Game?
That's why the MacBook Air appears so odd. The mini notebook is a new segment for Apple, but it's a very competitive one, and the MacBook Air looks ordinary. Why would Apple launch such an obvious dud?
One problem Apple has in notebook technology is that it doesn't really have a defined cutting-edge product. The MacBook needs to be affordable; the MacBook Pro needs to be powerful and capable. Neither can push the envelope if that means compromising on their basic value proposition. All the MacBook Air needs to be is style-forwards.
Strategically, Apple has a number of technical needs. More environmentally-friendly components would be a great PR boost. A good way to get the MacBook's price down is to simplify its design by putting the whole system on a single board. Dropping overall voltage will lead to less heat and longer battery life across the whole laptop range. Making Intel design a new package for its chip just for Apple sets the relationship on the footing Apple would prefer. Multitouch may eventually be a super-efficient, well-loved interface tool that effectively differentiates the Mac OS from Windows and Linux. But all of these changes are expensive and technically challenging at first -- then cheaper as volume ramps up. How to avoid implementing such changes all at once across a high-volume line of products that are critical to your bottom line? Launch a new product that will ship in smaller volumes!
Also, make no mistake: eliminating the DVD drive is part of the channel play. Jobs killed the floppy with the first iMac, and he's betting he can do the same with the DVD. And it's a smart strategy, because, if Blu-Ray and HD-DVD go nowhere, how else do you get your HD content? Oh, iTunes. Right.
h3. Whence the iPhone?
So the iPhone has been out for a bit now, with no update. Well, guess what, it doesn't need one! But there's a channel play here too: by making the maps' autolocation dependent on WiFi, Apple creates more demand for WiFi, which means more WiFi deployment, which means more places in which users can buy movies and TV on their iPhone.
Oh, and they save money by not having to build in a GPS receiver too. That's nifty.
h3. Time Capsule
Time Capsule hearkens back to the days in which Apple was in the computer business and nothing but. Back in those times, Apple had to continually roll out new features for its computers just to demonstrate its value as a company. It's become clear that the main selling point of Macs is that they Just Work. Time Machine and Time Capsule are great examples of that: you plug in, you get a backup, and your data is kept much more reliably than with those other operating systems. That's a good definition of just works. But it's funny and nostalgic to see this small, progressive improvement in computer user experience in the basket with the big strategic plays.
h3. So What's Next?
Reasonably enough, scuttlebutt has it that the next big event -- Apples World Wide Developer Conference -- will be iPhone-centric. It would make sense to announce that the phone is open to new software then, but that's all part of another long-term strategy we didn't see from Apple here at Macworld.
The channel strategy will continue to grow as Apple pushes the studios to allow more features. Longer rentals will come in the next year or so; Apple will also push for some simultaneous releases on iTunes, which will work great for many of the direct-to-DVD releases, such as the myriad American Pie sequels.
Apple will integrate full 3G networking via AT&T's upgraded network in the next version of the MacBook Air, just because Apple needs to start somewhere. And DVD drives will go away on all new Macs by this time next year: Apple will offer some sort of software purchasing and installation system, perhaps via Software Update. That'll show the Blu-Ray and HD-DVD people!
But AppleTV will never work with TV, because that's a different distribution channel. This means Apple won't buy Tivo; you heard it here first. Amazon, however...