Jason Calacanis: “[OWS]…convince us your option is better.”

“You don’t need to convince the world that Wall Street is corrupt — we know that — you need to convince us that your option is better.”

Jason Calacanis delivered a real Zinger today in his email newsletter. If the above quote tickles your fancy, do yourself a favor and subscribe to his newsletter at: http://calacanis.com/

PS: I don’t think you’ll receive the latest newsletter when signing up, I might have to “secretly” post it here if you wish. Let me know: twitter/hanseich

Book Recommendation: Linchpin by Seth Godin

I’ve never really been star struck. As a sound guy I’ve met many stars, I’ve sat next to Shakira, was fortunate enough to work and hang out with Tom Cochrane, and many others. Until the moment when I had to clip a microphone to Seth Godins tie at a marketing conference about a year ago. Here I was, sharing a quiet moment with the man that had written “The Dip”, “Meatball Sunday” and “Tribes”. I wanted to say something smart, but nothing came out. So I just quietly went about my job.

In this book, Seth Godin has great new insights on how you should be completely and utterly outstanding at your job in your own rights.

Watch this quick book recommendation and hopefully you’ll give this book a shot. Let me know what you think about this book. Maybe we can share some thoughts about it. I almost didn’t read it, because I didn’t really agree with Seth in the beginning.

Choose a Future Path: “The harder, the better”

I’m currently in a state of choosing which path I would like to go in the future. I’ve started one company and shut it down. One reason that I decided to close it down was that I realized that there was nothing really new about it. Wooden toys exist, maybe not made in Canada and with that kind of respect for the environment, but in essence there was nothing really earth shaking about it. This does not mean that it is not a viable business. New plumbing business’ get started every day, new brands are created that are just a tiny variation of something that already exists. It also does not mean that these less earth shaking products/companies can not be very successful (ie: Innocent drinks in England)

I often talk to people that have “spontaneous” ideas of what kind of business I could start next or get into, but 99.9% of them are nothing that I’d like to get started. I hear the sentence “such and such makes very good money.” Often I have to dismiss the ideas. The reason? Too easy, not outrageous enough!

Here is one of the biggest indicators of what company, project or job I find to be worth giving a shot: how disruptive is the technology, system or company to current markets. The more disruptive, the better. The current status quo of whichever industry you are “attacking” will always try to downplay your idea, say that it is not possible to do what you want to do. I say, unless you get a lot of flack from the guys you are trying to play ball with, the better. This is probably also an indicator that you are probably on the right path.

Here are some examples of products that have disrupted previous systems:

  • the car to the “horse and buggy industry”
  • vonage to the traditional phone industry (or even one step further: skype)
  • emails to snail mail
  • online movies to DVD rental stores
  • (upcoming) electric cars to gas powered cars
  • (upcoming) alternative decentralized power generation to current power generation

I think you get my point. Getting into a disruptive industry will yield the best returns, but it is a hard path of rolling that big massive stone up the hill. Eventually it will get easier as it gets more mainstream, but for the beginning: the harder, the better.

What do you think about that? Please leave a comment.

PS: Also keep in mind, that eventually the technology that was so disruptive in the first place, will also be disrupted by new technology of the future, so be outrageous and think even further down the road.

Why Vinyl Sucks and You Know It!

“You can buy our latest record on vinyl at our merch booth… of course it comes with a free download of the songs in MP3 format.” Everyone wants to be a little bit of a connoisseur (What the Cuss? Why is it not spelled connaisseur in english?) these days and seems to know exactly that vinyl just sounds the best – only if it comes with the MP3 download though.

I recently sold my player and conquered my inner hipster. It was even a really good vintage model with a mint modern cartridge. All in all a great sounding thingy-ma-jiggy.

But really, who sits down these days, pulls out a great piece of vinyl, puts it on the platter, spins it up, pulls out the brush, cleans it, properly lands the needle in the groove and sinks into the musical sound scape of … whoever-is-big-this-nano-second.

I was just going to let this topic go by without ever saying anything, but it flared up in me again when I read a great article in “Hear the World“, while waiting to see my audiologist. The article was titled “MP3 or hi-fi? Is MP3 really destroying music, or is it the musicians themselves doing it?”. The article argued, that there is certainly nothing wrong with MP3’s (or AAC’s, the much better and newer format), but rather the musicians and producers and the music industry, which drives music to sound worse than ever. And here comes the best quote of the article: “Some high-end audio fans are more interested in mysticism than solid improvements in sound quality.” (Professor Karlheinz Brandenburg) Amen, brother! You hit it on the head.

Analog certainly has much more information than any digital format has (infinitely more in theory). I’m not going to argue that. Vinyl does have some limits though – you have to properly master the music to create a great groove, which BTW is probably what appeals to most people. The real problem is that music is mastered to be as loud as possible and has lost all dynamics, to stick out of the crowd. This has nothing to do with Vinyl or CD’s or MP3’s for that matter. The article puts it like this: “For example, amplify the sound of a bird chirping to the level of a passing truck.”

I’m pretty sure that there are a lot of vinyl records which sound totally amazing on great stereo rigs, but I can’t afford them. Sure a $50 record, on a $1000 player with a $500 cartridge, a $1000 pre-amp, with a nice $2000 amp and $4000 worth of great speakers sure sounds great (don’t forget those $1000 oxygen free pure silver cables). But I can’t afford it, and I’m pretty sure that most of you can’t either, and never actually want to spend this kind of money on a rig. (If I remember correctly n’s principle is that you have to spend 10 times more, to get 10% better sound, which will very quickly break the bank of the average music lover.)

So here is what I did. I figured out how I can consistently get the best sound, without cracks and pops, at the lowest price (I buy quite a few used CD’s at flea markets and even at Value Village). I just can’t beat the sound of a $3 CD vs. a $3 Vinyl record (which is very likely completely junk), with music that I absolutely love, through a half decent stereo. Most of my music is digitized (Apple lossless, or AAC 320kbps for the music that I’m not too fond of) and I use an Apple-TV to stream the music to my stereo. “Light pipe” (optical) to a neat little amp (Peachtree Decco with Tube Pre-Amp) to a great sounding set of speakers (B&W DM302) that don’t break the bank.

Now I can concentrate on just buying great music and enjoy it with the click of a remote. For a second I think about the guy that was rummaging through the used vinyl section at the flea market, just to find out at home that the record is totally wrecked by someone that did not clean it properly in the past and stored it in a sunny spot for decades. Just for a second though, because I almost missed the great lick of the Hammond Organ in Feist’s “Leisure Suite”. Who is enjoying the tunes now?

1931: “I’d put my money on sun and solar energy…”

“We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy โ€” sun, wind and tide. … I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”

โ€” Thomas Alva Edison talking to Henry Ford and Harvey Firestone in 1931

What a great insight 70 years ago. What have we done with this so far?

Owning a Business as an Introvert

“It appears to me that you are an introvert. How do you deal with that when running your own business?”

This question was asked to me at a recent entrepreneurial event, at our local library.

image by rionda

The answer I gave was relatively simple: “I am introvert. I’ve always been relatively shy about hooking up with other people. I’m aware that this is my personality and that it can be an issue in business. But I noticed in the past that every time I step out of my comfort zone good things happen. Also, being a bit more careful about throwing myself out there, generally prevented me from getting into business situations that are too risky [and not my nature].”

I’d like to elaborate on this topic a bit more and then rap it all up at the end with a great post from Steve Blank that I recently read.

Stick to yourself

I am an introvert, but that’s okay. I stick to it. I don’t think this really keeps me back from doing business. I might not be as “out there” during a networking event and working the room as Gary Vaynerchuk would. I am a bit more shy when I comes to cold calls and connecting with new people. I feel it every time I pick up the phone or introduce myself to someone new. In these situations, I keep reminding myself that my head will certainly not be cut off and the other person or party will most likely not even notice anything. Even if you are rejected, who cares? You just go on to the next person or situation.

I also make an effort to learn how to overcome this. Currently I hold a part time position as “sales rep” (trade broker with the charities division with Tradebank Canada) which is very much against my personality, but it teaches me how to deal with my feelings in the types of situations that I would naturally avoid.

Step out of your comfort zone

I use the feeling of shyness as an indicator that I’m about to step out of my comfort zone and into the zone where good things will happen. So I’m afraid about the step, but excited to know that good things will happen when I do this. Thinking about the good opportunities and possibilities that will open up on the other side encourage me to keep going.

It doesn’t hurt to be a bit “conservative”

Lets call it “conservative”, as in “not jumping the gun too fast”. Considering the consequences an action or decision might have before I do it, will make my business smarter and more secure and will most likely provide for a less bumpy ride. Just keep both extremes of this habit in mind: overdoing the thinking might stifle growth and slow you down, underdoing it will make you appear to be inconsequential.

What is actually important as an entrepreneur?

As an entrepreneur you will work in and on your business. The more the business grows, the more you will (and should) work on the business and not in it. You might eventually have someone else to deal with reaching out to others on a daily basis. Your job is it to recognize business opportunities and guide your business towards it.

“Entrepreneurs are artists”

Steve Blank recently posted a short video of how entrepreneurs are artists. Their art is how to create business’ out of all the different parts and opportunities out there.

See for yourself:

Don’t let your shyness or introverted personality keep you from realizing your dreams and business opportunities and start painting a beautiful business. Rather, embrace and use this trait to your advantage.

Eco Insanity vs. Realistic Environmentalism and Real Solutions

Do you know any eco freaks? A Prius driving friend that is always trying to find the next stainless steal lunch box, recycled doodiddy, solar powered toaster? Fast to point fingers at companies or products that are unsustainable, and choose products that at least appear green. They don’t waste a single sheet of paper without scribbling on absolutely every blank space. Your friend is now even fully carbon offset as well. (*)

I must confess that looking back, I did have an eco insane phase in my life. I’ve been a person with an environmentalists mindset all of my life because I love nature, which manifested itself very early on in my life. During my “eco insane” phase, I did things that in hind sight seem over the top and ineffective. Some things I’m rather embarrassed about, some that I would and will still do today.

My observation is that in general most of the changes done in our live styles only touch the surface of the issue, or they might seem environmentally friendly, but are only a continuation of the same over-consumption and destructive pattern, just now with an “eco” label. Humanity destroys the environment, and leaves great devastation behind. In nature we could classify this as behavior as parasitism: a parasite that feeds of its host until the host dies (and with it, also the parasite). In nature on the other hand, growth is generally encouraged and desired. Growth promotes a more healthy environment.

So what is actually wrong?

Most so called “greenies” are not looking at the big picture. The changes that are being done just skim the surface. Many “green” products are either just “green washed” or they attack the issue at the wrong end and not at the root. Our lives need to become more like what they were 300 years ago. Garbage back then was biodegradable and not the kind of garbage that would stay around for hundreds of years.

An old concept + new technology

In nature, waste products become food for the next generation. When a plant dies, or the leaves fall on the ground, they become fertile soil for more plants. This is exactly how we have to look at our production cycles. The book “Cradle to Cradle” is all about this concept. Rather than being eco-efficient, which is just a slower way to pollute the earth, process’ need to be eco-effective and biologically regenerative. Once a product has reached the end of its life cycle, it needs to be either simply safely composted with no harm to the environment or fully put back into the industrial material cycle, and fully reused again.

Landfills would be a thing of the past. Giant compost heaps would be the only garbage that would exist. Giant Hybrids, which “Cradle to Cradle” describes as landfills which consist of valuable industrial materials mixed with compostable matter, would be a thing of the past.

If a product actually promotes healthy environment, then why not consume as much of it as we need? It would mean that you are actually doing good by consuming it.

Two Examples of Products that are eco-effective

Climatex: A Textile made by Gessner AG in Switzerland. The documentary “Waste = Food” uses this company as an example of what the concept it all about. When they switched their production of textiles, which traditionally uses an enormous amount of toxic materials, from environmentally unsustainable and polluting process’ to creating fully compostable textiles, the waste water that was coming out of the plant, became cleaner than on the input side.

Calera’s Concrete: This product actually sequesters CO2 from the atmosphere. Rather than using regular concrete which uses a lot of energy to produce, why not use this product which benefits the environment. I’m sure that having a forest rather than a concrete drive way would be a better solution, but unfortunately we can’t live without this product anymore, so why feel bad when using this?

I’d like to encourage everyone to watch this documentary (I’m sure I have posted the link to it before).

For more detailed information, I would also highly recommend the book “Cradle to Cradle”

(*) What does the company actually do with the money they are happy to take from your friend? What does the company actually do with the money? Have you ever asked them? Shouldn’t it be used to actively get CO2 out of the air?

Lessons I Learned from a Failed Business Startup

As insignificant as Ukoonto might have been in the great scheme of things, there are many lessons that I learned from shutting it down.

Admitting that plans were not working out is hard, especially since starting a company always involves dreams and grand visions. So to give the venture some justification, I at least wanted to walk away with some lessons for the future.

Know your domain/market

When I started Ukoonto, a woodworking business that made wooden toys sold in stores across Canada, I had no idea about the toy business. I learned fast by observing what was going on around me. Some things really astounded me and some things I did were just common sense, but in general I was very ill prepared to some of the “unwritten” rules in the industry. Had I worked in this industry before or at least had guidance from someone that does, I might have been better prepared and been more agile to implement the necessary changes faster.

Domain knowledge also helps to know where your business is radically different from any other business’ in your field. I didn’t actually know that I was innovative in certain aspects of the business by just finding solutions to my problems on my own. I often heard from “old dogs” in the business what I could or could not do. It is very obviously intimidating when someone that has experience in the business tells you how things are to be done. I fell into some of the traps of “this is just how it needs to be done”, but I avoided others and never knew that they were set for me.

Here is a concrete example. I kept being asked about distribution and that I would obviously need distribution to make enough sales to survive. Distribution can become a complex net of logistics and you will loose a certain percentage of your profit during each step of its complexity. I never went down this road, because I always felt that I could just as easily throw my product in a box and use any of the shipping companies out there. Keeping my own simple distribution in house, I was able to save at least 20%. As it turns out, this is “revolutionary” in this business though. The old model is still that a manufacturer sells to a distributor, who sell to brick and mortar store, who then sells to the customer. As soon as you go down the rat hole of distribution, you will have a completely different set of issues to keep your company afloat. At the end of the day, you might funnel a lot more money through your company, but still keep the amount of profit as if you kept it simple stupid. In this era, you can go straight to the end customer and in my opinion it should definitely be done, at least in the early stages of your business, until you get the hang of how the big boys are doing it.

Keep very close track of your finances

I had to learn how to do my own book keeping, because I was not able to afford a professional to do the work for me. I obviously did all the mistakes under the sun, I was using the wrong accounting system, didn’t keep properly track of money in the beginning, didn’t understand crucial ratios of investments vs. income, and so on. My first advice is: talk to a good accountant and pay him for it! Set up a system that you can run, and that he can review when it comes to tax season. Doing your own book keeping also teaches you how to read your companies most important financial reports, which every company owner or CEO knows how to do.

The following are some concrete examples of what I mean by learning how to read your numbers.

There are certain standards in every business. One of them in retail sales is that you should be able to accept credit cards. “Really, how bad can those 3% fees to the financial institutions be?” Well, monthly fees and even low percentages of every sale, really ad up to large amounts at the end of the day. You will have to figure out if you loose more money by not selling to certain customers that want to use credit cards, or by just paying the fees.

It is very common in the toy business to present your products at trade shows, at which stores can discover your items. Show owners will promise you great returns on your investments. My investments in this field never paid off. I didn’t realize at first that show owners never cared about growing my business, which is what they would always say. They are just in the business of selling you space on their show floor, nothing else. They will pull out all the stops they can, to get you to fork over $2000 for your booth. This seems to be part of an old industry structure (BTW: even the biggest boys out there, like Mattel, have already pulled out of this system, they know how irrelevant this was to the success of their business). You are much better off to produce a similar experience online that store owners from all over the country can visit. $2000 will go much further this way. Obviously, there is no substitute for meeting someone in person, but you can use your creativity of how you can create the personal touch.

I always thought that shipping my product off to stores and then running after the money (sometimes for months on end) was twisted. When you go shopping, you pay and then you get the item. In wholesale, for some reason this model was turned upside down, you ship them your product and then get the money much later. This process can cost you a lot of money and time. If at all you can find a way to get paid before sending out your product, you will much better of. The best scenario would be “sell before you buy” which is not always possible, but you should keep that in mind.

Keeping your competition in mind is good, but don’t let them freak you out. You know best what is going on in your own company, and even though things might look great about your competitors and they might seem to be crushing you, you never know if they are just weeks away from shutting down. So look at your business and your customers and concentrate on making them happy and grow your business solidly. It is the only place that you have under control. You certainly don’t want to be spinning out of control because of what your competition does.

Business is about profit. Be it triple bottom line (people, planet, profit) or not, you need to make a profit after ALL your expenses, which include paying yourself. Paying yourself is an iffy topic for a small startup. You are “supposed to” put your blood sweat and tears into your company and hope everything goes well. “This is just the risk you take as an entrepreneur.” they say. After working years on your company andย  still not paying yourself adequately, you might have to reconsider just calling it a hobby. The business is supposed to be there to support you and not the other way around.

Things take time

There are no “make lots of money quick” schemes out there (not to mention “get rich quick”). I was running things as if I would be able to make a lot of money in no time. It takes a lot of time, until people catch up about your company with a great product. You have probably busted your back for years on end before reaching critical mass. The new generation of so called “entrepreneurs” today would rather relax their way into productivity, but that’s not how it works.

Jason Calacanis said on this podcast “Whether you dream small or big, you will be spending the same time on no matter what business you choose to start, so go big.” (I paraphrased, but you can call him on it). You will always be busting your back 120% of your time, so dream big and get started.

In my opinion, creating a company that leaves a legacy is the way to create real value. Founding companies just to flip them within a few years and hope to make a fast return, will set your eyes on the wrong goal. You can go for it (and many have done it), but I can only assume that it might leave you hanging empty at the end of the day.

Don’t overprice your (green and eco-friendly) products

Fortune Magazine (November 2009) had a great article about green products, and whether people are ready to pay more for them. As it turns out, the general population is okay with paying about 10% more for (so called) green products. Understand that it is crucial to find out as much as you can about your market and its pricing. It’s a very complicated topic and it has made or broken many great companies and CEO’s. I won’t be able to offer any real advice on this; all I can say, people do watch the dollar. They want value for what they pay, and that is the bottom line. The general population is in it for themselves and not for others (even buying green products generally makes them feel better about themselves, they might not actually care about the environment). Keep in mind, what people say they will pay for a product is not necessarily what they will actually do. Only actual sales will tell you the truth.

A lot of “activists” (lets just call them that, you could also call them “mommy bloggers”), demand much faster and often unrealistic changes. Fact of the matter is that our economy is run by big monetary machines and fast changes are very unlikely. If you go into business, you are now part of the system. Don’t think that you are in some kind of bubble and the economy does not affect you. The fastest changes, whether for the good or for the worse, still happen when investors and share holders can walk away with more money in their pockets.

Good artists copy, great artists steal. (Picasso)

Be smart. Be alert of what other business’ do, especially in other domains that you are not involved in, and try to use that knowledge. Don’t just blatantly copy someone’s business model, chances are you won’t be able to make it work anyways. Steal little ideas and make them yours. Creatively implement certain aspects of other business’ into yours. You will most likely walk away a winner.

Just get started

In the summer of 2007, I went camping with family. One day we ventured out to go swimming. There were really high (for my taste at least) cliffs to jump off of. Naturally we wanted to get up there and jump, but once you get up there and look down, you’ll probably change your mind very fast. Most likely, you will start discussing, why you should or should not jump. Some will say to do it, some will tell you not to jump. It takes some courage to actually jump and the longer you wait, the more courage you will need. I learned two things from that experience: 1.) Just do it! Once I landed in the water, I forgot what all the fuss was all about in the first place. 2.) Don’t always listen to what everyone tells you. Make up your own mind and then just go for it.

As an aspiring business man, you will never achieve your vision and dreams, if you don’t make the first step and jump! There is no alternative to actually starting a business and learning how it is to run it (and screw up). If you are planning to start something, but are never getting out of the planning stages, make your first step. No one actually cares if you scew up, so just get it going. Statistically, you will screw up your first few ventures, so the faster you get that over with, the better. You will never be able to plan for everything that will happen, so use your brain and make the first step!

Learn more about starting your own company from these great sources:
Steve Blank
(Entrepreneurship: Nature vs. Nurture)
Jason Calacanis (sign up for the “Jason Nation Newsletter”)
E-myth blog

Great books to read:
The Dip
Get Smarter
The E-Myth

I have not read this book myself, but I’m pretty sure this might be very helpful (hint hint, I’d love this as a gift ๐Ÿ™‚ )


Shut it down

In case you notice this little blip at the end, when you see that there is no way out of your situation and that you are in a dead end business, bring up the courage to shut it down. This is a very hard step and a long process, (it took me months just to properly shut down a very small business) but stand up like a man (sorry ladies, I think you don’t need this advice, you are much smarter than us men) and call it for what it is and shut it down. You know exactly when throwing more money at the problem will not fix it. One tip from the book “The Dip”: “Quit before you Start. An assignment: Write it down. Write down under what circumstances you’re willing to quit. And when. And then stick with it.” Quitting doesn’t make you a looser. Winners quit all the time. “They just quit the right stuff at the right time.”

Book Recommendation: The Total Money Makeover by Dave Ramsey

This is a quick book recommendation for Dave Ramsey’s “The Total Money Makeoever”, a plan for financial fitness. It gives you a very practical plan on how to get out of debt and stay out of debt, and start saving for retirement in dignity.

I lik it a lot, because it is very practical and encouraging, with many testimonies of people who have gotten out of large sums of debt and started saving for retirement, generally within the time span of 5 years.

The plan is simple and very usable, although not always easy to execute, since it requires “gazelle like focus” (as Dave Ramsey calls it) to get out of debt as fast as you can.

Strongly recommended. Even if you are in perfect financial shape, you probably know some people that would benefit from this book.

Please also head over to Dave Ramsey’s website, which gives you lots of tips (and an actual outline of the plan as well).

Normal is Broke, Be Weird! (Dave Ramsey)