Business Blog

Selecting Your Work At Home Business Opportunity

2005-01-08T20:37:00.000-08:00

I started looking for a viable work at home business opportunity back in 2001. It was a time consuming process, but in retrospect, I give myself a pat on the back every month when I cash the check from my home based business. The purpose of this article is to perhaps help others make their selection with a little less time and effort than I expended.

Having spent years running "bricks and mortar" type businesses, I didn't buy for one minute the heavily hyped, or worse yet, home business scam operations that touted the instant riches that could be achieved (often with little effort required). While doing research as to which business I would eventually pursue, this type of claim became an instant trigger to move on to check out some other "business opportunity".

I mean, give us some credit, if those claims were close to being true, why would they share their "secret business formula" with us? They would just execute their "magic system" and in short order have made all the money that exists in the world... get real!

In the course of my investigations, a few other natural filters surfaced to help narrow down the realistic and legitimate home based business opportunities from among the numerous unfounded offers. Early on, I determined that the "get in on the ground floor" offers were essentially smoke. After all, if I wanted to take a chance on the lottery, I would have purchased a ticket. Because of my business management experience, it soon became clear to me that three of the primary factors that would influence my choice would be:

*successful longevity (how long has this company been successfully doing business?)

*reasonable income expectations touted by the top management of the company offering the work from home opportunity.

*support systems and training resources available to help the participants succeed.

One thing that really struck home with me was a statement made by the founder of the company that I eventually selected for my home based business. It went something like the following:

"Hardly a day goes by that I don’t hear from an affiliate questioning why he or she is not seeing a big check yet. More times than not, the person asking hasn’t even been involved for more than 90 days and is only barely beginning to even understand how the whole system works. And frankly, even if the number was six months, it’s still much too early to be expecting a significant income stream to have developed.

I always say that if you’re not willing to give a business at least a year, don’t even bother getting involved. You need to understand that it takes time to get to know all the nuances of the compensation plan. It takes time to determine which products you want to lead with. It takes time to develop a game plan. It takes time to figure out what marketing activities deliver the biggest bang for the buck. Anything worthwhile takes sustained effort. If you’re not thinking long term, you’ve set yourself up for failure."

To sum it up, the selection process should focus on reality (there is no "magic" in home based businesses) and reject any so-called "home based business opportunities" that seem too good to be true.

Kirk Bannerman operates a successful home based business and resides in California. For more details, visit his website at http://business-at-home.us

Vicarious and Limited Liability

2005-01-06T18:20:00.000-08:00

Call me crazy, but the idea that society is willing to impose liability on one party for the acts of another is fascinating to me. Of course, it isn't just that we are willing to do this, but rather trying to figure out when we are willing to do this. Today, while I was substitute teaching for a colleague in Business Organizations, I discussed a recent New Jersey case in which a "rogue" law firm partner committed malpractice and stole client funds. In addition, this partner lied on a malpractice insurance application, and the insurance provider was attempting to rescind the policy. The case is complex, but it boiled down to a question of whether the malpractice insurance provider should be bound to a policy that was issued based on a misrepresentation by the rogue partner. On the one hand, this seems like a simple question of agency law. Every partner is an agent of the partnership; therefore, the agent's actions are the partnership's actions; therefore, the partnership cannot be protected by the policy because it was obtained under false pretenses.

But the trial court in this case had an interesting take on this issue, concluding that we should not punish all of the partners by rescinding the policy when only one of the partners lied. This reasoning would result in the insurance company -- rather than the law firm partnership -- bearing the burden of the partner's wrongdoing. The possible responses to this are many. We might say that the "innocent" partners should be more careful in selecting their fellow partners. Or that they are not really so innocent because they should have been monitoring the rogue partner more closely. We might also argue that they received the benefit of the agency relationship and now they must bear the burden.

All of these are perfectly acceptable responses, and the appellate court seemed to embrace this line of reasoning, ruling that the policy should be rescinded. But then add this fact: the law firm partnership was a limited liability partnership. As a result of this decision, the insurance company is off the hook. And the innocent partner is exposed only to the extent that he had money invested in the partnership. If the obligation exceeds the partnerships assets -- which appears to have been true in this case -- the big loser will be the third party, who suffered a loss, but now has no possibility of full compensation.

All of this makes me wonder again about the interplay of vicarious liability and limited liability. Does our current allocation of burdens make sense? Something tells me it doesn't, but I need to do more work on this before I can be sure.

Social Entrepreneurship

2005-01-04T18:14:00.000-08:00

Everyone seems to be talking about "social entrepreneurship" (including me, now). The term has been around for some years, but it is still new enough that we feel the need to describe what it means. Most people distinguish social entrepreneurship from socially responsible governance, though the two are closely related. Here is an excerpt from a recent paper by Mary Gentile published by the Aspen Institute:

Social impact management [socially responsible governance], on the one hand, attends to the impacts of traditional business activity on its wider societal context, making visible the often unseen, uncounted or unreported consequences of business practice on a wider set of actors over a longer time frame than is usually examined. It looks at the costs and benefits imposed by business on the quality of life of those both within and outside the firm, such as wealth creation and distribution, skill and technology transfer, environmental impacts, human rights issues, working conditions, and so on.

Social enterprise [social entrepreneurship] initiatives, on the other hand, consider more effective and efficient ways of responding to existing societal needs—either through nonprofit organizations adopting traditional business methods or through partnerships between the private and the social sectors—without necessarily taking into consideration whether existing business practices are contributing to these needs in the first place.

Universities have started to focus on social entrepreneurship. For example, Stanford Business School has formed a Center for Social Innovation; Harvard Business School has an Initiative on Social Enterprise; Columbia Business School has a Social Enterprise Program; and the Fuqua School of Business (Duke) has a Center for the Advancement of Social Entrepreneurship. I am sure there are many others, but you get the idea. And there are certain to be more soon. Here at Wisconsin, several people are in the process of developing a program, so stay tuned for that.

Perhaps I am too cynical (the study and practice of law can induce cynicism), but it is hard for me to imagine that the world is going to become a dramatically different place because of the study of social entrepreneurship. Promoters of social entrepreneurship talk about "blurring the lines" between business and social organizations. Fuqua's Center illustrates the blurring with this example (among others): "homeless shelters are starting businesses to train and employ their residents." This would be funny if it weren't so sad. At least a quarter of all homeless are severely mentally ill. Many others are abused or addicted. They do not need job training. They need treatment!

The fundamental problem with any attempts to blend learning from business entrepreneurship with social entrepreneurship is that the goals are fundamentally different. Business entrepreneurs measure their success by market acceptance and wealth creation. Social entrepreneurs measure their success by accomplishing a mission. As noted by Greg Dees in his now classic description of social entrepreneurship:

Markets do not work as well for social entrepreneurs. In particular, markets do not do a good job of valuing social improvements, public goods and harms, and benefits for people who cannot afford to pay. These elements are often essential to social entrepreneurship. That is what makes it social entrepreneurship. As a result, it is much harder to determine whether a social entrepreneur is creating sufficient social value to justify the resources used in creating that value. The survival or growth of a social enterprise is not proof of its efficiency or effectiveness in improving social conditions. It is only a weak indicator, at best.

Can you say "fatal flaw"?

What's the deal with Contracts professors?

2005-01-03T18:19:00.000-08:00

Last year, when I first began teaching Contracts, I signed up for a listserv, the purpose of which is to discuss contract law. I am on a similar listserv for corporate law, but the activity level on the contracts list is much higher. Not only that, but the professors there spend much of their time dissecting twisted hypotheticals constructed for (or by) their first-year law students. By contrast, professors on the corporations listserv rarely use the list, and when they do, it is usually to discuss recent developments in corporate law.

Instead of thinking about the contract hypotheticals, I started wondering why contracts professors would be so much more interested in this sort of activity than corporations professors. Perhaps more people teach contracts, so that list gets more traffic? Perhaps contracts professors spend more time working out fundamental questions, while corporations professors build on that foundation? Perhaps contracts professors are smarter (or dumber?) than corporations professors? Maybe the contracts listserv has some participants who feed this type of discussion, but the corporations listserv doesn't? Hard to tell, but if anyone is listening, I would love to hear your theory.

Search Engines: The Life Blood of Internet-Based Home Businesses

2004-12-29T20:54:00.000-08:00

Anyone involved in an Internet-based home business will soon come to recognize the importance of search engine optimization as a vehicle to attract potential customers from the search engines.

Since the inception of Google in 1998, the popularity of using search engines has increased dramatically. Nielsen NetRatings reports that about 114.5 million Americans, or a whopping 39 percent of the US population, currently use search engines.

Through February of 2004, Yahoo and Microsoft's MSN ranked as the two favorite spots on the Internet with 87.3 million and 86.2 million unique monthly visitors, respectively, according to figures produced by Nielsen NetRatings.

Microsoft.com, ranked third, with 64.2 million visitors, but this figure is somewhat misleading because this site attracts much of its traffic by repairing flaws in the Windows operating system. Google was the fourth most popular site with 60.8 million visitors.

The market shares of MSN and Yahoo haven't changed much in the past three years while Google has emerged as a powerhouse without spending much of anything on advertising. Google's audience is now approximately six times larger than it was in early 2001, when it was the 26th most popular destination on the Internet.

As they vie for position, Google, Yahoo, and Microsoft plan to continue upgrading their search engine services - healthy competition that can only serve to improve the search experiences of Internet users in the future.

According to comScore Networks, an estimated 3.5 billion online searches are performed in the United States each month, making searching the second most popular online activity, ranking behind only e-mail.

In 2003, businesses spent an estimated $2 billion on advertising related to searches and some knowledgeable sources expect the search-related advertising market to triple during the next three years.

There are various search engine formats including natural search, pay for inclusion (PFI), pay per click (PPC), and hybrid approaches which combine both PFI and PPC characteristics. Because of the immense and growing popularity of search engines, their effective utilization is the life blood of Internet based home business.

Kirk Bannerman operates a successful home based business and resides in California. For more details, visit his website at http://business-at-home.us

Network Marketing Is A Relationship Business

2004-12-26T21:03:00.000-08:00

Heavily branded websites like amazon.com are household names and carry an implied trust with visitors. However, the vast majority of websites are not well known and are found and visited as a result of search engine searches. In these instances, the visitor is probably arriving at the website for the first time and human nature often dictates fear or suspicion of the unknown.

If someone is shopping around for the best price for a particular item, say a Cuisinart food processor, they would probably go to a site such as Ask Jeeves (at ask.com using the Smart Search for Products feature) and quickly obtain a list of sources and prices for the desired item. The "yes/no" purchase decision has already been made and it is simply a question of who to buy it from.

In the case of network marketing, it is of critical importance to build a sense of trust with your team members. Network marketing is very definitely a relationship business and each relationship typically starts out with two complete strangers sitting at their respective keyboards.

The team building aspect of network marketing is of vital importance to the success of each individual member and to the team as a whole. Two key elements of team building are trust and confidence and these factors play a very large role, particularly for new team members.

As a team leader, you need to be knowledgeable about the business (products, services, or whatever) and straight forward with answers to questions about the business as well as providing timely and thorough support to your team members. These actions will cement the relationship and build trust and confidence among your team members.

Kirk Bannerman operates a successful home based business and resides in California. For more details, visit his website at http://business-at-home.us

Advertising Your Home Business on a Budget

2003-07-12T08:12:00.000-07:00

When you are starting out in a new home business and no one knows who you are, one of the greatest challenges you will face is how to drum up new business.

If there were not people in your community or marketplace that you knew who needed your products or business services, you probably would not have started your home based business to begin with. But, once you have talked to those who you personally knew who needed your service or product, then your next task is to find others who will help keep your doors open.

Many businesses know that they must turn to advertising at some point in the future, but they hope that day will be long down the road. For some, this utopian concept will come to fruition. But for the rest of us in the real business world, we must come up with creative solutions for meeting our home business advertising needs while working within our budget.

Most businesses have a misconception about having to spend lots of money in order to advertise their home based business. When you start out, you honestly will not have much money available for advertising, and if you do, you should still spend it wisely.

Before you jump headfirst into the world of advertising, let me share some of the lessons I have learned concerning this most important topic.

Advertising your Home Based Business Lesson #1

It does not have to cost an arm and a leg to advertise your home business, unless you fail to plan and fail to test.

As much as is possible, you should always test your advertising. If you jump in and start dumping tons of money in to business advertising without first testing your advertising, you might find yourself broke and without sales at the end of the road. Most who commit this error write off their failure on the home business they chose or the economy or any of a hundred other excuses. But, if they are unwilling to take responsibility for their mistake, they will never learn from their mistake. Don't let this be you.

Advertising your Home Based Business Lesson #2

All testing should be done in blocks. If you begin to advertise simultaneously in newspapers, radio and television, how will you know which advertising is bringing people to your business? You won't. All you will know that something might be working, but you will not know what is actually doing the trick.

Even if you tell people in your advertising to tell you how they found you, my experience shows that fewer than 10% of the customers ever will tell you anything --- and those people who do may not even get the facts straight! You cannot rely on your customers to tell you what advertising is working for your work from home business. You must put in the extra effort to know for yourself.

Advertising your Home Based Business Lesson #3

Only when you have a proven and solid advertising portfolio should you venture to drop big bucks in an advertising campaign. Even then, you should be careful to keep further measurements to determine how much the maximum advantage of an ad would be. Sometimes you might be able to reach ten times as many people, but depending on the kind of media and other factors, the additional exposure will only generate twice as many sales. Keep your eye attuned to situations like this to get the most from your advertising dollars.

Advertising your Home Based Business Lesson #4

As Lesson #3 illustrates, sometimes your best advertising investment may actually cost you less money. When you are first starting out, whether you are running a home business or a business outside of your home, you need to be able to get people talking and thinking about your business.

If you are busy testing ads in media's such as the newspaper, magazines, radio, and television, you need to learn ways of promoting your business that do not require large cash expenditures. A few examples are:

· Word of Mouth
· Business Cards
· Press Releases
· Non-Primetime Ads on Radio and Television

Here is more information about each type of low-cost business advertising:

WORD OF MOUTH

This of course is the cheapest kind of advertising on the planet --- it does not cost you anything. Ask your customers if they know anyone who could also use your products or services. When they are happy with your offerings and service, they will be willing to tell you whom you can contact, and they will pass the word for you.

BUSINESS CARDS

You can usually pick up 500 business cards for about $20. When you do, hand them out. Do not give more than a couple of cards to each person. If they need more cards from you, they will ask.

Some people are known to network with others on a regular basis. Some of these people are also known to be always looking for an extra few bucks. With these people, you can suggest to them that if they write their name on the back of one of your business cards and the card is presented to you, then you will pay a referral fee to them. You do not have to offer much --- sometimes one dollar is enough. Look at your home business and your offerings and decide how much would be a good referral fee.

PRESS RELEASES

Press Releases are a good source for generating news about your home business. The business editor at your local newspaper is always on the lookout for a good business story to fill the business news section of the newspaper.

Of course, the business editor understands the economics of running a paper and is more inclined to run your story if you buy advertising in his/her publication, but will still print stories for special events and openings.

The important thing to remember about Press Releases is that it must be constructed in the form of a news story. Even if you are a sole proprietorship, quotes from you should be written in a third person format: John Doe said, "Your quote here."

A Press Release should pack the most important information at the beginning of the copy, and leave extra details towards the end.

You should always provide the reporter who gets the task a simple and easy way for him/her to contact you directly. Often the reporter will want to contact you to get details that will enhance their take on your story.

To learn more about creating Press Releases, you may check out Rusty Cawley's site: http://www.PRrainmaker.com/

NON-PRIMETIME ADS ON RADIO AND TELEVISION

Believe it or not, some of the best rates for radio and television are on the overnight and non-primetime venues. These target times are not a total waste as they can easily keep the infomercial people in business.

These off-hours are just less populated than the primetime hours.

Don't be afraid to check your local radio and television rates for non-primetime hours to see what bargains may exist. With television, primetime is 7pm to 10pm. With radio, primetime is 8am to 5pm. This sure leaves a whole lot of hours available to advertise your home business at discount rates!

IN CONCLUSION

When it comes down to it, there is a lot to understand about advertising, but when you have the basic knowledge down pat, everything will fall into place and bring more dollars to your bank account.

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Entrepreneurship in Unexpected Places

2003-07-11T18:08:00.000-07:00

I suppose if I had thought about it for a few seconds, I would have concluded that the desire for profit played some role in the invention of the printing press. On the other hand, my impoverished image of 15th Century Europe normally does not include much space for entrepreneurs. Then tonight, I stumbled across this passage in Alister McGrath's interesting history of the translation of the King James Bible:

The control of sections of society was slowly but surely shifting from the old patrician families to the entrepreneurs. The emerging breed of venture capitalists was looking for business opportunities.... Our story concerns one such opportunity -- the invention of printing. The financial backing of the new technology of printing was quickly identified as one of the surest ways to make money. Investment in printing technology became increasingly attractive on account of a major social change -- the rise in literacy. People began to read; someone had to produce the books they came to demand.

Despite the success of Gutenberg's methods, he did not make a fortune. It seems Gutenberg's "venture capitalist" (Johann Fust) sued to recover his investment and was rewarded with ownership of Gutenberg's press. The other problem for Gutenberg: No patents. Even though he had a head start, others soon caught up.

Best Business Magazines

2003-07-10T18:06:00.000-07:00

Inspired by this article http://www.chicagotribune.com/news/showcase/chi-0306120068jun12.story The 50 Best Magazines of 2003, I started thinking about the best business magazines.

Here is my Top 3: Fortune, Business Week, and Business 2.0. Fast Company deserves honorable mention. The Economist is also a great read, though it would be too limiting to call it a "business magazine." I wish The Red Herring were still publishing. Same with The Industry Standard. Other magazines aimed at entrepreneurs, like Inc. and Entrepreneur, are pretenders. One promising "newcomer": Capitalism Magazine.

The Value of a Venture Capitalist Time

2003-07-08T18:10:00.000-07:00

Warren Buffet is offering to have lunch with the highest bidder on eBay, with the proceeds going to the Glide Foundation, a San Francisco non profit serving the poor, hungry and homeless. (And, of course, Glide has its own Web site.) According to the New York Times, Buffet has done this twice before, and the lunches sold for $25,000 and $32,000, respectively. (As of this writing, the bidding on the next lunch stands at $20,600.)

I admire Buffet for this. He could easily write a check for much more than those amounts -- and he probably does -- but investing time is more meaningful. I once met with a venture capitalist who spent the first 10 minutes of our meeting telling me how valuable his time was. "My most valuable asset blah, blah, blah." What an arrogant bore!

When we value our own time too dearly, we are reluctant to give it away, even to family and friends. When I recognized this inclination in myself, many years ago, I stopped wearing a watch and threw away my day planner. That was a liberating experience. Although I have since acquired a PDA, I have learned to manage my time in a way that removes the "guilt" associated with spending time on people.

Dracula Land

2003-07-07T18:04:00.000-07:00

The Washington Post is reporting on the struggles to build a Dracula theme park in Romania. This project has been in the works for some time and has been haunted (sorry, couldn't resist) by several controversies, but the government is behind the project. The big obstacle appears to be lack of interest from investors:

The planned location in Snagov, an upscale lake resort near Bucharest, is close to the burial site of Vlad the Impaler, the real-life Romanian prince who inspired the Dracula myth. A feasibility study indicated that the park would likely earn millions of dollars in profits and attract hundreds of thousands of foreign tourists a year. However, a year after being launched, the project has become idle because no major private investor has come forward with the estimated $15.6 million needed to build the park. Last week, 8 percent of investors sold their shares.

Sounds like a good idea to me. Then again, I bought shares in Webvan.

Chicken Law

2003-07-05T17:42:00.000-07:00

During an otherwise tedious faculty meeting today, one of our most popular and entertaining professors, John Kidwell, analogized law to chicken. Every law school serves chicken, he said, but they use different seasonings. (Our preferences at Wisconsin run in the direction of the "law-in-action approach.")

This reminded me of a well-known and oft-cited law review article by my former dean, Jim Huffman, called Chicken Law in an Eggshell: Part III--A Dissenting Note, 16 Envtl. L. 761 (1986). In the article, he is dissenting to a symposium on anadromous fish and notes, "it is important to make it clear that the concern is for anadromous, not androgynous, fish. Although the way fish do it, they might just as well be androgynous. But let's face it--you see one salmon, you've seen them all."

He then offers a few observations about chickens and chicken law:

* "The chicken is neither androgynous nor anadromous. It mates the good old fashioned way and travels neither upstream nor downstream: it just hangs around the farmyard. But don't be deceived by its ordinary habits. You see one chicken; you want to see another."

* "Given the importance of the topic, it may surprise some readers to know that chicken law scholarship is embryonic at best. The reason is regretfully obvious. Who would have the nerve to sign his name to a discourse on chicken law? ... My hope is that future generations will think of me in relation to chicken law, the way scholars today think of Ulisse Aldrovandi in relation to the sociology of the chicken. Aldrovandi, it seems, was the first person since the Romans to write of the chicken without the prophyactic of a pseudonym. "

There's more where that came from.

Happy Birthday, America!

2003-07-04T18:01:00.000-07:00

I am an unabashed fan of the United States of America. The world has never seen a startup quite like this one, and several of the founders (particularly Franklin and Jefferson) belong in the Entrepreneurs Hall of Fame. So, Happy Birthday, America! From your favorite entrepreneurship blog ...

I love the '80s

2003-07-04T17:42:00.000-07:00

VH1 has a very entertaining show called I Love the 80s. Watching it makes me feel very old. In 1989, I worked as a summer associate in the Wilmington office of Skadden Arps, and the M&A boom was in full swing. It was an amazing experience. It seemed that every day brought a new deal or a new decision from the Delaware courts. I later signed on as a real associate, and that was not so amazing. (We'll leave those stories for another day.)

Business Week is now reporting a renewed interest in M&A for technology companies, spurred by Oracle's hostile bid for PeopleSoft. Our economy could use a measured dose of hostile takeovers, but don't get your hopes up. As stated in the article, "Don't expect an avalanche of deals overnight, though. Any significant rise in volume isn't likely to show up until late this year or early 2004."

The Biggest Biotech Company You've Never Heard Of

2003-07-03T17:41:00.000-07:00

Even casual observers of the biotech industry know about Amgen and Genentech, but how many have heard of Gilead? (As in "balm of Gilead"?) Get to know them. The FDA just approved Gilead's new anti-AIDS drug, Emtriva. That makes three FDA approvals in the past two years, which is lightening speed.

My dot-com experience

2003-07-01T17:44:00.000-07:00

All this talk about dot-coms has put me in the mood to reminisce ...

In the middle of the dot-com bubble, I was approached by the folks at TheLaw.com to become one of their academic columnists. (I was recommended by my good friend, Lydia Loren, who also took the leap and became a columnist.) After signing the "consulting agreement" and receiving my grant of stock options, I wrote one column and the company tanked. I don't think there was a correlation between my writing the column and the company running out of money, but that pretty well illustrates my luck as a business person. (Why do you think I became an academic?) Shortly thereafter, the company had a revival, attracting an investment from former-NYC Mayor Ed Koch, and it is still going today.

Dot-com Renaissance?

2003-06-30T17:45:00.000-07:00

Just after I made a negative comment about dot-coms (in my last post), The Wall Street Journal reported that some old friends -- Akamai, WebMD, and Monster -- are making a comeback. The fuel powering the comback? All of these dot-coms are attracting more traditional companies as customers. In the case of Monster, those traditional companies are paying for advertising, which should make any success more sustainable. While I will always have a soft spot for dot-coms ("thanks for the memories..."), I doubt we will see a period like the late 1990s for some time.

Google IPO

2003-05-28T17:32:00.000-07:00

Yesterday I wrote that I was skeptical about the possibility of Google prying open the IPO market. What I didn't explain was my reasoning: simply put, Google strikes me as a company that will not lead a new IPO boom, but will follow on the heels of other successful IPOs. (This is based on my "reading" of Eric Schmidt plus a smidgen of inside information.) I didn't realize that another high-profile technology company -- Crystal Decisions -- filed documents with the SEC last Friday. According to The Wall Street Journal, Crystal Decisions, Google, and SalesForce.com (it's nice to see that dot-coms have not been erased completely from the corporate landscape) are three companies that could start a new rounds of offerings.

Google

2003-05-27T17:33:00.000-07:00

Yesterday, I found this blog on Google! What an amazing search engine! Although I am not an early adopter of most technology, I was an early convert to Google and I remain an avid fan. Lately, I have been watching Google for another reason: wondering when the firm is going to take the IPO leap. Cnet reported on Sunday that Sergey Brin was pooh-poohing the idea at the PC Forum in Scottsdale. He gave all of the usual reasons, but take it from someone who has helped a number of companies to go public, the pros will soon outweighed the cons, and we will soon see a Google IPO. That said, I am skeptical that a Google IPO will trigger a raging bull market (a la Netscape in 1995), but the market seems poised to elevate, and Google could provide some much-needed fuel.

Venture Capital Comeback?

2003-05-25T18:03:00.000-07:00

The numbers do not show a revival of venture capital investment ... yet. Investments in the second quarter of 2003 reached their lowest level in five years, and the IPO market continues to disappoint. But there is some reason for optimism. Gains in the stock market and the filing of a registration statement by Crystal Decisions have spawned hope of an IPO revival. The Wall Street Journal recently quoted Steve Fisher of Draper Fisher Jurvetson as saying, "We are doing more deals in any single month than in the history of the firm." Of course, VCs are nothing if not great salesmen, so take their proclamations with a block of salt.

Cycling and Newspapers

2002-09-04T18:00:00.000-07:00

So what is it about cycling and newspapers? After writing that last post, it occurred to me that one of the most popular cycling events in the U.S. -- the RAGBRAI -- is sponsored by the The Des Moines Register. Once my children are old enough to ride along, we are going to make that ride.

When I read a story about the RAGBRAI recently, it showed pictures of Iowans on their porches watching the cyclists pass. The whole notion of cycling as a spectator sport is a bit silly, really. Unless you are driving alongside the cyclists (or watching a television picture by someone who is doing just that), the most you can see is a few seconds, perhaps a few minutes on a mountain stage. Still, people line up in Normandy and Cedar Rapids to see just that. Strange.

Strategy and Corporate Governance -- Part II

2002-09-02T17:36:00.000-07:00

Here is a thought prompted by my preparation for the Directors' Summit (see immediately below): if entrepreneurial firms have different strategic needs from other companies, should their corporate governance system also be different? Of course, privately held firms will necessarily be different from firms whose shares are publicly traded, but is corporate governance a "one size fits all" affair for publicly traded firms? My intuition tells me that there must be important differences among firms, but I don't think we have really confronted this issue as a regulatory matter. Stay tuned for more thoughts on this topic as things develop.

Strategy and Corporate Governance -- Part I

2002-09-01T17:34:00.000-07:00

Since last fall, I have been at the University of Wisconsin, working with a group called the Initiative for Studies in Technology Entrepreneurship (INSITE). They have quickly become some of my favorite people, and I am learning a lot about entrepreneurship.

Last week, Anne Miner, Mason Carpenter, and I met with representatives of the State of Wisconsin Investment Board (SWIB) to discuss their upcoming Directors' Summit. Mason and I will be doing a panel entitled, "Governance practices as strategic assets." Or something like that.

The main focus of the panel will be the relationship between corporate governance and corporate strategy. With all of the talk about monitoring in the wake of Enron, Worldcom, etc., we may have lost sight of the relationship between corporate governance and corporate strategy. My first paper as an academic was a study Kmart's decision to fire its then-CEO Joseph Antonini. While I am not sure that I still agree with everything I wrote there, I still think that shareholders should have a limited role in determining corporate strategy. I am afraid that all of the efforts to improve monitoring will result in more opportunities for shareholder mischief. And that would be a shame.

The Legacy of Benjamin Franklin

2002-08-29T17:59:00.000-07:00

Randall Kennedy appeared yesterday on what is quickly becoming my favorite radio talk show, On Point. The topic tonight was Walter Isaacson's new book, Benjamin Franklin: An American Life. Kennedy wanted to talk about Franklin's participation in the slave trade, but the guest host pressed Kennedy on another topic. Here is my rough transcription of the broadcast:

Host: Do you see something in Ben Franklin that still resonates today?

Kennedy: Sure. For one thing, he clearly was entrepreneurial. He was an entrepreneur himself, and he was a supporter of entrepreneurial values. That's certainly one of the central values in American life. And, indeed, American's have exported entrepreneurial values around the world.

By the way, the regular host of On Point is Tom Ashbrook, who wrote a nice book about his experience founding HomePortfolio.com, which still exists. Quite an accomplishment for any dot-com! The book is called The Leap, and prospective entrepreneurs -- especially those who are considering the possibility of leaving a stable job -- would be well advised to read it.

Rome on College Sports

2002-08-27T17:58:00.000-07:00

Jim Rome is certainly one of the funniest and insightful sports commentators around. His take yesterday on the jump to the Atlantic Coast Conference by the University of Miami and Virginia Tech: the college presidents are "corporate raiders and robber barons." No doubt!

All of this revolves around football, which at most schools is the only profitable sport. Here at the University of Wisconsin, men's basketball also turns a profit, but the money generated by football dwarfs that and allows the entire athletic department to operate in the black. It is also the only college sport that does not have a playoff championship. The Bowl Championship Series was designed to address that problem, but it is obviously flawed because it leaves too many good programs on the outside looking in. This is particularly frustrating to schools like BYU, Louisville, and Fresno State, all of which have high-quality programs but must continually try to convince top athletes to choose their programs over BCS schools. That is a tough sell.

Which brings us to the ACC. Great basketball conference, but basically a one-school (Florida State) football conference, despite up-and-coming programs at Maryland and Virginia. Until now. Miami and VT are football powers, and the ACC has certainly upgraded. Kirk Herbstreit thinks this is the beginning of a trend, but allowing the conferences to compete for the best football programs is crazy. Stability in this industry has value because we want all of the market participants to survive and prosper. Simply stated, the competition belongs on the field, not in the presidents' offices.

So who will step forward and tackle this problem? The obvious candidate is the NCAA, but NCAA President Myles Brand has been frustratingly reluctant to act. He appears to be pandering to the big schools. Some people are talking about antitrust, and Scott Cowen, the President of Tulane, is attempting to exert public pressure. The last time we went through this, when the BCS was created, Congress played the role of instigator.

My prediction: Congress will be called into action again before all of the dust settles. Congress already made a cameo appearance in the Big East-ACC controversy, and it will be back for a more pominent role in the sequels.