TWEEN ENTREPRENEURS of BLAMtastic(R) HONORED by CREATIVE CHILD MAGAZINE and MOM365 for TOP PRODUCTS.
More congratulations to our friends at BLAMtastic(R) as they continue to fill their trophy case with prestigious national and international awards. Nice going! http://bit.ly/RPJVXQ
SHOULD WE BE FUNDING START UPS WITH PUBLIC FUNDS?
-B Wolford 10/04/2012
(ATTN: Prefer to Listen rather than read? Click here: http://bit.ly/PcI3vL )
I am a Capitalist! Born a Capitalist and will die a Capitalist. Every cell in my body is a Capitalist Cell!
I strongly believe new company formation and the principal of capital at risk is absolutely a fundamental cornerstone of past and future economic prosperity. Let’s hope nothing changes that.
I believe strongly in reaping the rewards of placing capital at risk when new companies create high-value products and services for their markets. I wish much financial reward and a future of low capital gains tax rates to those 60-70 hour per week, hard-working entrepreneurs who achieve overwhelming success. I observe many of them doing “Act Two” after their liquidity event from a successful venture—yes, many put their financial rewards right back into the capital pool.
I also strongly believe in the freedom of losing all your money in a failed venture. I’ll relegate the definition of “all your money” to each entrepreneur’s friends and family. ( I really cringe when I see a second mortgage on a home being used to capitalize a new business.) However, the freedom to place capital at risk in the pursuit of substantial rewards also carries with it the freedom to fail. I love Capitalism for both reasons. The strong need to survive and the weak need to fade away to free-up resources for the next round of strong ones.
My closest, most personal view to start up activity is in greater Atlanta, Georgia. This region has an impressive history of new company creation and some excellent success stories. The “rap” against Atlanta has been with regard to the availability of capital. In addition to some of the local Atlanta success stories are stories of companies who needed to move out of state to become visible and attract capital. In an era for which new job creation is a critical issue, these occurrences are understandably on the radar screen of business persons, citizens and politicians.
Many new, highly-publicized initiatives and events are being created. Increasing amounts of public funds are finding their way into support of new company formation and other start-up activities. Not to anyone’s surprise, the largest programs with the biggest price tag are at the Federal level. One recent example is SBIR: Small Business Innovation Research. I understand SBIR provided over $2 Billion in grants during 2010. Also, I understand foreign companies can receive SBIR grants if they have a nominal presence in the US—but that’s another blog for another day.
I observe state, county and local governments joining the start-up funding fray as they vie for creation of job growth in their respective locations.
Obviously small business loans with attractive terms have been helpful to start up companies who qualify. However, loaning money into a business sector with such high default rates seems to defy the definition of the word “loan”….. let’s face it, many are not “loans” but “grants”.
As previously stated, all the cells in my Capitalist body support the freedom of private capital to invest in as many or as few as their resources and patience can endure. However I am beginning to question the increasing number of photo-ops of politicians delivering public funds to these ventures. “We’re supporting the creation of new jobs”, is the predictable quote. As election dates grow closer, the amount of funds and number of so-called “job creating” vote-seeking photo ops we observe increase proportionately.
I applaud sincere efforts to create jobs by helping start-ups with some funding. However, I question the outcome. Let’s examine some facts. In the past it been proven and predictable (and no one questions the statistic) that 50% of new business creations will fail. Recently, several reputable publications have moved that statistic to a 75% failure rate. (I believe this reflects the high number of unemployed persons in transition who try to create success with their own new venture, but fail.)
Once again, no knocks against private money entities who invest into a system of such high failure rates, hoping the return on the winners will out-pace the losses of the failures. But, should public funds be placed into a system of such high failure? Are the so-called job-creating public funding activities really producing jobs or just photo ops before elections? Given the overwhelming dominance of “Tech” companies amongst start-ups, who need completion of software programming as their next step, I often wonder if their receipt of funding doesn’t create more jobs in Bangalore than in the local community.
Now here’s a suggestion. Although there is no clear line of demarcation and it’s not the intention to embark upon a battle of definitions, there is clearly a more effective option for business-building, job- creating activities where the use of public funds is an issue. I’ll use the term, “Accelerating Growth” companies. They are beyond start-up, have achieved proof-of-concept, have most if not all development completed, have real customers, real revenue and may or may not have reached profitability. They are the 25% survivors from the batch of new start ups three and four years ago. I know them. I work in this space. They know exactly what actions they need to take to ramp up their respective companies to the next level. They know the headcount and what job descriptions they would add tomorrow, if funding should become available. This seems to be a high-impact usage of public funds for job creation, however there are arguably less voters involved in this space than the high numbers of start-ups in the backgrounds of some photos I am viewing recently. I understand this.
Yes, some of these Accelerating Growth Companies will fail. But at a 50-75% rate? Hardly. Many have already survived the hardest years and are poised to staff-up and take their ventures to the next level.
I encourage public officials to closely examine and reflect upon the growth stage in new company evolution at which they are attempting to achieve job growth, and begin monitoring and supporting those efforts which truly lead to sustainable rates of job creation.
That’s my opinion. I sincerely welcome yours. Really, I would like to hear from you.
IRA NEIMARK, FORMER CEO OF BERGDORF GOODMAN….. Good stuff:
Outside of NYC retail circles most people have not heard of Ira Neimark, former CEO of Bergdorf Goodman. Like Sidney Marcus at Neiman Marcus, Neimark was very impactful and totally involved in all the “detail of retail” for many years. We can all learn from him. I like his comment on focus groups in the following article: http://on.wsj.com/vXkCaI
PUBLIC DOMAIN VERSUS PROTECTED, “OWNED” WORDS–this is rather scary:
But of course the word “entrepreneur” is in the public domain, right? WRONG!!: I wonder what word is next: Another “must read” brought to you by BBR…..
IN THE FUTURE PEOPLE WON’T READ
By Bernie Wolford, President of Buckingham Associates, LLC
January 30,l 2012
In the future many people simply will not read. For many the future is “now”.
What? How radical! How can I make such a statement?
Well, because I observe it, and quite frankly because I am part of it. Now let’s calibrate: There’s nothing like reading a good novel on a sandy beach during vacation; likewise, who hasn’t stayed awake far past bedtime to find out Who-Done-It when reading a James Patterson mystery. No, this article refers to all the other “stuff” senders ask us to read—printed text on paper, or in small fonts on websites, trying to gain our attention and provide us with information. Slowly, but surely, I see it disappearing.
It’s certainly generational. Under-Thirties receive information differently than Fifty-somethings. Under-Twenties, differently still. Does Madison Avenue really expect today’s teens to read their slick copy as they enter the workforce with increased purchasing power? To me, that would seem to be the equivalent of investing in a buggy-whip factory.
To the well-known Atlanta-based law firm who sends me, by snail-mail, an impressive eight-page glossy mini-magazine several times a year: “Thanks, but I don’t read it”, and I suspect I am not alone.
I examine my own information-receiving habits: It’s Bloomberg Television for business news in the morning (on my iPhone, by-the-way); TV for local news; CNN and Fox for national news; Bloomberg Radio driving to work; NPR for a break from the news; and on and on. Thanks to DriveSafe.ly my incoming email messages are converted from text to voice—I listen to email, I don’t read email. Then suddenly, as I go to a website for information, my world changes– I’m asked to sit patiently in front of a screen and read, and read and read. It’s like going back in time—I consciously, or even subconsciously, really want to receive information through audio and/or video formats. I’m increasingly impatient and turned-off by having to read.
Yes, for many the future is now. Many websites are replacing their tired, stale head shots and written verbiage with crisp, concise presentations using video and audio. Recently, I learned to use my voice-to-text software by watching a very well-designed and professionally-presented four minute video on the vendor’s website. I’m spoiled! I may never read a user’s manual again.
Time-shifting is also increasingly important. Like many busy persons, not only do I wish to receive information by audio and video means, but I need to receive it on my schedule…often not the sender’s schedule.
Finally is the topic of multi-tasking: How cool is it to quickly download several audio interviews of persons and topics of interest to me, onto my iPod, and listen as I hit golf balls on the driving range, or pull weeds from the flower beds. I do it regularly, filling my head with information I would not have otherwise received had reading been the only option.
• We must prepare for a time in which people won’t read
• For many the future is now
• Connect with me by audio or video or both—assume I won’t read your information
• Allow me to time-shift into a time period convenient for me
• Allow me to multi-task while I am receiving your information
That’s what will work for me in the future, and that’s what is working for me today.
I think I should make an audio or video recording of this Blog! Yep, I probably need to do that.
January 12, 2012:
To prime the pump on this page of Buckingham Business Review is a fascinating story from the medical field.
I love the proverbial “paradigm shifts”. Conventional wisdom is that medical procedures costing less than 20% of the going rate can’t be offered with the quality and outcomes we’ve come to expect……. Or can it? Enjoy this video recently brought to my attention by some friends…… (I would enjoy your comments, too): Where I will likely have my surgery (if necessary).