Emily Carr

Sunlight in the Forest, 1912

Firestone Group of Seven Collection

Ottawa Art Gallery

http://www.ottawaartgallery.ca/

Essays on Life, Entrepreneurship,

City Building and Development

Volume I

Dr. Bruce M. Firestone, B. Eng.-Civil, M. Eng.-Sci., Ph.D.

Founder, Ottawa Senators

Entrepreneur-in-Residence, School of Management, University of Ottawa

Adjunct Research Professor, School of Architecture, Carleton University

Realtor, Metro Suburban Realty Ltd.

Executive Director, Exploriem.org, Professional Entrepreneurs and Intrapreneurs Organization

Chair, Blue Heron Storage Corp, Manchester Development Corp., Villager Home Corp.

Contents

Section 1 …………………………………………..……. On Life

What is the Purpose of a National Economy? …/3

Section 2 ………………………………………..……..... On Entrepreneurship

Entrepreneurship and Intrapreneurship—The Basis for

Economic Development, Personal Freedom and Knowledge …/10

Entrepreneurship, Development and Sustainability …/24

Build and Hold—the Difference between Getting Rich and Being Wealthy …/47

Creditor Proofing …/53

Non Linear Selling …/78

What’s More Important? Good Execution or the Next Big Idea? …/79

Section 3 …………………………………………..…….. On City Building

Livable Cities Versus Mono Cultured Suburbs …/80

Why Realtors Should Increase Sale Prices …/112

Democratic Abuse- Getting Rid of the OMB is NOT the Answer …/114

Peggy Feltmate’s Policies …/116

Strength through Diversity …/118

Why Invest in Real Estate? …/121

Section 4 ……………………………………………..….. On Creativity

Measuring the Value of Design and Creativity—Value of a City’s Treescape …/139

Logic has its Limits …/148

Section 5 ………………………………………………… On Development Economics

Interview with Hernando De Soto …/153 Should the United Nations Recognize the Efforts of Entrepreneurs in

Alleviating Poverty and Creating Wealth by Establishing The International

Day of the Entrepreneur? …/155

Section 6 ……………………………………………..….. On Sports

Why Cheering for the Leafs In Ottawa, Calgary, Edmonton, Vancouver

and Montréal is … Unnatural …/157

New Jersey Stanley Cup Win 2002/2003 Season—

Probability Theory, Winning Percentages and Outcomes …/163

Degree of Difficulty …/167

Section 7 …………………………………………………. On Everything Else

Exceptions to the Rule Make Bad Law …/169 The Value of Education- A Case Study of the Perceived Value of An

Architecture Degree, Carleton University …/171 Should Canada and the USA Socialize more Leisure Time for their

Workers, Managers and Entrepreneurs? …/180

Section 1 …………………………………………..……. On Life

What is the Purpose of a National Economy?

Introduction

Now this is a BIG question that is tied into (at least, to my mind) to the even BIGGER question: What is the Purpose of Life?

Before we look at that, let’s try to enunciate what we most commonly think of as the purposes of a national economy. They are to provide: a) for the defence of the nation-state, b) for the health and education of its inhabitants, c) for the edification, entertainment and happiness of its citizens and d) for the furtherance of the nation-state in its endless competition with other nation-states.

Now these goals are not universally held to be true in all nations but even in those that are governed by dictators they tend to pay lip-service to the middle two of these goals. As George Orwell informed us in 1984, the bigger the lie, the easier it is to believe. But for the purposes of this essay, let us assume they are an acceptable set of answers.

When I was a child of about 10 (circa the early 1960s), I was impressed by the vision of a future (circa the 21^st Century) that would allow people to work 12 hours a week and still enjoy a rich lifestyle. For a kid laboring in a private boarding school where the teachers were called Masters and they still caned and strapped their students, this sounded marvelous to me. A future filled with time to play, amazing!

Alas, it was too good to be true. But wait, why is it too good to be true? We have robots building cars, we have labour saving devices in the home, we have satellites in geo-synchronous orbit, we have space travel and space stations, we have universal, ‘free’ and instant communication (the Internet), we have clones, we have heart transplants, we have quantum teleportation, we have… all the things that were first speculated upon by science and science fiction writers in the 50s and 60s and yet everyone I know in 2005 is working incredible hours and not really getting any further ahead. Huh? What’s with that?

On Golden Lake

A few years ago, my family and I were at Red Pine Camp on Golden Lake. It was one of those fantastic Ontario summer days—the temperature was perfect, the humidity low and a huge weather front had arrived from 2,000 kilometres of prairie lands to the west of us.

I sat with my wife, Dawn on a high bluff overlooking the Lake—the sunlight reflecting off the surface of Golden Lake was indeed golden. The light patterns on the Lake were complex as the winds created wave forms that were endless in their variety. Hours passed, an entire day was spent watching this stupendous display of natural beauty.

During that time, I thought that it was highly probable that men and women had been coming to this particular bluff and enjoying this spectacle for at least the last 30,000 years. And that led me to think that for most of those generations (before the coming of the White Man), they had had enough time to actually enjoy it. I read that the average work week for a native Indian male in North America before the current era was about 12 hours a week—during which they were able to hunt enough game and provide their families with the necessities of life. The rest of the time, they could indulge themselves in: games, competitions, smoking unadulterated tobacco, communing with their gods, making love and war, playing with their children, trekking, telling stories, chewing peyote buttons, observing the natural world, perfecting their arts, teaching their kids, etc.

I also had time to reflect on a conversation I had with a worker at a resort in Jamaica some time earlier. He was responsible for towels at this particular resort—he managed the inventory of beach towels; he made sure that only resort patrons got them and he collected them from the beach after their use.

I got to know him a bit while I was staying at the resort and one day he asked me: “Mr. Firestone, who has the better life? You or me? I work 25 hours a week; I do a fine job, my boss likes me and I meet nice people. I get good tips and I still have time to smoke the Ganja, listen to music and make love to my woman. How many hours a week do you work?”

You have to ask yourself the question, if we accept the four purposes of our national economy as described above, how come it isn’t producing these kinds of results?

Socialization of Risk

In many developed nations, with the significant exception of the U.S., we socialize the risk of the health of the population—i.e., we provide national medical care for all citizens. Now we know that there are something like 45 million Americans who do not have any health coverage and, for many of them, getting sick means financial ruin and a much higher risk of death or impairment because they can not afford treatment or the most advanced treatment.

There is no nation on the planet that has ever held the power of the U.S. The U.S. is exporting its value system to every corner of the globe either through its legions of trans-national corporations, its cultural hegemony or its mighty armies.

One can not ignore the national priorities of a country like the United States because they set the de facto standard for the rest of the world.

Ask yourself the question: ‘If the U.S. decided to go to a six day work week (God forbid), what would your leaders do?”

In a relatively powerless nation-state like Canada, we would be sunk. A few years ago, one of Ottawa’s great companies (Newbridge, now owned by Alcatel) lost more than 10% of its value overnight because they dared to close on a national holiday in Canada when the U.S. was still at work. A few U.S. analysts tried to call the PR department to get an answer to some trivial question and when they couldn’t get an instant response, well, rumors started swirling around that Newbridge had gone out of business and then the rush was on to dump the stock. Now major publicly-traded companies in Canada have to keep a skeleton staff on at all times when the U.S. is at work lest it happen to them and, presto, they are forced to sell out to a larger competitor.

Socialization of Leisure

Now the Europeans have tried to take a middle path and, certainly, they have had more success than Canada could ever have in terms of pursuing their own independent policies* with regard to working hours and working conditions. France is famous for shutting down every August and German spa resorts are world-class; they know how to pamper the body.

(* Mind you, this has never stopped U.S.-based fund managers from constantly criticizing Euros for their ‘lazy’ ways despite the fact that the Euro zone has some of the highest productivity economies anywhere. It is my experience that the U.S. has this peculiar notion that unless you’re an American, you’re a dunce. I once dated a girl from NYC, a producer for a major television network, who, after finding out I was a Canadian, started talking s l o w e r to me. This occurred after a few dates and presumably finding out that I wasn’t a moron. I thought to myself: “Did my IQ suddenly drop or did she just find out I was a Canadian?”)

The Euros laugh at North Americans; they call us the ‘Work/Pajama People’. We work all day to come home at night to get immediately into our PJs so we can get to bed so we can get up the next day to do it all over again. Social life? Fun? Hobbies? Art? Play? Being with our Kids? Lifetime Learning? Hanging Out? Other interests? Extended Family? Bosom Buddies? Are you kidding, who has time for any of that?

It seems clear to me that there is no way we could ever have a national economy (in Canada and maybe everywhere) that truly puts the interests of its people first without first having an international agreement to that effect. It would be like the MAD (Mutually Assured Destruction) doctrine of the Cold War only it would apply to working hours and conditions—“I (name of country goes here) promise not to work myself and my co-workers to death trying to out compete and out do and out sell you if you (aka the United States of America) promise not to do the same to me.” The only difference this time would be that the doctrine would revolve around a calculus of life instead of the Strangelovian calculus of death that haunted my early childhood and all those who are middle aged today*. Hmm, that sounds somehow right to me.

(* We practiced preparing for nuclear Armageddon in the basement of our school—we were told to crouch down and put our heads between our legs. I remember hearing the wail of the early warning sirens, which were tied into NORAD, as these were tested. We would get 20 minutes warning of a nuclear attack. Plus we regularly got updates from the Doomsday Clock. Scientists set the hands on the clock—the closer to 11 it was, the higher the likelihood of nuclear war. The futility of it all, the expense, the never ending stupidity of all humans, it just boggles the mind.)

At its most primal, the urge to work ourselves to death doesn’t just come from our avarice to buy more stuff. It derives from a deep seated fear that if we don’t, our competitors will eat our lunch. If we don’t work hard, our boss will fire us, our chief competitor will steal our clients, our city and our country will fall behind other nations that we compete with, we will all lose our jobs because there are others out there willing to work even harder than we do and for less money, we won’t be able to provide all the necessities of life and educational opportunities for our children, we won’t be able to pay our bills, our spouses will leave us, …

Think about it for a minute—our primary motivations are greed and fear. And these are hugely powerful forces when it comes to humans. Is this the right way to run our lives—living in fear that we are going to get beaten out and greedy for everything we can grab lest one day we don’t have enough?

Standards

National or international standards have always made us wealthier. What’s the purpose of having a fax machine if every fax machine has its own standard and one machine can’t talk to another? What if all the fax machines in your city could talk to each other but not to one in Toronto? What if they could all talk to each other in every city in your nation-state but nowhere else?

Most of us have no idea how important these agreements are—we have standards that affect nearly every part of our global economy: we agree on the time of day (don’t laugh; it wasn’t that long ago, before the acceptance of GMT (Greenwich Mean Time), that scheduling am appointment with someone was subject to a great deal of clarification as to which time you were using); the calendar, voltage, spelling, driving (right handed or left handed), signalization (red for stop, green for go), table heights, measurement (length of a centimetre, etc.), temperature scales, operating systems, counter heights, work week, right handed screws, protocols for the telephone, television, fax, tape deck, VCR, IP (Internet Protocol), Browser, Email, DVDs, secure e-documents (basically, by default, Adobe PDFs), right click, left click and so on. English has become the international standard for the Internet, for technology, for business, for politics. Think about the economic advantages that derive from having one common language that everyone speaks. The alternative is Babel and we know what became of them…they couldn’t work together as a team and teamwork is perhaps uniquely important to the survival of the human species.

We might not like some of the standards that we have adopted but their economic benefits are enormous.

Now what if we agreed on a new international standard that people should only work 12 hours a week? Would that be possible to do? No, probably not but it might be possible to, say:

Agree on 12 days a year that would be set aside as universal, internationally sanctioned holiday days—one a month.

That would allow people to have one three day weekend per month and it would be a start in a new direction. Is it possible that better rested people might be more creative and more productive? It certainly is possible and would be worth finding out.

I know that I can not take any time off; I feel guilty if I do. Work ethic is so deeply ingrained in me that if I try to take a day off when other people are working, I feel lousy. I am sure that I am not alone in this—I need Big Brother to impose time off and make it a social goal, then I am fine with it.

Wouldn’t it be nice if one of our ‘leaders’ was worried about something other than, say, Bill Clinton’s ‘love’ life? That debate practically monopolized the U.S. Congress for two years. The national dialogue in most countries, it seems to me, is incredibly picayune. No one seems to talk much about issues that would really mean something to their citizens. What are we afraid of?

Why couldn’t our leaders simply agree to add the 12 new international holiday days to whatever national holidays they already have in their countries whether that is 6, 8, 10 or whatever number of days. Imagine 12 internationally recognized holiday days where everyone got to rest and, maybe, the planet got to rest too. Turn stuff off for 12 days each year. And while we’re are at it, turn off all the outdoor city lights too so our kids can see the night sky. God knows ‘Gaia’ (Mother Earth) needs a break from human activity.

The Purpose of Life

I wish I knew what the answer to this question is. The framers of the U.S. Constitution thought it was: Life, Liberty and the Pursuit of Happiness. In Canada, our philosophy is based on: Peace, Order and Good Government.

As a young man, I lived in Oz for seven years and I thought that the purpose of life then was sailing. (This was later confirmed for me when then Prime Minister, Bob Hawke, declared an impromptu national holiday in Australia the day after Alan Bond’s yacht wrestled the America’s Cup away from the damn Yankees, after more than 120 years of U.S. domination of the sport).

When I was a kid, I felt sure the purpose in life was to advance technology so we could go flying around the Solar System and then the Galaxy. Immediately after this phase, I felt really sure that the purpose in life was girls.

So what is the purpose of life? Maybe if we understood it better we might also find the answer to what we should be aiming to do with our national economies too. If the purpose of life is to sit on the beach and contemplate nature then perhaps we should only be doing just enough with our national economies to keep ourselves fed.

If we decided this was the right path, then we would need international agreement (an impossibility I realize) to implement a radical change like this. You can’t have one nation working feverishly piling up wealth, technology and weapons while others made up of slackers are contemplating the Tao because, if there is any one lesson that history shows us, is that nations and peoples that don’t keep up with their competitors, well, they simply cease to exist. So you need agreement before any one nation-state could even consider re-jigging national priorities to, say, give people more family time*.

(* International agreement is a practical impossibility; you can’t even get national agreement on anything like this. Look at what happened to the national consensus and provincial consensus in Canada concerning Sunday shopping. Whether you believe in a Sabbath day or not, Sunday was the day of rest by national consensus in Canada. Families spent time together because, in a way, they were forced to. Commercial interests pressed hard for decades to make Sunday just another shopping day, like any other. They had logical arguments on their side like: not everyone recognizes Sunday as a Sabbath day or some shops in designated tourist areas were allowed to be open while others a few metres away were not allowed to.

They also put forward plausible sounding arguments like: “Shouldn’t people be allowed to choose what they want to do and when they want to do it? People can always choose not to shop on Sunday but why should they take away the rights of others to shop if they want to.” The result of these campaigns is that Sunday shopping is now allowed practically everywhere in Canada.

It has proven to be disastrous, in my view. Now every day is just like every other day. Nothing is special anymore. There is no rest day. My youngest son, Matthew, works in a local retail store and they all are required to take shifts whenever management requires them to; unwillingness to take their turn may result in dismissal.

So if we can not come to agreement about what purposes the national economy should be put to and if we do not then socialize these goals by agreement and by implementing these agreement through standards, then they aren’t going to happen and the whole debate is just stale air coming out of our mouths anyway.)

Now if you examine the geological record, you can see the evidence of mass extinctions and selective extinctions. Mass extinctions seem to have occurred when external events like a comet impacting the earth happened. Selective extinctions are harder to explain but in all probability, those species disappeared because they could not adapt to new circumstances in their environment or because of the rise of new competitors that literally either ate their lunch or ate them for lunch.

It seems the height of hubris to think that this cannot happen to humans; in fact, it seems all too likely.

In the case of extinctions, the biological slate is being cleaned—and biological room is being made for other life forms to arise. The convenient extinction of the dinosaurs almost certainly made room for the rise of mammals and humanity with it too.

Arthur C. Clarke recognized this possibility in one of his early works Childhood’s End, where humanity perished in the process of giving rise to its successors. (Interestingly, he also predicted in this novel (in 1953, no less) that long distance would be at an end as of December 31^st, 1999. The Internet arrived just in time to see Mr. Clarke’s prediction come true.)

If all the works of humans must one day perish, what’s the point*? Maybe smoking Ganja and listening to music is the right path after all.

(* Existentialists embrace a philosophy that emphasizes the uniqueness and isolation of the individual experience in a hostile or indifferent universe. They regard human existence as unexplainable and stress freedom of choice and responsibility for the consequences of one’s acts.** This seems to neatly get around the need to explain things like: how did life begin? But if human consciousness, ‘I think therefore I am’, is unique, or at least, a very special event and not plentiful in the Universe, then it seems to me that we are here to ask the hard questions and not to embrace a philosophy, that even though it does have a moral underpinning, it refuses to go beyond a ‘rose is a rose’ explanation of the wonders on the unimaginably large and unimaginably old space we experience around us. Humans seem to need absolutes to tell right from wrong—everything can’t be relative; everything can’t be ‘Beautiful in its Own Way’ as a syrupy old song once crooned… There is too much evil in the world for that to be true.

But somehow I don’t think life is really like that. Humans have an innate desire to create new things and manipulate their environment. Our brains have grown so enormous that the only limit on their development is the diameter of the birth canal. There must be a point to it.

We have opposable thumbs that are just perfect for gripping tools. Tools and brains, brains and tools. That is a recipe for hard work—I realize it is a circular argument; we have big brains and tool using digits so we must be meant to use them and we have big brains and tool using digits because we have used them.

Life is a self organizing and powerful force. If you have ever been present when someone dies, you would realize how precious it is and how fiercely it is surrendered.

There are many unanswered BIG questions—what created the Universe, how did life begin, how do different species actually arise? No matter how hard we think about it, no one can truly understand the meaning of a Universe that is 15 billion years old. Can you imagine, for a minute, what it would be like to witness 1,642 billion sunrises and sunsets (the approximate age of our Solar System is 4 and ½ billion years)?

No matter how hard we try, no one can really grasp the idea that there was NOTHING before the Big Bang and that the Universe was created at that moment and the enormous energies unleashed at that moment in time were conjured up from the nothingness of nothing; not even the background noise of space since space and time are linked and without time (which began at the moment of the Big Bang), there can be no space. Huh?

No one really understands how you mix a bunch of chemicals and energy in a Petrie dish and, voila, you get self-replicating DNA*. No one can really explain how you breed generation after generation of cats and, somehow, through speciation, you get a dog. Sure, we understand that longer necked giraffes had a competitive advantage over their shorter necked cousins, so now all we see are the longer necked ones. I get that. But no matter how many times we breed giraffes, we aren’t ever going to produce a zebra.

(* In Bill Bryson’s excellent book, A Short History of Nearly Everything, he notes that in order to create proteins, you need to assemble amino acids (the building blocks of life) in a precise order. To produce collagen, a common protein, you require a 1,055 sequence molecule. The chance of this happening randomly is vanishingly small. For a protein with a more modest 200 sequence, the probability of this happening by itself is 1 in 10²⁶⁰, Bryson calculates (p. 288). That is a larger number than all the atoms in the Universe. Obviously, science has a great deal more explaining to do to solve the mystery of how life began. Wouldn’t it be remarkable if science found the answer—it is bound to be wonderful because it is so improbable.)

Speciation has been defined as occurring when isolated groups from a single species develop along differing evolutionary paths until finally they can no longer interbreed. This seems much too limited a theory to account for the incredible biological diversity we see around us and that has taken place on earth over geologic time.

And random mutation isn’t the answer either since an entire population needs to be created simultaneously so they can breed successfully.

Life is stubborn and I suspect that it could be quite widespread. Intelligent life might be much rarer. Exogenesis seems as likely a vector for the start of life on earth as anything else that I have read—for example, rocks have traveled from Mars to the Earth and, less frequently, from the Earth to Mars. Natural forces such as asteroid or comet impacts have thrown Mars rocks into orbit which have later intersected with Earth’s orbit and fallen to the surface. If there was life on Mars at one time, it’s already here in all probability—having hitched a ride on space debris.

I think we have little to fear from space borne plagues that we haven’t already seen at one time or another already.

So what is the purpose of life? I don’t know but it isn’t to work ourselves to death and it isn’t to feed our children into the maws of corporate giants to spit out ever more profit for the lucky 1% of the population that are equity lords (thanks to Neal Stephenson for coining this term in his novel, The Diamond Age) in our society. But I don’t think it is to just sit on a beach either, smoking weed. If we all did that, life would still be short and brutish—you’d be old, toothless and dead before 40. No thanks*.

There is something much more complicated, much more beautiful, much more dangerous going on. I just don’t know what it is.

(* If you are unsure about our use of at least some technology, I recommend you see the film, Quest for Fire, again. It shows what life is like for a primitive tribe that has lost its one source of fire; it’s not a pretty sight. Life without fire is not pleasant for the group. Fire is the basis for cooking, warmth, development of new technologies and for protection. It allows them to extend their day (because they can see at night.) It has subtle effects like allowing them to hang around the fire at night and begin to tell each other stories. They now can pass on information to their children and each other. They can entertain themselves. They can discover humor and leisure time. They can become more creative.

So anyway, they send out three hunters to find fire and bring it back to their cave. The three hunters have many adventures, the most important of which is their contact with a more advanced group that has mastered the art of making fire. If you think this skill is trivial, remember that in subsequent episodes of the hit TV series, Survivor, not one modern human could successfully make fire despite the fact that each of them knew, in advance, after watching the contestants in the first series, that this would be a huge advantage in the game to outwit and outplay their opponents and win a million dollars. Yet not one of the next 16, after more than two days of effort, could do it.)

Section 2 ………………………………………..……..... On Entrepreneurship

U Ottawa Homecoming Speech—September 16th, 2006

Entrepreneurship and Intrapreneurship—

The Basis for Economic Development, Personal Freedom and Knowledge

By Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., Ph.D., Entrepreneur-in-Residence, entrepreneur en résidence, University of Ottawa, Founder, Ottawa Senators

There are a dozen lessons for Students who want to be successful entrepreneurs or intrapreneurs highlighted in this speech today. They are:

A) Set goals for yourself and your team;

B) Be a self-starter;

C) Practice as hard as you play;

D) Focus on your goals;

E) Work hard;

F) Be flexible in how you achieve your goals/show some adaptability;

G) Bring some innovation to what you do;

H) Create a Personal Business for Life;

I) Protect your reputation and understand and apply ethics in all that you do;

J) Be prepared to deal with uncertainty and stress;

K) Execute well;

L) Take care of the business and it will take care of you and your family.

INTRODUCTION

Good morning and welcome. Bienvenue à tous.

I would like to thank Dean Kelly and the School of Management for giving me the opportunity to speak today at the 2006 Homecoming.

J’ai le grand honneur d’être le premier entrepreneur en résidence à l’Université d’Ottawa. J’ai demandé au doyen Kelly : « Qu’est-ce qu’un entrepreneur en résidence ? » Il m’a dit : « Je ne sais pas. Vous êtes le premier et vous devez inventer le poste. »

C’est parfait pour moi – toute ma vie, je n’ai jamais su ce qui m’attendait…

Je suis le fondateur des Sénateurs d’Ottawa et de presque soixante-dix entrepôts. J’ai construit plus de mille cinq cents maisons et plusieurs édifices commerciaux, notamment la Place Banque Scotia, où les Sénateurs d’Ottawa jouent.

I also have held utility and industrial design patents in electronics and aerodynamics. I teach, write and research not only in the field of entrepreneurship but also in the field of design economics, real estate development and architecture.

Now I tell my entrepreneurship students that focus is an important part of their future success and then they stare at me—much as you are doing now—and so I must tell them not to follow my example.

Question—what would you rather do? Race the downhill course before or after your chief rival? Well obviously, you would choose afterwards. Humans are capable of incredible feats when they focus and set goals. When you know the spilt times of the other skier, you might be amazed to see that your times are fractions of a second better on each part of the course.

When we brought the Senators to Ottawa, I set a very public goal that we would get 22 points that first season—I told the media, the players, the coaches, everyone that that was our goal for the season.

Now why did I choose 22 instead of say 30 or some other number? Because the worst ever team in NHL history (the 1972 Washington Capitals) got 21.

Does anyone here remember what our point total was in our first year? 24.

I believe that if you set your goals, if you visualize them, if you internalize them, if you can see yourself achieving them, you have a great opportunity to be successful. I suggest to all my student entrepreneurs that they write a simple equation everywhere—their homes, their offices, wherever they can see it:

N = ?

Where N is number of clients, customers, visitors, revenues, patients … Anything that measures the performance of their organizations. It seems simplistic but if everyone in your organization buys in to a single goal and all efforts are focused on achieving that, you will.

Notice I said set your goals; I haven’t said a word about planning how to get there. Plans are useful guides but they are like war plans—they change as soon as you come into contact with reality. So whether you are an entrepreneur or you are working for a large company or a Not-For-Profit organization be prepared to be flexible—life has a lot of surprises in store for you and you need to be able to change with the changes in your environment—adapt or perish.

If you remember Sigourney Weaver’s role as Ripley in the Alien series, she showed remarkable ability to make the best of her situation. The US Marine Corps unofficial motto is ‘Show Some Adaptability’.

WHO GETS THE PROMOTION

I am interested in applying entrepreneurship skills to large organizations as well. Not everyone wants to be an entrepreneur with all the risk, stress and responsibility that that entails. But many of my students learn how to apply those skills within larger organizations. Those people are called intrapreneurs.

Now suppose you and a colleague both go to your manager with a proposal. She says: “I have a great idea for a new product. If we invest $10 million in R & D, I can get the product out the door.”

You say: “I have a great idea for a new product and I have three pre-launch clients willing to invest $2.5 million each to help us with $10 million in R & D expenses. Plus they are willing to take the first six months of production.”

Now whose project gets the green light? AND WHO GETS THE PROMOTION?

When we won the NHL franchise for Ottawa in December 1990, what was the first thing we did?

a) Have an all night blow out party?

b) Come back from Florida (where the NHL’s Board of Governors met) to launch our first ever season ticket blitz?

Answer: BOTH. We partied then we got back into town the next day and sold $22 million in season tickets in cash in ten days.

An entrepreneur or intrapreneur is someone who can create $2 in revenue for every $1 that any fool could generate.

Most successful entrepreneurs start with (practically) nothing. If you had to choose three things from the following list, what would they be:

Launch clients and customers;
Access to VC financing;
A great, never-tried-before idea;
A good business model;
Sound execution;
Approved bank financing;
A good partner;
Access to government grants?

If you chose 1, 4 and 5, go to the head of the class. I tell my students, don’t waste your time pursing VC money and government grants. The best partnership is often none at all. Banks only lend you money if you don’t need it. Maybe the reason the never-tried-before idea has never been tried before is because it is a bad idea.

Entrepreneurs and intrapreneurs who start with nothing often build much stronger businesses, focused on real clients, real cashflow and real profits. If you have real clients and real cashflow, you will get financing today, not the other way round.

I like the ad where Canadian basketball superstar and League MVP Steve Nash says that if you want to be great, you need to practice the day after the best game of your life. I’ll bet Steve Jobs after launching the iPod spent very little time resting on his laurels.

And that is what you need to do: FOCUS, SET GOALS, PREPARE, WORD HARD, BE FLEXIBLE. The harder you work, the luckier you’ll get.

THE DIFFERENCE BETWEEN BEING WEALTHY AND BEING RICH

I really like comedian Chris Rock. Has anyone heard Chris Rock do his thing on wealth versus rich?

Well, according to Mr. Rock, Shaquille O’Neill, the basketball player for the Miami Heat, is RICH but the guy who signs his pay cheque (Micky Arison) is WEALTHY.

Chris Rock got it exactly right. You can get rich by winning the lottery, becoming a NBA Star, speculating, asset flipping, gambling, picking the right parents or prospecting for gold, diamonds, nickel, whatever, but you can’t become wealthy doing any of these things.

Wealth derives from control over a factor of production, a license, a franchise, a territory, a concession, some IP (Intellectual Property like the secret formula for Coca Cola or the 11 secret herbs and spices that the Colonel uses to make fried chicken), a competitive advantage, a comparative advantage, property ownership—anything that creates a sustainable, repeating and renewable income stream; it is your ‘pixie dust’—the magic that really makes your business work.

Now let’s just look at some numbers; let’s say someone controlled the early Beatles catalogue (say, someone like Michael Jackson). Mr. Jackson is reputed to have bought the catalogue in 1985 for $47m (but he lost his friendship with Paul McCartney along the way). By 1993, MJ’s company was reportedly earning $30m from it (albeit, MJ had added other songs by other artists by that time but let’s ignore this for the moment) and it was estimated to be worth $300m at that time. This yields a cap rate (capitalization rate) of 10, which is pretty typical for this type of privately held asset. No one knows what kind of income stream he gets from this now but it has a rumored value of $1 billion today. MJ still owns 50% of it, the balance is owned by Sony.

With a cap rate of 10 and given that MJ owns half of the catalogue, we can guess that MJ gets $50m a year in income from his ownership. Plus the Beatles are making a huge comeback—just ask my 14 year old daughter, Jessica, who only wants Beatles CDs for her birthday and knows just about every word to every tune the Beatles ever recorded. So it wouldn’t surprise me if MJ’s income is going up every year from this source. This is called wealth. However, let’s say that MJ is in need of some quick cash and sells his interest to Sony for $500m. Now MJ would be rich (for a while) from selling his interest in the catalogue but he would no longer be wealthy because he has lost the ability to renew his wealth every year by producing an income stream from control over this particular factor of production.

But what’s that you say? He could invest the proceeds in T-Bills, Muni Bonds and GICs (Guaranteed Investment Certificates). Sure he could, but they produce puny 1.7% to 4% rates of return. If MJ paid $100m in taxes, he would be left with $400m, which would give him an income stream of $6.8m to $16m a year with no inflation protection. I mean if MJ were to continue to control the catalogue, he could always increase the price (aka royalty) paid for each tune if inflation takes off and starts to bite into his revenue stream. But even ignoring inflation, why would MJ trade an income stream of $50m a year that makes him wealthy to become a remittance man getting $6.8m to $16m a year? MJ has already turned down offers to sell; presumably he understands the Chris Rock difference between becoming rich and being wealthy*.

(* Somehow I doubt whether Lisa Marie Presley has read this piece. In December 2004, it was announced that Lisa had sold her father’s image and name as well as 85% of Elvis Presley Enterprises Inc. to Robert Sillerman-controlled SFX Entertainment for a reported $100 million, which included some stock in a new SFX controlled business. So not only does Lisa no longer own, control and direct a valuable franchise (her father’s estate, which brought in $45 million last year), she didn’t even get all her compensation in the form of CASH. As any entrepreneur knows, cash is KING. (Pardon the pun, Elvis). Now compare that with J.K. Rowling’s absolute and tight control over her creation (the Harry Potter series)—not only the publishing rights but also the film rights and other media rights as well. It has made her the richest woman in the U.K., worth more the Queen).

Did you know that many, maybe most, lottery winners blow their entire wad in less than five years? By that point, their spouses have left them, they are alienated from their old friends, they have got a whole new set of ‘friends’ who are only around while the money lasts and they don’t even have their old job to go back to. Many of them have picked up nasty habits along the way like taking drugs. It’s absolutely amazing how many of them end up in bankruptcy. They are much worse off for their ‘good fortune’.

PERSONAL BUSINESS FOR LIFE, PB4L

For the last few months, I have become increasingly certain that people in the 21^st Century are going to need what I can only call a Personal Business. It seems to me that there are so many changes in the local, national and global economy going on and so many things can and do go wrong, that it might not be a bad idea after all to have a fallback position.

You know that I have been stressing to you how important it is to have a Personal Web Site for life—a place where you can collect your personal IP over your lifetime and career and one day, maybe, you can find a way to make money from it too—while you are lying on a beach.

But something else has struck me recently—just how many people have little sideline hobbies, gadgets, gizmos ... micro businesses really that make a bit of money. It also struck me that this could be a highly useful thing to have.

Let me give you an example. I recently met with Richard Rutkowski is a former Kanata City Councilor.

Richard is an intriguing person—he is very sure of himself, a good marketer, a good promoter and a sure handed politician—prepared to make the time investment in being a City Councilor (which is like a 24/7 J.O.B.).

I asked Richard what he does between political jobs and, sure enough, he hauls out this cute little magazine called The Best of Kanata. Now this is really low tech—businesses advertise in it, so that is one revenue stream for Richard. It costs about $600 for a half page and there are lots of pages. Then, people buy these things for 20 bucks and in the back of the magazine, there is a 'member's card' about the size of a credit card, which entitles them to 10% off at all stores and services featured in the book.

When I did a Google search, the only mention I got was: http://www.ncf.ca/gcuc/food.html

So, Richard hasn't even bothered with a web site. (The Kanata Food Cupboard sells the book for 20 bucks and keeps 15).

Well, this is a pretty simple business and folks advertise in it like crazy because they like Richard and it works for them and it is pretty inexpensive.

Richard sells 5,000 copies of the thing, so you can figure out for yourself the economics pretty easily.

There have got to be a zillion of these kinds of ideas. Do you know what I told Richard: "NEVER, NEVER sell this thing—it is like a sinecure, a franchise, a license, a concession ... it is your 'pixie dust' forever."

It is low tech and low intensity to manage this particular micro business and it is a kind of concession because it is so local, so focused and Richard is so well known locally that everyone who is anyone in the 'urban village' that is Kanata is going to be in it.

So while I have told you to create businesses through entrepreneurship that will provide you with more value than if you just had a J.O.B., maybe there is a more subtle message here that I could provide you.

Maybe, we should each have one micro business that we hang onto for life—that never gets shared with anyone, no partners, never is pledged to a Bank for a loan and, thus, something that we can fall back on in troubled times.

It would be pretty cool if every man, woman and child on the planet each had a Personal Business for Life (PB4L) that stayed with us throughout our lives and, if things get messed up, well, we have (as my late father, Professor O. J. Firestone, would say): “a fallback position” or “an iron reserve”. My father lived through two World Wars and he really understood the need for both.

CHINA AND INDIA—ENTREPRENEURSHIP IS THE KEY TO WEALTH CREATION

How did China and India become the great success stories of the last quarter century? Hundreds of millions of people in both countries now enjoy a lifestyle unimaginable just one generation ago. Was it because of wise government plans, a great leap forward engineered by central planners or a new set of five year plans issued by state edict? None of the above.

It was the unleashing of their entrepreneur class along with freer financial markets, better education systems and access to international trade that largely powered this economic miracle.

Thousands of people in China and India independently pursuing their own objectives (directed only by Adam Smith's Invisible Hand) alleviated poverty and created wealth. Governments in those countries deserve credit for setting some of the pre-conditions for economic take-off and for not getting in the way of progress. It is an example for other developing nations to follow.

INDIVIDUALS COUNT

Imaginez ce que serait chacune de nos communautés sans les entrepreneurs. Les entrepreneurs prennent de grands risques pour créer de nouvelles entreprises, et juste un petit nombre d’entrepreneurs peuvent avoir un impact important sur leur communauté locale. À Ottawa, par exemple, une poignée d’entrepreneurs comme Terry Matthews, Mike Cowpland et Mike Potter ont créé des milliers d’emplois directement ou indirectement en démarrant des entreprises comme Mitel, Cognos et Newbridge (qui appartient maintenant à Alcatel). Les communautés locales doivent appuyer les efforts de leurs entrepreneurs pour que les avantages économiques qu’ils apportent soient durables.

MORAL UNDERPINNINGS

While it is true that the entrepreneur is largely following his or her own self interest, there is a moral underpinning for this: one's first obligation to society is to take care of yourself and your family so as not to become a burden on society. Once that is achieved, humans who are uniquely interdependent, have a further obligation to take of their fellow human.

MICRO ENTREPRENEURS

I read an interesting article in the Globe and Mail (by Luke Harding of the Guardian News Service, February 10, 2003) about micro entrepreneurship in Kalmandhai, India.

There, slum dwellers erected latrines—one for men and one for women and a third for children only. Charging just one cent per use, they built a profitable business using only $900 USD in start-up capital advanced to them by UK based WaterAid.

Who would have thought that you could make a successful business out of a latrine but that is apparently what the women of this village did. I was intrigued so I sat down and did a spreadsheet on it this morning and here is what I conjectured:

Village of Kalmandhai, India with assistance from WaterAid, UK

Cost of Construction of New Latrine
Men's $450 USD
Women's $450 USD
Children $0
Total $900 USD

Revenues Per Use $0.01 USD
Daily Use Men 300
Women 375
Children 400 free
Total Use 1,075
Total Paid Use 675
Total Daily Revenue $6.75 USD

Annual Revenue $2,463.75 USD

Maintenance 10% $90
Night Watchman 1 $450 $450
Cleaning Staff 3 $1,350

Net Revenues $573.75

Return on Investment 64% p.a.

So they achieved a (possible) 64% p.a. rate of return on this investment, which is impressive. Just as importantly, there are significant health benefits that accrue to these people from proper disposal of human wastes. Plus they generated additional activity including:

a. the construction of a shower block for traveling truck drivers that pass through the Village and for the villagers themselves (and more fees);
b. the use of their 'product' (from the latrines) in their herb garden (for self use and third party sales);
c. startup of a composting business;
d. money lending to women in other villages to start similar enterprises.

Think about the number of jobs they created-from a latrine! Give a human a fishing rod, not a fish.

If these ladies could create a thriving business from a $900 investment just imagine what privileged people like us, like you students here today—with all the advantages you have: great education, access to capital, free, civil societies and much more—can do.

TRUE JOB SECURITY

People often tell me that they are scared to become entrepreneurs. “Isn’t it safer just to get a pay cheque every two weeks?” Well, maybe.

But a friend of mine worked for the GOC (Government of Canada) doing post project reviews for 25 years. In the great downsizing in the 1990s, he was laid off! After sending out 500 résumés, he had a total of ZERO interviews. What kind of JOBS are available for a guy with a PhD in History who has done nothing but GOC work for 25 years? ZILCH.

So he came to me and asked me what to do. I knew he was not the kind of person to star his own business—he needed some kind of structure so I advised him to buy a franchise, He did. He bought a Subway and a couple of years later he bought another.

He took over a loser of a location but turned it around in less than 24 months using smart (guerrill