Magic From a Hat Inaugural Lecture Series 2000
Monday September 11, 2000
'Magic From a Hat' Inaugural Lecture Series 2000
Entrepreneurialist Culture- How to Bootstrap Yourself to Success
in the 21st Century
By: Dr. Bruce M. Firestone, Founder, Ottawa Senators Hockey Club, Chair, Hickling Capital Corporation, Adjunct Research Professor, School of Architecture, School of Business, Carleton University
e-mail: bmfirestone@hickling.ca
web: www.dramatispersonae.org
Introduction
Firstly, let me say that I am honoured to give the inaugural lecture in the new 'Magic From a Hat' School of Business Lecture series and to kick off another year with Professor John Callahan for students studying Small Business Management (Course 360) and Entrepreneurialist Culture (Course 491).
Later this year, you will be hearing from a terrific group of speakers including: Ward Yaternick, Senior Director with Business Objects ("Tips and Techniques of Launching a Softare start-up"), John Kelly, newly appointed CEO of Rebel.com ("Entrepreneurship- 30 years of Lesson"), David Luxton, from Ottawa Business Journal and Silicon Valley North ("Winning, in a World of Competing Business Models"), Cyril Leeder, a close friend and COO of the Corel Centre ("Location, Location, Location- How this Axiom Will Work for You for More than just Real Estate") and Randy Woods, President of Buystream.com and Carleton graduate ("Magic from a Hat- How to Take a Credit card Start-up to a Multimillion Dollar Success").
The name for this lecture series, 'Magic from a Hat' comes from Randy. His experience in taking non-linear creations from a state of over used credit cards to a multi million dollar buy-out is an example that: a) many of our business students will want to learn about and b) hopefully follow! It also demonstrates for us the huge opportunities in the New (and Old) economies and the fundamental difference between entrepreneurialist culture and 'getting a J.O.B.'
Here in the School of Business, we are training young minds to be top notch middle managers; some of you, a few, will be COOs, CFOs, CIOs, CTOs and still fewer will be Presidents, CEOs and Chair.
Well, the training to be an entrepreneur is different; it combines education, experience and luck with street smarts, desire and a willingness to change the rules of the game much as Butch Cassidy did when challenged for the leadership of the Hole-in-the-Wall gang. As his challenger discovered, 'there are no rules in a knife fight'.
The difference between an entrepreneur and a J.O.B. (as former B School graduate, Fred Carmosino refers to it) is that an entrepreneur is striving to create lasting value; value that is ultimately not dependent on the founder and his or her continued involvement. An entrepreneur is fundamentally different in his or her objectives; coincidentally, this motivation also leads to much higher payoffs too, a not inconsiderable incentive one would think.
The winning business plan that I saw last year in a local university competition was written by two talented students from this school. Their b-plan was a soundly based one; it described how they were going to build an accounting practice for NGOs and charitable, not-fot-profits and then sell it for a 'million' dollars within five years. There was only one problem- the assets of the proposed business went home every night. What exactly were they going to sell?
I suggested that they change the business model and create a niche business based on renting out (placing) junior accounting staff inside the not-for-profit corporations and institutions they deal with. They would then create value that was independent of themselves and would, as a result, have something to sell (i.e., a client roster and cashflow) after their five year plan was completed. Transactions Inc., a local Ottawa firm, does something like this now- they rent our junior accountants to busy executives to do personal bookeeping. It is a terrific service and a good business model too, I think.
Mental Map of The World
As you mature, you need to create for yourself a mental map of the way the world works. This will allow you to conduct what Einstein called 'thought experiments'. You can imagine being on Mars a lot faster than you can go there. Indeed, thoughts and imagination are faster than the speed of light.
Thought experiments can save you time and money and trouble because if you have an accurate map of the way the world works, you can test your hypotheses against your map quickly and efficiently.
Let me give you an example. When we brought back the Ottawa Senators in 1990, a team that had not played in the NHL since 1933, as part of our Grant of Franchise by the NHL, we were required to do a market survey. I am not a great believer in market studies. It seems to me that the only way to know if something is going to work in the real world (or the virtual one too), you need to do it.
That is what entrepreneurs do. They're like New York City Cops: "Bang, Bang, Bang. Stop!"
Well, our market study consultant asked folks in a telephone survey if they would buy season's tickets. They reported back to us that the Sens would be successful- we would be able to sell more than 100,000 season tickets based on the favorable results they had obtained in the poll. We dutifully sent on the study to the NHL office in NYC who were, I suppose, impressed with the depth of the market.
Common sense tells us that this conclusion is ridiculous. In Chicago, which is a fine old NHL town, they work hard to sell 15,000 season's tickets and if they don't, Bill Wirtz, the owner there, "tells 'em to hit the phones until they do."
Obviously, before an NHL team is awarded people answered that they would pay … $1,500, $2,000, … 'any amount of money to watch NHL hockey' in this town.
The modern economy is all about creating new options. Economic growth is accelerating in Canada and even more so in the USA. Why? The simple answer is the web.
Once computers started to communicate one with the other in a mass way beginning in 1994, they finally started to fulfill their destiny much as earlier waves of technological progress took many years or decades to achieve their potential (rail and electrification come to mind).
The New Economy is growing at a fantastic rate. In the last two quarters, the US economy's productivity numbers have been fantastic (5.3% and 5.5% at an annual rate); this, in the 40th quarter of the longest economic expansion ever.
The internet is eating a hole in the global economy and the USA is eating everyone's lunch. When the Ottawa Senators played their first ever game of the modern era on October 6, 1992, Don Holtby, General Manager of local radio station CFRA was listening by telephone to the play-by-play from his condo in Florida. Don told me that the $220 US for the three hour phone call was worth it (the Sens won). Today, of course, Don would listen using his PC and real audio over the net- marginal cost to CHUM and Don- zero! No matter how little a person earns in the third world, the web can do it faster and cheaper.
The US dollar is ascendant; the Euro is sinking, the C $ is 67 cents; the Australian and New Zealand currencies much worse.
Many people have the view: "More pie for you means less for me."
The folks fighting on Canada's east coast at Burnt Church over lobster quotas clearly believe this old economy saw and, maybe they are right.
But it is possible that they aren't. Jane Jacobs, a learned commentator on urban issues, feels certain that all economic growth derives from urban agglomerations- villages, towns and cities.
Economic growth derives from a multiplying of options, from specialization, from comparative advantage, from the development of standards and, in the new economy, from network effects, disintermediation and scalability.
Now let us go back in time to the land of Ugh, Nnn and Zll.
In the land before time, the family of Ugh lived by themselves in the savannahs. Ugh was an expert antelope hunter providing his family with four antelopes a month. His carving skills, however, are poor, producing only one flint knife per month. A mile away, the family of Nnn is hungrier- Nnn is a good flint knife producer, producing three flint knives per month but only bagging one antelope.
The families of Ugh and Nnn decide to co-locate to form a village, at first, for the protection of both. By co-locating and forming the first primitive village, they also open up the possibility of observing each other and co-operating and trading between the families.
The result is that after a few months, they decide that Nnn will concentrate on producing flint knives and Ugh will focus on hunting. The GDP of the two families before the co-location is five antelopes and four flint knives. After co-location and specialization, the GDP has increased to seven antelopes and six flint knives each month. This represents a phenomenal increase in the well being of the two families. So much so that this first village is producing goods surplus to their needs. This sets up the possibility of trading with a third family, the family of Zll, who are expert in producing textiles (animal skins) resulting in a further substantial increase in value for the emerging regional economy.
This simple example demonstrates why the 'more pie for me' doesn't necessarily mean less for you.
Ideas are not limited. They are for all intents and purposes infinite. There are no limits to human ingenuity.
Cisco is doing $650,000 US per employee per annum, a fantastic revenue number. Over 80% of their sales are booked over the net and we're not talking about an Amazon.com average order size of 30 bucks per click!
A comparable number for other companies in this industry is $250,000. Cisco's embrace of the web goes way beyond the front end sales effort; their internal processes and supply chain are all web enabled.
Specialization, comparative advantage, core competencies, web enabled, … these are some of the keys to success in the 'New Economy' and, except for the latter, maybe always have been.
When we brought back the Senators, we identified our core competencies- hockey management (although some observers might debate that with us, at least in the early days of our seven to twelve year hockey plan to win the Stanley Cup) and the managing of key commercial relationships. Everything else would be contracted out including: ticket sales (Ticketmaster), beer sales (Ogden), F & B (Ogden), security, catering (Palladium Catering), restaurants (Hard Rock, Marshy's), parking (United), radio (Chum), television (OH, RO, CTV Sportsnet, …).
The advice we got from the Montreal team was to do our own F & B. But surely Ogden knows a great deal more about hot dogs than the Sens do. We simplified the business; we can't be expert in all fields- afterall, it is tough enough to ice a quality, winning hockey team. Taking a cheque to the bank once per month from individual suppliers (actually, EFT), well, what can be simpler?
When teams do their own television (or Leagues like MLB a few years back) or provide the F & B service, costs tend to rise. Indeed, costs always tend to rise to the level of revenues and this is especially true in businesses that you are not familiar with. Better to receive a known percentage of revenues.
The key commercial relationships that the Sens retained include the relationship with season ticket holders and corporate sponsors. This is a core competency and can not be delegated.
I have not yet made up my mind about whether the operation of the Sens web site should be part of their core competencies. It certainly could play a significant role in managing key commercial relationships but the existing www.ottawasenators.com web site has a long way to go before it lives up to its potential. Exploitation of internet rights is the next great cash cow for sports businesses, if they can figure out what that means and how to do it.
The Web Changes Everything
Network effects are happening around us at a fantastic pace.
The value of a network is said to increase as the square of the number of users.
What is the value of a 'network' with only one fax machine? Obviously, zero.
Network effects rely on the development of one universal standard. Fax machines have to be able to talk to other fax machines.
The web itself is the best example of network effects; the value of the web today is proportional to the square of the number of world wide users, now estimated at 320 million. The value is pretty large- it is proportional to 320 squared times 10 to the power of 12 or 102.4 quintillions. My expectation is that the web will have over two billion users within seven years.
What is amazing is that in Canada over the last year, the fastest growth rate of web use has been in lower income groups (30% growth) and amongst girls ages 9 to 14. This bodes well for our nation- incomes will rise fastest amongst the web-enabled portion of our population. Giving their children access to the web and the vast window on a new world that it represents are hugely important to their futures. It can help to bring future generations out of poverty.
First, the web was all about the US communications infrastructure surviving a nuclear holocaust (hence, the web's origin as a DARPA initiative in the 60s). Second, it was a text based medium for researchers to send data back and forth from distant shores (70s and 80s). Then it was all about mass communication of data and graphics and automation (the 90s). Now it is about relationships (check out www.sissyfight.com, a site I was introduced to by my three daughters ages 9, 11 and 12 where kids, playing in a cyber playground, can adopt new identities, call each other names, make Survivor-type alliances and find friends too), scalability, work reversal. Pretty soon, it's going to be all about broadband communications (you know that's true when Terry Matthews, founder of Mitel and Newbridge, leaves Alcatel to join newly renamed March Networks to specialize in broadband applications) and, ultimately, humans will interface with ('goggle' into) cyberspace and interact with the environment there in the same way that nature has developed for the human interface with the natural world (RL) over the last three or four million years (check out Neal Stephenson's Snow Crash for a glimpse of the 'metaverse' of the near future as 35 of the top 50 tech CEOs have already done).
Faxes, email, instant messaging, VHS/Beta, even the net itself depends on a single universal standard before network effects can yield the types of increases in value and productivity we have seen and will see. It is ridiculous that MSN Messenger, icq, AOL's Instant Messenger and others can't talk to each other.
North America will fall behind Europe if we don't get our act together and develop one standard for wireless broadband soon.
John Roth, the genius behind Nortel's amazing comeback, speaks of web tone; making the web as reliable as the dial tone and making it ubiquitous. That means the web is there, always available, in the ether; i.e., we're talking about broadband wireless.
How dumb can it be that our office faxes, PCs, Macs, printers, photocopiers, Palm Pilots and Blackberrys, Digital Cameras, Video cams, VCRs, data projectors, webcams, Voice Mail, MP3s, radios, scanners, CD Players, DVDs, computer networks, TVs, Video Mail and voice systems don't talk to each other or not very well (we should all root for Blue Tooth universal compatibility)?
Bill Gates reportedly compared the computer industry and auto industry in this way: "if GM had kept up with the technology like the computer industry has, we would all be driving $25 cars that got 1,000 miles to the gallon".
A tongue-in-cheek response to Mr. Gates suggests that if GM had developed technology like Windows then your car would perform something like this: 1. For no reason, your car would crash twice a day. 2. Every time they repainted the lines in the road, you would have to buy a new car. 3. Occasionally your car would die on the freeway for no reason. You would have to pull over to the side of the road, close all of the car windows, shut it off and reopen the windows before you could continue. For some reason you would accept this. 4. Occasionally, executing a maneuver such as a left turn would cause you car to shut down and refuse to restart, in which case you would have to reinstall the engine. 5. Only one person at a time could use the car unless you bought an upgrade to car NT and then you would also have to buy more seats … 13. You would have to press the 'Start' button to turn the engine off. (Source: anon). You catch the drift.
How stupid is it that our Palm Pilots and Blackberrys can't handle voice traffic. I want wireless, broadband web tone and soon!
I want a Blackberry equipped with email, a QWERTY keyboard as well as voice recognition and a pen based architecture, IP telephony (so that we can fulfill the destiny described by Arthur C. Clarke in Childhood's End, a 1960s work, which said that the world would all be one local calling zone before the turn of the Century, which he said would be December 31st, 1999), a Bluetooth wireless ear piece and microphone so I am not constrained in my physical movements, office suite, web designer and d-base capability, web surfing and search tool, equipped with personal productivity tools (phone list, fax list, maps, addresses, agenda, calendar, intelligent agent) and also doubling as a pager, voice mail and video mail machine, digital camera, camcorder, MP3 player, video player, video conferencing platform and interactive TV. I find myself watching dumb old TV and looking for the mouse to double click on an icon of something I actually find interesting on the television. I want one phone number, email address, fax number and I never want to have to think about how something I write, dictate, draw or say will get delivered to my intended audience. I want the world's entire body of knowledge sucked up onto the web and available everywhere in the 'ether'.
I don't have high expectations, do I? But the industry mustn't stop until they get there and much further.
I think that people will soon move their 'desks' to the web; right now people are keeping copies of documents in their word perfect files, their photo paint files and so forth then duplicating them for posting to one or more of their web sites. This is causing an explosion in memory use, a great deal of difficulty in keeping all of their (similar) files up-to-date with the latest information and, more importantly, a delay in getting needed documents out there into a shared space where they can be accessed and modified by team members, customers, clients, suppliers, ...
I am sure that the telcos don't want the computer people to invade their space. The cost of voice calls is absurdly high and cellular 'technology' ridiculously unreliable; they make Windows look good!
Hooray for IP telephony- hurry up and get better, please. My daughter Jessica, age 9, has phone pals (using our Dell system and high speed net connection) in Johannesburg; the marginal cost- zero.
Again, the web is all about automation, reversing work, building relationships, network effects and scalability. It is also about disintermediation, greater specialization and more democratic access.
How important was the adoption of HTML programming as standard in web development, particularly for graphical interface? Very important.
Companies are replacing armies of clerks who hitherto were operating employee stock option plans (ESOPs) and employee stock ownership plans. Every time an employee wanted to change his or her payroll deduction, they would call it in, there would be some kind of (often, ad hoc) confirmation of identity, and then a series of clerks would leave a paper trail a mile wide until finally after weeks of trying, they might finally get your pay cheque right.
A web based solution would allow the employee to go to a password protected space, make their changes and this would automatically interface with the payroll program which would change (by EFT) your situation.
This is an example of: 1. automation, and 2. reversing the work (making your 'customer' or client do the work for you). It also gives the client or customer (in this case, the employee) a much higher level of service, faster response time and democratic access.
This would be a good business for a third party to get into- operating a web site for large and medium size companies' employees. A highly focused, specialized business in this area would probably be a successful business model- any takers?
It would provide the service free to the employee, in my view, consistent with web culture. It would charge the company a flat fee for each transaction (i.e., each change in the ESOP). I don't recommend dotcom business models that don't make money. Listen to John Callahan when he talks about business models in 360- they must make fundamental business sense, even in the New Economy.
This service is scalable- once you can handle 100 ESOP changes a day, you can handle a million. The additional cost is negligible; the increase in performance in the overall economy is substantial. Even the measured rates of productivity growth in recent quarters in the USA (over 5%) underestimate the network effects because they don't fully factor in higher quality levels (such as the greater reliability of our ESOP management web site).
The web can do it faster and better and cheaper.
The web is all about relationships.
Amazon.com has got to be a pretty stupid business model. You place your order, some clerk goes into a huge warehouse somewhere to pick your books, puts them in a bag; they go to a UPS warehouse on a truck where they get sorted again and put on another truck to go on a plane to go to a hub to be sorted again and put on another plane to be offloaded onto a UPS truck to be delivered to your door, only to find you are not home so that you can get in your car to pick it up at the UPS store, to find that not all the customs fees have been paid and half of the order is wrong. Now who pays to send the stuff back and where do you send it anyway? This doesn't sound like a revolutionary technology to me!
However, there is one aspect of Amazon.com that does blow me away. Remember, the web is all about relationships. Well, when you find something on the Amazon.com site that you want to buy, the site asks you: "Would you like to know what others who bought this book also bought?" I know, I know, this helps Amazon sell more stuff. But it also is an incredibly powerful use of their relational data base- it is like putting millions of researchers to work for me. If I am buying something on Spatial Apartheid, I'll find out what other researchers in this (albeit somewhat esoteric and exotic) field are looking at. It saves me time and plugs me into the field. Again, productivity figures don't reflect changes in quality (or at least not very well) but they are very real.
I must admit I am a great believer in ten cent web sites. Anytime that someone tells you that they need $4m to get their web page started, run!
Entrepreneurs don't wait for financing, market studies or Godot- they just do it.
Let your web site grow in response to demand; make changes as you go.
Webcasting is 24/7 messaging to the entire planet (or at least a substantial fraction of the planet). Your site must change. How would you like to see all TV stations running 'I Love Lucy reruns' 24/7 or worse, the same episode of 'I Love Lucy' 24/7?
The web is all about disintermediation.
Check out my personal web site- www.dramatispersonae.org for a copy of these remarks. It surely is a ten cent site but it does the job of conveying assignments, course outlines, schedules, etc. to my audience.
And I program it myself (it shows too). This is disintermediation; Corel's web designer software allows internet dummies like me to post materials and make changes immediately without any intermediary (with apologies to Diane Paul, our office manager and Paul Leblanc, our network specialist for the phone calls asking for help).
I expect each and every one of you to learn at least this much.
The web is all about providing data. In real estate, another area of interest of mine, everyone is afraid of putting prices on their web sites. They don't want their competition to find out what they are doing. I have some news for them- there are no secrets in this world. When I was at the Senators, we could have a management meeting in the afternoon and read about it the next am in the Sun!
Consumers want prices and you should want to give it to them. Why do you want someone looking for a $35,000 lot or a $150,000 home in your subdivision with $100,000 lots and $300,000 homes anyway? It's embarrassing for them and a time waster for you. You think that you can up-sell them but how realistic is that and why would you want to?
Kent Plumley, an early Mitel and Newbridge investor, once told a young Bruce Firestone: "Your most valuable possession is your reputation." Kent is right- a solid reputation and good credibility allow you to walk into a bank and get a $3m loan to start your business when you are 29 years old and it is 1982.
People like to deal with people they like. At Terrace Corporation, we looked first for people with 'good heart'. Education, experience, … came second. Generous, good hearted people make good team players.
In my view everyone in your company is in sales. From the person answering the phone (and, yes, there are still a few of them) to your accounting group, everyone is in sales all the time.You should rename your receptionist: "Chief Information Officer"!
How many times do you call a company in response to an ad or a need and: a) not get anyone at all, or b) get someone who knows nothing about the company and its products and services? That is why companies like Home Depot are eating everyone else's lunch- they believe in staff training, staff retention, staff empowerment. Gosh, they even hire older folks who actually know something about chain saws, woodcarving, plumbing, electrical, …
I gave a speech not too long ago to an audience containing not a few homebuilders. I told them that one day soon they would all be web site operators. "Yawn," was the reaction I got and "When is dinner served?"
But it's true.
And if they don't make the leap to hyperspace, the Americans will do it for them and put them out of business.
In the near future, the customer will go the Acme Home Builder web site and choose from dozens, possibly hundreds of home plans; they will choose a lot. Meanwhile, as these items get added to your shopping cart, the e-cash register is whirring and showing you your price.
You choose your carpet (colour and type), your kitchen cabinets, light fixtures. Then you notice that you can't afford it, so you unpack your shopping cart lopping off a few nice-to-haves along the way.
Once you are satisfied, you fill in the e-reservation form, arrange an EFT deposit and the home and lot are yours. An electronic copy of your Agreement of Purchase and Sale is available to your solicitor and to Acme's and they work on the password-protected document together using group ware. An e-mortgage application is applied for and, of course, approved. You firm up the deal and apply your password-protected e-signature.
The builder e-submits for a building permit and the work is ready to begin.
If that's all the web could do, that would still be a pile of work reversed out to the consumer.
But supply chain management is where even greater costs savings are available.
Acme's suppliers and sub-trades will go on to the site to bid on their part of the work.
CPM and e-scheduling means that you can reduce the time to build homes and your suppliers and sub-trades will never have to guess when they are needed.
Your worried home owner can check twice daily to see where the project is at.
Suppliers and sub-trades must update the schedule as they supply material or services or they don't get paid by EFT (or any other way).
Ultimately, you have an e-closing and an e-filing with the registry office.
So, yes, home builders are going to be web site operators and they will manage key relationships with customers, suppliers and sub-trades. They will market their web sites. Their web sites will really be e-home stores with much greater options (again, a quality boost- eg., hundreds or thousands of plumbing and light fixtures to choose from) available to their clients.
It is scalable too. If you can sell 30 homes with this site; you can sell 30,000.
If it is 30,000, your leverage increases. One of the confusing aspects of the New Economy is who pays whom?
Do you pay the bank to provide e-mortgage approvals for your customers or do they pay you to get on your site? Well, if you are selling 30 homes per year, you pay them and if you are selling 3,000 or 30,000 they pay you, as do all your suppliers and sub-trades too.
Disney's ABC network and Time Warner's cable system got into a similar tussle over who pays whom. ABC has Peter Jennings and Time Warner has access to mom and pop's home. Mom and Pop want to see Peter but Time Warner has control of the purse strings (they get the cable fees and he or she who has the money usually wins).
But it is unclear who will actually win this battle. In major league sports and in Hollywood, the battle has been fought and the winner is clear- content providers (i.e., star athletes and star actors) are ascendant (well, maybe not all of them).
I teach at the School of Architecture, Carleton University, as an Adjunct Research Professor there (also known as a 'Junk' Professor). A question upper most in the minds of architects these days is what is going to happen to the profession in the era of the web- demands on architects in the bizarre world of municipal approvals and in the land of nimby'itis (not-in-my-back-yard syndrome) are up and fee-for-services is down. Why pay an architect $6,000 to design a new home when 100s of designs and working drawings are available over the web for $350?
The web is blowing everything to bits, to paraphrase a recent book title.
I think the web will be a huge boon to achitects. Architects will suck up their knowledge and portfolios to their personal web sites- all their Intellectual Property will be there and they will find ways to exploit their IP. The web will allow architects to sell their designs many times over- to use and reuse whole designs and parts of their work for many clients and customers. They will retain ownership and copyright of their IP and they will still be receiving royalties from their body of work even when they are relaxing on a beach somewhere. We just have to figure out how to do it.
As an example of the possibilities, imagine coupling together critical path scheduling software with a cost handbook calculator and a CAD system so that architects could see how much each design change costs and how it affects a project's total costs and its schedule. Further, let's imagine connecting this new tool to a cost/benefit program so that one could see how the objective function (say, maximizing the Rate of Return) behaves when a project's design or its schedule is changed or when component or labour costs change or the benefit stream changes. Now that would be a powerful tool that would increase the value that architects can bring to the table. Benefits can be measured in monetary terms but they might also be measured in other ways; for example, a costly design change in a museum project might be justified because it leads to a much higher visitor count even if attendance at the museum is free. Architects, like other professionals, have to boost their productivity and they have to be able to justify their designs on the basis of the benefits they produce instead of an exclusive focus on costs and incessant budget cutting.
I now think that every classroom should be equipped with data projectors, large curved screens, web browsers, powerful desk tops and servers, DSL or better (broadband) web connections and laser pointers in the hands of teachers that act as an on-screen mouse. Integrating the resources of the web with live teaching is a fantastically powerful new tool that should be available in every elementary school, high school, college and university on the planet.
Ford Motor gave every worker on its lines a free PC to take home with them just so they could receive email from top management directly and respond too. Every node (worker) is connected to every other node in this new world. Hierarchies are flattened; team work is enhanced; connectivity is vastly improved. Management is disintermediating everything betweeen themselves and their workers. The new organization becomes a learning organization that reacts very quickly to changes in its environment. It's Darwinian survival of the fittest and it's fast evolution of the organization- it mutates in response to environmental pressures.
Every school needs a utility that registers each student's free email account for each of their classes. Teachers can then push new material, ideas and assignments to their students rather than just relying on the pull of their web sites.
I have had people ask me about net services like Napster, Gnutella and Freenet. I'm not at all sure about their business models but: "Vive Napster, Libre. En bas, les companies d'musique."
Napster and even more so Gnutella and Freenet are all about disintermediation.
The new model might work something like this. Prince puts snippets of songs from his new album on his web site. When he has pre-orders for some defined number (let's say 2,000,000 copies at two bucks each), he releases the album to your MP3 player. He nets $4m less costs of about two cents each for the download (i.e., $40,000 for distribution).
If he did the deal through a record company, he would get about 70 cents per album sold and the consumer would pay the absurdly high cost of more than 20 bucks for a CD. Prince would make about $1.4m and he would have to wait a long time for it in all likelihood.
After release, Prince doesn't care if people listen to his songs on the radio, by streaming over the internet or even by copying for personal use, using services like Napster or software like Freenet.
He'll make more money in the new world not less, in my view, and he will disintermediate the music companies.
The web does have a tendency towards monopoly (the more people who use a site (eg., job postings) or a 'standard' (eg., AOL Instant Messenger), the more attractive it becomes (to advertisers, companies posting job listings, people interested in instant messaging, …) in a self-reinforcing cycle leading to monopoly. There is a tendency to one standard. This is bad but this is good! Standards unlock network effects.
So the answer is OPEN STANDARDS like Linux, HTML and so forth. Let us require that AOL Instant Messenger and MSN Messenger and workopolis.com and monster.com all can talk to each other and anyone can join the parade. Subcultures will thrive and survive (eg., Brahmin Instant Messaging and horsetrainerswanted.com).
LONG LIVE THE WEB!
Winners Never Quit and Quitters Never Win
You need endurance to win in a hyper competitive world. There are at least 35 million Americans in their basements right now, some of them working on the brilliant new idea that you thought up last night.
Ideas are cheap and abundant; execution is not.
You can succeed with good management and mediocre products (some toy companies come to mind) but not the other way around.
Still you need to be flexible and entrepreneurs know and assume going in that they will have to make changes in direction.
Corel started out making hardware (CD ROM readers, I believe.) They cost something like $4,000 to make at that time and sold for maybe $1,200. They didn't sell very many. But they did have a piece of software that they sold (Corel Draw) bundled with the machines so they could sell more machines. People started asking them if they could have the software but 'hold the mustard' (i.e., don't ship the hardware). They could sell Corel Draw on its own for $800 and make it for less than five bucks.
My father, Professor O. J. Firestone used to say: "Keep the winners and dump the losers". You might be surprised at how difficult people find this; their egos get involved.
An entrepreneur needs a tough hide and a willingness to submerge his or her ego.
Obviously, Corel was smart enough to stop producing CD ROM readers and back Corel Draw. Surprisingly, even very small companies seem to be doing a lot of things that they should stop doing and a few things that they should be doing a lot more of.
Rentalex Tool and Equipment had 33 stores at the beginning of the 80s; 16 in the Ottawa area and 17 in Toronto. 15 out of 16 stores in Ottawa made money and all 17 stores in TO lost money.
They were steps away from bankruptcy. What should they have done?
Dump the losers.
Actually, that is what they did. They closed all their Toronto operations (they even made a profit doing it- they sold the stores to their largest TO based competitor). Within two years, they went from losing $2m per year to a profit of $1.5 to $2m.
This turnaround was due in part to a rebound in the national economy but in large measure it was the refocusing of the company on their Ottawa area stores that saved them.
Their profits weren't just accounting based ones; they were what my wife calls 'IGA' money- money that you can touch and spend!
That is another rule of entrepreneurs- cash is king.
If you have cashflow you will have a business; it's that simple.
I like to pre-sell everything.
When we were putting together our bid to Bring Back the Senators, we pre-sold 15,000 PRNs.
Some of you may be aware that after we were granted an expansion franchise on December 6, 1990, we put together a season ticket sales campaign in that month that sold $22m in season tickets in cash in ten days for a team that did not play its first game until October 6, 1992 ( a 5 to 3 Sens win over the Habs, by the way).
Now that's pre-selling!
In actual fact though, we sold those tickets by selling Priority Registration Numbers one or two or three at a time over the preceding year. I remember one of my colleagues (Jim Steele) arguing over the phone with a group of guys in a pub, getting dressed and going down there only to come into work in the am having sold them two PRNs at $25 each.
All in all, we collected 15,000 PRNs (for $375,000), 500 Associate Corporate Sponsors (at $500 each) and 31 Original Corporate Sponsors (at $15,000 each) even before we got the franchise.
Good thing too because it: a) boosted our credibility, b) demonstrated a huge pan-city swell of support to the NHL for the NHL, c) helped us defray some of the costs of the bid ($7.5 million spent for the Palladium (now Corel Centre) site, $2.5 million spent on the actual bid).
People often talk about 'fallback positions'; like: "What's your fallback position?" Entrepreneurs intuitively know that a fallback position quickly becomes your actual position. Entrepreneurs are out there without a safety harness and no net.
When I was a young engineer working for the Metropolitan Waste Disposal Authority in the early 70s, my Deputy Director asked me: "What's our fallback postion if the (non-linear programming) model we are working on doesn't actually work?" We were trying to optimize and rationalize Sydney's garbage disposal, a process involving 33 firecely independent Local Goverment Areas and 3.5 million people. Politically, I felt that we needed a reliable optimization program that officials of the MWDA could point to and say: "You've got to get on board with a regional solution, 'cuz the computer says so!" It would coincidentally reduce costs and help us convince some of the LGAs to close environmentally unacceptable landfill sites. I told the DD that we could do some type of a manual 'solution' but we couldn't do both- a manual solution and a LP model and the former wasn't going to provide either an optimal solution or political cover for the MWDA. To his credit, we stuck with it; we produced a working, dynamic, mixed integer programming model that led to a lower cost, rationalized waste disposal system for the Sydney Metropolitan Region with higher levels of environmental protection.
You know you never want to get too high or too low. Life is full of up and down cycles.
I still remember an Ottawa Citizen headline a few days before we got the franchise: "And the winners are … Seattle, Milwaukee." That hurts.
Actually, it was Ottawa and Tampa.
The night before we won the franchise, one of the voters (i.e., a member of the Board of Governors) told me (at a NHL dinner thrown for the nine bidders) with his face just centimeters from mine: "You'll never, ever get a franchise for Ottawa."
I can remember Norm Green, then Owner of the Minnesota North Stars, coming over to my table and asking: "What's wrong." "Nothing," I said. "Well, get that smucky look off your face, kid, and get out there and hustle."
Good advice. Lydia Leeder, in Ottawa, on hearing that comment from Cyril later that night said: "You can't stop now! It's just like the Canada/Russia series of 1972. Canadians never quit. Everyone is running to their radios every half hour for an update … We're counting on you." Now that's pressure!
We did just that and in fact the last thing the Board of Governors saw before they shut the door to consider the matter the next day at 8:00 am was my nose and the faces of my whole team.
We never stopped.
At about noon that day, the pressure was enormous and frankly getting to me; so I went for a run along the beach (this was Palm Beach in December). I returned at about ten to one and saw some of my team members waving frantically to me. "What's up," I asked. "The NHL has asked all bidders to be in their suites at one for an announcement," said Connie Cochran. "What announcement?" "They didn't say."
Without a shower, I changed into a suit. At one, NHL security took us down to the basement of the Breakers Hotel, a huge antique of a hotel. Next to rotting garbage and standing under dripping pipes, I turned to my colleagues to say: "Fellows. This doesn't look too good. You have done everything that you could do. I am proud of you. If we have lost, we are going to thank the NHL for allowing us to join this process, we are going to congratulate the winners and then we're going to have a press conference to announce- 'We'll be back'."
Then NHL security took us up to the meeting room. Marcel Aubut (of the Quebec Nordiques) gave Randy Sexton, a big hug: "Felicitation, mon ami," he said. We thought he was congratulating us on a good try!
When I went up to the front of the room and sat next to John Ziegler, I saw the words: 'The NHL is proud to welcome, as conditional Members under the Plan of Sixth expansion, the cities of Ottawa … and Tampa." It was a magic moment and a future shaping event.
Winners never quit and quitters never win.
(Footnote: about six weeks later, I did call the Governor who had told us that we would never get a franchise. He told me that his comment was part of a plan by a few Governors. They told each bidder the same thing; it was a character test designed to see how each bidder would react. Two of the bidders stormed out; they weren't successful.)
The whole Sens deal got tougher as we went along. For some unknown reason, the intensely popular Liberal Premier of the day, David Peterson, called a Provincial election two years early. On September 6, 1990, Bob Rae and the New Democratic Party became the new government of the Province of Ontario with 38% of the popular vote. David resigned. The new era had begun.
I told my colleagues not to worry, the NDP would live up to the promises of the previous government: "Afterall, 2,500 new jobs, 2,500 new union jobs (building the Palladium, now the Corel Centre) would be as important to the new socialist government as the previous regime.
David Peterson, the deal making former Premier, had promised to us in an earlier meeting that: a) he would come to West Palm Beach in December 1990 with us to lobby the NHL for expansion teams for Ontario (Ottawa and Hamilton), b) his government would give the Palladium rezoning an expeditious govermental review, and c) as long as private money paid for the team and the new building ("We don't want another SkyDome!" (at a cost or over $450 million to the taxpayer)), the Province would pay for the public infrastructure (read, a new interchange on the 'Queensway'). "It's the least we can do," said David.
On November 29, 1990, five days before the NHL Winter Meetings began and seven days before Ottawa was awarded its franchise, we received a letter form Ontario which, basically, reneged on these three promises.
The additional costs for the project and losses to the company amounted to about $80 million- $30 million was eventually paid by the team and building for the new interchange and $50 million was, at least temporarily, lost in land value from the failure to rezone all of the Palladium lands.
The NDP Ontario government hired the 'Perry Mason' of OMB lawyers, a torpedo from Toronto, Tom Lederer, to represent them in a 13.5 week Ontario Municipal Board hearing in opposition to the Palladium zoning. It was probably the most extrordinarily hostile act in the history of professional sport by a state or provincial government.
Nevertheless, on September 2, 1991, permission was granted by the OMB for the Palladium contsruction- we had fought 'city hall' and won.
Winners never quit and quitters never win.
A Little About Guerrilla Marketing, Bootstrap Marketing and Financing
Entrepreneurs don't wait for financing; they don't believe in market studies; they believe in bootstrapping and crashing everything.
They use bootstrap marketing and financing; they believe in guerrilla marketing.
They crash all of their projects replacing CPM with a do-everything-at-the same-time approach. They reduce a 254 day project to 85 days as one of my clients did recently in opening his food service business in two thirds less time than the CPM schedule suggested to him.
In Germany, they believe in a systematic approach to things, to put it mildly. When they organize a 9:00 am meeting, they expect you there ready to go at nine, not collecting your coffee, making small talk or generally fooling around.
In real estate, this deliberate approach yields a steady, precise schedule which looks something like this: 1. select and buy a site (1 year), 2. rezone it and obtain municipal approvals (2 years), 3. complete the design program, design the building and finish the working drawings (1 year), 4. tender the project, receive bids, possibly revise design program and building design if costs are too high, re-tender, award contract and apply for building permit (6 months or longer), 5. build building (two years), 6. building shakedown, leasing, move-in phase (3 years), 7. put permanent financing in place for the building (6 months).
A major office project can thus take a decade or more.
The advantage of this approach is that fewer mistakes are made at all stages and the schedule of events are predictable in the extreme. When a tenant is given a move-in date, by golly, that's the date.
The disadvantages are that it takes so long to do anything and that this is a closed industry in the sense that only very well capitalized companies can play. You will notice that permanent financing (i.e., a mortgage) only comes after the building is completed and all tenancies have commenced. This is nice because all the uncertainties have been removed- the cashflow is known so you can expect to get perhaps less than LIBOR rates (i.e., better than prime). It also means that entrepreneurs are shut out.
Indeed, in many parts of Europe, it is still true today that if your father was a farmer or mechanic or if you have the wrong accent that you can not get a commercial loan.
This is also why commercial real estate is so hide-bound in Europe and so expensive- little real competition and a very slow process indeed.
How would an entrepreneur approach this problem in Canada?
Firstly, she would buy the site conditional on rezoning and financing. While she was getting the property rezoned, she would also be pre-leasing it. She would take the pre-lease commitments and pledge those to a financial institution to secure interim financing. She would apply for a building permit before her drawings were finished and she would be topping off the sixth floor before her building permit was issued. She would have the GC and her Construction Managers in the boat with her, on her side of the table working on a Groass Maximum Price before the working drawings were even started. She would set out a formula, in advance, with the GC and CM to share any savings in the GMP, giving them incentive to find ways to save time and money. She would also have a contingency fund within the GMP that she would expect to spend to ensure that the project could cope with inevitable change orders and that the project would also meet her quality standards. Her first tenants would be moving in before the building had actually been fully commissioned. By crashing it, the project would be completed in 18 months (or, quite possibly, not at all) at a fraction of the cost of the other model.
When the Sens played their first three and a half seasons in Ottawa's 10,000 seat Civic Centre, the City offered to build 16 'luxury' suites for $12m and give us 10% of the revenues. They would take about a year to do it. We asked if the City would object if we built them ourselves, at our cost, and kept 100% of the revenues. We would leave them behind when we moved to the Palladium for their use at no cost to the City. "By all means," they said.
PCL built 44 suites, on our behalf, in 12 weeks at a cost of $2.9m including all F, F & E. We pre-leased virtually all of them at rates between $50,000 and $72,000 per suite per season and made our money back in about .9 of a season (that's like paying off your mortgage on your new home in less than a year). The junior team, the Ottawa 67s, now makes excellent use of the suites built by the Sens; they add about $200k per year to their cashflow, a not insignificant amount for an OHL team. (In fact, the 67s are building a bunch more suites this year; we can only hope that they are building them privately!)
How come the private sector can build faster and cheaper and better ($65,000 per finished suite versus $750k by the City per suite (this is not a typo), a factor of 11.5 more)?
It is because entrepreneurs crash everything, decision-making is fast, changes are few, no committees are involved and there is a soupcon of creativity too.
Yes, it can make that much difference.
We financed these suites using the multi-year leases as collateral. We were using the covenants of our customers and clients (which were certainly superior to that of the Sens at that time) to make the proposition a bankable one. The financing was retired over two seasons and added cashflow of about $1.5m to the team in each of year one and two rising to $3m in year three after the financing was retired.
Cashflow is king.
Bootstrap financing is about using OPM but not necessarily Mom and Dad's or rich Uncle Buck.
It is about looking at the problem from the perspective of who benefits?
He who benefits, should contribute. He that contributes, should benefit.
This means looking for long term, future suppliers and future customers who might like to see that you get going. Returning to my example earlier of the phantom web service that reverse automates ESOPs, maybe there is a big company out there, who will pay you to develop such a service because they will: a) save money if such a service is available to them, b) provide their employees with a better level of service, more timely, more accessible, more democratic, c) make a killing by taking a stake in your business which, if successful, does an IPO.
Bootstrap marketing and guerrilla marketing probably mean the same thing. A while back a major shoe company did a little ambush marketing at the Atlanta Summer Olympic Games. While one of their competitors paid $40m to be an official sponsor, they set up a mega tent on a parking lot down the street from the main Olympic venue. They filled the place with product, interactive games, VIP sections, you-name-it. It became the in-place to be and they scooped the competition and scored a major PR hit (both admiring and outraged reactions were welcomed).
A client of mine has been promoting his e-classified web site in the classified sections of major newspapers, under their radar.
Entrepreneurs use unorthodox methods to get their messages across; the best start-ups are chronically undercapitalized.
It may not feel like it, but less capital actually makes you better than the competition- necessity is the mother of invention.
Entrepreneurs hate the words: "I'll try." Trying is for losers.
Having said that, you also need to know when to fold.
There are plenty of 'good' ideas for products and services that fail.
I remember one I was involved with in the early 1980s- the Wayne Gretzky Starflyer. It was a flying disc that had LEDs and a small camera size battery that could be used at night. It was a cool product that looked like a flying saucer with the endorsement of the greatest hockey player to ever play the game, in my view. The only problem was that it had lousy management (I was part of that team) and there was another little problem- it turns out that nobody wants to play 'frisbee' at night. (Why would you? It is ankle breaking time.)
I still have box fulls of the darn thing.
Some things to remember are: 1. buy low and sell high, 2. don't be a sheep, 3. creativity is important, 4. lack of resources can be an advantage. Your objective as a fledgling entrepreneur is to go from what College Pro calls uninformed optimism when you start out through the inevitable crisis of commitment when things start to get tough to a state of informed optimism where all things you set out to do now become possible to achieve through your own efforts and those of your teammates.
Entrepreneurs also have to know that pricing is an art. There is no relationship between costs and prices. In monoploy services prices can be way more than costs and in price-taking industries like farming, prices can be way below costs. Accountants at Ford Motor were reputed to have said that the company could save huge amounts of money by shuttering plants. Engineers responded by saying: "Imagine how much we could save if we shut every (car) plant that we own!"
Never let the accountants run your entreprenurial business (or any other for that matter). It doesn't matter what something costs you, the price that you sell that something for is a completely separate issue. At the end of the season, a land developer has a low ball offer on his last lot in his new subdivision. His cost to produce each lot is $75k; the offer is for $80k; he is asking $99,000 and he was getting it on the other lots he sold earlier in the year. Should he accept the offer or wait until next year?
His internal rate of return is typical of entrpreneurs- he expects returns on equity of roughly 40% per annum. So his choice is to take the $80,000 now or perhaps get $99,000 in a year. If his probability of sale next year is 90% and his internal discount rate is 40% (and, yes, entrepreneurs have those kind of expectations), then the two alternative outcomes look like this- a) he sells it and receives an $80,000 boost to his cashflow now, or b) he sells it in a year and receives $99,000 times .9 times .6 or $53,460 in today's money. By waiting for a higher price next year and looking to produce a better margin on his sale (i.e., a larger margin between price and cost, an accounting measure), he loses $26,540. Make the deal now.
Try not to get too high or too low.
Take care of yourself- physically, mentally and financially and never retire!. My father said: 'never retire'. Perhaps you will change careers, do something different but don't retire to watch the soaps or to move to a condo in Florida where you will be cut off from family and friends. Humans aren't designed to be idle. You'll be dead within 18 months if you are. And people aren't meant to be physically inactive either. Find a lifetime fitness regime that suits you and stick to it. That doesn't mean you are going to look like Brad Pitt or Jennifer Aniston. Brad gets paid $20m per picture to look like Brad Pitt; that's Brad's job. You can be sure that he has a fitness regime and a nutrition plan that is better organized than the D Day invasion fleet.
Lifetime fitness means finding something that you can do three to six times each week for a few miuntes at a crack that you can sustain for decades. Don't get into running marathons for six months followed by a lifetime of indolence because of all the 'pain' you sufferred. A low, sustainable level of exercise is much better. Don't drink and think. Never smoke. Don't do drugs. Take some vitamins and anti-oxidants. Give yourself a break every so often (anything taken chronically or in excess can become toxic) and, once a year, stop exercising for a few weeks to allow your body time to recover. Stable, married persons with a degree of spirituality in their lives and a degree of other-directedness (working for goals as part of a team effort without financial compensation and belonging to something bigger than oneself, a feeling most of us haven't had since we left high school) live longer.
Grow up. Exhibit a little maturity. Try to walk around in the other person's shoes for a few minutes. Try a little understanding. Get outside of your own tiny, noisy inner world; stop drinking your own bath water. Keep the lines of communication open- don't make any more enemies than you have to. Nevertheless, it's true that if you are a doer and a pioneer, well, pioneers get shot at, don't they?
Know when to go to the wall on something and when not to.
But when it's war, go all out to win. Starve the other side for information and remember to focus your entire attention on the problem because the other side will be thinking up some very unpleasant surprises for you (that's why my daughters ages 9, 11 and 12 always win; they spend 99% of their creative energies thinking how they can weasle something out of Dad and he spends 1% of his time thinking how not to get bamboozled; the girls always win.)
This may comfort you at those times when you face an unbeatable opposition that forces you to retreat from the field- Sun Tzu, the great Chinese General, once may have said: "If you stand by the banks of the river of life long enough, you will see the bodies of your enemies float by." Also, lots of problems do solve themselves given enough time. And evil does tend to have a short half life.
Pay yourself first- keep the heart of your organization pumping and the brains working (make payroll and your statutory payments first). Remember suppliers and other creditors are better off if your company lives to fight another day; they are actually more secure because you and your staff then have the opportunity to earn enough to pay them off.
Don't do what I have done by leaving my personal investing in the hands of a major Canadian Chartered Bank, who in the greatest stock market boom in history managed to achieve a negative 2% per annum return on my portfolio in the 90s.
Disintermediate the 'experts' and open an account at e*trade!
Hopefully, it's not too late at 48 to follow 'value investing' as pioneered by the world's most famous investor, Warren Buffett of Oklahoma City.
Asked why he was based in that city rather than on Wall Street, he has repeatedly said that it has been a huge advantage for him and his shareholders in the world's most expensive stock (Berkshire Hathaway) to be a thousand miles away. That's so he doesn't get caught up in the rumour-de-jour. He can buy low and hold; he can avoid the stampeding and sheep-like behaviour of most investors and their counselors.
Once, when one of his major holdings took a heavy hit (Coca Cola, I believe) and he had 'lost' a few billions (on paper), a NYC reporter asked him breathlessly whether he too would bale out of the stock. He wasn't even aware of the change on the markets that day but thanked the reporter for the 'tip'; it was a golden opportunity to add to his position!
Buffett believes in buying companies with outstanding management, good products and significant franchises and brands.
If you buy a stock for $1 and over a period of time (sometimes measured in decades) it goes to $800, you have a capital gain of $799. If someone else buys and sells 799 stocks over the same time frame and each one of them goes up by a dollar, then you both have gains of $799. However, the other person has to pay 799 commissions, they have to pay income taxes on each transaction, they have to be able to pick 799 winners (an impossible feat, I would think) and they have to do a heck of a lot of work, not to mention the worry!
When told of the NDP's opposition to the new home for the Ottawa Senators, Peter Pocklington, former owner of the Edmonton Oilers was rumoured to have said at the 1990 Winter Meetings: "I'll be damned if we're going to allow the socialists to tell us where we can put our teams." Sometimes the things that you think will work against you are the very things responsible for your success.
One of the questions from the Palladium Ontario Municipal Board hearing that haunted me for months afterwards (which Tom Lederer never actually asked) was: "Isn't your plan for West Terrace (the name for the Palladium lands development at the time), doesn't it look a lot like downtown and so why didn't you put it downtown?" The answer is that West Terrace did look a lot like downtown. But a carefully considered answer, both the right answer and the smart one too, would be that there is a significant difference. The Palladium was to be be built before the other development went forward, rather than being foisted on an unwilling, already long established, downtown neighborhood.
Cities have long had markets and entertainment venues at their core; but these are established almost from the moment of the founding of those towns and villages. I can just imagine the reaction of the Glebe'ites in downtown Ottawa to the construction of a 22,000 seat arena that would see two million additional visitors in their tony neighborhood.
Conclusion
You know I read recently that there are now more than 7 million people worldwide with more than $1 million in investable financial assets (Business Week, August 28, 2000. Data: American Express.)
I guess this was said proudly and I am sure that it is an impressive number but it represents less than .1% of the world's current population. You can be sure most of those 7 million people are Americans.
Fair? Well, the world isn't a fair place but, in my opinion, it is a pathetic number really.
I can imagine a world with much greater wealth and much broader distribution of wealth. I don't think we can get there by redistributing wealth from rich people to the masses. That has been tried and failed. Rich people have better accountants and more options for avoiding taxation than governments have.
No, if we want more wealth, it has to be based on a creative economy where more pie for me doesn't mean less for you.
And more pie for all of us doesn't have to mean that we ruin the planet through environmental rape.
I view technology as the key to human health and well being and to saving the planet too.
Can you imagine a dumber industry than the newsprint business? We remove trees (and, by the way, every nation-state that has deforested itself throughout recorded history has also impoverished itself) to make pulp and paper. We bleach the stuff and ruin ecosystems and rivers in the process. We put it on trucks and in rail cars and in boats and ship it off to printers which churn out billions of newspapers each day that then get loaded onto trucks and planes and some poor guy comes to your door in the freezing cold early morning (at least where I live in Ottawa most days it seems to me) so that you can read it for 20 minutes and put it in the recycles where another truck burns huge amounts of petrol to pick it up to be put in other trucks, rail cars and boats to be 'recycled' in another hugely expensive, energy-intensive and environmentally degrading process only to start the cycle again.
Message to Amazon.com, IBM and all newspaper publishers- work on e-paper please (for students interested in mediatronic paper, read another Neal Stephenson book, The Diamond Age).
How about the megamergers involving telecommunications companies and content providers. Here in Canada, Bell Canada expects to find synergy between its pipes and the CTV network and TSN, The Sports Network or Québecor expects to find something similar from the combination of its newspapers and Vidéotron. Who knows, they might be right. But apart from a bit of additional ad revenues, what is the big deal? Convergence between twisted pair land lines, cables, fibre optics, cellular networks, computers and the web is likely to be a far bigger deal. I mean how many pay-per-view movies can you watch in a month? That isn't the killer app, in my view.
People are looking at the web as just another conventional part of an existing media continuum. Nonsense. Web culture is going to kill a lot of dotcoms and a lot of ill conceived 'convergence' driven mergers of huge corporations too. Web culture means 'free' to the typical user; it requires a completely new business model. Encyclopedia content is going to be free to folks to peruse to their heart's content. The new media will make money (in a B2B environment) by charging for links to and from the encycolpedia site. When reading up on the history of Jamaica, you will click on hotels, travel agencies, airlines, tourist attractions, car rental agencies, ... and each finanical transaction will return a percentage to the encyclopedia site.
I can imagine a planet with much greater levels of wealth where we treat the earth as a garden. Let us build Arthur C. Clarke's 'free' transportation system to orbit (aka, the space elevator project). Let us put dirty industry into space where it belongs. Let us get above the earth's atmosphere to where power is readily available and cheap (solar radiation).
Where are the leaders of the past, like President John Kennedy, who, in 1961, could imagine putting a man on the moon and returning him safely to earth before the decade was out and before there was the technology to do much more than catapult a tiny capsule around the earth for a few laps?
Is our current crop of leaders, with their obsession with re-election and the short term, truly the best we can do?
40% of all physicists in the US are involved in some type of research relating to quantum mechanics. Einstein said that quantum mechanics was, to his mind, voodoo science. It was and is but much of our computer science is based on it and a great deal more will be in the future.
As we all know, Einstein proved that the Universe's speed limit is c, the speed of light. Nothing can go faster than this- 186,000 miles per second.
What is weird is if you were in a speeding train moving in one direction at say 99% of c and you were to fire a laser in the opposite direction, the speed of that laser blast to an observer standing on the platform would still be c (instead of 1% of c).
The Universe is weirder still than even Einstein could imagine.
Matched pairs of bosons (tiny sub-atomic particles) are always created with clockwise spin and counterclockwise spins. When you act on one particle to reverse its spin, the other matched particle reverses its spin at exactly the same instant no matter how far apart they are. Somehow, the behavior of one particle is instantly communicated to the other no matter what the intervening distance. This appears to break the Universe's speed limit proposed by Einstein.
Whatever, the result is that a quantum phone or data network needs no infrastructure (sorry, Bell Canada, AT&T, Sprint, Worldcom- the nodes become the network) and you can talk to anyone in real time whether they are in Moscow, on the Lunar Sea of Tranquility or in a canal on Mars with zero transmission time.
Quantum computers have weird algorithms that search all elements of a data base close to simultaneously which means goodbye to difficult net navigation, hello to a world wide phone book and much more.
As entrepreneurs, we are trying to create lasting value. The Holy Roman Catholic Church is 2,000 years old. The Japanese Emperor's line goes back, continuously, over 5,000 years. The House of Windsor is a few hundred years old and the oldest, commercial charter happens to belong to the Hudson's Bay Company (over 350 years).
These long lasting human endeavours share a number of common characteristics: 1. They own and control their own real estate, which provides them with security of tenure, inflation protection and predictable cashflow (rents and imputed rents). 2. They are or have been tax exempt (property taxes, income taxes, capital gains taxes, wealth taxes, inheritance taxes). 3. They own significant concessions, brands or rights (based on land rents, resource exploitation, embedded constitutional positions, religious faith, feudal grants). 4. They are monopoly providers or oligopolistic concerns.
It is difficult to say who will join the elite group of long-lived enterprises but it might be 'brands' like Coke or Time Warner, who have created businesses that share some of the elements I described above. But you can bring some of this to your own endeavours- I wanted a NHL franchise for Ottawa for many reasons, love of hockey passed down to me by my mother and Russian Grandfather among them. But I also understood that there was likely to be only one NHL franchise in Ottawa! Creativity can give you a monopolistic or oligopolistic advantage.
I tell some of my small business clients, own your site and your building. Otherwise, you're eventually toast. The Landlord always raises your rent, if you are successful, to the point where, you aren't.
I could go on and on about the lessons of the past and the opportunities in the future. The future is a place of limitless possibilities if we have the courage to carpe diem. Thank you.
Bruce M. Firestone, September 11, 2000, Carleton University, Ottawa, Canada.
Copyright, 2000.