Home sweet home

1. If you are thinking of doing business internationally – make sure you invest the right time and resource.

I went away for a very long five weeks to explore the business opportunities that existed in Canada for an extension of the Flight & Partners Fund Management Business. Five weeks is a long time – but you need to give yourself time at that level if you are serious about doing business in another country.

Many governments sponsor and support trade missions which last about two or three days. I am now skeptical about this approach (I was enthusiastic before my own experience). You personally need to walk the ground of a new foreign market. Find out how the market is organized and arranged. Find out who the key players are and meet them. Too many people take what I would now call the ‘Yellow Pages’ approach. This involves simply being matched with the right partner and then expecting them to be really motivated to help you sell your product in their territory. I am sure they will – but it will help them a lot more if they can see a visible commitment on your part.

You may respond that you cannot spare the time or money to do this. My answer to that is to not do it then! There is no point doing something unless it can be done properly. It is rather like starting a DIY job and then leaving it half way as you don’t have the time/ resources to finish the role.

2. Networking is a key skill that you really need to develop

Halifax is a very warm and friendly place. Even so, it did take me a good time and a great deal of effort to network my way around the place. And I had a big head start as before I got there I knew a few people whom I had met at an Angel Conference last October. By the end of my time there, I really felt that the enormous effort I had made to network with people had paid off as I had signed up some work by the end of my time there. I cannot stress enough how important it is to really develop your networking skills. And that does not mean paddling around at lots of mediocre functions handing out your business card and delivering an elevator pitch to anyone who will listen. Have a read of a previous blog about networking.

3. Before you sign any contracts, make sure you are comfortable with your partners.

Before I got to Halifax, I was planning to get into a business arrangement with some other parties. One of whom I had not met before. There is only so much due diligence you can do before you meet someone. The curious thing I realized is that my business life in London is remarkably devoid of contracts. Most of the work I do is with people I have known for more than 5 years – and in most cases an email is sufficient to lay out what has been agreed.

In Canada, from day one, there were lots of contracts flying around from the moment I got there. These were necessary to govern working relationships but in the end they proved futile as the partners in the original venture amicably agreed that we would not work together. It was a good thing that we did not sign a contract as it could have been very problematic to extricate ourselves from a contract. So the lesson for me is to always spend a proportion of time pre-contract which relates to the amount of time the contract would seek to govern. (For example the contract we would have signed would have locked us in for about ten years)

These would be the top three lessons – more next time!

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You Can Now Follow Me

Most new technology ideas are dismissed because it is hard to imagine why you would need something that you have coped without perfectly. Mobile phones are a good example of that. How many of us said (if you were around when they first came out!) we really could not see why we would need a mobile number.

The internet is another example. At the beginning, all it was used for was pornography and IT speak. But that is not unusual, most new media is often first populated by pornography. Be it books, magazines, videos, internet etc. I remember Jeremy Paxman on Newsnight talking to someone from the BBC about ten years ago pushing them to justify the huge spending on this thing called the internet when all people wanted from it was access to Pornography?

How things have changed! There is a new buzz which I have got into which I understand has been around for some time – called Twitter. It is a mini blog – where you can use up to 140 characters to say anything you want. Lots of famous people are using it like Demi Moore, Stephen Fry and Lilly Allen. If you want to follow the thoughts and the musings of them – you can do.

I will be using my tweets to just mention where I am off to and who I am meeting (if they give me permission). It doesn’t take long to work out how this information could be really useful. If I am struggling with something, I could post out a tweet – and then hopefully someone with the answer can come straight back at me.

As an entrepreneur, you do have to embrace change and think through how it could make a difference to you. For example if you are supplying a product and you have too much stock – how about sending out a tweet with a special offer lasting no more than a couple of hours!

The point is don’t be too quick to dismiss a new technology or a new way of doing things. Just think through how it might be of use to you – and exploit it. If you do want to follow me on twitter find me at twitter.com/permjotvalia…..

Tweet soon!

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Which are you?

Pareto is remembered for his work on this and of course understandably; it is a very important analysis tool for every business (and can be used to great effect for personal effectiveness as well). However, I wanted to use today’s blog about another piece of work that Pareto co-authored. This piece was to do with political elites (and led to him falling foul of Mussolini).

Pareto developed a theory that basically stated that power oscillated between two types of leaders (or elites to be more accurate). These two types were labeled lions and foxes. The theory basically stated that leaders have characteristics that make them either behave like a lion or a fox.

It is interesting when you look at the past prime ministers of the UK going back to Harold Wilson – they seem to have held a steady pattern – of a lion being replaced by a fox (it is interesting that every lion has been replaced by a fox – without there being a general election!). The pattern also seems to holds true for US presidents. It is as if the population as a whole seems to choose different characteristics for different times – or they simply want a change.

Many people have argued that the theory of lions and foxes is too simplistic. In terms of the analysis I have done on US presidents, my fox maybe someone else’s lion. And then there is bias; is it really better to be a lion than a fox? They both end up occupying power and it is not a judgment on morality or effectiveness. It is just about the skills they use to get to power and how they may stay in power.

When I think about company leadership, it tends to follow the same pattern. Lions and foxes tend to alternate and they bring different skill sets and different priorities that can help company get through the phase they are in. Lions can be a bit too focused on themselves and the constant evangelical tone can get a tad tiring. Whereas working for foxes can be no fun at all – and you sometimes feel that you are lost in a soulless bureaucracy.

Have a think though about what trait you think comes closer to describing you. You will always be better of replacing someone who is different to your own trait – and equally, if you are a founder of an organization, you would be better served promoting someone to succeed you who is different to you. When you replace someone who is similar to you, you are likely to get clash of the egos.

It also will help the business if different skill sets come to the top of the organization and help it grow. If you are working for a lion or a fox, and they are the same as you – move to another organization!

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pareto

Pareto discovered that 80% of wealth was held by 20% of the population across most countries across most time periods. He was then able to find that this rule held true over most things.

Today, retailers know for example that 80% of their sales come from the top 20% of their product range. Or that just the top 20% of their top customers account for 80% of their sales. This ‘rule’ tends to hold true across most businesses and most fields. You may conclude from this that because of the huge cost of carrying stock – why not only stock the top 20% of items. There is a danger in this which a real life example may help illuminate.

It is known in the sandwich retail business that most customers will only ever buy one of three sandwiches (is this true for you?). However, customers like to choose from at least 10! (again is this true for you?). Customers feel very annoyed when they can only choose from a few – even if the ones available for selection are the ones they would choose from!

Customers need variety so there is a danger in cutting back to much, but nonetheless, Pareto optimality is useful in determining a business strategy. I would urge you to use this rule as much as you can. Focus your marketing spend on the 20% of your customers that generate the most profit, focus your stock availability on the top 20% of items. Focus most of your processes on the areas that generate most of the output.

Recalling Pareto always makes me smile as it brings back an anecdote which occurred in the first six months of my post university career. I was working for Mr. Kipling cakes and I went with my arrogant know-it all boss (Mr. S) to see a customer who was stocking our range of products. He explained to us that he needed to look at the range he was stocking.

Customer “I need to look at the range I am stocking. Pareto runs this shop”

Mr. S “And where is Mr. Pareto today?”

I got a telling off for laughing (I know you should not laugh – but it was funny because my boss thought he knew everything)

It was also nice to be able to apply something I learnt at University to my job selling cakes!

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Last week, Gordon Brown, the British Prime Minister changed his ministerial team. It was very much like rearranging the decks of the Titanic.

Last week, Gordon Brown, the British Prime Minister changed his ministerial team. It was very much like rearranging the decks of the Titanic. His days as prime minister are numbered.

Companies can be very similar to governments. When things are going well, the CEO can be all powerful and the management team will toe the line and challenge within the right forums. Minority shareholders will not have that much power to challenge the authority of the management team if all is going well (and you may ask – why would they want to if things are going well)

However, given the dire straits that the government finds itself in, Gordon Brown has re-arranged the team rather than do what most companies do which is to change the leader. CEO’s are paid a huge salary premium because there is a recognition that there role is very risky. It is easy to get caught up in the ‘fat cats’ story when talking about CEO’s. But the reality is very different.

Most CEO’s only manage three years in their role (for public companies the length of time served is significantly worse). Most of these CEO’s will not be able to get another job at that level again as they will have been branded a failure.

Hence it would seem logical that any person getting a CEO role would want to be paid a significant ‘losing-job’ bonus. This ‘bonus’ may have to last them a very long time as they will probably struggle to get another top level job.

If you are starting a business with external shareholders, just be aware that even if your business does survive, you may not as the CEO. This process can be very painful and I have talked about this before on this blog.

What CEO’s should do though is make sure they have a good blend of skills that fit into the organization. The management team should complement and build on the skills of others in the team. They should all though fit into the organization that they are leading.

For example, Sir Alan Sugar (soon to be Lord Sugar), will be joining the government. This appears to be a horribly mismatched appointment. Sir Alan has achieved great success and is a very clever businessman. However, his style of doing business and management is not one which I would advocate needs replicating. He is a man who appears to dislike education and will now be working in government leading very bright people who have a policy background. I am not saying which style is better – I am just suggesting that is a marriage made in Hell.

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One of the things I have enjoyed so much about angel investing and working with businesses is that you come across people with a very wide variance in terms of skill set. But there is one feature which really marks out successful people in my experience; they are all very bright.

However, being bright in my opinion is not the same as being intelligent. For example, I know many people who have been to prestigious universities or have PhD’s (they are the worst!) who are very slow when it comes to getting the commercials in deals.

As a salesperson, you are often required to think on your feet and work out quickly the impact on your bottom line of discounts etc. I have written blogs in the past about the importance of understanding percentages – yet I am amazed at how many people don’t get them.

As an entrepreneur in an organization you will be required to make lots of decisions quickly without having the time to evaluate all the options. It is here that your brightness comes into play.

The smartest people I know left school when they were 16 – and have been phenomenally successful. Having said that I like to work with people who are what I call graduate-caliber. By that they understand how to plan for growth and are not constantly engaged in tactical thinking.

As with all things, it is about getting the right blend in an organization. I have recently had an experience of working with two very intelligent people but I found it very frustrating because when it came to common sense and the ability to interact with people they were found somewhat lacking.

And yet, intelligence (as in an academic sense) is still regularly cited as a key pre-requisite for success. To me I would say it is actually your ability to apply common sense to a situation and get on with people. With any skill set – if it is sharply pronounced, you may find it difficult to relate to people.

Having said all of this, when you get the winning combination of great intellect, brightness, charm and drive – back it!

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The curious thing about escaping London recently has been that here in Canada, I have been engaged in more debates about the monarchy than during my time in England.

I should declare outright that I am a Republican. That does not mean that I am against the Royal Family – it is just that I find it absurd that in the 21st Century people still want to be subjects rather than citizens.

Max Weber, a German Sociologist, wrote in the early 1900s about how Capitalism seemed to have developed in European Countries that had embraced a protestant ethic rather than the prevailing catholic orthodoxy. There were lots of reasons for this and I cannot do this great piece of work justice in this blog. The very word protestant means that you are protesting against Rome.

Entrepreneurs are people who by definition are not happy accepting the status quo and want to change things for the better. The thought has only occurred to me since I have been out here in Canada, that most of my professional circle in England are republicans or are very soft royalists (in that they believe in the sovereignty of parliament over the Queen).

I am not saying it is hard to be a royalist and an entrepreneur, I just thing it is a strange combination. Royalism accepts the role that accident of birth plays in dictating your place in society. One of the cruelest facts about India is how it still enslaves hundreds of millions of its citizens through the barbaric caste system. The people who believe in this cruel system share the same belief values as royalists. That is that your role in life can be determined by to whom you are born.

I have never thought about this until recently. Halifax has a large number of ex-Brits residing here. They seem to think that part of holding on to their British Identity is being avid royalists. Needless to say, I have not fitted in terribly well in this scene.

I look at vibrant countries like the US and realize that they decided a long time ago to go down the republican route. This allows them to continuously renew and re-affirm the supremacy of achievement over birth right. The argument that is put forward by royalists is that democracy gives you George W Bush. Well it is the right of everyone to choose who they want to lead them. Bush was elected for two terms and people knew what he stood for. The argument that Hitler was elected is simply a fabrication of facts (67% of Germans voted against him, and he was able to manipulate through terror the democratic chamber to give him total control)

I really would like to hear from you if you disagree. Especially from entrepreneurs who are royalists.

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I was recently asked to resolve a commercial dispute between two parties who were friends of mine. The dispute was around the level of fees that were agreed to be split on a contract.

The dispute got very heated and I did not want either parties to use a lawyer as whatever the sum being disputed was, there is a guarantee that once you use lawyers you are all losers as the sum becomes a lot smaller.

There are some general guidelines to resolve a dispute

1. Make sure that the person adjudicating is seen as neutral by both parties

2. Both parties have to ask themselves whether they are defending a principle (or they want to make a point). If for either party it is a principle – forget it! You are doomed to end up in the courts

3. Both parties need to accept that whatever the outcome it will not be ideal for them. You need to work towards a compromise. But again, be honest. You will save yourself and your adjudicator a lot of time if you realize if you will not settle for anything less than 100% (but remember the 100% figure is likely to be less after the legal costs – and even if all costs are recovered, what is your time worth?)

4. Don’t get angry with the peacemaker – that will make it hard for them to remain neutral.

5. Have a line drawn up in your head in terms of what you would settle for. You could save a lot of time by communicating that with your adjudicator – but may choose not to do that.

In the case I am talking about, I failed to make the parties accept an agreement. A good agreement was readily available which I suggested but one of the parties then insisted on a complete breakdown of every item. This was of course done, and following the revelations that this threw up, the offer was rescinded.

The matter is now with the lawyers. It is of course a massive shame but at least it will keep the lawyers happy!

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Halifax is the capital of Nova Scotia and given the size of the economy in these parts, the government plays a very proactive role in trying to boost and support the economy here. They are particularly keen to encourage entrepreneurs and work with them to help their businesses.

My problem with Business Link in the UK has been that I have found them to be very poor whenever I have had to deal with them (I would simply get rid of business link altogether if it was up to me) and no one who has used their services has ever told me anything different.

I have enjoyed working with agencies like the London Development Agency or New East Manchester when they ‘skip’ the middle man and broker solutions directly. One of the issues I have always found with Business Link is that they seem to be staffed by people who do not have the first clue about running a business and seem to forget that the businesses they are supposed to help are their clients. (Ouch – there seems to be some personal issues on my side here and I should add that my experience is limited to Business Link, London)

The staff from government bodies I have met so far in Halifax seem to be similar to the ones I have met in Manchester. They ‘get’ business and are really receptive to ideas. They don’t seem to spend ages writing a manual and then look for people to deliver the manual – they are really proactive at asking people like me for ideas.

If you are an entrepreneur working in the high tech area (in any field) you should go ‘jurisdiction’ shopping. By this I simply mean you should look around at what support is available to you from government resources. The UK is going to be a pretty miserable place for the next 10 years or so. Government borrowing is simply huge – and is deferred taxation. Taxes are rising steeply for those whose incomes are over £100,000 a year and taxes will remain high. Whilst I have called the bottom of the market, the recovery will be slow and steady.

You may just decide that another country may offer you better support. And if you are relying on savings to see you through the first year or two, another country may help that money stretch further. (I have learnt that living in Canada is a lot cheaper than living in the UK – about half the sterling cost) and I know that the provincial government in Nova Scotia can offer lots of support.

All I am saying is shop around – you are in demand!

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This is probably one of the shortest blogs I am writing – but I hope it is a very enjoyable one. Regular readers will know my frustration with that great comedy show called The Apprentice. I love it – but as a comedy.

Well I saw this video on You Tube and I simply loved it. It is very, very funny. I love the way the humour builds up slowly. Please do watch the whole thing.

I am amazed both at the time people have and the creativity they have. It shows that this was painstakingly put together. I would love to have this team work with me on viral marketing campaigns!

Enjoy

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