Lessons I Learned Today 6/1/09 – Maybe Father Does Know Best!

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

*Want To Stay Motivated? Avoid Doing These 5 Things by Evan Carmichael

 “Do you have peaks and troughs in your levels of motivation? What do you think the top 5 motivation killers are?

 What would change in your business if your motivation levels were at 100% all of the time?”

 For each motivation killer there is a solution.

• Getting a Knockback
• A quiet period
• Don’t know where you are heading?
• Pain and Pleasure
• Fear of Failure

This article provides a nice set of “secrets of keeping high on motivation” to defeat each “motivation killer.”

 

*Behind Every Great Company Is A Great Team – Jim Treliving by Adam Toren

“Jim Treliving is just your average guy who found something he loved and went after it.” Since this article is YoungEntrepreneur.com’s part 3 of 5 in their Canadian Dragons Series, perhaps it is not so surprising the “average guy” is a former Royal Canadian Mounted Police officer who took over the Boston Pizza restaurant chain.

“Treliving is proof positive that you should always keep an open mind and be receptive to new things because your destiny could be waiting for you where you least expect it. For Treliving, his entrepreneurship was awakened when he took his first bite of pizza at Boston Pizza and Spaghetti House in Edmonton, Canada. After reviewing the finances and convincing his father to co-sign a loan, Treliving traded in his badge and job security and bought a Boston Pizza franchise.”

“Some might consider the franchise purchase a rush decision and a gamble, but Treliving was familiar with the company and liked what he saw. He stayed focused and diligent and soon he and his accountant George Melville purchased the entire company. From the very beginning, his motto has been: ‘Think like a customer, deliver outstanding food value and work closely with your partners.’”

“Treliving runs his business with the same attributes learned in his law enforcement career. He is disciplined, tough with establishing streamlined operations and loyal to his team members. ‘The very first thing you need is a good business plan. The second thing is to figure out exactly what will cause your business cash flow to jump to the next level. Then you project your cash flow. And then you sit down and say: this is what I’m going to do, and this is how I’m going to do it. And then you go out and work and work till you get it done. It’s all pretty simple, actually, if you just stop and think about it!’”

 

*Don’t Try To Be Perfect – Anthony Robbins

“’Success is doing what you want to do, when you want, where you want, with whom you want, as much as you want,’ says Tony Robbins. For the past 15 years, Robbins has been doing exactly that. As one of the most celebrated motivational speakers and life coaches in the world, Robbins has come from humble beginnings to rise to the top of his game.”

Tony Robbins has become one of the world’s most recognized authorities in the life coaching industry, as well as being Chairman of five private companies that together generate over half a billion dollars. In typical Robbins style, he says:

“You are now at a crossroads. This is your opportunity to make the most important decision you will ever make. Forget your past. Who are you now? Who have you decided you really are now? Don’t think about who you have been. Who are you now? Who have you decided to become? Make this decision consciously. Make it carefully. Make it powerfully.”

Some of his other points, in a short article worth reading, are:

• life is constantly testing us for our level of commitment
• life’s greatest rewards are reserved for those who demonstrate a never-ending commitment to act until they achieve
• an entrepreneur’s resolve must be constant and consistent
• for changes to be of any true value, they’ve got to be lasting and consistent
• any time you sincerely want to make a change, the first thing you must do is to raise your standards
• clearly decide what it is that you’re absolutely committed to achieving
• take massive action
• notice what’s working or not
• continue to change your approach until you achieve what you want, using whatever life gives you along the way
• all personal breakthroughs being with a change in beliefs

One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular.

 

*It comes down to basic skills our moms and dads taught us. Show up early, work hard, be disciplined – Robert Herjavec by Adam Toren

Multi-millionaire, Robert Herjavec, son of Croatian immigrants, grew up poor but overcame the odds. His family’s lack of money was the driving force behind his desire to become an entrepreneur and control his own destiny. “It was about getting away from where my family was. I imagined how much better it would be if we had money.”

After waiting tables at an upscale restaurant by day, he spent much of his evenings working on his technology idea. His first technology company, BRAK Systems, quickly became the leading provider of Internet security software in Canada. BRAK Systems was worth over $100 million when he sold it to AT&T. He could have lived a life of leisure after the sale, but instead became vice president of Ramp Networks, where he was instrumental in its $225 million sale to Nokia.

“Some people need good advice more than they need money. If you keep doing stuff you love to do, the money will follow.”

 

*The Essential Marketing Action Plan by Matthew Toren

What your business is, who your target audience is and how you attract your target market are essential elements to a successful business plan. A marketing plan also enables you to focus your action steps on these key areas.

The key is to create a plan that works for you and will keep your marketing action steps on track. Here are five easy steps to follow to create your successful marketing strategy:

1. Define Your Market. Describe who your customers are going to be, what types of people are more likely to buy your product or service being as specific as possible in terms of gender, age, occupation, lifestyle, buying habits, etc.
2. Identify Ways To Attract Your Customers. Identify what sets you apart from your competitors and how you plan to communicate these advantages.
3. Go Prospecting. Educate the consumer about why your product is better than the others.
4. Exposure. Think of all the possible ways you can get your message out to your targeted market.
5. Establish Referrals. Create referral marketing processes that maximize the potential for customer referrals.

Once you have identified your marketing plan, create an annual calendar and put in reminders of the daily, weekly and monthly marketing activities that need to take place to keep your marketing plan on track.

 

*There is no reason not to follow your heart – Steve Jobs by Adam Toren

(Steve Jobs is the winner of the YoungEntrepreneur.com poll “If you could meet one famous entrepreneur, dead or alive, who would it be and why?”)

“You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.” Steve Jobs

Jobs is CEO of Apple and co-founder of Pixar Animation Studios. He is worth an estimated $3.4 billion as a successful innovator in both the computer and entertainment industries. “To turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of disciplines.”

Jobs, according to the “legend,” “dropped out of college and had no money to support himself. He slept on the floor in friends’ rooms, collected soda bottles for the 5 cent return deposit to buy food and walked seven miles every Sunday night to enjoy a hot meal at the Hare Krishna temple.”

Jobs, however, was “pretty good” at innovation. “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it. Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

It is Jobs’ belief that if you give people something of value, they will buy it, regardless of its cost. “Innovation distinguishes between a leader and a follower. Pretty much, Apple and Dell are the only ones in this industry making money. They make it by being Wal-Mart. We make it by innovation.”

“My model for business is The Beatles: They were four guys that kept each other’s negative tendencies in check; they balanced each other. And the total was greater than the sum of the parts. Great things in business are not done by one person, they are done by a team of people.”

“There’s an old Wayne Gretzky quote that I love. ‘I skate to where the puck is going to be, not where it has been.’ And we’ve always tried to do that at Apple. Since the very, very beginning. And we always will.”

Some of Job’s advice for entrepreneurs is a follows. “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary. I was lucky – I found what I love to do early in life. Sometimes that first step is the hardest one.”

 

* Lives of a Cell, the 3-D Version by Kim Zetter

David Bolinsky was two years into a medical degree when he launched his first illustration company.” When I was four years old some friends of my family took me to see Fantasia and I was totally blown away. From that minute on I wanted to be an animator. My father (a sculptor and art historian who taught at New York University) taught me how to animate using serial drawings in a flipbook.”

“After I started my own company (in 1983), I found out what was available and ended up buying an 8-bit computer. You could get only 256 colors on screen — not the millions you get now. And it was really slow and really expensive and I had to mortgage my house. My fiancé at the time, who is now my wife, was totally freaked out. But I knew what I wanted to do and knew that I only had one way to do it.”

“I was fortunate enough when I was in junior high school that my pediatrician introduced me to Frank Netter’s artwork. I guess you could call him the father of modern medical illustration. He had an MD but he was also a painter…. Anyone having to do with medicine will have looked at Frank Netter’s art work…. I decided I would make him my model … getting my degree in medical illustration and then going on to medical school.”

Bolinsky, former lead medical illustrator at Yale, screened a three-minute version of a computer-generated film, The Inner Life of the Cell. The film was created by his company for Harvard’s Department of Molecular and Cellular Biology. Bolinsky decided to show it both at a conference and at Siggraph’s contest for the best animations of the year, where special effects from Pixar and Sony pictures and all the large Hollywood companies that make fancy commercials are entered.

“We started receiving tens of thousands of e-mails and phone calls, the hits on our website went from 200 a week to 650,000 a week and it was picked up by ABC News. We were getting e-mails from major universities all over the world asking if they could use this for their students (and) calls from high school teachers wanting it for advanced biology classes … and museums that want us to work on museum exhibits because they want to modernize how they teach science.”

“This is what I hoped when I started this company — that it could change how people saw things. We (thought) this great academic animation would be shown at Harvard and would disappear forever under the Ivy dome of silence…. We didn’t really anticipate that it would go anywhere and when it did it took us all by surprise.”

 

* How Web 3.0 Will Work by Jonathan Strickland

Think of Web 1.0 as a library. You can use it as a source of information, but you can’t contribute to or change the information in any way. Web 2.0 is more like a big group of friends and acquaintances. You can still use it to receive information, but you also contribute to the conversation and make it a richer experience.

Internet experts think Web 3.0 is going to be like having a personal assistant who knows practically everything about you and can access all the information on the Internet to answer any question. Many compare Web 3.0 to a giant database. While Web 2.0 uses the Internet to make connections between people, Web 3.0 will use the Internet to make connections with information. Some experts see Web 3.0 replacing the current Web while others believe it will exist as a separate network.

You never know how future technology will eventually turn out. In the case of Web 3.0, most Internet experts agree about its general traits. They believe that Web 3.0 will provide users with richer and more relevant experiences. Many also believe that with Web 3.0, every user will have a unique Internet profile based on that user’s browsing history. Web 3.0 will use this profile to tailor the browsing experience to each individual. That means that if two different people each performed an Internet search with the same keywords using the same service, they’d receive different results determined by their individual profiles.

 

* Web 2.0 is so over. Welcome to Web 3.0 by Jessi Hempel

The economic climate for today’s web startups is a lot chillier than it was during the first dot-com frenzy. The door for initial public offerings has all but closed: Just six U.S. venture-backed companies went public last year, and none were web outfits.

“Social-networking companies such as MySpace and Facebook have loyal fan bases, but they’re not exactly minting money. MySpace’s projected $600 million revenue in 2008 falls far short of parent News Corp.’s (NWS, Fortune 500) billion-dollar sales target for the site. Messaging service Twitter has no business model. Video-sharing site YouTube was the only big sale; Google paid $1.65 billion for it two years ago but still hasn’t figured out how to make much money off it.”

New companies are cropping up to expand the utility of the web, creating location-based services and financial payment systems that can be bolted onto existing sites. Often bootstrapped, they are frequently profitable and may get acquired quickly. Even in today’s tough environment, these upstarts are the ones raising money and trying to score a life- or business-altering hit. Welcome to Web 3.0

 

What I Think

I think I see a common thread in the articles posted on this date. Do you? Do you see what I see?

I’ll admit, as I wrote this late  on Father’s Day, I was a little tired and had some trouble connecting the dots for this post. Then I went back and found a message being repeated over and over in different ways, in many, if not all the articles. This “breakthrough” came partially with the help of the title of one of the articles, Skills Mom and Dad Taught Us. What better day than Father’s Day to read that message?

The common thread I see is just what I tell my kids, do what you love and the money will follow. Don’t get me wrong. I didn’t come up with this myself. I got it from my father.

Don’t think that is the only message I send to my kids. The other messages surrounding the one above may very well drown out the primary message the first time they hear the core thought. I remember that I used to absolutely hate to have to “debate” my father. When I wanted to drive across country with my roommate during one summer after college, I was ready to go and so was my roommate. I had to tell my parents, of course, and I knew it would not be an easy conversation.

When the day came, I was right. The conversation was not easy because he kept quietly asking me questions I had a hard time answering. I didn’t have much money left in the bank after the end of school, but my roommate and I had planned to get temporary jobs here and there as we worked across the country.

My father asked me if it wouldn’t make more sense for each of us to first go back to the summer jobs we had the previous year, and work there until we got enough money for the trip. His theory was that the existing summer job, with assured position and pay rate, worked while still living at home, would likely ensure us a larger amount of net cash, at a quicker rate, and eliminate a major risk. This, in turn, would delay our departure (i.e. the next day) but would probably give us even more time to travel, once we got the requisite money in our pockets.

The problem was, my roommate and I had already done our “business plan” and our analysis told us that we should leave immediately with almost no money, and then find work as needed during the “great adventure.” Neither of us wanted to delay our trip. We were ready to go.

As with essentially every other time I remember “debating” with my father, I finally saw that my father was clearly correct. It made much more sense for us to go for the sure bankroll, saving on expenses while we did it, even though it meant admitting our miscalculations and naiveté. Who knew if two college kids from out of town would even be able to get a job when we needed one? We would obviously be stuck if we couldn’t find work.

We could have tried our plan, and I’m sure my father would have let us go, but also been prepared for “the call,” when we ran out of cash in St. Louis, or further West, where there may have been greater distances between potential employers. My father was prepared to let us fail, and to try to help rescue us if needed, but he also knew the path of least resistance for everybody was to try a little logic first.

Now, when I talk to my kids, clients in my law firm, or those I meet with through the SCORE counseling I do, I often find myself sounding like my father. Initially, I try to “absorb” the client’s enthusiasm of the moment. I then start to ask a few “gentle” questions. I don’t start with “what is your failure plan,” although I always try to get that in closer to the end of phase one of the discussion. I do challenge the assumptions of my clients and try to come up with failure scenarios. I pretty much have to start out that way because often the ideas being bounced off me are so exciting that I have to get control of my own enthusiasm for the concept or opportunity. Best to slowly build up to the worst case scenarios first, and then ask the hard questions, before finally jumping in to see how to make things better.

The message is “do what you love” and the money will follow. You need to do what you love in order to be happy, and to have a sustainable enthusiasm for it long enough to be successful. On the other hand, there may be more than one way to do “what you love,” more than one way to start down that road, and there may even be more than one thing that “you love.”

As Anthony Robbin said, you don’t have to be perfect, but you do have to have focus. It is rare to find success without hard work and discipline. My roommate and I thought we were ready to do the hard work to get ourselves across country on our summer trip, but listening to a wiser voice helped us understand there was more than one way to accomplish our goal. The goal was not the work. The goal was the trip. Perhaps the other scenario would have been better or provided us another experience more valuable than the one my father suggested. Following his advice, however, worked, and it is hard to argue with that.

The other way to look at the lessons of these articles is from the point of view of wanting to change how people see things. That was the “goal” of the animator from the 3D Cell article, quite literally. It was obviously also what has made Steve Jobs successful.

If a former Royal Canadian Mounted Police officer can use his training to understand the “simple” view of starting a business or buying one to turn around, isn’t much of applied entrepreneurship about changing how you see things? Sometimes this is because you have experience others do not. Sometimes it is because you have insight from clarity of thought that others do not. Sometimes, perhaps like my trip out west or Web 3.0, it is because Web 2.0 doesn’t make money or sense, and if you provide the missing ingredient, or turn the idea on its head, you can make money and reach your goal, doing what you love.

Who knows? Maybe Father does know best!

  

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Lessons I Learned Today 5/29/09 One Lawyer’s Guide to the Tortoise vs. Hare Race

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

*Brand Protection Online: 11 graphic examples of brand abuse online

The threat of aggregate brand abuse can fuel a tipping point of how your brand is perceived, affecting the brand’s reputation, and thus, equity, worth, or value. Addressing threats to your brand on the internet is a primary business concern and the consequences of multiple brand abuse issues online can loom much larger than singular incidents of unauthorized sales, counterfeiting, cybersquatting, trademark dilution, or a gripe site making unpleasant claims.

This article is particularly useful because it presents nice examples of the primary forms of online brand abuse. Some of these are:

• Brand Erosion (trademark infringement, copyright violations, defamatory claims, and competitors advertising on trademarks) Brand Erosion is a slow but deadly brand killer. It is easy for disgruntled customers, clients, employees, or deceptive competitors to publish negative experiences or content about your company’s products and services.
• Cybersquatting is the registering, trafficking in, or using a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to another entity.
• Typosquatting (a form of Cybersquatting that utilizes various typographical errors within the name of a trademark)
• Brand Siphoning – On the surface it makes sense for direct selling and network marketing brands to utilize affiliates and web-savvy reps to generate revenues in the search engines for branded searches.
• Traffic Diversion occurs when any third party places ads for your trademarks (company name, products, etc.) on the search engines. These ads dilute your brand and divert traffic away from your web assets.
• Phishing – Generally speaking, phishing is primarily a threat to financial services companies. Phishing ploys are not only targeted at consumers, but to employees as well, designed to extract account information, passwords, and even trade secrets.
• Unauthorized Sales – Gray market and unauthorized sales channels can compromise the integrity of a brand and can create rancor amongst authorized vendors and reps who follow corporate guidelines and pricing structures.
• False Associations can be conveyed using trademarked domains (cybersquatting) as well as text or logos that suggest or imply some type of business relationship.

 

*A Theory of Trademarks in the Blog Era by Ron Coleman

The IP implications of blogs beyond trademarks, especially regarding copyright but even recently involving the publication of trade secrets, are also wide-ranging.

Unlike virtually no other mass publication of trademarks that is likely to interest mark owners, the Internet raises few barriers to entry. Blogging presents even fewer – virtually none. Trademark enforcement practitioners who are used to the frustration of chasing after ethereal Internet-based trademark infringers are understandably aghast over the incredible ease, and functional anonymity, with which bloggers can instantaneously upload text, graphics and files, including HTML links. Blogger software platforms, including substantial hosting resources, are available for free from services such as Blogger and many others.

There is virtually no editorial, legal or other oversight over what content is to be found on blogs, as is the case on most privately-hosted websites, but while most recreational blogs are graphic nightmares, even the simplest blogs present a structure that features easy interactivity, a choice of practical and attractive graphic designs, and numerous add-on features that enable even lightly experienced amateurs – for no or very little cost – to easily monitor the volume, origin and trends of reader traffic, feature cooperative or trade advertising (and for higher-traffic blogs, even paid advertising), and take advantage of the burgeoning phenomenon of online blog networking.

Communication on the Internet, typified by blogs, is highly symbolic, and trademarks, if they are any good at all, pack a powerful semiotic punch. This attraction is intensified by the countercultural, or at least individualistic, tone affected – and frequently realized – widely throughout the blog subculture.

Blogs are democratic, self-obsessed, essentially unaccountable, cheap, technologically powerful, judgment proof, ungoverned, interconnected, and very, very public – meaning that intellectual property lawyers, or those who play them on the Internet, should proceed with care.

 

*Forming and Operating a Small Business- ABA Family Legal Guide

A little planning now might save plenty of time, money, and heartache down the line.

This article deals with the legal and other issues that have to be resolved when forming and operating a small business. Whether you’re manufacturing lawn furniture, selling stuffed animals, or offering high-tech computer consulting, you’ll have to face certain basic issues, all of which have legal dimensions.

 

*So your Business has a Legal Problem. . . 8 Useful Tips on what to Expect from your Lawyer by Igor Ellyn

This article provides a very nice and details series of tips on everything from finding and hiring a lawyer, fee structures, and settlements, to how to be a good client and avoid legal problems in the first place. Definitely worth reading for any entrepreneur.

As a business owner, you are usually run off your feet with the challenges of operating your business. The last thing you need to worry about is a legal problem. Many business people put off dealing with a legal problem because they don’t know where to turn, don’t have the time, or most often, are afraid of how much it will cost and how much time it will take. The authors give tips on how to get legal advice efficiently.

Every business should have a team of on-call lawyers. This is less expensive or complicated than it sounds. All you need are the telephone numbers and email addresses of trusted corporate, employment law and litigation lawyers. Depending on the nature of your business, you may also need an intellectual property lawyer, who deals with trademarks, patents and copyright. You may even need a tax lawyer because not all tax issues can be solved by an accountant.

When you retain a lawyer, you need a trustworthy advisor, who will point out the weaknesses of your case as well as the strengths. A litigation lawyer who is waiting by the phone for your call and tells you exactly what you are hoping to hear may be too hungry or too inexperienced to manage your case. He may be in over his head and will bail out as soon as your case takes a negative turn. By then, your legal situation may have worsened. It will be more expensive and perhaps impossible to repair it.

Competent legal advice is available for matters such as corporate organization, leases, the wording contracts and other documents you use in your business, partnership and shareholder agreements, your relationships with your employees, your company’s trade names, logos and website, your regulatory compliance, your risk management and litigation prevention techniques. It’s all important to arrange legal affairs to ensure that your personal liability is limited in the case of a claim against your business.

Ensure that the legal issues affecting your business are in good order. This is likely to save you a lot of money and grief in the future. You might even consider having a legal audit or a “business legal checkup”. We plan to write about this topic in a future article in this newsletter. Preventative legal advice may be expensive but it is just as important as fire insurance.

 

*To Avoid Tax, Set Up as S-Corp or C-Corp? by Karen E. Klein

“The debate on proposed tax rate increases for the country’s wealthiest people has just begun, and the potential increases would not happen until 2011. Still, tax experts say it is not too early for small business owners to think about defensive strategies. Whether they’re contemplating moving from S-corporation to C-corporation status, accelerating income, or deferring compensation, their decisions should be thought through in the larger context of their business and personal goals.”

” Small business owners who think they might be affected really need to see their tax advisers and look at their long-term desires, not just for their businesses but also for their personal needs. They need to run the numbers; this should not be a gut reaction.”

 

*A Guide to Self-Employment

Besides paying taxes, finding health care, and landing clients, self-employed workers face another big challenge: motivation. It’s easy to procrastinate when there’s no boss looking over your shoulder.

One of the most important referrals you can get is for a good accountant. Knowing what to write off as business expenses can save enough on your tax bill to make hiring an accountant worth it,

 

What I Think

I think, after probably scaring you half to death yesterday, with a score of articles about a wide variety of potential legal entanglements, the articles posted on this date may calm you back down, a little.

Sorry about yesterday, if you still have the shakes. Unlike my usual custom of pretty much choosing the most interesting articles at random, I made some attempt in choosing the articles I posted on this date, to make amends for the horror show yesterday. The “amends” I’m referring to are those articles which demonstrate there can be light both at the beginning of the tunnel and at the end, in terms of what legal counsel can do for you. Not only do some of these articles tell you how to get out of your legal jam, some actually should help you avoid one in the first place.

This, of course, is good for you as a bottom line oriented entrepreneur, and bad for me, as a lawyer who makes much more fixing problems than helping clients avoid them. Oh well, it is great to see such a high percentage of my clients surviving the inevitable potholes on the road to success. My theory, is that a good counselor, legal or otherwise, will eventually see greater professional success, as well as personal satisfaction, helping clients avoid disasters for relatively lower retainers, than letting the chip fall where they may, hoping some of them will come back seeking disaster repair advice at relatively higher hourly rates. Stay tuned for the results.

Sure, I couldn’t help starting out with 11 graphic examples of brand abuse online, but the graphic depiction of the various forms of online abuse should help educate some as to what to actually look for. The Trademarks in the Blog Era article, by Ron Coleman, points out many of the problems the law has in keeping up with emerging technology. The other articles posted on this date provide a range of advice on topics, such as comparing an “S” corporation start-up to an LLC, self-employment issues, and a whole host of other topics, which should pretty well cover the spectrum for a small start-up business. Just as the horrors from yesterday’s articles wait in the bushes to jump you when least expected, obtaining sound legal and accounting advice is pretty easy and the sources plentiful.

Historically, it has seemed that cyber criminals, identity theives and their ilk always managed to stay one or two steps ahead of the law. I continue to be amazed, however, every time I research a legal or business issue, how many more narrowly focused blogs there are on topics of interest in my search, then there were the last time I looked.

With the explosion of such blogs and informational Web sites, this may be the first time the sources of advice have exceeded the number of individuals committing the crimes. Use these resources wisely and often to avoid becoming one of the statistics.

 

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Lessons I Learned Today 5/28/09 Take this Cupcake and Shove it!

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

 *Cupcake Trade Secrets Allegedly Stolen by Todd Sullivan

The Las Vegas area’s trendy and fast-growing Cupcakery business is suing a California cupcake entrepreneur, charging she stole trade secrets and infringed on trademarks when she opened two gourmet cupcake shops there.

The Cupcakery, in a lawsuit filed in U.S. District Court in Las Vegas, says Ballus is now profiting from the Cupcakery’s intellectual property assets.

“Upon information and belief, Defendant Ballus used Plaintiff’s trade secrets and confidential information obtained during the course and scope of her employment at The Cupcakery to develop a competing cupcake business,” the suit charged. “Upon information and belief, Defendant Ballus procured her employment with The Cupcakery under false pretenses and in order to obtain such confidential information and other trade secrets regarding Plaintiff’s business model to aid in the development of her own gourmet cupcake business.”

 

*The Trade Secrets of Luxury Hotel Concept Allegedly Stolen: Starwood Hotels v. Hilton Hotels by Todd Sullivan

Hilton Hotels was sued by Starwood Hotels & Resorts Worldwide Inc., the third-largest U.S. lodging company, over claims it stole trade secrets to improve its luxury brands.

“This case involves corporate espionage and the looting through computer fraud of a mountain of information,” the lawsuit claims.

 

*Reasonable Efforts to Maintain Secrecy – Learning from the Bad Experiences of the Brits by Press Millen

Virtually every trade secrets statute in the U.S. requires the owner of a trade secret to take “efforts that are reasonable under the circumstances to maintain its secrecy.”

Yet there’s not a lot of guidance about what that means or what is required.

One source that courts might well consider authoritative is the U.S. government’s own regulations regarding the handling of secret information. These are found at 32 CFR Parts 2001 and 2004 from the National Archives and Records Administration and they are quite extensive.

Among other things, they describe in detail how classified information is to be classified, marked and safeguarded.

 

*From Nuclear War to Net War: Analogizing Cyber Attacks in International Law by Scott J. Shackelford

On April 27, 2007, Estonia suffered a crippling cyber attack launched from outside its borders.. It is still unclear what legal rights a state has as a victim of a cyber attack. For example, even if Estonia could conclusively prove that Russia was behind the March 2007 attack there is no clear consensus on how Estonia could legally respond, whether with armed force, its own cyber attack, or some other measure.

There scholarly literature dealing with these questions, as well as the ethical, humanitarian, and human rights implications of information warfare (“IW”) on national and international security is scarce. Treatments of IW outside the orthodox international humanitarian law (“IHL”) framework are nearly non-existent. This underscores the tension between classifying cyber attacks as merely criminal, or as a matter of state survival calling for the same responses as conventional threats to national security.

International law has been slow to adapt. The facts on the ground, and the widespread, amorphous use and rapid evolution of the internet in many ways challenge state sovereignty. I will advocate that the best way to ensure a comprehensive regime for cyber attacks is through a new international accord dealing exclusively with cyber security and its status in international law. Yet, the international community lacks the political will to tackle this issue directly. Until such an accord becomes politically viable, it is critical to examine how existing treaty systems may extend to cover the novel facts presented by cyber attacks.

The main failings of existing international treaties that touch on cyber law though are that most do not carry enforcement provisions. Nor do they specify how the frameworks change or fall away entirely during an armed attack. Nevertheless, regardless of whether or not cyber attacks fall below the threshold of an armed attack these bodies of law have a role to play in forming an appropriate regime. The cyber attack on Estonia in April, 2007, presents an example of the dire need for clarity in the international law of non-conventional warfare using modern technology.

 

*Neuromarketing, Subliminal Messages, and Freedom of Speech guest blog by Marc Jonathan Blitz, Associate Professor of Law at OKLAHOMA CITY UNIVERSITY SCHOOL OF LAW  on the Neuroethics & Law Blog

One of the underlying themes in America’s First Amendment jurisprudence is the idea that speech (and other expression) can be strongly insulated from government regulation – because it is, at least in the typical case, a whole lot less likely than other activity to have coercive effects.

If pure speech were … like the imperius curse that allowed evil wizards in the Harry Potter novels to exercise total control over their victims, or like the display of the Queen of Diamonds card that similarly transformed a brainwashed soldier into an unwitting and robotic agent in “The Manchurian Candidate” – then we could not feel as safe leaving such a powerful instrument of coercion in people’s unregulated hands (which are, indeed, not only unregulated, but constitutionally-shielded from regulation).

First Amendment scholars have also grappled with the issue of subliminal advertising or expression.  In a 1979 piece on the philosophical foundations of First Amendment law, for example, Thomas Scanlon cited subliminal advertising as an example of speech that undercuts or circumvents individual autonomy rather than enabling it:  “What is bad about it is not just that it is ‘subliminal,’ i.e. that we are influenced by it without being aware of the influence . . . [but also that] if it works, it causes us to act – to buy popcorn say, or read Dostoevsky – by making us think we have a good reason for acting, even though we probably have no such reason.”

“[T]he rise of neuromarketing – and the decades-old worry about subliminal advertising that preceded it – threaten these judgments about speech’s “non-coercive” nature.”

“[W]hat makes subliminal speech or stealth neuromarketing unsettling for us is not that might enter our mind outside of our awareness, or that it might even subtly influence us in ways we can’t easily take control of, but rather that it is doing so to fulfill a certain kind of design that is intended to cause us – in our own minds – is a certain kind of harm.  A message that is carefully calculated to make us buy a product we wouldn’t otherwise buy (and to do so without us knowing why) is a deeper violation of our autonomy than a hidden element that powerfully influences the way we perceive a work of art (again without us quite knowing why) and changes our emotional response to that artwork, but doesn’t “program” us to engage in any behavior benefitting the speaker or an ally of his.”

 

*Non-Compete Agreements: Friend or Foe? by Rayna Gokli

The existence of a non-compete agreements can make or break an individual’s career. If a non-compete agreement is found to be valid, an employee may find himself looking for work in a new field. However, if the employee takes steps before signing the non-compete, such as making sure it is narrowly tailored, it will be less likely to interfere with the employee’s next job search. Additionally, before signing any contract, including a non-compete agreement, an employee should consult with an attorney who has the appropriate specialty.

 

*Business methods need patents by Wayne P. Sobon

From now on, only those methods that involve “specific machines” or transformation of “articles” from “one state to another” can qualify for patent protection.”

“The effect of Bilski has been felt almost immediately at the U.S. Patent and Trademark Office (PTO), where applications for business method patents are down and rejections are up.”

 

*Employment lawyers predict that furloughs may lead to lawsuits  by Tresa Baldas

In a recent survey of 245 large companies by Watson Wyatt Worldwide Inc., 10% of employers said they had offered unpaid time off, and an additional 9% said they planned to do so in the next year.

Furlough-related lawsuits are only a matter of time, predict management-side attorneys, who believe that the temptation for some employees to work outside the office will get too great, exposing an employer to liability. Blackberry use, checking emails or voice mail — anything that employees do while on furlough-leave can be considered work, they warn. And if it’s work that’s benefiting the company, it has to be compensated under the Fair Labor Standards Act.

“Be very cognizant of the fact that a lot of employees — your good employees — have a hard time letting go. They’ll check their e-mails.”

 

*Furloughs may be smarter than layoffs by Eric Bellafronto and Blaire Cleveland

Because reduction of exempt employees’ work hours poses significant legal risks and reduction of exempt employees’ salary can be seriously demoralizing, employers might consider implementing furloughs or shutdowns on a workweek basis.

 

* Fears rise over new fraud law by Marcia Coyle

“Obama signed a new law that, besides mainly targeting economic stimulus fraud, broadens the liability of businesses for defrauding the government in a host of other areas.”

“The Fraud Enforcement and Recovery Act of 2009 embodies the most significant changes in 23 years to one of the government’s most effective and financially remunerative fraud-fighting weapons — the federal False Claims Act (FCA). The law expands the potential liability of companies and institutions receiving federal funds, extending the act’s reach to subcontractors and subgrantees and enhancing the Justice Department’s investigative tools, among other provisions.”

“The law contains “qui tam” provisions that allow private citizens to sue on the government’s behalf those who defraud the government and to share the recovery — usually 15% to 25% of the total. Since the act was amended in 1986, the government has recovered more than $20 billion, with more than $5 billion in the past two years, according to the Justice Department.”

“Ambiguous definitions and a key change that Congress made retroactive likely will enmesh business in years of litigation…”

“The new law also expands liability to include the knowing retention of overpayments, even if the overpayments were innocently received. And liability for retaliatory acts against a whistleblower is broadened by removing the requirement that the retaliation be by an employer. The conduct covered extends to action taken against a contractor or agent.”

 

What I Think

I think this assortment of legal horrors should be enough to keep you awake for many nights. Horrors for you, heaven for me. After more than thirty-five years counseling entrepreneurs on how to set up and run their businesses, to have the best chance of avoiding such legal entanglements, while also enjoying litigating the cases of those who either didn’t heed such advice or ignored the counsel of “Mr. Goodwrench,” I am in my element in such turbulent legal waters.

For the entrepreneur, however, concerned with achieving the best bottom line with the least personal discomfort, these legal tales spell a disaster, no matter how they come or go. Aside from those pirates who would use and abuse the legal system to ambush the unsuspecting, deep-pocketed entrepreneur, none of the articles posted on this date can make any honest entrepreneur do anything but quiver.

All of these scenarios mean money lost from the bottom line, energy diverted from the business plan, creativity diluted, and opportunities lost due to the pressure from the legal department. I would be remiss in failing to remember that for every threat or crisis there is often a corresponding opportunity, but the eternal “black hole” of legal issues can easily suck the cash out of even the peripheral businesses, let alone the main parties.

Certainly, when one sees a competitor embroiled in any of the litigious situations presented in these articles, thoughts of how to profit from it may occur. On the other hand, risking having to even call the lawyers over a “former” key employee of a competitor can substantially diminish the return on investment made in recruiting such an individual. The same can be, and in my experience, often is true of even acquiescing to his or her presentation of a resume to your HR department.

I strongly suggest to my clients that they incorporate a provision in the offer letter, engagement letter, or employment packet, to the effect that the prospective employee is not bound by any non-compete or non-disclosure which would negatively impact their employment with my client. Whether or not this is effective to fully insulate an unknowing client depends upon the circumstances, including the jurisdiction. If nothing else, when combined with a proper offer and hiring protocol, it should provide an easy and efficient way to at least screen for such legal land mines in a prospective employee’s resume.

At the other end of the employment time line, clearly legal minds can differ on the usefulness of such downsizing tactics as furloughs, mandated time off, reduced hours, and other, more creative methods of reducing personnel costs. Once again, the good news may be that for every employee you lay off, there may now very well be several unemployed individuals you could find to replace that individual, and at the same time achieve a much better, and less expensive employee in return. The unfortunately unemployed talent now on the street is staggering. It should make you take a long, hard look at your own bevy of beauties from a retention and enterprise growth perspective.

Clearly, in a troubled economy, the possibility of unscrupulous competition cannot be ignored. You may very well be the last one in your business to recognize the corporate espionage, computer fraud and other forms of looting going on throughout your organization. If your business is slow, make sure it is not because you failed to take steps to plug a leak, of talent, data, of customers.

The articles posted on this date range from cupcake wars to cyber attacks and premonitions of nuclear war, all revolving around legal diligence, enforcement, and continuous monitoring of your legal environment. That leaves quite a bit of room in between the goal posts. Considering how hard you work to maintain or improve your bottom line in these turbulent economic times, how much sense does it make to fail to actively secure your defenses from a breach, which could totally put you out of business?

One of the first things I offered my clients, as the economy declined, was a free, 360-degree self-audit form. My decision was that I would rather see my clients start to recognize, and hopefully self-correct the areas in which they were short on compliance, vision, or protection, than to let them suffer the potentially catastrophic results of ignorance of such risks. How well do you understand what is coming and going through the e-mail and copy machines in your business, and the impact it may have on the viability or profitability of your company?

 

 

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Lessons I Learned Today 5/26/09 – Create Your Own Second Life

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

*Is Second Life becoming a First Business? By Adam Toren

Second Life is a 3D “virtual world” created in 2003. “Major companies, like Kraft, Walt Disney, Coca-Cola, IBM and the Apple Store, as well as small businesses, are already taking advantage of the marketing opportunities that the virtual world Second Life brings to their real life businesses.”

“It’s free to join and create an avatar that represents your digital persona. Once you have your virtual being, you begin living your virtual life. You can either recreate your current life or create a whole new “second” life. Those living in the Second Life community can shop for virtual goods, travel, take part in activities, go to concerts and socialize. Second Life residents pretty much do all of the regular things that go on in the real world, plus much more. Second Life evolves daily based on the imagination of its residents.”

“Coca-Cola conducted a virtual thirst campaign in conjunction with its real world marketing efforts. From a systems standpoint, IBM is using Second Life to test the functionality of its programs between real and virtual worlds. Besides having a marketing presence on Second Life, IBM is also using the virtual world to improve global communication among its workforce without incurring travel expenses. With their virtual avatars, employees participate in seminars and corporate meetings.”

 

*15 Helpful Business Tips to THRIVE in Tough Times! By Adam Toren

This article outlines 15 ways you can position your business to face any type of diversity that comes its way.

1. Review your business procedures for effectiveness and streamline your business practices.
2. Work smarter and use the latest advances in technology to their potential.
3. Express your appreciation for your customers by implementing measures to show it.
4. Know what marketing techniques are and are not working for your business.
5. Use the Internet to search for services to streamline administrative functions, enhance selling strategies and expand marketing efforts.
6. Expand your customer base by thinking of other ways where you can reach a whole new segment of the population.
7. Use the Internet to get national recognition from email publishers of entrepreneur and business publications.
8. The most effective business comes from word of mouth. So become more involved in community functions, events or organization.
9. Evaluate what is and isn’t working and put more efforts into what started you out as a successful entrepreneur in the first place, core business.
10. Consider revising your pricing strategies in order to thrive long-term in an unfavorable economy.
11. There is a lot of competition among vendors to attract new business, so you could realize some serious savings in this area.
12. Do a line item cost analysis for each expense so you will be able to identify areas that need greater attention. It’s also important to get a handle on any debt or to manage inventory.
13. Consider reducing hours, shortening the workweek, or job sharing, as well as introducing incentive strategies to award employees for generating business or reducing expenses.
14. Utilize all forms of media when brainstorming ideas.
15. Create ways that make it easier for everyone to do business with you.

 

*The New Era of Copyrighting by Adam Toren

“Creative Commons is a nonprofit Massachusetts corporation that provides free licenses and legal tools so a creator of intellectual property can easily indicate how the work can be used. Creative Commons offers three different license formats: Commons Deed, which is a summary of how the intellectual property can be used; Legal Code, which displays the legal wording of the actual license in its entirety; and Metadata, which contains the important elements of the license in machine-readable coding so it can be found by search engines.”

“Creative Commons allows people to promote and market their intellectual property in a less restricted manner while still enjoying copyright protections that are necessary for their particular work. Anything traditionally covered under copyright law, including books, songs, films, videos, photographs, audio and visual recordings, websites, blogs and software documentation, is protected under a Creative Commons license. While this approach gives you more freedom with creative opportunities, you might still want to copyright your work for complete legal protection.”

 

*Philip Mossop, co-founder, The Green House

“There are a lot of new laws telling businesses what they need to do to comply as well as lots of media spotlight on businesses performing ethically and ‘green’ but very few businesses employ people who understand all these areas. The green house provides that service for them.”

“Confucius said if you enjoy what you do then you never have to work another day in your life and I found this to be true when starting the green house.” 

“We went through all the usual problems of starting a business – finance, getting customers, managing cashflow and so on but it never felt a chore to get up in a morning and go to the office an not once did I feel like going back to my old life and getting a 9-5 job for someone else.”

“Our strategy was to be commercially and socially responsible – never to put profit at the expense of ethics. It is still part of our mission statement today and one of our core values. We also deliberately thought like a technology company – always innovating, thinking of new ways to deal with problems, challenges and processes.”

“We have begun building strategic partnerships with operators that allow us all to benefit from each other’s services…”

 

*Young Entrepreneurs Turn Ideas Into Reality At The Digital Open by Matthew Toren

Digital Open is an innovative expo for global youth. As an online technology community and competition, Digital Open supports youth from around the world who have an innovative project idea or just want to share ideas with their peers. It’s free, with registration needed to create your Digital Open profile. 

As part of the Digital Open community, you can create a blog and post your thoughts or share interesting links. You can also send notes to peers, comment on notes of others, or take part in the Q&A forum. Or you can challenge your knowledge of free and open technology by successfully completing quizzes and essays that unlock badges that you can embed on your blogs or websites. 

The purpose of Digital Open is to give young entrepreneurs a global online community where they can showcase how they would change or enhance the world through the use of free and open technology. Young entrepreneurs can express their ideas, share their expertise and enter their projects through text, photo, video, or a combination of the three.

“Digital Open is all about creating global openness in the world so that collaborative solutions to any problem can be achieved.”

  

*Pat Wood and Claire Lewis, founders of TruffleShuffle.com

“We never actually went into this with the aim of starting a business – it all happened organically!” 

“Basically, the idea for TruffleShuffle came to us back in 2004 – my partner Pat was wearing a Goonies T-Shirt he’d bought from an American website on a night out and got so many nods and comments from friends and even total strangers, all wanting to know where they could buy their own, that we realised we may have stumbled upon a little niche in the market. “ 

“Retro T-Shirts weren’t widely available in the UK at the time so while I was studying for my law degree and Pat was holding down a full time job, we bought a couple more to sell on eBay in our spare time, just to get a feel for whether there really was a demand.”

“www.TruffleShuffle.com is an online fashion store specialising in all things retro! From Thundercats to Dirty Dancing, My Little Pony to Top Gun, Button Moon to Barbie, we stock over 1,000 officially licensed tees, hoodies, gifts and accessories, all inspired by your favourite childhood memories.”

“Building on our knowledge of this market, we have also founded our own in-house brand and licensing arm, Famous Forever which as well as providing product for TruffleShuffle, also sells tees and hoodies through the High Street both in the UK and internationally.”

“Lastly, we run another online store in conjunction with the London street wear label, Amplified which specialises in classic band tees called www.SugarBullets.com”

“Because of the way the business was started, we didn’t really have a strategy as such although right from the start, we knew we wanted to make sure that the customer was king.”

“We were big fans of online shopping, even before we started the business but were often frustrated by companies who seemed to think that the fact they operated online gave them an excuse to hide from their customers.”

“Therefore, we wanted to make sure this wasn’t the case for us and the fact that our approach to customer service is something we’re congratulated for on a daily basis still makes me smile.”

“Be prepared to work very, very hard – starting a business is not for people looking for the easy life! On the flipside though – the rewards are definitely worth it!”

“Cash is king! Keep a keen eye on the finances at all times and if that’s not your strong point, hire someone who can.”

“Don’t skimp on customer service – not only are satisfied customers your best marketers but repeat custom alone is responsible for around 25-30 per cent of our turnover so it really pays to treat them well.”

“Enjoy it!”

 

*Launch a small business in 10 steps (parts 1 & 2) by Dan Matthews

“Every new business start-up has its own unique set of targets, problems and needs – so no two small businesses are alike. But there are certain golden rules common to all start-ups that you can follow to make sure your start-up business has the best possible chance of survival.”

1)    Learn about your market. Market research is the most fundamental thing you can do before setting up in business.

2)    Write a business plan.

3)    Create a ‘business’ legally.

4)    Get proper funding. Having too little money at start-up is one of the biggest reasons new businesses fail.

5)    Find business premises.

6)    Buy the right tech and equipment.

7)    Develop products and services. Once you have uncovered a need for your product or service, you’ll need to find a way of getting it to your target market. This process is what makes your business unique.

8)    Recruit staff. “They say your people are your business’ strongest asset, and this is no truer than in the case of start-up businesses. So choose wisely. Many start-ups headhunt people they have worked with in the past and have direct experience of managing.”

9)    Advertise and market your business. It doesn’t matter how good your offering is, you won’t sell it if no one knows about it.

10) Get paid.

 

*How To Foster Healthy Conflict by Steven Berglas

Healthy conflict resolution bolsters morale. “If no one is ever told they’re wrong, how can they ever truly take satisfaction in being right? The only way evaluators, advisers and even co-workers have any credibility is by offering the occasional critique. And that means being able to have an honest conversation about what works and what doesn’t.”

“There will always be “yes men”–some merely feckless, others full-blown snakes in the grass. Don’t hire them, don’t cultivate them and certainly don’t take your cues from them. Instead, invite conflict–the kind that creates and motivates. Above all, thank those with the courage to tell you the truth. Your company’s survival depends on it.”

 

What I Think

I think, using applied entrepreneurship, ” You can either recreate your current life or create a whole new “second” life,” to borrow a few words from Adam Toren’s article, Is Second Life becoming a First Business? Granted, Toren was talking about a 3D “virtual world, but why can’t you do this in the real world?

What is stopping you? Look at those fresh faces of Pat Wood and Claire Lewis, for instance, founders of TruffleShuffle.com and other businesses. It sounds like all they did is to follow the ten steps outlined by Dan Matthews in his articles, Launch a small business in 10 steps (parts 1 & 2), but clearly they had also some pretty good instincts of their own. In addition to taking those standard steps, they understood they needed to test the market for their products, and they took things one stage at a time.

First, they saw what they believed to be a demand for a product. They then did some market sampling, testing customer demand. Then they proceeded without pouring in a bunch of cash, while staying with their “day job” or educational track, until such time as the business was well underway and it pulled them out of the comfort zone and into the entrepreneurship zone.

Finally, they pursued growth in careful stages, keeping costs low with strategic partnerships, and expanding into new business arenas where they could essentially follow the money.

Along the way, they certainly focused on customer service, giving the customer the product and service the customer wanted, rather than coming up with something they wanted to sell, and then trying to figure out a way to finance the business and get customers to buy the product.

Several of the articles posted on this date show just how much the paradigm has changed, in terms of utilizing the various technologies now available to allow entrepreneurs to test and then demonstrate their entrepreneurial skills virtually, before risking anything in the real world. In more and more cases every day, these journeys into virtual entrepreneurship solidify real bricks and mortar dreams, or become the cash equivalent generated from a virtual marketplace.

The following is one of my favorite quotes from the articles posted on this date:

“The world has faced tough economic times before and many a company has survived and even thrived during them. The successful ones are those that are led by an entrepreneur who understands the value of their business and is proactive in meeting a challenge head on with a positive and motivating attitude.” – 15 Helpful Business Tips to THRIVE in Tough Times! By Adam Toren

What is stopping you from creating your very own “second” life?

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Lessons I Learned Today 5/25/09 – If Pavlov was an executive coach…

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

*The Key To Keeping A Family Business Alive by Steven Berglas

“Scads of studies indicate that family-owned companies (which account, by some estimates, for 50% to 70% of global GDP) have a competitive edge over the rest. But those bonds can unravel at a frightening pace too–and plenty of families don’t see it coming.”

The article recounts the efforts of Dr. Steven Berglas, coaching a business run by two brothers and a “Machiavellian” operations manager. The brothers worked well together when facing a common threat to their business, but childhood “ghosts” and friction returned when they opened another location.

Dr. Berglas spent 25 years on the faculty of Harvard Medical School’s Department of Psychiatry and now coaches entrepreneurs, executives and other high-achievers. He got the brothers to end each work week with a “decompression meeting,” where they hash out any raw feelings. The rule of thumb for these sessions is that no issue is too trivial, and no one leaves the meeting harboring a grudge.

 

*If You Want To Raise Cash, Get Brash by Brett Nelson

Raising money is difficult and distracting, and most small businesses fail because they run out of cash. Raising additional funds in smaller chunks at higher “implied” valuations might let you keep more equity along the way; then again, if you cut it too close, you could end up begging for money at far less favorable terms.

Brash chose to cut out financing risk and focus instead on execution. Its niche: videogames based on other media properties such as movies, television shows and music. Brash Entertainment, the 4-month-old brainchild of Mitch Davis and Nicholas Longano–co-founders of gaming company Massive, which was later bought by Microsoft, scared up a whopping $400 million from a group of private equity firms led by ABRY Partners, which invests in media and communications companies.

“Having an interesting business model isn’t enough when looking for money. You also need to show some proof that it will work. In Brash’s case, the company first had to land a few licensing deals. It had to prove it could strike deals with talented programmers, and it had to assemble a capable team.”

There was still another step in the financing process. Before investors write checks, they like to know how their money will be spent. “We had a detailed plan of attack,” says Longano.

Bottom line: Money in hand today is better than a dream dashed tomorrow. So when it comes to raising early-stage financing, get brash.

 

*How To Get Uncle Sam To Fund Your Start-Up by Maureen Farrell

“In 2006, Matt Silver, an engineering student in the Ph.D. program at the Massachusetts Institute of Technology, dreamed up a new method for converting organic waste into power. All he needed was some capital to prove the concept.”

“Our strategy is to maximize the extent [to which] we can get public funding before going to private investment,” says Silver, 29. “The more that we can prove our technology before going to venture capitalists, [the better position we'll be in, with respect to] how much of the company we’ll be giving up for the funding.”

The article outlines the process of obtaining SBIR and SBTT grants.

A final warning about the great grant chase: “This money can be very seductive,” says Fleming. “You get to work with really smart people and they pay your bills, but that sometimes distracts you from [building] a stand-alone company.”

 

*How We Started a Liquor Brand edited by Stacy Perman

Six years ago, Courtney, 29, and his brother, Carter, 28, then both Goldman Sachs (GS) investment bankers, took a surfing trip to Brazil. While there, the Chicago natives drank smoothies made with the açaí berry, known locally as “purple gold” because of its health properties. Four years later, Reum, who was working in Goldman’s consumer-products division, decided it was time to stop observing businesses from the outside and start his own liquor company.

Reum launched VeeV, an açaí-infused wheat based grain alcohol liquor, positioning it as an alternative to vodka. It was initially sold in high-end bars and clubs in Los Angeles.

While at Goldman Sachs, “I met people who didn’t seem that much older than I was who had good ideas and had just decided to take the leap. I decided if they can do it—I don’t know if I can—but I’m sure going to give it a try. “

“Having worked on one large alcohol merger in the spring of 2005 between Allied Domecq (ALYZF.PK) and Pernod Ricard, I was really struck by the lack of innovation in the alcohol space. When you really get down to it, there aren’t many industries that have evolved less in the last 100 years than alcohol.”

We began the business the way every business book tells you not to: by using a tagline, essentially ‘back-solving’ our way into creating a product. We came up with the line: “A Better Way to Drink” because that was the goal, both in terms of the product and the company as a whole. We wanted to produce a beverage that had an interesting taste and was better quality than existing alternatives.

“I put up the initial $250,000 in seed capital to get the first bottle on the shelf. I was confident I had a good idea and plenty of business experience. But I soon found that my time at Goldman was little help when it came to starting a brand from scratch.”

There were plenty more ups and downs. We learned that it’s tough to be first to market with something unique.

“My biggest takeaway from all this: Don’t try to do everything at once. It’s admirable but often not feasible. After initially being overwhelmed by everything we wanted to be as a brand, we took a step back and realized that you don’t have to be everything from Day One. Consumers tend to give you credit for “progress” as long as your efforts are genuine. So will investors—we’ve now raised a total of more than $5 million from angels.”

 

*Turning a Failing Restaurant Around

After a 10-year run operating the Michelin-starred, critically acclaimed New York City restaurant Etats-Unis with his father, Jonathan Rapp, 41, moved to the small village of Chester (Conn.) seven years ago to strike out on his own.

River Tavern is a 55-seat restaurant serving a menu that changes daily, sourced with local ingredients. From the outset, Rapp hoped to create a neighborhood spot that was good enough to draw customers from across the whole state.

Two years later, with business shrinking the restaurant was essentially bankrupt, kept alive for the moment with loans from friends and family. “It was time to take a hard, unforgiving look at my assumptions, my approach, and our execution.”

“I realized that I had had the equation backwards. I was making decisions based on what I wanted. I hadn’t been willing to make the compromises (as I saw it) sometimes necessary to create a broad coalition of customers—something absolutely crucial in a town with fewer people than the number that walked by Etats-Unis in a day.” The fact was, we weren’t connecting with our customers.

“While our fundamentals remained unchanged, I redirected much of the focus, work, and imagination that I had given to cooking to the task of growing a truly successful, sustainable business—one based on a real concern and strategy for making our customers happy.”

Once various changes were implemented, “we started thinking about how to extend our reach and capture new customers for the future. We began publishing a seasonal calendar of special events: monthly wine lunches, town-wide holiday events, and art openings with local artists. Our collaborations with local artists, restaurants, and businesses draws on and reinforces our image as a member of an unique, thriving village. Our customers love the sense that we are working creatively together to make Chester vibrant.”

“While you can’t be all things to all people, you can be a lot of things to many.”

 

 *Custom-Building a Life

Jeff Weinstein’s burger joint has taken off, but he has struggled to balance life and the job. Then he hit on a work-in-progress solution. Weinstein, 32, opened an inexpensive build-your-own hamburger eatery in 2003. The company earned $3.5 million in 2007 and estimates it will bring in $9 million in 2008.

“When I first started The Counter, I was going to own a small neighborhood restaurant that served burgers. It was going to be a place where I could have dinner with my wife, earn a nice income, and please people with great food at a fair price. That was my plan.”

I now have seven of those little restaurants open, five more under construction, and over 125 committed to open in the coming years.

“At the restaurant, we custom-build burgers. I realized that if we can do that successfully, I should be able to custom-build my life. There should be no boundaries or restrictions on when or how I get things done. I figured out that my work life doesn’t just happen from 9 am to 5 pm, and my personal life doesn’t happen in the remaining time. The reality is that they both happen 24 hours a day. Traditional work-life balance doesn’t work for me. The trick is being fluid.”

 

*Dogfish Head: Brewing Up Relationships

In 1995, Sam Calagione, 38, opened Delaware’s first brew pub, Dogfish Head Brewings & Eats, in Rehoboth Beach. The plan was to introduce a public house with original beer, food, and music to the town. Dogfish Head Craft Brewery fashioned itself as the flavorful indie alternative to the beer conglomerates and expanded its offerings beyond beer to include spirits (rum, vodka, gin, and tequila), T-shirts, music, and licensed alehouses in Gaithersburg, Md., and Falls Church, Va.

In 2006, Dogfish earned $14.4 million, and the company estimates it will bring in $18.5 million in 2007. “When I opened Dogfish Head Craft Brewery in 1995, we were the smallest commercial brewery in the country out of over 1,200 breweries. Today we are among the fastest-growing breweries in America.” Since day one, our motto has been “off-centered ales for off-centered people.”

“Our strategy was to focus on expanding our brewery using highly skilled, similarly ‘off-centered’ people to become co-workers and fellow beer evangelists. Now they travel to events throughout the country convincing people to try our beer.”

“We take full advantage of the opportunity to talk with the folks who care enough to join us on our commercial and artistic journey. Big companies have to talk to everyone with one booming voice. Small companies have the advantage of customizing our marketing to talk with the people who want to trade up to the small.”

 

*Sammy Hagar’s Tequila Supergroup

In 1992, Sammy Hagar opened his Cabo Wabo Cantina in Cabo San Lucas, Mexico, and four years later launched his own brand of premium tequila, also called Cabo Wabo. Hagar, 59, is a Rock ‘n’ Roll Hall of Fame inductee and former front man of rock bands Van Halen and Montrose.

Cabo Wabo Enterprises, based in Novato, Calif., earned about $60 million in sales in 2007. In May, 2007, Hagar announced a deal to sell an 80% stake in Cabo Wabo Enterprises to Campari/Skyy for $80 million.

“My original vision for this company started out with the Cabo Wabo Cantina in Cabo San Lucas, Mexico. I wanted to build a little tequila bar, where I could go and play acoustically with my friends, hang out, and, of course, drink tequila. And to have a great tequila bar, I needed a great tequila.”

“My first intention was just to have this little tequila brand for my friends at the cantina and then bring it to America. I thought it’d be awesome if we did 10,000 cases a year. Our first year, we sold 37,000 cases. Then it exploded and it really started getting away from me, because I’m not a good day-to-day business guy. You know, my feet are in the sand day to day. Cell phones on the beach—I don’t like it. I feel like an idiot. People look at me funny. I get one white ear out of it, you know what I mean?”

“Long story short: I realized how important it was for it to be a global brand and not just a little thing in my backyard or just in America. If it’s the best tequila in the world, then why isn’t it worldwide? The fact of the matter is that the brand outgrew my ability to take it to the next level. So, when Campari/Skyy Spirits approached me late last year with an offer to go global, I agreed.”

“I have turned down many big groups of investors that have offered me a lot of money. So if you say, well it’s about the money, bull crap. The money part of it is just a fringe benefit—it was about finding the right partner and that’s what I’m excited about.”

 

*Making the Most of a Second Act

Doug Ducey, 44, made his name in ice cream. As the CEO of Cold Stone Creamery (KAHL), he helped its founder, Don Sutherland, expand the brand from a single shop in Arizona to more than 1,400 stores worldwide, with annual sales of nearly $500 million. In May, 2007, Ducey and Sutherland merged the outfit with Kahala, a privately held franchising powerhouse, in a multimillion-dollar deal. Not long after the deal, however, Ducey left the newly combined company.

Ducey’s next act was to join iMemories, a Scottsdale (Ariz.) company started in 2006 that converts home movies, photos, and slides into digitally remastered DVDs. In 2008, Ducey helped launch iMemories Online, the company’s Internet-based technology that allows customers to store, customize, and share their home movies online.

“When one door closes, another opens. Given my experience, many people thought my next step would be in the food or franchise category. Yet I sought something that would make me jump of bed in the morning. I believe strongly that you must always have an open mind to see the possibilities. For me, I was searching for another brand I could help take from relative obscurity to household name. As an entrepreneur, you’re constantly navigating your way through a proverbial hallway of new opportunities. Identifying and capitalizing on the right open door defines your success.”

 

*Fun Money by Nichole L. Torres

Spending your free time gardening, restoring classic cars or collecting antique jewelry can be a joy, right? It’s the thing that renews your passion, the thing that makes you feel that all is right with the world. Wouldn’t it be great to find a way to make money doing what you love? Turning your treasured hobby into a business will take hard work and a truckload of creativity, but the rewards are endless. You’ll be doing what you love–and getting paid for it.

The benefits of starting a business based on your hobby are many, according to Rachna D. Jain, founder of business coaching firm Excel With Ease Coaching in Columbia, Maryland. “Many times you’ll have a lot of knowledge about [your hobby] already,” she says. “And the most successful entrepreneurs are the ones who have a passion for the work they do.”

Experts and entrepreneurs stress the importance of researching any business idea before jumping in. Denise O’Berry, president of business consulting firm Small Business Edge Corp. in Tampa, Florida, notes that research is one of the most important first steps: “You need a full plan of how you’re going to address your objectives. It’s all that stuff everybody hates to do.”

Think like a business owner by conducting a market analysis and a competitive analysis to see if existing businesses are similar to your idea. Is there a similar business in your area or nationally?

Find out if selling your hobby wares will sustain you. Jain echoes that sentiment: “Once you have a market identified, canvas Internet neighborhoods and invite people to meet with you [for focus groups].” You may even consider contacting a mentor who can point you in the right direction while you’re researching your business plan.

Before you make the leap, you should think long and hard about whether doing your hobby as a business will ultimately drain your enthusiasm for it.

“A passion for a hobby can help you start a business. But ultimately, hard work and a willingness to handle the not-so-fun aspects of running a business are what spell success. Done right, your hobby business can provide you with a great living–and an even greater source of joy.”

The article also has links to books and organizations “to get the heads up on your hobby business.”

 

*Not Just for Kids by April Y. Pennington

Bigbadtoystore Inc.

Description: Online toy retailer specializing in collectible action figures

Founder: Joel Boblit, 29

Location: Somerset, Wisconsin

Projected 2005 Sales: Over $4 million

Serious collectors prize mint-condition toy packaging, so Boblit guarantees his toys by using a grading system to distinguish “standard grade” (mint or near-mint condition) from “substandard grade” packages. He also offers a premium packing service that ensures an item is in tiptop condition and handled with extra care when it’s shipped. Another big draw is the “Pile of Loot” function, which allows customers to stockpile items they’ve already paid for in a virtual storage bin. Upon the customer’s choosing, the company will ship out all the items at once, reducing shipping costs. Future plans include distribution to approved retailers, who can view volume pricing online. Boblit says, “We’ve got the competitive edge for convenience.”

 

*Spelunking Brought Them a Goldmine by Geoff Williams

For a decade, Steve, an avid spelunker, had been trying to persuade a mountain man to sell him some land with some millennia-old caves on it. In 1999, the man finally relented, and Steve and Jeanne quit their jobs.

They immediately started a small cave-touring business, driving people up the mountain in a van and guiding them through the caverns. But it wasn’t until April 2003 that Steve and Jeanne transformed their independent operation into something quite different: an evolving, growing theme park that revolves around their cave tours.

 

*Karate Kids by Sara Wilson

Former ballerina and stunt woman, Dawn Barnes, 40s, has turned her love of martial arts into an empire. She is the founder of Dawn Barnes Karate Kids Inc., in Santa Monica, California, a children’s karate school that focuses on inspiring self-esteem in every child.

Startup Costs: $15,000 in 1995

Projected 2005 sales: $2.5 million for four studios

“In 1984, Dawn Barnes enrolled herself and her two young sons in a karate class with no idea of the adventures that awaited. By signing up, this former ballerina and stuntwoman started down the path to becoming a third-degree black belt, successful entrepreneur and well-known leader in the martial arts industry. Fascinated by the physical/spiritual balance of martial arts, Barnes trained diligently and, about 10 years later, opened the doors to her own school.”

“She has written instructors manuals and produced DVDs used by teachers worldwide, she spreads her teachings by speaking at national conventions, and she has written a new children’s book series–soon to be turned into a feature film–titled The Black Belt Club.”

 

*Amy Bielawski – Founder, Hare-Brained Productions by Susie Lacey

“In a slow economy, enjoying the arts is a luxury that is often the first thing people cut from their budgets. But performers provide joy and fulfillment so if the spotlight is your passion, don’t give up. If you’re persistent enough, people will find you.”

“I hired independent entertainers to round out my act and realized that I was basically running a business, so I started one.”

“I have no trouble living below my means so I never considered getting financing. I just scraped by. But boy was that first year tough. Luckily I’m not fazed by the things that normally scare people about business. Cold calling? No problem. I’m an actress! I get a big charge out of making a sale. I will say though, and no pun intended, that I took a real risk launching an entertainment business without a safety net. Luckily I’m part of a tight theatrical community. We’re all close. We help each other out.”

 

*How To: Find and Work With a Mentor by Amy Swift

Many people who think they need a partner or vendor would actually be better served by a mentor.

A mentor is generally someone who has a personal investment or interest in you. You can find a mentor through SCORE or StepUp Women’s Network, but the best kind of mentor is going to be someone who already knows you (or loves you!) and wants you to come out on top.

Don’t rely on them too heavily for day-to-day advice. A mentor is meant to be a bigger-picture thinker and strategist for you. They help you keep your head above water, and give you perspective and a sense of longevity with your business.

Set the agenda. Make a list of what you want to discuss and what problems you hope to solve in each session with your mentor.

Choose a mentor who has a history in your specific business.

 

What I Think

I think if Pavlov was an executive coach, many entrepreneurs would not be doing what they are today. You remember Pavlov from your high school biology classes, don’t you? He was the Russian scientist given credit for establishing the theory of “conditional reflexes.”  He noticed that dogs tend to salivate before food actually arrives, when conditioned to expect it, based upon set stimulus, and they prepare for it by salivating.

This led to further study by Pavlov and others of “transmarginal inhibition” (TMI), the body’s natural response of shutting down when exposed to overwhelming stress or pain. Pavlov proved that organisms have different levels of tolerance and all temperament types respond to the stimuli (such as conditioned responses to both pleasure and pain) in the same way, but different temperaments move through the responses at different times.

If Pavlov was an executive coach, I suspect the article by Steven Berglas, The Key To Keeping A Family Business Alive, might have been written up in a psychology journal. The brothers’ story is all too familiar to those of us who counsel family businesses on a regular basis. Childhood “ghosts” and prejudices have a way of lingering on and invading reason in many such situations. Instead of ringing a bell to make a dog salivate, I’ve had clients whose blood pressure I could raise by putting them in a board room with their siblings, parents, or children.

Just how long an entrepreneur will stay in a painful business relationship might likewise make a good research project for a modern day Pavlov. Some would quickly react to the pain and move to relieve it. Some would hesitate, while others might overreact, or even react negatively to positive stimulus. Surely, some entrepreneurs, “trapped” in a family business, might feel akin to Pavlov’s subjects, leading a “dog’s life.”

In case you hadn’t noticed, however, last weekend’s Memorial Day special was largely a selection of articles about entrepreneurs having fun. As Nichole L. Torres points out in the article, Fun Money:

Wouldn’t it be great to find a way to make money doing what you love? Turning your treasured hobby into a business will take hard work and a truckload of creativity, but the rewards are endless. You’ll be doing what you love–and getting paid for it.

Passion can give you a great head start on running a business, since loving the business is often a condition precedent to success in that business. This series of articles, aside from being a holiday weekend diversion, points out the common thread that hard work and perseverance are required, in addition to passion.

Many of these case studies point out that you can have a really great time, make a lot of money, love what you do every day, and have a balanced life, all by picking the right business opportunity. Sammy Hagar learned that there can come a time when your business exceeds your ability to manage it to the greatest potential. Finding the right partner, or mentor, can then make all the difference.

What is stopping you from custom-building your own life?

 

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Corporate Litigation as “Asset”

An article by Kate Ploud in the January edition of CFO magazine puts an interesting spin on how some look at the mass of corporate litigation in the United States. While much has been said disparaging the number of corporate lawsuits, Juridica Capital Management, Ltd., takes a different view.

 

Ploud’s article quotes the founder of Juridica, Richard Fields, as seeing this litigation as a type of asset sitting on the books of a company because it provides another way for companies to hedge their litigation risk and finance their own litigation expenses. Companies in the United States can apply to Juridica directly or through their law firm for coverage of a portion of their litigation legal fees in exchange for “sharing” 25-40% of any proceeds obtained in the litigation.

 

According to the company’s Web site, Jurdica is “a lawyer-owned financial services company operated in an investment banking tradition and focused exclusively on capital and finance for corporations, law firms, lawyers, and claim-holders worldwide.” Juridica is based in the United Kingdom but the company’s top management team, including the founder, is composed of American lawyers.

 

Jurdica’s Web site says it “prefers to examine potential business-related claim investments that have been vetted and accepted by qualified lawyers” and “ordinarily does not structure investments in personal injury claims.” It also states that the company’s due diligence process “is carefully designed to preserve client confidentiality, lawyer-client privileges and work product protections.  Our due diligence process normally takes 30 to 60 days but can be completed in less time where conditions permit.”

 

Fields says the company strategy of investment only in certain types of business-to-business cases, thoroughly screened by outside lawyers, has been very successful. In two cases, which settled, according to Fields, the company made a $5.25 million profit.

Prosecutors Finally Find a Pretext; First TELCO Indictment Filed

Prosecutors have finally come up with an indictment in the first “pretexting” case brought under a federal law President Bush signed on January 12,2007, the “Telephone Records and Privacy Protection Act of 2006” (“Telco Privacy Act” or “Act”). The law passed through Congress in 2006 in the wake of the Hewlett-Packard spying scandal.

 

The indictment, brought against Vaden Anderson, 28, alleged he used pretexting to obtain confidential phone records from Sprint/Nextel by serving the phone company with a fake U.S. District Court civil subpoena.

 

Pretexting generally involves obtaining telephone records from a telephone carrier under false pretenses such as by posing as a phone company customer, in order to request a report of last month’s calling records. It gained notoriety during the 2006 Hewlett-Packard (“HP”) scandal, when investigators hired by HP impersonated HP directors and others to obtain their phone records.

 

In an article in The National Law Journal, republished on Law.com, David Hricik, a law professor, former chair of the American Bar Association Section of Intellectual Property Law’s professional responsibility committee, and noted ethics expert, said the HP case prompted attorneys to re-examine how they deal with the investigators they hire, some of whom might want to use pretexting to obtain otherwise difficult to discover records.

 

Hricik, however, said the legality of pretexting is still a gray area. Using trickery to catch a discriminatory landlord, for example, may serve a social good, but using it to obtain private cell phone records could constitute a crime.

 

Telco Privacy Act penalties include fines and imprisonment for up to 10 years and also provide for enhanced penalties, increasing the fines and imprisonment by up to five years in certain enumerated circumstances.

 

Facebook and Others Accused of Violating the Privacy of Users

Suit has been filed in the U.S. District Court for the Northern District of California against Facebook and other defendants, including Blockbuster, Hotwire, Overstock.com, Zappos and Gamefly. The litigation, Lane et al, vs. Facebook et al, alleges the group of defendants violated a variety of laws, including the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Video Privacy Protection Act, California’s Consumer Legal Remedies Act, and the California Computer Crime Law.

 

Facebook, a social networking site, was launched in 2004 by Mark Zuckerberg, while at Harvard University. Zuckerberg has been the target of several earlier suits from former classmates who say he stole their intellectual property, including computer source code. He has also been the subject of a suit by ConnectU, which hired him during his sophomore year at Harvard, to complete programming for their site. The ConnectU suit, which was dismissed without prejudice on technical grounds, claimed Zuckerberg intentionally sabotaged development there, while using the stolen code to help develop Facebook.

 

Facebook launched the Beacon system in 2007, which allowed third-party websites to include a Facebook script by on their sites, to send information about the actions of Facebook users on those sites, such as purchases made, commenting, and games played, back to Facebook. This opt-out scripting prompted serious privacy concerns and eventually led to a change in policy by Facebook

 

The Lane litigation focuses on the joint marketing venture between Facebook and the other defendants, which the plaintiffs allege violated users’ privacy by sharing personal information about other Web sites. Information about those activities was then published on the user’s home and profile pages on Facebook and broadcast to designated “friends” on Facebook.com.

 

The plaintiffs are asking the court to certify the class and award injunctive relief and monetary damages. A copy of the Complaint is available online.