A Dog’s Brexit – or why you don’t give students a vote on homework

Watching the fall out from the 2016 Brexit vote has been met with increasing alarm and bewilderment. No matter what side of the debate you are on.

The increasingly entrenched tribal views of each side of the Brexit question have added to the mess. No one is listening anymore. Hard, extreme core groups are facing off against each other, making it hard to see a sensible way forward or any palatable compromise that can get passed by the UK parliament that is also acceptable to the 27 EU member nations, and that also honours the ‘Leave’ result of 3 years ago.

At this stage, no one knows what the end result will be. At the time of writing almost anything is possible: from a no deal crash out of the EU, to a managed exit with some kind of deal, to a long delay, to a total change of mind and remaining in the EU.

The poor British public are losing the will to live – they are either saying “get on with Brexit!” or “for goodness sake, stop this Brexit madness!”

It’s an extremely complex issue, as global and regional trade, business and politics are intertwined in all kinds of ways. Hundreds of thousands of companies in Europe rely (and have been built up on) free movement of goods, people and services over the past 45 years, and to rip that up is very destabilising.

Even more so, when those businesses have no idea what the final outcome of all this wrangling will be. Uncertainty is the greatest killer of business.

What happens to the millions of Europeans who have settled in the EU, and those Brits who have done likewise in Europe? What happens at the Northern Ireland/Irish border, and what implications does this have for the 1998 peace deal (‘The Good Friday Agreement’)? What about Gibraltar?

It is for these precise reasons  – and many more – that a complex issue such as Britain’s membership of the EU should never have been boiled down to such a simplistic choice of Leave or Remain in 2016.

Lunatics taking over the asylum

It’s akin to asking school students whether they would like to ban homework or not.

I bet if you held that vote in pretty much any school, it would come down on the side of ‘Leave’.

“We want to take our lives back!” you could hear the Leaver camp scream. “It’s a golden, new future that awaits us – we can do this!” they would argue. “Imagine all the time you would have now to do those other things you can do, like social media, listening to music and going to parties?!”

Sounds like much more fun. I am sure it would get up. It’s easy to bash things that are difficult to understand. Even easier if you want to stick it to those in power.

No doubt there’d some some brave souls arguing the benefits of remaining with homework, the educational benefits, the long term lessons it teaches in working independently, solving problems yourself and solidifying your understanding. The study skills it teaches. The self reliance. The confidence. The feedback on learning it provides.

But they’d be drowned out by the leave populists. Why not try it? What’s to lose?

On the Leave side, there may even be some arguing against homework stating its adverse impacts on education, how only the richest kids have nice study areas at home and how divisive this is. And how mean it is to set homework which some students can’t complete. But mostly, the Leave arguments would be based on emotion, not facts.

“I don’t really accept your alleged ‘facts’ about the benefits of homework,” a Leave proponent would say, “I am more interested in how homework makes students feel.”

And so, when it comes down to it, on polling day, a majority vote to ban homework. Great celebrations ensue. The lazies love it. They can’t quite believe it.

But it’s not long before issues start to take hold.

So we’ve voted against homework, does that mean all work done at home is banned (Hard Leave) or just that teachers can’t set and grade homework (Soft)? It was not all that clear. Leave meant different things to different people.

Parents and teachers bemoan a further dumbing down of an entire generation of students, and the results the school can deliver. The older students are only a year out from uni anyway so aren’t as bothered. It’s the youngest ones that will suffer.

The implication of banning bright, studious pupils from doing work at home is becoming hard to implement. There’s a back lash against the vote, and the decision to even hold it in the first place.

(It was only held to appease a noisy hard core of teachers who had had enough of marking homework. The head teacher had been pressured to hold a ‘put up or shut up’ in or out vote. That head teacher has since resigned and the much-harangued successor is now feeling duty bound to follow through on the decision.)

A mass exodus of families starts as they move out of the school catchment area, selling their houses and buying in other suburbs where the local schools still have homework. House prices fall around the school.

Sounds crazy right?

The Real Politic

Politicians are elected to make decisions in a representative democracy.

This means they represent their constituents and make decisions on behalf of the people. It’s why they are there. They don’t go back to their people every time they have a decision to make. The public have their own lives to live, and differ among themselves anyway.

Politicians are then held to account at the ballot box every few years. They make the decisions and vote on behalf of the people, for what they believe is in their best interests.

The referendum was flawed from the outset. Even leavers could not agree on (nor know) what they were leaving for, and how that would be arranged. No one is happy. One lesson from the mess is not to ask a simple question to a complex issue; especially if those answering it have little idea of the long term consequences, or understand what’s good for them.

~~

Photo by Deeana Creates from Pexels

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How do I value my startup?

Valuing a tech startup is one of those ‘how long is a piece of string’ questions (which is no help at all), but it’s still an important factor in trying to raise money for your early stage venture…

Naturally, both sides will look at valuation in opposite ways.

The plucky founder will want to give away as little of the company as equity for as much cash as possible (the highest valuation), thus retaining more for themselves, their co-founders and any future funding rounds.

Meanwhile, the investors will want some meaningful slice of the company, so if things really do take off and the company is worth something in the future, they will get some kind of nice return on their money. As they may invest in several startups knowing most will fail, for each one they do invest in, they will want to see 10 times return on their money (to cover those that fail to give any return at all.)

Maybe, somewhere in there is a deal. Maybe not. You may have to speak to dozens of people before you raise a cent. It can take months. It might not happen at all.

But if you are venturing out to get some equity funding, my best advice is ‘be realistic‘. That means, don’t go crazy over your valuation, don’t do it slap dash (invest the time to do it properly), prepare yourself and practice.

I am assuming we are talking about a brand new, pre-revenue startup with no trading history. You have an idea, a business plan, maybe a prototype, have set up a company, put in some of your own money, and have something (an app, website, some users) to show for it. But you are otherwise brand spanking new.

Are you really going out with him/her?

Before worrying about valuation, please think carefully about WHO you get on board as an equity stakeholder in your business, and think WHETHER you actually need new shareholders at all.

Investors tend to hang around (as there are only limited opportunities to get them out). It can be very awkward if – later on – you think you’ve made a mistake. Also, some future investors won’t touch you if you have the wrong people on your share register. The same goes for co-founders and sometimes employees too. Be careful what you wish for.

You will be assessed by who you associate with, and having investors in your business is about ‘as associated’ as you are going to get in your life. Like a marriage, it can take a lot of nasty unravelling to undo.

Also, have a real think about how far you can go on your own.  With your own money, or some cash you can cobble together from some kind of early or trial revenues, partnering, R&D tax incentives, rich Uncle Tom Cobley and all.

Do you really need to raise money? Can you not get your customers to fund your business, at least a little bit further… to profitability? In many ways, that’s the best way.

But let’s say you’ve done all that and exhausted all other avenues. Equity fund raising it is. It will just take more money to give this thing the push it needs.

How to value it?

Simply put, the price of an early stage tech company is whatever the founder is willing to sell a piece for, and whatever someone is willing to pay for that piece. This is also not very helpful, but it’s true.

It’s a bit like selling your car, or your house. There is only one unique version, and a limited amount of buyers. But you only need one (or a few) brave buyers, and then the deal could be done.

If you need, say $50K, and are willing to sell 10% of your startup for this investment, and someone is willing to pay you $50K cash that for the stake, then, by definition, your company is valued at $500,000 pre-money.

Pre and Post Money Discussions

The ‘pre-money’ bit means that BEFORE they put the $50K in, your company was worth $500K (as $500K is 10% of $50K).

Note that AFTER they have put it in, it now ALSO has $50K in it, so technically your business is now worth $550,000 (‘post money’). Talking ‘pre-money’ is cleaner and easier to calculate in any valuation discussion. ‘Post money’ gets a bit fiddly.

With your startup now valued at $550K, the new investor does not actually have 10%, they have 9.09%. What was 10% pre-money is now 9.09% post money.

If they wanted 10% post money, then they’d have to put in $55K (which is 11% pre).

If you, as founder, owned 100% of the business beforehand, you now own 90.91% after the transaction. The issue of the new $50K of shares has diluted you a little. But you will have over 90%, which is almost as good as 100%. You have complete control, except you now have an investor, who one day hopes will get more than $50K back for their investment, hopefully half a mill or more. That is the point of investing, after all.

Now, with the $50K in the bank, you can get on with business and ring every last ounce of value out of that fresh investment. The hope is that if used wisely, future valuation will be way more than $500K by that stage. Which is the whole point. You and your investor wins.

Stuck in the Middle with You

Except, the investment is not liquid (they can’t get it out of a bank as cash) and you won’t be able to borrow against it. Effectively, it’s stuck in there until there is some ‘liquidity event’ (someway down the track) like the future sale of the whole company, an IPO or new investors come in allowing some original ones to exit some or all of their shares.

This latter eventuality is a rarity. What new investor wants to see their money used by original investors exiting stage right?

Another way of earning on shares is dividends, but I am assuming you are a long way out from profits.

Valuation Ranges

So, back to valuation. How do you come up with $500K, or $1M or many millions as the fair market valuation for your early stage tech business?

There’s a basic rule of thumb, which seems to be ‘accepted wisdom’ in these parts.

Assuming the business is a truly scaleable tech startup with a clear defensible position, a significant market to go after and with good founders…

1. If it’s just an idea and a slide deck, you can’t value yourself more than A$500K. That is, if you wanted $100K to build a prototype, then you’d have to sell off 20% for that (pre-money). Better to try to cobble together $100K, or whatever you need, or code it yourself, and get to MVP that way? Many startups can get to MVP on less than $20K if they are frugal and clever. Startups usually turn to “family, friends and fools” (the 3Fs) in this round. (Hint: don’t get fools.) If you expect your business to be worth a few million over time, why even start at a valuation so low, give away so much for so little and raise money on an idea? Go further.

2. If you have a MVP/prototype, but are still pre-revenue/launch, or perhaps have a trickle of early sales, then you may be valued in $1M-$2M range. So if you wanted, say $500K for growth/sales and gain market traction, then you’d be selling off 25%+ for that. Or ~10% for $200K, etc. This would be ‘Seed Angel’ round (pre-VC) from high net worth investors most likely. This is perhaps the hardest money to get, as you are still very early, and too small for VCs. Raising $20K is much easier, finding people who can part with a lazy $50K or $100K each takes more effort.

3. If you have launched your product, have paying clients, revenues, growth and traction, you could value yourself more than $2M, and really the sky’s the limit the more of that (and the more time/evidence & unmet potential you have). Once you’ve been around for a while, have good market share, growth… you get more into normal business valuation metrics like annual total and growth of sales, net profit, clients, market share, etc… You’d need to know your ‘Cost of Client Acquisition’ numbers really well, as well as ‘Lifetime Value of Client’ etc.. Investors will be all over this. You may then be in VC and Series A territory, so would looking at investment here of at least $500K, probably $1M or several millions.

If you are a WA-based early stage tech startup and have an idea/deck and perhaps an MVP, and think you’re worth $4M or $5M+ then I would have to say ‘you’re dreaming’.

That’s not to say you won’t be able to raise money at all on that valuation. There’s always someone out there with more money than sense, and might be persuaded by a slick slide deck and some fine words. But even if you did get early stage money at that price, how can you sustain it? How will you be able to build an upside for your investor(s)?

Knowing how risky it is, most investors into early stage ventures are looking for a 10x return over time. If the valuation starts too high, that makes the 10x even less likely and they will shy away. Remember, it’s easy to buy things, but when you buy you are setting the base price from which you want to see a multiple. The buyer can make a profit when they buy, depending on the purchase price.

Finally, it’s more than money

Of course, this all depends what you want to do; how much money you need, what you want to sell it for, and (more importantly) the VALUE the investors bring besides money.

It’s YOUR company remember.

How much do these investors ADD in more ways than money? Can they open doors to your next round? to new clients or partners? Do they have experience commercialising what you are doing? Have they been there and done it before? How have their other investments gone? What are their real motivations for investing? Are they going to be active or passive investors? Involved, but not too much, or just plain annoying?

If you’re not happy, 100% rock solid happy with an investor, don’t take their money. Listen to your gut. It’s usually right. Making the wrong choice is simply not worth it, no matter how much money they throw at you.

~~

Photo by rawpixel.com from Pexels

We need to educate the investors

Startup-image

In the recent Business News corporate finance report for calendar year 2018, I added up over $9.58B worth of equity capital raisings for WA companies, across 548 deals. That’s $17M+ per deal. And this not count another $41B+ in M&A (merger and acquisition) deals.

How much of the capital raising money went to early stage private (Pty Ltd) tech companies?

Go on, have a guess… no?

$28M.

That’s less than 0.3% of total raisings.

So, this proves there IS money in Perth ($9.5B of it in our calendar year!), but NOT yet for early stage private tech companies. Well, there’s $28M a year, which is not nothing (and MORE than there was a few years ago), but it’s still a drop in the relative ocean.

A company I came across recently – one of the best startups I have seen – told me they went to 130 meetings, and pitched their business 130 times before raising a cent. They had 129 ‘no’s; before a single yes. There was no one I could introduce them too, they’d seen them all.

Where did they raise money from? Singapore. (Everyone in WA and Australia passed.)

Over the past 6 years we’ve seen the development of a pretty strong local ecosystem for startups – startup weekends, meetups, co working spaces, accelerators, incubators, pitch nights, media interest.. etc.

The education of startups & founders is happening and well entrenched. There’s no excuse now for your lonely tech entrepreneur not to know what they are doing – they could wander down to Perth Morning Startup, join the upcoming Startup Weekend or pitch at Perth Angels, Innovation Bay or plus-Eight tech accelerator. They should find their way, knowledge and people if they put their mind to it.

What we need now is the EDUCATION OF INVESTORS.

People with money to invest in businesses need to be taught HOW to do this in the early stage tech sector.

People who’ve made money will fall back on what has worked for them in the past. That’s perfectly natural. And if you are a Perth investor, then that probably means via ASX companies, mining investment & commercial property, whipped up by the brokers of West Perth.

We do not need much to swing the startups’ way to make a material difference.

If we could raise it from 0.3% to just 1% then we would be tripling the amount of investment. To $90M or so a year.

Imagine what that could do.

Not for ASX companies or rushing companies (too early) to a listing. For private, early stage, little or no revenue tech companies that could scale and become the next Canva.

99% can still go to ASX, mines and property. Just carve off 1% of early stage, scaleable businesses, that could “do a Canva” and grow to $1B valuation in 6 years.

By the way, Canva failed to raise money in WA too. They tried, for many years. In the end, a chance meeting with a visiting American VC in Perth set them off on their road, assisted by Lars Rasmussen (ex of Google Maps and then on Facebook). Canva moved to Sydney.

Yes, we need more startup success stories. You can point to a mining billionaire, and several property or ASX multi-millionaires. Business News is full of them. You bump into them walking down the Terrace.

But to get more success stories, we need more early stage investment. We need to ‘throw more darts at the dartboard‘ to see if we can hit some bulls eyes.

I don’t know which ones will succeed, but I know within the 300+ startups in Perth, there could be the next Canva, HealthEngine, Moodle, or whatever.

So, we need to EDUCATE the investors on HOW to invest in startups; how to value them; how to spot the potential wheat from the chaff; how to be patient; how to give advice; how to mentor.

The monied classes have a lot to give in this respect. They also offer more than money; they have hard won experience, contacts and savvy.

Perth Angels do their master classes – which is great! – but in a way they are preaching to the converted. Members of Angel groups.

We need to reach more of those that have money, know they probably need to invest in tech, but have no idea how to start; but are willing.

How do we reach them I wonder?

~~

[Sources: Business News, Techboard]

Being your own (digital) worst enemy

A few days ago I was trying to get me some car insurance, having bought a little run around Toyota for the eldest child, who is now learning to drive…

So, there I was looking up the usual car insurance companies, and comparison sites, and seeing what kind of a deal I could get for my precious first born. I began with a Google search – of course – and scoured some of the websites thereto thrown up in my direction.

A few minutes later I was trying to complete an online quotation form and seeing what the thing would cost me. The number seemed a bit high, so I tweaked a few variables, and was still getting an answer I didn’t much like.

So I rang the company – their call centre number was clearly displayed on the same page – and a very nice lady answered and helped with my query. It seems you don’t need to insure the driver, as they are an L-plater, and cannot get insured anyway. YOU, as chief driver, sitting in the passenger seat, would be the insured driver.

Ah-huh. Makes sense.

So I tweaked the online quotation form and – bingo – out popped a number that was far more to my liking. Simultaneously, the nice insurance lady told me her number, and it was $100 more than the same number I was staring at on the screen.

So, we had the same, exact insurance, from the same company, at the same time, and the online quote was significantly less than the one I was being quoted on over the phone.

How could that be? Had I done anything wrong online? Nope, it was all correctly done.

So I asked the lady if she could get me the same quotation, and I could buy from her. To which she prompted said (and this blew me away)…

“Sorry sir, I cannot help you with the online quotation. Is there anything else I can help you with?”

This response flummoxed me for a few seconds. What the..?

‘Hold the phone,’ I thought, ‘Is she saying that she cannot help me complete an order online for her own insurance, on her company’s own website, the same one with the phone number showing that I rang her on?’

Her silence was golden. My jaw dropped.

After a few seconds, I think I said “Oh… thank you very much, goodbye”, got off the line and duly completed my insurance online saving myself $100 or so.

This whole nonsensical episode got me thinking as to the logic of the rules that she was (presumably) being told to follow.

Did the company only provide phone assistance to those not able to do all the quotations online? As the online quotation involved less cost (no human being being paid to be on the end of a phone) is that why they offered it cheaper online? For the exact same product?!

But as I was already online and used their published phone number – ON THE SAME WEBPAGE! – to contact them in person, why were they not then allowed to even help me submit online?

They could have lost me as a customer at that very point.

I could have printed off the quotation, gone to a rival car insurance place and told them to match or even beat it.

Or I could have shoved their business through a fit of pique. (Happily, dear reader, I am not that small. Well I think not anyway.)

Surely, the call centre staff in the insurance company should be empowered to use their common sense, help close the deal, provide a service and take the customer’s money? No matter what mechanism that is done by? Online, phone, letter, walk in, carrier pigeon, steam engine, wax tablet..!

Why compete against yourself? Isn’t the market competitive enough?!

Here we are, 25 years or more into the internet age, and people are perfectly happy to buy online, and in many cases, happier. They are doing so in droves. Have you been to a shopping strip lately? Yeah, nor have I.

Online, customers don’t get hassled by pushy sales people, can shop when they like, compare what they are buying easily, get independent reviews, have their order placed immediately and get back to what they were doing 3 minutes earlier. No commuting, no parking, no rain, no 40 degree days, no fines.

If businesses are going to fight against online, and put up unnatural barriers for their customers, then they will struggle to maximise the benefits of their digital transformation. Indeed, they could be sowing the seeds of their own digital disruption. Butting heads against themselves.

Think like the customer. Think user interface, and customer experience. It’s not you you are trying to better, it’s the customer you should be focused on serving.

Always. And in every way.

11th hour of the 11th day of the 11th month

The Gunninghams at the cavalry charge field, south of Villers Guislain, earlier this year

One hundred years ago today, at this time, the guns fell silent. The great war was over.

We pause now to remember those that fell, that never came back, those that were scarred for life, families affected… the massive sacrifice. It was a bludgeoning war, a stalemate of forces stacked up against each other, smashing away for 4 years at terrible cost.

But within it, were personal stories. Here’s one…

At 9.35am on 1st December 1917, the Indian 2nd Lancers (Gardner’s Horse) Cavalry were ordered to charge on horseback up a valley with the intention of capturing the town of Villers Guislain.

This was northern France, during the wider Battle of Cambrai, that had been raging for months. The battle was the first time tanks had been used in war. They were moderately successful, many broke down, so commanders still liked the fast paced nature of a horse back attack. After years of bloody stalemate, you had to do something different to break through.

My grandfather, who I am named after, Charles Harris, was on horseback that day charging up that hill. I remember him telling me how some of his regiment fell off their horses during the battle, and he wondered why this was happening as the ground (mainly cabbage patches) was not too hard going. They were being shot off their horses of course. Something that did not occur to him in the adrenaline of the moment.

As bullets whizzed overhead, the Lancers made it to the top of the hill and jumped over the trenches. Most of the fighters had fled, and some returned to their positions as the mounted cavalrymen overshot their positions, were halted and then jumped back over the trenches and retook them a second time. 3 officers and 42 ranking servicemen were killed. My granddad (‘Pop’ as we called him later) survived.

Now becoming surrounded, two volunteers rode back on horseback to get word on what to do next. One was killed, the other – Lance-Daffadar Gobind Singh – had three horses shot from under him, an action that would result in the awarding of the Victoria Cross.

The upshot of this skirmish was that the 2nd Lancers were told to retreat to their former position. They had gone too far too fast, and could not be supported. Pop and his crew had to fight their way back to their own lines.

Earlier this year, together with my two older brothers, and our families (which included three great grand children of Pop Harris) found the location of that brave cavalry charge, just over 100 years ago. I had last visited with my own parents in 1980, and when I saw the crucifix in the road, I remembered being there 38 years earlier, and how Pop had told us the cavalry turned left at this point then up the hill.

When I saw the crucifix, and the path to the left, I knew this was the place

This week, the Daily Telegraph in England, in homage to those that fought in the Great War, reprinted a series of articles and stories from the time. They chose to reprint Pop’s obituary that they had ran in 1996, when he passed away 6 days before what would have been his 100th birthday. (‘ Lest we forget: Brigadier Harris, the Battle of Cambrai veteran who charged the Germans on horseback – obituary.’)

I remember listening in awe to Pop’s stories over the years. He remembered that charge as if it had been last month, yet he was telling me the story over 60 years later.

Of course, if he’d not lived to tell the tale, he would not have had my Mum 12 years later, and neither me, my brothers, or our children would have existed.

What bravery. What a generation.

And so today, at this hour, I pay tribute to The Rev Brigadier General Charles E ‘Pop’ Harris, and all those that fought with him on that day and in that war, on all sides. May we never endure such a terrible event again. May we never forget the sacrifice of that generation, and those since.

Future Generations: 3 of Pop’s great grandchildren with poppies from the nearby field.

 

 

Your wealth is ultimately tied to the customer problems you solve

Anyone running a business should understand, with laser like clarity, the customer problems their business solves. Not only will this mean the business will be focussing on the right activities, it will also be the single greatest determinant of the business owner’s wealth.

There’s a coffee shop (restaurant really, that also does a nice coffee) overlooking a lake near where I live. When I have a new client to meet, and it is convenient for them, I suggest we meet there. For me, it’s a pleasant, neutral venue in lovely surroundings, where I can hear the founders’ story, what they want to do with their business, what they have ‘got’, and if I can help.

The customer problem the local cafe solves for me is that, as I work from a home office, I don’t want to invite the business into my own home, and I don’t necessarily want to pile out to their office (if there’s a second meeting, we can meet there), so I need a ‘third place‘ (as made famous by Starbucks) to meet.

Once the order for coffee is taken, I also want to be left alone to have a conversation with the client. I don’t want to be ignored, I don’t want to be pestered. I don’t want to feel we have overstayed my welcome just because we have finished my coffee (ooohh, how I hate that).

Coffee with a lake view

My local cafe understands this. They are friendly, attentive, chirpy even, and seem genuinely pleased to see me. I frequent the place so much they guess that the person at the front counter peering inside is probably coming to see me, or if I have arrived after the client, they point me to who it probably is.

In this way, they are going above and beyond, and they will have my business for a good while yet. In fact, the place is so thriving, that visitors usually remark ‘Wow, this place is a gold mine‘ or ‘What a great place.‘ Some come back on their own volition later on.

Contrast this to a cafe I used to visit. They seemed genuine and friendly at first, but as soon as your cup was nearly finished, they would pounce and whisk it from you asking ‘Anything else?‘ (which  was plainly delivered to mean ‘Can you leave now!?‘). Staying any longer made you feel uncomfortable. I would barely stay 30 minutes, and after a while, never went back. At my local cafe above, I stay an hour per visit, and often have 3 meetings there in one day. I like my coffee. And I like it there.

The second cafe seemed to be focussing more on solving their problems (getting as many customers in and out of the place), than paying attention to their customers’ problems (a third place to meet, a catching up place, a filling in time space, or whatever). By focussing on the wrong things, and taking a short term view, the ‘cafe-I-never-visit-anymore’ lost my business, and I wonder how many others? I passed it the other day and it had shut down. Meanwhile, my local thrives.

Now I am not a restauranteur nor am I well versed in running cafes – I often do a rough calculation of revenues at the place, notice the high number of staff and wonder how they make money – but if I was to run a cafe I think I would realise that the third place concept was well established and understood by now. Customers are not flocking there for the wonderful coffee, or even the view, but for a service that provides them that place other than home or work (even if it is nothing more than to catch up with old friends or fill in an hour reading the paper.)

If I was running a cafe, I would like to think I’d train my staff to appreciate what the third place meant. I would provide free wifi. I would encourage local business people to meet up, linger, and ‘become members’ (a simple loyalty stamp card would suffice). Yes, I would make more money from the evening meals served with alcohol, but if I am to open during the day, then I would encourage more and more to attend and keep the tills ringing over. The more that come through, the more will be enticed by the carrot cake and muffins, or to have lunch, or to come back one evening for a nice meal, give me nice reviews and to spread the word.

It’s the funnel concept of selling – tip more in at the top, and more shall be returned to you down the bottom. Tweak the conversion rates, and off you go.

In the end the value of any business – and the wealth it creates – comes down to one simple question: how well do you understand and then solve the customer problem?

For, as I have said many times before, only if you solve a customer problem (the person who pays you for your product or service) will you create value; only if you create value will they pay, and only if they pay will you even have a business.

And… if you rinse and repeat this enough over a period of time, your revenue will grow, as will profits (as long as you control your costs) and the business will be worth a pretty dollar or three. This could ultimately determine your own wealth.

If you are not born into money, or have not made it in property or mining, then probably the best way to build wealth is to create a business you own, build it up and sell it (or live off the wonderful dividends it provides). The recent Australian Rich List (self made under 40s) all made their money in business, with 42 of the 100 in tech or online business of some sort. Only 6 were in resources, and 1 in property. The next generation of wealth creators have understood the process well.

Meanwhile, enjoy the coffee.

Learning startups at uni… what a blooming great idea!

Now in its second year, UWA showcased its Launchpad graduates – which gives participants full six credits for any undergrad course at the university – at an annual pitch night…

They never had uni courses like this in my day‘ – is what almost every audience member over the age of 25 was probably thinking, as they watched the nine graduating teams from UWA’s Launchpad unit pitch on Monday night.

Not only that, most people were also thinking ‘I wish they’d had‘. And ‘what a great idea‘.

Yes, it’s true. A 13-week course, with mentors and guest speakers, took enrolled students through all the main stages of ideation, lean canvas model, customer problem, market validation, key metrics, channels, the pitch and reflection, culminating in a pitch night.

FUTURE LEADERS: Graduates from ‘Launchpad’ – UWA’s startup unit

KPMG consultant Graeme Sheard and Bloom Lab co-leader Jack Hallam put the students through their paces in a 3-hour workshop every Monday, with weekly assignments including blogging and business plan development.

It’s the only university in WA to offer such a course, and in a fitting conclusion, the final pitch night at Bloom showcased all 9 businesses, before a panel of judges, which included visiting Professor  Martin Katz from the University of Denver (Colorado, another hotbed of startups).

Last year, Humm Tech went through the program, and they were on hand, via video link to wish the graduates well. As reported a few months ago on, Humm are now based in San Francisco.

CLEVER CUPPA: Easy Brew’s drip coffee solution for adventurers

The startups this year were a real mixture, with five of the nine having a social enterprise angle, and four being educational.

The businesses ranged from a neat little coffee capsule for making a great cuppa in the outback to story telling cooking classes to help better understand different cultures to a program to help Year 12 students find their true purpose.

After much deliberation, the judges gave the pitch contest to Charlotte Pennel from ‘Mother & Bride’, who in a pitch perfect performance, explained how her new wedding planning web service works. Yes, she got married earlier this year – and found the process of the wedding planning a pain – and yes, her mother is also in the business. And she already has four weddings booked up on her platform.

Honourable mentions were given to the team from ‘I Can and Will Do’ (educational resources for rural kids in Cambodia), ‘EnviroVend’ (vending machine to replenish food and staples, to reduce plastic) and ‘Pay It Forward’ (an app that allows you to gift a meal to a homeless person).

All great ideas, and some real potential businesses here. Plus, another unit ticked off at uni. How good is that?!

~~

MAIN IMAGE: Charlotte Pennel pitching her ‘Mother & Bride’ startup

This article first appeared on Startup News.

How win free media for your business – Part THREE (Press Releases)

In the THIRD post in this series on ‘how to win free media for your business’, we look at press releases.

Earlier we looked at the importance of thinking like the media, and there were also 15 pieces of advice to bear in mind when contacting the media.

A well written and target media release can be worth its weight in gold in terms of the free publicity and promotion it can provide for your business brand.

Be aware though that journalists may receive hundreds of media releases a week by email, so it’s important your message follows a recognisable structure and is easy to read (layout easy and clear with no typos and grammatical errors).

When I worked at Business News – a relatively small media business in the grand scheme of things – we received 1000 press releases a week, and very few (less than 10) probably ended up being a story.

Now, in my role running Startup News – an even smaller, niche publisher – I can tell you we receive several press releases a day, perhaps 50 a week, and only 2 or 3 become stories.

That’s because many of them are pretty rudimentary (this person has been appointed here or done that deal there) or are not targetted at the publication in mind (for example, Startup News only publishes stories on WA startups, so there’s no point sending us a press release about a Melbourne tech business with no connection to WA).

Faced with these odds, your media release needs to get to the point quickly, and have some degree of urgency.

The best ones will leave the impression that the media outlet needs to READ THIS NOW without resorting to click baity techniques like actually putting ‘READ ME NOW’ in the heading or subject line of course (!).

It’s fine line between appear authentic and having something to say without coming across as desperate.

Generally, an effective press release will have several elements to it:

  1. Inverted Pyramid – the most important information is at the top, in the headline, and first paragraph with supporting detail below. This will also be on the subject line of the email.
  2. First Impressions matter – most journos and editors do not read beyond the title (or the email’s subject line) and the first paragraph before they have decided to publish or not. It needs to be newsworthy. What’s new and interesting for their audience?
  3. Send by email – the universally accepted method of reaching media. The email itself should be short (no more than 2 paras with the main gist of the story and who is available for interviews and photos). The press release and photos (or links to photos) are an attachment to the email, in word format, not pdf, so the text can be copied and pasted. Ideally, the media could simply lift your release and publish it as is, or with minimal changes (except perhaps to make it even better.)
  4. Title your release ‘FOR IMMEDIATE RELEASE’ in block capitals.
  5. An attention-grabbing HEADLINE then follows, with the BODY of the press release and CONTACT & ABOUT ‘XYZ Pty Ltd’ on the company at the bottom.
  6. Include QUOTATIONS from someone knowledgeable and authoritative (e.g. the CEO). It might be why this novel product is going to be useful to the industry.
  7. Clearly mark the end of the release with ‘ENDS’.
  8. Make the release no more than one page. Sentences should be no longer than 25 words. Every sentence starts a new paragraph. Make it as SHORT as possible to get the story across.

Here’s an example of a recent press release sent to Startup News…

PR1

Structure of a well laid out media release

Notice how the various elements of the release are clear and it has made it easy for the media to follow. This release has followed good practice to the letter, and it was no surprise that Startup News duly published the article, almost exactly as per the release. The main photo had also been supplied…

PR2

The resultant article mirrors the original release, almost word for word, including the headline and opening para.

What was then interesting was in follow up social media posting, there was acknowledgement of the article, from the person mentioned, and his friends, so the information reached an even broader audience…

PR3

Flow on effects of social media add to the reach.

That’s how to do it.

How win free media for your business – Part TWO

In the first post, we set the scene. Media is a tough business and you have to put yourself in their shoes if you are going to understand how to approach them.

Below, there are 15 pieces of advice, that will help you win a nice steady stream of free media attention, which will strengthen your brand with your current and prospective clients, staff and investors…

Most media organisations like to post positive stories – not all journalists are looking for an axe to grind, but some are, so stay away from them.

There are some easy things you can do to increase the chances of your business being covered in a positive light, consistently…

  1. Have a MEDIA page on your website – here you will post your latest press releases, published news stories, clear links to people (or the person) inside your organisation that deals with media enquiries, and a library of logos, photos and images (in various media-friendly versions). Have press kits, backgrounders and case stories on your business. A good example of this is here: http://www.boundlss.com/press/ (simple, small AI business) or https://about.canva.com/press/ (large, well known business).
  2. Be AVAILABLE! Make yourself available to be interviewed over the phone or in person. Respond to media interviews, and act in a professional manner. (Treat journalists like clients, not pests!)
  3. Learn how to produce a well written professional MEDIA RELEASE. (The 3rd post in this series will deal with this.)
  4. Grab ATTENTION! There is a lot of clutter and too much information around, especially in media organisations under time pressure and with thin staffing levels. Cut through the clutter with a great headline and first paragraph. If you are talking about something very topical (war on waste, blockchain, AI, data analytics … ) then use that as your way in. Piggyback on existing stories that are already running well in media.
  5. Be INTERESTING! What’s unusual about your business or what you are doing? Give stats and trends. Give context.
  6. TEACH! Give something away in your story, something that people can take away and learn from. Something you have learned. Give in order to receive.
  7. Try to be real and HUMAN, and not overly rehearsed. You can be too media-trained. Think about what you are saying, but talk in a normal conversational way. Think about some nice snippy sound bites that the media could use and quote you on.
  8. Do your RESEARCH. Find out which journalists and online influencers write about your area, and get to know them. Reach out to them. Buy them a coffee. Show them what you are doing. Discover what stories they like to write about, their interests, and then feed them relevant stories over time. Listen to them. Thank them after the piece is published. Tweet the resultant article out mentioning their twitter handle.
  9. CUSTOMISE your message to the relevant media; in that way you can use the same basic story with more than one media outlet. Sometimes. But be careful, if you hock the exact same story around to all media, don’t be surprised if no one picks it up. Each media has their own audience, so you can change the message accordingly. Or sprinkle stories around different media over time (better).
  10. Become an AUTHORITY in your specialist area. Once you have had some media coverage, you may find the media comes to you for your thoughts. Great! This is free media you don’t even have to arrange beforehand, and it’s wonderful branding.
  11. FOLLOW UP! Just like the best sales people do. Don’t just smash out some press releases and hope events will take their course. They invariably won’t. You need to ring up and ask the journalist ‘Are you going to use the story? Would you like to arrange a time for a photo and interview?’ Get on the phone. Don’t hide behind a keyboard and just spam journos with emails. (The basic rule is: if you already have a good relationship with someone, email; if you don’t yet, pick up the phone.)
  12. Be REALISTIC. You may think you have the best thing since sliced bread, but the journo may not know you at all, or appreciate what you have developed. Building a media profile can take months and years. Not everything works. But if you persist, listen and learn, it will happen. Don’t be put off if you don’t get any media attention for a while.
  13. Use SOCIAL MEDIA. Be savvy. Pithy headlines that can be tweeted. If they are a play on words they may be shared well beyond your own networks. Think creatively. Follow journos on social media, twitter and LinkedIn especially. Remember to copy them in if the publish you.
  14. MULTIMEDIA. Can you do a 60 second video? A 10 second meme? Learning how to do this can make your message multiply many-fold.
  15. SHARE the coverage far and wide. When you do get covered, make sure you share this with all your networks. Print the article and frame it, display it in your boardroom or entry foyer for all to see (current and potential staff, clients, media, board members and investors…).

As in all things, persistence and patience wins.

Don’t do the above, and very little (if anything) will come to you. So don’t whinge that the media is ignoring if you do little yourself to make it happen.

The THIRD POST in this series will deal with Press Releases.

How to win free media for your business – Part ONE

These days we are faced with a wide range of media channels. More than ever before. It’s a minefield. But there are ways to cut through…

It’s a tough old business

Firstly, perception switch.

Think of things from the media’s point of view. Media has become a very tough business over the past decade or so, having undergone immense disruption and change. Many media organisations are running very thin indeed with very few resources.  Barely clinging on in fact. No one has been immune – everyone from the local newspaper, magazine, TV station, radio channels and every other form of media has been struggling for a shrinking pie.

If you want to get your message out via the media, you have to be far more subtle than merely bashing out a press release to the local paper (although that can still work, to a degree, if done correctly).

Some business owners are (understandably) a bit shy or nervous about gaining media attention, but if you research and then select the most appropriate journalists, control the interaction between yourselves and the media channel, and have a clear goal in mind, things need not be problematical.

It is fairly easy these days to gain positive media coverage if you know a few ‘tricks of the trade’. The ideal is to have a drip feed of positive stories about your business over time. This all adds to your brand and name recognition, which can be helpful in all kinds of ways.

Having an editorial about your business has about four times the value than a paid for promotional ad of the same size.

Remember, the media is not there to give you free promotion though.

Most of their business models rely on them gaining a significant readership in their local area or niche, then charging advertisers for publishing promotional messages to that audience.

The media understands all too well that businesses would love to circumvent their advertising models and get free exposure in their online and offline media, and at their events.

Therefore, be aware that your message should not be too ‘self-promotional’. It should be informational and targeted at the specific audience of the media in question.
Put yourself in their shoes.

Before you approach any media, make sure you have answered these questions:

  • Why is your story of interest to their readers?
  • What is the ‘angle’?
  • Is the story given exclusively to this media source, or is it for general release?
  • Why is this particular story relevant to this particular media source?
  • How can you help the media organisation towards their own goals?

Treat journalists like clients

With a little research, you can find out which writers, journalists and online influencers are relevant in each local media source (the daily newspaper, the business journal, the local free paper, various online news sites and blogs…)

Think about your local media contacts as if they are clients of yours. Contact them, take them out for a coffee or lunch. Send them a personally written Christmas card each year (yes, really.)

Ask them what kinds of stories they like to write about, and then, when the time is right, feed them this story. Don’t overdo it, but have enough stories and writers to keep you in the lime light over time.

A steady drip of positive news stories does wonders for your company’s credibility, brand awareness and positioning.

Plus your staff, shareholders, board, management team and clients will love it too. You will also find that this reputation will precede you, so that it will easier to attract higher quality staff, clients and investors as well.

It’s all ‘hidden’ to some degree, but it adds up and it is real.

Imagine someone (a potential client or employee or investor) researching your business online. What will they fund? If they discover a good deal of positive news stories written by independent media, this will only enhance your brand in their eyes.

Part Two in this series gives you 15 pieces of advice for approaching the media.