Focus on what you can do

Focus on your own s**t

At a recent business cocktail function the WA swimmer Eamon Sullivan was interviewed about his illustrious career, which has included a world championship gold and a bronze, 2 Olympic silvers and bronze, as well as various world records.

A major take away for me was his honest self appraisal of his failure to win gold at the Beijing Olympics in 2008, despite having the 100m freestyle world record at the time (which he had broken in the semis). He put it down to a ‘classic and unforgivable error’ in the final, as he concentrated more on what his opponent might do, than on what he was about to do.

‘All coaches tell you, never worry about your opposition or concentrate on what they might do. Concentrate on your own skills, your own game, your own stroke, and what you can control. My failure to do this cost me the gold, and it’s something I have to live with, and I know I’ll regret it for the rest of my life.’

You might think he’s being pretty tough on himself, but it’s a really important point. In life generally, we can often get caught up in what others might do. We cannot control what they do. We are only in charge of what we can do, and that’s what we should focus on. Our own performance. Our own skills. Consistently. Persistently. Patiently. Avidly.

We can control what time we turn up for work, what calls me make, how we make them, what we say in client and staff meetings, what we prioritise. We are in control of what we put off for later in the day, or tomorrow. We determine what we do now, and how we do it.

What Eamon reminds us, is that we need to make sure, no matter what, we do the best we can do. For no matter what result occurs, we do not want to have to ponder what we might have done better. Looking back on an exam result, a sales proposal or a potential partner meeting, you do not want to be thinking ‘what might have been if only I’d…’.

It’s obviously something Mr Sullivan is learning to live with, in relation to his big moment, 8 years ago. So, I ask you – are you going to focus* on what you can do, or get distracted by what others might do?

~~

* Or as someone once eloquently put, focus means “focus on your own s**t”.

Two natural ways to increase sales

Bob2

A business owner friend and I were discussing the current business environment this week, and swapping notes on what works (and what does not) when it comes to increasing sales.

Assuming the product and services are in demand and provide value to customers, there seem to be two relatively easy ways a business owner/development manager could increase sales …

  1. Attend 2 or 3 business events a week

Now, a word of caution here. You don’t go along with sales uppermost in your mind. Your intent is to meet new people, make some connections and add value to their conversations and knowledge.

The more you do this in the right spirit (‘give more than you expect to receive‘), the better you will become at it, the more people you will meet, the more of their connections you will be allowed to make, and you will actually walk away with more sales opportunities, and ultimately more sales.

People are naturally gregarious, which means we are wired to cluster in groups. (Be they sporting clubs, political parties or when we attend a business event.) So go along to these gatherings, regularly, and, although it might seem a bit daunting at first, here’s a trick I learned from the master of networking himself, Ron Gibson:

As you walk into the room, don’t go over to people you already know (by all means say ‘Hi’ to them) but head directly for those you don’t. In fact, make a beeline for a person who is on their own. They will probably standing at the fringe of the event, hoping the walkpaper swallows them up, feeling a bit uncomfortable and nervously looking at something interesting on their phone. They will normally be relieved and delighted to see you approaching them, smiling, introducing yourself. Ask them what they are doing here, what their business is, and engage them in conversation. Show genuine interest in what they do, while exploring in your mind how you might best help them. (Not how they can help you, the other way around). When you get a chance let them know how you can help them (if possible) and also explain what you do, and you’ll quickly see if there is any common ground. If relevant, swap cards, and maybe promise to catch up in a few days time. Try to make 4 or 5 new contacts this way at every meeting. Attending 2 or 3 a week means you’ll quickly gather 10 or more new potentially useful business contacts every week, and remember, each will have 100 or more contacts of their own. The value of this regular exercise is the permission you win to gain access to these new people.

Pick your events wisely. I have found the ones set up expressly for networking are not necessarily the best ones as they can attract those that are only trying to sell. You know the kind. The same people frequent them, they are usually free. Go to a variety of professionally run (and often paid for) business functions, because that’s where the interesting business people are. As a nice bonus, you will also learn much from the presentations and discussions on stage. Some might be stand up cocktail functions, others a sit down breakfast or lunch. Either way, there will be opportunities to mix and mingle, where it is far easier to stay seated or in your comfort zone. Most will stick to who they know. But as a wise sale coach told me recently, you only grow when you are out of your comfort zone. So get up and go meet some people. People are naturally friendly in this setting, far more so than if you cold called them. So get it done!

Consistently doing this over time expands your own networks, and believe me, for someone like me, not born or bred in this fair city, it has worked a treat.

In fact, failing to do this not only harms your business, it also limits your career opportunities. I’ve had 6 jobs in my 30-year career so far, but have only ever had less than a handful formal job interviews. My last 4 jobs (spread over almost 2 decades) have not stemmed from a formal job interview at all. They have been gained through networks I have forged over time, and often from cups of coffee or a phone call from a referral. I even sold my business within 6 weeks of an initial coffee meeting where the idea was first mooted.

Following up with those people you can help, that you might open doors for (and they you), is critical. This is where you need a good system to lock away your new contacts in your Outlook Contacts or a CRM (client relationship management) system. Using something like CamCard (a free app that takes a photo of business cards and automatically synchs the data into your contacts) can make it a piece of cake.

       2. Treating LinkedIN like a business event

I treat LinkedIN in the same way I do a live business networking event – I go there to meet new people, connect and add value. The more you do this the more new business will drop off the bottom as a matter of course. I also do this with Twitter, and to a lesser degree Facebook and Instagram.

Essentially, LinkedIN is very much like business networking, except you don’t have to physically meet someone first. Again, don’t go on there to sell, go there to connect and add value, and in time you will meet loads of new people, some of whom will be interested in how you can help them (and they you),  and the permission to sell to them (or one or more of their contacts) may be granted. I have met many new business contacts this way. I have also used it to get into a company, that hitherto had seemed impossible.

As in networking events, be careful not to cross that line. Don’t go on LinkedIN too much (10 minutes a day will suffice), and use it to meet new people, publish and share interesting information. Be the better Roman. Share and like other people’s posts. Add some comments. Share and publish something of your own.

~

As with all these things, it’s about persistence and consistency. If you only do a little bit for a few weeks assuming this to be ground breaking, you will be sorely disappointed. Do not expect results straight away, learn as you go. Don’t overdo it either – there are people in every town (mine included) that have a bad reputation of spamming people on these networks and at business events. They’re always there, and sadly, they seem blissfully unaware that whenever their name is mentioned, you can hear collective groans of disapproval. Don’t be them!

Get out there and be seen, both physically and on LinkedIN, in the right way, and I promise you will make more connections and win more opportunities to do more business. You might enjoy a pretty nice career as a result.

Extra resource: Read this excellent post > ‘Scared of Networking? How to kill it at your next event

Beware the creeping changes

monsters

Things that creep up on you can be the hardest to recognise and defend against. Whether they be imaginary spooks hiding in the dark to frighten you from your slumbers, or people quietly tip toeing up behind you to shout ‘boo!’ in your ear, if you don’t see it coming, it can be unnerving when it’s already upon you. Of course, you are at your most vulnerable when you have no idea what is about to hit you.

Last week I saw a stat that really summed up all the digital changes that have been happening over the past 15 years or so. Online advertising in Australia surpassed the A$6 billion mark in 2015.

6 big ones.

The growth is not slowing either; since 2010, online ad revenue in this country has been rising at more than 20% a year. Last year it grew 28%. Within this growth, mobile ad revenue grew 80% last year, and video ad income 75%.

Online ad revenue was almost zero in the year 2000. I remember that year well. It was probably the toughest year of my life so far. There were illnesses in the my family, two friends of mine succumbed to cancer, and it was first year of my fledgling tech startup. Our initial seed funding had run out, and we had passed the dotcom crash after which no more investment funds would be forthcoming. I had quite a few sleepless nights, and not a few doubts. We had a few real estate agencies on board, but very few were paying very much, and it was going to take a while for us to get to cash flow positive, let alone profitability.

A few years on, I remember when online ads in Australia went over the $1 billion mark (2003) and then within two years had doubled to A$2 billion. At A$6 billion, it is now the number one advertising medium in the country. Print ads have fallen to A$2.2 billion and set to continue their decline. Movie ads, radio ads, TV ads, are being left in online’s wake.

When I talk to online tech people these days I joke that we had almost 100% market share of the online real estate ad market in Perth in 2000, but unfortunately it was 100% of very, very little. But as the online market grew, we kept ourselves alive long enough (sometimes I wonder how) to take advantage of the creeping change that was occuring all around us. We built a nice little business out of this, with real profits appearing in year 5 and dividends paid to shareholders from then on.

Today, realestate.com.au (ASX: REA) is worth over A$7 billion (share price $55). In 2000, REA Group’s share price was a mere 12c (half its listed price of 3 years earlier). It was touted as yet another dotcom disaster, an example of greed overtaking common business sense. With 3 CEOs in 4 years, it was but a few months away from closing shop altogether. Or so the wise analysts thought. By 2008, it had billion dollar value, and now after another 8 years is seven times that.

We weren’t the only ones to see that real estate search was broken in the last century, and that the new one would herald a new way of finding your next home. Many people knew this was happening, but the incumbents paid lip service to the imminent threat. Very few people are crying for them now. The 2 weekend papers that once had huge real estate (and cars, and jobs, and boats…) sections in them that landed on your doorstep with a loud thud, are now so weak they are having to combine forces to give themselves a few years more life. In an isolated marketplace with little competition (bar online, which they don’t have much share of). They hide their limp real estate sections in among the cartoon section. A tie up that was once thought anti-competitive, is now being hurried through.

I was once in a boardroom of one of the main paper-based media empires during the early 2000s. Accosting me from across the table, one executive jabbed his finger towards me saying: “Why would we turn a $380 million business into a $38 million dollar business?” (the online ad market being much smaller at the time, his reasoning was why would be chase the internet market and so herald our own demise?). Pausing for a while to take in this question, I answered “Because you have to. And if you don’t this year, it will only get more expensive the next year, and the year after that. It will only get harder for you to make the change.” He glared at me like I had lost my mind.

In all of this is a lesson. Never take things for granted. At your peak, be your most worried. When feeling most comfortable, be nervous. Analyse what is happening, what could happen, what you could do to take advantage of things. Some things will lead you down dark alleys, some of it will be wasted time, dead ends, but you’ll be experimenting, learning, feeling your way. No one can predict the future, but the onset of online advertising was certainly something that could have been foreseen, in the same way mobile and video ads are now galloping along.

Get on trend, or be left behind.

Economic growth set to continue

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I’ve lived through a few recessions in my time. I still remember getting the candles out (yes, really) during the miner’s strike of the early 1970s in England. I was 9. It was fun – as a family we knew when the power cuts were coming to our little town, and when to get the candles ready.

The oil price shock brought on by the Arab-Iraeli war a year later would plunge the world into recession as oil prices quadrupled. The same happened again after the Iranian revolution 7 years later, which, combined with strict monetary policy plunged the UK into deep recession and mass unemployment (reaching 4 million at one stage). Another miner’s strike, this lasting just under a year, was finally defeated by the government of the time, who had cut taxes and deregulated the stock market ushering in a surge in share prices, which promptly collapsed on ‘Black Monday’ (a day that coincided with a hurricane sweeping across southern England, which closed our school for the day – I was now a teacher). The resultant interest cuts forged a strong recovery which only resulted in a deep recession in 1991. The UK had suffered through 3 major recessions in 20 years, one every 7. I taught this as an economic rule – a recession every 7 years.

By then I had moved to Singapore, which was enjoying two decades of non stop double digit GDP growth. I moved to Perth, Western Australia, just as the Asian economic crisis hit in 1997.

[If you, dear reader, see my exit just prior to these two recessions as anything but pure coincidence, please be assured I am not writing this post from my own island.]

And so to Australia, whose last recession was in 1991. 25 years of continuous economic growth has seen the country become a confident and influential player on the world stage. The 12th largest economy, boasting some of the best places to live.

With budget season now behind us, the latest figures predict our economy will continue to grow for at least another 5 years (albeit slower at 2 to 2.5% a year), which will stretch our period of non stop growth to 3 decades. Quite an achievement.

No doubt people will argue about whether we have invested this growth correctly, have built the infrastructure and society we want, which looks after as many as it can, and allows families to live in peace, and prosper. Some have got richer than others. 105,000 people still live on the streets, homeless. It’s not perfect by any means.

Government budgets are in deficit as the ‘mining boom’ ended and built-in spending programs have persisted. Billions of dollars of government spending cuts are blocked in the Senate (hence the double dissolution election coming up), and surpluses are many years away. Federal government debt has risen to just under 40% of GDP (in WA, state government debt has blown out to $40b or almost 100% of WA GDP).

Taxes in Australia are about the same as in other developed countries, but are more slanted towards direct (income and profit tax) than indirect (GST, taxes on cars, alcohol and cigarettes).

Meanwhile inflation is negligible and predicted to stay around 1%. The most recent quarter, it even went negative (hence the recent cut in interest rates to a record low of 1.75%). Interest rates could go to 1.5% later in the year, or even next month.

Unemployment is around 5.5-6%, and may rise a little more, but is unlikely to go much higher. A threat of a recession is small (we’d need something in excess of 8.5% unemployment for that).

Many WA businesses are feeling the pinch, and have been so for about 3 years. The real estate market has gone nowhere, and is still oversupplied in terms of the number of properties for sale or rent. Population growth in WA has slowed as those that came here for the ‘mine building’ boom have returned home.

Most people and businesses have ‘got used’ to the new normal of 2016. It’s no longer 2012, or 2006. The drag from mining and commodity prices is easing. Other industries are showing brighter signs, and everything feels a little more steady, if cautious. You have to work harder now for every dollar, every deal. [This is where the good sales people and good businesses prosper.]

Much depends on China. If China continues to grow, at 5% or 7% or even more, then what China wants, WA has. The US economy has improved, and the UK is one of the strongest in Europe. A few possible speed bumps are spread out in front of us: the threat of a ‘Brexit‘ and the election of Donald Trump to the US Presidency. Both these, and especially the latter, have grave consequences for world growth. And, make no mistake, we all live in the same world. While the chances of both happening are less than 50%, they are not zero by any means.

For now then, it looks like Australia will continue to grow, almost inexorably onward. It’s blue skies over the Great Southern Land…

If Brexit happens, what then?

Brexit

The phony war is over, the real war has begun. On Friday, the first official day of campaigning started with those that favour UK leaving or remaining in the European Union making their opening arguments.

Prime Minister Cameron, coming off a difficult week thanks to the Panama Papers and findings around his father’s money, is arguing for the country to remain “in a reformed, modern EU”. His adversary, Boris Johnson, Mayor of London, and fellow Tory, speaks about “a glorious alternative” where Britain takes back control of its own destiny.

The UK referendum is still 2 months away (June 23rd) and polls show it is on a knife edge ~ the latest one showing a tie or there being one point in it. Considered wisdom seems to be that the most likely result is a small majority to remain in the EU, but this is not guaranteed at all, and even if this happens, things will have to change. A ‘leave’ vote could precipitate a change in Prime Minister, and then 2 years of negotiation of hundreds of trade agreements and arrangements.

What is the EU?

12 years after the end of the second world war, the Treaty of Rome was signed by 6 countries (Belgium, France, Italy, Luxembourg, the Netherlands and West Germany) which led to the creation, on 1 January 1958, of the EEC (the European Economic Community). The UK was not a part of this, and requested to join (along with Norway, Ireland and Denamrk) twice during the 1960s, only to be blocked by then French President de Gaulle (who feared growing US influence through a UK admission). With a new President (Pompidou) in France in 1967, the admissions were agreed, but Norway subsequently voted in a referendum not to join. Years of negotiation then took place, and on 1 January 1973 the UK, Denmark and Ireland joined to become 9 countries in the EEC. In 1975, UK held a referendum on whether to stay in, and by a vote of 2 to 1 voted ‘Yes’ to the EEC (or ‘common market’ as it was referred to in UK).

The 70s

I remember the admission to the EEC and that referendum. The choice (for my 10 year old intellect) seemed to be about ‘joining Europe’ in order to ensure peace and friendship with our European allies, along with wider access to goods and services (before this time we only ever had grapes if we were on holidays “on the continent”). After admission, the range of fruit in supermarkets exploded. Good times. I’d only ever known apples and oranges before this.

The 80s

Greece, Portugal and Spain joined in the 1980s, and by then I was at university studying economics. Pretty much everything I read about the EEC was in favour. The massive benefits of open trade, reduced barriers, free movement of labour, closer monetary integration… in a single market of 350 million made sense to me, and I was all for it. Intellectually it made sense, and we were benefiting from a massive market, with free and open access of labour, goods and services.

The 90s

In 1993, the community became known as the EU (European Union) with more developments around monetary union and a single currency (the Euro) which came into effect (virtually) on 1 January 1999. It had always been a goal of European proponents in the 1960s (and even in the 1920s) to a closer and closer economic integration, with a single European wide interest rate and a single currency. The Deutschmark, the Franc, the Lire… 22 currencies in all disappeared in 2002, all rolled into one.

Meanwhile, the UK had started to lag behind all this ‘integration’. Never signing up for economic integration, and never for the Euro, the British pound remained outside the Eurozone. Various sputtering attempts were made to keep in line with the European Monetary System (EMS), with Black Friday and other events demonstrating the difficulties for the Pound (a petro currency) being forced to move the same way as various others. Meanwhile, the centre right Conservative party contained members of parliament vehemently opposed to the growing powers of the EU (the so-called Eurosceptics) and in the early 2000s, a new party, UKIP, was formed to contest elections on an anti-Europe (and often anti-immigrant) hard right platform. By 2014, it had attracted the largest vote in the European elections in the UK. Oh the irony.

Today

Fast forward to 2016.

There are 28 countries in the EU, enjoying the central 4 Fs (freedoms) – freedom of movement of money, products, services and people. The EU now covers 500m people, and a $18tr economy has been struggling. We’ve had periods where Greece, Portugal, Ireland and others have had to be helped to remain in the EU, post the GFC and the repercussions that ensued.

UK industry and the EU are now inextricably linked. 45% of UK exports are to EU.

In the 2015 Conservative manifesto, there was a promise to  hold an “IN OUT” national referendum on the issue of EU, if the Conservatives won the election outright, which they did. This ploy was designed to pull away UKIP supporters, and to some degree it worked. To the amazement of many, including all the polls, Cameron’s party duly won the election outright.

So on June 23rd there is a referendum on this issue. The polls are close. A leave vote gives the UK government the right to negotiate a leave agreement over 2 years. No one the size of the UK has ever left the EU, so this is a unique situation.

Assume UK leave…

The post leave vote position is very uncertain, and solutions would be found, but it would be very complex.

There are alternative models – such as a European Economic Area, which has Norway in it – and the EEA has bilateral agreements with EU but all EU regulations without seat at the table. This is unlikely to be acceptable to UK, having voted to leave mainly because of the subjugation of powers to Brussels.

The EFTA (Euopean Free Trade Area) model with countries like Switzerland exist, but again this open border model is not going to suitable be for UK.

So it would be a new model for UK if they leave.

It has been argued that 40% financial services business would move to EU; as UK is used as a place to get into Europe due to their being in the EU. The City of London has become a global financial services centre as a result.

Large new tariff barriers would be in place (the EU has massive common external tariffs around its borders), and all these need to be reorganized. There would be hundreds to renegotiate. It could be done, but it would take time.

Among the larger countries, UK has the strongest economy in the EU currently, so as the EU is client to UK (UK imports more from EU than it exports) so there would be a compulsion to put in place trade agreements. France and Germany alone make up over 20% of UK exports and imports. A new agreement with China and US and EU would all need rearranging with UK.

The U.K. has Commonwealth, so will not be alone and might increase trade there. The $10tr economy of Commonwealth (53 countries) is predicted to rise, whereas the $18tr EU economy is stagnating presently and has less upside.

Mood for change?

Older people are more for leaving than younger, but apart from that this the question is splitting people in the UK on every level. Everyone has an opinion. It’s not split on north south or rich poor, it is divisive all round.

Conservatives are for staying except for some high profile ministers. Labour are for staying. SNP for staying. The Telegraph and Mail newspapers are for leaving, Guardian for remaining; The Times is undecided. Big businesses are for remaining, smaller business are for leaving.

Referendums don’t often vote for change; most people in Australia want an Aussie head of state, yet when given the opportunity arose in 1999 they firmly voted against it. Same too with day light saving.

Could it be that when the Brits get in the voting booth, they will stick ‘with the devil they know’? As the Scots did in 2014? Is it that the ‘heart says go, but the head says remain’ and in the end the head will prevail? Maybe.

On the EU side, Europeans feel a mixture of dismay, irritation and growing apprehension around Brexit.  If UK leaves, Spain would probably next. If the UK stays, Holland and others may demand the same exceptions that UK has won.

And for Australia, there will be implications. Australia and UK are major trade partners, and Aussie and British firms have subsidiaries in each others’ countries. People move between them, and Australia is a #1 destination for non European emigration from the UK.

Either way, the EU is not going to be the same, and will evolve in some shape or another in the next few years.

Let them eat cake

Asking for startup money

Legend has it the wife of King Louis XVI of France, Marie Antionette, uttered the words “let them eat cake” on hearing the starving peasants were in revolt against bread shortages. We’re talking late 18th century, and although the Queen would have probably said the words in French (something like ‘Qu’ils mangent de la brioche‘) there’s no evidence that she actually said this at all. The saying actually predates her birth.

But the attribution persists, and has been used to show how out of touch the nobility were at the time, resulting in the French Revolution, and King Louis losing his head.

The words rung in my head this week as I indulged in a discussion I’d had many times before, relating to Perth’s burgeoning startup sector. The weight of opinion agreed that there’s not enough early stage funding deals going on. As to why, there was a distinct divergence of views.

I’d like to explode a few myths if I can …

Myth 1 – If they were good deals, they’d get funded

I hear this one a lot. If they were good deals, the argument goes, then eventually (or even swiftly) they would get funded, as an investor would see the opportunity was too good to miss. Some may pass, but eventually a good startup business would attract money.

However, this argument rests on the Perth market for startup funding acting perfectly, which (let an old economist like me remind you) only exists where there are a large number of buyers and sellers, such that no one buyer or seller can influence price. Perfect markets also rely on a perfect spread of information, freely available to all, and homogeneous (exactly the same) products.

Perth’s startup sector is no perfect market. While there are a good number of startups to choose from (300 at last count?), there are a very limited number of private investors willing to back them. There is one VC fund (and that’s already fully invested, 2/3rds in biotech) and one angel group which meets 4 times a year and maybe does 5 or 6 deals annually. Meanwhile, there are plenty of potential investors dripping with (business, mining or property) money removed from startupland.

Neither is there a perfect spread of information, with only a privileged few getting in front of the investors, and as they are all very different, each startup investment opportunity needs to be considered individually, one by one, a bit like buying an investment property. It’s time consuming, uneven and sporadic, at best.

I have no idea what makes a good startup investment (well, I have some idea, but I am not arrogant enough to say I know which one will be a unicorn and which will fade to nothing), but I believe there are many more out there worth a $25,000 or $50,000 investment that are currently being funded. I am seeing too many move away from Perth for funding (and securing funds) and too little getting funded here; and yet, Perth has far more high net worth individuals per capita than anywhere in Australia, and is one of the top places in the world for multi-millionaires.

There is a distinct disconnect between those that might have spare money to invest and those that could do with a decent little early stage investment that could give them 6 to 9 months of road, get them to market and revenues to see if there is something viable there.

Myth 2 – They shouldn’t be raising money anyway

This argument goes that startups should forget about raising money anyway (far too many think the capital raise IS the end game, clearly it is not) and should start pitching to customers instead. Get to minimum viable product (MVP), get early clients on board, earn revenues, and maybe they’ll find that they won’t even need investors at all, or if they do, they’d secure a better price, be able to raise more money and give away less equity in the bargain.

Bingo – I agree 100%.

However, most startups are either doing exactly that (out of necessity) or cannot get any further without something else investing upfront. They’ve piled in their own cash, savings, credit card debt, taken money from family and friends, spent months on the idea, with no pay back, giving it their all. They have got somewhere, and now are looking for some extra help.

Some ideas just need money to get off the ground. You have to spend something to build it, you have to get out there to see if it works, and this may take $50k or more beyond the funds available to the founders.

Most successful startups have had early stage money. Very few are profitable or cash flow positive from day one (or after the family and friends money has gone). Often there are dead ends, false starts, wasted attempts, and this is all the cost of learning. If you’re doing something very new, disruptive and game changing (surely what the investors want to see?) then it simply takes some funds upfront. Like buying the investment property.

It also takes time. The successful ones will tell you it took 5 or more years to make money. It certainly took my startup this length of time, and others like realestate.com.au, carsales.com.au and others took 7 or 8 before profits appeared.

Mel and Cliff from Canva understood this. There they are today, smiling out at us from the front page of the local weekend paper. They’ve raised millions and millions of funds  – are they profitable, or cash flow positive yet? They were helped off with a cool $3 million raise a few years ago, which took them away from Perth to Sydney, and have since raised many millions more. Nick and Al from Simply Wall Street could not raise money in Perth, but have successfully raised $750k from angel investors, also in Sydney (why not in Perth?). Talking to their lead angel at a lunch function a few months ago, he told me that in their case, they had an idea so disruptive, “you just had to give it a go to see if it worked.”

Exactly.

Not all startups deserve money, some may not be at the right stage, but somewhere along the line, many do, and the vast majority of these simply aren’t getting the funds they need, despite there being ample in our city. Water water everywhere, nor any drop to drink.

Myth 3 – The entrepreneurs are unrealistic 

Sure, owners of anything are unrealistic about their valuation. I think my property is worth more than it is, and also my car. The price is determined only when someone is willing to pay for it what I am willing to sell it for.

But with a limited number of genuine local startup investors the power is weighted heavily on the buy side, such that in some cases the negotiation is more like staged bullying (running down the efforts of the down trodden entrepreneur, and finding all sorts of reasons not to invest). Meanwhile, the poor startup trudges back to their lean canvas to see if they can eke out another month or two.

Perth investors have grown fat on the ability to exit their investment through an ASX-listed entity. We have seen 60 ‘back door’ listings announced over the last 2 years, as the mining downturn takes hold and now empty shell companies look to evolve into a tech company. This is a highly expensive and dangerous way for a genuine startup to raise funds. While potentially fine for a commercialised organisation with revenues and a clear growth path, it is clearly not suitable for the early stage venture (or only in very rare cases – FMG was in fact a back door listing, but I wouldn’t classify that as a tech startup.)

Sure entrepreneurs are unrealistic, but so are investors. You can’t have it both ways, you can’t have your cake (or bread) and eat it. It’s a punt. It’s a riverboat gamble. It’s like betting on the horses. You will probably not see that money again. Yes, it’s probably illiquid, for years. But if you win, you win big, so it’s best to make a few bets, to cover yourself. The more you make, the more you spread your risk. You may say ‘no’ to 20 before saying ‘yes’ to your first. But you might do 2 or 3 a year.

Myth 4 – It’s good they get money elsewhere & leave

The argument goes that we should not worry about our best and brightest startup ideas leaving our shores to get funded elsewhere. Sometimes they just need to spread their wings, bless them, and once they make their money they will return and help our ecosystem back here.

OK, maybe. But why can perfectly good Perth ideas get funded in Sydney, Singapore or San Francisco and not here? Why should they have to leave to get funded when we have so much money in the hands of private individuals in our fair city (and come July a nice little tax deduction too)? Why should they have to leave our great lifestyle, family and friends… unless they really want to?

To me, this argument is lazy. While it’s perfectly fine for businesses to go wherever they want (fly my darlings fly), it is not fine to have so few early stage funding deals that jobs and income that could have been created here (and stayed here) are exported to other cities or countries. We are competing in a global marketplace, the gloves are off, it’s either get nimble and innovative, disrupt your own market or someone else will do it for you. Where is the post mining diversification we so badly crave? Even during the boom, people were worried about us becoming a one trick pony. Now that pony has well and truly run its race, where are the up and coming industries? They need to be backed. We have no idea what great businesses might flourish and grow unless we give them a helping hand.

~~

Startup investment is not for the faint hearted. It’s not a slam dunk. It’s not for your nest egg, it’s play money. Many thousands of high net worths in Perth could make two or three $25k to $50k investments a year, and not even notice it. Conservatively, that’s $250 to $500 million of available funds a year, that would make a tiny fraction of a dent in the portfolios of many, yet revolutionise our local economy.

Perth could become a regional tech startup sector, offering a great lifestyle, climate and investment funds to plucky entrepreneurs who want to cash in on a place that just happens to sit in the same time zone as 60% of the world’s population.

It would be almost criminal (and certainly negligible) if we don’t do this.

Why a tech startup? Because the best ones have highly scalable business models. Those guys and gals down at Spacecubed hammering away at their idea on a laptop could have $100 million businesses in a few years (just as Canva does today after a relatively short 4 year journey). This type of growth is hard to do with traditional bricks and mortar businesses.

It’s the most speculative investment these investors will make, but for many of them, it’s the best fun they can have. They can add some value to the startup (sharing hard won advice on commercialisation, open some doors) and it can give them plenty of dinner party conversation.

If we can throw enough darts at the dart board here in Perth, we will hit some bulls eyes. It’s a numbers game. It’s a funders’ game.

So, let them eat bread. Cake will come later. Perhaps.

Photo Credit: Flickr.com, Heather Katsoulis

Encouraging women entrepreneurs

Springboard-panel
It is a sad fact that today in 2016, you are more likely to meet a board chair called “Peter” than a female board chair. Only 22% of Board appointees are women, although this has increased from 9% a few years ago. In Australia, a recent report showed that men in full time jobs were paid 15.4% more than women in full time jobs. In Western Australia, another report showed the gender pay gap is 25.3%, the worst state in Australia.

Achieving equality in the workplace is not just the right thing to do, it makes economic sense. Above and beyond the obvious and outrageous discrimination (systemic, implied, institutional, cultural…) is a case that we are only “fishing in shallow waters” if we ignore and keep down the majority (now 50.8%) of the population – women. The GDP foregone every year in Australia is assessed to be 20%, or around $300 billion.

This week I listened to the former Sex Discrimination Commissioner (and former lawyer and NSW Businesswoman of the Year) Elizabeth Broderick talk on these issues.

“In Australia today,” she says, “there are 1.4 million women suffering physical violence at home.”

1.4 million women. Domestic violence, which also includes exclusion, continual verbal and emoitonal attacks affects an even larger.

One solution? Get the people with the power (men) to act.

Male Champions of Change is an attempt to do just that. Men champion the changes in the home and at work, because this needs to be as much as male movement as a women one…

I also attended the launch of Springboard this week, a US-based accelerator for women entrepreneurs. It’s been going 4 years in Australia, and 3 in WA, and some of the excellent people who have taken part in recent years were interviewed about their experiences since going through the Springboard program (see photo above).

Most have either raised money or are in the process of doing so, and have had their businesses accelerate dramatically since leaving the program. Sharon Grosser from SEQTA and Louise Daw from MiPlan were on the program in 2013, and I remember they graced the cover of Business News along with Wanida from MagnePath, being the first time 3 women made the cover in its 23 year history. I’ve been following their progress with interest every since.

A 3-month accelerator for women in (mainly) tech startups is a great way to get women more actively involved and promoted. All other accelerators I’ve been too have had, by sheer weight of numbers, a preponderance of men, usually single and their 20s and 30s.

At Springboard, only 8 women are selected from across Australia every year (WA has been well represented recently with 5 in the last 2 years alone) and more information on 2016 applications can be found here or here. Applications are now open, and close on March 30th. The Bootcamp itself is run in Sydney and will take place from 16 – 18 May 2016 followed by 8 weeks of mentoring before the accelerator culminates in a pitch night for investors. { If anyone requires more information, they can contact Sheryl Frame  or the CEO in Sydney Elisa-Marie Dumas.}

Whether it’s tech startups, boards or any type of business, we have to do far more to encourage women to reach the upper levels of organisations. My best two managers (by far) over my 30 year career have both been women. Women tend to have less ego, are more nurturing of their teams, but can be as steely and tough as the next man. In study after study, women leaders come out on top. A 2012 Harvard Business Review report showed women are better business leaders than men on pretty much all elements, not just traditionally ‘female’ ones.

It’s time to make some changes.

When I look at my own organisation, I see the top CEO is male (me), but 60% of our executive team are female as are half the managers, half the sales teams, and all the corporate services team.

We can’t lose!

Drumming the management beat

Drummer manager

I have a philosophy on management which goes – if you notice the manager, then management has gone wrong.

Good management should be invisible. It happens behind the scenes, allowing the parts to move together efficiently and the whole organisation to work effectively. Good managers select great people, self motivators, give them the tools to do the job (training, time, support, resources…) and then get out of the way.

In so doing, the manager does not absolve themselves of the responsibility for the performance of their team. The best managers are always on top of the numbers (the activity of the team, the work they are producing and the results). This can be achieved through simple CRM methods, regular quick meetups or huddles, and and ‘we’re all in this together’ spirit.

Getting away, and letting them get on with it, is a tough thing to do. It’s easy to meddle, it’s hard to bite your tongue and bide your time. You’re there to help, and when you’re needed, you’ll know. Sometimes you’ll err on the side of being too disengaged, but this won’t last long as the results come in. It is far worse to err on the side of being too engaged, micro managing your team to distraction, and not allowing them the freedom to fly. In this atmosphere, the best people will leave, and may even turn on you (think Kevin Rudd).

A manager is a bit like a drummer in a band. If you notice the drummer, something is wrong. Sure, you can listen out for the drummer, but if you sit back and listen to music, it’s rarely the drumming you are listening to explicitly. You’re singing along with the singer and maybe air guitaring a cool lick. Perhaps a cool drum fill will have you reaching for the pencils and drum rolling along the top of your desk, but usually it’s the general sound and lyrics you listen to. And yet the drumming is there. Remove it, and the whole thing collapses. Even a capella singers snap their fingers.

The drums hang in the background (within the sound, and literally, on stage) yet keep the whole on track, efficiently, and on time. If a fellow band member wants to go off in a new direction, the drummer signals this and goes with them. If the whole song is collapsing and needs to end, band members look to the drummer and the drummer brings the thing to a close.

Being in control is not the same as being up the front, posing and taking all the plaudits. You can manage things perfectly well from the back, keeping it all together, encouraging others on, marking time, going with the flow when need be, and bringing it all back at other times.

Drummers don’t need a flashy kit either, a simple set of a few toms, hi-hat and a couple of cymbals will do. Managers don’t need flashy offices, suits, pens or cars.

The best drummers, and managers, know that their skill is to work with the best team mates, and whenever possible, set the tone, support the team and stay the hell out of the way.

The new normal

Everything's just fine

It’s been an interesting few weeks already in 2016, with celebrity deaths (Bowie, Rickman, Frey…), jittery stock markets (down 7% one week, up 5% the next, down 2%, up 3%…) and the worst heatwave in 80 years (heralding in the Chinese New Year of the Fire Monkey). And it’s only Feb 14th, Valentine’s Day. Where’s the love?!

So I’d like the pause at this point and say ‘Hold on! It’s going a bit crazy, and we all need to calm down.’ (to echo Larry Hagman’s character Fred Picker in the Primary Colors.)

The period from about 2002 through to 2012 was an unprecedented super cycle of ‘once in a generation’ proportions, not known since the late 1960s. As an MD of a junior miner told me this week, “It’s terrible at the moment, but it only reminds me of the time 15 years ago when we picked up these mining assets for a song. Maybe I should have remembered that and got out of the game a couple of years ago!”

Meanwhile, the mass media has been forced into a corner shouting headlines to get attention. Less and less of us are paying attention, so they shout louder and louder. I turned on the news today and it was just one murder or death after another. Is this what the news has become now? Preying on our emotions, to get and hopefully hold our attention?

So, Picker style, I just ask everyone to calm down. We live in great times of enormous wealth. We are incredibly fortunate and need to count our blessings. Yes, the super cycle finished in late 2012. Get over it, it’s gone. Love it while it lasted (although during that decade it was damn hard getting a plumber, or persuading a teenager to go to university), but it’s gone, along with the cashed up bogans and tripling in property prices. Thank goodness, say I.

We are back to normal, where you have to work hard for a living, work smart for a sale, and become more and more productive to stay competitive.  You may have to work longer than you’ve been used to of late, with less people in your company doing the same amount of work in total. Pay rises may be small, at best. Many will feel fortunate to have a job. People out of work may have to take longer to get a new one, or might look to set up something for themselves. Some companies will shrink, some may pack up, but most will carry on OK. Some, on the cusp of a new wave, a new industry, will grow and attract new talent. It’s the way of things. It’s how markets work. Either extreme is not healthy. No need to scream, it’s the middle ground for a while, and that’s perfectly fine.

Promoting the positive force of business people

Australians of the Year

For the past 55 years, every Australia Day, the ‘Australian of the Year’ is announced, usually by the Prime Minister in a ceremony outside Parliament House. It’s become a major occasion, and is televised.

The Award was originally designed to bring some deeper meaning and a focal point to Australia Day itself. These days the winner is picked by the National Australia Day Council (NADC), in order to honour the Australians who make us proud to be Australian.

Glancing down the list of 59 (no doubt worthy) recipients, we see a distinct skew towards Science and Sport ~ with 15 Scientists and 14 Sportspeople honoured. That’s half the total list. 9 politicans & activitists and 9 entertainers make them quite a common category as well … then it’s a bit of a drop off to 4 business people, 3 military personnel, an artist, an author, a Bishop, a Cardinal and a judge. There are only 9 women, so it’s 85% male.

I love my sport like the next guy or gal, but surely they get enough recognition already? And not to mention their many accolades, wages, endorsements and everything else. When 4 win it in a 7 year stretch from 1998-2004 you think things have gone a bit over the top, even considering the sports mad Prime Minister we had at the time. How can you really compare the spray on skin brilliance of a Prof Fiona Wood with a tennis player, or an Indigenous leader with a cricketer?  And why so few women?

If we are trying to inspire our kids, then whose example are we trying to promote? Science is for boys and sports are so important the best ones are to be placed on another pedestal?

All hail Rosie Batty, the 2015 recipient and a campaigner against domestic violence. I’d like to see far more women, and more business people honoured too.

The first business person was Alan Bond in 1978 (oops!), then Dick Smith in 1986. Recently there has been a bit of a rush on  with Simon McKeon (2001) and Ita Buttrose (2013), who were honoured more for their post business work than what they did in business.

4 business people in 60 years? Slim pickings you might say.

Is this the tall poppy syndrome rearing its ugly head? Is it somehow ‘dirty’ to be successful in business? Are we only interested in what James Packer is up to with Mariah Carey, or Clive Palmer’s latest absurd remark? Are there no other admirable people in business who have served their organisations and communities well, creating jobs, wealth and happiness for tens of thousands? Well, yes there are, and I could name plenty. I’ve found the higher up you go and meet people, the more impressive they are. Not show offs, but working people, working hard, with the right attitude to their staff, clients and the community in which they operate. Most of them quietly get on with it. They give back in bucket loads. They pay a lot of tax, as do their companies. They pay dividends.

It’s not bad to be successful, and we should applaud those that are. Those that have worked hard over many decades, created the backbone of the economy, and have made this country the one that simply has the best lifestyle in the world. No exaggeration, even our cities get in the best places to live. And Australia gets even better when you step out of the cities!

So, come on NADC. Let’s see some positive reinforcement of the excellent business people out there. Women and men. Good people who can inspire the young of today, show them they can get out there and do it. Show them that they don’t need to settle. They can build up a  great company themselves. Yes, they can do science and maybe sport or entertain, but equally they can create a whole organisation, or go into one and transform it, building wealth for many (yes, including themselves) in the process.

Maybe not Clive Palmer. But perhaps Michael Chaney, Gail Kelly, Scott Farquhar, Jack Cowin, Stan Perron, Janine Allis, Radik Sali, Carla Zampatti … and many more besides. If you look, you will find thousands to choose from.