click this button to get back to the previous page

THE WEATHER REPORT

Welcome to the first electronic edition of New Global Opportunities. It seems like only yesterday that I was engaged in my first ever publishing venture: an alternative literary magazine that my friends and I printed using something called a Roneo Machine. The machine smelled, for some reason, of alcohol – a long run would have us all feeling decidedly giddy. Anyway, the fact that we are publishing this electronically is, I hope, proof that an old dog can learn new tricks.

Although I am interested in all sorts of businesses, over the last few years I have been very much focused on international trade. I tend to go for small projects that are going to bring me in repeat income; having said that, I recently had a huge hit with the sale of heavy plant equipment from Ireland to Germany.

Anyway, at the moment I am working on a much smaller project, selling health snacks. Fed up with the poor quality of packets of nuts, dried fruit and other similar items in takeaways, garages, independent grocers etc., I have been working on creating a new range of high-quality health treats. I think I have found a suitable supplier and am now negotiating with a couple of soft-drinks companies (basically juice/smoothie manufacturers) to market the product with them. My idea is to use their brand name and packaging and, most importantly, distribution network. If I pull it off, I will be selling health snacks to a drinks company that will in turn sell it to its international network of distributors. It is a complex deal, but if it succeeds I will make a small but very regular commission on sales for absolutely zip capital outlay. It depends, of course, on forging some meaningful alliances. To which end…

For richer or poorer, for better or worse

One of the most successful ways to launch any new business or product is to forge an alliance with another business. It is difficult to break into new markets but such a partnership can bring instant access to new customers. A partnership doesn’t have to be about entering new markets, of course. It can also supply capital or access to technology or even manufacturing processes. If you are a small company, forging an alliance with a bigger player can add to your credibility, too.

Whatever the reason for forming an alliance, if it is going to be successful you need to make sure that you are getting into bed with the right partner. Here are a few tips:

• How to choose a partner. Any business that has something you need (customers, technology, manufacturing capability and so forth) is a potential partner… provided you have something it needs as well. Because, obviously, for any alliance to succeed both companies must benefit from it. But partnerships are time-consuming, so you need to be careful that you are choosing a partner that is going to give you what you really require. It is more sensible, where possible, to think long term. An alliance shouldn’t simply be a single, one-off transaction. Do remember to investigate the reputation of whomever you plan to align yourself to. Research whether the prospective partner deals honestly with associates, employees and customers. Expect any partner you plan to join forces with to investigate you and your business as well.
• Making the deal. Once you have found a potential partner, you need to sit down and negotiate the actual deal. Don’t rush it. You need both to lay the foundation for a productive relationship and to uncover potential hazards. Make sure that you and your partner both have the same vision. Establish the key topics you need to sort out and a timetable for the talks. Come to every meeting with a formal agenda. Look at the scope of the partnership, its goals, the roles of those involved and the obligations each of you will be making. Set milestones and other operating details, agree rules for any intellectual property and document your financial arrangements.
• Agree the decision-making process. The key conflict between partners usually revolves around how decisions are made. For this reason it is important, early on, to plan the decision-making process. This means setting out the names and/or titles of who is going to sign off on all key decisions as well as the reporting process. Make sure you meet your partner’s senior management, in other words all the key players involved in whatever projects you plan to undertake.

Don’t seal any deal with a handshake… put it in writing. The partnership agreement should encompass all the parties’ legal obligations and anything else that is relevant. Remember to plan for the worst. What would happen if things were to go wrong? Build in an escape clause so that neither party is trapped in an untenable predicament.

A good example…

While I am on the subject of forming alliances, let me just update you on Darling’s Real Dog Food, a company that I have written about a couple of times before. You may remember that the company is not actually making its product (dog food and biscuits) but has formed partnerships with a butcher and a baker (but not a candlestick maker). Now that Darling’s is up and running, Vicky Marshall, the MD and former head of marketing at Nationwide Building Society, and a pretty smart cookie, has started to form marketing partnerships. For instance, she has tied in with the UK’s largest dog training group and with a veterinary surgeon association. Thanks to these alliances, which are based on mutual support without cash changing hands in either direction, she is building the company without needing much cash.

Remember the bottom line

I was interested to read an article by Steve Martin (not the comedian but one of the authors of Yes! 50 secrets from the science of persuasion) describing an experiment done by Professor Max Bazerman from Harvard Business School. Apparently, on the first day of his negotiating class he takes a $20 banknote from his wallet and offers it up for auction. Anyone is welcome to take part in the auction providing that they abide by two rules. The first is that bids must be made silently in one dollar increments. The second is that the runner-up in the auction must, as a penalty, pay an amount equivalent to their last bid while receiving nothing in return.

As the auction begins, apparently, hands quickly go up as the audience sense an opportunity to acquire cash on the cheap. Then something interesting happens. When the bids reach the 14- to 16-dollar range it suddenly becomes clear to everyone that they aren’t the only ones hoping to pay less than face value for the $20. Very quickly, all but the two highest bidders drop out. At that point, something really interesting happens. Without realising it, the two remaining bidders become locked in a new game and instead of playing to win they are now playing not to lose. Almost always, the two bidders will keep going well over the $20 you would expect them to stop at given that that is all the thing they are bidding for is worth. Indeed, in over 200 separate experiments only once did the auction end before the bid reached $20. Many times the $20 sold for more than $100. The record is $204.

During the auction, two persuasive forces appear to influence the bidders. The first is commitment. Although small, each incremental bid commits the bidder further and further, and once they get so far down the line it becomes difficult to let go. At that point a second persuasive force comes into play: the desire to avoid losing.

Rather than providing a lesson in how to persuade others, perhaps this experiment is a better demonstration of how easily we can be persuaded into actions, sometimes against our better judgement. In our desire to land that new client or win the bid for that lucrative new contract, we may become so committed to winning and so keen to avoid losing that we invest more time, resources and money than is prudent.

Six brilliant business people

I am a man who loves new business ideas. But those ideas are created, of course, by individual entrepreneurs. And so I follow the careers of certain individual entrepreneurs in the same way that other people might follow a favourite sports team. Here are the six people I’ve been keeping my eye on over the last few years. Why? Because in each case I believe that they will do something else that is quite brilliant. Something else? Yes, all of them are already proven winners.

Federico Alvarez

Alvarez comes from Uruguay. Three years ago, he spent just $500 shooting a five-minute special effects video called Panic Attack! about an alien invasion in Montevideo and posted it on YouTube. It was so good that he was hired to make a multi-million-dollar film less than two weeks later. I urge you to look it up… it is inspiring what can be done with a home video camera!

Perry Chen

Chen is the founder of something called KickStarter. KickStarter, only a year old, is a computer platform that lets users crowd-source funding for creative ventures. How does it work? The site carries hundreds of different projects from entrepreneurs hoping to open, say, a retail establishment to would-be publishers hoping to produce a comic book series. Possible donors decide what to back. If a venture doesn’t meet its fund-raising goals then the donations aren’t processed. KickStarter itself takes a 5% cut. Apparently, about half of KickStarter’s hopefuls don’t succeed, but some 1,000 have been funded already.

Andrey Ternovskiy

Ternovskiy is the genius behind Chatroulette. He built the site in, wait for it, two days and funded it with a $10,000 dollar loan from his parents. Basically, the site connects random users via webcam and lets them hit ‘next’ to switch partners at will. The site is getting over 1.5 million users a day. When Ternovskiy came up with the idea, by the way, he was just 17.

Scott Belsky

Belsky’s ambition is to make his website Behance (makes me think of the pop star Beyoncé) the epicentre of the creative world. Ambitious, yes, but not impossible. Behance is about organising talent on an international scale, a Web-based platform that allows everyone from a graphic designer in Poland to a make-up artist in Iowa to compete for the site’s best real estate, based purely on peers’ judgement of their work. A light graffiti team in Cologne, Germany was discovered on Behance by an ad agency for the telephone carrier Sprint. A New York photographer and an Indian illustrator found each other and collaborated on a stunning series of artworks. If you are involved in any sort of creative work, Behance is the place to go. Meanwhile, Belsky is someone to watch.

Ray Kurzweil

Kurzweil is known as a futurist and if you want to understand what he is about read a book called The Singularity Is Near. He is co-founder of something called the Singularity University. Its mission is to educate young entrepreneurs on the latest in such hot fields as artificial intelligence, biotechnology and nanotechnology – and then to focus them on the major challenges of humanity. In other words, it is trying to help entrepreneurs come up with solutions that will solve major problems.

Fred Wilson

Fred Wilson is one of the founders of Union Square Ventures, a controversial blog about entrepreneurialism that hits both the lofty (social impact, reputation management etc.) and the gritty (deal size, board strategy, due diligence etc.). The site is worth checking out and Fred Wilson, who is now in his late 40s, is a study in creative thinking.

Summer reading

What the Dog Saw: And other adventures by Malcolm Gladwell

It is now almost ten years since Malcolm Gladwell became famous for his worldwide bestseller The Tipping Point. That book was all about how small-scale social events can have huge potential implications, whether that is a rise in the sale of Hush Puppies or a drop in the New York City’s crime rate. Gladwell’s latest book is actually a selection of the author’s favourite New Yorker articles, covering everything from the inventors of automatic vegetable choppers to the collapse of Enron. Gladwell has to be one of the most exciting business writers in the world.

The Leader Who Had No Title by Robin Sharma

This is a business book written as a fable. It tells the story of Blake Davis and his mentor Tommy Flinn and the four teachers who transform Blake’s life. If you can put up with the rather nauseating writing style, there is much to be learnt from this enjoyable little book.

The Match King by Frank Partnoy

Ivor Kreuger made a fortune lending American money to Europe during the Great Depression in exchange for monopolies on the production and sale of… matches. This is the true story of the way greed can bring the financial system crashing down. The parallels with the more recent financial crisis are there for all to see.

The 2020 Workplace: How innovative companies attract, develop and keep tomorrow’s employees today by Jeanne C. Meister and Karie Willyerd.

Thanks to a demographic time bomb, in the year 2020 it is possible that employees from five generations with formative experiences ranging from World War II to the latest online war games will be sharing the workplace. This book really explains how entrepreneurs must prepare to manage their different needs, expectations and attitudes. If you read nothing else, read the chapter on social learning, which argues that the most important question for future workers will be ‘How have you helped me to learn?’

Teach Like a Champion: 49 techniques that put students on the path to college by Doug Lemov

You may wonder what a book about education possibly has to do with starting and running a successful business. Well, this book is really about meticulous observation and how it can help one to come up with new ideas and innovations. Of course, meticulous observation is pretty common in the world of sports but it is much less used in business.

Doug Lemov is a consultant to school districts that are desperate to improve. He is a former headmaster and teacher and he was convinced that better teaching was the answer. He discovered that in one year the top 5% of teachers can raise students an entire year and a half. The bottom 5% can put their kids a half-year behind. Lemov wondered: what if we could make all teachers a little bit better. There was a problem, though: no one knew what made some teachers better than others.

Most people thought some teachers just had ‘it’ and the rest didn’t. Lemov, on the other hand, suspected that there was a technique underneath the teaching magic – and if he could find it he could teach it. So he identified a successful teacher in a particular school and observed his class and, indeed, filmed it. This led to five years of recording and analysing hundreds of hours of videotape. The best teachers have a lot in common. For instance, they circulate around the whole space of their classrooms. They are always within seconds of being at the shoulder of any student in the room. They start their class before the bell has rung with a ‘do now’ assignment on the board. Their students are trained to come in, get settled and begin working on it.

Businesses tend to get itchy when you talk about filming employees. But you don’t need videotape to generate new insights. You just need to observe what is going on around you.

Made By Hand: Searching for meaning in a throwaway world by Mark Frauenfelder

Frauenfelder is the co-founder of BoingBoing.net and the editor-in-chief of Make magazine. He makes his own yoghurt, raises chickens and is something of a DIY pundit. He uses such experiences to make the case for releasing your inner amateur. It is an engaging book full of lots of interesting case histories.

New business ideas

Here are a few different new business ideas I have come across on my travels this month.

The Sky Factory

The Sky Factory makes backlit images of sea and sky that are installed on ceilings and walls. Its products are popular in hotels, spas, restaurants and hospitals. What may surprise you is that the business employs 34 people and turns over millions of pounds a year. There has to be a wider, international market for these products. And there have to be other manufacturers engaged in doing the same thing. There is money to be made here – I am sure of it. Perhaps representing a manufacturer or else by going into the same line oneself. I’d be looking at the office market, too, which seems totally undeveloped.

California Carnivores

Well, you will have guessed that this business is located in California. But what may surprise you is that it has nothing to do with animals that eat meat but everything to do with… plants. It is, in fact, the largest nursery in the world that sells nothing but carnivorous plants. Indeed, it carries more than 1,000 varieties in a giant 11,000 square foot space in Sebastopol, California.

If you think that a love of insect-devouring plants such as Venus Flytraps is only of interest to schoolboys, think again. California Carnivores runs a giant mail-order business shipping plants all over the world. The company’s founder has also written a definitive book on the subject, The Savage Garden. Anyway, if you are looking for an unusual business to start perhaps this is it. Also, I point out it is a good example of how someone has turned a hobby into an unlikely (but profitable) business.

Teracycle

Teracycle collects all sorts of unrecyclables – packing, old pens, dead cell phones, potato chip bags – and turns them into items such as school supplies and gardening tools which are then sold at retail. It is proof that there has never been a better time to be a green business, with customers increasingly eco-conscious and venture capitalists pinning their hopes and a lot of money on the clean tech industry. When I tell you that Teracycle is expected to turnover $20 million in retail sales in 2010 after just eight years in business you’ll get a feel for the potential.

Other green businesses to watch include Advanced Electron Beams (an alternative to using chemical processes for sterilisations and curings), Bloom Energy (the company behind Bloom Box, a miniature power plant that creates electricity from air and fuel cells without emissions), Environment Furniture (a sophisticated furniture line that uses eco-friendly materials such as reclaimed wood and aims for low environmental impact), Ravenbrick (the thermo reflective windows and walls developed by this clean tech firm can reduce energy usage by half and replace materials such as brick, insulation and concrete) and Green Garmento (a $10 reusable dry-cleaning bag that holds 12 garments and doesn’t contribute to the 300 million pounds of plastic bags dumped in US landfills every year).

The outsourcing of domestic life

More and more, domestic life is being outsourced. It is no secret that busy parents are willing to pay for help around the house. In fact, child care, sports training and tutoring are multi-million-pound industries and entrepreneurs are regularly coming up with new ways to serve the market. For instance, there is actually an American potty training programme in the United States called Booty Camp Potty Training Program that sells for $90. Others to watch in the same sector include Cleanology (a website matching professional housekeepers with households that fit their cleaning style), Divalysscious Moms (think of it as a mother’s group on steroids), Manhattan Childproofers (provides the gates to cabinet locks that make New York apartments kid safe), My Punch Bowl (a free online party planning and invitation service), Tutorvista (one-to-one professional tutoring in a secure Web environment) and Oliver’s Labels (with an embedded homing device the labels let parents track lost toys and clothes using an online tracking system).

Some international trading opportunities

Here are a few companies that I suspect would welcome an approach to export:

• Blik – all decals that bring high design to the masses.
• Aeonian Brick – clay-based, eco-friendly, interlocking bricks that are waterproof, fireproof, termite proof, soundproof and mould- and mildew-resistant. And they can withstand hurricanes.
• Anna Sova Food Paint – a VOC paint and stucco made of as much as 94% food-grade ingredients.
• Fantasy Shade – pull-down blinds created by a designer called Mellissa Borrell.
• Nama Rococo Wallpaper Studio – produces hand-painted, hand-screened wall coverings for offices and homes.
• SRS Energy – a roof tile company that has created something called the Sole Power tile.
• Tomboy Tools – a direct-sales company offering top-quality tools designed for women.

 
Fruit Guys

A brilliant piece of lateral thinking, Fruit Guys supplies fresh fruit to the employees of over 1,000 businesses based in the San Francisco area. When I tell you that it is now turning over nearly $8 million in fresh fruit every year, you will get an idea of just how successful this business has been. Initially, the business community thought the concept was a bit of a joke. But with the growing interest in a healthy lifestyle, Fruit Guys is now taken very seriously indeed. One of the things I like about it is that they are social entrepreneurs and wherever possible use local, seasonal produce.