Monthly Archives: July 2009

Most Important Revenue Number in the B-Plan

Jim Logan says that the most important number to focus on in a business plan is the nearest revenue number the company lists. Typically this is the Year 1 revenue projection. Hone in on that number (ignore all the others, I'd say) and ask the following questions to make sure the entrepreneur knows how s/he's going to hit their first revenue forecast. If they don't know how they're going to hit the first number, how will they hit any of the others?

  • What is the profile of the person you’ll primarily be contacting?
  • Who influences the person in their position?
  • What does this person value or fear in their job?
  • What are the steps to your target account’s typical purchase cycle?  How do they make decisions?
  • What are your sales steps?
  • What is your anticipated sales cycle?
  • What is the expected time for each of your sales steps?  Did you factor in time for making contact, scheduling, negotiating, etc.?
  • What is the expected value of your average transaction?
  • What is your expected close ratio?
  • What is your expected time to revenue?
  • What is your expected time to cash?
  • How many prospective accounts do you expect to have to engage with each month to meet your revenue forecast?
  • How are you going to find these prospects?
  • How are you going to contact them?  What means?
  • What lead generation activities do you have planned?
  • What sales tools do you have?
  • What sales forecasting and review process do you have in place?
  • How accurate were you past forecasts?  Did they adjust much weekly and monthly? (a really bad sign)
  • What is the skill-set and number of sales people you must have to reach your revenue forecast?
  • How will the first customers weigh on the organization’s ability to continue to sell?
  • What are your booking and revenue recognition policies?

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Here are 50 side businesses you can start on your own. Here are 10 outstanding lessons from a failed start-up. Here's the founder of And1 talking about how he built his company.

Santiago, Chile

800px-Santiago_do_Chile

Chile is the Switzerland of Latin America. Chile is the Japan of the Southern Cone. Santiago is Zurich. Santiago is Tokyo. Valparaiso is St. Gallen. Valparaiso is Kyoto.

OK. This might be stretching it. Chile is still a developing country, with all that that entails. But it is striking to arrive in the country after time in Argentina and Uruguay — it feels like arriving in Hong Kong or Japan after time spent in China and India. (Granted the contrast is not as stark; but then, nothing compares in intensity to India.)

The Santiago airport is clean and well-signed, and the personnel are helpful and professional. I got in a taxi at the airport, and he looked at my address, conferred with a colleague about the best route, then called the office en route to double check directions. The highways were exceedingly well lit (it was night time) and all traffic laws were obeyed to the T.

I spent the night with a friend in Vitacura, a tony neighborhood in the north of Santiago. The next morning I went for a run in this Atherton-style hood. The air was crisp and cool and the Andes mountains served as an unmatchable backdrop. (Think: Boulder Flatirons, except grander.) Again I noted how everyone obeyed crosswalk signs and how well marked everything was.

The next night L, D, and I shared a couple bottles of Chilean wine and several plates of tapas at a hip, loud wine bar (that turns into a dance club at midnight). Spanish was the common denominator, so I got plenty of practice. Wine always loosens the tongue as well, especially when it’s a foreign language.

Vitacura is not the real Santiago, so I spent the next six nights in an apartment in Barrio Brasil, a neighborhood near the center of town that’s full of students and nightlife and restaurants. It was an ideal location and the apartment set-up worked well as it allowed me to buy some groceries/food.

I took the same approach to Santiago as I did in Buenos Aires: walk around, more or less randomly. There was plenty to see, including ample mullets (the fashion choice of most Chilean young men), spontaneous dance protests in streets, school children, and more. I walked to the zoo and metropolitan park and to get there I had to walk through the Palestinian neighborhood. I know this because a guy came up and asked if I needed help (it’s happened three times so far in Chile; didn’t happen in Argentina or Uruguay) and he told me there are 70,000 Palestinians living in Santiago.

Food in Santiago is still heavily meat-based but not as much as in Argentina and Uruguay. Churrascos are the go-to. “Completos” are just hot dogs but with loads of sauces on top. The produce and fish are tasty, thanks to Chile’s coastal location.

The Santiago metro is the best I’ve ever used, anywhere (Japan is probably better, but again, Japan is a separate category). The trains come every two minutes or so; there are a million people standing around to help you through every stage; queues are formed and respected; the trains are trash-free and well-signed; and the coverage of the subway/metro is vast. You can get anywhere on the subway, it seemed cheap, and very user-friendly.

Pollution in the city? Yes, it’s there, and the smog and so forth is as advertised. But it wasn’t as oppressive as I expected. Some told me it would be impossible to run outside due to smog. Not so.

The city is segregated by class and in the nicer neighborhoods there isn’t much poverty to see or deal with. The wealthier suburbs are incredibly American-looking. Similar looking homes, trimmed grass lawns in front, etc. I was told that American ex-pats can live in one of these suburbs and feel right at home.

Bottom Line on Santiago: I love it.

Vigilance on the Travel Trails

A person traveling with me tells me that I am the most vigilant traveler she’s traveled with in terms of security precautions, preemptive battles against scams, etc.

Other than a passport issue in Switzerland four years ago but besides that nothing bad has happened to me. Never been robbed or mugged and nothing’s been stolen from a hotel room (even though I always hide my stuff under mattresses etc especially in lower end hotels).

I’m not sure whether this actually makes me MORE vigilant. Perhaps if something like this happened, I’d realize its big picture insignificance. Until then, it’s an “unknown.”

Either way, I think I have an optimal amount of vigilance – I do venture into dangerous hoods, countries, etc. just always try to be safe…

Environmentalist Follies: The Spiritually Rich Global Poor Must Be Protected

In their New Republic piece on environmentalism, Ted Nordhaus and Michael Shellenberger make several interesting points. This one I loved most:

It has become an article of faith among many greens that the global poor are happier with less and must be shielded from the horrors of overconsumption and economic development–never mind the realities of infant mortality, treatable disease, short life expectancies, and grinding agrarian poverty. The convenient and ancient view among elites that the poor are actually spiritually rich, and the exaggeration of insignificant gestures like recycling and buying new lightbulbs, are both motivated by the cognitive dissonance created by simultaneously believing that not all seven billion humans on earth can "live like we live" and, consciously or unconsciously, knowing that we are unwilling to give up our high standard of living.

They say later that too many environmentalists “reject the modern project of expanding prosperity altogether.” This happens to be one of my strongest gripes with people who supposedly care about the global poor. The Moral Consequences of Economic Growth ought to be required reading for these people.

There’s a similarly flawed thought process behind Western do-gooders who decry the existence of sweat shops in third world countries: We need to “protect” poor people whose wages are “too low” from doing menial, backbreaking labor. Ugh.

Culture of Intelligence in Chile

In metro stations there are bookshops and what appear to be mini-libraries. In Plaza de Armas there are at least 30 chess tables set up and lots of businesspeople wearing suits competing over their lunch hour. People read on the subway. Just three signs of an overall culture of intelligence that I notice in Chile.

Chile_bencamera 030

Assorted Musings

Quick thoughts, cheap shots, bon mots…

1. A recipe for good character? Be raised religious – absorb the good old-fashioned values of the 10 Commandments variety — and then become atheist later, and bask in rationality. My friend Dave generalized this observation to the following: “People who were raised with a strong value system of some kind, but then questioned the value system and decided for themselves their values and ethics, both (a) tend to choose value systems that you like and (b) live them relatively consistently.”


2. Among the many other benefits of playing team sports when young: You get used to people yelling at you and giving direct, brutally honest feedback. You are being constantly criticized. At every single one of the thousands of basketball practices I went to, I made mistakes, and somebody told me how I could improve.


3. When there is a crying baby sitting next to me on a plane, I am sometimes tempted to take off my sock, preferably sweaty, and tie it around its face and mouth. [Speaking of babies, why are black babies generally cuter than white ones?]


4. In a group setting with impressive people (conference, dinner party, etc) have a third person introduce each person instead of self-introductions. You can’t brag about yourself. A third party can.


5. It seems like we need some intermediate step after you graduate from a liberal arts college. There's college, in which you learn little about the real world, then right away the real world. Maybe four year colleges should offer a fifth year that is a super charged internship period / life skills bootcamp. I have long liked the Northeastern University co-op program


6. Theory: People who glorify "being different" were born normal. Normal people think being different is cool. People who are actually different spend most of their life trying to be normal.


7. Here's what I do when I visit new cities: I meet people. I was in New York one week and I met 17 people in five days. I didn't go to MOMA, or Central Park, or do any other tourist things. I sat in Starbucks and met people. To me what makes a city special are the people who live there. That's what I can't get at home. I can go to top museums or restaurants or parks in any big American city. And most of the tourist attractions in the U.S. don't interest me much. When I'm abroad, I spend less time meeting people and more time exploring, but I still find myself going into office buildings and meeting people.


8. Doubt the awesome power of peer pressure? Next time you’re at a crosswalk and someone starts jaywalking on a red light, notice how you feel.


9. The key characteristics of people who make good travel partners: flexibility, open-mindedness, low-keyness. When deciding whether to travel with someone emphasize these characteristics over your overall closeness with the friend.


10. Sometimes asking a direct question about an abstract concept can be effective. For example, in a job interview, you could ask a candidate,  “Do you have self-confidence?” and see how he responds. The answer is in the body language and poise, so it wouldn’t work as a written question.


11. Single men and women tend to be more self-absorbed and arrogant than their married or in-a-serious-relationship counterparts. This is for two reasons: married life means focusing a lot on someone else’s life (almost as intensely as on your own) and second, a spouse will ground you when your conception of self becomes a bit grandiose. When another person has seen your dirty laundry and seen you in your lowest lows, she sees you as a fallible human and can call bullshit when you forget this fact. It is extremely difficult to get this type of honest feedback from anyone else.

(Thanks to Seth Roberts, Penelope Trunk, Steve Dodson, and Dave Jilk for helping brainstorm some of these musings.)

Terremoto – Chilean Alcoholic Drink – Literally Translates to “Earthquake”

It's famous. There's a big scoop of ice cream on top. It only takes one.

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Rising Tide Lifts All (Nation-State) Boats

Americans, in their (our) obsession with “national competitiveness,” too often frame the discussion in a zero-sum manner: if China rises, we fall; if India wins, we lose.

The United States over the next 50 years will experience a relative decline in material living. But in absolute terms, we will not suffer at all. To the contrary, the rise of other countries improves our material well-being.

Alex Tabarrok, in his must-watch econo-optimist TED talk, makes this point well by describing the market for cancer drugs. Suppose you were diagnosed with cancer. Would you rather have a common form of the cancer or a rare one? Common, because common cancers have a larger potential customer market, which means there's greater incentive for companies to invest in research to find a cure. This is what is happening in all sorts of markets when hundreds of millions of Chinese and Indians become middle-class consumers. If China and India were as rich as the U.S., Tabarrok says, the market for cancer drugs would be eight times larger!

More rich countries means more innovation, because of increased demand (larger target market for products like cancer drugs) and increased supply (rich countries have more educated people who can create the new ideas and innovation in the first place). More innovation in country X means more innovation for the world — everyone in the world benefits from new ideas and products, no matter where they originate. 

Why, then, do Americans fear the rise of other nations? Isn't it obviously in our self-interest to cheer on poor countries becoming rich?

In the case of China, critics may denounce its anti-democratic values and human rights violations and say to support the economic growth of China is to endorse these values and make their spread more likely. For example, China, in pursuit of oil, has used its economic might to support corrupt African dictatorships while America and Europe have withheld aid in pursuit of regime change. This is a fair critique.

Unfortunately, most reasons have nothing to do with enlightened values (yes – some values are more enlightened than others) and everything to do with a mis-understanding of economics, misguided notions of nationalism, and good ole’ xenophobia. Watch Bill O'Reilly or Lou Dobbs for more on how these concepts hang together in the minds of the stupid.

By the way, it's not just Americans who ought to remember "a rising tide lifts all boats."

When the financial crisis hit, Europeans seemed almost gleeful at American economic woes: Finally the U.S. pays the price for its gluttonous ways and rampant free market culture! Finally their arrogance comes back to hurt the! Yet they soon discovered that in an interconnected world, when one (big) country hurts, all countries hurt. Same thing went down in China: Finally U.S. consumers pay the price for not saving and reckless spending! Followed quickly by, Shit! U.S. consumers – can you binge anew on our exports?

Bottom Line: Other countries are growing richer. Rejoice! Other countries are growing more powerful. Big deal. Americans should support the economic growth of other countries, even if that growth means our political sway and material standard of living are lower in relative terms.

Overcoming Adversity and Facing Reality

My friend Colin, in a wonderfully honest blog post, writes: “I'm going back to AA. Jesus. Somebody kill me.”

In March I spent a couple weeks in Colombia. Colin (last name omitted by request), who lives in Bogota, saw my tweet about heading down there and reached out asking if I wanted to meet up. His bio on Twitter reads: "Sexually-frustrated, alcoholic gringo in latin america." I was intrigued. I sent him an email asking for more info on his background. It only took a few emails for me to figure out that he was smart and thoughtful and interesting. He said he had been a long-time reader of my blog. We agreed to meet-up on my last night in Bogota.

For me it was an exercise in randomness. His online presence suggested he was unlike me. One of his blogs, Expat Chronicles, contains stories (which probably will offend many readers) about his exploits on the Latin America nightlife scene. In his own words: "This is a blog for Lonely Planet types and chronic travelers, those curious about the world, people who drink too much, guys with Latina fetishes, and filthy degenerates. People like me." Here's a post about going to a brothel. Here's a post titled "Peruanas' Gringo Desire Reaffirmed." His personal blog contains more general musings on the world.

I drink but not a ton, I don't do drugs, I've never been in jail nor have I patronized brothels. Meanwhile, Colin talks about all these things freely on his blog. I saw meeting him as an opportunity to understand the perspective of someone who has accumulated life experiences different from my own. We met over dinner, about which Colin posted a detailed blow-by-blow.

What impressed me most about Colin was his perseverance. He's had a tough life. It started with a grab bag of childhood traumas, followed by unfortunate run-ins with the law and school problems. Chronic alcohol and drug use compounded all of the above. At some point he decided to move to Latin America, leaving friends and family behind, and create a new life for himself. With his recent post on taking control of his alcohol problem, Colin is not just talking the talk when it comes to improving his life — he's taking concrete steps in the right direction

The other striking thing about him is his self-awareness. At dinner he displayed a tremendous ability to analyze himself and his actions, even if his own conclusions proved devastating to his character. Brutal honesty over charitable narratives or excuses: I like this.

People who have overcome real adversity in their life are not only more interesting than their silver-spooned counterparts, but they also seem to be the ones who become the most powerful and inspirational leaders. I expect Colin will be a future star of some kind.

He lives in Bogota and is available for freelance writing and web development. Email me and I’ll connect you with him if you’re interested.

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Here's Colin's post on how Latin Americans perceive love and romance more intensely than Americans. Speaking of honesty, my friend Penelope just blogged about being physically and sexually abused as a child. Wow.

Inspirational Video of the Day

Between watching this video on YouTube (embed below) and the all-time classic movie Wedding Crashers, I'm pretty stoked for my own wedding some day.

(hat tip Jon Bischke)