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Interview with Bryan Pate about Launching a Product

Bryan Pate is co-founder of the company ElliptiGO Inc. and the inspiration behind a new innovation in sports fitness, the ElliptiGO 8S, the world’s first elliptical bicycle. Bryan is a former triathlete, United States Marine, and McKinsey alumnus. His company has just recently launched their product which can be found at ElliptiGO website.


Here are my 5 questions with Bryan and his answers:

1a) Now that you have officially launched your first product (the ElliptiGO 8S) what would you say are the three most important lessons you’ve learned from the experience thus far?

One, that the old adage is true: everything is going to take longer and be more expensive than you planned for. Two, becoming very comfortable with uncertainty is imperative. Three, you need to be careful where you, “burn calories”. Every entrepreneur for the most part is dealing with a finite amount of time and resources. Ultimately you need to make quick decisions and not dwell too long on the outcome. For instance, for our new black bike, the team had to make a decision to go with a flat black or a glossy black. We don’t have the time or resources to poll our potential customers about what they think. We have decided to go with a glossy black based on our gut feel, but we might never know the impact (positive or negative) of that decision.

However, with that said, customer response/dialogue/polling is an extremely important part of this process. We base these decisions not on just what we think but what we learn from the various ways we have listened to our customers (ex. surveys from the site, talking with customers at various PR events, social outlets, etc.). From there, we make educated guesses based on what we know at the time. It is more important to move things forward than agonize over the unknowns, regardless of the innate desire to want to get it right every time.

1b) Were there any unique challenges in launching a product that is technically not available yet (a product that is only available via pre-order)?

It is a tough sale to get people to put money down on something they can’t immediately start using. Part of consumerism is instant gratification, and our current model doesn’t satisfy that aspect of the transaction. Furthermore, there is limited ElliptiGO brand recognition – as a result, we have a huge trust hurdle to overcome with every single potential customer. Unfortunately, using scarcity as a marketing attribute did not seem to influence sales. We are launching into a market that we are in essence creating. It is definitely a challenge.

2) From what you have learned so far about launching a product, what is one aspect you would have done differently or plan to change moving forward?

I would have taken fundraising a little more seriously. After our second round, I was concerned about other aspects of the business and stopped focusing on fundraising for several months. When I returned to fundraising, I found that I couldn’t simply pick up where I left off and that many potential investors had lost interest because of the break in fundraising. If I had a better fundraising plan and was able to move more quickly into raising the next round, as opposed to taking some time off, I believe it might have made things a little easier. When you are going through the process of funding a business, it is important to have a well thought-out fundraising roadmap and not be caught in a situation where you are discussing investments without a clear set of terms and realistic timeline for closing the round.

3a) Even though you have acquired funding, I think it is fair to say that you are a bootstrapped organization. Given that maximizing marketing dollars is extremely important to a bootstrapped business – especially when launching a new product and introducing your company to the world – where have you seen the biggest bang for your buck with regard to marketing dollars?

The biggest bang has been the Web, no question. In November, we had more than 8,000 unique visitors come to our website and spend several minutes there. This is without spending any money on advertising at all, other than the site. The ability to provide quality information to a self-selected audience like this so easily, and the scalability of the platform, makes it an easy question to answer.

3b) Have there been any surprises?

I think the surprise has been the organic growth in awareness over the past year. Now, I’ll be riding the bike around and I’ll hear someone say, “Wow! What is that?” And before I have a chance to answer their friend will say, “That is the ElliptiGO, you haven’t seen that yet?” Considering the limited quantity in existence right now and our lack of investment in awareness building other than online and riding the bikes, it is surprising how many people know what an ElliptiGO is.

4) How did you develop the success metrics to gauge your level of achievement regarding your launch? In other words, how did you get past setting up criteria that potentially could be arbitrarily based on a market that you are in essence creating (and has no historic data in which to establish baselines)?

You sort of make it up as you go along. We have come up with what we would like to accomplish (ex. number of new entry markets, number of elliptical bike races created, criteria specific to creating brand recognition). We have PR goals. For instance, in the launch event in San Diego our goal was to get coverage on every network news station, which we accomplished. We have qualitative goals about acquiring people interested in the brand, which we keep exceeding and then we have more quantitative figures based on pre-orders that we would like to improve on. With that said, we do realize that because of the new space we’ve entered, some of this is just conjecture. For instance, we know there won’t be much correlation between how we influence people to pre-order versus how we motivate people to buy when we are ready to ship product. We are aware to some degree the deposit model has failed us and that we need to go back to the plan and make adjustments.

When we are looking for data we are cognizant that some of our desired outcomes will need to be ball-parked. When we had our launch party, there were specific things we were looking for and trying to garner. However, we were also well aware that we were not conducting a scientific experiment. You do the best with what you know at the time. Success metrics are important so that you can make adjustments and gauge progress; I suppose in our case some are “arbitrary” but because they exist they are actually almost as useful (as goals based on existing data) because they create a standard by which one can measure initial expectations.

5) How did you ultimately develop your launch plan and what facets do you think are going to play the biggest role in converting interested consumers into customers (ex. PR, product demonstrations, social media and creating a community of satisfied evangelists, etc.)?

We developed the launch plan over several years. It has gotten refined throughout the process through mentors and experts, and as facts have changed so have we (and the plan). However, the plan has been deliberate. And truthfully, your launch plan is never over until the lifecycle is over anyway. There are always going to be new markets and new iterations of the product. In the case of ElliptiGO, we understand the importance of our first customers. In some sense, they will be our de facto sales force and because of that we need to make sure we take care of them and foster a great relationship with them.

We accomplish this by exhaustive customer interaction, making sure we are an active part of the conversation regarding our product (and market), treating anyone that puts down a deposit as a VIP and making sure that to the extent that it is prudent we influence who those first movers are. This last measure is the hardest because it is a delicate balance. I mean, I am suggesting that it is important that we in some way control who are the first owners of our product, while at the same time I want to do whatever I can to increase sales. It is a tough position to be in.

So to answer your question, one of the most important aspects of the plan at the initial launch stage is to manage, enable, and influence to the best of our ability these first movers with the hope that they in turn will do the same with follow-on consumers in a positive way. Right now it is a one-on-one conversation but we hope it evolves to the stage that people begin to learn and be influenced by customers we nurtured in this initial launch.

Interview with Mark Friedman about Innovation

Mark Friedman is the co-founder and president of Perfect Fitness, LLC, the creators of the Perfect Pushup and Perfect Pullup. Mark is active in the Young Presidents’ Organization and in the past has served in numerous executive management roles including eLabor.com (which was ultimately acquired by ADP and Microsoft) and The Genetics Institute, acquired by Genzyme Genetics.


Here are my 5 questions with Mark and his answers:

1) Your original fitness product BodyRev was an innovative idea, which solved a problem, and had a great back story but ultimately did not find a big audience. In due course you made significant changes which led you to a product that customers were able to identify with. What was the evolution of realizing something needed to change? What was the process from genesis to realizing finding a market is better than creating one?

In 2002 I met my business partner, Alden Mills. He was working on a device that could measure and track workouts, and that allowed a user to store performance data and track progress. When I got involved I discovered that there were already some major players (such as Nautilus) in this space and they were having very limited success. In other words, money had been invested, products created, yet the early entrants weren’t finding a market. So we decided to switch directions.

This change provided an opportunity for Alden to explore an idea he had during SEAL training for a device focused on core exercise and functional fitness that allowed you to do multiple exercises using a small piece of equipment. I added some innovation to the invention (rotating handle grips) and after several iterations BodyRev was born. As a fitness apparatus, the BodyRev has a high efficacy in a weight loss application. We used the direct response market route and created several 30 min infomercial “shows” that promoted the product on television. We also penned a deal to get them into all 450 full service Marriott hotels in North America and onto the Home Shopping Network ten times.

Ultimately the product had trouble finding a market because consumers had difficulty equating a predominantly upper body workout to overall fitness. Women (the target market) couldn’t envision getting a smaller waist using a device that was held in their hands even though our study group achieved amazing results that backed up the claims.

Three years into the venture, we were running out of money. I was significantly leveraged and even our investors were telling us to pack it up. We had another product that we had been developing — a device for doing pushups that rotates to simulate natural body movement that was easier on the joints and engaged more muscles. Since we didn’t have the capital to launch with TV advertising we adapted our approach, buying small ads in men’s magazines including Men’s Journal, Men’s Fitness and Outside Magazine. This allowed us to garner proof of concept at a fairly low price.

Within a few weeks we had thousands of orders for the Perfect Pushup. Although it would be great to tell you this was all by design, the lesson of “finding a market is better than creating one” was rather serendipitous and a result of circumstance, tenacity and not giving up. After proving the market for the product, we launched a small scale TV advertising campaign based on a 60 second infomercial. The spot ran for almost 2.5 years and was recognized as the number one infomercial spot for much of 2008. TiVo tracks which ads viewers fast forward through and ours was one of the top three ads that viewers don’t fast forward.

2) You have admitted that you came close to having to give up on your idea. In the book The Art of the Start by Guy Kawasaki, he states, “The old platitude is that good entrepreneurs never give up. This is fine for books and speeches, but not for the real world. If three close friends tell you to give up, you should listen. As the saying goes, when three people tell you you’re drunk, you take a cab home.” As someone who benefited from not giving up, would you challenge this analogy?

What I will say is it sometimes takes a high pain threshold to be an entrepreneur. The BodyRev experience can be described as “pushing a rope”. No matter how many different ideas we tried, how much expert advice sought, or how many hours we worked, consumers did not respond to the product. With any new idea it is inevitable that you will get evangelists and distracters. There is a phenomenon I call the “Entrepreneur’s Dilemma” that can come into play with start-ups. It happens when the business concept is not initially successful. Some signs indicate you are on to something good and that it will only take more work and time to succeed. At the same time, you hear it’s a bad idea and to move on. As an entrepreneur, it often takes stubborn single mindedness to succeed and an ability to block out negativity and doubt. However, if your concept really has zero potential, no matter how hard you try, it’s like holding onto a boat anchor. The dilemma is knowing which advice is right and how long to keep at it.

To mitigate this, what I’ve seen good serial entrepreneurs execute successfully is to set predetermined success metrics on a realistic timeline. If the concept doesn’t hit the milestones, they move on to the next idea.

In the early days of direct marketing, if you put something on TV, more often than not it was going to be successful. Those days are long gone. The “direct response” space has become extremely competitive and it is a lot harder to turn a profit through this channel. With most start-ups, you are betting your company with each new product. This is a high risk strategy and especially difficult for smaller businesses if the bet is on a large project with a long lead time. To diminish this risk, one can develop several smaller projects and test them on a small scale. This spreads the risk (like the portfolio effect) and increases the odds of a win. Then it is a matter of avoiding distractions, staying single-minded and focused, and continuing to push forward.

3) Another entrepreneur now famous for not giving up on his endeavor is John Schnatter, the founder of the Papa John’s pizza chain, who sold his prize Camaro to help keep his father’s restaurant afloat and launch his own pizza business. John recently awarded a quarter million dollar reward to someone who returned the original car to him. When you realized you finally had a hit product on your hands what luxury did you afford yourself?

My partner and I went for four and a half years without an income so my “Camaro” is the relief of a paycheck and backfilling the holes we created getting this far. However, I did pick up a good piece of advice from a fellow entrepreneur: With everything at risk all the time, try to take something off the table along the way.

As an entrepreneur there are going to be ebbs and flows in your business that are beyond your control. During the good times taking something for yourself helps ensure that all your efforts don’t go up in smoke if the company doesn’t survive the long haul.

4) Now that you have a successful invention, which has found its market, and is selling well, was there ever a moment of dread or concern of being a one hit wonder? What steps did you take to either avoid or overcome being a one product company?

We have about 50 ideas in various stages of development. We’ve always been good at studying what people are doing physically and seeing what innovation we can add to this to help them do it better. However, the challenge becomes the degree/level with which you take a land grab approach and race to fill retail shelf space while your brand is hot. Do you put your name on everything, as it appears to some extent Under Armour has done, or do you stay true to your brand, keep the bar very high, and only introduce things that are truly innovative.

Ultimately I believe you strike a balance between the two and that is what we are trying to achieve at Perfect Fitness.

5) As a modernizer of sport equipment do you see any innovations and/or paradigm shifts on the horizon that warrant excitement (ex. http://exerciseismedicine.org)?

I know of some guys trying to create an outdoor elliptical bicycle, that’s pretty cool?. I don’t have a crystal ball but in the fitness arena, lots of people are starting to understand that functional exercise is where it is at. Exercises that simulate natural movement, using multiple joints and muscle groups is an important trend and is especially significant for our aging population. The days of up-down and forward-back weight lifting that you see in the gym will decline as people recognize the importance of core strength, balance and stability in their active years and when they get older. I hope to see more innovation that supports this trend.

Interview with Todd Dipaola about Internet Search

Todd Dipaola was the co-founder of Vantage Media and served as the company’s Chief Finance Officer and Vice President of Strategy. Under Todd’s leadership the company rose to 31 in Inc Magazine’s annual 500 Fastest-Growing Private Companies in America List. The company was also named the fastest growing technology company in Los Angeles by Deloitte’s Fast 50. Todd is now the president of Pier Alliance, a company that he has founded with former executives from Yahoo and Google. Pier Alliance is a stealth mode company optimizing revenue generation for clients with search functionality. All of this was achieved by Todd before turning 30. In his free time Todd serves on the board of directors for California Common Cause and is also an active environmental philanthropist and a member of the Los Angeles Social Venture Partners.


Here are my 5 questions with Todd and his answers:

1) Much of your success building businesses has been around maximizing Web traffic and maximizing monetization potential. Through your experience what are a few of the lessons you have learned that would help budding entrepreneurs?

There are still so many tech companies getting funded that lack a sound monetization model, sometimes I want to call it Bubble 2.0. Let’s face it you need to monetize to survive. People talk about YouTube and Facebook as successes but to me they are lottery tickets… brilliant ideas with the right people, at the right place at the right time, but not necessarily great business models for hundreds of other start-ups to follow. If you want to make money in business, seek out an existing ecosystem that you can make more effective and capitalize on the upside.

I have succeeded because I develop companies that guarantee value. I don’t make a dollar until my client makes two. My companies are based on performance and in turn the value proposition sells itself, which is good because I am a poor salesman.

If you want a big win don’t look to a business to consumer model online. There are only a few examples of big successes regarding B-to-C where consumers are paying the dollars. EBay is obviously on top there, but there have been others like WebVan who’s model was “we lose money but we make it up on volume.”

Seriously though, I suggest business to business opportunities. Consumers are notoriously stingy with opening their wallets online, but you usually can rely on businesses to perceive value correctly.

Lastly, don’t solve a problem that doesn’t exist. Start by reducing someone’s burden and you will be building a solid foundation.

2) There is a growing list of invaluable online tools to help people regarding optimizing online search potential: Google Webmaster Central, Wordtracker, etc. What tools and/or websites make your top five list (and why)?

Instead of giving you a “top five” I can give you more of a top of mind list…

  • www.webmasterworld.com ~ I like this site because they are an independent voice on website issues
  • www.linkedin.com ~ This is my favorite social networking site (for business, especially for start-ups)
  • www.google.com/voice ~ The old GrandCentral app, this application has a great suite of features
  • www.archive.org ~ This is a great tool for competitive research to see how different companies have evolved over time
  • www.google.com/websiteoptimizer ~ This is another great tool for a small to mid-size business that needs to effectively but economically optimize their website
  • www.techcrunch.com ~ TechCrunch is a great weblog for learning about new Internet products and companies

3) It is common dictum that the Internet has gone through two evolutions. What Web 1.0 is and what Web 2.0 is usually is interpreted differently depending on who you talk to, but in my experience it boils down to two simple things: Web 1.0 was a one-way conversation (information based) and Web 2.0 is conversation based (user interaction). What do you foretell will be what signifies our transition to Web 3.0?

As you just mentioned, sometimes meaning gets lost when you frame things using terminology so I am not going to speculate what Web 3.0 is going to mean. However, the next transition I see on the Internet is going to be a focus on the way we make sense of the volume of information disseminated on the Web. The concept of reputation and authority are critical in the online jungle but are hard to implement online. Plus, part of the human condition is to believe what you read. If you think about it, it’s a little scary. There is no rigor when it comes to integrity on the Web. The problem is sorting out all the noise. Search engines are trying to tackle this problem, most recently with Microsoft launching Bing.

4) Speaking of Bing, if it can revolutionize anything is yet to be seen. Is there anything that excites you regarding any Internet search innovations you see on the horizon?

What Bing brings to the table is competitiveness. Google has actually been daring someone to come after them for awhile because they believe competition will only force them to improve. Let’s face it, regardless of the current discussions to the contrary, Internet search is working. You or I can find what we are looking for 99 percent of the time. Search is not a problem. Information overload and data security are problems. I mean every minute you and I talk 20 hours of video is being uploaded to YouTube. That is content generation on just one site. Regarding security, search engines track what you search, this is well known, and they claim it is anonymous but that is only half true. You, as an Internet user, are uniquely tracked along with your Web searches and surfing history. This happens so that search trends can be analyzed. This data is very valuable. So I ask you this, have you Googled yourself more than once? Have you used mapping software to get directions from your home or work? By aggregating data from one user it is really easy to identify who that user is by connecting enough dots. This has already happened in a publicized case with AOL. Search engines are free market companies and I imagine there are dozens of people who have the golden key to this information. It is a scary thought.

So in short regarding search’s future, I see competition as inspiring and the ability to accurately discern fact from fiction and privacy as “problems” that need to be solved.

5) Switching gears, you are an avid philanthropist. As a successful entrepreneur, what inspires you to make the time and dedicate personal resources to ensure that, along with your success, you make a contribution to the greater good?

I naturally feel an obligation as a productive person in society to give back. I went to public schools. I was educated at a public university. Let’s face it, it is easy to do good for yourself. The challenge is can you do good unto others? It’s my belief that if you are a talented individual and only engage in activities that help yourself, then you really haven’t reached your full potential.

I also feel obligated to affect political policy. Not to sound silly, but who is the voice for the trees, or the homeless? Big business has a voice, special interests have a voice, it takes competent people with resources to champion the needs of the deserving (that are unable to represent themselves). President Obama has said that government should ultimately be judged not on how much is spent but ultimately how effective they are. This resonates with me. Ultimately human capital is as important, if not more important, than financial capital so I never look at my contributions as sacrificing time — rather I am compelled to facilitate positive change in areas where I think I can make a significant impact.

Interview with Kristi Frank about Mompreneurs and Women in Business

Kristi Frank is the founder & CEO of Saturday Morning Success. Saturday Morning Success is an online-based company that helps women entrepreneurs live out their dreams through tele-seminars with the country’s top female CEOs, experts, and entrepreneurs. Kristi holds a degree in Industrial and Systems Engineering from the University of Southern California and was one of the featured contestants on the first season of Donald Trump’s The Apprentice.


Here are my 5 questions with Kristi and her answers:
1) As an entrepreneurial consultant who specializes in helping women obtain their business goals, what would you say is one of the biggest hurdles facing the female entrepreneur in our current landscape?

Of course the economy would be an easy answer, right? But I do not believe that entirely – I actually think it’s an exciting time for entrepreneurs… a powerful time. Sometimes prosperity can go the opposite direction of the economy – FedEx and CNN are two examples of companies that started in economic downturns. It gives the entrepreneur a perfect opportunity to catch the pendulum swinging the other way.

To answer your question, the biggest barrier I see currently with women entrepreneurs is the limited amount of role models we had growing up. This is obviously changing, but in general a lot of women currently launching businesses do not have a roadmap to follow. They can change this by finding the right mentors that are already successfully doing the things they want to do. And that is, in part, why I started Saturday Morning Success – to respond to this problem.

2) Although there are unique obstacles specific to female entrepreneurs, there are also some unique opportunities. For instance, there is grant money that is specifically earmarked for women in business. However, many times the process to successfully obtain these advantages can be prohibitive. What are some of the female focused resources that you have seen women employ with the highest rate of success?

First off, I am not an expert on grants, but I can reiterate that I have witnessed mentorship as an extremely effective tool for women. Women especially gravitate to a social connection and the ability to feed off one another. They tend to have business models that are more creative than their male counterparts. One thing I believe is that you do not need a traditional business plan to successfully launch a business; a business model that is creative will, in turn, be unique and can make you standout in the crowd.

The best female focused resources are the ones that are organized to feed off the social connection desired by women. Some great examples are American Express Women’s Business Initiative from OPEN; then there are female business retreats, female online groups, and as you mentioned federal funding, etc. A little focused research on what it is you are trying to achieve will go a long way. My advice to women is to follow your own needs, desires and ideals, and go from there. If you are passionate about something, there is a lot of help out there for women, but it’s not going to find you, you have to seek it out.

3) A unique challenge specific to many female entrepreneurs, especially those with children, is the work/life balance conundrum. What are some of the top strategies you are able to pass down through your work and teachings at Saturday Morning Success that would immediately impact a “mompreneur” or female entrepreneur’s ability to manage time more effectively?

Women get flooded with self-talk: Can I do it all? What will happen if I leave my corporate job to stay home and be with my children? I crave being an entrepreneur but do I want to sacrifice spending time with my family?

The truth is you can do both. Again, I started Saturday Morning Success to help solve this problem. You can do so many things from home. There are too many successful “At Home Businesses” to name them all.

One thing that can make an immediate impact is the implementation of powerful time management tools. And they don’t have to be complicated to be powerful. For instance before I get out of bed I write down three things that will move me forward before I even allow myself to check my email.

Another thing is the importance for women to have a support system. I have found a lot of women have issues asking for help — women believe they can do something but they usually need to delegate more. It is important that they find other people to assist them with activities that support their business objectives. You will feel overwhelmed if you continue to perform tasks that you don’t want to do. You can farm out so much nowadays (ex. virtual assistants), and this is an important step so you can focus on the things that you do well.

4) Okay, I have to ask a couple questions pertaining to your experience on the show. In the episode of The Apprentice you were “fired,” one of Donald Trump’s comments seemed directed to the women on the show, which was one should tread lightly when using sex appeal for advantage. Without digging too deep into the debate, to what extent do you think it is fair to use what is uniquely female to gain market advantage? And not necessarily just sex appeal, for instance Lisa Hammond’s success with Femail Creations.

They asked me about this on The View, and the simple truth is sex appeal sells. Donald Trump said what he said on-air but he will also tell you the same thing if you ask him in person. Whether it is the color or length of your hair, sex appeal, or whatever, I am a believer that you use whatever you bring to the table, what makes you unique, or what is going to differentiate you or your product from the crowd.

For example, I identified raw foods as an up and coming trend. I knew it was going to be huge because it had become a hot topic in Los Angeles, so accordingly I created a raw foods restaurant because the differentiating factor had yet to be leveraged well, and of course the restaurant became a success. Again, you have to be different and differentiate yourself. I don’t believe someone has to apologize for using what is uniquely theirs if they do not hurt anyone in the process. In fact, if you don’t the end result could be failure.

5) In your experience on The Apprentice, what is one business lesson you learned that you will never forget?

I actually will give you two. The first was when I met Donald Trump and the rest of the contestants. They were going through their pedigrees, resumes and accomplishments and it was a little overwhelming. I mean I was freaked out the first day about how amazing these people were/are but the reality is that their past accomplishments meant little in the present. Sure, experience can open doors, however I quickly learned that action speaks louder than your resume. Believe in yourself as a leader — better yet prove you can lead the pack and take ownership of your life — but to do this you must first believe you can do it. I learned even amongst impressive accomplishments and resumes it is easy to standout and take charge if you believe in yourself and put that belief into action. Pretty big lesson!

The second lesson, speed is very powerful! On the show we would have to create businesses and plans of attack in a few days (and sometimes in just a few hours) and then launch them. And I saw first hand the power of just doing. The takeaway being that this type of pressure unlocks creative possibilities by forcing you to think and act quickly. Also, there is power in believing just good is good enough (i.e. things do not always have to be perfect). It forces you to get your product out there. There are obviously some pitfalls you need to keep your eye out for but I believe the good outweighs the bad. Perhaps you are the first to market or maybe it forces you to finish something that would never get finished without a deadline. Having too much time can evoke paralysis oftentimes. I learned on the show that enforced deadlines are pretty powerful for eliciting action.

Interview with Scott Bell about Wealth Management

Scott Bell spent the last ten years at one of the largest and most revered firms on Wall Street. In 2008, he started the firm Gross Domestic Product and within less than a year is already managing over $25 million in assets. No longer confined by corporate protocol Scott is redefining the industry. Through Scott’s influence Gross Domestic Product approaches wealth management in a unique way, helping their clients envision and accomplish their dreams and define their legacy.


Here are my 5 questions with Scott and his answers:

1) You left the security of a high-profile job at one of the biggest asset management firms to pursue the dream of starting your own firm in the height of our generation’s worst financial crisis, what inspired you to pull a Jerry Maguire and start the journey of your own entrepreneurial endeavor?

The reason I left to start my own endeavor is because I saw the writing on the wall… Wall Street is broken. I believe this to be true on so many levels. I will save most of the evidence for my book, “Everything Your Advisor Doesn’t Tell You”, but today I will share one eye opening experience to your readers:

First, the economics of the wealth management industry are wholly skewed against the individual investor. Unfortunately, the individual investor is nothing more than a cog in a giant “gotta move this stuff” world, you – the individual – are a loss leader. Unless you have $50 million with a Wall Street firm, you are a commodity, you and your money is actually a bit of of a loss leader. Here’s how it works:

All of the major Wall Street firms offer an almost identical menu of choice in investments. This is not an accident. Every manager or mutual fund you own makes the promise to do all of their trading and buying (and all of their research for that matter) from the referring firm… negotiating the same “good enough” deal. The more business the manger receives, the more it basically churns the account (albeit legally and with data to support their moves — conveniently provided by Wall Street’s research). As the manager flips over the portfolio, sometimes doing what is counter to a firm’s call, buying everything you are selling or vice versa, you (Joe Public) are being spun to the tune of billions of dollars a year.

The inherent problem is those aggregated commissions start to become real money. Actually, trading revenue is often 5 to 10 times bigger than the commission revenues realized in the wealth management division by your broker. And the more money that goes to the manager from the referring firm, the more trips and conferences are sponsored, the more free lunches are bought by the management companies to wine and dine the sales force, to inspire your broker to sell you more crap you don’t need.

Truly, a full 70 to 80% of the money manager firms in the world are offering returns worse or only equal to an index. When you factor in the cost of trades (which you never see) and taxes, it’s an even worse deal. Even in a flat-fee arrangement, the advisors in most firms are only compensated once they get you paying for a product or manager. What do you think, they get paid to keep you in cash? They are motivated to sell you on products that might not fit your needs, even if it’s the wrong decision financially. Motion breeds activity, which busies the mind enough to allow people to forget the raw deal they are being served. Activity in some perverted way implies value.

2) Although your expertise is in financial markets, I gather from knowing you that you view investing as a part in the gamut of one’s overall well-being. How does this view affect your (and your company’s) approach to wealth management?

Experts sometimes talk about the “big three” with regard to importance in one’s life: health, family and money.

The amount of money you have (or don’t) really represents nothing more than a series of decisions, good ones and bad ones almost regardless of income. How does a nurse and Joe the plumber become the Millionaires Next Door, yet the guy making $350K a year “living the life” has nothing to show for his efforts? Clearly having more money is not the sole recipe for success.

Because I believe this to be true, as part of my firm’s process, we’ve actually taken the time to hire a coach who works with our clients to define and continually refine what their life values are.

Often times, we get caught up in the illusion that “stuff” equals happiness. Retirement becomes a destination, with all of the trappings. I see people who are disappointed to realize that once they’ve “made it” to the top, it just means that it’s more work to maintain the life they’ve created, often leading to disappointment/depression. Those fancy cars are really nothing more than rolling liabilities unless there is perceived value tied to owning them, most of the time it is just another shiny object, what’s the point?

It is the person who walks through life, knowing what makes them tick that seems to get satisfaction and peace with where they are. Decisions are much less impulsive and often much easier to make clearly when these values are at the front of your mind. Instead of money becoming an enabler of materialism, wealth becomes the vehicle for values like security, time with family, and creating a legacy. This is the essence of one’s well-being in their relationship with money… this is what we foster.

3) Your firm is beating the stock market by a significant percentage but, as with almost all asset management firms, your clients have had to take significant losses in the stock market. What do you say to the client that is down X% for the year and wants to take their money out of stocks?

Most of what my job entails is managing people’s expectations. I cannot tell you what the market will do specifically at any given time, no one can. I can, however, with a fair degree of accuracy provide a workable range of possibilities. The essence of my company’s duty is to ensure that people are true to themselves in knowing how much risk they can handle, so that they don’t sell out usually when the market is at its worst.

4) What are your thoughts on the current state of economic affairs? I realize this is a pretty open-ended question so limit your answer to the opinions you hold that people could possibly takeaway and immediately act upon?

What we’ve just witnessed is the closing argument for why the “slash and burn” economics of the 20th Century is not sustainable. We cannot slash rates and continue to burn money. Guess what? It has consequences and you are paying for them. This mess will take 20 years to clean up. Our banks have destroyed themselves, our health care system is bankrupt, our manufacturing base is a fraction of what it once was, and we have two of the three major pistons of our economic engine almost completely seized: consumers and private sector. Fortunately, the government (the third piston) is here to help. This is not without cost. In about 2 to 3 years, if we are lucky — we could be staring down the barrel of some pretty hefty inflation. Right now, every world government is throwing the kitchen sink at the problem, so I believe eventually we will turn the corner.

I am worried however that we could be in a liquidity trap, so I am investing in TIPS, Preferreds, select hi-yield and hi-quality corporate bonds, and high quality large US multinational firms that pay sustainable dividends greater than 4% — making stuff that will either be part of the new economy or making stuff people absolutely need. I am also investing in large US multinationals with good cashflow, no debt and a secular growth story (like Google, Apple, Cisco, etc.). Stocks and oil are actually the best place to be in inflationary times because of their purported pricing power. I am also investing in agricultural commodities, with the idea that more people, means more stuff to eat, which means more money. Baked in all of our portfolios, we build a solid foundation of indexes for our clients and then fill in the gaps with individual beaten up Blue-Chip stocks (almost buy and hold) that fit their investment profile. It’s pretty simple actually, which I think is the key to our success, clients can understand it because it is not the smoke and mirrors I have described in your other questions.

5) As a follow-up to the last question, knowing you are somewhat of an optimist, what should we be optimistic about with regards to the future financial health of the United States? Any predictions? Or markets we should keep a close eye on?

We all should be optimists with the dream of America right now. It’s our execution as a nation that needs some work. This is our chance to redefine the next 50 years of our history. It won’t be easy or fun, but from chaos comes clarity, and we are just starting to see things clearly now.

As for the markets, visibility is very low currently. Normally, as financial practitioners we try to forecast 6 months into the future. In today’s market, we are lucky to forecast into the next quarter. Regardless, there are some great companies selling for prices that warrant attention.

But honestly, in the next quarter, we could easily retest the lows. You asked for immediately actionable items in the last question. The news that consumer credit card debt is going to face some the similar struggles that the mortgage market went through probably is what will take us back to a Dow below 8000. However, details of the stimulus plan from the new administration coupled with next quarter’s earnings that beat Wall Street estimates and we could easily rally back to 10,000 on sentiment. From there, this continues to be a “show-me” story with real estate being front and center — which for the next two years probably isn’t great, so we are even more conservative with our allocations for the foreseeable future.

Interview with Olav Sorenson about Business Strategy

Olav Sorenson is an expert in the field of business and strategy and a prolific academic professor who has taught at the University of Chicago, University of California (Los Angeles), London Business School and is now teaching at the University of Toronto. His current research agenda sits at the intersection of organizational ecology and social networks. In particular, he is investigating how social networks affect transactions and shape the geography and evolution of industries.


Here are my 5 questions with Olav and his answers:

1) What is the most surprising successful strategy that you have ever seen implemented? In other words, a strategy that made you think, “I can’t believe they thought of that and it worked”?

Even though it is a well-known and a well-studied company I would have to say Starbucks. They were able to deploy a strategy that created a luxury brand out of a commodity. They did this in realizing that by educating their consumers about coffee they could, in the process, define their brand and create brand equity. They have been able to create — from what is essentially a take-out model — the feel of a lifestyle product. Their consumers have been trained that a cup of coffee is worth dollars (not cents) and that now translates into any given new establishment recouping their original investment within 18 to 24 months. It’s amazing.

2) If you are a small business or start-up that cannot afford the McKinsey & Companies or Baines of the world, what are some innovative ways you can ensure that you are still able to add the benefits of strategy in your overall business plan?

There are a few options if you get creative. Counselors to America’s Small Business is a nonprofit association that provides free/low-cost support to aspiring entrepreneurs. One can learn more about this group at www.score.org. Also, I would suggest reaching out to local business schools. University of California, Los Angeles for example has a program (The Applied Management Research (AMR) Program’s Management Field Study to be precise) that pairs student teams with executives from organizations around the world with the intent of helping the companies develop better strategies. To learn more about UCLA’s program you can go to www.anderson.ucla.edu/x911.xml. And this is just one of many programs, I also oversee one here at the University of Toronto. Do your homework and you will find there are a lot of reasonable resources out there if you look.

3) One of the biggest “strategy” barriers I see affecting bootstrapped entrepreneurs trying to develop strategic initiatives is access to sound data. What inventive ways have you witnessed and/or recommend to getting around this issue?

What I have seen work for my students is to go out there and simply ask. It sounds crazy or simplistic but it works. Just ask. You’ll be surprised at what you can find out and get — with regards to information and data — for free.

Some places to start:

  • Conferences and Conventions – often times you can find high-level people at these events that are bored out of their minds and actually would welcome the chance to talk with you.
  • Academic Outlets – this is basically an extension of my answer to question two.
  • Free online resources such as www.census.gov, etc.

4) If one of your students were only able to remember three main takeaways from your general strategy course, what would they be?

Bar none, the first one is avoid competition — people forget this is how Wal-Mart became the juggernaut that they are. They basically would go to rural America where mom-and-pop shops could not compete (with Wal-Mart’s economies of scale and selection) and within ten years take over half of the retail trade of the surrounding area.

Second, is focus – Think In-N-Out Burger. If you are going to do something, do it well and do it simply. You can offer choice but do it without increasing cost. Taco Bell is a great example. You go in there thinking there are an exorbitant amount of items to choose from but they are really all made from the same limited amount of ingredients. The more complicated things get the higher the risk of failure.

Third, remember that almost everyone is over-confident, especially entrepreneurs. My favorite demonstration of this is that you give a group of aspiring MBAs a middle-of-the-road business model and about half of them will tell you it will be successful and the other half will tell you it will fail. You give the same group that model and ask them how it would do if they were to run the company and 85% will tell you it will succeed. Nothing has changed (in the model) and there is no information that the leadership is flawed. The results are telling. Make sure you get an outside sanity check before launching any idea.

5) For someone new to strategy, can you suggest any resources that can help someone achieve the benefits of strategy without a thorough knowledge of the subject? How can one learn more about strategy on their own?

Unfortunately most books are drafted in a manner that tell people what they want to hear and are less about strategy and more about implementation and/or history. A book I would recommend is Porter’s Competitive Strategy: Techniques for Analyzing Industries and Competitors. It is a balanced view of strategy and the book is not as academic as it sounds. Good to Great is also a good read.

If you want to understand why businesses succeed and/or fail, you are better off looking at why a business has failed than at a runaway success. Because they are interesting stories, we tend to focus way too much attention on why businesses succeed. It would be like you studying Lance Armstrong to become a better cyclist. The knowledge transfer is intriguing, but you will never be Lance — he was blessed with genetics and most likely following his training regimen would be a complete waste of time for an amateur athlete.

On the contrary, failure usually happens because something stupid or correctable took place. We can learn from this and ultimately these strategic lessons are more useful.

Interview with David Allen about Productivity

David Allen is an international author, lecturer and founder and Chairman of the David Allen Company, a management consulting, coaching and training company. In the last twenty years he has developed and implemented productivity improvement programs for over a million professionals in hundreds of organizations worldwide, including many Fortune 500 corporations and U.S. Government agencies. He delivers public and in-house seminars, executive work-flow coaching and consulting programs that address interactive and organizational productivity and alignment issues. In short, he is the godfather of the Getting Things DONE movement.


Here are my 5 questions with David and his answers:

1) What is your rebuttal to authors such as David H. Freedman and Michael Penn that claim in their respective books A Perfect Mess and Microtrends that people who appear to be messy and unorganized have been shown statistically on a variety of criteria to have an advantage and/or outperform their organized counterparts?

These labels mean many things to many people. When one thinks of “stuff” and/or “clutter” the question becomes where is it and what does it mean to that person. Is someone naturally organized or is their life filled with psychological clutter? One possible explanation for these findings could be that other studies have show that the people who believe they are disorganized are actually some of the most organized. They are cognitive of the fact that the better you get, the better you’d better get. They have learned to adapt but for one reason or another they identify themselves as unorganized when in fact, compared to their peers, they fall high on the scale for being organized.

2) You and Tony Robbins are both proponents of the Reticular Activating System, has there been any recent research that has caught your attention on how a person can better leverage their RAS?

There has been some recent research on RAS and improving ADD and ADHD but the Reticular Activating System is fairly common and well-known. A better way to look at it is that there hasn’t been any research to discredit its importance. It is really just common sense. If you are aware and present, then you can pick up on patterns and improve your pattern recognition. Using science, researchers can actually trace the nerve signals pattern when you are aware of something. People can use “assumed affirmations” and eventually these affirmations will become self-fulfilling, which means it is important to keep these affirmations positive.

3) What is the most exciting idea that you have had (or know about) that has happened on the back of an envelope?

My whole life has been the back of an envelope. It has all been the back of the envelope thinking because that is the way the brain works. Brain storming is brain relaxing and my life’s work has come out of this process.

4) One of the areas of weakness commonly identified in aspiring entrepreneurs is that they try to do too many things and do not allow themselves enough bandwidth for activities that generate the highest return. In your opinion, is there some inherent risk in horizontal thinkers/multi-taskers/entrepreneurs taking actions on a someday/maybe list, especially if they are using it as a distraction?

One tool to counteract this would be to tier or segment your someday/maybe lists. Maybe you have a somday/maybe list and a someday/never list, whatever works for you. First you need to make an agreement with yourself that you will stick to and decide what you want and/or need to keep. People often mistakenly think Getting Things DONE is about getting rid of stuff. That has not ever been explicitly stated; rather one just needs to be conscious of the things that are pulling at their psyche. Have as much stuff as you would like as long as it is not a distraction. It is about being honest with yourself and learning that it is okay to tell yourself and others “no” once in awhile.

5) In Getting Things DONE you steer away from endorsing a specific filing system/model, do you have any recommendations on where to start for someone looking for a good system beyond the general filing system, particularly a system that would also apply for organizing computer files since storage of electronic information is so readily available these days and its accumulation voluminous?

No, the advice here is to just make sure that on some periodic basis you need to go through your files and ask yourself what is relevant. Have confidence in your archived files. If the information is stored properly you can’t really have too much. If it gets in the way, then there is a problem and you need to adjust your system.

Interview with Jamie Ramsden about Leadership

Jamie Ramsden is the CEO of Goodridge USA which is an automotive company that supplies high performance products to the automotive and racing industry. Jamie is a Certified Executive Leadership Coach and ad hoc faculty member at the Center of Creative Leadership. Jamie also manages his own consulting firm, Adastra Consulting, which specializes in the development of executive talent and leadership potential.


Here are my 5 questions with Jamie and his answers:

1) If you only had a minute to sum up what leadership means to you, what would be your answer?

During my ongoing study of leadership, I have always been struck by how many authors focus on a) the traits of the leader or b) the inter-relationship between leader and context, or between leader and followers. For the 19th and 20th century this was an adequate model. However, it is insufficient for the world we live in today. I believe that leadership in its optimal form is based around the relationship between leader, followers and context – a 3-dimensional framework, if you like – if it is to be relevant today.

From a practical standpoint, the successful leader must recognize that he/she represents the goals and dreams of the people who put him/her in their current position and provide a framework for people to develop in four key areas: their sense of self, their sense of community, their sense of meaning (making meaning of the world around them) and their sense of purpose.

2) In researching the subject of leadership have there been one or two authors/experts that have really seemed to capture the essence of leadership for you?

For me, the key text that really opened the door to understanding this rather intangible subject was Warren Bennis’ “On Becoming a Leader”. In it, Bennis stated that “leadership is like beauty, hard to define, but you know it when you see it”.

However, there are many other people who have written knowledgably on the subject from an intellectual standpoint, notably Kouzes and Posner, Boyatzis and McKee and Goleman. If you like your leadership medicine a little stronger then, Welch and Giuliani offer very practical guides. One book that I really love that has an oblique view on the universal essence of human motivation is by Pasternak, “Quest: The Essence of Humanity”. If a leader wants to understand human motivation there is no better book.

3) Like a talented singer, or a fast runner, do you tend to believe that exceptional leaders are born with a gift, or do you believe leadership is primarily a skill that can be developed by anyone?

One fascinating theme that came out of my original research was that people in leadership roles normally define their leadership style by studying what NOT to do from their previous bosses, rather than what they should be doing. It was very clear that there are not many models out there. Most importantly, every person I spoke to about the subject stated that leadership for them was more commonly defined by people outside of their working world i.e. family, friends, social leaders, etc.

This led me to the conclusion that leadership is an every day event. As a parent, you have to show leadership, as a friend you have moments that lend themselves to leadership, as captain of your local soccer team, or chair of the mom’s club, or as a sponsored athlete, or within your church group or chess club, people are demonstrating leadership every day. Once I realized this, I felt like I had fallen into a gold mine. We are all leaders and we are all followers – it simply depends on the context!

The point about the publishing world is that they have missed the obvious target of every day leadership, which is where most people derive their inspiration. They instead focus on spurious titles such as “Jesus, CEO” or “The Leadership secrets of (Insert CEO Here)” that really adds nothing to the understanding of the subject.

4) You have acquired significant success in business in a relatively short amount of time, how much do believe that this can be attributed to the attention you have paid to the subject of leadership?

Well, I am a relatively young CEO, but that is probably due to 2 parts hard work, 2 parts dedication and 8 parts good fortune (oh, and a long-suffering and supportive wife!). The key thing to understand is that unless you are prepared to challenge yourself, look like a fool most of the time, admit that you don’t know what the hell you are doing some of the time and most critically LEARN from your mistakes, you can never be the best in whatever you are doing, be it CEO or anything else.

The format that I have developed into a book talks about a leader as a Role Model, a Community Builder, a Sense Maker and a Dream Enabler. This has certainly helped me make sense of the world but I don’t for a minute think that it will work for everyone. As John Lennon once said “Whatever gets you through the night, it’s alright”.

5) You are currently writing a book on leadership. What do you hope people will get out of your book and when will it be available?

Probably 70% of my job at work is helping people make sense of the world. Is this threat real? Is this person ready to jump? How does this tactic fall in line with our overall strategy? Why has person x done such-or-such a thing? I hope that my book and the framework contained within will allow people to make better sense of a small portion of their lives, not just from a business standpoint, but in many other areas that will ultimately enable them to be the best person that they can be.

I do coaching work at the Center for Creative Leadership. Their mission statement is “to advance the understanding, practice and development of leadership for the benefit of society worldwide”. My utmost joy would be to see the worldwide community make a small step forward because of some of the thoughts contained in my book. It is entitled “Dream Enablers” and we are in the final stages of negotiation. I’ll let you know when it surfaces…

Interview with Stuart MacFarlane about Venture Capital

Stuart MacFarlane was the COO and founder of MXG Media, an executive at idealab!, and the CEO of Insider Pages (one of the first large scale Ruby for Rail projects). He is now Managing Director at Momentum Venture Management where he aids early stage technology companies gain the necessary traction to turn their ideas into successful businesses.


Here are my 5 questions with Stuart and his answers:

1) What are the top 3 things not to do in a venture capital meeting?
a. Don’t start talking about your technology until you’ve explained the problem your technology is solving. Often times entrepreneurs will be so focused on the proprietary technology they have built that they forget that their audience doesn’t have any context to understand whether the technology really helps someone.
b. Being defensive and/or arguing. I am here to help and my job is to fund businesses. If I ask hard questions or offer constructive criticism it is because I am doing my job. If someone is unable to keep their composure I am left wondering how well they will attract and keep a quality team. Furthermore, the VC world is so much smaller than people think. If you upset one of us, your reputation will precede you faster than you think.
c. Do not try and close a deal on the first meeting. Often times in a first meeting you are not meeting with someone who can make the ultimate decision. If you are not aware of this there are many things you could do that would jeopardize the deal.

2) What does Web 2.0 mean to you?
Web 2.0 has been used to describe so many different things that it’s hard for anyone to know exactly what it means anymore. For me, Web 2.0 means several things. It means software as a service rather than a product. It means websites or technologies that foster communities, facilitate openness, and incorporate user generated content such as voting or reviews. It’s Flickr, Digg and YouTube. You’ll see Web 2.0 on websites that pull content from multiple other sites to improve the user experience. Look at a Google Map mash-up or any MySpace page to see how many different sites are feeding their content onto the page. It also means new technologies like AJAX that allow easier user interaction on websites.

3) Viewing start-ups as a product, what do think the VC market is going to be the hungriest for in the foreseeable future?
Any business that solves a real problem, can scale quickly, has great margins, and can make a 10x return for the investor! To try to be slightly more specific, it’s difficult to predict where the VC dollars are going to flow. Web 2.0 companies are still hot but there are a number that have been funded that are now looking like me-toos and that have dubious revenue models, so who knows if they will continue to be funded in the future.

4) In your experience of reviewing (and also creating) business plans, what is the most common mistake would-be entrepreneurs make?
One big mistake is building a technology before you really understanding the problem you are trying to solve. Most successful startups come at it from the other way. Understand the pain point — then find a way, often using technology, to make it go away.

5) Being the principal of a multi-million dollar startup that you had to help through bankruptcy, what is the most valuable takeaway you received from your experience?
If you ever have to take a business through a distressed situation, like a bankruptcy, remain honest, open, and compassionate and treat everyone as fairly as you can. This includes the people that work for you, your business partners, your creditors and your investors. You will have to deliver a lot of bad news during a situation like that, so make sure people understand that they can trust what you say and that you will do what you can to help them.