Our government has authorized $800 billion in stimulus funds to be spent on roads, bridges, sewers, etc. The theory, is that this will create jobs. It will. But the jobs will be short term for the most part. What if there was a way to create a lot more jobs, create entirely new industries, regain leadership in key technology sectors, and provide long term giving to charities? And by the way, do it for say…$2 billion not 800. Here’s the plan.
Take $2 billion. Parcel it out to would be startup companies / entrepreneurs, in $100k chunks. Don’t loan it. Don’t take equity. Give it.
Require the entrepreneur to match the 100k, for a total of 200k to prove out the business concept. Friends, relatives, angel investors, would be the source of the matching funds. If the entrepreneur can’t find matching funds, its a good bet the idea doesn’t have merit. We’re using the free market to vet these ideas. Not a government bureaucracy.
Now let’s do some math. We just funded 20,000 new startups. Yes, 20,000 new businesses. True, many of these will end up being roadkill on the startup highway. But many will survive. Some will flourish. and a few, just a few, will go BIG. Google big. Microsoft big. Subway sandwich big.
Let’s say, that out of a 20,000 new companies we get just one Google. The value of Google, as of this writing, is close to $200 billion dollars. We just made a 100x return on our investment! But wait there’s more:
* we created ton of jobs.
* we created some new industries that spawned other companies. A multiplier effect if you will.
* we provided an incentive for private capital to invest in startups.
* we didn’t expand the size of government.
* charitable giving goes through the roof. We know this. Successful entrepreneurs give back.
What are we waiting for?
October 22nd, 2010
Here’s a link to a guest post that I wrote for Red Lemon Club, a cool blog for creative types. The post gives an overview of essential business tips and practices. Hope you enjoy it!
October 20th, 2010
Last week I had the pleasure of teaming with serial software entrepreneur, Mahendra Vora, founder of Intelliseek and Vora Ventures. Mahendra and I spoke to a group of technology folks in Cincinnati about entrepreneurship. We talked about basic requirements, assumptions, and revenue models.
If you are regular reader of this blog, you know my passion for building businesses that have recurring revenue as part of the business model. At our talk, Mahendra explained what he calls the ” 3 R’s” .
Recurring being, establishing a consistent monthly / annual stream of revenue from existing clients. ex. subscriptions
Referring being, establishing a model where customers delight in telling their friends and colleagues about your product / service.
Renewing being, establishing a model where customers come back to purchase more products when they run out. ex. paper towels
It is rare that a business will have all three of these components. Having one is a must. Having two out of three is fantastic.
How does your business measure up against the 3 Rs ?
October 15th, 2010
Yesterday I received an invitation from the folks at 37 Signals . The offer was this. Come spend a day learning how 37 Signals develops web apps at their 37signals Masterclass: How We Work.
* Cost $1000
* Travel to 37 Signals office in Chicago
* The first 37 people to sign up get in
An oh, by the way, the seminar is only 30 days from today.
Can you get 37 of your clients to jump on a plane, with little notice, and pay you a total of $37,000 for a day of knowledge? These guys can. Its all about the measure of the value they provide. Their offer is scarce, valuable, and unique. Is yours?
September 23rd, 2010
I had a conversation today with a former employee who has had his own consulting business for about a year now. He is at the point where he needs to increase his capacity to do more work for clients. We talked about the options for doing so.
Hire an Employee
Hiring an employee is a big commitment. You commit to paying a salary. Fixed costs every pay period. This makes sense if you have steady, recurring work (revenue!) , that you can depend on month after month. Possibly, you have clients that are on a monthly retainer. Or you have a large project that will stretch over 1 -2 years. Hiring an employee will typically (not always!), yield a better margin on service performed.
Hire a Contractor
Hiring a contractor is a bit like dipping your tow in the water to check the temperature. Much less of a commitment. Your costs are variable. You pay the contractor when they perform work. You match revenue with costs, protecting yourself from losing money in slow times. You don’t withhold payroll taxes and are not burdened by other costs associated with employee status.
In most cases it makes sense to go slow. Hire the contractor. Do you like working with this person? Do they treat your clients well? If the relationship works out, then consider offering the contractor a full-time position.
September 13th, 2010
In the US, we are guided by a strong culture of ambition, capitalism, and wealth creation. We work hard to earn money, and more money. Money the artifact, is then used to purchase “stuff”. Autos, houses, boats, jewelry…more houses, more autos.
The “stuff” promises to make us happier. Maybe it does. But paradoxically, stuff serves as weight around our future ambition. Weighted down by the obligations of large purchases and long-term commitments, we find ourselves unable to move quickly as the market place changes. Old opportunities close down. New ones open up. But we are unable to ACT quickly.
“Can’t fly to Paris on that $400 round tripper. Gotta get the boat out of the water.”
“Can’t take that six month gig in New Zealand. Who would take care of the house?”
“Can’t take a year off to build for Habitat for Humanity. Don’t have any savings to live on…bought too much stuff.”
There are alternatives. What is showing up for you?
August 20th, 2010
What’s the best way to be in a position to ACT on the opportunities that come your way? Be nimble. Configure your life for maximum capacity to act.
* Rent…. don’t own. The heady days of real estate appreciation are not coming back for a long time.
* Don’t buy and collect “stuff”. The more stuff you have, the more time you spend maintaining, upgrading, eBaying, and Craiglisting.
* DO collect people. Nuture relationships with those that can help you fulfill on your ambition.
* Be an entrepreneur. Create a business with a recurring stream of revenue. Make sure you can run the business from anywhere in the world. Better yet, configure it so someone else can run it for you someday.
* Keep investment assets liquid and transferrable. Don’t get blindsided by changes in government regulation and taxation.