Getting to "yes" in a world of "no"…

Archive for January, 2012

Presenting to the 3Cs Community this evening…

This is what I’m aiming to avoid ūüėČ

Unsurprisingly, the reason I’ve been rejigging my pitch deck of late is that this evening (17th January 2012) sees my first business presentation for a fair few months. It’ll be¬†at the 3Cs community, by all accounts a nicely eclectic London-based group of entrepreneurs, techies and investors – it encourages¬†its members to “Pay It Forward” by helping other people out, rather than merely being snarky and pouncing on opportunities etc.

Just so you know, I’m reliably informed that the “Connections – Commitment – Capital” tagline that appears on¬†its website is actually a [much later] backronym –¬†the name “3Cs” originally came about because it was¬†set up by three guys called Colin. ūüôā

I was very kindly introduced to the 3Cs by Mike Scase (who I met¬†via Rosco Paterson, Redhill’s one-man¬†network hub) and Alan Ferdman (who I met through¬†KRTI): I’m therefore honour-bound to fill them with copious amounts of beer in the pub afterwards. If you find yourself¬†near the Rack and Tenter from about 8.30pm (it’s super-close to Moorgate BR & Underground stations), feel free to say hi. ūüôā

“The Secret History of Commodities”…

Next week will see my first proper Nanodome pitch following a fair old period developing stuff, so I’ve spent a bit of time this week revising my pitch deck, and even had a chance to run it past KRTI’s Bob Lindsey (who often attends 3Cs meetings) over coffee at the¬†Surbiton Brasserie (very good hot chocolate there, by the way). After far too many iterations,¬†my first slide ended up¬†a really ‘left-field’ thing¬†– titled “The Secret History of Commodities“, I thought it was interesting enough to deserve a blog post as well. So, here goes…

One of the biggest¬†challenges when pitching startups-that-actually-make-physical-things (as opposed to pretty much any of the¬†social media¬†/ digital services startups Old Street is currently awash in) is that perilously few angels have any experience¬†of making money out of making things.¬†To be precise,¬†the¬†large majority¬†of the¬†Home Counties angel investors you’ll ever get to meet will have made (and, in fact,¬†will usually still be making) their¬†money from¬†relatively ‘pure’ financial service plays: by and large, most seem to treat angel investing as an extension of that financial services mindset. Hence most are basically on the prowl for scalable service model startups with relatively lightweight capital funding requirements.

Another issue is that there is a widespread perception of manufacturing as a stagnating, overoptimized¬†segment –¬†as if by merely saying the M-word you are necessarily invoking the slothful ghost of British Leyland and its awful ilk. In reality, few people (even those in government who like to espouse manufacturing as¬†the way that UK plc will turn its fortunes around) realize that the nature and practices of manufacturing have dramatically changed over the last ten years: and¬†one of the¬†key reasons for this lies in what I call the secret history of commodities.

My secret weapon¬†to help me¬†make this visible is a 20-year graph of commodity¬†indices from May 1992 to May 2011 collated by¬†the International Monetary Fund’s economists, corrected to¬†notional 2005 dollar values (hence all the curves cross at index=100 in 2005).

For me, this tells the secret recent history of both commodities and manufacturing. For a start, it’s notable that the dotcom bubble¬†leaves not a butterfly-flutter of a trace on the graph¬†circa 2000: there was essentially no overlap between the physical and Internet business worlds back then. I’ve also divided the chart into three sections to make it absolutely clear how I read it:-

  1. 1992-2001 – the “steady-state optimizing” phase.¬†Supply (and improvements in supply) generally outstripped demand for most commodities. Margins were tight. Some supply chains were tightening up thanks to an influx of MBAs, whose fat consultancy fees were paid for by savings from the JIT (just in time) regimes they designed and put in place.
  2. 2001-2005¬†– the “uh-oh” phase. Something not really seen during the 2oth century happened: demand for a whole¬†set of commodities started to accelerate faster than supply. Manufacturers responded by outsourcing (particularly to the Far East), extending their JIT arrangements, and integrating yet further with distribution and customers. Fragility of the system started to ramp up.
  3. 2006-present – the “OMG” phase. Just look at the relative volatility! Demand continued to accelerate faster than supply, but – far more importantly – almost all commodities started to be actively traded by speculators looking for the next gold bubble. What’s more, widespread trading in commodities derivatives and futures magnified and amplified any micro-trend until it became a macro-trend. This has led to a succession of short-term price booms and busts as waves of fashion interest moved into steel, nickel, tin, aluminium, lead, ABS plastic, wheat, corn, whatever (apart from onions, but that’s another story).

I think that without extensive and wide-scale government intervention into the futures¬†/ derivatives market (and you may be surprised to hear that many governments are actively considering this!), (3) is what manufacturers are now stuck with… forever. Hence this level of price volatility affects the raw cost of every physical thing you buy.

From the point of view of a manufacturer, this price volatility of physical stuff is like a dark, dark shadow hanging heavily over how you design things. Nobody wants to design defensively for price volatility; nobody in the twentieth century has really had that as a dominant factor guiding their design strategy; typical manufacturing design strategies revolve around engineering an appropriate balance between scale and demand. All the same, I suspect this mad (and maddening!) price volatility will rapidly turn out to multiply the strength of the many pro-green arguments by a major factor. Engineering devices as platforms for long product life, reduced resource consumption, etc are now the starting point for Manufacturing 2.0 – whether or not you want to call them “Green” doesn’t matter.

But what hardly anybody seems to¬†have noticed¬†is that really long life products are actually more of a service than a product. Which (I think) means that the next wave of mega-manufacturers will surely go completely vertical and sell long-life services directly to end-users, destroying every shred of value chain¬†between them and end-users.¬†Ultimately, it seems that the upshot of a “Green” manufacturing economy is vertically integrated service providers masquerading as manufacturers.

When I put this point of view to¬†my ex-Reuters friend Martin, his response was:¬†“so, you’re basically saying¬†the mobile phone contract model will take over industry?” And in many ways, I think he’s right: manufacturers may aspire to be Lean and Toyota-like, but their real future is Orange. Who’d have thought it, eh?

Introducing the “Pő¶rn Startup Methodology”…

Entrepreneurs, if you’re not hugely impressed¬†by supposedly-best-in-breed startup methodologies, why not instead make use of all the¬†Lessons Learned¬†by¬†pő¶rn sites? Really, applying the whole pő¶rn-site business model to your own non-pő¶rn startup could make you rich, rich, rich. And you don’t even have to buy an expensive blue book (or even, errr,¬†a blue magazine) to help you do it,¬†because here’s¬†everything¬†you need to know to thrust you forward:

  1. Minimum Viable Pő¶rn: make sure your¬†launch site touches a raw nerve.
  2. The Market Will Decide: build on customer niches with the most traction.
  3. High Velocity: ensure each online transaction lasts three minutes max.
  4. Freemium: free samples leave a funny taste in the mouth, help visitors trade up to the real thing.
  5. Fill Your Funnel: find enough (bulging) eyeballs, and every startup problem becomes trivial, right?
  6. Be Hard To Beat: find your unique angle and work it, work it, work it, baby.
  7. Build Customer Satisfaction: cultivate that warm fuzzy feeling wherever you can.
  8. Love Your Suppliers:¬†it’s a¬†hard¬†job giving you what¬†you need, so be good to your suppliers.
  9. Love Your Customers: keep finding ways to fill their eyes with tears of joy.
  10. Retention: keep customers coming back to you, whatever it takes!

As¬†startup methodologies go, I’d say this has 10,000x more empirical data than other fashionable so-called startup¬†methodologies currently being touted. So, you should get with this “Pő¶rn Startup Methodology” programme: reposition your crappily self-indulgent social / digital / media startup as a pő¶rn website that just happens not to have any pő¶rn, and success will surely come your way! ūüėÄ