Peter Christo

Looks like Pitch Club is in for a shake up next year.  We’ll be launching more than 10 chapters nation wide. Big stuff!  If you have had the Pitch Club experience and would like to be a Chapter Pesident (or at least find out more), zap me an email.

On another matter, Arion Program, spawned in Christo Partners in 2005, is now Pitch Club’s own internal education workshops where we choose topics and subject matter experts to deliver their knowledge to you in a workshop type environment (syndicated education). FYI Arion currently delivers;

1. Pitching 101 – The foundation of Pitch Club and what we do as entrepreneurs.

2. Opportunity Evaluation – How big is big, and what is it really worth.

3. Economics & Finance for Entrepreneurs.

4. Negotiation & Legal Documentation for Entrepreneurs (formerly execution).

5. Marketing for Start-ups.

Next week we are running: Negotiation & Legal Documentation for Entrepreneurs.

Legal’s for Entrepreneurs, presented by Mr Bart Janouski, from Goshawk Law (see link on this page). Bart will take attendees through the key legal issues facing entrepreneurs, and what you can do yourself and what you should not. He will cover, assembling and negotiating heads of agreements that will stand legal scrutiny and save you money on contracts and unnecessary legal opinion.

Key topics covered are;

· Negotiating an Agreement
· How I Became a Better Negotiator
· Drafting a Heads of Agreement
· Instructing a Lawyer
· Understanding Lawyers’ Cost Structures
· Contemporary Debate in the Legal Industry about Costs
· What Does it Really Cost Today?
· Doing It Yourself – Is it an option?
· Business Structures Basics
· Capital Raising Basics
· Contract Basics
· Intellectual Property Basics

Register: https://pitchclub.wufoo.com/forms/pitch-club-campus-registration/

I have entered into a collaborative deal with RMIT’s Bachelor of Business Entrepreneurship to “kill two birds with one stone”.  Students need for experience, and new ventures need for commercial evaluation, strategy and planning.

I am inviting new venture and startup business opportunity owners to nominate their ventures as prospective projects for the Entrepreneurial Venture Class under My and Nathan Wakeford’s guidance (Somage Fine Foods).

We have a limit to how many we can take, and this will close end of July 2009.  Click here if interested.

Hope to see ya’ll at Pitch Club Thursday night!

It’s been a while since I posted, which is symptomatic of high activity (in this case) rather than low.

After enduring the startup years between 2006 and 2008 with Christo Partners, I have managed to create a vortex of ventures which is keeping me very busy and forcing the business to grow as the commercialization advisory and consultancy it originally was intended to be.  In fact, that description does not really tell the story of what CP does. It is now as much an investment business, as we have some sort of stake (equity or options) in most clients we deal with.

You’ll recall Pitch Club was spawned in 2007 in collaboration with BSB Australia and Anthill.  That business continues to go from strength to strength having been recently profiled in AFR and now has its own offspring in Pitch Club Campus, a business dedicated to educating entrepreneurs and business angels.  If you are not aware, Pitch Club has its next Melbourne event on the 25th of June at Docklands.  I assure you it’s going to be big, and probably a sell out, so if you want to take advantage of some early bird deals go to the web site (www.pitchclub.com).

The next exciting adventure is of course Melbourne Coffee Review (MCR).  From its humble start as a blog in 2004, MCR now has about 800 unique visits a day, and about 20 reviewers worldwide.  I flicked it into a business after much deliberation, as a foody type review business will quickly become irrelevant if there is a conflict of interest evident (real or perceived). Other than the reviews, MCR offers a Job board for café owners, hotshot listings (mini web sites for cafes).  The business has a part time staff of 6 and is rapidly becoming my main focus (for a while anyway). We recently committed to deploy the MCR café Guide for 2010 (a real hard copy publication), and review the top 100 cafes.  The ex sub editor of Epicure Leanne Tolra has joined us on this journey along with 20 Melbourne based writers/reviewers.  It’s a pretty funky project, (www.melbournecoffeereview.com).

Some of the more notable client projects that are going well are the Watch My Numbers business (www.watchmynumbers.com), and Medical Media (www.medicalmedia.com.au).

I’m still doing a part time lecturing gig at RMIT (call it an addiction) in 2nd Semester and am pushing into corporate commercialization advice.  All in all, pretty good given this GFC thingy.

What I have learned is that it is very important to be organised, delegate, and manage people (not micro manage).

Peter

Hedge Funds and the Global Economic Meltdown from Judd Bagley on Vimeo.

Business principles that facilitate the development of strategies which result in a competitive advantage and therefore increased chances of business success are probably the most overlooked and least understood business activity.

A well thought out strategy should underpin your business plan.  In other words, the plan should go beyond being a detailed account of just how you plan to work.  Rather, it becomes a detailed road map to success.  The strategy (aka; how we plan to win) should be as crystal clear in your head as your own name.  Its merit and chances of success should also be obvious.  If someone commercially astute were to read it, and then was still not clear on how you pan to execute and compete successfully, you best stop right there.

8 Steps to a winning strategy .

I offer eight main steps in developing a sound strategy like this.
1.    Determine the demand driver for your customer and in the B2B case, your customers customer.
2.    Determine the value chain of the industry and identify where you fit in the process.
3.    Identify what all the value propositions are in each segment you represent.
4.    Rate each item in the value proposition as to whether you:

• Do it well
• Should do it well and thus need training
• No need to do it yourself and thus can outsource

5.    Identify what market your competition is targeting
6.    Identify what your competition is communicating in terms of a VP to that market.
7.    Determine a better mix or alternative VP (it could be the business model remember)
8.    Communicate this VP in everyway possible to the market.

Demand Driver
Fundamentally, every industry and therefore every business, is underpinned by a demand driver.   For example, the fishing industry is underpinned by the demand driver – hunger for fish.  That is something that is undeniable. People want and will continue to want to eat fish, drives a while industry.  The telecommunications industry is underpinned by the demand driver around the need for us to communicate with each other, and the superannuation industry is underpinned by the need to protect, grow and get an income from our savings/investments.
If you are in a business to business  (B2B) organisation, then your demand drivers are simple.  In fact every business has the same demand drivers.  They are:

• Generate revenue, the more the better.
• Minimise costs, the less the better.
• Manage any risks that could affect the above two.

It flows that to effectively service a business in the B2B space you need to know your customers customer also and their demand drivers.
The question you need to ask is what drives demand in my industry and/or for my clients?
Value Chain Development
All industries have three main stages.  Going back to our fishing industry example; these are the capture stage, where the fish are actually netted and end up at a processing plant, the second stage, to be categorised, canned, filleted etc. and then the third distribution stage, where the fish ends up in its new form at the shops, supermarkets, restaurants, wholesalers etc.

If you think that this framework doesn’t apply to your industry, then think again.  The resource for the industry that catches motorists speeding is of course the speeding drivers (not all get caught).  The net is the camera and the production is about undertaking the activities necessary to comply with the law and issue the infringement to the speeding motorists.  Collecting the money is merely delivering the result.  Demand is driven by you and me, as the people of the state who want safety on the roads and for our kids crossing the roads for that matter.

A final example is the financial services industry which is underpinned by us all wanting to protect, grow and get an annuity from our nest eggs.  The list goes on, but I guarantee you every single industry and business fits into this framework.

Resource –> Capture –> Process –> Deliver –> Consumer
Value Proposition Identification and development
This part is hard work.  A value proposition is best described as “the benefits to your customer.  For example; low cost is a value proposition, as is quality, and is the way one can pay, how fast they will get their product etc.  Having access to information easily say via a 1300 number is also a value proposition.

Using our fish guy again, the VP from the fisherman to the production guy is what?  Fresh fish (maybe a specific fish, like Snapper) delivered by 11am, at a great price, and guaranteed (ie: no poingt in doing it once and a while, business needs consistent supply).
In most businesses, the VP between segments could number in the dozens.

Rating the VP’s
Focus is the key here.  The underpinning principle is that you don’t waste effort on non core activities.  Core must be delivered with exceptional quality and effectiveness.
Go through the VP list and choose which items you offer as part of your own business VP. Rate each one as core or non core, and determine your level of competency as a business in each one.
Eg:

1. Fishing – core (10/10)
2. Navigation – core (6/10)
3. Knowledge of snapper core - (7/10)
4. Boat cleaning – non core – (2/10).

I would, maintain 1, do some training on 2 and 3, and outsource 4.

Competition’s Market
Look at the type of consumer your competition is going for.  Are they twenty something’s?  Are they full next stage 1 (with young kids) or empty nesters.  To be super strategic, use Mazlow’s hierarchy of needs to identify what the need the message is targeting (is it communicating at a sustenance level or at an esteem level?) and where in the ‘normal’ life stage they are.  Obviously don’t forget the pink market, DINK by choice.

Competition VP
Look at your competition and determine what VP their marketing communications are claiming.  If they simply claim to be the cheapest, and they actually are, then don’t compete on that unless you know you can beat them.  Identify up to three of your most obvious competition and map where each has positioned itself.  Ideally, you position away from them and add dimensions to your VP that they can’t deliver on.

Communicating your VP to the market
Now that you know how well thought out or not your competitions message and VP is, you can structure your business service, message and collateral accordingly.  In the fishing example, Pete’s Fishing fleet could be an “on-time, specialist at delivering snapper to the market at a great price”.  Develop your message in an appropriate way as to avoid the competition and extend the VP.  Make yourself untouchable.  Your VP could relate to the service or product, or how they pay (the business model) or where the product can be found (easy to access).

As for delivering the message, given you have done most of the work now, leave this to the pros.  But if you have to do it yourself, keep it succinct and clear.

This process is not just for entrepreneurs.  This is a great process for established big and medium businesses and it  applies whether you are an entrepreneur or a CEO or even a manager dovetailing your department’s services into the broader business (eg: HR, IT, Marketing etc).

Now you that you have this done, you can start writing your business plan.

The Age had an artricle yesterday titled “Infighting clouds stem cell centre’s future” about the Australian Stem Cell Centre’s inability to choose a path between research and commercialisation.  They talked about how the organisation had stalled due to this differing opinion in approach.

This is a perfect example of corporations being illinformed as to the appropriate approach relating to entrepreneurship or commercilisation in these types of organisations in partuicular (ASCC or CSIRO etc).  I suggest that these organisations should be solely focussed on their research.  Their agenda should be determined by the source of thjeir funding.  Giovernment funding should have a ’social good’ agenda and a human agenda (in this case anyway).   The organisation should be generating a plethora of new technologies relating to stem cells and offering themr up to entrepreneural organisations who think they can take them to market at a profit.   The organisation might have a number of external relationships with organisations who have the mandate to commercialise in this space.  The ASCC should havever have a section within their organisatiuon that manages these external relationships and allows their IP and knowledge to enter the economy.

That activity is a seperate function.  Like electricity that comes out of the wall, one needs the same effect with these types of organiosations,.  They need to be free to think and go where ever they choose in terms that work for them or their finenciers so disconinuous innovation and true leaps forward can occur.  If the organisation is government they their may be both a social and human mandate and a commercial one.  The commercial one belongs to the entrepreneur or entrepreneuriial organisation that knocks on the door and says, hey, let’s do some business.

I was interviewed recently, about the stresses associated with being an entrepreneur. Soon after the interview commenced, I was described as a serial entrepreneur. Until a year or so ago this was arguably the case, mind you, no keys to the Tuscan villa yet. This time however, I responded with a ‘No!…I’m not a serial entrepreneur; I am more a parallel type of guy”. I was joking of course, but there was an element of truth in it.

I run MCR, Christo Partners, and am a one of three in Pitch Club. Three bone fide businesses all taking my time to varying degrees during the week.

Every one who has ever advised me insisted that I needed to focus on one venture at a time, but for me it does not work. Of course if I ran 10, I would be dead from exhaustion and confusion, but three works for me nicely. It keeps my risk spread, and keeps me interested.

The interview got me thinking about how I managed to navigate my way through the last 2.5 years in terms of stress, cash-flow and the occasional night sweats. It’s not an easy thing, even for those of us who are hard wired to seek that risk. What about people who are in corporations looking to get out via entrepreneurial endeavour? Are they stuck with the either or option, job or venture, and the prospect of a wild business ride which may or may not (as is mostly the case) result in financial freedoms?

I had been discussing this with a buddy of mine Kelly McGowan who runs an online web site for six figure salaried people looking for work (sixfigures.com.au) and we talked about the changing landscape of employment and what I called the “hybrid entrepreneur”. I believe there are smart folk out there who actually don’t quit their job, but effectively use a downshift model or a job share to free up some time to undertake a venture.

The thing is that some of these people have no intention of leaving; they just hack away at their venture until it can stand on its own two feet and actually keep their job. Mad I know, but it’s effectively the same thing I do. They split their risk in half rather than work 5 days and drop savings into investments which just go up and down with the mystical ebbs and flows of the economy.
To me this hybrid career makes much more sense. It’s more interesting and it has big upside potential.

Interestingly, a Hybrid Entrepreneur (HE) in adopting new skills, will inevitably become more valuable to their employer also. Imagine someone who had to learn financial management, marketing and some online skills by actually doing it.

I think that this type of approach works well for younger entrepreneurs who don’t know if they have ‘it’ and for older people who might have families, particularly young kids or on the way.

The same skills apply.

There is a common directive communicated down through large organisations that permeates in many cases to the coalface: - “Be more innovative!”, of course this means taking risks and trying things that have never been tried before, and in most cases not even thought of. This request and policy in some cases, is generally met with cynicism because the very structure of the organisation rests on process and the eradication of risk and uncertainty.

The traditional role for innovation was the R&D lab, but businesses have come to realise that R&D is not enough. Many millions of dollars spent on R&D have done little in either research or development, and in fact it has become obvious that a big gap exists between the company’s ability to create new products and its ability to get them to market at a profit. In more recent times, businesses incentivise their people so that they will undertake intrapreneurial (entrepreneurs within the organisation) activities and, some companies create large corporate programs and even departments and management roles (eg: Innovation Director) to support this endeavour. A range of consulting companies has popped up to assist with just that. The success of such initiatives has been less than impressive.

This paper seeks to argue that what is described as being innovative in business is simply efficiency, not innovation.  Really, it is nothing different from management and business theory espoused over the last five decades. Furthermore, that undertaking innovation and commercialisation activities by imitating the business angel rather than the traditional R&D approach would yield better results and deliver more value to the business strategically, operationally and in terms of profit.

To R&D or not to R&D.

I suggest that many in-house R&D departments do little to serve the firm’s short or long term viability or ability to generate profits. Consider the following scenario; A business with a budget of $10M for R&D allocating that money in a traditional setting, employing scientists, engineers and all the associated support required for them. Consider now the economic and productivity merits with this budget (or half of it in fact) being allocated to three well trained and educated people who jump on planes and scour the globe for new businesses and technologies that fit with the organisations strategic goals (of course they have the whole gambit of technology and network management tools to assist). The organisation would be presented with a number of candidate opportunities to consider.  The organisations options then include (other than rejection) acquisition, license or even partner at a fraction of the price it would have cost to develop internally.
In many cases these small enterprises have not only developed the new ‘widget’ but commercialised it to a degree by bootstrapping and thus have de-risked the opportunity for the right buyer. The next phase for these start-ups is normally to raise growth capital in the realm of a few hundred thousand dollars. This range of investment is trivial in comparison to the costs of internal R&D. The challenge is having the skills and frameworks within the business to manage the identification process, evaluation and then the engagement or acquisition.

Supporting my argument further, I believe that the enterprise, no matter how big, is no match for the billions of thinkers on the planet, particularly in the free market economies who value entrepreneurial behaviour.  Some of the most innovative and profitable companies are now starting to think like this.  Take a look at Venture Beat and Techcrunch talking about Google’s new VC fund.

It should be noted that some organisations do very good things with incremental innovation (via R&D labs), building on already successful and commercial products.  What I am referring to in here is disruptive innovation that are ‘trend breaks’ and set the pace for the future (Think Amazon, iPod, Google, etc).

The enterprise as the business angel.

Business Angels normally ‘hook up’ with up to three or four business ventures and inject some capital and knowledge to take the venture forward beyond what the entrepreneur could achieve on his or her own. I suggest that enterprise needs to behave more like the Business Angel to achieve legitimate commercial and strategic goals, when operating within the rapidly changing economic and geopolitical environment. The Business Angel works with the entrepreneur, guides and assists and uses their own networks and other resources to assist the business to move forward. The reality is that large enterprise has little in the way of internal skilled staff that can take on this type of function and effectively engage with entrepreneurial businesses from the external world that have some appeal to the enterprise strategically and/or commercially.
The large enterprise needs to document its collective strategic agenda with respect to its strategic business plan, then establish a framework and find people with the right experience (probably successful entrepreneurs with some corporate experience) to manage the portfolio of ventures for the firm. This could take a project management type approach. The BA (business analyst) is in effect the project manager and the venture management office works like a Project Management Office (PMO) giving the ‘top table’ visibility on progress and contextualising in terms of the rest of the businesses success.

In Conclusion

Large enterprises are better off ‘sticking to their knitting’. Attempts to innovate internally are really wasted energy, and business would be better served to spend its efforts on creating the equivalent of a business angel function that works in a similar way to a PMO.

Enterprise should work with external consultants or businesses to quantify and agree on their strategic goals with regard to innovation and then act to find these opportunities and engage them accordingly.

Special Thanks to Eric Seuret for contributing to the discussion re this topic.