Week 15: American Work Ethic

This week I have been working in Netchemia. What I have slowly come to notice while working here, and hearing stories from other internship students, is the work ethic in American business.

The average working day is 8am-5pm. Often though I have found that many people are in the office before 8 and these same people are still in the office after 5. Compare this to the UK where office hours are 9am-5pm and workers stick to these hours quite rigidly. In previous companies I have worked for in the UK I found that as soon as 5PM comes the office is suddenly deserted.

Does this lead to higher productivity? I am not sure. In America the general practice is to take 1 hour for lunch; in the UK I have found lunch to usually be 30 minutes. I don't feel 30 minutes gives the same amount of down time to relax and unwind as an hour for lunch. This lack of unwinding means that the UK worker doesn't get the same chance to 'disconnect' from their work, which could in turn affect productivity.

Hard at work: source

During the lunch hour American's tend to go out of the office to a restaurant or takeaway. This allows greater socializing with colleagues in a more informal environment. UK workers tend to sit at their desks or the canteen with sandwiches. This could be because of the time allowed for lunch or maybe because in America the number of options and the price of eating out is so much cheaper.

Looking at the figures, America's GDP per capita is $43,500 compared to the UK's of $31,400 (source CIA World Factbook) I wonder if the work ethic has anything to do with it. (Maybe its a direct effect of incentivized employee payment through commission and tips).

On a side note, the US Courts have just had a landmark patent case challenging the meaning of 'obviousness' in a ruling against Teleflex's patent for being to obvious. Maybe the system will now reform! (see Bloomberg coverage here).

Week 14: Its all about Incentives

This week I met with 'Polsinelli Shalton Welte Suelthaus' an Attorney in Kansas City to discuss Intellectual Property. As the business plan for myself and partner Luke, comes together, there is a lot of things we need to discuss and make decisions on. One of the decisions is whether it is worthwhile patenting our idea.

Pro's

• A patent can potentially make it easier to get funding: more credibility
  
• A patent gives you the right to sue those that infringe on your idea
• A patent allows you to license the technology out

Con's

• There a lot of fees associated with patents
• Having the right to sue an infringer is often pointless if you have no money to go through with a court battle: a large company can trample all over a small one just because they have more money
  

The US System
There are also some of patent issues which have arisen in the US in the last 20 years highlighted by the book by Adam B. Jaffe and Josh Lerner "Innovation and its Discontents". The book clearly explains the issues:

• The likelihood of receiving a patent has risen
• The likelihood of winning a law case against an infringer has risen

Why is this a problem? For the patent holder its not! however for the rest of the economy it is. Individuals and companies have patented the most ridiculous things over the last few years. For example a 5 year old girl in the US owns a patent called: 'A Method for Swinging a Swing' . Amazon owns a patent for '1-click ordering'. (Even better 'Method of Exercising a Cat'). How did the system get to this?

Simple: its all about incentives! 2 Changes in the 1980's Patent Law changed the incentives completely

• The Patent Office was no longer Funded by the US government and instead had to fund itself from issuing patents!
• In 1984 The Board of Patent Appeals and Interferences consolidated into 1 board.
  

Now the Patent Office - in order to stay profitable - needs to file more patents. And the appeal board, once a precedent had been set stuck with the precedent rigidly: it had been made in their own building.

Incentives
Its my view that laws, which ultimately characterize incentives control the global economy. If a person has the power to incentivise a market place, they control it. The effect of incentives greatly outweigh any other: culture, intelligence, capital. These things will come to the market if the market has the right incentives. (Look at Dubai - heres links to pictures comparing 1990 - 2003).

What can the UK do to increase entrepreneurship? Change the incentives: change the law.

NCGE-Kauffman Entrepreneurship Fellowship (NKEF) Application tips

The 'NCGE-Kauffman Entrepreneurship Fellowship 2007' application is now open here. Apart from the stupidly long name this fellowship has given me more opportunities in 5 months than I have had in the last 24 years. Plus its been a huge amount of fun. So thought I would offer some thoughts on what you need to do I think will help.

The selection is in 2 stages: Application and Interview.

The application last year had to be about 3,000 words. So prepare it carefully before writing it up on the internet, have it checked by as many people as you can. The focus of the application should be on the following:

• Entrepreneurship, leadership, business
• these words mean nothing unless you can give examples showing how they apply to you
• A solid technology based business idea
• You don't necessarily have to have a technology/engineering background but it helps
• the most popular degree out of this years Fellowship is 'Product Design' because their final year projects focused on a real world need and product
• Extra marks for having a patent/ actively pursuing the idea but this is not essential
• The business plan and the customer is more important than the idea itself
• The unfortunate problem for most of us Engineers out there is that we like 'cool gadgets' thats not what the fellowship is about, its about a real business which means a customer and a market. This is most important. Whats the need the product is filling? whose need? why will they buy?
• You
• Your enthusiasm
  
• Your desire to want to start a business
• Again give solid examples of your experiences in the past
• How you're going to spread entrepreneurship when arriving back in the UK
• At you university etc.
• This was one of Gordon Browne's hopes for the Fellowship

Interview
The interview is split into 2 parts, Q&A and 10 minute presentation.
The presentation is you only, no powerpoint. Make sure you can give the presentation without referring to notes. Some people like to memorize talks word for word; I like to memorize the main points and talk conversationally. Whatever works for you. Pratice normally works for everyone.

The Q&A session will test what you really know about leadership and business (at least it did for me). Knowing isn't the most important thing - although it helps. How you respond and compose yourself is most important. One word of warning Ian Robertson, a former serial entrepreneur and Director of the NCGE is very concerned that you know who the customer for your product is be sure you have worked this out!

And good luck!!

p.s. the profile an average Fellow this year was:
Male, 25, Degree and above in Engineering or Product Design, a prototype of their idea,

Saying that I don't fall into any of those categories (except male ;o)

I think if you're female and have a great idea then you should definitely apply for the fellowship. NCGE and Kauffman are eager to bring on females to the scheme. (And the 16 boys this year would have been equally eager ;o)

Week 13: Netchemia Internship

This week I had a day off work to attend some lectures organized in part by Kauffman. This included 'Angel Investment Term Sheets' at 'Invest Midwest'. What made this talk so interesting was that the talk was being presented to Angel Investors by an Angel Investor to try and educate them on how to go about writing a term sheet.

The bottom line was this: What is good for the Entrepreneur is often the best terms for the Angel investor also. Wow! Not only was this good new for all entrepreneurs out there but also they backed this up with solid data.

To ensure the best return as an Angel Investor the lecturer talked about tee-ing up the Start-up company for the next round of investment: trying to make the terms and conditions as easy as possible to stomach for the next round investors. Often if the angel investor doesnt consider the next round and tries to give him/herself terms which are too ownerous on the entrepreneur then one of 3 things happens:

• the entrepreneur can't find an investor who can tolerate the terms of the previous round and so doesn't invest
• the next round investor says that they will invest ONLY if the terms which they dont find favorable are changed
• the entrepreneur must find an investor who has money but not much sense

The second talk was at the Kansas City branch of 'Polsinelli Shalton Welte Suelthaus' an IP attorney. The talk was by Rob Sweeney founder of TextCaster. Rob talked about his experiences in business and what he learned when founding a company. At the time he spoke to Ewing Marion Kauffman and asked him for advice. Kauffman replied:

"Find the best person you can in your field, hire them and pay them well"

What great advice. Rob's company textcaster has patented the concept of "Permission Based Text Messaging" (see Patent US7197324). At first I was amazed this was possible. The 2 key points about patents are that they are:

• original
• not obvious

And too me this seems to be neither of the above. Even more surprisingly to me was that the patent has been extended to Europe, as originally i assumed this would be a business process patent. Looks like nearly anything can be patented these days!

For Rob the patent is great news as it provides his business with at least theoretical protection against competitors copying him. But I would bet that there are many companies who have infringed either unknowingly or before Rob filled his patent. And what small company can afford a patent lawsuit? So the patent at least at a glance seems useless.

Week 12: Netchemia Internship

This week my main task has been to create a marketing survey for Netchemia's newest product. Then call the target prospects in Kansas and Missouri and get results to the survey. This is the first step in the 'Sales Funnel' which slowly whittles down the number of prospects till you find a prospect who wishes to buy the product. The funnel seems to involve about 5 main stages.

1. Survey
2. Indepth discussion
3. Product Demonstration
4. Pricing
5. Purchase

The number of potential prospects diminishes rapidly as the sales process continues; the potential value of each prospect increase.

Conversion funnels like this appear everywhere in business. Just do a quick Google image search for 'funnel' and you'll find:

• student enrollment funnel
• marketing funnel
• selling funnel
• Funnels occur in personal life: for example dating.
  

Ideas also create a funnel. And this leads to the product development funnel, for example: many product ideas, lots of computer designs, a few prototypes, one final product. And the product development funnel is just apart of a larger funnel, which is the consumers product choices in the market place.
The funnel is where entrepreneur's have both an advantage and disadvantage.

Advantage: entrepreneur can go with Gut instinct ignore many stages of the product development funnel and create the product which they feel will fill a niche best in the marketplace, this short circuits the funnel and gives the entrepreneur a huge time and money saving compared to well established companies, also allows entrepreneurs to create unconventional products.
Disadvantage: If the entrepreneur's instinct is wrong: the product fails in the market place, most likely their business will go bust. The large company can afford to fail and try again. The large company can also afford to invest more resources into the processes between the top and bottom of the funnel potential increase the value of the outcome.
In effect the entrepreneur funnel is very short bypassing many of the conventional big business process', leading to one offering: just like the big business.

Which is better? Who can say. It comes down to in the individual entrepreneur, the individual company, luck, connections, the list goes on.

Most business seminars today, in any field, will be showing to the audience how to improve the process between the start and end of the funnel, be its Sales, Marketing, product development etc. etc. (and for personal seminars this could be dating ;o).

Week 11: Start of Internship at Netchemia: Sales

My new Internship is at Netchemia. A 6 year old start up with 20 employees and 4 person partnership at the top. Netchemia provides school districts with web based software which allows them to streamline office processes by making them paperless. These process' include recruitment and learning plans for students.

I've been placed in the Sales department, where I will learn about Sales, Marketing, a small amount of Technical Development and making proposals for potential clients (in the UK called a 'bid' or 'tender' in America called an RFP: Request For Proposal).
Having only been at Netchemia for week I feel this will be a really useful placement for me, and also like the Kauffman course so far has missed out on a very important subject: Sales. You don't have a business; you don't have a customer without first selling.

The course has covered pitching for investment. I feel this is different. In a pitch I already have the listeners permission to sell to them. In a sales office getting this is just one of many steps involved: getting the permission to speak to the right person. This is a difficult challenge and a very worthwhile skill any entrepreneur should learn.

No matter who you are selling to the first few steps of the process are the same:

1. Target the right company.
2. Contact the company.
3. By default be put through to the company's gatekeeper.
4. Get permission from the gatekeeper to speak with the target customer: the prospect.

Step 4. to me, is what defines one of the key differences between an average and a great salesman (there are many more key differences but this is the first important one). The gatekeeper is often a receptionist or special assistant to the prospect. One of the jobs of the gatekeeper is to shield the prospect from 'unsolicited calls'. So as a sales person, one of the gatekeepers jobs is to not let you past. The gatekeeper is an interesting position, they have all the power to block you, but not necessarily the understanding to know if you will benefit their boss or not. Trying to sell to the gatekeeper is often a waste of time: what influence do they have in the decision making process to buy? Probably none and yet you must convince them that their boss would appreciate speaking to you.

Heres a few basic tips I have learnt.

1. Don't have a set script: it makes you sound like another seller in a call centre (center).
2. Don't waste to much time trying to explain to the gatekeeper why you are calling: the longer you're on the phone with them the less chance you have to speak with the prospect. Often you get to a point in the conversation where the penny drops the can almost hear the gatekeepers thought process: "oh hang on this is a sales person I don't want them to waste any time of my boss".
3. Just say in a confident polite way "X Please" where X is just the first name of the prospect (as if you know then on a personal level).

Then your through to the prospect! The first call you make to a prospect is never a sales call, all you want is 5 minutes of their time to see how they are currently dealing with issue 'x' and whether they would benefit from your system. Try to see if your product and their needs are a fit. Then arrange an appointment to call: a next contact: where you take a step closer to the sale.

Hopefully as the weeks go by I'll be able to close a sale!