Creative/Generalist

If cultural observation is one of my favourite sports, then there is no better arena than the dining table. 

Travellers' tales are full of eating-related anecdotes. How many times have you heard the story about the visitor who offended his or her host by burping, or not burping, by putting his or her elbows on the table, by arranging cutlery in a cross rather than parallel - the list goes on and the potential pitfalls for the culturally ignorant diner are numerous. 

Eating in Spain, as you can imagine, is steeped in tradition, culture, habit and simple everyday repetition. Even so, the possibilities for causing offence are probably less prominent here in Spain than in other, more sensitive, cultures (unless you should dare start eating before everyone has their food - that's a big faux pas). 

So, rather than an etiquette guide, this is more like a list of observations of the Spanish in their natural habitat - enjoying a good meal with friends and family. They are small, mostly completely insignificant details - points I've picked up on over the years as an Englishman living in Spain. If you're sensitive to national stereotyping and stuff like that, perhaps don't read on - this is lighthearted stuff, meant for a laugh and a bit of discussion. Nothing more.

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I hate to say it, but a lot of the business advice you’re googling for is either outdated, inapplicable – or both.

Let’s face it, there’s too much advice out there these days – and yes, I am only making the problem worse. From your closest network of friends and contacts, to the furthest extremes of the net, your world is most likely populated by gurus who are more than happy to throw a constant stream of wise words your way.

In day-to-day life, choosing which advice to follow is somewhat easier than when it comes to business. Of course, there are hard decisions to be made from time to time, but gut feeling and a strong sense of morality or principle are often enough to get you through. Not so in business. The entrepreneur’s path is continually bisected by a myriad of minute technical decisions that need to be made, all of which have a potentially explosive effect on business? Sell on Amazon, or not? Increase Adwords budget, or decrease? Go with product x, or choose product y. And that’s often where so many people turn to google. Try it now – go to Google, and type in the words ‘should I’ – what suggestions do you get? Currently, for me, it’s

- Should I stay or should I go

- Should I buy an iPad

- Should I text him

- Should I upgrade to Lion

Not that it’s of any relevance, but my advice would be ‘go, yes, no and yes’ respectively.

There’s a lot of people with a lot of doubts out there, but there are more than enough ‘experts’ available to fill the gap. But what do you do when your ‘advice stream’ gets overloaded with repeating, differing and contradictory statements? How do you identify what’s most applicable to you.

I have to constantly remind myself that everyone (including me, of course) writes or speaks from their own perspective born of their own experience married with their own values.

Back when man sat around fires telling stories and eating dinosaurs, the wisdom imparted to younger generations by the elders could pretty much be accepted without question. When food is plentiful, stash some away for winter. Don’t get into fights you can’t win. When faced with bear, run in opposite direction. Life didn’t change much from year to year, and what worked a hundred years before, probably worked a hundred years later.

But now we live in a world that changes at breakneck speed. What’s here today is gone tomorrow. What worked this morning, might not work this afternoon. So beware advice that comes from ‘years of experience’ as we so often hear. It might just be outdated.

This is especially true in the internet era, when business models are being creating destroyed in a continuous, rapidly moving cycle. An entrepreneur might extol the virtues of a model that has worked well for him or her, and you might be tempted to go the same way, but ask yourself first – does this still apply?

If you read, in isolation, some of the ‘first wave’ blogs written by internet entrepreneurs who started before about 2005, you’d be inclined to think that with a little work you could be bringing in $40,000 a month just through blogging. If you read some of the stuff written over the last year or two, you might come to the conclusion that blogging is dead in the water for income generation. Before taking anything you read on the internet to heart, take a look at the post date first. I’m not saying that absolutely all advice has a sell-by date; nor that everything that was written yesterday is more useful than that written a year ago. It just pays to think about the landscape that gave rise to any particular piece, and consider whether it might have changed significantly since then.

Of course, it’s not just the passing of time that gives rise to irrelevancy. An entrepreneur, when giving advice out of experience, speaks from a singular perspective. Perhaps you operate in the same industry, with the same products, even with the same client base. But your business is ultimately yours and represents your unique combination of past decisions and future aspirations. What works for him, may not work for you. In fact, the reverse might be true, it might do your business harm.

At the end of the day, a business, at its core, is just a system to produce profits for its owner(s). Engineers define systems with formulae and algorithms, with their constants and variables. Each unique system is defined and described by a unique formula. When trying to discover the formula that describes a particular system, a good engineer will certainly look to the past and to similar systems and their underlying formulae. But he will realise that the object of his attention is unique, that he must experiment, tweak and iterate in order to discover the inputs and outputs of his system.

Each business is unique, and so is the formula that describes it.  Learn to identify the variables and separate them from the constants, the concepts and ideas that change very little as times passes.  Good customer service, proper branding, effective marketing, solid financial control – these are all concepts that have shaped businesses for decades, if not centuries, and the best advice stands the test of time and applies to the vast majority of businesses.  Variables – the combination of factors that make your business unique, are much more individual and transient.  Only you can find out what particular combination of products works for you, how much you should spend on adwords, whether you should sell on Amazon, Ebay, both or neither.  Searching for advice can help you envisage and set up the system, but the variables that have to be plugged in are yours to discover through experimentation, test, success and failure.

Take what others say with a healthy dose of skepticism. Accept the uniqueness of your business. Accept that what worked for others, even in apparently identical circumstances, won’t necessarily work for you. Experiment and find your own formula.

This is a lighthearted concept introduction and the first in a series of pieces looking at business models in the modern economy and what they mean to potential Non-9-to-5′ers. If you are an expert economist, probably best to look away now.

If you don’t know what a ‘business model’ is, join the club – nobody really does. It’s a concept that entrepreneurs and bank managers toss around casually but when it comes to the crunch, good definitions are hard to come by. That is, unless you’re a business studies professor, in which case you might say something like: “an architecture for the product, service, and information flows, a description of the benefits for the business actors involved, and a description of the sources of revenue” Got that? No? Here’s an easier way to think of it: it’s the answer to the question “How the hell are you going to make money out of that?”. Listen up.

- Hey Bob, I’ve got a brilliant idea.  

- Oh yeah?  

- Yeah, I’m going to set up a car rental agency and undercut everyone else. I’m thinking of charging £25 a day.  

- That sounds like it’d be less than cost. How the hell are you going to make money out of that?  

- Well, you see, I’m going buy loads of brand new vehicles all the time and make people sign a contract with tiny print that says they’ll have to pay £500 for every scratch on the car when they return it. Then I’ll sell the cars for a bit less than I bought them for, leaving me with a fat profit.  

- Nice.

Of course, this entirely fictitious conversation is in no way related to any practices going on in the vehicle renting industry in the UK and has nothing to do with the fact that you can rent a van for £30 a day whereas in Spain it costs £100. Seriously.

So, a business model is best thought of as how an organisation makes money doing what it does. It sometimes helps to think of businesses that look impossible on the surface and dig deeper for examples of clever or innovative business models. Or illegal ones. A knitting materials shop that is still in business today is clearly a front for something sinister.

Now the example I’ve given is clearly highly contrived, and in the old days, the question “How the hell are you going to make money out of that?” was easy to answer. “I’m going to sell it”, was the about the only option.  Most industries ticked along nicely under the assumption they would always be able to make piles of money just selling the product or service they were making or supplying.  Then the internet came along and ripped up the rule book, and the conversations now go:

- Hey Bob, I’ve got a brilliant idea.  

- Oh yeah?  

- You know those lovely wicker baskets I make? Well, I’ve decided to make it into a business.  

- Good for you. How much are you going to sell them for?  

- No, caveman, I’m going to give them away for free.  

- How the hell are you going to make money out of that then?  

- Well, I’m going to weave clues to websites into the fabric of the baskets and set up an online treasure hunt with prizes of holidays to Lanzarote.  Then, I’m going to sell timeshare companies rights to 30 minute sales pitches to the winners once they arrive.”  

- Oh.

In short, people are finding ingenious ways to make money out of virtually anything, including, in many cases, giving it away for free.  Now, I don’t know this for sure, but my feeling is that if walked into Harvard Business School or a board meeting twenty or even ten years ago and propounded this as a vision of the future, they would have sent you away for treatment. Of course, this movement is causing old school businesses to rethink the way they make money as consumers change their habits and their willingness to part with cash in the same way as before. The public face of this is often the music and film industries first trying to sue everyone, and then having to adapt to the market with innovative value propositions, like iTunes or song downloads included with GSM airtime bundles. Other businesses, and their models, will just wilt and die. Blockbuster had stores all over Spain once – now they’re gone.

The point to take away from this is that you don’t need a shop to make money. Even if what you’re selling seems wholly traditional and mundane, with just a a bit of imagination and an observant look around your sector, you can probably come up with a crazy (perhaps even profitable) way of selling it. Just think outside the box a bit.

To get your creative juices flowing, I’ll let you in on an idea I had for[my own company but will almost certainly never do. A note to competitors: if you’re reading, please have a go at this and tell me how you get on.

Right, we sell speciality food, OK? How about we sell that food at cost price (we could even scan and upload purchase invoices to show that we were being honest). This essentially amounts to what creators of knowledge are doing when giving away their product for free. “How the hell are you going to make money out of that then?”, I hear you ask. Well, as standard we’ll do 3-5 day delivery and premium number telephone support. Then we’ll offer yearly ‘Preferred Customer’ subscriptions for £100 which entitle the holder to unlimited 24 hour deliveries and unlimited freephone telephone support.

Novel and 10-years-ago-lock-you-away-in-an-institution business plans are not just for porn hawkers and bloggers, they are for the whole business community – particularly Non-9-to-5′ers who feel that ‘old’ business is inaccessible. Well, here’s your invitation. Try something new. Experiment with novel business models. Then, when people ask “How the hell do you make any money out of that?”, just keep the secret to yourself and lie – tell them you don’t.

The first half of this double post comes from a rambling, ranting conversation I had with my girlfriend in the car yesterday; the second half comes from the niggling sensation I’ve had ever since I wrote the very first post on this blog that I never quite made my intentions clear. Depending on whether you’re Gen X or Gen Y, your brain might be running out of hard drive space – mine certainly is. The more crap you read on the internet, the more secondary school French trickles out your left ear, never to be heard from again.  What will you do, monsieur, when your tire bursts on the A-10 from Tours to Biarritz, eh?  My solution to this problem is generally to construct never ending mental summaries which tend to spill forth when anyone is stupid enough to ask my opinion on, well, anything.  As time goes by and more information comes in, I adjust these miniature world views until they are compact answers to some of the world’s trickiest questions.  And so it came to pass yesterday, on the road from Leon to Burgos, after taking far too seriously what far too many people I don’t (physically) know have to say about life, the world and business, I loosely formulated my personal summary approach to world domination.  These are not really my own, original ideas, but more how I understand and conceptualise what a lot of people far more intelligent than myself are currently saying about the way the world works.

First, let me clarify what I’m talking about, and that’s business – business in the widest sense of the word.  I doesn’t matter whether it’s big or small, short or fat, charitable or selfish, employed or freelance, online or offline, full-time or part-time, legal or illegal.  We’re talking about activities that are designed to make money – the more the better.

From the millions of words that have been written about commercial success, and the thousands I’ve read, it seems to all come down to three things (which are so intertwined that they’re really just one thing):

1. If you’re a person, find a genuine niche.  If you’re are a business, find a proper Unique Selling Proposition, then…

2. Be great.  Better – be the only one, then…

3. Find an innovative, honest business model which makes big company execs cry and makes you money whilst treating your customers as human beings.

That’s it.  Really.  I’m tempted to leave it there for maximum impact, but I’d like to expand at least a little bit on each of the above points.  If you like the maximum impact idea, stop reading now and just take that little snippet away with you.

If you’re a person, find a genuine niche.  If you’re a business, find a proper Unique Selling Proposition.

For the sake of simplicity, I’ll consider these concepts as one for the time being.  The question to ask is “What makes me, or my company, different?”.

The more time I spend in business, the more I realise that being different isn’t reserved for Nando’s chicken restaurants where you have to order at the counter but a server brings the food to the table (?).  Being different is your ticket out of 15-hour days, a prolonged cash flow struggle and eventual financial death.

It would be pointless for me to go into USP, niches and value propositions in any detail here as there is already an overwhelming amount written on those topic.  The ground truth is this:  if you’re considering an activity that isn’t going to make people wet themselves with excitement, even if it’s accounting, don’t bother.  If you’re already running an enterprise that isn’t doing something astoundingly different from everyone else, change – or shut down.

All the bad stuff in business comes from ignoring this most fundamental piece of advice.  And by ‘all the bad stuff’, I mean competition.  As any small business owner will tell you, being part of an over-competitive market is no fun at all – you end up slashing margins until you’re making next to nothing and spending what you do make on advertising to get noticed.  It’s a short cut to baldness, divorce and bankruptcy.

Robert Stephens of Geek Squad once said that ‘marketing is the tax you pay for being unremarkable’.  Aside from semantic quibbles, it might be the single most sit-up-and-kick-you-in-the-nuts piece of advice I’ve ever heard, and it turns out to be painfully true.  The newspapers, business press and internet are full of examples of clever businesspeople leveraging their uniqueness to get mammoth amounts of free, prime publicity.  The television news wouldn’t look twice at another new fruit smoothie on the market, but might give you 30 seconds of coverage if your USP was that you were shooting it into your customers’ mouths from the International Space Station.

The bottom line is that real uniqueness creates its own publicity and leaves you with a viable business rather than a massive AdWords bill.  

Be great.  Better – be the only one

There’s a lot of people around at the moment that want a lot of pieces of lots of pies.  The world has turned into a horribly competitive place.  The means that even if you’ve found your niche and are crystal clear about the value you are bringing that your neighbour is not, you’ve got to do it seriously well.  If the only pizza place in your town was rubbish, they might still make some money off their uniqueness.  If the only pizza place in your town had been voted one of the top five in the country…

You’ve got to be the go-to-guy (or organisation) to the exclusion of everyone else.  You don’t have time to be mediocre or even good – even being the best won’t cut it these days.  If you nail your market positioning  right, you should be the only entity worth considering for good or service x.  Of course, if you nail your niche right, nobody else should be around to stop you anyway, but to be 100% successful you’ll still need to offer an outstanding service to your clients.

Why? Because customers talk.  Not like they did back in the day when if you failed a customer, you might lose them and their immediate family, no, nowadays customers Twitter.  If you’re really crap to a single influential player, you could conceivably lose 10,000 potential customers overnight.  If you’re amazing, the reverse can happen.  If you write something mediocre, you might have 5 or 6 friends and your Mum read it.  If you write something earth-shattering and its merit takes it to the front page of Digg, 100,000 people might read it.  The connected, social world of commerce is a meritocracy the likes of which has never existed before.  If you don’t believe me, check out what Get Satisfaction are doing for customer service (and if you’re a business owner, don’t bill me for new pants).

Find an innovative, honest business model which makes big company execs cry and makes you money whilst treating your customers as human beings

Let’s not beat about the bush, most big business have made vast sums of money by treating consumers like dirt and generally ripping them off wherever possible.  We’re so used to it we’re immune.  It’s what we expect.

But anyone who spends any time on the web must have noticed that things are slowly changing for the better.  Look around the trend-setters and you’ll get a good feel for what it means to treat customers as human beings: clear, honest product descriptions written in every day language, no misleading offers, no long-term contracts or tie-ins, no small print, no extortionate pricing.  You might have to look hard for companies doing this sort of thing right now, but you can bet your arm that everyone will be doing it five years from now.  Terms and conditions will be ditched in favour of more human agreements, like the Company-Customer pact.  ‘Offer Subject to Conditions’ will be a thing of the past.

As usual, the web croud are light years ahead of everyone else on this.  Bloggers have already embraced hyper-honesty.  In times past, blogs were full of links which took you to places to buy stuff if you inadvertently clicked on them thinking they might give you some extra info.  Nowadays, bloggers routinely include disclaimers about affiliate links, often disclosing just how much they will earn should you buy something via their site.  Why do they do this?  Because it turns out that deliberately but subtly misleading people to make a sale really annoys them. When confronted with a bit of good, old-fashioned honesty, they’re more like to go for the product.  I came across a currency exchange company recently that proclaimed total transparency.  They would show you the price they were buying the currency at for any trade you asked for and would then show you exactly how much they were making out of the deal.  Madness?  Of course, you might be turned off to know how much they are making out of you and run a mile.  That’s probably why almost nobody is doing this yet.  If they’re charging a fair price though, isn’t it more likely that you’ll appreciate their honesty and transparency and probably consider that the minimal fee they’re charging you is fair dues for a unique and excellent (remember?) service.

Being honest and transparent, means you can’t hide behind a rip-off business model which is going to make you insanely rich on the back of little work or talent.  An 800% markup won’t cut it anymore.

Here’s a quick exercise (actually it’s quite time consuming) that is guaranteed to turn you from a bed-jumping, babbling, raving optimist into a weeping manic depressive in as little as a single weekend.

Collect up the following:

- A stack of self-help/productivity/entrepreneurial type books.  The more outlandish the claims they make, the better.  More or less any will do, but  ‘The 4-Hour Workweek’ by Tim Ferris is the obligatory piece-de-resistance.

- Hard liquor of choice.

- Laptop with internet Access.

Start on Friday after a hard working week by getting good and drunk and partying until it suits you.  Take Saturday to sleep it off and then go for a nice long walk and take a refreshing shower.  This should ensure the appropriate zen-like, the-world-is-all-good state required for the next phase.  After dinner on Saturday, knock back a good few espressos, put on ‘Eye of Tiger’ and start reading. Stay up all night until you’re 100 pages from the end of ‘The 4 Hour Workweek’ and so high you can barely control the pencil you’re using to plan tomorrow’s trip to the Cayman Islands.  Wake your partner/neighbours with jubilant screams proclaiming you have found the answer to all your life’s problems.   So far, so good.  Now sleep.

On Sunday morning, realise that the Caymans will have to wait until Monday and grab that pencil and paper again. Start work on planning how you’re going to make shit loads of money doing absolutely nothing, or at most, half an hour every other Thursday in-between luxury transatlantic voyages. You could go for an online business, probably a blog.  Blogs are like the keys to the mint right?  Hell, you’re a crap writer and don’t have anything to say anyway, but with the right marketing and a content-poor ebook you’ll be on your way to the big time in no time.  Or maybe you could start a product-shipping business specifically designed to afford you this lifestyle.  This should be easy, brainstorm a few ideas, test a few models, manufacture a product, set up a website, outsource all the work to India – you know the drill.  Six figures in six minutes a day.

After lunch on Sunday, come back and read the rest of this article.

I’m really sorry to have to break this to you, but it’s not going to happen.  Of course, I mean that in a ‘you’re not going to win the lottery’ way; so technically, it could happen, but really, it won’t.

For a start, you’re not going to make real money and work an hour a day blogging.  Don’t just take my word for it, read what Darren and Penelope, two people with vastly more experience and wisdom than me, have to say on the issue.  Believe me now?  OK – let’s procede to the ‘why’, which takes less than 5 seconds.  Economists have a concept called ‘barriers to entry’ which explains why you can’t make money doing something anyone can do.  Blogging has zero barriers to entry.  Almost anyone can do it and it gets easier and cheaper every day with free, idiot-proof software being developed faster than a 50MB broadband connection.  That’s right, in 5 to 10 short years, blogging has gone from cash-cow to dead-in-the-water (as a form of quick and easy income).  If you want to make a living from blogging now, you’ll have to develop serious expertise in online marketing and write empty, search engine and advertising driven, garbage for about 20 hours a day.  Thats because 30 million people are trying to do the same thing and 29 million of them are willing to work 19 hours a day.

A Ferris-style muse won’t work either, or at least not for any protracted period of time.  Firstly, really good products, the type that can support an 8x markup are like goldust, and you probably can’t think of one.  Most retailers work on 2-3x.  If you think you can ‘feign’ a luxury product and charge 4 times what competitors are asking for just by printing off a glossy label and adding ‘sex’ to the name of the product – think again.  Noone has any money any more and that’s probably going to be the case for a good while.  Plus, consumers get savvier by the minute and with a quick ‘Is x the same as y in Google?’ anyone can shatter your myth in seconds.  Why is all this happening to you?  Barriers to entry.  What if I can find a product that works, then I’ll look stupid, won’t I?  Maybe for a while, but if you uncover something that good, it won’t be long until zillions of would-be-new-rich come after you – and they’ll get you as well.  Why? Barriers to entry.  Let me say it again, just in case you haven’t got the idea.  Barriers to entry.  Like it or not, resources are scarce and there is heavy competition for them.  If something is easy, requires little effort and makes enough profit to justify outsourcing the labour that goes into producing, marketing and distributing it, there will be competition, and lots.  If not now, then later.

The upshot of an ‘easy’ business is that you’ll spend so much time ‘defending’ it, that you’ll be putting in 15 hour days before you can say ‘VIP lounge at Heathrow’.  Aggressive marketing and competition monitoring, patent filing and enforcement, legal battles, attempted differentation of your product through advertising – whatever your defense is, it’s likely to cost enough that at some point, your ‘muse’ just doesn’t produce anymore.  At that point maybe you drop it and move onto the next opportunity.  If you’re smart and quick enough in the water, perhaps you can snake between profitable opportunities, jumping ship before saturation point.  There’s a word for that person – ‘serial entrepreneur’.  Go and find one of them and ask them if they’ve managed to set up any of their businesses to the point where they can stand back and let them run more or less autonomously in less than three years, or two years, or even one year.  Thought not.  Serial entrepreneurialism is not easy.  Why?  High barriers to entry (capital, intelligence, diligence, experience, knowledge, risk).

In the end it all comes down to this.  There are easy activities which will earn you little money (low barriers to entry, e.g., blogging) and there are hard activities that will earn you (lots) more (high barriers to entry, business set up).  If a low barrier to entry, high paying opportunity exists, it s a temporary imbalance in the system, a quick defiance of the laws of economics.  Of course, you can make a worklife out of chasing these opportunities, but fighting the laws of economics takes more than 4-hours a week, so best come prepared.