How to Really Get your New Enterprise Off the Ground
(It Doesn’t Take Many Entrepreneurs to
Reshape a Community)
Prepared for: Y Enterprise Centre | Centre d'entreprises du Y
By: @ProfBruce
Date: Dec. 6, 2012
Professor Bruce Murray Firestone
B. Eng. (Civil), M. Eng.-Sci., Ph.D.
Founder Ottawa Senators, Ottawa Senators Foundation and
Scotiabank Place; Entrepreneurship Ambassador, Telfer
School of Management, University of Ottawa;
Executive Director, Exploriem.org, Learn By Doing School
Novelist, Quantum Entity Trilogy; Writer, Entrepreneurs
Handbook II; Columnist, Ottawa Business Journal; Broker,
Century 21 Explorer Realty
•Follow him on Twitter at @ProfBruce
•Find his books at: www.brucemfirestone.com
•Read his blogs at www.EQJournal.org and www.DramatisPersonae.org
•Current motto: “Making Each Day Count”
Teamwork in the 10th Millennium B.C.
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Synergy is a fancy word for teamwork
According to Jane Jacobs all human economic
development stems from development of
villages, towns and cities
From proximate co-habitation learn about
strengths and weaknesses and learn to share
and divide tasks according to individual skill
sets
Teamwork in the 10th Millennium B.C.
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But many people have view: ‘More pie for you
means less for me’
Wrong!
Economic growth derives from multiplying
options, from specialization, from
comparative advantage, from development of
standards, from network effects,
disintermediation and scalability
Teamwork in the 10th Millennium B.C.
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Let’s go back in time!
Ugh and Nnn
Family of Ugh lives by themselves in savanna
Ugh expert antelope hunter provides four
antelopes a month
Teamwork in the 10th Millennium B.C.
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Ugh’s carving skills poor, producing only one
set of flint knives per month
One mile away, family of Nnn hungry, bagging
only one antelope a month
But Nnn good flint knife producer, producing
three sets of flint knives per month
Ugh and Nnn meet– decide not to kill each
other
Co-lo instead
Teamwork in the 10th Millennium B.C.
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At first, for mutual defence
But then, through observation due to
proximity, Ugh see what beautiful flint knives
Nnn makes
Ugh spends all his time hunting/Nnn carving
What happens?
Teamwork in the 10th Millennium B.C.
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Explosion in (primitive) village productivity
GDP jumps!
Teamwork in the 10th Millennium B.C.
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Phenomenal increase in wellbeing of two
families
Village producing goods surplus to needs
Sets up possibility of trading with third family
(family of Zll), expert producers of textiles
(animal skins)
Results in further substantial increase in value
for emerging regional economy
People Need People
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People need people like no other animal on
planet
Uniquely co-dependent
Skill sharing is fundamental
The most important decision you make other
than to actually start a new enterprise is who
you hire, so hire up
People Need People
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Lesson No. 1:
GET THE RIGHT PEOPLE ON THE BUS WITH YOU
Choose the Right Idea
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Grade A Techs
Four original founders
Two engineers, one IT guy and a Biz Dev
person
5 original concepts
The fourth was SILENT ALARM CLOCK
Fifth one was Grade A
Choose the Right Idea
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Get a trusted mentor
Verbalize like Tom Hanks in Castaway (to Wilson)
‘Don’t worry, Wilson.’
http://www.youtube.com/watch?v=lv_LfXcjWew&
feature=endscreen&NR=1
‘I’m sorry, Wilson.’
http://www.youtube.com/watch?v=LHtgKIFoQfE
Choose the Right Idea
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Lesson No. 2
SELECT THE RIGHT IDEA
AND
MENTOR
Get the Business Model Right
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Sam Palmisano (former IBM CEO) and Steve Jobs
(former Apple CEO) spent up to 40% of their time
on Biz Models
Not Business Plans
Not Products or Services
You competitors can copy a product or service
but not so easy to do with Biz Model
Get the Business Model Right
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Plans are out of date before you can complete
them
Always change when you come into contact with
RL
It was the biz model of the iPhone that made
Apple the most valuable co on the planet
Get the Business Model Right
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Share of carrier fees each month
Revenues from app store
Revenues from iTunes and iBooks
Revenues from rights fees (to be featured on
Apple iPhone or iPad homescreens)
Revenues from Apple’s share of content created
by others
Ad revenues from iOS platform
Search fees
Get the Business Model Right
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App developers make money
Encourages more apps to be created
More apps means more iPhone buyers
More iPhone buyers means more developers
288% p.a. return to Apple (est.)
Get the Business Model Right
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Lesson No. 3:
GTBMR
YOUR COMPETITORS MAY BE ABLE TO COPY
WHAT YOU’VE ALREADY DONE BUT NOT WHAT
YOU GOING TO DO
ONCE YOU CREATE A COMMUNITY AORUND
YOUR BIZ, YOU’RE HARD TO KNOCK OFF
Add Some Differentiated Value
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Your new idea doesn’t have to be e = mc2
Or Priceline (consumer names price)
Or Fed/Ex (overnight parcel delivery/hub and
spoke system)
Add Some Differentiated Value
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Can be BHSC– no minimum lease terms
Or Zappos– excellent customer service
Or Amazon– ‘would you like to see what other
people who bought this [CD/DVD/Book] also
bought?’
Add Some Differentiated Value
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Imaginative reuse of Petrol Station
Good sandwiches
Use outdoor canopy to shelter picnic tables
Can do more!
Add Some Differentiated Value
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Can do more with big empty parking lot!
Add Some Differentiated Value
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Add leisure element!
Add programming!
Start a volley ball league/ladder!
Add Some Differentiated Value
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Lesson No. 4:
ADD DIFFERENTIATED VALUE, AKA ‘PIXIE DUST’
Self-Capitalize
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Get capital from clients, suppliers, strategic
partners– it’s often FREE!
Clients/customers will give you
deposits/retainers
Suppliers will give you time to pay
Self-Capitalize
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Be strategic
Ask, ‘Who Benefits?’
Then ask for their help
Eg, starting Fed/Ex?
Who benefits?
Aircraft Manufacturers, Airports
Get investment from them…
Self-Capitalize
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Lesson No. 5:
BOOTSTRAP YOURSELF
So that a VC firm or other investors, partners
or creditors don’t end up owning your biz
instead of you
Use Smart Marketing
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If you can’t reach customers and clients in a
cost effective manner, you are DEAD
Guerrilla Marketing is the art of substituting
brains from money in the Marketing Wars
Use Smart Marketing
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‘If any part of de-orbiting Mir space station
hits our target in the Indian Ocean, we’ll buy
everyone in the continental USA a free taco,’
TACO BELL
Use Smart Marketing
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Free communication with worldwide audience
through Twitter, Facebook, YouTube, Email,
Skype
What a great time to be an entrepreneur
Use Social Media (it’s not Social Marketing)
Be authentic
Use Smart Marketing
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Lesson No. 6:
USE GM
Remember, if it requires heroic efforts to sell,
you are DEAD
Mass Customize Products
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For first time in history, can get custom
outputs from standard inputs
Reverse out some work to clients, customers
and suppliers using the Internet
Can now create scalable enterprises that
produce more value than if you simply had a
JOB
Mass Customize Products
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‘You can have color of car you want as long as
it is black,’ Henry Ford
Only 2 choices– custom inputs (artisan) for
custom outputs or standard inputs for
standard output– Model T Fords
Mass Customize Products
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Now can allow, say, homebuyer to semi
customize their homes (lighting, flooring,
kitchen, plumbing packages etc.) on a website
Reverse out the work to clients
And to suppliers who can come on website
and bid for jobs, submit invoices for payment
and keep schedules up to date
Mass Customize Products
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Lesson No. 7:
MASS CUSTOMIZE
‘THERE IS NO INVENTION MORE IMPORTANT IN
THE LAST 40 YEARS THAN THE INTERNET,’
JACK WELCH
Find Launch Clients
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Find pre-launch and launch customers
Sell, sell, sell
Or as Ben Affleck said in the film Boiler Room:
“ABC”—always be closing
If you have cashflow, you will probably survive
Ever hear of a company with fast rising
revenues folding?
Find Launch Clients
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Minimum number of launch clients is three
Why?
Cuz you may be able to fool one or possibly
two clients but probably not three
Gives you confidence you are on right track
Will critique your offering and often improve it
for free
Find Launch Clients
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Sens launch clients?
10,000 season tickets sold in ten days and
collected $22 million in cash
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Lesson No. 8:
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ALWAYS BE CLOSING
Execute Expertly
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Ideas are nice but you have to be able to
execute
Every Biz needs the entrepreneur (leadership
and sales), the manager (organization and
check/check/check everything) and the
technician (the doer) [Michael E Gerber, The E
Myth]
Execute Expertly
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You have to be all three in a startup
You can’t delegate sales or leadership, EVER
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Lesson No. 9:
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BE AN EXPERT AND EXECUTE FLAWLESSLY
Set Goals
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Democratize them
Achieve goals—people are excellent at
achieving goals if they remember to set some!
Successful, fast growing startups track their
metrics and hold themselves accountable
Set Goals
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Lesson No. 10:
N=?
Smart Pricing
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Mini offices, our price was $650 + $115
‘facilities charge’
Much less expensive than competition who
was charging $765
Hotel lowered prices in last
recession/occupancy rates went down not up
How come?
Safety concerns
Smart Pricing
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Lesson No. 11:
TELL THE TRUTH, THE SMART TRUTH
COCA COLA AND THE SODA POP DISPENSER
THAT INCREASED PRICES ON HOT DAYS
Wilderness Tours, Beachburg + DV
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Three hour river ride becomes all-day North
American success story
How?
Programming!
Stop and swim the rapids; stop and have lunch
Wild ride versus family ride– different channels
Kayak School, bungee jump, mountain biking,
rock climbing, hot tub…
Whitewater Village, range of accommodation
Saunders Farm– Not just locally grown
Halloween frights + DV
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Pedal Cart Track
Captain Aidan’s Playful Pirate
Ship
Witch Mountain Slide
Puppet Shows
Mile Maze
Wagon Rides
Farmer Bill's Barnyard
Treehouse
Water Spray Zone
Saunders Farm– Not just locally
grown Halloween frights
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Giant Jumping Pillows
Farm Garden
Saunders Hampton Court
Maze
The Classical 7 Ring
Labyrinth Maze
Children’s Discovery Barn
Fairy Gardens
Maze Lookout Tower
Trike Trail
Startup Plan
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Of course, Wilderness Tours, Saunders Farm,
Red Pine Camp, Sandy’s Deli… all financing
by GOVERNMENT, VCs and BANKS
Right?
Wrong!
And, they all asked for approval before they
started
Right?
Wrong!
Startup Plan
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If Joe Kowalski or Bill Saunders asks Canada,
Ontario, Quebec and local
cities/townships/counties for permission
there would be no WT or SF
If Joe or Bill wait for gov’t funding, they
might still be waiting
Got funding from
clients/customers/suppliers and sweat
equity
Startup Plan
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Last Lesson No. 12:
‘Entrepreneurs would rather ask for
forgiveness than beg for permission,’
Anon
@ProfBruce
@Quantum_Entity
Case Study– Ottawa Senators and the Palladium
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Canderel and others enter the Ottawa marketplace and out
compete the locals
Office rents go from $18 in 1982 to $6 in 1987
We were constantly trading up in terms of business size and
complexity
Move to a market with fewer competitors and some more DV–
get out of the way of the elephants
“What does TO have that we don’t have?”
Case Study– Ottawa Senators and the Palladium (Cont’d)
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A Zoo, the Princess of Wales Theatre, a NHL Team
NHL is getting ready for expansion again
Randy, MBA from Clarkson: “Let’s do it.”
Cyril Leeder, CA: “How much is it going to cost?”
Estimate: $35 million (then going rate for NBA expansion
team)
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Franchise cost: $50,000,000 USD in 1990
Pre-sold 15,000 PRNs for $25 each for a team that does
not yet exist
Pre-sold 500 Corporate sponsors for $500 each
Pre-sold 32 Original Corporate Sponsors for $15,000
each
Pre-sold media rights for radio and TV for $250,000 and
$4,000,000, respectively
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Pre-sold 30-year arena management contract for $15
million + a corporate guarantee
Pre-sold pouring rights for $3 million
Pre-sold product rights for $1 million
Pre-sold 10,000 season tickets 22 months before the first
game for $22 million in cash
Pre-leased 100 suites at $100,000 per suite per year or
$10 million per year for 5 years = $50,000,000
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Bought 600 acres for $12k per acre, won a NHL franchise,
built a MCF (Major Community Facility– aka, Scotiabank
Place) in the middle and sold extra 500 acres for $112k
per acre to make $50,000,000
You get the picture… PRE-SELL, PRE-SELL, PRE-SELL… find
‘launch clients’ before you launch
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Howard Darwin: “If anyone should be bidding for a NHL
team for Ottawa it should be me. But you have the only
site for a MCF, you have 500 corporate sponsors tied up,
you have 15,000 reservations for season tickets, you have
the relationships with the NHL BOG.”
Me: “That’s right, Howard.”
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Having launch clients (pre-sales) changes everything– it
gives everyone involved confidence that you are on the
right track, it increases your credibility and is an important
source of (cheap) capital
The minimum number of launch clients you need is three:
you can convince one fool to buy any product or service,
maybe two but probably not three
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Meet with each member of the BOG at least twice
Meet with the President of the NHL
Go to Palm Beach with 120 followers including the Ottawa
Fire Department Marching Band
Slogan: “Bring Back the Senators”
Name things like: “The Palladium”– give it the breath of life
(like the Elves did in Middle Earth)
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Prioritize
Lobby
Know what you are doing (learn from Bill Torrey/Glen
Sather/Sam Pollack)
Media proclaims: ‘Milwaukee/Seattle’
Stand your ground– “You will NEVER, EVER get a NHL Team
in… Ottawa.”
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Plaster Palm Beach Airport with Bumper Stickers
Make your presentation a conversation
Never stop
Last thing they see is your happy, smiling face
Be someone others can have trust in; trust is the
foundation of a successful life in business and in your
personal situation
“Go where hockey is known and loved and we’ll take care
of your franchise.”
Beat Milwaukee, Portland, Seattle, Houston, Hamilton and
St Petersburg
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Dec. 6, 1990, the NHL awarded franchises to the cities of
Ottawa and Tampa
But really they awarded them to Phil Esposito (for Tampa)
and Bruce Firestone (for Ottawa)
They trusted us
Our theme song– Tom Petty’s DON’T BACK DOWN
We get a unanimous vote from the NHL!
In entrepreneurship, results count and results come from a
fundamental source: trust— remember this— “People like
to buy from people they like and trust.”
Case Study– Ottawa Senators and the Palladium
LESSONS LEARNED
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Set your goals, internalize them, democratize them and
publicize them
Outwit, outplay and out execute the competition
Know who your real audience is
There’s the published hierarchy then there is the one that
really makes things happen– not all owners are created equal–
know the business ecosystem