Wednesday, September 30, 2015

What: Eric Clapton, Clapton: The Autobiography (Broadway Books, 2007)

Why: The story of a musical entrepreneur who has always focused on what he does best and left the business side to capable partners.

This time of year—late summer with its dry, windy and sun-drenched weather—always takes me back to one particular moment in my life. Late summer…1974…I’m hanging out with pals at the Minnesota State Fair, near the Grandstand, within earshot of the KDWB booth. We’re talking AM radio here. Back then, FM was for late night album-oriented listening (KQRS was the station of choice for that purpose). AM radio ruled the airwaves with repetitive playlists that drove sales in 8-track or vinyl format (or, if you were a real audiophile, cassette or even reel-to-reel).

In this moment in time, I can clearly hear the song blasting from KDWB’s speakers. Eric Clapton’s cover of Bob Marley’s reggae anthem “I Shot the Sheriff” had quickly risen to the top of the charts (as had the album on which it was featured, 461 Ocean Boulevard), and it was everywhere that summer.

Little did I know at the time that this represented a successful comeback for Clapton, to whom rock god status had already been ascribed in the late 1960s by fans who regularly spray-painted the slogan “Clapton is God” all over London underground stations. But in the intervening years, Clapton’s productivity had become erratic as personal struggles occupied much of his time.

All of this I learned from his memoir, Clapton: The Autobiography, which records Clapton’s rise to fame and fortune—as well as much of the sex, drugs and rock-and-roll we have come to expect from this genre. Particularly interesting are passages involving the business acumen of Ahmet Ertegun, founder of Atlantic Records and mentor not only to Clapton but also to a host of others, including Led Zeppelin, whose 2007 one-off London reunion concert was held solely for the purpose of raising funds for the Ahmet Ertegun Education Fund.

On the whole, though, it seems that Clapton himself does not spend much time thinking of the business side of things, and is content to let others attend to this side of his career. The most we discover is that Clapton himself considers music “an industry that abounds with hustlers and faceless corporate entities.” He is content to do what he does best, and surrounds himself with others who capably manage his brand and market his product. Maybe no different than so many skilled entrepreneurs who recognize their strengths (even if none of them is playing guitar like Clapton) and surround themselves with individuals who are most skilled in areas where they aren’t as strong.

Thursday, September 17, 2015

What: Lawrence M. Friedman, Law in America: A Short History (Modern Library, 2004)

Why: A short lesson for entrepreneurs about how and why the law governing their enterprises developed as a function of the economic landscape.

I didn’t see the inside of many lecture halls during my third year of law school. Instead of attending class, I spent most of my time in the law review office, attending to editing work (and quite often not). My fellow editors and I would draw straws as to who would attend a class, do the required reading, and take notes. At the end of the term, combining our notes produced a tailor-made outline of the course that told us everything we needed to know for the exam. Some might see this as gaming the system, but I’m convinced this was actually a lesson that the school wished us to learn, particularly those of us who would be going on to private practice—how to work in teams, and to achieve the desired results through efficient collaborations.

That said, there was one professor whose lectures I would always attend, if only for their entertainment value. Lawrence Friedman, an expert in American legal history, was a genuinely nice guy, very approachable, with a knack for illuminating his lectures with telling and often humorous anecdotes. You might think that my undergraduate history major predisposed me to enjoy his lectures, but that would be to underestimate both Friedman’s appeal and the capacity of other faculty members to take otherwise interesting topics and make them tedious.

Friedman also was—and, now at age 85, still continues to be—a prolific author, and over the years I’ve read many of his books. Perhaps the quickest read of them all is his Law in America: A Short History, which offers much of interest not just to law geeks but to others who have a healthy interest in the world around them.

Of particular interest to entrepreneurs is the third chapter, which traces the relationship between law and the economy during the developmental years of the industrial revolution. Those who refer to government’s attitude toward economic matters during these years as laissez faire are simply mistaken—not because government was regulating business, but because it was actually actively promoting business. The law supported economic growth by providing a functioning court system to protect private property rights. In addition, the government—which “had very little in the way of money, but it had land to burn”—used land grants to stimulate education as well as entrepreneurial ventures like railroads.

Economic development, of course, had a dark underside. As Friedman notes, “nothing does a better job of mangling human bodies than machines.” Everyone stood to benefit from the developing railroad system, so the law initially placed the risk of any personal injury arising in the course of building the system on the injured party rather than hamper railroads and other entrepreneurs. But “once the investments were made, and there was a fully functioning railroad net, the situation altered,” with tort law shifting toward compensating victims.

This book is, in short, an illuminating read for the entrepreneurially inclined. While you may not learn to love the law (while still loving your lawyers, at least if they work at our favorite law firm), at least you’ll begin to understand how it got to be the way it is.

Tuesday, September 15, 2015

Israel: The Land of Milk and Honey…and Technology

I recently returned from a family trip to Israel. I was struck by not only how much the country had changed since the last time I was there (25 years ago), but by the incredibly vibrant high tech and entrepreneurial community.

Contrary to the TV images that would lead you to believe that life in this tiny desert country is centered on war, violence, and religion, driving north from Tel Aviv to Haifa you can see large buildings with a “who’s who” of technology company names –Google, Intel, Cisco, and Microsoft. Much of the underlying technology that makes up our desktops and handheld devices was developed in Israel (so I guess you can blame Windows 8 on the Israelis). 

Venturebeat has listed Silicon Wadi (the Arabic word for Valley), a region in and around Tel Aviv, as second only to Silicon Valley in its startup ecosystem, with more startups per capita than anywhere else in the world and 89 companies trading on NASDAQ (second only to the number of U.S. companies). Not bad for a country roughly the size of New Jersey with just over eight million people!

There are probably a lot of reasons why Israel has been able to transform itself from a semi-socialist swamp with few natural resources into a major player in high tech. Others, including The Atlantic, have posited reasons for this success. Some common explanations include Israel’s need (given its “friendly” neighbors) to have cutting edge technology to support its defense forces, a lot of government investment in new enterprises, and the highest number of scientists, technicians, and engineers per capita in the world.

We drove over 1,200 kilometers in a week and saw much of the country. Fortunately, we were able to use the Waze app, a mobile GPS application developed in Israel that uses mapping technology and real-time data from users to determine the best route—think Google Maps on steroids (BTW, Google purchased Waze Mobile for over a billion dollars in 2013). My kids are still quoting the “Waze Lady”—“in zero point one miles, at the roundabout, take the second exit.…”

Unable to stay completely away from my career, we also seized the opportunity to take a tour of Technion (the Israel Institute of Technology). Technion was established in 1912 to foster education in science, engineering, and related fields and it was supported by some really smart people (including Albert Einstein). In addition to learning about the rich history of technology development (including several Nobel Prizes), we were able to meet Charlie and Billy, two 3D printed hexapod robots – invented by a current PhD student, Jonathan Spitz – you can control with your smart phone.

Yes, it’s clear that entrepreneurship and technological innovation are alive and well in Israel. I hope it doesn’t take me another 25 years to get back and see what else they have developed.

Tuesday, September 8, 2015

Chautauqua Institution and Continual Renewal

My friend has a home on Lake Chautauqua, only a few miles from the famous Chautauqua Institution – a not-for-profit community “dedicated to the exploration of the best in human values and the enrichment of life through a program that explores the important religious, social and political issues of our times; stimulates provocative, thoughtful involvement of individuals and families in creative response to such issues; and promotes excellence and creativity in the appreciation, performance and teaching of the arts.” 

Founded in 1874 as an educational vacation experience for Sunday school teachers, it quickly expanded to offer learning opportunities and programs for all ages in music, the arts, religion and recreation. Each summer, it hosts dozens of lecturers on public issues, international relations, literature and science (known as a “season”), in addition to its regular fare of courses and performances.

On the eve of the last day of the 2015 Chautauqua season, it was announced that the Chautauqua Institution was going to seek bids for the “renewal” of its amphitheater – the prime assembly forum of the Chautauqua Institution for 140 years. After studying the matter for five years, it was determined that major reconstruction of this historic gem would best honor the “history of place and purpose” of the Chautauqua Institution. 

I happened to be staying with my friend when the announcement was made, and I read the article in the local newspaper with dismay. The rationale – structural concerns, poor sightlines, seating discomfort, and inadequate backstage facilities, stage and orchestra pit configuration – seemed poor reasons for not preserving this historically significant structure in its “natural” state.

As luck would have it, my friend’s brother-in-law is an accomplished pianist and organist who has had the honor of playing the amphitheater’s Massey Memorial Organ (5,640 pipes) on several occasions. He not only knows the amphitheater, but the Institution grounds, history and programs. On the day after the close of the current season, we visited the Institution, and as I observed the charming homes and other buildings in the village, it was clear that this was a community that was continuously evolving. Homes built in the late 1800s were constructed on platforms originally used for tents in the earliest days of the Institution. Structures were added in the early part of this century to accommodate expanded programs for opera, theater and youth-oriented recreation, and have continued to be added for dance and other arts, as well as for the expanding religious denominations participating in the Institution’s religion programs. Renovation of older buildings, including the amphitheater, has been constant.  

When we finally stopped at the amphitheater, I felt a sense of loss for what may come. But I also saw the limited stage and orchestra space, the steeply inclined ramps going into the bowl of the theater (no steps and no hand rails) and the bleachers placed around the upper rim, outside the cover of the roof, in order to accommodate the ever-increasing audiences. Backstage dressing rooms and rehearsal spaces were cramped.  

As I sat – uncomfortably – in one of the wooden pews that constitute the sole seating option in the amphitheater, I gained a grudging respect for the Institution leaders and their understanding of and commitment to purpose. As with any organization, it sometimes takes leadership willing to make difficult (and sometimes unpopular) decisions in order to continue to grow and remain relevant. Failure to evolve usually is the beginning of the end for any business. If the Institution’s programs constantly evolve to remain relevant, shouldn’t the infrastructure also adjust to accommodate the changing program needs? I just hope they don’t put electronic charging stations at every seat.

Tuesday, September 1, 2015

Twin Cities Startup Week

That noticeable chill you’ve felt in the air recently signals that summertime is sadly and quickly coming to a close.  It will soon be time for the State FairLabor Day, kids returning to school, football, and of course, Twin Cities Startup Week.  For those who don’t know, Twin Cities Startup Week (running from Tuesday September 8th through Sunday, September 13th) is a series of informative, fun and networking based events focused on the Twin Cities startup community.

Events include Beta.MN, which is a showcase of local startups identified by the Beta.MN team. There are no formal pitches at Beta.MN, just startups exhibiting their products and services, kind of like the exhibitors at the State Fair.  At the end of the evening, the audience votes on their favorite startup, and the winner receives the famed “Golden Ipod.”  This event is being held from 5:00 to 8:00 pm on Tuesday night of Startup Week (the 8th) at Target Commons on Nicollet Mall.

The MN Cup final awards reception is being held on Wednesday night (the 9th) at the McNamara Alumni Center on the University of Minnesota campus.  We’ve posted about MN Cup many times on this blog (including, most recently, here), so not much else needs to be said.  However, if you haven’t attended the final awards reception before, it’s a great event for Minnesota entrepreneurs and supporters of the entrepreneurial community.  The event is well-attended and is a good opportunity to meet and network with leaders of the entrepreneurial community and learn about some exciting new companies.

MinneDemo, which is a demonstration showcase for seven companies, is on Thursday night (the 10th).  Each of the seven companies will have seven minutes to show their work.  These are real demos, not powerpoint presentations.

The week’s events culminate in Startup Weekend, which begins Friday night (the 11th) and continues through Sunday afternoon (the 13th).  On Friday night, any participant can pitch their idea for a startup.  Teams then organically form around the ideas they find most interesting.  The teams then spend the rest of the weekend creating a business plan and developing a product.  On Sunday evening, the teams give demos and pitches to a live audience.  Real companies have come out of Startup Weekend, including hidrate and QONQR.

There are several other events throughout the week, which can be seen on the schedule listed here.  I’ll give a quick pitch for my colleagues Doug Ramler and Kate Nilan, who will be hosting the first in a series of quarterly presentations on legal issues for tech companies.  This event will be from 8:00 to 9:30 Friday morning (the 11th) at our office in downtown Minneapolis.  At this event, Doug and Kate will be discussing how to launch a new tech venture, terms of use/privacy policies, and the top five tech law developments you should be aware of.  There will be lots of good information, checklists and sample documents, and an opportunity to connect with others in the tech community. 

It will be a great week for the entrepreneurial community in Minnesota.  I hope to see you at some of these events.

Thursday, August 27, 2015

‘Banana Peel’ ruling trips up Wyndham in FTC battle over data security

Franchisors and privacy professionals have been closely watching a case in which Wyndham Hotels has challenged the authority of the Federal Trade Commission to regulate data security practices. While many doubted that the FTC would be stripped of its power as the great poobah of privacy enforcement in the United States, I was mildly hopeful that we might get some guidance as to what constitutes adequate data security.

Watch those banana peels! 

On Monday, a federal appellate court ruled against Wyndham and determined that the FTC does have authority to regulate corporate data security practices. The FTC may now continue its claim that Wyndham’s computer system “unreasonably and unnecessarily” exposed consumer personal data to unauthorized access.

This ruling will likely embolden the FTC to pursue similar claims against businesses that experience cyber-attacks and other data breaches. Talk about adding insult to injury.

Wyndham, already dealing with the aftermath of a data breach in which Russian hackers accessed credit card and other information from more than 619,000 consumers and ran up more than $10.6 million in fraudulent charges, must now also defend itself against the FTC.

Wyndham argued that the FTC failed to provide adequate notice as to exactly what is required to achieve adequate data security and suggested that to allow the FTC such authority was akin to allowing the FTC to regulate hotel room door locks or suing a supermarket that failed to sweep up banana peels.

In response, Judge Ambro wrote, “a supermarket leaving so many banana peels all over the place that 619,000 customers fall hardly suggests it should be immune from liability.”

So sweep up those slippery banana peels and make sure that your computer systems are safe and secure from cyber-attacks.

Tuesday, August 18, 2015

What: Harry Beckwith, Selling the Invisible: A Field Guide to Modern Marketing (Warner Books, 1997).

Why: A satisfyingly quick read that will improve your marketing skills.

I’m currently struggling with the decision whether to attend my 40th high school reunion. Not that this was a terrible time in my life (as, apparently, it is for many people), but I wasn’t exactly a cool kid. (Cue the knowing looks from my colleagues.) I got good grades, which tended to lend a certain geekiness to my reputation, although I was also mildly athletic and something of a politico. Like many of the people I deal with on a day-to-day basis, I really didn’t come into my own until my college years.

So here’s me cracking open this book to see how I can improve my business development skills, only to stop short at the following passage: “College…seduces us with the notion that real life will be an oasis where sheer talent is what counts….Life is like high school.”

This does not come as great news to someone whose grand slams in life came after his high school years.

Luckily, Harry Beckwith—local author and consultant—explains why this is true, in a book composed of short and quickly digestible chapters aimed at helping those of us who missed the memo about life skills. Much of his advice is predictable and in fact pretty basic (especially for a successful entrepreneur), but where Beckwith shines is linking the ideas together and presenting the ideas in very accessible form.