Monday, March 28, 2011
Thursday, March 24, 2011
Before anybody gets too wound up about a cost of almost $150,000 for each new job and before any opponents of the credit declare victory, let’s remember that the number of jobs created by companies receiving investments to date is completely irrelevant. The long-term impact of attracting new businesses to Minnesota (and keeping existing businesses in Minnesota) is what really matters.
Minnesota has for decades been known as one of the best places in the world to start and grow a medical device company. I’m pretty certain that, had Earl Bakken been convinced to locate his fledgling medical device company (a “little” business you may have heard of called Medtronic) somewhere else—maybe because of a really forward-looking angel tax credit in a neighboring state (decades before anyone actually dreamed of such thing)—this would not be the case. It is likely that the jobs created from a small tax credit way back then wouldn’t have amounted to much more than a hill of beans six months later. If you fast forward about 50 years, an entire industry, encompassing hundreds of thousands or even millions of jobs is, in part, the result of that early activity.
DEED is putting some emphasis into increasing participation levels for the credit in Greater Minnesota. These levels have been lower than anticipated so far and so this seems like a good idea. That, along with a handful of minor legislative fixes, is all the hand wringing we need at this point. Talk to me in a couple of decades and we’ll know whether the state got a good bang for its buck.
Tuesday, March 22, 2011
- Start with talent and vision.
- Draw a lot of attention to the things that you want people to pay attention to, so they won’t pay attention to the things you don’t want them to pay attention to.
- Be fiercely loyal to your supporters.
- Don’t lie.
- Periodically reinvent yourself to continue to be relevant.
- Thank your management, all the time.
- Don’t just think big, think huge.
- Acknowledge those who have inspired you.
- Don’t forget where you came from.
- Be a student of what you are producing. Study and become an expert in your product and in your image.
The next time I see a picture of Lady Gaga with a ridiculous outfit, or walking through the streets of London in January with no pants, I will stop and think about what her strategy was, what her next move might be, and what we could all learn from it.
Friday, March 18, 2011
Why: Legal issues can be some of the most frustrating an entrepreneur encounters. A broader understanding of the context in which these issues arise is useful, although not necessarily liberating.
It happens all too often. An entrepreneur comes up with a great business idea. The business plan is a work of art. Investors are lining up to provide capital. Just a few details to check with the lawyers—and then the details take on a life of their own. We lawyers frequently take the blame, sometimes deservedly so, but more often than not we’re just the messengers. The real problem is a statute, an ordinance or a regulation that provides detailed guidance as to what must be done, but unfortunately what the law requires just makes no sense under the circumstances.
Philip Howard, a practicing lawyer in New York City, recognizes this scenario all too well. In the 15 years since The Death of Common Sense first appeared, he has written two more well-received books pointing out flaws in our legal system and has founded an organization, Common Good, dedicated to restoring common sense to American law. All of this is built on the basic premise that in seeking to legislate fairness for all, we have elevated procedure over substance, replaced sound judgment with mind-numbingly detailed laws, and created “a system of regulation that goes too far while it also does too little.”
Take, as one egregious example, the Occupational Safety and Health Administration. Volumes of regulations set out precise, objective rules meant to advance worker safety. So much law, in fact, that the law no longer offers a clear guide, but is essentially unknowable except in bits and pieces. And those enforcing the bits and pieces exercise no judgment in doing so, which leads to arbitrary enforcement, enforcement that requires that hugely expensive but unnecessary modifications be made, enforcement that misses real problems and focuses on paperwork. The result? “Safety in the American workplace has been largely unaffected by OSHA.”
But government still tries to detail the fix for every problem with absolute precision. That’s how we end up with a Department of Defense that, in 1994, spent “more on procedures for travel reimbursement ($2.2 billion) than on travel ($2 billion).” Does anyone really think things have changed for the better since then?
So where did we go wrong? Howard traces this to the turbulent 1960s, the emerging regulatory state and the rise of legal rationalism—the belief that everything can be figured out in advance and problems avoided through detailed lawmaking—and the glorification of process. We now argue “not about right and wrong, but about whether something was done the right way.”
Howard’s proposed solution could be called “Back to the Future.” Return to a system of law that establishes rules and guidelines that are “subservient to broader principles,” and allow those enforcing the law to use their judgment—their common sense—to make an exception whenever a rule in a particular case leads to a result inconsistent with the principle. Principle, not rules, should control. The focus should be what is right and reasonable, “not the parsing of legal language.”
Reading this against the background of current events, it’s hard not to wonder whether now is an opportune time to implement this idea. On the other hand, it just may be that this is the only time we might be able to do it, and doing it may be critical to rebuilding our economic infrastructure. As they say, some food for thought.
Thursday, March 17, 2011
- The death of the original producer
- Plenty of financial troubles, including an essentially bankrupt production after the first $20 million had been raised
- Broken bones by three actors during rehearsals and performances (two feet, two wrists, and one back)
- The postponement of the opening, six times
- Universally negative "preview reviews" by the press, who have gotten tired of waiting for an actual opening
- Just last week, the ouster of Julie Taymor (director, book writer, and famous visionary behind “The Lion King”), purportedly because of her unwillingness to listen to feed back and make changes—something no entrepreneur would EVER do…)
Given how I’ve seen entrepreneurs raise capital over the years, here are my guesses as to the three most likely ways:
- Convince the same folks who invested the initial capital that it isn’t “throwing good money after bad” and that additional investment is the only chance they have to get a return on their already sizable investment.
- Offer new investors a significant preference over prior investors on the “last money in” so they have the prospect of significant returns—a common strategy in the venture capital community, affectionately known as a “cram down.”
- Just getting people who think it would be “cool” to own a piece of a show like “Spider-Man: Turn Off The Dark,” with music by U2’s Bono and The Edge. Of course, this last strategy overlaps with the first one because these may be the same people who invested in the first place.
I guess we’ll all know in the next few years (or maybe few months, if it is a total failure) whether being an investor trapped in this web was a wise investment decision.
It isn’t that we’re complaining about taking our client’s problems home with us; it’s just that we noticed that we tend to view whatever interests us through an entrepreneurial lens—you might say it’s a little akin to everything looking like a nail when you’re holding a hammer. So, we figured, why not share our entrepreneurial perspective with entrepreneurs and others who are interested. As a result, we created EntreView.
While we inevitably will post about legal topics of concern to entrepreneurs (we are lawyers after all, but don’t hold that against us), that isn’t our only focus. Whether it’s Nevin Harwood posting about “building things” (like bikes, golf clubs, cars, and businesses), Frank Vargas giving us “the view from Mountain View” (near Silicon Valley), where he currently resides much of the time, or Dave Morehouse (who also once lived in Mountain View, but never mind about that) sharing what he’s learned through feeding his voracious appetite for books (or his love of history and Indiana Jones, not necessarily in that order), we hope to impart our likes (and dislikes), interests, insights—and maybe even occasionally wisdom about life—as viewed through an entrepreneurial lens.
Thanks again for listening and please let us know if you have comments or suggestions along the way!