Monday, August 26, 2013

Entrepreneurial Musings from the “Great American Road Trip”!

A few weeks ago, I managed to convince my family to hop into a rented RV and head off on the "Great American Road Trip" (or “GART,” as we called it) to the Black Hills. I realize that for many this may conjure visions of Clark Griswold's "sports wagon" or Robin Williams hanging out with the Gornickes in “RV.” For a guy like me who spends his days working with entrepreneurs, in addition to those allusions, it also made me think about a couple of pioneering entrepreneurs:

The face on the front of Mount Rushmore—"America's First Entrepreneur," George Washington. Did you know that Washington, who wasn’t as wealthy as many of the other founding fathers of our nation, was able to transform Mount Vernon from a quaint tobacco town into an industrial village producing flour and whiskey? 

I guess you can’t travel to Mount Rushmore without thinking about sculptor Gutzon Borglum.  Like many entrepreneurs, he wasn't always viewed favorably; that said, his dogged determination (and ability to raise capital from industry leaders and the federal government) made his dream a reality.

Lester “Si” and Ruth Pullen, who purchased a hole in the ground in the 1950s and transformed it into Rushmore Cave, a fun tourist destination that today sports not only cave tours, but a zip line, gemstone mining, and even a “7D Interactive Ride.”

One of the more interesting entrepreneurial success stories I learned about in our travel was that of Harold Schafer.  In 1942, Schafer founded the Gold Seal Company (famous for many products, including Mr. Bubble, Glass Wax, and Snowy Bleach), which was North Dakota’s largest home owned business before it was sold to Airwick Industries in 1986. 

Most relevant to our trip, Schafer was responsible for leading the restoration and development of Medora, one of North Dakota’s leading tourist destinations. On a beautiful July evening, we were fortunate to experience the "Pitchfork Fondue" and see a performance of the “Medora Musical” (which is more of a variety show than a musical, but not bad for the middle of North Dakota…). Schafer’s entrepreneurship and vision led Medora to become the vibrant tourist attraction that it is.

If you know your geography, you may be wondering how my GART to the Black Hills ended up in Western North Dakota.  Fortunately, thanks to the persuasive skills of my colleague (and fellow entreVIEW author), Kermit Nash (unabashedly, a native North Dakotan), we took a northern route through North Dakota back from our travels. It didn’t hurt that we were also able to stop and spend an afternoon with some close friends near Alexandria on the way back home. We even were able to experience, first hand, the world’s largest (i) scrap metal sculpture, (ii) Holstein cow, (iii) buffalo—see photo above, (iv) sand hill crane, and (v) prairie chicken.

I guess all of this proves that there’s hope for entrepreneurs. If you’ve got the vision and drive, you can create something out of nothing—even a destination attraction in the middle of nowhere (anyone else been to the Corn Palace or Wall Drug?)

Thursday, August 22, 2013

The Book: Steven Silbiger, The Ten Day MBA: A Step-By-Step Guide to Mastering the Skills Taught in America’s Top Business Schools (William Morrow, 1993)

Why: A relatively short and easy-to-read introduction to the analytical tools taught in MBA programs.

Let’s start this review with a frank admission (something regular readers of my posts already know): I do not read books typically found in the “Business” section at my local Barnes & Noble. Maybe it comes from my liberal arts background, or maybe I just find that inhabiting the business world for most waking hours during the work week generally satisfies my appetite for learning about that sphere of life.

That doesn’t mean I don’t think about business in my off-hours; I do, in fact, and I even draw business lessons from reading material one would not normally associate with the business world.  You need only take a look at my previous reviews to see how my mind tends to snatch relevant tidbits from reading about fishermen, or entertainment moguls, or the the workings of the brain, or even medieval England.

I have to admit, though, that there is one business book that I have found very useful in understanding my clients, their world view, and the language they use (not to mention my own business). Steven Silbiger, in The Ten Day MBA, sets out to summarize the “essentials of a Top Ten MBA education,” and jauntily assures his readers that “MBA jargon is easy to learn!” He follows with short chapters summarizing what he believes are the critical take-away points in the areas of marketing, ethics, accounting, organizational behavior, quantitative analysis, finance, operations, economics and strategy. Whew! And all in just 348 pages!

Now I’m about as likely to believe that reading this book is an acceptable substitute for an MBA as I am that taking a tour of Disneyworld will position me to run an amusement park. Nonetheless, and maybe this is the scary part, I have to admit that this is a very useful read for someone who, like me, deals on an almost constant basis with people who spent two years of their lives studying this stuff.

Highly recommended.  Now in its fourth edition.

Monday, August 19, 2013

Lessons from Tony Soprano’s Estate Plan

James GandolfiniJames Gandolfini, a/k/a Tony Soprano, died unexpectedly at the age of 51.  Not that we should all take money management lessons from a TV mobster, nor should we take guidance on estate planning from him, but the death of a high profile actor at such a young age provides an opportunity to review the good and the bad decisions his estate plan made.

First, here is a copy of his will.  Mistake #1:  If you are a famous person, you should (or your lawyer should insist) that you keep your estate plan PRIVATE.  Any will that has to be probated is public.  Most of the time no one will care, but if you are Tony Soprano, someone will care.  In fact, I am nowhere near the first person to write about this.  If his estate plan had been private, no one could write about it.  His estate plan would have been private if he had used a revocable living trust to hold his assets.  Trusts are not public documents.  Even if they become an issue for dispute in court, often the document itself is a non-public filing.  Now we all know he is giving his assistant $200,000.  

The second reason James Gandolfini’s estate plan is notable is because it appears to be very tax inefficient.  Newspapers and magazines have been making a huge deal about this calling his estate plan a horrible mistake, a tax disaster.  His plan gives about 80% of his estate, including a property in Italy, to taxable beneficiaries (not a spouse or charity).  This triggers estate tax on all but $5,000,000 at a rate of 40% or more.  The New York Daily News estimates that this amounts to about $30,000,000 in tax on his approximately $70,000,000 estate.

Again, the media labels this a horrible mistake, a disaster.  Is it possible that James only provided 20% to his wife (thereby making that 20% not taxable) because they agreed to do that in a premarital agreement, he had another trust for her benefit, or he used the 2012 gifting craziness to give her a number of assets already?  Or, maybe, he WANTED to give the rest of it to his kids and relatives, and didn't care about the taxes.  Novel idea?  It is true, however, that most people care about the taxes.  A few relatively simple estate planning techniques may accomplish the same goals but save significant taxes.  I certainly hope he was informed of the consequences of the design of his plan.

The third lesson from this estate plan is how (not) to structure gifts to your children.  His will provides for his children significantly, and early.  Many children, even children of celebrities, are not ready to manage a pile of money at 21.  I can appreciate his desire to keep things simple, but providing more money to your young daughter than you do your wife—seems like a bad idea?

The final lesson is in the disposition of his Italian property.  James gave his children the property in Italy.  Italy and many foreign countries have limitations on who can own property there, and who may be taxed as a beneficiary of that property (inheritance tax).  It is also possible that a significant capital gains tax occurs when the property is transferred to certain individuals.  Our system is an estate tax borne by the deceased’s estate, not by the beneficiaries receiving the property (unless the document requires that).  As a result, it can be possible that the estate would pay estate taxes in the U.S. for the property, and the recipient could pay further taxes to the country the property is located in.  Many countries in Europe, like Italy, have a treaty with the U.S.to make sure there are less situations of double tax, but it is important to take careful consideration with properties abroad.

Tuesday, August 13, 2013

Women Leaders Achieve Childhood Dreams

The Minneapolis / St. Paul Business Journal recently published its annual Women in Business award list, highlighting 51 women business leaders in the Twin Cities.  I like reading this edition each year, and others like it, because I like to learn about successful people and how they got to where they are.  The publication includes a short bio on each of the women honorees, followed by a sampling of their answers to a set of survey questions, one of which was: “When you were a kid, what did you want to be when you grew up?”  

There were a lot of interesting responses to that question, but one of the things that struck me was the number of women who are doing today exactly what they wanted to be doing when they grew up.  For example, Sarah Caruso, President and CEO of the Greater Twin Cities United Way, wanted to be a leader and business person.  Dr. Lisa Tseng, CEO of hi HealthInnovations, wanted to be a doctor and CEO.  Jackie Schneider, Vice President of sales and customer service at Proto Labs, wanted to be a sales person.  Lisa Peck, owner and principal designer of LiLu Interiors wanted to be an interior designer who ran her own business.

There are several others who are doing exactly what they wanted to be doing when they were kids, or something similar to it.  Of course, there are others who are doing quite well even though they haven’t lived out their childhood dreams (at least not yet).  Included in that group are those who wanted to be a large animal veterinarian, an FBI Agent, a Rockette, Annette Funicello, an Olympic equestrian and President of the United States.

I found all of this quite impressive, especially since I can’t really remember what it is that I wanted to be when I grew up (or, for that matter, what I want to be when I grow up).  If I had a childhood dream, it probably was being second baseman for the Minnesota Twins or quarterback for the Minnesota Vikings (dreams that I assure you died out long before I got out of middle school).

Knowing that my career today has very little to do with any childhood aspirations, I wondered why so many of these women were able to live out dreams they had as kids.  Without knowing any of them, it’s hard to speculate, but I can probably assume that they are all exceptionally bright, goal-oriented, determined and driven.  It would certainly be hard to accomplish all that they have without those characteristics.  Beyond that though, they all must also possess a certain degree of passion for what they do.  I can’t imagine that one can pursue a lifelong goal without having a lot of passion for that goal.  

That reminded me of the role that passion plays for successful entrepreneurs.  Entrepreneurs who are passionate about their businesses are far more engaging and persuasive than those who are not.  It takes a lot more than passion to succeed as an entrepreneur, including a good business concept, strong team, perseverance, luck, etc., but without passion for your business, I think it’s very challenging for an entrepreneur to succeed.

For example, I recently sat through a practice investor pitch with an aspiring entrepreneur, who had many of the things you look for in an investable company.  He had an interesting business concept, a demonstrated need for his product, some initial sales and a good team of advisors.  However, his presentation lacked the passion and enthusiasm necessary to get his audience excited about his product and the business opportunity.  If you can’t passionately describe what differentiates your business from your competitors, and show that you’ll do whatever it takes to make your business succeed, it is very difficult to persuade potential customers and investors to take a risk on you.

I also don’t think you can manufacture passion or enthusiasm for your business.  Either you have it or you don’t.  To me, it’s obvious when someone is genuinely passionate about their business, and also when someone is faking it.  Real passion is what motivates you to get out of bed every day and pursue your goals, regardless of the obstacles.  

For some people, passion also helps them to grow up to be exactly what they wanted to be when they were kids.

P.S.  If you like the content of entreVIEW (my posts or those of my fellow authors), please consider nominating us to the ABA annual list of top 100 Blawgs.

Friday, August 9, 2013

GPM Clients Profiled in August 3rd TECHdotMN Weekly Digest

Minnesota’s TECHdotMN's Weekly Digest email report, sharing tech news and events from around the state, is a staple of my weekend reading repertoire – so it was fun to see multiple Gray Plant Mooty entrepreneurial clients included in the lineup of headlines last week!

Naiku, a developer of classroom assessment software, has been chosen by the Edina Public School system to provide assessment solution products to Edina teachers for the 2013-2014 academic year. The article quotes Edina’s educational staff as calling Naiku’s products easy and efficient to use and able to be integrated with other popular classroom systems. This is definitely a “win” for “edutech startup” Naiku

SMART Signal was also called out for the “green light” it received from MnDOT to install a new software product on over 50 Minnesota intersections. The technology works to improve congestion due to traffic signal performance in Minneapolis’s most frustrating traffic zones, saving both time and money for drivers in the Twin Cities. Multiple Gray Plant Mooty clients have collaborated with the University of Minnesota to license and commercialize valuable technology developments, and SMART Signal is an illustrative success story. 

Fitness on Request, an on-demand fitness technology company, received a mention due to its recent financing.  Fitness on Request develops fitness class software and technology to allow for on-demand workouts at exercise facilities. As the article mentions, the company has been growing quickly, with a goal to double its revenues by the end of 2013. 

Last, ReconRobotics received a nod regarding the transfer of its Robotics Alley™ Conference and Expo event to Minnesota-based The Event Group, a production and marketing agency. The 2013 Robotics Alley Conference and Expo, hosted by the Twin Cities Chapter of AUVSI (also a Gray Plant Mooty client), aims to “bring together leaders in robotics research, design, business development, law, government and policy, and investment banking to share their insights into the explosive, worldwide growth of robotics and autonomous systems.” This November’s event will be the third annual conference hosted in St. Paul. 

While it’s always enjoyable to read about Minnesota’s entrepreneurs and their successes, it’s even better knowing that Gray Plant Mooty played a part in helping some of these companies achieve such noteworthy milestones. Congratulations to our clients and thanks to TECHdotMN for the press!

A Post by Karen Wenzel, Guest Blogger

Wednesday, August 7, 2013

A Legal Guide to the Use of Social Media in the Workplace

This past week Gray Plant Mooty lawyers, in collaboration with the State of Minnesota, published A Legal Guide to the Use of Social Media in the Workplace. This Guide follows our publication last year, A Legal Guide to Technology Transactions.  

As businesses increasingly utilize social media they face new and evolving legal issues. Whether they collect customer information, use social media to screen employees, market, blog, or use text messaging, they should have a basic understanding of the applicable laws and regulations.  As an employer, you could also have vicarious liability for the actions of your employees. Nobody is immune from the legal risks inherent in the access to and use of personal information and social media.

You could unknowingly be risking your most valuable trade secrets, become liable for unfair or deceptive trade practices, engage in defamation, violate employment or labor laws, infringe someone else’s intellectual property rights, or assume any number of other risks. Reputation, brand equity, and goodwill can quickly evaporate or be tarnished through unauthorized use of social media.

This new Social Media Guide highlights some of the legal issues a business or organization should consider when using social media in the workplace and offers guidance on best practices and ways to mitigate risk.  

On August 28, Gray Plant Mooty will be hosting a related workshop and webinar.  To see more information regarding the workshop, click here.

Workshop attendees will receive a free copy of A Legal Guide to The Use of Social Media in the Workplace.

The Guide is also available for free (hard copy or CD-ROM) by calling either the Minnesota Department of Employment and Economic Development Small Business Assistance Office (651) 556-8425 or Gray Plant Mooty (612) 632-3000. You can also view and download a copy here.