Green Politics

January 21, 2009 – 12:18 am

The Citizen’s Briefing Book on change.gov was closed yesterday, ending an interesting experiment in direct government. The Briefing Book allowed any American to suggest policy priorities, and then vote them up or down. The project had an overwhelming response with over 70,000 participants.

I was surprised to see that the most popular policy was ‘End the Prohibition of Marijuana’. I was expecting something like ‘Get out of Iraq’, or “Provide Medical Insurance for All’, but apparently voters have more important things on their minds.

Now, this isn’t a post arguing the virtues of legalized pot, but it’s worth speculating what would happen if it were legalized. I’d predict a wave of investment as individuals and companies attempted to secure a piece of the opportunity. An entire industry would be born, including horticulture, biotech, food and beverage, retail, trade magazines, offerings for every niche and segment of society, and more. All this would create jobs and boost economic activity, provide new services to consumers, and reward entrepreneurs for their enterprise. And the government would increase its tax income too.

This all serves to illustrate the opportunities that are created when red tape is cut. It’s easy to imagine what would happen if marijuana were legal, but often the results from cutting more obscure red tape can be even greater. But the basic fact is anytime you eliminate red tape you create opportunities for the private sector to invest and create growth.

There’s outright panic about the economy at the moment, with the inevitable pleas that the government should ‘do something’, and Obama is stepping up to the plate with a pledge to spend $850 bln to create 3-4 million jobs. That’s a whole lot of ’something’, but even if you accept that this spend will indeed create all those jobs (which I don’t) it still works out at over $200k per job. What an incredible waste.

So here’s my suggestion to Obama and all other politicians– “Don’t just do something - sit there!”. Save the taxpayers money, and stimulate the economy by having the government do less. Free markets and unfettered competition within the rule of law are the best way to spur the growth we need, so cut red tape and have the government step out of the way. It’s a shame and a worry that the political pendulum is swinging away from this understanding.

By Steve | Posted in economics, politics | Comments (0)

Advice for a Friend

December 24, 2008 – 5:37 pm

A friend who’s starting a business asked my advice recently. Here’s a cut and paste of what I emailed him. I think there’s some pretty good guidelines here, although I’m not sure I always follow them myself…

  • Create value.
    Sounds obvious, but I’ve met a lot of entrepreneurs who don’t really get this. Obsess the benefits you will offer your customers (don’t go straight to the financials to figure out the benefits to you!). Customers needs come first.
  • Choose a growing market.
    It will be hard work no matter what, so target new markets that have the potential to get really big and at least you’ll have the wind at your back.
  • Find a niche.
    Always better if you’re young and small.
  • Sales sales sales!
    Sales bring cash, which you need to solve the million and one problems you’ll face. Also, without growth you can’t build a great team who believe in the company, and you’ll be stuck facing the problems single-handed.
  • Look for step changes.
    Don’t ask yourself how to improve by 10% this month - that’s the wrong question. You should ask yourself how to double or triple performance, and then come up with answers. Ask yourself small questions and you’ll build a weak company that won’t go anywhere.
  • Think really big.
    This is how to build a team and momentum. Every team needs a bold ambition to strive towards.
  • Hire slowly.
    The biggest drain on cash is people (in services, at least). It’s hard to keep them all productive, even if they want to be (and many don’t). Even when you are desperate for more help, wait another month. Ignore your least important tasks. Make existing staff do more. And when you finally hire someone, make sure they are really really good.
  • Pass the pressure down.
    As the leader it will seem like a force of gravity pulls pressure and problems your way. Every issue falling outside the scope of your team’s job descriptions will end up on your desk, plus all the financial and legal pressures of running a business. And you’re taking all the risk! Even if it’s not in your nature, get tough and don’t let problems get passed up to you. Even if you succeed in pushing all the operational pressure onto your team, you will be busy enough figuring out where to lead the business.
  • Be action oriented.
    Biggest killer for a small company is lost time so you have to be really efficient. Short meetings (or none at all is better), quick decisions, a fast pace, and go go go.
  • Be frugal.
    And I mean really frugal. A penny saved can be invested in growth, and through the magic of compound growth over time this can make a major difference to your company’s success. Your team will come up with a million ways to spend money and it will pay you to be vigilant on this issue. Try to delegate cost oversight to someone with a passion for it - you’ll be too busy to scrutinize every penny all the time, but that doesn’t mean it’s not worth doing.
  • Use technology.
    The best way I know to create value is through deploying technology, either to improve internal operations, or to create a customer service. In mature and tough markets, it gives you a chance to be the nimble exciting alternative to the crappy but massive incumbents.

What do you think? Good advice? What’s missing?

By Steve | Posted in Uncategorized | Comments (0)

Nuggets of Gold

December 20, 2008 – 8:33 am

Bogart in The Treasure of Sierra MadreKen recently lent me The Treasure of the Sierra Madre, saying I’d recognize a lot in the movie. He wasn’t wrong. This blog is about the ups and downs of an entrepreneur’s life, but I don’t think I could do a better job telling the story than John Huston. They should show this film at b-school.

OK, not every entrepreneur will have to face madness and bandits, but other than that the story is pure archetype. This passage is classic;

…That’s gold, that’s what it makes of us. Never knew a prospector yet that died rich. Make one fortune, you’re sure to blow it in trying to find another. I’m no exception to the rule. Aw sure, I’m an odd old bone now, but say, don’t you guys think the spirit’s gone. I’m all set to shoulder a pickax and a shovel any time anybody’s willing to share expenses. I’d rather go by myself. Going it alone’s the best way. But you got to have a stomach for loneliness. Some guys go nutty with it. On the other hand, going with a partner or two is dangerous. Murder’s always lurkin’ about. Partners accusin’ each other of all sorts of crimes. Aw, as long as there’s no find, the noble brotherhood will last, but when the piles of gold begin to grow, that’s when the trouble starts…

Awesome stuff, although I’ve known a moderate amount of gold to paper over cracks in a partnership, and hard times to really open them up.

The naivete with which the partners start out rings a bell with me too (’how hard could it be, after all’). Down and out in Tampico, they decide to lift themselves up with hard work and enterprise;

Why not try gold diggin’ for a change? Well, it ain’t any riskier than waitin’ around here for a break. And this is the country where the nuggets of gold are just cryin’ for ya to take ‘em out of the ground and make ‘em shine in coins and on the fingers and necks of swell dames.

It doesn’t take long to realize that getting your hands on those nuggets is a lot harder than you’d thought. Fortunately for me, the digging is as much fun as the finding…

By Steve | Posted in Life | Comments (1)