Archive for January, 2017

A Racing Certainty

Monday, January 23rd, 2017

In a letter to the Editor of the UK’s leading horse racing daily newspaper, Racing Post, James points out that without a “profitable growth” mindset and an investment alternative that reflects it, the industry is accepting certain decline. There is no “plateau”. In this case, The Jockey Club has chosen to sell a profitable business and an iconic racecourse, Kempton Park, for housing development under the smokescreen of further investment in the sport’s “new heritage”. What is really happening is a lack of vision, a lack of bold new ideas and a lack of leadership.  Yet that doesn’t have to be the case, if racing’s rulers want to leave a meaningful legacy.

“Seeking Private Investment” 

170114 Racing Post Ltr1

© James Berkeley 2017. All Rights Reserved.

 

 

Startup, Startdown

Monday, January 23rd, 2017

three-skiers-on-ski-lift-picjumbo-com

 

Are you taking advice from an experienced entrepreneur as you proceed (business growth, raising capital, building partnerships and so forth)? Have they done what you want to accomplish successfully? Can they translate and transfer their expertise, knowledge and contacts to me? Never hire anyone who you cannot confidently answer a firm “YES” to those questions. There is a huge cottage industry of fawning advisers, business brokers and connectors, prying on startup and early-stage entrepreneurs with lousy and unproven advice. A great many entrepreneurs are drawn to these individuals by people they assiduously trust (family, friends, past colleagues and so on).  The giveaway is a promise to introduce the entrepreneur to a “celebrity” investor, adviser, potential client etc. The entrepreneur signs away a monthly retainer, and lo and behold they are taken on a merry ground, laced with excuses and failure. There is close to zero commitment because the economics don’t justify it.

You are building a “start-up”. Make sure that you are not consciously or unconsciously now in a “start-down”.

© James Berkeley 2017. All Rights Reserved.

 

Why Should They Care?

Thursday, January 19th, 2017

I hate being “pitched” ideas, it immediately feels like my interests (building a trusting relationship) are being subordinated to advance your interests (line your pockets). Yet we all need to attract ideal customers or investors with a memorable description of our impressive value. How else can they recall when they need your product, service or proposed investment? You need a clear crisp 1 or 2 sentence statement. It needs to embrace:

  • Legitimate immediate value
  • Impressive results from its’ application and use
  • Improved performance, not problem solving
  • Your target audience’s aspirations
  • It needs to be specific, not too general

It is not about your approach, technology or ideas. Nor is it a sales tag line.

“We have created a platform to resolve the shortcomings of wealth managers, who put their interests before their customers” is interesting but it tells me little about what is really in it for me.

Contrast this with “We dramatically improve HNW investors’ performance, security and peace of mind in complex and ambiguous situations”, which begs the immediate question “great, tell me what would you suggest in this situation?” You have given the other party a reason to care about you (their self-interest), to immediately delve into a pragmatic not conceptual discussion and to recommend you to others.

© James Berkeley 2017. All Rights Reserved.

 

Hot Airbnb

Tuesday, January 10th, 2017

howairbnbworks

 

A rocket-propelled growth trajectory creates a “siren call” to investors and garners predictable and less predictable media comment. Executives ride the bandwagon of super valuations (fame, inflated bonuses, celebrity) but all too often the focus on dramatic market expansion and top line growth outpaces risk mitigation initiatives (the boring stuff). Heat melts the shell of the rocket on re-entry and the business becomes highly vulnerable.

This past week, Airbnb came in to sharp focus with me. (1) A European CEO of a “bricks and mortar” global serviced apartment business pointing out that Airbnb is flagrantly allowing its’ hosts in many key European gateway cities to run full-time hospitality businesses (83,000 room listings in Paris) and (2) Personally experiencing their underwhelming response to a cyber hack on my own Airbnb account.

My observation is Airbnb are playing too fast and too loose. They are tripping up on common sense responses to foreseen risks (cyber hacks, hosts flouting local trading rules), not just unforeseen risks. I don’t believe they are alone, there are hundreds of “celebrity” high growth businesses, whose risk mitigation strategies are being lapped by their growth plans.

I am all for disruptive businesses helping raise the levels of customer service. That is capitalism. No business or industry has a “right” to survive. What isn’t acceptable is when a business is acquiescent or adopts approaches (cyber hack) that are so inadequate that trust and integrity is destroyed. Are management asleep while cyber thieves roam freely in their booking system, setting up fake bookings, lifting credit card information, conversing brazenly with hosts and potentially putting “hosts” in physical harm’s way with bogus guests? Are their customers solely responsible for alerting Airbnb to breaches and mitigating the immediate risks (financial theft, loss of personal data, potential physical harm to hosts)? Should  this matter to investors?

Yes, if you are an investor for whom reputational risk is equally as important as financial risk.

There are plenty of disruptive businesses (Ryanair), where executives have assailed their competitors, regulators and their customers for years while the growth trajectory dramatically outpaces the risk mitigation strategies.

The difficulty arises when growth slows, investors ask “why”?

Businesses aren’t in existence to be liked, they are in business to be respected. If you don’t believe that look at Apple, GE, Singapore Airlines and Virgin. When respect is destroyed by leaders failing to prioritise managing risk effectively, customers, shareholders, employees and business partners walk. No one individual or brand is insulated from that certainty.

© James Berkeley 2017. All Rights Reserved.