In my spare time, I enjoying singing in my two choirs Schola Cantorum of Oxford and Wadham College Chapel Choir. Because buying music for a whole choir is very expensive as even if each score is one or two pounds the cost gets multiplied by twenty or thirty, I often find myself singing free scores of out-of-copyright works, mainly from the Choral Public Domain Library. Although better than nothing, the quality is variable, in terms of the accuracy and typography. I have been aware of a program called Lilypond for a while, which outputs, typographically, very good scores so I thought I’d give it a go. Although a little difficult at first, I think the final result was pretty good. What do you think?
Today, I attended a Building a Business lecture by Paul Fisher of Advent Ventures (who blogs at www.thecoffeeshopsofmayfair.com) on raising capital, which was the last Building a Business lecture before the Christmas break. As always, here are the lecturer’s slides:
VC is good for some firms and bad for others
success e.g. Skype
highly disruptive business.
not a success if
not the right type of business
not the correct risk appetite
you don’t want dilution
the cost of raising money for business are, in order of cost,
and the most expensive type of equity is VC
by accepting VC, you are committing yourself to the VC’s risk profile – i.e. high risk.
more and more VC are seeing the attractions of “growth capital” - principally being driven by the recession.
VC’s look for
scalable business model
an exit within 5 years
a great team
a potential market which is large and high growth
an unfair advantage
a commercial lead
a cracking product
a robust IPR
confidence – in what you want, knowledge of the business.
Business plans aren’t important – back of the envelope will do.
NEVER cold call or cold mail!
Run investor conversations in parallel not in series
Tonight I attended the third lecture of the Building a Business Series, this time on negotiating skills given by Owen Darbishire, the Rhodes Trust University Lecturer in Management Studies at the Saïd Business School, University of Oxford. I’ve typed up my notes and posted them here, which you can use in addition to the lecturer’s slides:
Escalation of commitment: people are committed to decision in the past, even if objectively it was a bad one
Auctions: winner’s curse
e.g. 3G auctions.
70-75% of acquiring companies loose money in M & A activity.
“Process of potentially opportunistic interaction by which two or more parties, with some apparent conflict, seek to do better through jointly decided action than they could otherwise.”
first think about the “best alternative to negotiated agreement”.
recognise that sometimes an agreement is not possible.
the more information you acquire, the more options you will have and so you will get better results.
think about what your interests are versus a particular position.
use creative solutions: contingent contracts can increase expected value for both parties.
a mythical fixed pie often exists where it need not.
People negotiate around a number – set it to your advantage.
presentation of situation (price labels in used car salesrooms)
Today, I attended the first of the “Building a Business” lecture course at the Said Business School, which was given by Tom Hockaday, the managing director of Isis Innovation Ltd. His talk was titled “Taking the First Steps, Company Basic”. These are my notes (the lecturer’s slides are here):
Defines things like liability,
Has a set of documents called the Memorandum and Articles: these define the purpose and rules concerning the running of the company.
A Company Secretary handles bureaucratic aspects of the companies legal status.
Minimum Requirements for a Company
the Companies Act 2006 covers company law at the moment. It covers, among a lot of other things, directors’ duties: there are good resources online for this. Companies must keep accounts and not trade insolvently. Directors are personally liable for what a company does if it gets into trouble.
boring but important. There are corporation and personal tax issues to address: the Enterprise Investment Scheme and the Enterprise Management Scheme help investors and managers small companies save money.
There are lots of grants and free advice and expertise available.
If relationships get strained, it’s important to stop trading and fix the problems.
Deal honestly and decently with people in your company and the relationships will be more effective.
The MD plays a crucial roles
Supports everyone else
Ideally should be someone who has done it before
if you can’t afford one, seek advice from friends.
Being an MD of a startup is harder than doing the same role in an established company because there is no momentum.
Advisors: it’s important to work out who’s paying – take free advice, and get it early.
Business support networks
Not a business plan but a value proposition – “the elevator pitch”.
(1) Do something – product/service
(2) Sell it to someone – customer
FOR MORE MONEY THAN IT COSTS YOU
A lot of startup companies will have predominantly intellectual property – make sure you protect your rights.
Companies need to make money. Most companies need some initial investment.
“Money changes people and never for the better. [Founders] usually start out as mates, but if one of them is getting much more money than the rest can lead to jealousy and resentment”.
“Cash is King”
There are many reasons why you should shop for your groceries online. It is true that it is convenient, and that you save time by not having to traipse around the store collecting items, and that there’s a certain thrill to be gained from shopping at Tesco at 4am for the first time in the comfort of your pyjamas, but all of these reasons have been covered many time before. Having glided through the virtual aisles for the first time this month, it struck me that there was a strong environmental case for forgoing a trip to your local supermarket. For most people, the weekly shop involves getting in their car and driving, which seems to me the lowest hanging piece of fruit on this particular tree. Obviously, the delivery vehicle is probably burning fossil fuels too, but a sensibly planned “milk-round” delivery service covers less miles than a “hub-and-spoke” model for the same number of houses, and will reduce congestion at the store itself.
There are several other ways that this type of shopping can benefit the environment too: in my experience, less packaging is used, as either the food is put in boxes which are carried into your kitchen and then taken away, or the food is brought in strong plastic bags that can be reused again and again. Those that have researched Internet shopping will know that there are broadly two ways for the food to come to your door: the first is direct from the warehouse and the second is when someone walks around the shop for you collecting your goods as a regular shopper would. The former is by far the more environmentally friendly: the warehouses can be more tightly packed, so less heating is needed, you save the added trip of taking the food from the warehouse to the store and lastly there’s no need to have open refrigerators, which seem to me the most wasteful piece of equipment in modern retailing as you’re simultaneously heating and cooling the same air.
Tonight I was lucky enough to go to a question and answer session with James Rubin, Democrat and foreign policy expert, ably hosted by the chief economist of HSBC Stephen King. The questions were very diverse, and of a high quality as one would expect from an audience of fund managers; they compared well with those at the Oxford Union, which tend to show the audience’s comparative (and understandable) unfamiliarity with the topics, and with those at the Reform Club, which tend to lack focus on the questioning aspect and sometimes sound awfully like statements.
One subject of discussion that I found particularly fascinating was Russia. Rubin compared Russia with China, styling the former as a country with a need to be a global power, in contrast to the latter which he described as a regional political power, with geopolitical concern only for Taiwan and recognition in Asia, which restricted it’s global policy decision making solely to economic concerns. He cited the Russians renewed muscle flexing around the former Soviet Union, for example in Eastern Europe and most recently Georgia. Continuing this theme of a global outlook, Rubin predicted that the Kremlin would use Russia’s vast quantities of oil and gas for political purposes.
Of course, in the context of the wider debate, we heard his thoughts on the difference in approach that the two presidential candidates would take: McCain, he said, would be more willing to use force, presumably not directly against Russia, and not worry about bringing the United States’ allies in Europe and elsewhere along with him. Obama, on the other hand, was predicted to be more focused on dialogue, considering force as a last resort. It was also interesting to hear that he thought Joe Biden, who he used to work for would be well suited to a role drumming up support for US actions among its allies.
I don’t want to add too many of my own thought: I broadly agree with Rubin and I would say that it is a brave man who bets against Putin, who has sucessfully held onto power even after his move from being President to Prime Minister. Russia never really went away and they are certainly here now with memories of the humiliation they suffered in the 1990’s on their minds.