The Wall Street Journal has an online article today on blogging positions in corporations. Saw the names of at least two people I know in the blogosphere and in the real world (not mutually exclusive BTW): Paul Brown and Heather Hamilton.
When Should Product Safety Concerns Be Addressed (Product Recall) Versus When Are People Just Plain Stupid
This weekend I had a pretty scary and very painful incident with getting a towelette dispenser stuck on my finger (product is Cutter Backwoods Mosquito Wipes). I have two bruise points on the first knuckle of my right hand index finger
that look like the entry points for where a dull-toothed Dracula may have tried to suck my blood. I am surprised that my finger is not much more seriously damaged.
For those that may have used cleaning wipes or baby wipes, some of these dispensers have holes coming out of the top of the dispenser with plastic teeth all around the inner circumference that grip the towelettes as they come up through the hole. When towelettes come up through the hole, I (now) presume that people are not supposed to stick their fingers back into the hole to push things back in. As I might do with a Kleenex box at home, I tried to push back in a towelette after two too many came out.
*Very* wrong thing to do. The hole in this case is just a little larger than the size of my index finger, plus the killer here was that the teeth were both pointed and the plastic was much stiffer than other product packaging I’ve encountered. It was *not* just a matter of getting my finger stuck and waiting for the right solution to present itself. My finger was turning purple, and the teeth created a lot of pain just by waiting around. As I tried to get the product off of my finger, the teeth dug into my finger harder – I imagine that the experience would be similar to the difficulty to get a barbed arrowhead out of your body (in the direction of the entry point) upon penetration. The temptation was to push or twist, but this only drove my index finger in further. My wife tried to help me with a blunt butter knife as a wedge … after two to three more fractic attempts of finding something to get the thing off my finger, luckily my wife finally found a needle nose set of pliers laying nearby that we could use to bend the stiff teeth away from my finger. A bit of an emotional release on my part after the whole thing was over and done with.
I personally think that the product packaging on this Cutter product should be recalled (or the the product packaging should be modified with softer and/or non-pointed teeth). That said, sentence number seven on the back label of the Cutter product does say, "Do Not push finger through lid opening".
When do (generally) sensible people become stupid? When do products need to be modified for safety reasons? Would your answer change if it were a child’s finger that got stuck in the story I recounted?
Speaking Quotably Versus Incoherently (To The Press)
Something I need to work on. For those who don’t know, I’m more of a right-hand man than a front-man. What this means for me is that I’m good for a "on the one hand there’s this" and "on the other hand there’s that" type rants. Doesn’t mean I’m a slouch for having a definitive opinion, but for persons that have played a facilitative role in consulting or other areas, being balanced and level-headed comes with the turf. I’m familiar with the scenario where the client CEO confronts you in the elevator and you need to give the 30-second pitch on where the engagement is at while at the same time justifying your existence. All said, giving an executive business summary is a bit different from "speaking quotably", the latter which is required for talking with press reporters.
Ford Harding, in his book "Rain Making" (a very good book for those looking to hone their skills in attracting new clients in the professional services or consulting world), has some good examples of speaking quotably (categorization is mine):
- Colorful words – "… like Bambi caught in the headlights …"
- Cliches – "This is only round one."
- Dramatic – "That issue is as dead as the flat earth theory."
- Despair – "Many will never work again."
This past Friday I was called by a reporter as related to an article on corporate blogging just being finalized for one of the major East coast newspapers. The reporter was extremely friendly, smart, nice, and precise about her work. Have no idea whether the statements I made will be used, but it made me realize I have something to work on.
Caught off guard I was. Use this encounter as a signal I will. Make improvements I shall. Have any thoughts do you?
Blogs Are Hot And Not
Cheryl Gidley, managing partner of Gidley Consulting, former GE Capital Exec, and a Northwestern MBA, says that while blogs are hot now, they are going to get old. She provokes thought and makes some excellent points in an ePrairie article. In particular, she writes:
Segment marketing is both the medium and the message. Blogs are simply place
in the latest deliverable format. The reason this isn’t news is that
there will always be evolutions in place. Right now, post cards with
fabulous color and great copy are still hot.
They’re going to get old.
Everything does. Sending text messages is hot – that is, until schools
outlaw the use of cell phones because kids are cheating. It’s hard to
reach that age group when all the messages are stored up and they’re
blasting through them to clear their message cues.
What’s hot and what’s not is
pure and simple. It’s segmented marketing. Understanding any segment –
whether it’s generational, ethnic, cultural or educational – means
understanding what makes its members tick and what makes them buy
whatever it is you’re peddling.
The thing I resonate most with is her comment that "blogs are simply the place in the latest deliverable format". I agree here.
Where I think such a characterization can be a little misleading though is that I think such an argument reduces any communication and Internet technology down a bit too much to the point that people just don’t want to understand things at all. The telephone system has been around for quite awhile. R&D related to the telephone system networks have extended the life of underlying technologies, created the seeds for wireless phone technologies, and we are now seeing disruptive forces like VoIP having an impact on people’s lives. Accounting systems get old too. Should we not install those? Perhaps not with the cost of S-O, right [joke]?
I guess my point is that the blogging hype will likely get deflated over time and come back to reality, but that doesn’t mean we should ignore or even pass on learning about blogs and using them. Heck, the investment is not that big, right? And even if the total invested $$ in blogging is small, there’s more people (VCs, subscribers, software R&D) longing the market with real money and actual dollars than shorting the market. True in Bubble 1.0 too I suppose … perhaps I need to go to Warren Buffet to get a hedge instrument for this market …
Launching Point For Information On Online Factoring
Anita Campbell, editor of Small Business Trends, has a good post that highlights a qualified source of information on online factoring services. In her post, she provides some background:
Facteon is a factoring
service for small businesses. What that means is that if a small
business is owed a decent-sized invoice (typically US$25,000 and up),
but needs money for, say, payroll and can’t afford to wait 60 days
until the invoice is paid (because we all know employees won’t wait
that long for their checks), the owner can "sell" or
factor the invoice to a company like Facteon. Facteon will advance the
invoice amount, less its fee of course.
To be truthful, although I’ve investigated offline account receiveable (A/R) factoring services in the past, I’ve never used a factoring service. An online service seems pretty intriguing (because it seems as if it can save managers some time).
Empathy Versus Sympathy In Management Consulting
I’ve had some interesting discussions on how corporate politics play a role when consulting to clients. Perhaps I have a parochial view here.
My take is that consultants should take no part in corporate politics.
It was a lesson that I learned early on while at the management consulting firm PRTM (a great firm to work for BTW – see Consulting Magazine PDF here).
Here’s the rationale for "no politics": consultants are often brought in to make things
better. Clients pay a premium for consultants for any number of
reasons. One common reason is that consultants are supposed to be
unbiased third-parties. If one gets consumed in politics, there’s not
enough focus on motivating everyone to get to the end goal.
Here’s another distinction (my own wrinkle) as it relates to consulting:
- In consulting, empathy is the ability to understand what a person is going through.
- Sympathy goes one step further. One not only understands a person but also agrees with the person on an emotional level.
Sympathy can be the "dark side of the Force". Suppose one is working
within a business unit (sponsored by one of the EVPs) and there are two
VPs below the EVP that don’t get along with one another. You are alone
in the office with one of the VPs that you may like better from a
personal chemistry point of view, and this VP starts to bad mouth the
other VP. If you join into this sort of thing, while you may be
ingratiating yourself with the one VP, you are hurting the client by
participating in politics. Bad mouthing is just not constructive. In
this sort of scenario, you should probably consider something like
letting the VP know that you can understand why he/she might feel this
way but that as a consultant, you can’t have any part in this. Other
good options would be to try to get the VPs to work it out
face-to-face. One may also want to probe a bit with the VP to see if it
is a worthwhile thing to bring things up with the EVP if the
disfunctionality is hurting the productivity of the business in a
significant way. Junior consultants should probably also consult with
their firm’s primary manager for the engagement, especially before
escalating things to the client sponsor level.
Watching Nickels And Dimes On Legal Costs In Start-Ups And Ventures
Venture capitalist Ed Sim had a good post recently that touched on a number of things ranging from principle-centered negotiation to matching the core DNA and chemistry of a team in a venture. He entitled his post, "Nickels and Dimes Don’t Add Up" to reflect his late-in-the-negotiation realization that perhaps the DNA of a prospective executive hire didn’t match up because some of the aspects of the negotiation got extended too long for little reason. Because negotiations for executive employment arrangements can be complicated and involve more layers of legal mechanics stretching into the Board-level, his post triggered some tangential thoughts I had on the costs of legal and bootstrapping these costs from garage-level operations through seed and some cases of Series A financing. I suppose I could have called this post, "Bootstrapping Legal So That Nickels and Dimes Don’t Add Up Too Much".
A core problem with bootstrapping legal costs (and following a variation of a "cash is king" strategy) is that a company may pay for things later by bootstrapping these things now. For example, if a company needs to perfect its intellectual property rights because of poor professional services agreements, this can be a sore spot to have to go back to every customer one has dealt with to perfect the agreements.
But lawyers can cost from $200/hr to $500/hr. To create additional pressure on ventures, post-bubble many legal firms
(not to mention employees and other partners) pushed down their
willingness to take stock options in lieu of portions of cash compensation. Some are willing to push off costs for a few months, but you need an in then.
Let’s face reality then. Not everyone can afford to have lawyers draft every legal document change, even if one tries to make sure that drafting is the last step after negotiating or planning business terms.
If find it useful early on to know what type of company is in the making. This way you can think about how complex the company may be in the reasonable future (e.g., 12 to 18 months). As examples of types of companies and some of the pertinent legal aspects:
- Services-only company – may need very basic things like NDAs, professional services agreements, and subcontracting agreements
- Software-only company – may need more advanced things like NDAs, MNDAs, licensing,
maintenance, OEM inbound and/or outbound, distribution and partnership
agreements - Software and services company – may need all of the above, plus additional
considerations for when they interrelate surrounding intellectual
property rights and/or interstate tax, say
I’ve seen the stuff above range from $1,000 to $25,000ish. When one
talks about adding core infrastructure paperwork (e.g., equity, stock
option plan, executive employment docs) costing anywhere from $5,000 to
$25,000ish, and then adding stock purchase or recap docs (post Seed round)
costing anywhere from $25,000 to over $100,000, things add up over time. One really needs to breakdown the timing of company needs (and scope of work) to get narrower ranges on these costs (and thus to bootstrap the org along).
To weigh through some of this entrepreneurial & legal jungle, I find it useful to examine some pertinent operational considerations:
- Whether there will be a future for the venture – Entrepreneurs are pioneering, experimenting, and there is high risk early on. Don’t expend too much on legal until you’ve figured out what you are doing and what works. Somewhat related to this, don’t make core foundation documents or organizational structures too complex and customized unless you really need to.
- How far out the next phase of the future is – Try to storyboard out the future of the firm in a rational way. Consider only structuring legal stuff to keep you rolling for 12 to 18 months. Things like getting perfect distribution, licensing, and maintenance agreements may not make sense until you’ve got more traction selling direct. Why? People may not be able to sell accounts for you until you’ve a critical or workable mass of reference accounts. Although one may pay $5K more or even $15K to fix the job in the future on a $10K job, weigh the costs systematically.
- What that future could look like – Will there be things like capital raises? On core infrastructure documents (primarily corporate finance documents), I would not mess around here too much. In my opinion, these problems are the most expensive to fix, and it is in part because the problems are more diffused through the legal documents. The key factor that one can control, however, is that looking for iron-clad documentation and customization can cause much $$ pain early on. Maybe some of this can be fixed if the venture makes it to the next round.
Yet another strategy is to look at each of these types of documents above and figure out where they are most likely to break. If you need lawyers to focus on just getting that piece of the document iron-clad, this is another strategy to minimize costs in a somewhat "layered way".
I also find it useful to note, at least based on my experiences, that so long as one is reasonably careful, there’s little that lawyers can’t fix. Delaying costs is a key principle to look at.
Aside from actively managing legal costs and mechanics, I have another good option. Consider having a lawyer in as one of your business partners. They can save you a ton and help put your mind at ease.
Note these are insights on legal topics within start-ups from a
non-lawyer but from a person that has worked with a number of lawyers
in corporate finance and infrastructure, intellectual property, and
employment and human resources within start-ups and growth firms. I have been spanked (lightly) by lawyers for drafting stuff.
Steve Shu
Subscribe to Steve Shu’s blog feed
now (click icon) using a free newsreader where you can consolidate your
other reading information from the Internet as well. Business and
technology information for everyone!
Discovered Management Consulting Blog
In at least two prior posts (here and here), I talked about the absence of blogs by those at traditional management consulting firms. Well I missed this one. It’s a blog by Michael McLaughlin, a principal with Deloitte Consulting LLP. Looks like a very good one that addresses guerrilla consulting (and guerrilla marketing for consultants).