How to sell books using social media

http://tinyurl.com/HowtoSellBooksUsingSocialMedia

Some things to look for when seeking venture capital

Venture capital firms are not just a source of finance for the lucky few who manage to pitch their idea better than the thousands of other innovators competing for scarce resources.

A venture capital firm looks beyond the idea and is often more concerned with the team who will deliver the business growth.

In the same way, when seeking an investment by a venture capital firm, don't just spend your time marching up and down Sand Hill Road, rattling the tin for contributions hoping for the quickest offer of a term sheet. Instead, you need to view the process as a courtship. In the same way that a job interview is really an "inter-view" - an opportunity for a company to size you up, but also an opportunity for you to gain direct insight into the team you may be working with - you need to work out if you can work with this team.

1. Will the VC team be able to help marshal all of the non-financial resources you will need to scale up your business? 
2. Will they be an active or passive board member? 
3. Can they help you find the right staff and do they have the connections to help you get the product or service to market quickly and efficiently? 
4. Will they be a useful sounding board and source of ideas for when the going gets really tough?

Bear in mind that for the VC money they will have active board involvement to ensure that they maximize the return to their investment and minimize the risk that the entrepreneur is going to make mistakes. And they have most likely seen all those mistakes before.

Remember that this relationship will likely last several years and for the success of the business, it has to last. But there will be an end - because the VC must be focussed on 'the exit'. VCs are always looking at how they  will recoup their investment and pay back their Limited Partners with profit

So when preparing your pitch remember that the VC is not just a source of finance to help an innovator on the path to mega wealth, you have to make the relationship work.

Unleashing the Collective Genius of Employees

Unleashing the Collective Genius of Employees is the name of a webcast from Stanford University which I watched recently. It describes an excellent idea for capturing and encouraging innovation in the workplace. If you're interested in watching the whole seminar it takes less than 1 hour and can be found here. http://tinyurl.com/ylnf3fm

In summary, it describes a kind of 'stock market' for ideas in which participants (the employees) are given notional capital to invest in the ideas generated from within the company. The idea is that rather than have good ideas lost in the 'ideas basket' because of a lack of time or resources or because the promotor of the idea can't navigate the politics, there is a mechanism to have ideas investigated and championed (or quashed) based on an internal market mechanism.

Venture Capital 101: How a VC fund works

A General Partner (GP) raises a fund (say $100 million) which is usually a 10 year partnership between a group of Limited Partners (LP). This limited partnership of typically involves about 10 investors.

All the investing is made in new high risk ventures over the first five year period during which time the GP draws down the funds promised by the LPs ($100 million) at the rate of $2 million/year

The second five year period is the harvest time (although there might be some follow-on investing made during this time as well).

The ventures need to execute the 'exit' part of the strategy and the GP starts returning funds to the LPs.

The GP charges a management fee of typically 2%/year of the total for the first 5 years.

This management fee declines at a linear rate to zero over the second 5 year period (or a percentage of the assets is the consideration if those assets haven't been sold yet).

If the fund has doubled in value as a result of all of the exits (ie. $200 million), the LPs get all of their principle back plus all of the management fees.

Of the remaining $100 million, the LPs get 80% and the GP gets 20%.

See more at: http://www.mycapital.com/VenetureCapital101_MyCapital.pdf

Social Media and the Dispersion of Authority

McKinsey's article on "Building Private Sector Diplomacy" has interesting implications for all organisations. http://www.mckinseyquarterly.com/Building_private-sector_diplomacy_2450

Social media has 'dispersed authority' and customers and stakeholders are now not merely 'price-takers'.

Engaging with customers/clients is now truly about 'inter-action' and the more flexible and responsive an organisation is, the better it will survive change.

Technology Disruptively Enhancing Education

Learning material away from the class room using technology and using the classroom to reinforce the learnings is so simple yet so effective.

Instead of trying to focus on what the teacher is saying with the distractions of the classroom and then staying up too late trying to solve the homework problems by texting, IMing, Facebooking and calling friends for the answers is the 'old way' of learning.


The smarter way to use technology such as the iPod or any delivery mechanism on a computer is for the material to be delivered in a format in which the student can listen and learn at their own pace, and in their preferred environment (like the bean bag in the bedroom without the distraction of someone cracking jokes on the other side of the room) and review and repeat the material.

And then use the classroom time to go through the problems with the help of peers and the teacher. (This isn't my idea! This is what they are doing at the Menlo School in California.)

Wouldn't it be fun to go back to school!?

Well of course you can - for free - just go to iTunes University.... http://www.apple.com/education/mobile-learning/

ENJOY!

Commercializing Technology - Strategies for Australian Corporates

Are Australia's major industrial firms aggressive enough with their strategies for commercializing their R&D internationally?

I have had two recent interactions with academics who have both caused me to ponder whether Australian corporate R&D is maximizing returns to innovation.

In a Working Paper from the Centre for Governance of Knowledge and Development, Regulatory Institutions Network (RegNet), College of Asia and the Pacific, ANU, Dr Hazel Moir questions: "Who Benefits? An empirical analysis of Australian and US patent ownership"
(http://cgkd.anu.edu.au/menus/workingpapers.php) (October 2008)

Firstly, there are several positive observations which can be made such as:

• Australia is in the top 10 countries holding patents in the US (not bad considering that the Australian economy is only 6% of the US economy).
• A large proportion of the patents held by foreign companies in Australia are in the biotech and pharmaceutical sectors. (Perhaps this is because of the value of the investment in a patent because the lead times and costs involved in bringing these products to market is so significant but perhaps it also implies strong R&D credentials in those sectors in Australia.)

However, one of the most striking points made by Moir is that 92% of all patent applications in Australia are made by corporates, yet there is only 1 company in the top 100 companies that own patents in Australia which is headquartered in Australia! This means that all of the 'royalty payments and knowledge spillovers' flow overseas!

Considering the phenominal technological advancements in such industries as mining and the extractive industries and our strong agricultural reseach and development, two industries for which Australian technology is world renowned, I wonder whether Australia's largest companies are sufficiently engaged in extracting rents from the global market for our knowledge and innovation?

The other academic interaction I had which has also been contributing to my thinking in this area a seminar I attended by Dr Richard Dasher, Consulting Professor and Director of the US-Asia Technology Management Center at Stanford University, entitled "Technology Strategies in Silicon Valley and Asia: Contrasting Patterns of Open Innovation"
http://www.stanford.edu/group/us-atmc/cgi-bin/us-atmc/wp-content/uploads/2009/09/090924-402a-flyer.pdf

Dasher made several very useful points comparing and contrasting the open style of innovation for which Silicon Valley is synonymous with the closed and incremental style of innovation typical of Japanese corporates.
I was particularly motivated by a comparison of strategies which major corporations could employ to develop innovation as a tactical advantage, both offensively as well as defensively.
According to Dasher, the requirements for successful open innovation are:

• an ability to evaluate external knowledge
• an ability to integrate external knowledge (both tacit and explicit)
• a clear vision of the direction and strengths of the company
• brilliant understanding of market psychology and potential new markets (unmet needs)
• flexibility in business planning
• strategies to hedge risk
• strong external sources of knowledge who will cooperate.

Australian corporates need to look at connecting with global technology markets as a source for new technologies to develop internally and for possible avenues for spinning off their own technologies in a global market.