Business Insights

I recall some of my first stock purchases, tiny amounts from a discount broker as I was a punk ass kid with big dreams. With some money from hustling I bought a few shares, after reading the WSJ newspapers that I would get from Walden Books.

Then my tech career took off, so I had a few more bucks. Just a tad bit later the tech boom happens. Here I was thinking I was Gordon Gekko getting crazy returns from my “stellar analysis” but it was just luck. And even more than just luck, I actually rested some of the money before the bust and was able to avoid disaster (a mentor taught me to rest money often. Thankfully, I listened.)

The reality was, I was picking thoroughbred losers, but it was good times in the stock market….

So, I have witnessed the boom and the bust. Also like all of you, I keep hearing about the next tech bubble, the next tech bubble, we are in a bubble, bubble bubble bubble, ahhhh just shut up already!

And here we go now with the Snapchat IPO. Really a first of its kind with three classes of stock in which the founders get a 10x multiplier on their votable shares. And that results in their complete control over pretty much everything, even if they leave. And when you jump on your Robinhood account next month to cash in, just know that those Class A shares get you no voting rights.

That is the real buzz here. You, as an everyday investor, gets no voting power (you can go to the shareholder meeting though, yay!). Doesn’t this partly undermine our markets? Facebook and Google are similar but not this intense in terms of control.

This is like asking your parents for money and sticking your hand up in their face and saying: “Don’t tell me how to spend it!”

I don’t know if we are in a bubble or not, but this will likely be the new trend for super-hot tech companies and I have to say, good for them! Keep control, this is every founders dream.

It just sucks for investors. But, more importantly, if this how it will be, does it just encourage more short term focus over long term investment? But if you believe it’s going to rocket to the moon, do you care if you have voting power or not? Not really right? If you’re getting results, you give two shits about voting rights.

But after you drop a chunk of your nest egg in and it drops by 25% because of poor management or decisions, how will you feel then? Yeah, you can’t do anything about it. And that is the reason why many will avoid it.

With the rise of the activist investor we know why this is happening, but part of it just seems to defeat the purpose of investing in companies. I guess this is a sign of the times.

If you’re a startup and want to own your future and pretty much control your business and day even after going public, this seems to be the new model to follow.

But as investors, we may choose to take our money elsewhere.

Business Insights

You didn’t have to be an MIT quant or someone that trades off the pattern of migratory routes of elephants to see this one coming. With Buffet dumping $900M in Walmart stock, headlines like “Retail is dead” or “Buffet just put retail on notice” are inevitable.

This actually was a pretty simple play on a couple levels. You already know Amazon is an unstoppable force at the movement. When you hear about Amazon, you hear about technology, amazingly optimized supply chain operations, and drone delivery.

When you hear Walmart, all you ever hear is negativity, anti-Made-in-China sentiment (being in the Midwest, I may hear this more often than others), along with being voted amongst the most hated retailers. Add to the equation our current administration with a nationalist and protectionist viewpoint, Walmart looks like a sitting duck, as Made-in-America is going to be the beat everyone marches to for a while.

Now Here Is The Key

Amazon sells a lot of that same Made-in-China stuff that Walmart does, but they don’t catch all the hell for it.

In the same way, do you ever wonder why Chipotle flies under the radar with their food? Chipotle is often viewed as a healthier option, not because of the nutritional value, but because you’re distracted with the marketing hype of antibiotic — free meat and locally-sourced ingredients. In fact, one Chipotle burrito may have more calories and sodium than a Big Mac meal from McDonalds.

And Starbucks, they can serve you a Venti Mocha with 490 calories and 45 grams of sugar without all the unhealthy food rage but Coke catches hell for how much sugar is in their drinks, which is 39 grams for 1 can.

This is about looking at what is going on in the marketplace and not so much about what should be happening. You have to be a 100% realist and look around with eyes wide open because some things just don’t make sense anymore.

And it doesn’t have to make sense, you just need to be aware that it is happening and Buffet is great at that.

Business Insights

The rise and fall of brands has always been of interest to me. They fall often because of their own wrongdoing or an uncontrollable groundswell from a newcomer that starts as a fad from some celebrity. Either way, trying to understand the why is important.

I remember the days when Columbia was all the rage, then it slowly became a discount brand as the market was oversold with their products.

Then we witnessed the rise of North Face and they became the 800 pound gorilla going from a higher end product and fad to complete market saturation.

Now, if you have been paying attention, especially in larger metro areas, you will have seen that Canada Goose patch everywhere you go. You will also catch the name on a Drake track as OVO has collaborated with Canada Goose.

Canada Goose has become the Louis Vuitton of the cold outerwear market. Stomping on North Face and not looking back. Many will say they are equally warm and of similar quality, but GC is significantly more expensive and to those buying them, more stylish as well as with more brand prestige. (Prestige is worth a pretty penny these days to some people as they will say the brands you associate with says something about you.)

Much like Kors marching right into Coach’s space and jacking billions in revenue from their core market, GC is doing the same thing to North Face and similar brands right now.

Did North Face rest on their laurels? Did they lack innovation? They kept doing the same thing over and over, thinking it would last forever but, hey, JCPenney, Macys and Sears thought that too right? Oops, the story is not going to end well for them.

Do you invest in some different brands? Become an ambidextrous organization, printing money off your hot products now while you’re developing a whole new brand and look at the same time?

Could you ride the wave longer if you don’t over saturate the market? A la Ferrari. When I’m at the malls in Michigan or walking the streets of Chicago, everyone and their Pomeranian has something North Face on (women usually pair it with UGG boots. Dudes in UGG boots… Ah, that is another topic!)

Fashion is fickle, success for certain luxury brands is fleeting from the moment they get a hint they have something cool, far before the apex.

Right now we are watching $500–1000+ down coats sell out while the company prepares for an IPO. Is Canada Goose already planning for the day the fad ends or will they ride the high until the brands becomes uncool?

I guess we shall see…

Business Insights

For the last decade or so I have seen my fair share of pitches. In the last 2 years, the start-up game has really ramped up from everyone wanting to live their Shark Tank dream to wanting to become the new Facebook. I get as many as 10+ pitches a week, and some are good, a few are OK but most are really bad. After talking to some other angels I came up with a quick list of what to do and what not to do based on the feedback I received.

You can have the best looking deck in the world, but if your idea has no legs, it won’t matter so save the time.

Don’t make demands such as “you must call me either way if you like my pitch or not” umm no. If we see something we think is interesting, you will get a reply, otherwise please understand we are mostly busy people and cannot reply to every blind solicitation coming our way, don’t take it personal.

Persistence is not a bad thing, but if you email someone at every address and social media outlet 10 times a week, it feels like a stalker, don’t do it.

In your SHORT intro, give the person you’re pitching a glimpse into what makes your idea special. This really is fishing so you need a sharp hook.

I don’t care about your financial projections. VC’s that have quants on staff may care as they can run the numbers 10 different ways, most angels won’t. I have started enough businesses to know those fluffy numbers are never close to the real world. I looked at my own spreadsheets from 15 years ago and thought well shit, I was way off, if I only knew then what I know now…..

If you do get someone interested, if you don’t want to hop on the phone or meet in person, that is another turn off or red flag. Most people are not going to do a deal over email, wire you some cash, spread some pixie dust in the air and pray they can get 10x back.

Have a clear path to money, everyone knows it will take a while, but if you haven’t figure out how to make a penny, wait before you pitch.

If you could not raise some money from FFF, that is a red flag. Tell me a handful of people that know you, put some cash in because they believe in you.

Have idea of how you will handle talent as you scale. Seen tons of great ideas fail because they didn’t have the team to execute. If you have to hunt heads on your own or go to meetup groups to find some like-minded people, I don’t care, tell me how you’re going to get the people to grow. (an Indeed ad likely won’t work btw, don’t think passive)

Do you want funding, a consultant or both? If you want crazy terms but want the investors to be part to full time consultants the deal is going to end up different than you planned, time is the most valuable thing and hand holding costs money.

Anyway, these are just general tips, they won’t apply to everyone nor every situation. Getting money out of people isn’t easy, hell it’s hard to get your friend to pay for the bar tab right? Picture how hard it is to get someone to lend your start-up money….

Business Insights

After spending some time at my Chicago office and hot swapping between Uber’s and Taxi’s I had some thoughts that may go against the grain. It’s trendy to jump on the technology bandwagon. I came from the tech world, it was good to me, I love tech and always will. BUT it seems, if it’s tech, its better, even if its not better.

When Walmart came to town and ran all the small business owners out of town, there was a period of time when the uproar was pretty loud. Walmart was a job and business killer right? Shame on them! Uber comes into the market and “disrupts” and it killed a lot of jobs that people worked full time, as a craft and replaced it with some full time and some side hustle people. But it was ok to kill some of those full-time jobs because, it was tech.

Now I use Uber, have had some good rides and met some cool people/hustlers! It has so many benefits from outskirt area’s to getting different types of vehicles etc. I look forward to the idea of Uber Emergency where if you run out of gas on the freeway, an Uber will roll up with a gas can so you don’t have to wait an hour or two for roadside assistance (for the record, I have not run out of gas before but I have been close!) I also appreciate how Uber creates jobs on the fly, as someone that has always has multiple jobs since a young teenager, on the grind, just trying to survive, I really do appreciate the opportunity that Uber brings to many people.

But I Had An Eye Opening Moment Or Two In Chicago

The thing that caught me this time was several back to back Uber trips where the driver, to be honest, didn’t know where the fuck they were going. The swerving and stop and go motion, with one hand on the wheel and another holding their phone for the GPS made me car sick and screwed up a good part of my day. I got to the point where I said screw it, just let me out here.

This has happened many times in the past, but this was my tipping point. Put your phone on the dash at least? But I don’t think it’s big enough for some people to read, so they hold it. Yeah thats what I want, my drivers face looking down while navigating the busy streets of Chicago. We caught the Bulls vs. Pistons at the United Center and on the way out, we caught a taxi. It was a clear reminder of why I appreciate some of the regular taxi drivers over the side hustle drivers.

Very very rarely do I need to explain where I need to go exactly to old school taxi drivers, just an address is all they need. I can screw up and say 340 North and they will catch it and say do you mean 320 North because they know the block and there is no 340. No GPS, no nothing, they just know. The gentleman this evening has been driving taxi’s in the city for over a decade. THIS IS HIS CRAFT I reflected more on that.

It may be just driving, but he perfected his craft. He didn’t treat it as a side gig to get a couple extra bucks for a vacation, this fed his family and paid his rent. Not to say Uber drivers don’t do the same, I have just ran into more side hustle drivers than those perfecting a their craft (you know those Uber drivers that are making a life out of it, they will have a bottled water, gum, mints etc. Not all but some, they take it serious.) If you hired an Uber driver for an hour, it would cost you $60 to $100 or more per hour. I wanted to map this out since most people only use the service in micro-increments.

Can you think of any professional, doing anything, where you would accept them not knowing what they are doing while you are spending $60-$100+ per hour?

And that is where I have a fundamental issue. Many of the come and go drivers can get by, just using tech (GPS) but it does not make for a good experience especially in fast moving traffic and when GPS signals are iffy especially in the city. Tell me the taxi costs $1 more per ride, ok deal! Getting the right experience is worth every penny to me. And on the closing note that Uber drivers make more than classic taxi drivers. Maybe they do, maybe they don’t… I have quizzed a lot of drivers, it is hard to tell who gets paid more.

I have yet to run into an Uber driver that actually itemizes out all costs for their car, from the leather conditioner to tire shine, understands how their car depreciates etc. I run into the same issue with people that say renting a home is a waste of money vs. buying a home. Then I ask them to keep an excel spreadsheet of everything they buy to maintain their home from a shovel to a screw and all of a sudden it’s at least a debate now.

I have had my fair share of bad taxi rides as well, it’s not a 100% perfect thing. And we need Uber, and other ride shares. But dollar for dollar, I want the person that has perfected their craft, that does their job well, that can save me time and spare me the motion sickness while they try to do their job correctly.