December 31, 2004

Is it important for you to own a 51% stake in your company?

Here's what Guy Kawasaki, CEO of Garage Technology Ventures, has to say in his Forbes.com column:

The party that owns 51% of a company does not control it, other than on paper--and, maybe, in their minds. The moment you take $1 from outside investors, you are working for them. At the end of the day, your dream should be to hold 5% to 7% of a huge company, not 51% of a trivial one. To build a huge company, you do what you have to do, including bringing in investors who can help you. These investors will require a larger ownership than your, individual one.

December 28, 2004

Entrepreneurs who excercise do better at business

A survey of 336 entrepreneurs by Ball State University found those who regularly run reported better personal satisfaction, independence and autonomy than their non-excercising counterparts. The study also found that companies managed by runners report better sales results than firms directed by non-runners.

"Good physical condition should contribute to entrepreneur’s success in reaching their personal and financial goals as well," said Mike Goldsby, a Ball State entrepreneurship professor. Entrepreneurs who only weight train should add running to their workouts to increase their effectiveness, Goldsby adds.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

December 16, 2004

Why segmented pricing not such a good idea

Pricing a product is often a very difficult task: there are simply too many variables out there. Joel Spolsky of Fog Creek Software has written a great article on the subject.

Spolsky first illustrates how segmentation - separating your customers into different groups according to how much they are willing to pay - maximes profitability. Theoretically.

He then argues why segmentation does not prove to be such a good idea in the real world:

It pisses the heck off of people. People want to feel they're paying a fair price. They don't want to think they're paying extra just because they're not clever enough to find the magic coupon code. The airline industry got really, really good at segmenting and ended up charging literally a different price to every single person on the plane. As a result most people felt they weren't getting the best deal, and they didn't like the airlines. When a new alternative arose in the form of low cost carriers (Southwest, jetBlue, etc.) customers had no loyalty whatsover to the legacy airlines that had been trying to pick their pockets for all those years.

And God help you if an A-list blogger finds out that your premium printer is identical to the cheap printer, with the speed inhibitor turned off...

...Even assuming you're willing to deal with a long-term erosion of customer goodwill caused by blatant price discrimination, segmentation is just not that easy to pull off...If your customers talk amongst themselves, they're going to find out about the price you're offering the other people, and you'll find yourself forced to match the lowest prices for everyone. Especially the big corporate purchasers who theoretically should have the "maximum willingness to pay" since they represent rich customers. Corporations have full time purchasing departments staffed with people whose entire job is whittling down prices. These people go to conferences where they learn how to get the best price. They practice saying "no. cheaper." all day long in front of mirrors. Your sales guy doesn't stand a snowflake's chance in hell.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

December 15, 2004

Video interview with Guy Kawasaki

Click Here to view an interesting video interview with Guy Kawasaki, Founder & CEO of Garage Technology Ventures and author of some great books on start-ups and entrepreneurship.

December 05, 2004

Why 2 week vacations should be mandatory even for entrepreneurs

As an bootstrapping entrepreneur - and until recently, an one-man show - vacations have been a luxury that I can not afford to even think about.

This blog posting by Terry Gold, Founder, CEO, and President of Gold Systems, has however made me think differently about the need for vacations. It seems as if they are not something meant for "spoilt, no-care-in-the-world employee types" only.

An extract:

If you only take a week at a time, I think you're only getting the mental benefit of about one day off. Think about it - the first three days you're still thinking about work. You get one good day and then spend the next three days thinking about going back to work. I think it takes two weeks at least, consecutive, with little or no thoughts of work to really recharge.

Your employees could probably use the break too, and they get to prove that they can run the business without you. If you must think about work, keep the thoughts big and bring back a good idea or two.