HermannM

Archive for April, 2009|Monthly archive page

Stay in the Boat

In Interesting on April 27, 2009 at 2:05 pm

We are quickly coming upon “Business Plan Competition” season and I have to admire the gifted entrepreneurs who make a go at starting a business.  Given the economic environment, this may seem an unlikely time to forgo a paycheck in search of greater riches.  But starting a business is like having a baby, it’s never a good time; but we do it anyway.

The National Venture Capital Association recently published reports on 1Q09 and, as expected, the news was difficult to swallow.  Investment volume dropped significantly and many would-be entrepreneurs are opting against the promise of self-determination.  At the same time, many founders and employees of existing startups are re-evaluating their career options, present company included.  The primary concern is the likelihood and timing of exit opportunities and the resulting impact on our wealth.  In other words, is it worth it to stay the course.  My resounding answer is YES, provided you have tangible reasons for being at a startup in the first place beyond the expected financial payoff. In fact, there are many reasons beyond financial to be in a startup and I am extremely wary of those who are “in it” just for the money. Put another way, I would rather be surrounded by idiots who share my passion than geniuses who have neither courage nor faith.

The financial entrepreneur dates back to the 1850s with the San Francisco gold rush. When we were an agrarian society, hard work went hand-in-hand with seedtime and harvest. You put in a hard day’s work, you earned a hard day’s pay (obviously I am black and my ancestors probably didn’t get paid as much as your ancestors, but we were farmers nevertheless). And everybody ate. But then the concept of the “American Dream” was forever changed.  With the gold rush, America’s investment horizon and risk profile was altered and I don’t think we’ve ever really recovered. A few people struck gold and this inspired an army of paupers to head for the hills in search of riskless rewards and easy money. Not many found gold but the concept of the financially driven entrepreneur was forever ingrained in the hearts of the media and the American people.  There are too many entrepreneurs looking for easy money and riskless investments that it is screwing things up for the rest of us. We need to return to better days. If you are part of a startup or you are thinking about joining a startup, here are some reasons why you should stick with it.

  • You want to create real value
  • You want to establish a vehicle for self-determination
  • You possess a unique and valuable skill that cannot be harnessed within a corporate setting.
  • You passion, experience and attention to detail has allowed you to identify a business venture whose risk profile is lower than what “conventional thinkers” perceive
  • You would rather fail with your team of winners than win with a team of Enron-esque losers.
  • You have wisdom beyond your years, while lesser men & women might not.
  • You can’t stop thinking about the startup, its driving you crazy
  • You are an idiot blessed with a God-sized portion of faith

My company is HomeShop Technologies, Inc. and everyday is a struggle. I probably should have quit a long time ago were it not for the fact that all the above reasons apply, especially the last one. There are a lot of easier ways to make money. In fact, had wealth been my only goal, I would have become a plumber. I might also suggest becoming an electrician or drug dealer; both professions offer equally lucrative alternatives to hard work.  But if you are fortunate enough to come up with a novel concept that addresses a real and growing problem and you can attract a winning team, I have a feeling that a winner VC will eventually find you, if you whisper loud enough.  The goal for all of us is to create something that was worthy of the effort put in to achieve it. Now that’s an American Dream worth pursuing.

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Haitian Coffee & the American Revolution

In Interesting on April 27, 2009 at 12:25 pm

Although much of the talk this week has been about tea, this discussion will focus on the real catalyst of the American revolution… coffee.

At the time of the American Revolution, Haiti was the world leader in coffee production. Some of the coffee was sent to France to be sold in the posh coffee houses of Paris. The majority however, was sent to the colonies. Demand for coffee was inspired in part by anti-British sentiments. Price was probably the stronger motivator for switching consumption from tea to coffee. Whereas Arabian coffee had cost 18 shillings, Haitian coffee was priced at 9 shillings. By 1790 coffee imports were a third greater than that of tea. At the turn of the century, coffee imports outstripped tea by a factor of 10 to 1.

It should be clear why the colonists resisted an increase in taxes on the British tea. Strong demand for the less costly but equally satisfying coffee was a precursor of the “Boston Tea Party.” In fact, had a viable substitute not been identified, the dumping of British tea might never have occurred.

Haiti’s dominance in coffee production funded numerous slave revolts and eventually led to revolution in 1804. Although losing Haiti was a great loss for Napoleon, the resulting effect, in many ways, could not have made him any happier. Constantly at war with its English-speaking neighbor to the north, France needed a break from the fighting without leaving itself vulnerable to attack. Shortly before losing Haiti, Napoleon had sold Louisiana to Thomas Jefferson. The combination of America doubling in size and its securing a suitable cash crop that allowed it to resist British imports, created a third superpower in the world. England’s dominance in world trade would forever be challenged. With a new ally against England, France vacated the Western Hemisphere allowing Napoleon to pursue the unification of the rest of Europe.

So how did Haiti lose its stranglehold on coffee production? Well, in a nutshell, the only thing wrong with Haiti are Haitians. After the revolution, the slaves didn’t want to work anymore. Production slumped causing prices to shoot up. America eventually identified alternative sources of coffee from Brazil. The rest is modern history.


A resurgence in Haiti, however, appears to be underway. In the mid 1990’s Haitian coffee growers embarked on an economic experiment to sell directly to independent roasters in America under an agreement of fair trade. Marketed under the brand Haitian Bleu®, Haitian coffee competes in the premium category and offers a distinctive sweetness not found in beans from Columbia or Brazil.

hatianbleu-custom-2

Today, coffee remains the country’s flagship export and the industry employs one out of every six citizens. America’s support of fair trade is a prime example of business and government working together to help developing nations bootstrap their way out of poverty. It doesn’t necessarily explain the Republican Tea Party, but then again, neither can FoxNews.

I hope you found this to be scintillating Food for Thought!

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