Archive for the ‘Business’ Category

What Black Entrepreneurs Can Do To Fix Silicon Valley

In Business, Entrepreneurship, Interesting on November 1, 2011 at 1:09 am

I hate blogging. I haven’t blogged in over two years and there’s a reason for that. But an issue has emerged that is too important for me to sit back and watch unfold without offering a dose of perspective. You don’t need a Twitter fight to recognize that Silicon Valley exhibits bias in its investment decisions. And, while it’s great that CNN has made waves with previews of its upcoming show on the subject, you don’t need cable TV to tell you that, either. I could quote statistics or hide behind anecdotal accounts of who-said-what to-whom and when, but the end result is still the same. Silicon Valley has a race problem. The question before us is: what do we want to do about it?

I was proud when I read Dylan Tweney’s post about fixing the problem. It was refreshing to hear someone with clout acknowledge publicly what most Americans know, but hesitate to discuss. What also surprised me was his willingness to call out his peers who question or deny the existence of a problem. He showed great leadership in paving a path towards reconciliation across racial lines. I felt compelled to do the same in the spirit of cooperation. The truth is, Silicon Valley’s race problem wasn’t born in the Valley, it is really just a reflection of the last vestiges of America’s 400 plus race problem. The issues are deeper than we think and if we’re going to address it, we’re going to need to do it together. So the following is my advice to black entrepreneurs (existing, budding and otherwise) on what they need to do to fight racism in Silicon Valley.

Consider the history. Although we live in a post-racial society, Silicon Valley social DNA was formed many years before President Obama was ever elected. The majority of venture capitalists are in their 40s or older, which means they attended college during the tumultuous 1970s and 1980s. My undergraduate experience was rife with racial tension and it seemed like every few years, a new issue would occur to deepen the wedge of social distrust. The Stuart murder, the King beating and the Simpson trial all played a role in shaping our racial views and social alliances. While most people have moved on intellectually from that, our emotional networks and spheres of influence take longer to adjust. Just as African American students might have banded together at the “black table” for lunch, so to did our white counterparts who also dined and socialized in an unforced but segregated manner. College was never the melting pot it was designed to be. And divisions that formed along racial lines then, only widened once we got into the workplace. This explanation doesn’t excuse the racial isolation we experience. But it may help explain the reason blacks and whites remain divided on the role of race and bias in the decisions made on Sand Hill Road.

Lighten up. Some of the hostility we’re experiencing now is a tension arising from people who struggle to make sense of what they observe, relative to what they’ve long believed to be true. Don’t react. Let people work out their issues in the absence of public scrutiny. What disappointed me most about CNN’s interview with Michael Arrington was it captured an awkward moment without giving him a chance to reconcile any conflicting views on race, many of which had just emerged when he was introduced to a house full of black entrepreneurs. That moment created a great sound bite from which to generate buzz for the documentary, but I found it to be an irresponsible piece of journalism. When I say lighten up, what I mean is you need to give people time to process your existence, especially if it conflicts with the steady reinforcement of traditional images they’ve experienced of black people and of entrepreneurs. Mistakes are going to happen and black entrepreneurs will do themselves a disservice by succumbing to knee-jerk reactions.

What may sound like ignorance to you may very well be a moment of naive honesty for others. Don’t look for negativity where it doesn’t exist. Not everybody is against you, although it may seem that way. The temper of the times has changed and people from all backgrounds recognize the vulgarity of outright racism. When someone makes a comment that may be construed as insensitive, consider the context. As an example, being called “articulate” is, more often than not, an uninformed but genuine complement. Accept it as such. And let people make their mistakes. Over time, you’ll learn to discern the hateful comments from the ones borne of unfamiliarity. You’ve got to believe there is long term value in letting the other guy off the hook.

Be In The Present. When in Rome, do as the Romans do. And when in Silicon Valley, do as they do there too. Whether we admit it or not, we carry our culture with us and many aspects of black culture are counterproductive to our success. So we have to leave it behind. When I was growing up, my mother told me I had to be three times as smart as my schoolmates and four times as smart as colleagues to get ahead. What resulted is an over-achiever with a perfectionist attitude. This is something I fight hard to overcome. In entrepreneurship, great is the enemy of good enough. The time it takes to get a project from 20% to 70% is half the time it takes to take it from 70% to 90%. When speed of execution matters, we have be comfortable with projects at 70% of its theoretical potential. I heard someone say that “if you’re not embarrassed by your first release, then you released it too late.” I never understood what that meant until I finally released a beta version of HomeShopr. It sucks but it’s out. I’m actually proud to not be behind a LaunchRock Splash page as so many ventures remain.

Also, THERE IS NO SUCH THING AS STEALTH MODE. A common behavior amongst African Americans is to keep their ideas close to the vest. This usually occurs out of fear of it being ripped off or out of doubt that it’s worth discussing at all. In either case, this line of thinking is counterproductive. If you’re operating under the radar, most VCs will assume you lack the confidence to stand by your convictions. As a result, they won’t, and shouldn’t, waste their time with you. And you will have made a bad first impression from which it takes time to recover. Be present and be willing to sometimes make a fool of yourself. There is no shame in having made a bad assumption. If you recognize it quickly and pivot, you won’t be penalized. The myth of the perfect idea is simply that. Your startup has flaws, my startup has flaws, they all do. But the quicker you subject yourself to the scrutiny of the market, the quicker you’ll gain external feedback, identify any major flaws and refine the idea. Don’t lock yourself out of that valuable feedback loop.

Expand your network. If you know another startup founder, ask them for feedback on your startup. The best advice I get is from other founders who want me to succeed. Don’t be afraid to ask for an introduction to others; most people have at least one contact to share. Then go talk to them and so on. Over time, you’ll develop a robust network, some contacts you’ll keep for yourself, some you’ll share. From time to time, it also makes sense to network beyond your comfort zone. I call this venturing into the “unknown unknowns.” The easiest way is to attend a meetup and talk to total strangers. Meeting people is not an art, it is a science and anyone can do it. When I walk up to someone I don’t know, I just look them in the eye and say name name, that I’m working on a digital grocery list and I ask the magic question, “What do you do?” That is usually enough to get a conversation started. A great place to engage new people is at a co-working space. I am also a big fan of meeting strangers via office hours. The bottom line is, you have to be comfortable striking up conversations with total strangers and converting them into allies. The more people you know and the more who know you, the more likely they are to extend certain courtesies they wouldn’t extend to a stranger.

Temper your expectations. Horny men & women have sex on the first date, VCs don’t. If the first time you meet a VC is the day you pitch to him or her, don’t expect them to write you a check; it doesn’t matter how great you are. Very few VCs invest in points, they invest in lines. So help them construct a two-dimensional data set that best describes you. Many investors attend tech events, meetups, pitch nights and demo days. These are the best times to speak with them and establish a first data point on their radar of possible deals. If you see them on a panel, ask an interesting question. If they blog, tweet about a contradiction you’ve observed. Be smart and get noticed. By the time you’re ready to pitch, you won’t be pitching to a total stranger, you’ll be pitching to a stranger who might have heard of you. It’s a start.

Get noticed. If you really want to get noticed, get out in front, way out in front. Every tech community needs leaders to run the myriad of events that holds it together. During Internet Week, or Social Media Week, or Entrepreneur Week, Blogger Appreciate Week or I Hate This Week Week, plan one of the events. Investors say they’re not impressed with entrepreneurs who waste time managing a meetup group but there is merit in demonstrating a willingness to lead and an ability to execute.

Respect the source. The funding bottleneck for most African American entrepreneurs occurs at the seed through Series A stage of capital raising. Unfortunately, these are the riskiest stages and there is no community reinvestment imperative in venture investing. If an investor’s source of funds is from the sale of a business or from generational wealth, they are under no obligation to invest it in a racially diverse or representative manor. Charity and guilt are poor arguments for justifying an investment decision… so don’t suggest them. Unless you’ve got pictures of the investor in a compromising position, you’re only left with making the strongest business case possible to attract investment dollars. This requires you to refine your concept even further, prioritizing pain points, layering feature sets, developing multiple revenue models, accelerating scalability and incorporating defensibility measures every step along the way. If you’re not familiar with any of those words, please consider attending my Art of Pitching workshop next spring (#shamelessplug).

Stay the course. Even if you do all the things mentioned above, there is no guarantee you’ll get funded because, as we stated above… Silicon Valley has a race problem. The hardest part of entrepreneurship is knowing when to pivot, when to give in and when to stay the course. This is largely a function of the size of your wallet, the strength of your support group and the depth of your convictions. But if you choose to stay to course, please know you’re not alone. I am in the same boat with you and so are many other entrepreneurs, black and white.

What I hope comes that out of the current debate is a widespread acknowledgement of a problem and a comprehensive strategy for addressing it. Amidst the initial hostility, I am encouraged by an air of unity that is fighting to emerge. The economics also favor greater inclusion. Venture capital returns have slid in recent years. I strongly believe the lack of diversity in the pool of ideas that get funded plays a role. While there may be an economic imperative for Silicon Valley to change its ways, it isn’t going to happen over night. But I believe it will happen. The question is how long will the current base of investors continue to hide behind a veil of bias to avoid admitting that the best ideas don’t always emerge from the usual suspects, namely young white males. Only time will tell.


Mission, Vision, Values & Goals

In Business, Entrepreneurship, Interesting on May 3, 2010 at 3:56 pm

I joined an organization that is in the process of redeveloping its vision statement, mission statement and goals. Two questions came up when presented with the current mission & vision statements. The first was “what is the difference?” and the second was “which supports which?” One member of the group responded that the vision supports the mission; most others in the room nodded in agreement. I disagreed with the consensus but kept my mouth shut for the time being. Well, I am on the committee that was charged with the task of developing the mission statement, vision statement & goals, milestones and statement of values. The following is a summary of the definitions I’ve received so far.

  • Vision. An exercise of this sort begins with a vision statement, a declaration of an organization’s tangible expectations for the future. This statement should be developed first because it reveals the intentions of the organization under which one or more strategies for achieving it can be developed. The mission statements support a vision and so they go hand-in-hand. A key aspect of a vision is that it is developed in the interest of the beneficiary of the organization, not in the interest of the organization itself. A good vision statement is a memorable, forward looking, passionate, vivid, hopeful, motivating and compelling description of the state of things as it will one day be.
  • Mission. Once a vision for the organization has been established, a mission or strategy for getting there can be developed. A good mission statement gives rise to a purpose, a direction and/or a strategy that is easy to understand and can be easily adopted by those in charge with developing underlying actions, initiatives and objectives. Whereas a vision statement answers the question “What”, a mission statement answers the questions “Who”, “Why” & “How”. It is expected that over time, an organization’s mission can change while the vision remains the same. Visions, however, can also change, at which point its mission will necessarily change.
  • Objectives. While a vision speaks to intentions and a mission speaks to purpose, an organization’s objectives speak to its actions. When properly drafted, all objectives support a mission which in turn leads to a transformation of the organization in accordance to a vision. Whereas the mission statement is broad, objectives are specific. At the time of development, they should be achievable, observable and measurable. Observability and measurability allow for the development of milestones that monitor progress, identify inefficiencies and alert to the need for course corrections along the way.
  • Values. Often overlooked is the need for a statement of values, which provides a framework for decision making within an organization. Properly drafted, a statement of values reveals an organization’s belief system and allows decision-makers to apply those beliefs in weighing the need for tradeoffs.

This is as much as I’ve got for now and invite comments. If there is anything that was said here that doesn’t make sense or requires clarification, please feel free to comment below or send me a note via twitter. Wish us luck in this exercise.

Who Said You Can’t “Bite” City Hall

In Business, Finance, New York, Politics on December 16, 2009 at 9:58 am


I would like to thank the Chairman on the Finance Committee and the members of the Council for this opportunity to speak with you this morning.  My name is Hermann Mazard, I currently teach a graduate course on innovation at Polytechnic Institute of New York University and I am the CEO of a technology startup, HomeShop Technologies, Inc.

My company, HomeShop, has developed the framework for a digital grocery list. Our goal is to create a tool that allows consumers to save time in the grocery store, reduce impulse shopping and eliminate unnecessary trips. We are staunch advocates of the home-cooked meal and given the high concentration of foodies in the metropolitan region, New York would be an ideal location in which to deploy our technology. I am here today because I question the City’s commitment to technology entrepreneurs.  And I am not alone.

Over the last six months, there has been a mass exodus of entrepreneurs who  have found it increasingly difficult to grow a technology business in New York City.  Lack of capital is often cited as the primary reason but the real problem in New York is a lack of structure for attracting and retaining investment capital at the stages needed most. Specifically, at the seed stage.

Historically, federal government has been able to create liquidity for technology investments by lowering the capital gains tax. This tool was instrumental in fueling the flight of capital from the bond market to the stock market; it was also a factor for attracting venture capital and IPO investments during the late 1990s. But times are different now.  Manipulating the capital gains tax rate alleviated a bottleneck at the growth & expansion stage of technology development. Today, that bottleneck exists at the seed stage and early stage of development. Because investing at this stage involves more risk, there needs to be greater proximity between investors and entrepreneurs. In other words, there is no federal program that can address this issue, it has to be done at the state and local level.

Silicon Valley is often referred to as the model for innovation but there are successful technology communities in many other cities including Boston, Austin (TX), Denver & Philadelphia.  What these cities have in common is (a) a partnership between the private sector, the university system and government and (b) a robust investment community.  New York City has the former, not the latter. The City is home to only seven venture capital firms, of which only two are nationally recognized and actively investing. The City also has only three angel investment funds, of which only one is actively investing. The concentration of capital in the hands of so few investors creates a death-trap for any entrepreneur looking to raise capital, especially at the seed and early stage of development. This is why we are leaving. More competition is needed to create a robust investment community. If the goal of members gathered today is to turn the Big Apple into an orchard of innovation, I urge the City Council to address the barriers to attracting and retaining investment capital at the seed and early stage of development.

New York City is the financial capital of the world and the resources to build a robust investment community already exist within the city limits. That capital, however, exists on the sidelines earning a low rate of interest as it waits for the next “bubble” to emerge.  For many years, New York investment houses have made a name for themselves by trend-surfing and riding investment waves. There is one more wave left to be surfed in the form of energy-investing and sustainability-investing as a result of federal stimulus programs.  But that does little to create opportunities for the 95%+ of entrepreneurs who have neither experience nor training in solar energy, sustainable farming or wind-turbines.

What is needed is an investor literacy program that empowers high net worth individuals with an appetite for risk to effectively evaluate the merits of a business plan. The shutting down of the IPO markets coupled with the private sales of social media companies has reduced the public disclosures about new revenue sources and business models.  The net result has been a widening of the education gap between investors in-the-know and those out-of-the-loop. An investor literacy program can change that; a curriculum has already been developed by the Kaufmann Foundation, which promotes the development of angel investment funds.  Such a program could easily be administered in partnership with NYU, SUNY Levin or the CUNY system. It would be an essential first step in broadening the base of investors in New York City startups.

What is also needed is a tax incentive to attract investors, such as the seed stage tax credit implemented in over 20 states nationally. NYC’s QETC tax credit attracts investors to companies that are post revenue but this not where the bottleneck exists. In fact, there is adequate investment capital available at the Series A & Series B stage for companies that generate revenue.  Where the incentive is needed is at the seed or angel stage where entrepreneurs are proving the viability of new business models.  This program, sometimes called a High Tech Investment Tax Credit or Angel Investment Tax Credit creates liquidity at the earliest stage of investing. Implementing such a program in New York City would go a long way in creating jobs and re-energizing the local economy.

I spent time speaking about what the City Council should consider; if time permits, I would like to spend a minute talking about what doesn’t work. As much as we need the money, entrepreneurs could not in good conscience accept a direct investment from the City. State-sponsored investment programs don’t work because the interests and risk appetite of the municipality may not be aligned with that of the entrepreneur or his/her investors.  Too much oversight and the investment vehicle becomes vulnerable to patronage and corruption; too little oversight and it becomes vulnerable to krony-ism with the private sector. A so-called “public option” in technology investing may have seemed like a romantic idea. But the interests of the City are better served by building a robust base of private investors rather than trying to beat the venture capital community at their own game.

That having been said, there are gaps in the funding universe where a public option would continue to prove helpful. This gap exists for immigrant entrepreneurs, women, blacks and Hispanics. Refocusing the City’s direct investment programs (micro-lending, seed fund, pension investing) to groups that have historically had limited access to capital  would level the playing field and create a technology sector that is more reflective of New York’s diversity.

I would like to conclude by saying that New York City is the greatest city in the world.  One source of our greatness, that is rarely talked about, is the high concentration of churches, synagogues, mosques and temples within the five boroughs.  What it tells me is that faith lives in Gotham City.  Well, innovation is as much about faith as it is about technology; given the City’s religious leadership, there is no reason why we should rank behind Boston, Denver or San Francisco in any category much less believing in its people and our believing in ourselves.

Thank you again for the opportunity to speak frankly today. I strongly believe that the key to solving the capital issue is to address the structure of the investment landscape. I am available to answer any questions and look forward to working in partnership with you as we turn the Big Apple into an orchard of innovation.

Great Moments in Brand Management History

In Business, Cooking, Grocery, Lifestyle, Marketing on December 1, 2009 at 10:33 pm

Erik B. & Rakim penned the lyrics “it’s not where you’re from but where you’re at” but I disagree, especially as it pertains to innovation. Where you’re from matters! History matters! Entrepreneurs who demonstrate a thorough understanding of historical innovations are the ones best positioned to guide the next generation of commercial ideas. I tend to think that I am one such entrepreneur.  In the interest of praising history, the following is my salute to:


1883 – Kroger acquires independent general stores to form the first grocery chain

1893 – Coca Cola distributes the first paper coupons

1920 – Women gain the right to vote

1930 – Kroger president ignores employee Michael Cullen’s ideas on self service

1930 – King Kullen launches as the first self service supermarket, though it hardly gives juggernaut Kroger a run for the money

1930 – Northwestern students write a sorority sketch called “Clara Lu ‘n Em”

1930 – WGN Chicago airs “Clara Lu ‘n Em” live, radio’s first daytime soap opera

1931 – Colgate-Palmolive sponsors “Clara Lu ‘n Em”

1931 – P&G develops brand management to maximize sales of Camay & Ivory

1967 – Amana debuts the first microwave oven for the kitchen

1971 – McDonalds tells housewives not to cook (“You deserve a break today“)

1972 – Congress passes Title IX, increasing educational opportunities for women

1974 – McKinsey, IBM, Kroger et al. collaborate on a bar code system to alleviate bottlenecks at the checkout counter

1981 – MTV captures teen’s attention with music videos

1981 – Nickelodeon provides programming for kids who outgrow Sesame Street

1989 – Peapod allows consumers to order groceries online

1990 – 20th Century Fox releases “Home Alone” and draws attention to latchkey kids

1992 – Al Gore invents the internet

1993 – Catalina Marketing distributes contextual coupons via grocery checkout

1993 – Food Network teases Generation X’ers who don’t know how to cook

1996 – Professor Herm earns a masters degree from the Kellogg School at Northwestern University (#1 BusinessWeek), receiving a Distinguished Dean’s Award at graduation.

1998 – Coupons, Inc. distributes the first printable coupons over the internet

2001 – WebVan burns through $1.2 billion in 18 months, files Chapter 7

2007 – Venus Williams demands and gets equal pay for women athletes at Wimbledon

2007 – Grocery iQ emerges as the first digital grocery list for the iPhone

2008 – Kraft launches iFoodAssistant, a recipe engine/grocery list for iPhone

2009 – Coupons, Inc. acquires Grocery iQ for an undisclosed amount

2010 – HomeShop emerges to help millenials “Fight the war on take-out” and lure them back to the kitchen

I am a Food Criminal

In Cooking, Grocery, Marketing on September 25, 2009 at 1:43 pm


My parents are Haitian immigrants and they raised me to obey the law and set an example of leadership.  Their advice served me well for the first 40 or so years of life but a recent experience has converted me to the dark side. I am not ashamed to have joined the ranks of New York’s felonious underworld. The following is the story of how I came to be a food criminal.

Last August, I attended an industry event in Lower Manhattan. It was hosted by the National Association of Specialty Food Trade, the sponsors of the Fancy Food Show.  It was there that I first experienced Alili Morocco’s harissa. Business events are often cold and impersonal; I expected no better when I entered the conference room. There was a food table and so I helped myself to the offerings so lavishly provided. After spreading a little harissa on a piece of french bread, I chomped away.  The first bite ignited a culinary explosion inside my mouth; the second bite caused me to tell somebody. Within minutes, the room was sticken with harissa-fever. Everyone tried it and we all experienced something profound.

We live in a world that values conformity, convergence to the mean and (quite frankly) blandness. It was uncommonly refreshing to experience the unique and bold blend of spices that make up Morocco’s third greatest export (behind Wm Shakespeare’s Othello & Humphrey Bogart’s Casablanca). The harissa shook us all up. That shared experience was the ice-breaker that ultimately brought us all together.  Suffice it to say, we had an extremely productive meeting.

At the close of the session, everyone shook hands, exchanged business cards and went on their merry way.  I, on the other hand, had a more grandiose plan. It isn’t fair for industry professionals to have sole exposure to this North African delicacy; it belongs to the people! Fancying myself a Robin Hood of the kitchen, a Babyface Nelson of spices and a culinary Jesse James, I swiped an unopened jar for my personal consumption.

I shared it with some colleagues and often bring it to picnics, brunches and dinner parties.  In doing so, I have rescued countless palates from the gastronomic mediocrity of most processed foods. Just as Robin Hood “stole from the rich and gave to the poor,” I steal from the enlightened and give to the bland. My harissa campaign, if you can call it that, is to “Spread the spread.”

As the Alili Morocco brand is not yet carried in local New York supermarkets, I have had to get creative in order to satisfy my harissa addiction.  I frequent their website to learn about upcoming trade shows. At the ones I attend, when nobody’s looking, I apply a five-finger discount toward the acquisition of my next harissa supply. So far, I haven’t been caught and I doubt that this public confession will alert the authorities.  After all, who reads my blog?

I am a food criminal. So goes the story of my entry into a life of crime.


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Desperate Housewives

In Business, Interesting, Marketing, New York, Sports on September 14, 2009 at 1:32 pm

"I feel like shoving this ball down your fuckin' throat!"

Serena Williams using a tennis prop to express herself

Amidst a lot of hullabaloo, Kim Cleijsters won the US Open; why hasn’t anyone congratulated her? The weekend headline should have been about the triumph of a first time mother who returns to the workforce and regains championship form. Her achievement should be a celebration for all women who struggle to balance family and career. Procter & Gamble, Kraft Foods and CafeMom should be lining up to sign her to an endorsement deal. But that is not likely to happen. Instead, we are left to read about a superstar athlete who lost her cool after finding herself on the wrong side of an unjust penalty.  The following is my post-mortem on an unfortunate incident that ended terribly wrong. Or did it?

Was Serena wronged?

Yes, in fact the line judge who so ineptly called a foot foul should have been issued a lifetime ban from the USTA.  She is not fit to judge a dog contest much less a world class tennis match. Good riddance.

Was Serena right to argue the call?

Yes. At her level, she has the right to expect decency from the officiating crew. She is not a novice to the game. Bad calls impact performance which in turn impact endorsement negotiations. As the highest grossing female athlete in history, she has the right to protect her earning potential from the squintingly lack of attention afforded the line judge.

Should Serena have used profanity in lodging her complaint?

It’s debatable. John McEnroe was extremely effective in using profanity to call attention to judicial indiscretions that might otherwise have been swept under the rug. His antics have also set the tone for an illustrious career after tennis. On the other hand, her choice of words were vulgar and unbecoming;  I would have preferred for Serena to responded differently when playing the sport of kings in the county of Queens.

Was the USTA right to fine her?

Absolutely! In fact, the $10,500 fine may not have been enough.

Should we still be talking about it?

Again it’s debatable. Serena Williams is extremely popular among young girls and her actions matter. It is interesting that on the same weekend that Serena stood up for judicial fairness, Peggy Olson’s character on “Mad Men” walked into Don Draper’s office to demand equal pay. By design or circumstance, we may be witnessing next wave of the women’s movement as confident women exercise their deserved authority.

In New York alone, the oft maligned candidate for the office of Manhattan District Attorney, Leslie Crocker Snyder (left, with husband Fred), is on the eve of taking the top job in law enforcement. Running in the same Democratic primary, Melinda (“I told him to stick it”) Katz (below) may very well win the nomination to become the city’s next chief financial officer. However attractive we may find them, their looks do not define them. Both women have abandoned a Betty Boop approach in favor of a confident presence, fact-based analysis and decisive actions to define their careers. In a country that failed to pass the Equal Rights Amendment, women are taking matters into their own hands with neither apology nor reservation. Could Serena’s assertiveness be viewed in a similar light?

There has been talk of further sanctions against Serena and if that occurs, it will only reflect a failure of our compassion for someone who made a mistake. In all, many mistakes were made. But the only real loser was the quiet woman who showed up, did her job and won the match. For this, Kim, we should all be sincerely sorry.


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Obama-to-Congress: Go Deep!

In Healthcare, Interesting, Politics, Sports on September 5, 2009 at 1:14 pm

I am a huge fan of football and I can’t wait for the start of the 2009-10 season.  In one year, the Jets, my Jets, lost a Hall of Fame quarterback to injury, retirement, indecision, free agency; fired their Mangenius head coach; and parted ways with standout receiver Laveranues Coles. Ten years ago, I would have written off the season, calling it a rebuilding year. But the NFL has changed. The Jets, instead of rebuilding, may only be reloading. I won’t participate in conjecture and speculation but the early talk is that of the Jets winning the AFC East and perhaps even making it to the Superbowl. One can only dream, right?

That dream, however, has a fighting chance of becoming a reality because NFL rules, which are a reflection of NFL values, dictate so. The league used to be dominated by a few teams but this is no longer the case.  The championship returned to the city of Pittsburgh but there are no guarantees the Steelers will even make the playoffs again.  Is this progress? I don’t know… but what is happening in football is as American as the proverbial “apple pie.”

There are less dynasties in the NFL because the league has instituted policies, many of which resembling socialism, to protect the viability of its brand. The college draft, salary caps and free agency transfer power from the ‘haves’ to the ‘have less’ or ‘have nots.’ The net result is a game that is fairly played, less disparity between the best and worst teams and a national hope that any team can beat any other on ANY GIVEN SUNDAY.

Compared to MLB, the NHL & the NBA, the NFL appeals to a wider audience, is watched more frequently, generates more revenues and grows much faster. Football viewership has expanded from once on Sunday locally to 2 games locally and 3 nights per week nationally. Its national games are bid on by 7 television networks and countless other local TV and radio stations. Off-the-field coverage has expanded from highlights during the evening news to integrated networks of out-of-home-, television-, radio- and print-media channels. In 2010,  league expansion will add 4 more teams in Orlando, LA (finally), Portland & San Antonio. In short, the NFL is its own mini-economy and football has become America’s game.

Just as I am excited about the upcoming season, I have counterparts from first place Pittsburgh to 0-12 Detroit who are equally anticipating a competitive season. It is nothing short of amazing that the NFL’s embrace of a few seemingly socialist policies can have a positive impact on a capitalist economy.

I am going to withhold my opinion on the current healthcare debate but I do have an opinion on what is an what isn’t America. On that note, I will conclude with a simple homework assignment… Please answer the following:

If Football = Socialism and Football = America, can Socialism = America?


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The Inefficient Grocery Shopper

In Business, Finance, Grocery, Lifestyle, Marketing, Politics on August 21, 2009 at 1:14 am

Last week I walked into the grocery store expecting to spend $20 – $30. After all was said and done, I found myself debiting almost $130 from my Chase account. I would love to tell you that I was surprised, but I cannot. This happens to me all the time; upon further inquiry, I found out that this happens to many people with an alarming frequency. Why is that? and why isn’t anyone doing anything about it?

In economic terms, we call this phenomena a disconnect between realized behavior and prior intent.  For most Americans, purchase intent and purchase behavior aren’t even remotely correlated.  To better understand this problem, we collected anecdotal frustruations to identify the key sources of shopping inefficiency. Some of the mistakes were made in the grocery aisle, while others were made in the home.  The combined list included thirty-seven (37) unique actions, however near universal consensus was found amongst the following eight (8) behaviors.

  • Forgotten Purchases – suffering a memory block about a needed item but remembering it after you’ve left the store. | Tweet: I’m guilty!
  • Impulse Buys – purchasing items only because they were on sale, accessible and/or prominently featured.| Tweet: I’m guilty!
  • Binge Buying – buying items in extremely large quantities to avoid the possibility of it ever running out.| Tweet: I’m guilty!
  • Duplicate Purchases – making a purchase on a “just in case” basis only to find out that you already have more than is needed.| Tweet: I’m guilty!
  • Subjective Consumption – focusing deeply and purchasing items you use while mis-prioritizing items needed by others in the household.| Tweet: I’m guilty!
  • Recipe Roulette – risking the taste of a meal by substituting an available ingredient in lieu of making a special trip to the store| Tweet: I’m guilty!
  • Unplanned Trips – making an unplanned trip to the store for one or two essential items.| Tweet: I’m guilty!
  • Plan B Dining – ordering take-out or fast food because you don’t have the ingredients to prepare a decent home-cooked meal| Tweet: I’m guilty!

Using only three of the mistakes (impulse shopping, unplanned trips & plan B dining), we did some analysis to quantify the impact of the problem. We concluded that consumer inefficiency in the store was a $2800 a year problem.

  1. Impulse Purchases: The average household with children spends $119.30 per week on food and other grocery items. Of this amount, approximately 20% represent spontaneous and unnecessary buys that reflect the wants of the consumer, not an immediate need.  On an annual basis, impulse buys create $1240 of economic waste.
  2. Unplanned Trips: The average household makes 2 trips to the grocery store per week. Assuming one of those trips is unnecessary, a 10 mile distance between the home and grocery store, gas prices of $3.00 per gallon and fuel efficiency of 12 mpg, unplanned trips.  On an annual basis, unplanned trips create $260 of economic waste.
  3. Plan B Dining – One of the biggest sources of economic waste is switching the venue of food consumption from the home to a restaurant or take-out counter. In general, the cost of a meal prepared outside of the home (approximately $15 per person) costs between 3x and 6x the cost of preparing that same meal at home.  Assuming a family can eat one more meal at home and a markup multiple 3x, on an annual basis, Plan B Dining creates $1300 of economic waste.

In 2008, the median household income in the US was $50,233 and grocery waste represents 5.5% of that figure.  To put it in other terms, solving the shopping inefficiency issue has the same effect as President Barack Obama putting forward a $392 billion stimulus package that reaches every American family without increasing the federal deficit.

Surely, there will be opposition to such an endeavor. But no goal worth achieving was ever met without challenge or adversity. Solving the inefficiency problem has been a constant obsession and is the goal of my company, HomeShop Technologies, Inc. We surely hope you will join and support us as we embark upon this journey.


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Happily Every After

In Business, Cooking, Finance, Grocery, Marketing on July 17, 2009 at 8:11 pm

Can you tell a little bit about yourself? and most importantly about your passion in healthy and delicious foods?

When I was growing up, my mother cooked every night; the family ate dinner together and life was a lot of fun. As I grew older, it became harder and harder to orchestrate a family meal. With both parents working, we kids had to fend for ourselves. Sometimes I would eat at a friends house and I don’t remember what my sisters did. When we stopped eating together, we started to drift apart. I think this happens to a lot of families. In America, most people can count on one hand the number of days per year when they share a meal at home with more than one other person. I think this is bad. My generation works longer and harder than did our parents, we earn more money than our parents did but we enjoy life less.

I am now an adult and I don’t believe that success and isolation are inextricably linked. My primary focus in starting a company was not so much good food but rather the impact good food could have on making us feel more connected, more alive. I love bringing people together and have always viewed food as the ultimate lubricant for social interactions. I think that if we can get more people to break bread together, we can solve a lot of problems in terms of how we relate to one another, how we feel about ourselves and our place in this world. With this as my goal, I sought to figure out a way of getting people to cook more.

What is HomeShopr? What’s the goal? How did it start?

I conducted a brief survey to understand why people don’t cook. The #1 reason was because they didn’t think they had the time to cook. The #2 reason was because they rarely had the proper ingredients in the cupboard. The #3 & #4 reasons were not knowing what to cook and not knowing how to cook, respectively. Of the four problems, I thought the second was the most important. When I started HomeShop, I was looking for a solution that would address the empty pantry problem. The first thing that came to mind was a grocery list so I examined the reasons why people don’t shop with a list.

The problems I found were two-fold. First, lists are hard to generate and second, people usually leave the lists at home. Any solution I came up with would have to address both those problems with tools to which everyday people would have immediate access. When Apple announced that they would allow third-parties to develop applications on the iPhone, I immediately saw mobile phones as the platform for delivering a digital grocery list. What I liked about the iPhone was the large screen and high quality graphics. The Treo and Palm Pilots called for small fonts that were very hard to read; but the iPhone offered design flexibility given its large face. The other thing I liked about mobile phones was that, like an American Express card, people never left home without it. I often tell a joke about how Brittany Spears doesn’t always wear her underwear but she’ll never go out without her phone. America, and the rest of the world, is very much the same way. The mobile phone is a constant and its ubiquity solved the problem of access to the grocery list. My only problem now was devising an easy way to get entries onto the list.

Can you tell me the story behind ReciClick? What were your goals in the first place? and how its going so far?

When I originally launched the company, I thought a hardware solution would be the most optimal. I purchased a laser scanner, wrote a serial driver for the device, hooked it up to a Mac-mini and built a barcode database for the 300 most commonly purchased items in my home. I positioned the scanner near a garbage can; whenever I ran out of an item, I would scan the barcode then throw the item out. It seemed like a perfect solution because we (me and my original partner Eric) had developed a solution for capturing product needs at the “point-of-depletion.” This solution was superior to the pen & paper because it was effortless. We also developed a wireless solution that would connect multiple scanners to a Mac-mini. By positioning one scanner in the kitchen, another in a bathroom, another in another bathroom and maybe one in the home office or other room where there was a garbage can, we offered significant flexibility for creating an accurate grocery list. And because the scanners were fixed in their positioning, they wouldn’t get lost.

It sounded like a great idea so we costed out the materials. We figured that we could build a stand-alone single-purpose computer that bridges to wi-fi, connect it to two wireless satellite scanners and sell it for $120. At that price point, we would suffer a slight up front loss but profitability would be achieved by charging a subscription fee for using our service. We also came up with alternative ways of monetizing the scanner information to further recover costs and meet profit and growth expectations. It seemed like a great idea until the economy turned and we came to the conclusion that people aren’t going to have an extra $120 to spend for what, to many, would seem like a “nice to have” product. When times get tough, people cut back on extras and the general feeling was that our model would not be feasible. Confident we had a killer solution, we looked for another way to monetize our product. At first we took the idea to an online grocer to see if they would give the product away in exchange our directing their grocery list information to their fulfillment centers; they said no. We went to an appliance manufacturer to see if they would incorporate our scanner in their refrigerators; they too said no. Innovation for innovation’s sake did not make sense. As 90% of the refrigeration market is controlled by 3 companies, we could not make the case that it was in anyone’s best interest to incur the cost and technological risk of our new gadget. After only nine months on the path to entrepreneurship in pursuit of Life, Liberty & Happiness, we gave up and started looking for jobs.

Later that year on Thanksgiving morning, I was sent to the store to buy ingredients for the meal my then wife was going to cook. When I got to the store I was greeted by an army of cell phone’d boyfriends and husbands taking orders from their significant others as they shopped in the aisle. One man’s wife was reading off the ingredient list from the web page of a celebrity chef while he navigated the supermarket aisles. A mental light bulb was immediately lit; instead of linking my digital grocery list to a scanner, maybe it would make sense to link it to online recipes. This was the genesis of ReciClick.

I put a few thoughts on paper and went to a pitch event to get feedback. It was there that I met our third founder, Maria, who worked at a marketing company that delivers contextual coupons alongside the receipt of a supermarket purchase. She was there to get feedback on her pitch for a real estate idea but heard my idea and sort of liked it. I thought her marketing expertise would prove useful so we kept in touch. Within a month, I invited her to join Eric and me on our journey, more like a bridge to nowhere, and Maria agreed. We clicked and started working together. After doing a little research, we found that most people shop at the grocery store based on habits. At dinner time, they look inside their cupboards to see what ingredients they have and, based on that, decide what to cook. When the ingredients run out (as they most often do), people then resort to plan B, ordering take-out. With ReciClick we can change all that. Instead of shopping first and selecting meal ideas based on the ingredients you have, we allow you to select from the web the meals you want to cook and we’ll then tell you the items for which to shop. Our ReciClick solves the empty pantry issue, thereby eliminating a key barrier to cooking. We changed our business model from purchase and subscription (razor and blade) to an advertising model. By converting to a software-based entry solution, we made the service free to the consumer thereby eliminating an adoption hurdle. We built a prototype of this functionality and are currently raising a seed-stage investment in order to launch into a public beta.

Can you share tips for new start ups around the world? How should they follow their passion? Is it easy?

I attended top schools and received the best education money could buy. Nevertheless, nothing I ever studied could have prepared me for the life of an entrepreneur. Unlike in most professions, intelligence is not a factor in determining ones entrepreneurial success. The driving factor has been a passion for solving problems and the perseverance to see things through. I am not yet successful but I strongly feel that we are on the path to success; for this I am eternally grateful. There are times when I have wanted to quit or when I think my life shouldn’t be so hard. But then I step back and ask two fundamental questions: #1 Do people need help in cooking at home? #2 Would my digital shopping list be useful to them? For as long as the answer to those two question is yes, I summon the will to keep going.

In a more general sense, entrepreneurs have to be problem-focused, not solution-focused. When I started, I identified a problem and developed a solution to that problem. When my solution didn’t work out, I gave up because I was married to a solution, one of many possible solutions but I was not singularly focused on the problem itself. It took a few weeks for me to realize that the problem still needed fixing and I probably wasted a lot of time by not sticking with it. Thank goodness someone sent me shopping on Thanksgiving morning. A goal is only worth pursuing if a great deal of effort is required to achieve it. In other words, entrepreneurship, problem solving, innovation is supposed to be hard. If it were easy, everybody would do it and there would be no great rewards at the end of the journey.

Life is not a fairy tale but if everybody does their job, dreams can indeed come true.  Having been through all this, I am certain I will never take any bit of future success for granted. I have seen very high highs, I am experiencing very low lows and I feel that I am back on the path to even higher highs than ever before. No matter what happens, I can say with definitiveness that I was not cheated out of life. I feel more alive now than perhaps ever before; if I had it all to do over, I would not change a thing.

When all is said and done, I sincerely hope history determines mine to have been a life worth living.

Comparing Prices before the Grocery Trip

In Business, Grocery, Interesting, Marketing on July 15, 2009 at 4:35 pm

I gave a presentation last week on the business case for HomeShop’s digital grocery list. One of the panelists suggested that we incorporate a price comparison feature that allows consumers to choose a grocery store on the basis of cost of the overall basket. My gut reaction was to resist this strategy but I hear it so often from venture capitalists and advisors that I may have to reconsider. The following thoughts are the initial ramblings of a Confused Enthusiast on what I believe to be the key issues in this matter.

The internet was designed to be a democratizing platform that shifts the balance of power from producers and retailers to consumers.  In the early 1990s, we saw price comparison features on just about every retailing application on the internet.  The prevailing concept was that price margins were so fat on manufactured products that favored the rich industrialists at the expense of poor consumers. Price comparison tools changed the balance of power, transferring producer surplus to consumer surplus.  The reduction in price forced manufacturers to increase supplies to maintain profitability while allowing more consumers to enjoy the benefits of so many manufacturing innovations. No more was this true than in the consumer electronics industry, where very few would dare purchase a plasma TV, camcorder or other gadget or device before consulting MySimon or C|NET. Today, many people consult GasBuddy in advance of filling up at the pump and other industries have implemented price comparison tools as well. As a result, I can understand why so many would consider such a tool for the $750 billion grocery industry.

My initial thought is to resist the deployment of a price comparison tool simply because the industry’s margin structure would not support it.  Let me explain…

In the consumer electronics space, everything is new. At product launch, consumers rarely know much about the products available for sale and this provides manufacturers a great deal of latitude in pricing. The original DVD players sold for $1,600 and people paid that price, especially those who relied on retailers to direct their purchases. When retailer information falls short, consumers can rely on user reviews and feature/price comparisons from independent sources to make a decision. Information, in the consumer electronics industry, has been a game-changer. The net effect has been a ceding of market power from producers and retailers to consumers, eventually leading to lower prices and wider adoption. This could have only occurred in an industry where product knowledge and the power of substitutes were low while profit margins remained high. The grocery industry does not exhibit these characteristics.

Last year, Tide launched its Tide-to-Go stain remover. It was the iPhone of cleaning products: Tide had finally gone mobile. A stain on a shirt can mean the difference between getting a job or not; it would be reasonable to expect the on-the-go stain remover to be priced in the range of an increase in salary. But that didn’t happen. Pricing was severely undermined by consumer expectations and the power of substitutes. P&G could never market the item at a price-point anywhere near the consumer surplus it creates; instead, Tide-to-Go sells for $3 a pen (less than a penny a stain). Were it marketed any higher, Katja Presnal and Jessica Gottlieb would have launched an online “twissy-fit,” the likes of which would surely have caused the carcasses of William Procter and James Gamble to turn, if every so slightly, in their graves.

The repetitive cycle of use and purchase, consumption and replenishment allows consumers to quickly gain knowledge of items sold in a supermarket. When knowledge is high, the power of retailers to raise prices is severely undermined. As a result, the best grocery retailers (including my Mom, may she rest-in-peace) are little more than middlemen who convert inventory risk and location to turn a profit. Caught in the squeeze between manufacturers, who take all the risk in bringing products to market, and consumers, whose brand and product knowledge have a restrictive impact on price, supermarket retailers rarely, if ever, have sufficient margin to ever effectively compete on price against one another. This is why I oppose price comparisons in the supermarket space.

From an economics perspective, let’s consider what would happen if consumers knew the price of their entire shopping basket before the moment of purchase. They would simply go to the store with the lowest price. This, in turn, would force retailers to lower their prices to lure consumers. In the short run, every retailer would be caught in a prisoner’s dilemma where the Nash equilibrium solution would be to drop their prices to the level of variable costs. Eventually, some retailers to go out of business. The few that remained would have to rationalize their product offerings, carrying fewer brands in any one category and limiting excess inventory. The marketplace would begin to experience a higher incidence of stock-out and consumers would be forced to visit multiple stores to purchase all the brands they like. Overall, value would be destroyed once market discipline set in. It’s a nightmare scenario. Having grown up in a retailing family and knowing how hard it is to turn a profit, I wouldn’t wish it on my worst enemy.

Price Comparison for Grocery Shoppers

Price Comparison for Grocery Shoppers

That being said, I am very anxious to understand the opposing view. Perhaps the suggestion was the brain-child of a misguided MBA who puts more faith in the philosophies of Gordon Gekko than Epicurus. Or maybe I am missing a key point. In the UK, there is an experiment underway amongst a consortium of top supermarkets. Tesco, Ocado, Sainsbury and Asda each participate in MySupermarket.com’s price comparison service; I am eager to learn if the venture proves successful and if so, if that business model can be ported to North America. Again, my gut reaction is to resist price comparisons… I guess only time will tell.


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