Incubating a business

I’ve just returned from Spacecubed a co-working space in Perth, Australia. I was helping to run the GovHack competition which was a great success all over our country. I had a number of excellent conversations throughout the course of the weekend with a wide variety of people. But most interesting was the general commentary about the Perth startup scene.

Here in Perth we have little exposure to the rest of Australia, the rest of the world or their investors. While we have a mining boom which is sheltering the rest of Australia from an economic downturn the money is being thrown at holes in the ground rather than tech startups. The immediate feeling is frustration, annoyance and sadness about the lost opportunities. Right?

If the experience that Spacecubed has witnessed over the last 12 months since opening is anything to go by maybe we are looking at this all wrong? What they’re witnessing is a number of businesses that aren’t even looking for extra funding, don’t care about the lack of VC’s or being bought out by some big conglomerate. Rather they are effectively being forced into producing businesses that generate income from day one. They literally cannot afford to do anything else.

So whilst many of us in the community often find ourselves pining over more investors, more exposure, more money maybe the better incubation environment is in fact the opposite. Hotter the fire, Stronger the steel.

Diet and Startups

For the last 10 years or so I’ve been interested in what we eat. I was raised as a pescetarian (vegetarian who eats fish) purely as a result of my parents feelings and research. My parents while being relatively poor were insistent on having a library which contained a whole book-shelf dedicated to diet. As a kid growing up with this diet you think that it’s normal and everyone else are being the weird ones.

As I ventured out on my own and started to having to buy food for myself, I started questioning what I was eating, where it came from, the nutritional value of things, observed how my body reacted to certain foods, and the impact it had on my moods. In the last two year I have taken it to another level by reading and listening and watching more about what we eat. As a result I have effectively turned into a lazy vegan, I still eat eggs (we have two chooks in the backyard) and need a dash of milk in my coffee, and still occasionally eat some fish when it’s too difficult to be difficult.

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Desiderata

I enjoy poetry and when I came across Desiderata (Latin: “desired things”) a 1927 prose poem by American writer Max Ehrmann (1872–1945). It struck a chord with me, particularly in relation to my recent few years building my web startup www.tidyclub.com

So I invite you to turn off the music, find a quiet place, take a few deep breaths and enjoy the following words, however you interpret them.

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Leadership

Tonight I spoke with my football club. It’s the last round of the season for the majority of the club as we haven’t made finals, but the last game is a must win game.

Throughout the year, in fact for the last few years, whilst the off-field strategies have grown stronger the players seem not be as strong, not individually but as a team, as a club.

As a club President I don’t feel it’s my role to discuss or raise my concerns about the on-field performance, typically I leave this to the coaching staff, providing that I don’t hear strong words of discontent I presume things are on track, whether they win or lose is not my problem, provided I am furnishing the club, the players, the coaches and the supporters with the resources, the people, the equipment, then the results are what they are.

But a word has been thrown around consistently, sometimes in frustration sometimes in exasperation; leadership.

Leadership is also thrown around a fair bit in the wider world, in universities, in boardrooms, in resumes and elsewhere. The problem is like many other parts of our society, we want instant success, instant ability to be a ‘leader’ and we have that expectation in others. The problem is that leadership cannot be found through having the best coach or President, or going to the best private schools, or attending the most overpriced universities, it is not handed to someone with a title of CEO or Sports Captain. Leadership comes from within, it comes from thoughtful reflection of ones own actions, or inactions or closely observing the world around them and then making the appropriate changes.

Whining about things instead of changing things is the fastest way to end up unhappy and in middle management.

People aren’t born leaders, nor are they taught by anyone on how to be leaders, true leaders are those that reflect deeply on the path they want to go on, and where they are going or not going and then make adjustments.

The Depression of Startups

For the most part I’m a pretty cheery fellow. I’m happy and excited about the future and the many offerings I see pouring out of not only web startups but also design, manufacturing, architecture and other aspects of this ever increasing globalised world.  But lately I’ve been feeling down.

Actually that’s a lie, for the past decade I’ve been feeling down, depression is always with me, and whilst I may get happy for a while I always sink back into darkness. It’s hard to explain to people, so I don’t. Everyone gets sad from time to time and many don’t understand how intense it actually is.

I wouldn’t say it slows me down, in fact it speeds me up. It’s why I’ve been successful in my business life, it’s why I’m so tenacious with work, happy to sleep at midnight and rise at 6, and always putting my hand up to volunteer, to participate and get things done, it keeps me and my mind busy and distracted. I find it healthy to always be busy.

Where it can sometimes always go wrong is with startups, where the natural highs and lows that go with starting up something new, with limited funds, or expertise or skills. The problem occurs when depression is multiplied by a down day or period. It is impossible to describe, and I won’t attempt to describe the thoughts and feelings that goes through ones mind, but it’s not healthy.

Talking with friends, family and others in the startup and surrounding community is critical to getting through it.

It’s a taboo subject in the majority of circles, but as this world gets smaller and smaller I dare say it will become a bigger and bigger problem as people feel less valued or less loved.

So if you’re in feeling a bit down about things, particularly in the world of startups, but even more generally, please talk. You’ll be highly surprised at how many others are having similar feelings.

You are most certainly not alone.

Talk soon.

Clarity and the Elimination of Obstacles

Creating a work of art requires clarity, which is achieved by peeling and coring your thoughts and ideas one by one.

“The progression of a painter’s work, as it travels in time from point to point, will be toward clarity: toward the elimination of all obstacles between the painter and the idea, and between the idea and the observer. As examples of such obstacles, I give (among others) memory, history or geometry, which are swamps of generalisation from which one might pull out parodies of ideas (which are ghosts) but never an idea in itself. To achieve this clarity is, inevitably, to be understood.”
— Mark Rothko

The ability to look at something and start drawing lines through features or perceived assets of a device, or layout. I think that is a real skill.  I feel that MBA degrees and now even entrepreneurship classes give those that attend their classes a feeling that it is more about how well it is executed rather than thinking more deeply about what it is executing, it is academia for the sake of academia. The thought that a great business can continue to revolve around an ordinary idea needs to be banished from our thinking.

Personally I see this failure with the current Qantas saga whereas they are approaching their traditional business plan from the same perspective, the same process, the same thinking they have used for the last 100 years. They are not drawing lines through add-ons, or creating a better experience for the traveller beyond what has already been done, rather resorting to that tired backstop of reducing costs be it labour, maintenance or materials. This is a tired short-sighted thought process, whereas they will be chasing the same problem as long as there is cheaper labour to found, which of course we know there always will be. Few groups have gone down this rabbit hole and survived for the better.

“The painting must be a revelation, an unexpected and unprecedented resolution of an eternally familiar need.”

The type of clarity to be found through minimalism is probably best benefited by the process behind it. Personally speaking this sort of refinement is something I admire but not something I have mastered or even gotten close to. It’s something I try to work hard at, and would like to sink firmly into. I would like to live in a bare place, with only my thoughts and a pen and paper and some good books. I can’t help but carry on to this quote by Steve Jobs which firmly ties into Mark Rothko’s ‘parody of ideas’ comment.

“I’m actually as proud of many of the things we haven’t done as the things we have done. The clearest example was when we were pressured for years to do a PDA, and I realised one day that 90% of the people who use a PDA only take information out of it on the road. They don’t put information into it. Pretty soon cellphones are going to do that, so the PDA market’s going to get reduced to a fraction of its current size, and it won’t really be sustainable. So we decided not to get into it. If we had gotten into it, we wouldn’t have had the resources to do the iPod. We probably wouldn’t have seen it coming.”

 

Spirit of Australia

 

Qantas is currently in disputes with a variety of its workers unions predominately about pay, what has been most surprising is the complete lack of negotiating by Qantas instead opting for media, and now Government to push their agenda, and I’d imagine eventually see the moving of jobs to other places.

I have heard a variety of attitudes and opinions around this story, from hearing from Qantas upper management in my MBA course about the structuring of Jetstar, to hearing my sister talk of her employment with Qantas (it must be said she is quite balanced on the topic) to what we read and hear in our mainstream media. But above all of the noise I think our independent federal Senator, Senator Xenophon has summed it all up very well.

Whilst from a purely capitalistic point of view it makes complete sense, from an Australian citizen point of view I think the way these things get reported on in the mainstream media needs far more attention. Short term greed corrupts higher quality and longer term thinking for a company and for the country. I dare say however that Qantas will successfully push through particularly after Labour and Gillard said she’d support Qantas!?  Meaning more will no doubt join the #Occupy movement.

Both sides of politics in this country are a sad indictment on our relaxed attitude towards politics in this country. I truly hope that more independents and perhaps even the Greens get into power, at least then we will have some worthy legislation getting debated, instead of just shades of grey (offshore refugee processing).

Hansard, 23 August 2011……Senator XENOPHON ( South Australia ) (19:37):

I rise to speak tonight on an issue that is close to the hearts of many Australians, and that is the future of our national carrier, Qantas. At 90, Qantas is the world’s oldest continuously running airline. It is an iconic Australian company. Its story is woven into the story of Australia and Australians have long taken pride in the service and safety standards provided by our national carrier. Who didn’t feel a little proud when Dustin Hoffman uttered the immortal line in Rain Man, ‘Qantas never crashed’?

While it is true that Qantas never crashes, the sad reality is that Qantas is being deliberately trashed by management in the pursuit of short-term profits and at the expense of its workers and passengers. For a long time, Qantas management has been pushing the line that Qantas international is losing money and that Jetstar is profitable. Tonight, it is imperative to expose those claims for the misinformation they are. The reality is that Qantas has long been used to subsidise Jetstar in order to make Jetstar look profitable and Qantas look like a burden. In a moment, I will provide detailed allegations of cost-shifting that I have sourced from within the Qantas Group, and when you know the facts you quickly see a pattern. When there is a cost to be paid, Qantas pays it, and when there is a profit to be made, Jetstar makes it.

But first we need to ask ourselves: why? Why would management want Qantas to look unprofitable? Why would they want to hide the cost of a competing brand within their group, namely Jetstar, in amongst the costs faced by Qantas?

To understand that, you need to go back to the days when Qantas was being privatised. When Qantas was privatised the Qantas Sale Act 1992 imposed a number of conditions, which in turn created a number of problems for any management group that wanted to flog off parts of the business. Basically, Qantas has to maintain its principal place of operations here in Australia , but that does not stop management selling any subsidiaries, which brings us to Jetstar.

Qantas has systematically built up the low-cost carrier at the expense of the parent company. I have been provided with a significant number of examples where costs which should have been billed back to Jetstar have in fact been paid for by Qantas. These are practices that I believe Qantas and Jetstar management need to explain. For example, when Jetstar took over the Cairns-Darwin-Singapore route, replacing Qantas flights, a deal was struck that required Qantas to provide Jetstar with $6 million a year in revenue. Why? Why would one part of the business give up a profitable route like that and then be asked to pay for the privilege? Then there are other subsidies when it comes to freight. On every sector Jetstar operates an A330, Qantas pays $6,200 to $6,400 for freight space regardless of actual uplift. When you do the calculations, this turns out to be a small fortune. Based on 82 departures a week, that is nearly half-a-million dollars a week or $25½ million a year.

Then there are the arrangements within the airport gates. In Melbourne , for example, my information from inside the Qantas group is that Jetstar does not pay for any gates, but instead Qantas domestic is charged for the gates. My question for Qantas management is simple: are these arrangements replicated right around Australia and why is Qantas paying Jetstar’s bills? Why does Qantas lease five check-in counters at Sydney Terminal 2, only to let Jetstar use one for free? It has been reported to me that there are other areas where Jetstar’s costs magically become Qantas’s costs. For example, Jetstar does not have a treasury department and has only one person in government affairs. I am told Qantas’s legal department also does free work for Jetstar.

Then there is the area of disruption handling where flights are cancelled and people need to be rebooked. Here, insiders tell me, Qantas handles all rebookings and the traffic is all one way. It is extremely rare for a Qantas passenger to be rebooked on a Jetstar flight, but Jetstar passengers are regularly rebooked onto Qantas flights. I am informed that Jetstar never pays Qantas for the cost of those rebooked passengers and yet Jetstar gets to keep the revenue from the original bookings. This, I am told, is worth millions of dollars every year. So Jetstar gets the profit while Qantas bears the costs of carriage. It has also been reported to me that when Qantas provides an aircraft to Jetstar to cover an unserviceable plane, Jetstar does not pay for the use of this plane.

Yet another example relates to the Qantas Club. Jetstar passengers can and do use the Qantas Club but Jetstar does not pay for the cost of any of this. So is Qantas really losing money? Or is it profitable but simply losing money on paper because it is carrying so many costs incurred by Jetstar? We have been told by Qantas management that the changes that will effectively gut Qantas are necessary because Qantas international is losing money but, given the inside information I have just detailed, I would argue those claims need to be reassessed.

Indeed, given these extensive allegations of hidden costs, it would be foolish to take management’s word that Qantas international is losing money. So why would Qantas want to make it look like Qantas international is losing money? Remember the failed 2007 private equity bid by the Allco Finance Group. It was rejected by shareholders, and thank goodness it was, for I am told that what we are seeing now is effectively a strategy of private equity sell-off by stealth .

Here is how it works. You have to keep Qantas flying to avoid breaching the Qantas Sale Act but that does not stop you from moving assets out of Qantas and putting them into an airline that you own but that is not controlled by the Qantas Sale Act. Then you work the figures to make it appear as though the international arm of Qantas is losing money. You use this to justify the slashing of jobs, maintenance standards and employment of foreign crews and, ultimately, the creation of an entirely new airlines to be based in Asia and which will not be called Qantas. The end result? Technically Qantas would still exist but it would end up a shell of its former self and the Qantas Group would end up with all these subsidiaries it can base overseas using poorly paid foreign crews with engineering and safety standards that do not match Australian standards. In time, if the Qantas Group wants to make a buck, they can flog these subsidiaries off for a tidy profit. Qantas management could pay the National Boys Choir and the Australian Girls Choir to run to the desert and sing about still calling Australia home, but people would not buy it. It is not just about feeling good about our national carrier—in times of trouble our national carrier plays a key strategic role. In an international emergency, in a time of war, a national carrier is required to freight resources and people around the country and around the world. Qantas also operates Qantas Defence Services, which conducts work for the RAAF. If Qantas is allowed to wither, who will meet these strategic needs?

I pay tribute to the 35,000 employees of the Qantas Group. At the forefront of the fight against the strategy of Qantas management have been the Qantas pilots, to whom millions of Australians have literally entrusted their lives. The Australian and International Pilots Association sees Qantas management strategy as a race to the bottom when it comes to service and safety. On 8 November last year, QF32 experienced a serious malfunction with the explosion of an engine on an A380 aircraft. In the wrong hands, that plane could have crashed. But it did not, in large part because the Qantas flight crew had been trained to exemplary world-class standards and knew how to cope with such a terrifying reality. I am deeply concerned that what is being pursued may well cause training levels to fall and that as a result safety standards in the Qantas Group may fall as well. AIPA pilots and the licensed aircraft engineers are not fighting for themselves; they are fighting for the Australian public. That is why I am deeply concerned about any action Qantas management may be considering taking against pilots who speak out in the public interest.

A lot of claims have been made about the financial state of Qantas international but given the information I have presented tonight, which has come from within the Qantas Group, I believe these claims by management are crying out for further serious forensic investigation. Qantas should not be allowed to face death by a thousand cuts—job cuts, route cuts, quality cuts, engineering cuts, wage cuts. None of this is acceptable and it must all be resisted for the sake of the pilots, the crews, the passengers and ultimately the future of our national carrier.

Tumblr

After looking around at my space… the places I occupy on the net it dawned on me that unless they’re my* spaces, my domains, showing the content I want to in my own way, I end up being the content; read; Facebook.

So I’ve stopped posting the interesting snippets I find to Facebook, and after listening to my good friend Sam I setup a Tumblr blog. I had looked at Tumblr some months ago but it didn’t really strike a chord with me, it seemed just like Blogger v2.0.

I had Blogger it wasn’t that great.

Having shifted since then a number of times before ending up with WordPress and this blog. Continue reading

Being a Business, Man

This constant fear I’ve been feeling, is it insanity or just the ambition? Is it not knowing enough, or knowing too much?

Being an entrepreneurial sort, particularly in the web-startup realm gives you an understanding that computer technology provides opportunities in specialisation as well as integration. Through the benefit of the Internet, peripheral knowledge and skills don’t necessarily need to be mastered in order to be good at a particular niche. For example in order to become really good at handling customers I merely need a great CRM system, as opposed to a great way of tracking customers and knowing intimately what each of them are doing, the CRM integrates with Twitter, LinkedIn and Facebook feeds of individuals and companies allowing me to instantly know their latest thoughts and developments.

That being said however, you can’t cheat the last 10%. The difference between a good salesman and the best salesman will never be an IT system, you won’t be able to Google your way to that sort of success. However you will be able to read and learn about that 10%. Most would say that there is most definitely an art to that last 10% and for the most part really great management regardless of the amount of reading or number of MBA type qualifications on the walls, and letters following a surname you just can’t teach that 10%, it has to be earned and experienced, and I would argue some are merely born with it, but most are not.

Numbers, sales, marketing and other disciplines all exist as manifestations of the same commerce medium and the capability of simultaneously analysing numbers and composing an organisational chart and other ‘speciality type’ tasks will influence the sale and marketing of an organisation. However some argue that it is now possible for one central software title to take on all functions required in producing a highly successful and profitable business; accounting, marketing, production, pre-sales, post-sales, IT, engineering, design… bringing together all varieties of disciplines and consequently streamlining and fast tracking the production of a new or existing enterprise.

Integration of previously isolated disciplines will certainly improvise some aspects of a business, the idea of a central realtime dashboard cause some senior management teams to drool, in fact the number of senior staff I have spoken to who get glassy-eyed and simply nod in an up and down fashion once various acronyms and key words are spoken to them is sometime sad. But this advance, could cause a dramatic quantum leap for the business into the future, it’s like seeing a shortcut open up before you. But what if it’s reversing the knowledge base of our most senior directors and management teams. What if the inability to understand the workings of your production line, and only view the outputs will cause the business to head backwards, particularly in time of stress.

It was thought in the mid-80′s when computers really started to take a grip on commerce that we would see the technology be focused towards particular niches in their traditional markets, it would no longer be necessary to market towards the lowest common denominator, and whilst drilling down into sectors and numbers is totally plausible on these gargantuan CRM, and ERP system the chances of truly distilling knowledge from huge data banks I think it can only be conceived as useful when we can comprehend it appropriately. I know, I’ve helped implement various SAP and Oracle type installations, and handed the keys over to managers who are less than worthy of the quality of data they spit out.

So what separates a good manager and a great manager? A good entrepreneur and great entrepreneur? In my mind it is perception and understanding. Being handed all the numbers on a platter make cause even the best to act differently. In other words the more we move forward, the more need there is to look back. The basic principles of great business will always remain.

Personal experience has shown me that for all the degrees, and fancy resumes of the elite of listed companies nothing will beat old fashion gut instinct and traditional fundamentals to find the true path to success. We shouldn’t be building great businessmen, we should merely be building a great business, man.  Titles are nothing.

 

Philosophy of Workspaces

I am working by myself, for myself. Trying to get some startups cranking, running a consulting company, and as anyone who has done this will testify it’s a roller-coaster ride, there are ups and downs. One moment you feel like you just made huge progress, the next you’re in front of a brick-wall, it’s emotional, it can be frustrating and when you’re by yourself, you have no one to bounce off, ideas, thoughts feedback, anything.

I’m exceedingly lucky, working in a beautiful office in East Perth, it’s quiet, I have a nice size desk, and a coffee machine. I don’t need much else.

But the ability to be in an environment that could combine an exceedingly productive workspace, clean, quiet, functional, well facilitated in combination with housing other like-minded individuals would be amazing. Until very recently this space has been lacking in Perth, a few friends and I were going to set one up ourselves based on the New York, Grind Spaces but we were happily beaten to it by Hub Perth which also utilises the corporate support of property developers Stockland.

I must admit, I haven’t yet visited The Hub Perth, so the following comments are no reflection on the space. But the predominant problem I had when browsing the various communal work spaces in the US (there aren’t many in Australia I know of beyond Sydney’s Fishburners ) is that the beauty of the space lies in the simplicity. Simple work spaces, much like simple and articulate documents and websites, are easy to use, understand and one just feels good to be a part of it. In practise most work spaces are somewhat ugly and filled with too much ‘stuff’. Why do managers have such a hard time keeping it simple?

Leonardo da Vinci said simplicity is the ‘ultimate sophistication’, I thoroughly agree, achieving simplicity is a difficult task regardless of if it’s a work space, a website, a business plan or many other disciplines. But simplicity in a work space that is to be used by different people, from different backgrounds all trying to achieve different objectives multiplies that difficulty. From my observations it is a constant struggle.

Simplicity in a common work space must be the unity of various conflicting parameters. To create any sort of unity is a particularly difficult task, on the one hand a user must feel comfortable and at home and on the other the ease of use and how productive and non-combative the space feels will dictate just how popular and successful it is. These work spaces after all are typically priced not to make a profit but to break even, so they need to be filled to survive.

So how should a communal work space, or any work space work to achieve optimal results? In my mind there needs to be a philosophy that needs to be subscribed to by all parties. It needs to speak to the various characteristics of the interaction that will go on within that space. It isn’t about where the desk should go (which will be a given), but rather of who the person is, and what they are trying to achieve. It is what words they stand for, and what they are going to do to compromise in order to make it work.

Work spaces are expected to be filled with desks, chairs and computers, so typically this is the last thing people think of.  In my mind the philosophy (not the individual) needs to speak to which chairs and desks and where they are placed. If not, they are simply filling the space with grey noise, a sure way to lose people. A space should struggle to justify every desk, chair and other clutter.

Simplicity is not a given, it is a continuous debate, and requires concentrated diligent efforts to get it right. Only those that know what they are doing do it simply. I don’t think there is a recipe for an ideal space, but regardless of who is working within that space, they should be able to reduce their needs to the essence of their requirements.

A good work space in not there from the beginning it has to elaborated on and then kneaded until the balance is clear.

P.S. All the very best to the Hub Perth, this city needs more spaces like it.

Feb 2012 Update: Hub Perth is now Spacecubed