More tips on start ups; zero to one

Nation building via learning and being the best in business

1.  Visioning

     1  Draw of a picture of what your projects would look like when completed:  entrance, office, landscaping, workspace

         Troy to do this comprehensively   COMPLETO  INCLUSIVE  Be alive be motivated energized by this picture.   You can do a an 

         great one by working with the architect or designer to complete your vision

    2. Draft you VMBP   

    3.  Draw a road map

2.   BE violently  insane  obsessed with customer service  Be like SJ  (Steve Jobs, when it comes to CUSTOMER SERVICE he is passionately fiercely obsessed.

      observing simplicity, efficiency functionality as key features.  Improving customer experience.  Look is important the satisfaction of 5senses.  Want satisfaciton

     CS and COBS

3.  Some billionaire tidbits

     1.  Entrepreneurs go into their own venture to establish control of business and independence

         A  tradesman was working hard and was asked why working so hard/  He said he wanted to earn so much to buy tools so that he can have his own

         contracting company.  

         But the billionaire said:   you are still a working man at the control and service of somebody else:    the general contractor and the owner.

        Why not:   seek contract, consolidate workers and trade and be a general contractor yourself:    you dont need tools  manpower.  All you do is negotiate

         contracts and you get clear profits.     Adds ons % etc.

      2.  On securing funding from vcs and other funders

           They sound so important because of mumbo jumbo but a clear paradigm injected into every ones start up mind.  Input first before business

           You need capital first before you can put business.  What  do you need the capital for:   initial hires, ads, software, office equipment

          But the billionaire said to Arthur who wants a $200,000 start up funding said focus on 3 S:  (YOU MIGHT NOT NEED THE $200, 000)

          SYSTEM

          SERVICE

          SCALE

        So Arthur went home went into a deep reflection problem solving mode.   What does he have, who is market.?  What can he offer them?

        So Arthur concluded that he is skillful  in logistics and there is one logistics problem he is working on.  So he has a list of 300 logistics company whom he

        emailed offering his solution.   One replied.   They had a deal.  If he can solve the company problem by Friday, he gets paid $6,000.  And they did.  Arthur

        got the bank transfer of $6,000.   He spent the $2,500 for someone to code him a program, spent $500 for supplies and saved the $2,000

       So he went into scaling up.  He made videos of his achievement for the first user and sent the gmail again to the rest of 299 addresses  3 replied.  He offered

       $2,000 lease of his software for their solutions.  He got 3 and got contract for $6,000 monthly revenues.  

       After 3 months Arthur was grossing $80,000 a month, enough to gross him $1,000,000 a year

      He met VAnce the billionaire again after 3 months.  Would Arthur still need the VC assistance?   Naw.  You are right with your 3s.  

How we wish business success can be via the crystal balls? (or how many gurus, we and pundits have crystals between their thighs)

Nation building via learning and being the best in business

We know how many zillionaires came to being:  by correctly predicting the next big thing:  Bill Gates that the software is  more valuable than hardware in the PC market, Steve Jobs that the next central platform for entertainment:  shows music knowledge would be via mobile phone (not PC or TV as billion dollar investments were poured into this)

Predicting correctly the trend in the future gave them the big bucks (or did they create the future?)

There was a knowledge platform Megatrends before (what happened to this) that focussed on changing socio economic trends to predict the next big thing.  Now we have the AI hype but which is now showing mix results.  Others say we will have more leisure time, but most will be out of job.  But even minor tasks being assigned to the AI like writing a business plan, marketing plan is showing a lot of mistakes.

Generals kings before consulted oracles before going into a large batttle.  How we wish there were oracles of Delphi before  making a big bet on new technology or next big thing

You dont have to work harder, but smarter to be rich

Nation building via learning and being the best in business

1.  You are the business.  You have your own story, your brand, your grit, your energy.  Show your face

2.  Raise the bar, or burn the bar down  SJ was violent about standards, simplicity  That is why customers love Apple.   What habits are you tolerating low standards?  Be careful of what you tolerate.

3.  From star wars.    Build the parts of your vision before it happens    (Eg Lucas - who built their sets for the galaxy that never exist.  Can you do that for the business you envision)

4.  Conviction beats consensus.     E. g Bernard Arnoux  (LV)  50 year vision

5.  Delete before you improve  (Schumpeterian -  you have to destroy before you build)

     Destroy before you start.   Return to basic principles.  

     A E Del

     Automate

     Eliminate

     Delegate

     A Del2  (Automate,  Delete, Delegate

6.  Energy of start ups build empires  (Alexander the Great)

7.  Draw the dream and build the machine.  Eg. Disney  Land.  Drew the dream and built it.  

     Have you drawn the dream you want to build.   

      

Legal loopholes you can use to speed up (not slow down) compounding

Nation building via learning and being the best in business

You can build your wealth through compounding.  That is doubling your money every x years using the rule of 72.  (72 /9  = 8 years to double your money).    That is why higher yields (less risk) make you double your money faster.

Compounding is one of the greatest feature (others say invention) of modern finance.  Others say returns on stock investment is marvelous but there could be bad days/months.    Psei again returned to 6,000+ level.    How many were slaughtered at Phil stock market   My daughter stopped talking about her stock portfolion several years ago

Rule in investing -  DONT LOSE.   Is paramount.

However taxes can take a bite of your returns, Lower the returns and the compounding slows down and takes longer    At todays rate at banks, if in savings this will take  144 years.   At 3% on time deposit (gross)  2.4% net, this will take 30 years.

This video outlines several tips on how to beat the tax bite on returns so that your PHP can compound:

1.  Tax free investments -  There used to be CBCIs  I wonder whether there are still available  There seems to be none

2.  Borrow still die strategy -  Borrow against your stock sleep on it, pay off interest with your dividends.  Dont sell or liquidate.

3.  Hold off selling and pay capital gains when you do.    Those who sell and who are on salary basis pay cgt year after year.

     However for RE in PHL it seems to be a losing battle for real estate flippers.  Its because of the regular increase in Zonal Valuation and having the real property classified as capital goods subject to 12% vat.  No wonder, leases are popular, and flipping is slow, as seen in the 3 years worth of inventory of condos.  No wonder a fmr senator Sec of DOF gets so much hated  Mr. Tax Man.  Mr VAT

    There was this condo offered in Cubao for mere P7 m (market was 12)  But after computing for cgt, interest, and CUSA, the margin  for the  flip in case was merely P500,000 or just a little over 10%

which was minimal.    We could get that return elsewhere.

4.  Depreciation in commercial property.  

    Though there is capital appreciation commercial properties can charge depreciation for 10 20 years  And thus, tax due is lesser and ROI becomes bigger.

5.  Tax free employee plan for retiremen;

     Tax free income for retirement fund, stock options and the like

6.  Index fund -  several transactions gathered togehter as fund, lesser CGT or transaction tax.

7.  Wrappper, corporate veil by placing your investment under a corporation, holding company, or trust, you shiled our personal risk via a corporate veil.   Only the corporation, trust or holding company gets the hit.

8.  Geographicala arbitrage -  Lesser tax bureden abroad, lesser cost of living, lesser cost of investing in the Bahamas, Switzerland,  Cayman islands, lesser cost of livng in Thailand, the PHL, Vietnam

Why Warren Buffett prefers securities over real estate

Nation building via learning and being the best in business

1.  You can do stock transaction in 10-15 minutes and only one deal either buy or sell

2.  Real Estate is more complicated and takes a lot of time   You deal with the owners who could be varying in ideas about the property and one complication lead to another.   It takes time to sell real estate:  you have to find agents, you have to list this, nego for the dp, arrange for the bank financing, and it takes time.   One issue leads to another.  There could be dead owners, unpaid electircity bills, etc.  It is complicated.  It is not a simple business transaction.  It is a lot of head ache

(We have a case of seller suing us for alleged fraudulent docs  They received the full payment. what is there to sue for?)

Only 3 numbers to look at before buying shares/company according to Warren Buffet

Nation building via learning and being the best in business

There may be a lot that analysts other businessmen look for.  Warrent Buffett looks only at 3 measures:

1.  ROI

2.  DE ratio

3.  PE ratio     

Yesterdays business icons, todays villain - Jack Welch stint at GE

Nation building via learning and being the best in business

When this post was starting out as a businessman, it was an advice to hold on to somebody as a role model.  And one of my lodis was Jack Welch.  I bought books about GE, Jack Welch.   And the whole world idolized him.  He made GE a mega business

But lately, there are news and allegations that actually destroyed GE.   His moves did not make GE unsustainable And by making 50% of GE more of a finance company via GE Capital GE was exposed to financial and capital market risk that required more than a hundred billion bail out.

Hero or villain?

Selling dirt/soil instead of vegetables

Nation building via learning and being the best in business

The billionaire saw the farmer working so hard - selling vegetables and competing hard on price.   Racing to the bottom.

Build business around value.  Sell solutions instead of products

The billionaire advised the farmer that instead of selling vegetables, he sell the source.  Many urban dwellers want to raise vegies in their apartments.  Why not sell $20/bag of soil   branding Organic  Heritage  Soil.  He automated the soil packing.  Marketed via internet.   And made $300,000  a year.

Business ideas galore?

Selling dirt

Value creation and pain removal: the Main Value Proposition of Business model

Nation building via learning and being the best in business

 

THERE ARE ONLY TWO WAYS TO MAKE MONEY  - the crux of all business model.   It is a compnaion post about finding capital first to make money.   Find problems first, find solution and get paid for it.   Leave the input capital first to be truly wealthy.

All the options just like the alphabet exist and all ready there, and can be rearranged in infinite number of ways.   Find the key holes (ther problems) and make keys that can fit and open the doors (solve the problem)

Doctors make a lot of money because they remove pain.  Do do pharma company;   or consultants, or auditors.   

So do lawyers and security agency:   they lessen fear.

Pain removal   

THERE ARE ONLY TWO WAYS TO MAKE MONEY

Add Value.

Subtract Suffering.

Everything Else Is A Variation Of These Two Movements.

If You Increase Someone's Advantage, You Get Paid. If You Remove Someone's Friction, You Get Paid. Markets Do Not Reward Effort. They Reward Impact.

The Objection Appears Quickly. Hasn't Every Valuable Idea Already Been Discovered. Hasn't Every Problem Already Been Solved. That Question Assumes Value Is Invention. It Is Not. Value Is Arrangement.

Mark Twain Said There Is No New Idea. Only Old Ideas Rearranged Into New Combinations. The Pieces Exist. The Pattern Changes. And The Pattern Is What The Market Buys.

Art Is Not Created From Nothing. It Is Collected, Filtered, Combined, And Released With Precision. The Same Is True In Business. You Study What Exists. You Notice What Is Inefficient. You Combine What Others Kept Separate.

Adding Value Often Means Making Something Clearer, Faster, Simpler, Or More Accessible. Subtracting Suffering Often Means Removing A Frustration People Have Learned To Tolerate.

Sometimes A Problem Must Be Made Visible Before It Can Be Solved. Entire Industries Were Built By Naming A Pain People Had Normalized And Then Owning The Relief.

The Game Is Not About Being Original. It Is About Being Effective.

If Money Follows Value And Relief, Then The Real Question Is This: Are You Searching For New Ideas — Or For Unclaimed Friction?

Abandoning the input first mindset to be true entrepreneur start up; provide value/service first

Nation building via learning and being the best in business

We are often living in the mindset  of old businessman - INPUT FIRST.  You need capital to: rent an office, pay employees, etc.   Its an employee mindset.   Poor mindset.  But the businessman in the video a businessman emphasized that you PHP or $ is the last or inconsequential in starting a business.  There are 3 things you must give priority to:

       SERVICE

       SYSTEM

       SCALING UP.

So first find a problem and provide a solution.

Following Vance advice Arthur looked at a specific logistic problem he want to solve.   He emailed 50 logistics company and until he finally got one respondent.  He would be paid $6,000 if he got the solution by Friday.  Then he got his $6,000.   He having now proof, emailed the rest of the 49 who turned him down, and offered $2,000 monthly subscription for using his solution.  He got 3, grossing him $6,000 per month.  He eventually grossed $8,000.

So Vance was right.   

Input paradigm shouldnt exist in the mind of the entrepreneur

Some Filipinos have businesses that dominate the world

Nation building via learning and being the best in business 

 Some Filipinos dominate their industries not only in the Phil but even the world:

1.  Jollibee -  fastfood, also buying ohter food brands owned by Tan Cak Tiong

2.  Enrique Razon through ICTSI dominates Port Operations globally      

3.  Andrew Tan through  Emperador (he was unwilling owner before) now owns  Fundador and owns vineyard in Spain. a brandy company in Mexico and whisky firm in Scotland

How could they?

Just selling or running a business

Nation building via learning and being the best in business

A wealthy businessman as the story goes, went into a coffee shop and he noticed that were not customers.   Business was bad.  The previous night, the total receipts were only P280 php and rental that was to be due was P8,000.  The owner was in a bind    He could not reach the P8,000 rental

The wealthy businessman suggested that the businessman offer free coffee.  But he said it would totally erase him he being in tight spot.  Why are you selling or are you in business.

The coffee shop owner agreed and soon many people, 20, 30, 50, 100 soon flocked to his shop,  Most people are not freebie hunters,   40% ordered  pies, cookies, bread, ground coffee and soon he was grossing about P1,000+ per day x 30  that is 30,000 per month, enough to pay for the supplies, rent and even a staff. 

So think:   are you just selling or running a business.  Establish a system to earn money.  Set a business model. 

Happy Chinese New Year

Nation building via learning and being the best in business

More success to our partners in progress and entrepreneurship

My missive to protege on a start up

Nation building via learning and being the best in business

You have at your fingertips two important projects, so huge, affecting the lives of many people.

You have estimated revenues and income equivalent to 40 years of work

1.  You will be mostly on your own to decide the results and your destiny.

2   Two laws:

    Kidlins law -  on problem solving.  Defining and writing down the problem solves

    50% of the probleem.

   Therefore:   clarity is needed and write down your action plans on regular periodic

                      basis

    Walsons law-  intelligence and knowledge precedes alll system and then money

                           follows

3.  Entrepreneurship

     You do not have all resources you need now.   Entrepreneurship comes into

     play

     1.  Act, don't be imprisoned by your past beliefs and past action

     2.  Don't wait for permission.   Act but do this in a concerted collegial fashion

     3.  Zero to One (by Peter Thiel Pay Pal)

         1.  All things come from your thinking

         2.  Entrepreneurs create one from 0

      4.  Your capital (capito - head) is your mind -  the endless source of ideas

           innovation and solution.  Use it constantly

      5.  Be present at all times.  The eye of the master solves many issues

       6.  Courage, audacity determination count

   

Semirara stocks fall - P30B on news that govt is no longer renewing its mining contract at Semirara

Nation building via learning and being the best in business

Semirara stocks took a nosedive losing as much as P30 billion in market value, after news that govt is no longer renewing its contract to mine Semirara which it has done for the last 50 years.  Thats what the mining laws say and DOJ affirmed it.  DOE under Garin says the mine is up for bid

Well coal is still impt for PHL power gen.    (Despite the move towards clean energy)  95% of the coal is supplied by Semirara

Anyway the world is trying to wean itself from dirty fossil fuels, like coal.   Activisits green peace especilly would like to see that coal operations stopped

Thats the power of the govt.  It can kill your business.  Thats not he problem with Razon, Aboitiz who know how to to play their business games.  (That the bitter pill for the young billionaire Leviste)

Its better to do business where the govt power over your business is minimal  (But there isnt any)  In the recent case, we have to cough out P100/sm for an LGU ordinance   

Also there is no 4ever in love and in business.

Smart thinking in a nego bags multi million deal

Nation building via learning and being the best in business

This post was inspired by a post regarding a multi millionaire who saw an old building but did not focus on the property deal but what he can do with this.    There was this $50 million property and he had no $ to buy this on usual deal of making a down payment, going to bank and borrowing the balance.    He made a $200,000 option up front which would be  a rental, if after 3 months he does not have a deal.   So he sold the idea of a membership to prestigious club with the house a palatial one for $6,000 each to only 1,000 members.  That is $50M for the deal, and $10M for him to pocket 

So we got two deals both worth 9 numbers controlling the property, with but P400,000.   We yet to make the whole works work   But its the same.  The team should work hard and organize to generate the 9 numbers become a reality.   We got P400,000 forfeiture if things dont work out 

Why are so many flocking to retail business despite high closure rate in US, and very thin margins

Nation building via learning and being the best in business

This post is wondering why in the Phl so many entrants are in the retail business despite record closures in the US.  Even Walmart the largest, Costco are experiencing decline (mainly in California due to very high inventory shrinkage due to the change in the treatment of the law of shoplifting

We see many entrants, Save, Dali, Family Mart, and so many more in the provinces. 

We have seen this as our retail firm closed due to the same reasons.  Thin margins shoplifting electricity cost, and high rental

We understand that one of the late entrants funded by ADB is in the red by billions.    Dali loses P3.26 billion in the last 3 years

It is not rational, it does not jibe with the math?