Simple way to organize business plan/pitch to investors

by philg

My friend Kasim and I went out to have lunch with one of my MIT classmates (Class of 1928) and look at his business plan and pitch to investors. As the startup company is located right next to an airport, we decided to fly there in a helicopter. Kasim took off from Bedford, put on a hood, flew an ILS 5 at Lawrence, glide slope out of service, simulated GPS failure, on the missed got vectors to the VOR 23 (asked ATC to identify the final approach fix, continuing our simulated GPS failure), and on the missed from that got a full approach into our destination airport. I had Kasim maintain the approach altitude and initiate an autorotation while still under the hood (pretty simple if you simply maintain attitude). We burned up just 2 hours of helicopter time for what would have been an agonizingly uncomfortable 30 minutes of round-trip driving (plus another hour to preflight, push out, shut down, push back into the hangar).

I found that the 40 or so pages of plan/pitch documents did not answer any of the questions that I had about the business, which is centered around an Internet application. Most had been written by a VP at a Fortune 100 company (and had the errors in grammar, usage, spelling, and punctuation to prove it).

This got me thinking about how I’d like to see a business plan targeted at investors to read. I said “Why can’t you show me all of the ways that your product creates value for people. Then, for each value that is generated, show me how you can turn some of that into revenue. Obviously you can’t capture 100 percent of the value that you generate because there would be no consumer surplus, but you can probably capture some. And if you’re not generating value to begin with, you won’t be able to get any revenue at all.”

What do folks think? Is this a good way to organize a business plan/pitch for a startup company? Until I’ve seen the value generation and potential revenue story, I’m not really interested in the details, such as who is going to be hired and at what salary and in what role. Nor am I interested in multi-year projections because if I liked fantasy I could mug a child coming out of the public library and steal his Harry Potter books. Let’s say the value/revenue summary takes up 7-10 pages. If an investor likes that, he or she might ask for a more traditional plan.

[Update: I discovered this useful business plan methodology, written by Cesar Brea, who used to be a management consultant at Bain.]

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The sheep farmer and her Border Collies

by philg

It has been nearly a year since Alex died. I have been thinking about adopting a puppy. I told a woman who knows me well that I was considering getting a Border Collie so that “there would be one female in the house who listens to me.” She said “Border Collies are too high energy and they bark and they’ll run after small children, thinking that they are sheep, and nip them. You don’t have enough physical strength and energy to keep up with a Border Collie.”

A friend said “Go visit my friend Betty; she has a lot of experience with the breed.” So we went over today to see the woman on a 20-acre sheep farm. Three Border Collies approached the car but did not bark. Before we walked out to a field with Betty, she put some cramp-ons on her boots. “I had polio and still have some weakness in my legs,” she explained while walking over the solid sheet of ice leading to the gate. Once inside the pasture, she demonstrated using a whistle and a few voice commands to have the 11-year-old dog work four sheep. Then it was the turn of a 6-year-old bitch. Finally she showed us how she was training an 8-month-old puppy.

At least three times during the meeting I asked questions and she sharply reminded me that she’d already answered it during a phone conversation over the weekend.

As it happens, we’re friends with Robin, one of Betty’s neighbors, so we dropped by to see how her greenhouse was doing. We mentioned that we’d seen Betty and her Border Collies. Robin said “That’s really a lot of farm for an 82-year-old woman to run by herself.”

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Head-mounted 4×5 film camera used while skydiving

by philg

When a mobile phone camera used in between sips of a latte does not indicate a sufficient dedication to the craft of photography, one may wish to emulate Aaron Gustafson. He has published a series of photos taken with a head-mounted 4×5″ film camera while skydiving. Check out the guy’s Web site (the HTML design is so advanced it doesn’t work with Google Chrome or Microsoft Internet Explorer) or this Youtube video.

[For young readers: 4×5″ sheet film was the standard negative size for high quality photography from just after World War II until the advent of the digital age. It was typically used in a view camera, equipped with a bellows and a dark cloth. Each sheet of film was developed individually in a tank. More: see the film chapter of my online photography textbook.]

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Gay Pride Day at the elite private school

by philg

I enjoyed brunch today with a family whose boys have attended the elite Cambridge Friends School (about $23,000 per year). The kids were saying that they did not enjoy a full day event celebrating Gay Pride and did not understand why a teacher was telling her coming-out story to the entire assembled school, including pre-K. I asked the 10-year-old “If I told you that I was gay and was going to marry my boyfriend and move to Greenwich Village, would that raise or lower your opinion of me?” [this is why parents usually don’t let me near their kids] He replied that it would lower his opinion. His mother, shocked at this prejudice despite so much well-intentioned indoctrination at school, said “What about Dan [a gay family friend]?” The kid said “I would like him better if he were straight.”

The older boy said that he had no interest in any teacher’s opinions about politics, sexuality, personal philosophy, tolerance, race relations, etc. “I only listen to them when it is educational,” he said. A good student, he wanted to get skills and facts from adults. But he was not influenced by the teachers’ attempts to mold him into what he called a “politically correct human being.” [He did say that the school overall had lowered his opinion of gays by harping on the subject constantly; he did not think that he’d been prejudiced to begin with, but the 1000th appeal for more tolerance was “annoying”.]

Perhaps a lot of the arguments about what should be taught in school rest on an overestimate of kids’ interest in what adults have to say. They respect us for knowing more math than they do; at least by age 10 they don’t necessarily naturally follow our lead in politics or religion.

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Reporters don’t compare jobs to population growth

by philg

In Edward Tufte’s books, he stresses that one should never present a number in isolation. The question that one should answer, as a writer/presenter, is “compared to what?” For the number of jobs in a country, you’d think that the relevant comparison would be to population (ideally working age population) and population growth. If Chile were to add 1 million jobs, that would be a very different experience for the population than if China were to do the same.

I just did a Google News search to see how many reporters compared the latest jobs report from the U.S. Labor Department to the U.S. population growth rate. The answer was “none”. This New York times story was typical. It reported that 20,000 jobs were lost in January, but did not say anything about how the number of Americans had changed. In less than one minute the reporter could have discovered that the U.S. population is growing at 0.98 percent (source). The population clock says that there are 308.6 million people living in the U.S. Without leaving Google, one can calculate that 252,000 people were added to the U.S. population in January. So we have 20,000 fewer workers and 252,000 more people. To me that is a much more interesting story than simply “we have 20,000 fewer workers.”

Given that Tufte’s books are perennial bestsellers, why the reluctance of journalists to present any kind of context or comparison?

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Generation Gap at the Supermarket

by philg

Tasked with a shopping list for a Mexican dish, I went to the supermarket to look for some dried pinto beans. I couldn’t find them, so I asked the 17-year-old girl working the information desk where they might be found. “Dry beans?” she asked. “Do you mean canned beans?” I replied that canned beans are typically pretty wet. “Is it a new product?” I replied that I thought dry beans had been available in the Americas for roughly 5000 years (Wikipedia says 6000). She said “We have some soup beans, but I’ve never heard of dry or dried beans.”

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A taxpayer is deported

by philg

A friend who is originally from India is coming by this weekend for a farewell-to-the-U.S. visit. He has a Ph.D. from an American university. He has a good job on Wall Street. He owns a condo in the NYC area. He owns a car. He has no wife or kids. His U.S. visa has run out and he and his employer and all of their lawyers can’t figure out how to get it extended. He’s moving to London and will continue his work for this bank from there.

So… even as we welcome uneducated refugees from the world’s trouble spots, we’re deporting a person who consumes virtually no government services. The guy is not in school, is not old enough for Medicare, has no kids to dump off on the state for 6 hours a day, has never been convicted of a crime or imprisoned, and has never collected unemployment insurance. Meanwhile he pays federal income tax, city income tax, state income tax, social security tax, medicare tax, unemployment insurance (tax), tolls, car sales tax, gas tax, car registration fees, property tax on his condo, sales tax, meals tax (those Wall St. guys eat pretty lavishly).

How do we do stuff like this without eventually running out of money?

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