December 8, 2008

My Contribution to GM, Ford and Chrysler

The Economy & News Angles

My contribution to GM, Ford and Chrysler

Every now and then, something occurs to me that I believe has been swept under the rug. In the past few weeks, we’ve all heard plenty of shouting and screaming about best how to save the Big 3 Auto Makers. However, I’ve not heard anyone talk about saving particular Car Models. For example, who ever picks a movie based on which Studio made it? (Like, hey man, there’s this great MGM flick coming out this weekend.) That’s my point! Why doesn’t GM just make the cars (the models) that people like? Why do we hear all this talk about which Divisions that GM wants to keep? If I was running GM, we’d keep the Corvette, Camaro, Cadillac, Solstice (Pontiac) and some GM Trucks. If it was Ford, it’d be Mustang (of course), Lincoln and for some diehards, the Explorer. And hey Big 3… no more making the same car under four different brands. Most of us figured out that trick about twenty years ago. Duh.

My Obsessions

Gas-price WATCH

Back to the Future is here again. Today, we saw a Costco here in Tucson selling regular gas at $1.57. Wow, if it goes below a buck, we’re thinking of picking up one of those big Hummers we see abandoned on the side of the road!

My Travels

Entrepreneurs Conference in Sedona, Arizona

Last Thursday, along with four other investors, I was on a panel that reviewed about thirty entrepreneurs pitching their companies to us. There were plenty of good ideas, but most of all, I’ve not seen such a motivated and energetic group of start-ups. There seemed to be no slowdown in these companies. And, right after their presentations, they got in long lines to confront us investors, and some waited half an hour for just a few minutes of face-time with us.

Advice to Entrepreneurs

Accordion to me…This week’s advice to entrepreneurs

At some point, I’ll give you my full list of the Do’s and Don’ts for raising funds for your company. For now, please take these three quick Don’ts to get you through the holidays. Please… 1) Don’t tell investors you expect to get your exit via an IPO. I wouldn’t bet on being one of seven IPO’s that’ll happen in 2009, and who knows whether it’ll be any different in 2010 and 2011? 2) Don’t describe some big deal you have in the works, and then tell investors you can’t tell them who the customer is, and 3) Don’t put a large budget item amount for marketing in your forecast and not take the time to figure out what you’re actually going to do with it, and how you can prove it’ll actually work. Got an idea or something you need help on? Email me at rick@hotventures.com




December 1, 2008

$700 Billion Rounding Error?

The Economy & News Angles

$700 billion rounding error?

You’d have to be a desert island not to hear about the current financial bailouts. No matter whether you’re for or against em, the numbers are astounding. Word on the street is that the original $700 billion number was not derived from what was needed, but instead by a calculation on what wouldn’t upset the apple cart. In other words, what could be absorbed, sort of like a rounding error? Ummm…$700 billion, that’s it! Sure, who could blame us for spending 5-7% of our GNP? Well we’re not alone, most other big nations have recently followed suit. China $586 billion (16% of their GNP), Japan $68 billion (1%), S. Korea $80 billion (9%), Russia $209 billion (12%), Britain $450 billion (21%), Germany $151 billion (7%), Spain $111 billion (8%) and Switzerland $66 billion (15%). And this just in… the U.S. is up to $850 billion, plus another $300 billion more for mortgage guarantees (about 6% of our GDP). I just hope it’s going to be enough. [Numbers from Businessweek, December 1, 2008]

When should we start paying President Obama?

Watching CNN or Fox News, you can’t help but see that President-elect Barack Obama is already working ‘round the clock, and he’s not even been sworn in yet. Makes you hope he’s getting some kind of salary for being President-elect. Wouldn’t it be weird if he’s doing all this without pay for the next two months? What kind of welcome would that be? I am sure we are paying for secret service and T&E for all those big meetings, so why not pay the Prez salary upon election, and not simply stand on ceremony?

My Obsessions

Gas-price WATCH

Since gas prices represent the clearest icon of our ‘emotional economy’ we need a reminder how large the swings have been. Since 2007, the price of crude oil per barrel rose from the $50’s and $60’s up to $145 on this July 4, 2008. This month, on November 21, it was $49.93 and on November 29 it was $54.43. Wheeee!

While the lowest I’ve seen recently is $1.83, I decided to check out http://www.gasbuddy.com/ I found there I could buy gas in Tucson for $1.73! Remember, it was $4.00 in July 2008 (regular gas in today’s dollars)? Don’t forget it was up to $3.32 in March 1981, during the Iraq-Iran war. [Prices per zFacts.com]

Advice to Entrepreneurs

Accordion to me…This week’s advice to entrepreneurs

What do angel investors look for? Ideally: A really big market with a big problem, your big solution, your big capabilities, and all it needs is money. Problem is it’s really hard to prove, and contrary to what you may think, even wealthy people don’t want to lose money. Here are two tips on finding your first investors. First, look to people who will give you the benefit-of-the-doubt. These are people who already like you, your friends and family, and already know how great you are, and very much want to help you succeed. Second, while I’m active with several angel groups, including Desert Angels and Northern Arizona Angels, I urge you to spend just as much time looking for specific investors who are likely to find instant ‘relevancy’ with what you’re doing. Like, if you’re working on cure for Alzheimer’s, try talking to local neurologists. No doubt, they’ll be a tough audience, but if you’re on the right track, they’ll know it. Better to find out now. Got an idea or something you need help on? Email me at rick@hotventures.com




November 24, 2008

Fortune of Reversals

Rick GibsonFirst, talk about the Economy….Let’s call it a ‘fortune of reversals’

First it was housing, banking, and insurance. Now, retail and automotive. Not a good time to have big stores, big shelves and lots of goods from manufacturers who want to get paid. With the credit crunch, big ticket item sales are near impossible, everyone clobbered but the category leaders… i.e. Circuit City and Linens ‘n Things have been slammed. If smart, Walmart, Target and Costco will find ways to get by. Next, it’s clogging auto dealers who sit with big inventories. No one’s buying a car that doesn’t need one right away. I hear 2009 autos are sitting in the ports waiting for 2008 autos on the lots to clear out. Not going to happen this year. And it’s no solution to throw money at them, the big-3 need to change big-time. They need some kind of structured re-organization. If we as citizens must invest in them to keep the entire Midwest economy from crashing, the big-3 must find a way to make better cars, have fewer dealers, and dump their legacy obligations. Sorry, I think big unions (more mouths to feed), big stores and big inventories should be jettisoned. And I say, down with expensive marketing plans, good products should sell themselves!

My travels

This week, I hit Flagstaff (think Grand Canyon) and Tempe (mainstreet for ASU). First, we dedicated the new Northern Arizona Center for Emerging Technologies and AZ Governor Janet Napolitano cut the ribbon of this new 10,000 square foot incubator, which by the way, is already filled with ten awesome technology companies (more about these companies next time). Later that day, the new Northern Arizona Angels group met at the ultra beautiful Pine Canyon Golf Club. Investor presentations were made by Protein Genomics (they make skin), Norchem Drug Testing (like they say, drug testing), Density Investments (new age green building), Ambature and Visible Energy (making sense of energy).

Spressions

“Be careful what you wish for”… remember when we longed to get rid of our biggest problems: high gas prices and the Iraq war? Don’t you wish we were back there now?

Accordion to me…This week’s advice to entrepreneurs

Looking to fund your company? Wherever you are, there are probably angel investor groups in your region. While November and December may be shot, if you have a killer company, you should apply to the angel group(s) in your area and then, others nearby too. [ look at their directory at http://www.angelcapitalassociation.org/ ] Get some professional advice, know your domain, make sure your company can exploit its unfair competitive advantage, and know your true valuation boundaries. Concentrate on proving the details on how your sales will be brought in. Very few companies know enough how they will get their sales. And…don’t talk about fast exits or IPO’s. Of course you are open to the right liquidity event, but right now, no one knows when, how and where. Ah, but you must be ready and wise. Got an idea or something you need help on? rick@hotventures.com