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Between last week and the next week, I have about 60% of my total graded performance due in my 5 classes.  That’s taken up a lot of my time, and distracted me from talking about a lot of the interesting things I’ve glanced over lately.  I’m flying to San Francisco tomorrow night for the GreenNet conference (come talk to all us cool guys in the Soneter shirts!) so I’m going to try to bang out a post on Hulu’s new freemium strategy during the plane ride.  That is, if I don’t spend all the time shoring up my business plan for Social Entrepreneurship.

Anyway, here’s what’s left of my deliverables for the last semester of my MBA so you understand why I’m AWOL.

Market Research
4/29 – Final project due/presentation (25%)
-Consumer segmentation and pricing strategy for a new frozen yogurt shop

Consumer Behavior
4/27 – Final project due/presentation (20%)
-Consultation on the physical store layout of an accessories store in Atlantic Station (think, Why We Buy)
5/6 – Final exam due (20%)
-Take home exam, so it shouldn’t be a huge undertaking

Negotiations
5/4 – Critical analysis paper due (25%)
-The negotiation and conflict management strategies present in 12 Angry Men

Social Entrepreneurship
5/3 – Final project paper due (20%)
-Business plan for Altruize, an E-lance type site for students doing technical volunteer work with non-profits

E-commerce
5/4 – Final paper due (25%)
-Post-campaign write-up for the Google Online Marketing Challenge

It’s a two book update this time, with Influence: Science and Practice by Robert Cialdini and Getting to Yes by Fisher, Ury, and Patton.  Both of these were assigned for my Negotiations and Conflict class and one of them turned out to be a lot better than just a textbook.

My classmate George loving called Influence “the psychopath’s handbook,” which is a fitting title.  The insights in this book are amazing and, if used by a certain type of person, also incredibly dangerous.  It’s no surprise that more than a few of the examples deal with cult leaders.  There is a lot of science to explain why we humans fall into these traps, and it seems like there is very little we can do about it.

The book breaks down influence techniques into 6 broad categories:

• Reciprocation
• Commitment and Consistency
• Social Proof
• Liking
• Authority
• Scarcity

Wikipedia does a pretty good job summarizing each category if you want a little more info, but the book itself is a very good read and surprisingly easy to get through for what basically amounts to a textbook.  My favorite part is that for each of these topics Cialdini also lists defense techniques for when someone is trying to use them against you. Being a pretty bad negotiator (hence taking the class) I was pretty happy about that.

In one of those weird coincidences (my AP English teacher in high school called this kind of thing “Mom’s corollary”) ever since I read this book I see people referencing it everywhere.  So yeah, Influence is pretty well known and cited often by people in all kinds of positions, from upper management to marketing.

The second book, Getting to Yes, … not a fan.

I’m not going to say this book sucks, because I’m sure other people before me have gotten a lot out of it, but I hated it.  It can be boiled down to four basic points:

• Separate people from the problems
• Focus on interests, not positions
• Invent options that make both people better off
• Use fair and objective criteria for measurement

There you go, I just saved you all the time you would’ve spent reading it.

The problem with Getting to Yes is that it tries to fit waaaay too much information into such a short book.  They should have focused on the above outline more and not tried to fill the book with other little rules.  Instead, it basically reads like:

Bold headline you should remember!

Two paragraphs of explanation

Another super important bold headline!

Three paragraphs of explanation

etc, etc.

That’s just not a good structure for getting the overarching ideas to really sink in, and hurts the book’s readability.

If you want to be a better negotiator and be less susceptible to many of the tricks others will try to use, buy Influence: Science and Practice but skip Getting to Yes.

You would think that giving people an avenue on to East Lake Golf Club, one of the most exclusive courses in the country, at a price lower than they’ve ever charged before would be cause for appreciation.

But instead, as I’m busy finishing up 4 presentation and 5 papers and a business plan due in the next 3 weeks, I also have to deal with an evening student emailing me with his alumni/student partner preference of:

Don’t put me with any hackers.  I don’t think I can handle it.

FU dude.  Why don’t you spend the last year setting all this up like Brian and Bethany did or learn to “handle it” for an MBA program scramble event that’s designed to raise money for charity.

I hope you end up with a 4-some handicap over 120.

So I’m not really sure if I’m allowed to say this, but like 8 people read this thing anyway so why not break the news?

Soneter, the non-invasive water meter company I’ve been doing some work with, is one of 10 companies that have been accepted to present at the Green:Net 2010 conference in San Francisco on April 29th. It’s pretty cool to know that the company will be presenting in front of people like Bill Gross, Vinod Khosla, and Paul Kedrosky.

Please feel free to follow them on Twitter (@Soneter) or check out the webpage, which will hopefully be updated to actually be useful in the next day or two.

I hate politics.  I hate listening to politicians, I hate arguing about politics, I just hate every single part of it.

And yet, here I am talking about a bill that is currently moving through the Georgia House of Representatives.

Lance has a great post describing the reasons to support HB1001: The Angel Investor Tax Credit Bill.  It would be a great addition for the state of Georgia’s business community and hopefully open up more sources of funding for the companies around here.

Here’s the letter I sent to my representative today (with key points easily plagiarized from Lance’s post), I hope others will do the same.

Representative XYZ,

I am a 2^nd year MBA student at Georgia Tech and I want to urge you to support the recent legislation House Bill 1001.

As a passionate member of the start-up community, I believe that there are many Georgia companies who stand to benefit when this bill is passed.  Many promising start-up companies in Georgia, most of which have been created by graduates of Georgia colleges and universities, are at risk in today’s challenging economic environment.  Due to their business models and the inherent risk, the primary sources of capital for these businesses are angel investors: private individuals who take personal financial risk to enhance business and job creation in this state.

HB 1001 will keep angel investors active and help promising young companies get started and create jobs in our state.  It will also help to keep existing jobs here, rather than forcing them to move across the country to be closer to investors.  Competing states are benefiting from Georgia innovation as we’ve seen entrepreneur-graduates of our schools leave in pursuit of capital in other states.

Twenty two other states have been utilizing these investment incentives for years and those states have benefited from new business creation, new jobs and new revenue.  I believe HB 1001 will allow Georgia to do the same.

Thank you for your time

Ryan Anderson
MBA Class of 2010
Georgia Institute of Technology

Now that your wife has a job it’s time for you to become more gainfully employed.

This has your name written all over it.

Captain of the Sludge Boat

btw, rumor has it that Will Bynum is suiting up again for the game tonight, so expect a repeat.

Last Friday I went to the finals of the Georgia Tech Business Plan Competition.  While I wouldn’t be participating, 5 of the 7 teams had MBA students involved so I had to go and support my friends.  Plus, it’s not every day you get to sit behind judges like Sig Mosley and just listen to them riff questions at people trying to raise money.

So, after sitting through 4 hours of presentations/questions here is my list of the good questions each team fielded.  I also linked to the companies’ websites, if they have one, in case you are interested in more information on them.  What I learned here, more of these guys need websites.

NanoShield (catheter coating)
-Have existing companies in this space shown a willingness to acquire or license from new entrants?
-What are the issues your solution does not solve?
-Talk more about your pricing and how you came up with what it should be.
-Are you trying to raise any other money besides grants, the plan is unclear? How much and when?

Medivity (endoscope utility to reduce surgery complications)
-What’s the story on the company formation and how did you get involved?
-Who decides what gets bought for the endoscope?
-How long is the sales cycle?
-How much money would it take to get to the initial adoption stage?

AlpZhi (microlens manufacturing)
-What does “a great deal of interest” mean?
-Can you expand on that alternate applications you mentioned?
-How do you get from here to the first set of customers?
-How did you come to an NPV for the company?
-Are the potential customers set to take advantage of what you offer?

viaCycle (bike share/rental solution)
-What is patentable in your design?
-You’re using a European model as predictive of US adoption. Why do you think you can overcome the obvious cultural differences?
-What was the adoption cycle of similar programs (ZipCar)?
-Are you set up to capture and analyze the behavioral data and commuting patterns of your users?

Belle Curves (shape enhancing sports bra)
-What stops people from creating third party inserts cheaper?
-How many did a competitor sell previously?
-Why plan to enter the retail market is those distribution channels lower your margin?
-Why the decision not to pay yourselves and dive in full time?
-Have you trademarked the names?

Agile Genomics (bio-informatics software)
-How do you handle customer support for the users?
-What is the penetration of competitors’ software in the market?
-What is your insight into competitors’ pricing strategy and changes?
-There are great approaches outlined, but no plan for introducing them or costs.

Pneumera (pneumonia diagnosis device)
-Why can’t you sell through channels other than hospitals, like physicians’ offices?
-The key to your exit strategy is the strength of your patent, talk to that.
-The “first 50″ hospitals you mention, what/where are they and what percentage of the market do they make up?

Overall some pretty good stuff. It certainly gave me some insight as to what kind of questions people want more information on around here (funding plans, intellectual property).

Also, congrats to AlpZhi for winning the competition. I guess drinks are on Greg next time we go out.

I haven’t written much here lately.  I’ve been writing so much stuff between class assignments and outside business stuff I’m doing that I just couldn’t find the time or energy.  Well, all those class papers are over now so let’s open up the floodgates.

The topic for today: staking people in life.

VentureBeat had a post today titled Entrepreneurs offer their life’s future earnings for an investment.  The basic premise is people were offering to sell a small portion of their life earnings (typically 1-5%) in order to get cash up front.  One 26 yo girl is profiled who is trying to sell 6% of her future earnings for $600,000 to help pay off debts and start a new venture, valuing her future stream of income at $10m present day.

This idea is similar to the staking economy in poker.  Unfortunately the Poker staking page in wikipedia is woefully short, so I’ll do my best to explain it in a little more detail.  I’ve been on the receiving end of a few stakes and bought a percentage of others’ action a couple times so, while I’m no expert on the inner-workings like sheets is, I can offer a little experience.  In a staking agreement, I offer to pay your buyin to tournaments (you can get staked for cash games too but let’s stick with this) and then I take a portion of any winnings you get.  Usually these agreements last for a longish period of time since the world of tournament poker sees huge swings, and it’s also common for there to be a payback clause where the staker takes close to all of the profits until all previous buyins have been paid off before they split the remaining winnings at a predetermined percentage.  There’s obviously a lot more you can talk about here, but that should cover the idea in enough detail for the rest of this post.

So, given that, it’s not surprising at all that one of the founders of a fund currently offering to buy a percentage of promising young workers was champion poker player and Georgia Tech graduate Phil Gordon.  If you can identify a talented young performer and have capital available that they lack, it can be a great deal for both people.  Also, I like that they offer a buyout option for everyone so that you aren’t stuck with a lifetime debt if you want to get out of it.

Is it possible that people could get screwed with this system?  Certainly.  Over time people have shown a remarkable ability to consistently use things that should be beneficial (hello credit cards) in harmful ways.

More importantly, I like this idea because I have developed a couple business ideas around this same idea.  It would be wrong of me to not give a little credit to Bill Simmons here for his meme of “I wish I could buy stock in X” where X is something like “the Patriots falling apart this year as Randy Moss goes into ‘I don’t care’ mode.”  However, instead of that, I want to buy stock in John Wall’s future earnings.

Coming out of school, Wall is looking at something like a $5m/yr rookie contract and sponsorships that probably get him to about $7-10m/yr initially if he gets a shoe deal like I expect.  Meanwhile, you have to expect that his next few contracts and endorsements are going to be HUGE.  Max contract big.  Looking at a couple $60-100m contracts and various endorsements spread out over a 15 year career (obviously all optimistic projections) that’s probably somewhere around $200m in present value.  Actually, it’s probably not even close to right, but humor me.

What if he could sell 10% of his future revenue stream on a stock market and suddenly have $20m in walking around money?  That would be AWESOME.  It’s legalized gambling, wrapped up in unrealistic price inflation by hometown fans!  Similarly, you could do that for music acts.  What if Bruno Mars could sell a profit percentage of his first CD to raise money to get it produced himself?  Automatic democratization of the music industry, and no more predatory tactics by the record labels trying to milk an artist for everything they can.

So yeah, I love this.  I’m also open to receiving stakes

I’ve always had an interest in education.  I grew up with a mother who was a high school math teacher and is now an elementary school counselor.  Her father was a professor at University of Kentucky, Tulane University, and University of Georgia.  My aunt has been a teacher for as long as I’ve been alive.  And obviously there was my summer internship at Flat World Knowledge where I got to work with a company that is designing open-source college textbooks.  There’s a lot of history to explain why I’m so close to it.

Lately, however, I seem to be spending even more time thinking about the education system and ways to change it.  I’ve also been reading a lot more articles that have been linked to me about schools and students and the challenges they face.  Here’s a collection of some in case you’re interested:

A Peek at Apple’s Plans to Re-invent Textbooks (Gizmodo)
Apple iPad vs. Kindle DX: Which is Better for Education (PC World)
5 Reasons Why the iPad Won’t Change Higher Education (PC World)
Annual Poll of Freshmen Shows Effect of Recession (NY Times)
Open Educational Resources (Opensource.com)
CC Salon NYC: Opening Education (Creative Commons)
An Educational Extinction Event (Dr. Dick Lipton, GT Professor)
Free Education Can Be Profitable (The corridor of uncertainty)
Universities Find Free Classes Don’t Hurt Enrollment (Ars Technica)

Whew, that’s a lot.

I’m not really sure if I’ve been actively searching these out more, or if it just so happens that more are showing up in front of me.  I’m also not sure if it really matters since I end up reading them all anyway.  Whatever the cause, I find myself pushing a lot more in that direction so maybe I’ve finally picked an industry to work with.

The third book in my quest also doubles as the first book I had to read for school. There will be a few more of these (and a couple I read that I don’t count) but they probably won’t be as interesting as this one.

Guy Kawasaki is pretty well-regarded for what he does, which is basically tout the value of companies he likes. He started doing it at Apple and now he does it to help promising young companies raise venture money. I read a piece by him recently where he jokes about how often he gets mentioned as an entrepreneurial thought leader even though he’s never started a company. I’m willing to be that in private he’ll admit that he deserves a little more credit than that, because the things he shares can be eye-opening for people new to the game.

This book does a great job going over what needs to be in your DNA to start a new venture. It’s obviously written for the standard startup company, but we were supposed to read it as an instruction manual for non-profits/social enterprises. So, from that perspective, here are a couple passages I found enlightening:

Q. What is the starting point of evangelism?
A. The starting point is a great product or service (DICEE) that empowers people and improves their lives. Customers must be able to say, “This is good. This makes the world a better place.”

This comes from the first FAQ in chapter 5, “Make Evangelists, Not Sales.” Honestly, I could have copied this entire chapter because it’s that good and relevant to both for-profit and non-profit enterprises. When you can create evangelists you create salesmen. Only they’re salesmen who don’t want to get paid and feel as though it’s their duty to change the mind of anyone who disagrees. Sure, that could be annoying for the non-believers, but it’s great for you as the owner of the company.

This is a prime example of the principle, “Don’t ask, just watch.” When you ask people what they want, they think about how they should answer; they want to look smart; and they are influenced by what other people say.

I wanted to write a whole other blog post about this topic. I was gonna title it the Heisenberg Uncertainty Principle of Marketing to prove by nerdiness and pontificate on my choice to study marketing when there is so much research out there that shows people are too messed up in the head to get anything worthwhile out of it. Oh well.

I’d say this is the best book I’ve read so far, but that’s mostly because of how directly it relates to the things that interest me. Also, I’m pretty sure I was the last person on this bandwagon so I doubt you haven’t read it if you’re interested in this space. However, if I’m wrong, let me try to be the final person to push you over the edge.

Rules For Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services