Radio Free Enterprise

Steve Jobs and the folks at Apple have done it again.

The Apple iPhone that was unveiled during Jobs’ annual tent revival meeting at the MacWorld Expo in San Francisco on Tuesday is flat-out fantastic. And it will be my next phone when it becomes available in June.

Most of the reviews I had been reading were positive - but tenative, describing how big of a risk Apple’s push into the phone business represents and all the ways it might blow up on them. I didn’t have a chance to watch the online video of Jobs’ (I refuse to call him “Steve,” after all, I hardly know the guy!) demonstration of the phone until this morning. What I saw blew me away.

Being as this is a business-oriented site, I won’t go into all of the cool ways you can listen to music, watch movies and look at photographs on the phone. For many users like myself, those features are just icing on the cake.

No, what I want to talk about is how functional the iPhone is as a communication device, making standard, repetitive tasks like placing and answering phone calls, managing voice mail, conferencing lines together, scrolling through your address book, reading and writing emails and text messages - simple, easy, fast and intuitive.

Add a few little features like the fact that it is running Apple’s OSX operating system - not some watered-down “mobile OS,” and that it uses a full-blown web browser allowing complete integration with mobile-friendly sites like Google Maps, and you’ve got a device that will simply become a must-have for most business owners and salespeople.

I could go on and on about this little beauty but I think my boy Steve does a much better “job” explaining how insanely great the new iPhone is. Surf on by the Apple site to watch his presentation for yourself.

Did I mention it doesn’t have any buttons?

You might be surprised to learn that a $37 billion dollar economy revolves around the 2 million+ inmates currently serving time in America’s jails and prisons.

And while you might imagine that much of that $37 billion goes to construction, food service and concertina wire, it may not have immediately occurred to you that millions upon millions are being spent every year on things like pre-paid calling cards for people on the inside and even self-defense/orientation courses for people facing imminent incarceration.

The opportunities in this highly-targeted market are enormous - for companies of all sizes and from myriad industries. Don’t think you have a shot at a potential penitentiary payday? Listen to what this big cheese has to say:

“Our core business touches so many things - security, medicine, education, food service, maintenance, technology - that it presents a unique opportunity for any number of vendors to do business with us,” Irving Lingo, CFO at Corrections Corporation of America

For more information, check out this fascinating article by Michael Myser at CNNMoney.com, which was originally published in Business 2.0 Magazine (a Frankie Fave). You’re “bound” to learn a thing or two.

And don’t worry about this marketplace drying up anytime soon. The current prison population of 2 million is up from 744,000 just 20 years ago and, according to the Federal Bureau of Justice Statistics, 52% of released convicts are back in jail within three years.

Give my regards to Sing Sing!

As has been said many times before on this site, nothing can communicate more information more quickly than moving pictures with sound. And now, according to this article in today’s Wall Street Journal, Fortune 500 companies appearing to be waking up and smelling the pixels.

“When the people involved relate how their life has changed and you actually see it, it’s far more compelling,”

That’s what Monsato public relations manager Tom McDermott had to say about a video his company recently produced which shows how their genetically modified crops had improved the lives and livlihoods of farmers in Australia, the Phillipines and elsewhere. As the Journal’s Bobby White put it succinctly in the article, Monsanto wanted to “go beyond statistics to make a case for bioengineered crops.

Corporate behemoths like Monsanto, Sun Microsystems, Wal-Mart and General Motors are not embracing online video is not because it’s the latest fad. They are rapdily adopting it as a marketing channel because the combination of the communication power of video with the global reach of the Internet - at the amazingly low costs offered by today’s technology - presents, to use a famous movie quote, “an offer they cannnot refuse.”

Non-media companies, until recently, had been relative laggards in the video field. But that’s changing rapidly, driven less by the desire to entertain than to deliver corporate messages more effectively via their Web sites.

All of this wonderfulness applies even more directly to small and mid-size businesses (SMBs), because of their lower marketing budgets and more niche marketplaces. Delivering high-quality specialized information directly to the desktops of those most interested in that subject matter is a great way to connect your brand and offering to those most likely to purchase from you.

Now let’s get out there and start filming! Don’t forget the B-roll Billy!

New Year’s Day is a popular time for predictions about what the coming year will bring. Oftentimes, pundits will go way out on a limb with wild crystal ball prognostications. Other times they simply state the obvious.

As I enter my 34th year of working in and observing small and mid-size businesses (SMBs), I know that anything can happen in any given year - and often does. But, at the same time, most “amazing” developments are simply the logical next steps of factors that have been at work for quite some time.

With that experience to draw upon, here’s what I believe the coming year has in store for entrepreneurs.

1) Downward pressure will continue on both your costs and your prices.
The Wal-Mart Effect has hit every segment of our economy. The world’s largest retailer has taught every consumer to expect the very lowest prices and every vendor to find the most efficient processes. Your challenge is to take advantage of the lowered costs while resisting the urge to lower your prices. The former is relatively simple thanks to Sam Walton and your trusty Internet connection. The latter requires you to deliver an offering whose value is truly superior to your competitors.

2) E-Commerce will increase its attack on bricks-and-mortar businesses.
During the 2006 holiday season alone, e-commerce sales were up more than 25% over 2005. Apple’s iTunes Music Store (and the overall shift away from CDs to downloadable media) forced the venerable Tower Music to close every one of its gigantic stores permanently. The increasing cost of gasoline is forcing more consumers to buy online instead of driving to the mall. Every business owner must assess their company’s vulnerability to this trend and create a strategy which either embraces e-commerce or successfully defends against it.

3) Outsourcing will become increasingly mainstream.
Over the past year, I have personally done more work with people I have never met than ever before. I have worked with folks in Arizona, Michigan, Pennsylvania and Texas whom I only know via email and telephone conversations. I have solicited and received proposals from people in China, South America, India, Eastern Europe, etc. for web site work and other types of programming. While outsourcing has been in the news for a long time, I believe that 2007 is the year that the majority of SMBs will either buy through it or sell through it.

4) Marketing will be both more challenging and more rewarding.
No matter what year it is, my pat phrase that “For most SMBs, Marketing is a mystery and sales is a dirty word,” still holds. The difference in 2007 is that marketing may become even more mysterious while sales becomes a little easier to swallow. Why? Because of all of the new marketing channels and opportunities opening up through multimedia on the Internet. On this site alone you will find text postings, podcasts, streaming video, screencasts, Google ads, links to Amazon.com, etc. These new channels mean that business owners won’t have to do as much face-to-face selling (the kind that most recoil from), as long as they’re willing to learn how to implement these powerful new tools.

I’m sure 2007 will also bring us our usual share of dot-com millionaires and board room scandals, postal rate increases and tax legislation, minimum-wage discussions and immigration law reform.

After all, some things never change.

Many entrepreneurs dream of attracting millions of dollars in venture capital (VC) funding to bring their innovative business concept to the world.

It’s not until they’ve gone through the meat-grinder process of pitching VCs, negotiating with VCs, working with VCs, giving up huge chunks of equity to VCs and taking orders from VCs that they realize that their dream was at least one part nightmare.

Venture Capitalists are not interested in seeing you fulfill your dreams. They’re interested in making money. If you’re able to fulfill your dreams and make some money for yourself along the way, all the better. But those two criteria are not necessary for them to judge one of their investments to have been a success.

This short rant is my way of saying Be Careful What You Wish For when it comes to landing VC funding.

With that off my chest, pray allow me to relate an intersting article I came across on the Money magazine web site. Reporters from Money asked a group of successful venture capitalists to share their ideas on what types of companies they would fund if they could just find the right people and business plans. The result of the survey was a list of 20 concepts which can be reviewed by clicking on the headline of this posting.

Two things I found particularly interesting:

1) Most of the numbers and timelines (as in how much money they would invest over what period of time) the VCs cited were unrealistic. For example: $5 million to fund a 20-person team over the course of 3 years to develop a heads-up display to retrofit on automobiles. Payroll and overhead for a 20-person team in any high-cost metropolitan area is going to bust that budget long before we even talk about doing any research and development.

2) The idea of VCs pitching their own ideas and recruiting entrepreneurs to come in and make them happen turns the usual approach on its head. Entrepreneurs are generally willing to put up with all the hell and dilution of ownership that accompanies VC participation in order to make their own dreams or business ideas manifest - not those of someone else. Now, if an entrepreneur sees an item on this list that is in direct alignment with what he is currently working on - great! Otherwise, I just don’t get it.

You see, more likely than not, after spending 3 years and $5 million, that heads-up display venture will be no more. Without a dream providing at least the mirage of light at the end of the tunnel, the people on the team are going to have a hard time coming into work every day.

Nobody seems very excited about traditional radio these days.

In an era of streaming video, satellite radio, podcasts and scores of entertainment alternatives from on-demand movies to the XBox 360, good old fashioned terrestrial radio (as in AM and FM) seems like a dusty afterthought from an age gone by.

So why is it that Google, the standard-bearer for all things leading-edge, is reportedly hiring up to 1,000 people to lead their charge into an industry that produced it’s first commercial broadcast in 1927?

I’ve got to figure they see money in there somewhere.

While Google is notoriously tight-lipped about their plans in all of their ventures, it is being reported that they are putting a great deal of effort into hiring veteran radio ad salespeople and paying them up to 50% more than radio firms to sell the same spots. The company also recently paid over $1 billion to acquire DMarc Broadcasting, which automates the radio spot buying process for advertisers.

Reports are also coming out that Google may be interested in purchasing a stake in Clear Channel Communications, which owns local radio stations across the country and controls approximately 20% of all local radio advertising inventory.

Radio is a uniquely personal medium which makes it an excellent advertising channel. Listeners are paying attention to what’s coming live from their speakers and local stations lend an element of connection that satellite companies and recorded programs cannot match.

I’ve been a fan since listening to crackly nighttime baseball broadcasts on a transistor radio as a kid and have also had the great fortune to be behind the microphone many times on both AM and FM. This lifelong love affair makes it difficult for me to be objective about the future of what for me is a cherished medium - one whose demise would be heartbreaking.

Google’s huge move in support of traditional, terrestrial radio is music to my ears.

When I was studying Economics in the early 1980s, the battle between Capitalism and Communism - between free market action and central market control - was just about over. By that point just about everyone had agreed that individuals and corporations acting in their own best interest would move the Quija board of commerce to everyone’s benefit; what the famous 18th Century economist Adam Smith called The Invisible Hand.

Later that decade, Smith’s “Hand” pushed down the Berlin Wall. Today Russia has denounced Communism but still hasn’t made up it’s mind about freedom of action and so is mired in a seemingly endless cycle of shortages and corruption. China’s less-restrictive but still authoritarian approach has yielded results so astonishing that there is some question how long The Party can maintain its powerful position. What are called Black Markets in Cuba are actually free markets forced to operate in the shadows. With the imminent demise of Castro, perhaps the American embargo can end and that country’s new leaders will take a new look at capitalism.

One point that is often lost in this type of ivory tower discussion of global economics is the impact that free enterprise can have on those at the bottom of the socio-economic ladder. Any aspiring entrepreneur, no matter their education or social stature, can elevate themselves through hard work and dedication if they are only given the tools and knowledge to succeed and the opportunity to engage in free commerce with their fellow citizens.

Such is the premise and mission of Trickle Up, a New York City-based orginization that provides seed capital and training to micro-enterprises in developing areas worldwide. Over the past 27 years Trickle Up has helped tens of thousands of often illiterate entrepreneurs provide for their families through the fruits of their own enterprises.

Most Trickle Up clients are women who use the regimented business training, ongoing support and accountability - and $100 in seed capital - to begin earning money from the sale of crafts, vegetables and services such as laundry and child care. Over 80% of these business owners succeed, providing their children with much higher levels of nutrition and education, causing them in turn to be more productive members of society whose valuable production trickles up to the entire country.

One more benefit these children receive is that of an entrepreneurial role model whose efforts they can emulate to continue to become evermore productive.

I applaud Trickle Up for their mission and 27 years of successful application of the free enterprise concept to those who can benefit from it the most. If you would like to learn more about - or make a contribution to - Trickle Up, you can visit them online at http://www.TrickleUp.org or telephone them at 212-255-9980.

The idea of attracting new customers through the offer of free samples is nothing new - old school products like laundry soap and perfume have done this for decades.

But the Internet lets online service providers to take this approach one step further: offering valuable services at absolutely no charge and making huge profits through adjuncts and add-ons.

Venture capitalists love this approach and have dubbed it “Freemium” which refers to how the basic service is offered free and the money is made on buyers of premium-level services.

Well-known examples are Google (search is free to users, advertisers pay the bills) and Adobe Acrobat (the reader software is free but tools to create Acrobat files are not). Hundreds of other examples include You Tube, MySpace and Blogger.

If you are considering an approach like this for your business you would do well to click on the headline above to read a short article on the topic from Business 2.0 magazine. In it you will find a list of “Nine Tips to Make Your Freemium Service Soar.”

My favorite quote form the article is that by not charging people “you remove one of the major obstacles to product adoption.” Brilliant!

I found a fascinating article by Janet Adamy in today’s online version of the Wall Street Journal. What appears below are a few tidbits from that piece along with my take on what it all means for business owners.

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While most fast food chains are pulling back on their expansion plans, Subway is continuing to open restaurants at a rapid clip and in fact is now the largest such firm in the U.S. with over 20,000 locations. McDonald’s, for camparison, has approximately 13,700 stores.

One of the ways that Subway has succeeded where their competitors have faltered is in the area of “non-traditional” locations - defined by Subway as any place you wouldn’t normally find a restaurant.

Such as?

Such as inside a German car dealership, at 110 hospitals, in a Goodwill Industries store, a downtrodden church in upstate New York and The Jewish Community Center of Cleveland. At the JCC the menu was altered to provide only kosher fare and an Orthodox Jew is on hand at all times to oversee food preparation.

Sound crazy? That location is #5 in sales out of all Cleveland locations in spite of only being open half a day on Fridays and closed all day on Saturdays in observation of the sabbath. Cleveland’s top selling Subway is inside a hosptal.

I guess this is sort of a “think outside of the box” or “think outside of the bun” success story. Subway didn’t let the fact that they started out much smaller than McDonald’s or other burger chains limit their vision of what they could become. And their willingness to be flexible in altering the basic store layout to meet the needs of as many non-traditional locations as possible has paid off big time.

How big?

Right now 22% of their locations are non-traditional, up from 13% ten years ago.

Food for thought.

Late last year I posted an artilce to Radio Free Enterprise about what I perceived as the hype surrounding video on the Internet.

I noted how I had been creating video for over 20 years and had been posting it online for so long that the MOST RECENT of my video postings was over 3 years old.

The premise of my post was “What’s the big deal? This is not news!”

I was wrong.

What makes the “new” world of online video different is the variety of free distribution channels available and the possibility that hundreds, thousands or even millions of people can and will view your creation on YouTube, Google Video or any of the scores of other online video aggregation sites.

These sites will convert your video to a common format (usually Flash), post it on their site, let you use their servers and their Internet bandwidth, make it available via search engines, and even offer code allowing complete strangers to post your video on their sites - still using the server power and bandwidth of the video aggregator.

The power of this model to transform both entertainment and marketing is profound. YouTube is only 18 months old but already claims to display over 100 million videos per month. That’s a lot of eyeballs.

But that’s not all: Google and other online advertising media are testing and rolling out video ads which can be placed by small business advertisers in place of text ads on search result pages. While it will take time to find what works best in this new medium, the potential exists for companies of any size to present “television commercials” directly to people who have the most interest in learning about their offering.

I hearby eat crow and promise to keep a close eye on developments in this area - reporting back as I see great ways that business owners are putting the new medium to use.

Stay tuned!