01 December 2016

How to Start a Business & Ignite Your Life -- the review

I assigned this 2012 book to my "entrepreneurial production" class because I like Ernesto Sirolli's perspective on start ups and entrepreneurs.

(His 1999 book, Ripples from the Zambezi: Passion, Entrepreneurship, and the Rebirth of Local Economies is really great for understanding how he learned to just "shut up and listen" -- watch his TED talk -- but it's not as pragmatic as this book.)

The main point of this book (subtitle: "a simple guide to combining business wisdom with passion") is that few entrepreneurs succeed on their own. Teamwork is useful necessary because:
  1. A startup product or service needs attention to production, marketing and finance. Pretty much everyone is better or worse at each of these skills.
  2. Teams share the burden of work as well as limiting (not) brilliant ideas that can derail or distract efforts to produce value for customers.
  3. Communication among team members forces them to quantify and qualify ideas that may be "obvious" in their head but make little sense when explained to others.
The book is short (100pp), clear and useful. Rather than discuss it chapter by chapter, I will leave a few notes that may interest potential readers.
  • Passion ("suffering") is important for entrepreneurs, as success is neither quick nor inevitable.
  • Outsiders are usually ignorant of what a community needs (the development aid trap), so they should try to find and enable passionate locals with solutions.
  • Entrepreneurs often have good ideas but little experience. That's why they may need partners who can speak from experience and/or fill in areas where the entrepreneur is weak.
  • Every team must have at least one person with a comparative advantage in each of the big three roles: production, marketing and financial management (P, M and FM). A division of labor improves time allocation, speeds decisions, and drives innovation on each of these critical margins.
  • If you don't like (or can't do) P, M or FM, then find someone who can. They may even work for free if they have passion.
  • Good production people are always looking to improve but don't let perfection prevent sales!
  • Good marketers genuinely want to help people, not dump crap on them.
  • Good financial managers can help you understand where you are and where you might go, using only realistic numbers.
  • Investors back teams, not ideas. A good team will write a good business plan. A bad business plan means the team is too weak in talent or cooperation.
  • "Entrepreneurship is much more a social game than an individual one. The most striking characteristic of a successful entrepreneur is perhaps the ability to identify, cultivate, and use other people’s competencies."
  • If you need a partner for P, M or FM, then find someone you like in that area and ask for a referral. They may not be free, but they probably know someone who is.
  • "Solitude is the death of the entrepreneur. Just as you must look inward to understand your passion, you must look outward to find others to help you. Success in business rests primarily on these two actions. Never be reluctant or embarrassed to seek assistance, and do so with prudence and optimism. Remember, there are “magical helpers” out there waiting for a passionate “hero” to commit to the entrepreneurial journey."
Bottom Line: I give this book FIVE STARS for providing useful advice to would-be entrepreneurs and insight to those of us who want to understand the elements of success. Find partners and bring value to the world!

29 November 2016

Interdisciplinary incentives

Continuing from this morning's other post...

In my most recent newsletter (subscribe here!), I wrote:
I'll be presenting at an interdisciplinary education conference in Amsterdam in February. I'm still surprised and dismayed at how hard it is to get academics to talk outside their disciplines (like economists talking to hydrologists), let alone outside the ivory tower. The reason is (a) it takes work to translate jargon into the common tongue and (b) a total lack of professional incentives (i.e., publish or perish), which explains why so much academic research brings few insights (partial analysis is useless) or impacts (inaccessible means unconsidered).
To this, Ed Dolan replied:
I agree with your interdisciplinary comments. One of the pleasures of being retired is being liberated from some of those constraints. I have been giving a series of talks at a local discussion group of almost all retirees in our small town here. At the latest one (Free Trade under Fire) there were about 40 people, at least 10 with PhDs in various fields (only one other economist) and another dozen or so with advanced degrees in engineering, law, or medicine. More than an hour of lively and insightful discussion following the slideshow. In contrast to a discussion with students in the audience, the participants had not only opinion but experience. In contrast to a faculty seminar within an econ department, or at an econ conference, there was no feeling that the discussion was a competitive event in which the goal was to ask questions that made the discussant look brilliant and the presenter look stupid.

The economist as public intellectual

Gordon Tullock (1984):
Most economists only occasionally give lectures to something like the Rotary Club. I am suggesting that this aspect of professional life be sharply increased. Furthermore, I am suggesting that you become an expert on some rather obscure topic instead of giving your lecture to the Rotary Club on what is right or what is wrong with Reaganomics. This is indeed a change from the normal academic life but not a gigantic one. I am not suggesting that you devote immense amounts of time to these joint projects, merely that you do indeed devote some time to them. In a way it may be a pleasant change from the more profound and difficult work that I am sure mainly occupies your time.

[snip]

Even if there were no beneficial impact on your career, nevertheless, I would urge it on you. All of us are, to some minor extent, charitable and this is a particularly convenient way for economists to work out their charitable feelings. Getting rid of the British Columbia Egg Board* might not impress you as a major accomplishment, but individuals can expect to have only small impacts on the massive structure that we call modern society. It is likely that you will do more good for the world by concentrating on abolishing some such organization in your locality than the average person does—indeed, very much more. It is an unusual form of charity, but a form in which the payoff would be high. But although such work falls squarely in the path of virtue, it also has positive payoffs. You can, to repeat my title, do well while you are doing good.
Bottom Line: I'm glad to have such a distinguished thinker as an inspiration for my work.

* The BCEMB, sadly, is still screwing Canadians ... just as the milk and alcohol boards are.

24 November 2016

For whom are fisheries managed?

A fisherman writes [edited for anonymity]:
I want a license to fish X. I made an application, but they said I would have to buy out an existing fisher. The cost of which would be approximately one million dollars even if anyone would sell.

The X fishery was developed approximately 25 years ago out of experimental licenses that were given to those that took part in the experimental fishery. Those fishers have formed a group, but they have never fully caught their quota for X in all those years.

I proposed that I be allowed to fish only the average of the past five years uncaught quota by fishing where the "group" did not chose to fish. Ultimately this was rejected.

I am asking for some advice on attacking this situation. From your perspective is there a reasonable argument that I could put forward?
In reply, I wrote:
It seems that the regulator is defending the property rights of the existing folks as a means of (1) protecting their (cartel) profits that would fall if you brought X to market and (2) potentially protects the X fishery from pressures on other places that may serve as nurseries for the commercial catch.

The purpose of cap and trade is to keep the fishery sustainable and profitable -- not to allow entry by those who may like to make money. The only angle I'd predict you could get would be to introduce some innovation that promises enough profits that you could buy out an incumbent. But, as you said, that's a lot of money.

My only suggestion is that you work for a permit owner who wants to retire, perhaps on a partnership that transfers quota to you over 10 years... like an apprentice.
Bottom line: New fishermen do not have the right to start fishing in sustainable fisheries.

23 November 2016

Interesting links

I stopped "speed blogging" about a year ago as I switched to twitter and (for my students) Facebook. Now that I am off both (except for tweeting for Life plus 2 meters -- without much success), I will return to posting interesting links here.
  1. The Society for Decision Making Under Deep Uncertainty (free membership :)
  2. I donated $100.22 to the American Civil Liberties Union. Trump tower's ZIP is 10022
  3. The "Lex Mercatoria" (private merchant courts dating from the 1450s) never existed
  4. The power of peers: self-evolving institutions that aid development
  5. Basic income lowers risk and raises productive fulfillment
  6. "We’re heading into dark times. This is how to be your own light in the Age of Trump"
  7. Yes, you can be too successful as a startup (eatable cutlery!?!)
  8. Michael Lewis on the intellectual foundations of MoneyBall
  9. Trump the Troll (analysis by cyber-psychologist) is now paying fraud damages. He's also making business deals with foreign leaders to benefit himself his daughter. People who voted for "the guy who makes deals" may not have realised that he wasn't talk about making deals for them.
  10. James C. Scott: "I was trained as a political scientist and the profession bores me, to be frank. I am truly bored by mainstream work in my discipline, which strikes me as a kind of medieval scholasticism of a special kind. People ask me about the intellectual organization of my interdisciplinary work, and I have to say, it’s the consequence of boredom and the knowledge that so many other things had been written about peasants that are more interesting than anything political scientists have written about them, that I should go to those places and learn these things and read things outside of the discipline like Balzac and Zola, novels about the peasantry and memoirs."
H/Ts to MV and CD