So one thing I have not been able to wrap my head around is this current push for electric cars and even venture capitalists financing electric car startups. What makes anyone think that electric cars are viable? With the current technology, there is no electric car capable of driving the same distance as a car powered by an internal combustion engine. And the ranges of the current electric cars that do exist, those are assuming you aren't using the air conditioning or heater, along with other features, which is unrealistic considering one will usually have to use one of those during long parts of the year.
In addition, because the car is electric and powered by batteries, if you say mash the accelerator to go from 0-60 fast, you can really drain the batteries rather quickly. And then of course there is the charging. The quickest an electric car can be charged is about four hours (and that's pushing it; it takes more around five to six hours or longer). Who wants a car like that?
But let's assume that they developed an electric car that has the range of a regular internal combustion vehicle and takes about five minutes to charge. Okay, well what happens if you run out of charge? For example, during the Hurricane Katrina evacuating, there were quite a few cars that got abandoned on the sides of the freeway because they ended up running out of gas. The thing is, with a fuel-powered vehicle, you only need to get a gas container, put a few gallons of gas in it, put the gas into the tank, and you'll be on your way. Even the most fuel-inefficient truck getting around say ten miles per gallon could go 40 miles on four gallons of gas from a gas container. Most vehicles today get better mileage than that. A small fuel-efficient car could go really far on just four gallons.
But with an electric car, if this happens, you've got no way to quickly partially charge the car up. If all those abandoned cars were electric powered, you'd have to bring in trucks to haul them all away. Now maybe if battery technology advances to the point that the batteries of electric-powered cars are smaller, lighter, last a LOT longer, and can be charged quickly, then they will also have say charge packs that you could buy. Basically it would do the same as a gas container, except instead of putting gas into it, you take it to a charge station, charge it up, then take it to your car and it gives the batteries a partial charge to get you to a charge station.
But the thing is, investing in electric cars now in the hopes of such advancements in battery technology in the near future strikes me as just silly. Same with solar panels. The technology isn't viable enough. Both batteries and solar technology need breakthroughs similar to the transistor and how it replaced the vacuum tube in computers. Transistors revolutionized computers and electronics. Then the microprocessor was invented, because they figured out you could create the equivalent of thousands of transistors on a tiny little chip through special engineering and manufacturing.
Hopefully, we'll see some type of similar breakthroughs for batteries and solar technology in the future, but until then, electric cars make absolutely zero sense to me. One thing interesting to think about is how will consumer electronics be influenced by such new battery technology? I mean think about it, batteries that can last a looooooong time and that also can be charged nearly instantly, that would mean cellphones, laptops, etc...with batteries that last days. And when the charge depletes, it takes only a few minutes at the most to re-charge it. As an aside, I'll bet the battery industry sure isn't going to like that!
Some environmentalist types talk about how the oil companies supposedly have a conspiracy to prevent any major research into something like electric cars or solar technology, but has anyone ever quesitoned what the stance of the battery industry is towards revolutionary batteries that would make electric cars viable? Such batteries would also have application in everything else, meaning you wouldn't need to buy batteries nearly as much anymore, which would hurt their profits.
Friday, February 24, 2012
Sunday, February 19, 2012
A Day Made of Glass
Very intriguing vision of the future by Corning. I hope I live to see such technology! I bet that we'll also have personal humanoid robots and cars capable of driving themselves if one so wishes. What will videogames look like!?
Friday, February 17, 2012
Polar Spiders
So this is just a random observation, but as everyone knows, one of the concerns regarding global climate change (or global warming, whatever they are calling it right now), is the concern over the effect it will have on the polar bears. And the global warming proponents (by that I mean the people who believe in global warming) have really found a great mascot with the polar bears, as they are so cute and cuddly-looking. "Save the Polar Bears!" is the message (nevermind polar bears are man-eaters and very vicious). Nonethless, well it's understandable still that no one wants an animal like polar bears to be harmed by global climate change if it is really occurring.
But what gets me is that most of the people soooo concerned over the polar bears probably wouldn't give a damn if they were instead of bears, big hairy giant polar spiders. For example, imagine if there was some gigantic polar version of the tarantula, with long white hair, the same size as the polar bear, except instead of looking cute and cuddly, it's a monstrous eight-legged, hairy, multiple-eyed arachnid. Imagine trying to do the marketing over that! Many people would probably think, "Global warming will kill off the polar tarantulas!? Great!!!"
Yet the polar bears, which are killers just as much as spiders are, get a pass, all because they are furry and cute-looking.
But what gets me is that most of the people soooo concerned over the polar bears probably wouldn't give a damn if they were instead of bears, big hairy giant polar spiders. For example, imagine if there was some gigantic polar version of the tarantula, with long white hair, the same size as the polar bear, except instead of looking cute and cuddly, it's a monstrous eight-legged, hairy, multiple-eyed arachnid. Imagine trying to do the marketing over that! Many people would probably think, "Global warming will kill off the polar tarantulas!? Great!!!"
Yet the polar bears, which are killers just as much as spiders are, get a pass, all because they are furry and cute-looking.
Wednesday, February 15, 2012
Is A Re-Election of President Obama an Endorsement of His Agenda?
So it is probably pretty apparent that I lean rightward in my political leanings. I am not a strict right-winger or left-winger, but I guess you'd call me center-right, or a classical liberal or a believer in human freedom (classical liberalism is not the same as the modern American definition of liberal which tends to refer to people who believe in a large amount of State intrusion into the economy and society but are socially liberal). One thing some commentators I have noticed have been saying as of late is that if President Obama is re-elected, that this is an endorsement for basically taking the country down the road (or continuing to take it down the road) of European-style social democracy. However, I do not agree with this, for two reasons:
1) As Ayn Rand once said, "There is no such thing as a collective brain."
2) The Republican candidates seem to be so bad that if Obama wins, it might not be so much an endorsement of social democracy as a rejection of what they saw as a worse alternative. Now some might say that a rejection of the Republican alternative is an endorsement of social democracy, but the thing is that the average voter may not even really understand these issues. For example, does the average voter even know what social democracy is? A Republican candidate with a strong message about the difference between the socially-democratic model (large social welfare state, large amounts of regulation, government seeking to steer and drive the economy, etc...) versus the "American model" (maybe more appropriately termed the "classically-liberal model"), consisting of limited-government, a strong private-sector unhampered by intrusive government, overall low taxes, fiscal conservatism, a fiscally-responsible government, etc...and the policies the Republican will implement to do this, could probably beat Obama.
Such a Republican could point out the dangers of the debt and deficit the country is running, how this president has done virtually nothing to address the issue of the debt and deficit, and also the failure of the European social-democratic model (the Europeans have virtually no defense budget and higher taxes yet still struggle to maintain their social welfare states, some of them having been pushed over a cliff economically due to this recession).
But as it stands, the current crop of GOP candidates is as follows:
1) Mitt Romney: There is no real platform he is running on. Nothing about social democracy and how America should not go down that route, nothing about how to repair the debt and deficit or the dangers of the debt and deficit, nothing about what he will do to really get the economy growing again, etc...instead, his entire platform seems to be, "I'm a successful businessman, so vote for me."
In addition, he seems to be completely incapable of defending his own record in the private-sector. He and his campaign were blindsided it seemed when Republicans such as Newt Gingrich began criticizing his time at Bain Capital. Did it not occur to him that this would occur? Maybe it occurring from Republicans was a shocker, but it would occur nonetheless. As a private-equity person, Mitt Romney, should be well aware that his political opponents would try to pervert his record, saying that he was a vulture capitalist who hunted for troubled companies, bought them up, fired everyone, and sold the company off for parts. They will do things like get some old woman and some old man and make commercials showing them talking about how they worked their whole lives at X company, until Romney came in and fired everyone and destroyed the company.
That should be common sense! If you are a private-equity person who saved struggled companies and now are running for political office, that you will be attacked like that should be something you're fully expecting and prepared for. Because if that's a career one has had, there will be companies that one tried to save and failed to do so, and also companies where one did have to fire people and put the company into bankruptcy, simply to save the entire company from going out of business.
This also leads to another point: bankruptcy. A lot of people think bankruptcy means the company ceased operations and went out of business. It doesn't. There are different forms of bankruptcy. Bankruptcy is a tool used to resructure a company. The airlines for example have been into and out of bankruptcy multiple times. So saying that under Mitt Romney, ten companies "went bankrupt" could technically be accurate, even though it's completely mis-leading (implying that all those companies went out of business). So one would think Romney would be prepared for such attacks. I am giving Mitt Romney the benefit of the doubt in that this is the type of private equity that he pursued, and that he was not literally a vulture capitalist. But let's say he was, then it gets even more confusing ,because one would think a guy who is an amoral politician, who made his money preying on and ruining companies, would again be smart enough to know he will be attacked on this and that he must be fully prepared to defend against it.
But Mitt Romney has instead shown incredible weakness defending his private-sector record. He did not respond strongly to the attacks from Newt Gingrich and Rick Perry at all. What he should have done was give a very strong response, defend what he did while at Bain, say people were wrongly trying to demonize him, and completely distorting his record (and give some examples). For example, point out that with GM and Chrysler, Obama did the same thing: GM and Chrysler were put into bankruptcy, people were laid off, dealerships were closed, but it was done to save the company.
Romney does not seem to be fluent in conservatism or libertarianism at all (small-L libertarianism). He does not seem to understand the intellectual foundation behind the principles and policies the right support. It's like he is just trying to run as a right-leaning guy when he really has no idea of the framework for those policies. So he is unable to explain them or talk about them well. Up against the Obama campaign's onslaught, if his sole platform is "I'm a businessmen so vote for me" and then he is unable to defend his background against criticisms, he will lose.
2) Rick Santorum: Rick Santorum is likeable, except that his sole platform seems to be based on social conservatism, which is problematic for two reasons: one, it doesn't talk about the other issues (debt, deficit, etc...) and two, in the general election, Americans tend to be more moderate-leaning, not wanting a very socially-conservative person. Perhaps Santorum could pull an Obama and run more centrist in the general (as Obama ran to the far-left during the Democratic primary in 2008, then ran to the center during the general election), but the problem here is that Obama had the media on his side. The media hid all of his far-leftwing statements throughout the general election, whereas with Santorum, if he runs as a far-right social conservative during the Republican primary and then tries to run as a centrist during the general (provided he was the nominee), the mainstream media will make very sure that they inform the public about how socially-conservative he is (like when he said that homosexuality is akin to incest). This, without a solid platform contrasting the Republican vision for America with the Democratic party vision, means he will likely lose.
3) Newt Gingrich: Newt Gingrich is probably the most intellectual out of all of the candidates, but he has the problem of occassionally saying things that blow up in his face and get him into trouble. All it would take is one such incidence during the general election to wreak havoc with his campaign. There is also the problem that he has a lot of baggage. He was fired from being Speaker of the House over ethics violations. He was later found innocent of these violations, but this is not widely reported. He also has the reputation for having cheated on his wife (wives?) and having served his first wife divorce papers while she had cancer. Plus his current wife, Callista, looks like a stepford bride. While this is not unto itself a bad thing, it just doesn't look good to have the reputation regarding wives Newt Gingrich has and to currently have a wife who looks like a stepford bride. If she was his wife of fifty years or whatnot, that would be a real benefit. But she is instead a secretary he was having sex with for six years before revealing this to then wife Marianne, and Callista does not look like she can relate at all to the plight of the average person (even if she can, what counts is how people perceive her (and in addition, how will people perceive a woman who was sleeping with a married man for six years!?)). The Obama campaign would have a field day running against Newt Gingrich and he would probably inadverdently provide them with ammunition.
4) Ron Paul: I know my opinion here is going to enrage any Ron Paul fans, but personally I see the man as a nut. A Grade-A Looney-Toon. He has a history of being involved with conspiracy theories (the latest being his seeing the border fence as a way to keep Americans in!?), he has what seems very amateurish and ideological understandings and views pertaining to foreign policy and economics (he wants to get rid of the Federal Reserve and go back to the gold standard, or at the very least, audit the Federal Reserve, which would mean outright politicizing it), and he has referred to the United States, in one of his books, as an empire and one of the most aggressive and militaristic empires in history. He would be to the left of Obama on foreign policy issues and if the nominee, Obama would win in a landslide election.
Out of the four above, it seems the nominee will either be Romney or Santorum. With either one of these candidates, if they run in the general election the way they are running right now, the American people may well re-elect Obama not out of any endorsement of his socially-democratic agenda but simply because the alternative candidates do not seem any better, or even seem worse.
1) As Ayn Rand once said, "There is no such thing as a collective brain."
2) The Republican candidates seem to be so bad that if Obama wins, it might not be so much an endorsement of social democracy as a rejection of what they saw as a worse alternative. Now some might say that a rejection of the Republican alternative is an endorsement of social democracy, but the thing is that the average voter may not even really understand these issues. For example, does the average voter even know what social democracy is? A Republican candidate with a strong message about the difference between the socially-democratic model (large social welfare state, large amounts of regulation, government seeking to steer and drive the economy, etc...) versus the "American model" (maybe more appropriately termed the "classically-liberal model"), consisting of limited-government, a strong private-sector unhampered by intrusive government, overall low taxes, fiscal conservatism, a fiscally-responsible government, etc...and the policies the Republican will implement to do this, could probably beat Obama.
Such a Republican could point out the dangers of the debt and deficit the country is running, how this president has done virtually nothing to address the issue of the debt and deficit, and also the failure of the European social-democratic model (the Europeans have virtually no defense budget and higher taxes yet still struggle to maintain their social welfare states, some of them having been pushed over a cliff economically due to this recession).
But as it stands, the current crop of GOP candidates is as follows:
1) Mitt Romney: There is no real platform he is running on. Nothing about social democracy and how America should not go down that route, nothing about how to repair the debt and deficit or the dangers of the debt and deficit, nothing about what he will do to really get the economy growing again, etc...instead, his entire platform seems to be, "I'm a successful businessman, so vote for me."
In addition, he seems to be completely incapable of defending his own record in the private-sector. He and his campaign were blindsided it seemed when Republicans such as Newt Gingrich began criticizing his time at Bain Capital. Did it not occur to him that this would occur? Maybe it occurring from Republicans was a shocker, but it would occur nonetheless. As a private-equity person, Mitt Romney, should be well aware that his political opponents would try to pervert his record, saying that he was a vulture capitalist who hunted for troubled companies, bought them up, fired everyone, and sold the company off for parts. They will do things like get some old woman and some old man and make commercials showing them talking about how they worked their whole lives at X company, until Romney came in and fired everyone and destroyed the company.
That should be common sense! If you are a private-equity person who saved struggled companies and now are running for political office, that you will be attacked like that should be something you're fully expecting and prepared for. Because if that's a career one has had, there will be companies that one tried to save and failed to do so, and also companies where one did have to fire people and put the company into bankruptcy, simply to save the entire company from going out of business.
This also leads to another point: bankruptcy. A lot of people think bankruptcy means the company ceased operations and went out of business. It doesn't. There are different forms of bankruptcy. Bankruptcy is a tool used to resructure a company. The airlines for example have been into and out of bankruptcy multiple times. So saying that under Mitt Romney, ten companies "went bankrupt" could technically be accurate, even though it's completely mis-leading (implying that all those companies went out of business). So one would think Romney would be prepared for such attacks. I am giving Mitt Romney the benefit of the doubt in that this is the type of private equity that he pursued, and that he was not literally a vulture capitalist. But let's say he was, then it gets even more confusing ,because one would think a guy who is an amoral politician, who made his money preying on and ruining companies, would again be smart enough to know he will be attacked on this and that he must be fully prepared to defend against it.
But Mitt Romney has instead shown incredible weakness defending his private-sector record. He did not respond strongly to the attacks from Newt Gingrich and Rick Perry at all. What he should have done was give a very strong response, defend what he did while at Bain, say people were wrongly trying to demonize him, and completely distorting his record (and give some examples). For example, point out that with GM and Chrysler, Obama did the same thing: GM and Chrysler were put into bankruptcy, people were laid off, dealerships were closed, but it was done to save the company.
Romney does not seem to be fluent in conservatism or libertarianism at all (small-L libertarianism). He does not seem to understand the intellectual foundation behind the principles and policies the right support. It's like he is just trying to run as a right-leaning guy when he really has no idea of the framework for those policies. So he is unable to explain them or talk about them well. Up against the Obama campaign's onslaught, if his sole platform is "I'm a businessmen so vote for me" and then he is unable to defend his background against criticisms, he will lose.
2) Rick Santorum: Rick Santorum is likeable, except that his sole platform seems to be based on social conservatism, which is problematic for two reasons: one, it doesn't talk about the other issues (debt, deficit, etc...) and two, in the general election, Americans tend to be more moderate-leaning, not wanting a very socially-conservative person. Perhaps Santorum could pull an Obama and run more centrist in the general (as Obama ran to the far-left during the Democratic primary in 2008, then ran to the center during the general election), but the problem here is that Obama had the media on his side. The media hid all of his far-leftwing statements throughout the general election, whereas with Santorum, if he runs as a far-right social conservative during the Republican primary and then tries to run as a centrist during the general (provided he was the nominee), the mainstream media will make very sure that they inform the public about how socially-conservative he is (like when he said that homosexuality is akin to incest). This, without a solid platform contrasting the Republican vision for America with the Democratic party vision, means he will likely lose.
3) Newt Gingrich: Newt Gingrich is probably the most intellectual out of all of the candidates, but he has the problem of occassionally saying things that blow up in his face and get him into trouble. All it would take is one such incidence during the general election to wreak havoc with his campaign. There is also the problem that he has a lot of baggage. He was fired from being Speaker of the House over ethics violations. He was later found innocent of these violations, but this is not widely reported. He also has the reputation for having cheated on his wife (wives?) and having served his first wife divorce papers while she had cancer. Plus his current wife, Callista, looks like a stepford bride. While this is not unto itself a bad thing, it just doesn't look good to have the reputation regarding wives Newt Gingrich has and to currently have a wife who looks like a stepford bride. If she was his wife of fifty years or whatnot, that would be a real benefit. But she is instead a secretary he was having sex with for six years before revealing this to then wife Marianne, and Callista does not look like she can relate at all to the plight of the average person (even if she can, what counts is how people perceive her (and in addition, how will people perceive a woman who was sleeping with a married man for six years!?)). The Obama campaign would have a field day running against Newt Gingrich and he would probably inadverdently provide them with ammunition.
4) Ron Paul: I know my opinion here is going to enrage any Ron Paul fans, but personally I see the man as a nut. A Grade-A Looney-Toon. He has a history of being involved with conspiracy theories (the latest being his seeing the border fence as a way to keep Americans in!?), he has what seems very amateurish and ideological understandings and views pertaining to foreign policy and economics (he wants to get rid of the Federal Reserve and go back to the gold standard, or at the very least, audit the Federal Reserve, which would mean outright politicizing it), and he has referred to the United States, in one of his books, as an empire and one of the most aggressive and militaristic empires in history. He would be to the left of Obama on foreign policy issues and if the nominee, Obama would win in a landslide election.
Out of the four above, it seems the nominee will either be Romney or Santorum. With either one of these candidates, if they run in the general election the way they are running right now, the American people may well re-elect Obama not out of any endorsement of his socially-democratic agenda but simply because the alternative candidates do not seem any better, or even seem worse.
Tuesday, December 27, 2011
Good Summary of "The E-Myth Revisited"
LINK - this is a good summary ,but for those who haven't, get the book and read it! The sequel, "The E-Myth Mastery" I think is very good too, although the first sixty or so pages of it can seem a bit flowery. But once it starts getting into the nuts and bolts about business, it is very meaty I think.
Should a New Entrepreneur Seek Venture Capital?
A lot of entrepreneurs may have dreams of building a business, getting venture capital money, and then building a super great company that will make them rich. I have no personal experience with this (yet anyway), but having studied the subject some, my opinion would be, for a brand-new entrepreneur, do not seek venture capital. Yes, there's the chance you could start the next Google or Facebook and get venture capital and become a billionaire very quickly, but this is extremely unlikely. There's a few bad things that can happen if you are a new entrepreneur seeking venture capital:
1) The business is likely your livelihood. It's how you feed yourself and your family if you have one. And the venture capitalists will know this. If so, they have a lot of leverage over you. They will know if you are desperate or not. This doesn't mean one can't seek venture capital with a new business, but if so, make it where it is purely optional; do not design the business from the get-go where it would absolutely need venture funding. This way, the venture capitalists will not have leverage over you if you can always reject their offer and walk away.
2) You lose freedom and control of your business once venture investors come in. They are in the business to make money, and in exhange for money, you give up equity in the firm, and hence a good deal of control. Now, the company no longer just moves along at the pace you want it to, instead, it has to grow and produce some real results, the kind that the venture capitalists want (it might produce results that are okay with you, but not okay with the venture capitalists). There might be things you want to do, directions you might want to take the business that now you cannot.
3) An inexperienced entrepreneur up against experienced venture capitalists can end up finding themselves made into an employee of their own company. The venture capitalists may well replace you as the CEO with someone much more seasoned and experienced in growing and operating businesses, and you may even find yourself fired from your own company, losing your equity stake.
2 and 3 can be especially stressful if the company is your livelihood. In my opinion, I would first build up a company that I completely own, then, after having built up a level of wealth in this sense, I would look for venture capital when starting up another company. At this point, you are far more experienced as an entrepreneur, maybe even in a position where you could yourself be a venture capitalist. You will have far more leverage over the venture capitalists in the sense that the company is not your livelihood. It is not the primary source of your wealth. You therefore will not be as inhibited about giving up equity in the company and hence control and the venture capitalists will know they can't push you around like an entrepreneur for whom the business is their livelihood.
In addition, two added benefits are that now that you have experience from having built a business already, you are not an inexperienced entrepreneur dealing with the venture capitalists, but rather an experienced one (and thus more able to spot any tricks they might be trying to pull on you), and also, because of this experience, the venture capitalists may be a lot less likely to want to replace you as the CEO, as you're not some inexperienced person in the CEO chair of the company in which they have invested money, but rather a successful person in your own right who already has built a prior successful business, who now is seeking to build another successful business. If anything, that's an incentive to KEEP you in the CEO chair.
I would follow this same strategy regarding partnering with other people to build a business as well. If two or three people decide to partner together to build a business, it can work, but then again, it can be very prone to failing, in particular if the partners' livelihoods are tied to the performance of the business. If two or three people decide to form a company because they feel they can create a company that will make them much richer, it is a lot easier emotionally if each partner already has their primary fortune elsewhere, and thus if the business venture fails, then they've lost money (which can still create hard feelings), but no one is now worrying about how to feed themselves or their family.
1) The business is likely your livelihood. It's how you feed yourself and your family if you have one. And the venture capitalists will know this. If so, they have a lot of leverage over you. They will know if you are desperate or not. This doesn't mean one can't seek venture capital with a new business, but if so, make it where it is purely optional; do not design the business from the get-go where it would absolutely need venture funding. This way, the venture capitalists will not have leverage over you if you can always reject their offer and walk away.
2) You lose freedom and control of your business once venture investors come in. They are in the business to make money, and in exhange for money, you give up equity in the firm, and hence a good deal of control. Now, the company no longer just moves along at the pace you want it to, instead, it has to grow and produce some real results, the kind that the venture capitalists want (it might produce results that are okay with you, but not okay with the venture capitalists). There might be things you want to do, directions you might want to take the business that now you cannot.
3) An inexperienced entrepreneur up against experienced venture capitalists can end up finding themselves made into an employee of their own company. The venture capitalists may well replace you as the CEO with someone much more seasoned and experienced in growing and operating businesses, and you may even find yourself fired from your own company, losing your equity stake.
2 and 3 can be especially stressful if the company is your livelihood. In my opinion, I would first build up a company that I completely own, then, after having built up a level of wealth in this sense, I would look for venture capital when starting up another company. At this point, you are far more experienced as an entrepreneur, maybe even in a position where you could yourself be a venture capitalist. You will have far more leverage over the venture capitalists in the sense that the company is not your livelihood. It is not the primary source of your wealth. You therefore will not be as inhibited about giving up equity in the company and hence control and the venture capitalists will know they can't push you around like an entrepreneur for whom the business is their livelihood.
In addition, two added benefits are that now that you have experience from having built a business already, you are not an inexperienced entrepreneur dealing with the venture capitalists, but rather an experienced one (and thus more able to spot any tricks they might be trying to pull on you), and also, because of this experience, the venture capitalists may be a lot less likely to want to replace you as the CEO, as you're not some inexperienced person in the CEO chair of the company in which they have invested money, but rather a successful person in your own right who already has built a prior successful business, who now is seeking to build another successful business. If anything, that's an incentive to KEEP you in the CEO chair.
I would follow this same strategy regarding partnering with other people to build a business as well. If two or three people decide to partner together to build a business, it can work, but then again, it can be very prone to failing, in particular if the partners' livelihoods are tied to the performance of the business. If two or three people decide to form a company because they feel they can create a company that will make them much richer, it is a lot easier emotionally if each partner already has their primary fortune elsewhere, and thus if the business venture fails, then they've lost money (which can still create hard feelings), but no one is now worrying about how to feed themselves or their family.
Summary of Ways to Build a Business/Wealth
So I just thought I would summarize some various ways to build a business, or wealth anyway:
Franchising and Chaining: This is where you build a business where you create the initial unit, systemize it to make it able to be replicated, and then begin expanding via opening additional units via chaining (where you put up the capital and open additional company-owned units), franchising (whereby you sell a franchise to another person who puts up the capital, assumes the risk, and operates the business according to the systems you have established, and then pays you a franchise fee), or some combination of the two. This can be done with many different types of businesses, in particular with restaurants, hotels, bar shops, hair salons, gyms, car dealerships, etc...new franchise concepts are being created all the time.
Create Brands/Franchises: This is what they tend to do in for example the toy industry, i.e. create franchises whereby in addition to the toys, a whole slew of additional merchandise can be created. Creating such a brand/franchise that is very popular is the Holy Grail in this kind of franchising. Some prominent examples could be Spin Master's Bakugan toys (with a cartoon and tons of merchandise) and Dora the Explorer (a cartoon which Nickolodeon franchised into a whole bunch of merchandise, thus making it a billion-dollar brand).
Although I can't think of any off the top of my head at the moment, I would imagine that franchising in this sense doesn't just apply to toys and cartoons though, it can be applied in other industries as well.
Roll-Up: This is basically where you start a business in a fragmented industry, or buy a business in a fragmented industry, or even buy multiple businesses in a fragmented industry and combine them together, then you take the company public, and use the stock to acquire other companies in the industry to build up an organization with economies of scale, that is greater than the sum of the parts. Like any method, this can be risky though, and I am no expert, but from my understanding there is more to it than just finding a fragmented industry. Two things to remember about a fragmented industry are:
1) Why is it fragmented? Is it fragmented into a bunch of smaller companies just waiting to be consolidated and no one has done so yet, or is it fragmented because the industry is simply structured whereby large firms do not have the advantage?
2) By "fragmented," one means a single, definable industry that is around $10 billion to $40 billion size. For example, the rubber industry is fragmented, but that is a highly-misleading way to look at it, because the rubber industry consists of many smaller actual industries, which can be consolidated. For example, the tire manufacturing industry is part of the rubber industry, but it is consolidated.
There are strategies and ways to go about finding fragmented industries that are good targets for building a company in.
Buy-and-Build: This is very similar to the roll-up strategy, but is done by private equity firms, and instead of taking the company public and using the stock to purchase new companies, they use forms of financing such as debt to be able to buy companies. Again, this has its own share of risks (if the economy bottoms out and the company is in a recession-prone industry, what was a manageable level of debt can very quickly become unmanageable). Private-equity firms will usually use buy-and-build strategies to build up a company that is greater than the sum of the parts, and then either sell the company to a larger private-equity firm, or take the company public via an IPO. Much of the consolidation that has occurred in the various fragmented industries throughout the economy over the past few decades has been due to private equity firms.
Automated Internet Business: This is a business in which is to a good deal automated and exists solely on the Internet, providing a service. I do not know much about these types of businesses, but I am sure that there is much potential for creating such businesses, just one has to think up new ideas. This type of business is one that can be very easy to start, or at least easier to start (requiring no major expenses on land or a building or capital for example), but yet can generate a lot of money for the owner.
Something to remember---the Internet is still very young. Thirty years from now, there will be a whole slew of new Internet businesses that were created whereby many people will be thinking to themselves, "Why didn't I think of that!?" But one doesn't need to try to create the likes of the next Google or Facebook, if anything, that might be involve too much competition. What I am talking about here are small Internet businesses, for example one that you could grow to generate say a few million dollars in income for youself a year. It has been done, although I have no idea how to do it (and if I did, I wouldn't tell the idea for obvious reasons :D), but I mean that would be an awesome amount of money, so what I would suggest is just do what I am doing, i.e. research and brainstorm constantly.
Also keep in mind that if you find an un-filled niche in a type of Internet business that is easy to start, you will very quickly end up having a slew of competitors, many of which may have no inhibitions about blatantly copying your website and service. If you can, try to find a business with harder barriers to entry.
Ecommerce: There is still a lot of potential I think to create a sizeable business via ecommerce as well. Amazon may be dominant, but that doesn't mean other companies can't be started to compete. Build a really good and sizeable company and Amazon may even buy it, for example they purchased Zappos (footwear ecommerce business) and Quidsi, Inc (owner of Diapers.com and Soap.com, along with some other brands now).
There are other ways to build a fortune or business I am sure, but these are all the big ones off of the top of my head for now.
Franchising and Chaining: This is where you build a business where you create the initial unit, systemize it to make it able to be replicated, and then begin expanding via opening additional units via chaining (where you put up the capital and open additional company-owned units), franchising (whereby you sell a franchise to another person who puts up the capital, assumes the risk, and operates the business according to the systems you have established, and then pays you a franchise fee), or some combination of the two. This can be done with many different types of businesses, in particular with restaurants, hotels, bar shops, hair salons, gyms, car dealerships, etc...new franchise concepts are being created all the time.
Create Brands/Franchises: This is what they tend to do in for example the toy industry, i.e. create franchises whereby in addition to the toys, a whole slew of additional merchandise can be created. Creating such a brand/franchise that is very popular is the Holy Grail in this kind of franchising. Some prominent examples could be Spin Master's Bakugan toys (with a cartoon and tons of merchandise) and Dora the Explorer (a cartoon which Nickolodeon franchised into a whole bunch of merchandise, thus making it a billion-dollar brand).
Although I can't think of any off the top of my head at the moment, I would imagine that franchising in this sense doesn't just apply to toys and cartoons though, it can be applied in other industries as well.
Roll-Up: This is basically where you start a business in a fragmented industry, or buy a business in a fragmented industry, or even buy multiple businesses in a fragmented industry and combine them together, then you take the company public, and use the stock to acquire other companies in the industry to build up an organization with economies of scale, that is greater than the sum of the parts. Like any method, this can be risky though, and I am no expert, but from my understanding there is more to it than just finding a fragmented industry. Two things to remember about a fragmented industry are:
1) Why is it fragmented? Is it fragmented into a bunch of smaller companies just waiting to be consolidated and no one has done so yet, or is it fragmented because the industry is simply structured whereby large firms do not have the advantage?
2) By "fragmented," one means a single, definable industry that is around $10 billion to $40 billion size. For example, the rubber industry is fragmented, but that is a highly-misleading way to look at it, because the rubber industry consists of many smaller actual industries, which can be consolidated. For example, the tire manufacturing industry is part of the rubber industry, but it is consolidated.
There are strategies and ways to go about finding fragmented industries that are good targets for building a company in.
Buy-and-Build: This is very similar to the roll-up strategy, but is done by private equity firms, and instead of taking the company public and using the stock to purchase new companies, they use forms of financing such as debt to be able to buy companies. Again, this has its own share of risks (if the economy bottoms out and the company is in a recession-prone industry, what was a manageable level of debt can very quickly become unmanageable). Private-equity firms will usually use buy-and-build strategies to build up a company that is greater than the sum of the parts, and then either sell the company to a larger private-equity firm, or take the company public via an IPO. Much of the consolidation that has occurred in the various fragmented industries throughout the economy over the past few decades has been due to private equity firms.
Automated Internet Business: This is a business in which is to a good deal automated and exists solely on the Internet, providing a service. I do not know much about these types of businesses, but I am sure that there is much potential for creating such businesses, just one has to think up new ideas. This type of business is one that can be very easy to start, or at least easier to start (requiring no major expenses on land or a building or capital for example), but yet can generate a lot of money for the owner.
Something to remember---the Internet is still very young. Thirty years from now, there will be a whole slew of new Internet businesses that were created whereby many people will be thinking to themselves, "Why didn't I think of that!?" But one doesn't need to try to create the likes of the next Google or Facebook, if anything, that might be involve too much competition. What I am talking about here are small Internet businesses, for example one that you could grow to generate say a few million dollars in income for youself a year. It has been done, although I have no idea how to do it (and if I did, I wouldn't tell the idea for obvious reasons :D), but I mean that would be an awesome amount of money, so what I would suggest is just do what I am doing, i.e. research and brainstorm constantly.
Also keep in mind that if you find an un-filled niche in a type of Internet business that is easy to start, you will very quickly end up having a slew of competitors, many of which may have no inhibitions about blatantly copying your website and service. If you can, try to find a business with harder barriers to entry.
Ecommerce: There is still a lot of potential I think to create a sizeable business via ecommerce as well. Amazon may be dominant, but that doesn't mean other companies can't be started to compete. Build a really good and sizeable company and Amazon may even buy it, for example they purchased Zappos (footwear ecommerce business) and Quidsi, Inc (owner of Diapers.com and Soap.com, along with some other brands now).
There are other ways to build a fortune or business I am sure, but these are all the big ones off of the top of my head for now.
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