Solon Partners

My friend Harles Mägi has been pursuing his passion for music and entrepreneurship through his event promotion agency HiMusic Agency. After a several smaller classical music events the Agency is now staging a very interesting series of concert experiences that combine opera and jazz elements in the original production entitled “Femme Fatale.”

The production is rather unique as it combines everyone’s favorite scenes from classic operas such as “Carmen”, “Don Quichotte” and “Samson and Dalila,” but instead of a symphony orchestra there are four saxophones.  The intriguing narrative of  each man confrontation with his Femme Fatale combined with a mix of musical cultures makes this a very innovative approach to opera that is sure to win new fans to the genre.

The star of the performance is undoubtedly Yaroslava Kozina - a raising European  opera star. Kozina has quickly won acclaim for her performances on stages of Paris, Lyon, Berlin, Frankfurt, Bremen, Strasbourg and other European cities. In 2006,  the highly respected European music publication „Opern Welt“ conferred her the title “Young Singer Of The Year”, noting her unique velvet-soft timbre, great acting talent, captivating individuality and charming temperament. In 2007, the singer was awarded the coveted „Young Wagner Singer Grant“.

The concert has received positive reviews in the local press (for those of you that can read Estonian the article can be found here). I recommend seeing the performance (14 April in Tallinn or 17 April in Tartu) and experiencing innovation in this cultural arena.

yrjo entrepreneurship innovation

Challenging Goliaths takes something special

I have noticed that too often in exploring business ideas and considering projects I have come up against a strong established market leader and said  - ok there is no way to compete with that!  Maybe that’s the “safe” strategy, but you also miss out on some sensational opportunities.

Its a dilemma faced by many start-ups, as by definition they are just stating up while some market leader is already the preferred provider.  However, there are many ways that you can outwit the Goliath and service their customers much better.

Collis Ta’eed has written a great piece giving us advice for taking on the perceived  market leaders.  Collis is the co-founder of the successful start-up FlashDen. Here is my summary of the main points if you don’t have time for the full article:

• Specialize (Technorati and Kyak’s sites are getting nice traction in subniches despite the power of Google)
• Dramatically Change the Product Features (make a much better product, if you are cutting prices - make it dramatic)
• Position Yourself as the Alternative ( Pegging yourself against a big player raises your profile too)
• Internationalize (Bebo and Orkut can make money in markets underserved by Facebook and MySpace)
• Generalize (Superniche for the superbrave entrepreneurs who think they can be bigger, better and than anyone)
• Parallel Niches (same basic product idea as the Giant but apply it to different audiences in other contexts)

Obviously Collis, has no silver bullet and there are many other ways to do it as well.  Nevertheless all, giantslayer start-ups really must differentiate themselves. Your suspicions are probably right  -  just 10% cheaper, or 10% better is usually not enough advantage to overcome the big boys.

If you can be 50% better, or open up a brand new market there is no reason not to take on the Goliaths. You will know that you are really doing it right when the Goliath offers you an obscene amount of money to by you out.

yrjo books, entrepreneurship start-up

Erik Ries

Erik Ries offers some good advice on his blog Lessons Learned regarding timing your start-up PR and marketing campaign launch. Reis is a founder of IMVU and an advisor to Kleiner Perkins, and serves on the boards of a number of technology startups including pbWiki, Bunchball, FooMojo, Causes and KaChing. BusinessWeek named Ries one of the Best Young Entrepreneurs of Tech in 2007.   Ries explains why launching  too early without product readiness may be a big mistake:

We really did it well, with a great PR firm and great coverage. New York Times, Wall Street Journal, CNN, the works. But it turned into a crushing defeat, because we couldn’t capitalize on all that attention. The product didn’t convert well enough, the mainstream customers we were driving weren’t ready for the concept, and the event fed expectations about how successful the product was going to be that turned out to be hyper-inflated.

Read the rest of the story at Don’t Launch.

yrjo entrepreneurship PR, start-up

I have always admired Warren Buffet’s good sense of humor. He gives me hope that not all top management talk has to be pretentious and a distortion of reality, making the business look like a cheap parody when compared to the actual situation.

For example, take this snipet from his latest annual letter to Berkshire Hathaway shareholders where he discusses GEICO’s (their insurance cash cow) outlook in the current economic outlook:

As we view GEICO’s current opportunities, Tony and I feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere.

I strongly recommend to read the whole document. It is packed with unusual straightforwardness and seasoned wisdom.

rait entrepreneurship

Ryanair CEO Michael O’Leary claimed seriously on BBC that the airline is considering charging 1£ for - get this:

using the bathroom.

Airline’s PR chief Steven McNamara sensing an public relations disaster downplayed the chief’s bright idea: “I don’t think it’s going to happen in the foreseeable future.”

I say abolishing check-in desk - fair cost cutting, but coin-operated airline toilet -  just plain stupid.

yrjo entrepreneurship

Wolves are circling the prey

I have been asked several times in the past six months - if and when will the mega-rich start buying up the best of the distressed assets. I must admit having heard rumors about local business tycoons and groups of wealthy Swedish business sharks hoarding piles of cash, ready to pick the low hanging fruits. But my honest answer is - I am not sure if Estonia has that much of valuable assets to buy up at all, distressed or not. In Estonia and its neighboring countries there is little to no transparency to determine the actual purchasing power and liquidity of the rumored buyers. 

In US however, the wolves are ready for a moose hunt and their preys know it. Kara Swisher pointed out that high-tech giants are sitting on a huge amount of shiny acquisition dollars. Take a look at these enormous reserves:

• Microsoft (MSFT): $20.7 billion
• Cisco (CSCO): $29.5 billion
• Apple (AAPL): $25.6 billion
• Intel (INTC): $11.8 billion
• Oracle (ORCL): $10.6 billion
• Hewlett-Packard (HPQ): $10.2 billion
• Google (GOOG): $15.9 billion
• Yahoo (YHOO): $3.5 billion

To continue the fauna analogy, this wolfpack (clearly on steroids) is patiently following the moose herd (i.e. start-ups) to go after the ones that show sings of weakness and can’t keep up with the pace of others (i.e. run out of money). It is clear that the wolves could already make their move right away, but they are holding it back to maximize their gains. They bet on the dire economic landscape that will become even harder to pass for the moose, allowing the hunters to optimize their attack when the prey is completely exhausted.

Thanks to the internet, we have front row seats for witnessing the brutal outcome of this hunting season. Stay alert and let the chips fall as they may because there is little hope for the moose.

rait economy, entrepreneurship economy, entrepreneurship

Want to check whether your CEO has accepted the fact that economy has its breaks on and it won’t get prettier for a while? Then read Guy Kawasaki’s Tough Talk for Tough Times: What the CEO Should Be Saying Now posting and see if you find some similarities. Hopefully not…!

rait entrepreneurship economy, entrepreneurship, VC

In the past three years I have read and heard hundreds of business plans and pitches in Scandinavia and the Baltics.  The two weakest topics have consistently been the business model (how you will actually make money) intellectual property status (how will you keep others from copying and underselling you). It is worth remaining that these are the two most important parts of the business plan.  I leave the business model discussion for another posting, but will address some basic issues related to IP here.

IP strategy needs to be part of any business plan

Everyone should absolutely have a business plan section or power point slides dedicated to IP. Even if you think that your know-how or invention is not patentable there are many different ways to still address this issue. Average cost of filing one US patent including legal and filing fees is approximately $15,000 plus future maintenance fees.  A good system of IP agreements will cost you 75% less, and may offer you even more practical protection. A system that educates your workforce regarding the importance of protecting the businesses’ trade secrets and proprietary information, and instills the use of NDAs, professional employment agreements that clearly delineate intellectual property and invention ownership issues, invention award and motivations policies, proper documentation of know-how, noncompetition agreements, digital watermarking, document security procedures, publication review procedures, and proper labeling of confidential documents will go a long way in securing your valuable intellectual assets.  Showing investors that you have thought of these issues and are doing something about them will usually set you above your peers in sophistication, and will encourage investors to take a harder look at your business plan or presentation.

Know your patent facts

If you do have patents, make sure you present them clearly. Make sure that you clearly indicate which regions are covered, when do they expire and clearly state what they cover – method, device, application etc. A key patent that is well written and has defensible claims can be worth a lot more than any other asset in your company. However, such patents are usually not a matter of accident or luck, but skillful writing by the scientist and an experienced IP lawyer.  Improper presentation of pending patents is one item that can flag you as a dilettante for investors.  Pending patents are just that – pending – a process that will be anywhere from 18 months to many years – during which they can easily also be denied, thus making them worthless.  Also keep in mind that pending patents do not give you any legal rights to keep your competitors from putting out their identical product today.

Consider cheaper and faster IP protection alternatives

Consider the use of trademarks, copyrights, and design rights in protecting your intellectual assets. Often these protections are cheaper and easier to achieve than patents. These tools may be especially relevant for protecting your software business.

Be creative with IP strategy

Finally, there are other creative ways to prevent competitors from getting strategic intellectual property under their control. One such trick is “defensive publishing” which is a technique of publicizing an idea by posting it in a public forum such as IP.com.  Such a public dissemination marks it as prior art under patent laws, and limits patentability of such ideas by others. If the invention is not part of your core business, but you do not want others to have the power to prevent you from using it, this technique is a much cheaper, easier and faster alternative to patenting.

I’ll be teaching an IP development training course for Arengufond on March 8, and will get more in depth on these issues.

yrjo entrepreneurship business plan, intellectual property, IP, VC