The Pit - IMI Trust

The old tradition of political marketing was all about direct media advertising, with carefully designed ad placement and a whole lot of kissing babies. TV, Radio, and Newspaper photo ops. Media organisations love nothing more than an election year for marketing budgets to open up.

Whilst this platform is still very relevant, there is an entirely new landscape that has opened up and both parties are feeling their way through new media.

The new platforms being adopted are Social Networking sites, Wiki’s, Online Video and Blogs. The main sites the politicians are looking to utilise are Myspace (which now has it’s own political section), YouTube, and Wikipedia.

This new media offer more power and opportunity then ever before to sell their promises… but on the flipside it makes the public acutely aware of the potential pitfalls.

TV, Radio and Newspaper have all the same features. They are expensive, can only provide short messages, and only provide generic messages.

New media is different. Inexpensive, gets instant media coverage, can provide long or short messages, can target specific groups, they can provide interaction with voters and it allows the parties to respond to comments from their opponents.

This is Political Marketing the Web 2.0 way. In the US, YouTube created national Online debates, where Youtube users ask the questions, and viewers can watch the debates live. Australia is looking to follow this lead.

It is now common in the US for candidates to spend more time with influential bloggers, than with journalists. If you look at the websites of Hilary Clinton and Barack Obama, the have embraced the Web 2.0 medium completely. The have blogs, online videos, user profiles and offers to ability for supporters to unite and communicate their message.

Whilst elections can be won this way, they can also be very quickly lost. Just ask John Edwards. The Democrat politician was doing what he called “The Poverty Tour.” His entire campaign was about helping people out of poverty and getting back to basics.
His campaign was ruined when footage of him appeared on YouTube, getting a US$400 haircut. The YouTube footage, made its way to all the blogs, other video sites and then into the mainstream media. His popularity has never been the same since.

It will be interesting to see how John Howard, Kevin Rudd and fringe parties like the Greens use this new media when the election date is announced.

Macquarie Bank is down 20% from it’s all time highs a fortnight ago.  This was mainly caused by concerns on the creditworthiness of consumers taking out Sub Prime loans in the US.  However, you shouldn’t cry for the bank here.  This is the reaction from Jim Cramer on CNBC about the market in the US at the moment.  Armageddon!

With the ASX 200 and the Dow Jones Index consistently achieving new highs, investors have now started to seek investments with higher risk and higher growth potential. Many sophisticated investors realise that this occurs before companies hit a stock exchange.

Sophisticated Investors, Retail Investors and Professional Investors are now seeking to invest in the companies of tomorrow. By investing in start-ups or early stage businesses they can reap large rewards if the companies lists or is bought out.  On the flipside, there is every chance the company could fail.

Why would they do this, when everyone knows the risk associated with companies in their infancy? Risk vs Reward is the simple answer. 

Investors are now looking to allocate risk capital to these companies as part of their portfolio.  When looking at asset allocation in a traditional portfolio, you tend to see cash, property, conservative investments, growth investments and aggressive investments.  Typically, early stage investment is seen as aggressive but in reality it sits in its own band even higher.

The rewards are great but the chances of losing money are just as high.  Which is why only risk capital, or in layman’s terms, money you can afford to lose, should ever be placed in these investments.

Even only as far back as 3 or 4 years ago, this kind of investment was only available to the wealthy who acts as business angels or venture capitalists.  Today, companies such as the Australian Small Scale Offerings Board (with whom IMI Trust is a member of) is making it easier for investors to gain access to these type of opportunities.

Early stage investment is an exciting prospect but carries heavy risks.  Investors should carry out their due diligence, ask questions, find out as much as they can about the Company, its Management Team, the Market, the Competitors and the Marketing Strategy for success.  By analysing these aspects, an investor can see if the Company is doing its best to be successful.

And by success, this can be defined in a number of ways.  As an early stage investor, a good result is a company takeover or a public listing.  Today’s penny dreadful may be tomorrow’s dollar dazzler.

Companies are looking for early stage investment but do they deserve the capital from investors?  Many don’t but some do.  To learn more, about emerging growth companies looking for early stage and expansion capital, click here.  Or if you have any stories to tell about early stage investment, please tell us here. 

When we tell companies that we deal in both web and marketing they think we are pulling their leg.  Most web companies don’t have the first idea about marketing and most marketing companies are clueless about the web. 

Graphic designers and web designers are often focused on technical and visual aspects of a site whereas marketing specialists are hellbent on getting their message across.  The issue is that if favour to much of one the other falls down.  The internet is littered with websites that are exceedingly functional but have no visual appeal or they are incredibly, knock your socks off beautiful but impossible to navigate around.

Are there any examples you know of beautiful, functional sites?

Imagine if you woke up stupid every day, with a hunger to learn, grow and evolve! That is the difference between the minds of innovators and routine.  Actually, it would probably be immensely frustrating that you have to start from scratch every day but in essence, innovators are those who wake up looking to pioneer.

Innovation is about looking at problems or gaps with new eyes.

When News Corp saw computerisation take hold they revolutionised the newspaper industry by streamlining and templating the whole process.

When Apple and Steve Jobs were being a thorn in the side of PC manufacturers Apple were busy conceiving how the music landscape would be changed forever.

It is interesting to look at the increase in Apples share price when Jobs is there… and when he is not.

1986 to 1998 Minus Steve Jobs - 120%

1998 til today with Steve Jobs - 1240%

Anyone else notice the difference innovation can make? What inspires you?

Time to get things off our chest…

It is our experience to steer clear of search engine marketers who boast badges with the Google AdWords Professional qualification.

Let’s be clear.  We, at IMI Trust, love Google and so should you.  It is the reigning champion of search and rightly so…however…

The Google AdWords Professional qualification can be earned if you, as a marketer spend $1,000 per month with Google.  Some people spend much more than this in a day.  Not because they are clever, or skilled in search engine marketing, but because they see the value in this type of advertising.  As they have spent that dollar value they qualify as being a Google AdWords Professional.  Can you begin to see where the issue lies?

There is no qualification in place and people can claim to be an endorsed professional.  This fails in a number of ways.

1. Punters that need help in Search Engine Advertising are looking for reassurance and expertise.  The Google AdWords Professional provides neither, though the name alludes to the fact it does.
2. Professionals who are great at Search Engine Marketing have more trouble finding work because they are competing with thousands of clowns who don’t know their KPI’s from their CPC’s.
3. Google is diluting its brand by offering this nonsense award.  Google do have other qualifications that are far more meaningful but as this is the easiest to achieve because you just have to spend dollars.

We are not against people becoming search engine advertising experts but if they claim to be experts there has to be more to it than that.  Which reminds me…I’ve got an email to answer about claiming my Fijian Medical Degree.

After the rumoured $70bn merger of Yahoo and Microsoft kind of went wet, news so astonishing began to come through the wires that if it happened I would believe that anything could happen. 

A couple of smart Merrill Lynch analysts figured that BHP Billiton is massively undervalued. Its divisions are worth more than the sum of its parts.  The multi-national resource conglomerate has a market capitalisation of approximately $117bn but if you split up all its divisions into individual resource companies the assets would be worth approximately $242bn.  Sounds great huh?  Let’s do it.

Perhaps in response to this analysis there has been speculation regarding BHP and Rio Tinto merging.  That would create a company worth over $250bn and surely would be protected from any kind leveraged buyout.

Please don’t tell me there is a bank or group of banks able to facilitate a quarter-trillion line of credit to buy a company?  If so, can I have Lo-Doc mortgage from you and don’t look to closely at my financials.  Thanks.

The traditional benchmark companies use for success is financial. Money talks. Now, there seems to be a trend towards ‘Triple Bottom Line’ values. Triple bottom line is to achieve success on three levels - Economic, Social and Environmental.

The more cynical of us would think that it is a ploy from marketers to exploit fears over climate change and the lack of community currently pervading society. However, members of Generation X and Generation Y inherantly have a ‘greener’ social compass and a Triple Bottom Line agenda is effective in speaking directly to these groups.

Investors and consumers alike are actively looking for companies, products and opportunities with that fit within a Triple Bottom Line agenda. The focus is no longer just on achieving solid to spectacular earnings from quarter to quarter, just to keep shareholders and employees happy.

Government, and shadow government, are both using Triple Bottom Line metrics to shape policy. Corporates, such as Westpac Bank, are spending millions on advertising to align their brands with consumers who are socially and environmentally minded.

Countries are looking at carbon offsets, people are looking to be carbon neutral, businesses are looking at sustainable practices. And seemingly, for the first time, profit can be generated too from these scenarios. This is why Triple Bottom Line is an important change to the corporate landscape. Historically, companies have looked at social and environmental initiatives to occur at the expense of profits. Today, there can be success on all three fronts: economic, social and environmental.

For instance, governments are allocating resouces and grants to ideas with a triple bottom line bent, corporates are willing to sponsor these initiatives and investors are passionately seeking companies with triple bottom lines to invest in.

In the last few weeks we have come across two powerful companies with solid triple bottom line structures. Companies from isolated rural areas in Australia, in areas that have had it tough because of drought and natural disasters, in recent years. They have now captured the interests of companies and governments worldwide.

This will be interesting space to watch in the coming months as we lead up to a federal election and over the next few years as the impact of triple bottom line companies is felt by society.

Capital Raising, Venture Capital, Business Angels and Private Equity have become flavour of the month in Australia.

The reality is, for businesses looking to raise capital, it can become a nightmare for the unsuspecting owner. You always read about the successful ventures but rarely do you hear of about the challenges associated with raising capital for your business. For other business, who utilise business factoring services, it is their opportunity to utilise an alternative solution. 

When it comes to capital raising, most business owners believe they have 3 places to go: Banks, Angels and Venture Capitalists. Few people realise there is a 4th way to go if you want to raise between $250,000 and $5m (without a prospectus).

Below is a snapshot of some of the issues related to each.

Venture Capitalists
There is a reason they are called Vulture Capitalists. They generally look for small to mid size companies and traditionally Venture Capitalists will value your company on its current value (prior to growth following funding), and then look to take a stake based on that value. Some Venture Capitalists, will also look to play a role in the management of the business. It is a coin toss whether this becomes an asset or a liability.

This path is fraught with problems especially if you are looking to retain control of your business. With one business we worked with after funds were raised through a Venture Capitalist, personal attitudes and business differences surfaced and the owner was forced to leave the very organisation they started.

Business Angels
Business Angels could be ideal for your business if the Angel brings a wealth of experience, contact or resources to the table but again the problems you face with Venture Capitalist’s, you are likely to face with Business Angels. You lose control and possibly a lot more.

Banks -
Although the most common option for people, you should only really go to a bank if you a desperate. This is why…

1. Do you enjoy putting your own personal assets at risk?
2. Do you enjoy paying interest for the life of the loan?

Of course not. When raising capital the questions you want to be asking are…

1. What percentage of the company am I willing to offer? How are the shares going to be split up between the current owners and stakeholders.
2. Is your business structure investor friendly, as well as business owner friendly
3. If you are utilising the banks, are you willing to put your personal assets on the line
4. Do you want to retain control of your business, or are you happy for a 3rd party to have an influence?
5. Have you put in place a strong management team?
6. How unique is your offering, and what is your realistic potential for growth?

All of these questions are important, and you should definitely know the answers before you approach any organisation to assist you in funding the growth of your business.

These are the questions you need to answer when looking at the 4th way for you to Raise Capital for your business

This path offers some unique benefits…

1. The capital raised is interest free
2. Doesn’t require you to put your home up as security
3. Allows you to maintain the majority shareholding in your business… allowing you to retain control of the future direction of your company.
4. Allows you to crystalise the value of your business, which is recognised by the markets and considered as an asset on your balance sheet
5. Provides an investor-friendly environment allowing your investors the opportunity to sell their holding if they desire
6. Ensures that you are compliant with ASIC’s rules and regulations. Most people dont realise the legal mine field and potential issues if you try and do this yourself… and get it wrong. Let me provide some insight… a $20,000 fine, 5 years jail, the company wound up… and then it starts to get ugly from there.

Our focus is to help entrepreneurs realise the aspirations they have for their business!
What this means for you is that IMI Trust is able to facilitate debt and equity funding for your business growth, expansion and acquisitions.

To explore the commercial potential of raising capital for your business click here.

FON.  If you haven’t heard of them yet then you soon will.  They are backed by some of the most powerful organisations on the internet, Skype and Google as well as the venture capital companies behind these giants, Sequoia Capital and Index Ventures are all investor partners in FON.  So why has FON done so well to capture the attention of these giants?

FON is the world’s largest WiFi community. Started in Spain by Martin Varsavsky, FON is built on the idea of creating a community of people who get more out of their internet connection through sharing. Every router purchased by a user enables that user to become a mini-ISP.  The beauty is they can choose to charge for the service or give it away for free if they so wish. Any amount they charge is split down the middle with FON.

Clearly, this is the best home-based business idea in a long time.  Have an internet connection and resell the bandwidth to people in your local area.  Be your own ISP and profit.  Or be chartiable and give it away. 

We love the idea here at IMI Trust but we are not alone.  There are over 300,000 ‘hotspots’, or router portals worldwide and FON want to grow that to 1m by 2010.

When FON finally hits Australia, it will cause a massive shake up in a stagnant and relatively service-free industry.  Large Internet Service Providers are getting fat on the easy profits made by broadband users.  Wireless service is poor in Australia and worse still, fees for usage are ridiculous compared our international counterparts.

So FON sound ambitious.  You are not wrong.  To kickstart their success in the US, they have have just offered 10,000 people who live near Starbucks, or any cafe with any existing WiFi hotspot, the opportunity to receive their FON WiFi router for free. A bold move considering Starbucks has its own service it provides, but when you have Google, Skype and Sequoia Capital backing you, bold moves come with the territory.  Since there are over 13,000 Starbucks stores worldwide, this initiative is only the beginning of a large scale, long term plan.

Forbes Magazine have listed them as one of THE companies to watch this year. Not bad for a company which only had its first birthday this February.

The question on Australian lips is surely when is FON coming to Australia? We need your service sooner rather than later. 

Also, on a more self-interested note, when is the IPO? And where can we sign up?