The Pit - IMI Trust

Some good news, that may cause a dent in the multi-billion dollar diet industry forever. In Sydney last week, I discovered an amazing weight loss formula. As I researched this formula, it amazed me that it had been around since the dawn of time. From personal experience, I can say with absolute certainty…
If you a looking to…

• Lose weight fast
• Lose weight without having to exercise
• Lose weight in such a powerful way that you can do it whilst sitting in front of the TV or even while you sleep
• Lose weight with a time-tested and proven method, which your boss will even want to give yourself the day off
• Won’t cost you a single cent
• And best of all, it has an amazing ability to supress your appetite completely. Chocolate, beer, meat pies and all the temptations you face on a daily basis will seem like hell on earth.

Well I have the solution for you. *drum-roll*

Gastroenteritis

All around you, people will be amazed at how they saw you 4 days ago and you magically look 10kg lighter.

Now, I do have to provide a brief warning and few tips for anyone looking to choose this path.

1. People will think you are highly irrational for the amount of times you will be going to the bathroom
2. At times it will feel like your insides are having their own internal nuclear war
3. You will find you are not the life of the party, and in fact you dont really want to speak to anyone… unless it is to get you something. Others refer to this as the ’selfish approach’
4. But If discomfort persists, please, please, please see your doctor

“I lost 10kg in 4 days!”

Let’s see if Jenny Craig, can beat that offer!

NO NO NO NO!  It is incredibly frustrating to see how people compete on price.

The number one reason companies compete on price is because they are poor at marketing.  It is the worst way to try and grow a business, as your marketing plan seeks to eliminate your own profits and the more aggressive you market the slimmer your margins are.

If your marketing appeals to your target market correctly then it is unneccesary to compete on price.  A well-known Australian Bank split-test a marketing campaign recently.  To a sample of 10,000 people they sent two separate credit card offers.

1. One offer with an interest rate of 12.5%
2. One offer with an interest rate of 16.5%

Clearly, credit cards that have the lower interest rate should be more popular.  Which offer do you think would be the most successful? Remember this was the same company, going to the same client client base.

To their sample, the interest rate of 16.5% was easily the most successful.  So what was the difference?

On the 16.5% offer there was a photograph of an attractive, healthy, female on the letter. Marketing and appealing to your target market wins over low prices.  In this case, just one photo encouraged credit card prospects to take an offer 33% more expensive.

There is so many frontlines in business in which the war can be won.  If you are trying to win it on price… ask yourself if this is really your best strategy

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?

Now when you use Mozilla and have Skype installed, a Skype icon appears next to phone numbers on browsers. You simply click on the icon and the call is placed. 

For those not in the know, Skype is the most popular global internet telephone system.  Calls can be placed through your internet connection as if you were making calls on a landline.

What makes this simple addition so remarkable is that Skype have accessed the second most popular browser on the net.  Approximately 18% of all web users use Mozilla.  This means millions and millions and millions of people will have this functionality available to them.  No amount of advertising and sponsorship can match that reach. 

By creating a simple, yet powerful joint venture, Skype will boost their revenues by millions overnight.  You too could do the same thing.  Maybe not to the same scale but by choosing your joint venture partners carefully you could effectively double or triple your business.  If you do, you may need to use this number…

- Say Hello to the Australian Tax Office.  HELLO!!

This blogging thing seems relatively easy.  Every once in a while you post some commentary about what you want, the news of the day, some story you want to re-tell or just shoot the breeze about something banal. 

However, many companies that are adopting blogging are struggling to post.  They are getting writer’s block.  Is the subject worthy of commentary? Will readers laugh at my attempts at communicating?  Is there even anyone out there?

‘Blogophobia’ seems so prevalent that major corporates are paying bloggers thousands of dollars a month to write 3 or 4 posts.  To the average blogger that seems like a dream.  To a company, that seems scary that the going rate for a blogger is so high.  Well, there is an alternative…

PayPerPost is a start-up based in the US that is connecting writers with companies that need content.  Bloggers can get paid and companies can pay for content.  Blogger purists are turning there nose up at the idea that you can outsource such a personal form of communication.

For us, this is further evidence that you are able to outsource even the most minor of functions to free up time for yourself and the people at your company.  Many companies in Australia are still doing accounting, archiving, book-keeping, word-processing and other support functions all in-house. 

Companies choose not outsource these functions because they like maintaining control, however, by outsourcing these functions you can give each action a unit price.  A cost-per-word, the price per pdf, the record keeping costs all have unit value.  If you know that it costs $20 to process a document and you can be certain what you need to do to make the process profitable. 

And everyone likes profit…even bloggers.  Well most of them, anyway

Unless you have been hiding with the weapons of mass destruction this week, you would have noticed that Microsoft have released Windows Vista.

You have to love the hard sell. Not many corporates really do it to consumers anymore. Not Apple, not Google, not the oil companies, not the car manufacturers. They are all into the brand.  Microsoft have allocated US$500million to marketing their new operating system and it shows.  Come back Crazy Frog all is forgiven.

Actually, Microsoft, well done for bringing back blanket coverage in marketing and sticking it in my face everywhere I look. It is a good reminder as to why you are a $300 billion company.

The truth is the only companies persistantly doing the hard sell is the credit card companies and the banks. Can’t understand why they keep on announcing record profits.  Probably because if you put a product in front of a consumer that services a need then they consume it…

When I checked out the Microsoft site to read the Vista marketing, i was stunned to see 100 reasons as to why Vista is so great. If you were absolutely insane… that is perfect for you to discover all of Vista’s benefits. if you are a bit more human, they had the highlighted benefits. From a marketing perpective, this warmed my heart.

The truth of the matter is I am going to Harvey Norman, or similar electrical retailer, and ask for a PC that is loaded with XP.  I know for a fact they will be fire-sale-ing that stock so I can get one or seven really cheap.  That is only one reason but better than the 100 reasons Bill gave me for getting Vista. 

Experts have come out of the their holes to comment on Vista.  Us included. The reality is in 2 to 3 years time, we all know we are going to be using it. This should impact their share price of (MSFT) Microsoft significantly. Will its recent bull run continue until then?  Maybe.

PS. Bill, I dont care that you have copied Apple, nor do I care that they will release something even more impressive with Leopard. Which they won’t because I’m over operating systems named after big cats.  Just please be taking notes when they do. Look forward to my Wow beginning Now!

Henry Paulson, former CEO of investment banking giant Goldman Sachs and now US Treasury Secretary is the man that the US financial markets are pinning their hopes on to stimulate the market for US exports to China.  The US is in a massive hole to China in its balance of payments.  Consider…

• Most junk found in street markets is ’Made in China’. 
• Most middle-order and high-end, manufactured items that are commonly known as ‘US Brands’ are Made in China
• In the US market alone, Chinese investors have around $1trillion in US Currency

The US is not happy with this and want to redress this imbalance.   They believe in ‘Hank’, as he is known, that Ben Bernanke, Chairman of the US Federal Reserve has deployed a dedicated to team to facilitate this ‘mission’.  If Hank can’t do it, no-one can. 

Henry Paulson is known for his ties in China. His relationship with the Government and Corporate Enterprise, is seen as the fundamental reason Goldman Sachs has strong credibility in China. But there is more to it than that.  John Thornton, his second in command while at GS, was the first western business leader to take up a full-time teaching role in China.  Tsinghua University is China’s leading business university and is producing 1200 MBA’s per year.  These link led GS to be Lead Manager in the ICBC IPO and numerous other domestic listings. 

Goldman Sachs, is one of the only US companies freely doing deals in China. Obviously, George Bush noticed the respect he received with his Chinese dealings, all this without the rigmarole of actually having to go to war. 

The US want him to make the US position in China stronger.  The first step is to encourage China to float their currency, the Chinese Yuan, to enable the massive trade deficit to close.  China’s approach is ”We will… eventually!”.  Without Hank on the case, it would have been a definite ‘No’. 

Hank Paulson is a faciliator of business.  He realised long ago you can’t just ‘take’.  There has to be a balance.  In order to receive you have to give. Funnily enough, as the US consumer ‘gave’ for Christmas, the Chinese manufacturers ‘received’.

There are some huge tech success stories around the world.  Many that started with a few people with vision and now household names.

Steve Jobs with Apple Computer, Larry Ellison with Oracle, Sandy Lerner and Len Bozack were the brains behind Cisco Systems and Jerry Yang & David Filo made Yahoo! stratospheric.  More recently, Larry Page and Sergey Brin made Google synonymous with search, Chad Hurley and Steve Chen did the same with YouTube and Online Video.

All these companies have been helped along by the capital corporation with the midas touch, Sequoia Capital.  Without Sequoia Capital it is likely that Google and YouTube may have fallen to oblivion. They needed help to get off the ground.  Genius only gets you so far.  Money takes you to the next level. Not just money, but business acumen and experience in finding ‘the next big thing’.

Sequoia Capital have sunk money into many companies that have become hugely successful.  After searching on Google, you discover that 10% of the value of the NASDAQ is made up of companies which have had some sort of business involvement with Sequoia Capital.

They promote themselves as the entrepreneurs behind the entrepreneurs.

The world of capital raising can be highly lucrative and very risky. And many capital raising companies raise capital for the sake of taking a cut.  Sequoia Capital have backed their deep pockets up with great results.  They have ensured that entrepreneurs are able to grow their dreams.

How many Google’s have we not seen?  How many other tech nerds with a passion have missed out on a multi-billion fortune?  Without the seed funding, and without the business guidance, where are these guys today with Page and Brin and Hurley and Chen?

Behind every great success story there is a depth that is rarely explained or mentioned.  We see the end result, nothing else. Companies like Sequoia Capital make it happen.

The reason they are successful is because they are passionate and have a believe in the value of ‘The Idea’ and ‘The Culture’ underpinning the idea.  In business, the support is what you need to succeed.  That and billions of dollars.

Corporations spend billions a year promoting themselves. Advertising on billboards, TV, radio, online banner ads, nearly everywhere you look. On your television, on buses, painted on football fields and even on the skin of boxers, there is brand placement everywhere.

Companies focus on the promotion of their brand as a means of communicating with their clients. They do this through their logo, their slogan, their colours and the types of people that appear in their advertisements.  On the other hand, some companies use the ‘Celebrity CEO’ to push the brand through.  Richard Branson and Donald Trump are known for their amazing abilities for self-promotion.

Web 2.0 has capitalised on this theme. The principles of Web 2.0 are that there are open channels of communication.  Consumers can connect with the company. On the flip side, a CEO can present themselves to be human. This allows consumers to move beyond the brand and create a connection with another human.

This connection creates loyalty.

A good example of this is Jonathan Schwarz. A recent blog post headlined 5 things highlights 5 things you may not know about him.Why does he do this?

The answer is simple.  To break down barriers and create trust and loyalty. It breaks down the myth of the superhuman or the egotist at the head of the company. It allows him to connect.

Branding is an important aspect to the growth of any company. Introducing your clients to a personality within your business builds loyalty.

Steve Jobs at Apple has done an amazing job in pushing forward Apple’s growth. The personality has become an integral part of the Apple Brand where he garners unwavering loyalty from users of his products.  The downside to this is that there is concern about the future of company when Jobs steps down.  It is clear there are benefits to showing personality but there are issues too.  These themes are relevant to your business too.

• How do you build loyalty with your client?
• What personality shines through your business?
• Does that personality appeal to your target audience? 
• What is the impact on your company if that personality disappears?

The answers are different to different companies and their particular situation.  What is crucial is that you should explore these themes and how they can impact your business.  Don’t be scared to try something new.

Approximately 4 years ago I was looking at Corus Steel shares on the London Stock Exchange.  They were at the very low price point of 9p per share.  Earlier in the year they had been down to 5.5p.  Analysts believed then the company was going to go bust because there was little demand for steel in the market.

As Corus was the new identity of the formerly government-owned British Steel I believed that it was unlikely to go bust as the government would step in at some point if the situation got really bad.

I then moved house, moved country, started up in a different industry, spent some time with my wife and forgot all about the stock.  I was planning on a Buy and Hold strategy especially for stocks who have been affected by bad news.

I was browsing the newspaper today and lo-and-behold, Corus caught my eye.  As at close of trading 10 January 2007 it sat at 536p.  A 59.5x appreciation or a 5950% rise in that time.  My ‘dipping-the-toes’ investment of approximately $12,000 would have been worth around $800,000.

March 21 2003 - Corus Group - 9p. 
January 10 2007 - Corus Group - 536p.

I really should have bought shouldn’t I?