I’m not a sports guy (aside from my beloved Cal Bears Football - in Tedford we trust!) so it’s a tad odd that I’ve begun reading the blog of Mavericks owner Mark Cuban. Of course, this is the same guy who sold Broadcast.com to Yahoo for millions and is now widely heralded (and somewhat rightly so) as a business-minded futurist, so he has plenty of interesting things to say about all sorts of topics, from business to the entertainment industry to, yes, his Mavs.
Not too long ago, he revelaed his secret to business success. Here it is: “You only have to be right once!”
And I quote:
“In basketball you have to shoot 50pct. If you make an extra 10 shots per hundred, you are an All-Star. In baseball you have to get a hit 30 pct of the time. If you get an extra 10 hits per hundred at bats, you are on the cover of every magazine, lead off every SportsCenter and make the Hall of Fame.
“In Business, the odds are a little different. You dont have to break the Mendoza line (hitting .200). In fact, it doesn’t matter how many times you strike out. In business, to be a success, you only have to be right once.”
What an amazingly liberating concept! Back in the dotcom days, folks kept saying that the Internet changed all the rules of business. This was, of course, a total exaggeration, and that’s strongly reflected in the massive dotbomb burnout that happened just a few years later. The core concepts of business - generating real profit by building value - will simply never change. They are, in fact, what defines business.
What the Internet did do, however, was significantly lower the barrier to entry for starting a business. Rather than rent a store front on main street, purchase a ton of inventory to clutter the backroom and hire a staf of sales people to man the tills, all you need now is a web host ($9.95/mo at Hurrican Electric - Tell them Rob Zazueta sent you), a few HTML pages (free if you if you learn HTML, CSS and JavaScript), some way to collect the momey (also free if you know where to go) and a marketing plan that gets your site in front of the right eyeballs. Rather than keep a ton of inventory, you can buy just what you think you’ll need to have on hand to satisfy most of your customers and special order the rest. Do you think Amazon’s warehouses are stacked with books that are collecting dust? Think again - they do go out and buy pallets and pallets of certain popular books (hello, Harry Potter) but a large majority of their catalog consists of either one or two books in their bins or, in the case those items that “ship in two to three days”, can be rapidly delivered to their warehouse from the manufacturer as they are needed.
With barriers so lowered, the number of times you can be “at bat” in business is virtually limitless, increasing the chance that you’ll get it right at least once. You just have to keep hitting the plate.
The Internet made it so that someone with a good idea can take it as far as they’re willing to go without incurring huge overhead. So many businesses online still fail because they don’t understand this mentality. Even more than 10 years into things, so many businesses are willing to pump untold amounts of money in high-paid consultants, in-house server farms and expensive commercial back-ends based on the belief that, in order to make money, you must spend money. When their Internet projects don’t produce the returns they want, they simply scratch their heads and try to figure out what all the hype was about.
The Internet removes a lot of the tedium and overhead of running a business, allowing savvy owners to focus on bringing in new customers and enhancing their offerings. Under the right circumstances, the cost of operations can be brought down to an almost negligable number, further increasing profits from revenues. Of course, making all this happen requires some amount of knowledge of what is possible.
If you want to succeed in the new new economy, you absolutely must learn how technology works and how it can benefit you. The excuse of “I leave the ‘how’ of technology to the geeks” doesn’t carry water anymore. You *MUST* understand how this stuff works if you hope to succeed. Certainly, you don’t need to learn the minutia of implementation - you don’t need to understand how to configure an Apache web server or program in Java - but the basic concepts behind these things are critical. Without such understanding, you’re simply missing opportunities.
Anyone who wants to truly succeed and excel in business these days should connect with a technology coach - a mentor who intimately understands what’s going on out there who can break these concepts down into digestible bits of information that you can use to construct new ideas upon which to build your success. If you live or work in the San Francisco Bay Area, I’m your guy.
Back to Mark Cuban for a moment. He recently wrote anothe interesting entry about investors vs. speculators. Breaking it down, investors put their money into things that build wealth beyond any increases in their trade value, such as stocks that produce regular dividends or a business whose goal is to turn a profit. Speculators put their money into things that rely on their ability to simply grow in trade value, such as stocks you buy low in the hope that they’ll go up in share price so you can sell it higher or businesses that break even until their goal of a buyout is met. This is not a radical way to look at investing - this is, in fact, the way investing was originally meant to work. When we talk about investments, whether it be a stock, a rental home or anything else, the ultimate goal is to put our money into something that will actually return some value to us beyond its market price. That value doesn’t necessarily mean “money” either - If you invest in a bicycle, you’re probably hoping to get a return on that investment in the form of better health through exercise.
So, ask yourself this: how much of a return has your last technology investment paid off, whether in the form of money, savings or efficiency? If you can’t calculate an expected return on investment - the much-valuted “ROI” MBAs spout on about - from your technology purchases, you aren;t actually investing. You’re speculating. An who wants to speculate on something that will be obsolete the moment you open the box? Seriously, drop me a line. We need to talk.
