“Humour is the number one way to disarm someone, and get them to let you in to their lovely little world.” I love being in Zimbabwe because every day I get a chance to interact with all of the “serious” businessmen doing “serious” things.
Drinks are on you; jokes are on me.
Sitting with investor worth a few million dollars can be awkward; especially the first time. You are telling him what you think he wants to hear and your sweat beads tell him you are as nervous as a family of worms paddling over a bream pond. The first time I started down the entrepreneur lane I memorized my pitch and nothing else for my first presentation. I desperately stuck to the speech I had rehearsed a hundred times in front of a mirror. In fact, it was so bad that I did not even wait to hear how everyone’s weekend was (after all mine had been spent in front of the mirror). I aggressively pulled out my laptop and started rushing helter-skelter through my slideshow as if I was talking to a bunch of machines that were going to make a decision right after I was finished. I had to learn to relax and have fun with my presentation.
Relax. Get your target to relax and enjoy the show, after all you are not the first person looking for his money and there is little worse for a prospective investor than spending thirty minutes sitting through a presentation that can put the dead to sleep. You could buy him a great glass of wine, take on the bullet of the bill and pay for his truffle covered fillet and his Dom Pedro. Tell a few great stories. Entertain him. Tell a joke. The tears drizzling from his eyes as he is banging the table is the sound of money splashing into your account.
You, my friend, have just entered the realm where “there are numbers in laughter.” Think about a first date with a beautiful girl. On your first date you may not impress a high-class socialite with your clean looks or the extent of your vocabulary, but if you can make her laugh you win. Laughter is where the gold is and laughter is where the next date awaits. You spill your salad onto your lap in a fit of nerves; make a joke out of it. Humour is like a rubber sword, you can make a poke without drawing blood.
A lunch time sales pitch is no different. Create a memory without that thick, heavy, sad smoke of a serious offer lingering around causing your tie and his to feel very tight and uncomfortable. You are trying to sell the best thing since sliced bread; so are a thousand other people. I have said many times that a relationship is more important than quick buck. A strong business partner or serious financial partner is looking for more than just a plan. It’s about class, it’s about humour, and it’s about “can you be someone that I’d like to invest my time in or will all of our meetings just be boring as high school.” Begin to build that relationship in that first meeting.
Two years back I had my first dinner with a billionaire. He was from the US and was sniffing out the prospects of putting down some finance for various projects. He started off very reserved. My brother and I took our seats. He was very reclusive in his posture. My brother and I took the “All or nothing approach” and directed him through the African Based Menu. There were two ways we could leave this dinner-crying or laughing. We could have become quickly overwhelmed by the facade of this heavy weight. It was him in one corner, my brother and I in another. The score was 1 to 1 billion in dollars. We used the only weapon in our arsenal, humour.
We took the view that he was probably very bored with talking business and wanted a little a bit escape – that’s what we ended up giving him. You know that it’s going well when he begins to try and throw back the fruit. He ended up giving my brother “high fives”. High Fives at a business dinner? You better believe you do not leave a billionaire hanging when he puts his hand up for a connection. My hand was sore from the high fives he was giving me in response to perfectly executed jokes. The roar of laughter was almost embarrassing for us (not that we let that show however). At the end of the dinner we did not gain a business partner. We gained a friend. He invited us to his hotel and personal telephone numbers started coming out. Pictures of his single daughter (and no I did not take her for a date) and even if we only saw him again in 5 years he will never forget that night. It was priceless, and better still he paid for our dinner.
Ninety percent of your best memories lie in the area of humour. That is why people go the pub and grab a drink and laugh off all the serious number-crunching meetings they have had during the day. This does not give one the license to be a total clown or to show you as unserious or unreliable. The humour only works when you can deliver it well and your reputation is solid. In humour, timing is everything. If they are not laughing, then it probably was not funny.
Don’t take everything so seriously. Enjoy business, enjoy food, enjoy life and make the billionaires laugh.
Friday 21 October 2011
Thursday 13 October 2011
Starting to Invest...a few tips
Building up your investment portfolio is something that takes time. If
you’re starting to branch out into other small investments the goal of
this piece is to give you a few pointers on what to look for, and what
to avoid. Many people get excited about “Quick Spins” or “Investing in
other countries” but the grass is not always greener on the other
side.
Invest in relationships not just in concepts. Consider this situation,
you get pitched this great idea in a boardroom in Harare. The person
who is running with the concept is from a city in Ghana and his pitch:
“You can buy a piece of land on the Ghana coast at next to nothing.
The value of the plot will double every year because of a coastal
development fund and when you finally decide to build you’ll be so
happy that you put your money here because the return will be unreal.”
Your eyes perk up, and the sounds of having an exquisite beach plot on
the lovely beaches of Ghana sounds like a dream.
Even though you’ve never been to Ghana before and you are not really
sure if the water is warm or cold, and you’re also not really sure
that the beaches are beautiful. The return sounds good and you could
also rent it and then use if for your own family vacations. This is a
good deal. Well… maybe. Another way to look at it is that you buy the
property on impulse. You end up visiting the plot and you convince
yourself that you’ll start building. You contract the builders while
you are there and go back to Harare. Three weeks later the builders
call – they need more money. You fly back to Ghana only to find that
the builders have made a huge mistake on the foundation of the
property. You cannot fix the problem in the few days that you are in
the city and so you have to schedule another trip in a month. Every
extra profit you make begins to be poured into your plot in Ghana.
Finally, long overdue, it is built and you start renting. Then the
tourists that rented your place trashed it and break several things in
the house and you are not sure if they paid the full amount. You also
have a hunch that the person you left in charge of your property stole
your geyser and replaced it with a substandard copy but that will take
weeks to prove. You are in Harare and your local business needs your
attention and so you cannot just pick up and leave every time there is
a problem. You’ve got an investment in Ghana (for the record: I think
Ghana is great country) that is frustrating the heck out of you and
when you mention to your wife that you would like to take her there
for Christmas she bursts into tears because you forgot about your
annual Cape Town Visit. An opportunity that sounded great ended up an
expensive managerial nightmare. Yes, this may be a cynical approach
but it may not far from the truth.
When you are starting to build your portfolio invest around the
corner, literally. Unless you have money to play with, invest in a
place that you can drive to, it is so much easier to check up on. I
had a friend that did once buy a lovely beach property on the East
African coast. He lived in the U.S. When he first invested in the
property he was overjoyed. “This will get me a constant revenue source
from visitors every single month.” Like in the example, there was more
travelling backwards and forwards to manage the property then actually
enjoying it’s return and benefit.
In another instance there are large asset management companies that
will help manage your money but you will not end up owning anything
and the return will be controlled. Now there is nothing wrong with
that but remember what you are getting into. Do not put everything you
have in something that is extremely controlled. Should you go this
route make sure you are clear about the fee structure, penalties for
early withdrawal and do some homework on the funds you are investing
in (their prime investments, who manages them etc.).
If you’re friends with a stock broker, or there is someone you have
been to dinner with a couple times and he knows how to trade on the
market then give the market a shot, but remember that you are
investing based on a relationship. If you have a friend in the real
estate market that you trust; talk to them. Perhaps they have a fund
you can be a part of. Remember though, get everything in writing. When
it comes to hundreds and thousands of dollars that you are looking to
invest. Portion it out. Do not, I repeat do not invest everything into
one place. The world is replete with stories of people who have lost
everything when a market has turned or a company has failed. Ask
anyone who invested in Enron where in an 18-month period shares fell
from 90USD to 1USD.
In the long term there are high-risk entrepreneurial opportunities.
When you are investing in a small, local, computer business you can
see the possible returns. You can go the office if there’s an issue.
If you have partners you can organize a 20-minute coffee and sort out
the dividends and straighten out problems. Ask a few people that you
trust. What can I do with $2,000 or $3,000? See if there’s anything
that works for you. Weigh your options. Get it in writing and go
forward.
you’re starting to branch out into other small investments the goal of
this piece is to give you a few pointers on what to look for, and what
to avoid. Many people get excited about “Quick Spins” or “Investing in
other countries” but the grass is not always greener on the other
side.
Invest in relationships not just in concepts. Consider this situation,
you get pitched this great idea in a boardroom in Harare. The person
who is running with the concept is from a city in Ghana and his pitch:
“You can buy a piece of land on the Ghana coast at next to nothing.
The value of the plot will double every year because of a coastal
development fund and when you finally decide to build you’ll be so
happy that you put your money here because the return will be unreal.”
Your eyes perk up, and the sounds of having an exquisite beach plot on
the lovely beaches of Ghana sounds like a dream.
Even though you’ve never been to Ghana before and you are not really
sure if the water is warm or cold, and you’re also not really sure
that the beaches are beautiful. The return sounds good and you could
also rent it and then use if for your own family vacations. This is a
good deal. Well… maybe. Another way to look at it is that you buy the
property on impulse. You end up visiting the plot and you convince
yourself that you’ll start building. You contract the builders while
you are there and go back to Harare. Three weeks later the builders
call – they need more money. You fly back to Ghana only to find that
the builders have made a huge mistake on the foundation of the
property. You cannot fix the problem in the few days that you are in
the city and so you have to schedule another trip in a month. Every
extra profit you make begins to be poured into your plot in Ghana.
Finally, long overdue, it is built and you start renting. Then the
tourists that rented your place trashed it and break several things in
the house and you are not sure if they paid the full amount. You also
have a hunch that the person you left in charge of your property stole
your geyser and replaced it with a substandard copy but that will take
weeks to prove. You are in Harare and your local business needs your
attention and so you cannot just pick up and leave every time there is
a problem. You’ve got an investment in Ghana (for the record: I think
Ghana is great country) that is frustrating the heck out of you and
when you mention to your wife that you would like to take her there
for Christmas she bursts into tears because you forgot about your
annual Cape Town Visit. An opportunity that sounded great ended up an
expensive managerial nightmare. Yes, this may be a cynical approach
but it may not far from the truth.
When you are starting to build your portfolio invest around the
corner, literally. Unless you have money to play with, invest in a
place that you can drive to, it is so much easier to check up on. I
had a friend that did once buy a lovely beach property on the East
African coast. He lived in the U.S. When he first invested in the
property he was overjoyed. “This will get me a constant revenue source
from visitors every single month.” Like in the example, there was more
travelling backwards and forwards to manage the property then actually
enjoying it’s return and benefit.
In another instance there are large asset management companies that
will help manage your money but you will not end up owning anything
and the return will be controlled. Now there is nothing wrong with
that but remember what you are getting into. Do not put everything you
have in something that is extremely controlled. Should you go this
route make sure you are clear about the fee structure, penalties for
early withdrawal and do some homework on the funds you are investing
in (their prime investments, who manages them etc.).
If you’re friends with a stock broker, or there is someone you have
been to dinner with a couple times and he knows how to trade on the
market then give the market a shot, but remember that you are
investing based on a relationship. If you have a friend in the real
estate market that you trust; talk to them. Perhaps they have a fund
you can be a part of. Remember though, get everything in writing. When
it comes to hundreds and thousands of dollars that you are looking to
invest. Portion it out. Do not, I repeat do not invest everything into
one place. The world is replete with stories of people who have lost
everything when a market has turned or a company has failed. Ask
anyone who invested in Enron where in an 18-month period shares fell
from 90USD to 1USD.
In the long term there are high-risk entrepreneurial opportunities.
When you are investing in a small, local, computer business you can
see the possible returns. You can go the office if there’s an issue.
If you have partners you can organize a 20-minute coffee and sort out
the dividends and straighten out problems. Ask a few people that you
trust. What can I do with $2,000 or $3,000? See if there’s anything
that works for you. Weigh your options. Get it in writing and go
forward.
Thursday 6 October 2011
Picking the Right Person to do Business With
"Let us get married so that we can make more money together." Imagine marrying someone only for the financial benefits.
You would focus more on the legal contracts than on the wedding day.
In fact, you would probably get a lawyer to help write your vows and make sure that there was a pre-nuptial agreement before there was a down payment on the wedding venue.
What kind of a marriage would that be?
Similarly, what kind of a business life would you have if every relationship only focused on the money?
People spend thousands of precious dollars on legal fee's to get a start-up business or partnership protection, just in case something goes wrong.
When or if it does, an additional "fortune" has to be spent on more legal work to get you out of the fix.
Pretty soon you would have wasted all your start-up cash protecting yourself, and in the end you still get burnt.
How much better would it be to build a business relationship (still having the partnership clearly outlined) on trust and transparency instead of legalities and suspicion.
If you don't know what I am talking about then you probably have not started a business yet.
If you catch this principle it will save you a lot of money, emotional heartache and a few intense meetings with lawyers.
(During the first year of operation lawyers often charge you per minute so be careful not to have long chats about your upcoming family vacation with them - nothing against lawyers).
Relationships are key to any business venture. The old adage of its not what you know but it's who you know holds true.
People that you partner with need to be chosen carefully.
Start-ups have potential for high friction levels; cash-flow crises, differences of opinion, fatigue and perceived imbalances in workload.
Prevention of the problem is infinity better than trying to cure it.
I had a question from one of our readers this week that ties in here.
"Where do I invest US$2 000 or US$3 000 today in Zimbabwe?"
Good question and my answer is simple.
A business partner of mine who was a former Wall Street investment banker (I'll keep his name anonymous) answered this way: "You never invest in a business idea. You always invest in a relationship."
Let that sink into your pool of beliefs and give it time to ferment.
I will give some more practical advice in another article.
Here are some buffering questions you can ask yourself when considering: "Is this guy going to be a good partner or person to invest with in the long run".
Question number 1: Is their vision the same as yours?
There must be the same desire to bring about change in your clients' lives as a result of your product.
If their goal is simply to make money, then be prepared for a potentially rough ride.
Do not let the "root of all evil" grow in the backyard of your business. Enriching the lives of others through your product and helping build a better world around you will often bring in the cash flow you desire.
Question number 2: Do they have the same values as you do?
If one member of the team is fine with overcharging while another is not you have a problem.
If your values are not the same it will be hard to have a firm foundation on which to solve problems.
Watch for patterns that repeat themselves, and do not be too quick to say, "let us partner".
Question 3: Is this person always late for meetings?
Is he shifting goalposts? An example: I helped start a business that had brilliant potential.
We got the business to a place where it would be investor worthy and operationally viable.
We had 25 percent of the company on the table for a certain amount of money.
An investor came in with the money, only to later shift his interests and he demanded 51 percent of the business. (There are sharks out there that have great smiles).
My partners and I immediately pulled out of the project because of the violation of integrity.
Legal battles could have been fought but time wasted on spilt milk can cause you to miss new opportunities.
There was no point in trying to build the business with someone who is dishonest.
Question Three: Can you trust this person?
If you cannot trust your partners on a handshake, then it will be hard to hold them to a document.
Once the handshake is trusted, then get roles, responsibilities, timelines and deliverables down in writing.
Let me say that again, all you agreements should be in writing.
Do not get me wrong, problems will arise even if you are doing business with angels and the human memory is too fallible to be relied on in an argument.
Put it on paper, it remembers better.
The truth is you may make or will make a wrong decision on a business partner.
It does not mean that things cannot be solved amicably.
The decision on whether to fight it or walk away remains yours.
Business is people. You need people to help you and to buy from you.
You need people to audit your books and to encourage you when you have hit the bottom of the ocean.
Don't short change yourself by making everything "just a contract". It is more like a marriage.
You would focus more on the legal contracts than on the wedding day.
In fact, you would probably get a lawyer to help write your vows and make sure that there was a pre-nuptial agreement before there was a down payment on the wedding venue.
What kind of a marriage would that be?
Similarly, what kind of a business life would you have if every relationship only focused on the money?
People spend thousands of precious dollars on legal fee's to get a start-up business or partnership protection, just in case something goes wrong.
When or if it does, an additional "fortune" has to be spent on more legal work to get you out of the fix.
Pretty soon you would have wasted all your start-up cash protecting yourself, and in the end you still get burnt.
How much better would it be to build a business relationship (still having the partnership clearly outlined) on trust and transparency instead of legalities and suspicion.
If you don't know what I am talking about then you probably have not started a business yet.
If you catch this principle it will save you a lot of money, emotional heartache and a few intense meetings with lawyers.
(During the first year of operation lawyers often charge you per minute so be careful not to have long chats about your upcoming family vacation with them - nothing against lawyers).
Relationships are key to any business venture. The old adage of its not what you know but it's who you know holds true.
People that you partner with need to be chosen carefully.
Start-ups have potential for high friction levels; cash-flow crises, differences of opinion, fatigue and perceived imbalances in workload.
Prevention of the problem is infinity better than trying to cure it.
I had a question from one of our readers this week that ties in here.
"Where do I invest US$2 000 or US$3 000 today in Zimbabwe?"
Good question and my answer is simple.
A business partner of mine who was a former Wall Street investment banker (I'll keep his name anonymous) answered this way: "You never invest in a business idea. You always invest in a relationship."
Let that sink into your pool of beliefs and give it time to ferment.
I will give some more practical advice in another article.
Here are some buffering questions you can ask yourself when considering: "Is this guy going to be a good partner or person to invest with in the long run".
Question number 1: Is their vision the same as yours?
There must be the same desire to bring about change in your clients' lives as a result of your product.
If their goal is simply to make money, then be prepared for a potentially rough ride.
Do not let the "root of all evil" grow in the backyard of your business. Enriching the lives of others through your product and helping build a better world around you will often bring in the cash flow you desire.
Question number 2: Do they have the same values as you do?
If one member of the team is fine with overcharging while another is not you have a problem.
If your values are not the same it will be hard to have a firm foundation on which to solve problems.
Watch for patterns that repeat themselves, and do not be too quick to say, "let us partner".
Question 3: Is this person always late for meetings?
Is he shifting goalposts? An example: I helped start a business that had brilliant potential.
We got the business to a place where it would be investor worthy and operationally viable.
We had 25 percent of the company on the table for a certain amount of money.
An investor came in with the money, only to later shift his interests and he demanded 51 percent of the business. (There are sharks out there that have great smiles).
My partners and I immediately pulled out of the project because of the violation of integrity.
Legal battles could have been fought but time wasted on spilt milk can cause you to miss new opportunities.
There was no point in trying to build the business with someone who is dishonest.
Question Three: Can you trust this person?
If you cannot trust your partners on a handshake, then it will be hard to hold them to a document.
Once the handshake is trusted, then get roles, responsibilities, timelines and deliverables down in writing.
Let me say that again, all you agreements should be in writing.
Do not get me wrong, problems will arise even if you are doing business with angels and the human memory is too fallible to be relied on in an argument.
Put it on paper, it remembers better.
The truth is you may make or will make a wrong decision on a business partner.
It does not mean that things cannot be solved amicably.
The decision on whether to fight it or walk away remains yours.
Business is people. You need people to help you and to buy from you.
You need people to audit your books and to encourage you when you have hit the bottom of the ocean.
Don't short change yourself by making everything "just a contract". It is more like a marriage.
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