LinkedIn
Facebook
TwitterOne Man's Blog
Specialization is for Insects.
Posted on Feb 11, 2009 - 3:33am by John P. in Finance, Philosophy, Work
Mark Cuban pitched an idea over on his blog in which he offers to fund business plans for people, but only if:
Unfortunately, I believe Mark is off base with this concept, and left the following comment over there on his blog. I doubt he’ll respond, but he did at least get people talking – even though he might have done more harm than good.
Mark,
I’ve been reading your blog for quite a while. Never left a comment before. Decided now was the time.
First of all, let’s be clear about one thing. I don’t want your money. Won’t take it if you offer it just on principle of being entirely candid. Now that that’s out of the way.
I’m not sure I understand your impetus for putting this “offer” out there? Trying to figure out if it is a publicity stunt, a VC pitch in disguise, an “off the top of your head” idea, or what? But I fail to see how asking all of these people to pitch an idea in the open and asking them to “open source” the project adds value?
You are asking people, in essence, to forego first mover advantage on any sort of good idea. You are asking them to forego the ability to get patent protection, copyright, or any other sort of valuable intellectual property. This will only serve to weaken fledgling businesses – not help them get launched.
In addition to that, you’ve placed restrictions on cash flow and profitability that will have the exact opposite effect on employment as you purport to be seeking. Anyone looking to hire employees can barely get them up to speed in 60 days much less have the business break even. This means you are pretty much limiting the opportunities to one man shows in fields that have extremely low barriers to entry.
I would suggest that if you wish you really help fund businesses and put people to work you should change your parameters.
- Allow 6 months to reach break even, 9 to turn a profit.
- Ensure that the plan requires the business to actually hire a minimum number of employees (like 3-4).
- Remove the restriction on generating “any” ad revenue in lieu of ad revenue being only a secondary source (if a business can be profitable without ads, why not allow ads as a bonus?)
- Ease up on the cash flow and banking restrictions. You can’t tell people that you won’t be available, but that you have to approve of monetary decisions. You’ll stifle the business.
- And for God’s sake, don’t require them to publish the entire plan in the open and encourage stealing of the idea!I know that you said that you are “trying not to be a VC”, but frankly these “terms” are worse than any VC terms I’ve ever seen. They are unrealistic when it comes to creating real employment, they are more restrictive than necessary, and they just aren’t going to work.
How about doing something completely different? Why don’t you buy a small building which can be partitioned into “open source office space” and give small businesses a free place to actually get together, work and share ideas. Augment this by inviting successful business people to come in and help with brainstorming sessions, etc. And perhaps organize a group of Angel investors to listen to real business plans. (I’d help, and even consider Angel investing if you did this.)
In short, I’m a fan of the Open Source model. But I think the way you’ve gone about open sourcing this particular concept is a bit off.
Cheers, and good luck!
John P.
Of course, Mark is as free to do with his money as the rest of us are. But I hope that he changes his mind about this particular project because I don’t see anything good coming of it.
I am glad that you made that comment. I was thinking along the same lines when I saw his idea put out there. It didn’t follow the descriptions I have read about how to empower other people to work and thrive, including the important point that when you delegate or provide someone with ability, it works heavily against productivity to then put limits on their functions. It is not far from someone partially delegating a task to another, and then going back and saying “You didn’t do it completely right, so I will correct what you did.” That is not beneficial for the esteem of the person being delegated to, and curbs enthusiasm.
So… care to put your money forward and offer a loan to help a business expand? Our family farm is looking to setup inspected on-farm meat processing for our Certified Naturally Raised pastured pork. We sell to white table cloth restaurants, coop food stores and individuals throughout central Vermont with weekly deliveries. We already make the money, we just would like to keep more of it by doing the slaughter and butchering ourselves and more importantly we would like the work done right.
We’ve been taking commercial meat cutting classes and working with the USDA & Vermont Department of Ag since last spring – they’re very encouraging and eager for us to move forward as there is such limited processing capacity in Vermont. We will be razing an old shed to use the foundation as a location for our facility this spring.
I haven’t posted to Mr. Cuban’s blog (yet) as I’m not done polishing our business plan. I’m perfectly willing to open source, to share our business plan. In fact, if you read my blog you’ll find I do a lot of sharing what I know about what we do. I’m a firm believer in how sharing information can help all of us. I would love to see more small slaughterhouses and butcher shop scattered across the nation. Finding processing capacity is a major hurdle for farmers and local food gives consumers better quality and more food security.
Mark Cuban’s offer looks interesting. I agree the time frame is tight for most businesses. For us it is okay as our processing facility will immediately start saving us money over what we currently already pay out.
As to the advertising limitation, hey, that’s his rule – it is his money so no big deal. Frankly, advertising isn’t producing something and that is one of his points.
The banking limitation is quite reasonable. He appears to want to control the spending of the startup or expansion capital so it isn’t wasted on frivolities. Smart. That is not the cash flow of the business, it’s the revolving loan, capital investment or such.
I wouldn’t worry about people stealing ideas. Ideas are a dime a dozen. I come up with ten good ideas a day, several before breakfast. The key is implementation. A business plan is not a magic formula. It takes skills and other resources to turn ideas into products and then to sell them. Mr. Cuban’s thought of stirring the pot of ideas is actually a pretty good idea. The implementation will be interesting.
On the employees issue, I see where he’s coming from – we need more people doing things, making things and fewer people sitting back and managing. Small businesses don’t have the depth of personnel to be wasting it on management. I like a flat organization. Everyone works. Everyone produces. That’s how we run our farm.
Can you make a better offer? I’m looking for a loan and can pay interest plus excellent pastured pork. I have excellent credit and have always repaid my loans, both business and personal. Let’s get this going. Help small businesses and boost the economy. Be a hero.
Cheers
-Walter
Sugar Mountain Farm
Pastured Pigs & Sheep
in the mountains of Vermont
http://SugarMtnFarm.com/blog/
So maintaining someones selfesteem is more important than actually doing the job right……… I wont hire or work with you.
I fail to see how Mark’s plan would “forego the ability to get patent protection, copyright, or any other sort of valuable intellectual property.” Would you care to elaborate?
Absolutely Aaron. He is asking people to literally “open source” their entire plan. He wants all the details put out in public. If you were to put an idea out in the public domain and label it as “open source”, it means that I’m free to run with it as well.
Now, I’m not including things which are so complex and brilliant that they take time to really develop because the 3 months to profitability rule really excludes that sort of stuff right off the bat.
But let’s say that we had an idea for a cheap, easy to produce widget that we could make money on immediately. Well, if it’s that quick and easy, it means that anyone else reading that post could do it too. And if they did, you’d have absolutely no defense against it because you literally “open sourced” the idea.
Make sense?
John