Bill Flagg

Bonuses

noreply@blogger.com (Bill Flagg) — Mon, 12 Dec 2011 13:16:00 +0000

Last week I had couple conversations about bonus structures. I've experimented with a lot of things over the years and here's what I've come to believe. I think of bonuses in two categories:

1. Incentive

2. Appreciation

I think they have more impact when kept separate. Let me explain...

Incentive Bonuses

I believe we all have an instinct to want to play games. I call it "the gaming gene", and we all tend to get excited to have games to play, keep score, and win. I also believe this instinct is the basis for why some, albeit a small % of people, are truly motivated by money. It's a score to keep track of their progress in the game of life.

The incentive bonus is really more about a "prize" that individuals and teams can look forward to as a result of hitting their goals or playing the game well. I've seen more motivation come from offering $100 worth of movie tickets than receiving $100 cash. So the "prize" or bonus does not need to be a cash, in fact it may be more effective if it isn't. But, what's really important and motivating is setting up the "game" well. For example at RegOnline, we would have quarterly departmental goals that were focused on moving the needle above and beyond where we were. Sales may be looking to increase conversion on their demo's by 10%, or development would be pushing to get an extra project released, or marketing would be focused on getting a few more top search engine rankings for a couple more keywords. Goals seem to work best when they:

1. Move the needle/important to where the company wants to head

2. Achievable - aim low, make progress

3. Short term - no longer than 3 months

4. Team oriented - the team agrees and is excited

5. Fun/motivating bonuses (i.e. everyone gets massages, we all go to Mexico, Fridays off for the next quarter)

Appreciation Bonuses

I believe that unexpected bonuses go a LONG way with sending a caring message. Much more so than giving regular expected bonuses that are really just a way to true-up below-market pay. Pay market rate and then do the UNEXPECTED. I try to make them random both in timing (3-4 times a year) and in format (ipads, cash, airline miles, spa treatments, trips to mexico, etc.). I love how excited my co-workers are when they receive a bonus/gift they weren't expecting. It makes it SO much more fun for everyone.

I've never been a huge fan of holiday bonuses because they are expected. But, I also know that it helps people who aren't as good at saving for the holiday gifts. So, I tend to give cash/gift cards in the 4th quarter to help.

I also believe in splitting my bonus budget EQUALLY amongst full-time employees. Doesn't matter if someone makes double the salary of another. I believe differences in salary has little to do with ability to be of value to the company. I've seen $35,000 support team members win customers for life with their care and responsiveness and $80,000 developers cause customers to head for the door because of poorly written code. I also like sending a signal to EVERYONE in the company that everyone CAN (and does) make a big difference regardless of pay.

Motivate and Appreciate SEPARATELY.

Engender team work.

Have fun with it (with prizes instead of cash)

Expansiveness

noreply@blogger.com (Bill Flagg) — Mon, 28 Nov 2011 20:14:00 +0000

In the past couple months I've participated in three intensive, mind-blowing workshops/gatherings. All three helped me grow and expand my view of what's possible in my businesses and personal life.

The first was a 4-day Lifebook workshop I did with my amazingly-supportive wife, Chelsea. Where we went through 12 categories of our lives and created visions for what the next level of growth looked like. While 4 days seems like a long time to lock ourselves in a room with 10 other couples, we found some real nuggets for growth in our lives.

Then came another two days with the genius-founder of Zingerman's (see last March's trip description here). I went with my partners from StickerGiant & SurveyGizmo, and manager from PosterBrain. We pealed back the layers of our businesses and created new enhanced visions for our companies and teams that gave us all a TON of new energy and excitement for growth. That gave our teams a whole new energy as well.

Then I spent three days at the Conscious Capitalism Summit (see last year's notes) with incredibly conscious leaders/founders of some GREAT companies like Whole Foods, Panera Bread, Starbucks, Dansk shoes, Southwest Airlines, Nordstroms, and more. They each spoke of the visions/consciousness by which they have built and are building their companies. When I asked John Mackey, the founder of Whole Foods, what is the bottleneck for more companies to grow in a more holistic way, his answer was simply "the consciousness of the leader". Each time a leader expands their consciousness, or more simply grows, the company will naturally follow.

All three of these gatherings were great reminders of:

1. The joy I get out of engaging in things that help me grow and expand my view of what's possible.

2. The HUGE benefits to me, my family, and my businesses from growing

3. The desire to find more opportunities for growth

4. The incredibly HUGE power of VISIONING (or expanding my view of what's possible)

I have always gravitated towards a handful of "growth" trips each year. A lot of times as the trips get closer, I don't feel like going. But I'm always glad I did because I attribute a lot of my success and happiness to those opportunity to expand my view on things.

Other trips I do/have done...

Annual trip to Berkshire Hathaway to hear Warren Buffet and Charlie Munger talk for 4 hours

Annual trip to Endicott House in Boston where 50 entrepreneurs gather to engage with top-of-their-fields people for 4 days (a more intimate version of TED)

Field trips to see the inner workings of different businesses (Zappos)

Personal growth workshops (Tony Robbins, DreamWork, Mankind Project)

Please share if you have growth experiences that have expanded your views on life and business that you'd recommend.

Own it

noreply@blogger.com (Bill Flagg) — Tue, 16 Aug 2011 12:00:00 +0000

I've had a couple experiences as a consumer this summer that have made me want to scream. Things go wrong all the time. Thats ok. It's when an organization doesn't own it and communicate quickly about it that erodes trust and desire to do business with them.

I also believe OWNing IT is a MAJOR trust builder and the more we do it, in a timely and personalized way, the more people will LOVE to do business with us.

One of the most basic tactics I have used in my businesses is to automatically send a follow-up email immediately after their first use... so we could own any problems that may have come up. For example, at PosterBrain we send this email the day after someone receives their order...

"subject: How's your poster order?

Hi Jim,

Did your poster order get to you ok? What did you think of the quality (and your experience with us)?

On a scale of 0-10, how likely are you to recommend PosterBrain to a friend or colleague? Can't wait to hear."

90% of replies are a "GREAT!"

10% of replies are about things that went wrong that we then have the opportunity to WOW them with our customer service.

If we didn't ask directly, most people won't give unsolicited negative feedback. Then we would lose a customer without even knowing it.

At RegOnline we periodically had glitches in our system. We would move as quickly as possible to email those that were affected, be specific about what happened, and explain how we were solving the problem so it wouldn't inconvenience the customer again. I was always amazed by how many people would reply back and say that's why they loved doing business with us, because we were quick to own and communicate our problems.

Are we asking for enough direct timely feedback? Are we owning the problems before our customers need to mention them?

Little Bets

noreply@blogger.com (Bill Flagg) — Mon, 13 Jun 2011 11:04:00 +0000

A friend recently gave me this great book... Little Bets. The basic theme is about how the most successful folks around also ITERATE the most. They try lots of little new things and then amplify what resonates for their audience/customers. One great example is how the comedian, Chris Rock, shows up at a small comedy bar in New Jersey to test out new content. Most of what he does flops there, but he makes note of the ones that get the laughs and keeps iterating until he gets the best content for his HBO specials and tours.

I'm a big fan of iterating in every business I'm involved with. Here are a couple examples of how we've iterated recently and discovered things that resonate:

1. PosterBrain adding Wurther's candy to every order - customers now regularly email us about how much they love the little surprise inside.

2. StickerGiant sending follow-up emails to every customer to see how their stickers turned out - we now get both rave reviews and know right away of any issues

3. PaySimple simplifying their online application to take half the time to complete - drastically improving conversion rates

4. SurveyGizmo promoting "Enterprise Survey Software" on the homepage - increased conversion rates of our core business

Sounds easy, right? Well, for every success there's probably 10 things we try that fall totally flat and one that actually has a negative impact. The key is to test without shame and as nimbly as possible. My mantra has always been "how quickly can we test this?"

I find that it's real easy to over-engineer projects and as a result they can take way too long to see the light of day. An example of an idea that I was involved with at RegOnline four years ago, has finally launched with tremendous impact... a one-page homepage (no navigation bar) has seen a 90% lift in conversion! What was our opportunity cost of not having tested this four years ago?

How many little bets can we make this week to see what happens?

Are sales teams adding value?

noreply@blogger.com (Bill Flagg) — Fri, 20 May 2011 12:24:00 +0000

For years, a good friend of mine (who owns Finished Basement Company) and I have debated the real value of commissioned inbound sales teams. He claimed his $10 million+ revenue company couldn't survive without his coin-operated sales guys. Then about three months ago, after being sick of feeling like he was being held hostage by his 6-person sales team, he decided to let them all go and see what happened.

Instead of prospective customers going through a salesperson and being "closed" by them, they now speak directly with the basement design team. The designer asks the customer what they envision, what their budget range is, and then gives the customer a design. The customer then chooses to buy.

The process runs far smoother. There is much better service with all the communication going directly to the “technician” (the designer) vs through the sales person. Budget conversations are a straight forward matter of the design process vs. a chess match between seller and buyer. At the end of the day the client wins with a better design, better communication and better service.

What's the difference in sales so far? Close rates and profitability have nearly doubled. Overhead is down, cost to the client is down and frustration with a pain-in-the-butt sales team is down to zero.

P.S. (added 5/26/11)

I'll also add that the reason we had these conversations to start was because RegOnline started with a similar commissioned inbound sales team. I didn't have the guts to amputate the whole team, but I did convert the team to a no-commission "Client Services" team and found better results at half the cost and none of the hassles of a commissioned team environment. We did experiment recently with SurveyGizmo leaving some of the inbound leads untouched by a human (and just get automated emails) and found that human interaction DID have a significant impact on sales and justified their non-commissioned compensation.

Berkshire Hathaway 2011

noreply@blogger.com (Bill Flagg) — Tue, 17 May 2011 11:16:00 +0000

This year's trip to Omaha to listen to Warren Buffett & Charlie Munger answer questions for five hours was the same as previous years... a great cleaning of my investing windshield, an epiphany (or two), and a good time connecting with my 77 year-old father (and brother-in-law and nephew this time too).

This year's epiphany was about cyclicality. Buffett & Munger talked about how their residential businesses are not doing well right now and how they are perfectly comfortable with "lumpy" profits and cyclicality. They made a comment about how most people understand and are comfortable with seasonality in businesses, but few have a comfort level and understanding of cyclicality. Most overreact both on the ups and downs of cyclical industries like real estate. A great read that talks about how much opportunity there is in understanding cycles is Howard Mark's book The Most Important Thing (chapters 8 & 9).

Eight more nuggets:

1. Munger prefers to have permanent partners in acquiring companies vs. pushing paper in out-smarting others in marketable securities (although Buffett disagreed).

2. Biggest mistake - going into smaller business that could never be bigger

3. Raising rich kids - don't let them think they are special because of being rich and give incentive to work.

4. Fancy projections do more damage than good because people start believing they will be true. Don't ask the barber if you need a haircut - investment bankers love projections... Reduced expectations are best defense for investing.

5. All $35 billion of BRK's cash is in treasuries because they want a parking place where we know we'll get our car back.

6. "Serving on boards is for the birds." - CM

7. Buffet's replacement? Get the right person with the right values, comp structure secondary.

8. “I wish I could read faster. It’s a huge advantage to read fast. There’s hardly anything more pleasurable then reading, and reading, and reading and reading. Charlie and I do a lot of it, and we continue to do a lot of it, but I don’t do it as fast as I would like to.”

And 53 more...

1. All businesses are doing better, except those related to residential real estate.

2. Sokol affair was "inexplicable & inexcusable". "It's a mistake to assume perfect rationality in very able people" - CM (Charlie Munger).

2.b. "You can always tell a man to go to hell tomorrow." in response to their congenial press release about Sokol

3. Separating the Chairman & CEO roles enables better management/change of management.

4. If were to develop new expertise would want it to be in the tech or energy field.

5. Difficult to identify people with competence in areas we don't have competence.

6. Ease of entry - always 1st question in determining durability.

7. Standard of living in the past century increased six fold. How can anyone NOT be enthused about this country. Power of capitalism is incredible. Resusitive growth pattern will continue. Our system works incredibly well.

8. Best companies require little capital to grow and can price adjust with inflation (vs. businesses with tons of inventory or receivables)

9. Continuous learning important to success

10. Ideal asset - royalty on sales on inflation adjusted products

11. We don't view BRK as over-priced. Would use BRK stock unless fairly valued (which isn't now)

12. Doesn't like the CAPEX on utilities with inflation

13. Dividends - if can't reinvest internally, then dividend out. Stock price would go down as an admission of inability to create greater returns.

14. Outlook on banks - returns will be considerably less because of reduced leverage. Have added to their WellsFargo position.

15. M&T bank wonderful company and annual report. Same with Jamie Dimon's (JPMorgan) letter to shareholders.

16. When BRK started a share was worth $1 of gold, now worth $1,500 of gold today (vs. $120,000 stock price)

17. ALL currencies have declined in value over time.

18. Gold 67 foot cube = all world supply

19. Value is based on what asset will deliver/produce. Invest in good PRODUCING businesses.

20. Rising prices creates excitement. Over time, not way to get rich though.

21. "Doesn't seem rational to buy an asset that goes up if the World goes to hell" - CM

22. How'd you attract investors? "It helps if you conduct yourself so that others trust and you deserve that trust."

23. We ARE a conglomerate, but ok if not a stock issuance machine to do it.

24. Legacy? "Fortune fairly won and wisely used" - CM, "Teacher" - WB, "At last I sleep alone" - Wilt Chamberlain

25. No question that purchasing power of all currencies will decline over time (hard to tell which relative to each other). $1 in 1930 worth 16 cents today. "A great civilization has a lot of ruin in it" - Adam Smith

26. Index fund is best if not actively managing. Like BRK at current prices

27. Reduced expectations are best defense for investing.

28. General culture of trust in organization better than big compliance department

29. US has had foot to the floor with both monetary and fiscal policy

30. Residential construction flat-lined - when excess inventory bought up, economy will take off again.

31. Rail shipments (gauge of economy) 1Q06 = 219, 09=150, 11=190

32. Haven't learned from our recent excesses. Need to more heavily tax undesirable financial activity

33. Oil? 88m barrels/day - finite supply. $ price of most things will go up. Think about productive assets rather than speculating in commodities.

34. "Go to bed every night a little wiser than you woke up." - CM

35. Need to at least make CEO's of failed institutions dead broke. Expect more messes in lifetime. Failure due to stupidity not evil.

36. Goodwill should not be used in valuing. Amortization of GW doesn't make sense.

37. Costco extreme meritocracy that created extreme loyalty. GM - worst - wiped out common shareholders

38. Will not participate in auctions and would pay less if came back afterwards.

39. Make different deals at different times because of different opportunity costs

40. “I wish I could read faster. It’s a huge advantage to read fast. There’s hardly anything more pleasurable then reading, and reading, and reading and reading. Charlie and I do a lot of it, and we continue to do a lot of it, but I don’t do it as fast as I would like to.”

41. Views job as CEO as Chief Risk Manager

42. Shareholder charitable giving program - $/share allocated to 3 charities. Stopped because didn't want the parent company to be a distraction b/c of social issues they were contributing to.

43. China? - tax laws, customs, shareholder sentiment. Make allowances for lack of understanding. Absurd discounts to cover the risk.

44. Windpower - doesn't work without subsidies.

45. BRK share of taxes = 2% of all corp taxes in US

46. Improve your own skills - only diploma WB has hanging in office is Dale Carnegie - communication skills.

47. Find what you're passionate about and then improve your skills there. Didn't succeed in re-insurance business for 15 years.

48. Beware of the salesman selling a derivative product.

49. Won't take the risk of going after a really big elephant.

50. Companies issue stock to trade confetti for real assets.

51. Wants to continue buying businesses they know and management they like.

52. "What do we care if we buy a good business that's lumpy in its profits?" - CM

53. Look at cyclical business the same as would seasonal.

Lessons from Trader Joe's

noreply@blogger.com (Bill Flagg) — Mon, 09 May 2011 13:13:00 +0000

I had the opportunity to spend some time with the former president, Doug Rauch, who helped build Trader Joe's over the past 30 years.

A little background on Trader Joe's first. They started as a private label wine seller because of a little loophole in California wine retailer laws that enabled them to resell good wine for really cheap prices. 70% of their revenue was wine. Then Doug came in to apply a similar private-label concept to food products. Then they created a great customer service model. And then they had the discipline to stick to their great formula... and voila, 30 years later they are one of the most admired grocers and companies in the country.

Ok, so what was so unique about Trader Joe's? And why did it work in the face of big-box-stores-are-better and branded-products-are-king? One word - they made grocery shopping fun and easy. When most stores carry 40 types of peanut butter, TJ sells 10. 4,000 products vs. 50,000 products. 80% private label (lower prices). Less selection makes it easier. And then they have fun with the limited selection they have (example).

What else?...

+ Change 1/4 of the selection each year creates surprise and discovery (difficult to do when thousands of shoppers complain about their favorite products being discontinued)

+ Put managers in front of the store (instead of in back office) to create greater team leadership/engagement.

+ Have all employees do a little of everything (register, stocking, cleaning, etc) to create a more consistent experience overall. This is a theme I recognize in other great companies like Southwest Airlines.

+ Create fun, caring culture for employees (and they'll do the same for customers)

What I love about TJ's is that there's nothing "me-too" about them. They took a unique approach in the face of what everyone else was doing. And people love them for it because it's refreshing and fun.

4-minute video interview with Doug Rauch - love "a store of stories... that was the fun" and "context that transcends the content" and "a customer experience company that happens to sell food"

Good article in Fortune

Great interview in LA Times with Joe

I made two killer recipes out of a wonderful wonderful Trader Joe's cookbook for Mother's Day. This cookbook isn't by Trader Joe's, it's by a customer who loves TJ's so much she made a cookbook based off all the great quirky things you can buy there.

Hilarious video another customer made with his phone.

What can we do with our organizations that'll inspire raving fans?

Setting the Table

noreply@blogger.com (Bill Flagg) — Sun, 01 May 2011 12:00:00 +0000

I read this AMAZING business book a couple months back by a great New York restauranteur, Setting the Table by Danny Meyers. He had the courage to be revealing about the in's and outs of his very successful restaurants. I loved a couple of his themes that apply to most businesses (not just restaurants):
1. Start by bringing unique value to the community/customer base - he only opens restaurants that can bring something new and exciting to the NYC restaurant scene (no me-too's)

2. Find a soulful source to draw inspiration and ideas from - he would travel with his partner-chefs to understand and encourage their cooking heritage

3. Plan to start with some flailing around before finding the sweet spot and working out the operational kinks - EVERY restaurant was a train-wreck to start with.

4. Being of service and connecting your community of customers is HUGELY valuable and fulfilling and still extremely rare - he fully engages in the local community on many levels

5. As success grows, stay focused on what is meaningful versus going big - with lots of offers to expand nationally, he chose to stay locally focused and great.

6. The more successful you are, the more people expect of you and the bigger the example you become (good or bad) for the press. - he learned to embrace the publicity rather than fight with it.

7. Connecting the dots between customers creates community (and value for customers). - he gets to know customers in his restaurants so he can make introductions to other customers and "connect the dots" of that local community. One of his restaurants became known as the place for publishers to eat and hang out as a result.

So as the title suggests, how are we "setting the table" of our businesses to engage more fully and authentically in the community they are creating?

Pile of Money or Creative Platform?

noreply@blogger.com (Bill Flagg) — Tue, 26 Apr 2011 12:30:00 +0000

I've had a half-dozen of conversations in the past couple weeks with entrepreneurs who are considering selling their companies... $4 million, $15 million, $20 million, $40 million, $70 million... all at crazy multiples.

My questions go as follows:
Do you NOT enjoy your business?
Do you have partnership issues?
Do you think your core model is flawed and not sustainable?
Is your growth done?
Are you lacking in money to sustain your lifestyle?

In most of the conversations, the answer to ALL of these questions has been NO. The reason for thinking about selling has been solely about MONEY. More of it. More of it in a way that they can feel more secure about their future.

Little thought is given to how they would invest it and usually after talking it through more there's a realization that they won't be able to beat the return they are getting from keeping their company. But diversification makes sense.

Little thought is given to what they would do after they sold. Just the thought of hitting a nice beach, buying some cool stuff, and then coasting right into their next "midas-touched" venture (rarely happens twice). Or be more purposeful in helping others through sitting on nonprofit and for-profit boards and helping others. But they'll figure it out in between margaritas.

Little thought is given to what will really happen with their great cultures and family of great employees. But the acquirers are good people who promise and insist on not changing the magic formula or the great cultures... yah right.

Then I remind them what it took to build the amazing platform they have now. And how they are the masters of their domains. The kings of their happy kingdoms. The painters of their beautifully growing canvases. But all the annoying stuff will be gone. I saw a great quote recently, "Big offers are a good thing, but personal sovereignty matters a whole lot more over the long run"

Having gone through all of the similar thinking, I shared with them that the reality was different for me and many others I know who have "cashed out". The reality is the money means little in the end in comparison to having a great platform/canvas to continue growing and creating great things with.

In most cases, NO ONE is advising them NOT to sell. It seems to be part of the American dream, the ultimate accomplishment, and the biggest ego stroke for an entrepreneur to "cash out". What if we changed that dream to having pride in building great companies that our great grandchildren can be proud of?

Three of the six entrepreneurs I spoke with decided NOT to sell. Not because the money wasn't enough (it was). But because they were excited about continuing to create and grow on THEIR hard-earned platforms.

Got Zing?

noreply@blogger.com (Bill Flagg) — Wed, 30 Mar 2011 16:25:00 +0000

I grew up near and then went to college in Ann Arbor, where there was a deli that had such an incredible level of passionate energy for their food and service that I remember thinking to myself that I hope to one day create a business that could have that great level of energy flowing through it. I also remember thinking, this will probably be the first of many businesses like this that I'll see. Well, fast forward 20 years, and Zingerman's STILL optimizes what I strive for.

Last week I spent two days with Ari Weinzweig, the founder of that now-not-so-little deli in Ann Arbor, Zingerman's. Started in 1982, it now does $40 million in business out of Ann Arbor alone. They've expanded into a bakehouse, coffee roasting, mail order, creamery, candy making, roadhouse-style restaurant, and a training business. Ari walked through their secret sauce in this great 2-day seminar.

Their size is not what's truly amazing about them. What's amazing about them is the energy and excitement that pours out of every team member I encountered in their businesses. For 30 years they have had these recipes for success (before any of them became trendy):

1. Great service goes beyond service to just customers - it also includes how co-workers are of service to each other, how the owners and managers are of service to their employees, how the company is of service to its suppliers, and how the company is of service to its local community.

I saw how co-workers would lift each other up and how every interaction included a consciousness of "what can I do to help?" And how that lifted everyone's energy.

2. Great service is defined as Listening, Getting the person what they asked for: Accurately, Politely, and Enthusiastically, and Going the extra mile - it MUST be something above and beyond that the customer didn't ask for. I saw how co-workers went the extra mile at each interaction, and how empowered they felt as they WOW'ed customers.

3. Empowerment through open book and weekly huddles around numbers.

Every department in every business has a dashboard of numbers they track on a weekly basis from revenues to energy rating of co-workers. Usually about a dozen numbers on each board

At first, I was thinking people probably roll their eyes at all the numbers ever week. But then I asked a random group of five co-workers what they thought of their numbers boards and was surprised to find that they LOVED them. Why? They like having and SEEING the impact they can make and it's a fun game they can play at work everyday to see how they can positively impact the numbers

4. A passion for the product/food.

At Zingerman's they aren't interested in just selling anything. They have a passion for great food products that have a great story behind them. Each person I met was truly passionate about the food and service they were offering.

5. Servant Leadership

Several people commented on how they appreciate how the owners were humble and worked shoulder to shoulder with them a lot of the time. Ari spends most of his evenings filling water for customers at the restaurant. He calls it "management by filling water." I call it genius. His co-workers love it, customers love it, he gets his ear to the customer where it counts most.

6. Appreciation

A bunch of years back Ari heard about doing "appreciations" at the end of meetings. Where everyone is invited to express appreciation for another co-worker. At first his managers resisted the idea. Then Ari said, "you know what, we are just going to give it try for a while." That little practice comes through loud and clear with how expressive everyone is of their appreciation for one another. Which adds a ton of positive energy to everyone's day. They also have a monthly internal newsletter, with 10 pages of "thank you's" between co-workers. Amazing.

7. Visioning

Two posts ago, I talked about the power of visioning and shared Zingerman's example. After last week, I have a little more perspective on why this is so powerful. When the vision is expressed as if it has already happened and in a way that has both heart and is tangible then:

a. the team gets excited about a bigger vision to reach for

b. the team has an invitation, permission, and expectation to make it happen on their own

c. the team members get excited knowing that there's opportunity for growth for themselves within the organization.

8. Training

With over 500 employees, the one thing that the founders of Zingerman's won't delegate is their new employee training. It's where new employees get the Z cool-aid from it's source. They talk about their history, philosophy, and recipes for success. As Ari was talking about this, I hit myself in the head realizing that it was a subtle piece that I've missed in my businesses. We assume that new folks will naturally pick it up from others. But there's something real powerful about making sure our employees hear direct from the owners what the company is really about.

Thanks Ari and everyone at Zingerman's for your inspirational example of greatness!!

Want more?...

http://www.inc.com/magazine/20030101/25036.html (old article)

http://shop.zingtrain.com/ (Ari recently put out a great book and the DVD's are great for training)

http://www.inc.com/magazine/20110201/creating-a-company-vision.html (new article on visioning)

6 Bootstrap Traps

noreply@blogger.com (Bill Flagg) — Thu, 03 Mar 2011 11:24:00 +0000

As I meet with more and more bootstrappers and see their stories play out, here are the most common traps I see themselves getting into:

1. Raising money without really knowing whether the extra spend will generate a return

2. Getting distracted by offshoot ideas rather than focusing on the core

3. Spending more time on raising money than on really listening to customers and prospective customers

4. Spending more time on the big partnerships or bigger customers than on the bread-and-butter business.

5. Believing someone else has the answers (new hires, consultants, partners, etc)

6. Forgetting to focus on what people really want and are willing to pay for

It all comes back to: focus on what core customers want first, and don't get distracted by the rest.

Visioning

noreply@blogger.com (Bill Flagg) — Mon, 21 Feb 2011 12:30:00 +0000

I was recently reminded of a powerful visioning technique I've used in the past. As I look back now, it's wild how well it has worked. It's a little weird and fun at the same time.

Assuming it's February 2011 today, I would write as if I it was now February 2015 and describe in great detail how everything looks as if it has already happened.

For example, At RegOnline when the support team was just a couple people trying to keep their heads above water, we each wrote out what it would look like a couple years out. We wrote something along the lines of "It's amazing how we are able to WOW so many customers everyday. And how much our customers love us and how often they comment that we have given them the best support they have EVER received from any company. Our support team is filled with happy, energized, growing people, and we have a line of great people wanting to join our team. Other companies want to learn what our secret is to providing "knock-your-socks-off" customer service so they can do the same at their company." Sure enough, within a couple years we had a support team at RegOnline that embodied most of what was written!

I've done the same with other departments, businesses, and with my personal life over the past 15 years. And have had similar, "holy cow!" moments when I look back on what was written to discover how much has come to fruition.

I don't tend to do the traditional specific goal setting like, "$5 million in revenue, own a Ferrari, and lose 30 pounds". I have found that directional, more colorful feelings inspire better results and feel better in the process. For example, "We have become more profitable every quarter which enables us to expand our service to more people and grow our organization. I can now afford to have a nicer car and feel better financially. I have been having a lot of fun improving my physical well being and it gives me more energy in everything I am doing. The abundance I feel and the joy I am able to share with others is amazing."

Another GREAT example is Zingerman's 2020 vision (one of the World's best deli's based in Ann Arbor)... http://www.zingermans.com/zingtrainfiles/2020vision.pdf
Notice how it is all written as if it has already happened. Weird, but it works.

Write yourself from the future and see how great it feels.

Our biggest competitor - Status Quo

noreply@blogger.com (Bill Flagg) — Thu, 20 Jan 2011 13:00:00 +0000

I was talking recently with a telecommunications broker who shops for the best deals for companies. He has a list of prospects he can verifiably save 30% off their phone/internet bills. But only 20% of them have signed the paperwork to make it happen. The rest haven't moved yet even though every day costs them real $'s. The broker is competing with just "status quo".

I had another conversation at lunch the other day with the founder/CEO of a medium-size contract development firm that does $200,000 projects for Fortune 500 companies. When I asked what was the #1 reason their bids on projects were not accepted, he said it was because they decided not to do anything at all... "status quo"

In most industries I've seen, "status quo" is by far the number #1 factor to compete with. Why hasn't a prospect bought from us yet? Because it's easier to keep doing the same-old thing.

Most prospects are just dipping their toes into the water of what it might feel like to make a change or try something new. It is our job to help the water feel warm and inviting to them.

A couple things that help:

1. Easy to try/take the next step (free trial)

2. Being reminded that its never been easier than now

3. A bonus for buying now rather than later (buy now and get something extra)

Bottom line, make it abundantly clear how much better you are than status quo and provide compelling reasons why switching now is a better and easier proposition than having another day of "status quo".

Being of Service with a Passion

noreply@blogger.com (Bill Flagg) — Sun, 19 Dec 2010 14:12:00 +0000

I just returned from a trip to Queenstown, New Zealand to see my friend's new gourmet sandwich shop. Yep... committed myself, wife and one-year-old daughter to over 50 hours of airports and planes to eat sandwiches on the opposite side of the world. Why?

Two years ago, we got married in New Zealand and had the single best dining experience of our life there at this tiny restaurant right on the water of Queenstown. When I asked to talk to the chef (which I have never done before anywhere else), out came Ramy Abu-Yousef... a non New Zealand, non chef looking guy who grew up in Iowa, went to Michigan Law School, worked at a big law firm in LA, and THEN decided to put on a backpack with his girlfriend, go to New Zealand, and pursue his real passion - cooking.

So with no formal training, Ramy worked his way from the bottom up to being the head chef and manager of the Bathhouse which we were taking full delight in. Each dish had something about it that made it like nothing we had ever experienced, the atmosphere of the place was uniquely intimate, and the wait staff were joyful. We were so blown away by Ramy that we asked him if he would come to Colorado to cook for our wedding reception a couple months later.

Ramy didn't cook for our reception, but we did stay in touch, and he started reading this blog. Then last February, after deciding not to buy the Bathhouse, Ramy announced he was going to open a gourmet sandwich shop in town (with a moustache theme for the fun of it)... Johnny Barr's.

Then in September, I got an email from Ramy saying the shop had been open for just three months and was so well received that it was already profitable. And he asked if I would be interested in getting involved in further growth. I knew nothing about sandwich shops, but there was something unique about Ramy's passion, that compelled me to go to New Zealand to learn more.

To make a long story longer, what I discovered after spending a week at Johnny Barr's with Ramy and his lovely girlfriend and business partner Syndey, was an incredibly beautiful passion they both have to share their love for great food with others. Everything about the shop breathed their desire to delight others, from the warm atmosphere of the hand-picked brick walls, to the smiling excited folks working behind the counter, to the constant ongoing food experiments to come up with the best corned beef recipe or homemade granola bars that are a big hit with the 1.5 million backpackers that come through town or the borscht soup made by their Czech cook named "Easy". Even after working in the shop all day long they would come home to cook even MORE amazing food for us.

It made me realize that having a passion for something is one thing, but using that passion to be of service to and delight others is divine. I have a poster hanging in my study at home that says "The World Needs More Stache". Thanks Syndey & Ramy for sharing your "stache" with us!

The Magic of Conscious Capitalism

noreply@blogger.com (Bill Flagg) — Mon, 25 Oct 2010 14:16:00 +0000

For as long as I can remember, all I've wanted to do is create GREAT companies. Companies where everyone who touches the company - customers, employees, suppliers, owners, and their community - all can say "what a GREAT company!" It has never been about "exiting" or getting rich for me. Growing profitability has been a means to create stability and grow that great connection with more people in more fun ways.

A couple weeks ago I had a chance to spend some time with a couple GREAT leaders and examples of this at the Conscious Capitalism Summit. The founders of Whole Foods, The Container Store, Trader Joe's, and other really interesting entrepreneurs shared examples of how they have fostered holistic, "conscious" approaches in their businesses.

On the surface, it seems like an obvious, almost hippie, approach to business. But there's something EXTREMELY powerful about the model by which they all live and grow their companies. Here are a couple examples of differences between our old "shareholder model" vs a more holistic "stakeholder" model:

1. Advertise and "close" customers with gimmicks vs. create real caring relationships

2. Squeeze vendors via costs and terms vs. creating win-win vendor relations

3. Spend more on acquiring new customers vs. creating raving fans of existing customers

4. Have investors focused on maximizing short-term profit vs. greater long term value

5. Look at the company as an asset to be "flipped" vs. a company that exists to bring more and more good value to the world.

6. Treat employees as cogs to accomplish tasks vs. as real people who love customers more because their company loves them.

The differences really boil down to one tenant for me... How can we add more value/appreciation/love to ALL our stakeholder relationships?

"Fill the other guy's basket to the brim, then making money becomes an easy proposition." - Kip Tindell, The Container Store

"Long-term profits are maximized by NOT making them the primary goal" - John Mackey, Whole Foods

After coming back from this gathering I decided to try something new with PosterBrain. In October we had our best month ever. So we decided (with the amazing help of my wife, Chelsea) to throw a last-minute party and invite ALL our stakeholders - our tube, ink, and paper suppliers, Fedex rep, Paychex payroll coordinator, HP printer repair man, employees, accountant, and many more. We thanked everyone with hand-written thank you cards and a cool magic trick - thanking them for the specific magic they bring to helping make PosterBrain great.

Our mailing tube vendor, based in Ohio, tried to hop on a plane to be here. Our paper supplier sent cheesecakes from Chicago. Several people sent wonderfully heart-felt emails, including this one from our payroll coordinator yesterday... "I received your "Thank you gift". And I must say I have been laughing all morning. My supervisor read your wonderful note to the whole office and made me stand up in front of them flashing my fingers. It was great fun and thoughtful of you. I appreciate it."

While pulling everyone a little closer by sharing our appreciation didn't help the company's short-term profits, there is a new connection between everyone that makes us all want to share more of our magic to help the company thrive more.

Hitting the Sweet Spot

noreply@blogger.com (Bill Flagg) — Mon, 11 Oct 2010 12:00:00 +0000

At RegOnline one of our biggest epiphanies was that our core business was NOT the bigger events (1,000+ registrations) but the smaller ones (250 regs). At about $5 million in revenue, we discovered that 90% of our revenues were coming from the small guys.

Up until then we spent a lot of time, energy, and money trying to attract the big guys. We had hired a bunch of outbound sales people, spent a lot of time on selling partnerships, and invested significant development resources to try to customize our system to accomodate the "big" guys.

It was liberating to realize the bigger guys were NOT our core. It meant we could simplify and refocus a lot of resources on our sweet spot. Which translates into making an even better product for our "small" guys and be even more profitable doing it.

Finding sweet spots isn't easy and usually takes a couple million in revenues for it to start to reveal itself (if we are looking). I've been exploring the sweet spots with a handful of different companies in the past couple months. And here are a couple questions that have helped us:

1. What group of customers comprise the largest % of our revenues?

2. Which customers are most likely to be repeat/long term customers?

3. How profitable is each group of customers when we factor in marketing, COGS, and servicing costs.

4. What niche do our competitors miss that has a lot of unfulfilled demand?

Unfortunately, it's rarely an obvious conclusion when looking at all this info. But it does start to facilitate lots of conversations that can eventually answer "How can we be an even better company by focusing on our sweet spot?"

Other examples:

PosterBrain - do we focus on consumers who order just a poster or two once a year or on more business-related customers who place larger orders every couple months?

SurveyGizmo - do we focus on the customers who are looking for more capabilities than SurveyMonkey offers, or on customers who are looking for a lower-priced option to their $100,000/year enterprise systems?

StickerGiant - do we focus on the customers who want cheap custom labels or on the customers who want high-quality custom vinyl stickers... or both because we ARE the StickerGIANT after all.

Minimalist Entrepreneurship

noreply@blogger.com (Bill Flagg) — Tue, 03 Aug 2010 22:51:00 +0000

At RegOnline our revenues were about $150,000 per employee. I used to joke with my partner that we could just hire MORE to increase our revenues. Sometimes it really felt like we doing that. What I REALLY wanted to do was put on a hiring freeze so we would be forced to figure out how to do more with less.

The guys from 37 Signals just wrote a GREAT book about this called Rework. They talk about all the nuances of building a GREAT, but NOT big company. They talk about their minimalist approach and the things that most of us THINK are important to our success, but really are NOT, like: investors, PR, lots of employees, salespeople, meetings, and marketing departments.

Another great minimalist example/article of the guy who built Plenty of Fish. While an extreme example to do $10 million in revenues with 3 people, let it blow your mind into what's possible.

I like the minimalist approach because it keeps us out of trouble and focused on what really matters without carrying a bunch of extra weight on our shoulders. Which makes it easier to deliver real value to customers in a way that is as sustainable/profitable/fun as possible.

Picking the Right Partner(s)

noreply@blogger.com (Bill Flagg) — Wed, 14 Jul 2010 18:21:00 +0000

I'm still amazed at how great a business partner Attila was for me at RegOnline. I've also been involved with and seen many other partnerships that haven't gone so well. I get asked every so often my thoughts on partnering-up and partnerships. So here's my experience...

Attila & I didn't know we were going to be great partners. A friend we both respected suggested we might be good together. We had a short romance of daydreaming together about the future potential of RegOnline. I liked his common sense business approach and his willingness to speak the truth directly and without emotion. But that, in itself, would not make for a great partner.

I've seen many people be unhappy with their partners and wish they had done things differently before jumping into bed together so quickly.

Attila & I had a feeling it could work to become partners. So we discussed the terms under which I could buy in AFTER a 4 month trial period.

After 4 months I knew:

1. I loved the business, it's future, and had a sense I could add real value
2. Attila and I had a similar work ethic (hard when needed, but not non-stop)

3. We had a similar philosophy in growing our team (be direct, compliment sincerely, take action, hire sparingly)

4. We had a similar approach to testing new things, but always staying focused on growing profitability

5. We felt the same about taking care of customers and doing what's right by them first.

6. A shared sense of humor to laugh with each other every day

After 4 months I don't think there was a question in either of our minds that we had found great partners in each other, so we did the paperwork and officially became co-owners of RegOnline. 4 years later, we had had a lot of fun building a great company together.

So my advice to people considering partners/partnerships:

1. Have a no-strings-attached trial period with a plan for what happens if both people are delighted to be partners together.

2. Give the founder/controlling partner an easy way to buyout the other partner if things don't work out in the medium term (up to 2-3 years).

3. Share decision making power, but let the founder/controlling partner pull the trump card every so often.

4. Share/show appreciation for each other a couple times a year.

There's also another type of "partner"... called investors. If you want to build something great (vs. be pressured into cashing out in 3-5 years) make sure your investor-partners are on the same page as you. Tony from Zappos shares his experience on why he felt forced to sell in this excerpt from his book, Delivering Happiness.

Technology Hostage Crisis

noreply@blogger.com (Bill Flagg) — Mon, 21 Jun 2010 11:16:00 +0000

Technology is supposed to free up our companies to better/more efficiently serve our customers. Every so often I see companies that are being held hostage by their technology... and it's not pretty.

It looks something like this:

1. The technology developed has not helped the business grow or serve the customers significantly better

2. An over-investment in technology and the ongoing support of the new technology undermines the profitability of the company

3. New technology priorities are planned in order to dig out of hole #2

4. More development staff are hired

5. Repeat #1

So what's the solution? Stop. Drop. And roll.

STOP the development train.

DROP the belief that we think we know what our customers will want without asking (or have heard only from a few).

ROLL forward only after REAL feedback from prospects/customers as to what new planned technologies will make a SIGNIFICANT difference in their usage/purchasing decisions.

Then go on a technology "fast" of sorts. Narrow the project list down to just the 1-3 things that will REALLY make an impact. Purge the rest of the projects on the list. Then figure out the minimum development team necessary to implement. Once you feel ultra lean, use that new space to truly hear the voice of customers again. Then implement lightly and with a new heightened sense for where the REAL technology value is for our customers.

Good Growth

noreply@blogger.com (Bill Flagg) — Mon, 14 Jun 2010 11:32:00 +0000

Growth is fun. Healthy companies have lots of growth opportunities. With those opportunities come the need to hire on more folks. Those folks cost money.

I've found that if a company is growing profitably or has easy access to capital, then these hiring decisions are not scrutinized as much as they probably could be. What I have seen happen with several companies in the past year is they hire like crazy and then realize their growth doesn't support a healthy profit margin like they thought it would.

As we were growing RegOnline 50% a year we would have a wish-list of positions we wanted to hire for. How did we decide how many were too much? We knew we wanted to maintain a certain margin level every month - like 40% net profit. We were willing to sacrifice some of that margin to hire more, having a floor of 25%. It would have been easy to say, well since we are continuing to grow we can hire more than that and grow into our profitability again later. But we didn't. And I'm glad we didn't because we had lots of months where we didn't grow or went backwards. We would have felt unnecessary pressure because of a bloated overhead. It felt much better to know we were continually enjoying great profit margins AND growing.

This process then forced us to prioritize our hires based on ROI. How would each hire produce more profitability for the company, what was the certainty level, and in what period of time. Adding to our support or sales team based on metrics was a little easier than doing the math on another developer or admin person. None the less, prioritizing our hires and doing the math helped us stay profitable in up and down months.

Know Your Customer

noreply@blogger.com (Bill Flagg) — Mon, 07 Jun 2010 12:00:00 +0000

REAL business boils down to ONE thing at the end of the day. Serving peoples' needs and getting paid for it in a way that you can operate profitably. The best way to do that is to know your customers.

At RegOnline we constantly listened to what our customers needed and wanted. It was an iterative process that started with my partner, Attila, building the first version of the software for one client based on what they said they wanted to make their event registration management easier for them. Then Attila turned to the next customer, and the next, and the next, until we were at about 5,000 customers.

As we began to expand our marketing to be more self-service (didn't need a salesperson to learn about the product). We constantly looked for how we could make it easier for prospects to FIND what they WANTED in our product by listening to what they asked the salespeople on the phones and then repeated that in a simple way online.

Getting inside my prospects and customers' minds was one of the most valuable activities I did at RegOnline. Getting face-to-face at trade shows helped me learn and play back what customers WANTED. Sitting in on our public online demos to hear the questions prospects asked helped me get in their heads and understand what they WANTED. And then eventually we got into doing usability testing to see where our prospects and customers would trip up and fall in trying to do business with us. And then we would iterate like hell to fix what confused people. To create a frictionless experience and make it super easy for people to fall in love with us.

We wanted our customers to know that we respected that basic exchange of "we are in business to serve you well and don't want to get paid if we don't." We decided to put a message on our invoice "If you are not completely satisfied with your service, mark down this bill as you feel is appropriate and tell us where we can improve."

It's refreshing to see startups that focus their first priority on providing real value in their products and services to people who are willing to pay for it. There are SO many distractions that we face as entrepreneurs - building cool technology, getting funding, hiring, office space, partnerships, acquirers - that its easy to lose sight of THE reason we are in business. STAY FOCUSED. Listen to what people need and help them get it. Then do that again, and again, and again... and enjoy watching your CUSTOMERS make your business more successful.

Appreciation

noreply@blogger.com (Bill Flagg) — Tue, 01 Jun 2010 12:00:00 +0000

I talk a lot about creating value. It's important. But, there's something that we all crave more than getting value for our money... and that is appreciation

Being appreciated as a customer, employee, boss, friend, husband, wife, child, human being... is priceless. It's worth more than anything money can buy. It means we are loved.

Over the years I have flowed in and out of hand-writing thank you notes to those I appreciate. I've probably written over a thousand of them. I have welled up inside as I have written many of them. I have later seen them pinned up on cork boards, sitting on desks, and stuck to refrigerator doors of friends, family, and colleagues.

I don't do it to get a reaction. I do it because it feels great to share a piece of my heart with others. I try to do it as soon as I get the inspiration. When my companies were smaller, I wrote thank you notes to coworkers to express what I uniquely appreciated about working with them.

Yes, it feels weird sometimes. And sometimes the receiver doesn't know how to respond. But every time I do, I feel great. I've also done it via phone and email. But there's something about the hand-written note, especially in our digital age, that means more to the person getting the note.

If "to appreciate" means "to add value". I have discovered that "adding value" to my relationships makes my life more enjoyable.

Thank you to all of you who have given me a reason to appreciate.

Cooking for our Customers

noreply@blogger.com (Bill Flagg) — Mon, 24 May 2010 12:00:00 +0000

I've talked about how we've sent company cookbooks to customers for our holiday card in the past with amazing response from our customers about how great it felt to be able to connect with us in that way.

A couple months back I got a tin of homemade cookies from Trada (a great way to outsource PPC). When I sent the founder, Niel Robertson, a thank you email, he said something about his house still smelling like cookie dough. I asked if he cooked them. He said yah along with the rest of his team and they did a strategic launch plan while making the cookies too. Now this blew me away that a technology company got together to bake cookies for their clients. AWESOME.

Then I thought about it a little more. Isn't that what we are doing everyday? Making things for our customers? As we have all compartmentalized the roles in our businesses, have we lost touch with the fact that it's the complete package that our customers want and choose to buy from us? Not being marketed to, then sold to, then setup with the product, then supported, then sent a holiday card. It's a much more holistic thing that I REALLY want from a company that I buy from. I want it to feel like I bought from one person who honestly and fully described what the product can and can't do for me because they built the product and then will support me on it too.

When we are just getting started as a company, and only have a couple cooks in the kitchen, this comes naturally. As our companies grow, they become more compartmentalized and the customer starts to get the feeling that the right arm doesn't really know the left arm. And they then get the feeling that they are dealing with a machine without a heart more than a real company with a heart and sole connecting all the parts together. And since we are humans with hearts and souls, we are attracted to companies that remind us of our own hearts and souls, want to do more business with them, and tell others about them.

What is your team making for your customers? Does it have heart and soul? Do the arms and legs know what were cooking for the customer?

Beware of the Executive

noreply@blogger.com (Bill Flagg) — Mon, 10 May 2010 12:14:00 +0000

I heard a story today that I've heard happen to half a dozen other entrepreneurs in the past year. It goes something like this...

1. Entrepreneur is growing company and has lots of good paying customers
2. Thinks they don't have what it takes to take it to the next level (or is getting tired and wants to just focus on what they are good at)
3. Gets introduced to a former executive of a well-known company and thinks this person has seen a LOT more than them and could grow their company better.
4. Hires the executive on as their President, COO, CFO and/or CTO
5. New executive convinces entrepreneur to raise money to fund all the people they need to hire to really make their BIG plan work
6. Entrepreneur gets diluted down and sometimes loses control of the company
7. Entrepreneur wakes up and realizes their BIG executive didn't really know anything about growing a small company, fires them, rights the ship, and wishes they had believed in THEM-SELF at step #2, were more patient, and grew it themselves.

I think part of the problem is executives from big companies have credibility in managing already successful systems but don't have experience in being entrepreneurial and creating growth. Entrepreneurs have experience and an intimate connection with creating value in their business but don't have the credibility in their own minds.

Now, I'm sure there are success stories out there where this story did turn into a happier ending. Hopefully, I won't have to hear a hundred more to find one.

Berkshire Hathaway 2010

noreply@blogger.com (Bill Flagg) — Fri, 07 May 2010 12:00:00 +0000

I just got back from my annual pilgrimage to Omaha to listen to Warren Buffet & Charlie Munger share their wisdom for 5 hours at the Berkshire Hathaway annual shareholders meeting. This is the third year that I've done this trip with my 76 year old father, which is such a wonderful opportunity for us to have fun, reminisce and connect with each other. I enjoy our shared love for learning and taking naps.

While a lot of what Warren & Charlie talk about each year is the same, I still get inspired in new ways each year. Remember BH is the 7th largest company in the world with only 21 people at HQ.

Here's eight nuggets that came up for me this year:
1. The power that lives within you is new in nature.

2. Integrity is the safest way to make $. Professing isn't the same as having it. Situational ethics problem is huge ("everyone else is doing it")

3. What's important isn't size of circle of competence, but knowing where the perimeter is.

4. Bearish on ALL World currencies holding their value over time because of huge deficit spendings. If we continue the policies we have now, inflation will become more severe. Safest antidote is to add as much value as possible and you will always command your inflation adjusted price.

5. BH has been structured so they can act when everyone else is paralyzed

6. Never hire a compensation consultant - each biz has different economics - some easier to run than others. Simplest way to compensate given the dynamics of biz requires ability to differentiate and interaction with managers to agree on what ACTUALLY adds value to company. BH system the opposite of GE or US Army (with centralized comp structures)
Treat people fairly - rationale should be understood. No Managers have left BH over compensation. HQ doesn't impose, keeps simple

7. 100% failure rate at trying to change a company's culture

8. Energy solution is the largest benefit to society to come

And 69 more:
1. Don't believe in EPS (because of managed earnings)
2. Goldman Sacks - doesn't feel like they did anything wrong
3. Options - complexity is counter productive
4. New options legislation - if retroactive, then unconstitutional
5. Bearish on ALL World currencies holding their value over time because of huge deficit spendings
6. The US system has enabled ordinary people to do extraordinary things
7. Confident in succession & culture of BH continuing success of BH companies
8. Reinvestment of cash most important for BH
9. I like businesses where customers tattoo your name on their bodies (Harley Davidson)
10. Debt investment decision simpler because the only question is "will they go broke or not?"
11. BH has been structured so they can act when everyone else is paralyzed
12. Took decades to build BH culture
13. BH has become the premiere insurer of the world
14. $60 billion of float and keeps going
15. BH doesn't invest as much in India & China because limited to under 25% ownership
16. Would bet on higher inflation going forward because of high deficits relative to GDP
17. 90% depreciation of dollar since 1930
18. Good financial habits early in life important - Ben Franklin's ideas
19. McDonalds hires marginal kids and teaches them responsibility and hard work
20. Taxes are 15% of GDP which is a good level
21. NetJets mistakes - buying planes at prices not able to sell for later and operating costs out of line. Sokol turned $750 million in loses into profitable company now.
22. Performance of BH managers far beyond dream when started BH
23. BYD - learning new things - Sokol driven
24. "I want to hear about problems fast" to protect reputation of BH
25. Always look for risk and get compensated for it
26. With our insurance we allow other companies to smooth their earnings while ours look lumpier
27. Why friend likes to be sole owner - "I like to look in the mirror and say ALL my shareholders love me"
28. Usefulness of derivatives overrated - commodities and currency beneficial - others are not. Does not condemn anyone form using derivatives to hedge risk.
29. 95% of derivatives activity is gambling
30. China has record dramatic growth per capita
31. "too many words in an annual report can obfuscate rather than illuminate"
32. Charlie is converting his IRA to a Roth IRA this year
33. In 1975, there was nothing that looked more bullet proof than daily papers
34. There will always be investing opportunities. Be patient and wait for the right opportunities
35. "Take the high road, it's far less crowded"
36. Municipal bond default rate risk is contagious
37. Owning equities over the next ten years better than owning bonds
38. Ratings agency - requires no capital and have great pricing power
39. We don't believe in outsourcing our investment decisions
40. 150 years ago, oil changed the world in a major way. The world will not be dependent on oil in another 100 years. If I picked a time to be born, it would be today.
41. Krafts Pizza & Cadbury deals this year were dumb. We're stupid in many ways, but have avoided a small subset
42. Integrity is the safest way to make $. Professing isn't the same as having it. Situational ethics problem is huge ("everyone else is doing it")
43. BH managers don't submit budgets.
44. Create structures that minimize human failings
45. There were NO apologies for the recent financial fallouts. No one felt responsible.
46. If you get scared when others are scared, won't make much $. Love it when stocks get cheap.
47. Develop courage with experiencing more failure
48. If you want to put in solar panels, wait because it's going to get cheaper
49. BH isn't dramatically undervalued
50. There's no better way to be happy than to reduce expectations
51. Gets misquoted in interviews which is why writes on stuff and does video interviews instead.
52. We want shareholders who think the way we do so they wont be disappointed
53. We view our shareholders as family. Blessed by the fact that doesn't have an investor relations dept
54. It won't work forever to have huge budget deficits. Stocks are up because interest rates are low
55. What's important isn't size of circle of competence, but knowing where the perimeter is
56. What business will be around 30 years from now?
57. Observed what was working and what was failing in terms of fundamental economics
58. The great consumer businesses need little capital
59. People approach us to buy when they wouldn't sell to anyone else (PE groups, competitors, etc)
60. BYD outside of what they usually invest in. Shows ability to learn new things. BYD will help solve significant problems of the world
61. BNSF better for their shareholders than ours - but still good for ours
62. Can you keep using your capital effectively enough? In 10-15 years size would make it hard
63. Wealth is he who spends less than he earns. Follow your passion. Love what you do. There's not much competition
64. If you do something well you won't have much competition
65. Pragmatism - when something is working well, we keep doing it.
66. High speed rail service in US not economically feasible when compared with auto and air travel
67. BH could handle $250 billion of catastrophe exosure and still be profitable
68. BH could withstand more than any major corp could
69. Our gov understands the necessity of taking major action in a meltdown "I'm not worried about it"