AOL revenues decreased 23% ($261 million) to $867 million, due to a 27% decline ($146 million) in Subscription revenues and a 20% decrease ($109 million) in Advertising revenues. The decline in Subscription revenues reflects mainly a continuing decrease in subscribers, related primarily to AOL’s strategy to offer its e-mail and certain other products free of charge. Driving the decrease in Advertising revenues were declines in sales of advertising on third-party Internet sites, as well as display advertising and paid-search advertising on AOL Network sites.
Operating Income before Depreciation and Amortization declined 37% ($150 million) to $255 million, resulting primarily from lower revenues, offset partly by lower traffic acquisition costs ($58 million), lower personnel and overhead costs, as well as reduced marketing, network and other expenses. The current and prior year quarters also included netrestructuring charges of$58million and $9 million, respectively.
Operating Income decreased 47% ($134million) to $150 million, due primarily to lower Operating Income before Depreciation and Amortization, offset in part by lower depreciation expense ($14 million).
Key Operating Metrics
During the quarter, AOL had 106 million average monthly domestic unique visitors and 58 billion domestic page views, according to comScore Media Metrix, which translates into 181 average monthly domestic page views per unique visitor.
As of March 31, 2009, the AOL service had 6.3 million U.S. access subscribers, a decline of 570,000 from the prior quarter and 2.4 million from the year-ago quarter, reflecting subscriber losses due partially to AOL’s strategy to prioritize its advertising business.
And the rest of Time Warner?
Not horrible. Revenue dropped 4%, thanks mainly to a horrific 23% decline in Publishing. But EBITDA was actually up 3% year over year.
Fears over infectious outbreaks, from SARS to bird flu to the latest swine-borne virus, have boosted investment in vaccines and fostered fresh approaches
No one knows yet whether the flu outbreak in Mexico and in states like New York and California will turn into a major pandemic or a forgettable blip in the annals of infectious diseases. It's not even clear exactly what to call the virus, since it seems to have acquired genes from both pigs and birds on its evolutionary journey to making people sick. "As far as we know, this never happened before," says Laurie A. Garrett, senior fellow at the Council on Foreign Relations and author of The Coming Plague: Newly Emerging Diseases in a World Out of Balance. Maybe we should call it the swinebird flu.
The good news is that the world—especially the vaccine industry—is far better prepared to deal with a threat such as the new influenza virus than it was just a few years ago. Key decisions to rush through a vaccine have yet to be made. But governments around the world could move quickly to tap the industry's capability if the outbreak continues to worsen. One scenario floated by the Centers for Disease Control in Atlanta: The U.S. government could direct a drug company to drop some of its current development projects, create a swine flu vaccine, and start ramping up manufacturing.
An action like that would be costly and politically fraught. But the surprising thing is that such a step is even possible. That certainly was not the case during the flu season of 2004-2005. Back then, the pharmaceutical industry couldn't make enough vaccine for regular flu. There were only two companies in the business—Aventis Pasteur (now a unit of Sanofi-Aventis (SNY) and Chiron (since acquired by Novartis (NVS). One of Chiron's facilities had to be shut down during that outbreak because of safety concerns.
Egg-Cultivated Vaccines Take Time
What has occurred in the interim is a vaccine revival fueled by both improved profitability and an increase in government dollars. Three pharmaceutical giants now manufacture flu vaccine: Sanofi-Aventis, Novartis, and GlaxoSmithKline (GSK), along with small players such as MedImmune, a unit of AstraZeneca (AZN). These companies are already gearing up to make the vaccine for next winter's flu season. There's enough capacity among the players to ramp up production of swine flu vaccine—assuming funding is available—and still prepare for the regular flu season.
The bad news? The latest threat can't be squelched quickly or completely with a vaccine produced by traditional methods. The manufacturing process takes months because the virus first must be carefully grown in eggs, then harvested to be turned into a vaccine.
Yet there's possibly a way around this problem. Over the past few years, several companies have sprung up to develop methods for making vaccines more quickly, such as growing viruses in cells rather than eggs. These processes hold considerable promise, but none has been licensed yet by the Food & Drug Administration. One of the difficult decisions the Obama Administration will face if the epidemic threatens to spin out of control is whether to fast-track approval of one of these next-generation vaccines in order to make it available more quickly. "If this turns out to be a crisis, the government might go to one of the newer technologies that has quicker production," explains John Clerici, chair of the life sciences and public health practice at law firm McKenna Long & Aldridge.The bigger the crisis, the greater the tolerance for regulatory risks.
Courtesy article by John Carey appearing in Business Week on April 28, 2009
As states and Congress move to make e-tailers collect sales taxes, Overstock.com and eBay oppose them while Amazon.com calls for uniformity
Amazon tax fever is spreading. In the months since a New York State law took effect that imposes sales taxes on products promoted through Web sites based in the state, other governments have moved to get in on the action, and online retailers aren't happy.
Last year, New York became the first state to pass legislation requiring large Web-based retailers, including Amazon.com (AMZN) and Overstock.com (OSTK), to collect state sales taxes on products promoted through affiliated state-based Web sites. Cash-strapped states across the country are mulling similar legislation and a federal online-sales tax bill that may be introduced in Congress could be signed into law as early as this year.
The growing impetus for taxes on online goods has touched off a flurry of lobbying activity and lawsuits from online retailers hoping to defeat legislation that would take away some of the price advantage they enjoy over brick-and-mortar retailers. ""We'll do everything in our power to assist our sellers so they are not harmed," says Tod Cohen, deputy general counsel and vice-president for government relations at eBay (EBAY). "We want to make sure than small businesses aren't strangled in their cribs."
State Sales tax collections are down
States and local governments hope sales taxes would help them recoup part of the revenue lost amid a recession that has diminished property values and crimped demand for items sold in stores. In the fourth quarter, state sales tax collections dropped 4%, the steepest decline in 50 years, according to the Nelson A. Rockefeller Institute of Government. Online sales taxes could help states generate at least $52 billion in added revenue over the next six years, according to an Apr. 13 study conducted by three University of Tennessee professors. Requiring virtual stores to collect taxes, even in parts of the country where they don't have physical operations, would also place e-tailers on a more even footing with brick-and-mortar stores such as Wal-Mart (WMT), which collect sales taxes on in-store as well as online purchases.
Companies that sell products over the Internet say the taxes would hamper growth. "The introduction and passage of an Internet tax bill would have adverse effects on e-commerce," George Askew, an analyst at Stifel Nicolaus, wrote in a recent note. After New York's law was passed, Overstock.com says it had to terminate agreements with some 3,400 Web sites that once promoted the closeout retailer in the Empire State.
Overstock ceased operating in New York altogether, says the company's president, Jonathan E. Johnson III. After losing a court battle seeking to repeal the law, Overstock plans to file an appeal in the coming weeks, Johnson says. "These states are signing up for a lawsuit, or for businesses to pull out of their states," he says.
TO VIEW THE COMPLETE ARTICLE CLICK ON THE FOLLOWING LINK:
Courtesy article by Olga Kharif appearing in Business Week on April 26, 2009
Like much of the rest of the media marketplace, estimates for the rate of ad spending for online video has slowed down considerably in recent months, but it remains one of the fastest growing of any "emerging" medium, according to new estimates scheduled to be released today by one of Madison Avenue's leading forecasters. Advertisers are projected to spend $699 million on online video ads this year, an increase of 32% from the $531 million spent on online video advertising last year, according to the new forecast from Brian Wieser, global director of forecasting for Magna, a unit of Interpublic's Mediabrands division. As healthy as those projections may seem, they are a significant downward revision from last summer, when Wieser issued a report calling for online video ad spending to rise 45% to $805 million this year.
Noting that his previous estimates were made prior to the escalation in the U.S. and worldwide recession, Wieser notes that online video advertising's gains still "will likely outpace growth rates for most other emerging media platforms."
The new report does not provide details for other emerging media platforms, but Wieser's last report had online video rising at the fastest rate nine months ago, surpassing the growth rates of online search, social media, mobile, gaming, advanced TV, and emerging out-of-home media - the other emerging media platforms that are the basis of Wieser's periodic reports. Updates for the others, which presumably have also been revised downward due to the recession, will be released over the next several weeks.
One reason for online video advertising's relative staying power during the recession, Wieser says, is its ability to "reach their consumers in a more targeted and cost-effective manner" than traditional media. Another factor is that while user-generated content still dominates the supply of online video inventory, there has been a marked increase in the availability of premium online video advertising from network and cable TV programmers, and the penetration of broadband Internet access has risen to nearly two-thirds of the U.S. population. The combined effect, Wieser estimates "led to a 24% increase in time with professionally produced online video during 2008," the kind most desired by conventional national advertisers.
While growing fast, the rapid expansion of online video consumption and availability still is no significant threat to the most ubiquitous form of video advertising: conventional broadcast, cable and satellite TV. During 2008, Weiser notes that Americans spent 490 billion person-hours viewing traditional television, according to Nielsen estimates, which is equal to 244 times more consumption of all the professional online video consumed that year.
Assuming last year's rapid rate of growth was to continue through 2012, Wieser noted that traditional TV would still represent "98 times more consumption" than online video that year.
Even so, the rate of online video advertising's expansion will continue to outpace traditional television's as mainstream marketers flock to an expanding supply of professionally produced online video content, and as advertising networks aggregate the supply of the rest of the online video advertising marketplace, creating "cost-effective" alternatives for marketers seeking mass reach with online video.
Those combined factors, Wieser says, will contribute to a continued expansion in advertising dollars spent on online video, which will break the $1 billion mark by 2011, based on a compound annual growth rate of 36% through that year.
For more of Interpublic's views on the growth of online video advertising, check out Mediabrands TV’s latest installment, including an interview by Wieser of Mark Mackenzie, Head of Technology, Media and Telecom Venture Capital, AllianceBernstein.
Courtesy of article by Joe Mandese appearing in Media Post News on April 27, 2009
USA Today reports that Verizon and Apple are discussing the possible development of an iPhone for Verizon users, which would be introduced next year, after AT&T's exclusivity contract with Apple expires. AT&T has exclusive distribution rights to the iPhone in the U.S. into 2010. The move would mark the first time Apple has produced an iPhone for a CDMA wireless network, which is a different protocol from AT&T's GSM technology.
According to the report, New York-based Verizon entered into "high-level" discussions with Apple management a few months ago, when Steve Jobs was still overseeing day-to-day operations at Apple. The sources declined to be named because they weren't authorized to talk publicly. A deal would give Apple access to Verizon's 80 million customers.
The iPhone has been a huge boost to AT&T, which is why many analysts believe the telecom giant is trying to persuade Apple to extend its exclusivity contract for another year, at least. If Verizon succeeds, it would be a huge loss for AT&T. As Roger Entner, head of telecom research for Nielsen, says, "Breaking the (iPhone) exclusivity with AT&T is a huge thing. That would send shivers into AT&T's stock and senior leadership." He adds that it would be a huge win for consumers. - Read the whole story here.
NOTE: I can hardly wait for this deal to happen because AT&T is the exclusive distributor of the iPhone in the US. Without any competition, they can pretty much do what they want. A Verizon deal would change the competitive landscape completely and hopefully lead to a lowering of iPhone prices. I also happen to be Verizon subscriber, so this would be good for me.
With antibiotic resistance on the rise, three biotechs are developing new
ways to wage war on superbugs.
Multidrug-resistant infections are the new plague. The most publicized, methicillin-resistant Staphylococcus aureus (or MRSA), causes nearly 19,000 deaths in the United States each year -- more than AIDS. Today, 70% of infections are impervious to at least one antibiotic, prompting many clinicians to prescribe multiple drugs. And new antibiotics aren't the answer: Bacteria often begin to show resistance during clinical trials, before doctors have even had a chance to administer the drugs. The Achilles' heel of antibiotics? They poison most bacteria, but allow the hardiest to survive and breed drug-resistant progeny.
Our best hope of defeating antibiotic resistance, says Georgetown University immunologist Michael Zasloff, is to develop drugs that kill bacteria so immediately and thoroughly that they can't evolve resistance. "A drug like penicillin targets an enzyme, and it's easy for an organism to develop a single mutation to get past that," he says. "But when a drug destroys a bacterium's entire membrane, it's very difficult for the bacterium to redesign it." Here, three biotechs that have adopted a scorched-earth approach.
Eastern European doctors have long recognized the power of phages -- naturally occurring bacteria-eating viruses -- to treat antibiotic-resistant infections. The United States hasn't quite caught on yet, but Intralytix, a Baltimore company that manufactures phage-based products to kill bacteria on food, is looking to change that. "We're concentrating on fighting multidrug-resistant bacteria and on building a drug that's effective against MRSA," says CEO John Vazzana. "Enormous amounts of data show phages really do work."
Phages destroy bacteria from the inside out. They enter a bacterium through its membrane (I) and deposit DNA inside, where the phages replicate (II). Baby phages burst out of the bacterium, exploding it like a water balloon (III), and head after other bacteria. Intralytix recently concluded a Phase I human trial at a Texas wound-care clinic, which showed that phage therapy is safe, and is seeking funding for a Phase II trial to demonstrate efficacy against infections like MRSA.
One potential sticking point: the Food and Drug Administration. Since each species of phage attacks one specific type of bacteria, phages work best in a cocktail custom-mixed to combat the particular bacteria causing a patient's infection. FDA policy calls for trials of each combination of phages. But FDA guidelines have accommodated flu vaccines, which must be changed several times a year to keep up with the evolving virus. "I'm an eternal optimist," Vazzana says. "I think that within five years, the FDA will approve a phage-based drug."
"When you put mild environmental pressure on billions of bacteria," says Ron Najafi, the CEO of Emeryville, California -- based NovaBay, "there's enough genetic diversity that you can kill them all except one, and that one becomes the predominant player." Casting about for a more effective weapon, NovaBay scientists decided to take a cue from the body's own immune system. The result is an experimental drug, dubbed an aganocide, which is patterned after small molecules that white blood cells churn out to defend the body against invading pathogens. These molecules bind to the membrane of the bacterial cell (I) and deliver a payload of toxic chloronium ions that envelop it. This chlorine cover causes irreversible damage to a vast range of proteins on the cell's surface, rendering the bacteria noninfectious (II). "Antibiotics might attack one enzyme," Najafi says, "but we attack billions and billions."
NovaBay recently inked a $10 million deal with eye-care provider Alcon to give the company access to its drug technology. Human clinical trials evaluating aganocides' effectiveness in treating eye infections began in January, and a trial on ear-infection patients will begin later this year. Najafi also has big plans to use his creations against bugs outside the bacterial universe: "These compounds are extremely antibacterial, antifungal, and antiviral. The critical thing we're doing is attacking the problem using the body's own mechanism of action, which we already know has been successful."
Like NovaBay, Radnor, Pennsylvania -- based PolyMedix looks to the body's immune system for inspiration -- in its case, a particular class of naturally occurring human-host defense proteins called "defensins." These proteins entrench themselves in a bacterium's membrane, creating small pores and defects. As a result, essential ions and nutrients flow out, and the pathogen dies without reproducing. "It's a direct attack, like a needle punching a hole in a balloon," says CEO Nick Landekic. "You're literally killing the bacterium mechanically."
Because the defensins overwhelm bacteria's external defenses all at once, the bacteria have few chances to regroup and emerge leaner and meaner, as they typically do in response to antibiotics. "Many of the big pharma companies have tried to use animal-host defense proteins in drugs, but it didn't work," Landekic says. "We've succeeded because we have a computer-aided drug-design approach that helps us study how these natural proteins work and create artificial drug molecules."
In PolyMedix's Phase I safety trial of its anti-Staphylococcus aureus compound, concluded this past December, no subjects suffered severe side effects, even when they had concentrations of the drug in their blood sufficient to kill staph bacteria. A Phase II efficacy trial may begin by the end of 2009. Landekic is already investigating ways to fast-track the drug's FDA approval. "This is a huge market opportunity," he says. "Staph is such a major problem that the alternative to treatment is often death."
NOTE: I have conducted considerable research with chemical-based antimicrobial agents, which are used as hard surface anti-bacterial disinfectant sprays (example: Lysol) and to sterlize medical devices, As a result of this research, I am very much aware how Staphylococcus aureus (or MRSA) has morphed into "Super Bugs" which are restant to just about every known antibiotic.
I was recently in the hospital, and I observed first hand, the infection control practices that hospital's have taken to prevent the spread of the Staph virus which includes using rubber gloves, wearing face masks and continuous use of disinfectant sprays on hard surfaces like hospital room beds, chairs, curtains, windows, carts and even food trays.
The recent swine flu epidemic that has killed over 100 and hospitalized over 1,000 people in Mexico, is really starting to alarm me, because should the swine flu virus morph into an antibiotic-resistant virus, this could lead to a worldwide pandemic killing perhaps millions like the flu virus killed during the last century.
From what I understnad there are just a handful of biotech firms conducting research on swne flu, and only one with an effective antibiotic for treating swine flu, so the pressure is on the CDC and medical research labs to develop antibiotic drugs that can treat swine flu and the Staph virus "Super Bugs".
John P. Aguirre – Accomplished Director, Producer and Visionary
Behind "My First Day at Preschool"
John's Bio and Filmography
John Aguirre is the founder of My First Day Productions, a Los Angeles film creation and production boutique that specializes in producing feature films, television programs and pilots and children’s entertainment and educational (“edutainment”) films.
John Aguirre is multi-award winning film producer and director who joined the Directors Guild Of America in 1987. He has consistently worked in the feature film and network television programs as an Assistant Director, Director, Writer and Producer for over 20 years.
John has worked with some of the most accomplished producers and directors in the motion picture industry including, Oscar winner, Paul Haggis (“Million Dollar Baby”, “Crash”), Oscar Winner Tom Schulman, (“Dead Poets Society”, “8 Heads In A DuffleBag”), Ron Underwood (“City Slickers”, “Mighty Joe Young”), Mel Gibson (“Passion of The Christ”, “Braveheart”), Joss Whedon (“Buffy”, “Angel”), and Barry Sonnenfeld (“Men In Black”, “Wild Wild West”).
John’s film career began while attending Cal State University Fullerton as an intern at Bar Films, Pasadena, California under the stewardship of acclaimed director Ron Underwood (“Tremors”, “City Slickers”). After graduating from college, John worked for Barbara Walters to work on a number ofBarbara Walters television specials. He was later recruited by Carson Productions, as a production assistant and later promoted to multi-camera stage manager for Ed Weinberger, legendary sitcom creator and producer.
John spent the next several years honing his film production skills as a stage manager and assistant director, working on a myriad of television series including, “Amen”, The Mickey Mouse Club”, “Hunter”, “Melrose Place”, “The John Larroquette Show”, “Nash Bridges” and “Family Law”plus feature films“The Hot Chick”, “Campus Ladies” and “Men In Black”, to name a few.
John Aguirre has produced several widely distributed independent films including “You Did What?”(Mar Vista and Lionsgate), "The Utopian Society" (Warner Brothers) and "My First Day at Preschool”(Think Films) and he wrote, produced and directed "Women On Top", a television pilot which he is trying to get on the air.
As a film director, John has directed three feature films including "Peppersteps", "Lucky Stroke"and "Marine Corps Warrior".During the Spring 2009, John hopes to produce “Frail” for Gynormous Pictures starring Catalena Sandeno Moreno who starred in “Maria Full of Grace”, and is discussions with Collin Firth and Alan Arkin.
John's first feature film, “The Utopian Society”, distributed by Warner Home Video and Scanbox International, starring Malin Akerman of "Watchmen", was shot in an unprecedented 11 days. It was selected in over 30 festivals nationwide and went on to garner a myriad of awards including “Best First Feature”, “Audience Choice Award” and won other accolades.
My First Day at Preschool
I was first introduced to John about five years ago when he approached me about producing a series of children’s educational films based on his award-winning “My First Day at Pre-School” video which targets preschool-aged children, and has won Parenting Magazine’s “Video of the Year Award” in 2003, Scholastic’sParent and Child Magazine’s “Best Children’s Videos for 2004” and garnered a Telly Award in 2003 for original songs and musical score.
The leading star in “My First Day at Preschool” is Buddy Bear a funny and adorable bear character, who is experiencing his first day at a preschool, hence the title.Buddy Bear is now a well recognized and popular brand name and “My First Day at Preschool” has been distributed to preschools, day care centers, public libraries and schools, and sold through big box retailer’s Target, Circuit City, Best Buy, Blockbuster, Border’s and Barnes & Noble plus online retailer’s Amazon.com, Buy.com and DVD Empire, to name a few.
The My First Day Productions’ children’s entertainment and educational concept is embodied in My First Day Production’s Mission Statement:
“My First Day Productions is dedicated to the education of young children during their formative preschool years. We combine education and entertainment, ‘edutainment’, if you will, by teaching children about the real world through a series of ‘first day’ or ‘first time’ life experiences. We believe that learning should be a fun and interactive experience for children that combines unique characters, music, song and humor. It is our goal to combine all these elements into our films, videos and branded products to illuminate and enhance a child’s learning experience”.
I have known and consulted for John Aguirre for nearly five years on a number of different projects and John is in the process of re-releasing “My First Day at Preschool” and currently talking with investor’s about producing a series of children’s edutainment videos based on the “My First Day at Preschool” children’s edutainment concept.
We believe that the My First Day edutainment series has the potential to become a blockbuster in the fast growing children’s video or KIDVID sector and Buddy Bear, the star of the My First Day series, could become as recognizable and popular as Winnie The Pooh, Dora The Explorer, Baby Einstein, Teletubbies and Barney the purple dinosaur, with the potential to become a bankable global brand with licensed merchandise from books-to-games-to-apparel.
My First Day Productions seeks capital to re-release “My First Day at Preschool” and produce ten to twelve videos for the My First Day video edutainment series.Interested investor’s are urged to contact Tommy Toy, PBT Consulting for further information.
For the first time since going public in 1986, Microsoft has suffered a drop in revenue and profits.
It’s 23 years since Microsoft went public, and in that time they’d never experienced a dip in revenue or profits – until today. Welcome to the recession.
In its earnings statement for the first quarter of 2009, the company showed revenue of $13,65 billion, down 6% on the same period in 2008, while profits took a fall of 32% to $2.98 billion, which includes write-downs of $420 million in the value of investments as well as severance charges of $290 million to cover job cuts.
Microsoft CFO, Chris Liddell, called this recession “the most difficult economic environment the company has faced in our 30-year history" and said:
"While we'd all like to think the economic recovery will be soon and painless, we unfortunately think it will be slow and painful."
Microsoft has been cutting costs, and is shedding some 5,000 jobs.
Stock in the company rose 4% in after-hours trading.
SAN FRANCISCO — The resignation of MySpace CEO Chris DeWolfe late Wednesday underscores the unrelenting pressure it and its rivals face in a down economy: turning their popular social-networking sites into money-making ventures.
A diminished role for DeWolfe as a company strategist — and the uncertain future of MySpace's other co-founder, Tom Anderson — underscores tumult not just at MySpace but for its peers.
Facebook has suffered a brain drain of sorts as it preps for a highly anticipated initial public offering, which analysts speculate could happen this year. Its CFO, Gideon Yu, abruptly left the company this month. Twitter is frequently being mentioned as a takeover target of Google despite a healthy war chest. And tech analysts predict consolidation among the crowd of lesser-known social-networking services.
"When you're around five years (as MySpace and Facebook have been), the pressure to monetize intensifies," says Caroline Dangson, research analyst at IDC. "It's already a horrible time for established businesses to make money during the recession. The assumption was that advertising would pay the bills for social-media firms, but (display) ad spending is down — which is crucial to these guys."
DeWolfe, 43, and Anderson, 33, helped build MySpace from seven employees in January 2004 to 1,600 today and turned it into one of the most popular sites.
Still, the shake-up at MySpace is not surprising — three other executives quit last month to start a company — given MySpace's sputtering growth and the rise of rival Facebook.
Facebook passed MySpace in overall users worldwide last year. It now has 200 million to MySpace's 130 million.
MySpace is still the largest social network in the USA, but its year-over-year numbers slipped 4%, to 70.2 million, in March, according to market researcher ComScore. Facebook's users in the U.S. rose 72%, to 61.2 million.
Compounding matters: MySpace fell shy of the financial expectations of its owner News Corp. (NWS), the media giant run by billionaire Rupert Murdoch.
Murdoch predicted in August 2007 that Fox Interactive Media — which owns MySpace, Photobucket and other online properties — would top $1 billion in annual revenue in 2008. But the unit hauled in $881 million.
Most of that came from MySpace's $585 million in U.S. ad revenue, according to an estimate by researcher eMarketer. Facebook, by comparison, took in $210 million. Neither company discloses figures.
A huge chunk of MySpace's revenue came from a $900 million, three-year ad-sharing deal with Google. That deal expires in August 2010.
At the same time, eMarketer says online ad spending will be flat this year, at $24.5 billion.
"It's a rough environment," says Amra Tareen, CEO of Allvoices, a citizen-media site, and a former venture capitalist. "New investors are constantly asking for a proven business plan. Ad-based business models are out of favor."
DeWolfe will remain on the board of MySpace China and as a strategic adviser to the company.
Courtesy of article by John Schwartz of USA Today dated April 22, 2009
Starting a business in a downturn is never easy. Just ask Wally Amos, who founded the “Famous Amos” cookie brand during the recession in the mid ‘70s. Though difficult, he managed to pull it off with a superior product, and one that was, quite frankly, an affordable luxury.
Nonetheless, you can’t ignore the present circumstances. The credit markets are tight, especially for small business. Venture capitalists are fleeing to more established businesses with proven business models and positive cash flow. And the once standby startup method—of using credit cards—to fund an initial venture has gone by the wayside, given the tight credit card restrictions now in place.
So what’s an entrepreneur to do?
First, this is the moment to get creative. You need to have the guts to approach family and friends, and, if they can’t help, then at least get them to give you referrals to others who may. For example, most people have a lawyer and an accountant; they are excellent sources for finding angel investors, as they deal on a daily basis with people with money, and you should use them as a network to build a base of other attorneys and accountants as well.
Also, you need to attend your local Chamber of Commerce meetings and network accordingly.
Second, you need to bootstrap. Forget about getting stuck in the minutiae of setting up the perfect office with the perfect chair, etc. You can literally set up office at your local library—with free internet—with a decent laptop and a cell phone. When the library’s closed, go to Fedex Kinkos™, and pay the $6 an hour, if you need internet access…many are open 24/7. Or simply setup your business at home, with a laptop and cell phone.
Third, start small. That means you may have to keep your day job to keep the cash flowing. You don’t want to bet the farm just yet. You need to test your business model, to see if it can actually generate positive cash flow within a short period of time. Hopefully, you’ve drawn up a business plan (doesn’t need to be fancy), and this “start small” mindset will allow you to tweak your plan, and will help you to determine where the real nuggets of cash are to be found.
A great article written several years ago pointed to a man who would start his venture before even incorporating. With an idea (and he was in the technology services arena), he would simply pick up the phone and start calling prospective customers to see if they had a real need for his proposed services. If he found enough customers, then he would incorporate and begin his venture. Talk about a brilliant way to save time, money and effort.
Revisit Your Business Model!
Fourth, take a hard look at your business model. Is it one that’s appropriate for a down economy? Are you riding unstoppable trends like the boom in health care and wellness (due to the retiring Baby Boomers), or the surge in “green”—from organic foods to the development and implementation of alternative fuel sources, or the growth of the Hispanic market to the desire for affordable luxuries and experiences.
Remember, you want to build you business model on a sustainable platform—and the above-mentioned trends will be viable for at least the next 25 years.
Consider a Franchise!
Lastly, if you want to start a business but have no clue as to what kind, then you may want to consider a proven franchise…and pay the upfront fee and set-up costs to become a franchisee. The benefits include (for established franchises) a proven business model, proper training, and positive cash flow—especially if you chose the right location (critical for food establishments).
Three franchises I like right now—given our economic situation—include Subway™, Jamba Juice™, and a growing chain that has great (but affordable) Mexican food, Tijuana Flats™.
Regardless of your venture, you need to keep in mind the following points:
§Sales is everything; without growing sales, you have nothing, and most businesses fail for this very reason.
§Know your numbers; know your gross and net margins, net profit per product or service, and don’t hesitate to dump those products and services that take up a lot of time but deliver little to the bottom line.
§Hire carefully; you want to bring on people who complement your talents, not replicate them. If you’re a natural salesperson, you should consider bringing on a good numbers and management person, and focus your energies on what you do best—sales!
§Know your market and do the research. For a client I actually spent an entire day at a location counting cars. And here’s a hint: follow the big boys like McDonalds™, as they spend a ton of money researching locations.
§Provide unbeatable customer service; the key is to under-promise and over-deliver. In this way, you will remain most memorable in the customer’s mind.
The Bottom Line
We are definitely in a down market. However, believe it or not, now’s the time to start a business. In Florida, for instance, the commercial real estate market is about to go under. With a good lawyer, you will soon be able to negotiate amazing deals. Look for great opportunities like this in all the proclamations of doom-and-gloom surrounding us.
Even if your first attempts at starting up fail, by trial and error, you’ll eventually tap into a real need and succeed. For most of us, entrepreneurship is the only true path to a secure, worry-free retirement, through down markets and up markets.
Courtesy of an article dated April 24 authored by Stephen L. Bainton for StartupNation.com