A VC in Vacationland

Does a Top-Tier MBA Matter?

February 12, 2011

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I have lots of younger, entrepreneurially-inclined friends who ask me if spending perhaps $300K (including foregone income) to get a degree from a top business school is worth the time and energy. I generally tell them that "it all depends". If you want to be an billionaire entrepreneur, you might be better dropping out of Harvard–witness Bill Gates and Mark Zuckerberg. But seriously, does the MBA from Harvard instill some magic sauce in your brain that will allow you to perform better than others? Evidently not at the CEO level, according to a new study by the University of New Hampshire.

According to Massachusetts Hi-Tech, the study, titled “CEO Education, CEO Turnover, and Firm Performance,” analyzed data from the largest 1,500 U.S. firms and used U.S. News & World Report’s 2008 rankings of national universities to determine the top-20 tier of schools when comparing the education data of CEOs.

Brian Bolton, assistant professor of finance at the University of New Hampshire’s Whittemore School of Business and Economics, conducted the research using data from the years 1993 through 2007. Bolton found that CEO education played a significant role in the hiring process of a new CEO, even though he observed no strong correlation between the quality of a CEO’s MBA education and the company’s long-term performance. He said that those companies performed no better than companies led by a CEO with any other type of education, MBA or not. He noted that an MBA degree may give a slight advantage early on. According to the report, companies may initially experience some growth following the hire of a CEO with an MBA, both top-tier and average, after firing the previous CEO but those improvements in operating performance were generally short-lived and the correlation does not apply to all firms in general.

So, what's the answer? Still, it depends. If you want a career in certain businesses like finance and banking, the MBA is very useful. If you want to be an entrepreneur, get going on developing your innovative start up earlier rather than later.
Green Logistics: Hara Energy Management

February 5, 2011

According to Xconomy, Energy management startup Hara recently released a supply chain module that can evaluate energy efficiency among a client’s suppliers – vendors, transportation services, warehouses and the like.

The addition of Hara Value Chain effectively widens the scope of Hara’s main product, a software called Environmental and Energy Management (EEM) that identifies energy inefficiencies within companies. EEM – which counts among its customers eBay and Safeway — can make recommendations about potential energy savings and track carbon emissions.

Hara has had some nice momentum lately, most recently landing the city of Philadelphia as a customer. It has signed up some 40 clients — big names that include toymaker Hasbro and Coca-Cola — and tripled its workforce in the last year. Competitors (who have been poaching their employees), include Enxsuite.

The Hara Value Chain module marks the company’s seventh release in 21 months. “We opted for a much faster deployment and innovation cycle. It’s still a relatively early market,” Hara Chief Technology Officer Udo Waibel said. “A year ago no one really looked into the value chain capability.”

Indeed, the company is moving at a fast clip. But this new release begs the question: Why would a customer pay for a software that helps its suppliers analyze energy efficiency?

Risk mitigation, for one. As Waibel explains it, the software requires the company and its suppliers to enter data into the system, which the company could then use to project how costs could change in the event, say, oil prices rise. It also allows companies to achiever greater energy efficiencies by casting a broad net that looks outside the company itself.

“At the end of the day it’s purely cost-oriented. If you help your suppliers figure out how much energy they consume and eventually provide them with tools and methods to help improve…the parts that you buy might become less expensive,” Waibel said, adding that Hara developed the new module in response to feedback from existing customers.

Hasbro and Intuit, for example, have already been piloting the new program. Pricing for the software is based in part on the number and type of facilities customers want to analyze.

With this announcement, Hara is also unveiling a number of upgrades – the system is now available in seven languages, a mark of its adoption globally. The EEM software is in use in 94 countries.
Supply Chain Innovators: StorageByMail

January 29, 2011

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Do you hate the idea of visiting your storage unit to get something? Then storagebymail is for you. You can ship boxes of “can’t part with” items to their warehouses and have them ship them back to you when you again need them. Here's how it works:

You pack a box with, say 45 lbs. of goodies, call the USPS and have them pick it up (for free), they deliver it to one of a number of storagebymail warehouses in the US. The boxes are bar coded and stored in a secure part of the facility until you want them. Then the USPS delivers them to your door, or anywhere else you want them sent. You pay a monthly rental depending on the number of cubic feet your boxes take up.

From a warehouse owner's perspective, this is a pretty innovative way to compete with self storage facilities, one of the major growth areas in the warehouse business over the last decade. From the consumer's perspective, this saves a few trips to the out-of-the way, frequently closed self storage unit that is twice the size you need. Of course, this will not work for furniture and other assorted stuff you will never use again, but face it, you will never use those again, and Goodwill will gladly take it off your hands.
Supply Chain Innovators: Adaptive Learning

January 22, 2011

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Training new employees in company-specific processes and operations is a major task for any company, large or small. All sorts of on-line, mentoring and classroom options are available, but often require significant amounts of senior staff time and energy to monitor the results and ensure that the new employee is "getting it".

Education clearly needs to become more focused on individual training needs, time available and mastery. Adaptive learning, an emerging technology that uses a combination of computer science, education and cognitive science, features both desktop and web-based programs that can mimic the interactivity of human professors.

Start-ups like Kwenton and Grockit are pioneers in this area, with current focus on training prospective students for SAT and GMAT tests. The technology could be expanded into company-specific training in areas such as S&OP and inventory management, processes that are often the entry-level positions for supply chain professionals.
Managing Your Start-up: Receivables Exchange

January 15, 2011

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Small companies often have difficulty raising growth capital. Duh, you say–just look at my credit card balances. New Orleans-based Receivable Exchange won the 2010 Wall Street Journal's Most Innovative Technologies competition in the e-commerce category for its on-line marketplace where small and medium businesses can auction their receivables.

Lack of access to traditional financing leads many small businesses to tap the "Bank of Dad" and other sources of short term working capital. Factoring, whereby a company takes out a loan based on their receivables, is generally reserved for larger companies, can be expensive and is often difficult to arrange.

Receivables Exchange screens the company to make sure it meets a minimum revenue requirement and has been in business for two years or more, then posts its unpaid invoices on the exchange–all usually within 24 hours. Bidders offer to buy some or all of the receivables, with both the seller and buyer paying a commission to the exchange.

The exchange is currently providing a marketplace for between $1 and $5 million in receivables per day. Run by former investment banker Justin Brownhill, the Receivables Exchange is a welcome addition to the portfolio of small business funding options.
Marketing & Sales Innovators: EepyBird

January 8, 2011

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The EepyBird founders are viral marketing geniuses. Besides being great entertainment…think on-demand Mythbusters….EepyBird has used traditional media, especially TV (Early Show, CNN Webby Awards, Modern Marvels), to build a large web following. They do live performances, corporate events, video sponsorships, among other options as revenue producers to fund their crazy experiments in Buckfield, Maine.

Anyone interested in understanding viral marketing strategy needs to study these guys.

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Managing Start-Ups: The Fox and The Fur Coat

January 1, 2011

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"An opportunist is someone who meets the wolf at the door and shows up the next day in a fur coat"

–Kemmons Wilson, as quoted in Half Luck, Half Brains: the Kemmons Wilson, Holiday Inn Story, by Robert Kerr.

Kemmons Wilson gave new meaning to the word perseverance. A serial entrepreneur, with the Holiday Inn chain as only one of his accomplishments, Kemmons embodies the spirit of what I like to see in a start up team. And the above quote is exactly the attitude a founder needs to have if they are going to be successful in migrating the inevitable troubles that will beset a start up. The whole book is well worth a read.

My best portfolio company CEO's are the ones with the most perseverance. They do not view all the start up troubles as problems, only opportunities. Like Kemmons, I hope they all end up with fur coats.

So how can founders make perseverance work for them? Trust me, there is a right and wrong form of perseverance.

The wrong way is to mistake perseverance for a monomanical focus on success. As I have suggested many times, have a good business plan and stick to it. But not if it is not working.

The right way to persevere is to not accept artifical barriers that others create for you. Think two or three moves ahead in your business and be ready to respond when adversity happens.
Big Cargo Ships Pollute More than all the Cars in the World

December 25, 2010

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According to the British newspaper, The Guardian, Britain and other European governments have been accused of underestimating the health risks from shipping pollution following research, which shows that one giant container ship can emit almost the same amount of cancer and asthma-causing chemicals as 50m cars.

Confidential data from maritime industry insiders based on engine size and the quality of fuel typically used by ships and cars shows that just 15 of the world's biggest ships may now emit as much pollution as all the world's 760m cars. Low-grade ship bunker fuel (or fuel oil) has up to 2,000 times the sulfur content of diesel fuel used in US and European automobiles.

Pressure is mounting on the UN's International Maritime Organization and the EU to tighten laws governing ship emissions following the decision by the US government last week to impose a strict 230-mile buffer zone along the entire US coast, a move that is expected to be followed by Canada.

The setting up of a low emission shipping zone follows US academic research which showed that pollution from the world's 90,000 cargo ships leads to 60,000 deaths a year in the US alone and costs up to $330bn per year in health costs from lung and heart diseases.

The US Environmental Protection Agency estimates the buffer zone, which could be in place by next year, will save more than 8,000 lives a year with new air quality standards cutting sulfur in fuel by 98%, particulate matter by 85% and nitrogen oxide emissions by 80%.

The new study by the Danish government's environmental agency adds to this picture. It suggests that shipping emissions cost the Danish health service almost £5bn a year, mainly treating cancers and heart problems.

The calculations of ship and car pollution are based on the world's largest 85,790KW ships' diesel engines which operate about 280 days a year generating roughly 5,200 tons of SOx a year, compared with diesel and petrol cars which drive 15,000km a year and emit approximately 101gm of SO2/SoX a year.

For the full story: see www.guardian.co.uk

Merry Christmas!
Supply Chain Innovators: Wishpond-Another Real-Time Store Inventory Monetization Play

December 18, 2010

According to TechCrunch, On the heels of Milo’s $75 million acquisition by eBay; a similar product inventory site, called Wishpond, is throwing its hat into the ring. Like Milo, Wishpond lists the real-time inventory of brick and mortar retail stores and is building its product listings platform around large chains like Target or BestBuy as well as from mom and pop shops in small towns.

On the merchant side, Wishpond’s platform integrates with point-of-sale systems and allows retailers to upload their inventory onto the site. Wishpond will not only list the in-stock inventory on its platform, but will also help the merchant create a storefront on their Facebook page (similar to what Payvment does). The startup says that it will populate the page with new products and promotions when applicable.

Wishpond will also advertise for the retailers inventory and Facebook storefront on Google and Facebook. And Wishpond is opening up its API to users to access the site’s 4 million products from 1400 retailers in over 100,000 locations.

Another unique feature that Wishpond offers is the ability for consumers to name their own prices on products they find on Wishpond. Local retailers can then match these prices or offer promotions for these products.

Milo, which will continue to offer its product listings as a standalone site, offers much of the same functionality as Wishpond. But I think the idea of connecting to Facebook for an online storefront with in-store product inventory is compelling. Right now Wishpond is a small fish in a big sea that includes eBay and now Google as well. But if the startup can actually pull of what it says it plans to do for small retailers (and scale), it could be successful.

I know this is obvious to all the supply chain geeks out there, but these technologies are a BIG DEAL, allowing stores to monetize on-shelf/back room inventory using the power of the web, instead of waiting for the customer to visit their website or walk in the door.
Supply Chain Innovators: Milo-Real Time Product Inventory in Retail Stores

December 11, 2010

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According to The Business Insider, ecommerce juggernaut eBay is acquiring up-and-coming local shopping startup Milo.com for a reported $75 million.

We’re independently confirming the acquisition and trying to get details of the transaction, but the deal would certainly make a lot of sense.

The company’s mission is to track every product on every shelf of every (U.S.) store in real-time. It currently covers about 52,000 stores across the United States, delivering search results for some 3 million locally available products.

For eBay, it would be a chance to bridge online commerce with physical, in-store shopping, as Milo is really good at enabling people to find the best price and availability for products they want to buy immediately, offline.

Milo has raised roughly $5 million in venture capital from several early-stage investment firms and a slew of angel investors, including heavy hitters such as Keith Rabois, Kevin Hartz, Jawed Karim, Magid M. Abraham, Brian Pokorny, Aaron Patzer and Chris Dixon, among others.

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