Outlook for WA business in 2017: better!

sunny times in WA

In a talk I delivered to the Western Suburbs Business Association last week, I struck a cautiously optimistic tone in regards to the prospects for business in WA in 2017. Most of those attending seemed to agree that things had been picking up of late, and perhaps in 2017 we would all just get on with business, and not worry about post mining-construction doom and gloom.

Here are the slides from the talk.

As always, start with a story, so I began with one of my favourites about the motorcylist in June 1944, having to turn around a convoy of armoured vehicles and trucks on a rainy country road just north of Portsmouth, UK. To find out out he did it, read this post.

The 3 main lessons from this story are:

  1. If you’re going in the wrong direction, admit it! (most managers can’t)
  2. Think about what direction you should be heading in (hint: the trend is your friend)
  3. Make sure you stick to the new direction (no returning to old ways)

While Nokia and Kodak famously did not find a better path, Samsung and Apple most notably did.

There’s no doubt that 2016 was a difficult year (for most, but not all, in businesses in WA). Apart from all the celeb deaths (no more than usual, statistically), we had the Brexit and Trump election shocks, more senate issues for PM Malcolm, a sluggish local economy  and the media got smashed (SCOOP went under, and The Sunday Times was bought by The West with barely a whimper).

In fact, 2016 was a relatively good year for WA stocks, as shown by the ‘BN30’ index of 30 representative WA ASX-listed companies. Starting the year at a base of 100, the BN30 ended it 20% higher at 120.

There was some good news around in 2016:

  • the US economy grew, and markets hit new records
  • US CO2 emissions were the lowest since 1991
  • The Giant Panda is off the endangered wildlife list, as are Tigers
  • Poverty levels fell, to their lowest levels
  • The Colombian government signed a peace deal with FARC

But there’s no doubt, some sectors in WA did it tough in WA:

  • Mining services
  • Retail
  • Property
  • Recruitment
  • Business Services

Mainly because:

  • WA population growth has stalled
  • Mining construction boom ended
  • Digital disruption
  • Uncertainty about the future

…. all fed in to lower business confidence, lower investment, less new jobs created.

Despite all this, unemployment peaked at 6.1%, and GDP grew (for the 25th successive year.)

There were some bright spots in the local economy:

  • ICT, tech and digital businesses did well
  • Professional services did OK as activity continued
  • Annuity (SaaS) businesses were fine
  • Agribusiness
  • Some miners, especially iron ore, gold and lithium were hot

On that last point, it should be noted that the mining boom is not over, even though the construction boom may have over. Mining, as an industry, is three times the size it was 10 years ago. It’s just that they are not building as many mines as they were during 2004-2012.

FMG’s share price rose 250% in 2016. Atlas Iron, once the darling of the stock market, and then pronounced dead, saw its shares rise from a penny to 4.5c. Long way off its prime, but still alive. For many, this signalled all is not lost. Atlas started paying down debt. FMG could be debt free soon.

What has great potential in WA business?

  • Tourism
  • Education
  • Aqua/agriculture
  • Mining/bio/tech startups and software
  • Many other industries

So looking to 2017 and beyond, there is much to be thankful for, and positive about in business in WA.

Much of what happens is in the mind anyway. If we think it, it may very well happen. We can create our own future, and we can certainly determine the success of our businesses by the attitude we take.

Plus, we live in paradise, lest we not forget. The sun is shining. The beaches are gorgeous. As is the wine.

Public Speaking? Start with a story

tell a story

There are 2 really bad ways to start a speech, and most of the time when I hear someone speak in public, one or other of them is used.

The most common way, and one that I have fallen into the trap of doing myself a few times, is to throw up a slide with the title of your speech on it, your name, position, perhaps your twitter handle. You say ‘hello’, or something like that, thank the person who introduced you, then repeat the title slide with your name, and flick to a second slide with the agenda for your talk on it: maybe 4 or 5 bullet points sunken into a nice visual background, repeating that also.

I suppose we do this because it is the natural order of things. We had to do a cover sheet for our assignments at school, and we did a contents page. When we got to talk about our assignments in class, we were encouraged to do a power point slide with the title of our talk on it, and then the agenda for our talk. This was how we began our public speaking career.

Part of the reason this is so bad is that the human brain can read your slides very fast. Very, very fast. By the time you have taken your first breath on stage, and the slide has been up there for 0.5 seconds, the audience has already read it.

SO WHY ARE YOU READING IT OUT TO THEM?!!!!!

OK, now this is not the very worst way of starting a speech, but it is the second worst. The worst is to shamble up to the podium, look around the room, glance at your watch, adjust your notes, cough a few times, drink some water, murmur ‘Ermmm… ummmm … good morning/afternoon/evening..’ and then follow this with an apology of sorts (as if to curry favour with your audience)…”Errr, sorry, I’m not very used to public speaking… errr, how long have I got? OK, well, here we are, ummmm, today I’d like to…”

Cue slumping of audience, flicking open of social media from the audience’s smartphones, and you’re off to the worse possible start. You’ve lost your audience, and you’re only 15 seconds in.

There is ONLY ONE good way of starting a speech.

Well, possibly two. The second best method is to start with a quirky, surprising statement that takes people by surprise and makes them think.

“More photos will be taken this year than in the entire history of the planet to this date.” That’s it, your first sentence. ‘OK’, think the audience, ‘we’re off to the races here’ and they sit up.

If I was speaking about digital disruption/transformation (my favourite subjects) then this might get me off and cracking.

But it’s not the best start. The best start is to start with a story. The adult equivalent of ‘Once upon a time’.

The best orators do it, every time. JFK, Martin Luther King, Obama.

Steve Job’s wonderful Stanford commencement address in 2005 is 15 minutes long and has 3 stories from his life. Wonderfully, simply told, with points made powerfully. (If you’ve not heard it, please do yourself a favour and watch it.)

It’s such an easy technique, I am amazed not everyone does it. We are all wired to listen to stories. It’s how our ancestors and their ancestors before them passed down their learnings, around the camp fire, from generation to generation over millennia. It’s how we as children learned our vocabulary, and bonded with our parents by our bed at night.

It does not matter if you have a 20 minute keynote at a business sundowner or an hour long keynote at a conference. Launch into a story. Straight away.

Have a visual on the slide (no words) if you like. But no bullet points. No elaborate diagram.

Choose a story that will transform your audience, take them with you and fire their imagination. You’ll have them (immediately) eating out of your hands. Take 5 minutes or so telling your story, in all its detail, using lots of layered description: the colour of the sky, the ebb and flow of the waves, the scream of the seagulls. Transport your audience. If you do this well enough, at a good pace, they will come with you. Practice it. Many times, until it is fantastic.

Once the story is over, make the point(s) count. The story is a device to grab your audience, and make the analogous links to what you want to get across. Your (few) bullet points or visuals can help ram it home.

I have a hand full of favourite stories I like to wield in public speeches: one is about the germination of the idea for my startup, which actually happened (true story) the same night my wife and I were dragged on stage to perform with Dame Edna.

Or I might talk about the ‘cup drop moment‘. Another relates to a young motorcyclist in June 1994 doing a U-turn, just before D-Day, of the convoy of trucks down a narrow country road, using a field and a gate. Yet another involves my Dad, who, unbeknownst to us had a growing tumour on his brain (thankfully benign) which, over 5 years,  grew to the size of a golf ball before anyone knew it was there.

I use these to grab the audience’s attention, draw them in, and make my points. They remember the story, and they remember the points. And perhaps, they remember me.

Next time you are delivering a speech, start with a good story, told well. Next time, and every time after that. Your audience will thank you for it, and as a means of communication, nothing beats it.

Advice on starting a blog

write something

5 years ago I made it a new year’s resolution to start a blog. I’d been telling many of my clients they should blog and thought I should practice what I preach. I’d guest blogged (posted on someone else’s blog) but not run my own. I owned charliegunningham.com (and a few other) domain names and were not using them, so off I went.

If you have not started a blog yet (let’s put aside the reason why you should, or perhaps should not, for a moment), it is very easy to do so.

A 3 step process really:

  1. Choose your blogging platform – for me it was either WordPress (which I chose) or Blogger (owned by Google). These days you can use SquareSpace, and a whole raft of others. But I went with WordPress as it was the largest (250,000 posts are uploaded through WordPress daily), and I wanted to learn it’s ‘back end’ (the system that powers it, all those clever little themes and plugins).   So off I went to WordPress.com and got myself a free account.
  2. Buy a domain name (optional) and hook it up to your blog. You don’t have to do this, and can happily run with the web address of ‘Yourname.wordpress.com’, but there’s something nicer in allowing someone go to Yourname.com address. If you do this, then you are up for 2 regular fees (but they are not large)…
    1. the cost of buying and renewing your domain name. I already owned charliegunningham.com so there was no extra cost here, but every year I pay about US$13 (~A$17) to renew it.  I buy and renew my ‘.com’ names from Aplus.net and my ‘.com.au’ names from NetRegistry.com.au.
    2. the cost of hooking this up to your wordpress blog, and allowing those entering yourname.com into their browser to seamlessly finding your site. Another US$13 (A$17) a year to do this.
    3. And that’s it – sum investment, apart from my time blogging away, is ~$35 a year. Hosting all included.
  3. Write regular posts. This is the time consuming bit, and I’ll talk more about this below. Mechanically, wordpress makes it easy – you click POSTS > ADD NEW and off you go – think of a title (which becomes part of the all-important web address of that post) and then write the main body of your post. When ready, hit PUBLISH and off it goes up to your website (and, once you get some subscribers, it will arrive instantaneously in their InBox).

So, getting going is easy. If you skip step 2, it can all be done inside a few minutes.

Like all new things, it can seem exciting at first, and then that initial feeling can wear off. What am I going to write? What if no one reads it, or comments on my posts? Does that matter? Why am I doing this anyway?

I’d have some good reasons for doing it before you begin. For me, it was to learn about the wordpress platform, so I could talk from experience when advising people. As time wore on, it became a weekly rhythm (and discipline) to write something interesting on topics that interested me, and I hoped others. Things I learned about my favourite subjects (digital, ebusiness, tech, strategy, leadership, occasionally politics or even cricket) I would pass on in 500-800 word articles. It helped order my own arguments.

Over time, I found it was good to talk about my blog, sending people there, so they could register for my posts. It was personal branding of a sort. By sharing my latest posts on Twitter, LinkedIN and Facebook, I could build an audience. I started to receive feedback in the form of comments on the blog, or within my social networks. Once LinkedIN opened up its own internal posting mechanism (a blog system within LinkedIN really) I would take some posts and repost them there, further promoting my own blog.

If you stick at it, you will also notice a few things happening. 5 years in, I have developed my own style. When I started, I was not yet working in the media. These past few years I have written over 150 articles for Business News, and learnt how real writers – journalists and sub editors – work and this, I think, has improved my own writing. I post at least once a week, without fail.

Another point is that I can categorically testify that blog posts are ‘cat nip’ for Google. Google loves nothing more than indexing fresh text. It’s what it does. And new posts are full of exactly that. Fresh text. Now that I’ve posted over 300 times on my own blog, every single post is indexed and searchable on Google, forever. New posts are found within minutes.

This means if you’d like to be found in a Google search, then make sure the title of your post (and many words within it) includes those key search words. Remember, the title is given high priority by Google, as are the keywords that appear regularly within the post itself.

I have chosen the title of this blog deliberately, with key words such as ‘advice’, ‘blog’, ‘starting’ appearing. Notice how the web address (URL) also contains these words.

Google “Calling it strategic does not make it important” and the 1st and 2nd results are my  original and LinkedIN posts from November 2015. Out of 369 million results.

Posts I have done only a few minutes earlier are being picked up on Google. It’ll be interesting to see how this post goes, and if I can get it up onto the first page of Google, or near it, within a few hours of me hitting the publish button.

Above all, make your posts full of relevant and meaningful content about your topic area, and others interested in those areas will be able to find you. In that way, you’ll become an influential expert.

If I was a small business owner, I would simply use a WordPress blog, buy a domain name, hook it up, and then write about my chosen expertise, the jobs I do, the pitfalls, advice … in fact, I did up a wordpress blog for a mate of mine who is a bathroom renovator. He works on his own, has done so for years, and never needs to advertise. What he now also does (and WordPress make this so easy) is to take some photos of the bathroom before he started work on it, then some progress and after shots, and posts these. He does this all from his iPhone, using the free WordPress app. His site already comes ‘mobile responsive’, meaning it looks fine on all devices.

$35 a year, including website name and hosting. Now that he’s been doing this for a few years and has published dozens of posts, when you enter “bathroom renovation doubleview” or “bathroom renovation wembley downs” into a Google search he’s up the top of the first page of organic (free) search results. These are highly competitive search terms, yet he’s there amid some major players. It costs him very little to do this, beyond spending $35 a year, and having the nous to take photos and post them onto his blog site, JSBaker.com.au. And, more importantly, hundreds of competing bathroom renovators are nowhere near that first page.

So, might blogging work for you? Yes it might. But it’s not for everyone. All I can say is that I have learnt a lot about the power of blogging these past 5 years, and am still learning.

~~

EPILOGUE:

As some of you more keenly aware folks may have noticed, I have made a slight tweak to the categories I will blog under. 5 years on from when I started, I am now more interested in the digital transformation of businesses, strategy around the digital disruption of various industries and how organisations and their people can best respond, plan and take advantages from the immense changes going on around us.

Hence, I will now post on these topics: digital, transformationstrategy and leadership. (Less venting about the English cricket team and politics I promise.) I invite you to stay around for the ride… the next few years are going to be critically important for the future of our local economy.

~~

POST SCRIPT:

blogI posted this on Australia Day, in mid afternoon.

By the following morning, the post was already on the first page of Google if you searched “Advice on starting a blog”, out of 23 million+ results…

 

You can complain, wait or do something

leader adjusts the sails

As the seasonal period of goodwill recedes, and people trudge back to work (only to grab another week off before the end of January while the kids are still on holidays), some of us are prone to ponder the state of the world, and how 2017 might run its course.

This time last year I was optimistic about the coming year, despite the slew of celebrity deaths that kicked it off. In some ways, this may have been the harbinger of things to come, a portent of the gloom that was 2016. I did not predict Brexit nor the Trump presidency. But neither did I predict that the Aussie stock market would rise 20%  …well, a selected group of WA ASX listed stocks anyway, as shown by the BN30 index, something my business posted daily from Jan 4th 2016. It started at 100 (index) and today sits above 120.

Like many, I knew there was disquiet in areas of the western populace, but did not think there was enough to herald the UK to leave the EU, or for the orange bullying buffoon to actually get elected to the most powerful position on the planet (is it though?)… even though he garnered nearly 3 million LESS votes than his opponent. Malcolm Turnbull’s (nail bitingly close) reelection seems amazing in hindsight, compared to the crazy results elsewhere.

Meanwhile the Aussie economy ticked along, with some high points in iron ore miners and gold, and varied other places. The global economy also improved, helped by a resurgent US (now raising its interest rates, not once, but twice) and an OK China, expanded global trade. The Indian, East Asian, Brazilian and other economies are now part of the global picture, and contribute to its future much more than its past. The European economy has less sway than before. The Aussie economy is now entering its 26th year without a recession, and there does not seem to be one on the horizon either.

However, back on the ground, things are tough for many in business in WA. Real estate sales are slow, as is advertising, print, retail, media and the whole raft of mining and professional services. IT & technology is a growth area, as is aged care services. There are deals being done, IPOs and reverse take overs being planned and executed, money being raised. Not on the grand scale of the mining expansion from 2004-2012 no, but it is there nonetheless. And it’s patchy.

So here we go 2017. Things could bump along for a while before lifting, but most people now think the worst is behind us. Whereas I got the Brexit and US election totally wrong, I am not going to predict elections in WA, Germany or France, but a change in government in all 3 is not out of the question. Plus sa change… as the French like to say…

We can complain about the wind, or just expect it to change. The leader, as John Maxwell once noted, is the one that adjusts the sails, tweaks the business, sees opportunities, and sails off in a new direction, plotting their own course. That is what we should do in 2017. Happy sailing!

Busking in Perth – memories from 25 years ago

Ruff n Ready

The first time I came to Perth, WA, was exactly 25 years ago, as a busker. Christmas 1991. We had a brilliant 10 days, and – incredibly – each made enough to cover our return airfares.

At the time, I was living and working in Singapore, where busking was prohibited. Something about it being against the law to have two or more people gather together in a public place; a law that had been brought in to help quell communism in the sixties. Singapore did quite a good job of quelling communism, but that’s a different story. The strange remnant of this law (since lifted) meant that 2 fellow band members who had travelled down to Perth the year before (‘where there’s a terrific street entertainment scene‘) said we should visit this Christmas and do some busking.

Yes, I had fellow band members. I had moved to Singapore the year earlier, and somehow inveigled my way into a fairly well known (in expat circles anyway) 6-piece rock n roll tribute band (the ‘Ruff n Ready Roadshow’) which was made up of teachers, mainly from the same school I was working at. Anyway, 4 of us agreed to do it, and so we cobbled together a skiffle set of rock n roll classics, interspersed with some silly jokes and improvisations.

Our first port of call was Council House to get the required $2 busking license. It showed some red dots on a CBD map of the city, which denoted where we could busk and off we trotted. We saw one small stage set up in one of the malls, and set to work. Everyone pretty much ignored us, and by the end of day 2, we had not much to show for it.

Oh well, we thought, at least we’ve given it a go. And we are hardly street performers anyway. We’d do 20 or so dinner dances in Singapore, but this live performing to Christmas shoppers malarky was a different ball game. One upshot of actually performing on the street was meeting other performers, many of whom do it for a living, and do very nicely thank you. They can sense when it’s a good time to do a show, know exactly how to build up a crowd and milk it for all it’s worth. People I met that week, I would meet a year later in Covent Garden in London, or in Edinburgh at festival time.

The person I was staying with said that by performing on a stage, Perth people might think we were paid by the council, so the next day we went and found a spot outside Myers’ main entrance in the central shopping mall. There was a steady throng of people there, who were happy to stop and listen. Suddenly the money started pouring in. People would sing along, laugh at our silliness (we looked a picture in our multi coloured teddy boy outfits and greased up hair – the photo above shows us in Fremantle that same week), and would generally get the idea that it was time to pay up when we ended each set with the Motown/Beatles standard ‘Money, (that’s what I want)’ .

On one occasion, the Salvation Army lady was standing near our audience getting donations for her tin, so we decided to donate a whole set’s worth to her. You should have seen her face.

Never change a winning formula, we thought, so we played there for most of the week pre Christmas, and a few days after. In between, we did a day in Fremantle (not so good tippers that lot), and also got booked to play on stage in Forrest Chase for the Carols by Candlelight and were entered into a busking competition (we came second!).

All the while I was struck by Perth’s beauty: the clean streets, stunning blue skies, bright sunshine, great coffee and beautiful beaches. The friendliness of the people and their genuine warmth (we were asked to play at so many parties & corporate gigs, but it was always the week after we’d left). ‘I’m going to live here one day‘, I thought. And so it would prove, about 5 years later. For 2017 denotes the 20th year that Lisa and I moved to Perth. We’re set here for life, and every year about this time, when I find myself walking through the mall or Forrest Place, I always remember the time, a quarter of a century ago, I first landed here, and strummed a tea chest base for 10 days and sampled my first (of many thousand) flat whites.

Merry Christmas Perth, and a Happy New Year. You’re beautiful.

Get out of your social media bubble, easily

popping-the-bubble

As a former teacher said to me once – There are those who do, and those who watch. I remember when social media burst upon the scene, well, not so much burst, as crept into our lives, only to now (almost) take over, there were those who scorned the Twitter, the LinkedIN, the Facebook and all those that have come since. And there were those who jumped in early, while others became hooked later on.

Those who decided to watch, chose not to start accounts, not to spend countless hours thumb-flicking through the ever lengthening news feeds, nor posting sunsets, their lunch or a selfie. And they felt strangely superior, in a strangely superior kinda way. They probably were ‘of a certain age’, or disposition or just felt busy enough as they were. Perhaps they were a bit conservative and a bit tech-unsavvy. Either way, they hung back.

The rest of us slowly warmed up to social media, and found new friends, re-engaged with former colleagues and school mates, and became amazed at the information that could be shared, instantly, within almost anyone, anytime. We were never bored again!

Slowly more and more of us were on it, for an hour here, and hour there, and then increasingly most of our spare waking moments. We found ways to use it in business, and we settled on an equilibrium of our favourite social media platforms, and ways of using it. We became annoyed at the self-promoting wannabees, who would clutter our newsfeed with their humble bragging or pushy salesy ways. Some of this would make us unfriend them or leave a group they were in.

All along, these social media sites were learning more and more about us: not only who our friends were, but what we clicked on, liked, commented on and pages we visited. Slowly, it began to give us information it had learned we liked. They knew how to drag us back, keep us engaged, clicking and liking. They sold this information to advertisers who could target us individually, and as a group.

In the meantime, something happened to our feed. It got personal. We all have a feed specific to us, specific to what we had done before. We were (literally) fed what we know we liked – be it news, sports, entertainment, whatever.

About 17% of your total feed is fed to you. The rest is invisible, unless you do something quite simple – tell your newsfeed to give you the ‘Most Recent’ news, not just what Facebook believes are the ‘Top Stories’. Remember, your feed is what you see, not what anyone else sees. You are (actually) in control.

fb-feedUnless you like this Facebook-decided feed bubble, switch to the ‘most recent’ news feed. At the top left of your Facebook HOME page (or news feed) is a simple pull down, ‘News Feed’. Click the pull down option triangle thing to the right and choose ‘Most Recent’. You’ll now get all the latest news from your friends and pages you’ve liked, not just what Facebook has decided. It will make your news feed look ‘more full’ as it will include everything in chronological order (which is what it originally was designed to do, and did.)

As you can see from the graphic above, there is also a little wheel graphic to the left. Click this and then ‘Edit your Preferences’ and you can tailor exactly what you see in your feed. You can decide to see only what your friends post (not friends of friends, or even the pages you’ve liked), unfollow friends who will still remain connected to you but you won’t see all their stuff in the feed, you can reconnect with people you’ve unfollowed and find some pages that might interest you.

Furthermore, go up to your privacy settings (top blue bar, the icon which looks like a padlock) and there is a whole array of things you can lock down or open up. Have you ever looked in this area?

Most people have no clue on how to tweak these settings, and are left with the default. Or they may have made a change years ago and forgotten it.

So what, I hear you scream?

Well, as Google started giving us customised search results years ago, and Facebook is also giving you a sample of your information, and both are eating the internet (swallowing up the lion’s share of viewing time and ad dollars), so we are being given a version of the world these 2 companies believe we want to see.

We’re actually living in our own bubble. We are discovering less and less new information. We are learning less. We are being (quite literally) dumbed down. Surprising new information is less common.

An excellent BBC ‘Seriously’ podcast analysed this recently (it’s well worth a listen). Is it partially to blame for the tribal politics we now live in? No one listens to the other side anymore, there is no debate, only point scoring and name calling. Even if the facts are on your side, we get Brexit and Trump. We are gathering facts we are already programmed to agree with. We don’t think beyond the headline. We are post facts. It’s all about feelings.

So, let’s break away from the same old same old. Update your newsfeed to ‘most recent’. Secure the privacy settings you want, not that which is given. Go out of your way to understand alternative view points. Become more rounded, not a greyed out facsimile of your good self.

With social media now becoming part of the traditional media landscape (it’s where most people get their news), then this is more important than ever. The role of the traditional media is to reach out and explain the issues, and delve into detail. Mobile and social media can be platform to distribute the more rounded view, to keep a sense of perspective, to pique intellectual curiosity, and to protect the citizens from making uncivilised decisions. Or is it too late?

Angels, 5 reasons you should invest in tech startups

Send me an angel right now
When we set up our tech startup back in 1999, we looked to angel investment to get our business off the ground.
Some new business ideas just need to be tried in the marketplace in order to see if they will work, and they cannot be launched without some financial support. Often the idea is so new and disruptive that it will take time to educate a new market in new ways, and allow the fledgling business to take hold.
It is about the riskiest investment you can make as an investor. It is not for your nest egg, and the most likely outcome is you will never see that money again. In fact, the odds are (even if you carefully sift through your potential investments, saying no to far more than you say yes to) that 7 or 8 out of every 10 will fail, 1 or 2 you may see your money back, and 1 in 10 may return a lot.
That’s the deal.
I remember telling our angel investors (high net worth individuals and others who had a punt on us) that they would most likely not see a return at all. We wrote a chapter in our business plan outlining all the things that could go wrong, and how they would not see their money again. We wanted them to be awake to this reality, and not treat us like a bank. They could not ring us up in a few months and ask for the money back. The money, by then, was gone. It was used to set up the website, database, consultants, software, computers, the office, pay rent and the first few months of staff costs.
By the time we’d launched 65% of our money raised was already spent. We had barely 5 months of money left to last. We had to immediately raise still more, which is what we did. It took 7 years before those initial investors received an option to sell.
This is the reality of the tech startup. If you are interested in being an angel investor, then you need to understand that this is possibly the riskiest investment you can make. It is only a part of your portfolio of investments, a small part, perhaps 2-5%.
Say you are quite well off and have $1 million to invest. You might put some in blue chip shares, more in a property syndicate, high return deposit or a managed fund. Perhaps $20,000 to $50,000 in a tech startup. If you have a few million, then you could afford to do a $20,000 to $50,000 investment every year for a few years. You might look at several opportunities before deciding to have a punt.
If this is you, then I have 5 reasons why you might be persuaded to have a go. I have no idea which startups will make money – if I did, I would be out farming cupcakes from unicorns.
However, as someone who’s been there and done it in startupland, may I be so bold as to venture the following:
  1. Low rate of funding, startups need you

Tech startups in Australia are woefully underfunded. Far more is bet on the Melbourne Cup every year, per capita, than is bet on tech startups. Report after report bemoans the low level of funding, and the exodus of great Aussie ideas to Singapore and Silicon Valley demonstrate the lost opportunities. These types of business have scaleable business models, and could be $10m or $100m businesses in a few years. This kind of rapid wealth creation was simply not possible in earlier generations. Now is the time.

   2. The Economy needs you, because of digital disruption

25% of the GDP of Australia, and 40% of jobs, are under threat from digital disruption over the next 10 years. What kind of an economy will be left for our children and grandchildren? Where are the Aussie tech disruptors? Most of them hail from one country, pay little tax here, employ few people, yet are eating away at our economy.

   3. You have a lot to share and give 

You’ve made your money, are relatively well off, some might say wealthy. You have $1 million or more in various investments. How about carving out 2-5% of this for the tech startup scene? Take a a direct investment, and help seed a new business or three. Create jobs immediately, get involved and share some of your hard won advice gained over your own career in business. Pay it forward. Pass it on. Add value to this businesses, open doors. Have skin in the game.

   4. You get a tax rebate, and are capital gains tax exempt

Even better, from this financial year onward, investments in eligible tech startups attract a 20% tax rebate (yes, money back) from the ATO. Plus, you get a 10 year capital gains exemption, with no ceiling. Meaning – if you make a million or even a billion on the shares, it is tax free. The government is actively encouraging you, and rewarding you, for having a go. What’s stopping you?

  5. You’ll enjoy it 

Why not have some fun? You never know, you might learn something, have some awesome dinner party conversation, and can enjoy the ride. Why can’t business be fun? In fact, it should be.

So, if these 5 reasons have inspired you to find yourself a tech startup to invest in, then get yourself down to Spacecubed, listen to this podcast, or peruse these 140 WA startups.

Imagine if 1,000 angels decided to invest between $20,000 and $50,000 in some tech startups every year for a few years. That would pump in $20 million to $50 million a year to get 1,000 startups going. Among them could be a hundred $10m businesses employing tens of thousands, and maybe the odd billion dollar unicorn. Then we’d see some action, and maybe we’d even save our economy in the process.

Clinton won 2 million more votes

Clinton

For those you left numb and disbelieving over the recent election of a President Trump, consider that Hillary Clinton won the 2nd most number of votes ever in a Presidential election and 2 million more than her opponent.

Of course that did not get her elected, due to the quirks of the electoral college system. It’s actually a system I admire in that it forces nominees to travel around the country (or at least the dozen or so swing States) rather than just rack up votes in their most populous areas.

Unfortunately for Clinton, she racked up some amazing votes in States she was always going to win, and others she was bound to lose, mainly around the coast. She won California by 3 million votes, which would not have meant any difference to the electoral college outcome compared to winning it by just solitary vote. She lost Texas and Arizona, but scored far better there than Obama did 4 or 8 years earlier. It did not matter, she still did not get one solitary electoral college vote from these places. Nor did Obama.

A week on, we can see a clearer picture. Trump’s narrow path to victory lay in flipping Clinton’s so called ‘blue wall’ of Pennsylvania, Michigan and Wisconsin, where he collectively won the combined 3 States by only 107,000 (less than 0.1% of the total votes case). They are worth 46 electoral college votes. Add that 46 to Clinton’s likely 232 votes and she sails over the 270 winning post, and is President.

She lost Michigan by less than 12,000 votes. The fact that Clinton won 2 million more overall does not matter one jot. Trump threaded the needle by the slimmest of margins where it mattered.  He was very fortunate, a few tens of thousands of votes the other way and we’d be analysing things very differently.

I say ‘fortunate’ because the electoral college map was always stacked against him, and he was pandering to a diminishing number of the electorate – whites. They represent 72% of the population, and falling. The majority of babies born in the US today are non white. In the 1980s, whites made up 84% of the population. Trump had to win a huge proportion of this vote to win, and he had to win them in the right places, which is what he (just) did. You might call it a brilliant strategy, maybe it was. It did not make for a pretty campaign, but it worked. It all had to come off for him, and it did.

Consider the maths for Obama in 2012. He lost the white vote 39% to 59% to Mitt Romney, but he won the non white vote by a whopping 60 points. That adds up to 50.2% of the total vote, and 47.8% for Romney. Plus Obama won them in the right places – Iowa, Ohio, Florida, Pennsylvania, Michigan and Wisconsin,  … the blue wall. Clinton already knew (weeks out) she was well behind in the first two and Florida was on a knife edge, but she did not realise she was behind in the other 3, until it was too late. She never even visited Wisconsin. Trump won all 6 and shot to more than 300 electoral college votes.

So it was wafer thin. Yet Trump won fair and square, that’s the system.

So, we are left with two very large amorphous groups of the electorate – one, so annoyed at their lot, GFC, their changing country (they don’t like change, hence ‘Make America Great Again’ appealed)  and everything else that they would cast a vote for someone they may not like, but who was telling them he would blow up the system (#draintheswamp), throw the whole lot out and only he could fix it because he was the ultimate outsider. They were more likely to be white, non college educated and rural. And then there’s another large group, which is larger, who did not vote this way, a coalition of college educated, city dwelling whites and non-whites who appreciated Obamacare and wanted more affordable college education. Both these two policies only appealed to a minority on Clinton’s side, and did not interest the others.

After 8 years of Obama, they wanted change, and Clinton could not run on change. Trump could, and did. Boy, did he. After 8 years of W Bush, the country wanted change, and Obama personified it. Brilliantly. After 8 years of Bill Clinton, and the scandals that ended it, the country wanted change, and Bush was change. 8 years earlier Bill had represented a cool, younger change to the old and crusty Bush senior. Reagan was change from the washed up Jimmy Carter, who in turn had been change from the Watergate-plagued 1970s Republicans…

So the wheel has turned. It has not resolved the issues, nor the divisions. But the other side will have their turn for now. I wish Hillary all the best in her retirement. As Donald himself says, she deserves a vote of thanks for her 30 years of service. I hope Trump ends up being better than we fear, because the world could do with a little less fear and uncertainty right now.

We’ll see. I reckon it will be fascinating watching, no matter what. Get the popcorn ready.

UPDATE (Dec 23rd 2016) – Clinton won 2.9 million more votes than Trump)

If Trump wins New Hampshire, he’ll be President

It's all about new Hampshire

I’ve been watching this crazy, relentless US Presidential campaign over many months, open-mouthed at how low it has sunk. A reality TV celebrity kingpin real estate billionnaire (who, I learned this morning, is an anagram of ‘Tan Dump Lord‘) is extremely close to winning the Presidency against probably one of the most qualified, deserving and divisive of candidates, and its first woman (not before time).

How close? It all comes down to the little north eastern state of New Hampshire, the ‘granite State’.

The state that almost started the whole dang voting process back in January (Iowa snuck in first with its caucus), with only 4 electoral college votes and 1.3 million population, would provide the GOP nominee with sufficient to get him to 269.

By my calculation, at this moment, he is more likely than not to get to 265 electoral college votes, 5 short of an overall win. New Hampshire can push him up to 269 and a tie with Clinton. Now, wouldn’t that be entertaining?

According to the combined polls-only model at FiveThirtyEight.com States where he is more than 60% chance to winning gets him to 215 votes. Add in the 3 toss up states of Florida, Nevada and North Carolina (worth 50 votes combined) where he is currently more than 50-50 in favour of winning each gets him to 265. (See calculation below.)

If he wins New Hampshire’s 4 electoral votes, where he currently is favoured 38% of a chance (so not impossible by any means), he gets to 269, and a tie. Clinton would also be a 269.

If that happens, the House of Reps votes on the President, and the Republican leaning House would vote their man in. In a wonderful twist, the Senate would vote for VP, and if that goes Democrat, we might have Tim Paine as Donald’s VP. Or would the current Senate (which is Republican) get to vote?

It would be poetic beauty in many ways, and was predicted by the storyline in the wonderful comedy Veep, where the erstwhile Julia Louis-Dreyfus character is forever VP and never, quite, makes it to the top job.

FiveThirtyEight has Donald at 35% chance of becoming President, about the same as his chances of winning New Hampshire. It’s more than a 1 in 3 chance, and a far better chance than the Chicago Cubs had in winning last week’s world series (especially after coming from 3-1 down and not having won in 108 years). Yet that happened.

In the polarised world, most of the other States will vote as they will, with a certainty factor of 75% or more. Tuesday’s election will come down to 4 States, and Trump has to win them all to fall over the line by the slimmest of margins. Clinton needs just one of these to block his route.

So, if you want him in (or, like me, don’t) watch Florida, Nevada, North Carolina and New Hampshire. 3 of them are east coast states so will be called earlier than others, probably around 10am here in Western Australia.

~~

Here’s how I got to a 269-269 tie:

States that Clinton has a lock on give her 201 votes
– she’ll probably (more than 68% chance) also win Colorado, Michigan, Pennsylvania, Virginia & Wisconsin, which add 68, bringing her to 269

States Trump has a lock on gives him 164 votes
– he’ll probably also win (>68% chance) Arizona, Georgia, Iowa & Ohio, which add 51, bringing him to 215.
– add the toss up states (where is just ahead, between 50-53% chance) of Florida, Nevada and North Carolina, which give him another 50, and he’s at 265.
– New Hampshire is currently 61% (and falling) chance of going to Clinton. If Trump flips that, he gets their 4 votes, and he’s at 269.

Trump’s case is much more solid if he can win any of Clinton’s states (Colorado, Penn., Michigan, etc) but he has to hold all his. If he fails to do this and Clinton wins just one of the States (or new Hampshire), she’s won.

Predicting the Future, the US Election and other distractions

FiveThirtyEight

I must confess I am a bit of an addict when it comes to the US Election. As such, I am a frequent visitor to two of the best websites that try to make sense of what is going on, FiveThirtyEight and Politico.

The US Presidential election is an incredibly long examination process for what is probably the most important elected position on the planet. As we have seen this cycle, pretty much anything that can come out, will, including past video indiscretions or stacks and stacks of embarrassing emails. Lies have been told, and doubled down on, and trebled. News, in itself, has splintered into factions, meaning anyone can gather the ‘truth’ they want, about each candidate or the other.

The presidential decision gets cast over a relatively long term period (about 18 months), and as you can see from the chart above, the US has pretty much made up its mind, that, like her or not (and I quite like her, to be honest), the US will elect it’s first lady President in its 240 year history as it’s 45th President. 70 or more other countries have already had female head of states before the US, but it looks like the US will cross that bridge come November the 8th this year.

The probability of this occurring is now approaching 87% confidence levels according to FiveThirtyEight’s model (which takes all scientific published polls in all states and nationally and runs tens of thousands of ‘mock’ election outcomes to see what % of those outcomes yield a victory for one side or another, updating in real time). 538 predicted the last two presidential elections and margins of victory almost perfectly, and indeed predicted the winner in each of the 50 states as well.

The chart above shows that when the US public ‘has been watching’ (notably during the 2 conventions in July and then the first two debates in September and October), Hillary Clinton has pulled away from Donald Trump. Only for a brief period after the Republican convention did Trump pull to a tie with Clinton, and for most of the time he’s been less then 25% chance of winning. He’s now sitting at a tad over a 13% chance, 3 weeks out. It’s all over, red rover.

This gap is quite astonishing in many respects. Firstly, because Hillary is such a divisive figure in the US, one of the most unpopular and derided candidates ever to hold office. Her unfavourability rating tops 55%, but of course that is only topped by The Donald himself who has plunged the heights (if that’s the right expression) of 65% unfavourability. (‘Anything you can do, I can do better’.)

So it’s the battle of the least worst candidates. And it’s a race to the bottom, as we’ve seen. Any reasonable Republican candidate might have given Hillary a good run for her money this year (and she has raised a ton of money, more than anyone previously). But Trump’s blustering, unpredictable style, which got him enough attention and support during the Republican primaries, has been a disaster in the general election (where a more sensible, calm, dare I say, Presidential, Trump may have been more attractive to the undecideds and ‘swing’ voters).

Instead, the Donald has pandered to his base, especially after the 2005 Access Hollywood tapes came out, which showed him bragging about his sexual assault on women (‘I can do anything, they let me…’ etc). He has spiralled out of control ever since, throwing blame around everywhere – at the media, Hillary, the FBI and even at his own party. The very people he needs to win to bridge the gap (female suburban voters, Latinos, African Americans and moderates) are precisely the groups he has antagonised with his ‘Mexicans are rapists’, ‘the Blacks live in poverty’, attacks on the Gold Star family, a Latino former Miss Universe and other such riffs.

Come election day, it looks like Clinton will garner  49% of the vote with Trump back on 42%. Given that either major party is pretty much guaranteed 40% of the vote, you can see that Donald J Trump has not managed to grab that all important middle ground, while Clinton has.

Some of Trump’s party are shaking their head in bewilderment and can’t wish November the 9th come soon enough. Many have given up on the Presidential race altogether and are now battening down the hatches trying to prevent the Senate from tipping Democrat (which 538 now estimates will happen with 74% certainty, as they only need to win a net 5 seats) or possibly even the House as well (where Democrats need to win a historic 30 seats to put the 76 year old Nancy Pelosi back as Speaker).

The most likely outcome is a comfortable Hillary win as President (probably 340 electoral college votes, with Trump back below 200), a Senate majority for the Democrats but the House will remain Republican. For many in business, this is a workable outcome, as it might dampen down some of the anti-business things Clinton has been talking about, yet allow her to govern. Although divisive, she may be more experienced at getting things done than Obama, who took up to 6 years to get much of his agenda passed (barring Obamacare, which was pushed through in his first 2 years when he had majorities in both houses.)

Barring an incredible turn of events (and we’ve seen pretty much everything thus far), we will be hailing Madam President come Jan 20th 2017, with former President Bill Clinton back in the White House as ‘First Gentleman’. Historic times indeed.