Tribute to a great man

Lars Hinrichs is a great entrepreneur and my friend. He’s also the founder of OpenBC the preeminent social networking platform in Europe, and the best of breed in the world (more on that in another post).

OpenBC now has a blog OpenBlog and I was saddened to read of the passing of Lars’ grandfather. While I never met the man, Bill Liao’s tribute to a great man touched me as did the WH Auden poem.

Many of us celebrate success carved from adversity by the mythical lone wolf entrepreneur. But a greater legacy is to succeed and then mentor and guide another generation.

Heinz Richard Böse was by all accounts such a man.

Vale.

Focus on the Product

In light of the $20mm to $35mm sale (depending on who you’re reading) of Weblogs Inc to AOL many pithy words of wisdom are emerging about Jason Calacanis.

So why shouldn’t I add one.

In his what now? post, Jason tells the following Mark Cuban story:

Mark Cuban (who’s the best investor you could ever have BTW) always said “let’s not drown in opportunity” when he, my partner Brian and I would talk about the business. That’s why we didn’t launch an RSS reader or blog search engine, and that’s why we told everyone who wanted to do “business development” that there were only three ways to work with us: 1. read our blogs, 2. write our blogs, or 3. support our blogs with advertising.
[…]
I have to say my one piece of advice to startups is to focus on building your product and revenue and don’t waste time on partnerships. Maybe when you’re a huge company these things can work out, but the most important things in any startup are: 1. the product and 2. the bottom line.

So as I work on some IT consulting at the moment I feel the opportunities bobbing around. But if I pursued each one I’d be spread so thin I couldn’t execute well on any of them.

So I’m now working on two questions: what is my product? and how will it feed my bottom line?

Donations from your customers

The Big Moo : Stop Trying to Be Perfect and Start Being Remarkable is the new book by Seth Gordin and The Group of 33 Authors.

While I’m waiting for my copy to arrive, a review mentioned How would you run your business if you relied on donations from your customers in order to survive?”

This concept is is like the story of how Charles Schwab at Bethlehem Steel learned to manage his time. Ivy Lee, a management consultant, offered to make Schwab’s executives more productive, in return Schwab would pay what it was worth to him after a month. After teaching the executives to make a list every evening, prioritise it and work on it in order the next day (the earliest successful todo list strategy), Charles Schwab wrote a cheque for $25,000 in the days when the average worker owned $2 per day.

There are counter examples.

I once negotiated a book contract for a friend. Originally he was going to self-publish, but I convinced him to talk to the major Australian trade publishers.

At the end of the deal we’d increased his advance, got him author discounts equal to the lowest wholesale price, plus bookclub rates out of the first print run to sell at seminars. Not a bad outcome – it changed the project from a costly gamble to a guaranteed five-figure payday.

“Pay me what it was worth to you,” I said. He figured out how many hours he thought I’d worked on it and paid me at an hourly rate that was substantially below what he’d have paid an agent.

Sometimes customers are cheap. But treat them like they’d pay what it was worth.

Low doc loan fine print

When things are going smoothly a low-doc loan is a great way to get an investment mortgage without the hassles of paperwork and producing tax returns. Beware the fine print.

I took out a low doc loan from Liberty Financial in August 2004. These are also called non-comforming loans and generally come at a higher interest rate in exchange for the easier qualifying criteria. Given I was using the funds in a business deal I didn’t mind.

I thought my loan was scheduled for an automatic rate review and reduction after 12 months of good payment history. In June, I faxed Liberty to check out the status of the rate. I also advised them I would be closing the bank account they had on file for repayments and gave them the new account details.

Unfortunately 2005 has not been a great year for me. The aftermath of the litigation I went through plus physical and emotional exhaustion have taken their toll. As a result I haven’t been as vigilant in checking loan payments and deadlines as I normally could be. So I didn’t check to see that they had actually acted on my fax. They claim to have not received the fax and I should have checked that the payments were still going through. Of course Liberty didn’t even have my phone number recorded correctly.

You can see were this is going, yes?

It turns out a rate reduction must be applied for. If you have a low doc or non-conforming loan, your broker will say “and the rate will reduce in 12 months”. This never happens automatically, and many brokers will not follow up on the anniversary of your loan to make sure you apply for it. Stupid move on my broker’s part as he’s lost me as a customer for the sake of a post card.

So I’ve been paying unnecessary extra interest since May 2005. And because I didn’t follow up with the payment change I am two payments in arrears. I’ve made those payments today, as soon as I found out about it. But my 14 months of perfect payment history doesn’t count anymore. I have been invited to reapply in 12 months for a reduction or my account manager, Peter, said I could contact my broker to refinance the loan elsewhere. Not a good customer experience.

Given that attitude I must conclude that Liberty Funding expects their customers to make mistakes. Oversights in applying for rate reductions and stuff ups with closing accounts. I’m guessing there must be many other ways to screw up your loan with Liberty.

This is not a tirade against Liberty. It’s a cautionery tale. I went into this deal with my eyes wide open and knew these people were not my friends. Yet changed circumstances has affected me and cost me a lot of money.

Live and learn.