Category Archives: Psychology of the Deal

Investment psychology

Niche Retailer TrollAndToad.Com Makes Inc. 5000 Again

Clicks and mortar retailer TrollAndToad.com came in at #1063 in the Inc. 5000  fastest growing private companies in America for the second year with 285% revenue growth over the last three years. TrollAndToad.com is a the world’s largest retailer of collectible games. That is the very definition of niche.

So these guys are successful retailers. They are even more successful story tellers to attract customers, press buzz and decent management talent to the company.

Their website encourages sharing across the range of social media networks their customers may like. They have dedicated themselves to getting their story out.

I’m impressed because they get it. Sadly many companies do not. So the message is

  1. execute the business
  2. tell the world to attract customers, staff and media.

Successful businesses must do both, well.

TrollAndToad.Com’s also credit their growth and success to  acquiring the most talented people in the industry to oversee its growing divisions.  In an effort to rapidly expand its brick-and-mortar retail endeavors, the company has brought hobby retail store veteran Marcus King on board to chart and direct the course for this initiative.

King was a Board Member of the GAMA Retail Division (GRD) for many years. He also served as Vice President of the Game Manufacturers Association (GAMA) Board of Directors, helping to oversee all the activities of that body.  “I will be working with, and in, the newly opened Richmond, Kentucky store,” King explained, “and opening more Troll And Toad Retail and Tournament Centers — first in Kentucky, then across the nation.”

So they hired an expert. Some  companies try to do everything in-house especially when they are not good at it.

I knew a CEO who wanted to write every press release despite being a poor writer. I mean bad grammar, limited vocabulary and shocking spelling. He was smart, but had no talent with words. This industrial company boasted they put 20 press releases out in their best year. They needed to put 2000 releases out and engage with journalists in covering industries. Instead they worried about cost. What did it cost for the CEO to spend two hours on a press release? If he doesn’t add $400+ per hour in value, fire him.

Involved or Committed

Bacon & Eggs
photo by Anna Moderska, Warsaw, Mazowieckie, Poland

I like the following metaphor.

In a bacon and eggs breakfast, the chicken is involved while the pig is committed.

The normal mode in business is to look for people who are committed. Those that get the company logo tattooed on their bodies.

For senior executives, founders and entrepreneurs that is the spirit which drives a company forward.

However is it fair or reasonable to expect that from everyone in the organization?

At the senior executive or board level it is vital that there is someone who has not “drunk the kool-aid”. This person provides vital perspective and challenges the assumptions to avoid group-think.

At the front-line staff level having committed staff is certainly a competitive advantage. The main challenge then is to scale the business with a keen and engaged workforce. The second obstacle is managing attrition or top-grading when staff become disengaged.

Alternatively a business can design its systems to be executed by the average available hire. McDonald’s and American Express do this well. McDonald’s front-line staff are among the most committed in the fast food industry – compare staff at Burger King or KFC. But nobody is kidding them that this is a career. McDonalds managers and above are very committed and engaged. The whole business is executed by 15-19 year-olds.

American Express also chooses the best call center staff they can find. There is  still high employee turnover. But once people in the rest of the business make it past 3 years they are often there for life.

Emotional Control for Success When Trading Currencies

Forex Foreign Exchange Rate
Stranger in a Strange Land, photo by A Syed, Midland, MI, United States

Guest contribution provided by Forex Traders

For many investors, learning the intricacies of investing is a continuing effort that focuses on expanding personal knowledge of the principles involved and on gaining experience at the craft. Unfortunately, many of these individuals tend to be unaware or just plain forget that the most important ingredient for success, the third “leg of the stool”, is emotional control.

Understanding the psychology of trading and acting upon its precepts are often easier said than done. Not only must one react properly to the “socially-driven” movements of the market, but one also must be aware of his personal tendencies and how to prevent his mind from undermining his well-thought out trading strategies.

Studies in the field of trading psychology have confirmed time after time that our subconscious mind, programmed from birth by our personal external experiences, can often become our worst enemy when trading in a stressful environment, especially when real money is on the line and the fear of loss is present. These conditions exist in all investing markets, but the intensity is heightened when trading currencies in the forex world. Time frames are compressed. Market reversals can be swift, and successful traders must be technically nimble and decisive in asserting their trading plans.

If truth be known, behavioral dynamics actually are the contributing factor that make our markets tradable in the first place. When major currencies were allowed to float back in the seventies after years of regimented central bank control, finance officials reacted with amazement to the level of volatility in the forex markets. Each currency pair developed its own personality, fluctuating daily well beyond previous standards that had been maintained for decades following World War II. The interpretation of fundamental and technical factors can vary by individual, and these varying opinions are what lead to wavelike market patterns before a consensus equilibrium is reached.

For the individual trader, psychological factors manifest primarily in an inability “to pull the trigger” before opening or closing a forex position. This “hesitancy” can result from several causes, but the most probable reasons fall into two categories. First, a lack of confidence when applying trading principles to react to various patterns and trade set-ups can stop a trader in his tracks if he lacks experience in how he trades and in the methods that he has been taught. More practice trading on free demo accounts is the recipe, as most experienced and successful traders swear by their practice regimens.

The second reason can be termed “performance anxiety”. Fear of loss or accountability can wreak havoc on a trader’s mind. Your subconscious mind is a storehouse of many uncomfortable experiences, accompanied by coping responses that will prevent a recurrence of the previous trauma. Opening a position can generally be a more positive situation, invoking hope for future gain and displaying assertiveness when confronted by a particular market situation. Closing that position can be quite the opposite set of events. Should I or shouldn’t I? When do I pull the plug? Why now and not later? Suddenly, the threat of poor performance results in hesitancy and procrastination, a recipe for failure in the world of forex trading.

So what is a trader to do? Trading simulation systems are the only way to gain the necessary confidence and consistency with your individual training plans, but the “cure” is more about extensive practice routines to “habitualize” your step-by-step trading plan. Creative visualizations also help to define exit “triggers”, but a trusted and disciplined routine is the only known method for preventing unwanted mental intervention in the course of trading positions. And keep in mind that, even if practice accounts and theoretic trading are great for learning, they have many limitations and do not necessarily reflect real market conditions.

Making excuses

My daughter is 11 and it seems she is always complaining or making excuses about why she didn’t do something perfectly. I think she is a perfectionist and the complaining acts as a relief valve for her emotions.

I want the best for her, and tend to “coach” when I should just listen and be empathic. However complaining to me is fingernails down a blackboard. I react first then think about the true message next. There must be some fear that my kid will grow up making excuses for failure.

This piece could go that success has on no excuses. I believe that. But do I also believe “No pressure honey – just be perfect”? We succeed through failure. Making mistakes is what leads to success.

Instead I wonder about the excuses I make. Surely if children do it, we all must. And I must be really good if I think I don’t.

Well I’m 10kg overweight. There’s plenty of excuses in that part of my life.

What excuses am I making in my marriage? My business? My friendships? My professional life?

So I’ll give myself 45 seconds to be bummed out by the realisation I’m not perfect. Now I pick myself up and choose 3 things I will make no excuses for in January 2011. Today I will do something about 1 of those 3.

Hat-tip to Rich Stoner at Elite Basketball Training for blogging about Thinking of Making Excuses.

Warhawk Matt Scott in Nike “No excuses” commercial

Finance for SME’s

Many people complain that banks don’t support Small and Medium Sized Enterprises. However don’t expect politicians, economists and bankers to come up with the solution to problems besetting SME finance.

Residential mortgages are cheap because the risks are relatively easily defined and standardised. Except when they were securitised into some bastard demonic child and sold off without any link to their underlying risk or value.

Each business owner would say her business is unique. Thankfully trade and receivables finance has grown and is “not your father’s factoring” anymore.

SME’s must seek out these smaller financiers whose skill and systems allow them to move faster and understand SME risk better. While receivables finance costs more than a residential property secured loan, that is because Australians will do almost anything to avoid losing their home. Therefore the risk to the financier is lower.

Dick Smith sold out the first time to Woolworths because he didn’t want to put his house on the line, again, to fund another round of expansion.
At some point every entrepreneur must resist putting the family home on the line for access to the cheapest funding. If your business can’t afford business finance then improve the business don’t take the cheap funds.

Waiting for any “pillar” of the economy to step into this space is a long shot.

Personally Controlled Electronic Health Record (PCEHR)

I want a Personally Controlled Electronic Health Record (PCEHR). That’s an electronic record of my current and historic health status, under my control and private to me and the health carer’s I select. Think of it as all your health records in one place in case you ever need it.

It turns out my family needs it. My medical records are scattered in the archives of various specialists and GP’s over the years. I used to believe doctors were the experts and they’ll let me know when I need something. Unfortunately, that means they know as much about me as they can assimilate from a quick scan of my file whenever I drop by. Being male, they don’t see me too often. I’m told I suffer from high cholesterol, but I don’t know the pattern of my tests over the years. Now I take some medicine to fix it, but it’s hardly an integrated, holistic and preventative care plan.

My mother is aging, my daughter has an undiagnosed chronic condition. In both cases we’ve left it to the experts to guide us. But as keepers of the medical records I’ve allowed doctors to cater to the lowest common denominator of health care.

So the first step is gathering all my records to one GP. Then I’ll want a copy of my records. While I’m at it I’ll get my family’s records done.

The federal Australian Government has funded NEHTA National E-Health Transition Authority to get this process going. Like most bureaucracies they seem to take forever to get something everyone is happy with. So we’re looking at 3 years to implement the “government’s e-health strategy”. I don’t want to wait that long.

What’s wrong with release and revise? Quick constant beta-releases. I understand privacy, interoperability, and transmission issues. But the basics of what a PCEHR should like and a standard to allow tools to be built shouldn’t take 3 years.

I’ll write more on this as the journey continues.

I’m almost tempted to launch a startup to deliver this stuff.

Five Key Reasons Why Newspapers Are Failing

Bill Wyman wrote a wordy, erudite and brilliant two-piece article at splicetoday.com entitled Five Key Reasons Why Newspapers Are Failing (and part 2). While I haven’t blamed editors and journalists in my post Business Model for News, I do agree with Bill’s assessment of their culpability.

Bill’s piece has received some play and is well worth a read to see what excess playing to Wall Street’s demands can get you.

The major take-home for me was his suggestions for the future. This part has been pretty much ignored in the discussion so I’m reproducing it here. I’ll remove it if Bill or Splice Today want, but it’s a great manifesto to build any business by.

If I were running a chain of papers, here’s what I’d do:

1)    Go hyper local; devote all resources, from reporting to front-page space, to local news. No one cares what the Pittsburgh Post-Dispatch has to say about Iraq.

2)    Redesign the websites to present users with a single coherent stream of news stories and blog entries. Create simple filters to allow them to tailor the site to their preferences.

3)    Tell the union you won’t be touching salaries, but that all work rules are being suspended, including seniority rights. Tell all reporters that they’re expected to post news if word of it reaches them in what used to be thought of as “after hours.”

4)    Get out of the mindset of “nice” coverage. Tell the reporters to find the “talker” stories in town—development battles, corrupt pols, anything with a consumer bent. Monitor web traffic to find out what people are interested in. If a particular issue jumps, flood the zone. Make each paper the center of every local debate, no matter how trivial, and make finding and creating those debates the operation’s prime job.

5)    Create chain-wide coverage of all areas where it can be done. It’s sad, but it means laying off a lot more film critics and dozens of other duplicated positions. For such positions, do this. Hire two people to cover the beat for the chain. Make them into sparring partners, arguing about each new TV show, movie, CD, traveling Broadway show, concert tour etc. Get out of the business of being promotional. Give your readers sharply argued opinions, something fun to read they can’t get anywhere else.

6)    Create local listings second to none. Create them from the users’ point of view. Don’t use abbreviations. Overwhelm users with insider information that only locals know; where to park, where to sit, when to go, etc. Get rid of all the site navigation levels no one cares about. Put the information people want front and center.

7)    Devote as much manpower as possible to creating must-read local news blogs. Tell the bloggers to work the phones and IMs, finding out about every personnel change, every office move, any tidbit. Support and cite local bloggers in the same areas. Yell at staff members if they are consistently being scooped by (unpaid) competitors.

8)    Create and maintain a wiki designed ultimately to function as an encyclopedia for the town, from neighborhoods and politicians to every retail establishment. Let it become the ultimate guide to the area. Like Wikipedia, it will inevitably contain information that is controversial. Cover the controversies with alacrity.

9)    Serve the community. Don’t publish crap. Tell folks stuff they might not want to hear. Grow a pair.

Bill Wyman is a cultural critic and author of the blog Hitsville. He can be reached at hitsville@gmail.com.

Business Model for News

Rupert Murdoch has created a stir with his intent to charge for content. Dave Earley wrote a great piece at Earley Edition explaining how it won’t save news media’s business model.

What is the core business of news media? They are not in the business of “reporting the news”. News media’s business is to aggregate an audience to deliver to advertisers. That is why celebrity tabloids sell – the perceived quality of the “product” only affects the demographics and size of the audience. But in reality the audience is the “product”, journalists and producers are the manufacturing team. The sales team are supposed to be the rain makers. But news media believes their own manufacturing-oriented PR that their business is “the news”.

If news media companies are to thrive under a pay-for-content business model they must now do two new things well for sustainable competitive advantage. Firstly they must deliver compelling content, now mixed with rights management and security that does not interfere with the reader experience. Secondly they must become expert subscription marketers – better than Time Life or Readers Digest. Because the internet is littered with the corpses of companies who believed “if you build it, they will come”. If your business depends on paid subscription you had better become outstanding at the skills to deliver subscriptions. Dave Earley said

It is worrying that users will now be made to pay for news simply because marketing departments are unable to make online advertising work.

Sadly this is typical of sales and marketing reactions in a mature market, it always looks easier to chase the next big thing rather than get great at your core business. If their marketing departments can’t sell online advertising (B2B) how are they going to develop the skill to convince people (B2C) to pay for something they’ve previously got for free? I wouldn’t take that bet.

News media is like the buggy whip manufacturers complaining their markets are shrinking because cars have replaced horse-drawn carriages. Nobody promised newspapers a perpetual license to make money. Evolve or die.  Get good at your real, core business.

Rupert, baby, deliver an audience to your customers.

Twitter Updates for 2009-08-14

  • RT @mktbot From 10 Aug $CXN:ASX ConnXion Limited is $CXN:ASX ConnXion Ventures Limited http://is.gd/2gBot #
  • RT @mktbot From 12 Aug $ETC:ASX Entertainment Media #
  • RT @mktbot From 12 Aug $ETC:ASX Entertainment Media & Telecoms Corp.Ltd is $NBS:ASX Nexbis Limited http://is.gd/2gB5m #
  • RT @mktbot As of 14 Aug $GLI:ASX GoldLink IncomePlus Limited is now $BIV:ASX Blue Capital Limited http://is.gd/2gAeb #
  • ASX-listed Companies price sensitive announcements 14Aug $ACX $AGS $AVJ $AVO $BAR $BAU $BEL $BIV $BPT $BSR $CAB $CDI http://bit.ly/6LMUV #
  • ASX-listed Companies price sensitive announcements 14Aug $CER $CGM $CKK $CNP $CNX $CRE $CUE $CWN $CXU $DCG $DDT $DEG http://bit.ly/6LMUV #
  • ASX-listed Companies price sensitive announcements 14Aug $DGO $DIO $DLS $DMX $EMG $FNT $FUN $GCG $GCR $GMG $GPG $GRT http://bit.ly/6LMUV #
  • ASX-listed Companies price sensitive announcements 14Aug $GXY $HAW $HAZ $ICN $IDG $IEF $IGR $LEI $LKO $LLC $LLP $LML http://bit.ly/6LMUV #
  • ASX-listed Companies price sensitive announcements 14Aug $MAE $MAH $MAP $MCP $MCR $MEO $MMA $MOC $MPA $MSR $MTU $NEM http://bit.ly/6LMUV #
  • ASX-listed Companies price sensitive announcements 14Aug $ODG $ORG $OTI $PDM $PMP $PRV $PTN $PXS $RAU $RHD $RHM $ROG http://bit.ly/6LMUV #
  • ASX-listed Companies price sensitive announcements 14Aug $SEG $STU $SYM $TCQ $TGX $VBA $WCN $WHN $WOT http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $ABM $ACK $ACZ $ADA $AGO $AGX $AHC $AIB $AIO $AIQ $ALF $ALK $ALR $AMP $AMU http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $AMX $ANZ $AOD $AQP $ARO $ARU $ASP $ATJ $AUP $AUZ $AVG $AVJ $AVO $AXY $BBG http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $BBI $BCS $BIV $BKN $BLP $BMN $BPH $BPT $BUL $BWN $CAM $CBA $CDI $CDM $CEY http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $CHN $CLO $CSJ $CSR $CSU $CSW $CTW $CUE $CXM $CYA $DBS $DCG $DIO $DLS $DUE http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $ECE $EHL $EMA $EMR $EON $ERC $ESG $ESN $EVE $FAC $FAS $FAT $FMG $FND $FPH http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $FUN $GIP $GMG $GMI $GRT $GUD $HAP $HAW $HAZ $HDN $HHV $HHY $HJB $HLS $HRL http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $HSN $HZN $IBC $IDG $IFL $IMA $IMD $IMU $INE $JVG $KAT $KIL $KNH $LBY $LEP http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $LLC $LLP $LML $LUM $MAK $MAP $MBL $MBN $MCK $MCL $MCP $MCW $MGO $MIF $MLE http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $MMR $MMS $MMX $MPJ $MPS $MQG $MRI $MSO $MTH $MWG $MXQ $NEU $NGE $NHC $NSP http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $NVT $OLH $OMI $ONC $ORC $ORN $PBA $PBB $PHG $PMH $PMP $PRG $PRV $PTN $PTR http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $PXS $QBE $QGM $QMN $QPN $RHD $RMS $ROG $ROY $SAK $SBS $SFY $SHX $SLF $SLV http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $SNB $SPI $SRE $SSS $STE $STO $STW $STX $SUL $SYG $SYL $SYM $SYS $TEN $TES http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $TGG $TLS $TOD $TON $TOV $TRS $TSF $TWD $TXN $TYS $UBS $UNX $UOS $URL $VBP http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $VIL $VMT $VTP $VXR $WAA $WAM $WAS $WBC $WDC $WHC $WHF $WHN $WIL $WME $WOT http://bit.ly/6LMUV #
  • ASX-listed Companies announcements 14Aug $XEN http://bit.ly/6LMUV #

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