Guest Blogger: HeresTomWithTheWeather

Oh no! I have been given the keys to blog here! I would like to blog about an interesting speaker I heard on Monday upstairs at Opal Divine's. Mr. Thornton (I forget his first name. I remember his last because when telling a story, he referred to himself by his last name). He has started up a bunch of companies over his lifetime. With his gray beard and as a bit of a "good-natured curmudgeon", he could pass for a good Santa Claus. He said quite a few profound things. I wasn't expecting that, but he's a hardware engineer with an anthropology background and that's not something you see everyday, either. He talked about the phenomena of habituation...we put on a shirt, we feel it on our body, but then our body filters that sensory experience out as it is persistent and we're no longer interested in it. This obviously happens all the time and we generally don't think about it (I guess that's the point). Instead, we crave novelty. Always seeking novelty. That's why the entertainment industry is such a huge presence in our lives. He talked about meeting with customers. Instead of asking him how he could help them make money, they squander the opportunity and ask "What's new? What's going to be the new big thing?" They waste their time reading industry magazines with all their useless new devices. Always seeking novelty and ignoring what matters.

He said if you're starting a new company, do whatever you can to not take money from venture capitalists. He recently met an honest one who said "our business is to screw you." Once you take their money, time deadlines have been imposed on you. However, that's not how the great companies are made. Great companies need time to iterate their original idea to something that works. There's a kernel of truth in the original idea but it needs time to evolve and it can't be rushed.

He explained that government regulations are often a source for new business. For instance, he says that the downtown buildings around us are required to sense danger (like a fire) and you get different directions from the building depending on where you are in the building. Offering products that are mandated by law means you don't have to worry about whether or not there's going to be a market for your product.

He said he doesn't start companies unless the products they're building have at least a 70% profit margin. The way he's doing that today is building computers. But those are low margin, right? Not if they are running life-and-death applications like health care and the stock market. Customers are willing to pay through the nose when someone's life is on the line.

He talked about one of his first companies. In the early 70's, he worked with people like Jethro Tull. He was into making audio equipment for the entertainment industry. He said that for the first year and a half or so, they just showed up at the industry trade shows. They didn't have any operations and they didn't build anything. They declined any orders. If someone gave them a big order, they would say they weren't big enough to handle the order, but after a while, because their company name was out there for so long, people just assumed they were a real business and contacted them and told them what they were looking for and they built a business around that.

Finally, he said a good place to invest is in 2nd world countries. Just a small amount of money makes a big difference for them and they don't squander money like we do over here. Afterwards, I walked over to BookPeople and picked up a copy of "Inside the Tornado" as he seemed to think that was a worthwhile read.