Last class BBW

Last class started with gifts to everyone - Martin Varsavsky gave us Foneras, since we heard about this product and idea throughout the whole course. That was smart - guess, which wifi router I will use when come back to my father's appatment?

Ok, it's time to post some notes (those are not direct quotations since sometime I simplify notes).
* If you're always successful, you start beleive in every shit you produce. Moreover, people around you start to believe in the shit you produce. Critical evaluation becomes weaker.
* I was shocked when I told a successful entrepreneur that I amazed by his way of behavior and he answered that his children hate him. Are you sure you want to copy this?
* Google earnings are 5 times less than Microsoft's, but marcap of Google is 2/3 of one MS has. Market surely appreciates Google more than MS and beleives that Google will overcome MS.
* After a failure you may be afraid of starting something new. Martin had a break of couple years after his biggest failure before he shared FON idea at his blog and it was appreciated highly.
* Question to Google owner: What is your limit?
Answer: Electricity.
Btw, computers consume enormous amount of energy. Google consumes the biggest amount of energy in US among corporations. More, than mining companies and aluminium plants.

Well, I will miss this class. It was really insightful.

Advertising

You never know when you can use information obtained. Last wednesday I had two presentations: one for IOP (investment oriented project) commitee (my second entrepreneurial team was qualified for semifinals) and right after that I went to class to present advertising.

And I never expected Martin would ask questions, cause after my last presentation no comments followed. This time he asked me for pricing strategy, was confused with low lewel of charge - 50K EUR per week, but I explained that it was competitive price for russian market, told the situation in St.Petersburg and gave some references.

I'd better mention that by the moment of second presentation I was exhausted and was able to answer only because of clear understanding of the business idea and assumptions I had made before. I beleive this is crucial for every business.

seven businesses you can start tomorrow

Forbes has just published a new article about enterpreneurship - Seven Businesses You Can Start Tomorrow. Related slideshow is really nice.

Very basic, very simple, some of them require minimum start cost, but you can make money. Think different, see opportunities.

advertising (3)

In my mind I have the following points of improvement for advertising:
1. Quality of source, of course.
2. Cut off the episode with bed, add more sailing episodes, shorten the chef episode.
3. Slogan in final episode should appear earlier.
4. Wording.

And when Olaf saw the video, he gave me advise to change the yacht part slogans to "this is my" style. E.g. this is my chef... this is my root... Peer advise rulezzz!

advertising (2)

After 2 days of communications between Sain-Petersburg (Russia) and Madrid (Spain) we finally made good enough video (due to technical problems at my friend's working station we decided to cease following improvements implementations).

Here it is.

advertising (1)

Nevertheless, the chance to be broadcasted at the VC (class) audience had to be taken. But I had no idea, what and for whom to do (the question how was ignored on purpose).

What I decided to do? Right, delegate!

I asked my friend who is in love with classic rock music to find me a soundtrack. And she did! Her first sugesstion of using Rod Stewart's I'm sailing was 100% hit.

When I downloaded some cruise videos... And added one more - music video of Ucrainian singer Tina Karol.

And finally I delegated eedition to my Spb friend who is a designer andknows my tastes.

I will show the result soon.

creative part

According to Martin Varsavski, another part of being entrepreneur is to be creative. That's why we have one more assignment - to make an advertising. That should be a movie of no more than 1 minute, it can be composed from other videos, but specially for the project. I.e. you can't take Nokia advertising and say that it is for Motorolla.

Be creative!

The hardest thing for me was that my business suppose to have no video advertising at all - everything should be based on personal contacts. So, it wasn't clear what to do...

and it turned to be this beauty)

| View | Upload your own

1st draft

Fuf, after a couple of daysof trials, I've got a code for presentation. This is the first draft I've spoken about, it is just a flow of thoughts.

Dream Yacht

| View | Upload your own

financials (2)

Income statement


Balance sheet


Capitalization

finance

Having in mind that all the finances are approximate just to know the profitability, I made a set of assumptions and created all the statements. Well, not all of them, causeI really hate making cash flow statement, that's why I took only approximate one for market capitalization calculation.

1. PnL.
a. I put approximate occupancy (I really understand that it is a bit too high, but nevertheless...) and average price. Simple revenue model!
b. CoGS are not really relevant, cause in case of cruise we have huge overheads, and variable costs are not that big. I just put 15%.
c. OVH are divided into the following pieces:
- yacht operating (fuel, crew salaries, repairment, putting on water, insurance and even property tax), which are considered as 10% of yacht cost (benchmark I received from one of the articles),
- dry land costs - office salaries and rents,
- bad debt - just to make a provision,
- marketing - which is mostly for website creation and contacts, the excess amount will be put into sales bonus, cause the team really matters here and all marketing should be personal.
d. Depreciation - straightforward method of 4,5 mio of investments (benchmark received from my friend who reall thought of building luxury yacht at Admiral Shipyards of St.Petersburg) for 30 years (time before next big repairment).
e. Corporate tax - 32%.

2. Balance sheet.
a. Cash - balancing line.
b. AR - 60 day turnover.
c. AP - 30 day turnover.
d. Non-comm creditors - 5% of GA+Mrkg+Design

3. Marcap. Discounted cash flow method.
a. WACC - 12% (just more or less relevant).
b. Growth - 2%
c. 10 years period.

Why 10 years? Well, because I can calculate). To be serious, first couple of years normally we spend to generate positive cashflow and profit, 3-5 more to cover initial investments, and 3-5 more to generate investor's revenue. Or just following the advise of Paz Ambrozy, VC and our finacial enterpreneurship professor.

I will make a screenshots of files and post later.

presentation (3)

After plain text was ready and embeded into slides, I closed PPT, changed my laptop ty class computer and started google picture search. I do this even in case of real presentation for business purposes, because I need to receive inspiration. If I work for business, the next step would be looking for copyright issued to be solved. When I was making ski waxing presenations, I just used corporate web-bank - we hadrights for all the pictures. Or even I could order special pictures - but never did that (exept for specific pictures with models wearing our apparel).

In case of study presentation I just omitted this step cause nobody cares and I'm notgoing to make money out of picture use.

Next stepwas to choose custom design. Obviously I didn't have time for creating orordering mine, so I just took existing one from Microsoft Office 2007 templates (software was in Spanish and I never used it before - so I had a great time to challenge myself in understanding magnificent logic change Microsoft made for Office 2007).

When upload pictures, cut words again, make animation, check hundred of times, proofread, check goals, make presentation even more understandable to my buddieswho are going to read this.

And then peers check - I asked two friends who were online to evaluate. Critical issues were taken into consideration, presentation was checked once more and delivered. 2 hours before deadline.

Slides willbe provided soon.

presentation (2)

Since I was thiking about presentation a lot, the structure appeared in my head. I have a habit - to put a thought into my head and cook it internally in subconscious part without interrupting. I may read related articles, search for pictures, walk down the river queue, but finally - voila, this is the result.

So by the time of deadline I really had an impression, so I just sat down, openned PPT and started typing. Plain text and some bullet-points. No design, no slide breakdown - just a plain thought expressed in words.

After that I revised, took out some information I don't need and went to designing. I really emphasize content over design, so in case of real presentation that would be my scratch cards - info I present, not show.

Since slideshare doesn't work now, I will upload plain presentation later.

Presentation

As I told in previous post, I made presentation very quickly. The following comments should be considered:
1. Although presentation was prepared for investors, the VCs were my classmates and the aim was to caught their attenton.
2. Since I made speech without background presentation, the ppt file was distributed additionally.
3. The ppt was created for VCs to read (I know that that's not the initial goal of power point, but I decided to give them PPT, not PDF because of two reasons: (1) it's easier to explain logics with basic animation (to give information piece by piece; (2) I can't make nice pdfs in my laptop, but PPT - yes.).

The step-by-step explanation will follow.

VC presentation

Well-well (heh, that's my favourite word to start the blog post), it's been a long time since my last project update here. Meanwhile, I presented the idea to "investors board", but I was not prepared well, so mostly I showed my beleif into the project, emphasized the team and let people know me. I could do better of course, but at least I made a full stop of idea searching - Dream Yacht appeared.

Couple of days I spent searching in the internet all relevant information to understad supply of charter services (luxury and normal) and realize costs. Or at least receive benchmarks, cause your first projections never come true, but you need to know if the business is going to bring money.

Since it is study project, I made some assumptions about costs not to go deeply into details: crew salaries were considered as a part of Yaucht service, investments were brought to required amount and first calculations were made.

When I realized that from 5 mio of investments 1 mio went to cash, increased Yacht investments and gave up 1 mio of net income in 10 years.

Still,it is my personal record of making all the statements and markcap calculation within 40 minutes (of course, I had preliminary information and used templates from the other project), but still...

And presentation was made. Having in mind, that it is class exercise and I know "the investors", my aim was just to get people remember me.

All the files and slides will follow soon.

to sell or not to sell

Talking to potential buyers about your company is the only way to know how much is worth. There´s nothing wrong with that as we all need to make informed decisions.

Martin Varsavsky quotation

Small business success

Three things you need:
1) the ability to abandon a plan when it doesn't work,
2) the confidence to do the right thing even when it costs you money in the short run, and
3) enough belief in other people that you don't try to do everything yourself.

seth godin quotation

x-posted to curious notes blog