Entrepreneurial Ramblings

Later today I have the privilege of guest lecturing in the Entrepreneurship and New Venture Management class at my alma mater, Emory University, where the undergraduate business school presently ranks #7 in the country.

Sometimes I wonder, if I had to go back and apply to college today, whether or not I’d even be accepted to Emory.  The school has been climbing the rankings year after year and the admissions process is no doubt harder than ever.

What’s funny about today is that I’m not entirely sure what I’ll be discussing in the two lectures.  I’ve pretty much got free reign to discuss anything.   But forget what I want to talk about…what will the students want to hear about?

To answer this question, I’m trying to imagine myself back in business school and what would be the ideal lecture – i.e. now that I’m 10 years out of school, what would do I know now that I wish I’d known then?

The following quick list comes to mind:

1.    You have to have thick skin, patience, and determination in order to survive. Business is hard.

2.    Nothing happens fast; however, things eventually do happen – i.e. progress is not noticeable in one day, one week, or even one-month intervals.  It really takes about 90 days to show measurable progress and more even noticeable progress is made in 6 month, one year, and multi-year intervals.

3.    Since progress does not happen overnight, a major contributor to success in business is your ability to hang in there for the long haul.  As cliché as it may sound, the longer you stay in business the better.  There’s little such thing as a quick in and out, especially in today’s environment. Persistence is key.

4.    Financial Success in the real world is not just about intelligence.  What’s more important (aside from luck and timing) are salesmanship and connections.  The ability to market oneself is what often makes the difference between not having a job and having a job that pays well.  College grades and raw intelligence alone will only get you so far in the business world.  Communication skills, a knack for networking, and persistence will take you much further.

After jotting down these “fartherly” tips, I ultimately came to the notion that if I were an undergraduate business student today, I wouldn’t want to hear someone preach to me about how I should act.  Instead, I would want to hear someone talk about topics that I was genuinely interested in.

So how am I supposed to know what these students are genuinely interested in?  Take a survey, that’s how…

I’ve prepared a fairly comprehensive slide deck complete with the usual background info, how to secure funding, elements of a pitch deck, how to size up the competition, market size analysis, and many more; however, to better nail down the items to focus on in the lecture, I decided that I should poll the class at the beginning of the discussion to find out what they’d like to hear about.

I’m hoping that through polling, I’ll get some good solid feedback to help guide the discussion towards a meaningful place and that we’ll just skip over the slides / topics that are of little interest to the class.  This should be an interesting experiment.  If you’re a college student and you happen to be reading this post (the readership on this blog is massive – wink wink), then I’d love to get your thoughts.  Which topics that are of interest to you?  What would you want to learn about in an entrepreneurship class? Please leave your input in the comments section below.

Later this week, I’ll post video of the lecture here.  Stay tuned until then and wish me luck…

Related articles:

• Your Business School Is Great, But Is It Fun? (huffingtonpost.com)

Have you ever wondered how much money a particular company makes? Perhaps you just wanted to know their annual sales?   The only problem was, the company was small (i.e. not publicly traded) so there’s no public financial information available on them.   So how do you calculate their revenues?

I created a simple, back of the envelope (i.e. quick and dirty), mathematical calculation that accurately estimates the revenue of pretty much any public / private company, large or small. It’s certainly possible that I’m not the first to come up with this calc, but for now, I’ll take the credit for it. Here’s how it works:

ANNUAL REVENUE = NUMBER OF EMPLOYEES X $100,000

That’s it!  It’s that simple.  Now let me briefly explain the logic behind this one.  The average American makes a little over $40,000 per year.  The costs of an employee to an employer is about 1.25x their base salary.  The additional 25% comes from payroll taxes, health insurance, worker’s comp insurance, office space for them to sit in, etc.  Therefore, the employer must bring in $50,000 ($40,000 x 1.25) for every employee in the company.  Because most companies have a gross profit of 50% or so, this means that in order to stay in business, the average company must have $100,000 in revenue for every employee in their company (($100k x 50%) – $50k) = $0 or Break Even).  The companies with more than $100k in sales per employee are more profitable (e.g. GOOG) than those that don’t (e.g. pretty much every startup company on the planet that takes VC / Angel money).

We so often hear about how well a company is doing based on their press releases, speaking engagements by their founders, etc.; however, no one ever wants to tell you exactly how much money their company makes. The next time you want to know how much revenue someone’s company is doing, don’t just ask them point blank. Instead, simply ask them how many employees they have. Every CEO will tell you how many employees they have. If they won’t tell you, just ask one of their employees how many people work in the company.  Once you have that number, simply multiply it by $100k, and you now have a quick and dirty (and in my experience, highly accurate) estimate of their annual sales.

A word of caution on startups…If the company is a startup, you can pretty much rest assured that they are doing way less than $100k per employee.  For now, assuming the company has a business model where they actually sell something), take their number of employees and multiply by $50k instead of $100k to arrive at the annual revenue estimate.  In a later post, I’ll explain how you can more accurately nail down the exact revenues of a cash burning startup. In addition, I plan to explain how to accurately estimate a startup’s market cap (i.e. how much the company is worth) in a calculation just as simple as the one you’ve read about here today.

UPDATE: I’ve been reading in the comments about how the calc needs to be adjusted upwards / downwards depending on the industry (Duh!  It’s a “back of the envelope” ESTIMATE, hence the title of this post!).  Therefore, I’ve come up with a simple adjustment such that it works for nearly any industry.  The revised formula is  as follows:

ANNUAL REVENUE = NUMBER OF EMPLOYEES X AVERAGE SALARY OF AN EMPLOYEE IN YOUR INDUSTRY X 2.5

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DISCLAIMER: If you attended USC, please don’t be offended by this post. It’s really not your fault.

Before we head into the 2010 college football season, I just have to get a prediction out of the way, one that’s been on my mind for a while now. I’m hereby predicting a 20 year curse on the University of Southern California brought on by their hiring of Lane Kiffin as head coach. During the next 20 years, USC WILL NOT WIN ANOTHER NATIONAL TITLE. I’ll even go on to say that during this 20 year period THEY WILL HAVE A LOSING BOWL GAME RECORD, regardless of how long Lane Kiffin sticks around.

For a little backstory, Lane Kiffin coached the Oakland Raiders for a little over one season with an overall record of 5-15 as an NFL coach.  He was fired from the Raiders and even called a “flat our liar” by Raiders owner Al Davis.  He went on to sign a 6 year deal to coach the University of Tennessee Volunteers, taking over for the legendary Phillip Fulmer (the Vols were the 1998 National Champ under Fulmer). Before UT’s season even started, Lane was talking trash about SEC powerhouse Florida and their well respected coach Urban Meyer.  In 2009, Lane coached the Vols to a mediocre 7 -6 season.  To show his pride and dedication to the University, Lane even named his son “Knox“, after UT’s home city, Knoxville.

At the conclusion of the 2009 season, 5 years before the expiration of his contract, Lane turned his back on the city for which he named his son after and resigned from Tennessee to take the head coaching job at USC, which was vacant after Pete Caroll took a position with the Seattle Seahawks.  This is the move (dissing Tennessee for USC) that I truly believe will bring about the 20 year curse of Lane Kiffin, during which time the USC Trojans will not win another national championship and have a losing bowl game record.

Soon after Kiffin arrived at USC, his curse went into full effect as the Trojans were banned from postseason play for 2 years due to recruiting violations from the Reggie Bush / Pete Carroll days.  More recently, and this certainly won’t be the last controversy he causes, Kiffin went behind the back of Titans coach Jeff Fisher, one of the most respected head coaches in the NFL, to illegally recruit an offensive coordinator and he’s now being sued for it.  USC fans, good luck with your new coach. I predict that it’s going to be a tough couple of decades under the curse of Lane Kiffin.

Related articles:

• Tennessee Titans to Sue Lane Kiffin (bleacherreport.com)
• Lane Kiffin: The Most Dangerous Man in Sports (bleacherreport.com)
• Lane Kiffin Tackles the NCAA Sanctions at USC (bleacherreport.com)