I'm captivated with the idea of concierge medicine right now...private pay, family medicine, and especially in combination with major medical insurance. It solves a lot of problems in the healthcare space right now.
MDVIP now has over 123,000 patients, with doctors who have no more than 600 patients in their practice. Average times with patients have gone from 8 minutes to over 1/2 hour, and longer for annual physical exams.
The issues of healthcare mandates and expense to small businesses is huge. It's a burden on economic recovery. Combining concierge private practice, private pay medicine with major medical insurance and a healthcare savings account can help a small business to cut their healthcare insurance expenses in half. That's a huge savings for a business with 9 or 10 employees, doing $1 or $2 million in sales a year...savings that can go to discretionary cash flow and used to hire, expand, grow, or make the payments on a new condo in Breckenridge (thus helping the real estate market).
Concierge medicine also has the potential to change the way we are dealing with our aging population. It's a travesty that a lifetime of accumulated wealth should be lost so rapidly when someone has to enter an assisted living or nursing home facility.
The most interesting aspect is its ability to put the power of economic decision-making squarely in the hands of the healthcare consumer, and reduce the negative impact of government intervention. The direct relationship between doctor and patient will improve quality, drive costs down, deliver cost savings to small businesses, and disrupt the government's power grab. All good things.
Friday, December 31, 2010
Thursday, December 23, 2010
Sunday, December 19, 2010
The Law and Education - an excerpt from Bastiat's "The Law"
You Say: "There are persons who lack education" and you turn to the law. But the law is not, in itself, a torch of learning which shines its light abroad. The law extends over a society where some persons have knowledge and others do not; where some citizens need to learn, and others can teach. In this matter of education, the law has only two alternatives: It can permit this transaction of teaching-and-learning to operate freely and without the use of force, or it can force human wills in this matter by taking from some of them enough to pay the teachers who are appointed by government to instruct others, without charge. But in this second case, the law commits legal plunder by violating liberty and property.
Frederic Bastiat, The Law (1850)
Frederic Bastiat, The Law (1850)
Friday, December 17, 2010
Wednesday, December 15, 2010
Ron Paul vs. the Fed. Video Interview - CNBC.com
Ron Paul vs. the Fed - CNBC.com
Ron Paul talks about seeing Paul Krugman debate the Austrian Economists, why we need to let the bad debt be liquidated, real inflation.
Ron Paul talks about seeing Paul Krugman debate the Austrian Economists, why we need to let the bad debt be liquidated, real inflation.
Monday, December 13, 2010
PCM Survey | Pepperdine University | Graziadio School of Business and Management
Expected Rates of Return in Private Capital.
Thursday, December 9, 2010
Hit the risks head on in your business plan
Whether it's for your own benefit, or the benefit of someone trying to understand your business, maybe the single most important thing you can do in a business plan, is hit the risks head-on.
All of us entrepreneurial/founder types are optimists and risk takers to a certain degree, but that doesn't mean we ignore risk. We want to know what they are. By definition, we need to know what they are. They are what stands between us and success...a thriving enterprise or a healthy exit.
Risk is also how investments/deals are priced. The higher the risks, the higher potential returns must be offered.
You need to know what the risks are in your venture, and anyone getting involved with you needs to not only know the risks, but know that you know the risks.
Laying them all out on the table from the start demonstrates your grasp of your business, and of the private investment considerations. It's also the basis for a good working relationship. We all want to know that we are working with people of integrity who will talk candidly with us about the hard things.
All of us entrepreneurial/founder types are optimists and risk takers to a certain degree, but that doesn't mean we ignore risk. We want to know what they are. By definition, we need to know what they are. They are what stands between us and success...a thriving enterprise or a healthy exit.
Risk is also how investments/deals are priced. The higher the risks, the higher potential returns must be offered.
You need to know what the risks are in your venture, and anyone getting involved with you needs to not only know the risks, but know that you know the risks.
Laying them all out on the table from the start demonstrates your grasp of your business, and of the private investment considerations. It's also the basis for a good working relationship. We all want to know that we are working with people of integrity who will talk candidly with us about the hard things.
Wednesday, December 8, 2010
Good ideas don't stay quiet for long
There is definitely an advantage to being an early mover...in any market, particularly in a small market. But if you don't have some kind of patent or product protection, i.e. if you're in a service or retail venture, you run the risk of just waking up your potential rivals. Good ideas don't stay quiet for long.
If you are the first mover, but you lack the horsepower to get to market the way you need to, you have to know that there are others who are ready to "swoop" in, with more experience, talented people, or even more capital.
There's a delicate balance between keeping a low profile, and building your horsepower: infrastructure, people, technology, strategic relationships, and capital in place, so that you're building the traction you need to effectively compete with whomever may try to encroach on your turf. Ideally, you want to project (not just cosmetically, but in reality) that you've got it figured out, and you're there, and you've got enough of a head start to make it difficult to cut into your market dominance.
Truthfully, there is almost always someone who is positioned well, and has better access to capital. So the best you can do is to build the highest quality operation as quickly as you can. Then at least you have a fair shot at being able to compete when the wolves arrive. If you build it right, you can position yourself to be an effective competitor, or an attractive acquisition target to a larger and better capitalized player.
If you're a start-up, and you don't have piles of cash sitting in the corner, you need to make the most of whatever you've got.
Move to the most advanced, money-saving technology you can. There are very inexpensive cloud-based customer relationship management, productivity applications, and industry specific applications. Advances in technology are driving quality and functionality up and price down in software, hardware, telephony, etc. Don't start off in the hole, using legacy technology, where someone else can come in and do the "technology leap-frog" over you. Better technology means more efficient handling of information, production or communications, or operations, and more flexibility and adaptability. All of these contribute long-term to more effective decision-making, and ultimately to higher and more sustainable margins, making you a better competitor.
Get key people in place, internally and externally in the form of strategic partnerships. You're going to need highly motivated and highly adaptable people in strategic positions...this might be strategy and development, or legal, or sales and marketing. If you have a good opportunity, entrepreneurial and driven people will recognize it and will want to be a part of it, and willing to share the risk to build it in the hope of future glory.
Most of all, don't go to sleep. Don't get complacent. The wolves really are at the door.
If you are the first mover, but you lack the horsepower to get to market the way you need to, you have to know that there are others who are ready to "swoop" in, with more experience, talented people, or even more capital.
There's a delicate balance between keeping a low profile, and building your horsepower: infrastructure, people, technology, strategic relationships, and capital in place, so that you're building the traction you need to effectively compete with whomever may try to encroach on your turf. Ideally, you want to project (not just cosmetically, but in reality) that you've got it figured out, and you're there, and you've got enough of a head start to make it difficult to cut into your market dominance.
Truthfully, there is almost always someone who is positioned well, and has better access to capital. So the best you can do is to build the highest quality operation as quickly as you can. Then at least you have a fair shot at being able to compete when the wolves arrive. If you build it right, you can position yourself to be an effective competitor, or an attractive acquisition target to a larger and better capitalized player.
If you're a start-up, and you don't have piles of cash sitting in the corner, you need to make the most of whatever you've got.
Move to the most advanced, money-saving technology you can. There are very inexpensive cloud-based customer relationship management, productivity applications, and industry specific applications. Advances in technology are driving quality and functionality up and price down in software, hardware, telephony, etc. Don't start off in the hole, using legacy technology, where someone else can come in and do the "technology leap-frog" over you. Better technology means more efficient handling of information, production or communications, or operations, and more flexibility and adaptability. All of these contribute long-term to more effective decision-making, and ultimately to higher and more sustainable margins, making you a better competitor.
Get key people in place, internally and externally in the form of strategic partnerships. You're going to need highly motivated and highly adaptable people in strategic positions...this might be strategy and development, or legal, or sales and marketing. If you have a good opportunity, entrepreneurial and driven people will recognize it and will want to be a part of it, and willing to share the risk to build it in the hope of future glory.
Most of all, don't go to sleep. Don't get complacent. The wolves really are at the door.
Monday, December 6, 2010
Revisiting the mind of the private equity investor...
Entrepreneurs who need capital (all of them at one time or another), need to step back every once in a while and try to take an objective look at their own deal through the eyes of a potential investor.
So try this for an exercise:
Let's say you're an "accredited investor". You like being involved in small and lower middle market deals...start-ups, re-starts, turnarounds, special situations.
Imagine that you have a liquid net worth, or you participate in a partnership, that not only gives you the opportunity to invest in a full range of investments, but also requires it. You have capital that has to be put to work.
You're comfortable with the risks of starting, building, running and selling private companies.
If you're not in a controlling interest position, that's fine, but there will be the necessary protections and incentives.
This is more than a hobby or a passing interest, but you've got your own set of demands, maybe an existing portfolio of investments and personal involvements.
Maybe you've had some success yourself in building private companies, so you have a taste for it. You enjoy it. This also means that you've been through some ups and downs before. You're not going to panic when things don't immediately go as planned.
You're able to change direction when it is clear that the market is moving away from you.
You've come to appreciate the benefits of having skillful, motivated people involved with you.
You're not naive.
You're not stupid.
You're looking at deals all the time, some are more interesting than others.
You've seen a million unreasonably optimistic business plans, or plans with no substantial basis in reality.
You have your own opinions.
You have your own interests, strengths, fears, and history.
Now...let's look at your deal.
So try this for an exercise:
Let's say you're an "accredited investor". You like being involved in small and lower middle market deals...start-ups, re-starts, turnarounds, special situations.
Imagine that you have a liquid net worth, or you participate in a partnership, that not only gives you the opportunity to invest in a full range of investments, but also requires it. You have capital that has to be put to work.
You're comfortable with the risks of starting, building, running and selling private companies.
If you're not in a controlling interest position, that's fine, but there will be the necessary protections and incentives.
This is more than a hobby or a passing interest, but you've got your own set of demands, maybe an existing portfolio of investments and personal involvements.
Maybe you've had some success yourself in building private companies, so you have a taste for it. You enjoy it. This also means that you've been through some ups and downs before. You're not going to panic when things don't immediately go as planned.
You're able to change direction when it is clear that the market is moving away from you.
You've come to appreciate the benefits of having skillful, motivated people involved with you.
You're not naive.
You're not stupid.
You're looking at deals all the time, some are more interesting than others.
You've seen a million unreasonably optimistic business plans, or plans with no substantial basis in reality.
You have your own opinions.
You have your own interests, strengths, fears, and history.
Now...let's look at your deal.
Inflexibility kills opportunity
Inflexibility can absolutely kill an opportunity, and it can certainly kill a deal.
Maybe it is because we're used to just dealing with banks, where a fairly stable or constant product, like a house or car is easily measured and connected with your credit score, and a decision is made in short time within fairly limited range of expectations.
That's not the way it works in private equity. I'm not doing deals at the top of the food chain, and I don't present myself that way. The deals I look at might have real potential, but they are most of the time limited by the owner's or the entrepreneur's limited vision, limited capital, limited expertise. Each of these deals are "one-off" deals. Each of them is going to take a unique connection of multiple moving parts to get them off the ground, and to keep them off the ground until they can be successful. It's a combination of building and surviving until you can get enough "traction" that you break free of that initial inertia of being unknown, undercapitalized, inadequately staffed, and too tired to do it all your self.
Maybe you're one of the lucky few who will have an idea, have a rich uncle, and have an immediate raging success with little effort, but most of the small and lower middle market entrepreneurs I know are visionary people, with a ton of perseverance, who believe so strongly in what they are doing, that they are willing to scratch and claw for as long as it takes to be successful.
Scratching and clawing means giving up equity, doing without certain things, compromising with strategic partners, financial partners, and looking for creative ways to get things done and survive.
Sometimes, when I meet people who haven't come to terms with reality in this respect, I wonder how many deals with real potential are going to die on the vine, or languish because of inflexibility or a lack of scrappy perseverance and the willingness to see things another way.
Maybe it is because we're used to just dealing with banks, where a fairly stable or constant product, like a house or car is easily measured and connected with your credit score, and a decision is made in short time within fairly limited range of expectations.
That's not the way it works in private equity. I'm not doing deals at the top of the food chain, and I don't present myself that way. The deals I look at might have real potential, but they are most of the time limited by the owner's or the entrepreneur's limited vision, limited capital, limited expertise. Each of these deals are "one-off" deals. Each of them is going to take a unique connection of multiple moving parts to get them off the ground, and to keep them off the ground until they can be successful. It's a combination of building and surviving until you can get enough "traction" that you break free of that initial inertia of being unknown, undercapitalized, inadequately staffed, and too tired to do it all your self.
Maybe you're one of the lucky few who will have an idea, have a rich uncle, and have an immediate raging success with little effort, but most of the small and lower middle market entrepreneurs I know are visionary people, with a ton of perseverance, who believe so strongly in what they are doing, that they are willing to scratch and claw for as long as it takes to be successful.
Scratching and clawing means giving up equity, doing without certain things, compromising with strategic partners, financial partners, and looking for creative ways to get things done and survive.
Sometimes, when I meet people who haven't come to terms with reality in this respect, I wonder how many deals with real potential are going to die on the vine, or languish because of inflexibility or a lack of scrappy perseverance and the willingness to see things another way.
Everybody thinks they need cash...
Entrepreneurs always think they need cash, and sometimes it's true...maybe most of the time it's true. Everyone I talk with believes they are "underfunded". But sometimes what they really need is another set of eyeballs...a different perspective on their market, their operations, their product, their technology, etc.
Sometimes what you really need is horsepower. When you're a start-up, it's hard to get the caliber of people you need for your financial management, marketing and sales, etc. The impact of mediocre execution in critical areas is hard to measure, but imagine what your business would be like if you had really capable and motivated people in key positions. No, you can't afford them. Yes, you need to find a way to get them.
Sometimes what you really need is horsepower. When you're a start-up, it's hard to get the caliber of people you need for your financial management, marketing and sales, etc. The impact of mediocre execution in critical areas is hard to measure, but imagine what your business would be like if you had really capable and motivated people in key positions. No, you can't afford them. Yes, you need to find a way to get them.
Wednesday, December 1, 2010
Things I like to see in a deal...
Sharp, motivated people...capable people of integrity. That's number 1.
Intellectual or technological innovation, and a commitment to keep innovating. Patent protection is cool.
A product or service that adds real value. Not interested in a gimmick. Not interested in anything that has its marketing success based on the ignorance or impulses of the buyer. Don't want the selling skill to be the thing that carries its success. If it's a good product or service and adds real value, it does the "selling". Then it's just a matter of getting it in front of people who can use it.
Prefer to be in the "wholesale" market. Just don't really dig retail. I'd rather be selling to someone who knows what they need, who even helps you develop the product in a mutually beneficial relationship, and who can see how it will contribute to their success.
A high barrier to entry. It stinks to work really hard to put a deal together and then get pushed out before you recover your investment or reach your goals because someone else with more capital can jump right into your space.
A large market...national or international. I don't want to be selling in the local market.
It's gotta be "scalable". Everything is to some extent. Software/Technology is scalable on turbo-charge. An iPhone App is a hyper-example. I'm just looking for opportunities to ramp a venture up quickly once its foundation is in place. Scalability can come through technology implementation, or through business model. More on that some other time.
Leverage to technology in production or management. It can be as simple as using a cloud based ERP to increase productivity, efficiency, to keep moving fast and making decisions with accurate info and keep the competition eating your dust. I particularly like it when technology allows me to leap-frog legacy competitors in the space...kind of like developing countries going straight to cellular phones and never laying the miles of copper.
Intellectual or technological innovation, and a commitment to keep innovating. Patent protection is cool.
A product or service that adds real value. Not interested in a gimmick. Not interested in anything that has its marketing success based on the ignorance or impulses of the buyer. Don't want the selling skill to be the thing that carries its success. If it's a good product or service and adds real value, it does the "selling". Then it's just a matter of getting it in front of people who can use it.
Prefer to be in the "wholesale" market. Just don't really dig retail. I'd rather be selling to someone who knows what they need, who even helps you develop the product in a mutually beneficial relationship, and who can see how it will contribute to their success.
A high barrier to entry. It stinks to work really hard to put a deal together and then get pushed out before you recover your investment or reach your goals because someone else with more capital can jump right into your space.
A large market...national or international. I don't want to be selling in the local market.
It's gotta be "scalable". Everything is to some extent. Software/Technology is scalable on turbo-charge. An iPhone App is a hyper-example. I'm just looking for opportunities to ramp a venture up quickly once its foundation is in place. Scalability can come through technology implementation, or through business model. More on that some other time.
Leverage to technology in production or management. It can be as simple as using a cloud based ERP to increase productivity, efficiency, to keep moving fast and making decisions with accurate info and keep the competition eating your dust. I particularly like it when technology allows me to leap-frog legacy competitors in the space...kind of like developing countries going straight to cellular phones and never laying the miles of copper.
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