Startup-CEO.com (Eli Portnoy)

As I mentioned yesterday, the economic and social reality of the United States today is that we need and want the 12 million illegal immigrants. We require the labor they provide, and even if we didn’t, there is absolutely no way the country can round up 12 million people and deport them. Not only is it impractical and immoral, but it would be economic suicide. That being said, the loudest opposition war cry is that o f Amnesty. For some reason, the country has been swept up in the notion that allowing immigrants to stay in the country, with a defined (albeit incredibly difficult) path to citizenship is paramount to forgiving someone for committing murder. There is so much heat regarding the amnesty issue, that the current bill being debated requires illegal immigrants to go back to their country of origin before they can become citizens here. That is just an impractical, stupid, and very costly requirement that is totally out of place and accomplishes nothing.

Let’s talk about amnesty. Firstly, what crime was committed? Illegal immigrants entered into the US without proper papers. Good point, but is that it?

What about the businesses that hired illegal immigrants?

What about the businesses that didn’t pay overtime?

What about the businesses that paid below minimum wage?

What about the country that stood by and allowed the exploitation of immigrants?

What about the social conscience of the nation that mistreated them?

On the one hand you have a dedicated, hard working person, who crosses the border because there are readily available jobs. He pays taxes, he lives in terrible conditions. He works hard. He is exploited. On the other hand you have illegal activity happening every single day by the 10s of thousands of businesses that hired illegal immigrants.

Shouldn’t we allow someone who has been exploited by our country, who has served us so well, and who only came because we asked him to, allowed the chance to become citizens?

This isn’t amnesty, its fairness!

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The views expressed in this post are my own, and do not represent the views or opinions of Emerging Demographics Inc.

Immigration reform has overtaken the country once again. 12,000,000 people are here in the United States illegally. As a Hispanic American myself, and a recognized expert on the issue of Hispanic immigration, I thought it would be interesting to do a couple of posts on the issue.

Our borders are broken – and our policies are screwed up

The US / Mexico border is easy to penetrate. A very, very large percentage of all illegal immigration comes through this border. Some people find it harder than others, but in general, it might be one of the easiest borders in the world to cross.

At the same time, the United States finds itself in a serious and possibly catastrophic labor crunch. There was a film that came out about 3 years ago called “A Day Without a Mexican” that asked what would happen to the economy if all Mexicans disappeared…you can imagine that the situation would not be pretty. And that is exactly the point; the US economy needs and depends on illegal immigrants because we are in the midst of serious labor shortage.

Understanding the situation from the vantage point of these two issues, one can understand how we arrived at the situation we find ourselves in. There is a porous border and tons of available jobs…well of course we would have a tremendous influx of immigrants.

For years we stood by in silence, never glancing in the direction of the border. We needed more workers, they needed us, let’s keep quiet and let the market resolve the issue on its own. However, over the last few years a couple of things changed.

1 – Terrorism emerged as a very serious threat and we realized that we simply could not allow such a gaping hole in our front-line defense. We have a right to protect and secure our border, and failure to do so is wrong, irresponsible, and dangerous.

2- We no longer need new immigrants. 12 million workers later, and we have satisfied our hunger for the labor they provide. Most of the jobs they fill are in the service industry, and at a certain point we realized we had as many as we needed.

As soon as these two things happened, we started to notice other problems: Undocumented workers were leading a very hard life; they weren’t being paid enough and were being mistreated. Payroll taxes weren’t being paid. Some of the immigrants where competing for better jobs with legal citizens. Our borders are a security threat…and before we knew it, the country was divided on the issue of immigration.

In the next post I will discuss the current situation and some of the proposals being discussed, as well as the question regarding “Amnesty”.

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Our Google Adwords account today had a little new message introducing us to Google Radio Ads. After playing around with the functionality, I am excited to have this option in my marketing arsenal, but I am weary of trying it out just yet.

The brilliance of using adwords is that it makes it dead simple to optimize campaigns and track the results. I would have assumed that if Google was venturing into the Radio ad world they would have taken a page from their previous success and let you target ads based on all sorts of demographic data. This is not the case, though that it is probably more because of a lack of radio inventory than anything else. Right now the only way to slice and dice the delivery of your ads is based on day of the week, time of day, gender, and age. That is just not enough to develop working and successful radio advertising.

That being said, Google does have a very neat feature called “Call Reporting”, which helps track the performance of radio ads by giving you temporary numbers to play on air, and which are routed back to your number. Google then provides you with a detailed report of how many calls you received to each of these temporary numbers, which makes it easy to segment the performance of your ads.Amazing that Radio and TV (with Spot Runner) are now fully accessible marketing platforms for small businesses. Even though these mediums are available, doesn’t mean they make a lot of sense for all businesses. My own experiences are that with radio and TV, and even print, repetition is the name of the game. Otherwise, they just don’t work. My hunch is that most small businesses will only realize this after spending enormous sums and getting little in return. Unless Google, Spot Runner, and anyone else entering this market, do a good job of educating us on TV and Radio advertising best practices, they will probably end up with few repeat users.

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Starting a business is like assembling giant mechanical watch in that there are hundreds of moving parts that must be timed to interact perfectly. Much like a watch has a face which is the external component that the world sees; an early stage startup has “the pitch” – the one facet of the business that must beautifully communicate everything that is going on in the background.

The difference between a good pitch and bad pitch not only can determine whether you get meetings with investors, but also how well you are able to hire, establish partnerships, build buzz, and generate excitement.

I am no expert on the pitch, but these are my thoughts:

A pitch is like a minimalist business plan, you need to get to the bottom of the issue very quickly.

1 - Hook your audience:
Propose a big problem. Think of a heavy hitting sentence that you can use to catch your listeners attention with the sheer magnitude of the problem you are trying to solve.

2- Solve the problem:
Explain the elegant solution you are developing to solve this devastating problem.

3 - Bring it home
Knock em dead with a real world example of how your solution will solve the problem.

Do:
Keep it short: The goal is to generate interest so that you are asked further questions.

Make it a conversation: A lot of entrepreneurs memorize the pitch and spit it back out word for word, try to keep it light and easy on the ears.

Show excitement: The more into it you get, the more people will feed of your energy and share your passion

Don’t:
Quote numbers: These numbers are great in presentations and models, not in pitches. If you must, then keep it to just the market size.

Use words you can’t qualify: Saying your product is the best will get you nowhere.

Explain features: If you have to resort to explaining features, your pitch won’t work. The pitch is all about the big idea not the details. Save those for later.

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I posted last week asking whether you thought an MBA was a worthwhile way to spend 2 years and 100,000 dollars. Most of the responses talked about the degree in subjective terms, arguing that it depends on the person and his or her ambitions. Okay, fair enough, so allow me to pose a new question: Do you think an MBA would help you achieve your career goals?

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Here is a question for you: Every year thousands and thousands of emerging business leaders attend Business School. Some do it for the network, some do it for the degree, and a few even attend school to learn a couple of new tricks. At the end of the day, is an MBA worth it?

Some say that business is more art than science requiring just as many soft skills (social interaction, leadership), that are near impossible to teach, as hard skills (finance, accounting). These detractors say that any hard skills needed are learned on the job and that a network can be built the old fashion way, and so an MBA is just plain useless. They go on to say that anyone who will make it in business will do so regardless of any three letter degree, and that formalized business training might even inhibit the creative juices.

At the other end of the spectrum, there are those who swear by the MBA. They point to the benefits of a strong network of contacts, a deeper understanding of core business skills, and the benefits of a prestigious degree. They understand that an MBA is not a pre-requisite for business success, but they argue that it is quiet helpful and increases ones odds significantly of “making it”.

I hear both sides of the equation and I wonder what you think…does an MBA increase the likelihood of success and is it a good investment?

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I tend to ramble and spew my thoughts on business, entrepreneurship and technology, but I never really discuss my own business. Now is as good a time as any to talk about what we do and how we do it. 

The low-wage or non-professional job segment (think restaurant, construction, retail, hospitality workers…) in the United States represents about 25% of the total job market. It is growing at a faster rate and suffers from extremely high turnover rate. The jobseekers filling these positions tend to have lower levels of internet penetration and in many cases lack the English fluency required to use the mainstream job boards. Because of these reasons they tend to look for jobs the old fashioned way; classifieds, word of mouth and employment agencies (which charge jobseekers up to a full weeks wage up front to find them a job). 

This is a serious problem for employers because it means that they are also stuck using 20^th century tools to recruit for these positions and missing out on the efficiencies of internet recruitment. At HireWorkers.com we have developed a multi-lingual and multi-platform approach to this issue. Jobseekers can access our system in either English or Spanish (more languages coming soon) and interact with the service via the telephone or the internet.

In the past few months we have registered well over 25,000 jobseekers. Most of them have never used the internet to find work before.  By making our system accessible to the job seeking demographic, we are able to empower employers with a system that finally harnesses all of the efficiencies of the internet and provides a recruitment platform that is fast, simple and inexpensive.  That is in a nutshell what we do.

It has been an incredible ride so far and I look forward to many more late nights and long weekends of doing what I love to do – building companies and turning industries on their heads with technological innovations.  

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No one is infallible when it comes to business. I learned this lesson pretty early on when I started my first business. With the naivety of a college student, I approached DVA (my first company) thinking that business was like a mid-term or a final exam, and that success was clearly quantifiable and directly correlated to intelligence and hard work.

Business is impossible to predict, mistakes are expected, and success is a combination of hundreds of variables – some within our power and some not. 

With that in mind, it is easy to understand why the masters of business over at Wall Street place so much emphasis on diversification. It is definitely not for a lack of confidence in their abilities. They understand that mistakes are expected and success is impossible to predict; the more they spread out their risk the better the chances of riding the winners.

If risk is difficult to quantify for Wall Street which is dealing with established companies with recurring revenues, proven concepts, large customer bases, and experienced management teams, then it is beyond impossible to project at the start-up level. 

Because start-up risk is so volatile and difficult to predict that Venture Capital firms have become masters of diversification. They understand that a portfolio of one or two companies, even if they are the “next big thing” is crazy. Every single day incredible ideas are born and die and professional investors mitigate the heavy risk inherent in the game by diversifying into multiple positions.

So what about the entrepreneurs, us poor souls who invest our live savings, multiple years of sweat equity, 18 hour days, and shattered social life’s all for a single lottery ticket with such bad odds that even the very best of the best of investors aren’t willing to commit even 20% of their resources to? 

There is no conclusion to this post, only an open ended question that I am sure my fellow start-up founders can appreciate and relate to. We are so caught up in our own confidence that we are blinded by the realities of the space we operate in.

My only advice is that when starting a business, be careful not to commit yourself to a single aspect of your business. You will need to iterate and evolve, so don’t even start unless you can afford to fail a few times within your business. At the end of the day, this might be our form of diversification.

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Josh Kopelman at First Round Capital wrote a very interesting post about monetizing consumer internet services with a subscription model. He maintains that going from free to even one cent is such a large step, that most services should remain free and look for advertisers to subsidize their costs and generate revenue.

This is an interesting idea, and I wholeheartedly subscribe to the notion that charging even one cent is extremely difficult when you have a two tier model. At the same time though, I think the advertising game is a dangerous one for most emerging companies. Most web services currently sell standard advertising opportunities for between $1-3 for every 1,000 impressions. This means that a site with an average of 10 page views per customer is generating about 1 – 3 cents per user. So a company needs to scale their service by 200 times to generate the same revenue as a single customer paying just 2 dollars. That’s like going from 100,000 to 2,000,000 users.

The point I am trying to make is, not that advertising is a bad model, but that there are few web businesses that can attract such large volume of users to have it make sense. Depending on the business it might be easier to maintain a smaller user base and monetize them at 200 times or better than what advertising would bring – even if it means sacrificing 150 times more users.

Josh Kopelman cites Free 411 as an example of a service that grew to 5% of the total market by not charging. That’s great from a growth perspective, but the question remains: are they able to monetize that huge volume even remotely as well as the pay-for-use directories?

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I get a lot of business plans sent by friends and acquaintances asking for my opinion and it almost seems like it is an unwritten rule of the business plan to list “first to market” as a competitive advantage.  What a myth! Being first to market usually means that everyone else can copy your idea and improve on it, while you undertake all of the risk.

Alta Vista came before Google

Broadcast.com existed way before YouTube

Rio preceded the Ipod

Amazon wasn’t the first bookstore selling online

Friendster was first to MySpace’s second

These are just the examples that I can think of at the top of my head for the technology/internet space. There are hundreds of others. I would probably say that copy-cats have a better success rate than market innovators.

So where does that leave you and your brilliant innovative idea? Isn’t the internet supposed to erect natural monopolies because of a “network effect” and the centralization of information? How do you protect your business if being “first to market” is not enough?

Execution!!! Build out your idea in the best way possible, because even though being the first to market your idea isn’t enough, being the first to own your market is the real key.

The internet absolutely allows for very serious natural monopolies, but to enact them you need to own the market first. Meaning you need to be the top dog in your space, be the Google, YouTube and Ipod of your space. Because only by being number 1 can you enjoy the competitive advantages that come with the network effect.

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