Big Business; Small Results

According to Crain’s Detroit, there was an announcement of financing a 1.6 million square foot sports entertainment center by Metro Sports LLC. The problem is they don’t have a piece of land yet. According to Crain’s even though there is pretty of land out there and this is a buyers market, once a plan is financed there can be a lot of tugging in different directions as to where the project should be built. The development would include a 12,000-seat arena, three basketball courts, four hockey rinks, a running track, indoor lacrosse, physical rehabilitation center and two IMAX theaters.

Although it sounds like good intention, the whole thing sounds like a debacle to me. First, the developer is a first time developer, formerly CEO of what Crain’s called a “now-defunct” computer company. Second, the initial marketing information for the project was announced for a piece of land in Romulus, when asked the owner of the parcel said there is no such purchase agreement for the property. When the development was announced the invitations said Granholm and Wayne County Executive Ficano would be there, neither of them were. And all this for a $167 million development. I think Jordan will show them up with $500,000, but we’ll see.

http://crainsdetroit.com/assets/PDF/CD25004812.PDF

Power Up

As Michigan strides forward in its quest to become a leader in alternative energy, an old cat has come scratching at its door. According to the Detroit News, Marathon Petroleum has Detroit in its cross hairs for a $1 billion upgrade. According to the News, this advance would create approx. 135 jobs and allow Detroit to process Canadian crude oil.

This would bring over 1,000 construction jobs to the area and should be finished by 2010 if Marathon chooses to move forward. The improvements would bring an additional 15,000 barrels of oil into the facility and would increase Detroit’s oil supply. Marathon is in talks with the City of Detroit in order to get tax breaks and plans on making a decision within a year.

Bottom line this sounds like good news for Detroit. More jobs and more fuel. What more could a city ask for? As alternative energy grows, it’ll be useful to have skilled energy workers who may more easily be able to fill those jobs.

http://detnews.com/apps/pbcs.dll/article?AID=/20070810/BIZ/708100383&theme=Autos-Gas-prices

http://www.crainsdetroit.com/assets/PDF/CD23965729.PDF

According to Crain’s Detroit, Wal-Mart is planning to open 19 new stores throughout Metro Detroit. Sadly, no plans are in motion to put one within city limits. According to the article this move is going to mean a lot more competition for mid-west based Meijer, Kroger as well as smaller grocers in the area. The article states, this will not be the end of the local grocery stores, but it will definately take a small percent of their market share.

Back to the no Wal-Mart in Detroit issue, aka the important stuff. According to an adjacent article in Crain’s, Wal-Mart claims they are looking at the opportunity but they are in the early stages. Surprisingly, Wal-Mart is not completely heartless, they set up a Jobs and Opportunity
Zones Initiative. Sadly, they are somewhat heartless though, although they set up this program Detroit is no where to be seen in it, even though the city has expressed interest in the initiative. Cities like Chicago, and Cleveland are on this list, but no Detroit. According to the initiative the program is for cities with high unemployment and high crime…but no Detroit?

Chysler on Crack

Everyone thought Hyundai was crazy. A 100,000 mile powertrain warranty was completely unprecedented. That crazy marketing scheme combined with a confidence in the quality of their vehicles (as well as actually creating a quality vehicle), helped push an obscure Korean car company into a legitimate player in the automotive industry that years later other car companies had no choice but to follow.

Now the slightly less obscure American car company, Chrysler, has upped the ante. A lifetime powertrain warranty. According to the Detroit News, this will take place on their 2007 and 2008 gas powered cars. The only catch is the warranty is only available to original owner or leases of the vehicle. According to Chrysler the car has to be inspected every 5 years and the average car owner gets a different car every 5 years, which would void the warranty.

My opinion: Bad Move. Penny pinchers and cheapos the world over will be grabbing up these cars in hopes of purchasing their final car. I think that 5 year trade up will change with this warranty. Maybe this is a good move though. Cerberus is in this to make money, not neccesarily cars. This crazy move could boost sales for the next 5 years making Chrysler an industry leader. They sell and dump the problem on an over zealous new buyer to inherit the unsuspecting years of what I can only imagine as debt.

One small step…

According to the Detroit Free Press, Mascoma, a Boston based alternative fuel company has secured a deal to move to Michigan. The announcement was made with excitement by both CEO of Mascoma Bruce Jamerson, as well as Michigan’s governor Jennifer Granholm on Thursday. Granholm for some time has been leading the way in trying to make Michigan a leader in alternative energy to support the struggling economy left broken by the auto industry. “This is a sector that Michigan can lead the nation in” Granholm stated.

Mascoma, unlike many ethanol producing companies, is using trees and timber waste to produce ethanol in a world where corn is king. Jamerson, who himself is a Michigan native, stated “This is really cutting edge.” But alas, tree huggers don’t fret, according to the forestry department the trees will be well managed and replenished to preserve the environment.

Could this be Michigan’s new major industry? Hopefully not. I don’t see anything wrong with Michigan being a leader in biofuel, but the old one trick pony economy is outdated (I thought we would have learned that in the coal mining days). While this advancement can be beneficial to the state, hopefully it will be in attracting more businesses to the area with innovative ideas and last but most important great people and great cultures.

Sold!

Robert Kiyosaki, America’s favorite rich dad, says he’s often asked how to raise money by people, according to a recent article in Entrepreneur magazine. Time and time again he tells them they need to sell. According to the article, Kiyosaki deferred his dream of becoming an entrepreneur after coming out of the Marines for 4 years while pursing sales training at Xerox.

Kiyosaki realizes that many people hate the idea of sales. There are too many stereotypes to list that usually go along with sales people, and sadly most of them are not too flattering. For this reason many people avoid selling at all or convince themselves their jobs don’t require sales. Kiyosaki boldly interrupts by saying, “Entrepreneurs can’t afford this luxury.” He goes on to describe how his rich dad told him that there are 3 types of people entrepreneurs need to sell to: employees, customers, and investors. And there are three sources of income: employees, customers and investors. He wraps up the article by drilling in that selling is the most important skill of an entrepreneur.

Interestingly enough, I agree. This article in no way came as a shock to me. Maybe only possibly a shock that it even needed to be written at all. I strongly believe that the ability to sell and network are hands down the most important skills any entrepreneur can have. I’m open to argument, but unless you argue leadership I won’t even hear you. Leadership in my opinion is a close third, but only because if you can’t sell you won’t even have people to lead. And if you can’t network good luck finding good people skilled enough to be worth leading.

MEDC and Me

According to Crain’s Detroit, on May 1, Crain’s had a roundtable meeting with the Michigan Economic Development Corp. (MEDC). In the meeting there were CEO’s and Presidents from small businesses from industries ranging from publishing to IT and they were all there to talk about supporting entrepreneurship.

According to Crain’s Detroit, The MEDC is in strong support of entrepreneurship in the state for a variety of reasons right now. Two major reasons are: over 50% of Michigan workers are employed by small business and well over 90% of all job growth is through small business currently. The MEDC,  much like most of Michigan is realizing the state can no longer depend on the Big three to do much more than take a big #2 on the city, according to John Hughes (who sadly was not quoted in the article).

A big issue that came up in the round table discussion was a lack of bank funding. The article discussed how 50 years ago the bank would lend money to small business and if they went up and smoke, the bank could take that matches that started the fire and any other assets the business had such as machinery and heavy equipment. Now if a company goes up in smoke, their assets pretty much go the same route. With much of the focus of modern business being on information and service rather than production.

  

$100 million for me?!…Sort of

According to Crain’s Detroit, Detroit Renaissance Inc. has announced a $100 million entrepreneurship fund up and available by the first quarter of 2008. According to the article it will be a fund for venture capitalist to support their investments. The funds will be focused at South East Michigan, but will be available throughout the entire state.  This fund is partly in place because many venture capitalist firms have complained that sources of funds such as universities have ignored Michigan VC’s and put money into many out of state firms. According to the article currently less than .5% of all U.S. VC money is spent in Michigan based business.  All and all I think this is an interesting development. Upon first reading the headline I thought a VC firm was offering 100 million to local businesses. Interestingly enough it is a fund of funds, as the article calls it. I was weary of that as I first dove into the explanation, but upon further evaluation I think it makes since for Detroit Renaissance to know its role and not to try to be a VC firm if it’s not, but to direct the money to VC firms that do know what they’re doing.  

Myface.com

Facebook.com began as the online social network for college students. It was characterized by it’s clean appearance and spam-free enviroment. It was the oasis from Myspace that college students were looking for. Was…was….were.

Facebook is changing. In the later part of last year, uproar flamed across the network as the simple college social network opened it’s doors to everyone and began to become more complex. Now facebook.com has announce they have opened up the site for developers like you and me (ok maybe you, but definately not me) to build applications that interact with the network.

There are already applications that can connect facebook to your instant messenger and share your music with your friends, and facebook will even allow companies to make money off of their applications if they choose. Now the question is, is that 22 year old idol to internet entrepreneurship, Mark Zuckerberg, a genius or too big for his barely of age britches.Sure options are cool. Adding video to myspace pages almost on its own changed the landscape of the internet helping throw youtube into the spotlight. But is facebook stepping away from its core going to do more harm than good?

http://www.themoneytimes.com/articles/20070525/facebook_unveils_platform_for_outside_developers-id-104121.html

Stamp Prices

Once again the price of stamps increases. It makes me wonder if the post office has any direction it’s moving in or if they’re just trying to stay afloat. The post office seems to be behind the market in new offerings such as package pick-ups and shipping of bulk items (Services that make up a large amount of there revenue). Yet they seem to be canabalizing their USP (unique selling proposition). The USPS is the only major service that provides first class delivery of simple mail and as in so many of our book clubs books suggest, they need to stay close to their core. Understandably, the Internet has taken a large market share away, with email, blogs, and online magazines, but still their are certain situations were a physical letter needs to be sent. Why are they letting FedEx out do them with overnighting these? Why do they keep making it harder and harder to mail a card to a friend? Maybe there is some strategic reason that the USPS is trying to keep people away from mailing letters, but it looks like to me, with this rise in the cost of stamps they’re just scrambling for pennies. Two to be precise.