Jason White in Northwest Alumni Magazine

Dr. Jason White, Principal and Director of Investments at Family Investment Center and Associate Professor of Economics at Northwest Missouri State University, was recently published in the university's alumni magazine. In the article, Jason reflects on his experiences as founder and faculty adviser for the school's Students in Free Enterprise (SIFE) team and the importance of a free enterprise capitalist society.

Click here to view the full article.

On Entrepreneurs: Social Network Movie is Both Entertaining and Thought-Provoking

Dan Danford, MBA, CRSP®
Family Investment Center

The late George Carlin was a favorite entertainer. He was blessed with a unique life perspective, and his genius for wordplay offered an enormous creative platform. Most anyone from the 1970s can recite verbatim bits from his wildly successful comedy albums.

George had some anger, too. He often poked fun at sacred cows – using biting commentary towards religion, politics, and corporate America. He was counter-culture in almost every way, and he made us laugh as he skewered many of the authorities and things that made America great. He’s renowned for, among other things, being the very first host of Saturday Night Live.

This is a classic entrepreneurial parable.

I thought about George while watching The Social Network. Mark Zuckerberg, the guy who created Facebook, shares a few quirks with Carlin. First, his personality is unique to the point of being antisocial. Second, his genius is unquestionable. Third, there’s an anger simmering right below the surface.

This whole Facebook story is pretty entertaining. I love entrepreneurs, and this is a classic entrepreneurial parable. It plots an unlikely hero against a host of challenges, and – against all odds – he meets with remarkable business success. It’s the same inspiring story of Bill Gates or Oprah Winfrey or Howard Hughes, from an earlier era.

You watch this movie unfold and wonder if Zuckerberg’s hilarious awkwardness fuels his unique genius. Maybe the miracle of Facebook grew from Zuckerberg’s personal deficits. Perhaps the real purpose of Facebook was to reject authority on every conceivable level. He sure tries.

I genuinely wish I knew this guy. He’s portrayed as an angry geek who torches his only friends. Along the way, he creates a $25 billion dollar company, and changes the Internet landscape forever. Possibly the world’s landscape, too, for that matter. There are now over 500 million Facebook users worldwide; more than the populations of any countries in the world except China and India. The Facebook community is now the world’s third largest nation!

You don’t get to 500 million friends without making a few enemies.

There’s another lesson in this story, as well. It’s a sidebar to every successful entrepreneur’s tale. It chronicles the rocky road from admiration to dismay to outright contempt. We love to publicly celebrate business success in America; it’s a lot less tolerable when it involves our personal friends and acquaintances.

Zuckerberg is plagued by people who want. He is the figurative goose who laid a $25 billion dollar golden egg, and various friends and acquaintances want some. No matter the legal grounds (documented in the movie, and elsewhere), none of them makes a serious claim to his tech skills, thought processes, or vision for Facebook’s incredible success.

It’s not that they didn’t contribute in some ways, just not in similar proportions. To me, that’s the tragedy. In America, guys who don’t deserve it can still collect an awfully big payday. That includes your former friends, if you are Mark Zuckerberg.

The Movie’s Trailer: http://trailers.apple.com/trailers/sony_pictures/thesocialnetwork/

It’s important to note that this movie was not authorized by Mark Zuckerberg and did not have his cooperation. He claims that it is inaccurate in a variety of ways. See
http://www.cbsnews.com/8301-501465_162-20019824-501465.html
for Zuckerberg’s comments.

Partnership Agreements: Necessity in Small Business

By Dr. Jason White
Director of Investments, Family Investment Center

Many of us at one time or another during our careers are bitten by the entrepreneurship bug. Some will be successful, while others will not. Nationally, the sobering statistics are more than 60 percent of small business start-ups fail within the first five years of operation. The most common reason for failure is that the firm/owner runs out of working capital (money) before the business begins to make a profit.

Forming a partnership can help ease the individual burden of working capital contribution, as two or more partners can fund a business start-up with less personal financial pain than a single owner.

That said, anytime a business partnership is being contemplated, prospective partners should never go into business together until the details of their partnership have been hammered out. The document to accomplish this is commonly know as a partnership agreement.

Most attorneys with business law experience are easily able to provide prospective partners with a template outlining their rights and responsibilities to the business, and one another, for a reasonable fee. In my experience, you should NEVER enter a business partnership without first making such an agreement. Unfortunately, this is something I have learned from the school of hard knocks. The following is a list of basic items that should be covered in most every general partnership agreement.

Of course, the agreement should list all the “particulars” about the owners of the prospective business, including spousal information. The document should list the name, address and social security number for each partner, along with any other aliases, maiden names, etc.

The partnership agreement should discuss generally the purpose of the business partnership; the date of formation of the partnership; and the anticipated duration of the partnership, especially if it is to be for a finite period.

The agreement should nail down exactly how profits and losses will be shared by the partners, and how much capital each partner is contributing to the enterprise. It is a good idea to also codify how additional capital contributions will be treated. Will these be treated as loans from partners, or will additional contributions change the ownership structure of the firm?

The agreement should address what happens in the event of major changes to the partners, such as death, divorce and disability. What if one partner wants to sell his/her interest a few years down the road? What is the method for calculating the value of that interest, and do the remaining partners have first rights to buy the exiting partner’s interest before it is offered to an outside party?

The agreement should also be as clear as possible regarding the duties of each partner to the partnership, and how business disputes are to be resolved in the event of disagreement.

Dealing with these sorts of issues is much easier to do before a new partnership is formed than somewhere down the road when a pitfall occurs. I have seen, and been involved in, partnerships where the partners began the business as the best of friends and ended up as mortal enemies. A solid up-front partnership agreement can provide a road map to partners having to navigate these sorts of trying times.

Magic words for business: Crush It!, a book worth reading

By Dan Danford, CRSP
Family Investment Center

This book was recommended by Dodie Jacobi, a respected business consultant in Kansas City. She suggested that it offers great insight into the social media environment, and is an easy read, too. If you own or work in a smaller business those are magic words: helpful and easy. I bought Crush It! that same day. I read it the next weekend.

I agreed to “lead” a discussion on this book blog because Dodie was right. Gary Vaynerchuk is a compelling character. His story is unique and wonderful. He used social media and other resources to crash one of the most exclusive parties in the business world – the wine industry. His fresh approach, enthusiasm, sincerity, and (yes) charisma allowed him to jump multiple rungs of the success ladder. That’s what any of us want, right?

And his story is not just about marketing, either. I know my way around marketing, and another marketing book isn’t necessary for my personal library. Gary’s approach blends both life and business lessons, along with a bit of Zig Ziglar or Dale Carnegie. Why Now Is The Time To Cash In On Your Passion is the book’s sub-title and Vaynerchuk clearly thinks that’s the important theme for success.

His three simple rules appear on the book’s second page:

• Love your family.
• Work superhard.
• Live your passion.

Now, the business implication is that social media and networks create the perfect opportunity to live your passion. Whether it is wine, motorcycles, or personal finance (to randomly select a few!), there is a community of like-minded people seeking expert commentary. And, since you are passionate about it, you can find an audience. Eventually, that audience can be lucrative enough to pay your bills.

Chapter Two’s lesson is that our personal uniqueness is an asset. I really enjoyed this chapter because Gary talks us through his personal story. In some ways, it’s the perfect American tale, from immigration at three years old, to eventual status as “Social Media Sommelier” (ABC News) and Wayne’s World Wine Aficionado (nightline). Like most success chronicles, it’s a great story and it makes fun read.

Chapter Three is – in many ways – the essence of this book. “Developing your personal brand is key to monetizing your passion online.” In the author’s case, that meant offering truthful information about wines in easy-to-understand terms. If you’ve ever browsed a wine store or bought a traditional book about wine, you understand how refreshing that is! You also understand why Gary Vaynerchuk has become so successful.

The point is that almost everyone has similar opportunity. We all care about different things and we all bring unique perspective to them. And we all have the ability to communicate that perspective in a variety of ways. We can write, talk, act, speak, or even create original art to share our message. And, if we are passionate enough and work hard enough, we can prosper because of it.

We'd love to have your thoughts on this great book. We've started a second blog for dicussion of business-related books, called Beyond the Bookshelf, and you can find it here. Please click on the link and comment there (same post content) if you'd like to tell us what you think about Crush It!

Here are a few questions for consideration:

1. Think about a successful person you know. In a few words, what is his or her passion?

2. How about Bill Gates or Warren Buffett? Again, in a few words, what separates them from others in their field? Describe their personal brands.

3. How does the Steve Jobs personal brand differ from Bill Gates?

4. If you achieved international success as a businessperson, how might people describe your personal brand?

Entrepreneurship matters

By Dan Danford, CRSP
Family Investment Center

Sometimes, I run across a thought or quote that's just too good not to share. Here's something I spotted in the latest issue of Ingram's business magazine that I wanted you to see:

The Promise of Entrepreneurship

“The importance of entrepreneurship can never be overstated. We have seen that, over the past three decades, nearly all new job creation has been generated by new and young companies. We shouldn’t pretend that every new company will succeed, let alone be the next Google. But by increasing awareness about the promise of entrepreneurship for everyone, and reducing the costs and barriers to starting and growing a new company, we can boost job creation and economic growth overall.”

Carl Schramm, President and CEO, the Kauffman Foundation
Ingram’s Magazine, April 2010