High Net World Magazine

LINKING ENTREPRENEURS & INVESTORS UK-WIDE £2.95

MIKE WILLIAMS:THE TECTONIC SHIFT NOWUNDERWAY Page 9

FORBES VIEW:PATIENCE IS AN INVESTORVIRTUE Page 7

WILLIE MALTMAN“EUSTRESS” STRESS; THE NEW NORMAL Page 36

IN THIS ISSUE

Also inside:

FEATURE:8 GREAT BUSINESSIDEAS FOR 2013

SOCIAL MEDIA:THE No1 THING EVERY EXECUTIVE SHOULD UNDERSTAND

INTERNATIONAL FOCUS ON…e-COMMERCE TRENDS IN CHINA

WHAT ENTREPRENEURSNEED (WEN):GETTING INSIDE AN INVESTOR’S MIND

WHAT ANGELS WANT (WAW):PINTEREST UP, ZYNGA DOWN

RICH VERSUS KING

Figuring Out Which Matters More To You

STEEL’S POINTS OF FEW:BETTER THAN YOUR AVERAGE...JOEJAN/FEB 2013

“As entrepreneurs we understand that our biggest risk will always be the

performance of our business.”

Martin Cook B.Acc.C.ADirector

“Paying tax at 50% is optional”

Your part-time, commercially focussed Finance Director.Providing accounts and tax solutions for contractors and consultants.

Pension led funding for growing your business may be the answer (see page 35)

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WHEN it comes to huge live events like the American Super Bowl, what’s the biggest difference between TV advertising and advertising on social media channels like Twitter?

Despite some 24.1 million posts on Twitter – up 13.7 million on last year – during the annual Americana “Big Game” fest we’re still nowhere near seeing the seven-year-old company’s ad revenues approach those achieved by the traditional mainstay of television.

Similarly, TV ratings are exponentially higher than second screen social media, with an average of 108.41 million viewers who tuned in to Super Bowl channel host CBS to watch the Baltimore Ravens defeat the San Francisco 49ers.   That’s compared with 111.3 million a year ago when the New York Giants defeated the New England Patriots on NBC. CBS said it was the third-most-watched program in television history.

And advertisers paid $4 million on average for a 30-second spot during the game.

There’s certainly impressive Twitter-style growth in activity for events of this type but where’s the strength, financial or otherwise, in the social media advertising and messaging world?

Personal engagement, permanence and signposting are issues that TV has yet to, or perhaps ever will, overcome, while all this noise we’re making on the Internet remains; pulling and pushing our searches back to brands, websites

and purchasing options perched in a hungry cloud.  

While extremely lucrative for Super Bowl channel host CBS the ads disappear quickly from our screens into the repository of the Internet like Hansel and Gretel’s breadcrumbs in a dark wood once the advertiser’s budget dollars have run dry.

The Fork In The Road

And therein lays the clarity. Social media and TV are perhaps not, as often suggested, a technological fork in the road where we must choose one direction over the other.  The two are more like merging slip roads onto the same information, entertainment and commercial superhighway.

Eileen Brown at ZDNET wrote: “Even watching TV has become a multi-tasking activity. We have one eye on the show, and the other eye is glued to Twitter or Facebook. We watch the social channel on our second screen avidly to see what our friends think about the show.”

So What About The Twitter Pound?

Super Bowl XLVII, like the London Summer Olympics and the U.S. presidential election, was yet another moment in which Twitter became the platform for millions of people to share quick reactions and participate in a massive, public conversation.

The company does make money by charging advertisers to promote

individual tweets, accounts or trends designed to spark a conversation. Research firm eMarketer estimates that Twitter will book advertising revenue of $545.2 million this year, up 89 percent from 2012. Next year, worldwide ad revenue is expected to hit $807.5 million, a 48 percent increase from 2013.

The Market Rub

But a report by Greencrest Capital who studies near-to-IPO businesses suggests Twitter’s preparations for its public debut may begin this year, with an initial public offering in 2014 expected in the range of $11 Billion. It’s yet another example of ridiculous stock market valuation versus revenue reality. Pity the market-sentiment-fuelled investor crowd.

And here’s the ultimate rub; Twitter has yet to show advertisers that it makes sense to pay to promote their tweets, as fans are likely to spread the catchiest slogans on their own, free of charge.

So while social media is succeeding in grabbing the big game media spotlight over TV, the revenue and audience numbers remain irreconcilable differences. And the score isn’t even close.

1

EmersonHNW Magazine Editor

Twitter GrabsBig Game Spotlight,But Not £££

HNW MAGAZINE JAN/FEB 2013THE EDITOR

REMOVING THE BARRIERS TO HIGH-GROWTH

CONTENTS

P.5 HEAT: The High-growth Entrepreneurial Action Team

P.6 Steel’s Points of Few: The Future Is Electric, Not Orange

P.7 Forbes: Patience Is A Virtue

P.9 Williams: The View From Manhattan

P.12 The Networks: HNW’s Distribution Partners

P.14 Angel News: Pinterest Up, Zynga Down

P.15 Angel News: Getting Inside An Investor’s Mind

P.17 Alan Steel: Better Than Your Average...Joe

P.20 WAW: The Top 20 Most Successful Tech VC Firms

P.21 WEN: Blogs Every Entrepreneur & Investor Should Follow

P.23 IBIS Report: 8 Great Business Ideas for 2013

P.26 Feature: Rich vs King by Noam Wasserman

P.29 HEAT Scotland 100

P.31 International Focus On...China

P.32 Practical Business: HR, Social Media, Pensions & Coaching

Published by HNW Magazine Limited. Registered Office 33 Oldwood Place, Livingston, West Lothian EH54 6UJ. The views expressed in HNW Magazine are those of invited contributors and not necessarily those of HNW Magazine Limited. HNW Magazine Limited does not endorse any goods or services advertised or any claims or representations made in any advertising in HNW Magazine, and accepts no liability to any person for loss or damage suffered as a consequence of their responding to, or reliance on, any claim or representation made in advertisements appearing in HNW Magazine. By responding or placing reliance, readers accept that they do at their own risk. Reproduction in whole or part is forbidden without the written consent of the publisher HNW Magazine Limited.

©2012 HNW Magazine Limited.

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Alan Steel Asset Management is authorised and regulated by the Financial Services Authority registered in Scotland No. 58014 / VAT registration No. 446593714 / Nobel House, Linlithgow, EH49 7HU / Fax: 01506 845074 (1Assumes annual charge of 1% and 2 x 6 monthly portfolio rebalances at cost of 1%. (2) Source: ASAM (3) Source: Moneymarketing magazine. (4)Source: ASAM.

The annual growth your investments and pension fund have to achieve each year to simply cover the total annual and switch fees now charged by many wealth managers.(1)

The maximum annual management fee charged by Scotland’s’ largest independent wealth manager – Alan Steel Asset Management.

The fees imposed by Alan Steel Asset Management on all portfolio and pension fund rebalances and fund switches.(2)

The percentage of existing Alan Steel Asset Management clients who would recommend our wealth and pension management services to a friend or a family member.(3)

The number of times Alan Steel Asset Management have been voted “Best UK independent investment advisers”. This is more than any other Wealth manager in the UK.(4)

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• HEAT is a unique UK-wide event programme designed to help established entrepreneurs overcome barriers to continued high-growth.

• HEAT entrepreneurs run scalable businesses and have outgrown their start-up stage support structures.

• HEAT events provide the professional advice, development insights, coaching and mentoring, sales and marketing, financial/investment and training input that each rotating group of 20 entrepreneurs has identified as areas of need.

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About HEAT Scotland

HNW Magazine’s HEAT Scotland 2013 programme will deliver four events in Edinburgh/Glasgow in the months of April, June, September and November with up to twenty “next-stage” entrepreneurs attending each discussion.

The HEAT Scotland entrepreneurs have been carefully selected by HNW Magazine as they are actively seeking support and guidance in the following areas:

• Financeandinvestment

• Salesandmarketing

• Educationandtraining

• Coaching/Mentoring

• Legal(employment,companystructures, internationalisation)

• Accountancy(funding,investment, tax)

HEAT launched in Scotland in September 2012, a concept created by the Harvard Business School in the mid-1990’s to support established scalable companies succeed through common barriers to high-growth.

The High-growth Entrepreneurial Action Team 2013 HEAT Scotland Event Series

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HNW MAGAZINE JAN/FEB 2013

Tesla Sports coupe, battery powered, zero emissions, travels 300 miles on one charge, and accelerates faster than a Porsche Turbo.  Battery technology is advancing so rapidly that it won’t be long before you can recharge as quickly as put 300 miles worth of petrol in your tank.

The future it seems is electric, not orange.

Bonds To Equities?

As to the debate about Bonds being dumped to flood into Equities...hmmm.  But what I can tell you is that Ned Davis compares the value for money between long term interest rates and shares, and reveals a striking resemblance between now and 1941/2. Back then, after a similar deep financial crisis, equities significantlyout-performedbonds(orGilts if you prefer) for the next 20 to 30 years.

But it did not happen overnight!

That said, I bet that 5 years from now you’ll be glad you stuck by your equities, and that your US holdings will have made the difference.

IF you’ve never heard of Ruchir Sharma it’s time you did.  Ruchir is Head of Global Macro and Emerging Markets at Morgan Stanley in New York.  In his search for where the smart money is heading next he believes it’s critical to avoid headlines, concentrate on independent research, then confirm what’s actually happening on the ground.

So that’s exactly what I’ve been doing while on holiday in Florida’s Anna Maria Island for the last 3 weeks.  Apart from speaking to business owners, I spent a day with four of the best independent economic analysts in the world, at Ned Davis Research in Venice...no, not the one with canals, the one on Florida’s Gulf Coast.  

And the good news is they are all confident the world is fixing its problems.

On The Ground

I’ve met pessimists and optimists, studied screeds of technical data, listened to talking heads on US telly and used my eyes “on the ground” as Ruchir suggests.  And while all this was going on World stockmarkets have defied gravity.  January 2013 was the best US stockmarket performance since 1997, with the broad based S&P 500 Index up over 5%, despite Apple’s share price collapse.

Incidentally Apple made oodles of profit, has $137 Billion in the bank, and if it were a country it would be the 45th biggest in the world, bigger even than New Zealand. 

America Re-Emerging?

Emerging Markets is the latest hot tip, and headlines obsess about “The Great Rotation”; dumping Bonds to buy Equities. I reckon a decent rule of the

road would be to back the US as a re-emerging market.  Surprise, surprise.

Somewhere in the world there’s a place boasting the biggest Walmart, petrol station and McDonald’s.  Where do you reckon that is?  New York?  Mexico City?  Beijing?  Mumbai?  All wrong. They’re all in Willieston, North Dakota, population 100,000. The Bakken Valley there is the hub of new oil and gas discoveries that are making the US into a world leader in energy production and exports.

Additional US game changers abound; positive demographics, incredible technological advances, and a record number of patents were registered last year, more than the rest of the world added together.

Consider 3- D printing. NASA is talking about sending one to the Moon to use local materials to build structures capable of housing scientists.  A company in Minnesota is using 3D printing to build a car that travels 70 miles on a gallon of petrol, and is built to last 35 years.

Outside a restaurant one night sat a California made

STEEL’S VIEW

Alan Steel, Chairman,Alan Steel Asset Management

Steel’s Points of Few:The Future is Electric,Not Orange

Consider 3- D printing. NASA is talking about sending one to the Moon to use local materials to build

structures capable of housing scientists.

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HNW MAGAZINE JAN/FEB 2013

approximately 70% of the companies the fund holds are at the early stage in the recovery cycle and, as such, their share prices have not yet benefited from their progress.  I should point out that the fund is the very epitome of long term investing having been launched in 1969 and having had a total of only four different managers in that time! What this shows is that sometimes the answer can’t be found by looking at the finance websites, Twitter or Facebook. When we allow ourselves to be bombarded by instant information we are in real danger of not being able to see the wood for the trees. The short-term investor gets spooked and never realises the long-term investment benefits. I read recently that one of the growing developments in the psychiatric world is dealing with information addicts who cannot cope without having access to their smart phone, tablet or laptop. Retreats are even being built that to allow them to detox. 

Judging by the teenagers I see these days, that looks like a business with great long term potential!

THE constant stream of information is getting out of hand.  The TV news channels are battling for our attention, and a myriad of websites are competing for our clicks.  This strange need to be informed at all times means more and more drivel being produced, and an increasingly difficult task to differentiate between items that matter and those we can safely discard.

For example, every day when the Stockmarket opens it is going to be either up or down.  But nowadays we need to have a reason why the FTSE100 is up or down 5 points.  So some poor hack has to dredge up an explanation for this, but within seconds of posting on a website the market has moved in the opposite direction.  This constant need to feel “informed” is nonsense and often forces explanations when none really exist.

This is definitely the case when it comes to investing.  Everyone knows that owning shares, or funds that invest in them, is a long term strategy.  But our actions appear to be at odds with

this. The average length of time that investors now hold a share is now down to 6 months compared to over 8 years inthe1960s(sourceNYSE). Short-termism leads to volatility and unjustified movements in share prices even on the smallest piece of news.

Predictions Conflict with Profits

Anyone who has owned or managed a business will know that when a company reports earnings of 9c per share, rather than the 10c that was predicted, they can expect to see a significant fall in their share price. It’s ludicrous but true.

A couple of weeks ago I had a meeting with Tom Dobell, the manager of the M&G Recovery Fund.  As the name suggests, Tom’s fund invests in companies that have fallen out of favour and are experiencing problems, but which also exhibit recovery potential.  These shares are held through the different stages of the recovery cycle until their turnaround is complete.  On average this takes between 4-5 years and means that year on year there is little change in the make-up of the fund, other than the companies within it being at different stages in the cycle.

This also means that some years the fund will underperform. Last year was one such year, however, the reason for this underperformance is due to the fact that

STEVE FORBES

Steve ForbesAlan Steel Asset Management

Forbes:Patience IsA Virtue

WOW, Shergar’s body was found under a Leicester car park and Richard the Third turned up in a Findus Crispy Pancake! Or was it the other way round?

ALL OF THE INFORMATION

WHAT YOU REALLY NEED TO KNOW

9

HNW MAGAZINE JAN/FEB 2013MIKE FROM MANHATTAN

MIKE WILLIAMS:THE VIEW FROM MANHATTAN

Tectonic Shift –UnderwayYES, I know there’s been a great deal of chatter about energy, and much lip service paid to reports about the US finding more oil. The press has not done a spectacular job, however, describing just how significant and beneficial this shift really is. And it’s all happening under the surface, away from the spotlight.The below charts are from Dr. Ed Yardeni and his team:

Thefirstchart(above)showstherapidincrease in oil output from the US and Canada in recent months. But what it does not show is the pipeline of projects

underway – some only a few months or quarters from adding more fields of production – which are set to significantly augment this production trend.

But if you assume this pace will level off shortly you will be proven wrong, as the secondchart(below)beginstoweavethestory of the tectonic shift unfolding in North America. It’s a change few have allowed for in the chatter about the alleged economic end of the world dead ahead:

The above shows the output of Saudi Arabia....the King of Middle East oil. It has been a story for so long in our lives that the idea of it falling into the dust bin is simply...well... ludicrous. Not too fast, indeed.

Study that second chart closely. Notice that they have cut their output by over 1.1 million barrels a day in the last quarter....just as our output has been ramping up in the shadows of little real press about the topic.

Understand that it’s better to keep you afraid of the future, and far more profitable at the pumps.

But I digress.

Massive Change...Many Channels

It’s important to get in touch with what this data is now telling us. Clearly, the Saudi’s

output is being cut to support prices. Now re-read that sentence. They have to reduce their output to keep prices up. And that will work for a while....but not forever.

What do you suspect they will do a year from now? Two years? Five years? It’s like the never-ending rally in bonds which has covered 30 years and swept trillions into the bin based on historical assumptions which cannot, in anyway, be repeated. That second chart needs only has a few of those 1MM barrel clips downward before the entire world changes indeed.

Who Is The Winner?

The good ole’ USA; that dustbin of a country which cannot seem to get out of its own way, and where everyone assumes the dollar has been crashing for decades - it actually stopped going down over 5 years ago and has been in a trade range since. It’s also the place that cannot seem to get its finances straight and which has “existed only because the Fed is printing funny money....

Yup, that’s the place. Now imagine for a moment a time in the near future when the Middle East will need to make another million barrel a day cut....and then another. Look forward to 2018 when the US doesn’t need any Saudi oil. Imagine 2020 when America is not only filling its own needs for energy but is now supplying the globe with its excess.

There is a logical conclusion that the US trade deficit will be reduced, and along with it all that chatter about China ruling the world.

Consider the following from the US Energy Agency: “Last year, the petroleum-

Mike Williams

Par Equity invests in innovative young companies with high growth potential. Our approach is hands-on, investing where we can add value through our Par Advisers, deploying intellectual as well as financial capital. We offer qualifying investors access to both EIS and conventional venture capital collective investment vehicles.

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Par Equity invests in innovative young companies with high growth potential. Our approach is hands-on, investing where we can add value through our Par Advisers, deploying intellectual as well as financial capital. We offer qualifying investors access to both EIS and conventional venture capital collective investment vehicles.

To find out more please contact either Paul Atkinson at paul.atkinson@parequity.com or Paul Munn at paul.munn@parequity.com or call +44 (0)131 556 0044.

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Par Fund Management Limited is authorised and regulated by the Financial Services Authority. Funds managed by Par Fund Management Limited are available only to elective professional customers, who are able to invest in unregulated collective investment schemes. Retail investors will not be eligible to receive information about, or to invest in, such funds.

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HNW MAGAZINE JAN/FEB 2013

related trade deficit totalled $265 billion and accounted for 42 percent of our total deficit in goods. To put this in more personal terms, $265 billion averages to about $850 for every woman, man and child in the U.S. So in 2008, when oil prices hit their all-time high, the petroleum-relateddeficittotalled$386billion(over$1,260 for each person). That’s a lot of money flowing out of the country for a commodity with a volatile price over which we have little control.”

Sounds terrifying right?

So what if it all changed. What if we cut it in half...and then we needed no imports? Can we fathom the impact of crude oil at $50 a barrel again...or gas at say $1.75 a gallon....for good?

It’s a bottom line tectonic shift when a massively improved, more energy efficient Detroit collides in real-time with the just as massive wave of energy spewing from every crack and crevice we can find in the US.

In the summer of 2008, just as oil hit $147 a barrel and the press cycle was assuring us our twilight was here and $300 oil was on the way, we wrote a piece called: “Crude Crisis or Financial Terrorism?”

In it we commented:

“As much as everyone is now convinced we should be terrified of rising oil prices and the sabre-rattling from Iran and Columbia now getting so much press, we think the end game is a bit different. In fact, our contrary (crazy)thoughtsgomorein this direction: In the next decade, the US will take this problem and find more oil here than you can imagine. That response will cause the dirty little secret about the Middle East which few ever consider. That is you might ask? There are only two things in the Middle East...oil

and sand...and you can’t eat sand. Hence, when we take the oil demand out of the equation, they have nothing of value left.  The sabre-rattling will end badly....with a whimper not a bang.”

Imagine the cost reductions in ending the need for being the policemen of the world, the lives we won’t have to risk, the dollars we won’t spend and the massive wealth we’ll stop exporting out of the country.

We’ll again see the long forgotten and much maligned impact of “trickle-down economics”.

Crazy? But That’s How It Goes

All change looks crazy when it starts.  And after it’s completed the crowd thinks “Sure Mike, that’s obvious...”

So sharpen your pencils and your minds to the changes going on underneath your feet. This is tectonic alright; underestimate it at your peril. And it smells more and more like 1982 all over again.

I’m often asked, “Mike, when will stocks be good again?” And my answer is always the same. “Don’t worry....when they are, you won’t want them, you won’t like them, you will think they are too risky...and then you’ll vehemently disagree with me when I tell you...they are valuable right now.”

Oh, and one more thing. Pray for a correction. Then, try very hard to grab your courage and take advantage of it instead of fearing it.

Mike Williams, President, Genesis Asset Management, NY & Chicago

Understand that it’s better to keep you afraid of the future, and far more profitable at the pumps.

MIKE FROM MANHATTAN

12

HNW MAGAZINE JAN/FEB 2013 THE NETWORKS

Angels Denwww.angelsden.co.uk

The only Angel investment network to provide free business funding clinics and one-to-one pitching at regular SpeedFunding events throughout the UK and Asia, with regional managers dedicated to supporting and introducing you to the right Angels.

ASAMwww.alansteel.com

If the confusing messages in the financial media leave you not knowing which way to turn, and you want to reduce your risk and organise your future with more certainty, contact Alan Steel Asset Management’s award-winning team.

Footdownwww.footdown.com

Mentoring. Insight. Coaching. Footdown is passionate about improving the performance and quality of leaders, and works from within a peer group to inspire, inform and help leaders respond better to all challenges.

HNW magazine prizes its relationships with leading organisations in the entrepreneurial and investor sectors and is delighted to provide direct links and information about these organisations below.

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“ A man must be big enough to admit his mistakes, smart

enough to profit from them, and

strong enough to correct them.

”John C. Maxwell

THE NETWORKS

Gecko New Mediawww.geckonewmedia.comThe straight-talking Edinburgh-based digital agency that helps you make sense of the web, providing strategic planning, design & build and leading edge solutions that help your business grow.

Jumpstartwww.jumpstartuk.co.ukThe leading research and development(R&D)taxcreditsadvisory business for companies throughout the UK with a 100% success rate for Government R&D Tax Credit applications.

Kiltrwww.kiltr.comKILTR is a Social Media Platform for everyone with a connection to Scotland, founded with the local-to-international Scottish Diaspora at its centre.

LINCwww.lincscot.co.ukThe national association for business angels in Scotland, with a membership network of hundreds of investors including those operating individually, many of the best known groups and syndicates, and a number of significant private offices.

Par Equitywww.parequity.comPar Equity is an investment firm with a difference. We bring a pragmatic, hands on investment approach and extensive business experience to investment opportunities that have the potential for significant returns.

The Angel Investment Networkwww.angelinvestmentnetwork.co.ukLondon-based Angel Investment Network Ltd was founded in 2004, and is now the largest angel investment community in the world with 500,000 members across 30 networks in over 80 countries.

Scottish Social Enterprise Coalitionwww.socialenterprisescotland.org.ukSocial Enterprise Scotland is the national collective voice for social enterprise in Scotland, bringing together social enterprise and its supporters into a strong force for change.

Thrive for Businesswww.thriveforbusiness.co.ukThrive is a membership based networking organisation for business-to-business SMEs across Scotland bringing together like-minded individuals willing to share knowledge, ideas and contacts in an unrivalled atmosphere of talent and enthusiasm.

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HNW MAGAZINE JAN/FEB 2013

Angel News:Pinterest Up, Zynga Down

ANGEL NEWS

THE internet is a fickle mistress. One day you’re begging people to listen to your idea then suddenly a wave of traffic overwhelms your server. You ramp up, move to a bigger server, hire more people and start taking call after call from the media. Then just as suddenly you have a room full of employees all living on Ramen noodles because the money’s gone, along with 90% of the users. All that’s left behind are 1,000’s of profiles that haven’t been updated in the last six months.

This is how internet ghost towns are born.

TheWallStreetJournal(WSJ)andtheNew York Times both recently ran a piece about the future of a hot, internet start-up. WSJ profiled the ever-growing Pinterest while the Times looked at what went wrong with the faltering Zynga.

Two years ago, Zynga was the king of social gaming. FarmVille, CityVille, Mafia Wars – if people were playing it, Zynga made it. The problem? They hitched their farm wagon too tightly to Facebook, leaving them no choice but to go where they were lead. Eventually, people started seeing these games as “Facebook games” not “Zynga games” and they lost valuable brand recognition.

Last year, they made the move away from Facebook and began looking more seriously at mobile technology. That may be too little too late.

Helpless In Hindsight

Mark Pincus, Zynga’s founder and chief executive said in an interview:“Do I wish that we would have gone all-in on mobile and made a bigger commitment to it earlier? Yes.”

Two years ago Zynga was valued at $20 billion. Their recent fourth-quarter results valued the company at $2 billion, which analysts say is still better than expected. Zynga may have stumbled but they still have their fans. In spite of the devaluation and stocks still rose this week by 7%.

Pinterest Rises Up

Pinterest is in talks for a new round of funding and they’re probably going to get everything they need. This photo scrapbook site exploded last year to become one of the hottest trends in social media. Not only did consumers come on the run, but businesses have carved out their own space using the site to promote brand awareness and community and some even run contests challenging folks to build their own Pinboards.

But like so many crowd-building sites the one area Pinterest hasn’t cracked is the revenue portion. They have the traffic but they haven’t found a way to turn people into cash.

Since October, Pinterest has created a team of four people whose job it is to interact daily with companies to learn about what’s working and what’s not. But even the roll-out of “business” accounts, pending data-analytics and

a feature called “suggestions” linking audience interaction with a single picture doesn’t lead to sales.

Traffic? Yes. But Show Me The Money

In December, Hearst Media reported more online traffic through Pinterest than Facebook and Twitter combined. That’s impressive stuff as overall, 3% to 5% of traffic to Hearst’s various brands was through Pinterest that month, with about 1.5% from Facebook and 1.5% from Twitter.

So where do we go from here? The question is less about whether Pinterest will find a way to become a solid performer and a contender for social media dominance, and more about which of these companies will find attract the long sought after lightning strike; where social media audiences equal real sustainable revenue streams.Without that result both of these companies could easily become a footnote in internet history twenty years from now.

by Cynthia Boris

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HNW MAGAZINE JAN/FEB 2013

Angel News:Getting InsideAn Investor’sMind

ANGEL NEWS

INSIDE an investor’s mind he or she is thinking about the team, the product and the market and how they feel about working with the organisation for 5-7 years to get their money back...exponentially!And when investors are willing to provide early money to start-ups they’re looking for a few key elements in that founding team. There are a variety of different make ups but some key competencies need to be covered. In the tech space, the best start-up teams comprise on developer, one designer and one ‘business’ person; all bases covered with complimentary skills. But before the cheque book emerges he or she will want toseetheproduct,thealphaexample,toprove(a)thatyou’reforreal(b)youcantalkitthroughsimply,and(c)tocheck the entrepreneurial teams responses to sometimes harsh criticism. Those too close or emotionally involved in a potentially flawed beginning will not see a signature on a cheque in the end.

Jeff Clavier walks through his own thinking in the following infographic when a start-up pitches him for funding.

NewTechnologiesNew EconomyNew ScotlandOne Constant . . .

Aye Cloud

To find out more visit nvtgroup.co.ukTel. (+44) 08453-893-300

NVT Group

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IN September 2008 I was on holiday in Nova Scotia and given the opportunity of meeting up with some Ned Davis Research top dogs in Manhattan only an hour and a bit flying time from Halifax.  It was a chance too good to pass up especially as we were being joined by a few US based fund managers. 

At the time the consensus view of the investment community and economists was that the worst was past regarding Banking bail outs, and that a new economic cycle had begun.

Vegan Teetotaller Workaholic Predicts Armageddon

Things were going swimmingly well until the black clouds entered the room simultaneously as Joe Kalish made his entrance.  In case you’ve forgotten Joe’s a vegan, teetotal, workaholic economist who’s head of global macro strategy at Ned Davis Research in Venice, Florida.  Joe therefore is pessimistic by nature. 

The poor man was shouted down as he predicted imminent near Armageddon for the World economic system.  “They just don’t get it,”

he retorted.  Within the week Lehman Brothers collapsed, world stockmarkets went into freefall, and I began a six week experiment with insomnia.

What does Joe think now?  Why does that matter?  Over the last 10 years since I discovered Ned Davis and his team of Independent analysts I’ve found they, like Joe, have a fortunate tendency predicting accurately what’s next.  They do this by studying history, cycles, sentiment, momentum and a whole host of other factors including demographics and central bank policies. 

They Just Don’t Get It

So while on holiday in Florida a couple of weeks back I spent a day with them.  And boy was it reassuring. Joe had a big smile on his face, and for an hour explained in detail again why “they” just don’t get it!

What don’t “they” get?  That their studies point to an impending new Secular Bull Market that once started could last 20 years or more.  Now that is not a view shared by many, and they are not saying it’s gonna happen any day soon, but all their top analysts unusually are in complete agreement whatever their discipline or sector.  Quietly bullish you might say. 

One chart in particular sums it up, and it compares rolling 10 year returns from stockmarkets to long term interest rates from 1928 onwards.  And what

stands out is the remarkable similarity between the period from 1942 onwards to that in recent years.  Following a severe financial crisis in the Thirties, similar to the near Armageddon of 2008, stockmarkets entered a multi year bull market.  Check the records!

Street Smart vs Selling Books

Now this of course is not a given.  But it’s a probability and the good news is, despite the gains made since March 2009, when some stockmarkets have doubled, including reinvested dividends, most folks and all media commentators remain unconvinced.  Good because worry is better than euphoria for stockmarkets.  So what else does the past tell us?

Also over in the US Sy Harding since ‘87 has provided research and investment advice to what he calls “serious investors”.  One of his “Street Smart” blogs this month covers history of sentiment rather well.  He reminds us that big negative theories are nothing new.  And they’re typically of the doom and gloom variety.  As he says gloom definitely sells books, causes anxiety, even fear, keeps investors out of stockmarkets at the best buying opportunities, dominates headlines, and never comes to pass.

For example, as World War 2 was coming to an end, the negative brigade

Better ThanYour Average...Joe

ALAN STEEL

Alan Steel

www.lincscot.co.uk

LINC Scotland is the national association and representative body for the business angel community in Scotland, and was a founder member of the European Business Angels Network (EBAN).

Since our establishment in 1993 our members have made investments in hundreds of companies.

In doing so they have provided tens

of millions of their own risk capital, on average levering three times more from other sources.

Just as importantly they have invested their own skills and experience in the next generation of SMEs.

The companies supported have created thousands of high quality jobs in the Scottish economy.

EUROPE & SCOTLANDEuropean Regional Development Fund

Investing in your Future

Business angels More than just money

Millions of £s, Thousands of jobs, Hundreds of deals, One Network...

LINC Scotland FP.indd 1 16/06/2011 18:28v6 HNW July11 - for print.indd 43 31/08/2011 09:53

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HNW MAGAZINE JAN/FEB 2013ALAN STEEL

warned, on both sides of the Atlantic, that millions of folks being demobilised would send unemployment sky high and cause a serious recession --- most probably another depression.  Convincing statistics supported this scenario.  But instead of this definite disaster the reverse happened.  Economies prospered. 

Automation = Armageddon? Ehh, Not Really

Then in the Nineteen Fifties it was the turn of automation that would bring about economic Armageddon and mass unemployment.  Mathematicians at the time said it was “perfectly clear” unemployment would reach levels that would “make the Great Depression seem a pleasant joke”.  Wrong again.

By early 1981 we were all in soapy bubble once again.  President Reagan - a buffoon according to leading political and economic thinkers - began what they said would be a “disastrous experiment”--dropping taxes and interest rates, and increasing Government debt so much that “experts” predicted bankruptcy for

the country by 2000 at the latest.  Instead, the economy exploded and one of the strongest equity bull markets in history began.

Twenty years ago this month as President Bill Clinton sat in the Oval Room wondering what to do with his cigar, the world was in recession again, with UK unemployment increasing for the 31st month in a row, economists predicting 3.5 million UK job losses before any improvement, and 80% of Brits dissatisfied with the Government (nothingchangesthere),ifyou’dinvested with Warren Buffett, you would have outperformed a US stockmarket tracker by over 4 and a half times.

Closer to home Neil Woodford’s High Income fund, which many clients will recognise as a core holding, has just celebrated its 25th Anniversary.  This is a man the media have written off quite a few times over the years.  But £10,000 invested at inception is worth £71,000 odd, plus total income paid out net of ordinary tax is over £36,000. That’s compared to the £10,000 still sitting in a top Building Society account with only £15,000 paid out in net income over the years.

And Still The Gloom, Because It Sells Newspapers

Yet still the gloom continues.  Markets which were supposed to keep plummeting from 4 years ago have miraculously almost doubled, and now we’re told it might be time to pile in. Or not.  Maybe too much has been invested recently in shares we’re told.  Not true.  Actually we should only invest in cheap Index Trackers because they’re better.  Rubbish! Research shows that there’s rarely been such a difference between the top 10% performers in an Index and the bottom 10% -- in Europe for example over the last year, the top decile averaged 38% gain, while the bottom decile lost 15.2%. 

So why would you settle for an average?

It was said once the average human being has one breast and one testicle.  That’s how daft averages are.  

That’s why we seek out the best economic research then try to find the best fund managers. And it works, as long as we’re all patient. 

The last word goes to Warren Buffett, who said: “Wide diversification is only required when investors don’t understand what they’re doing.” Alan SteelAlan Steel Asset Management

It was said once the average human being has one breast and one testicle.  That’s how daft averages are.

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The Top 20 Tech Venture Capital Firms

WAW

PRIVCO has revealed its exclusive Top 20 Most Successful Tech Venture Capital Firms In 2012, ranked by the total number of U.S. private tech companies in each firm’s portfolios acquired last year – IPOs were excluded.The top ranked Tech V.C. firm of 2012 was INTEL CAPITAL, the very active corporate venture arm of chipmaker Intel(NASDAQ:INTC) withthemostprivate tech company investment exits. Some notable exits for Intel Capital in 2012 include Ancestry.com, Gaikai, Inc., and DynamicOps.

Rounding out the top 3 were FELICIS VENTURES and relative newcomer SV ANGEL ranked at #2 and #3, respectively. “Notable among this year’s Top 20 Most Successful Tech V.C. Firm Rankings was that relative upstart venture capital firms beat out traditional Silicon Valley ‘Old

Guard’ like KleinerPerkins (whodidnot make the Top 20 Most Successful Tech VC Rankings this year),” said PrivCo Founder & CEO Sam Hamadeh.  

Added PrivCo VC Deals Manager Alex Tarantino:

“Last year saw a record number of exits for a newer generation of venture capital firms such as Felicis Ventures (Ranked #2), SV Angel (Ranked #3), True Ventures (Ranked #11),

and Lerer Ventures (Ranked #13). This new wave of V.C. firms is formed by partners that come from entrepreneurial backgrounds, instead of investment and financial ones. These firms provide startups with extensive guidance in realizing their visions, in addition to financial backing.” 

The Top 20 Most Successful Tech V.C. Firm’s of 2012 are:

What Angels Want

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HNW MAGAZINE JAN/FEB 2013

FinanceI Will Teach You to be RichTwitter: @Ramit

Ramit has become one of the leaders of personal finance through his blog. However, as you read it, you will see that it goes way beyond personal finance and into entrepreneurship and life. As he says “I Will Teach You To Be Rich is a community focused on personal finance and entrepreneurship for college students, recent college grads, and everyone else.” His content is specifically catered to young people and he should know how since he only graduated Stanford in 2005.

MarketingSeth GodinTwitter: @ThisIsSethsBlog

Seth Godin is simply a legend. He has founded multiple companies and authored 12 best selling books and counting. He is one of the most respected figures in the world on marketing and leadership. His blog is followed by 100′s of thousands of people and his style of short, concise posts is truly unique. You won’t find comments or him personally active on twitter but you will see that just his blog updates are plenty to get you thinking.

High GrowthQuickSproutTwitter: @NeilPatel

Neil Patel has founded two companies, Crazy Egg and KISSmetrics. KISSmetrics is his focus today.  By the age of 21 he was named one of the top influencers on the web by the Wall Street Journal and one of the top entrepreneurs in the nation by EntrepreneurMagazine.QuickSproutis his way to communicate what he has learned with a very straight forward approach. He has built a strong following on the site and is active in engaging with readers.

Social MediaChris BroganTwitter: @ChrisBrogan

Chris Brogan is a leader on communication, social media, and new media. His blog is straightforward, witty and was around before most people knew what a blog was. Chris is also a New York Times Bestselling author of books like The Impact Equation and Trust Agents (cowrittenwith JulienSmith), Social Media 101, and Google Plus for Business.

Writing (Online)CopybloggerTwitter: @Copyblogger

Copyblogger teaches people how to create killer content online. Copyblogger has created a massive following and is out to help you sell more stuff through the free content you create on your site. With content being so important in today’s online world you can never have enough ideas for what to write about or how to write it so you can stand-out from the crowd.

Start-UpsOnStartupsTwitter: @Dharmesh

Dharmesh Shah is the founder of the popular and successful internet marketing software company, Hubspot.  At OnStartups he talks about entrepreneurship and startups in a fun but very informative way. He is looked at as a leader in internet marketing and startups especially in the software space.

ManagementHBRTwitter: @HarvardBiz

Harvard Business Review is Harvard’s own publishing platform that covers business, leadership, management, and more. Most of the content is created by Harvard professors and faculty which leads it to be thought provoking and will challenge how you think about things.

Business InvestmentBoth Sides of the TableTwitter: @MSuster

Mark Suster is a 2x entrepreneur who has gone to the Dark Side of VC. His blog provides an in depth look at some of the deals he does and his thoughts on venture capital. He is also the host of This Week in Venture Capital, a weekly web television series designed to help entrepreneurs better understand the world of Venture Capital.

Jared O’Toole, Under30ceo.com

WEN

What Entrepreneurs NeedThe Top Blogs Every Entrepreneur &SME Owner Should Follow

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8 Great Business Ideas For 2013

HIGH GROWTH

Online shoe sales

•Five-yearannualgrowthrate:16.2percent •2013revenuegrowth:14.5percent

Experts estimate that 100 million Americans purchase items from online retailers. That growth has benefitted a number of industries, but perhaps none more so than online apparel sales. Nielsen says accessories and shoes are the second most popular items purchased online after books. Not only are shoes widely purchased online, but they are also in the middle of a growth upswing. Revenues for online shoe sales are expected to reach close to $9 billion in 2013.  However, those looking to carve out their own names in the online shoe sales industry should

know that the many well-established players present a challenge. IBISWorld suggests new entrants look to differentiate themselves from other players from the start.

Virtual data rooms

•Five-yearannualgrowthrate:15.8percent•2013revenuegrowth:16percent

Virtualdatarooms(VDRs)representanother industry with a high growth-potential in the coming years. IBISWorld describes VDRs as secure document-management platforms geared toward information-sensitive applications such as legal due diligence, mergers and acquisitions(M&A),initialpublicofferings

Online shoe salesFive-year annual growth rate: 16.2 percent 

2013 revenue growth: 14.5 percent

What To Watch

SOMETIMES timing is just as important as having a great business idea. To help you take advantage of that fact IBISWorld, an independent source of industry and market research, says aspiring entrepreneurs and business owners should look to the following eight industries on the upswing in 2013.

“In general, low barriers to entry and strong revenue growth are creating opportunities within these industries,” said Kevin Boylan, a co-author of the IBISWorld report. “Barriers to entry have decreased primarily due to technological change in the form of a greater percentage of services conducted online.”

Some high-growth industries going forward include: 

Social network game development

•Five-yearannualgrowthrate:184.3percent

•2013revenuegrowth:31.9percent

Social networks have not only changed the way people socialize and interact, but have also changed the way people play. For that reason, the social network game-development industry is growing rapidly. In fact, IBISWorld reports the industry can expect close to 32 percent revenue growth in 2013, with revenues reaching $6 billion for the rest of the year. Growth is expected to continue, in particular, thanks to the continued popularity of games and social networks. Research from Neilsen confirms the observation that consumers spend 20 percent of their total time online using social networks. That number reaches even higher among consumers on smartphones, tablets and other mobile devices.

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alternatives. That shift means the industry can expect to see 6 percent revenue growth in the next year, bringing revenues to just less than $21 billion in 2013. This growth comes after disappointing losses in 2009, in which brick-and-mortar agencies lost ground to their Internet counterparts. Because of this shift to online business, those beginning in the industry in coming years will face few barriers to entry and a low startup cost, IBISWorld says.

Translation Services

•Five-yearannualgrowthrate:2.4percent •2013revenuegrowth:3.4percent

As the global economy and the world population continue to grow, the demand for companies in the translation-services industry will only continue to grow as well. Combine that with the fact that technology has helped improve many aspects of the industry, and savvy business people will see why this area is expected to grow in coming years. To that end, IBISWorld predicts revenue growth of 3.4 percent alone in 2013.

Information technology security consulting

•Five-yearannualgrowthrate:9.8percent •2013revenuegrowth:8.8percent

Steady growth is also expected in the information technology security-

consulting industry over the next few years. Industry watchers predict a number of factors to drive growth, including the continued increase in e-commerce and mobile Internet usage. Not only will those factors help to grow the field of IT security consulting, but continued security breaches will also keep the industry growing at a healthy yearly rate. Additionally, IBISWorld estimates that private investments in computers and software will increase nearly 7 percent per year during the next five years, which will also help sustain continued demand.

Digital forensic services

•Five-yearannualgrowthrate:11.9percent•2013revenuegrowth:11.2percent

As digital devices continue to grow in popularity among Americans, industries servicing those products expect growth as well. One such industry is digital forensic services, which recover and investigate material found in digital devices. Services from this industry are most often used in investigating and solving cyber crimes, but IBISWorld expects the industry’s reach to grow in coming years. The rise of electronically stored information will lead that development. To that end, IBISWorld expects a growth of 11.2 percent in 2013 for this industry. 

David Mielach, Business News Daily

Industry watchers predict a number of factors to

drive growth, including the continued increase in e-commerce and mobile

Internet usage.

(IPO)andbankruptcies.Thoughthisindustry caters to highly specialized clients, revenues are expected to reach $728.4 million in 2013. In addition, entrants can expect high growth thanks to a transition to and demand for these services.

TV and home theatre installation services

•Five-yearannualgrowthrate:0.5percent •2013revenuegrowth:4.1percent

Savvy business owners can also take advantage of the constant evolution of the latest and greatest technologies. In particular, businesses centered on television and theatre installation can expect to see modest growth in the next year. IBISWorld estimates that the field will grow 4 percent in 2013 alone. Research by the Consumer Electronics Association bolsters expectations for the industry, estimating that 98 percent of households in the United States have at least one TV, and 84 percent have a DVD player or recorder. Furthermore, additional research has revealed that 25 percent of Americans have a home theatre.

Travel agencies

•Five-yearannualgrowthrate:3.9percent•2013revenuegrowth:6.1percent

Recent losses at traditional brick-and-mortar travel agencies have led to significant gains at Internet-based

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HNW MAGAZINE JAN/FEB 2013

using your own capital instead of taking money from investors. You’ll have less financial fuel to increase your company’s value. But you’ll be able to continue running the company yourself.

If you’re more motivated by power than wealth:

• Restrict yourself to businesses where you already have the skills and contacts you need.

• Focus on a business in which large amounts of capital aren’t required to get your venture off the ground and flying.

• Consider waiting until late in your career before setting up shop for a new venture. That will give you time to develop the broader skills you’ll need as your business grows and to accumulate some savings for bootstrapping.

Time To Choose

As start-ups grow, entrepreneurs face a dilemma—one that many aren’t aware of, initially. On the one hand, they have to raise resources in order to capitalize on the opportunities before them. If they choose the right investors, their financial gains will soar.

A founder who gives up more equity to attract cofounders, non-founding hires, and investors builds a more valuable company than one who parts with less equity. The founder

FEATURE

The Idea

MOST entrepreneurs want to make pots of money and run the show. But Noam Wasserman reveals that it’s tough to do both. If you don’t figure out which matters most to you, you could end up being neither rich nor in control.

Consider that in order to make a lot of money from a new venture you need financial resources to capitalize on the opportunities before you. That means attracting investors—which requires relinquishing control as you give away equity and as investors alter your board’s membership. To remain in charge of your business, you have to keep more equity.

But that means fewer financial resources to fuel your venture. So you must choose between money and power. You need to begin by articulating your primary motivation for starting a business. Then understand the trade-offs associated with that goal. As your venture unfolds you’ll make choices that support—rather than jeopardize—your dreams.

“At every step in their venture’s life, entrepreneurs face a choice between making money and controlling their businesses. And each choice comes with a trade-off.”

If You Want To Get Rich

Startup founders who give up more equity to attract cofounders, key

executives, and investors build more valuable companies than those who part with less equity. And the founder ends up with a more valuable slice of the pie.

On the other hand, to attract investors and executives, you have to cede control of most decision making. And once you’re no longer in control, your job as CEO is at risk. That’s because:

• You need broader skills - such as creating formal processes and developing specialized roles—to continue building your company than you did to start it. This stretches most founders’ abilities beyond their limits, and investors may force you to step down.

• Investors dole out money in stages. At each stage, they add their own people to your board, gradually threatening your control. If you’re motivated more by wealth than power:

• Recognise when the top job has stretched beyond your capabilities, and hire a new CEO yourself.

• Work with your board to develop post succession roles for yourself.

• Be open to pursuing ideas that require external financing.

If You Want To Run The Company

To retain control of your new business, you may need to bootstrap the venture -

Rich Versus King“Most entrepreneurs want to make a lot of money and to run the show. New research shows that it’s tough to do both. If you don’t figure out which matters more to you, you could end up being neither rich nor king.”

Noam Wasserman

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Gabbert is clearly willing to live with the choices he has made as long as he can run the company himself.

Most founder-CEOs start out by wanting both wealth and power. However, once they grasp that they’ll probably have to maximize one or the other, they will be in a position to figure out which is more important to them. Their past decisions regarding co-founders, hires, and investors will usually tell them which they truly favour. Once they know, they will find it easier to tackle transitions.

Choosing between money and power allows entrepreneurs to come to grips with what success means to them. Founders who want to manage empires will not believe they are successes if they lose control, even if they end up rich. Conversely, founders who understand that their goal is to amass wealth will not view themselves as failures when they step down from the top job. Once they realize why they are turning entrepreneur, founders must, as the old Chinese proverb says, “decide on three things at the start: the rules of the game, the stakes, and the quitting time.”

Noam WassermanHarvard Business School

FEATURE

ends up with a more valuable slice, too. On the other hand, in order to attract investors and executives, entrepreneurs have to give up control over most decision making.

This fundamental tension yields “rich” versus “king” trade-offs. The “rich” options enable the company to become more valuable but sideline the founder by taking away the CEO position and control over major decisions. The “king” choices allow the founder to retain control of decision making by staying CEO and maintaining control over the board - but often only by building a less valuable company.

For founders, a “rich” choice isn’t necessarily better than a “king” choice, or vice versa; what matters is how well each decision fits with their reason for starting the company.

“Rich” Examples

Consider, for example, Ockham Technologies’ cofounder and CEO Jim Triandiflou, who realized in 2000 that he would have to attract investors to stay in business. Soon, he had several suitors wooing him, including an inexperienced angel investor and a well-known venture capital firm. The angel investor’s offer would have left Triandiflou in control of the board: Joining him on it would be only his co-founder and the angel investor himself. If he accepted the other offer, though, he would control just two of five seats

on the board. Triandiflou felt that Ockham would grow bigger if he roped in the venture capital firm rather than the angel investor.

After much soul-searching, he decided to take a risk, and he sold an equity stake to the venture firm. He gave up board control, but in return he gained resources and expertise that helped increase Ockham’s value manifold.

Similarly, at Wily Technology, a Silicon Valley enterprise software company, founder Lew Cirne gave up control of the board and the company in exchange for financial backing from Greylock Partners and other venture capital firms. As a result, CA bought Wily two years later for far more money than it would have if Cirne had tried to go it alone.

On the other side of the coin are founders who bootstrap their ventures in order to remain in control.

The “King” Bootstrappers

For instance, John Gabbert, the founder of Room & Board, is a successful Minneapolis-based furniture retailer. Having set up nine stores, he has repeatedly rejected offers of funding that would enable the company to grow faster, fearing that would lead him to lose control.

As he told BusinessWeek in October 2007, “The trade-offs are just too great.”

The “rich” options enable the company to become more

valuable but sideline the founder by taking away the CEO position

and control over major decisions. The “king” choices allow the founder to retain control of

decision making by staying CEO and maintaining control over the board - but often only by

building a less valuable company.

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The HNW HEAT Scotland 100 Publication & CD

What is the HEAT Scotland 100? The HEAT Scotland 100 is a unique new publication & CD featuring 100 established high-growth entrepreneurial businesses in the Central Belt, Fife and Aberdeen.

What does the HEAT Scotland 100 provide? Detailed information about these hard to find businesses in various stages of high-growth. These company leaders are frustrated by barriers to increased profitability and in need of specific advice, assistance and support.

Who are the HEAT Scotland 100 companies? The HEAT Scotland 100 comprises 100 established high-growth entrepreneurial businesses with existing client revenue streams and financial turnover between £100thousands and £multi-millions.

What types of support are HEAT Scotland 100 looking for?Banking & funding, staff & training, sales & marketing & conversion, assistance with internationalisation, and replacing the services of current professional advisers that these businesses have outgrown.

Why are HEAT Scotland 100 companies important? HNW HEAT Scotland 100 companies have outgrown many of their start-up stage advisers, partners and suppliers. The high-growth stage is when new working relationships are created to partner them toward UK-wide and global growth. HEAT Scotland 100 companies are at the ideal stage to acquire as clients.

What should I do next? You don’t need to do anything. We’ll be in touch with you. However, you can contact HNW editor & managing director Ed Emerson directly at:

ed@hnwscotland.co.uk or email editorial@hnwscotland.co.uk

Part of the High-growth Entrepreneurial Action Team (HEAT) Scotland programme

www.hnwmagazine.co.uk LINKING ENTREPRENEURS & INVESTORS UK-WIDEHIGH NET WORLD MAGAZINE

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In 2012, the number of China’s online shopping users reached 220 million, far exceeding 150 million in the U.S. It is estimated that there will be 423.4 million internet users who make at least one purchase in 2016.

In 2011, China B2C e-commerce market (including online retailing and travel booking) was USD55.37 billion, and the growth was 103.7% compared with that in 2010. In 2012, the total transactions will reach $107.5 billion, exceeding that of 2011 by 94.1%.

China is the second largest B2C e-commerce market in Asia, only second to Japan. China will likely surpass Japan and replace UK to be the second in the world.

ECONOMY & INTERNATIONAL

International Focus on...China’s e-Commerce Position

“China’s gradual recovery will be sustained in

coming months thanks to firmer labor market conditions, improving domestic demand and

relatively accommodative policy support. ”

Source: Sina English

PRACTICAL BUSINESS

Practical BusinessHNW Magazine’s Practical Business section looks at key areas of business needs across legal, accountancy, marketing, finance, leadership, strategy, research and other areas of support. In this issue we look at: Willie Maltman’s “new normal” and the Eustress principle is dealing with stress; Ewan Jardine’s advice on becoming an employer of choice despite the size of your business; Dave Kerpen’s view on the huge importance of listening in social media; and Martin Cook’s guidance on how to “pension fund” your business to make it grow.

HR:How To Become An Employer Of Choice

SOCIAL MEDIA: What Every Business Must Understand

WEALTH:“Pension Funding” Your Business

If you don’t understand your culture and can’t explain it readily then hiring will be very hit or miss.

The thing every executive must understand about social media is that it isn’t about talking, it’s about listening.

Pensions are very often an individual’s greatest financial resource after the family home and the business.

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will suffer, your motives may be doubted and you can expect a considerable period of disruption as you sort it out.

If you don’t understand your culture and can’t explain it readily then hiring will be very hit or miss. To identify your culture look to the people who have the right attitude in your organisation they are the positive influence on your culture and probably what you want.

Look also to those with a poor attitude they also influence your culture and you really need them to be drowned out by positivity. In my view you should only ever hire on attitude.

Simply Put

Great people are the best investment you can ever make. In aggregate your staff make you an employer of choice. They make your customers feel good, create a positive working environment and attract better people, all of which will make the business much more productive. Ewan Jardine

Stellar Global

HR

In today’s world of paired back margins and pressure on costs in every aspect of business we lean on people to become ever more productive. Yet, when the value of an individual’s contribution rises it tends not to go un-noticed, e.g. they want a pay rise. Uh, sorry. No.

BUT the “leaning” doesn’t always work out how you want it to, and the organisation’s culture goes from supportive to aggressive and beyond. Desperate, you start a collection for the people you don’t want to leave or you’re left with the poorer performers.

And when you try to bring in fresh talent only to find that your reputation is sullied; you’re no longer an employer of choice.

Ouch!

Let’s Try That Scenario Again

Start by leaning on the right people. Identify those who can and should be doing more and find out what’s stopping them.

It’s probably pointless to ask someone who contributes massively to find another 10%. They won’t feel honoured that they’ve been chosen for the task but they may feel very negatively about being asked for more.

The people who are not pulling their weight are probably aware of it and are waiting for the cold hand of management to “do something”. At this point a decision has to be made as to whether you should back them or....?

Clearing The Decks

Moving someone on is never pleasant but the downside to inaction is organisational risk.

There are two hand maidens of poor performance at work; unhappiness and negativity. Both are infectious. Consider their cousins, happiness and positivity; both are equally as infectious and are the root of being an employer of choice.

In my long experience of recruiting into and out of organisations, money is only an issue when either financial undervaluation is very clear, or where negative cultural changes have destroyed your employee’s reasons for staying.

The trick is to identify those who are your future and those who are your past, who lines up with the vision of the company and who doesn’t. When your team shares the vision, you are well on your way to becoming an employer of choice.

Productive organisations are attractive to employees. So in getting great things from people you will create the ability to attract even better people. A virtuous circle if ever there was one. When employees know what is expected of themandhavethetools(bothmentaland physical) to deliver, very often they do. When their attitude is great you can bet their performance will be too.

The Direction Of Attitude

It’s pretty pointless to do all the groundwork with your existing people and then hire in someone who is wrong for the model. All sorts of bad things can happen, most of which are easy to guess at but here’s a sample: Your credibility

How To Become An Employer Of Choice...And Size Doesn’t Matter!

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HNW MAGAZINE JAN/FEB 2013 SOCIAL MEDIA

SOCIAL media is still in its infancy, and many business executives still don’t understand how to Ieverage it for their organizations, large or small. They’re too focused on the talking, and not focused enough on the listening.

When I speak, I often begin by asking my audience, “How many of you know at least one executive who doesn’t fully understand the business value of Twitter?”

Sure enough, the entire audience raises their hands. Then I tell them about my experience in Las Vegas three years ago.

Lesson in Las Vegas

I had been standing in line to check in at Las Vegas’ then-trendiest hotel in town, the Aria, for nearly an hour. I was exhausted and frustrated after a 6 hour flight from New York, and just wanted to get to my room and rest. The last thing I wanted to do was waste an hour of my life waiting in line.

Frustrated, I did what any social media nerd would do - I pulled out my phone, and tweeted the following:

“No Vegas hotel could be worth this long wait. Over an hour to checkin at the Aria. #fail”

Unfortunately, the Aria wasn’t listening, and didn’t tweet back to me. But a competitor was listening. Just two minutes later, I received a tweet from the Rio Hotel down the street.

Now at this point, if you’re anything like most executives I’ve shared this story with, you’re thinking, “What did the Rio tweet - “Come on over, we have no line here” or “Call us, we have a room for you!”?

Had the Rio tweeted something like that to me, I would have thought two things: First, “Why are you stalking me?” and

second, “Why is it wide open at the Rio when it’s jam-packed and happening at the Aria?”

On the contrary, the Rio Las Vegas tweeted the following to me: “Sorry about your bad experience, Dave. Hope the rest of your stay in Vegas goes well.”

Guess where I ended up staying the next time I went to Las Vegas?

The Social Media Money Game

The Rio hotel earned a $600 sale on the basis of that one tweet. But the story gets even better, because I gave the Rio a “Like” on Facebook, and a few months later, I got a message from a friend on Facebook. My friend Erin asked, “Hey, I’m having a family reunion in Vegas this New Year’s, and I saw you liked the Rio’s page. Do you recomend them?”

I wrote back to her, “Well, the Rio isn’t the newest hotel in Vegas, or the nicest - but I’ll tell you one thing - they know how to listen to customers.” She booked the Rio for 20 guests that day.

One tweet from the Rio, and one “like” from me led to over $10,000 in revenue for the company.

Ears To The Cloud

No executive that’s heard or read this story could argue that the Rio’s message was a marketing or sales message, either. All they did was use social media to listen, and then show a little empathy to the right person at the right time. An ad, or a push-marketing-like message from the Rio, simply wouldn’t have worked. But their ability to listen, respond and be empathic did work.

The Rio was listening on Twitter by tracking keywords of their competitors, and of the word “Vegas”. If you work at a hotel, you can do the same. If you work at a law firm, try listening by doing

a Twitter search for the words “need a lawyer”. Or if you work for a recruitment firm, try a search for the words “We’re hiring.”

Whatever your organization does, you can find your customers and prospects on Twitter, Facebook, blogs, and everywhere on the social web, by listening for the right words.

The one thing every business executive must understand about social media:The secret to social media success isn’t in talking - it’s in listening.

Dave Kerpen is the New York Times bestselling author of two books, Likeable Social Media and Likeable Business.

Read more on the Likeable blog or Dave’s blog.

The No 1 Thing Every Business Executive Must Understand About Social Media

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HNW MAGAZINE JAN/FEB 2013

2. Loan – A SSAS can make a loan up to50%ofthevalue(oftheSSAS)provided that an acceptable asset is available as security on a first charge basis

3. Alternative investment strategies These may be able to release cash directly into your business.

4. Purchase of unquoted shares – Admittedly subject to very tight HMRC and pension provider rules.

5. Purchase of Intellectual Property – A SSAS /SIPP can buy some or all of the Intellectual Property of your business.

There is no question that there is always going to be risk associated the above strategies. We are substituting a retirement asset in the form of an annuity in order to support the growth of our business in the present.

However as entrepreneurs we understand that our biggest risk will always be the performance of our business...... and, back to my earlier maths, how is the near certainty of £100k pension pot turning into £77.5k not a risk?

There’s a way through all of this of course. By speaking to someone about which option could be right for you.

So go ahead.

Martin CookMartin Cook Accounting

WEALTH

OK. So you’re 35 – 50 years old and you’ve had a few different jobs over the years as your career developed. With the job changes through the years came accrued pension assets. Now you find yourself running your own business and you’re looking for finance to fund growth. The banks however aren’t interested and your desire to retain control makes you wary of venture capital solutions.

So what are your options?

Believe it or not, pensions are very often an individual’s greatest financial asset after the family home and the business. As a company director you may well have accumulated significant pension assets over the years. In fact you might not even know how much you’ve accrued, and like many have little inclination to navigate that grim stack of paperwork laden with financial gibberish in very small font that explains the terms and conditions of your retirement savings.

Fear not as you are not alone. Let’s first assume that you have a cumulative pension “pot” of £100k, and follow a rather typical pathway.

I am a Chartered Accountant so here is the maths.

You get a £25k tax free lumps sum of cash+(15years*£3.5kannuityperannum). Add it up like this: £25k + 52.5k = £77.5k. So where’s that £100k pension pot? Oh, and let’s be clear, I fully understand that the tax relief on individual and company pension contributions is very attractive to taxpayers, particularly those paying 40 – 50%.

However, in this example the businesses prime need is cash for growth. So what options are available?

1. Sales and leaseback of property A SIPP/SSAS can buy commercial property owned by your business (100%orevenjustaproportion)or indeed from a third party such as a landlord. The business has now received a cash injection from the sale and will pay an ongoing rent to the SIPP/SSAS which is an allowable business expense but is also resulting in funds being held in a tax efficient investment

Milestone Events

55 years of age Receive£25ktaxfreecash(25%offund)

65 years of age Retire and purchase annuity income with remaining £75k pensionpot,theincomewouldbecirca£3,500p.a.(couldbehigher or lower depending on what basis annuity set up on)

65 – 80 years of age Draw fixed and secure annuity which will normally be taxable

80 years of age Yes I’m sorry but “feels like heaven”

“Pension Funding” Your Business

by Martin Cook

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HNW MAGAZINE JAN/FEB 2013 COACHING

REMEMBER those times when we had quiet spells? When the flow of work eased for a while and we could stop and take stock of things? Those wonderful moments in life’s rear view mirror when we seemed more able to pause, consider and find the right route to progress.

So how can we, in the frenetic present, best deal with increased pressure and conflict as we face an even busier in future?

What makes sense is to seek out a new equilibrium, one where we are still very busy but equally more productive and able to accomplish more; conquering that continuing state of “overwhelmed “ and “stressed”.

Good Stress, Bad Stress

For some, work is self-generated and we can regulate the pressures. Those less fortunate see work flows from others – bosses, customers, staff, peers and assorted hangers-on. The latter is by far a more difficult path to control.

“In either scenario above we encounter two types of stress; bad stress that creates the “fight or flight” response in us, and a good type of stress, known as “eustress”. Eustress is a curative stress. It gives us energy and motivation, and arrives when you clinch a big deal or get a great result, and we subsequently enjoy clearer thinking, focus and creative insight.”

Why do we care about making an effort to manage bad stress? Because prolonged exposure to bad stresses without resolve can make us physically and mentally ill.

Research shows that if we can learn to let go of a problem completely by applying certain triggers, our brain re-arranges itself so that the left and right hemispheres communicate better. That allows the brain to better solve problems.

The New Normal

This is known as the breakout principle where, by triggering a relaxation response at the point we experience bad stress, we find a path to sudden creative or energetic insight into a problem. This leads to a state of sustained improved performance called “the new normal” where the breakout principle effect can be reapplied or even remembered indefinitely.

So, how do we go about accessing this? Like all good consultancy ideas, this takes place in four steps:

1) Start by struggling with a thorny problem – one that really taxes your thinking. You’ll need something that will take you up the stress curve quite a way and you will know when you get there as you’ll stop feeling productive.

2) You then need to step away from the problem completely and do something different to invoke the relaxation response. Meditate for ten minutes, jog, walk the dog, look at paintings or listen to your favourite music. The key is to stop your brain from analysing,

surrender control, and detach yourself completely from the problem. In doing this your body creates the chemical response to relax you and make you feel more productive.

3) The third step involves sudden insight; the actual breakout itself or “flow”. You’re suddenly in the zone, like an elite athlete who trains hard and then allows muscle memory take over, or an artist who experiences a surge of creativity or imagination.

4) What follows is the return to the new normal state, where the feeling of self-confidence continues. When we emerge from this calm period and expect things to go well, they often do. Practice and persistence helps to embed this as part of our work habit.

Re-framing a problem or adopting a different perspective in this way has applications in disputes between individuals as well as with internal conflict; helping to work out the inner deadlock or achieve a breakthrough with a colleague, client or competitor.

Whether we can or can’t control our work flows, we can control how we deal with them. The cost to our organisations and to our own physical and mental well-being necessitates finding a resolve and new routes to progress.

Willie MaltmanEglinton

The New Normal:Using “Eustress” To Beat Stress

Q Court, 3 Quality Street, Edinburgh, EH4 5BPFor further information, please contact Stephen Paterson on:Telephone: 0131 625 5151 spaterson@hwca.com

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