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Archive for the ‘Along the Way’ Category

I started listening to “Falling into Grace”, by Adyashanti (available from Sounds True, or from Seattle Public Library via Overdrive!) a book recommended by a friend of mine. So far I’m liking it, it’s sensible basic Buddhist advice. He starts off emphasizing that the simple basics are more important than the complex subtle so-called advanced meditation or thinking. I was listening as roomie & I were cooking and right as dinner was ready he was going through several explanations about how people suffer fundamentally because they believe their own thoughts.

I have come to believe the truth of that statement, but it still triggers a reaction for me to hear it stated. Of course I believe my own thoughts, how else am I to function? It helps a little when he says “you don’t automatically believe someone else’s thoughts when they state them.” Ok, but I don’t necessarily have the experience of built trust with that person that I have with myself. Still, there are people in my life I know well and respect and so yeah, why should I automatically hold the value of my own thoughts above theirs?

Thinking from that perspective, my mind flashed to an article from Strategic Finance magazine that I’d been meaning to photocopy for my business friends. It was about why we make poor business decisions. It basically also says that the problem is A) we believe our own thoughts because B) we believe we can have the whole truth of a situation, so ergo our thoughts are correct. The SF article was about specific ways in which we usually DON’T have the whole truth, in hopes of helping us design a “Professional Judgement Process” to get better results as teams.

Examples of why we don’t have the whole truth:
We are subject to Groupthink – the tendency to suppress divergent views. We are subject to Anchoring – a preference for not moving far from an initial numerical value. We are subject to Overconfidence – the tendency for confidence to grow more rapidly than competence as we gain experience. We are subject to Availability – the tendency to only consider easily accessible information and ignore other relevant information.

Hopefully you find those concrete, specific examples helpful in understanding the Buddhist notion that you should not automatically believe your own thoughts. Another phrase I like is “Pain is inevitable, Suffering is optional.” In this case, Pain will be when you inevitably (because you are human) make one of the above mistakes. Suffering will be if you beat yourself up about it, perhaps because you read this blog or that Strategic Finance article. Awareness of the mistake you made, graceful acceptance of your humanity (one way to describe Equanimity), and then calmly making the best correction you can will have you on your way to enlightenment!

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Today I finally got to visit Highline park in New York City, one of the top destinations people have mentioned to me as a “must see”.  It really is amazing.  A former elevated railway that “went to seed” it was ultimately embraced and over the course of a decade formalized into a mile-long, elevated, threading amongst tall buildings park. It will be longer when it is finished. Sitting in a spacious section, looking down its length with buildings rising on either side I had a mental flash to a “city of the future” like I’ve seen in Star Trek movies. The only thing missing was the traffic of flying cars overhead.  Suddenly, it clicked: that vision of the future has it backwards – we don’t want to add flying cars overhead, we want to leave them hidden below.  We should build our subway of the future Pioneer-Square-style:  by building new pedestrian walkways over top the roadways and turn them into subways, perhaps someday to be filled with electric, autonomously piloted vehicles.

There has been talk of the Highline as inspiration for what could be done with the Alaskan Way Viaduct, to imitate it in style and materials if not actually in elevatedness.  The Viaduct seems to be more problematic structurally and keeping it was not an option.  More importantly from a use perspective, its simply not well located.  It tracks along the fringe of the downtown residential and commercial core, not through its heart. For me the magic of the Highline is the embededness it has in the city – it’s very easy to imagine it becoming a major pedestrian commuter route. Bicycles & skates are not allowed and are discouraged by the style of pavement.  Walking the length of it seemed like no distance at all because it was so pleasant.

Several years ago the city seemed ready to throw in the towel on the Monorail.  It was completely non-functional for more than a year, but the arrival of the Seattle Center’s 50th anniversary seemed to provide the nudge to get it back working again so we could sigh over Elvis memories and lure downtown energy to the Seattle Center’s year of events.  My feeling is the Monorail has become Seattle’s Lace Doily.  Grandma made it years ago so it is sentimental though archaic and even a little tacky. We keep it out on our coffee table or bedside stand because we don’t have a sideboard or buffet.

Being in NYC really brings  home to me, a 12 year Belltown veteran, how much Seattle’s downtown is lacking for quiet spaces.  The urban geography there has a nice alternation of very busy London-style commercial high-streets with long quiet tree-lined blocks where the noise quickly drops off and one can actually hear the birds.  Our downtown layout doesn’t allow the same escape from traffic – one must go to Queen Anne, Wallingford or Capitol Hill.   We spent a long time in Seattle talking about a cut-and-cover option for the tunnel downtown, perhaps as we envision our future we can skip the cut and just go to cover to bring in more quiet greenery and pedestrian spaces to the sustainable heart of our downtown.

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I’m working with a small coffee shop on profitability and I’ve been working on managing inventory.  At MBA school we learn standard inventory management methods and how important it is to track, but it’s not so easy to implement where the dollar meets the register.   For starters, perpetual inventory with food is really challenging – we’d need a super detailed POS system which is expensive.  I’m starting to see why my banking school instructors said they think 50K is a minimum for starting a successful business.  Without technology your business can’t be very efficient, and you’re competing against businesses that do have technology.  It seems the only other option is to be such a small business that one person can track most of it in their own head and have really good intuition.

That leaves me with periodic inventory, which I don’t mind except that Quickbooks seems to handle it poorly.  So I’m currently in a bit of a chasm between what I’m able to do with Excel pivot tables and what we know how to do in Quickbooks.

I do see a purpose for the oft taught “reorder point” setting even in our small-inventory setting.  It would help us generate the weekly shopping list.  I’m also discovering an inventory challenge I didn’t learn about in business school – how to construct a minimum order.  As a very small business we are challenged to meet vendors minimum orders – in some cases to order at all, in other cases to get at least a first level price break.  For example:  as a coffee shop we order all our flavored syrups and some other products from a single vendor.  We’re running out of our most-used syrup so we need to make an order. Just ordering a case or two of that syrup doesn’t meet their minimum order, so what else should we order, and in what relative quantity?  I’d like to analyze the relative consumption of goods that we order from that vendor and construct an order to the minimum amount that matches our needs.  Anyone know of a quickbooks plugin (or other inventory package) that can do that?

Another challenge – like any good business we work to keep our inventory thin. Well, we don’t have to work too hard at it, we have neither the physical space nor budget to get too fat.  However it seems to be a fairly common occurrence (every other week maybe?) that some item we use is not in stock when we go to purchase it.  I’m learning that Cash & Carry seems to be a sort of discount supplier that will always have some variant of a product available, but it will vary: IE sometimes the napkins will be bleached and sometimes they’ll be recycled.  Ditto for the paper bags of the size we like.  That is a problem I’m sure larger businesses deal with as well, perhaps by padding inventory, or by getting big enough to have better relationships with their suppliers.

Another suffering of the very small business – data entry.  To track all this requires hours of typing in numbers from paper receipts.  Where’s the EDI interface for Cash & Carry or Costco?  No wonder so few business owners do it, but without it you’re missing a key advantage.  I’m beginning to think that broad support for data and analysis for small business owners would be a huge support for economic development.  It amazes me what a lock QuickBooks seems to have on the market.  Small suppliers don’t seem to offer much in the way of Electronic Data Interchange,  but I’m just beginning to look.

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As I continue to wrestle with how to do a social investment appropriately, I’ve gotten a couple of new insights.  One: both in investment and grantmaking the fund provider seeks some kind of low-grade control, the tools are just different.  Two: I’m becoming convinced that for something to be a good investment, someone in the deal needs to understand how to steward that investment.

One critique of restricted non-profit funding compares it to for-profit funding and decries the specificity of how funds can be spent.  I forget where I read my first version of this critique, but it went something like “Investors in FedEx don’t get to say ‘this money is just for trucks’”.  At the time I thought that was pretty thoughtful, but now I see it’s not that simple. For profit investors have their own set of tools for exercising control. For one, most of those nonprofit donors writing detailed contracts aren’t also seeking representation on the board, but for-profit investors expect it. For-profit investors also have their own versions of restricted funding – providing services for free or discounted in return for equity. In non-profit, restricted funding is the more common tool. In for-profit, board representation is the common tool, but both are for similar ends – some funder engagement in where the money goes.

I’ve also been thinking more about how to emulate Kim Scheinberg’s Presumed Abundance model, and talking to her a bit about it. I do think that innovation needs some amount of essentially grant funding – don’t worry about the details, let’s just get started. If it doesn’t work out it was at least worth the try (and Kim emphasizes that You the Entrepreneur deserved the support anyway) and if it does work out then we all win.  I’m beginning to see that latter part can only happen if the entrepreneur actually understands how finance plays a role in the enterprise or recruits the right talent to help.  I suppose knowing how to recruit talent would be an aspect of the kind of inspiring person that a social investor just wants to support, but it doesn’t seem guaranteed.

I was initially attracted to the idea because I want to dedicate a pool of capital to building social enterprise and I don’t need that money to come back to me, but I do need it to come back to the fund or it will quickly be game over.  One aspect mentioned in Kim’s original blog was a hope of better aligning interests if it wasn’t about making more money for a seemingly greedy investor but for social enterprise overall.  I do think that helps professionals: the separation from the return being for themselves vs representing others. However I think to really “partner” with the entrepreneur, they need to understand the economics of an investment fund and be bought into the success of the fund, and getting their time & attention for that is not easy when they’re deep into their own enterprise.

In other news: I visited the Viva Farms incubator today in Skagit Valley.  I saw beautiful Romaine lettuce being grown. It actually kind of blooms out in its natural state and the 1st-year farmer showed us how just yesterday he learned that as it grows the leaves should be closed together and bound with the long twist-tie we see when it shows up at market, so it will have that distinctive elongated head.  I now think of Romaine as the veal of the lettuce world.

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Cheryl Sesnon at Washington CASH just passed on to me a new report done by an Evans School MPA Student for the Seattle Office of Economic Development : “ Using Small Business Technical Assistance to Preserve Diversity in Rainier Beach”.   Author Andrea Lehner does a great job of showing the disconnect between what happens at a community level in business and what happens at city and regional levels, as well as how much business opportunity and success is shaped by social networks.  In that report, she also captures why it’s particularly important to support minority-owned businesses:

“Research indicates that minority-owned small businesses are more likely to employ minorities and are more likely to provide goods and services for minorities that are ignored by the larger chains. In addition, there is indication that some minority-owned businesses do not move out of low income neighborhoods when they become more successful. Instead, they stay and continue to hire from that neighborhood, especially if there are other efforts to regenerate the area.”

Last fall I listened in on a webinar about a Kellogg Foundation funded initiative to develop Rural Entrepreneurship Development Systems.  One of the speakers was from North Carolina, where they took a top-down approach and tried to create a one-stop-shopping location for entrepreneurs in NC to identify resources near them.  I’ve been thinking I’d love to see something like that in Washington State.  Last year I tabled for Washington CASH at a small business assistance fair  held at Renton Technical College (The Renton Biz Fair) and I was fascinated by the array of services there – from government agencies to a program doing business assistance out of the Seattle School District, I think aimed at potential contract bidders.

Andrea’s paper does include a survey of Seattle area technical assistance providers on page 27, and that list strikes me as a good one for small and micro businesses.  She also notes that providers agree that there is little comprehensive information about how the various services combine to provide a coordinated spectrum.  Page 33 has a roundup of all the services and makes an assessment of their combined offerings as “Seattle’s Technical Assistance System”.

Looking beyond the Seattle area: earlier in the paper she references a conversation with someone at the Department of Commerce about survey work they did.  Turns out they’ve published it:  The Washington State Guide for Small Business, 2010 edition. However when I look at it, it’s much more at what I’d call a small business level, as opposed to the micro-business level that seems appropriate to Rainer Valley local businesses.

More appropriate is the  Washington State Microenterprise Association (WSMA) which I’m familiar with from my experience with Washington CASH.  Their member listing is a good assortment of service providers in the state who reach all the way down to microenterprise.

Andrea’s report concludes with a list of recommendations for the city.  The ones that resonate for me – creating a service provider roundtable to coordinate provision and having a 3rd party entry point to help entrepreneurs find the right set of services; focusing service provision on business owners as much as businesses;  and focusing evaluation on long-term outcomes (the holy grail!)  Great reading!

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Investing in Haiti

Most of my readers by now have likely made at least one donation to the Haitian relief efforts, help that is urgently needed. Many intermediaries have created compilations of non-governmental organizations (NGOs) with pre-earthquake operations in Haiti, my preference because they will have existing local knowledge and relationships to aid their own effectiveness.

Conversation has already turned to the question of a long-term solution, with a spicy kick-off from columnist David Brooks in the NYT comparing the Haitian earthquake to a San Franciscan one and asserting that this is “not a natural disaster story but a poverty story.” If Haiti were not so poor, the infrastructure would not be so shoddy and the resulting negative impact from the quake not so deadly.

(more…)

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While researching Haitian charity, I discovered that GiveWell.net, a blog focused on non-profit effectiveness, has written a bunch on why they don’t like microfinance nonprofits, and don’t like Kiva and Grameen in particular. I’m sharing for your next idle moment that pairs with an urge to know more about microfinance as an industry!

The core criticism:
Too many organizations that lead with their financial metrics (loans made, repayment rates) over their social metrics (are clients actually better off? Is there good client satisfaction?) MixMarket, a MicroFinance Institution (MFI) research site lists 1,678 MFIs with financial data but according to GiveWell only 66 have filed social reports. They assert that profitability does not necessarily equal impact and I agree. That’s a core tenant of Social Impact investing!

http://blog.givewell.net/2009/12/25/where-we-stand-on-microfinance-charity/
Warning, this contains easily an hour’s worth of muddling around. But interesting stuff!

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