Gene Marks: A Small Business Lesson: Romney Was Right to Admit He Was Wrong

My whole life, like many small business owners, is about being wrong. Not a day goes by where my mistakes aren’t pointed out by an employee, a customer or (most often and gleefully) by one of my teenage kids. And about 15 years ago I was as wrong as Mitt Romney.

Back then I was doing a lot of the service work for clients in my growing technology company. One client, a small manufacturer, asked me to prepare a special spreadsheet analysis of gross profit per product line from a software system we had installed. Yes, it sounds very boring and it was. But it was important for his business. And so I worked on it for days and submitted it to him. Thinking I was through with the job I had moved on to the next. Until my client called me about a week later. Some of the numbers didn’t make sense to him. Some of the columns didn’t seem to add up correctly. He wasn’t angry. He just wanted to clear things up and make things right.

And he was right. I was wrong. But did I admit this? No, I didn’t. Did I respond like a man and fix my mistakes? No. I was a wuss. Sure I had my reasons. At the time, I was up to my eyeballs in other clients. My company was struggling and every hour counted. I didn’t have the time to fix up his spreadsheet. I didn’t want to admit my stupid mistakes. I didn’t want to incur any extra costs in what was already a low profit project. Did I mention that I was a wuss? Well, some things never change. So I denied and made excuses.I avoided his calls. I never gave him a straight answer. I never admitted my mistake. Instead, I pocketed his money and hoped the whole thing would just go away.

And… it did go away. Phew! Eventually the client stopped calling. He gave up pursuing me for answers. I’m guessing in the end he just made the fixes himself. I never found this out. That’s because he never used us again. A few months later he had changed his software altogether and we never heard from him. This was a nice guy and I acted like a wuss. This memory has stuck with me for a long time.

I was reminded again of this painful incident last week when Mitt Romney publicly announced that he was wrong about his infamous “47 percent” comment he had previously made at a wealthy fundraiser’s house back in May. Mitt Romney was wrong. And for a while there I was starting to worry about him. Because he was starting to sound a lot like me back then.

This is what he said:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it — that that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what … These are people who pay no income tax … [M]y job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.

It’s not what he said. The fact checkers and pundits can argue that. And it’s not where he said it. Raising money from rich people at a rich person’s home is nothing new in politics. It’s the fact that his statements were insensitive and incorrect and, most importantly, he didn’t admit to the mistake afterwards. For a good week or so he danced around the issue, He made excuses, He tried to soften the statement. He was doing what I did with that client years ago. Until he finally did something that I wish I had done. He admitted he was wrong.

It took him a week but yes, last Thursday he said in an interview that he was “completely wrong.” Why didn’t I just do that? I should have. So should we all.

It may sound trite, but it’s true: running your business is all about credibility. Why else would Larry David always keep sticking his face right up to the other guy’s and look him closely in the eye on episode after episode of Curb Your Enthusiasm? He’s trying to figure out if that person is being truthful with him. We’re all trying to figure this out. Running a business isn’t about selling products and keeping costs low. It’s about trust.

We trust that a customer is going to pay when they say they’re going to pay. We trust that a supplier will deliver product when they promise to deliver. We trust that our employees will show up as agreed and perform their work as we expect. Legal contracts are there to protect us, but they can’t prevent situations where people don’t do what they say they’re going to do. And by the time our lawyers are pulling out the contracts to review the fine print it’s usually too late to fix the problem.

Running a successful small business means being trustworthy. It means doing what you say you’re going to do. It means delivering on time and being reliable. It means not taking advantage of the other guy because it benefits you. And most importantly it means admitting your mistakes.

Because we all make mistakes, all the time. In Governor Romney’s defense, the guy is speaking to groups of people and members of the media all day. Being human, he’s bound to say something wrong or stupid. We all say wrong and stupid things. In business, like politics, it’s not about being wrong. It’s how you handle being wrong.

You don’t deny that something was said, particularly when it’s captured on video. You don’t shake your finger at a press conference and say “I did not…have sexual relations with that woman.” You don’t avoid phone calls. You don’t dance around your mistakes with your customers like I did. Maybe some people have the time and the intelligence to weave their web of responses and come up with that alternate universe where the facts are hidden under layers of fabrication and their story actually becomes true in their minds. Maybe some people have the intestinal fortitude to be that way. I, for one, found myself feeling nauseated every time I saw that client’s number pop up on my caller ID. I learned that I didn’t have the stomach for this kind of behavior. And I’m definitely not smart enough to remember a bunch of excuses and lies just so that I can cover my butt.

Maybe Governor Romney only admitted his mistake because he had a little extra political capital to spend after his successful debate. Or maybe he just did it because it was the right thing to do. The reasons don’t matter. Like the event, it’s how you handle it. Smart business people I know and great companies that I do business with admit their mistakes immediately. They take their lumps. They absorb the cost of making things right. And then they move on. Customers may grumble. The media may be joyful. The bloggers and tweeters may have a field day. Profits may be affected. Heads may roll. But then the situation dies down. And when people look back no one will be able to accuse you that just by mistakenly doing the wrong thing you didn’t ultimately do the right thing.

A version of this blog appeared on Inc.com.

Why You Shouldn’t Build A Business On An API Call

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Editor’s note: Joseph Puopolo is an entrepreneur and startup founder of Printchomp who blogs on a variety of topics, including green initiatives, technology and marketing.

I am constantly amazed by the number of startups that build applications and take a huge business risk by building their company on an API call. Countless apps, particularly social apps, have popped up through the last 24 months that have taken data from other systems and re-displayed it in their systems. While there is widespread usage of APIs (and not for a moment am I suggesting that people not use them at all), I just think that start-up founders consistently underplay the business risk.

The risk is clear, if the data dries up so does your business. For all that have created apps based largely on API calls, consider what would happen if that information fire hose wasn’t there anymore. The companies who provide these APIs may not disappear, but it will definitely be a game-changer. The changes to Twitter’s API should serve as a warning sign and an important reminder. Countless third-party Twitter apps have found all their hard work rendered useless by the latest release of their 1.1 API, as the vital flow of data has come to a halt or slowed greatly. Some might blame Twitter and say how dare they shut down the fire hose to the community. I think a lot of responsibility needs to be placed on the developers who consciously build on an ecosystem they knowingly can’t control.

Two examples cited directly by Michael Sippey on the Twitter blog are Tweetbot and Echofon. In the words of Sippey, “Nearly eighteen months ago, we gave developers guidance that they should not build client apps that mimic or reproduce the mainstream Twitter consumer client experience. And to reiterate what I wrote in my last post, that guidance continues to apply today.” I am not here to parse the he said she said, just to offer a warning to startups building their business on an API.

If your startup could have its throat cut by a TOS (Terms of Service) change or API change, you shouldn’t just brush inherent risks to your company under the carpet. Moving beyond the risks to your company you should also consider what the true value you are providing to your users. In many cases (especially in the case of social), apps merely have a new UI on top of the information of Twitter or Facebook.

On the contrary, there is something amazing to be said for companies who build into the ecosystem and allow their functionality to be seamless across a broader group of applications. The best example that comes to mind is 37 Signals universe and the way they have built and integrated into countless other useful applications. They allow vital business information to flow freely flow between systems.  The trouble I have with many other companies and apps that have emerged is their sole dependence on other ecosystems to drive data into their systems via an API.

Perhaps I have an old-fashioned view of the Internet when I propose the following.  Your application needs to be able to offer some additional value beyond what you can drive via an API call and the subsequent data derived from it. There are definitely edge cases for this statement, but there is an underlying problem in how people are approaching the creation of a new business. Create your own mechanism for your users to contribute data into your system and encourage them to be active users with their own accounts in your system. Your system needs to be able to able to stand on its own two legs. For many young startups, API calls have become a crutch in lieu of generating their own data.

Some soul searching needs to occur for a lot of young entrepreneurs who are trying to create something people will find interesting and use. Just because you can make an API call and slap a slightly new UI on it doesn’t make it a business.

[Illustration by Bryce Durbin, based on Zimbbos]

Report: Europe Inching Closer To Fining Microsoft Billions Over Failure To Offer Internet Explorer Alternatives

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Pull out the ibuprofen, Redmond: it looks like the antitrust headache that bothered Microsoft for years in Europe may be coming back: the European Commission is preparing to bring charges against the company worth billions of euros because Microsoft has failed to implement an effective way of offering users alternatives to Microsoft’s Internet Explorer browser on Windows-powered devices, according to a report in the German-language Der Spiegel.

After Microsoft had been fined over $2 billion (€1.64 billion) by the European Competition Commissioner because the regulators ruled that it was being anticompetitive by bundling its Internet Explorer browser software with its operating system across millions of PCs sold in the European Union over several years, in 2009 the two sides reached a settlement. Part of that settlement involved Microsoft agreeing to give consumers a clear way of choosing another browser in the future in future versions of its Windows OS. But apparently Microsoft failed to do this with a subsequent version of Windows 7 that was distributed and activated 28 million times.

This is an ongoing investigation into that failure, and when it first surfaced in June, Microsoft acknowledged the error, saying that it had “fallen short” of expectations and that it had “deep regret” over the mistake. At the time, Joaquin Almunia, the current European Competition Commissioner, said: “We take compliance with our [original antitrust] decision very seriously. If the infringement is confirmed, there will be sanctions.”

So it looks like the Der Spiegel report is a sign that the authorities may be inching closer to making a move here. The next step in the process is for Almunia’s office to send Microsoft a indictment in the form of a Statement of Objections, and then after several weeks in which Microsoft is allowed to appeal, Alumnia will reassess and potentially apply the sentence.

The news is timed quite badly: it’s coming just weeks before Microsoft is due to start a big $1.5-billion marketing push on Windows 8. It has a big event for the media scheduled for October 26.

But it’s also an ironic turn of events Microsoft: Internet Explorer is no longer the most dominant browser in the region. According to figures from Stat Counter, it now sits in third place in Europe behind Google’s Chrome and Firefox (see graphic below).

Microsoft says that it will get us a response for this story as soon as possible, and we will update as we learn more. We have also reached out to the European Commission for a comment.

Skydiver breaks speed of sound after jumping from edge of space

An Austrian daredevil survived a jump from a balloon more than 24 miles above earth on Sunday morning. In the process, he set a world record for the highest jump and became the first skydiver to break the speed of sound, according to various news reports.

Felix Baumgartner stepped from an enormous helium balloon that, at 128,100 feet above the eastern New Mexico desert, was at the edge of space. He wore a pressurized suit to protect his body from the near vacuum, which because of the extremely thin air, allowed his free fall to reach the speed of 690 miles per hour in the first 40 seconds according to CNN. His highest estimated speed was 833.9 mph, a would-be world record. His free fall lasted for four minutes and 21 seconds, falling a total of 119,846 ft.

It took the 43-year-old Baumgartner two hours and 21 minutes to reach the altitude. The ascent included a critical 4,000-foot stretch known as the “dead zone,” during which it would be impossible for him to parachute to safety should something have gone amiss, The New York Times reported. His balloon was made of 40 acres of ultrathin plastic that was described as an inflated dry-cleaning bag big enough to fill the Los Angeles Coliseum. It was the largest balloon ever used for a manned flight.

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Moon rocks, chunks of Mars on auction block in New York

NEW YORK (Reuters) – Several lumps of Mars and the biggest piece of the Moon ever offered for sale were unveiled on Sunday in New York in what organizers described as history’s largest meteorite auction.

Sparkart: How A Digital Agency Helped Redbox Get Into The Ticketing Business

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Earlier this month, Redbox announced that it’s going to start selling live event tickets from its ubiquitous red kiosks. That seemed like a smart move for Redbox, which is best-known as a DVD rental service, but it turns out the idea actually came from outside — specifically from Naveen Jain, CEO of digital agency Sparkart.

Jain says the idea came to him when he was on a plane to Chicago, where Janet Jackson and Bon Jovi were both having concerts. (They’re both clients of Sparkart, which is also getting into the product business with a website builder called Storyteller.) He ended up sitting next to a Redbox engineer, and they struck up a conversation about the company’s business. Near the end of that conversation, Jain asked the important question: Had Redbox ever thought of going into the ticketing business?

After all, Jain knew (through his work with musicians at Sparkart) that 40 percent of LiveNation tickets go unsold, often because people just didn’t know about the event. At the same time, he argues that when someone goes to a Redbox kiosk, what they’re looking for is entertainment, which is a lot broader than movies. So it seemed like a natural fit to help people discover local events.

I suspect that many of us have moments of inspiration like this too, but we rarely act on them. Jain, on the other hand, actually set up a meeting at Redbox, with Mark Achler, its senior vice president of new business, innovation, and strategy. That meeting led to a partnership between Redbox and Sparkart, with the agency offering business development, technical consulting, and design.

Achler tells me that the possibility of selling tickets may have been discussed within Redbox before, but over the course of a year, Jain transformed it from a random thought into a real product.

“Naveen got our wheels turning,” Achler says. “We really think our customers find and discover great movies and games with us, and we wondered if we can do that same thing with live entertainment.”

Right now, the program is being piloted in Philadelphia, where customers will be able to buy tickets to the Philadelphia Film Festival, NASCAR’s Pocono Raceway, and more. Next, it plans to expand to Los Angeles, and eventually, to roll the service out nationally. (Redbox says it currently operates 38,500 kiosks across the country.) The company is working with partners on a national, local, and neighborhood level to offer tickets for a wide range of events, Achler says — and for all of those tickets, they’ll only need to pay a convenience fee of $1.

“What I love about the Redbox vision for this business, is it’s more than just concert tickets,” Jain says. “It could be tickets to the zoo, it could be the local sporting event, it could be tickets to a museum.”

Achler adds that he doesn’t want to take business away from the existing ticketing industry, but instead to help them “grow the pie.” He also suggests this is part of a broader effort by Redbox to expand its business, as evidenced by the relatively recent addition of video game rentals and its partnership with Verizon to launch a streaming Netflix competitor.

David And Charles Koch Send Pro-Romney Mailing To 50,000 Employees

David and Charles Koch are “attempting to control their workers’ votes” by sending out pro-Romney informational packets and “stifling workplace political speech,” In These Times reports.

According to an investigation carried out by the magazine, the Koch brothers allegedly sent out a mailing to 50,000 employees earlier this month offering information as to how to vote in this year’s presidential election.

For more on this, read the full report at In These Times.

The Koch brothers have long been known for their conservative political views, and much has already been said about the hundreds of millions of dollars that the pair have donated to right-wing candidates and causes.

Sections from the packet were reproduced on the magazine’s website, as well as on that of Chris Hayes, host of MSNBC’s Up w/ Chris.

A letter, dated Oct. 1, from Koch Industries president and Chief Operating Officer David Robertson, was included in the mailing. According to In These Times, Robertson wrote:

If we elect candidates who want to spend hundreds of billions in borrowed money on costly new subsidies for a few favored cronies, put unprecedented regulatory burdens on businesses, prevent or delay important new construction projects and excessively hinder free trade, then many of our more than 50,000 U.S. employees and contractors may suffer the consequences. … It is essential that we are all informed and educated voters. Our future depends on it.

According to Up w/ Chris, the packet also included “editorials critical of the Obama administration, written by Charles and David Koch for newspapers like The Wall Street Journal and The New York Post.” A flyer which lists Koch-endorsed candidates was also reportedly enclosed in the packet, with Mitt Romney and Paul Ryan said to be at the top of the list.

In a statement sent to Up w/ Chris, Rob Tappan, Koch Companies director of external relations, said that the letter was sent “to encourage employees to be informed about and engaged in the political process.”

The Koch brothers are not alone in pushing to sway their employees’ political views.

In August, The Huffington Post reported that Murray Energy Company allegedly forced hundreds of coal workers in Ohio to give up a day’s worth of pay to attend a Romney campaign event. Also in August, Richard Lacks, CEO of Michigan-based Lacks Enterprises, allegedly urged his employees to vote for Romney and warned them in a letter that an Obama re-election could lead to “higher taxes and lower pay.”

Then just this week, David Siegel, founder and CEO of giant timeshare company Westgate resorts, came under fire for an “opus-like email” which he allegedly sent out to his employees, “railing against one-percent bashing and arguing that the president’s reelection would threaten” their jobs.

Don McNay: Find a Financial Adviser Who Has Worked With More Money Than Your Nest Egg

“I will provide for you, and I’ll stand by your side
You’ll need a good companion now, for this part of the ride”
-Bruce Springsteen

After 30 years of helping people with their money, I discovered that financial issues were rarely about rates of return or asset allocation.

Money is about emotions. People often use money to buy something that is missing in their lives.

It could be they are missing love, self-esteem or security. Most of the time, money doesn’t cure what really ails them. The ailment remains, but they wind up losing their money too.

People need help in finding out where they want to go and how to get there.

My solution is simple: Find advisers who have worked with more money than you have. If you win $100 million in the lottery, find advisers who have worked with $150 million.

Getting people to seek out advisers can be complicated.

There is a great disconnect in the financial world.

A comprehensive Financial Capability Study by the FINRA Investor Education Foundation said that 67 percent of Americans rated their own financial knowledge as “very high.”

This is a primary reason that people blow through their money so quickly. They don’t know what they are doing, but are convinced that they do.

By the time they figure out their lack of knowledge, they are broke.

The second thing that the FINRA study noted is that only 28 percent would “trust financial professionals and accept what they recommend.” It then said that 51 percent agreed with the statement, “Financial professionals are too expensive for me.”

In short, people don’t trust financial professionals, don’t want to pay for a financial professional and think they know what they are doing already.

The financial professionals know they are people who really need help, but they often do a poor job in marketing their services.

People need help. From somebody.

Going back to the FINRA study, it said that 20 percent of the population spends more than their income. Sixty-two percent did not compare features when getting a credit card.

Fifty-eight percent of non-retirees have not tried to calculate how much they will need for retirement. Forty-five percent of retirees didn’t try to figure out how much they would need before retiring.

The dueling statistics remind of the Steve Goodman song “Banana Republic,” which was a hit for Jimmy Buffett. A line in the song says, “You know that you cannot trust them, ’cause they know they can’t trust you.”

I found a great mechanic by asking people who loved cars which mechanic they used. The referral method works in any kind of situation.

The best way to find a financial adviser is to ask someone with lots of money to recommend one.

I tell lottery winners that they should consult with an attorney before doing anything else. That is good advice for most people. Lawyers can set the foundation for good financial and estate planning.

As much as people disconnect with financial professionals, it is even worse with attorneys.

Every year since 1991, the Gallup Organization has polled Americans on which profession they consider the most honest and ethical. Lawyers always run near the bottom, ahead of lobbyists, car salespeople and members of Congress, but behind reporters, bankers and auto mechanics.

Lawyers can help you with business disputes and tax questions. They can make sure your business and real estate purchases are set up correctly. Lawyers can help you plan what happens to you or your family if you should suddenly die or become disabled. And, even more importantly, they can make sure those plans are carried out. Lawyers can help if you are in an accident.

I’ve watched people make serious life decisions without using lawyers. That usually doesn’t work well. I’ve seen people pay large chunks in taxes because they didn’t ask a lawyer about a transaction. I’ve seen property disputes arise, simply because people didn’t use attorneys to draw up proper deeds, leases and agreements.

I’ve seen people get burned because they drew up business agreements without an attorney to help them. I’ve watched extremely wealthy people lose everything because they co-signed or guaranteed loans and didn’t ask an attorney to guide them through the pitfalls.

Arkansas football coach John L. Smith recently filed bankruptcy because of his involvement in real estate deals gone bad. I suspect that he did not understand how an attorney could have minimized his risk.

Most of us need someone to double check decisions and keep us from making serious mistakes. That is the thing that lawyers do well.

People need advisers who understand their situation. Finding one that has worked with more money than what you have is a good place to start.

Don McNay, CLU, ChFC, MSFS, CSSC is a bestselling author and expert on what to do when you win the lottery. His latest book, Life Lessons Learned From the Lottery, will be available on Kindle on November 10.