What is Capitalization?
Posted by: kelly in Business and Strategy on April 12th, 2009
This email exchange between myself and a business partner explains Capitalization or Cap Structure:
From: KT
Subject: What is Capitalization?
You and Dave mentioned Capitalization today…..is this the right definition for what you were talking about?
Capitalization
Total amount of the various securities issued by a corporation. Capitalization may include bonds, debentures, preferred and common stock, and surplus. Bonds and debentures are usually carried on the books of the issuing company in terms of their par or face value. Preferred and common shares may be carried in terms of par or stated value. Stated value may be an arbitrary figure decided upon by the director or may represent the amount received by the company from the sale of the securities at the time of issuance.
KT
And the response:
From: John
Subject: RE: What is Capitalization?
Yes, but a simple definition would be the finical makeup/ownership of the company in terms funding and value. For example ACME’s current ownership structure is 50% ABC Holdings and 50% XYZ Corp (me). In bringing Steve aboard we will ask him for additional capital in order to join the company in exchange for his acquired percentage of ownership. We will determine a value of the company (lets say $1 million) and then exchange 10% of equity in ACME for $100,000.00. A simple example but on point. We could also go to a bank and get a loan and provide capital to the company. This would alter our capitalization or cap structure adding debt in place of equity funding. Let me know if you have other questions.
John
The future of Online Retail
Posted by: kelly in Business and Strategy on February 18th, 2009
I had the opportunity to ponder the state of online retail lately and came up with 5 topics relevant to the discussion.
Layaway
If an online retailer offered layaway I would use it. The concept seems easy enough, enter your bank routing and account info along with the amount you would like to apply towards your purchase each month. The retailer has a great interface for you to check on your progress and sends you email reminders each month, etc…for participating in the layaway you get a better deal from the retailer on the item. (Layaway would make chipping away at the price of that new Mountain Bike a bit easier!) By offering layaway the retailer would also be forging a relationship with the customer above and beyond a basic transaction. The ease of paying bills online combined with chatter about being more responsible with personal credit creates a great environment for layaway to become reality.
Customer Service via Social Networks
@comcastcares is the twitter handle for Comcast’s customer service department. Using twitter search tools they can monitor tweets about Comcast and respond immediately to customers. This type of customer interaction is revolutionary. The customer’s complaint and the Company’s response is out there for others to view. This trend will no doubt continue as the idea of picking up a phone to call and complain about something fades.
Sustainability and Used Goods
As people care more about their impact on the environment related to consumerism they will look at 2 things: how the item is manufactured and should they buy new or used.
Retailers like Apple and Patagonia are very transparent and offer information about their manufacturing processes which they use as a product differentiator. Environmental impact will not be as important as product performance but it will carry weight with customers.
“Reduce, Reuse, Recycle” will continue as a trend causing consumers to look for used or second hand goods. Retailers need to prepare a solution to customers not wanting to buy brand new items.
Niche Advertising
Targeted niche advertising has, of course, been around forever. Using Facebook ads, Lijit’s ad network and other highly targeted advertising channels is becoming mandatory.
Interactive Video
The best experience I’ve had with any sort of Interactive Video was watching Obama’s inauguration on Facebook. A high quality video stream combined with my Friend’s activity displayed on the screen making for a unique, interesting viewing experience. This concept can certainly apply to online retailing. Imagine a ski gear website showing a live stream of the new, cool ski movie from Warren Miller on a Friday night. Your friends from around the world are posting comments realtime as you watch the video and see product specs and information displaying inline with your Friend activity.
Review of Valley Boy by Tom Perkins
I finished reading Valley Boy by Tom Perkins a few months ago, the first book I read on my Kindle. Valley Boy is an autobiography filled with interesting stories about tech history, fancy cars, extreme wealth, famous people and sailing. Perkins is one of those unique guys that was incredibly smart and worked his ass off to achieve elite status in the tech and venture world however, his passions seem to lay elsewhere in pursuits such as sailing and writing. I love stories about people that are wildly rich and powerful but still get childishly excited about meeting one of their favorite authors.
RIP PowderFone
Posted by: kelly in Business and Strategy on January 8th, 2009
Last week I discontinued PowderFone, a wakeup call service for skiers and riders that I launched with my partners Micha Hanson and Doug Goodwin in 2002. In our prime, our resort customers included Intrawest, Vail Resorts and many other popular ski areas.
Using the open source platform Asterisk and PHP we built an application that assembled a custom snow report from data provided by Snocountry. Users could define the resorts and day/times they wanted to receive a call.
In retrospect, we overcame many technical hurdles in areas that we were not experts in such as VOIP. As we grew, scaling became our primary issue as call quality began to suffer. Our vendors were also a challenge as they went out of business or dropped support for volume calling that our application required. I learned a ton about customer service as users moved or changed phone numbers and we placed calls to people that did not subscribe. Calling people at 5am in Iowa about 6 inches of new snow at Vail is not a good way to make friends.
All in all it was a great run. PowderFone was the first startup that I solicited investments from family and friends. I was not prepared for the guilt I felt telling them we had to shut down the company.
Thanks to the Interns that helped us year after year and to Doug and Micha for working so hard on the application and search engine optimization of the website.