Thank you for reading this issue of Insights For Founders. This one is focused on questions for founders. Why no answers? Because founders like you deal with unanswered questions every day, and are very good at it.

New, New Deal?

It is interesting to remember that the "3 Rs" of Roosevelt's New Deal were: Relief for the unemployed and poor; Recovery of the economy; Reform of the financial system. I wonder why are we not revisiting them now, since they are needed again. What's your opinion?

What contribution can business founders make to correct these renewed ills? I hear you answer, "Those are political issues and only concern me since they are conditions of doing business. All I can do is go to the ballot box." However, there are vital actions you can take in your own business. 

It's like individuals who say, "I can't cure global warming, so there's no point in me doing anything." Yet lots of tiny actions can have a big impact.

Relief for the unemployed and poor
Here are 3 actions you can take:
  • ensure staff are trained in more than one skill;
  • have employment policies that cover health and parental leave;
  • reconsider your recruitment policy criteria.

Recovery of the economy
Here are 3 actions you can take:
  • use as many local suppliers as you can;
  • preserve your jobs; small business creates about 80% of all of them;
  • maintain continuous innovation in all that you do.

Reform of the financial system
Here are 3 actions you can take:
  • avoid banking with JPMorgan Chase, Bank of America, Wells Fargo, Bank of New York Mellon, and State Street;
  • pay all corporate taxes in your place of business*;
  • borrow less, bootstrap more.
* Last week, even Woz, Apple's co-founder said, "I don't like the idea that Apple might be not paying taxes the same way I do as a person," he said. "I pay over 50 percent of anything I make in taxes, and I believe that's part of life and you should do it." According to the GAO, in each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability.
Rewrite the Rules?

Rewriting the Rules of the American Economy is the title of the newest book (2016) from Joseph Stiglitz, the Nobel Prize-winning economist. It should be the mantra of all social partners. As he said in mid-March, "Social injustice on an unprecedented scale, massive inequities and loss of trust in elites define our political moment-and rightly so."

The Stiglitz agenda for taming the top and growing the middle should suit both right and left in politics, because the ultimate beneficiaries will be all of us, rather than the present system that favors a minute minority. "The vast majority of Americans-not just the poor-are deeply worried about the basics: getting their kids a decent education, bringing home a paycheck that can put food on the table or pay the bills, saving enough so that one day they can retire," he says.

So many of us abdicate responsibility and are leaving it up to politicians to 'fix' the problem. What's interesting to me is that a new breed of business founders are not waiting for 'them', understanding that we all have to make our own future. There is no battle between socialism and capitalism. There is no 'us' and 'them', we are all mutually interdependent.

This interdependence is something well-recognized by new entrepreneurs. When they build a business model they look at both the whole and the parts. They acknowledge that customers will not be delighted if they use inappropriate channels of distribution; if planned activities are not matched with available resources, the model will never become reality.

Outcomes not Output
So, if we burden our professional workforce with insurmountable student debt burdens and as employers we don't help pay for education of our people, or we fail to empower workers to participate in the decision that impact them, we all lose. And the measurement of success should not simply be about output, it should focus on outcomes as well. Piling up assets in the hands of few is a road to ruin.

New entrepreneurs tend to be much more aware of the downstream consequences of business actions that do not produce value for all stakeholders. They are better equipped to assess impact of their actions upon others. They also are aware that being concerned with mutual benefit is likely to produce better benefits for themselves, too.

Import Substitution Opportunities?

International trade is high on the political agenda in the run-up to the American presidential election. It has caused me to wonder about its relative merits, and especially to startups.

If you ask the US Government ( they will tell you, #1 that 95% of the world's population is outside America. They'll also say that it helps companies here to reduce risk in the domestic economy and give other less compelling reasons as well. Other Government departments chime in, too. For instance, talks of risk mitigation. Sales and profits can grow faster too, they say.

Cast Iron*
Cast iron storm water drain covers are an interesting subject. Why should so many 250lb monsters have been made in the UK by a French firm (Saint-Gobain PAM), be shipped across the Atlantic, and installed in my street in Georgetown, Texas, even though the US company CertainTeed is a Saint-Gobain subsidiary? Likewise, why did many smaller cast iron drain inspection covers get shipped even further, from India to the same city?

China is the runaway leader in casting production (46 million tons, 2014) worldwide, followed by the USA at a mere 12 million tons (!), but it's still a big producer. India comes in third at 10 million tons. The UK and France are out of sight in the table of big producers.

I wonder about shipping such hunks of metal so far. It begs the question about international trade and whether it makes sense. Is there an opportunity for founding (!) a drain cover foundry business right here in the US to compete with other municipal casting companies like Alhambra, D&L, Olympic and US Foundry?

The USA produces less than 2% of the world's rice (13th producer in the world, 2014) and yet it exports half of its production to Mexico, Central America, Northeast Asia, the Caribbean, and the Middle East. China in Northeast Asia is the world's biggest producer by far.

India, Thailand and Pakistan between them account for 62% of world rice exports (2014). The US does about 8%. Shipping companies of course, are delighted, but is there a sense in this? In 2014, American consumption of rice increased to 26 pounds per capita, a one-pound increase compared to the previous year. About 20% of that was imported.

Since we seem to like rice so much, is there not a huge opportunity for domestic rice producers, millers and processors right on their own doorsteps? What about the organic rice producers? What opportunities result from the 'arsenic in baby rice' scare? Think about your own industry in this kind of way. You may be surprised at the opportunities that lurk.

*These are only examples and my lack of sector knowledge may hide obvious answers, but the principle remains: take a good look at your own business circumstance and ask yourself if you have opportunities for import substitution.

Thanks for reading. I would appreciate hearing about your own startup dilemmas. 
OutsideInsight provides comments and suggestions on your own business plan in 7 days for $399. Contact me for an initial discussion.

Will Keyser
Venture Founders LLC

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