Category Archives: Business

Some entrepreneurship studies I’d like to read

I have searched for these sorts of studies and been unable to find anything. If anyone knows anyone who might help me uncover these answers, please let me know:

1) Is there a correlation between starting your career with a large business vs a small business and ultimately going on to start your own business?

2) Are people who start their own companies after working at small businesses more or less likely to achieve success than those who start their own companies after working at large businesses?

3) Are software companies started by software developers more likely to be in business in ten years than those started by non-technical founders?

4) Are companies started by MBAs more likely to be in business after ten years than those started by non-MBAs?

5) Are companies started by 18 year olds more likely to be in business after ten years than those started by 50 year olds?

What if D.R. Horton had an army?

Here in the United States, we make some pretty aggressive infrastructure expenditures (I won’t call them investments, as that suggests there is some desired ROI for the investor) that road contractors, lobbyists, and politicians argue we will need in the future.

One extreme example: at this very moment, we are widening little two lane roads into six lane highways in hundreds of towns with declining populations. I’m in one such little town right now. It has lost 5% of its population in the last ten years, and everywhere I go, I’m driving through road construction sites (obviously, there’s no walking option – I just drove 0.6 miles to the Food Lion to pick up some strawberries). Unless you are profiting from this expenditure, I can’t imagine any rational argument in support of it.

All the crazy market interventions we do here in the United States (from the mortgage interest tax deduction to our highway construction) accelerate exurban development and debt accumulation. But we’re playing in the minor leagues. The Chinese really know how to do it.

Their government is developing hundreds of cities in order to urbanize the nation.

The damage (both health and environmental) resulting from the waste associated with that pace of industrialization is devastating. China just closed a city of 11 million because it’s smog index climbed over 1,000. The WHO considers 300 hazardous, and “recommends” under 20. For comparison, Atlanta’s smog index is presently at 13. NYC, with a population of  8 million, has a smog index of 41. And all the pollution they’re seeing today is just the tip of the iceberg.

This morning, I was wondering how that sort of thing might happen. I suspect that if there was only a single real estate holding company in the entire United States, if it had an army, and if it subcontracted its development to fee developers who controlled our politicians, this is exactly what would be happening.

Imagine if D. R. Horton, the largest homebuilder in America, had an army and could force people to buy its homes. That’s what’s happening in China.

Identifying our beach head

In GuildQuality’s earliest days, virtually all of our prospective customers came from my personal network of homebuilders, remodelers, and real estate developers. That network carried us to a couple dozen customers and enabled us to flesh out a real product that solved real problems and created real opportunities for quality-minded contractors. From there, we had to figure out how to expand.

Our first meaningful market expansion opportunity came via a referral from one of our earliest customers. They suggested we get in touch with a company that organized roundtables and provided consulting services for more than 100 design-build remodelers all over North America. 100+ companies may not seem like a lot, but it just so happened that these remodelers were among the most respected remodelers out there. Our relationship with this new network not only helped us to quickly expand beyond my 1st degree network, but it also helped establish GuildQuality as the type of service that exceptional companies choose to work with.

Not long after that, we developed similar relationships with organizations that introduced us to networks of homebuilders and neighborhood developers, and our customer base grew to nearly a couple hundred remodelers, builders, and developers. Around then, we began asking ourselves: What does a great GuildQuality member look like?

By “great”, we meant, “Who, when they learn about GuildQuality, is most likely to sign up pretty quickly?”

We settled on three characteristics:

1) They were a member of a network within which we had some reasonable penetration. This meant that they were likely to know at least a little about us, especially with networks that had a formal relationship with GuildQuality and who helped to market us to their membership. Building product manufacturers’ preferred contractor programs are the most common example of this sort of network.

2) They were in a geographic market where we had at least a few very reputable customers. This meant that they almost certainly had heard of (and respected) some of our customers, and were more inclined to give a salesperson the time of day.

3) They were the type of company that was interested in technology solutions that could help them improve their business. Back then, this meant that they had a website, though today that standard has risen a good bit.

We found that if they matched any one of those three characteristics, there was a decent chance that they’d sign up. Two out of three meant a very good chance. Three out of three meant they would almost certainly sign up.

We used those three characteristics as our beach head, and spent almost all of our sales and marketing efforts targeting companies that matched at least two out of three.

To this day, those three characteristics are still excellent indicators of whether or not a company will be interested in our service. And as our membership has grown, our networks have grown, and the percentage of contractors who are investing in technology solutions has grown. That means there are now considerably more companies who are hanging out on our beach head.