Miami is America’s future, not its retirement home

A few weeks ago a friend of mine who used to live in Miami (for about a year) suggested that I should promote Miami as a place for burnt out Valley types to come and recharge. They could benefit from the slower pace, the great lifestyle, lower cost of living, and recuperate for a while she suggested. All the while they could share their wisdom of the west coast or north east with us Miamians.

Not gonna lie, this really rubbed me the wrong way.

Miami may not be anywhere near as sophisticated as Silicon Valley or New York or Boston from a tech industry perspective, but we aren’t a bunch of glorified spa workers either. Sure Miami might be lower stress than some of these other cities due to our insistence on things like work-life balance (the horror!) or the fact we’re able to go outdoors 362 days a year (the other 3 days are usually hurricanes, the one day it dips below 55, and/or we’re hungover from celebrating calle ocho or noche buena).

The idea that Miami is where one goes for mid-career semi-retirement was counter to everything we’ve been hard at work on for the last decade. Miami is a place where people go to seize the American dream. People from all over the world come to Miami for opportunities that aren’t present in their home countries or states. There is a very good reason so few people you meet in Miami are actually from Miami (we’re like unicorns), people want to come here, so our population grows faster than some other booming metropolises (5% growth in just the last 4 years).

Miami is the embodiment of the American dream. 51% of our population was born outside the country vs 35% in San Francisco or 28% in New York. This makes us one of the most cosmopolitan cities in the US.

Sure Florida has a reputation for lots of less than stellar things, but that’s because Florida is so desirable to live in, people of ALL types will come here. That however doesn’t really paint the picture of what makes Miami great. As a native Floridian, I think the good far outweighs the bad. It’s not as if people outside the Valley think East Palo Alto is the same as the cozy confines of Palo Alto just across the highway or think the Tenderloin district really represents San Francisco’s heart and soul. Miami, and much of Florida, present fertile grounds for creativity and growth because we don’t have as much history or as many entrenched players impeding change.

In Miami if you have a vision, and know how to get the necessary capital, you can build it.

Leveling Up: Why I decided to get an MBA

So I’ve done it, I’ve taken the plunge and decided to get an MBA. This was not an easy decision, but one that I had been considering for nearly 4 years. A few years ago I was burnt out on Miami, and thought the best bet would be to leave and go to a top tier MBA program for a few years. As fate would have it, I didn’t get in to the programs I really wanted at the time. This was probably for the best, as lots of the things I was involved with started to really take off after my full time MBA efforts didn’t pan out. This made the opportunity cost of doing an MBA full time even higher, and less likely to happen. Yet the idea of an MBA was still on my mind.

So as of a few weeks ago, I am officially a student at Northwestern University’s Kellogg School of Management, in their Executive MBA program. Fortunately for me, Kellogg has a campus that is literally 4 miles from my apartment right here in Miami. The number of factors converging made it an easier decision (top-ranked program, proximity, lower opportunity cost, program culture, and more) despite the high financial cost.

In the first week of class one of the professors asked us what our goals were for the program, as well as what were our goals for our cohort. This was a great question, which made us focus more internally as well as externally. We had been asked prior to class to fill out a survey indicating our goals, and everyone’s anonymized goals were shared with each other. These were very high level goals (what type of organization would you be proud to lead, what kind of world would you like to live in, etc), but it was a promising sign that most of the answers were in line with mine (kind of hippie and not at all aggressive capitalism like I expected).

Lots of my friends asked me why I decided to get an MBA. As an entrepreneur, I don’t necessarily NEED an MBA, but I looked at the factors at play in my life. I studied political science at the University of Virginia, and took a handful of business and economics classes. Everything I’ve learned in business over the last decade has been self taught. That means I am slowly learning things I might have otherwise known years ago with a formal and focused business education. I’m also having to learn a lot from my own mistakes, many of which I could have avoided if I had known better beforehand (hindsight is always 20/20 I guess).

I see the MBA as helping me become more sophisticated in business. To help me accelerate my business growth in both my for-profit endeavors, as well as my non-profit endeavors at Refresh Miami.

My goal is to share the stuff I learn with you, my faithful readers, and hopefully articulate how it applies to startups. Interestingly enough, I joined the Kellogg program in order to grow as an individual, and Kellogg recently rebranded itself to highlight its focus on growth.

Why the Burger King – Tim Hortons deal is about more than taxes

Much has been said about the recently announced Burger King merger with Tim Hortons for the presumed purpose being a pure tax inversion. A tax inversion is where a usually United States-based company merges with a foreign company and assumes the foreign company’s headquarters as its new home; this move typically results in a new combined company benefiting from foreign tax breaks. The press is salivating over the prospect of Miami-based Burger King merging with the Ontario-based Tim Hortons in order to benefit from Canada’s lower tax rate.

The United States has a base rate of 35% for corporate taxes vs Canada’s base rate of 25%. This is the base rate, not the EFFECTIVE rate. What this means is that no one in the US who has a semi-competent tax accountant pays the full 35%, with the myriad of deductions and loopholes that abound. That being said, I don’t think the merger is actually about the theoretical 10% base savings in taxes, I think it is about a much more strategic move.

Coffee if King
Tim Hortons is bigger than Starbucks in Canada, controlling roughly 62% of the Canadian coffee market and 76% of the baked goods market. Together that makes Timmy’s a dominant force in the breakfast market. Burger King knows it can’t compete with its current products on the coffee or breakfast fronts in the United States. In the last 15 years, the US retail coffee market has nearly doubled to just under $13B a year, a growth that has benefited Starbucks more than any of the major fast food players, with the exception of Dunkin Donuts. McDonald’s is reported to be opening standalone McCafe locations in the next 12 months.

If Burger King wants to grow its US and foreign stores’ traffic during non-peak meal hours, it needs to bring people back to the stores for mid-afternoon and mid-morning coffee breaks. It has tried a few times in the last decade with Burger King Joe for example, which it ended up dumping for Seattle’s Best brand coffee (owned by Starbucks). Seattle’s Best didn’t resonate enough with customers as premium coffee, not on the scale McDonald’s McCafe efforts have. So for Burger King, this buy would allow it to offer Tim Horton’s coffee products to its franchisees immediately, driving non-peak traffic.

Breakfast
For years Burger King has been struggling to keep up with McDonalds which commands over 30% of the $30B/year market for quick serve breakfast . With largely futile efforts to grow their share of the breakfast market (heck Taco Bell seems to be gaining in this space faster), it makes sense to acquire the leader in this space just across the border. Tim Horton’s will add a wide selection of proven products that can be produced at scale, and likely in equipment that isn’t terribly expensive to retrofit to Burger King’s stores. By buying into Canada’s market, Burger King can also start sneaking their own Burger products into Tim Horton’s stores if it wants. Burger King currently only has a 1.8% share of the Canadian fast food market.

Franchises
In the last year or two, Burger King has been quietly divesting its stake in owning actual stores and transitioning to being a pure franchiser. This removed the burden of tons of the operational costs associated with running individual stores, and left them with a flexible and more profitable business that can focus on the franchise model. With Tim Horton’s, a proven product that despite numerous tries, hasn’t succeeded in the United States because Time Horton the hockey player lacked name recognition and/or any number of other reasons, Burger King can offer its network of franchisees a new product to sell. They can see who has the capital, who is good at running their stores, and whose markets could support a Tim Horton’s. This could even lead to combo stores like we see with Yum Brands Pizza Hut / Taco Bell / KFC hybrids. It might make sense for Burger King to abandon breakfast foods entirely in lieu of adding Tim Horton’s mini stores that would stock the 10 most popular flavored donuts and a breakfast selection similar in size to what they have now.

Before we go and run around thinking this is purely a tax move, we have to consider the strategic advantages a roll up like this has for BK. Wendy’s may have failed to integrate Tim Horton’s when they owned them during the early 2000s but they also didn’t have an existing breakfast offering OR more importantly a super aggressive CEO who seems willing to try new things.

The Future
Possible moves we see BK do after this merger (and this is all speculation)

  • Sell off all the stores they newly acquire to franchisees
  • Cross-sell BK franchises to TH franchisees and vice versa
  • Acquire another potential franchise operator in the QSR (quick service restaurant) market, perhaps a mid-level chicken or other category like smoothies or juices.
  • Follow emulating YUM brands strategy, but focus on faster growth, cheaper options in the QSR.
  • Acquire a fast casual player like Qdoba to chase Chipotle’s growth or Noodle Co as those are the fastest growing categories outside of burgers.
  • Or if they were really smart, acquire Lyfe Kitchen which is run by a former McDonald’s boss, and bring him on board.

photo credit Flickr

How to fix the sales & dev team disconnect

A few of the startups I work with have been telling me they keep running into the same issue: the sales team is selling the product differently than the development team expected.

Wait, what do I mean selling it differently? Well it boils down to communication of value to the customer. The development team sees A B C as the prime reasons to use their product, the customer is looking for C D E reasons, and the sales guys are trying to emphasize B & C. Often this disconnect is the result of apps being built in silos or off of internal gut feeling data, or even from talking to a small or the wrong sample set of customers.

Step 1 – Improving dialog
The first step in this entire process should be to work on customer development. The entire team should be learning from the customers through interviews, screencasts, and more. Anything done without this data is going to be an inefficient waste of time. This is a process that should involve as many key decision makers in your team as possible. Everyone should be learning from this process as it should influence everyone on the team’s decision making.

So how do you reduce the disconnect between the sales reps and the dev team? Apart from investing in more customer development, there is a simple way to streamline the Dev < - > Sales part of the sales process: simulate sales calls.

Step 2 – Simulate sales
The next step in reducing friction or miscommunication between the development team and the sales or biz dev team is to have them both simulate a sales call. In an ideal world you have a third party observing this interaction and taking copious notes(your CEO comes to mind). Start by having the developers walk through how they envision a sales call going, with the sales team acting as your potential customers. If possible, maybe film this entire interaction. Write down the pain points or friction points that come up during the demo or sales process.

Next up is to flip the tables around. Have your sales guys sell to your developers. Listen to what the dev guys now emphasize as their questions vs what the sales guys did in the first phase. Keep taking notes.

The last step is to simulate this with an actual customer or lead if you have one available. Have your sales guys handle this as they typically would, but have the development team observing both parties. The dev team and the CEO should be taking notes.

Step 3 – Learn and repeat
After you’ve learned what you can, sit down with the team and figure out who can improve where. Once that has been done, wait a few weeks of using the new system before repeating this experiment.

The goal of this exercise is to see what pain points we can cut, what messaging customers are losing and how can we improve it. This might seem like common sense, but quite often I see sales teams and dev teams isolating themselves from each other, which leads to a lot of problems down the line.

Focusing on growth – my first blog contest

So I’ve been taking this blog more seriously lately, as I think it’s important and I should get more organized with it. One of the key factors involved in building a steady blog with regular traffic is to grow its audience. I recently purchased a contest plugin for wordpress from my friend Noah, and decided, well if it worked so well for him, why not give it a shot. So with that in mind, I present you with my first contest.

I’ll be giving away 4 $25 amazon gift cards to lucky entrants in the contest. All you need to do is head on over to the contest landing page, and sign up. Each person you refer earns you extra points in the prize pool. I’ll be selecting four winners in 2 weeks. So get cracking and signup and share. The more you share, the better your odds are of winning.

At the end of the contest I will make sure to update you all on the results. Hopefully I get more than $100 worth of value out of it, and learn something from it too. Hopefully you my loyal readers get some valuable knowledge out of it too. If you’re interested in giving something away in a future contest here, feel free to contact me, I’m sure my audience would love to hear more about your products.

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