Brown Bag Lunch - Entrepreneur meets Artpreneur - transcript of talk
Brown Bag Lunch - Entrepreneur meets Artpreneur
What makes a good business? Gavin Eddy As a Brown Bag Lunch Event, Gavin Eddy, Entrepreneur and former investment banker, founder and owner of Forward Space, gave a fascinating talk about what he looks for when he invests in a business. What he looks for is an effective combination of the four P’s: Purpose Product People Profit Purpose Some of the most successful businesses in the world have a higher purpose beyond just making money. In some cases it’s a higher moral purpose, but often this purpose is about solving problems for your potential customers. If you solve peoples’ problems, rather than just sell people things, you are more likely to succeed. This is particularly relevant today with the “unacceptable face of capitalism” (over-use of limited resources, unsustainable practice etc.) being so much under the microscope. He talked about how very few large organisations had re-invented themselves as truly sustainable businesses, including all the way down the supply chain. He mentioned Unilever as one of the few who had done this, and Innocent Smoothies as an example of tapping in to a clear need, and hence being driven by purpose. So…be clear about the purpose of your business. Product Three things make a product attractive: Relevance. This is about tapping in to a purpose, as discussed above. If your product doesn’t meet a purpose, nobody will buy it! Uniqueness. Your product shouldn’t be like anything else. But there are very few new, unique products. Most businesses are iterations not radical innovations. So this is all about good timing to market (not always the first, but at the right time) and good execution (do it well). Hard to duplicate. Is your product capable of erecting “barriers to entry” to the market? If your product is easy to duplicate, you may well end up attempting to differentiate on price and that’s not a particularly easy or sustainable position to be in. There were also interesting discussions about the relevance of art, and how this compares with the relevance of a product, and how artists can produce work that provides some form of barrier to entry. And there was an impassioned declaration that artists need to attract more people towards art who are currently not involved; who do not buy art at all. Following a question from the audience, Gavin gave a quick overview of intellectual property rights: Patent – this relates to invention; it can only be for something that you produce that involves “inventive step”. It’s unlikely that artists will obtain this form. Copyright – the problem here is often how to prove you have the copyright and when Trademark – this can be a design, a name etc. There are two types: trademarks that exists in common law; and registered trademarks Design rights – these are generally in relation to the design of something e.g. plans of a property See the IPO website for more. Gavin also talked about product positioning; where the product fits in the market. Is the product budget, mainstream, premium mainstream or super premium? Artists often don’t understand value, and value relates to positioning. A problem artists have is valuing their own work, and hence positioning their work in a market. People This is the most important of the four P’s. Gavin places more emphasis on this than anything else. He looks to invest in highly driven, obsessive people who live and breathe what they do (this sounds like artists!), who will go to any lengths to make their business successful. But it’s critical to know what your skillset is; what you’re good at. So if you are a good artist it doesn’t necessarily follow that you are a good manager, marketer or financial controller. You may well need to buy in other skills even if the core skillset is sound, and you have to be realistic about this. You are also very likely to need a mix of people. A successful business person is very likely to work with people who are not like them. Surrounding yourself with people similar to you can be a recipe for disaster. Profit Apparently, this is the least important! Profit doesn’t have to be about surplus income; it could be about sustaining your business. Almost anything can be a business; but not everything can be a profitable business. But a lot of businesses that Gavin sees don’t think through basic financial concerns such as required incomings and outgoings; what they have to make each month to keep doing what they do. His advice is not to get too hung up on the technicalities, but sit down and work out your basic incomings and outgoings so you have some idea how much you need to sell in order to keep doing what you want to do.