May 2004

If you didn't know yet Tim Oren, who's a VC working for Pacifica Fund (based in Palo Alto, Ca.), is giving the chance for being pitched with a killer idea. He claims he's done it before and it worked out - he had to choose from 110 ideas and shortlisted 10. So if you think you got what it takes, hurry up, the deadline is June 21.

In case you're interested Tim also keeps a blog - Due Dilligence.

Very good posting and comments over at A Fistful of Euros about the low cost airline Ryanair.

There are several ways to learn - get a good education, read a lot, look around at other people - basically I think that keeping your eyes open and getting your lessons will do. One of the most effective ways is listening and learning from stories - events and experiences that somebody had faced as well as their take from it. Of course the lessons for you may be different than the lessons the one who experienced the story may be. Now, why this intro? Having the "crucible moments" context in mind I find it fascinating reading and thinking through the Mark Cuban's Success and Motivation saga, now at the 4th episode. Cuban is Dallas Maverick's owner and he is one of the persons that apparently started straight from the bottom. If you have half hour to spare read it all: p1, p2, p3 and p4.

I have seen different blogs pointing to this article about CEOs degrees of wisdom and experience combination  and about how they faced several experiences that proved to be crucible in the turn their self development and organizational one took in time. A crucible moment is a unique experience in one's lifetime where he/she can demonstrate a remarkable capacity not only to survive tough experiences but also to extract profound insights from them. The authors mention four types of circumstances for crucible moments: mentoring relationships, enforced reflection, insertion into foreign territory, and disruption and loss.

I think I've had my share of crucible moments, starting with my MBA times when besides business fundamentals I learnt that team work is invaluable. A second one was my post MBA job where I had a great business mentor, an unique individual, I was very lucky to have had the chance to work with him - I learned invaluable lessons about leadership and business from him. A third was the period I lived abroad - I got to know and respect different cultures and I think I learned so well that there is no only black and white but tons of nuances in between. Or differently put I finally understood the meaning of an old Japanese saying - truth has a thousand faces. Finally, I think I am experiencing a crucible moment nowadays as an entrepreneur, I am exposed to great challenges, everyday I am learning tons of stuff and I get to know myself quite well.

You can see here the timetable for a project that started exactly 14 years ago - a good transportation infrastructure between the capital and a key industrial node accounting for some 200 km. Parts of the highway will be ready this year and 2006 is when it is claimed to be fully operational. Take it with a grain of salt though, it's an elections year.

In the meantime more foreign direct investements are announced -- Howard Johnson intends to develop a franchised network in Romania and affiliate eight more hotels in the next six years while Japan's Koyo will put some 2.3 mil euro in a production facility in Alexandria (southern part of the country, at the Danube)

People from the Romanian industry seem to finally have gotten it -- they chose the markets, assesed the context and crafted the product. However putting your foot in the door is not as difficult as providing a compelling value proposition in time - and historically speaking Romanians still have a point to make here. I think that besides wine, textiles and software can make a product mix Romania can become famous for in the next 5 years or so. With the right marketing of course.

According to an IBM study (pdf) global firms view offshoring as a key element in their globaliztion strategy, others view it as global sourcing while a third category consider it as a necessarry response to costs and labor pressures and have made it part of their major strategy. The most outsourced processes are Information Technology and Manufacturing.

Some of the conclusions of a study made back in 99:

- a great majority of Romanian managers are task oriented leaders, meaning that in a conflict situation they adopt a win-lose approach (keywords: defending, competition) rather than win-win (which is a people oriented approach - keyword: compromise)

- the communication manner is an assertive one, meaning that the middle and low level management have little input in the organizational improvement or innovation if there's any.

One may argue that this defines a business context based on cultural values. Put this in the yesterday's "5 year from now on" context and you will think I was optimistic (a friend called me idealistic). It may be so, however it is so true that everything starts from education and this is one of the pillars that Romanians seem to lack the most nowadays.

You can read the entire study from here.

Stories like Jerry's are invaluable lessons, the parallel between a CEO and Shakespeare's Henry V proves that being a good CEO means more than grasping some business principles - it's also about mistakes, learning, humbleness or trust. There's a lot of people being exposed to it everyday but oh, so few getting it right. Just read and think it through by yourself, I need some time for myself to chew it all.

Seth Godin sees it as technology will become more and more part of our life -- free hard drive space, digital camera high usage, always on broadband or that "your current profession will either be gone or totally different". It got me thinking about what Romania will be like in 5 years from now on:

- we will be probably be nearly joining the EU

- Adrian Nastase will be the Romanian president

- a more mature business environment with a new class of leaders

- more pragmatism and seriosity at the decision making level. Also more respect!

- more entrepreneurs and cool ventures

- finally Bucharest will have a more decent look, especially downtown in the old area which will be pedestrian only.

- Ryan Air will operate in Bucharest as such it will become a foreign attraction in terms of weekend tourism. Not sure about the seaside though. 

- still no Champion League representative but that's ok.

Anybody takes the challenge of making some predictions?

A good pdf report somewhat old (2001) but well structured and useful if updated about the Romanian diary industry.

Remember when I mentioned about Romanian Stock Exchange option of looking for regional partnerships? Well, apparently others are already getting involved in the consolidation process of the stock exchanges. Hungarian Stock Exchange was bought by the Austrian one, and the Lithuanian one by the largest Nordic exchange company.

I had an interesting discussion last night about financing opportunities in the software industries. There were two options mentioned. One - the private equity side which is a bit inaccessible not because of the unattractiveness of the industry (it is growing at double digit rates after all) but because of the lack of managerial skills. This is a very good point indeed as unfortunately Romanian technical skills and innovation abilities are not backed up by the management ones. Solution for this one -- bridge the gap between the business/industry players and universities, more entrepreneurial classes, internships, etc.

Second option was debt from the banking system. Now, I am the one claiming that microcredits can be a very good way for sorting things out - you have a good project, an accordingly sound business plan for it and then ask for the dough. However, it looks like the banking industry is not ready yet (read interested) in such opportunities for the simple reason that they can find very easily alternative better investments (or less riskier or better returns). In other industries of course. Someone even mentioned about one banker claiming that "software projects are difficult to be quantified". Besides the lack of understanding of the industry per se, which I may add is a two way street, it certainly makes sense, actually this is a need that will be solved by the market forces. As long as the opportunity costs for not going after software projects is low banks will purely neglect them. However, I think that more than ever nowadays software industry is an underdog which can offer handsome returns if smart guys play it right. And sooner or later, with all the constraints considered, things start to settle and companies become more mature.

And btw, Doug has interesting stats about the microfinancing situation in Romania. What I think it would be even more interesting to know though is the industry spread.

I use messenger a lot on daily basis for either talking with my clients or my friends be it by using MSN or YM. Also I use it for the voice service, in case I don't use Skype. Today something strange happened while using voice over YM - there were other people interferring with my discussion. And I mean people I was not connected to or that I had any idea who they were. And this happened even after logging on and off several times and it was quite annoying. Must be a bug or something - anybody has any idea what's going on or experienced the same?

I guess it is old news now - still worth mentioning perhaps only for the waves among the analysts out of the blogging loop. See also Reuters, BBC and  CNET stories - I think the chasm is beginning to seem a bit narrower now. The stats are also encouraging.

Obligatory read for people in the software development business and especially for developers getting more and more project management responsibilities - also good for the ones involved in programming stuff. (thanks to my friend Pope)

Very good piece about innovation that can take place on four different organizational levels (finance/process/offerings/delivery) and argumented by examples from the real world. Worth 10-15 minutes of analytical thinking.

Umair is signaling about McDonald's new strategy of becoming a trendy place and provide healthier food. Apparently a successful one since they had a 56% revenue increase in the last quarter. That's not a problem in Bucharest - Mac restaurants tend to be quite crowded around here anyway.

I usually tend to stay away from the political discussions and disputes as I believe politics in general means hidden agendas. Also, I have to admit that I don't have the best opinion about G.W.Bush and about his way of dealing with international matters. However, in spite of this personal opinion I cannot help noticing that GWB really did a smart move by having the public support of some proeminent business people especially involved in technology companies. His counter candidate - Kerry - has also Apple's Jobs as adviser, however I don't think Kerry is wise by capitalizing on some wrong economical assumptions stating that outsourcing is threatening the economy and job outlook of the Americans.

Ion Tiriac, the former Romanian tennis player and now a very powerful business person close to the Romanian Government prepares the ground: "If I were the Pope of this country, I would refuse to join the Union in 2007 and I would choose 2010, to be able to have everything right by that time, and to negotiate properly". Moreover, most of the top managers from Romania claim that Romania won't be economically ready to join EU in 2007.

It finally starts making sense in spite of all the election BS.

...demistifying some of the popular prejudices about offshoring. (via Jeff) Also, some quick facts that clearly indicate offshoring will be used in spite of most populist/oportunistic political declarations:

- a junior software programmer makes yearly about EUR 26k in N. Ireland, 44k in Ireland and about 6k in Romania (a very good one in Romanian case!)

- a senior makes about 51k in N. Ireland, 66k in Ireland and about 10k in Romania

- an IT director makes about 91k in N. Ireland, 107k in Ireland and about 25k in Romania.

It is hard to be in a management seat and take strategic decisions without having these figures in mind.

Google's got a blog updated by Evan Williams. The story got slashdotted with people rambling about the uselessness of blogs. And in this tone I also changed the poll from the right.

Douglas translates the Czech story about it. Czechs are proud of that, and I assume they have reasons to. Still, some of my friends would argue that a beer is the best cure for hangover.

Here is an older post of Loic writing about the amazing progress Estonia did on the e-anything direction. Those guys even pay for parking by using the mobile phones! And Romanian ministers are reluctant even to answer their emails. :( You can read more about e-Estonia, e-strategy and such from here.

Heiko points to things the European Union needs in addition to love and what it was like in Poland when joining EU 2 weeks ago.

A great story about a persistent Romanian in seeing and betting on an emerging technology. In USA of course. I know that there is some consistency behind the story as Anca is a friend of mine back from the MBA times and she does make things happen. Excuse my rant from below, but THIS is the kind of story we should read more often about Romanians.

While Czech Republic and Slovakia seem to have an unbeatable position for being a regional cluster in the automobile industry, I've been reading lately more and more about investments in Romania for auto parts manufacturing facilities. The latest is the Lisa Draxlmaier's of 15 mill. euro in Timisoara. More specifically the factory is producing cables and wiring for BMW's Mini car brand. Must be spillover effects, eh?

Bankers complaining that Romanians are placed on the lowest places in deal transactions with credit cards. Of course they put the blame on the end user instead of looking at their decayed strategy (read greediness) or at least at providing incentives for stimulating John to use the plastic. Hint: close partnerships with stores by offering them discounts or good deals in the context LEAD to win/win situations.

The competition becomes rough with SAB Miller purchasing Aurora - a local brand supposedly with 5% market share (due to a very loyal customer segment) and with 30 mill technology investments made in the past. The value of the deal is an estimated 25-30 mill which seems rather fair in a 600 mil market. The industry is mature and consolidating with players fighting for scale and with Interbrew besides SAB Miller in the top seats.

Howdy folks, sorry for disappearing for so long, I've had rough times lately. Hope you didnot miss Tom Wilson's Lost in Translation about the discontinuity between Romanians' obsession about the image foreigners have about Romania (arguably inherited from Ceausescu's time) and the inability of a national promotion of a picture (at least) closer to the reality. Naturally, the question that comes in mind is what would be the first things a foreigner would think about Romania if he/she were to get informed from the international media. Stray dogs? Orphan people/adoption briberies? Corruption? None of them? Unlikely. All of them? Perhaps.

Mmm, that is I think the main problem - I would like to see more about the beautiful landscapes, more about easygoing and hospitable people, about cool places to hang out in the cities, perhpas more about the tremendous business opportunities. You can find anything for any taste. Unfortunately, the problem is not that the media is not reflecting any of these but the fact that we don't do anything at all for changing it, in spite of the above claimed national obsession about our international image. Reporters need stories - there's plenty of interesting ones around, how come that only the most horrible ones come up? That is a rethorical question of course, fact is we have no idea how to sell ourselves and what our core values are. We are just lost in translation.

An article from the latest Economist edition pinpointing the drawbacks of Google going public and supporting my arguments. Also, Mitch Kapor on the real terms of the Google deal is worth reading.

We were discussing a while ago that Estonians are open to technology and adopting innovative stuff. They seem to be again ahead of the pack in Central Eastern Europe at least by starting implementing wifi spots. The strategy implementation is simple and relies on the combination of evangelizing the concept (easy to use) and its value proposition (afordable most importantly).

It is a CNET Special Edition analyzing the impact of offshoring on the American economy. It is a very debated subject in the US nowadays, probably because of this year's elections than its effects per se. There are four topics to be covered with two more to go.

That's the title of my last article published in Computer World Romania.

One Romanian official speaking about EU accesion and Romanian food producers:

"Food producers here are pleased by the prospect of the first round of accession because it means that it will eliminate unfavourable tariffs on food products which in the past have been upheld by many of the new Member State governments".

That's one side of the coin. The other one is to say that most companies will go under as it will be getting more competitive. The reason: the industry is very fragmented with several (big or small) players looking for survival. As such the luckiest (read the better) will get bought by international strategic investors which cannot neglect Romania's market size while the rest will go under.

I don't see this one as good news - after selling their main technology to Microsoft last year GeCAD team started to desintegrate, as (key) people left the company for exploring other opportunities. GeCAD's CEO Radu Georgescu enjoys for sure fresh challenging starts but it takes time to find that killer application. My take is that time is a factor here, knowledge is the most dificult to gather and retain in the software industry. In the meantime, from one of the most important security software manufacturer the firm remains to act only as a distributor or consultant, which is not really too exciting for software developers, but hey, they still have to make a living.

On other perspectives, I think it is really smart that GeCAD is offering RSS feeds - the first Romanian company doing it as far as I know. I subscribed.

Remember Altex's budget optimism in spite of the delayed Media Galaxy's opening earlier in February? Well, it looks like the guys are ahead of the budget with Media Galaxy bringing in 2.5 mil in 2 months (they estimated 4 mil in 3 months). Also, I heard that AIG will take an equity position in Altex, which is not strategically bad at all - permits opening new channels and product development for consolidating AIG's position in the Romanian insurance industry.

Very nice tool to test your knowledge about Europe and Europeans (via Anne-Cecile).

A good overview of the Hungarian newspapers industry found via Editorsweblog. In this context you may also have a look at the state of Romanian press (via freeex and Doug)

The finalists from this year's business plan competition from Wharton are ventures in biotech (2), technology (2), environment (1), medical devices (1), biometrics (1), alternative energy systems leasing (1) and education (1).

Mike on Google's development strategy - I see some hedging going on, otherwise would be better to invest into an index fund. More about it here, here and here.

Some of the today's headlines after the weekend parties and celebrations:

Hungary: Hungary enters the EU with a flourish.

Poland: Poland's unpopular prime minister resigns.

Czech Republic: Leaders told to forge Brussel links. 

Romania: Confusion on new Romania - EU border. (in RO)

Also, some people don't seem to be too optimistic about the whole EU expansion.

A good article on 4 business models internet-related that presumably have the potential for becoming strong performers: social networking, local search marketing, blogging, and broadband video. They are in different stages of evolution yet all in the early adopters/tech enthusiasts phase; however, except for the second, I think the fundamentals need to be worked out until a profitable model is found. Interestingly enough the article also mentions 4 models that "crashed and burned" during the bubble period: online communities, push, pay to surf and ad-supported access.

If you have a spare hour I recommend you watch the "Building a Europe for Business" session from the World Economic Forum. Very good ideas thrown in -- I think this is the beginning of a social wave in the run to create a better Europe. Education and entrepreneurship are the key concepts here and  they should be combined with the notion of corporate social responsibility that was also touched upon in the debate.

And entrepreneurship needs not only to be supported by creating a sound environment (economic, social, cultural) but also promoted as success stories across the continent. Loic is very right -- European entrepreneurs don't have the the greatest image, but perhaps this is just marketing problem and presenting success stories are a good way for changing that. More specifically on the subject you can read from here (pdf) about cases of good practices on how issues of promoting entrpreneurial attitudes and skills in schools and universities can be tackled. The report was written by a group of national experts of 26 European countries and coordinated by the European Commission and is part of supporting materials of an European Entrepreneurship Action Plan. I only wish Romanian officials knew and got involved in all this stuff - be proactive not reactive!