The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
Don’t think of Tiger Woods as an athlete. Think of him as a business, a brand. Now let’s ask if Tiger Woods, Inc. was well served by its founder/chairman/CEO in the ongoing solo car accident scandal.
From the public relations point of view, I think not.
On November 30, Nancy Armour, a reporter for the Associated Press, called to ask me how I thought Woods was handling the incident. It was early on in the chronology of the story; the incident was just a bizarre early-morning single-car accident that may or may not have been caused by an argument over what might or might not have been an extra-marital liaison. At this point, only one rather disreputable tabloid had made a single salacious allegation against Woods. Woods had crashed his car, been to the hospital and returned home. He declined to talk with the police or the media, and he issued the first of his series of web site comments (this was the one where there was neither domestic abuse nor extra-marital dalliances).
I told Ms. Armour I thought Woods was handling his PR badly. My comments were shaped by my current job as a media trainer and crisis communications consultant, and by my previous experience as executive producer of "Good Morning America" and "Entertainment Tonight." Woods, I told the AP, would be wise to get out in front of the story, even if he gave only one interview to one reporter. Clamming up leads to rumor and speculation, and once they begin, it’s nearly impossible to close those floodgates.
Ms. Armour’s story contrasted Woods’ approach with the way David Letterman handled his scandal. Confronted with an equally salacious scandal wrapped in an extortion attempt, Letterman went on the air and told his audience the story. “By revealing that himself, Letterman followed the No. 1 rule in crisis communications: Take control of the story,” Ms. Armour wrote.
My point here is not to rehash the growing scandal but to look at it as a teachable moment for any business. Evasion and/or cover-up are almost always worse than the initial problem, and they never work. The more one evades, the deeper the media digs.
Neal Pilson, the former president of CBS sports, was quoted in another AP story as saying, “At some point, he’ll play golf and he’ll move on. And at some point this will become more embarrassing to the media than to Tiger.”
Now it is true that Tiger Woods owes you and me and the rest of the public absolutely nothing more than the best golf game he can deliver, but Woods owes much more to his sponsors, whose largesse has supplied the bulk of his estimated billion dollar fortune. He owes them what they paid for, which is unsurpassed talent wrapped in a clean, wholesome image. At the moment, the talent remains, but the image is tarnished. Woods owes his sponsors the behavior that is supposed to accompany the image they are paying for. If these sponsors wanted a “bad boy,” the sports, music and film industries offer no end of rogues they could hire.
That said, as of this writing, three of Woods’ sponsors--Nike, Gatorade and Gillette--say they will stand by him. Another sponsor, AT&T, had yet to be heard from; but it remains to be seen just what “standing by” means in this instance. A company can continue to pay Woods and use him far more restrictively than in the past. It can trot him out for corporate events and special appearances and simply not run his TV commercials or magazine ads. Certainly, Nike, which sells a lot of shoes and athletic gear to women, has got to be seriously thinking about how it can use Woods in a way that won’t alienate potential female customers.
We will never know about the deals that don’t come his way because a corporation that might have ponied up another fortune for a Tiger Woods endorsement decides not to approach him in the aftermath of the scandal.
Bottom line: you can’t protect your brand behind a wall of silence.
***Update: As the scandal has developed, Woods' sponsors have moderated their "stand by our man" posture.
As the annual franchise tax season approaches many clients become confused with the term “franchise tax”. On a daily basis we hear, "my company is not a franchise, why do I have to pay this fee?" Many people's immediate reaction to the word "franchise" quickly congers up images of McDonalds, Subway, Burger King etc.
When speaking from a corporate standpoint, think of the term franchise as the right or privilege granted to operate a company. Delaware is granting the entity the right or privilege to own/operate a company under the Delaware Corporate Law Structure, (which we know is the best in the nation!) and for that right or privilege Delaware would like compensation in return; this compensation is what we call the Delaware Franchise Tax.
Title 8, Chapter 5 § 502 of the Delaware Corporate Code clearly states:
“Annually on or before March 1, every corporation now existing or hereafter incorporated under Chapter 1 of this title or which has accepted the Constitution of this State, shall make an annual franchise tax report to the Secretary of State. The report shall be made on a form designated by the Secretary of State and shall be signed by the corporation's president, secretary, treasurer or other proper officer duly authorized so to act, or by any of its directors, or by any incorporator in the event its board of directors shall not have been elected.”
The annual franchise tax for the corporation is due on March 1st of ever year. No worries, as your registered agent we will provide plenty of notice to remind you of this deadline. The franchise tax is due even if the business didn’t conduct any activity or lost money.
We strive to make paying the franchise tax as easy as possible for you. You can pay it now, quickly and easily by using our franchise tax filing service on our website. https://www.delawareinc.com/payft/
If you have any questions feel free to call 800 345 2677, Ext 6904 or email email@example.com
In my media training workshops, I always encourage my clients to read newspapers and magazines with new eyes and listen to broadcast interviews with new ears. In addition to absorbing the facts of a narrative, I urge them to analyze how those facts are most effectively presented. In other words, how good soundbites work.
I do this all the time and recently I was reminded, while watching Charlie Rose on PBS, that investor Warren Buffett is not only a canny businessman, but he is also very good with soundbites. Recently, Charlie Rose interviewed Warren Buffett for a full hour, discussing his acquisition of Burlington Northern Santa Fe and the U.S. economy in general.
I don’t know if Buffett has what I call the "Harry Truman gift" -- that is virtually every point he wants to make comes out like a polished verbal gem (“The buck stops here.” / “If you can’t stand the heat, get out of the kitchen.” / “It’s a recession when your neighbor loses his job, it’s a depression when you lose yours.”) Or perhaps the Sage of Omaha is more calculating; maybe he -- like the late comedian Milton Berle -- rehearses his ad-libs. Most of us fall into the Milton Berle, rather than the Harry Truman category; we are not genetically gifted with the ability to compose great soundbites on the fly. But there is nothing wrong with composing them in advance and deploying them in an interview. For one thing they make your message points more effective. For another, good soundbites make you a “good interviewer,” and the media will come back again and again to solicit your views.
A November 18, 2009 New York Times story reported Goldman Sachs would support business and management education for 10,000 small businesses. The story said GS would be working with Buffett, the bank’s largest investor, on the program. Buffett told the Times he was not committing any of his own money to the program but rather would offer “advice from the 35,000-foot level.” That works as a soundbite or a pull quote because it is such a compelling word picture.
Here are some more "Buffettisms". They are all great word pictures:
“Chains of habit are too light to be felt until they are too heavy to be broken.”
“Derivatives are financial weapons of mass destruction.”
“I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”
“In the business world, the rearview mirror is always clearer than the windshield.”
“Only when the tide goes out do you discover who's been swimming naked.”
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”
“According the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.' "
Quotes can be effective in creating soundbites. But who would have expected American’s most celebrated investor to be quoting a Hollywood sex goddess? Here it is: “Why not invest your assets in the companies you really like? As Mae West said, ‘Too much of a good thing can be wonderful.’” A paraphrase of a familiar quote -- especially if it’s a funny one -- works well, too: “Beware of geeks bearing formulas.”
Comparisons, real or implied, make for good soundbites. Here are some of Buffett’s gems:
“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
“Price is what you pay. Value is what you get.”
“Time is the friend of the wonderful company, the enemy of the mediocre.”
“It takes 20 years to build a reputation and five minutes to ruin it.”
As an investor, Buffett frequently flies in the face of conventional wisdom. Here are some good quotes that challenge conventional wisdom:
“A public-opinion poll is no substitute for thought.”
“The investor of today does not profit from yesterday's growth.”
“Risk comes from not knowing what you're doing.”
“Wide diversification is only required when investors do not understand what they are doing.”
“If past history was all there was to the game, the richest people would be librarians.”
And, finally, I urge clients to leave comedy to the comedians, but by comedy I mean joke-telling. More often than not jokes don’t work but gentle humor can work -- especially the self-deprecating kind. Here’s a perfect example by Buffett: “I buy expensive suits. They just look cheap on me."
While doing some research I came across a few interesting studies regarding dyslexia and entrepreneurs that I found to be very interesting. In 2004, a study by a research center based at Case Business School in the UK reported that 20% of British entrepreneurs identified themselves as dyslexic. (Whereas, only 4% of corporate managers in the same study identified themselves as dyslexic). In 2007, a similar study suggested that the percentage of dyslexics among American entrepreneurs is in fact greater, where 35% of entrepreneurs identified themselves as dyslexic.
Some suggest that several traits and experiences common to dyslexics converge to create this tendency towards entrepreneurial activity. People who are dyslexic often excel in the one of the fine arts, see abstract patterns where others would not, rely on delegating to get certain things done, prefer to get straight to the point when reading and writing, they value doing rather than studying, show high levels of creative thinking skills, and have experienced failure and bounced back—all fantastic traits for entrepreneurs.
Here are a few very successful famous entrepreneurs who identify themselves as dyslexic: Richard Branson (Virgin), Charles Schwab (Charles Schwab), Ted Turner (Turner Broadcasting), John Chambers (Cisco), Henry Ford (Ford Motor Company), Paul Orfalea (Kinko’s).
If this topic interests you be sure to check out the book written by Paul Orfalea, the founder of Kinko's called Copy This!: Lessons from a Hyperactive Dyslexic who Turned One Bright Idea Into One of America’s Best Companies.
Despite their impact on the economy, relatively little is known about entrepreneurs' backgrounds and motivations. A study released by the Kauffman Foundation in July, titled "The Anatomy of an Entrepreneur," led by co-authors Vivek Wadhwa, University of Akron's Raj Aggarwal, University of California's Kristina "Z" Holly and former BusinessWeek tech editor Alex Salkever, aimed to discover who American entrepreneurs are and what makes them tick. To do so, the team surveyed 549 successful business founders from high-growth industries between August 2008 and March 2009. Now, the team is back with a second report, "The Making of a Successful Entrepreneur," in which respondents answer questions about the factors that contributed to their companies' success. Flip through this slide show for Wadhwa's thoughts on the most compelling data.