Archive for the ‘Business’ Category

As anyone who’s known me for more than a few years knows, I used to be an entrepreneur. I came up with Facebook before the world’s social network existed: the network of friends you’d have built on the second iteration of TheFence.com would have formed networks of interconnected “fences,” and the question wouldn’t have been “how many Facebook friends do you have?” — it would have been “how long is your fence?” Unfortunately I ran out of money for that one.

A few years later I came up with Betcha.com — basically an Ebay for bets. As I’ve detailed in this space at length, I ran out of luck on that one (or, more accurately, I never had any). Someday, someone’s going to get very rich when they launch their rip-off of Betcha.com. Maybe not Mark Zuckerberg rich, but they’ll have more than a few yachts to water ski behind.

As a guy who almost made it, I find it too painful to follow the entrepreneur/start-up scene these days. And while I don’t root against the little guy, I don’t care enough to root for him, either. That’s called envy.

Startup clothier Alial Fital lies at the intersection of Saville Row …

Recently, however, I discovered a company that captured my attention, my affinity and, ultimately, my business. The company is called Alial Fital and, until a link to its website ended up in my Facebook margin, I’d never heard of it. AF makes polo shirts. Not just ordinary polo shirts. With designs that called to mind both Saville Row and Magnolia Lane, AF polos were the coolest polos I’d ever seen.. And when I saw that PGA Tour player Bo Van Pelt was wearing them on Tour — well, I had to take a closer look.

and Magnolia Lane. For guys who care about their appearance, that’s a very good place.

I’m a guy who’s into golf, style and golf style (1I2I3), so I was quite intrigued. And the more I read the more I liked. AF was founded by — and is apparently run by — Gibran Hamdan, a thirty-something dude who bounced around both the NFL and CFL in an earlier life. I don’t know Mr. Hamdan, who sounds like a bit of a renaissance man, but suffice it to say he was doing a lot I liked. On the product side, AF was producing polos unlike the world had ever seen. Their unique contrasting collars and plackets — gingham checked, striped and the like — made them quite distinctive, not easy for a polo shirt. AF was zigging while the big boys were zagging: whereas the Nikes (more) and Pumas of the world were (and still are) producing lowest-common-denominator pieces that look like they belong in a Central American outlet mall (example), AF was producing seriously stylish pieces that would fly off the rack in the Nordstrom men’s department. And AF was getting rave reviews in the blogosphere (1I2) — not an insignificant matter given that one of the bloggers was Mike McAllister, a golf clothing writer for whom I have great respect.

As much as I was impressed by the AF product, I liked the company’s presentation even more. Whereas many start-up companies represent themselves as being bigger than they are, AF seemed to embrace its smallness. Take a look at the AF blog and it’s hard to imagine the company is much more than a handful of guys in a Minneapolis office. I appreciated its transparency and honesty: like me, they agree with the ol’ saying that you should never pretend to be something you’re not. Its website was better than Playboy for a clothes horse like me — the lookbook at the bottom of this page being its centerfold proxy. Most importantly, AF is doing all this with a sense of humility. Unlike, say, the guy at Iliac Golf, a company I want to like but just can’t, AF’s website and Facebook posts are light on references to “I,” something I very much like in people and companies.

Despite my affinity I could not pull the trigger. Most polos were listed at $85, quite a dig into a not-very-deep pocket. ($85 is a lot better than $245, which is what Iliac is asking for one of its limited editions shirts.) And every time I had enough spirits in me to pull the trigger, the shirt I wanted was unavailable in my size — the always elusive “Large.” That was understandable given that AF only produces one hundred shirts of each style, but that didn’t make it any less frustrating.

Last week, however, AF introduced some new polos and I finally pulled the trigger. On four shirts.

When Santa Claus — er, the mailman — finally arrived, I wasn’t disappointed.

Seriously sweet packaging.

My shirts arrived in a box that looked like it was made of alligator skin. Accompanying my shirts was a hand-written thank you note from Mr. Hamdan himself. Even better than the packaging where the shirts themselves. “Very dope” is about the right phrase. To paraphrase Mr. McAllister, AF’s microfiber shirts are an outstanding combination of feel, craftsmanship, style, technology and innovation. Suffice it to say that when I wear these polos out I’ll have the nicest shirt in the place, whether that’s a country club grill room, airplane cabin or backyard barbecue. And because the side splits are detailed to match the collars, they’ll look good either tucked or untucked. These AF’s will immediately go into my starting lineup — and with 150+ polos in my closet (including 40+ from Greenspan Cup and 30+ Tiger rapidly-aging Tiger shirts [more]), that’s no small achievement.

AF’s distinctive detailing gives their polos a serious “wow” factor.

My guess is that AF will go a long way — if it wants to. The company seems to have the marketing element figured out: its Facebook/Twitters feeds are always outstanding, and the less-than-two-year-old company already provides shirts for pro athletes like Van Pelt, Larry Fitzgerald (NFL), Brandon Weeden (NFL) and Tristan Herbert (auto racing). (Van Pelt is wearing AF (tucked) on the PGA Tour: his U.S. Open polo narrowly edged the Eagle shirt from Quagmire’s Arnie line (see the first pic of me at Turnberry in this set) for Golf Shirt of the Year in the Jenkins household. Fitzgerald has designed a few shirts for AF: the Arizona Cardinal star is wearing AF (untucked) in Italy.) It’ll have to figure out its distribution — you can only get so rich selling individual polos online — but that’s an easy problem to solve. It’ll have to expand beyond polos –again, easy enough. It’ll have to figure out how to get its price points down — a tougher task if it continues to remain just a manufacturer and continues to do its manufacturing in the United States. And it will have to bridge the brand gap from style to lifestyle, something that apparel brands must do to make it big (most recently Travis Mathew). If its execution to date is any indication, that, too, will be a gap it has no problem bridging.

Any company that would (1) produce this polo, (2) publicly admit that its biggest celebrity won’t wear it, and (3) name the shirt for that refusal (“The Design Bo Van Pelt Refuses to Wear on Tour”) has got to be pretty cool.

Regardless of what direction AF goes, I count myself as a new, loyal and enthusiastic customer. A bunch of good guys making outstanding, cutting edge products — well-made clothes for well-dressed men. It’s a vision I appreciate pursued by a company I can happily root for.

Next in my lineup — AF’s Ryder Cup sweetness. I’ve seen a sneak peak, and it did not disappoint.

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My hope to build a Seattle-based Next Big Thing didn’t work out so well. But there’s a new idea in town that’s sure to do a lot better. My buddy Roy Price and Amazon.com just launched Amazon Studios, a platform in which would-be moviemakers can utilize the brainpower of Amazon’s users to make their projects better and, hopefully, get movies made.

My buddy Roy Price, shown here with me at a preppy party in '09, may revolutionize moviemaking with Amazon Studios.

Amazon launched its Studio yesterday with Roy at the helm, and they’re already taking their share of arrows. (Click here, here, here, and here (see the comments).) As for me: as a big believer in the wisdom of the crowds (example), I’d bet on just about anything with crowdsourcing at its foundation. And while I have some concerns about the model — namely, many screenwriters are sure to be reluctant to share their great ideas with millions — I have little doubt that, with a visionary like Roy at the helm, Amazon Studios will figure it out one way or the other. Indeed, even if many would-be moviemakers do hold their ideas, many also won’t. And all it takes is one good one for this project to be a success.

Amazon’s new business is not without a bit of personal irony. A few months back I interviewed by telephone for a business development position with Amazon. The interviewer, a guy whose affinity for Amazon was rivaled, no doubt, only by his affinity for himself, asked one question: “How can Amazon double its revenues in five years?”

A strange question, I thought, given that this is no doubt what Amazon pays him to figure out every day, but in any case my answer was this: either expand your geography coverage (where) or your product offering (what). Since Amazon already sells an awful lot of “stuff,” extending the product offering meant selling services, a la Elance. The interviewer had never heard of the Kleiner Perkins-backed Elance, but he knew enough to know that selling services was a bad idea. I did not get a follow-up interview.

Apparently the interviewer did not know Amazon would soon be taking a long leap from its core business model and landing straight in the, uh, movie business.

Regardless of the personal irony, I hope and believe Roy’s studio will do well. I’d love to bet on how one of the studio’s projects will do at the box office on one of those new websites that allow people to bet on box office takes (more).

Oh wait. Congress made those illegal.

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Is it just me, or does it seem that the rap on real estate agents is going in the direction of lawyers? Gotta have ’em when we need ’em, I guess, but they sure make a lot of dough for doing not a lot of work. (Real estate agents run ads and hang key boxes. Lawyers — well I’m not sure what.) Heck, I know a guy who made three offers on a house on the lake only to have them all rejected. The eventual buyer ended up paying less than my friend offered. It turns out the buyer’s agent was also the seller’s agent. Can you say double commission, anyone?

Arguments in Freakonomics would make for the basis of a Redfin marketing campaign.

Well, I just finished reading Freakonomics, and it turns out the case against real estate agents is also an economic one. Authors Steven D. Levitt and Stephen J. Dubner argue that the current commission-based system :

(W)hat is the real-estate agent’s incentive when she is selling her own home? Simple: to make the best deal possible. Presumably this is also your incentive when you are selling your home. And so your incentive and the real estate agent’s incentive would seem to be nicely aligned. Her commission, after all, is based on the sales price.

But as incentives go, commissions are tricky. First of all, a 6 percent real-estate commission is typically split between the seller’s agent and the buyer’s. Each agent then kicks back half of her take to the agency. Which means that only 1.5% of the purchase price goes directly into your agent’s pocket.

So on the sale of your $300,000 house, her personal take of the $18,000 commission is $4,500. Still not bad, you say. But what if the house was actually worth more than $300,000? What if, with a little more effort and patience, she could have sold it for $310,000? After the commission, that puts an additional $9,400 in your pocket. But the agent’s share — her personal 1.5 percent of the extra $10,000 — is a mere $150. If you earn $9400 while she earns only $150, maybe your incentives aren’t aligned after all. (Especially when she’s the one paying for the ads and doing all the work.) Is the agent willing to put out all that extra time, money and energy for just $150?

Freakonomics at pp.8-9. Levitt and Dubner posit that the way to answer this final question is to measure the difference between sales data for houses that belong to real estate agents themselves and the houses they sold on behalf of clients. And sure enough, it turns out that, using data from the sale of 100,000 Chicago-area homes, real estate agents leave their own homes on the market an average of ten days longer and sell them for an extra 3-plus percent — $10,000 on a $300,000 house. According to the authors:

When she sells her own house, an agent holds out for the best offer; when she sells yours, she pushes you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer — $150 — is too puny an incentive to encourage her to do otherwise.

Redfin, anyone?

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Yesterday I had the opportunity to appear on The Dori Monson Show. Click here for a listen.

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Nearly twenty months after the Washington State Gambling Commission ordered me to shut Betcha.com down or else, we finally received the word we’ve been waiting for. The Washington State Court of Appeals ruled that bettors on Betcha are not gambling:

The salient point here is that as a prerequisite to registration and use of Betcha.com’s website, users must acknowledge and agree that all bets made on the website are non-binding. Accordingly, bettors cannot have an understanding that they will receive something of value if they win.

Exactly what I’ve been saying for years.

We don't drink, but if we did we'd be breaking out the bubbly.

We don't drink, but if we did we'd be breaking out the bubbly.

The court vindicated us, and while I wouldn’t say the judges were laudatory, they did throw in a few kind words. in particular, the court said we “forcefully argued” that the trial court erred in concluding the rule of lenity did not apply to this case because it was, for now, a civil matter. That wasn’t a difficult argument to make: there are no reported cases in any jurisdiction to support the trial court’s position. The trial court made that rule up without even the State’s suggestion. By contrast, the court was none too impressed with the state’s argument: it said there “is no logical basis for concluding” that bettors on Betcha are gambling under either state or common law.

Perhaps more importantly, the court rejected the State’s claim that the liberal construction provision the state Gambling Act applied here — emphatically so:

But that statute states in relevant part: “[a]ll factors incident to the activities authorized in this chapter shall be closely controlled, and the provisions of this chapter shall be liberally construed to achieve such end.” RCW 9.46.010. The plain language of this provision clearly provides that liberal construction is to be applied to chapter provisions regarding the regulation of enumerated “activities authorized.” To read the “liberally construed” language as broadly as the State advocates would require us to add language to the statute, which we cannot do. See Vita Food Prods., Inc. v. State, 91 Wn.2d 132, 134, 587 P.2d 535 (1978 ) (a court will not add words to a statute even if it believes the legislature intended something else but failed to express it adequately).

(Emphasis added.) Again, exactly as I’ve been saying for the last two years. In other words, Betcha has been out of business for almost two years based on a legal position that is rebutted by the plain language of the Revised Code of Washington. Incredible.

I might add: if the Gambling Act had actually read as the State needed it to, it would have been unconstitutional. In State v. Shipp, 93 Wn.2d 510 (1980), the Washington State Supreme Court held that the rule of strict construction of criminal statutes is a matter of procedural due process not subject to abrogation by statute. 93 Wn. 2d at __. That distinction is key: liberal construction is code for “the State always wins.” With strict construction, at least the individual has a chance.

News of the decision got out almost before I heard about it. Ian Ith of The Seattle Times called Betcha’s lawyer for comment literally before I’d read the opinion. (Mr. Ith’s report appeared on SeattleTimes.com late last night.) Venkat Balasubramani, a lawyer from West Seattle, reported on the decision on CircleID.com, albeit with a regrettable title. Randazza is the first blogger I’ve seen to pick it up: he covered it on his blog late this evening.

In the interest of full disclosure, one of the judges dissented. It was a three-paragraph job that made virtually no effort to tie fact to law. I’ll pick that one apart tomorrow for fun — there are literally no fewer than five errors therein. For now, it’s 2 am and I’m getting a bit tired.

It’s been a big day.

UPDATE: The case now has a cite: 201 P.3D 1045 (Wn. App. 2009).

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In case you don’t keep up on the developments of online gambling law, last week Kentucky Governor Steve Beshear ordered Kentucky authorities to seize 140+ domain names currently owned by Internet companies around the world. (The story.) All of these companies are operating legally in their respective domains, but the governor wants Kentuckians in Kentucky casinos, so he’s decided the domains should belong to the Derby’s home state. (I believe BoDog.com is one of the domains at issue. KentuckyDerby.com — not so much.)

Reason I’m writing about this here is that I’ve exchanged e-mails with Ed Leyden of iMega, a DC-based trade group that defends the online industry in matters such as these. iMega’s involved in this one, too. Anyway, turns out that Kentucky wants to seize these domain names on the theory that they constitute “gambling devices.” Kentucky law defines “gambling device” as follows:

(a) Any so-called slot machine or any other machine or mechanical device an essential part of which is a drum or reel with insignia thereon, and which when operated may deliver, as a result of the application of an element of chance, any money or property, or by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or

(b) Any other machine or any mechanical or other device, including but not limited to roulette wheels, gambling tables and similar devices, designed and manufactured primarily for use in connection with gambling and which when operated may deliver, as the result of the application of an element of chance, any money or property, or by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property;

If anyone can come up with an argument that a domain name constitutes a “gambling device” within this definition, please leave a post.

FullTiltPoker.com is reportedly one of the sites Kentucky has its designs on.

FullTiltPoker.com is reportedly one of the sites Kentucky has its designs on.

One more thing: Governor Beshear makes no bones about it that this action is all about protecting Kentucky casinos (from which Kentucky makes a bundle) from out-of-state competition — in effect, he wants to prohibit the importation of gambling services to Kentucky to protect Kentucky industry. According to an article in a Huntington, West Virginia paper:

Beshear believes Kentucky is the first in the country to attempt to block online gambling by taking over Web domain names of gambling sites.

“Unlike casinos that operate on land or on riverboats in the United States, these operations pay no tax revenues, provide no jobs and yield no tourism benefits,” Beshear said at a Monday afternoon Capitol press conference. “They are leeches on our communities.”

Kentucky, home to the Kentucky Derby, already has a state lottery and allows gambling at horse tracks and bingo halls. Blocking internet gambling sites in Kentucky would “protect the signature industry,” Beshear said.

Such sites “siphon off money from regulated and legal games such as Kentucky’s thoroughbred racing industry, our lottery and charitable gaming activities,” Beshear said.

Although Kentucky officials did not have a definite estimate of how much money is being lost to online gambling in Kentucky, Beshear claimed residents were wagering millions online.

Governor Beshear’s plan is about as per se a violation of the dormant Commerce Clause as one could imagine. But what the heck; when it comes to going after online gambling, who cares about the Constitution.

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A follow up on my entry yesterday in re: Washington being named the third-friendliest state for business. I just noticed that the National Federation of Independent Business endorsed Dino Rossi for governor back in April.

If Washington’s such a great place for business, why is the major small business lobby (among others) calling for a new governor?

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