An Entrepreneur's Approach to Challenging Augusta

I’m a week late in joining the Augusta conversation thanks to travel but have read a decent amount of commentary and put a lot of thought into it.

I think it was a smart decision for Augusta to allow female members because it’s the one I would’ve made. If I were a member there, I’d welcome female members for the more social environment.  If I were running the place, I’d welcome them because it’s smart for business as it doubles the pool of potential members and it’s smart politically.

I do not, however, agree with the pressure put on them to do it.  There are many social clubs in America that “discriminate” based on gender, ethnicity and other things like income and prestige.  It’s right that they’re allowed to do so.  They’re private and don’t involve access to jobs/education, fair pay, political equity or any of the other areas where women and men should be equal as human beings. 

I can’t join the Belizean Grove.  So what?  I’ll very likely never be allowed to join Augusta even though I’m a white male because I’m not rich and powerful.  I’m okay with that.

If women want to join a spectacular golf club in Georgia, they’re welcomed to create one.  They can make it female-only if they want.  That’s the beauty of America.

The entrepreneur in me has listened to Martha Burke for all these years and thought – if I were her, I’d transfer all of this time and energy into creating an amazing women’s-only club that rivals Augusta and use THAT as an example of why women are equal to (and in many ways superior) to men.  That would’ve been a powerful entrepreneurial approach to this situation.  

This is how all successful entrepreneurs I know look at the situations they find unsatisfactory.  They identify the problem, create an innovative solution, determine if there are enough like-minded people to develop a market and then go for it.  They don't bang on the door of the incumbent and demand change.  And, on a tangentially relevant topic, one of the beautiful things about entrepreneurship is that it’s almost completely agnostic to gender, ethnicity, age and everything else besides brains, guts and luck.

I applaud Augusta because I agree with their decision.  But I also believe that other male-only clubs like Cypress Point and Pine Valley are not doing anything legally or ethically wrong.  If their membership wants it that way, they have the freedom to do so.  And if you disagree, you have the freedom to do something about it.

The PGA Tees it Back While Telling Us to Tee it Forward

Adam Schupak had an interesting tweet recently that I’ve been thinking about.  It said:

Adam Schupak ‏‪@GolfSchupak

‪@JoshuaJTGA True but a mixed msg to say avg golfer should play fwd while pushing the pros back. If pros at 7700, whose going to play 6500?

There was intriguing dialogue back and forth about this concept between industry vets I know well and good points were made on both sides.  But the more I thought about it, the more I agreed with Schupak’s stance.

When you’re a kid shooting hoops in the backyard, what does everyone dream about?  Scoring 60 and hitting the game-winning shot in Game 7 of the NBA Finals, of course.  Or, at least that’s the scenario that played out in my mind almost every afternoon for years.

Fast-forward to adulthood and the same concept applies.  When you’re on the putting green lining up 8 footers, what do you imagine?  Is this the putt to win the U.S. Open or to shoot 88 instead of 89 on the local muni?

Kiawah's 9th Hole, a 494 Par 4

Tee It Forward is a great program and one that I want to succeed.  I bet we’ve all had too many bad experiences being behind a player or group that was playing inappropriate tees and holding everyone up.  A recent NGF study determined that the average round of golf takes 4 hours 17 minutes and 30% of golfers think that this is too long.  This is important considering most golfers cite golf’s time commitment as one of the two main limiting factors in how much they play (the other being cost).  Therefore, speeding up and maintaining a healthy pace of play is critical to the industry.

People want to play the courses the pros play.  The want to play under the same circumstances as the pros to gauge how far away they are from being as good as them.  It’s the kid in us that still likes to dream and play make-believe every once in awhile.  And telling folks to tee it forward while the pros are teeing it back eliminates the opportunity to do so.  Which is why people don’t play from their appropriate tees as it is.

Of course, the PGA of America has an obligation to the players and fans to provide a tough and fair test of golf, as does the PGA Tour and USGA.  However, I agree with Schupak that they’re sending a mixed message by using a 7,676 yard course for their national championship while promoting Tee It Forward during commercial breaks.

Next year the PGA Championship is at Oak Hill in NY.  Wouldn’t it be neat if they kept it at the length currently listed on the PGA’s website of 7,134 yards, or even shortened it to under 7,000, to align with their campaign?  That would send a powerful message, especially if they used other means besides length to challenge the players.  Otherwise, as long as the pros keep teeing it back, I believe the PGA will have a hard time convincing the weekend warrior to tee it forward.

What Kind of Entrepreneur Are You Going to Be?

I was talking to a serial tech entrepreneur and venture capitalist in the Bay Area recently and he had an interesting take on entrepreneurship.  This was his comment:

There are three types of successful entrepreneurs:

1. The young and dumb kind who work tirelessly and fearlessly until they find something that sticks
2. The technical experts who solve a specific problem that only a handful of people know exists and how to fix
3. The authentic kind who have domain expertise, industry experience and the infrastructure needed (relationships, etc.) within a market to exploit its inefficiencies

Barring you being a technical expert, what kind of entrepreneur are you going to be?

When I look at my career, we were definitely in the “young and dumb” category when launching and building TGA Premier Junior Golf.  But, thankfully, we succeeded due to a great concept and a decent amount of luck.

When we launched GLinks in 2010, we were sort-of authentic entrepreneurs.  We knew through our experience in the golf industry that there’s a real pain point for young professionals to learn golf in a fun, convenient and cost-effective way.  However, we came to realize that GLinks is mostly a marketing company and this is not where our expertise lies.  With TGA, the marketing is easy because our partnerships with the schools give us direct and open communication channels with our customers.  With GLinks, we had to get word out to the broader community…. A task that requires a greater investment in time, resources and capital.  We ultimately decided that it wasn’t worth it (right now) when our main focus is on building TGA.

Last year, we launched TGA Premier Youth Tennis again as sort-of authentic entrepreneurs.  Through TGA, we knew the youth sports market and franchising industries well, but we lacked experience in the tennis industry.  This concerned us.  So, we formed a founding partnership with the governing body of the tennis industry, the USTA.  The combination of our expertise with the USTA’s gives us all of the tools we should need to be successful.  If we could go back and redo GLinks, we would’ve used the same strategy and added a promotions guru to the founding team or partnered with a marketing/promotions group before launching.

The lesson in my friend's comment is that most entrepreneurs are either the young and dumb kind or the authentic kind, and you definitely have a better chance at success if you're in the authentic camp.  As my MBA professors used to say, always entrench yourself in an industry before trying to start a company in it.

This advice provided me with clarity and I hope it gives you food for thought as you put your ideas through the feasibility funnel.  And, for those of you aspiring entrepreneurs who don’t want to worry about such matters, the franchise industry has thousands of proven business models for you to explore.

The PGA Tour Golf Marathon Adds More Miles

This has been a big week for Tim Finchem and the PGA Tour.

Yesterday, the Tour officially announced that the 2014 season won't kick off in Kapalua in January, but rather will start three months earlier at the Frys.com Open in October.  The big change is that the four Fall Series events will start awarding a full allotment of Fedex Cup points, hence raising them to the same level as all other tournaments.  The Frys.com Open is just a few weeks removed from the Tour Championship, so an already exhaustive season will go from nine months to ten, with the only break coming from mid-November to mid-January.

I know people very close to the Frys.com Open and am happy for them.  This steroid shot from the PGA Tour speaks highly of their hard work and the quality of tournament they run.  And, if they switch the course to The Institute (a club so private it makes Augusta look like a muni) as this article suggests, it would be an awesome way to start the season.  I'm also happy for the McGladrey Classic, another Fall Series event where my favorite golfer, Davis Love III, is closely tied to as the Chairman.

While this decision boosts the profile (and surely the sponsorship dollars) of these events, I'm scratching my head about how it improves the experience for fans.  The golf season already seems like a marathon and fans will now be asked to jump into a new one a few weeks after the last one ends.  That's like having Week 1 of a new NFL season three weeks after the Super Bowl.  Then, as quickly as fans are asked to embrace a new season, they're forced to take a two month break until the Hawaii events in January.  I further worry that the longer schedule will result in lower-quality fields across the board as players have to pick and choose their events to avoid burnout.  Finally, I've always personally enjoyed the Tour season starting in Hawaii as it's like a big breath of warm fresh air after the holidays.

Following this news yesterday, the Tour announced today that Web.com is the new title sponsor of the Nationwide Tour, effective immediately.  Reports are that the deal is worth >$10 million/year for 10 years.  I couldn't find financial details of Nationwide's deal with the Tour, but I suspect that it wasn't $10 mil.  The Tour's recent decision to eliminate the traditional Q School model and make all aspiring Tour players go through the Web.com Tour for at least one season almost certainly sweetened the deal.  I've already talked about why I disagree with this decision.

Two days and two big announcements by the Tour.  I applaud them for being proactive about trying to grow their business.  I hope we look back on this week in a few years as a big one in a good way, but I fear that we will not as I don't see these decisions being fan or player friendly.  I hope I'm wrong because big in a bad way is not what a fragile industry needs right now.

Are You a Human Being, Visionary or Entrepreneur?

A friend/mentor at the Tech Coast Angels sent me a one-sentence email today that simply said:

"Person who sees problem--human being; finds solution--visionary; solves problem--entrepreneur."

No commentary was provided and none was needed.  The line comes from Naveen Jain and appeared in his article "How Entrepreneurs Become Visionary Leaders."  The full quote is:

"An entrepreneur is not a person who starts a company but he is the person who actually solves a problem. It’s all about execution and it is a state of mind. A person who sees a problem is a Human Being, person who finds a solution is visionary and the person who goes out and does something about it is an entrepreneur."

My favorite part of this paragraph is that entrepreneurship is a state of mind. Starting a company is as easy as spending 30 minutes and $500 on Legalzoom.com. Anyone can do that and it doesn't make them an entrepreneur. Solving a real problem does. And that can happen whether you're the founder or one of 10,000 employees at your company.

Is First the Worst?

I was taking a Sunday stroll with my family last weekend when, upon leaving our favorite neighborhood coffee shop, my wife asked - "Do you think Starbucks is successful because they were the first or because they make the best coffee?"

Great question.

The concept of first mover advantage is an important one to me as the COO and part-owner of a first mover.  And there is no consensus on whether it's actually an "advantage."

Intuitively, being the first seems like a good thing.  So much emphasis is placed on the "idea" that it makes sense that the first person with that idea will be the one who's successful.  For many years, this is how I viewed the world.

Then I learned that great ideas are in abundance and the keys to success are execution, monetization and timing.  It's not nearly as sexy to be #3 but be the best at providing the right solution at the right time with the right business model, but that's usually how you win the game.

My MBA professors almost universally agreed that being the first mover is a disadvantage.  The first mover spends tremendous resources creating a market and learning how to service it.  Customer acquisition costs are through the roof.  Each iteration drains more time and money.  And, right when you figure it out (if you're still around at that point), second and third movers with clean balance sheets and nimble teams come in and capitalize on the foundation you've built.  First movers put in the labor... second and third movers eat the fruit.

There are many examples of this.  Friendster before Facebook.  AltaVista before Google.  Atari before Nintendo.  And so forth.

But I don't believe this is a universal truth.  The exception is if the first mover can create significant barriers to entry, and fast. 

Starbucks is successful in my opinion for two reasons.  First, they had a great concept - create a "third place" for people to comfortably spend time outside of the home/office.  Second, they were able to scale quickly, opening a new store every work day, by utilizing debt financing to open company-owned stores as opposed to franchising like most QSR's, thus providing this "third place" for people wherever they may be.  Now, whether I'm in NYC or Temecula CA or Lake Geneva WI, I know that I can go to Starbucks to catch up on work and meet with clients/friends because I know exactly what I'm going to get.  And that's why people go there - not for the burnt coffee.

There are other barriers you can create as well - exclusive contracts with key suppliers, strategic partnerships with large industry incumbents, IP, customer loyalty, economies of scale, switching costs and others.

At TGA, I'm confident in our first mover advantage because we've created several of the aforementioned barriers.  But it hasn't stopped others from trying to compete.  And that, to me, is a good thing.  It validates the market, grows it and expands awareness of our concept.  It also makes us appreciative of being five steps ahead and keeps us obsessively focused on getting to six, seven, eight...

If you've come up with a new idea and no one else is doing it, there may be a reason for that.  But if you validate the concept in the marketplace, go for it.  Focus on scale and creating barriers to entry quickly.

If you've come up with an iteration on an old idea, that's great too.  It's how most businesses are started.  I remember hearing a story that Steve Jobs had the idea for the iPad a decade before its release (and versions of the concept can be traced back to the late 60s) but he didn't feel the market was ready for it yet. 

People have built great companies both ways.  Whichever path you go, remember that execution, monetiziation and timing usually win the game.

Good luck and happy entrepreneuring.

Not Feeling the Love? You're Probably on to Something Good

There was an article in the Harvard Business Review last weekend that caught my attention.  It was called "If You're Not Pissing Someone Off, You're Probably Not Innovating."  I found myself agreeing with much of it and finding it especially relevant to the golf industry.

The premise of the article is that industries are controlled by incumbents who do not look kindly on new ways of doing things.  As a result, a "fundamental obstacle to innovation that all would-be disruptors must be prepared to face is the potentially hostile response of incumbents who don't want to see their market advantages threatened."

This is very true in the golf industry where "tradition" is the cornerstone of a powerful culture.  "Innovation" to many is seen as a direct threat to the sanctity of the game they love and this causes emotions, both positive and negative, to run especially high.

Additionally, the industry is controlled, like most industries, by an exclusive "inner circle" that is difficult to penetrate. 

Fred Wilson talks about this concept in a blog titled "Insurgents vs. Incumbents."  In it he says: "The startup world is about insurgents. A person or a few people with an idea. And they drop everything and go for it. They are going up against the incumbents and that doesn't just mean the big companies that occupy the market position they want. That means all the people, institutions, and organizations that are in cahoots with the big companies."

In golf, this would be the PGA of America, PGA Tour, The First Tee, USGA, LPGA and a few others.

If you're a current or aspiring golf entrepreneur, be prepared to feel the opposite of loved by these groups.  And that's okay.  The golf industry has been contracting for a decade so these folks have reason to be defensive, and the data clearly shows that the current way of doing things is not working.  It's also a $76 billion industry in a volatile environment, making it a great time/place for disruption.

Being an "insurgent" is awesome.  It's thrilling, purposeful, educational, humbling and an opportunity to do something significant and meaningful.  But be prepared to face people every day - every hour, even - who don't share your vision.  Who will try to derail you.  Who will be dismissive.  Who will react negatively to the very premise of your concept.

But if you're getting this type of response from incumbents, know that you're on to something good.  Be resilient.  Because if what you were doing wasn't a threat to them, they either wouldn't care or would try to help.

We've faced this for years at TGA with success so it's definitely possible to overcome.  And now that we've reached a point where our footprint is too large to ignore - two franchise systems, 67 franchisees, >150k students, strong growth and huge opportunities on the horizon for 2012 - the "inner circle" is starting to open up their arms. 

I'm okay with having to prove ourselves to the incumbents and you should be too.  The goal is to be one of them, soon.  We just need to make sure that if/when that happens, we continue to be innovators.  It goes back to something I wrote about in the past - it's the pace of innovation that determines the winners, not the original idea.