Why the U.S. Hibernation?

The U.S. Open begins today and you’ll be hard-pressed to watch coverage without hearing about how the U.S. is getting dusted these days by international players.  Here’s the landscape:

·         The top three ranked players in the world are Europeans (Donald, Westwood and Kaymer, in that order).

·         Europe possesses the Ryder Cup and has won 4 of the last 5 meetings.

·         Europeans hold the U.S. Open Trophy and the Wanamaker Trophy (PGA Championship) with Graeme McDowell and Martin Kaymer, respectively. 

Adding salt to the wound is the fact that South Africa, a country 1/6 the size of America with 49 million people, holds the other two major trophies – The Open’s Claret Jug with Louis Oosthuizen and The Master’s Trophy with Charl Schwartzel.

Is there a sensible explanation for international dominance and U.S. hibernation on professional golf’s largest stages?  I decided to explore.

Theory 1: People are picking up golf at a greater rate overseas than in the states.

Year	U.S.	Europe
1985-90	8.1%	6.1%
1990-95	-2.0%	9.2%
1995-00	3.3%	5.5%
2000-05	0.8%	5.7%
2005-10	-2.6%	1.6%

Europe has been growing in overall golfers at a greater clip than the U.S. since 1985 but they’ve generally followed the same pattern.

Additionally, the number of golfers in Europe’s largest golf market, the UK and Ireland, actually decreased 4% last year.  This is the same market where five of the top ten golfers in the world reside. 

Thus, I don’t think growth/decline in golf participation is the culprit.

Theory Two: There are more overall golfers and/or a larger percentage of the population is playing golf overseas.

Country/Region	Total Players	% of Population
U.S.	26,100,000	8.5%
Europe	4,436,085	0.7%
South Africa	147,960	0.3%

This data suggests that the U.S. should dominate professional golf.  We have 5.9x more golfers than Europe and 176x more than South Africa!

Theory Three: We have less junior golfers who can be developed for competition at a young age.

The top 5 ranking European countries in terms of the percentage of overall golfers who are juniors are:

1.    Turkey (51%)

2.    Latvia (28%)

3.    Romania (24%)

4.    Greece (21%)

5.    Czech Republic (15%)

i.e. Not the U.K., Ireland, Germany and Spain where Europe’s top pros come from. 

Additionally, with 2.7 million kids playing golf in America, more than 50% of Europe’s 4.3 million total players would need to be juniors in order to outpace the U.S.  As shown above, that is not the case.

(Side note – if, in 15-20 years, we see young stars tearing up the PGA Tour from Turkey and the rest of Eastern Europe, you heard it here first.)

Theory 4: The quality of junior competition in the U.S. is inferior to Europe and others.

This is subjective and cannot be proved or disproved with data.  The folks at the American Junior Golf Association (AJGA) and U.S. Kids Golf would likely point out that top teenage golfers from around the world travel to the U.S. to compete … not vice versa.  Same with collegiate golf – top International players come to ASU, USC, Oklahoma St., Georgia, etc.  So, I doubt this is the culprit.

Theory 5: It is happenstance and we’ll see a return to equilibrium shortly.

My findings are that disparities in overall participation, growth in participation, youth participation and competitive preparation are not the causes for Europe’s recent dominance in professional golf. 

Thus, in conclusion, my lack of a conclusion leads me to believe that it’s happenstance – a perfect storm resulting from Tiger’s implosion, Phil’s struggles and the incubation period of America’s young guns like Rickie Fowler as they evolve from good to great.

Maybe equilibrium will start its process this week.  As a result of this analysis, my fantasy squad is loaded solely with Americans.

On a serious note, I look at this data as an entrepreneur and see two things:

1.    The golf industry is seemingly ripe for innovation to turn around the declining participation numbers.

2.    The international golf market is starting to blossom in places like Turkey, Eastern Europe, South Africa and elsewhere (i.e. China) and there will be some big winners who capture this growth.  Hopefully it’s you and me.

Have a great U.S. Open week and Happy Entrepreneuring. 

(All data about golf in the U.S. courtesy of http://www.ngf.org/ and data about golf in Europe and Africa courtesy of http://www.kpmg.com/ ... along with personal computations.)

The Franchise Option

I’ve been asked to guest blog for the Franchise Business Review (FBR) and I just wrote the first two posts as I travel from Charlotte to LA.  Thus, my mind is thinking heavily about the role franchising plays in entrepreneurship - and it is huge. 

I haven’t talked about franchising much on this site so I’m going to repost my blogs for FBR here as they’re published.

I recently came across a fantastic book (hat tip to Mark Suster) called “Do More Faster.”  The book covers seven main topics in entrepreneurship through short stories written by founders and venture capitalists who are involved with TechStars.

One of my favorite vignettes is titled “Trust Me, Your Idea is Worthless.”  The key line in the story is: “Entrepreneurs (often) overvalue ideas and undervalue execution … one can steal ideas, but no one can steal execution and passion.”

This describes the value of franchising to a T.

I’ve heard many people say: “I want to be an entrepreneur … I’m just waiting to think of that big idea.”  With franchising, you don’t need it.  The “big idea” is already established.  Your investment is in a proven business model where your chances of executing well are strongly enhanced.  And, it’ll likely cost you less than trying to start something on your own.

As a result, the U.S. Department of Commerce has found that 90% of franchises continue operation after five years as opposed to less than 25% of privately owned start-up companies. (Stats here)

Why?  Because franchisors have a tried-and-true model in an established market with identifiable customers.  When you buy a franchise, you leapfrog the first several huge obstacles most entrepreneurs face.  At TGA, we weren't profitable for several years  ... but our franchisees are mostly profitable in their first year because they immediately obtain the blueprint we spent a lot of time and money designing.

The downside to franchising is that you’re one part of a bigger system so you’re likely not going to change the world alone … and you have to deal with the franchisor, who thankfully isn’t a boss but acts like an uber-protective big brother.

Franchising doesn’t guarantee success because it always comes down to execution.  A franchise provides the blueprint and tools to build a castle.  Ultimately it’s up to the franchisee to pick up those tools every morning, follow the blueprint and build.

If you want to be an entrepreneur, franchising is an immediate, viable and less-risky alternative to waiting for your big idea and starting something from scratch.  It’s not for all but is great for some, especially first time entrepreneurs.  I look forward to further discussing the topic on this blog and for the FBR.

"Ready Fire Aim" & Fight On

I graduate from USC tomorrow with an MBA and it has me in a reflective mood.

One of the things I enjoyed most about the education was a dichotomy that emerged between my entrepreneur classes (of which I took a lot) and the rest of the classes. 

I’d sit in finance/operations/etc. on one night and focus on academic analysis.  I learned about Jack Welch’s philosophy on leadership, valuation based on DCF, supply chain management and so forth.

Then, I’d sit in an entrepreneur class the next night and focus on real-life execution.  Much of the academic analysis discussed in the other classes flew out the door.  Leadership?  “Build a team of people smarter than you.”  Valuation?  “What’s it worth to you?  That’s its value.”  Business analysis?  “What you think doesn’t matter – go talk to your customers and see what they think.”  I took many lessons out of these classes but they all surrounded a central theme – “stop talking and start doing.”

This dichotomy recently played out in a real-life setting.  I was meeting with a potential strategic partner for TGA Premier Junior Golf who is well-inundated in both the golf and education fields.  He said multiple times:

“How do you know your program is good?  Have you put your curriculum in front of the academic community on a university level for analysis and verification?  If not, you can’t tell me it’s good.  For all you know, you could be turning kids off to golf through a crappy program … it’s just that no one knows it yet because there’s nothing to compare you against.”

My response was: “We know it’s good because we’ve had 100,000 customers, of which approximately 40% are repeat.  We don’t need academic verification when we already have it from our customers.”

The reality is that we’d love to get our curriculum certified on many levels, but TGA wouldn’t exist today if we invested, at any point in the company’s eight year history, the hundreds of thousands of dollars required to do it.  Our philosophy, instead, has always been to bootstrap the business and get after it.  Start.  Get customers.  Test.  Make mistakes.  Learn.  Pivot.  Grow.

One of the best quotes I heard in a USC classroom came from Mark Suster, the well-known LA venture capitalist.  He said: “You have to create barriers that make it harder for people to come in after you, but it rarely comes from technology.  It almost always comes from the PACE of innovation ... the relentless pace that freaks your competitors out.” 

TGA has always been excellent at innovation.  That’s a large reason why, as our colleague pointed out, there is no one to compare us to even though we’ve been proving for eight years that a market exists for school-based youth golf programs.

I recently came up with an off-the-top-of-my-head analogy on this topic that I think would make my entrepreneur professors proud.  I was helping a friend with her business plan for a non-profit called Autism Assistance and I said:

 “You don’t need to create a blueprint for your entire castle right now.  Start by designing a simple and inexpensive dirt road that leads to a front door.  Then get it out into the real world and see if/how people use this road.  And then follow them.  They’ll design your castle for you.  You’ll just need to pay attention and put in the sweat needed to build it.”

“Ready Fire Aim.”  That’s the entrepreneurial spirit.  Academic analysis is good and important, but walking the path of happy entrepreneuring ultimately requires that you: a) get started; and b) Fight On.

Kickstarter - Sponsorships & Moore

After a weeks-long hiatus on everything except work and school, I thought it appropriate to re-energize this blog with some thoughts on Kickstarter.

According to their website: “Kickstarter is the largest funding platform for creative projects in the world.  Every month, tens of thousands of amazing people pledge millions of dollars to projects from the worlds of music, film, art, technology, design, food, publishing and other creative fields.”

According to a recent TechCrunch headline, it’s working – “Kickstarter, Two Years and 20,000 Projects Later: $53 Million Pledged, $40 Million Collected.”

I’ve received funding requests from friends/colleagues for projects that fit within this description, but what really got my attention about this company was a recent Fred Wilson blog post. 

Wilson told the story of how a professional golfer named Mike D is using Kickstarter to fund his journey on the mini-tours and create a documentary about it.  Wilson summed it up best by saying: “Mike is taking the classic big brand sponsorship model and crowdsourcing it with Kickstarter.  Awesome.”  He has raised over $13,000 thus far, which is almost double his minimum goal.

I think this is a great example of: 1) a golfer applying innovative thinking to the pursuit of his dreams; 2) a product being applied in a way that the company had no clue it could/would be used.  Great lessons for both golfers and entrepreneurs.

This story reminded me of Ryan Moore, the young PGA Tour player and 2004 U.S. Amateur Champ.  Moore parted with his club sponsors in 2008 and then signed a deal with a start-up equipment company called Scratch Golf in 2009.  The deal – Moore would play Scratch Golf’s irons/wedges in exchange for becoming a part-owner of the company.  Compensation was not cash, but equity.  Again, genius. 

The arrangement ultimately fell apart last year with Moore signing a deal with Adams Golf and losing his equity in Scratch, but I believe (and hope) he was a pioneer for more golfers to think in a similar way.  Certainly it’s a great opportunity for players to build equity in something other than their golf game.  It also injects an innovative spirit into the golf industry and provides a path for start-ups to penetrate and pivot around the “good ole boys network.”

I think these two innovative approaches to sponsorships are steps in the right direction and will hopefully pave more paths for golf entrepreneurs.

Augusta National vs. Technology

Masters week is finally upon us (!!!) and Augusta National has me a little confused.

We all know that Augusta is as private as private gets in the golf world.

Which is why I was surprised when I first learned that they had agreed to open their course to EA Sports this year.  Anyone can now see and learn every nook and cranny of the course from their living room couch. 

This is the place that doesn’t like showing their front nine on television during the tournament, after all.

I was further surprised that Augusta would attach their highly-protected name/brand to Tiger Woods in the form of the game’s title: “Tiger Woods PGA Tour 12: The Masters.” 

It seems, almost, risky.

And, it’s not like they’re doing this for money.  This is the club, after all, that dismissed its tournament sponsors (and thus commercials) to de-leverage attacks from women’s advocacy groups.

On top of providing this virtual experience, Augusta announced that they would provide comprehensive tournament coverage this year that includes an iPad app (which I’m buying) and a 3-D channel.  Whoa!

"Looks like they're joining the 21st Century," I thought.  I'm impressed, I think.  Golf fans now have an opportunity to thoroughly experience and enjoy one of their beloved game's most sacred places. 

Then, a couple of weeks after the game’s release, Ian Pouler and Graeme McDowell used their Twitter skills to post videos of the drive up Magnolia Lane and the view from the clubhouse.  Augusta was not amused and firmly reminded everyone of its “no phone” policy for players. 

Wait – what?  I can understand their no-phone policy for spectators, and to a degree for members too, but PGA Tour players?  What if they need to call their wife/kid or check an important email from their swing coach?  They’re on the job, after all, unlike everyone else who is trying to escape the job.

I found the dichotomy of these events interesting.  Confusing. 

Then, yesterday, it came to a head.  I saw a headline on ESPN about Anthony Kim being told that he couldn’t listen to his iPod on the range.  I thought – “Wow, the club that is embracing technology themselves is still enforcing anti-technology rules that mess with players’ practice routines.  How hypocritical – this is their livelihood!”

Then, Anthony Kim smacked clarity directly in my face.  

He concluded his iPod story by saying – “it’s those little things that make it a lot more special than other tournaments.”

Bam!  Confusion gone. 

Augusta may be open to giving those of us at home cool ways of experiencing their club through video games, 3-D TV and so on.  But, if you’re ever fortunate enough to walk through their gates, you are their guests and you follow their rules.

THIS is what makes the Masters “a tradition unlike any other.”  Thank you for the reminder, Mr. Kim.  Suddenly, all of the pics that are still showing up on Twitter seem almost tainted … disrespectful.

Augusta may have rules/policies that are strict and old-school, but that’s why it’s great.  For four days every year, it uses technology to transport golf fans like me back in time to a pre-tech world that doesn’t much exist anymore … when privacy was treasured, respect was assumed and tradition was valued.

In that context, Augusta’s strategy and execution seem, well, brilliant.

With that, I hope everyone has a wonderful Masters week.  My pick, as always, is Davis Love III.

Your Sources of Information & Inspiration

Ben Horowitz, co-founder of the awesome VC firm Andressen Horowitz (investments include Twitter, Facebook, FourSquare and Zynga), often has thought-provoking comments on his blog and Twitter page.  Today, he got my mind working with two separate ones…

The first, from Twitter – “@bhorowitz: I definitely listen to other genres, but hip hop is the only popular music that is pro business and deals with business as a topic."

I enjoyed that comment because I love many types of music and had never thought of it in that context before.  If you follow Mr. Horowitz, you’ll note that he starts all posts with a quote from a song.  I used to do the same thing when I was an editorial writer for my college newspaper, albeit I never pulled from hip hop.

Horowitz’s second comment is much more relevant to this blog and came from his guest-appearance on TechCrunch.  The assertion is that the most difficult CEO skill is “managing your own psychology” and the post offers techniques for doing so.  I found it insightful and you can read it here.

I share Horowitz’s comments partly because I found them interesting and partly to make a bigger point: 

As an entrepreneur, my encouragement is to have vast horizons for where you search for and find your information (and inspiration).

Followers of this blog know that I often draw from TechCrunch, VC blogs and so forth.  I’ve been asked about it.  On the surface, the world of tech entrepreneurship has little relevance to being a golf entrepreneur.  However, the qualities that make a great entrepreneur are not industry specific – and venture capitalists are THE experts on entrepreneurship.  Thus, I read and learn from them.  They give me gems like this Horowitz post on a daily basis, whereas you’ll be hard pressed to find this type of information in a Golf Digest.

In my opinion, the road to happy entrepreneuring includes daily detours from our industry tunnel.  I wish you the best of luck finding your information and inspiration down these unpaved paths.

Anatomy of an Entrepreneur

My two favorite VC bloggers wrote on the topic of management teams today.   Both are worth reading.  Fred Wilson’s “AVC” post is linked here and Mark Suster’s “Both Sides of the Table” post is linked here.

I talk to aspiring entrepreneurs on a daily basis as the person responsible for selling franchises for TGA.  I also talk to existing entrepreneurs daily as the person responsible for then training and supporting these franchisees.  Thus, I work with folks before they start their business and I work with them afterwards.

Seeing the entrepreneurial process from this wide of a spectrum has given me a good idea of what indicators in the “before” stage lead to success/failure in the “afterwards.”  Astute franchise candidates often ask me about these indicators and my conclusion is the same as Wilson’s, Suster’s and most others who live within the entrepreneurial world:

Great businesses are made by great people, not great products. 

From my perspective, past business experience – especially in sales, project management or business development – is invaluable.  Industry experience doesn’t matter much at TGA due to our franchise model, but it is very important for businesses starting from scratch.

Ultimately, though, personality and tenacity sit atop the importance list.  Entrepreneurs who are smart, personable and hungry usually figure it out.  If you read Fred Wilson’s blog, note the story about Airbnb and Obama-O’s.

The reality is that “experience” can’t serve as an entrepreneur’s alarm clock.  It can’t work past 5pm for them.  It can’t keep them from throwing in the towel when things get tough. It doesn't put up road signs when the business requires a new direction.  It can’t pick up the phone and call their potential customers.  It doesn’t build their relationships.  It can’t keep them motivated long after the initial adrenaline of starting a business wears off and the grind sets in.

Before I had any entrepreneurial experience, I thought about start-ups almost entirely within the context of the “product.”  I’ve since learned that almost all start-ups are forced to modify, pivot and overhaul their product multiple times.  Thus, in my opinion, the question of “will the business be successful?” is really about whether the management team is the one capable of navigating these choppy waters.