SBJ_July2016

SMALL BUSINESS JOURNAL
BUSINESS KNOWLEDGE. BUSINESS OPPORTUNITY. BUSINESS ACCESS.
AUGUST 2016
America’s
Middle Class:
Crushed
BY JIM CLIFTON
FEATURE
Mark Mitchke, VP, Marketplace Business at Amazon
VP, MARKETPLACE BUSINESS AT
Ron Shapiro, Attorney
SMOKESCREEN
EXCLUSIVE INTERVIEW WITH
THE POWER OF NICE
AMAZON


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2 SMALL BUSINESS JOURNAL


SMALL BUSINESS JOURNAL
AUGUST 2016
INSIDE
Crowdfunding: Why Access to Capital Is Now Easier 4
ALEX CASTELLI
Hands on Experience is the Best Way
to Attract Customers- and Sharks! 8 ASHLEY DRAKE
Arrowsight's RVA Technology Improves Safety
in the Meat and Healthcare Industries 10 ADAM ARONSON
America’s Middle Class: Crushed 14
JIM CLIFTON
Smoke Screen 18
INTERVIEW WITH MARK MITCHKE
Sports CEO 21
INTERVIEW WITH BRENT CELEK
e Power of Nice:
How to Become an Expert Negotiator 24 EXCLUSIVE INTERVIEW WITH UBER LAWYER RON SHAPIRO
The Small Business Journal contains business articles with a focus on business related news and features.
It is distributed through email and printed copies to thousands of subscribers.
AMERICA’S MIDDLE CLASS: CRUSHED
BY JIM CLIFTON
PAGE 14
The middle class in America is disappearing.
Here are two disastrous ndings from a Pew Research Center analysis of the current population survey from the U.S.
Census Bureau:
e share of adults who live in middle- income households, de ned as adults whose annual household income is two-thirds to double the national median, has fallen since 1971. In 2015, 50% of American adults were
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AUGUST 2016 3
BRANDtheRIGHTway.com


Crowdfunding: Why Access to Capital Is Now Easier
BY
Alex Castelli, CPA Partner, Technology/Life Sciences Industry Practice Leader, CohnReznick, LLP
THE SEC’S ADOPTION OF NEW CROWDFUNDING RULES COULD BE A GAME CHANGER FOR GROWTH COMPANIES
On May 16, 2016, the SEC’s nal rules on crowdfunding took e ect, permitting companies to o er and sell securities through funding portals on the Internet. As of June 20, 2016, the Financial Industry Regulatory Authority (FINRA) is currently regulating eleven SEC-registered crowdfunding portals.
For growth-oriented companies, crowdfunding provides another capital raising option while also o ering additional options for investors who want to get in on the ground oor of what could be a very successful business.
BENEFITS TO COMPANIES AND INVESTORS
Some of the key bene ts of the SEC’s rules permitting crowdfunding or, simply put, the ability of companies to raise capital from the general public through the Internet are listed below.
• Early stage and growth companies that may be unable or unwilling to raise capital from institutional or private investors have access to another source of capital.
• By o ering and selling equity in their company through the Internet, companies gain a wider distribution of the o ering to a larger audience when compared to traditional sources.
4 SMALL BUSINESS JOURNAL


• Using the Internet to o er and sell securities may decrease the cost of capital
• Non-accredited individual investors, previously excluded from equity crowdfunding investments, are now invited to become investors with certain limitations.
• Investors have a level of protection since companies raising capital through crowdfunding are required to utilize funding portals or registered broker dealers and have certain disclosure requirements to investors. Additionally, funding portals that wish to participate in the crowdfunding process as an intermediary are required to register with the SEC and become a member of FINRA.
LAUNCHING YOUR CROWDFUNDING CAMPAIGN
Even if you are a
tremendously successful
owner or executive, a
successful crowdfunding
e ort will require expert
marketing surrounding
your e orts to raise funds.
You and the members of
your management team will
assume the responsibility
of formulating a marketing
campaign to drive potential
investors to the funding
portal containing your
o ering. You’ll need a good
story about your o ering to tell investors - complete with business plans, nancial statements, and projections.
In the crowd, you’ll be competing for investment dollars with other companies so you need to engage in strategies to elevate your o ering over all others. Earning the trust and con dence of investors can lead to a successful o ering. Consider activities that could strengthen your relationships with clients, customers, and even vendors. ese relationships may help to support a successful crowdfunding campaign and could represent your future investors.
To launch your crowdfunding campaign, you’ll be using the services of an SEC registered broker/dealer or SEC registered crowdfunding platform or funding portal. Each will probably o er di erent services and fee structures. Once your customers, clients, and vendors have invested in your business, you may want to reach out to a broader base of potential investors. Getting your o er in front of the right investors will be critical to achieving your capital raising goals.
As a private company, you may not be accustomed to sharing operational and nancial information publically. A successful crowdfunding campaign may require additional transparency if you are to build trust and con dence in prospective investors. If you are not comfortable sharing company information with the world, you may want to explore a more proprietary method of raising capital.
Once you have executed a successful crowdfunding campaign, you will need to have a plan on how you will continue to communicate to your new investors. How much information are you willing to share? Which rights to information will investors have? Consider creating an investor-only section on your company’s website where you can post periodic information about your company’s progress, nancial results, etc. Transparency is the key if you want to keep your investors informed and hungry to make additional investment in the future.
PROCEED WITH CAUTION
CohnReznick supports capital formation whether it comes through the public markets, through private equity or venture capital, or from individual investors. We do believe, however, that a solid balance must be maintained between fueling the needs of growth oriented businesses and providing oversight to
protect investors eager to support the next generation of innovation.
As with any form of capital, we recommend that issuers consider the opportunities, challenges, and risks associated with o ering and selling securities through crowdfunding. We also advise investors to perform an appropriate level of diligence before making any investment decision.
For more information on the regulations pertaining to crowd funding, visit sec.gov.
With more than 25 years of experience, Alex Castelli serves as CohnReznick's Technology and Life Sciences Industry Practice Leader. Additionally, he is Co-Leader of the Firm’s National Liquidity and Capital Formation Advisory Group and a member of the Firm’s Public Companies Group. Providing audit, account- ing, tax, and advisory services, Alex primarily manages commer- cial enterprise engagements and services privately held companies, investor-backed companies, early and later stage companies, and SEC reporting companies.
AUGUST 2016 5


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6 SMALL BUSINESS JOURNAL


AUGUST 2016 7


Hands on Experience is the Best Way to Attract Customers- and Sharks!
In season 6 of Shark Tank, Captain Ashley Drake, the CEO and founder of e Natural Grip scored a partnership with Robert Herjavec. In an e ort to sell her product Ashley and her group were attending various trade shows, but after seeing little or no pro t they decided to give up the trade show angle and look for an alternative way to market their product. at’s when Robert stepped in- here’s what happened:
Jay: You mentioned in your BTT episode that before Robert encouraged you to attend many of the trade shows you were actually opposed to going to these shows.
Ashley Drake, Why did you feel that the shows CEO, were not a match for you?
The Natural Ashley: Trade shows are a double Grip edged sword, you can make money but it is a lot of operational work for the company. While the trade shows certainly can get us in front of a large audience, it simply wasn’t worth it- at least we thought so. And it was not just about the high prices we had to pay to attend the shows. ere is a tremendous amount of preparation and organization that go into these shows, as well as tight deadlines which created so much stress for our team. So when we saw that we weren’t making any money and we’d spent so much time preparing and organizing, we gured that our time and energy were better spent
elsewhere.
Jay: Sounds fair enough to me. Why was Robert so adamant about attending these shows, and how have the results changed?
Ashley: You know what Jay, this is exactly what is so valuable about having Robert on our team. From a dollar and cents perspective we were clearly right, it just wasn’t adding up. But because of Robert’s experience he advised that we make every e ort to attend the right shows. ere’s nothing like being able to speak to a potential customer face to face, have them try your product and show them exactly how to use it. We literally built a gym at our booths and showed every single person who passed by our booth exactly how the Natural Grip worked. We’d have them try out the product in our booth with one hand using the Natural Grip and keeping the other hand bare. Immediately they were able to see the di erence. e impact that actual user experience has on a potential customer is worth a whole lot more than a thousand ads.
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SMALL BUSINESS JOURNAL


Jay: I certainly understand the value of a face to face presentation, but it sounds like a tremendous amount of time that goes into these shows. How are you able to constantly attend shows and at the same time run your business?
Ashley: It’s a true point Jay, and one of the biggest lessons I’ve learned as an entrepreneur is that the most valuable asset you own is your time. ere’s no way we could attend every show, or even half the amount of shows. I get calls every week for us to attend a show, but we go to every show with the intention of selling out 100%. At the same time we know that we’re not going to sell to every single person, so we look for shows that have at
least 5,000+ people attending. In addition we look for shows with a lot of energy that carries a message that we’re comfortable with as well.
Jay: What type of message are you looking for when participating with a show? Is their message important when you’re creating your brand?
Ashley: Absolutely! When you’re branding your product or company it is so important to make careful decisions before you associate with anyone or participate in any type of function. Especially
in Iraq for 15 months you’ve got unique experience most of us don’t have. How has your experience in the service helped you grow and run your business?
Ashley: I think one of the greatest lessons I learned came when I was training as a cadet. We were always told “A decision is better than no decision”. So many people both in army training and as an entrepreneur stress so much about making the wrong decision. ere’s no question that you’ve got to be smart and connect with the right people, but at the end of the day you’ve got to make that jump, and decisions have to be made. As an entrepreneur you’re a leader of your company and sometimes you’ll need to rally the
when you’re a young
and emerging company.
Aligning yourself with a
brand that doesn’t share
your values can literally
ruin your brand forever. If
we are contacted by a show
that does not treat athletes
properly, or even if they
don’t run their operation
the way we would run our
business it’s an absolute no. e truth is, Jay, it runs a lot deeper than that as well. For example, we have a partnership with Reebok which we are extremely grateful for and we take very seriously. If we’re at an event, we make sure every single person on the oor selling our product is wearing as much Reebok gear as possible. Reebok is selling our product and we will do everything we can to promote their brand. I’m always open to opportunities to present the Natural Grip at large shows or functions but I’m guarded at the same time. I’ve always believed you say a lot by the things you do, so we make deliberate decisions when selecting events.
Jay: Having served in the army and being deployed
ere’s nothing like being able to speak to a potential customer face to face, have them try your product and show them exactly how to use it.
people on your team and come up with a solution in a tight spot, but never let time run out. Make the decision and modify from there.
Jay: It’s certainly not easy and it’s a constant struggle to keep it moving and keep producing. What keeps you going that makes it all worth it?
Ashley: It’s funny you ask because so many people see us on TV, they see that we’ve partnered with Robert Herjavec and they think that success ows along by itself. While the struggles are still
very true, what res me up is seeing rst time users have that lightbulb moment, they try e Natural Grip on and say with a smile “problem solved!” Every late night that my daughter has to sleep in the shop because we’re rushing to nish a production run is all worth it when my team
and I see so many people succeed because of e Natural Grip. at makes it all well worth it!
Army Capt. Ashley Drake spent 15 months deployed in Iraq overseeing the transport of construction equipment through- out the country and is now the CEO and founder of e Natural Grip, a grip to protect ones hands during various exercises like weight training, pull-ups and gymnastics. e Natural Grip was created out of the need to prevent your hands from ripping and tearing while working out. While Ashley had a hard time nding things that t her hands she decided to do something about it. Building the Natural Grip from her bedroom to now partnered with Robert Herjavec is amazing journey with much more success to come.
AUGUST 2016 9


Arrowsight's RVA Technology Improves Safety in the Meat and Healthcare Industries
Arrowsight employs remote video auditing technology to monitor and improve safety and performance in both the meat industry as well as the healthcare industry. I had
the idea over 20 years ago when I thought to myself, why isn’t
there game lm for business, similar to what sports teams use to BY improve their performance? So I took some of my own money
Adam Aronson, Founder and CEO,
Arrowsight, Initially, everyone was hesitant. e centers didn’t want to end up
Inc.
10 SMALL BUSINESS JOURNAL
together with some investors and started ParentWatch which was a web based video system that child care centers could install so parents could keep connected with their kids during the day.
with a lawsuit, teachers didn’t want parents complaining and it seemed like we couldn’t get o the ground. Later that year we met with someone in North Jersey who owned a group of childcare centers and his idea completely transformed our product.
He suggested adding the slogan “Keeping families connected”. To many people, the thought of being watched was threatening, but with the positive spin of providing the opportunity to keep families connected, people started developing a real appreciation for the service. What used to be a cause for worry now became an exciting and powerful tool for parents to feel more comforted about sending their kids to school.


While this simple but wise change certainly started attracting more child care centers towards our service, at that point we hit a major crossroads. On the one hand we had uncovered a great way to market the product which made it welcoming, but on the other hand funding the business became very di cult when the Internet Bubble burst in 2000 & 2001. Without being able to raise additional capital to support a high growth business we decided to exit the childcare industry and reallocate our remaining capital to another opportunity leveraging our core competency in web based video services.
were trying to avoid. Because we had initially raised over $30 Million for Parentwatch we had enough money left to give ourselves a second chance at bringing the Parentwatch or RVA technology into the business sector. We hired a consulting rm in LA to look at 30 di erent industries and tell us which industries our technology would help to increase production and drive the most value.
e results were absolutely shocking. e rm presented a comprehensive PowerPoint of- the meat industry! According to their results the meat market generated revenues of a whopping $170 Billion a year. e most intriguing part was that half of the market was
controlled by just 5 companies and 80% by just 20 companies. is was particularly exciting because if we came with the right approach we could capture a very large share of the market with a very small sales team. Looking back, we had just 2 sales people and we cover 50%- 70% of the meat supply chain.
While it was clearly a smart recommended choice for us, our challenge was uncovering the right combination of RVA services to o er the highly regulated meat industry. We quickly learned that food safety and animal welfare are the two most important focal points of all meat companies. With a high turnover workforce, it is very
di cult to ensure proper employee safety practices in extremely large facilities, some with over 2,000 workers. Lastly, many parts on the supply chain in the meat industry have an extremely low pro t margin, and if our monitoring services could make things a little better from an e ciency standpoint it would help to increase their pro ts.
With all those facts in hand we were con dent we’d be able to sell our services.
Understanding where we’d add value was only half the battle, now it was up to us to do our homework and
Giving up on a great idea is not and I knew there had be a better way to get remote video auditing into the right industry, we just needed to nd the one that t best. To me, it always made sense to create a way for businesses to increase production and the best way to do that would be to increase productivity and eliminate wasted time and e ort. While we began researching our next step, I asked a friend of mine who owned a chain of laundromats if we could have the permission to install our cameras in his locations.
something I do easily
" Many times when companies expand, mishandled growth can bring about their downfall, and that’s exactly what we were trying to avoid."
Much to our surprise even
simple things like leaving the door
open allowing hot air to ow into
the laundromat in the summer
with the air conditioning on can damage the machines. By installing our RVA system we’d be able to monitor and send alerts to make sure that didn’t happen. ere were also the basic needs of sending alerts to the repair team as soon as a machine wasn’t working properly. ere are so many basic functions that can be so much more e cient when monitored properly.
At this point we needed to take what we saw was working and take that to the next level with the right strategy. Many times when companies expand, mishandled growth can bring about their downfall, and that’s exactly what we


understand everything there is to know with the meat industry and come up with a way to develop a relationship with the companies we hoped to work with. We met up with a great guy from Chicago named Arnie Mikelberg who was former meat industry CEO. Arnie knew a tremendous amount about the ins and outs of the meat industry and had direct connections with many of the big players. Between 2003 and 2006, Arnie secured several important early stage pilots with meat companies he had strong relationships with that all showed positive food safety and productivity results using RVA. In 2006 we achieved a major milestone in selling our services to the world renowned OSI Industries which
is a world leader in providing quality products and custom solutions for the food industry. OSI has 60 plants in the U.S. and around the world producing a wide range of products including beef, pork, and chicken and pizza dough. On the back of several successful deployments of our services with OSI, we were able to establish credibility with a highly regarded top meat company which began to open other doors in the industry.
In 2010, we were hired by JBS,
which is a leading processor of beef,
pork and lamb in the U.S., a leading
processor of beef in Canada
and the largest meat company
in the world. While they had
a very strong existing food
safety program for their beef
slaughter plants, they wanted
to use Arrowsight’s remote
video auditing (RVA) program
to elevate their food safety
performance. When we put
RVA to work their compliance
rose to 99.7% and they lowered
their e- coli and salmonella rates
by 60%! at was a huge accomplishment and validated everything we stood for.
During the earlier years of our work in the meat industry, I was home for a family holiday and provided an update on the success of our food safety applications to my Dad who is a well-known doctor in Boston and who is still practicing at Beth Israel Deaconess Medical Center. After hearing about our progress, he immediately responded, “there are over 100,000 people a year who are dying because of hospital acquired infections and you have a social obligation to bring your technology
into healthcare”. Although I was happy with our success and hesitant to get myself involved with the complicated healthcare industry I agreed to give it a shot.
Although my dad had connections to some of the top hospitals in the Northeast and I had the ability to provide free technology to try it out, we had absolutely no luck. Not a single facility wanted to even try it. ey were concerned about privacy, malpractice, unions, etc. ey would have absolutely nothing to do with it. While it was discouraging because I knew from the meat industry what type of value our systems provided, I felt I had made my e ort. When it didn’t work out, I could get back to
business knowing we had given it a very strong e ort.
Less than a year after I refocused all our e orts on the meat industry, my Mom and sister developed horrible hospital acquired infections (HAI’s) that were extremely dangerous. All of a sudden I was very irritated that they had been harmed and I said to myself it is time to “take the gloves o ” - I’m going to make this happen. is time instead of going to a big name hospital, one of our employees had an uncle who owned a small surgery center in Macon, GA who agreed to test RVA in a healthcare setting to improve
hand hygiene compliance. We installed our RVA system and saw compliance rates rise up to 90%!
A short time after that we received an introduction to North Shore LIJ which is one of the largest hospital chains in NY State. ey are now known as Northwell Health System. I can’t tell you how accommodating they were and their attitude of
“let’s do this”. Again we started small with monitoring hand hygiene compliance for care givers going in and out of ICU rooms. While they thought their compliance was high, after our results came in our data showed that their compliance was shockingly below 10%! Within 4 weeks of remote video auditing, compliance shot up to 90% and they’ve been able to sustain it for four years.
At this point we knew we were on to something and we needed to come up with a way to keep the cost low and put up the least amount of cameras in a way that would give us the biggest impact. After a great deal of research
Within 4 weeks of remote video auditing, compliance shot up to 90% and they’ve been able to sustain it for four years.
12 SMALL BUSINESS JOURNAL


we found that the majority of revenue for a hospital comes from the operating room, so if we could improve e ciency and safety at the same time, we would have delivered a service that e ectively paid for itself. With doctors hesitant about malpractice, HIPPA and other complications, we came up with a way to blur the video enough so that you could not make out any faces or body parts, but would still be able to improve compliance on key safety processes that can prevent wrong site surgeries, retained foreign bodies, and surgical site infections, and at the same time signi cantly reduce turnover times (i.e. the amount of wait time in between cases). In late 2015, Northwell Health published a study in BMJ Quality & Safety that showcased our results in the surgery department of one of their largest hospitals. A top patient safety expert from
Johns Hopkins also wrote an editorial in the same medical journal in early 2016 that called it a “landmark study”. We’re proud of our progress and hope to help facilities across the world increase safety, productivity and provide overall better healthcare services for all their patients.
Adam Aronson is founder and CEO of Arrowsight, Inc., a devel- oper and service provider of remote video auditing (RVA) technol- ogies for a variety of industries, including health care of Arrowsight Inc. and its predecessor company, ParentWatch Inc., in 1998. Former Managing Director and founder of two hedge funds in the 1990’s. Earlier in career, worked at Credit Suisse First Boston as foreign currency trader. Received a Bachelor of Arts in History and Economics from the University of Vermont.
AUGUST 2016 13


America’s Middle Class:
Crushed
BY JIM CLIFTON


BY
Jim Cli on,
CEO, Gallup
The middle class in America is disappearing.
Here are two disastrous ndings from a Pew Research Center analysis of the current population survey
from the U.S. Census Bureau:
But the unemployment rate, as reported by the U.S. Bureau of Labor Statistics (BLS), has fallen to 4.9% -- doesn’t that mean the middle class is coming back? What you can’t see in this widely reported number is how many good-paying middle-income jobs have been replaced by low-paying hourly jobs each month.
e share of adults who live in middle-income households, de ned as adults whose annual household income is two-thirds to double the national median, has fallen since 1971. In 2015, 50% of American adults were middle- income, compared with 61% in 1971. e shrinking of the middle of America has been a steadily ongoing process through the ups
"What you can’t see... is how many good-paying middle-income jobs have been replaced by low-paying hourly jobs each month."
Let’s say someone has a good middle-class job that pays $65,000 a year. at job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour -- or about $28,000 per year. at devastated American remains counted as “full-time employed” because he has full-time work -- although with drastically reduced pay and bene ts. He has fallen out of the middle class.
and downs of the U.S. economy.
Also, when you read that 200,000 jobs were created in a month, about 400,000 new jobs were actually created and 200,000 others were lost, for a net gain of 200,000 jobs. What you can’t see is that many middle-class jobs were replaced by lower-paying hourly jobs. So the supposed “good news” about jobs each month re ected in 5%
“Fully 49% of U.S. aggregate
income went to upper-income households in 2014, up from 29% in 1970. e share accruing to middle-income households was 43% in 2014, down substantially from 62% in 1970.”
COVER STORY
AUGUST 2016 15


unemployment is misleading. e White House and Wall Street continue to celebrate this number because they want to sell Americans on an improving economy.
More disastrous is the emotional toll on the person -- the sudden loss of household income can cause a crash of self-worth and dignity, leading to a crisis of desperation that we have now in many parts of America.
Millions of Americans, even if they themselves are gainfully employed in good jobs, are just one degree away from someone who is experiencing either unemployment, underemployment or falling wages. One could conclude that almost everyone in America knows up-close the pain of the decline of the middle class.
In fact, many Americans experience the reality found in three facts:
According to the BLS, the percentage of the total U.S. adult population that has a full-time job has been hovering around 48% since 2010 -- the lowest full-time employment level since 1983.
e number of publicly listed companies trading on U.S. exchanges has been cut almost in half in the past 20 years -- from about 7,300 to 3,700. Because rms can’t grow organically -- that is, by getting more business from existing customers -- they give up and pay high prices to acquire their competitors, thus drastically shrinking the number of U.S. public companies. is has to contribute to the massive loss of U.S. middle-class jobs.
New business startups are at historical lows. Americans have stopped starting businesses. And the businesses that do start are growing at historically slow rates.
Free enterprise is in free fall -- but it is xable. Small business can save America and restore the middle class.
for the rst time in 2008. In the nearly 30 years before that, the U.S. consistently averaged a surplus of almost 120,000 more business births than deaths each year. But from 2008 to 2011, an average of 420,000 businesses were born annually nationwide, while an average of 450,000 per year were dying.
Considering all of this, how do we get small businesses to boom again -- and to create the economic engine that will restore the American middle class, along with trust and con dence in American leadership?
e solution will not come from Washington, but from cities. New business startups and shootups will be revived in the U.S. city by city.
"Small businesses are our best hope for badly needed economic growth, great jobs and ultimately accelerated human development."
Gallup nds that small businesses -- startups plus “shootups,” those that grow big --- are the engine of new economic energy. According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses.
But here’s the crisis: e deaths of small businesses recently outnumbered the births of small businesses. e U.S. Census Bureau reports that the total number of business startups and business closures per year crossed
Leaders of every American city need a system for early identi cation and development of business builders that is as intentional as systems for identifying high IQ, athletic skill or artistic talent. Gallup scientists have created an assessment to identify that God-given talent: the Entrepreneur Pro le 10 (EP10) predicts who has high potential to build multimillion- dollar organizations.
e EP10 can be used in cities to test eighth- through 12th-graders. Leaders can identify the most gifted and put them in a program that encourages them to start and build a business. And they might even give the program a cool name -- something like “Operation Juilliard.”
ere are 30 million kids in eighth through 12th grade. High talent is found in 2% of that group, or 600,000 kids. Kids with an
extraordinary gift -- those with the potential to build very large organizations -- are 0.5%
of the 30 million, or 150,000.
ere are rare business builders in every city. But most city leaders simply don’t know who they
are.
Cities in America have startup clubs and incubators. Many universities have entrepreneurship departments, but few of these systematically create new businesses. By focusing on high-potential talent, the success rate of startups could jump as much as ve times.
Bottom line: e two most trusted institutions for U.S. world leadership are the military and small business. Most people know about our military’s importance, but not as many appreciate the role small business plays in creating
16 SMALL BUSINESS JOURNAL


the majority of new jobs and in national security itself. Looking back over the past 60-plus years, one could easily conclude that the world works better when America leads and dominates it -- when we dominate economically, led by small businesses, we lead the world in freedom, global trade and prosperity.
America needs small business to boom again. Small businesses are our best hope for badly needed economic growth, great jobs and ultimately accelerated human development. When we get small business to boom in every city, we can save America, restore our middle class and once again lead the world.
Jim Clifton has served as CEO of Gallup, a global leader in con- sulting and public opinion research and analytics, since 1988. Under his leadership, Gallup has expanded from a predominantly
U.S.-based company to a worldwide organization with 30 o ces in 20 countries and regions.
Mr. Clifton is the creator of e Gallup Path, a metric-based eco- nomic model that establishes the linkages among human nature in the workplace, customer engagement and business outcomes. is model is used in performance management systems in more than 500 companies worldwide. His most recent innovation, the Gallup World Poll, is designed to give the world’s 7 billion citizens a voice in virtually all key global issues.
Mr. Clifton is the author of e Coming Jobs War and coauthor of Entrepreneurial StrengthsFinder, as well as many articles on global leadership. His blog appears regularly in the In uencer section of LinkedIn and on Gallup.com’s Chairman’s Blog. He serves on sev- eral boards and is Chairman of the urgood Marshall College Fund. He has received honorary degrees from Jackson State, Medgar Evers and Bellevue Universities.
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AUGUST 2016 17


exclusive interview with
Mark Mitchke
VP OF FULFILLMENT BY AMAZON
The Amazon Marketplace team builds and operates Amazon’s eCommerce platform for sellers of all sizes. Over 2 million sellers list their products for sale and manage their businesses on the Amazon.com Marketplace. Sellers are a critical part of Amazon’s ecosystem to deliver on their vision of o ering the earth’s largest selection and lowest prices. These sellers o er hundreds of millions of unique products, providing a broad and diverse inventory including Books, Electronics, Apparel, Consumables and much more. The Amazon Marketplace currently represents nearly 50% of Amazon units sold, and is growing at an unprecedented rate.
JAY: Before we get into Ful llment by Amazon (FBA), let’s rst talk about why the businesses that sell on Amazon are so important to Amazon and its customers?
MARK: As you may have seen in our 2015 shareholder letter, Je Bezos refers to Amazon Marketplace as one of the three pillars of the Amazon business. Sellers on Amazon, many of whom are small business owners, bring a vast and unique selection of products to Amazon customers around the world. These businesses represent nearly 50 percent of total units sold on Amazon and provide hundreds of millions of items that Amazon customers search for and purchase every day.
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JAY: De nitely a system with tremendous value for the sellers and the consumers without a doubt. What’s it like on your end? What type of volume do you handle on a daily basis?
MARK: In 2015 FBA delivered more than 1 billion products to customers worldwide, and active sellers using FBA grew by more than 50 percent compared to the previous year. We are constantly innovating to ensure that both sellers and customers have the absolute best experience, which will encourage more people to use Amazon for their buying and selling needs.
JAY: Those numbers extremely impressive. However, if I’m a small business owner and want to start selling on Amazon I’d be concerned by the fact that there are so many sellers already. How can I make myself stand out?
MARK: Let's take a look at one small business seller we’re particularly proud of - Cielo Pill holders. They created a pill holder that you can wear as a necklace or key chain that keeps the pills you need at your side wherever you go. They’re waterproof, stylish and most of all discreet. The product was developed by an entrepreneur that uses the Amazon Exclusives program and FBA to help scale and grow her business. She found a need and created a unique product that has helped millions of people. The beauty of FBA is that it works for both small and large sellers.
JAY: How does Amazon help these sellers and small businesses grow their business?
MARK: Amazon provides sellers and small businesses with instant access to a global customer base by opening up our virtual shelf space and letting these businesses sell right next to us on our detail pages. We are focused on helping small businesses succeed by inventing on their behalf and making our technology available to them through unique seller services, including Ful llment by Amazon , Amazon Payments and Sponsored Products.
JAY: I am an avid Amazon user so I certainly know from experience how Amazon has helped consumers, but hearing how Amazon has helped so many small businesses grow is amazing. What have you seen that has enabled Amazon to reach such success and what do you see coming down the road?
MARK: First o , thanks for being an Amazon customer – we appreciate it! Je Bezos often and famously says “it’s still day one” when talking about Amazon. It’s an incredible mindset, and when combined with our commitment to always start with the customer, it makes Amazon a really exciting place to work. The world is changing at a rapid pace and it’s our responsibility to continue to innovate on behalf of both of our sellers and consumers to deliver the best possible experience
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AUGUST 2016 19 Mylittlebigstore


20 SMALL BUSINESS JOURNAL
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The Journey from Sports to Business
BRENT CELEK
A nine-year NFL veteran, Eagles tight end Brent Celek has been the team’s starting tight end for almost a decade and recently signed a four-year extension. O the eld, he is a successful self-made businessman. Celek's entrepreneurial spirit can’t be stopped and he has even been named the Phil- adelphia Business Journal’s prestigious annual “40 Under 40” list – the rst Eagle to ever achieve this honor.
AUGUST 2016 21


Jay: Playing in the NFL is no easy task and there’s no question that it takes tremendous preparation, focus and time on a constant basis. e same is true with running a business. How have you been able to put your focus and attention to sports and so many ventures at once? I think so many entrepreneurs have great ideas but don’t have the way to manage their time and focus. is is especially true for those who are currently holding down jobs, and they’re scared to leave their position and branch out to another idea.
Brent: Obviously playing football is a full-time job and requires a great deal of my time and attention. at said, in my free time instead of playing video games or watching TV to unwind, I have always enjoyed learning about and helping my friends grow their businesses. In all the ventures I have started, I have partnered with people that I know and trust. I work to help them grow their business and expand their networks in any ways that I can and to genuinely develop those relationships. Once we are partners and in all of my current ventures, I take a back seat on the day-to-day operations and pop in and out as time allows. Regardless, I will say this... Being an entrepreneur is not easy at all and you have to be prepared for a roller coaster ride on a daily basis.
Jay: Regarding your experience in the music arena with Bank On It – the competition is erce and things are always changing, what have you been able to do to keep Bank On It at the top, especially in such an exclusive market?
Brent: I think with every business that it ultimately comes down to the product. If the product is good, it will sell itself and if the product is not well-received, you are ghting an uphill battle that is hard to win. I want great product in every situation and Guor- dan Banks just continues to put out hits. His rst song “Keep You in Mind” went No. 1 on the Urban AC chart. Once that happened, we released a song with Dej Loaf that we feel people are going to love called “#WYWDT”. Check it out!
Jay: As a tight-end, you have to constantly look for opportunities to exploit the defense and nd ways to advance the o ense. How has that mindset helped you in business, as you must constantly look to “break through” your competition and nd ways to get your product through?
Brent: I have been playing football my whole life, so I have a great understanding of the sport and how to evaluate my compe- tition and ultimately to defeat someone. In business, it is just as competitive a market as the NFL, there are just di erent rules to the game. I am always learning and slowly but surely picking up the ins-and-outs to all these business ventures. I did not become an NFL player overnight. It took an entire life of training and preparation to get there. In business, I am not a professional yet but I know that I will get there!
Jay: What business executives and entrepreneurs have inspired you?
Brent: First of all, I would de nitely have to say my parents. ey have owned and operated hair salons my entire life and I have learned a lot from watching them. In Philadelphia, there


“If you believe in something, go for it. If you fail, learn from your mistakes and try again - never give up. e greatest things in life dont come easy.”
are two guys that I really look up to. e rst is Jona- than Brassington, the CEO of LiquidHub. He has been a friend of mine for about six years now and has shown me the ropes on what it takes behind the scenes to be an entrepreneur. He has introduced me to some incredible likeminded people that have helped me in business as well. e second is Charles Robins, Managing Director at Fair- mount Partners. I actually met him pretty recently, but our personalities really click. One thing that I have learned
from all of these people is that business is about building relationships and learning how to manage and work with di erent people and how to push and keep them driven. Building a great team around you is key!
Jay: What advice do you have for young entrepreneurs?
Brent: If you believe in something, go for it. If you fail, learn from your mistakes and try again – never give up. e greatest things in life don’t come easy.
CREDIT: Philadelphia Eagles


The Power of Nice
HOW TO BECOME AN EXPERT NEGOTIATOR
24 SMALL BUSINESS JOURNAL


JayBlock,
CEO, Small Business Journal
THE BASICS
Underlying Shapiro’s philosophy is the assumption that treating people with respect and fairness is the key to
cited by parties representing each side in a negotiation as the ultimate “Win-win” negotiator.
THE SECRET TO BEING AN EFFECTIVE NEGOTIATOR
According to Shapiro, “the secret is to build long-term relationships, and the best way to build long term relationships - do ‘Win-win’ deals by using a systematic approach.” is is not just a principle that Shapiro teaches, it is something that he lives by.
Shapiro’s passion for negotiation and desire to help parties create “Win-win” deals led him to create the Shapiro Negotiations Institute (SNI) in 1995. SNI is a negotiation, in uence, and sales training and consulting rm that has trained over 350,000 professionals in the art of negotiation, dealing with di cult personalities, and enhancing preparation and listening skills.
“Negotiation is a skill that you can develop and learn,” Shapiro said. “To be an e ective negotiator, it not only takes a systematic approach that includes preparation but also empathy and
respect for the other side,” he added.
“In order to get what you want, help them get what they want,” Shapiro said. “Good negotiation is not just talking—it’s about e ective listening.”
Lessons like these are embodied in Shapiro’s four best- selling books on negotiation, including e Power Of Nice: How To Negotiate So Everyone Wins- Especially You!, and, most recently, Perfecting Your Pitch: How to Succeed in Business and in Life by Finding Words that Work, published in 2013.
As explained in e Power of Nice, some of Shapiro’s AUGUST 2016 25
Many lawyers, negotiators, and sports agents have a reputation of being tough and bullish. In some cases we think, “ ey’re hired to get results – that’s how they’re supposed to be!” Recently, I had the honor of speaking with Ronald M. Shapiro who explained how he has broken this stereotype with a systematic approach called “ e Power of Nice.”
success in building long-term mutually bene cial relationships. Shapiro has had an illustrious career as an Expert Negotiator, Attorney, Educator, New York Times Bestselling Author, Civic Leader, and Sports Agent for more Hall of Famers than any other agent, including Cal Ripken, Jr., Jim Palmer, Brooks Robinson, Kirby Puckett, and Eddie Murray as well as 2009 AL MVP, Joe Mauer. Shapiro’s down-to-earth style, combined with a genius for negotiation, is why he has been called “one of baseball’s most respected agent- attorneys,” according to USA Today, and among the top 100 “most powerful people in sports,” says e Sporting News.
KEEP IT SIMPLE AND REAL
A tuna sh sandwich instead
of a fancy lunch. at’s what
sports uber-agent Ronald M.
Shapiro o ered Baltimore Orioles
superstar Cal Ripken Jr. some
years ago when they met – and is
the reason Shapiro was chosen over a swarm of other agents eager to represent Ripken, one of the best shortstops and third basemen ever to step on a ball eld.
Shapiro’s genius is not limited to the sports industry. His dispute resolution techniques have settled a major symphony orchestra strike, facilitated solutions to human relations problems, and resolved disputes in governmental, corporate, and major biotechnology challenges. He has negotiated on behalf of, or served as deal coach to, Fortune 500 companies, government agencies, as well as entertainment and news personalities. Shapiro is frequently
According to Shapiro, “the secret is to build long- term relationships, and the best way to build long term relationships - do ‘Win-win’ deals by using a systematic approach.”


most challenging encounters were with the late, legendary trial attorney Edward Bennett Williams, who owned the Baltimore Orioles and the Washington Redskins. “Ed and I negotiated some very rough deals,” recalled Shapiro, who represented a “tremendous number” of players on the Orioles’ roster. Although the pair could have been viewed as adversaries, Shapiro added, “We both wanted the team to win,” and with that mutual goal, were able to successfully resolve salary negotiations.
“Negotiations are not a one-time transaction,” Shapiro said. “You have to see it as a long-term relationship.” Indeed, he and Williams developed an “unbelievable friendship” despite their di erences, in large part because they treated each other with respect and acted with honor.
Shapiro never imagined a career in sports. He planned to be a civil rights lawyer, and out of law school went to work for a Baltimore rm suing to integrate segregated housing developments and apartments. His rm also asked him to take over some securities cases, after which he was named Securities Commissioner for the State of Maryland – and that’s where his negotiating skills were born. ere were simply too many cases to litigate, Shapiro said, and he had to learn to resolve at least some through other means.
is is how Shapiro’s systematic approach to negotiation developed – out of necessity. rough his experience, he has developed what he calls the three Ps: Prepare, Probe, and Propose. ese are the fundamental steps in order to systematically approach each negotiation.
can be overlooked. To ensure that no stone goes unturned as you gather information, Shapiro has developed “ e SNI Prep Checklist.” As shown below, the checklist is broken down into two categories: Information Gathering and Action Planning.
THE SNI PREP CHECKLIST
Information Gathering:
SITUATION SUMMARY:
Describe the situation and objectives for this negotiation. Include who, what, when and why.
What are the roles and responsibilities of the people on your team and their team?
PRECEDENTS:
Deal comparables (for and against you).
Other similar deals or patterns of conduct you can learn from to model your strategy.
How has the other side operated in negotiations in the past?
ALTERNATIVES:
Various deal structures.
Highest Goal – Walk Away –
Other options that are worth considering if this deal doesn’t work (for us and for them).
INTERESTS:
Wants and needs of the other side (probe for undisclosed interests).
DEADLINES:
Are there any deadlines?
STRENGTHS & WEAKNESSES:
Factors that lead to leverage for one side or the other.
Action Planning
STRATEGY:
What is your plan to achieve your objective? Include a timeline and next steps.
SCRIPTS:
Complete thoughts or bullet points for message or proposal you want to make, including questions you want to ask. Use a devil’s advocate.
THE THREE Ps
PREPARE
Research, study, stockpile information.
PROBE
Ask questions and listen.
PROPOSE
Try not to make the rst o er. When you do make an o er, aim high within reason.
PREPARE
Preparation is the rst phase in any negotiation and the most important. When you prepare you learn, among other things, about the other side. e more you know about them, their expectations, objectives, limits (time, money, resources), their perceptions of you, the deal, and its rami cations, the better you have positioned yourself to make the deal you want. e most successful negotiators are also the most prepared negotiators.
Preparation can be tedious and because of that, it often
26 SMALL BUSINESS JOURNAL


PROBE
e other side is trying to tell you how to make the deal – let them. Information gathering is not limited to background research. Many times, the best way to gain information is by asking the other side questions. e more you know about them—their expectations and objectives, their wants and needs, stated goals as well as real interest—the better equipped you are to negotiate. By asking the right questions and listening, the other side may disclose information that will be vital for you to achieve a successful negotiation.
party refrains from accepting your o er they say, “Well, it’s not in the budget.” Rather than continuing to argue over why it should be in the budget, respond by saying, “But if it were in the budget, would you support the project?” Whether their response is “yes” or “no” you will be gaining information or at least the opportunity to ask additional questions.
By framing questions in a hypothetical, a good negotiator can break a deadlock and gain information even when the other side is reluctant to do so.
PROPOSE
e nal “P” is propose. It is the culmination of your diligent preparation and probing. Shapiro’s three rules of propose are 1) Try not to make the rst o er, 2) Set your aspirations high (or low)—with reason, and 3) Don’t (immediately) accept their rst o er. Each rule guides you throughout the negotiation from rst o er to acceptance.
Shapiro’s rst rule, try not to make the rst o er, has been the topic of debate amongst scholars. Shapiro emphasizes “try” because, in his decades of experience negotiating lucrative deals, when the other side makes the rst o er, you may learn that you have underestimated your position and are able to get much more than you had originally anticipated. While Shapiro prefers letting the other side make the rst o er, there are circumstances where that is not practical. Whether you are making the rst o er or presenting a counter-o er, focus on the second rule, set your aspirations high (or low)—with reason. Use prior precedents to justify your o er.
Remember, when you do receive the other side’s rst o er you generally should not (immediately) accept it. By immediately accepting their o er, the other side’s rst thought may likely be that they o ered too much (or little). Since you are still in the process of negotiating, the other side may retract what they initially o ered by adding conditions or subtracting payments to ultimately work
To do this, Shapiro has formulated a probing technique to learn the other side’s interests that reminds you to probe, and after you think you have probed enough, probe some more. is probing technique is called W.H.A.T. Each letter represents a series of questions to dig deeper into the interests of the other side.
For example, “H” stands for Hypothesize, which encourages the ow of information or breaks a deadlock without threatening the other side. Examples of phrases that can be used to set up a hypothetical are Let’s pretend ... What if? ... Just suppose. Many times when a negotiating
AUGUST 2016 27


their way back to a number where they feel comfortable.
Using the three Ps as the foundation for SNI’s systematic approach to negotiation, Shapiro and the rest of the SNI team have taught hundreds of thousands of business professionals and sports leaders throughout the world.
In addition to teaching business professionals and sports leaders, Shapiro remains in touch with the classroom as well. Shapiro speaks to universities, high schools, and even elementary schools as often as possible to impact the next generation of lawyers, politicians, civil servants, and even sports agents.
Robert C. Bordone, Director of the Harvard Negotiation and Mediation Clinical Program, spoke
about Shapiro’s impact on the students after one of his programs. “Ron Shapiro really embodies the values I aim to teach my Harvard Law students—that by treating others well and acting with integrity, you can create lasting value for clients and succeed in even tough negotiation environments,” said Bordone. “Ron is a great example of a creative problem-solving negotiator.”
is article is largely based upon an article that appeared in the Harvard Law Today on May 4, 2010. To learn more about how Shapiro and the rest of the negotiation experts at SNI can help your organization improve strategies and processes – leading to more e ective and successful negotiations, please visit http://www.shapironegotiations. com/Programs.html.
28 SMALL BUSINESS JOURNAL


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