Niches can be lovingly solved or horrifically exploited.  We all have little elements of our lives that aren’t served by the mass market.  These elements often are the things that we identify by or are plagued by.  If we’re involved with a niche, we often have deep knowledge about the minimal products created for it.  Why are niches a business darling?  What leads to them being coddled or corrupted?  This week I had the good fortune to attend a Future Commons session at Institute for the Future in Palo Alto and a panel discussion at the “Leading Best Practice in Language and Literacy” conference in Monterey.  The discussion at IFTF was largely around the iPhone, telecom spectrum ownership, and rapidly irrelevant business models.  The discussion in Monterey was centered around applying emerging technologies to education and assessment. A common theme: they both centered around niches. Niche is a rather overused business term, but here I think it crosses several of its definitions. Webster’s definition of niche includes: a : a place, employment, status, or activity for which a person or thing is best fitted <finally found her niche> b : a habitat supplying the factors necessary for the existence of an organism or species c : the ecological role of an organism in a community especially in regard to food consumption d : a specialized market In Seth Godin’s recent book, The Dip, he talks about quitting when you can’t be the best at something.  His message is that you have to be the best at something in order to really make it because the number of choices customers have is so massive now. You can never be the best pizza company on earth, so why try?  Which, of course, gives you a big hole to poke in the book - no one is really the best at anything.  But lucky for him, Seth answers this by basically telling you to have a good, tight definition for your endeavor. In other words, find a niche.  The best organic pizza place in Tiburon.  Much more obtainable and focused.  When we compare this back to the multi-definition for Niche, we find it could easily satisfy all four now, and not just “a specialized market”. The last few days have brought forth a few things about niches for me: Niches are nuanced Areas like telecommunications or education often seem like a market - a unified region of human activity which could be served with total equality.  The only seem like that for a second - that second we don’t give them a lot of thought.  So we get companies like AT&T giving us the same limited choices as Verizon or Sprint or T-Mobile.  We get initiatives like No Child Left Behind which seeks unprecedented standardized testing regimens in a world which is increasingly needing and rewarding diversity in problem solving and areas of expertise. Niches need special (thoughtful) solutions. They’re specialized, aren’t they?  Of course they need special solutions.  The thing is, they often don’t get them.  Within education and literacy are a jillion nuanced niches that do not get special solutions because of the reversion to rigid standardization. Special solutions aren’t easy to come by either.   They need to be thoughtful, insightful.  In something like education, the stakes are high.  You’re only 8 years old once.  It’s not golf.  You can’t play the hole over or take a mulligan. In telecom, the niches are hoarded by companies with an economic interest that trumps the interest of those actually in the niche.  This leads to things like spectrum hoarding and defacto price fixing. Niches are conspicuous If you are going to enter a niche, you’d better listen to Seth.  The more focused a niche, the more likely your clientele is to rank high in the niche-geek spectrum.    Niches have experts, those experts, due to their rarity, are listened to both inside and outside the niche.  By sheer need, the smaller the niche, the higher the percentage of experts.  They will tell you exactly what your solution does not do. Niches are also suspicious of newcommers.  If a solution comes from outside the Niche, it will likely be quickly examined.  From there it will either be adopted, watched, or discarded.  This reaction is important because it usually comes with decreasing levels of trust.  Adopted = high trust.  Watched = lesser trust.  Discarded = distrust.  This is very true if the product is discarded because it violates some central belief of the niche’s community. Invasion of a Niche Do you want to exploit a niche?  Sure! We all do! Walled gardens are usually built around a niche.  It’s part of how businesses meet Seth’s demand that you well define your product.  Niches are vulnerable due to the fact that they are often underserved. In telecom, the ugly invasion of a niche might be exorbitant pre-paid cell phone SIM cards sold in low-income neighborhoods. Elevation of a Niche Of course, bad things aren’t universal, and niches can be identified and well-served.  In Fresno, California, there is a magnet school (fighting for funding) that uses innovative techniques to teach it’s massive (over 70%) ESL population English and keep them mainstreamed.  These thoughtfully designed niche techniques have resulted in the best performance ever seen in that population. Killing an Industry to Open the Niches below Google wants to kill the Telcom industry by buying spectrum and opening it for free use.  The current owners of that plethora of niches (who have attached it to and misidentified it as an industry) aren’t very happy about this.  Like education, which is a large collection of niches (learning styles, lifestyles, focuses, desires, competencies) misidentified as one thing (are all kids the same?) So too is telecommunications.  The current telecommunications network was specifically set up to be a distributed network of independent nodes - yet it is managed as a centralized system. Centralized systems abhor non-conformity and thus reward thin and easily manageable mega programs.  No Child Left Behind and “My 5″ cell plans are great examples of mega programs that look like choice but ultimately serve the interest of no one. In both telecom and education we see a vast array of potential niches that would greatly enhance our most basic needs: to learn and to communicate.  The industries around them cannot support this, their very nature of bureaucratic centralization disallows creative problem solving inherent in open networks. Summing Up Telecom and education are both in a hard place.  Telecom has invested billions of dollars in rapidly antiquated communcations technology, making the US one of the worst places on earth for mobile communications.  They need to recoup this investment and can only do it by charging for and centralizing their services.  Yet, it is increasingly clear to even those in the industry that this business model no longer serves the need of the users. Education has a mandate to provide quality and equal instruction for all students regardless of circumstance (economic, mental, physical, geographic).  Offering a large range of choice means that kids will receive different types of education.  How do you defend yourself against law suits or claims that your particular school didn’t live up to its goals?  How do you test students for collegiate entrance when their backgrounds are so different? The obvious response to these issues by the institutions themselves is to largely ignore it.  Indeed with pressures from without to expand diversity, the best way to guard is to increase conformity and defend that as the best way for the system to operate. So, I have a simple plan to fix all this.  Okay, no I don’t.  Of course I don’t.  This is a hard and painful couple of problems.  It’s clear the direction both must take.  Only through overthrow (Telecom: Google, Education: Vocal Parental Involvement) can either of these institutions start to make the changes necessary for their and our survival. Technorati Tags: google, education, spectrum auction, telecommunicatoins, sprint, verizon, at&t, iftf, future commons, leading best practice in language and literacy, niche, seth godin, the dip
Source: feeds.feedburner.com

GZGT: Golden Dragon or Sleeping Snake?
(Click on the links to see larger images of the slides: Cover, Avalon, Global Telcom Holding Ltd, Godels, Solomon, Barber & Co., International Tea Company, Technology Resources Inc., WES Consulting, Contracted Services, Inc, MCG Diversified Inc., Electro Energy, Ivecon, Diane Harrison, Randall Drake) One of the problems with stock spam, is that it preys on the get rich quick mentality. Investors are encouraged to act right away and to take claims at face value. I’ve never been opposed to investing in high risk investments, but you can bet that I do my homework before I jump in. Unfortunately, too many investors don’t take the time to read the SEC filings, before making an investment and when the hype dies down, they get hurt. Another problem with stock spam is that sometimes the companies being promoted, are as much a victim to the fraud, as investors are. Some microcap companies will even issue press releases warning investors that spamming is going on. Even though these companies temporarily benefit from the attention, for legitimate businesses, the volatility can create real problems in the long term execution of a business plan. Because GrowthStockGuru was willing to pay bulk postage rates, just to get my attention, I wanted to take a closer look at the people behind Guangzhou Global Telecom (GZGT), just to make sure they weren’t a victim, in all of this. The deeper I dug, the more ugly things looked. It All Started With $100 In order to better understand the prospects for GZGT to succeed, you need to look at the qualifications of the key players behind the business. Because the company was formed as part of a reverse merger, it’s important to look at the pieces that make up this puzzle before the company merged. Even though, GZGT is being promoted as a Chinese stock market play, a Florida real estate company named Avalon Development Enterprises played a more important role, in creating the company. Avalon was first formed in 1999, after Charles Godels, invested $100 into the company and filed the appropriate paperwork. Shortly thereafter his wife, Marguerite Godels also purchased 100 shares for $100. Between Aug. 2004 and and Feb. 05, the company must have needed more capital because they had another underwriting where they sold 3 shares a piece at a $1 valuation and brought in 44 more investors. On 12/5/05, the company did a forward stock split of 4500:1 and overnight, investors saw their 332 shares turn into 1,494,000. They also filed a registration, that would allow them to sell their shares at .50 cents a piece to other investors. At this valuation, it meant that on a split adjusted basis, their $1 share price was now closer to $2,250. On 01/08/07, Charles P. Godels, Diane J. Harrison, Madanna Yovino, Michael T. Jones, and David E. Dunn all resigned from Avalon’s board of directors. At that time, Allen S. Greenberg officially took over as the company’s president. Two days later, they entered into their merger transaction. In the footnotes of the 8k filing announcing the resignations, I noticed something about Mr. Greenberg’s biography that raises some interesting questions about where the money is going to. “from 2005 until the present, Mr. Greenberg served as the Operations and Customer Service Manager for Global Administrative Provider in Costa Rica. In that capacity, he was the client service contact for all investment advisory firms, was responsible for setting up offshore investment structures for clients, oversaw all incoming and outgoing wires via international custodian banks, and oversaw all company invoicing.” Avalon was supposed to be a local Florida Real Estate company and yet, they brought Mr Greenberg’s in, in order to set up offshore investment structures from Costa Rica? As a Chinese company, I can understand why there would be some need for this, but while doing my research I found several offshore accounts, that can be connected to different players behind Avalon Development. I also found an alarming amount of small shell companies, that are either currently trying to get listed or who have tried, but failed to go public. If GZGT really is a once in a lifetime opportunity, why have so many investors utilized accounts, that are beyond the immediate reach of the US Government? Investors Cool To Hurricane Real Estate, China Gets Bubble Fever Investor were tuning out Real Estate, so if Avalon wanted to make a splash they needed access to a hot sexy growth market that investors like right now. They decided on a Chinese phone card company and agreed to buy them out with stock. In order to get access to Global Telecom Holding Limited,(herein referred to as GTHL) Avalon issued 39,817,500 of restricted common stock, in exchange for 100% of the company. During the merger, the company also executed another forward split, this time at 8.75 - 1. After completing the merger, they had 52,890,000 shares outstanding and could authorize up to 75,000,000. Based on Friday’s closing price of $1.95, this means that on a split adjusted basis, the original $1 per share investment is now worth $77,000 per share. Mr. Godels initial $100 investment is now worth $7.6 million or $15.2 million if you include his wife’s shares (assuming that he hasn’t sold anything along the way, of course ). Not a bad return, given that Avalon admits that Florida real estate wasn’t much of a business in their 10KSB filing. There isn’t a lot of information about GTHL, in the SEC’s database, but we do know that GZGT’s CEO Yankuan Li was by and large the largest beneficiary of the acquisition. He ended up with about 12.3 million shares (about $23 million based on Friday’s close) When all the dust was settled, GTHL ended up with 51% of the company, but a lot of it was in restricted shares. Investors Get Caught In PacificNet’s Tidal Wave In Mr. Li’s bio, it’s disclosed that he worked at PacificNet (PACT) from 2004 until 2005. During that time, the company experienced unusually high trading volume and went from $2.50 a share to as high as $13, before crashing back down again to $7 per share. These gains occurred largely in late October of 2004. According to Bloomberg, Sept 04′ was the highest activity of insider buying, in PACT’s history. Currently, PACT is delinquent in their SEC filings due to back dating issues, which occurred during Mr. Li’s employment with the company. I do not believe that this will end up being a slap on the wrist, there was a lot of insider selling at the top. The company has claimed that they relied on the advice of their auditor, Clancy and Co., P.L.L.C., who has since been forced to withdraw their certifications from that time. Three months before PACT saw their share price spike and than drop, the Public Company Accounting Oversight Board (PCAOB) performed an audit of Clancy and Co. During that Audit, they reviewed 6 of Clancy and Co’s 15 clients. I don’t know if PACT was one of those clients selected, but the PCAOB’s review did find 14 serious issues with their auditor, including “failure to properly perform procedures related to consideration of the possibility of material misstatement due to fraud.” None of this suggests, that Mr. Li was personally involved in any shenanigans, but it does raise some important questions about the corporate culture at his previous employer. The Bankers, The Bean Counters And The Ambulance Chasers In order to be able to underwrite stock to the public, there are a few key pieces you need in place. Mostly, bankers, attorneys and most importantly, the auditor. Information about GZGT’s banking relationships are scarce, but there is an SEC filing that references a company named Zenith Capital Management, who has agreed to buy 200,000 shares at a price of $2.50 per share. They only committed part of the money up front, which for me, would raise questions about Zenith’s credibility and their intentions to make good on these pledges, especially if GZGT falls apart, before it can get back to $2.50. When Avalon did their 4500:1 forward stock split, Diane J. Harrison was the attorney who wrote the consenting legal opinion. Charles Godels audited the books himself, (under small business rules that allowed him to avoid an independent audit) and later on, the company brought in Randall N. Drake as their official auditor. Mr Drake’s name shows up as the auditor in many of the companies mentioned in this article. In 2001, he audited the books of Mobile Area Networks Inc. (MANW.ob) Investors may have been hoping that MANW would make them rich, but it turned out to be a belly flop. After MANW went public, it briefly kissed $4.87 before it came crashing down to $1.00 over the next month. Today, the stock is at $0.10. Of all of the characters in this bizarre story, Diane Harrison is the one that raises the most eyebrows. She is the attorney. She helped create Avalon. She has been involved, either as an investor or as legal council, in many different penny stocks that can be linked to Godels or his partners. On 10/27/06, the Secretary of Avalon resigned and Harrison was official brought in as the new Secretary and as a Director. Her role at GZGT is unclear, but two days before Avalon’s merger, she resigned from the board. In 1999, her husband, Michael J. Daniels, was convicted of securities fraud and spent 6 months under house arrest and 3 years on probation. He is now officially classified as a stock promoter under the SEC rules. Daniels has had no direct affiliation with GZGT, but he can be connected to Godels through an auditing relationship with Godels, Solomon, Barber & Company, L.L.C. Before Avalon, Daniels tried to raise financing for a company called MCFTY National. The company was originally a mailbox etc. type business, but later tried to cash in on the vitamin water craze and changed their name to the International White Tea company. When Daniels and Harrison started the company, they also brought in Steven A. Sanders and Robert Bedore. Both Sanders and Bedore have also been classified as stock promoters by the SEC. Over the last several years, Ms. Harrison has helped to set up several other companies with Godels and/or his partners. These include WES Consulting, Ivecon, Harcom Products, Technology Resources Inc. (herein referred to as TRI), and Contracted Services Inc. What is interesting about all of these companies, is the number of related transactions between the different individuals involved. They would not only hire each other’s employees, but there was also money changing hands, between various companies. At one point, Godels CPA practice was a significant contributor to Avalon’s revenue. Even after studying the SEC documents on these companies, I still cannot sort out all of the different players involved. If you look at the shareholders, of these investments, there does appear to be another layer to this mystery, but for now, these players are beyond the scope of my discussion on GZGT’s business. In trying to unravel this complex piece of financial engineering, it didn’t take me long to figure out that, everything always ends up coming back to the Godels. Whether it’s the high number of family members who were shareholders of Avalon, or tracing the cash from the different related transactions, the Godels’ family name keeps popping up. It’s as if they are trying to build a dynasty for the entire family. Interestingly enough, in the GrowthStockGuru newsletter, the anonymous author who wrote the report hints that a family may be behind GZGT’s marketing attempts, by using the name Aharon Bronfman. The Bronfman family is a famous name on Wall St. In the 1920’s, they made their fortune selling bootleg liquor to the Northern United States. After prohibition ended, the Bronfman family distilleries were some of the most profitable in Canada. Later they would buy Segrams from the Segrams family and made a killing off the whiskey. The family’s history has always been checkered with allegations that their fortune was linked to the mob. There is no way to know for sure, whether or not the Godels are connected to Mr. Bronfman’s marketing campaign, but the subtle undertones of the alias, raise suspicions that Mr. Bronfman might be working on behalf of a family that is willing to do whatever it takes, for them to build their own dynasty. Electro Energy Shocks Investors Given the level of sophistication involved, in this sort of transaction, it came as no surprise, when I learned, that this wasn’t the Godels first reverse merger. They got their first taste of the profits that could be made, when they first set up MCG Diversified Inc. The company was created by the same players who keep popping up again and again. Diane Harrison wrote the legal opinion on the common stock and Randall Drake provided the auditing. MCG was supposed to be a human resources company. A lot of their revenue came directly from Avalon. Human resource companies seemed to be a common theme among the various public filings. On most of the filings they do not include information about partnerships, but it appears that some of the recruiting gong on, was just individuals shuffling from one company to another. Marguerite Godels owned 50% of MCG and from the filings, you can sense that she was eager to cash out. Things were on track for MCG, but they almost ran into a disaster, when Mr. Drake made a mistake that almost scuttled their plans. Somehow, he had managed to let his registration with the PCAOB lapse, but still filed audit reports for Technology Resources Inc. and for MCG, at that time. The PCAOB denied his application for a new license, after he agreed to a settlement, where he would be allowed to get his license back, in another year. Frustrated, with their attempts to get listed on the bulletin boards, the Godels turned their sites to the white hot alternative energy market and in 2004, they executed a reverse merger with Electro Energy. (EEEI) In exchange for the access to income statements with real revenue, MCG was forced to take a 30% position, following the completion of the merger. Even at 30% though, they still realized obscene profits, considering how little they had actually contributed to MCG’s capital. When EEEI announced their change of auditors, they never mentioned that Mr. Drake’s license was no longer current. After the reverse merger launched, stock promoters immediately jumped in. Had you invested at the first trading price, you would still be down 79%, but if you listened to the hype, you would have lost even more money faster. On 10/11/04 Stockwire issued a press release advertising EEEI’s stock. If you jumped in then, you’d be down 84%. On 11/04/04, Capital Investor Forum Growth, suggested that you look at the stock. Had you taken, their advice you would be down 90% right now. A year later, a firm that that continues to pop up on my radar, WallSt.Net issued a press release showcasing EEEI. Had you listened to WallSt.net’s analysis, you would be down 72%. During this sharp run up, EEEI insiders took advantage and sold out. According to SEC form 4 filings, between 10/19/04 and 11/01/04, Assari Farhad sold a significant amount of stock and options. Given the question marks surrounding the promotional activities going on while he was selling, I thought that it was notable that his form 4 filing reporting the sales, was not filed until 12/04/04. Perhaps, the strangest part of this whole story, isn’t that someone would want to sell inflated stock, it’s how Mr. Bronfman is going about generating the hype behind this bubble. Instead of the traditional email spam, they have been targeting investors by advertising in respected business magazines. On the Friday, that the Investor’s Business Daily ran their ad, their stock jumped very sharply before seeing heavy selling at the end of the day. IBD should be ashamed of themselves for not researching the company further. Their readers trust them to provide excellent financial advice and yet, they are willing to take money from a reverse merger penny stock, without hesitation. If IBD does not issue an apology, then they have lost all credibility in my book. So far, the only mainstream media outlet to pick up on GZGT’s innovative marketing attempts, has been Kiplingers. When the company was first approached, they knew something didn’t look right and took steps to warn their readers. Unfortunately, other business publications seem to be more than willing to sellout. Business Week and Forbes have both agreed to run the ads, regardless of how questionable this might be ethically. I would encourage both publications to take a closer look at GZGT, instead of their advertising revenue, before putting the company in front of their readers. Just because the bulletin boards are the wild west of the investing world, doesn’t mean you still can’t arm yourself with a six shooter. Six months ago, digging through these SEC files would have been much more difficult, but thankfully, the SEC has recently released a full text search feature on their website. It didn’t getting any buzz from the press, but by building the search tool, the SEC has turned over an exponential amount of data to the public. It is a powerful tool and an important development in making sure that the public has access to good data. There is a tremendous amount of information out there, but you need to read it, especially if you are acting on a tip, that someone paid money, in order to give you. In Mr. Bronfman’s report on GZGT, he says that GZGT’s management has a tremendous track record, but when I look at the track records of the investors involved in them going public, I see a very different picture. Many of the companies that they have been involved with have turned into a pile of rubble, after the promotions die down and the stock has been diluted. If investors want to play with high risk investments, that is OK, but just remember to do your homework before jumping in. Disclosures - I have no positions in any company listed in this article. To the best of my knowledge, no one that I have ever come into contact with has ever invested in or shorted, any company mentioned in this article.
Source: davisfreeberg.com

4 Places Where Your Customers Are (Hint: You want to be there, too!)
It’s vitally important to be where your customers are, but how, exactly, do you do that? Here are four actionable suggestions: 1. Forums Probably the most powerful online method to put yourself in front of your customers and hang out where they hang out is to participate fully in one or two popular forums for your niche. The operative words in that sentence being participate fully. Do not join a forum just to see what you can get out of it or so that you can pepper your signature link all throughout the forum. Put your gloves on, roll up your shirtsleeves, and dive right in. Be a real member, a real participant. Be active and involved. Don’t just respond to topics, but start your own. Be as helpful to other forum members as you can possibly be. 2. News Sites Many news websites have commenting capabilities similar to blogs, and some have related forums. People who want to keep informed in a field will be reading news at these sites, and that puts you in front of them. In some cases, these sites have and encourage people to become human editors for a topic on the site (like Topix.net). 3. Magazines Consider magazines as a strategy for placing yourself in front of your customers. There are several ways to do this. Magazines often have their own websites. That means that they are likely to have their own forums you can join and even (more and more) blogs you can leave comments on. Even if a magazine website doesn’t have a forum or a blog, you can contact its editors and writers, introduce yourself, and simply say hello and add people into your network. You can write letters to the editor where appropriate. And certainly, you can advertise in a magazine. For those of you who can write well enough, you may even consider writing a magazine article. Best of all, you could be the subject of a magazine article. It’s not as impossible as you might think. Writers are always looking for new and relevant people to interview and write articles about. Contact them and introduce yourself. Make sure you have read some of their articles so you are familiar with them. Tell them you like their work (be sincere, don’t contact someone whose work you don’t like or don’t know) and that you’d like to present yourself as a subject or at least as a resource because what you do is relevant to what they write about. 4. Trade Shows and Conferences This is a big one, because it involves more than an investment of time. Trade Shows and Conferences cost money to attend. This is where you will do some of your most powerful networking and you will meet tons of new people. If you can speak or have a booth at the show, great! But even if you’re just an attendee, the opportunities are astounding. The opportunities are even more amazing when you go across industries. Here’s an example: say you’re a graphic designer and you have a blog. Sure, it’s great to go to a graphic design conference, but you may not get a lot of new freelance work that way. What if you went to a conference in a completely unrelated industry, like home appliances and furnishings? Don’t people in that business need graphic designers? They sure do! And here you are, one of the few people not directly in the industry, handing out a pile of business cards sporting your URL and phone number. The World Will Not Beat a Path to Your Door There’s an old saying: build a better mousetrap, and the world will beat a path to your door. We know that’s not true. The world will not beat a path to your door. You go to the world. You need to be where the people are who have a mouse problem. Bookmark or Email This Post  © 2005 - 2007 Remarkablogger, all rights reserved. Feel free to contact me any time at michaelmartine@gmail.com or on Skype at michael.martine. The Secret LinkFauxto is a very cool flash-based web application for editing your images online for free!The secret link only appears for my RSS subscribers as a reward for subscribing to my feed. Who knows what will be here next or when it will change!
Source: www.michaelmartine.com

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