Letters

Readers react to articles from the July 1999 issue of Inc., including "Battle Grounds," by Joseph Rosenbloom, "Fiscal Therapy," by Emily Barker, and the cover story, "Hot Start-ups."

Whether our readers can abide all the costumed candy seekers on their doorsteps later this month is anybody's guess; many were haunted enough by a story in our July issue about a coffee chain that markets--some would say, masks--itself as a homegrown underdog.

Maine streets

In " Battle Grounds," Inc. senior editor Joseph Rosenbloom wrote about the marketing tactics used by Maine Roasters Coffee founder and president Rand Smith to compete with the Starbucks stores that have opened in Maine over the past year and a half. That story drew more letters than any other in the July issue. Many wrote with disdain of Smith's aggressive "buy local" pitch despite his own national ambitions.

If I were a betting man, I would put my money on Starbucks to beat out Maine Roasters Coffee, in Maine and elsewhere. Not because I know Maine Roasters Coffee is inferior or its service is less friendly; I have no such knowledge. It is a matter of passion. Starbucks portrays a passion (which I believe is not artificial) for good coffee, while Rand Smith displays a passion for competition. He doesn't even believe in his "buy local" facade. While Smith is proud of his image as a David up against the invading Goliath, Starbucks is proud of its coffee.

There is a lesson in this for all of us start-ups who long to become Goliaths.

Jefferson Bronfeld
Chief Electrical Engineer
Cadick Corp.
Binghamton, N.Y.

If Rand Smith can't handle the heat of competition, then he should get out of the proverbial kitchen. I would suggest he utilize his people, talent, and energies in a more constructive manner. He would be better off differentiating his product through superior service, quality, and innovation. At the same time that he maligns his competition, he also aspires to be the competition, maybe even to the point of selling out to them. He even acknowledges that the arrival of Starbucks has increased his business! Quit whining. His philosophies and morals are full of contradictions.

John L. Seifert
CEO
Timbuktu Design Station
Boulder, Colo.

In the past I have looked to your company profiles for inspiration. I find nothing to admire in Rand Smith's life or business. He's not from Maine. He'll use any popular sentiment to sell his product. Next thing you know, he'll be breaking his own windows in the middle of the night for hot copy. His methods and platform represent all that is sleazy and opportunistic about the "get rich quick on somebody else's idea" generation.

Jefferson Mack
Artist/Owner
Jefferson Mack Metals
San Francisco

Ignorin' Warren

In an interview with Inc. senior staff writer Christopher Caggiano, " Everything I Know, I Learned from Warren Buffett," Joe Mansueto, the founder of $44-million Morningstar Inc., discussed what he's learned from his business role model. A Berkshire buyer failed to see why Buffett was worthy of worship.

Warren Buffett is a great investor, no question, but why is this man a hero? I don't get it. Exactly why is it a big deal that he and Charlie Munger have 90% to 100% of their personal fortune in Berkshire Hathaway, which is nothing but a holding company? If you or I started a holding company to stash all our individual stock purchases, wouldn't we, by definition, have all our money there too? In a practical sense, how could you not? There is no operating business there. It's Buffett's big mutual fund, and he decides what's in it.

In 1985, as a student at Wharton, I started reading about Buffett, and later purchased Berkshire B stock. But lately, Berkshire B has been the poorest performer in my portfolio. Buffett generally won't buy technology, for example, because he doesn't understand it. He understands the demand for Coke, razor blades, shoes, etc. There's no point in arguing with obvious success, but future demand and reliable earnings growth are what we're after, even by Buffett's formula. How realistic is it to think that the need for basic consumables will outrun the demand to communicate faster?

Tom Frangos
President
Build America
Beverly, Mass.

Hot dog

Our July cover story, " Hot Start-ups," told the tales of 10 non-Internet companies that are off to sizzling starts. But this CEO griped that not all hot start-ups are created equal.

As a new-product developer I enjoyed your article but can't help commenting on the example of Beth Marcus and her company, Glow Dog. Am I missing something? She asked for, and got, $800,000 to start a company that makes glow-in-the-dark accessories for dogs. She's grossed just over $1.2 million in two years but has "planned" another $2 million in funding, for a total of about $3 million, before the year's out. Then one of her angels says, "She gets a dollar's worth out of 30¢."

Where do I find investors like those? We have two patentable products in two of the biggest consumer markets in the world, and if someone offered $100,000 of funding for either, we could go to market within six months. Taking nothing away from Marcus, I find it hard to understand how you couldn't get products of Glow Dog's type off the ground with almost $1 million to start.

Carl Simmons
President
Disktech
Nolensville, Tenn.

Sleepless in Cincinnati

" Fiscal Therapy," Inc. senior staff writer Emily Barker's account of Bootcamp for Startups, in Mountain View, Calif., portrayed some high-tech CEOs who sought empathy as much as cash. This reader had little of either for one entrepreneur we mentioned.