It’s like match.com for investors and entrepreneurs. Here’s the summary from the launch post:
The most common question we hear from entrepreneurs is, “Can you introduce me to investors?” Yes we can. We’re going to recommend startups on Venture Hacks. Investors are invited to subscribe to our recommendations. And everyone is welcome to recommend startups here. Request an invite if you want to help test the Recommended feature before we open it up—it’s also open for browsing in the meantime.
“Relative to GDP, government taxation is 18.5% and spending is 20%, so we borrow the balance. The national debt should not be a scary topic and the fact that it’s gone up is fine as long as it’s proportional to GDP. Where do we get that 18.5%? There’s 2.7 trillion in government revenues. 2.2 trillion comes from individuals, and less than 1% of that comes from the estate tax. 1.1 trillion comes from income taxes, with payroll taxes consisting of 900 billion, but it’s capped at the first $100,000 of salary. We want a tax system that encourages greater prosperity, but it needs to take care of the family.
“We did an informal office survey by looking at the total tax footprint versus the total income. I earned 46 million and paid a tax rate of 17.5%. My rate was the lowest, the average was 33%, and my cleaning lady paid 40%. The system is tilted towards the rich. The Forbes 400 total net worth has gone from 220 billion to 1.54 trillion, an increase of 7-to-1. You see in legislature that there is lobbying carried on by the powerful over issues such as the estate tax and carried interest for private equity investments. We need to flatten income and payroll taxes, and those making under $30,000 shouldn’t be bothered.
“… the best way to stimulate the economy is to give money to the poor. They will spend it.”
Naval Ravikant and I write a blog called Venture Hacks: an entrepreneur’s guide to hacking venture capital. Here are some excerpts from our latest articles:
“C’mon—you have $500M and I am raising $1.5M and you want me to take the first $25K to pay your legal expenses for doing the deal? That’s like your dad giving you your allowance and then asking you to buy him a hot dog. When we were raising money for Flixster I thought that must be a trick—like if I agreed to that term they would pull the term sheet at the last second and say I failed the secret fiscal responsibility test.”
A deal is only as good as its best alternative. Keep improving your alternatives until you have a signed term sheet. And keep developing your current offers or they will die. Finally, don’t say “shopping around”, it puts investors off their stroke.
Smart money is money plus the promise of help that’s worth paying for, dumb money is money plus hidden harm, and mostly money is mostly money. Weed out the dumb money with diligence. Evaluate supposedly smart money with the smart money test. Finally, assume your investors are mostly money: unbundle money and value-add to get money on the best terms possible and value-add on the best terms possible.
FriendFeed doesn’t have a compelling value proposition for me (yet). But it’s fun to visit it at the end of the day and see all the stuff that I’ve added to the read/write Web.
I can’t imagine anyone other than me would want to see that information presented in that way. But I like seeing it.
Maybe they’re planning to put a “Facebook skin” on the data and build a “distributed Facebook”. Whatever that is.
“iTunes kind of feels like Sam Goody to me. I don’t feel cool when I go there. I’m tired of seeing John Mayer’s face pop up. I feel like I’m being hustled when I visit there, and I don’t think their product is that great. DRM, low bit rate, etc. Amazon has potential, but none of them get around the issue of pre-release leaks.”
Songbird 0.3 is mostly for developers but I’m already using it to discover and subscribe to badass new music like Knob Tweakers. It is stable and the inevitable bugs at this stage of development are innocuous.
This checklist is about getting the odds in your favor. Fitting together all these pieces of the puzzle is what separates a good business plan from mere speculation.
1. Are you focused on creating the product?
2. Are you the world expert in your product niche?
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4. Do you have the force of will to make things happen regardless of the inevitable obstacles?
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6. Are you spending money wisely?
Then once you’ve shipped, continue to ask:
7. Will today’s task contribute to or diminish the organization’s focus?
8. How can I broaden the market?
9. Is the company’s scale appropriate to the task?
10. Is it time to sell?
Another snippet from the talk:
Spend Money Wisely
Profit. A bootstrap must have a positive cash flow (by definition), even though this is much less important to someone purchasing the company than sales growth.
“Just say NO” to things that aren’t profitable — and be happy
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Develop products that will be profitable. A give away, market share strategy is inappropriate for a bootstrap.
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Play on being small, “We don’t have a budget for that…”
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Many people inside and outside the company want to spend YOUR money because of what it does for THEM. You must ask what spending the money does for YOU.”
“All you have to do to turn the website on is put the little blinking line thing in the cyberspace window at the top of the screen, type ‘thegoogle.com,’ and press ‘return’—although it will also recognize http.wwwthegoogle.com, google.aol, and ‘THEGOOGLE’ typed into a Word document.”
“We believe that Google Desktop Search is the best way to unlock the information hidden on your hard drive,” Schmidt said. “If you haven’t given it a try, now’s the time. In one week, the deleting begins.”
Although Google executives are keeping many details about Google Purge under wraps, some analysts speculate that the categories of information Google will eventually index or destroy include handwritten correspondence, buried fossils, and private thoughts and feelings.
According to the scientists, the electromagnetic science-maker will make atoms move and spin around very quickly, though spectators at the hearing said afterward they could not account for how one could get some atoms to move around faster than other ones if everything is made of atoms anyway.
The highlight of the scientists’ testimony was a series of several colorful diagrams of how the big machine would work. One consisted of colored dots resembling Skittles banging into one another. Noting the motion lines behind the circle-ball things, committee members surmised that they were slamming together in a “fast, forceful manner.” Yet some expressed doubts as to whether they justified the $50 billion price tag.
“These scientists could trim $10 million if they would just cut out some of the purple and blue spheres,” said Rep. Roscoe Bartlett (R-MD), explaining that he understood the need for an abundance of reds and greens. “With all of those molecules and atoms going in every direction, the whole thing looks a bit unorganized, especially for science.”
Another diagram presented to lawmakers contained several important squiggly lines, numbers, and letters. Despite not being numbers, the letters were reportedly meant to represent mathematics too. The scientists seemed to believe that correct math was what would help make the science thing go.
Researchers who have found that negative stereotypes about aging can actually shorten your life. A Yale University study last year in the Journal of Personality and Social Psychology found that people who have a positive perception of aging tend to live seven and a half years longer than those who don’t. The difference may be the result of a better response to stress or even just the will to live, according to the study.
Research has found that memory studies can intimidate elderly subjects into performing poorly. Older subjects score higher on memory tests if they aren’t explicitly told that the study is about memory and aging, according to a study by researchers at North Carolina State University in Raleigh.
We are swayed by our own expectations. The research, reported in the Journal of Gerontology, found that elderly subjects scored 20 to 30 percent worse on memory tests after reading a pessimistic newspaper account about aging and memory than those who read a cheerful article about growing older.
“Moderating a forum is fairly straightforward: knowing what you want, deleting entire threads that aren’t going anywhere, correcting the spelling of the word “it’s,” fixing URLs, deleting individual contributions that fail to advance the thread. It helps to have experience writing and editing (and reading student papers, refereeing journal articles, reviewing manuscripts and grant proposals).
“As clearly indicated to potential contributors, we do a lot of deleting–only about half of all submitted contributions survive for more than a month. This doubtless hurts a few feelings but substantially raises the quality of the board. Very few published contributions are edited at all, other than silently to correct spelling, update an URL, or to delete a sour note in an otherwise good answer. Our view is that every contribution to Ask E.T. should advance the analytical quality of the thread. We particularly seek to avoid the chronic internet disease of “All Opinions, All the Time.” The idea is to have an interesting and excellent board on analytical design that serves the content and the readers, not a board logging every attempt at publication. We also are ruthless in deleting contributions with incivilities, rants, taunts, and personal commentary on other contributors.”
All else being equal, not many people would prefer to destroy the world. Even faceless corporations, meddling governments, reckless scientists, and other agents of doom, require a world in which to achieve their goals of profit, order, tenure, or other villainies. If our extinction proceeds slowly enough to allow a moment of horrified realization, the doers of the deed will likely be quite taken aback on realizing that they have actually destroyed the world. Therefore I suggest that if the Earth is destroyed, it will probably be by mistake.
The systematic experimental study of reproducible errors of human reasoning, and what these errors reveal about underlying mental processes, is known as the heuristics and biases program in cognitive psychology. This program has made discoveries highly relevant to assessors of global catastrophic risks…
Availability
A general principle underlying the heuristics-and-biases program is that human beings use methods of thought - heuristics - which quickly return good approximate answers in many cases; but which also give rise to systematic errors called biases. An example of a heuristic is to judge the frequency or probability of an event by its availability, the ease with which examples of the event come to mind…
People refuse to buy flood insurance even when it is heavily subsidized and priced far below an actuarially fair value. Kunreuther et. al. (1993) suggests underreaction to threats of flooding may arise from “the inability of individuals to conceptualize floods that have never occurred… Men on flood plains appear to be very much prisoners of their experience… Recently experienced floods appear to set an upward bound to the size of loss with which managers believe they ought to be concerned…”
Hindsight bias
Hindsight bias is when subjects, after learning the eventual outcome, give a much higher estimate for the predictability of that outcome than subjects who predict the outcome without advance knowledge. Hindsight bias is sometimes called the I-knew-it-all-along effect…
Viewing history through the lens of hindsight, we vastly underestimate the cost of preventing catastrophe. In 1986, the space shuttle Challenger exploded for reasons eventually traced to an O-ring losing flexibility at low temperature. (Rogers et. al. 1986.) There were warning signs of a problem with the O-rings. But preventing the Challenger disaster would have required, not attending to the problem with the O-rings, but attending to every warning sign which seemed as severe as the O-ring problem, without benefit of hindsight…
Black Swans
Black Swans are an especially difficult version of the problem of the fat tails: sometimes most of the variance in a process comes from exceptionally rare, exceptionally huge events. Consider a financial instrument that earns $10 with 98% probability, but loses $1000 with 2% probability; it’s a poor net risk, but it looks like a steady winner. Taleb (2001) gives the example of a trader whose strategy worked for six years without a single bad quarter, yielding close to $80 million - then lost $300 million in a single catastrophe…
Another example is that of Long-Term Capital Management, a hedge fund whose founders included two winners of the Nobel Prize in Economics. During the Asian currency crisis and Russian bond default of 1998, the markets behaved in a literally unprecedented fashion, assigned a negligible probability by LTCM’s historical model. As a result, LTCM began to lose $100 million per day, day after day. On a single day in 1998, LTCM lost more than $500 million. (Taleb 2005.)
But wait, there’s more! This article covers seven more biases! For free! (Opportunity costs not included.)
“Learning requires, first, a tolerance for failure, since by definition, learning means doing things you aren’t very good at.”
“A lie takes two people: the person who tells the lie and the individual who signals that s/he wants to hear it.”
“The most important three feet of real estate in retail—or in many industries—is the distance between the customer and the sales associate or individual who is serving that customer.”
“Companies choose to locate their R & D facilities on the basis of the availability of talent. This is more important than tax abatements and certainly much more important than rates of pay. If location was determined by cost, Silicon Valley would be empty.”
“Incentives should be large enough to provide an occasion for celebrating success but not so large as to distort behavior.”
“Even in the fact of massive competition, don’t think about the competition. Literally don’t think about them. Every time you’re in a meeting and you’re tempted to talk about a competitor, replace that thought with one about user feedback or surveys. Just think about the customer.”
– Mike McCue, CEO Tellme Networks, Former VP of Technology Netscape
If you don’t understand the customer better than the competition, quit.
If you can’t recruit a team that can serve your customers better than the competition, quit.
If you don’t think the market is big enough for competitors, quit.
Assume you have 30 competitors. Assume half of them have more money than you. Assume they’re ahead of you. Don’t worry when they launch before you do. Every overnight success story is the result of years of sustained, focused execution.
A vertical blog is for your readers. Personal blogs are great, but they’re focused on you and what you find interesting. They’re not focused on your readers.
A vertical blog is focused. Focus is a competitive advantage. It will be a better blog.
A vertical blog is branded. Its focus re-inforces its branding. People remember and spread brands.
A vertical blog attracts a specific audience. Readers come to a vertical blog because they know it has what they want. And they know you’re the world’s expert on the topic. What is the audience for your personal blog?
Complaining is silly. Either act or forget.
Thinking life will be better in the future is stupid. I have to live now.
Being not truthful works against me.
Helping other people helps me.
Organizing a charity group is surprisingly easy.
Everything I do always comes back to me.
Drugs feel great in the beginning and become a drag later on.
Over time I get used to everything and start taking it for granted.
Money does not make me happy.
Traveling alone is helpful for a new perspective on life.
Assuming is stifling.
Keeping a diary supports my personal development.
Trying to look good limits my life.
Worrying solves nothing.
Material luxuries are best enjoyed in small doses.
Having guts always works out for me.
