If you Google “entrepreneur” you get a lot of mindless cliches like “Think Big!” For me, being an “entrepreneur” doesn’t mean starting the next “Faceook”. Or even starting any business at all. It means finding the challenges you have in your ife, and determining creative ways to overcome those challenges. However, in this post I focus mostly on the issues that come up when you first start your company. These rules also apply if you are taking an entrepreneurial stance within a much larger company (which all employees should do).
(this is BS)
For me, I’ve started several businesses. As I’ve described in the rest of this blog, some have succeeded, many have failed. I’m invested in about 13 private companies. I’ve advised probably another 50 private companies. Along the way I’ve compiled a list of rules that have helped me deal with every aspect of being an entrepreneur in business and some in life.
[Btw, Claudia thinks I shouldn’t put this post up. This is going to be a chapter in a book I am self-publishing in a week or so: “How to be the Luckiest Man Alive”. But I’m trying to price the book for free on Kindle so why not? Plus, once I write something, I can’t help myself. I have to put it up.]
Here’s the real rules:
A) It’s not fun. I’m not going to explain why it’s not fun. These are rules. Not theories. I don’t need to prove them. But there’s a strong chance you can hate yourself throughout the process of being an entrepreneur. Keep sharp objects and pills away during your worst moments. And you will have them. If you are an entrepreneur and agree with me, please note this in the comments below.
B) Try not to hire people. You’ll have to hire people to expand your business. But it’s a good discipline to really question if you need each and every hire.
C) Get a customer. This seems obvious. But it’s not. Get a customer before you start your business, if you can. (see, “the Easiest Way to Succeed as an Entrepreneur”)
CA) Follow me on Twitter.
D) If you are offering a service, call it a product. Oracle did it. They claimed they had a database. But if you “bought” their database they would send in a team of consultants to help you “install” the database to fit your needs. In other words, for the first several years of their existence, they claimed to have a product but they really were a consulting company. Don’t forget this story. Products are valued higher than services.
E) It’s OK to fail. Start over. Hopefully before you run out of money. Hopefully before you take in investor money. Or, don’t worry about it. Come up with new ideas. Start over.
F) Be profitable. Try to be profitable immediately. This seems obvious but it isn’t. Try not to raise money. That money is expensive.
G) When raising money: if it’s not easy then your idea is probably incapable of raising money. If its easy, then take as much as possible. If its TOO easy, then sell your company (unless you are Twitter, etc).
(if its too easy, sell your company)
H) The same goes for selling your company. If it’s not easy, then you need to build more. Then sell. To sell your company, start getting in front of your acquirers a year in advance. Send them monthly updates describing your progress. Then, when they need a company like yours, your company is the first one that comes to mind.
I) Competition is good. It turns you into a killer. It helps you judge progress. It shows that other people value the space you are in. Your competitors are also your potential acquirors.
J) Don’t use a PR firm. Except maybe as a secretary. You are the PR for your company. You are your companys brand. You personally.
K) Communicate with everyone. Employees. Customers. Investors. All the time. Every day.
L) Do everything for your customers. This is very important. Get them girlfriends or boyfriends. Speak at their charities. Visit their parents for Thanksgiving. Help them find other firms to meet their needs. Even introduce them to your competitors if you think a competitor can help them or if you think you are about to be fired. Always think first, “What’s going to make my customer happy?”
M) Your customer is not a company. There’s a human there. What will make my human customer happy? Make him laugh. You want your customer to be happy.
N) Show up. Go to breakfast/lunch/dinner with customers. Treat.
O) History. Know the history of your customers in every way. Company history, personal history, marketing history, investing history, etc.
P) Micro-manage software development. Nobody knows your product better than you do. If you aren’t a technical person, learn how to be very specific in your product specification so that your programmers can’t say: “well you didn’t say that!”
Q) Hire local. You need to be able to see and talk to your programmers. Don’t outsource to India. I love India. But I won’t hire programmers from there while I’m living in the US.
R) Sleep. Don’t buy into the 20 hours a day entrepreneur myth. You need to sleep 8 hours a day to have a focused mind.
S) Exercise. Same as above. If you are unhealthy, your product will be unhealthy.
T) Emotionally Fit. DON’T have dating problems and software development problems at the same time. VCs will smell this all over you.
U) Pray. You need to. Be grateful where you are. And pray for success. You deserve it. Pray for the success of your customers. Heck, pray for the success of your competitors. The better they do, it means the market is getting bigger. And if one of them breaks out, they can buy you.
V) Buy your employees gifts. Massages. Tickets. Whatever. I always imagined that at the end of each day my young, lesbian employees (for some reason, most employees at my first company were lesbian) would be calling their parents and their mom and dad would ask them: “Hi honey! How was your day today?” And I wanted them to be able to say: “It was the best!” Invite customers to masseuse day.
W) Treat your employees like they are your children. They need boundaries. They need to be told “no!” sometimes. And sometimes you need to hit them in the face (ha ha, just kidding). But within boundaries, let them play.
X) Don’t be greedy pricing your product. If your product is good and you price it cheap, people will buy. Then you can price upgrades, future products, and future services more expensive. Which goes along with the next rule.
Y) Distribution is everything. Branding is everything. Get your name out there, whatever it takes. The best distribution is of course word of mouth, which is why your initial pricing doesn’t matter.
YA) Follow me on Twitter.
Z) Don’t kill yourself. It’s not worth it. Your employees need you. Your children or future children need you. It seems odd to include this in a post about entrepreneurship but we’re also taking about keeping it real. Most books or “rules” for entrepreneurs talk about things like “think big”, “go after your dreams”. But often dreams turn into nightmares. I’ll repeat it again. Don’t kill yourself. Call me if things get too stressful. Or more importantly, make sure you take proper medication
AA) Give employees structure. Let each employee know how his or her path to success can be achieved. All of them will either leave you or replace you eventually. That’s OK. Give them the guidelines how that might happen. Tell them how they can get rich by working for you.
BB) Fire employees immediately. If an employee gets “the disease” he needs to be fired. If they ask for more money all the time. If they bad mouth you to other employees. If you even think they are talking behind your back, fire them. The disease has no cure. And it’s very contagious. Show no mercy. Show the employee the door. There are no second chances because the disease is incurable.
CC) Make friends with your landlord. If you ever have to sell your company, believe it or not, you are going to need his signature (because there’s going to be a new lease owner)
DD) Only move offices if you are so packed in that employees are sharing desks and there’s no room for people to walk.
EE) Have killer parties. But use your personal money. Not company money. Invite employees, customers, and investors. It’s not the worst thing in the world to also invite off duty prostitutes or models.
FF) If an employee comes to you crying, close the door or take him or her out of the building. Sit with him until it stops. Listen to what he has to say. If someone is crying then there’s been a major communication breakdown somewhere in the company. Listen to what it is and fix it. Don’t get angry at the culprit’s. Just fix the problem.
(you don't want your employees to be sad.)
GG) At Christmas, donate money to every customer’s favorite charity. But not for investors or employees.
HH) Have lunch with your competitors. Listen and try not to talk. One competitor (Bill Markel from Interactive once told me a story about how the CEO of Toys R Us returned his call. He was telling me this because I never returned Bill’s calls. Ok, Bill, lesson noted.
II) Ask advice a lot. Ask your customers advice on how you can be introduced into other parts of their company. Then they will help you. Because of the next rule…
JJ) Hire your customers. Or not. But always leave open the possibility. Let it always dangle in the air between you and them. They can get rich with you. Maybe. Possibly. If they play along. So play.
KK) On any demo or delivery, do one extra surprise thing that was not expected. Always add bells and whistles that the customer didn’t pay for.
LL) Understand the demographic changes that are changing the world. Where are marketing dollars flowing and can you be in the middle. What services do aging baby boomers need? Is the world running out of clean water? Are newspapers going to survive? Etc. Etc. Read every day to understand what is going on.
LLa) Don’t go to a lot of parties or “meetups” with other entrepreneurs. Work instead while they are partying.
MM) But, going along with the above rule, don’t listen to the doom and gloomers that are hogging the TV screen trying to tell you the world is over. They just want you to be scared so they can scoop up all the money.
NN) You have no more free time. In your free time you are thinking of new ideas for customers, new ideas for services to offer, new products.
OO) You have no more free time, part 2. In your free time, think of ideas for potential customers. Then send them emails: “I have 10 ideas for you. Would really like to show them to you. I think you will be blown away. Here’s five of them right now.”
OOa) Depressions, recessions, don’t matter. There’s $15 trillion in the economy. You’re allowed a piece of it:
PP) Talk. Tell everyone you ever knew what your company does. Your friends will help you find clients.
QQ) Always take someone with you to a meeting. You’re bad at following up. Because you have no free time. So, if you have another employee. Let them follow up. Plus, they will like to spend time with the boss. You’re going to be a mentor.
RR) If you are consumer focused: your advertisers are your customers. But always be thinking of new services for your consumers. Each new service has to make their life better. People’s lives are better if: they become healthier, richer, or have more sex. “Health” can be broadly defined.
SS) If your customers are advertisers: find sponsorship opportunities for them that drive customers straight into their arms. These are the most lucrative ad deals (see rule above). Ad inventory is a horrible business model. Sponsorships are better. Then you are talking to your customer.
TT) No friction. The harder it is for a consumer to sign up, the less consumers you will have. No confirmation emails, sign up forms, etc. The easier the better.
TTA) No fiction, part 2. If you are making a website, have as much content as you can on the front page. You don’t want people to have to click to a second or third page if you can avoid it. Stuff that first page with content. You aren’t Google. (And, 10 Unusual Things You Didn’t Know About Google)
UU) No friction, part 3. Say “yes” to any opportunity that gets you in a room with a big decision maker. Doesn’t matter if it costs you money.
VV) Sell your company two years before you sell it. Get in the offices of the potential buyers of your company and start updating them on your progress every month. Ask their advice on a regular basis in the guise of just an “industry catch-up”
WW) If you sell your company for stock, sell the stock as soon as you can. If you are selling your company for stock it means:
a. The market is such that lots of companies are being sold for stock.
b. AND, companies are using stock to buy other companies because they value their stock less than they value cash.
c. WHICH MEANS, that when everyone’s lockup period ends, EVERYONE will be selling stock across the country. So sell yours first.
XX) Ideas are worthless. If you have an idea worth pursuing, then just make it. You can build any website for cheap. Hire a programmer and make a demo. Get at least one person to sign up and use your service. If you want to make Facebook pages for plumbers, find one plumber who will give you $10 to make his Facebook page. Just do it.
YY) Don’t use a PR firm, part II. Set up a blog. Tell your personal stories (see “33 tips to being a better writer” ). Let the customer know you are human, approachable, and have a real vision as to why they need to use you. Become the voice for your industry, the advocate for your products. If you make skin care products, tell your customers every day how they can be even more beautiful than they currently are and have more sex than they are currently getting. Blog your way to PR success. Be honest and bloody.
ZZ) Don’t save the world. If your product sounds too good to be true, then you are a liar.
ZZa) Your company is always for sale.
AAA) Frame the first check. I’m staring at mine right now.
BBB) No free time, part 3. Pick a random customer. Find five ideas for them that have nothing to do with your business. Call them and say, “I’ve been thinking about you. Have you tried this?”
CCC) No resale deals. Nobody cares about reselling your service. Those are always bad deals.
DDD) Your lawyer or accountant is not going to introduce you to any of their other clients. Those meetings are always a waste of time.
EEE) Celebrate every success. Your employees need it. They need a massage also. Get a professional masseuse in every Friday afternoon. Nobody leaves a job where there is a masseuse.
FFF) Sell your first company. Don’t take any chances. You don’t need to be Mark Zuckerberg. Sell your first company as quick as you can. You now have money in the bank and a notch on your belt. Make a billion on your next company.
GGG) Pay your employees before you pay yourself.
HHH) Give equity to get the first customer. If you have no product yet and no money, then give equity to a good partner in exchange for them being a paying customer. Note: don’t blindly give equity. If you develop a product that someone asked for, don’t give them equity. Sell it to them. But if you want to get a big distribution partner whose funds can keep you going forever, then give equity to nail the deal.
III) Don’t worry about anyone stealing your ideas. Ideas are worthless anyway. It’s OK to steal something that’s worthless.
IIIA) Follow me on twitter.
Questions from Readers
Question: You say no free time but you also say keep emotionally fit, physically fit, etc. How do I do this if I’m constantly thinking of ideas for old and potential customers?
Answer: It’s not easy or everyone would be rich.
Question: if I get really stressed about clients paying, how do I get sleep at night?
Answer: medication
Question: how do I cold-call clients?
Answer: email them. Email 40 of them. It’s OK if only 1 answers. Email 40 a day but make sure you have something of value to offer.
Question: how can I find cheap programmers or designers?
Answer: if you don’t know any and you want to be cheap: use scriptlance.com, elance.com, or craigslist. But don’t hire them if they are from another country. You need to communicate with them even if it costs more money.
Question: should I hire programmers?
Answer: first…freelance. Then hire.
Question: what if I build my product but I’m not getting customers?
Answer: develop a service loosely based on your product and offer that to customers. But I hope you didn’t make a product without talking to customers to begin with?
Question: I have the best idea in the world, but for it to work it requires a lot of people to already be using it. Like Twitter.
Answer: if you’re not baked into the Silicon Valley ecosystem, then find distribution and offer equity if you have to. Zuckerberg had Harvard. MySpace had the fans of all the local bands they set up with MySpace pages. I (in my own small way) had Thestreet.com when I set up Stockpickr.com. I also had 10 paying clients when i did my first successful business fulltime.
Question: I just lost my biggest customer and now I have to fire people. I’ve never done this before. How do I do it?
Answer: one on meetings. Be Kind. State the facts. Say you have to let people go and that everyone is hurting but you want to keep in touch because they are a great employee. It was an honor to work with them and when business comes back you hope you can convince them come back. Then ask them if they have any questions. Your reputation and the reputation of your company are on the line here. You want to be a good guy. But you want them out of your office within 15 minutes. It’s a termination, not a negotiation. This is one reason why it’s good to start with freelancers.
Question: I have a great idea. How do I attract VCs?
Answer: build the product. Get a customer. Get money from customer. Get more customers. Build more services in the product. Get VC. Chances are by this point, the VCs are calling you.
Question: I want to build a business day trading.
Answer: bad idea
Question: I want to start a business but don’t know what my passion is:
Answer: skip to the post: “How to be the luckiest person alive”. Do the Daily Practice. Within six months your life will be completely different.
Question: I want to leave my job but I’m scared.
Answer: same as above question. The Daily Practice turns you into a healthy Idea Machine. Plus luck will flow in from every direction.
Final rule: Things change. Every day. The title of this post, for instance, says “100 Rules”. But I gave about 70 rules (including the Q&A). Things change midway through. Be ready for it every day. In fact, every day figure out what you can change just slightly to shake things up and improve your product and company.
Throughout the rest of this blog I have examples, ideas, rules, etc. In fact, it adds up to a lot more than 100 rules. Many of the rules above are repeated in other posts ahead but use this post as a cheat sheet. If you can think of more rules for me, add them to the comments. I’ll try and put them in the upcoming book.
Friday, April 29, 2011
Monday, April 25, 2011
Alignment!
Long-term brands and relationships are built on alignment. Here are a few examples ("I" is the royal I, not me in particular):
A perfect relationship: I want your company to help me, and your company wants to help me. We're both focused on helping the same person.
The Walmart relationship: I want the cheapest possible prices and Walmart wants to (actually works hard to) give me the cheapest possible prices. That's why there's little pushback about customer service or employee respect... the goals are aligned.
The Apple relationship: I want Apple to be cool. Apple wants to be cool. That's why there's little pushback on pricing or obsolence or disappointing developers.
The demagogue politician relationship: I will feel more powerful if you get elected and get your way. You will feel more powerful if you get elected and get your way.
The search engine relationship (when it's working): I want to find what I'm looking for. You want me to find what I'm looking for, regardless of the short-term income possibilities.
The Mercedes (formerly Cadillac) relationship: I want a prestige product that reliably delivers an expensive label that's unattainable to many. They want to reliably and consistently charge a lot for a car that sends a message to everyone else.
The farmer's market relationship: I want to eat sustainable foods that make me feel good. You want to grow sustainable foods that make me feel good.
Compare these to the ultimately doomed relationships (if not doomed, then tense) in which goals don't align, relationships where the brand took advantage of an opening but then grows out of the initial deal and wants to change it:
The Dell relationship: I want a cheap, boring, reliable computer. You want to make more profit.
The hip designer relationship: I want the new thing no one else has yet. You want to be around for years.
The search engine relationship (when it doesn't work): I want to find what I'm looking for. You want to distract me and take money to send me places I actually don't want to go.
The reluctant purchaser relationship: I don't want to waste money on something I didn't know I wanted. You want to make a commission.
The troll relationship: I want to laugh at a buffoon who doesn't realize he's making a fool of himself. You want to be respected by the mainstream.
The young actor relationship: I want the fresh-faced young movie star. You want a career that lasts more than a year.
The typical media relationship: I want to see the shows, you want to interrupt with ads.
Alignment isn't something you say. It's something you do. Alignment is demonstrated when you make the tough calls, when you see if the thing that matters the most to you is also the thing that matters the most to the other person.
The tension that comes from misalignment can work for a while, but it's when alignment kicks in that the enterprise really scales.
A perfect relationship: I want your company to help me, and your company wants to help me. We're both focused on helping the same person.
The Walmart relationship: I want the cheapest possible prices and Walmart wants to (actually works hard to) give me the cheapest possible prices. That's why there's little pushback about customer service or employee respect... the goals are aligned.
The Apple relationship: I want Apple to be cool. Apple wants to be cool. That's why there's little pushback on pricing or obsolence or disappointing developers.
The demagogue politician relationship: I will feel more powerful if you get elected and get your way. You will feel more powerful if you get elected and get your way.
The search engine relationship (when it's working): I want to find what I'm looking for. You want me to find what I'm looking for, regardless of the short-term income possibilities.
The Mercedes (formerly Cadillac) relationship: I want a prestige product that reliably delivers an expensive label that's unattainable to many. They want to reliably and consistently charge a lot for a car that sends a message to everyone else.
The farmer's market relationship: I want to eat sustainable foods that make me feel good. You want to grow sustainable foods that make me feel good.
Compare these to the ultimately doomed relationships (if not doomed, then tense) in which goals don't align, relationships where the brand took advantage of an opening but then grows out of the initial deal and wants to change it:
The Dell relationship: I want a cheap, boring, reliable computer. You want to make more profit.
The hip designer relationship: I want the new thing no one else has yet. You want to be around for years.
The search engine relationship (when it doesn't work): I want to find what I'm looking for. You want to distract me and take money to send me places I actually don't want to go.
The reluctant purchaser relationship: I don't want to waste money on something I didn't know I wanted. You want to make a commission.
The troll relationship: I want to laugh at a buffoon who doesn't realize he's making a fool of himself. You want to be respected by the mainstream.
The young actor relationship: I want the fresh-faced young movie star. You want a career that lasts more than a year.
The typical media relationship: I want to see the shows, you want to interrupt with ads.
Alignment isn't something you say. It's something you do. Alignment is demonstrated when you make the tough calls, when you see if the thing that matters the most to you is also the thing that matters the most to the other person.
The tension that comes from misalignment can work for a while, but it's when alignment kicks in that the enterprise really scales.
Wednesday, April 20, 2011
Are Hindus More Sinned Against than Sinning?
The two principal objectives of corporate management are growth and profits. The organizational structure of the Church is often cited as a typical management case study, the other universal application being the armed forces. Just as in corporate management, the harvesting of souls is run like a business with the twin objectives of growth and profits, each feeding the other. The dwindling numbers of Church-goers in the West following secularization of societies is naturally a cause for concern for the top management. (The word secularization has an altogether different connotation in contemporary India which simply means adopting an anti-Hindu intellectual stance!) The remedial strategy adopted by the top management ironically
The background
For nearly two thousand years the Abrahamic faiths have been seeking to extend the hegemony - odd as it may sound, of their respective philosophies - by proselytizing people for love or for money and quite often by the sword. They have been vying for space in Europe and West Asia, which was the cause for intense strife known in the past as crusades. Their onslaughts in Africa and the rest of the world have often resulted in bloody demographic decimation and genocide of the infidel.
The persecution of Jews in various countries of Europe including in non-religious communist nations ironically by those who profess to be followers of the prince of peace has been well documented. The creation of Israel as a culmination of their persecution by one of the crusading faiths has only extrapolated into the twentieth century the strife between them; the other bitterly complaining it as a sleight-of-the-hand awarding of land belonging it.
Their campaigning for hegemony in South Asia has been equally bloody. Hitler's genocide of six million Jews in six years appears minuscule compared to the genocide of eight hundred million Hindus by Islamic invaders in five centuries between the tenth and the fourteenth.
The approach of Christians in India has been much more subtle although proselytizing campaigns with the Bible in one hand and the sword in the other have not been unknown. The campaigns of Francis Xavier (Sainted later) in Goa and Robert Clive in the rest of India may be cited as examples of this approach.
Health, education and exploitation of the weaknesses of the Hindu faith such as the caste system are subtle vehicles that the clever Christian proselytizers have employed to achieve their objectives. The naïve under-privileged or the tribal populations in the far reaches of India have never been told that there are as many distinctions, denominations and hierarchical rungs and under-privileged in the Christian world, only they had a different nomenclature.
The two principal objectives of corporate management are growth and profits. The organizational structure of the Church is often cited as a typical management case study, the other universal application being the armed forces. Just as in corporate management, the harvesting of souls is run like a business with the twin objectives of growth and profits, each feeding the other. The dwindling numbers of Church-goers in the West following secularization of societies is naturally a cause for concern for the top management. (The word secularization has an altogether different connotation in contemporary India which simply means adopting an anti-Hindu intellectual stance!) The remedial strategy adopted by the top management ironically is akin to Hitler's Lebensraum concept but by more subtle means.
The current strife in context!
As is their wont the secular exponents found in the recent Hindu-Christian violence in Orissa and Karnataka grist to their anti-Hindu mill. The violence in Orissa followed the brutal murder of a revered Hindu pontiff Swami Lakshmananda Saraswathi who happened to be the state vice president of the Viswa Hindu Parishat. He was murdered along with four other inmates of his Ashram including a woman devotee.
In the zeitgeist of Indian secular ethos Hindus are expendable. Swamijis and office bearers of Hindu organizations like the Bajrang Dal, the RSS and the VHP are even more equal - in being expendable! The Hindus should shrug off violence against them so that exponents of the Indian brand of secularism can praise the resilience of Indian secularism and syncretism.
This was the norm till the Bombay train blasts of July 11, 2006 in which two hundred and thirteen people were killed and more than 700 injured.
The city reportedly went about its business the next day in cynical disregard for the dead, and the secular exponents were all praise for Bombayites' resilience in the face of grave danger. The first lead in a secular newspaper the next day was that the serial bomb blasts were the handiwork of Hindu organizations!
The refrain of - the resilience of Indian secularism - continued till Delhi was bombed in 2008. The bombings of Jaipur, Bengaluru and Ahmedabad were explained away as an expression of Muslim anger against the BJP as these states were ruled by the party. The secular alibis for the mass murders included social alienation, exclusion from main stream society, poverty, poor representation in government jobs and anger against Ayodhya and Gujarat riots that followed the savage burning of fifty nine Karsevaks in February 2002.
With its eyes firmly locked on secular vote banks, the congress government did its bit to fuel disinformation by constituting the Justice Rajinder Sachar committee to prepare a report, ostensibly on the social, economic and educational status of the Muslim community in India. The other members of the committee include Mr. Sayyid Hamid, Dr. T.K. Ooman, Mr. M.A. Basith, Dr. Akhtar Majeed, Dr. Abu Saleh Shariff and Dr. Rakesh Basant with Dr. Syed Zafar Mahmood, a civil servant, appointed by the prime minister as Officer on Special Duty (OSD) to assist the commission.
The committee's job was all the more easier as it was given the theories; it was only expected to go out and find facts to fit into them! Lo and presto, it did it and how? Try as you might, you can not accuse the committee of objectivity or doing anything right either by commission or omission. The committee's report, to borrow from information technology jargon, was doomed to be GIGO (garbage in, garbage out) right from inception. The committee set out with faulty assumptions, faulty data collection, faulty analysis and of course ended up in arriving at faulty conclusions.
The following may be summed up as the report's errors of commission and omission. The report did not take into account the bulk of educated employed Muslims that migrated to Pakistan when the country was partitioned. It did not take into account the numbers of Muslims engaged in trades and other professions. It excluded the scheduled castes and scheduled tribes from corresponding Hindu figures thus annulling any equity in its comparisons. Last but not least it excluded educated / well off Muslims from comparisons.
The committee ignored the fact that the country did provide fair and equitable opportunities to all and those Muslims who availed of them did prosper - in filmdom, in industry, in government / university jobs or in politics. If you go by the findings of the report, Asghar Ali Enginner, A. G. Noorani, Azim Premji, Syed Shabuddin, the Khan trio and other Muslim celebrities of Bollywood and a host of other Muslims in high places (Sayyid Hamid, T.K. Ooman, M.A. Basith, Akhtar Majeed, Abu Saleh Shariff and Syed Zafar Mahmood included) - all need reservations in government jobs!
The National Sample Survey Organization (NSSO) has concluded that the findings of the Sachar committee were manipulated.
For a detailed analysis of the issue see "The Sachar report: A flawed number game" by Nitish Sengupta (The Asian Age, 16.10.2008).
When it was found that highly educated and well-paid professionals too took part in the terror attacks the groundswell of public opinion forced the secular exponents to change their refrain but only just. Forced on the back foot they had to a do balancing act by finding villains in the majority religion to appease their minority vote banks. Therefore the bogey of the Bajrang Dal was raised with a pliant media orchestrating it as the root cause of anarchy.
Returning to the main story, the strife between the Kandhas a Scheduled Tribe (ST) and the Panas a Scheduled Caste (SC) is not new. Under the Indian constitution, the STs can enjoy reservation benefits even after conversion to Christianity, whereas the SCs lose them if they convert. It is this legal loophole that is a godsend for the proselytizers. The statistics speak for themselves: the Christian population of Kandhamal district in 1961 was 2%, 6% in 1971 and 27% in 2001.
The proselytizers were only trying to extend their successes from the north eastern states: for example, in the last century they were able to convert 100% of the Nagas (in Nagaland) and 80% of the Mizos (in Mizoram).
According to Francois Gautier, "In Tripura, there were no Christians at the time of independence. There are 1, 20,000 today, a 90 per cent increase since 1991. The figures are even more striking in Arunachal Pradesh, where there were only 1,710 Christians in 1961, but 1.2 million today, as well as 780 churches! In Andhra Pradesh, churches are coming up every day in far-flung villages and there was even an attempt to set up one near Tirupati."
There were clashes between the converted Kandhas and the unconverted Panas even as far back as 1992, when the VHP did not exist in Orissa and the Bajrang Dal was yet to be borne.
Swami Laksmananda a Vedic scholar has been running schools and colleges, for the unconverted Panas. However both the converted Kandhas and the unconverted Panas were thronging to his satsangs and discourses in great numbers. This is the fly in the proselytizers' ointment. They wanted to do away with him and according to a recent report of the region's inspector general of police ? 'a religious group' - recruited the Maoists to do the hatchet job. Is it difficult to imagine who the unnamed religious group was? India's secular media blotted out these facts but went to town with the violence that followed the brutal killings, painting it as the handiwork of Hindu organizations.
For a detailed analysis of the issue see "Kandhamal and Bengaluru" by S. Gurumurthy (The New Indian Express, 11.09.2008).
The happenings in Mangalore Karnataka were again true to form: a neo-convert pastor in Andhra Pradesh wanted to be lauded for being more loyal than the King. His pamphlet, the product of a prostituted, putrefied and suppurating mind portrayed Hindu gods and goddesses in the most obnoxious manner possible accusing them of incest, debauchery and worse.
A Kannada translation of this rag entitled "Satya Darshini" was published by the Newlife Church and disseminated in Karnataka. Here are a few excerpts from it:
"Urvashi - the daughter of Lord Vishnu - is a prostitute. Vashistha is the son of this prostitute. He in turn married his own Mother. Such a degraded person is the Guru of the Hindu God Rama." (p. 48).
"When Krishna himself is wallowing in darkness of hell, how can he enlighten others? Since Krishna himself is a shady character, there is a need for us to liberate his misled followers." (p. 50).
"It was Brahma himself who kidnapped Sita." (p. 39)
"Since Brahma, Vishnu and Shiva were themselves victims of lust, it is a sin to consider them as Gods." (p. 39)
"When the Trinity of Hinduism (Brahma, Vishnu and Shiva) are consumed by lust and anger, how can they liberate others? The projection of them as Gods is nothing but a joke." (p. 39)
"God, please liberate the sinful people of India who are worshipping False Gods." (p. 39)
This was the background for the Bajrang Dal activists' protests in Mangalore. They were protesting mainly against Newlife prayer houses but as they could not distinguish one denomination from the other, it appears, they protested against a catholic church too.
For a detailed analysis of the issue see "What made Hindus angry in Karnataka" by Francois Gautier (The New Indian Express, 06.10.2008).
More sinned against than sinning?
While the print and electronic media aired exaggerated reports of these incidents the violence unleashed by the Christian groups against the police during their demonstrations were airbrushed.
The Archbishop of Bangalore chose to berate the Chief Minister of the state in the full glare of media cameras, when the CM sought to meet with him and commiserate with him for the violent protests. The secular exponents did not utter a word of reproof against such a blatant insult meted out to the democratically elected leader of a state.
Consider the secular exponents' quiescence vis-à-vis Muslim protests against the cartoons that appeared in a Danish newspaper and the furore against granting political asylum to Taleema Nasreen.
Consider also the secular exponents' quiescence when Christian groups protested against the screening of the movie Da Vinci Code eventually forcing some secular state governments to ban it, even though it was freely exhibited in many Christian nations including Italy, next door to the Vatican.
For the record, this article does not support either the Danish cartoonist or the Bangladeshi writer or the American novelist inasmuch as they hurt the religious sentiments of Muslims or Christians.
The quintessence of Indian secularism as it is in vogue appears to be not in separating the state and religion as the word originally connoted but in opposing Hinduism, its philosophy and social mores. On the other hand a pilgrimage to Azamgarh to commiserate with the families of those arrested for acts of war on the Indian nation and seeking a ban of the Bajrang Dal was seen as an avowal of their secular credentials by some!
The mantra of Indian secular exponents who would rather wear secularism on their sleeve is to oppose any opposition of Hindu organisations - which for them come under the collective moniker of the Sangh Parivar. Therefore if Hindu organisations protest against aggressive efforts to proselytize, then the secular exponents must rush to the defence of the proselytizers. Indian secular exponents dotingly refer to members of the Sangh Parivar as goons. For them, there are no goons in other religions and that is a fact. Every time there is a reference to religious fundamentalism in other religions the spectre of Hindu fundamentalism had to be invoked, in the name of balance!
The background
For nearly two thousand years the Abrahamic faiths have been seeking to extend the hegemony - odd as it may sound, of their respective philosophies - by proselytizing people for love or for money and quite often by the sword. They have been vying for space in Europe and West Asia, which was the cause for intense strife known in the past as crusades. Their onslaughts in Africa and the rest of the world have often resulted in bloody demographic decimation and genocide of the infidel.
The persecution of Jews in various countries of Europe including in non-religious communist nations ironically by those who profess to be followers of the prince of peace has been well documented. The creation of Israel as a culmination of their persecution by one of the crusading faiths has only extrapolated into the twentieth century the strife between them; the other bitterly complaining it as a sleight-of-the-hand awarding of land belonging it.
Their campaigning for hegemony in South Asia has been equally bloody. Hitler's genocide of six million Jews in six years appears minuscule compared to the genocide of eight hundred million Hindus by Islamic invaders in five centuries between the tenth and the fourteenth.
The approach of Christians in India has been much more subtle although proselytizing campaigns with the Bible in one hand and the sword in the other have not been unknown. The campaigns of Francis Xavier (Sainted later) in Goa and Robert Clive in the rest of India may be cited as examples of this approach.
Health, education and exploitation of the weaknesses of the Hindu faith such as the caste system are subtle vehicles that the clever Christian proselytizers have employed to achieve their objectives. The naïve under-privileged or the tribal populations in the far reaches of India have never been told that there are as many distinctions, denominations and hierarchical rungs and under-privileged in the Christian world, only they had a different nomenclature.
The two principal objectives of corporate management are growth and profits. The organizational structure of the Church is often cited as a typical management case study, the other universal application being the armed forces. Just as in corporate management, the harvesting of souls is run like a business with the twin objectives of growth and profits, each feeding the other. The dwindling numbers of Church-goers in the West following secularization of societies is naturally a cause for concern for the top management. (The word secularization has an altogether different connotation in contemporary India which simply means adopting an anti-Hindu intellectual stance!) The remedial strategy adopted by the top management ironically is akin to Hitler's Lebensraum concept but by more subtle means.
The current strife in context!
As is their wont the secular exponents found in the recent Hindu-Christian violence in Orissa and Karnataka grist to their anti-Hindu mill. The violence in Orissa followed the brutal murder of a revered Hindu pontiff Swami Lakshmananda Saraswathi who happened to be the state vice president of the Viswa Hindu Parishat. He was murdered along with four other inmates of his Ashram including a woman devotee.
In the zeitgeist of Indian secular ethos Hindus are expendable. Swamijis and office bearers of Hindu organizations like the Bajrang Dal, the RSS and the VHP are even more equal - in being expendable! The Hindus should shrug off violence against them so that exponents of the Indian brand of secularism can praise the resilience of Indian secularism and syncretism.
This was the norm till the Bombay train blasts of July 11, 2006 in which two hundred and thirteen people were killed and more than 700 injured.
The city reportedly went about its business the next day in cynical disregard for the dead, and the secular exponents were all praise for Bombayites' resilience in the face of grave danger. The first lead in a secular newspaper the next day was that the serial bomb blasts were the handiwork of Hindu organizations!
The refrain of - the resilience of Indian secularism - continued till Delhi was bombed in 2008. The bombings of Jaipur, Bengaluru and Ahmedabad were explained away as an expression of Muslim anger against the BJP as these states were ruled by the party. The secular alibis for the mass murders included social alienation, exclusion from main stream society, poverty, poor representation in government jobs and anger against Ayodhya and Gujarat riots that followed the savage burning of fifty nine Karsevaks in February 2002.
With its eyes firmly locked on secular vote banks, the congress government did its bit to fuel disinformation by constituting the Justice Rajinder Sachar committee to prepare a report, ostensibly on the social, economic and educational status of the Muslim community in India. The other members of the committee include Mr. Sayyid Hamid, Dr. T.K. Ooman, Mr. M.A. Basith, Dr. Akhtar Majeed, Dr. Abu Saleh Shariff and Dr. Rakesh Basant with Dr. Syed Zafar Mahmood, a civil servant, appointed by the prime minister as Officer on Special Duty (OSD) to assist the commission.
The committee's job was all the more easier as it was given the theories; it was only expected to go out and find facts to fit into them! Lo and presto, it did it and how? Try as you might, you can not accuse the committee of objectivity or doing anything right either by commission or omission. The committee's report, to borrow from information technology jargon, was doomed to be GIGO (garbage in, garbage out) right from inception. The committee set out with faulty assumptions, faulty data collection, faulty analysis and of course ended up in arriving at faulty conclusions.
The following may be summed up as the report's errors of commission and omission. The report did not take into account the bulk of educated employed Muslims that migrated to Pakistan when the country was partitioned. It did not take into account the numbers of Muslims engaged in trades and other professions. It excluded the scheduled castes and scheduled tribes from corresponding Hindu figures thus annulling any equity in its comparisons. Last but not least it excluded educated / well off Muslims from comparisons.
The committee ignored the fact that the country did provide fair and equitable opportunities to all and those Muslims who availed of them did prosper - in filmdom, in industry, in government / university jobs or in politics. If you go by the findings of the report, Asghar Ali Enginner, A. G. Noorani, Azim Premji, Syed Shabuddin, the Khan trio and other Muslim celebrities of Bollywood and a host of other Muslims in high places (Sayyid Hamid, T.K. Ooman, M.A. Basith, Akhtar Majeed, Abu Saleh Shariff and Syed Zafar Mahmood included) - all need reservations in government jobs!
The National Sample Survey Organization (NSSO) has concluded that the findings of the Sachar committee were manipulated.
For a detailed analysis of the issue see "The Sachar report: A flawed number game" by Nitish Sengupta (The Asian Age, 16.10.2008).
When it was found that highly educated and well-paid professionals too took part in the terror attacks the groundswell of public opinion forced the secular exponents to change their refrain but only just. Forced on the back foot they had to a do balancing act by finding villains in the majority religion to appease their minority vote banks. Therefore the bogey of the Bajrang Dal was raised with a pliant media orchestrating it as the root cause of anarchy.
Returning to the main story, the strife between the Kandhas a Scheduled Tribe (ST) and the Panas a Scheduled Caste (SC) is not new. Under the Indian constitution, the STs can enjoy reservation benefits even after conversion to Christianity, whereas the SCs lose them if they convert. It is this legal loophole that is a godsend for the proselytizers. The statistics speak for themselves: the Christian population of Kandhamal district in 1961 was 2%, 6% in 1971 and 27% in 2001.
The proselytizers were only trying to extend their successes from the north eastern states: for example, in the last century they were able to convert 100% of the Nagas (in Nagaland) and 80% of the Mizos (in Mizoram).
According to Francois Gautier, "In Tripura, there were no Christians at the time of independence. There are 1, 20,000 today, a 90 per cent increase since 1991. The figures are even more striking in Arunachal Pradesh, where there were only 1,710 Christians in 1961, but 1.2 million today, as well as 780 churches! In Andhra Pradesh, churches are coming up every day in far-flung villages and there was even an attempt to set up one near Tirupati."
There were clashes between the converted Kandhas and the unconverted Panas even as far back as 1992, when the VHP did not exist in Orissa and the Bajrang Dal was yet to be borne.
Swami Laksmananda a Vedic scholar has been running schools and colleges, for the unconverted Panas. However both the converted Kandhas and the unconverted Panas were thronging to his satsangs and discourses in great numbers. This is the fly in the proselytizers' ointment. They wanted to do away with him and according to a recent report of the region's inspector general of police ? 'a religious group' - recruited the Maoists to do the hatchet job. Is it difficult to imagine who the unnamed religious group was? India's secular media blotted out these facts but went to town with the violence that followed the brutal killings, painting it as the handiwork of Hindu organizations.
For a detailed analysis of the issue see "Kandhamal and Bengaluru" by S. Gurumurthy (The New Indian Express, 11.09.2008).
The happenings in Mangalore Karnataka were again true to form: a neo-convert pastor in Andhra Pradesh wanted to be lauded for being more loyal than the King. His pamphlet, the product of a prostituted, putrefied and suppurating mind portrayed Hindu gods and goddesses in the most obnoxious manner possible accusing them of incest, debauchery and worse.
A Kannada translation of this rag entitled "Satya Darshini" was published by the Newlife Church and disseminated in Karnataka. Here are a few excerpts from it:
"Urvashi - the daughter of Lord Vishnu - is a prostitute. Vashistha is the son of this prostitute. He in turn married his own Mother. Such a degraded person is the Guru of the Hindu God Rama." (p. 48).
"When Krishna himself is wallowing in darkness of hell, how can he enlighten others? Since Krishna himself is a shady character, there is a need for us to liberate his misled followers." (p. 50).
"It was Brahma himself who kidnapped Sita." (p. 39)
"Since Brahma, Vishnu and Shiva were themselves victims of lust, it is a sin to consider them as Gods." (p. 39)
"When the Trinity of Hinduism (Brahma, Vishnu and Shiva) are consumed by lust and anger, how can they liberate others? The projection of them as Gods is nothing but a joke." (p. 39)
"God, please liberate the sinful people of India who are worshipping False Gods." (p. 39)
This was the background for the Bajrang Dal activists' protests in Mangalore. They were protesting mainly against Newlife prayer houses but as they could not distinguish one denomination from the other, it appears, they protested against a catholic church too.
For a detailed analysis of the issue see "What made Hindus angry in Karnataka" by Francois Gautier (The New Indian Express, 06.10.2008).
More sinned against than sinning?
While the print and electronic media aired exaggerated reports of these incidents the violence unleashed by the Christian groups against the police during their demonstrations were airbrushed.
The Archbishop of Bangalore chose to berate the Chief Minister of the state in the full glare of media cameras, when the CM sought to meet with him and commiserate with him for the violent protests. The secular exponents did not utter a word of reproof against such a blatant insult meted out to the democratically elected leader of a state.
Consider the secular exponents' quiescence vis-à-vis Muslim protests against the cartoons that appeared in a Danish newspaper and the furore against granting political asylum to Taleema Nasreen.
Consider also the secular exponents' quiescence when Christian groups protested against the screening of the movie Da Vinci Code eventually forcing some secular state governments to ban it, even though it was freely exhibited in many Christian nations including Italy, next door to the Vatican.
For the record, this article does not support either the Danish cartoonist or the Bangladeshi writer or the American novelist inasmuch as they hurt the religious sentiments of Muslims or Christians.
The quintessence of Indian secularism as it is in vogue appears to be not in separating the state and religion as the word originally connoted but in opposing Hinduism, its philosophy and social mores. On the other hand a pilgrimage to Azamgarh to commiserate with the families of those arrested for acts of war on the Indian nation and seeking a ban of the Bajrang Dal was seen as an avowal of their secular credentials by some!
The mantra of Indian secular exponents who would rather wear secularism on their sleeve is to oppose any opposition of Hindu organisations - which for them come under the collective moniker of the Sangh Parivar. Therefore if Hindu organisations protest against aggressive efforts to proselytize, then the secular exponents must rush to the defence of the proselytizers. Indian secular exponents dotingly refer to members of the Sangh Parivar as goons. For them, there are no goons in other religions and that is a fact. Every time there is a reference to religious fundamentalism in other religions the spectre of Hindu fundamentalism had to be invoked, in the name of balance!
Sunday, April 10, 2011
The Easiest Way to Succeed as an Entrepreneur
The Easiest Way to Succeed as an Entrepreneur
I was the worst pizza delivery guy. Fraternity guys would chase after me as I was peeling out of their driveways after a delivery. Why? The sauce and cheese fell all to one side. I couldn’t help it. I also never got tips. Wende, my partner in our restaurant delivery business, always got tips. But she was beautiful, blonde, great smile, had personality, etc. And I secretly loved her. I couldn’t compete. I always hoped I would deliver to a frat party where all the girls were running around naked. But that never happened.
We also started a debit card for college kids. From the first day we were open for business we had college kids signing up for our card (there were no credit cards for kids then). And anyone who had our debit card could order food from the 20 or so restaurants in town and we’d deliver, but with a 25% markup.
I loved delivering food because it gave me twenty, or even forty minute breaks from my girlfriend. We were having troubles at the time. I’d sometimes stop the car between deliveries and just read. I was a screwed up 19 year old then. Now I’m only a mildly-screwed up 43 year old.
I’ve had seven startups since then. And some profitable exits. And another 20 or so that I’ve funded.
When I think “entrepreneur” I think Mark Cuban or Larry Page or Steve Jobs. I don’t usually think of myself. In part because I feel shame that after all of these startups I don’t have a billion dollars. Many startups fail. But I’ve had a few successes as well. Successes in a startup makes you feel immortal.
I was going to make this post: “the 12 rules to being a good entrepreneur” and I outlined the 12 rules that have consistently worked for me. But rule #1 is taking up 1500 words already. Tim Sykes tells me I need to break these posts up more. So this one rule is going to take up the whole post. But, for me, this is the most important rule.
The MOST IMPORTANT RULE: Have a customer before you start your business. This is a corollary of the phrase, “ideas are a dime a dozen”.
There is another corollary: lazy is best. If you have to work for two years before one dollar of revenue comes into business then thats too much work. I’m lazy so I like money coming in with as little work as possible. Mark Zuckerberg, of course, is different. He put in years of work before dollar one of revenue came in. But we’re different people.
In about twenty minutes I’m going to go to the local café here, The Foundry, and bring a pad, order a coffee and muffin, and write down ideas for businesses. Then I’ll probably throw the piece of paper out. Because ideas are useless. They are just practice to keep your idea muscle in shape.
FAKE RULE: People say, “Execution is important”. That’s not really true either. Execution is useless. It’s a commodity. The only thing that’s important is money. You get money by having a customer. You get a customer by satisfying a need that’s so important to them they would be willing to pay for it. If you have a customer that’s willing to pay you money, then execution becomes a lot easier. Life as an entrepreneur is hard. Why make it harder for yourself?
I like stability as much as I like taking risks. So for me, I need a customer. It’s a matter of how much risk you want to take. In an earlier post I suggest reasons why people need to quit their jobs and jump into the abyss. If a customer happens to be waiting for you in the abyss then you won’t be lonely there. Loneliness is bad for a startup.
Example: How Stockpickr Started
Tom Clarke, the CEO of thestreet.com called me up in mid 2006. He wanted to meet and brainstorm ideas with me. So I had about two weeks to prepare. I called up a development firm in India. MySpace had just been acquired by NewsCorp so I sketched out what I considered the “MySpace of Finance”. I threw in every idea from my own trading.
In other words, I wanted to create a site that I would use as a professional trader and so I knew other traders would benefit from it. And, I had a theory about making a quality financial site that basically had no news in it. I’m going to be blunt: 99% of financial news is useless and misinformed and misleading, if not outright lying. My ideas for the site were purely based on my own ten years experience as a professional trader. In fact, I had just turned down working for a multi-billion dollar hedge fund based on a specific strategy I had. Instead, I implemented that strategy within stockpickr.com.
Within a week, for free (because I told the company in India that I would be building the site with them if they sent back good screenshots, which was true), the company sent me back screenshots. I met with Tom and told him, “I’m almost done with the site. Here it is.” (I exaggerated) And I showed him the screenshots. I had set up meetings with Yahoo and AOL as well to discuss them so it wasn’t a stretch to say, “I’m also talking to Yahoo and AOL.” Nobody wants to be the first customer, so you have to create the aura of many customers.
And so he said, “why are you talking with them? You’ve been with us forever. Lets do this together.” So we negotiated right there. I said, “great, how about you guys take 10% of the company and put all your extra ads on all of our pages and let me link from every article back to Stockpickr.com (the name of the company).”
He said, “I thought we were partners. Lets do it 50-50.” So right away, I had given up 50% of the company. Most people I spoke to thought this was a horrible idea. In fact, one of my employees quit because I did this: but giving 50% of your company away is often better than giving 10% of your company away. When you give 50% of the company away, your partner is obligated to follow through and be a real partner. He can never forget about you. Its also always a good thing when the most popular person in financial media, Jim Cramer, was also a 50% partner in my business since he was the founder of thestreet.com. If you can get the top person in your field to take equity, you’re golden from day one. Again, its all about making life easy. With family responsibilities, health, life in general, why make things even harder for yourself?
Its like that saying when you owe the bank a million, they own you. When you owe the bank a billion, you own them. Three years later I watched another company thestreet.com only took 10% of almost disappear because Thestreet.com was not obligated to follow through.
So, at that point, without even having a site finished (or even started): I knew I had three things going for me:
A) I was going to get traffic. I could write three or four articles a day and link each one back to stockpickr all over the article. The street.com got 100mm pageviews a month so I knew I would get some percentage of that.
B) I was going to make money. If I got even 3 million pageviews a month and the average CPM of thestreet.com (according to their SEC filings) was $17, I would make about $50 thousand a month with expenses nearing zero. What if I put 3 ads a page on the site? Then I would make even more. Slap a 40x multiple on a growing company and before I even started I had real value.
C) Profitability and growth from day one meant I could put the company up for sale almost immediately. But that’s another story.
With my first successful company, Reset, I had about 10 paying customers before I finally made the jump to running the company fulltime: HBO, Interscope, BMG, New Line Cinema, and Warner Brothers were all paying customers before I jumped ship from HBO to run Reset fulltime.
(the Wu-Tang Clan was a paying customer)
When I started my fund of hedge funds I didn’t put one dime into the expense of setting it up until I had the first $20 million commitment. $20 million with a 1.5% management fee meant an instant $300 thousand in revenues, plus extra money for legal fees, etc. Enough to pay a salary or two. It took a year of cultivating my network before I had that commitment, but it worked.
This is just me, personally. Some people don’t mind starting a company without any customers. I’m too conservative for this. I’m happy to even give up equity to get that first customer. 50% of a profitable company is better than 100% of a company that will probably quickly go out of business.
How do you get that first customer?
- Who? List the 20 CEOs or high level executives you would like to meet. If you have a rolodex, great. If you don’t, then you might have to write to 40 people. This is why its important to Exploit your Employer and use some of the other ideas mentioned throughout this blog. But its ok if your rolodex is cold. Many successful businesses I’ve been involved with started with cold emails.
- Ideas. Develop 20 ideas for each person. Get your idea muscle in shape first.
- Communicate. Write them all, giving at least 10 of the ideas, in detail, and how you would implement them. Sometimes you have to dig for their email address. Like I did here.
- Meet. All this does is get you the meeting. Once you’re in the door, the conversation can go anywhere. Of the 20 people you write, rule of the universe is you’ll get six meetings.
- Ask. In the meetings ask the question, “what one product can I build for you that you will definitely buy?” Remember, execution is a commodity. Because of globalization you can build anything for cheap. I built the first working version of Stockpickr.com for $3000 in Bangalore. Throw in another $150 from a design made in Siberia. You need zero skillset for that. Just a good idea muscle, an ability to sell, and modest ability to manage a project.
- Never say No. Never. If someone says, “can you do this?” Yes. “But can you do this?” Yes. Can you do it for this? Yes.
- Follow up every day. Nice to meet you. Here’s my sketch of what you want. Is this right? Should I start today?
- Equity. If necessary, give up equity for that first customer. Or first two customers.
- Done. If more than one CEO wants the same product or service, and the price is right, then now you have a business. Build the product, sell it, and you’re in shape.
- Repeat. You’re not really “Done”. Every day you have to go back and see if your customer is achieving more success BECAUSE of your products. If he is, then ask him what else he needs and then build it. If he isn’t, then ask him what else he needs and builds it. Your easiest new sales will be with your old customers.
This has worked for me on three different occasions. And each time resulted in great profits for me. By the way, this technique has also worked for people who have contacted me with their own ideas.
Listen. You’ve been hypnotized. You’ve been told you need a corporate job. You need a college degree. You need stability. You need the white picket fence. You need the IRA and the health insurance. Snap your fingers in front of your face. The American Religion is a myth, just like the movie, Thor, is based on a myth. Stability is only in your mind. There’s $15 trillion dollars in our economy, recession or no recession. Its falling like snow. Reach out with your tongue and taste it.
—-
I was the worst pizza delivery guy. Fraternity guys would chase after me as I was peeling out of their driveways after a delivery. Why? The sauce and cheese fell all to one side. I couldn’t help it. I also never got tips. Wende, my partner in our restaurant delivery business, always got tips. But she was beautiful, blonde, great smile, had personality, etc. And I secretly loved her. I couldn’t compete. I always hoped I would deliver to a frat party where all the girls were running around naked. But that never happened.
We also started a debit card for college kids. From the first day we were open for business we had college kids signing up for our card (there were no credit cards for kids then). And anyone who had our debit card could order food from the 20 or so restaurants in town and we’d deliver, but with a 25% markup.
I loved delivering food because it gave me twenty, or even forty minute breaks from my girlfriend. We were having troubles at the time. I’d sometimes stop the car between deliveries and just read. I was a screwed up 19 year old then. Now I’m only a mildly-screwed up 43 year old.
I’ve had seven startups since then. And some profitable exits. And another 20 or so that I’ve funded.
When I think “entrepreneur” I think Mark Cuban or Larry Page or Steve Jobs. I don’t usually think of myself. In part because I feel shame that after all of these startups I don’t have a billion dollars. Many startups fail. But I’ve had a few successes as well. Successes in a startup makes you feel immortal.
I was going to make this post: “the 12 rules to being a good entrepreneur” and I outlined the 12 rules that have consistently worked for me. But rule #1 is taking up 1500 words already. Tim Sykes tells me I need to break these posts up more. So this one rule is going to take up the whole post. But, for me, this is the most important rule.
The MOST IMPORTANT RULE: Have a customer before you start your business. This is a corollary of the phrase, “ideas are a dime a dozen”.
There is another corollary: lazy is best. If you have to work for two years before one dollar of revenue comes into business then thats too much work. I’m lazy so I like money coming in with as little work as possible. Mark Zuckerberg, of course, is different. He put in years of work before dollar one of revenue came in. But we’re different people.
In about twenty minutes I’m going to go to the local café here, The Foundry, and bring a pad, order a coffee and muffin, and write down ideas for businesses. Then I’ll probably throw the piece of paper out. Because ideas are useless. They are just practice to keep your idea muscle in shape.
FAKE RULE: People say, “Execution is important”. That’s not really true either. Execution is useless. It’s a commodity. The only thing that’s important is money. You get money by having a customer. You get a customer by satisfying a need that’s so important to them they would be willing to pay for it. If you have a customer that’s willing to pay you money, then execution becomes a lot easier. Life as an entrepreneur is hard. Why make it harder for yourself?
I like stability as much as I like taking risks. So for me, I need a customer. It’s a matter of how much risk you want to take. In an earlier post I suggest reasons why people need to quit their jobs and jump into the abyss. If a customer happens to be waiting for you in the abyss then you won’t be lonely there. Loneliness is bad for a startup.
Example: How Stockpickr Started
Tom Clarke, the CEO of thestreet.com called me up in mid 2006. He wanted to meet and brainstorm ideas with me. So I had about two weeks to prepare. I called up a development firm in India. MySpace had just been acquired by NewsCorp so I sketched out what I considered the “MySpace of Finance”. I threw in every idea from my own trading.
In other words, I wanted to create a site that I would use as a professional trader and so I knew other traders would benefit from it. And, I had a theory about making a quality financial site that basically had no news in it. I’m going to be blunt: 99% of financial news is useless and misinformed and misleading, if not outright lying. My ideas for the site were purely based on my own ten years experience as a professional trader. In fact, I had just turned down working for a multi-billion dollar hedge fund based on a specific strategy I had. Instead, I implemented that strategy within stockpickr.com.
Within a week, for free (because I told the company in India that I would be building the site with them if they sent back good screenshots, which was true), the company sent me back screenshots. I met with Tom and told him, “I’m almost done with the site. Here it is.” (I exaggerated) And I showed him the screenshots. I had set up meetings with Yahoo and AOL as well to discuss them so it wasn’t a stretch to say, “I’m also talking to Yahoo and AOL.” Nobody wants to be the first customer, so you have to create the aura of many customers.
And so he said, “why are you talking with them? You’ve been with us forever. Lets do this together.” So we negotiated right there. I said, “great, how about you guys take 10% of the company and put all your extra ads on all of our pages and let me link from every article back to Stockpickr.com (the name of the company).”
He said, “I thought we were partners. Lets do it 50-50.” So right away, I had given up 50% of the company. Most people I spoke to thought this was a horrible idea. In fact, one of my employees quit because I did this: but giving 50% of your company away is often better than giving 10% of your company away. When you give 50% of the company away, your partner is obligated to follow through and be a real partner. He can never forget about you. Its also always a good thing when the most popular person in financial media, Jim Cramer, was also a 50% partner in my business since he was the founder of thestreet.com. If you can get the top person in your field to take equity, you’re golden from day one. Again, its all about making life easy. With family responsibilities, health, life in general, why make things even harder for yourself?
Its like that saying when you owe the bank a million, they own you. When you owe the bank a billion, you own them. Three years later I watched another company thestreet.com only took 10% of almost disappear because Thestreet.com was not obligated to follow through.
So, at that point, without even having a site finished (or even started): I knew I had three things going for me:
A) I was going to get traffic. I could write three or four articles a day and link each one back to stockpickr all over the article. The street.com got 100mm pageviews a month so I knew I would get some percentage of that.
B) I was going to make money. If I got even 3 million pageviews a month and the average CPM of thestreet.com (according to their SEC filings) was $17, I would make about $50 thousand a month with expenses nearing zero. What if I put 3 ads a page on the site? Then I would make even more. Slap a 40x multiple on a growing company and before I even started I had real value.
C) Profitability and growth from day one meant I could put the company up for sale almost immediately. But that’s another story.
With my first successful company, Reset, I had about 10 paying customers before I finally made the jump to running the company fulltime: HBO, Interscope, BMG, New Line Cinema, and Warner Brothers were all paying customers before I jumped ship from HBO to run Reset fulltime.
(the Wu-Tang Clan was a paying customer)
When I started my fund of hedge funds I didn’t put one dime into the expense of setting it up until I had the first $20 million commitment. $20 million with a 1.5% management fee meant an instant $300 thousand in revenues, plus extra money for legal fees, etc. Enough to pay a salary or two. It took a year of cultivating my network before I had that commitment, but it worked.
This is just me, personally. Some people don’t mind starting a company without any customers. I’m too conservative for this. I’m happy to even give up equity to get that first customer. 50% of a profitable company is better than 100% of a company that will probably quickly go out of business.
How do you get that first customer?
- Who? List the 20 CEOs or high level executives you would like to meet. If you have a rolodex, great. If you don’t, then you might have to write to 40 people. This is why its important to Exploit your Employer and use some of the other ideas mentioned throughout this blog. But its ok if your rolodex is cold. Many successful businesses I’ve been involved with started with cold emails.
- Ideas. Develop 20 ideas for each person. Get your idea muscle in shape first.
- Communicate. Write them all, giving at least 10 of the ideas, in detail, and how you would implement them. Sometimes you have to dig for their email address. Like I did here.
- Meet. All this does is get you the meeting. Once you’re in the door, the conversation can go anywhere. Of the 20 people you write, rule of the universe is you’ll get six meetings.
- Ask. In the meetings ask the question, “what one product can I build for you that you will definitely buy?” Remember, execution is a commodity. Because of globalization you can build anything for cheap. I built the first working version of Stockpickr.com for $3000 in Bangalore. Throw in another $150 from a design made in Siberia. You need zero skillset for that. Just a good idea muscle, an ability to sell, and modest ability to manage a project.
- Never say No. Never. If someone says, “can you do this?” Yes. “But can you do this?” Yes. Can you do it for this? Yes.
- Follow up every day. Nice to meet you. Here’s my sketch of what you want. Is this right? Should I start today?
- Equity. If necessary, give up equity for that first customer. Or first two customers.
- Done. If more than one CEO wants the same product or service, and the price is right, then now you have a business. Build the product, sell it, and you’re in shape.
- Repeat. You’re not really “Done”. Every day you have to go back and see if your customer is achieving more success BECAUSE of your products. If he is, then ask him what else he needs and then build it. If he isn’t, then ask him what else he needs and builds it. Your easiest new sales will be with your old customers.
This has worked for me on three different occasions. And each time resulted in great profits for me. By the way, this technique has also worked for people who have contacted me with their own ideas.
Listen. You’ve been hypnotized. You’ve been told you need a corporate job. You need a college degree. You need stability. You need the white picket fence. You need the IRA and the health insurance. Snap your fingers in front of your face. The American Religion is a myth, just like the movie, Thor, is based on a myth. Stability is only in your mind. There’s $15 trillion dollars in our economy, recession or no recession. Its falling like snow. Reach out with your tongue and taste it.
—-
Friday, April 8, 2011
What do you do after you make a ZILLION dollars?
What do you do after you make a ZILLION dollars?
In the dot-com boom I made a little bit of money and then proceeded to make every mistake possible with that money. It was like reading a Stephen King horror story written in blood across your bank statement. Several years later, I included the story in the intro to one of my books and gave the book to a potential investor. He read the intro and said, “I can’t invest in you. You’re a functional idiot.” And yet, I’ve seen the pattern repeated so many times with so many people can I at least enjoy the company of other idiots?
So to help out others who will pocket some of the $600bb in quantitative easing, I have a few simple tips for greatly improving the chances of success if you have sudden fortune thrust upon you, either through your hard work or simply by chance.
1.) The One-Year Rule. Don’t change your lifestyle at all for at least one year.
No new house or apartment. Don’t buy a fancy car. Don’t buy expensive artwork. This is not to say these things are bad. It’s just that you need to let the new wealth marinate your soul a little bit.
Get comfortable with it before you try on new clothes that might not fit yet. Once you buy some massively expensive toys or homes, it changes your whole perspective and might make you much more foolish than you were when you were first climbing the ladder of success.
Remember: One year.
[Follow me on twitter]
2.) The No-Friends Rule. Don’t lend money to old friends. Don’t be so quick to make new friends. Once you make money, everyone will approach you about new investments you can make. Or people will want to borrow money from you.
Don’t do either.
It’s very hard, of course, to deny a friend who says, “listen, I just need to borrow $100,000 for 90 days.” Or “I have a great new start-up that looks like Twitter but better. I’m just raising $500,000 and I left $300,000 for you to come into the round.”
But here’s what you can say, “I’d love to do it. It sounds great. Right now everything is tied up with my financial adviser and you can talk to him. I have to go by what he says because of all the legal stuff I don’t understand.” And then get some guy to pretend to be your financial adviser who can get you off the hook by denying your friend.
I know, it’s dishonest and devious. But it’s necessary in you want to keep your friends. Particularly in Year One (see previous rule).
3.) Don’t Invest. What’s the rush? You just made your money. Put it in a savings account for one year at least. Or under your mattress. No stocks. No paintings. No private investments. Try not to start a business again so quickly.
A friend of mine recently won $3 million in a poker tournament after being broke for many years (all his life). Right away he wanted to buy a hotel.
Don’t do it.
This was right before the entire housing crisis and recession that followed. Thank God he took my advice. If you feel absolutely compelled to do some investing then follow the next rule.
[Follow me on twitter]
4.) The 2% Rule. If you really feel that Google is going to $5,000 per share and you have to buy some stock at $500, don’t put more than 2% of your money into it. Then, if it all goes to hell, you’ve only lost 2% of your money (or more likely, 1%, since Google will probably never go down more than 50%).
This is hard for entrepreneurs who come into sudden wealth because they are used to making their money by having most of their net worth tied up in one investment (their business).
But this is probably the most important rule on the list.
5.) The Good Health Rule. Believe it or not, your health is now at risk if you just came into sudden wealth.
A friend of mine had a very stressful business in the online gambling space. He was worried the Feds were going to outlaw him and arrest him. He was broke and the business was always in a state of running out of money.
High, high, stress.
I thought he was going to have a stroke or a heart attack but he always stayed in great health. Then he sold his business and made about $50 million. Three months later he was on a ski slope in Aspen, enjoying the fruits of his labor, when he suddenly had a major heart attack and only survived because of immediate medical care. He was essentially dead for five minutes on the operating table.
Your body, in a high adrenalin situation, will postpone punishing you until the situation is over. But don’t think when the stress is over that your body will forget. It doesn’t.
You must focus on health after achieving sudden wealth.
6.) Try Not To Burn Out. Your business was brutal. I know. I’ve been there. Clients and customers are sometimes hard to deal with. And now you might have employers who just bought your company that you have to report to.
But don’t burn out just yet. You need to be responsible and show the people around you that they all made the right decision in trusting you, in buying your business, in buying your goods and services, in working for you, etc. You have few chances in life to demonstrate that you’re made of the right stuff and this is one of them.
And what to do if you lose it all? Don’t worry.
There’s no such thing as luck. In the chess-playing world there’s a saying: “Only the good players are lucky.” That applies to business as well. People can say you were lucky. But the truth is you’ll be able to do it again and again, no matter how deeply you fall.
Trust in this and follow these rules and sudden wealth will become permanent wealth
In the dot-com boom I made a little bit of money and then proceeded to make every mistake possible with that money. It was like reading a Stephen King horror story written in blood across your bank statement. Several years later, I included the story in the intro to one of my books and gave the book to a potential investor. He read the intro and said, “I can’t invest in you. You’re a functional idiot.” And yet, I’ve seen the pattern repeated so many times with so many people can I at least enjoy the company of other idiots?
So to help out others who will pocket some of the $600bb in quantitative easing, I have a few simple tips for greatly improving the chances of success if you have sudden fortune thrust upon you, either through your hard work or simply by chance.
1.) The One-Year Rule. Don’t change your lifestyle at all for at least one year.
No new house or apartment. Don’t buy a fancy car. Don’t buy expensive artwork. This is not to say these things are bad. It’s just that you need to let the new wealth marinate your soul a little bit.
Get comfortable with it before you try on new clothes that might not fit yet. Once you buy some massively expensive toys or homes, it changes your whole perspective and might make you much more foolish than you were when you were first climbing the ladder of success.
Remember: One year.
[Follow me on twitter]
2.) The No-Friends Rule. Don’t lend money to old friends. Don’t be so quick to make new friends. Once you make money, everyone will approach you about new investments you can make. Or people will want to borrow money from you.
Don’t do either.
It’s very hard, of course, to deny a friend who says, “listen, I just need to borrow $100,000 for 90 days.” Or “I have a great new start-up that looks like Twitter but better. I’m just raising $500,000 and I left $300,000 for you to come into the round.”
But here’s what you can say, “I’d love to do it. It sounds great. Right now everything is tied up with my financial adviser and you can talk to him. I have to go by what he says because of all the legal stuff I don’t understand.” And then get some guy to pretend to be your financial adviser who can get you off the hook by denying your friend.
I know, it’s dishonest and devious. But it’s necessary in you want to keep your friends. Particularly in Year One (see previous rule).
3.) Don’t Invest. What’s the rush? You just made your money. Put it in a savings account for one year at least. Or under your mattress. No stocks. No paintings. No private investments. Try not to start a business again so quickly.
A friend of mine recently won $3 million in a poker tournament after being broke for many years (all his life). Right away he wanted to buy a hotel.
Don’t do it.
This was right before the entire housing crisis and recession that followed. Thank God he took my advice. If you feel absolutely compelled to do some investing then follow the next rule.
[Follow me on twitter]
4.) The 2% Rule. If you really feel that Google is going to $5,000 per share and you have to buy some stock at $500, don’t put more than 2% of your money into it. Then, if it all goes to hell, you’ve only lost 2% of your money (or more likely, 1%, since Google will probably never go down more than 50%).
This is hard for entrepreneurs who come into sudden wealth because they are used to making their money by having most of their net worth tied up in one investment (their business).
But this is probably the most important rule on the list.
5.) The Good Health Rule. Believe it or not, your health is now at risk if you just came into sudden wealth.
A friend of mine had a very stressful business in the online gambling space. He was worried the Feds were going to outlaw him and arrest him. He was broke and the business was always in a state of running out of money.
High, high, stress.
I thought he was going to have a stroke or a heart attack but he always stayed in great health. Then he sold his business and made about $50 million. Three months later he was on a ski slope in Aspen, enjoying the fruits of his labor, when he suddenly had a major heart attack and only survived because of immediate medical care. He was essentially dead for five minutes on the operating table.
Your body, in a high adrenalin situation, will postpone punishing you until the situation is over. But don’t think when the stress is over that your body will forget. It doesn’t.
You must focus on health after achieving sudden wealth.
6.) Try Not To Burn Out. Your business was brutal. I know. I’ve been there. Clients and customers are sometimes hard to deal with. And now you might have employers who just bought your company that you have to report to.
But don’t burn out just yet. You need to be responsible and show the people around you that they all made the right decision in trusting you, in buying your business, in buying your goods and services, in working for you, etc. You have few chances in life to demonstrate that you’re made of the right stuff and this is one of them.
And what to do if you lose it all? Don’t worry.
There’s no such thing as luck. In the chess-playing world there’s a saying: “Only the good players are lucky.” That applies to business as well. People can say you were lucky. But the truth is you’ll be able to do it again and again, no matter how deeply you fall.
Trust in this and follow these rules and sudden wealth will become permanent wealth
33 Unusual Tips to Being a Better Writer
33 Unusual Tips to Being a Better Writer
Back in college, Sanket and I would hang out in bars and try to talk to women but I was horrible at it. Nobody would talk to me for more than thirty seconds and every woman would laugh at all his jokes for what seemed like hours. Even decades later I think they are still laughing at his jokes. One time he turned to me, “the girls are getting bored when you talk. Your stories go on too long. From now on, you need to leave out every other sentence when you tell a story.” We were both undergrads in Computer Science. I haven’t seen him since but that’s the most important writing (and communicating) advice I ever got.
33 other tips to be a better writer.
- Write whatever you want. Then take out the first paragraph and last paragraph. Here’s the funny thing about this rule. It’s sort of like knowing the future. You still can’t change it. In other words, even if you know this rule and write the article, the article will still be better if you take out the first paragraph and the last paragraph.
- Take a huge bowel movement every day. And you won’t see that on any other list on how to be a better writer. If your body doesn’t flow then your brain won’t flow. Eat more fruit if you have to.
- Bleed in the first line. We’re all human. A computer can win Jeopardy but still not write a novel. You want people to relate to you, then you have to be human. Penelope Trunk started a post a few weeks ago: “I smashed a lamp over my head. There was blood everywhere. And glass. And I took a picture.” That’s real bleeding. My wife recently put up a post where the first line was so painful she had to take it down. Too many people were crying.
- Don’t ask for permission. In other words, never say “in my opinion” (or worse “IMHO”). We know it’s your opinion. You’re writing it.
- Write a lot. I spent the entire 90s writing bad fiction. 5 bad novels. Dozens of bad stories. But I learned to handle massive rejection. And how to put two words together. In my head, I won the pulitzer prize. But in my hand, over 100 rejection letters.
- Read a lot. You can’t write without first reading. A lot. When I was writing five bad novels in a row I would read all day long whenever I wasn’t writing (I had a job as a programmer, which I would do for about five minutes a day because my programs all worked and I just had to “maintain” them). I read everything I could get my hands on.
- Read before you write. Before I write every day I spend 30-60 minutes reading high quality short stories poetry, or essays. Books by Denis Johnson, Miranda July, David Foster Wallace, Ariel Leve, William Vollmann, Raymond Carver, etc. All of the writers are in the top 1/1000 of 1% of writers. It has to be at that level or else it won’t lift up your writing at all.
- Coffee. I go through three cups at least before I even begin to write. No coffee, no creativity.
- Break the laws of physics. There’s no time in text. Nothing has to go in order. Don’t make it nonsense. But don’t be beholden to the laws of physics. Advice I Want to Tell My Daughters is an example.
- Be Honest. Tell people the stuff they all think but nobody ever says. Some people will be angry you let out the secret. But most people will be grateful. Else you aren’t delivering value. Be the little boy in the Emperor Wears No Clothes. If you can’t do this, don’t write.
- Don’t Hurt Anyone. This goes against the above rule. But I never like to hurt people. And I don’t respect people who get pageviews by breaking this rule. Don’t be a bad guy. Was Buddha a Bad Father? addresses this.
- Don’t be afraid of what people think. For each single person you worry about, deduct 1% in quality from your writing. Everyone has deductions. I have to deduct about 10% right off the top. Maybe there’s 10 people I’m worried about. Some of them are evil people. Some of them are people I just don’t want to offend. So my writing is only about 90% of what it could be. But I think most people write at about 20% of what it could be. Believe it or not, clients, customers, friends, family, will love you more if you are honest with them. So we all have our boundaries. But try this: for the next ten things you write, tell people something that nobody knows about you.
- Be opinionated. Most people I know have strong opinions about at least one or two things. Write about those. Nobody cares about all the things you don’t have strong opinions on. Barry Ritholz told me the other day he doesn’t start writing until he’s angry about something. That’s one approach. Barry and I have had some great writing fights because sometimes we’ve been angry at each other.
- Have a shocking title. I blew it the other day. I wanted to title this piece: “How I torture women” but I settled for “I’m guilty of torture”. I wimped out. But I have some other fun ones. Like “is it bad I wanted my first kid to be aborted” (which the famous Howard Lindzon cautioned me against). Don’t forget that you are competing against a trillion other pieces of content out there. So you need a title to draw people in. Else you lose.
- Steal. I don’t quite mean it literally. But if you know a topic gets pageviews (and you aren’t hurting anyone) than steal it, no matter who’s written about it or how many times you’ve written about it before. “How I Screwed Yasser Arafat out of $2mm” was able to nicely piggyback off of how amazingly popular Yasser Arafat is.
- Make people cry. If you’ve ever been in love, you know how to cry. Bring readers to that moment when they were a child, and all of life was in front of them, except for that one bittersweet moment when everything began to change. If only that one moment could’ve lasted forever. Please let me go back in time right now to that moment. But now it’s gone.
- Relate to people. The past decade has totally sucked. For everyone. The country has been in post-traumatic stress syndrome since 9/11 and 2008 only made it worse. I’ve gone broke a few times during the decade, had a divorce, lost friendships, and have only survived (barely) by being persistent and knowing I had two kids to take care of, and loneliness to fight. Nobody’s perfect. We’re all trying. Show people how you are trying and struggling. Nobody expects you to be a superhero.
- Time heals all wounds. Everyone has experiences they don’t want to write about. But with enough time, its ok. My New Year’s Resolution of 1995 is pretty embarrassing. But whatever. Its 16 years ago.. The longer back you go, the less you have to worry about what people think.
- Risk. Notice that almost all of these rules are about where the boundaries are. Most people play it too safe. When you are really risking something and the reader senses that (and they WILL sense it), then you know you are in good territory. If you aren’t risking something, then I’m moving on. I know I’m on the right track if after I post something someone tweets, “OMFG”.
- Be funny. You can be all of the above and be funny at the same time. When I went to India I was brutalized by my first few yoga classes (actually every yoga class). And I was intimidated by everyone around me. They were like yoga superheroes and I felt like a fraud around them. So I cried, and hopefully people laughed. It was also a case where I didn’t have to dig into my past but I had an experience that was happening to me right then. How do you be funny? First rule of funny: ugly people are funny. I’m naturally ugly so its easy. Make yourself as ugly as possible. Nobody wants to read that you are beautiful and doing great in life.
- The last line needs to go BOOM! . Your article is meaningless unless the last line KILLS. Read the book of short stories “Jesus’ Son” by Denis Johnson. It’s the only way to learn how to do a last line. The last line should take you all the way back to the first line and then “BOOM!”
- Use a lot of periods. Forget commas and semicolons. A period makes people pause. Your sentences should be strong enough that you want people to pause and think about it. This will also make your sentences shorter. Short sentences are good.
- Write every day. This is a must. Writing is spiritual practice. You are diving inside of yourself and cleaning out the toxins. If you don’t do it every day, you lose the ability. If you do it every day, then slowly you find out where all the toxins are. And the cleaning can begin.
- Write with the same voice you talk in. You’ve spent your whole life learning how to communicate with that voice. Why change it when you communicate with text?
- Deliver value with every sentence. Even on a tweet or Facebook status update. Deliver poetry and value with ever word. Else, be quiet. (And, of course, follow me on twitter for more examples)
- Take what everyone thinks and explore the opposite. Don’t disagree just to disagree. But explore. Turn the world upside down. Guess what? There are people living in China. Plenty of times you’ll find value where nobody else did.
- Have lots of ideas. I discuss this in “How to be the Luckiest Man Alive” in the Daily Practice section. Your idea muscle atrophies within days if you don’t exercise it. Then what do you do? You need to exercise it every day until it hurts. Else no ideas.
- Sleep eight hours a day. Go to sleep before 9pm at least 4 days a week. And stretch while taking deep breaths before you write. We supposedly use only 5% of our brain. You need to use 6% at least to write better than everyone else. So make sure your brain is getting as much healthy oxygen as possible. Too many people waste valuable writing or resting time by chattering until all hours of the night.
- Don’t write if you’re upset at someone. Then the person you are upset at becomes your audience. You want to love and flirt with your audience so they can love you back.
- Use “said” instead of any other word. Don’t use “he suggested” or “he bellowed”. Just “he said.” We’ll figure it out if he suggested something.
- Paint. Or draw. Keep exercising other creative muscles.
- Let it sleep. Whatever you are working on, sleep on it. Then wake up, stretch, coffee, read, and look again. Rewrite. Take out every other sentence.
- Then take out every other sentence again. Or something like that.
Sanket didn’t want to go to grad school after we graduated. He had another plan. Lets go to Thailand, he said. And become monks in a Buddhist monastery for a year. We can date Thai women whenever we aren’t begging for food, he said. It will be great and we’ll get life experience.
It sounded good to me.
But then he got accepted to the University of Wisconsin and got a PhD. Now he lives in India and works for Oracle. And as for me, I don’t know what the hell happened to me.
Back in college, Sanket and I would hang out in bars and try to talk to women but I was horrible at it. Nobody would talk to me for more than thirty seconds and every woman would laugh at all his jokes for what seemed like hours. Even decades later I think they are still laughing at his jokes. One time he turned to me, “the girls are getting bored when you talk. Your stories go on too long. From now on, you need to leave out every other sentence when you tell a story.” We were both undergrads in Computer Science. I haven’t seen him since but that’s the most important writing (and communicating) advice I ever got.
33 other tips to be a better writer.
- Write whatever you want. Then take out the first paragraph and last paragraph. Here’s the funny thing about this rule. It’s sort of like knowing the future. You still can’t change it. In other words, even if you know this rule and write the article, the article will still be better if you take out the first paragraph and the last paragraph.
- Take a huge bowel movement every day. And you won’t see that on any other list on how to be a better writer. If your body doesn’t flow then your brain won’t flow. Eat more fruit if you have to.
- Bleed in the first line. We’re all human. A computer can win Jeopardy but still not write a novel. You want people to relate to you, then you have to be human. Penelope Trunk started a post a few weeks ago: “I smashed a lamp over my head. There was blood everywhere. And glass. And I took a picture.” That’s real bleeding. My wife recently put up a post where the first line was so painful she had to take it down. Too many people were crying.
- Don’t ask for permission. In other words, never say “in my opinion” (or worse “IMHO”). We know it’s your opinion. You’re writing it.
- Write a lot. I spent the entire 90s writing bad fiction. 5 bad novels. Dozens of bad stories. But I learned to handle massive rejection. And how to put two words together. In my head, I won the pulitzer prize. But in my hand, over 100 rejection letters.
- Read a lot. You can’t write without first reading. A lot. When I was writing five bad novels in a row I would read all day long whenever I wasn’t writing (I had a job as a programmer, which I would do for about five minutes a day because my programs all worked and I just had to “maintain” them). I read everything I could get my hands on.
- Read before you write. Before I write every day I spend 30-60 minutes reading high quality short stories poetry, or essays. Books by Denis Johnson, Miranda July, David Foster Wallace, Ariel Leve, William Vollmann, Raymond Carver, etc. All of the writers are in the top 1/1000 of 1% of writers. It has to be at that level or else it won’t lift up your writing at all.
- Coffee. I go through three cups at least before I even begin to write. No coffee, no creativity.
- Break the laws of physics. There’s no time in text. Nothing has to go in order. Don’t make it nonsense. But don’t be beholden to the laws of physics. Advice I Want to Tell My Daughters is an example.
- Be Honest. Tell people the stuff they all think but nobody ever says. Some people will be angry you let out the secret. But most people will be grateful. Else you aren’t delivering value. Be the little boy in the Emperor Wears No Clothes. If you can’t do this, don’t write.
- Don’t Hurt Anyone. This goes against the above rule. But I never like to hurt people. And I don’t respect people who get pageviews by breaking this rule. Don’t be a bad guy. Was Buddha a Bad Father? addresses this.
- Don’t be afraid of what people think. For each single person you worry about, deduct 1% in quality from your writing. Everyone has deductions. I have to deduct about 10% right off the top. Maybe there’s 10 people I’m worried about. Some of them are evil people. Some of them are people I just don’t want to offend. So my writing is only about 90% of what it could be. But I think most people write at about 20% of what it could be. Believe it or not, clients, customers, friends, family, will love you more if you are honest with them. So we all have our boundaries. But try this: for the next ten things you write, tell people something that nobody knows about you.
- Be opinionated. Most people I know have strong opinions about at least one or two things. Write about those. Nobody cares about all the things you don’t have strong opinions on. Barry Ritholz told me the other day he doesn’t start writing until he’s angry about something. That’s one approach. Barry and I have had some great writing fights because sometimes we’ve been angry at each other.
- Have a shocking title. I blew it the other day. I wanted to title this piece: “How I torture women” but I settled for “I’m guilty of torture”. I wimped out. But I have some other fun ones. Like “is it bad I wanted my first kid to be aborted” (which the famous Howard Lindzon cautioned me against). Don’t forget that you are competing against a trillion other pieces of content out there. So you need a title to draw people in. Else you lose.
- Steal. I don’t quite mean it literally. But if you know a topic gets pageviews (and you aren’t hurting anyone) than steal it, no matter who’s written about it or how many times you’ve written about it before. “How I Screwed Yasser Arafat out of $2mm” was able to nicely piggyback off of how amazingly popular Yasser Arafat is.
- Make people cry. If you’ve ever been in love, you know how to cry. Bring readers to that moment when they were a child, and all of life was in front of them, except for that one bittersweet moment when everything began to change. If only that one moment could’ve lasted forever. Please let me go back in time right now to that moment. But now it’s gone.
- Relate to people. The past decade has totally sucked. For everyone. The country has been in post-traumatic stress syndrome since 9/11 and 2008 only made it worse. I’ve gone broke a few times during the decade, had a divorce, lost friendships, and have only survived (barely) by being persistent and knowing I had two kids to take care of, and loneliness to fight. Nobody’s perfect. We’re all trying. Show people how you are trying and struggling. Nobody expects you to be a superhero.
- Time heals all wounds. Everyone has experiences they don’t want to write about. But with enough time, its ok. My New Year’s Resolution of 1995 is pretty embarrassing. But whatever. Its 16 years ago.. The longer back you go, the less you have to worry about what people think.
- Risk. Notice that almost all of these rules are about where the boundaries are. Most people play it too safe. When you are really risking something and the reader senses that (and they WILL sense it), then you know you are in good territory. If you aren’t risking something, then I’m moving on. I know I’m on the right track if after I post something someone tweets, “OMFG”.
- Be funny. You can be all of the above and be funny at the same time. When I went to India I was brutalized by my first few yoga classes (actually every yoga class). And I was intimidated by everyone around me. They were like yoga superheroes and I felt like a fraud around them. So I cried, and hopefully people laughed. It was also a case where I didn’t have to dig into my past but I had an experience that was happening to me right then. How do you be funny? First rule of funny: ugly people are funny. I’m naturally ugly so its easy. Make yourself as ugly as possible. Nobody wants to read that you are beautiful and doing great in life.
- The last line needs to go BOOM! . Your article is meaningless unless the last line KILLS. Read the book of short stories “Jesus’ Son” by Denis Johnson. It’s the only way to learn how to do a last line. The last line should take you all the way back to the first line and then “BOOM!”
- Use a lot of periods. Forget commas and semicolons. A period makes people pause. Your sentences should be strong enough that you want people to pause and think about it. This will also make your sentences shorter. Short sentences are good.
- Write every day. This is a must. Writing is spiritual practice. You are diving inside of yourself and cleaning out the toxins. If you don’t do it every day, you lose the ability. If you do it every day, then slowly you find out where all the toxins are. And the cleaning can begin.
- Write with the same voice you talk in. You’ve spent your whole life learning how to communicate with that voice. Why change it when you communicate with text?
- Deliver value with every sentence. Even on a tweet or Facebook status update. Deliver poetry and value with ever word. Else, be quiet. (And, of course, follow me on twitter for more examples)
- Take what everyone thinks and explore the opposite. Don’t disagree just to disagree. But explore. Turn the world upside down. Guess what? There are people living in China. Plenty of times you’ll find value where nobody else did.
- Have lots of ideas. I discuss this in “How to be the Luckiest Man Alive” in the Daily Practice section. Your idea muscle atrophies within days if you don’t exercise it. Then what do you do? You need to exercise it every day until it hurts. Else no ideas.
- Sleep eight hours a day. Go to sleep before 9pm at least 4 days a week. And stretch while taking deep breaths before you write. We supposedly use only 5% of our brain. You need to use 6% at least to write better than everyone else. So make sure your brain is getting as much healthy oxygen as possible. Too many people waste valuable writing or resting time by chattering until all hours of the night.
- Don’t write if you’re upset at someone. Then the person you are upset at becomes your audience. You want to love and flirt with your audience so they can love you back.
- Use “said” instead of any other word. Don’t use “he suggested” or “he bellowed”. Just “he said.” We’ll figure it out if he suggested something.
- Paint. Or draw. Keep exercising other creative muscles.
- Let it sleep. Whatever you are working on, sleep on it. Then wake up, stretch, coffee, read, and look again. Rewrite. Take out every other sentence.
- Then take out every other sentence again. Or something like that.
Sanket didn’t want to go to grad school after we graduated. He had another plan. Lets go to Thailand, he said. And become monks in a Buddhist monastery for a year. We can date Thai women whenever we aren’t begging for food, he said. It will be great and we’ll get life experience.
It sounded good to me.
But then he got accepted to the University of Wisconsin and got a PhD. Now he lives in India and works for Oracle. And as for me, I don’t know what the hell happened to me.
10 Things I Learned While Trading for Victor Niederhoffer
10 Things I Learned While Trading for Victor Niederhoffer
I traded for Victor Niederhoffer for about a year starting in 2003. I was up slightly more than 100% for him, primarily trading futures using a quantitative approach. During that period I had one down month: June 2003.
Victor was a top trader for George Soros before starting his own fund in the ’90s and then writing the classic investment text “Education of a Speculator.” He then suffered one of several blowups in his career when his fund crashed to zero while on the wrong side of a couple of bets during the Asian currency crisis in 1997 (most notably, he was short S&P puts when the market crashed that year).
Despite that, Victor has consistently traded his own portfolio quite successfully and is one of the best traders I’ve seen in action. He still posts his daily comments on trading and the markets at his site dailyspeculations.com.
Here are 10 things I learned during my time trading for Victor:
1.) Test, test, test. Test everything you can. If someone says to me, “There’s inflation coming so you better short stocks,” I know right away the person doesn’t test and will lose money. Data is available for almost anything you can imagine. (In my talks, I always discuss the “blizzard system” based on data of what the stock market does depending on how many inches of snow have fallen in Central Park that day). Victor and his crew would spend all day testing ideas: What historically happens to the market on a Fed day? What happens on options expiration day if the two prior days were negative? Do stocks that start with the letter “x” outperform? Nothing was beyond testing.
2.) Optimism. There’s plenty of reasons every day to assume the world is going to end. The media is constantly speculating about imminent financial collapse, hyperinflation, peak oil, pandemics, terrorism, etc. One of Victor’s favorite books, which I highly recommend, is “Triumph of the Optimists,” which shows the success of the U.S. markets over the past century over other markets and asset classes. Yes, the markets take a hit. But invariably buying dips (and being careful not to get wiped out) will be a long-term strategy for success.
3.) Fearlessness. I had a big March 2003 trading for Victor. The market was threatening to go to new lows at the advent of the Iraqi war. I went long and strong and had a great month. Then, for the rest of the year, for fear of destroying a great track record, I would go up a few percentage points at the beginning of each month and then coast for the rest of the month, probably leaving another 100% or so on the table as I passed on trading many high probability situations. I always suspected Victor was very disappointed in me for that. When you have a high probability situation, trade it and trade it big.
4.) Everything Is Connected. Whether you are studying baseball, checkers, trees, wars – all contain patterns similar to the patterns we see every day in trading. Sometimes the best way to get perspective on your trading is to study something seemingly unrelated and to then consider the analogies.
5.) Ayn Rand. There’s a lot of retrospectives right now about Rand, one of Victor’s favorite authors. I don’t care much for the so-called Objectivism or Rand’s views on capitalism, but what struck me about her books was the emphasis on competence. Her novels are about competence and the personal gratification one gets by being good at what you do, whether it’s building railroads, designing a building, trading or cleaning a house.
6.) Warren Buffett. Victor is not a fan of Warren Buffett. This forced me to look at Buffett in a whole new way. Is Buffett a value investor? What other tricks of the trade has Buffett used over the years? I ended up reading every biography of Buffett, going through four decades of SEC filings, and pouring over not only his Berkshire letters but his prior letters from his hedge fund days (1957-1969). The result was my book, “Trade Like Warren Buffett.”
7.) The First Day of the Month. It’s probably the most important trading day of the month, as inflows come in from 401(k) plans, 1RAs, etc. and mutual fund have to go out there and put this new money into stocks. Over the past 16 years, buying the close on SPY (the S&P 500 ETF) on the last day of the month and selling one day later would result in a successful trade 63% of the time with an average return of 0.37% (as opposed to 0.03% and a 50%-50% success rate if you buy any random day during this period). Various conditions take place that improve this result significantly. For instance, one time I was visiting Victor’s office on the first day of a month and one of his traders showed me a system and said, “If you show this to anyone we will have to kill you.” Basically, the system was: If the last half of the last day of the month was negative and the first half of the first day of the month was negative, buy at 11 a.m. and hold for the rest of the day. “This is an ATM machine” the trader told me. I leave it to the reader to test this system.
8.) Always Protect the Downside. This is learned by negative example. As Nassim Taleb has pointed out ad nauseum, Black Swans occur. (See the Malcolm Gladwell article on Taleb to see Taleb’s thoughts on Victor.) No matter how much you test, there will be a “this time is different” moment that will force your bank account into oblivion. I trade a strategy based on selling puts and calls at levels where my software thinks its statistically unlikely the market hits those levels before the next options expirations day. But I also use some of the premium I earned from selling those puts and calls to buy slightly further out puts and calls as insurance the market doesn’t run away from me. No matter how confident the software is, always protect.
9.) Keep Life Interesting. Victor surrounds himself by games and the people who enjoy them. When I knew him, he took regular checkers lessons, played tennis every day, and has some of the oddest collections I’ve ever seen. He stands out on a crowded city street and seems to spend part of each day seeking out new and interesting experiences. He often asked me what I’d been reading and if it was trading related he was disappointed. Trading is ultimately a window into the psyche of the world at that moment. Uncovering the nuances of that psyche is ultimately more important than doing the latest test on what happens after a Fed announcement (but, on that point, tests have shown that whatever the market is doing before a 2:15p.m. Fed announcement on Fed days, chances are it will reverse after 2:15).
10.) Be Open to New Ideas. In 2002, I was still reeling from the dot-com collapse. I had sold a company near the height of the insanity in 1998 and also started a VC fund that opened up doors in March, 2000, the absolute peak of the market. I was trying to figure out new things to do. I came up with a list of about 30 people I looked up to and came up with 10 ideas for each person about how they could improve their business. To Victor, I sent a series of trading ideas that I had both backtested and had traded successfully. To Jim Cramer, I sent a list of 10 ideas for articles he should write. Of the 30 people, they were the only two who responded and ultimately I ended up managing a little bit of money for Victor and writing for Jim Cramer’s site, thestreet.com. I’m grateful for the opportunities that both people created for me.
I traded for Victor Niederhoffer for about a year starting in 2003. I was up slightly more than 100% for him, primarily trading futures using a quantitative approach. During that period I had one down month: June 2003.
Victor was a top trader for George Soros before starting his own fund in the ’90s and then writing the classic investment text “Education of a Speculator.” He then suffered one of several blowups in his career when his fund crashed to zero while on the wrong side of a couple of bets during the Asian currency crisis in 1997 (most notably, he was short S&P puts when the market crashed that year).
Despite that, Victor has consistently traded his own portfolio quite successfully and is one of the best traders I’ve seen in action. He still posts his daily comments on trading and the markets at his site dailyspeculations.com.
Here are 10 things I learned during my time trading for Victor:
1.) Test, test, test. Test everything you can. If someone says to me, “There’s inflation coming so you better short stocks,” I know right away the person doesn’t test and will lose money. Data is available for almost anything you can imagine. (In my talks, I always discuss the “blizzard system” based on data of what the stock market does depending on how many inches of snow have fallen in Central Park that day). Victor and his crew would spend all day testing ideas: What historically happens to the market on a Fed day? What happens on options expiration day if the two prior days were negative? Do stocks that start with the letter “x” outperform? Nothing was beyond testing.
2.) Optimism. There’s plenty of reasons every day to assume the world is going to end. The media is constantly speculating about imminent financial collapse, hyperinflation, peak oil, pandemics, terrorism, etc. One of Victor’s favorite books, which I highly recommend, is “Triumph of the Optimists,” which shows the success of the U.S. markets over the past century over other markets and asset classes. Yes, the markets take a hit. But invariably buying dips (and being careful not to get wiped out) will be a long-term strategy for success.
3.) Fearlessness. I had a big March 2003 trading for Victor. The market was threatening to go to new lows at the advent of the Iraqi war. I went long and strong and had a great month. Then, for the rest of the year, for fear of destroying a great track record, I would go up a few percentage points at the beginning of each month and then coast for the rest of the month, probably leaving another 100% or so on the table as I passed on trading many high probability situations. I always suspected Victor was very disappointed in me for that. When you have a high probability situation, trade it and trade it big.
4.) Everything Is Connected. Whether you are studying baseball, checkers, trees, wars – all contain patterns similar to the patterns we see every day in trading. Sometimes the best way to get perspective on your trading is to study something seemingly unrelated and to then consider the analogies.
5.) Ayn Rand. There’s a lot of retrospectives right now about Rand, one of Victor’s favorite authors. I don’t care much for the so-called Objectivism or Rand’s views on capitalism, but what struck me about her books was the emphasis on competence. Her novels are about competence and the personal gratification one gets by being good at what you do, whether it’s building railroads, designing a building, trading or cleaning a house.
6.) Warren Buffett. Victor is not a fan of Warren Buffett. This forced me to look at Buffett in a whole new way. Is Buffett a value investor? What other tricks of the trade has Buffett used over the years? I ended up reading every biography of Buffett, going through four decades of SEC filings, and pouring over not only his Berkshire letters but his prior letters from his hedge fund days (1957-1969). The result was my book, “Trade Like Warren Buffett.”
7.) The First Day of the Month. It’s probably the most important trading day of the month, as inflows come in from 401(k) plans, 1RAs, etc. and mutual fund have to go out there and put this new money into stocks. Over the past 16 years, buying the close on SPY (the S&P 500 ETF) on the last day of the month and selling one day later would result in a successful trade 63% of the time with an average return of 0.37% (as opposed to 0.03% and a 50%-50% success rate if you buy any random day during this period). Various conditions take place that improve this result significantly. For instance, one time I was visiting Victor’s office on the first day of a month and one of his traders showed me a system and said, “If you show this to anyone we will have to kill you.” Basically, the system was: If the last half of the last day of the month was negative and the first half of the first day of the month was negative, buy at 11 a.m. and hold for the rest of the day. “This is an ATM machine” the trader told me. I leave it to the reader to test this system.
8.) Always Protect the Downside. This is learned by negative example. As Nassim Taleb has pointed out ad nauseum, Black Swans occur. (See the Malcolm Gladwell article on Taleb to see Taleb’s thoughts on Victor.) No matter how much you test, there will be a “this time is different” moment that will force your bank account into oblivion. I trade a strategy based on selling puts and calls at levels where my software thinks its statistically unlikely the market hits those levels before the next options expirations day. But I also use some of the premium I earned from selling those puts and calls to buy slightly further out puts and calls as insurance the market doesn’t run away from me. No matter how confident the software is, always protect.
9.) Keep Life Interesting. Victor surrounds himself by games and the people who enjoy them. When I knew him, he took regular checkers lessons, played tennis every day, and has some of the oddest collections I’ve ever seen. He stands out on a crowded city street and seems to spend part of each day seeking out new and interesting experiences. He often asked me what I’d been reading and if it was trading related he was disappointed. Trading is ultimately a window into the psyche of the world at that moment. Uncovering the nuances of that psyche is ultimately more important than doing the latest test on what happens after a Fed announcement (but, on that point, tests have shown that whatever the market is doing before a 2:15p.m. Fed announcement on Fed days, chances are it will reverse after 2:15).
10.) Be Open to New Ideas. In 2002, I was still reeling from the dot-com collapse. I had sold a company near the height of the insanity in 1998 and also started a VC fund that opened up doors in March, 2000, the absolute peak of the market. I was trying to figure out new things to do. I came up with a list of about 30 people I looked up to and came up with 10 ideas for each person about how they could improve their business. To Victor, I sent a series of trading ideas that I had both backtested and had traded successfully. To Jim Cramer, I sent a list of 10 ideas for articles he should write. Of the 30 people, they were the only two who responded and ultimately I ended up managing a little bit of money for Victor and writing for Jim Cramer’s site, thestreet.com. I’m grateful for the opportunities that both people created for me.
Thursday, April 7, 2011
How to be THE LUCKIEST GUY ON THE PLANET in 4 Easy Steps
How to be THE LUCKIEST GUY ON THE PLANET in 4 Easy Steps
I told my dad, “I’m a lucky guy.” He said, “But are you lucky in love?” I was six years old. Love was the most disgusting thing in the world to me. What the hell was he talking about? Love was living in another neighborhood at that time. Or another planet. It would be years before Love stuck its ugly little nose into my house and said, “hello, anyone here?
Luck was all about rolling the dice. Or finding a quarter on the ground. Or seeing a double rainbow after a quick storm.
But now I’m different. I’m constantly checking in and out of the Hospital of No Luck. I’m older. I need luck to be constantly transfused into me or I run out of it. Without luck, I’m dead. For me, good luck equals happiness. On a scale of happiness from 0 to 10, I think I’m about a seven or eight. But that’s a big improvement. When I was lying on the floor here, I was probably about a zero. Or at different points in this story, I was maybe at negative. So I’m trending upwards. I get lucky when I stick to three simple goals:
My ONLY Three Goals in Life
A) I want to be happy.
B) I want to eradicate unhappiness in my life.
C) I want every day to be as smooth as possible. No hassles.
That’s it. I’m not asking for much. I need simple goals else I can’t achieve them.
There’s been at least ten times in my life that everything seemed so low I felt like I would never achieve the above three things and the world would be better off without me. Other times I felt like I was stuck at a crossroads and would never figure out which road to take. Each time I bounced back.
When I look back at these times now I realize there was a common thread. Each time there were four things, and only four things, that were always in place in order for me to bounce back. Now I try to incorporate these four things into a daily practice so I never dip low again.
THE DAILY PRACTICE
A) Physical – being in shape. Doing some form of exercise. In 2003 I woke up at 5am every day and from 5-6am I played “Round the World” on a basketball court overlooking the Hudson River. Every day (except when it rained). Trains would pass and people at 5:30am would wave to me out the window. Now, I try to do yoga every day. But its hard. All you need to do, minimally, is exercise enough to break a sweat for 10 minutes. So about 20-30 minutes worth of exercise a day. This is not to get “ripped” or “shredded”. But just to be healthy. You can’t be happy if you aren’t healthy. Also, spending this time helps your mind better deal with its daily anxieties. If you can breathe easy when your body is in pain then its easier to breathe during difficult situations. Here’s other things that are a part of this but a little bit harder:
1. Wake up by 4-5am every day.
2. Go to sleep by 8:30-9. (Good to sleep 8 hours a night!)
3. No eating after 5:30pm. Can’t be happy if indigested at night.
B) Emotional– If someone is a drag on me, I cut them out. If someone lifts me up, I bring them closer. Nobody is sacred here. When the plane is going down, put the oxygen mask on your face first. Family, friends, people I love – I always try to be there for them and help. But I don’t get close to anyone bringing me down. This rule can’t be broken. Energy leaks out of you if someone is draining you. And I never owe anyone an explanation. Explaining is draining.
Another important rule: always be honest. Its fun. Nobody is honest anymore and people are afraid of it. Try being honest for a day (without being hurtful). Its amazing where the boundaries are of how honest one can be. Its much bigger than I thought. A corollary of this is: I never do anything I don’t want to do. Like I NEVER go to weddings.
C) Mental – Every day I write down ideas. I write down so many ideas that it hurts my head to come up with one more. Then I try to write down five more. The other day I tried to write 100 alternatives kids can do other than go to college. I wrote down eight, which I wrote about here. I couldn’t come up with anymore. Then the next day I came up with another 40. It definitely stretched my head. No ideas today? Memorize all the legal 2 letter words for Scrabble. Translate the Tao Te Ching into Spanish. Need ideas for lists of ideas? Come up with 30 separate chapters for an “autobiography”. Try to think of 10 businesses you can start from home (and be realistic how you can execute them)? Give me 10 ideas of directions this blog can go in. Think of 20 ways Obama can improve the country. List every productive thing you did yesterday (this improves memory also and gives you ideas for today).
The “idea muscle” atrophies within days if you don’t use it. Just like walking. If you don’t use your legs for a week, they atrophy. You need to exercise the idea muscle. It takes about 3-6 months to build up once it atrophies. Trust me on this.
(use waiter pads to write down ideas)
D) Spiritual. I feel that most people don’t like the word “spiritual”. They think it means “god”. Or “religion”. But it doesn’t. I don’t know what it means actually. But I feel like I have a spiritual practice when I do one of the following:
1. Pray (doesn’t matter if I’m praying to a god or to dead people or to the sun or to a chair in front of me – it just means being thankful. And not taking all the credit, for just a few seconds of the day).
2. Meditate – Meditation for more than a few minutes is hard. It’s boring. Here I give tips for 60 second meditations. You can also meditate for 15 seconds by really visualizing what it would be like meditate for 60 minutes. Here’s a simple meditation: sit in a chair, keep the back straight, watch yourself breathe. If you get distracted, no problem. Just pull yourself back to your breath. Try it for 5 minutes. Then six.
3. Being grateful – I try to think of everyone in my life I’m grateful for. Then I try to think of more people. Then more. Its hard.
4. Forgiving – I picture everyone who has done me wrong. I visualize gratefulness for them (but not pity).
5. Studying. If I read a spiritual text (doesn’t matter what it is: Bible, Tao Te Ching, anything Zen related, even inspirational self-help stuff, doesn’t matter) I tend to feel good. This is not as powerful as praying or meditating (it doesn’t train your mind to cut out the BS) but it still makes me feel good.
My own experience: I can never achieve the three “simple” goals on a steady basis without doing the above practice on a daily basis. And EVERY TIME I’ve hit bottom (or close to a bottom, or I’ve been at some sort of crossroads.) and started dong the above 4 items (1991, 1995, 1997, 2002, 2006, 2008) magic would happen:
The Results
A) Within about one month, I’d notice coincidences start to happen. I’d start to feel lucky. People would smile at me more.
B) Within three months the ideas would really start flowing, to the point where I felt overwhelming urges to execute the ideas.
C) Within six months, good ideas would start flowing, I’d begin executing them, and everyone around me would help me put everything together.
D) Within a year my life was always completely different. 100% upside down from the year before. More money, more luck, more health, etc. And then I’d get lazy and stop doing the practice. And everything falls apart again. But now I’m trying to do it every day.
Its hard to do all of this every day. Nobody is perfect. I don’t know if I’ll do all of these things today. But I know when I do it, it works
I told my dad, “I’m a lucky guy.” He said, “But are you lucky in love?” I was six years old. Love was the most disgusting thing in the world to me. What the hell was he talking about? Love was living in another neighborhood at that time. Or another planet. It would be years before Love stuck its ugly little nose into my house and said, “hello, anyone here?
Luck was all about rolling the dice. Or finding a quarter on the ground. Or seeing a double rainbow after a quick storm.
But now I’m different. I’m constantly checking in and out of the Hospital of No Luck. I’m older. I need luck to be constantly transfused into me or I run out of it. Without luck, I’m dead. For me, good luck equals happiness. On a scale of happiness from 0 to 10, I think I’m about a seven or eight. But that’s a big improvement. When I was lying on the floor here, I was probably about a zero. Or at different points in this story, I was maybe at negative. So I’m trending upwards. I get lucky when I stick to three simple goals:
My ONLY Three Goals in Life
A) I want to be happy.
B) I want to eradicate unhappiness in my life.
C) I want every day to be as smooth as possible. No hassles.
That’s it. I’m not asking for much. I need simple goals else I can’t achieve them.
There’s been at least ten times in my life that everything seemed so low I felt like I would never achieve the above three things and the world would be better off without me. Other times I felt like I was stuck at a crossroads and would never figure out which road to take. Each time I bounced back.
When I look back at these times now I realize there was a common thread. Each time there were four things, and only four things, that were always in place in order for me to bounce back. Now I try to incorporate these four things into a daily practice so I never dip low again.
THE DAILY PRACTICE
A) Physical – being in shape. Doing some form of exercise. In 2003 I woke up at 5am every day and from 5-6am I played “Round the World” on a basketball court overlooking the Hudson River. Every day (except when it rained). Trains would pass and people at 5:30am would wave to me out the window. Now, I try to do yoga every day. But its hard. All you need to do, minimally, is exercise enough to break a sweat for 10 minutes. So about 20-30 minutes worth of exercise a day. This is not to get “ripped” or “shredded”. But just to be healthy. You can’t be happy if you aren’t healthy. Also, spending this time helps your mind better deal with its daily anxieties. If you can breathe easy when your body is in pain then its easier to breathe during difficult situations. Here’s other things that are a part of this but a little bit harder:
1. Wake up by 4-5am every day.
2. Go to sleep by 8:30-9. (Good to sleep 8 hours a night!)
3. No eating after 5:30pm. Can’t be happy if indigested at night.
B) Emotional– If someone is a drag on me, I cut them out. If someone lifts me up, I bring them closer. Nobody is sacred here. When the plane is going down, put the oxygen mask on your face first. Family, friends, people I love – I always try to be there for them and help. But I don’t get close to anyone bringing me down. This rule can’t be broken. Energy leaks out of you if someone is draining you. And I never owe anyone an explanation. Explaining is draining.
Another important rule: always be honest. Its fun. Nobody is honest anymore and people are afraid of it. Try being honest for a day (without being hurtful). Its amazing where the boundaries are of how honest one can be. Its much bigger than I thought. A corollary of this is: I never do anything I don’t want to do. Like I NEVER go to weddings.
C) Mental – Every day I write down ideas. I write down so many ideas that it hurts my head to come up with one more. Then I try to write down five more. The other day I tried to write 100 alternatives kids can do other than go to college. I wrote down eight, which I wrote about here. I couldn’t come up with anymore. Then the next day I came up with another 40. It definitely stretched my head. No ideas today? Memorize all the legal 2 letter words for Scrabble. Translate the Tao Te Ching into Spanish. Need ideas for lists of ideas? Come up with 30 separate chapters for an “autobiography”. Try to think of 10 businesses you can start from home (and be realistic how you can execute them)? Give me 10 ideas of directions this blog can go in. Think of 20 ways Obama can improve the country. List every productive thing you did yesterday (this improves memory also and gives you ideas for today).
The “idea muscle” atrophies within days if you don’t use it. Just like walking. If you don’t use your legs for a week, they atrophy. You need to exercise the idea muscle. It takes about 3-6 months to build up once it atrophies. Trust me on this.
(use waiter pads to write down ideas)
D) Spiritual. I feel that most people don’t like the word “spiritual”. They think it means “god”. Or “religion”. But it doesn’t. I don’t know what it means actually. But I feel like I have a spiritual practice when I do one of the following:
1. Pray (doesn’t matter if I’m praying to a god or to dead people or to the sun or to a chair in front of me – it just means being thankful. And not taking all the credit, for just a few seconds of the day).
2. Meditate – Meditation for more than a few minutes is hard. It’s boring. Here I give tips for 60 second meditations. You can also meditate for 15 seconds by really visualizing what it would be like meditate for 60 minutes. Here’s a simple meditation: sit in a chair, keep the back straight, watch yourself breathe. If you get distracted, no problem. Just pull yourself back to your breath. Try it for 5 minutes. Then six.
3. Being grateful – I try to think of everyone in my life I’m grateful for. Then I try to think of more people. Then more. Its hard.
4. Forgiving – I picture everyone who has done me wrong. I visualize gratefulness for them (but not pity).
5. Studying. If I read a spiritual text (doesn’t matter what it is: Bible, Tao Te Ching, anything Zen related, even inspirational self-help stuff, doesn’t matter) I tend to feel good. This is not as powerful as praying or meditating (it doesn’t train your mind to cut out the BS) but it still makes me feel good.
My own experience: I can never achieve the three “simple” goals on a steady basis without doing the above practice on a daily basis. And EVERY TIME I’ve hit bottom (or close to a bottom, or I’ve been at some sort of crossroads.) and started dong the above 4 items (1991, 1995, 1997, 2002, 2006, 2008) magic would happen:
The Results
A) Within about one month, I’d notice coincidences start to happen. I’d start to feel lucky. People would smile at me more.
B) Within three months the ideas would really start flowing, to the point where I felt overwhelming urges to execute the ideas.
C) Within six months, good ideas would start flowing, I’d begin executing them, and everyone around me would help me put everything together.
D) Within a year my life was always completely different. 100% upside down from the year before. More money, more luck, more health, etc. And then I’d get lazy and stop doing the practice. And everything falls apart again. But now I’m trying to do it every day.
Its hard to do all of this every day. Nobody is perfect. I don’t know if I’ll do all of these things today. But I know when I do it, it works
Why Apple Will Be The First Company to Reach a Trillion Dollar Market Cap
Why Apple Will Be The First Company to Reach a Trillion Dollar Market Cap
Various members of the NetNet crew are in and out this vacation and snow-filled week, so we've asked a few friends to fill in. The following is from hedge fund manager and financial columnist James Altucher ...
Apple [AAPL Loading... () ] is the dream company we always wished for when we were children. The messiah of companies that we never thought would come to Earth in our lifetimes.
Getty Images
Steve Jobs
When I was a kid the only thing I wanted in life was an Apple II+. When I finally got one, (my dad took one from his work and gave it to me for about six months) I did everything a young boy does with his computer.
I programmed (in BASIC) the computer to type my name over and over again. I then went to the local computer store and shoplifted Ultima III. My friends and I then copied each others games so we had a whole set of games to play with. I then skipped school incessantly in order to play games all day, my friends and I calling each other throughout the day (we all skipped school every day) in order to share the latest secrets we found while hacking our way through Castle Wolfenstein.
Fifteen years later Apple was on the verge of bankruptcy. The company I worked for (HBO) and Philip Morris, the cigarette company, were the only two companies in the city that I knew of that used primarily Macintoshes (except for the legal department, which used all PCs and every document was redlined, outlined, greenlit, in WordPerfect 7.1.1).
Gil Amelio, the CEO of the company for about 3 seconds came to visit HBO. We were all so impressed with him. The CEO of Apple! How much cooler could you get? At the time they were about this close from bankruptcy or being, at the very least, hopelessly inconsequential.
Five years before that was the Apple Newton. The head of Carnegie Mellon’s Art school said to me, “this will change the world.” And five years before that, I wrote my first term paper on this amazing little device, the Mac 512k. I also saw Steve Jobs when he visited Cornell’s Computer Science Department to get them to buy some NEXT machines. They were beautiful. Maybe still the most beautiful desktop machines I’ve ever seen.
Black cubes, super powerful. They were magic to program and experiment with. I wrote a chess program on them. Everyone surrounded Steve Jobs just to see what he looked like. I was jealous. He was young, rich, and had so much charisma you couldn’t even see past the light that shined out of him.
Getty Images
Now, I’m writing this on my last Windows-based laptop ever. I know what's going to happen. Already in my house there’s one Macbook Air. There are two IPod Touches, one iPhone, two iPads, and four or five iPods. I’ve got 10 authorized computers already for iTunes across two accounts. I download apps at least once per day, much more if you add in songs, TV shows and movies from the iTunes store. Within two weeks, before I leave on a trip for India, I will buy a Macbook Air 13” to travel with, and I know I will never go back to the HP laptops I’ve been using for almost the past 10 years.
Now lets look at the basic numbers.
This year iPad sales will probably end up being somewhere between 10 million and 12 million (they were 7.5 million at the end of last quarter.) Apple has about 40 percent gross margin on iPad sales
iPad has about 30 percent gross margin on app sales and 10 percent margin on song sales. They are selling up to 30 million apps a day.
Assume iPad is going to sell 50 million iPads next year (I’ve seen estimates ranging from 43 million to 65 million). That’s at least four times as many iPads. Lets say they only grow two times per year for the two years after that (new models, more availability worldwide, etc). That’s 200 million iPads in 2013, or 15 to 20 times what they did in 2010. Two-hundred million iPads with a 30 percent margin (currently margins on iPads are about 36 percent, but I assume they will go down) is about $30 billion in gross profits.
Assume 100 million app sales a day. Each app, on average, is about 30 cents They get 30 percent margins on an app, or about 9 cents per app. That’s $9 million in gross profits per day or about $3.5 billion per year in gross profits on app sales in 2013. Already we are at $35 billion in gross profits and that’s without counting iPhone sales, iPod sales, song sales (also about 10 cent margin per song), video sales, and of course, Mac sales.
You can’t even really make a calculation on everything else. The last few quarters: profits, Mac sales, iPod Touch sales, iPhone sales, all reached all time highs. Mac (which analysts originally thought might be cannibalized by the iPad) sales achieved double-digit growth in every worldwide market.
Next year the iPhone will be available on Verizon so will blow past all estimates
One can go on and on with the metrics of how Apple blows it away but lets just say that in 2013, iPad and app sales represent about 40 percent of Apple’s gross profits. Total gross profits could be about $80 billion (today is $25 billion). Cash flow could be about 75 percent of that (like it is today), or about $60 billion. Slap a 20 times multiple on that and you have a market cap of $1.2 trillion. That’s a shareprice of about $1200 by 2013.
We can try and model everything: Mac sales, iPod Touch sales, song sales, margins, etc. But even back of the envelope using current growth of the iPad and the app store, we can easily make a rationale for a trillion dollar market cap. The fact that iPad sales, rather than cannibalizing the Mac, has actually increased Mac sales further increases the argument. The day my dad had to take away my Apple II+, I cried. I have a 30 year relationship with Apple. I love it. I don’t think I have a real relationship with any other company on the planet. That’s why its going to be a trillion dollar market cap.
Various members of the NetNet crew are in and out this vacation and snow-filled week, so we've asked a few friends to fill in. The following is from hedge fund manager and financial columnist James Altucher ...
Apple [AAPL Loading... () ] is the dream company we always wished for when we were children. The messiah of companies that we never thought would come to Earth in our lifetimes.
Getty Images
Steve Jobs
When I was a kid the only thing I wanted in life was an Apple II+. When I finally got one, (my dad took one from his work and gave it to me for about six months) I did everything a young boy does with his computer.
I programmed (in BASIC) the computer to type my name over and over again. I then went to the local computer store and shoplifted Ultima III. My friends and I then copied each others games so we had a whole set of games to play with. I then skipped school incessantly in order to play games all day, my friends and I calling each other throughout the day (we all skipped school every day) in order to share the latest secrets we found while hacking our way through Castle Wolfenstein.
Fifteen years later Apple was on the verge of bankruptcy. The company I worked for (HBO) and Philip Morris, the cigarette company, were the only two companies in the city that I knew of that used primarily Macintoshes (except for the legal department, which used all PCs and every document was redlined, outlined, greenlit, in WordPerfect 7.1.1).
Gil Amelio, the CEO of the company for about 3 seconds came to visit HBO. We were all so impressed with him. The CEO of Apple! How much cooler could you get? At the time they were about this close from bankruptcy or being, at the very least, hopelessly inconsequential.
Five years before that was the Apple Newton. The head of Carnegie Mellon’s Art school said to me, “this will change the world.” And five years before that, I wrote my first term paper on this amazing little device, the Mac 512k. I also saw Steve Jobs when he visited Cornell’s Computer Science Department to get them to buy some NEXT machines. They were beautiful. Maybe still the most beautiful desktop machines I’ve ever seen.
Black cubes, super powerful. They were magic to program and experiment with. I wrote a chess program on them. Everyone surrounded Steve Jobs just to see what he looked like. I was jealous. He was young, rich, and had so much charisma you couldn’t even see past the light that shined out of him.
Getty Images
Now, I’m writing this on my last Windows-based laptop ever. I know what's going to happen. Already in my house there’s one Macbook Air. There are two IPod Touches, one iPhone, two iPads, and four or five iPods. I’ve got 10 authorized computers already for iTunes across two accounts. I download apps at least once per day, much more if you add in songs, TV shows and movies from the iTunes store. Within two weeks, before I leave on a trip for India, I will buy a Macbook Air 13” to travel with, and I know I will never go back to the HP laptops I’ve been using for almost the past 10 years.
Now lets look at the basic numbers.
This year iPad sales will probably end up being somewhere between 10 million and 12 million (they were 7.5 million at the end of last quarter.) Apple has about 40 percent gross margin on iPad sales
iPad has about 30 percent gross margin on app sales and 10 percent margin on song sales. They are selling up to 30 million apps a day.
Assume iPad is going to sell 50 million iPads next year (I’ve seen estimates ranging from 43 million to 65 million). That’s at least four times as many iPads. Lets say they only grow two times per year for the two years after that (new models, more availability worldwide, etc). That’s 200 million iPads in 2013, or 15 to 20 times what they did in 2010. Two-hundred million iPads with a 30 percent margin (currently margins on iPads are about 36 percent, but I assume they will go down) is about $30 billion in gross profits.
Assume 100 million app sales a day. Each app, on average, is about 30 cents They get 30 percent margins on an app, or about 9 cents per app. That’s $9 million in gross profits per day or about $3.5 billion per year in gross profits on app sales in 2013. Already we are at $35 billion in gross profits and that’s without counting iPhone sales, iPod sales, song sales (also about 10 cent margin per song), video sales, and of course, Mac sales.
You can’t even really make a calculation on everything else. The last few quarters: profits, Mac sales, iPod Touch sales, iPhone sales, all reached all time highs. Mac (which analysts originally thought might be cannibalized by the iPad) sales achieved double-digit growth in every worldwide market.
Next year the iPhone will be available on Verizon so will blow past all estimates
One can go on and on with the metrics of how Apple blows it away but lets just say that in 2013, iPad and app sales represent about 40 percent of Apple’s gross profits. Total gross profits could be about $80 billion (today is $25 billion). Cash flow could be about 75 percent of that (like it is today), or about $60 billion. Slap a 20 times multiple on that and you have a market cap of $1.2 trillion. That’s a shareprice of about $1200 by 2013.
We can try and model everything: Mac sales, iPod Touch sales, song sales, margins, etc. But even back of the envelope using current growth of the iPad and the app store, we can easily make a rationale for a trillion dollar market cap. The fact that iPad sales, rather than cannibalizing the Mac, has actually increased Mac sales further increases the argument. The day my dad had to take away my Apple II+, I cried. I have a 30 year relationship with Apple. I love it. I don’t think I have a real relationship with any other company on the planet. That’s why its going to be a trillion dollar market cap.
10 Unusual Things I Didn’t Know About Steve Jobs
10 Unusual Things I Didn’t Know About Steve Jobs
I was standing right next to Steve Jobs in 1989 and it was the closest thing I ever felt to being gay. The guy was incredibly wealthy, good looking enough to get any girl, a nerd super-rockstar who had just convinced my school to buy a bunch of NeXT machines (which, btw, were in fact the best machines to program on at the time) and I just wanted to be him. I wanted to be him ever since I had the Apple II+ as a kid. Ever since I shoplifted Ultima II, Castle Wolfenstein, and half a dozen other games that my friends and I would then rip from each other and pretend to be sick so we could stay home and play all day.
I don’t care about Apple stock. (Well, I do think it will be the first trillion dollar company). Or about his business successes. That’s boring. The only thing that matters to me is how Steve Jobs became the greatest artist that ever lived. You only get to be an artist like that by turning everything in your life upside down, by making horrible, ugly, mistakes, by doing things so differently that people will never be able to figure you out. By failing, cheating, lying, having everyone hate you, and coming out the other side with a little bit more wisdom than the rest.
So, 10 Unusual things I didn’t know about Steve Jobs.
1) Nature versus Nurture. His sister is Mona Simpson but he didn’t know it until he was an adult. Mona Simpson was one of my favorite novelists from the late 80s. Her first novel, Anywhere but Here , was about her relationship with her parents. Which, ironically, was Steve Jobs parents. But since Steve Jobs was adopted (see below) they didn’t know they were brother-sister until the 90s when he tracked her down. It’s proof (to an extent) of the nature versus nurture argument. Two kids, without knowing they were brother and sister, both having a unique sensibility of life on this planet to become among the best artists in the world in completely different endeavors. And, to me it was great that I was a fan of both without realizing (even before they realized) that they were related.
2) His father’s name is Abdulfattah Jandali. If you had to ask me what Steve Job’s father’s name was I never in one zillion years would’ve guessed that and that Steve Jobs biologically was half Syrian Muslim. For some reason I thought he was Jewish. Maybe its because I wanted to be him so I projected my own background onto him. His parents were two graduate students who I guess weren’t sure if they were ready for a kid so put him up for adoption and then a few years later had another kid (see above). So I didn’t know he was adopted. The one requirement his biological parents had was that he be adopted by two college educated people. But the couple that adopted him lied at first and turned out not to be college educated (the mom was not a high school graduate) so the deal almost fell through until they promised to send Steve to college. A promise they couldn’t keep (see below). So despite many layers of lies and promises broken, it all worked out in the end. People can save a lot of hassle by not having such high expectations and overly ambitious worries in the first place.
3) He made the game “Breakout”. If there was one thing I loved almost as much as the games on the Apple II+ it was playing Breakout on my first-generation Atari (I can’t remember, was that the Atari 2600?) And then breakout on every version of my Blackberry since 2000. If he had never done anything else in life and I had met him and he said, “I’m the guy who made Breakout”, I would’ve said, “you are the greatest genius of the past 100 years.” Funny how things turn out. He went on from Atari to form Apple. Nolan Bushnell, founder of Atari, went to form the greatest restaurant chain in the history of mankind: Chuck E. Cheese.
4) He denied paternity on his first child, claiming he was sterile. The other had to initially raise the kid using welfare checks. I have no judgment on this at all. Raising kids is hard. And when you have a kid you feel like this enormous energy and creativity you have for the world is going to get misdirected into a … little baby (Jobs’ parents must’ve felt that way as well. Like father, like son). Heck, I originally wanted my first kid to be aborted. But people change, mature, grow up. Eventually Jobs became a good father. And that’s what counts in the end. Much worse if it was the reverse. I didn’t know this either: that the Lisa computer (the “Apple III”) was named after this first child.
5) He’s a pescetarian. In other words, he eats fish but no other meat. And he eats anything else a vegetarian eats (including eggs and dairy). Turns out if you compare pescetarians with regular meat-eaters they have a 34% less chance of dying of heart disease. And if you compare vegetarians with meat eaters, they only have a 20% less chance of dying of heart disease. I think from now on I’m going to be a pescetarian, just because Steve Jobs is one. Except when I’m in Argentina. In Argentina you have to eat steak. Ted Danson and Mary Tyler Moore consider themselves pescetarians. Somehow, even the world “pescetarian” seems like it was invented in California.
6) He doesn’t give any money to charity. And when he became Apple’s CEO he stopped all of their philanthropic programs. He said, “wait until we are profitable”. Now they are profitable, and sitting on $40bb cash, and still not corporate philanthropy. I actually think Jobs is probably the most charitable guy on the planet. Rather than focus on which mosquitoes to kill in Africa (Bill Gates is already focusing on that), Jobs has put his energy into massively improving quality of life with all of his inventions. People think that entrepreneurs have to some day “give back”. This is not true. They already gave at the office. Look at the entire ipod/Mac/iphone/Disney ecosystem and ask how many lives have benefited directly (because they’ve been hired) or indirectly (because they use the products to improve their quality of life). As far as I know, Jobs has never even commented about his thoughts on charity. Good for him. As one CEO of a (currently) Fortune 10 company once told me when I had my hand out for a charitable website, “Screw charity!”
7) He lied to Steve Wozniak. When they made Breakout for Atari, Wozniak and Jobs were going to split the pay 50-50. Atari gave Jobs $5000 to do the job. He told Wozniak he got $700 so Wozniak took home $350. Again, no judgment. Young people do things. Show me someone who says he’s been honest from the day he was born and I’ll show you a liar. Its by making mistakes, having fights, finding out where your real boundaries in life are, that allow you to truly know where the boundaries are.
8) He’s a Zen Buddhist. He even thought about joining a monastery and becoming a monk. His guru, a Zen monk, married him and his wife. When I was going through some of my hardest times my only relief was sitting with a Zen group. Trying to quiet the mind to deal with the onrush of non-stop pain that was trying to invade there. The interesting thing about Jobs being a a Zen Buddhist is that most people would think that serious Buddhism and being one of the wealthiest people in the world come into conflict with each other. Isn’t Buddhism about non-attachment? Didn’t Buddha himself leave his riches and family behind?
But the answer is “no”. Its normal to pursue passions and outcomes, but just not to become overly attached to those outcomes. Being happy regardless of the outcome. A great story is the Zen master and his student walking by a river. A prostitute was there and needed to be carried over the river. The Zen master picked her up and carried her across the river and then put her down. Then the master and student kept walking. A few hours later the student was so agitated he finally had to ask, “Master, how could you touch and help that prostitute! That’s against what we believe in!” And the Master said, “I left her by the river. Why are you still carrying her?”
9) He didn’t go to college. I actually didn’t know this initially. Bill Gates and Mark Zuckerberg are the famous college dropouts that I knew about. But apparently Steve Jobs went to Reed College for one semester and then dropped out. I guess you don’t need college to program computers, make computers, build businesses, make movies, manage people, etc. (Of course, you can see all my other posts on why kids should not go to college)
10) Psychedelics. Steve Jobs used LSD at least once when he was younger. In fact, he said about the experience, it was “one of the two or three most important things I have done in my life.” Apple’s slogan for many years was “Think Different”. Maybe using a drug which tore him from the normal frame of reference taught him how to look at problems from such a unique perspective. I don’t think LSD is for everyone, but when you combine it with the innate genius the man had, plus the many ups and downs that he experienced, plus the Zen Buddhism and all of the other things above, its quite possible it all adds up to the many inventions he’s been able to produce.
Steve Jobs’ story is filled with nuance and ambiguity. People study Steve Jobs by looking at his straightforward business successes. Yes, he started Apple in a garage. Yes, he started Pixar and almost went broke with it. Yes, he started and sold Next and he was fired as CEO of Apple, and blah blah blah. But none of that will ever explain the man behind the genius. None of that will explain all the products he invented that we use today. None of that will tell us about the ipad, Toy Story, the Mac Air, the Apple II+, etc. A man’s successes can be truly understood only if we can count his tears. And unfortunately in the case of Steve Jobs, that is one task that’s impossible.
I was standing right next to Steve Jobs in 1989 and it was the closest thing I ever felt to being gay. The guy was incredibly wealthy, good looking enough to get any girl, a nerd super-rockstar who had just convinced my school to buy a bunch of NeXT machines (which, btw, were in fact the best machines to program on at the time) and I just wanted to be him. I wanted to be him ever since I had the Apple II+ as a kid. Ever since I shoplifted Ultima II, Castle Wolfenstein, and half a dozen other games that my friends and I would then rip from each other and pretend to be sick so we could stay home and play all day.
I don’t care about Apple stock. (Well, I do think it will be the first trillion dollar company). Or about his business successes. That’s boring. The only thing that matters to me is how Steve Jobs became the greatest artist that ever lived. You only get to be an artist like that by turning everything in your life upside down, by making horrible, ugly, mistakes, by doing things so differently that people will never be able to figure you out. By failing, cheating, lying, having everyone hate you, and coming out the other side with a little bit more wisdom than the rest.
So, 10 Unusual things I didn’t know about Steve Jobs.
1) Nature versus Nurture. His sister is Mona Simpson but he didn’t know it until he was an adult. Mona Simpson was one of my favorite novelists from the late 80s. Her first novel, Anywhere but Here , was about her relationship with her parents. Which, ironically, was Steve Jobs parents. But since Steve Jobs was adopted (see below) they didn’t know they were brother-sister until the 90s when he tracked her down. It’s proof (to an extent) of the nature versus nurture argument. Two kids, without knowing they were brother and sister, both having a unique sensibility of life on this planet to become among the best artists in the world in completely different endeavors. And, to me it was great that I was a fan of both without realizing (even before they realized) that they were related.
2) His father’s name is Abdulfattah Jandali. If you had to ask me what Steve Job’s father’s name was I never in one zillion years would’ve guessed that and that Steve Jobs biologically was half Syrian Muslim. For some reason I thought he was Jewish. Maybe its because I wanted to be him so I projected my own background onto him. His parents were two graduate students who I guess weren’t sure if they were ready for a kid so put him up for adoption and then a few years later had another kid (see above). So I didn’t know he was adopted. The one requirement his biological parents had was that he be adopted by two college educated people. But the couple that adopted him lied at first and turned out not to be college educated (the mom was not a high school graduate) so the deal almost fell through until they promised to send Steve to college. A promise they couldn’t keep (see below). So despite many layers of lies and promises broken, it all worked out in the end. People can save a lot of hassle by not having such high expectations and overly ambitious worries in the first place.
3) He made the game “Breakout”. If there was one thing I loved almost as much as the games on the Apple II+ it was playing Breakout on my first-generation Atari (I can’t remember, was that the Atari 2600?) And then breakout on every version of my Blackberry since 2000. If he had never done anything else in life and I had met him and he said, “I’m the guy who made Breakout”, I would’ve said, “you are the greatest genius of the past 100 years.” Funny how things turn out. He went on from Atari to form Apple. Nolan Bushnell, founder of Atari, went to form the greatest restaurant chain in the history of mankind: Chuck E. Cheese.
4) He denied paternity on his first child, claiming he was sterile. The other had to initially raise the kid using welfare checks. I have no judgment on this at all. Raising kids is hard. And when you have a kid you feel like this enormous energy and creativity you have for the world is going to get misdirected into a … little baby (Jobs’ parents must’ve felt that way as well. Like father, like son). Heck, I originally wanted my first kid to be aborted. But people change, mature, grow up. Eventually Jobs became a good father. And that’s what counts in the end. Much worse if it was the reverse. I didn’t know this either: that the Lisa computer (the “Apple III”) was named after this first child.
5) He’s a pescetarian. In other words, he eats fish but no other meat. And he eats anything else a vegetarian eats (including eggs and dairy). Turns out if you compare pescetarians with regular meat-eaters they have a 34% less chance of dying of heart disease. And if you compare vegetarians with meat eaters, they only have a 20% less chance of dying of heart disease. I think from now on I’m going to be a pescetarian, just because Steve Jobs is one. Except when I’m in Argentina. In Argentina you have to eat steak. Ted Danson and Mary Tyler Moore consider themselves pescetarians. Somehow, even the world “pescetarian” seems like it was invented in California.
6) He doesn’t give any money to charity. And when he became Apple’s CEO he stopped all of their philanthropic programs. He said, “wait until we are profitable”. Now they are profitable, and sitting on $40bb cash, and still not corporate philanthropy. I actually think Jobs is probably the most charitable guy on the planet. Rather than focus on which mosquitoes to kill in Africa (Bill Gates is already focusing on that), Jobs has put his energy into massively improving quality of life with all of his inventions. People think that entrepreneurs have to some day “give back”. This is not true. They already gave at the office. Look at the entire ipod/Mac/iphone/Disney ecosystem and ask how many lives have benefited directly (because they’ve been hired) or indirectly (because they use the products to improve their quality of life). As far as I know, Jobs has never even commented about his thoughts on charity. Good for him. As one CEO of a (currently) Fortune 10 company once told me when I had my hand out for a charitable website, “Screw charity!”
7) He lied to Steve Wozniak. When they made Breakout for Atari, Wozniak and Jobs were going to split the pay 50-50. Atari gave Jobs $5000 to do the job. He told Wozniak he got $700 so Wozniak took home $350. Again, no judgment. Young people do things. Show me someone who says he’s been honest from the day he was born and I’ll show you a liar. Its by making mistakes, having fights, finding out where your real boundaries in life are, that allow you to truly know where the boundaries are.
8) He’s a Zen Buddhist. He even thought about joining a monastery and becoming a monk. His guru, a Zen monk, married him and his wife. When I was going through some of my hardest times my only relief was sitting with a Zen group. Trying to quiet the mind to deal with the onrush of non-stop pain that was trying to invade there. The interesting thing about Jobs being a a Zen Buddhist is that most people would think that serious Buddhism and being one of the wealthiest people in the world come into conflict with each other. Isn’t Buddhism about non-attachment? Didn’t Buddha himself leave his riches and family behind?
But the answer is “no”. Its normal to pursue passions and outcomes, but just not to become overly attached to those outcomes. Being happy regardless of the outcome. A great story is the Zen master and his student walking by a river. A prostitute was there and needed to be carried over the river. The Zen master picked her up and carried her across the river and then put her down. Then the master and student kept walking. A few hours later the student was so agitated he finally had to ask, “Master, how could you touch and help that prostitute! That’s against what we believe in!” And the Master said, “I left her by the river. Why are you still carrying her?”
9) He didn’t go to college. I actually didn’t know this initially. Bill Gates and Mark Zuckerberg are the famous college dropouts that I knew about. But apparently Steve Jobs went to Reed College for one semester and then dropped out. I guess you don’t need college to program computers, make computers, build businesses, make movies, manage people, etc. (Of course, you can see all my other posts on why kids should not go to college)
10) Psychedelics. Steve Jobs used LSD at least once when he was younger. In fact, he said about the experience, it was “one of the two or three most important things I have done in my life.” Apple’s slogan for many years was “Think Different”. Maybe using a drug which tore him from the normal frame of reference taught him how to look at problems from such a unique perspective. I don’t think LSD is for everyone, but when you combine it with the innate genius the man had, plus the many ups and downs that he experienced, plus the Zen Buddhism and all of the other things above, its quite possible it all adds up to the many inventions he’s been able to produce.
Steve Jobs’ story is filled with nuance and ambiguity. People study Steve Jobs by looking at his straightforward business successes. Yes, he started Apple in a garage. Yes, he started Pixar and almost went broke with it. Yes, he started and sold Next and he was fired as CEO of Apple, and blah blah blah. But none of that will ever explain the man behind the genius. None of that will explain all the products he invented that we use today. None of that will tell us about the ipad, Toy Story, the Mac Air, the Apple II+, etc. A man’s successes can be truly understood only if we can count his tears. And unfortunately in the case of Steve Jobs, that is one task that’s impossible.
How I Screwed Yasser Arafat out of $2mm (and lost $100mm in the process)
How I Screwed Yasser Arafat out of $2mm (and lost $100mm in the process)
I needed to make one hundred million dollars pretty fast. You know how it is. There are bills to pay. There are things you want to do in life. I wanted, for instance, to work as a cashier in a bookstore. But with a twist. I would own the bookstore. I wanted to do a 90 second ad in the SuperBowl which would just be me walking around for 90 seconds saying and doing nothing. People would argue afterwards, “he could’ve used that money for charity. How selfish!” But I wouldn’t care. It was my money and I could do what I want with it. I would be teaching this grand lesson to all the people watching the Superbowl. I had no other specific desires about what I would do with one hundred million dollars. Just those two. But I knew more things would come.
At the time (1999) I had recently made money selling a company in the web services business. Among other things, my company made the website for the movie, “The Matrix”. I knew I was Neo but I wouldn’t be able to take the red pill until I had my first hundred million. That was the pill that would let me be a real person. The pill that would allow me to be fully alive.
So I came up with an idea. It was a catchphrase and I would use it many times over the next six months. “First there was the wireLINE internet. Then there was the wireLESS internet. Which would be ten times bigger.”
Those three sentences (or maybe its one if you use commas) were my path to $100 million. Here’s what you do then once you have your catchphrase. I had a business partner who wasn’t shy. So he called up 20 companies in the wireless software business and said, “We want to buy your company.” We had no money to buy anybody but if you ever let that slow you down you might as well run around naked in a football stadium with 60,000 people watching you.
One company responded. A company called “MobileLogic” out of Denver. They flew in and we took them out to breakfast at the Royalton Hotel on 44th Street. Its a fancy breakfast place. The sort of place Rupert Murdoch orders the pancakes, chews it up, spits it out without swallowing, and then orders granola to be healthy.
We’re all sitting around a table. “Its fortunate that you called,” the CEO of MobileLogic said to us. “Since Ericsson just offered us seventeen million and we’re thinking of taking it.” “Why would you take that,” I said. “We’ll offer you twenty million, half cash, half stock. That stock alone will be worth one hundred million or more once we go public. We have five other companies we’ll buy after you. You’ll be President of a major company thats going public, pronto. Ericsson is the old generation. Be apart of something new and exciting.”
I love the pancakes at the Royalton. They whip the eggs into the batter. Its fluffy and delicious. And the bacon is thick and the bacon juices spill into your mouth as you bite into it. Life was good. Jerry Levin might very well have been at the table next to us buying AOL right in front of our eyes. Thats how good life was then.
They took our offer. We quickly wrote up a binding LOI which they signed. We negotiated their salaries, their options, their earnout, everything. Now we needed to pay them twenty million dollars. We knew we could pay half the twenty in stock. So that was easy. That was a piece of paper. Now we had to come up with the other ten.
No problem. Because suddenly I had a real asset. I had a binding LOI for a company with $5-10mm in revenues (despite my propensity to remember every detail of my childhood, I can’t remember how much in revenues this company I was buying in 1999 had). There were companies going public then with zero dollars in revenues that were now worth over a hundred trillion dollars.
So, with some partners who were excellent middlemen I started going to potential investors. Mark Patterson, who was then vice chairman of CSFB and is now the head of multi-billion dollar hedge fund Maitlin-Patterson set up a conference call with a few small investors. One call he set up was with Henry Kravis, Leo Hindery, Jim McMann (CEO of 1800-Flowers) and Dennis something or other who just sold a huge Irish telecom company and was worth a random billion or so. I gave a fifteen minute talk. I described my background and the company I had sold. Then I used my catchphrase (see above) and scoped out the opportunity (“10x the size of the wireline internet”) and that was the call. Henry Kravis asked a question. I can’t remember what it was now because all I kept thinking was “you were the barbarian at the gate and now I’m the barbarian.”
Right after the call, Mark Patterson’s phone started ringing. Mark told me, “Henry wants to wire five million right now.” But we only took one from him. Too many other people wanted to invest. Everyone on that 15 minute conference call put in one million each.
At another meeting to raise money, I had to describe what we did. I wasn’t even totally sure what MobileLogic did. We protected data that was in corporate databases but was being sent out to the salesforces through wireless devices that we set up. It was pretty solid. I said, “the data goes to the satellite and then comes down to our devices.”
“I thought the data didn’t go through satellites. Doesn’t data go through cellular towers?” someone named Mamoon asked.
Uh-oh. That seemed to make more sense than satellites. “Sometimes,” I answered.
And they put five million in. Frank Quattrone put money in. Sam Waksal, Allen & Co. CMGI. The list goes on. We were the hot investment for three seconds. One guy who had initially rejected us but then saw the list of investors called me at two in the morning and said, “please let me put in a million.”
So we closed on thirty million dollars and bought our first company. Then we bought a second company. A consulting company called Katahdin. They had nothing to do with wireless but they had profits. We’d bury them in the IPO story but make use of their profits. Then we bought a third company. I can’t even remember their name but they were a spinoff from MIT. Right away we were getting calls. Aether Systems wanted to buy us but we said no. They only wanted to pay fifty million for the company. A banker at CS First Boston told us he could get us seventy five million no problem. But we didn’t even listen to him. In the elevator we laughed at him. What an old fool! We were going for an IPO.
Every bank came in with a powerpoint and a team of young people to pitch us. Goldman, CSFB, Merrill, Lehman, etc. CSFB was the front runner because Frank Quattrone was an investor but Merrill made a strong pitch. The pitch was funny. The top Merrill banker was there. He said to the associate on the deal, “John, walk them through the numbers.” And John said, “uhh, my name is Roy”. Two other things I remember from the pitch. The first was, “Henry Blodget will be the analyst on this deal. He loves wireless.” Which made no sense to me since he was an Internet consumer analyst.
The other thing I remember was the back page of the presentation. The beautiful back page. The only page that mattered. It had what my networth would be if we IPOed and the market valued us similar to Aether Systems. I would be worth something like nine hundred million dollars.
I knew exactly what bookstore I wanted to buy. It would be Shakespeare & Company on Broadway. None of the other employees would know that I would be the owner. And I would work just stacking books and being the guy at the cash register. My secret would give me infinite power.
I didn’t know how to be CEO of this company. And because I didn’t really know any of the employees of the companies we were buying I was feeling very shy. I would call my secretary before I arrived at work and ask her if anyone was in the hallway and could she please unlock my office door. Then I would hurry into the office and lock the door behind me.
Eventually they replaced me as CEO. Even later, when we had to raise up to another 70 million, they asked me to step off as a director on the board. At one point I arranged for a reverse merger to occur. We’d be public at at least at a hundred million dollar valuation. But the guy behind the reverse merger turned out to have a checkered past and had spent some time in jail in 1969 for either embezzlement or something to do with transporting fake diamonds. But thats another story.
None of this portrays me in a good light at all. Except for maybe the fact that I was a good salesman during the greatest bubble in world history. But it was decade ago and I don’t mind what people think.
But I did learn several things that became incredibly important to me later. :
A) if you have to raise thirty million to start your business, its probably not a good business (at least for me). All of my good businesses (businesses that I started that I eventually sold and made money on) started off profitable from day one and never raised a dime of money.
B) Most M&A transactions don’t work. When you buy a company, its very hard to keep the owners of the old company incentivized. 90% of acquisitions don’t work. Build your business. Don’t buy it.
C) A lesson I learn repeatedly: traveling for business almost never generates more revenues. New York (and America) are big enough places to generate revenues. You should never travel. In the course of doing this business I traveled repeatedly to the west coast, Denver, England (to try and buy a company), Sweden (where Ericsson was based), Germany (Ericsson wanted me to show up at a conference for one day), Georgia, Florida, Boston, etc etc. Not a single meeting generated any revenues for the business but wasted hundreds of hours of my life.
D) Hiring smart people doesn’t work if you aren’t smart. Everything ultimately comes form the top down.
E) Spending a lot of money on branding and marketing materials is a waste of money for a startup. If you don’t know who you are, no amount of money will create materials explaining who you are.
F) If you are going to raise thirty million for a business, then raise a hundred million if you can. Don’t turn down Henry Kravis’s five million. It doesn’t matter how badly you get diluted. If you have to raise money, take in every dime you can.
G) MOST IMPORTANT: If you raise thirty million, spend none of it. Warren Buffett once said, “if you know a business will be around 20 years from now then its probably a good investment.” With thirty million we could’ve stayed in business for 20 years or more and eventually figured ourself out. Instead, I spent forty million in the first month or so. I learned a lot, and over a hundred million was lost.
Eventually Vaultus (the name of the company. I think i forgot to mention it until now) was sold to Antenna Software. I made no money, as I rightfully shouldn’t.
Four years later, I was on a train to Boston with my business partner. It was 5 in the morning and we were going up to visit a hedge fund we were invested in. He was reading Bloomberg magazine. “Holy shit,” he said, waking me up. He showed me an article in the magazine. It was about Yasser Arafat, who had just died. Turns out he had a front corporation that was making various investments for him from the money he had somehow made off of the PLO. His largest (or second largest ) investment was two million dollars he had put into a “New York company, Vaultus, Inc.”. I can tell you for a fact his estate lost that two million. So, as they say in Brooklyn, it was good for the Jews.
I needed to make one hundred million dollars pretty fast. You know how it is. There are bills to pay. There are things you want to do in life. I wanted, for instance, to work as a cashier in a bookstore. But with a twist. I would own the bookstore. I wanted to do a 90 second ad in the SuperBowl which would just be me walking around for 90 seconds saying and doing nothing. People would argue afterwards, “he could’ve used that money for charity. How selfish!” But I wouldn’t care. It was my money and I could do what I want with it. I would be teaching this grand lesson to all the people watching the Superbowl. I had no other specific desires about what I would do with one hundred million dollars. Just those two. But I knew more things would come.
At the time (1999) I had recently made money selling a company in the web services business. Among other things, my company made the website for the movie, “The Matrix”. I knew I was Neo but I wouldn’t be able to take the red pill until I had my first hundred million. That was the pill that would let me be a real person. The pill that would allow me to be fully alive.
So I came up with an idea. It was a catchphrase and I would use it many times over the next six months. “First there was the wireLINE internet. Then there was the wireLESS internet. Which would be ten times bigger.”
Those three sentences (or maybe its one if you use commas) were my path to $100 million. Here’s what you do then once you have your catchphrase. I had a business partner who wasn’t shy. So he called up 20 companies in the wireless software business and said, “We want to buy your company.” We had no money to buy anybody but if you ever let that slow you down you might as well run around naked in a football stadium with 60,000 people watching you.
One company responded. A company called “MobileLogic” out of Denver. They flew in and we took them out to breakfast at the Royalton Hotel on 44th Street. Its a fancy breakfast place. The sort of place Rupert Murdoch orders the pancakes, chews it up, spits it out without swallowing, and then orders granola to be healthy.
We’re all sitting around a table. “Its fortunate that you called,” the CEO of MobileLogic said to us. “Since Ericsson just offered us seventeen million and we’re thinking of taking it.” “Why would you take that,” I said. “We’ll offer you twenty million, half cash, half stock. That stock alone will be worth one hundred million or more once we go public. We have five other companies we’ll buy after you. You’ll be President of a major company thats going public, pronto. Ericsson is the old generation. Be apart of something new and exciting.”
I love the pancakes at the Royalton. They whip the eggs into the batter. Its fluffy and delicious. And the bacon is thick and the bacon juices spill into your mouth as you bite into it. Life was good. Jerry Levin might very well have been at the table next to us buying AOL right in front of our eyes. Thats how good life was then.
They took our offer. We quickly wrote up a binding LOI which they signed. We negotiated their salaries, their options, their earnout, everything. Now we needed to pay them twenty million dollars. We knew we could pay half the twenty in stock. So that was easy. That was a piece of paper. Now we had to come up with the other ten.
No problem. Because suddenly I had a real asset. I had a binding LOI for a company with $5-10mm in revenues (despite my propensity to remember every detail of my childhood, I can’t remember how much in revenues this company I was buying in 1999 had). There were companies going public then with zero dollars in revenues that were now worth over a hundred trillion dollars.
So, with some partners who were excellent middlemen I started going to potential investors. Mark Patterson, who was then vice chairman of CSFB and is now the head of multi-billion dollar hedge fund Maitlin-Patterson set up a conference call with a few small investors. One call he set up was with Henry Kravis, Leo Hindery, Jim McMann (CEO of 1800-Flowers) and Dennis something or other who just sold a huge Irish telecom company and was worth a random billion or so. I gave a fifteen minute talk. I described my background and the company I had sold. Then I used my catchphrase (see above) and scoped out the opportunity (“10x the size of the wireline internet”) and that was the call. Henry Kravis asked a question. I can’t remember what it was now because all I kept thinking was “you were the barbarian at the gate and now I’m the barbarian.”
Right after the call, Mark Patterson’s phone started ringing. Mark told me, “Henry wants to wire five million right now.” But we only took one from him. Too many other people wanted to invest. Everyone on that 15 minute conference call put in one million each.
At another meeting to raise money, I had to describe what we did. I wasn’t even totally sure what MobileLogic did. We protected data that was in corporate databases but was being sent out to the salesforces through wireless devices that we set up. It was pretty solid. I said, “the data goes to the satellite and then comes down to our devices.”
“I thought the data didn’t go through satellites. Doesn’t data go through cellular towers?” someone named Mamoon asked.
Uh-oh. That seemed to make more sense than satellites. “Sometimes,” I answered.
And they put five million in. Frank Quattrone put money in. Sam Waksal, Allen & Co. CMGI. The list goes on. We were the hot investment for three seconds. One guy who had initially rejected us but then saw the list of investors called me at two in the morning and said, “please let me put in a million.”
So we closed on thirty million dollars and bought our first company. Then we bought a second company. A consulting company called Katahdin. They had nothing to do with wireless but they had profits. We’d bury them in the IPO story but make use of their profits. Then we bought a third company. I can’t even remember their name but they were a spinoff from MIT. Right away we were getting calls. Aether Systems wanted to buy us but we said no. They only wanted to pay fifty million for the company. A banker at CS First Boston told us he could get us seventy five million no problem. But we didn’t even listen to him. In the elevator we laughed at him. What an old fool! We were going for an IPO.
Every bank came in with a powerpoint and a team of young people to pitch us. Goldman, CSFB, Merrill, Lehman, etc. CSFB was the front runner because Frank Quattrone was an investor but Merrill made a strong pitch. The pitch was funny. The top Merrill banker was there. He said to the associate on the deal, “John, walk them through the numbers.” And John said, “uhh, my name is Roy”. Two other things I remember from the pitch. The first was, “Henry Blodget will be the analyst on this deal. He loves wireless.” Which made no sense to me since he was an Internet consumer analyst.
The other thing I remember was the back page of the presentation. The beautiful back page. The only page that mattered. It had what my networth would be if we IPOed and the market valued us similar to Aether Systems. I would be worth something like nine hundred million dollars.
I knew exactly what bookstore I wanted to buy. It would be Shakespeare & Company on Broadway. None of the other employees would know that I would be the owner. And I would work just stacking books and being the guy at the cash register. My secret would give me infinite power.
I didn’t know how to be CEO of this company. And because I didn’t really know any of the employees of the companies we were buying I was feeling very shy. I would call my secretary before I arrived at work and ask her if anyone was in the hallway and could she please unlock my office door. Then I would hurry into the office and lock the door behind me.
Eventually they replaced me as CEO. Even later, when we had to raise up to another 70 million, they asked me to step off as a director on the board. At one point I arranged for a reverse merger to occur. We’d be public at at least at a hundred million dollar valuation. But the guy behind the reverse merger turned out to have a checkered past and had spent some time in jail in 1969 for either embezzlement or something to do with transporting fake diamonds. But thats another story.
None of this portrays me in a good light at all. Except for maybe the fact that I was a good salesman during the greatest bubble in world history. But it was decade ago and I don’t mind what people think.
But I did learn several things that became incredibly important to me later. :
A) if you have to raise thirty million to start your business, its probably not a good business (at least for me). All of my good businesses (businesses that I started that I eventually sold and made money on) started off profitable from day one and never raised a dime of money.
B) Most M&A transactions don’t work. When you buy a company, its very hard to keep the owners of the old company incentivized. 90% of acquisitions don’t work. Build your business. Don’t buy it.
C) A lesson I learn repeatedly: traveling for business almost never generates more revenues. New York (and America) are big enough places to generate revenues. You should never travel. In the course of doing this business I traveled repeatedly to the west coast, Denver, England (to try and buy a company), Sweden (where Ericsson was based), Germany (Ericsson wanted me to show up at a conference for one day), Georgia, Florida, Boston, etc etc. Not a single meeting generated any revenues for the business but wasted hundreds of hours of my life.
D) Hiring smart people doesn’t work if you aren’t smart. Everything ultimately comes form the top down.
E) Spending a lot of money on branding and marketing materials is a waste of money for a startup. If you don’t know who you are, no amount of money will create materials explaining who you are.
F) If you are going to raise thirty million for a business, then raise a hundred million if you can. Don’t turn down Henry Kravis’s five million. It doesn’t matter how badly you get diluted. If you have to raise money, take in every dime you can.
G) MOST IMPORTANT: If you raise thirty million, spend none of it. Warren Buffett once said, “if you know a business will be around 20 years from now then its probably a good investment.” With thirty million we could’ve stayed in business for 20 years or more and eventually figured ourself out. Instead, I spent forty million in the first month or so. I learned a lot, and over a hundred million was lost.
Eventually Vaultus (the name of the company. I think i forgot to mention it until now) was sold to Antenna Software. I made no money, as I rightfully shouldn’t.
Four years later, I was on a train to Boston with my business partner. It was 5 in the morning and we were going up to visit a hedge fund we were invested in. He was reading Bloomberg magazine. “Holy shit,” he said, waking me up. He showed me an article in the magazine. It was about Yasser Arafat, who had just died. Turns out he had a front corporation that was making various investments for him from the money he had somehow made off of the PLO. His largest (or second largest ) investment was two million dollars he had put into a “New York company, Vaultus, Inc.”. I can tell you for a fact his estate lost that two million. So, as they say in Brooklyn, it was good for the Jews.
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