Archive | July, 2012

Ghandi

28 Jul

“Live as if you were to die tomorrow. Learn as if you were to live forever.”
—Mahatma Gandhi

Goal Achievement Quote – July 28, 2012
by Paul Mark Sutherland

Fred Wilson’s Post on Diversification

27 Jul

The Power Of Diversification

I have written about this topic before but it’s important and I want to say it again.

Investing in startups is risky. If you make just one investment, you are likely going to lose everything. If you make two, you are still likely to lose money. If you make five, you might get all your money back across all five investments. If you make ten, you might start making money on the aggregate set of investments.

The math behind this is pretty simple. If you assume that the average startup has a 33% chance of making money for the investors, a 33% chance of returning capital, and a 33% chance of losing everything and that only 10% will make a big return (>10x), then you canmodel this out.

Model startup portfolio

All the profit in that ten investment portfolio comes from the big winner. If you don’t make that investment, you would have made nine investments for a total of $450,000 and you would have gotten back $450,000. You would have been better keeping the money in the bank.

So you need to make enough investments to be confident that you will get at least one big winner. And so that means making enough bets.

There’s another important aspect of this. You should invest roughly the same amount in every investment. Don’t try to pick the winners at the time of investment by putting more in the ones that are “sure things” and less in the ones you are less sure about. The only sure thing about startup investing is that there are no “sure things.”

Let’s look at the same portfolio with a set of random initial investment amounts.

Model portfolio with inconsistent investments

You can see that even with the same set of outcomes for each investment, the amount invested in each one has a big impact on the total return of the portfolio. It really all comes down to how much you have invested in your big winner. And since I do not believe you can predict which one will be your big winner, my view is you want to be as consistent as possible with your investment amounts.

When you are an investor, there are days when some of your investments are doing great and some are doing badly. If you are broadly diversified, those days are easier to take. If you are all in on one investment, then those days are brutal. Entrepreneurs go all in and are rewarded accordingly when they hit it. Investors should not go all in. They should be

Angel Fundraising for Entrepreneurs

25 Jul

Director of the New York Angels, Thomas Wisniewski, offers his views on fundraising;

http://www.slideshare.net/Thomaswis/20120719-ga-angel-fundraising-vf

I did an internship under Tom for his NY Angel investments and he is a very brilliant investor.

Learning from Entrepreneurs Abroad

22 Jul

Interesting article…see what you have to learn!

What American Entrepreneurs Can Learn From Their Foreign Counterparts

Tenacious via Steve Blank

19 Jul

Tenacious.

via Tenacious.

Listening Skills

17 Jul

Osman Rashid, founder of Chegg, discusses what he looks for in a new hire;

Rashid: I look for things like, do people speak more than they listen? If I say something to them, how much did they retain of what I asked? I think one of the fundamental problems with most people is that they speak too much and they don’t listen enough. Unless you are listening, you are not going to solve a problem.

source-  “Venture Capitalists at Work”.

I have to agree with Rashid. I think listening skills are one of the most underrated and undervalued skills in a person. In finance, and the broader world of business, the culture is such that the person talking with a sense of authority must be right. Often times, it’s the understated comment from the intern in the corner, that’s spot on!  Every now and again, if you find yourself with too much “food on your plate,” take a breath, and pretend to be a fly on the wall- observe, listen, take it all in!

Natural Ideas

16 Jul

I have been pretty fascinated lately by the study of Biomimicry and the applications for entrepreneurs and innovators.

Biomimicry in it’s simplest form  is the examination of nature, its models, systems, processes, and elements to emulate or take inspiration from in order to solve human problems.

Apparently, the tiny hooks on the burrs of the Common Burdock plant provided the inspiration for the creation of Velcro!

         

      

“The hook-loop fastener was invented in 1948 by Swiss engineer, George de Mestral. The idea came to him after he took a close look at the Burdock seeds which kept sticking to his clothes and his dog’s fur on their daily summer walks in the Alps. He examined their condition and saw the possibility of binding two materials reversibly in a simple fashion. He developed the hook and loop fastener and submitted his idea for patent in 1951. It was then granted in 1955. De Mestral named his invention “VELCRO” after the French words velours, meaning ‘velvet’, and crochet, or ‘hook’. The uses and applications of the product are numerous. Today, the VELCRO mark is the subject of more than 300 trademark registrations in over 160 countries.” From Wikipedia.

The Kingfisher bird  inspired the design of the Bullet train in Japan-

Inspiration from nature…a beautiful concept!

http://earthsky.org/earth/sunni-robertson-on-how-a-kingfisher-inspired-a-bullet-train