Category Archives: startups

Only In The Valley

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When I am driving there is a strong chance that I am on the phone. About a month and half ago I got a ticket and had to pay close to $ 200.  Yesterday, a cop pulled me over for speaking on the phone.

At first I tried different excuses.  The office responds: “execuses are for girls, I am a Green Beret”.  At this point I knew I was dealing with a Grade A Jackass.  Then the officer proceeds to ask for insurance card which I did not have on me.  He then tells me: “missing an insurance card in California is a $ 1,000 fine”.  Now I knew I was fucked.

I tried one strategy after another, and then I mentioned that I am working on a startup.  Then the Green Beret/Police Office responds that he is also working on a startup.  A startup that kills animals in order to teacher first responders how to perform first aid in real situations.

Soon we were talking startups on the side of a major road for the next 10 minutes.   Afterwards my fine went from a range of $300-$1000 to a more manageable $40- $60.

From taxi drivers to developers to police officers everybody out here is working on something.

Why Quora is Undervalued at 400 Million

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Signal to noise ratio.

Google had over 10 billion dollars in revenue in the previous quarter because people have questions and they look for instant answers on the world wide web.  Google has came up with a genius way to rank the best results and make money off advertisers who offer products similar to those results.

Recently an article was written how Google is a “Magic Money Making Machine” and how Facebook ads suck.  Despite close to 1 billion users, Facebook is only making four billion dollars a year on advertising.  Google makes close to that in one month.  The article described Facebook ads as “It’s like you’re at a party, standing around, talking to your friends, and someone made the posters on the wall advertisements“

With only 4 billion in advertising revenue Facebook was initially valued at 100 billion.  Google is valued at 188 billion.  Quora is valued at 400 million.

What is Quora: A high quality question and answer website.  Ask  questions and receive quality responses from experts.  Numerous people could respond and the community curates the responses by upvoting and downvoting answers. Quora offers a symbiotic relationship: you need credits to ask questions and you earn credits from answering questions.

Last night I watched season finale of Game of Thrones.  At the end, all I could say is WOW.  I wanted to know how HBO time and time again creates the best shows on TV (Entourage, Curb, Sopranos).  Instead of doing a Google search I posed the question on Quora.

Today I got a response that completely answered my question and then some:

“They find a really talented person named David (David Chase, Larry David, David Milch,  David Simon and David Benioff) and then they give them some money, tell them to make great TV shows and then get the hell out of their way. 

Networks use focus groups, committees, layers of executives etc to dilute a show and try and give it mass appeal. The end results lack creative vision and have no original bite. But HBO (and Showtime) trust a talented person to deliver them a great show and they pretty much leave them to it. The results are usually fantastic.”

Future of Quora- More than Facebook or any other company Quora has the potential to become the Google 2.0 .  A fully mobile near instant search company (nobody wants to wait 12 hours for responses even if high quality).  A search company that display high quality responses to anything that the average person would normally go to Google for.  In order to prevent gaming such as SEO the Quora community would be essential in order to curate, upvote and downvote, the best and worst responses.

Quora does not have to revinvent the wheel to monetize.  All they have to do is follow Google’s playbook with relevant ads alongside the community response.  Or people can pay a virtual currency to send questions directly to the best experts (similar to Zynga).

With time and executed correctly Quora has the potential to be the next big Silicon Valley company that changes the world.  Instead of asking about HBO television shows somebody could ask “how to use social media to start the next revolution in Palo Alto”.

Self Motivating Mondays

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Going to list a set of goals for the week.  If I do not accomplish all of them I will donate $ 50 to a charity.  Either somebody can suggest one or I will pick.  I have until this Sunday night where I wil let you know if I have accomplished the goals and if I did not which charity it will go towards.

1) Learn how to do basic front end programming.

2) Test out and deploy two new concepts.

3) A solid good deed of the week for somebody random that I a have never met.

4) Create a mobile friendly version of this blog with StumbleUpon sharing.

Losing 30k: When is A Deal Done?

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When is a deal done? Is it complete when you shake hands, sign a contract or money is exchanged?

About 4 months ago I had closed a venture deal for a Middle Eastern company.  The company was going  to land a 1 million dollars investment in return for giving away a set percentage of equity and relocation of the company HQ.

We agreed to terms in December.  In January,they began to work on the due diligence behind the investment.  The investor group visited the company offices, went over the books, and met the senior team.  Subsequently, they started working on the final legal due diligence and then the money had been allocated to be transferred once the deal closed.

As of a week ago, the firm  more or less is closing down; the director is stepping down, and they are now freezing any new investments.

Venture Deals

Burning Contract

I consulted on the entire project and have spent time both on the phone and traveling to lead the deal, negotiate the terms, and make sure all parties agree on terms.  Now that the deal is over, I am out the $ 30,000 I was set to receive on the final terms.

This saga focuses on my original question.  When is a deal done?  If you say a handshake, it is only as good as a person’s word.  A person’s word is only as good as the person, considering most people are liars, and those that are not, will put their own welfare above any agreement or handshake then a handshake is useless.

Most of the time a contract is worth less than the paper it was signed on.  In order to enforce a contract you will have to pay very expensive lawyers who charge by the hour.  After adding in lawyer fees any amount you would have made will go to a lawyer’s next European vacation.  In addition, if a company goes bankrupt, there is nothing even the best lawyers can do.

Unless you are dealing with a major public company, a deal only closes when money is transferred into your company’s account.

A deal is not done until the “Fat Lady Sings” and the “Fat Lady” is only singing once the money reaches your bank.

 

An Idea for Somebody to Do

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Around 12 years ago the Washington Post company bought Atlanta based Quest education commonly known as Kaplan for $ 165 million dollars.  Fast forward 10 years and now the education company accounts for majority of Washington Post profits and is worth billions of dollars.  Although commonly known as a test prep company, Kaplan earns the majority of its money operating both in person and online vocational schools for low income students.

In Silicon Valley everybody is speaking about low cost online education.  You have seen many startups that are supposed to teach people to code and program.  Two well funded sites are: http://www.codecademy.com/ and http://teamtreehouse.com/ .  Millions of people have tried, but what is the real number of people that actually learned to code from these sites.   Nobody has published them and if the numbers were good, both of these startups would find a way to get the word out about these success stories.

On the other hand, there is a startup called Dev Bootcamp which is an in person 10 week program that offers 400+ hours of teaching how to code in a structured program format.  Here is the kicker: at the end of the program 14 out of the 17 that complete where offered jobs.  Now where this gets wild: the average starting salary for these first time coders was $79,000.  Wow.

The idea is a similar program in the format of Kaplan rolled out on a national level.  A centralized guide and format with decentralised teachers and classrooms along the same lines as Kaplan.  Unemployment rate is 8.1%.  Not only is this a billion dollar company as demonstrated by Kaplan, but it could make a major difference in quality of life  for millions of non/under employeed people.

Great Article on Lines from Breck Yunit

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Look for a Line

“A good friend passed along some business advice to me a few months ago. “Look for a line,” he said. Basically, if you see a line out the door at McDonald’s, start Burger King. Lines are everywhere and are dead giveaways for good business ideas and good businesses.

Let’s use Groupon as a case study for the importance of lines. Groupon scoured Yelp for the best businesses in its cities–the businesses that had virtual lines of people writing positive reviews–and created huge lines for these businesses with their discounts. Other entrepreneurs saw the number of people lining up to purchase things from Groupon and created a huge line of clones. Investors saw other investors lining up to buy Groupon stock and hopped in line as well. Business is all about lines.

In every country we travel to I look around for lines. It’s a dead giveaway for finding good places to eat, fun things to do, amazing sites to see. If you want to start a business, look for lines and either create a clone or create an innovation that can steal customers from that line. If you see tons of people lining up to take taxis, start a taxi company. Better yet, start a bus.”

What about creating fake lines?

 

GBWG

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Ground Balls Win Games

What separates the winners from the losers.  Drive, talent, and luck.  So what separates the successful from the super successful?  If you are playing in a field with the best of the best and under the assumption that everybody is driven and highly talented what separates the gamechangers from the others.

Ground Balls Win Games.  It is the person that hustles for everything, that moves now instead of tomorrow, that goes after everything possible under the sun in order to one day own the sun.  In baseball their are many groundballs that are impossible.  Most players let the impossible ones go and give their best on the difficult but achievable ones.  However, it is the Derek Jeters who jump 3 rows into the stands for the impossible foul ball, bloody and bruised, but scoring a vital playoff victory.

Ground Balls Win Games is also seen in many people who usually from nothing became industry leaders.  Once they say something you always know it is done, not in days or weeks but hours.  An easy way to spot these GBWG people is in business.  People who send quick replies with quick action oriented statements are GBWG people.

I have 2 recent examples.  When I have certain questions I email with somebody in Silicon Valley who founded the first major Silicon Valley law firm, is on the board of many of the legendary valley companies,  and was a close advisor to Steve Jobs.  You would think somebody of such stature would have so much on his plate that it would take awhile to hear back.  The average time (I counted) to hear back from this guy was 52 minutes.  Compare that to average response for the average person you work with.

Second example centers around a prolific VC who is not only highly visible but is also one of the most sought after people in the industry.  I send an email and within a few hours I hear back.

I know neither person professionally or informally.  Both people are examples of Ground Balls Win Games.  Both people are Jeter’s of their respective industry.  GBWG does not separeate winners from loosers, it seperates the cream of the crop, the leaders from the followers.

For the Love of The Game

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There is a place in Mountainview, California called HackerDojo.  HackerDojo as the name suggests is a shared work space for hackers.  There are many such places all around the world.  However, I have never seen anything like HackerDojo.  If you look at all the other shared offices spaces from Dubai to NYC, they are just that shared work spaces where people come in and leave when they are done with a day’s work.

However, at HackerDojo the people are there all the time, they drink and bbq with each other on Fridays, plan events together on Saturdays and the difference is they are not there until 6am working on a startup but also on personal projects that they are curious about.  Rarely have I seen people pulling the all nighter for a startup (once in awhile or a few days for short period), but I have never seen people stay up all night to build for fun. This is not people building in a living room with a lamp on and TV on mute, but this is a large group of people staying up all night just building to build.

This has lead me to reflect on 3 types of people in this world.

1) Those who work to live

2) Those who live to work

3) Those who work for the love of the game

1) Most of Europe with the capital of this group in Barcelona (where I first heard the term) These people do the minimal amount required to earn enough money to enjoy their lives, their family, their vacation, and the beaches. Category 1 makes up vast majority of people.

2) Highly talented ambitous people.  They work hard and get shit done.  These are often the executers who occupy senior leadership positions in most companies or governments.  They do not inspire but they are great at what they do and they usually make sure they are working with other great people as well.  Some tend to be mercenaries and jump at the next opportunity that arises.

3) The best founders, visionaries, hackers, teachers,leaders, athletes and rainmakers.  They are only there every day because they love what they do.  These people can range from a founder of a startup to a teacher in the inner city.  They work the hardest, are the most enthusiastic, and set the tone for the entire company/class/workforce.   They work 24/7 but it is not work for them, it’s fun.  Think Michael Jordan, Steve Jobs, and Thomas Edison.  The key to success of most enterprises lives and dies with these people.

Last night I heard the founder of Zaarly speak about one of his biggest worries is that after the age of 50, people his company will begin to loose its unique culture.  I think what he is referring to was at a certain point you have holes in an organization and you begin to fill them with people in the first category, the 9-5′s, and once you loose something most often there is no way to get it back.

#FortheLoveofthegame