Archive for the ‘passion’ Category

Flame out or become a $1Bil business

Saturday, September 19th, 2009

VCs take a porfolio approach to managing risk; individual company is largely irrelevant because of diversification effects. In fact, one of my portfolio companies was once rejected by Sequoia because, “You’ll almost certainly build a nice $100 million business. But we’d rather have a riskier investment that either flames out or becomes a $1 billion business.” Thus the key metric is expected value.

Quotable quotes, from 21 Million Reasons For Mint To Sell via CloudAve.

I’ve blogged before about Vinod Khola’s video here (iinnovate’s interview), where in it he says one of the problems he notices in entrepreneurs is that they don’t dream big enough. Just recently Sarah Lacy wrote that the consensus of the recent TC50 panel is that nobody was “swinging for the fences“, everyone just playing it safe–basically dreaming small.

Sarah writes:

Here’s why this matters: Start-ups by definition don’t have the experience, market position, funding or resources to tackle obvious market opportunities. If what they’re trying to do makes clear business sense, a bigger, better-positioned company would do it. A start-up’s only edge is that it’s not built into legacy businesses and preconceived notions and can do something, well, crazy.

There are entrepreneurs somewhere building the next big companies. But it’s probably just a wonky side-project that no one—not even the entrepreneur himself—realizes is the next big thing. That’s who we need to drag on stage next year.

I agree, if it’s an obvious opportunity, someone’s already on it. We need more crazy people working on crazy ideas.

Vinod Khosla on problem solving: You don’t solve all problems before you jump into a new situation. You just believe in yourself, and say, “I’ll figure it out, one way or another”. Vinod had no idea how he was going to pay for fees and rent when he got accepted to the Stanford GSB. To me, this is the “leap of faith” advice entrepreneurs talk about. You just got to jump.

Excerpt: Larry Page’s Commencement Speech

Sunday, May 10th, 2009

Full post can be found here.

You know what it’s like to wake up in the middle of the night with a vivid dream? And you know how, if you don’t have a pencil and pad by the bed to write it down, it will be completely gone the next morning?Well, I had one of those dreams when I was 23. When I suddenly woke up, I was thinking: what if we could download the whole web, and just keep the links and… I grabbed a pen and started writing! Sometimes it is important to wake up and stop dreaming.

I spent the middle of that night scribbling out the details and convincing myself it would work. Soon after, I told my advisor, Terry Winograd, it would take a couple of weeks to download the web — he nodded knowingly, fully aware it would take much longer but wise enough to not tell me. The optimism of youth is often underrated! Amazingly, I had no thought of building a search engine. The idea wasn’t even on the radar. But, much later we happened upon a better way of ranking webpages to make a really great search engine, and Google was born.When a really great dream shows up, grab it!

When I was here at Michigan, I had actually been taught how to make dreams real! I know it sounds funny, but that is what I learned in a summer camp converted into a training program called Leadershape. Their slogan is to have a “healthy disregard for the impossible”. That program encouraged me to pursue a crazy idea at the time: I wanted to build a personal rapid transit system on campus to replace the buses. It was a futuristic way of solving our transportation problem. I still think a lot about transportation — you never loose a dream, it just incubates as a hobby. Many things that people labor hard to do now, like cooking, cleaning, and driving will require much less human time in the future. That is, if we “have a healthy disregard for the impossible” and actually build new solutions.

I think it is often easier to make progress on mega-ambitious dreams. I know that sounds completely nuts. But, since no one else is crazy enough to do it, you have little competition. There are so few people this crazy that I feel like I know them all by first name. They all travel as if they are pack dogs and stick to each other like glue. The best people want to work the big challenges. That is what happened with Google. Our mission is to organize the world’s information and make it universally accessible and useful. How can that not get you excited? But we almost didn’t start Google because my co-founder Sergey and I were too worried about dropping out of our Ph.D. program. You are probably on the right track if you feel like a sidewalk worm during a rainstorm! That is about how we felt after we maxed out three credit cards buying hard disks off the back of a truck. That was the first hardware for Google. Parents and friends: more credit cards always help. What is the one sentence summary of how you change the world? Always work hard on something uncomfortably exciting!

As a Ph.D. student, I actually had three projects I wanted to work on. Thank goodness my advisor said, “why don’t you work on the web for a while”. He gave me some seriously good advice because the web was really growing with people and activity, even in 1995! Technology and especially the internet can really help you be lazy. Lazy? What I mean is a group of three people can write software that millions can use and enjoy. Can three people answer the phone a million times a day? Find the leverage in the world, so you can be more lazy!

Shai’s Divide and Conquer!

Monday, April 13th, 2009

Shai Agassi is a real genius—one of my rock stars that I’m just dying to meet. I’ve already got to meet the other big name in electric cars, Elon Musk from Tesla.

He has said before that he’s good at break big problems into smaller problems, solving the pieces, then aggregating the results. I’m not familiar with his work at SAP, but clearly he’s proved this with his divide-and-conquer approach to problem solving here. Computer scientists make some of the best problem solvers out there.

In this TED talk, Shai talks about a shift in thinking: viewing the electric car’s battery a discrete unit that’s interchangeable, vs. today’s mentality where the car is one with the fuel tank (who would buy a car without a fuel tank, or vice versa?)

I’ve previously blogged about unbundling production from delivery before with examples of Amazon.com and it’s IT infrastructure, mobile phones as a poverty buster, and this is kind of like that, but with other concepts tied in – e.g. subsidized pricing (e.g. like how cell phones are subsidized by carriers).

The analogy Elon Musk uses (I can’t find where he said this, but I swear I remember him saying this), is like air travel today. I can fly to Europe from California for $500. But that’s because I’m not the first person to ever fly on that plane, nor will I be the last; the same air plane gets reused over and over for many flights. The point here is that the owner of the plane doesn’t have to recoup the cost of the plane with a single flight, it is done over a period of time. The higher the utilization rate, the faster they recoup the investment.

That’s why Elon’s SpaceX goal of building a reusable rocket is so revolutionary (most people don’t realize this) and is an important step for man-kind. Imagine being able to fly to the moon or other planets in our solar system for the price of a flight ticket?

Back to Better Place. In Shai’s talk, he shows how battery for electric cars follow a Moore’s law-like curve; battery prices will drop as its technology increases. By unbundling the ownership of the car and the battery, you can increase the utilization rate per battery which result in people owning these cars having access to the latest and most efficient battery at that time (vs. someone stuck with the same battery for the lifespan of the car). Small but important point.

Shai’s a very cool guy who is literally, changing the world. I’m a big fan.

Check out his TED talk if you haven’t already!

The Entrepreneur And The Scientist

Sunday, December 21st, 2008

“How was your year?” brings them a small but containable spasm of pain deep inside, since almost all of their years will seem wasted to someone looking at their life from the outside.

Startup entrepreneurs and scientists share at least one important thing in common—positive “lumpy” outcomes. They toil away day in and day out, waiting to hit that pay dirt. Most of them will fail, but for the very few who succeed—it was all worth it. For the scientist, it may be finding that cure for cancer; for the entrepreneur, it may be that 7-10 X acquisition or IPO, or having successfully “changed the world”.

Granted, women have it harder than men for many things in life (men don’t have to worry about makeup, and not so much about what to wear since it’s pretty standard), but being a guy doesn’t come without its own set of challenges.

Here’s an excerpt from the book “The Black Swan“, by Nassim Nicholas Taleb. It’s a great book, I was inspired to read it after reading about his specialization in randomness (had I gone for my graduate degree, I would have wanted to specialize in non-linear dynamics and chaos theory). It’s rather lengthy, but I know this will strike a chord with entrepreneurs.

***

Umberto Eco’s Antilibrary: Living In The Antechamber Of Hope

Every morning you leave your cramped apartment in Manhattan’s East Village to go to your laboratory at the Rockefeller University in the East Sixties. You return late evening, and the people in your social network ask you if you had a good day, just to be polite. At the laboratory, people are more tactful. Of course you did not have a good day; you found nothing. You are not a watch repairman. Your finding nothing is very valuable, since it is part of the process of discovery-hey, you know where not to look. Other researchers, knowing your results, would avoid trying your special experiment, provided a journal is thoughtful enough to consider your “found nothing” as information and publish it.

Meanwhile your brother-in-law is a salesman for a Wall Street firm, and keeps getting large commissions—large and steady commissions. “He is doing very well,” you hear, particularly from your father-in-law, with a small pensive nanosecond of silence after the utterance-which makes you realize that he just made a comparison. It was involuntary, but he made one.

Holidays can be terrible. You run into your brother-in-law at family reunions and, invariably, detect unmistakable signs of frustrations on the part of your wife, who, briefly, fears that she married a loser, before remembering the logic of your profession. But she has to fight her first impulse. Her sister will not stop talking about their renovations, their new wallpaper. Your wife will be a little more silent than usual on the drive home. This sulking will be made slightly worse because the car you are driving is rented, since you cannot afford to garage a car in Manhattan.

What should you do? Move to Australia and thereby make family reunions less frequent, or switch brother-in-laws by marrying someone with a less “successful” brother? Or should you dress like a hippie and become defiant? That may work for an artist, but no so easily for a scientist or a businessman. You are trapped.

You work on a project that does not deliver immediate or steady results; all the while, people around you work on projects that do. You are in trouble. Such are the lot of scientists, artists, and researchers lost in society rather than living in an insulated community or an artist colony.

Positive lumpy outcomes, for which we either collect big or get nothing, prevail in numerous occupations, those invested with a sense of mission, such as doggedly pursuing (in a smelly laboratory) the elusive cure for cancer, writing a book that will change the way people view the world (while living hand to mouth), making music, or painting miniature icons on subway trains and considering it a higher form of art despite the diatribes of the antiquated “scholar” Harold Bloom.

If you are a researcher, you will have to publish inconsequential articles in “prestigious” publications so that others say hello to you once in a while when you run into them at conferences. If you run a public corporation, things were great for you before you had shareholders, when you and your partners were the sole owners, along with the savvy venture capitalists who understood uneven results and the lumpy nature of economic life. But now you have slow-thinking thirty-year-old security analyst at a downtown Manhattan firm who “judges” your results and reads too much into them. He likes routine rewards, and the last thing you can deliver are the routine rewards.

Many people labor in life under the impression that they are doing something right, yet they may not show solid results of a long time. They need a capacity for continuously adjourned gratification to survive a steady diet of peer cruelty without becoming demoralized. They look like idiots to their cousins, they look like idiots to their peers, they need courage to continue.

No confirmation comes to them, no validation, no fawning students, no Nobel, no Shnobel. “How was your year?” brings them a small but containable spasm of pain deep inside, since almost all of their years will seem wasted to someone looking at their life from the outside. The bang, the lumpy event comes that brings the grand vindication. Or it may never come.

Believe me, it is tough to deal with the social consequences of the appearance of continuous failure. We are social animals; hell is other people.

Two types of pain. Pick one.

Wednesday, October 22nd, 2008

“We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons.”
—Jim Rohn, entrepreneur, author, and motivational speaker

I found this in my inbox from Keith Ferrazzi’s Greenlight Community. Keith’s book “Never Eat Alone” remains one of the few books that I can wholeheartedly say that it’s one of my favourites of all time – and it changed my life.