New Years resolutions

I tend not to make these but this year I did make some for some reason. Here they are – personal and biz sort of collide.
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You can’t afford it

The fams went to go look at apartments yesterday in Jersey City. Yes – we’re contemplating leaving the city (with mixed emotions of course as it’s been 15 years).  We saw a somewhat nice place yesterday near Grove Street Path station which was one of the better places we’ve seen. Far from perfect and pretty drastically overpriced versus the market but nice given the general lack of supply in JC.

Within a few seconds, I could tell the broker sized us up and had determined we couldn’t afford the place. And then throughout the showing, he mentioned the price every 3rd sentence. I will give him the benefit of the doubt and just assume he didn’t have a good understanding for how expensive Manhattan is compared to Jersey City.

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Hatin’ on MBAs

A recent article in Fortune talked about Wharton, Harvard and other elite b-school ramping up their entrepreneurship programs. I have nothing against MBAs and am a Wharton guy myself (undergrad so I can still talk shit), but this IMO is one of those signs of things getting overheated in startup land.

Startups are becoming another career path or vocation as I talked about yesterday – raise funding, take a decent salary, get a call option on some upside and ultimately all for pretty low risk. These environments bring out the opportunistic. The real estate bubble saw a similar phenomena where everyone jumped in cuz it was easy money.  From the article on Fortune:

“Entrepreneurship is entering the mainstream in the economy and therefore it’s starting to enter the mainstream in the business schools,” Zoller says. “You’re starting to see people increasingly seeking out high-growth venturing as a pathway for their professional success.”

There is no pathway in entrepreneurship as far as I can tell. Or a very jagged zig zaggy one.

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No Risk, All Reward – The Startup Career Path

The Indie.vc post on Hacker News had some interesting comments.  Here’s one that caught my eye as pasted below (bold emphasis is mine):

The model is a fairly quick development cycle, fast early adopter sales, quick conversion to cash flow positive. Well, that’s a lot of things that have to go right all in a row with only $100k to start…. It may be enough to start some kinds of businesses, but many will require significantly more in startu pcapital to brave even an accelerated road to break-even.

As to the model, the question is does it fully factor in the risk level? The idea is lower the goalpost and manage the cash burn more carefully, to ultimately obtain a faster break-even and then ride growth through reinvesting profits, to some point in the future when you can actually start making distributions. The premise, possibly flawed, is that by not shooting for the stars you should be less likely the fail. They don’t need to win as big each time, because they will win more often?

Businesses need capital to grow. It’s that simple. $100k is a bare minimum startup fund for a sole founder for less than 6 months. It’s not a serious amount of money. You can’t expect that $100k to buy enough revenue to sustain full-time employees and also be paying out a meaningful dividend.

If the idea is to really, truly, avoid VCs and institutional investors…. I think you need to be able to seed about $2m. For example, structured as a Line of Credit, drawn over 48 months, but with warrants to convert into common stock at some ratio. The conversion ratio in the warrants adjusts to provide anti-dilution as needed.

That would provide a real amount of money for a 2-3 person team to potentially solve a real problem. And that would give the investors a meaningful percentage of the company and choice between a cash payoff or taking shares. That would be a really appealing alternative to VC funding which some strong founding teams might take notice.

Here’s my diplomatic’ish answer on HN:

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Indie.vc – this is exciting

So 2015 is off to a good start. I’ve rambled about revenue-based financing and other alternative models to fund tech companies a couple of times on this blog. And today, I saw something called Indie.vc by Bryce Roberts and the OATV team which is an interesting first step.  An alternate model to fund tech companies:

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American Sniper – It’s Always More Complicated

So I really enjoyed American Sniper. So did my wife.  And Chris Kyle, the protagonist, who the movie is about makes for an amazingly interesting and heroic character.  And so today, I’ve been kind of obsessed trying to read more about this guy. Because, honestly, I was sort of awestruck.

And most of what I read was confirming the mythical nature of this guy.

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American Sniper

Saw the movie. Go see it.

I’m lucky to have been born in a country that someone like Chris Kyle swore to protect.

Feedback

I’ve been sitting down with the team to do year end reviews. They are focused on what they did well, what could have gone better, what I did well, could have done better and what the company overall is doing well and could be better at.

They’ve been fantastic.
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The Stress

I was talking to a really successful head of sales at a company that he had built the sales organization from 3 to many before the company exited for over $500 million.
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Bad Boys

I just watched the ESPN 30 for 30 on the Detroit Pistons. It’s worth watching.

This was a team that wasn’t expected to win versus some powerhouse Celtics, Lakers and Bulls teams. They used a mix of physicality and psychology to change the game and win.

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