Everyday he has been posting one photo a day beginning on his 30th birthday. I’ve been reading them religiously everyday and one of my favorites includes the one he wrote on December 17, 2009.
I have been wanting to read some Faulkner, so I visited the Smith Family bookstore in Eugene. I asked the clerk if they had just received a big shipment, but she said that no, that is always how it looks in there. This confirmed my intuition that there are many books.
I would like it if somebody worth emulating would give me a list of the 100 books that I need to read, in order to push and poke at my stiff sense of self until I am larger and more dynamic, expanded like a rubber balloon in 100 directions by 100 well-expressed world views.
With such a list, I would have no problem with a computerless cabin-bound existence, and I would never venture back to the swampland of the Smith Family bookstore, nor any other wetland like it, trudging through printed sprawl to look for pearls.
For the past month, I’ve wanted to write an article on “book swaps” — essentially publishing all of the books I’ve read on my blog, and encouraging anyone to swap books with me. Instead, I’d like to compile “a list of 100 books that have changed your life.” These can be anything ranging from business to fiction. If it’s worth reading, please leave them in the comment section below. I’ve started the list by listing out a couple of books that have changed my life…
My goal is to eventually read through every book on this list in my lifetime. And share this list with others. I’d also love to start a book swap so please let me know if you’d like to trade any books as well!
2010 is finally here and I think it’s going to be one of the best years yet. I have friends traveling around the world, raising money for their startup, and others questioning conventions and the status-quo (hopefully to launch their own startup)!! As we move into 2010, I thought I would share what I learned in 2009 from the many mistakes I made (there are many) and the mistakes I avoided. My goal is to provide some guidance for younger entrepreneurs because these are all things I wish I read a year ago. I hope you find some of these useful.
1. Focus on focusing. I spent the majority of 2009 “incubating” startup ideas and spreading myself way too thin. Chris Dixon wrote about the trap that many entrepreneurs face with incubators. ”The appeal is the idea that you can do not just one startup but many, and just focus on the “fun stuff” in each one (idea generation, product features, strategy, etc).”
In 2009, we launched By/Association, TBD, and Lovely Day while growing The Feast and All Day Buffet from the previous year. (You read that right. I was involved with 5 different companies.) When things weren’t going as well as planned with a new venture, we just launched a new one. We fell into the “that’s a great idea, let’s launch something and see what happens” trap.
“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the 100 other good ideas that there are. You have to pick carefully. I’m actually as proud of the many things we haven’t done as the things we have done.” — Steve Jobs (h/t Caterina Fake)
If I could this all over again, I would have said NO to the majority of projects and ideas. By spreading myself thin over many different projects and startups, By/Association never got the love it needed to take it to the next level (Since then I have stepped down from the other startups to focus in 2010). I learned that success equals 1% idea and 99% execution and perspiration, so focus on the 99%. Saying no is more important than saying yes.
“So often people are working hard at the wrong thing. Working on the right thing is probably more important than working hard. — Caterina Fake”
Working on the wrong things are very, very, very costly for entrepreneurs. In 2009, I found myself running around like a chicken with his head cut off. I read almost every article on “re-iterating fast” and how “business plans were dead” so I took the advice and went with the flow and planned accordingly. It ended in disaster for me. I ran around in circles. It was like I was driving 90 MPH on the highway without a final destination. Looking back, I realized that I could have efficiently spent that time moving the ball forward for a plan with an end-point.
Having an end-point is essential for your business and personal goals. Yes, it can change. And yes, it probably will change. But thinking about a strategy will set you in a direction to achieve your goals and milestones. By committing to something in the future, decision-making in the present becomes much easier. It’ll save you money. And make you even more. That’s a win-win in my book.
3. Trust you gut. Timing is everything. We launched By/Association in July of 2009, and it’s been growing and gaining traction every month, which is really exciting. We have some big plans for 2010 which resulted from two major decisions we made: 1) We turned down a small amount of investment money; and 2) we didn’t touch the website for nearly 6 months other than fixing bugs and changing marketing copy (this was on accident because of lesson #1).
As many of you know, I play a lot of poker and part of being a good poker player is trusting your intuition. Most amateur poker players don’t follow their gut, and lose a lot of money in the process. At the end of the day, the timing wasn’t right for By/Association. We turned down money because we didn’t know where we were going. There was no plan. The product/market fit was nowhere close to 40%. And most importantly, my gut told me to sit back and wait for a better spot to “go all-in.”
If we took the angel investment to build what I thought should have been the next version of By/Association, we would have wasted a lot of time (refer to lesson #2) and built something that would have ultimately been thrown in the trash. Rather than re-iterating fast, quick, and deploying new versions every 2 weeks; we decided to think about the overall bigger picture by observing trends and talking to our members. This resulted in a better concept that solved all of the major holes in the older version. How do I know this will work? Because my gut’s telling me that the timing is right to build the next version, achieve product/market fit, and scale up.
4. The power of time off. Stefan Sagmeister recently spoke at TED about the power of time off. ”Every seven years, designer Stefan Sagmeister closes his New York studio for a yearlong sabbatical to rejuvenate and refresh their creative outlook.”
After producing and curating The Feast in October, I took the next month off to really think about my 5-year plan. Let me rephrase. I took the next month off to commit to something for the next 5 years of my life. Making this type of commitment takes a lot of self-reflection and soul-searching which can only happen when you take a 50,000 feet view as a lens for the future. It won’t happen if you have a lot of the same day-to-day distractions i.e. running your business.
I spent some time in Maine and New Orleans thinking about all the opportunities that I could take in my life. I talked to all my mentors, advisers, and friends (who were very supportive so thank you). And I emerged with a clear understanding and direction for 2010 and beyond. Taking time off is essential in making the right decisions, which leads to my next lesson.
5. Always make the best decisions. Lastly, a real quick story to wrap things up. Earlier in the year, I had breakfast with Annie Duke (professional poker player) who told me a great life lesson and story around sunk costs. In the most basic terms, the concept is used in making good decisions (which is the secret to the success of professional poker players). Wikipedia defines sunk costs as “costs that cannot be recovered once they have been incurred.”
So, for example, if you’re waiting in line at the grocery store, and the line next to you moves faster, most people won’t hop over to the faster line because of the time they “invested” in their current line. This makes absolutely no sense as anything invested in your past shouldn’t influence your future. Another example revolves around relationships. Most people stay together because they’ve “been together for the past five years.” Again, people shouldn’t make decisions based on past investments. And if you’re wondering how this applies back to poker. Once you make a bet and put your chips in the middle, that money is no longer yours (so you shouldn’t make bad decisions on getting it back).
Instead, you should look toward the future and look at all the different paths, opportunities, and possibilities presented to you right now. The sky is the limit. Everything in your past gets you to this point but it’s up to you to make the best possible decision on which path you want to go down. Because at the end of the day, if you make the right decision for yourself, there’s no way that it’s a bad one.
As we move into 2010, I hope many of you swing for the fences because entrepreneurs can and will change the world. There’s nothing wrong with making mistakes. It’s a rite of passage to becoming successful. And to close, remember, “there are no ceilings. Only the sky. The sky is the limit.” – Lil Wayne (via Notorious B.I.G.)
“You can tell by my attitude that I’m most definitely from New York
Concrete jungle where dreams are made of
There’s nothing you can’t do
Now you’re in New York
These streets will make you feel brand new
Big lights will inspire you
Let’s hear it for New York, New York, New York!”
Just in case you didn’t get the memo; the New York startup scene is taking off. Both Fred Wilson and Chris Dixon wrote on the New York Startup scene, and I thought I would add in my thoughts from what I’ve observed over the past couple of years.
“Greenwich Village 60s … Venice Beach 70s … London 80s … Silicon Valley 90s … Blogosphere 00s … NYC now…” — @RafeFurst
What sets New York apart from the rest of the world? New York attracts the most creative, ambitious, and hard-working people into one extremely diverse city. There’s an energy here that can’t be replicated anywhere else in the world. Mix that with a great nightlife, culture, and a city that never sleeps — you can see why the New York startup movement has been picking up momentum. I believe that NYC tech startups have a better eye for design, user experience, business models, and creating companies that solve real problems (and not launching more “me-too” companies). And the icing on the cake? The companies coming out of NYC right now are just… sexy. There’s no other way to explain it.
Need proof? Here’s a list of all the awesome things happening in the Big Apple. (You should press play on the Jay-Z “Empire State of Mind” video for the full experience).
UPDATE (December 22, 2009): Just to clarify, I did not write this article as a “NYC versus the world” thought-piece. I wrote this piece to give a 50,000 feet view of what’s happening in New York City. There are many other cities with a thriving startup culture such as Boston, Silicon Valley, Seattle, New Orleans, Boulder, Los Angeles, etc. Each city is unique in its own way, and each city will continue to pick up momentum and be successful. For example, Post-Katrina New Orleans is starting to become the hub for social entrepreneurs. That’s very powerful. They’ll uniquely define themselves for the history books. If we take what works in each city, this is something that can be replicated in every community around the world. Entrepreneurship is vital for innovation, and can work everywhere from New York to Africa. (Endeavor.org is a great example of a non-profit organization building entrepreneurial hubs around the world to lift communities out of poverty).
COMPANIES I put together a short list of some of the more prominent startups and established companies in New York. There are hundreds and thousands of other companies that can make up this list, so please add missed companies to the comments section below. Apologies if your company, organization, or initiative was left off this list.
One thing I’ve noticed over the past year is that NYC’s version of Silicon Valley will be Soho, which has been primarily associated with the fashion industry. The combination of the falling price of leases stemming from the 2008 financial collapse, and the dropping rent (all the bankers moved out of Manhattan); there have been dozens of creative startups opening up office in Soho. I’ve listed the ones I know in the list below.
20×200 sells art for everyone at ridiculously affordable prices.
Behance organizes the creative world to make their ideas happen.
By/Association is a private service for new introductions to remarkable people.
Bug Labs is a modular, open source system for building devices.
Boxee
Carbonmade helps you build and manage an online portfolio website
Drop.io allows simple real-time sharing, collaboration, and presentation.
Etsy is the world’s most vibrant handmade marketplace.
Foursquare
Harvest allows simple online time tracking, timesheet, and reporting.
Hello Health is helps doctors communicate, document, and transact with their patients in person and online
Hot Potato allows you to find events, join the crowd, and share the experience.
Hunch helps you make decisions and gets smarter the more you use it.
Meetup selps groups of people with shared interests plan meetings and form offline clubs in local communities around the world.
OMGPOP is the #1 place to play free multiplayer games with your friends.
Parachutes aims to reinvent how people teach and learn.
Quirky is a social product development company.
Squarespace is a fully hosted, completely managed environment for creating and maintaining a website, blog or portfolio.
Tumblr is the easiest way to blog.
Vimeo is a respectful community of creative people who are passionate about sharing the videos they make.
20×200 sells art for everyone at ridiculously affordable prices (Soho).
Aviary makes creation accessible to artists of all genres.
Behance organizes the creative world to make their ideas happen (Soho).
Vimeo is a respectful community of creative people who are passionate about sharing the videos they make.
PUBLISHING/EMAIL COMPANIES New York City has always been the epicenter of the publishing and advertising industries. And that hasn’t changed with this list of innovative companies changing the publishing and email businesses.
Daily Candy is a handpicked selection of all that’s fun, fashionable, food related, and culturally stimulating in the city you’re fixated on.
Flavorpill is a daily guide to quality cultural events in New York City, Los Angeles, San Francisco, Chicago, Miami and London.
Gilt Groupe offers luxury designers and fashion brands at prices up to 70% off retail.
Huffington Post offers syndicated columnists, blogs and new stories with moderated comments.
One King’s Lane offers exclusive sales on designer home accessories.
Tasting Table is a free daily email about the best of eating and drinking culture.
TBD is a free email newsletter that delivers one world-changing idea and one collective action to improve our future.
Thrillist’s daily emails sift through the crap to find the newest and best the Nation is hiding (Soho).
Urbandaddy brings you the single thing you need to know every day about your city.
Very Short List is a collection of distinct, free, daily e-mails that each recommend one must-see gem a day.
VENTURE CAPITAL Every city needs a strong VC and angel community to support everything from seed to established companies. New York City has a strong list of investors supporting the entrepreneurs.
First Round Capital is a venture capital firm dedicated to helping talented entrepreneurs build remarkable companies.
Founder Collective is a seed-stage venture capital fund, built by a collection of successful entrepreneurs.
Polaris Venture Partners invests in seed and early stage companies and in growth equity companies with substantial operating income.
Spark Capital is a venture fund focused on the conflux of the media, technology, and entertainment industries.
RRE Ventures focuses on expansion stage information technology ventures.
CO-WORKING SPACES Every new startup needs a place to work out of when they first get started. NYC has launched some new co-working spaces in the past year.
New York Tech Meetup is an event where entrepreneurs can demo something cool to New York’s tech community.
NextNY is a fun way to connect both socially and professionally with up-and-comers who have a stake in the future of tech and new media in New York City.
Social Media Week identifies and advances the use of social media in the corporate, public and non-profit sectors.
The Feast is a series of programs addressing social innovation and new ways to make the world a better place.
INNOVATIVE NON-PROFIT ORGANIZATIONS What’s a community without charity? These charities are re-inventing philanthropy.
charity: water is a non-profit organization bringing clean and safe drinking water to people in developing nations.
Echoing Green provides seed funding and support to social entrepreneurs with bold ideas.
Endeavor transforms the economies of emerging markets by identifying and supporting high-impact entrepreneurs.
Freelancer’s Union is a national membership organization that’s free to join.
Pop!Tech is a network of remarkable people, extraordinary conferences, powerful ideas & innovative projects that are changing the world.
StartingBloc educates, empowers, and connects emerging leaders to drive positive social change across sectors.
TED is a small nonprofit devoted to Ideas Worth Spreading.
GOVERNMENT Every city needs the support of the government and politicians. The City of New York has made numerous commitments to support entrepreneurship.
Mayor Bloomberg outlines 11 initiatives to support New York City’s financial services sector and encourage entrepreneurship.
NYC Seed funds seed-stage technology entrepreneurs in New York City.
New York City Investment Fund identifies and supports New York City’s most promising entrepreneurs in both the for-profit and non-profit sectors.
EDUCATION New York City has access to some of the top schools in the country for technology, design, and entrepreneurship.
NYU ITP is a two-year graduate program who mission is to explore the imaginative use of of communications technologies.
Pratt Institute offers studies in architecture, art and design, and information science.
SVA is a fine art and graphic art school in New York City specializing in art education for aspiring professional artists.
FUTURE OF THE NYC STARTUP MOVEMENT All of these things are essential to a thriving startup movement. Established companies, investors, education, talent, events, etc. But, what are some other things I’d like to see in 2010 and beyond to support the NYC startup movement and take it to the next stage?
Government support. The City of New York should set something up similar to the initiatives of the Greater New Orleans, Inc. GNO, Inc has setup a venture capital match program, which provides for a match investment ($1 for every $2 up to $5MM) for qualified venture capital funds. The also have angel investment tax credits, which redeems 50% of the initial investment to investors in the form of LA income tax credits. Both of these initiatives can spur the investment community in New York City.
Summer incubators. To support younger and inexperienced entrepreneurs, programs such as Y-Combinator and TechStars should launch in New York. Venture Capital firms should put up the capital to support these programs. This will attract some of the world’s most talented entrepreneurs to NYC while providing them an education and experience that will be vital to their success. And hopefully keep them here in New York.
Mentorship programs. The gap between new and successful entrepreneurs needs to be closed. Informal and/or formal mentorship programs should start for the up-and-coming entrepreneurs in New York City. Why not lend your expertise and experience to the next Steve Jobs when you’ve already sold your company for $500M? Pay-it-forward, please.
Access to capital needs to stay open. Another way to make this happen is through pitch events such as TechCrunch50 but our version in New York City. Even if none of the companies get funded, it allows entrepreneurs and investors to network, meet, and hopefully close some deals for investment in 2010. It would be even sweeter if the City of New York provided a tax credit for these investors (refer to #1).
More failures and successes. In 2010, New York City needs to see more failures to show the world that we’re willing to swing for the fences. And we need to see more successes to set the bar higher for all of the startups launching and growing. Fail harder.
I often get asked, “what’s happening in New York” and now I can finally zip over this link to answer that question. If you live in another city, take note on what’s happening in NYC right now. It’s a good case study to adopt and practice in your own community. And to quote Jay-Z, “You can tell by my attitude that I’m most definitely from…. Let’s hear it for New York!”
Feel free to add suggestions, ideas, and thoughts to continue this discussion in the comments section below.
(This is my latest article for the99percent.com on productivity)
Creative people have the tendency to generate tons of ideas. What’s not exciting about brainstorming new ideas? It’s intoxicating and fun. It hones your innovative thinking and nurtures your creativity at the same time. Of course, the real challenge begins when you come across an idea that you like. A lot of people I know struggle with pushing an idea into motion. Something about rolling up their sleeves and getting started is scary. However, my challenge is a bit different. My struggle is focusing on any one idea for an extended period of time.Over the past year, I’ve launched an online network, an email newsletter, and produced numerous innovation conferences. I’ve also wanted to start an online savings bank, a speakeasy bar, and a health insurance company. If you think these ideas are totally random, it’s because they are.
Upon reflection, I think my love of idea generation has become an escape hatch for when I start to second guess myself in the midst of long-term execution. When things aren’t going as well as planned with a venture, new ideas appear more attractive. And so I quickly jump to something new. As the saying goes, the grass is always greener on the other side.
When things aren’t going as well as planned with a venture, new ideas appear more attractive.
Yet by not focusing on one or two ideas long enough, I’ve spread myself too thin over too many – thus reducing my chances of success. These mistakes have prompted a new year’s resolution: To stop generating new ideas and focus my energy on a lucky few.
Throughout my creative journey, I’ve picked up a few tips that are helping me focus on long-term execution:
1. Creativity should be less about creating new ideas, and more about focusing on a few. You will gain valuable experience by enduring the hardships and obstacles that come with committing to fully pursuing your ideas to success or failure. This knowledge will lead to success in your current idea or the next one. Blake from TOMS Shoes started his entrepreneurial career with a laundry pick-up service in college. The laundry pick-up service was a small success, but it was also a step in the direction of TOMS. Gaining experience is necessary to develop better filters for your ideas.
2. Know where you’re going before you go there. My colleague Scott Belsky of Behance gave me this critical piece of advice which I’ve followed religiously over the past couple of years. It’s easier to figure it out as you go, but much harder to put a stake in the ground 5 years down the road. By committing to a goal or milestone in the future, decision-making in the present becomes much easier. If you want to be a professional photographer, what are you doing today that puts you one step closer to that goal?
3. Plan your life in 5-year blocks. Robert LeBlanc of LRGNOLA offered me this insight during my recent time off in New Orleans. He noticed that I planned my professional goals in 1-year increments, which caused me to never commitment wholeheartedly to anything. Approaching my creativity and business with a 5-year filter allows me to commit to the long-run without any distractions. Doing this helps me discard seductive ideas that, while exciting, are not part of my 5-year goals.
In order for innovation to really occur, we need to stop launching new ideas and focus on a few (whether they succeed or fail). Your next idea will be better because of it.
I’ve been thinking a lot about investing into startups (if you couldn’t tell by my last post). Most entrepreneurs spend the majority of the time thinking about how to get the highest valuation for their startup, and giving the investor the minimum amount of equity. For the past couple of weeks, I’ve decided to look at it from the lens of an investor, and how to structure a fair deal for both sides.
I believe the future of business will revolve around collaboration, creativity, and innovation. So, why not create a model around it? I’ve been following companies like Betaworks,Idealab, and Virgance, which are small conglomerates that incubate and invest into different startups. They have the smartest people in a room working on different startups together. The key words here are “smartest people working together.”
I’ll start explaining my new investment concept with this Venturebeat article I read about the Founder Institute:
Specifically, the institute asks participating founders to contribute warrants providing the option to purchase 3.5 percent of the company at the time of its first funding. Now the institute is setting aside 10 percent of that warrant pool for investors — the first 20 investors in Founder Institute startups will each get 0.5 percent of the total pool of all companies.
It got me thinking. Why not create a startup revolved around working together and the shared economy? Why not create a startup that incubates and launches other startups?
Let’s say 2-3 talented entrepreneurs are in the incubation/idea stage of their business, and they decided to create an incubation/labs company together. (This is how Max Levchin created Slide and Yelp out of his incubator: MRL Ventures). Each entrepreneur would be the CEO of their own startup, but would share the resources of the most talented web developers and designers. So, the development team would be working across 2-3 startups versus working on just one startup. I believe this is essential for creativity, innovation, and problem solving — taking a step back from a project.
The CEO’s of each startup would support each other with strategy, connections, etc. Everyone would be incentivized to work and help each other because everyone has equity in the overall company, which is diversified and spread through the three startups. They’ll also be an environment that allows them to test, kill & improve various ideas while working with the smartest & most creative people in the business.
Let’s say 20% of the company would be set aside for investors. The investors would invest and own 20% of three different startups. If any of the startups take off, the startup would break off and turn into their own LLC or Corporation. Having a flexible structure at the beginning allows the CEOs to really focus on killing and improving ideas.
It’s a win-win situation for the entrepreneurs and investors. The entrepreneurs own a piece of each other. The investors own a piece of the pie too. It’s kind of like putting together the ultimate all-star basketball team (Kobe, Lebron, Wade, CP3). Would you invest into the founders and startup team behind NY-based Kickstarter, Foursquare, and Hot Potato before they took off? I certainly would..
Someday in the distant future, I would love to be an investor. I’m a huge supporter of nurturing entrepreneurship (tech+social) in New York City, and would love to see more startups launching in that space. Let’s say I started a small $50M fund, I would split my investments over the following: 1) investing in companies; 2) investments to support the NYC startup movement; 3) donating to innovative non-profits; and 4) investing into people.
The companies listed below are in no particular order, and I selected them based on innovation/idea, management team, opportunity, and “excitement.” Or in other words, whether I get excited by the idea or not. The reason I have “excitement” listed as one of the filters for companies is because I would love to spend time with each of the companies and lend my ideas, creativity, connections, etc to make their ideas and companies more successful.
New York Based-Companies
Kickstarter is a new way to fund creative ideas. Kickstarter is a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, explorers…
Behance is a company that organizes the creative world to make their ideas happen.
Harvest allows small businesses to track time, log expenses, invoice clients, keep track of account receivables and revenue.
Foursquare gives you and your friends new ways of exploring your city.
20×200 (Jen Bekman Projects) is a website for art collectors. The site releases at least two new limited-edition prints a week: one photo and one work on paper.
Hunch is a decision-making site that gets smarter the more it’s used.
By/Association is a private service for personal introductions to remarkable people. (Disclaimer: I’m Co-Founder)
Eat.ly allows you to track your meals and discover new social food via images.
TBD is a free email newsletter that delivers one world-shaking idea and one collective action to improve our future. (Disclaimer: I’m Co-Founder)
Hello Health is an innovative new primary care practice platform that helps doctors communicate, document, and transact with their patients in person and online.
Boxee is the first social media center, an open-source software platform for entertainment across computers or traditional living room devices.
Carbonmade helps you build and manage an online portfolio website.
Frogtek is an early-stage social venture that will bring the IT productivity boom to micro-entrepreneurs in the developing world.
SHE “is developing a franchise model to manufacture and distribute eco-friendly sanitary pads using local materials, such as banana fibers. The aim is to sell pads for 30 percent less than existing brands, while creating a profit so that the model can be self-replicating.”
Outside of NYC Companies
Vittana is an early-stage startup bringing student loans to the developing world through the power of person-to-person microfinance.
Fitbit accurately tracks your calories burned, steps taken, distance traveled and sleep quality.
23andMe provides genetic testing for over 100 traits and diseases as well as DNA ancestry.
NAKEDpizza’s mission is to make an unhealthy and popular fast food healthy, raising consciousness about nutrition, health and the food supply, as well as the social impact and obligations of modern business.
Investments in Innovative NYC Non-Profit Organizations
charity: water is a non-profit organization bringing clean and safe drinking water to people in developing nations.
Echoing Green invests in and supports outstanding emerging social entrepreneurs to launch new organizations that deliver bold, high-impact solutions.
Investments into People (Superstars)
Rafe Furst wrote an article on “investing into superstars” where investors would buy a percentage of someone’s expected lifetime earnings. I followed up with a whole article on why the idea is so revolutionary (and light years ahead of its time).
Imagine you are in your early twenties, out of college several years and your best friend, who recently came into an inheritance of $300Kcash told you they could think of no better way to invest the money than to invest it in you. Not the company you started, not as a loan, but invest it in YOU, as if you were a startup. In return your friend said all they wanted was 3% of your gross incomefor the rest of your life. Do you think you would take it?
Now what if your friend said that they didn’t care what you did with the money or how much you made each year. If you wanted to sit on a beach in Nicaragua learning to surf, go work in the Peace Corps, stay at home and do your art projects, whatever you want it would be fine, just as long as you made sure to always pay the 3% of whatever you make (as little as that may be).
And finally, what if your friend said you could buy out of your obligation at any point for $6 million in cash. Then would you take the deal?
I would do the same for this investment fund.
So, all in all, these are the companies, ideas, and people that would make up the portfolio of my investment fund. Obviously, the fund would make these investments to turn a profit and get a nice return. But, I also believe in supporting the greater good — supporting the startup movement already happening in New York City. Who would you add to the list?
It’s no secret that I like playing poker. It’s one of the best games in the world that combines strategy, decision making, competition, math, statistics, psychology, behavior, patterns, etc. And you can win a lot of money playing poker, so what’s not to like about it?
Every year, the World Series of Poker (WSOP) is a series of poker tournaments held in Las Vegas. WSOP culminates with a $10,000 no-limit hold’em “Main Event”, which attracted 6,494 entrants in 2009 and had a first prize payout of $8,546,435! Through all of the 2009 tournaments during WSOP, they have currently awarded $173,335,842 in prize money. $173M!!
At the 2009 WSOP in Las Vegas, I was talking to one of my personal adviser/mentor Rafe Furst (who is also a professional poker player) about how to combine poker and good — we came up with an interesting idea…
WHAT IF WE COULD ENCOURAGE POKER PLAYERS DURING THE WSOP TO DONATE A PERCENTAGE OF THEIR WINNINGS TO CHARITY?
Rafe Furst and Phil Gordon have already started an initiative to make this happen called Bad Beat on Cancer (BBOC). Here’s how it started…
They asked their friends to pledge just 1% of their winnings at the WSOP Championship Event to the Prevent Cancer Foundation as a tax-deductible donation, resulting in enough money to fund a research grant for an entire year.
Since its inception six years ago, Bad Beat on Cancer™ (BBoC) has raised over $2 million for cancer prevention research and has grown to include other major poker tournaments, leagues and home games.
How can we take this to the next level? What else could we do to encourage more poker players to donate 1% of their winnings? Here’s what we came up with…
What if I enter the World Series of Poker and donate 100% of any potential winnings to charity, and encourage other players to pledge 1% or 100% as well. Here’s how I envision that it’ll work.
Option A – I sell 100 shares for $100 each. Each shares equates to 1% of my potential winnings and each funder can pick whatever charity they want to donate for the potential winnings.
Option B – I cover the cost and donate 50% of winnings to Bad Beat on Cancer and 50% to Ante up for Africa.
To ensure that I play the best to my ability:
I’ll be personally trained and coached by professional poker players Rafe Furst and Phil Gordon. And maybe Annie Duke if she agrees : )
I’ll enter WSOP Circuit Events (on my own dime) like the Bayou Poker Challenge at Harrah’s New Orleans next month to get some practice.
I’ll design and develop worldseriesofgood.com to encourage other poker players to donate a percentage of their WSOP winnings to Bad Beat on Cancer (Rafe and Phil’s charity), Ante up for Africa or DEF (Annie Duke’s charity), or any of the charities supported by Barry Greenstein. The website will allow players to make a pledge with the goal of raising over $1MM for the charities.
During the WSOG, it will coincide with a one-day conference before the main event. Every poker player that pledges to WSOP a percentage of their winnings will receive 50% off their ticket prices. (Maybe in 2011?)
The Big Idea is to encourage ALL poker players to donate 1%+ of ALL their online and offline tournament winnings to charity. Imagine if Full Tilt Poker allowed online players to automatically donate to charity? And all the WSOP tournaments allowed you to automatically pledge when you register?
And of yeah, we’ll make small 1% patches (like the one Rafe is wearing below) and huge 100% patches that take up you entire shirt.
That’s pretty much it. Simple eh? We’re still in the idea generation phase so please leave any comments, suggestions, ideas below to improve the World Series of Good. Would love to hear them!
Lat week Rafe Furst (my mentor/adviser/poker coach) wrote a blog post on “Investing in Superstars” which spread virally through the startup/investor communities. The concept is simple but extremely polarizing:
Imagine you are in your early twenties, out of college several years and your best friend, who recently came into an inheritance of $300Kcash told you they could think of no better way to invest the money than to invest it in you. Not the company you started, not as a loan, but invest it in YOU, as if you were a startup. In return your friend said all they wanted was 3% of your gross incomefor the rest of your life. Do you think you would take it?
Now what if your friend said that they didn’t care what you did with the money or how much you made each year. If you wanted to sit on a beach in Nicaragua learning to surf, go work in the Peace Corps, stay at home and do your art projects, whatever you want it would be fine, just as long as you made sure to always pay the 3% of whatever you make (as little as that may be).
And finally, what if your friend said you could buy out of your obligation at any point for $6 million in cash. Then would you take the deal?
I know what you’re thinking. It’s completely insane right? Words like indentured servant and CRAZY are probably popping in your head right now. But, let’s push aside all the logistical numbers, equity, buyout multiples, and think about the overall concept for a moment.
How would you live your life differently if you didn’t have to worry about finances for the next year or two?
Would you still be working your job? Would you travel the world? Would you take a year off like Stefan Sagmeister to figure your life and how you plan to make a huge impact in the world? Would you spend a year launching your idea and collecting investment? What would you really do with the freedom? That’s the BIG idea here.
Rafe and Phil are investing into people to help them figure that out. And they are betting that you will figure it out sometime in your lifetime, and buy out of the contract. Financially, they benefit because you buy out out of the contract. Idealistically, they benefit because they helped you find your way in life.
For the investee, you just accelerated something that would have already happened. So, let’s say you’re going to be a millionaire when you’re 40, but you had to work 10 years to get comfortable to take “that leap.” Now, rather than hitting it when you’re 40, you hit it when you’re 35. The 5 years you save in time can be tremendous. You could turn that $1M into $10M. You could take those 5 years off. You could do whatever you wanted. The opportunity cost is tremendous.
Let’s take it a step further. Let’s say that someone started a $100M venture fund to invest into people, not ideas. How would that revolutionize the investment community? How many smart, creative, innovative, talented people would not climb the corporate ladder, or work for investment banks, law firms, etc? How would you pitch yourself to investors over your lifetime?
Would I take the investment if it was offered to me? I have absolutely no idea. But it has definitely changed the way I think about my future.
Disclaimer: This blog post was a thought piece. It was never meant to cover every logistical detail of how to launch and run a bank. This is an article on how I would start a bank if I had to start one from scratch. Yes, it’s an insanely difficult to tackle but what isn’t?
I WANT TO START A BANK.
Why? Because it’s a super-duper profitable business (sidenote: Jason Fried of 37Signals likes startups that makes money from the get-go. I do too.) and it’s an industry that needs to be flipped on it’s head. Talk about a blue ocean? Also, since the major banks are responsible for the financial collapse that resulted in one of the biggest recessions in our history, there’s a tremendous opportunity for a new bank to enter this blue ocean. Consumers want to trust a financial institution again; not read about them going bankrupt in headlines every week.
If that doesn’t convince you, the WSJ thinks that “it’s a great time start a bank” too. And if you still need convincing…
“Former Federal Reserve Chairman Alan Greenspan recently claimed he would open one himself if he were 50 years younger. The return on capital could be impressive, the 83-year-old Mr. Greenspan said in an interview.”
Lastly, Andy Beal is one of my favorite business people of all time. Why? Because he plays $50K/$100K limit poker with the world’s best poker players like Doyle Brunson, Phil Ivey, and Howard Lederer. And beats them. And because he’s a banker. He does crazy shit like buy aircraft debt after the September 11th attacks when they were at an all-time low. Today, he makes over $70,000,000 a year from those bonds. Forget Donald Trumpet. Andy Beal is the real deal. Forbes ran a whole feature on Beal Bank.
“In the last 15 months Beal has put $5 billion to work, tripling Beal Bank’s assets to $7 billion, while such banks as Citigroup and Morgan Stanley shrink and gobble up billions in taxpayer bailouts. In 2000 American Banker declared Beal Bank the most profitable bank in the nation as measured by its five-year return on equity of 50%”
So, how would this bank look? This article talks about what a bank would look like if Apple moved into the banking business.
“This would be a niche bank, taking deposits disproportionately from Apple consumers and lending for the kinds of ventures that, well, your typical Apple consumer might be undertaking: creative small business projects, distressed urban lofts, student lending, hybrid vehicles, and renewable energy.”
This SafeBank article from Matt Mullenweg about how he would start a bank is the most brilliant piece I’ve ever read and I agree with everything he says too (Matt – want to start a bank with me?).
“The name of my bank would be something supremely boring, like SafeBank. The idea behind it is that bad behaviour in the banking world has been largely inevitable because their compensation structures incented people to do overly risky things. SafeBank would maintain a reserve level 2-3x higher than Fed requirements and any other bank.
After a certain milestone, say 100 billion in deposits, I would buy or clone Mint. SafeBank would have more (and more accurate) data about its customers than almost any other company in the world other than credit card companies, so the online interface would have Mint-like lead generation offers based on that information. For example, you spend $140 a month on electricity, but if you switch to this new solar provider you’d save $200 a year. Think of it like Gmail contextual advertising but based on where you spend your money rather than the words in an email. There also might be aggregate data opportunities for economic research or targeting, but I’m not sure if I like the privacy implications there.”
Yes! I would do all of that at this bank plus more. Here are some ideas of what I would want to implement at my bank.
It would live online like INGDirect to eliminate a lot of the traditional overhead costs from traditional banks. Like SafeBank, the majority of our focus would be on the website. Imagine if you could login and have mint.com capabilities to track and manage your money?
Like Apple, we would have “stores” that will allow account-holders to attend seminars on financial topics such as money management and financial independence. There would be ATMs but no tellers.
Design would play a huge role in our bank. From the design of the website to the design of the debit cards, it would have the same high quality of design of Apple.
Like Zappos, we would focus on customer service. Similar to Zappo’s policy on returning any purchases, we would allow all of our account-holders to withdraw funds from any ATM at NO CHARGE (woo-hoo!). Our account-holders would also be allowed to transfer funds to each other at NO CHARGE as well (everyone owes someone money). And it would never ever charge our account-holders with overdraft fees. If someone has overdrawn, they obviously do not have the cash so why charge them?
We would only give out credit cards to those who are qualified to receive one. Our goal is to encourage saving, not spending. Andrather than having cash-back, we would have charity-back credit cards. Our credit card holders would receive 1% of their spending every year to donate to any charity. For those that want physical goods, we would have cool products similar to those featured on joshspear.com and coolhunting.com
It would make money through loans (like every other bank) but not just any loans. We would offer the best rates and offer loans for everything except for mortgages. Our entire business revolves around getting as many people to deposit cash by offering high interest rates, and turning that money into loans and investments. Pretty simple eh? And also offer ways for our account-holders to save money like SafeBank. Oh yeah, our vehicle loans would only be for hybrid vehicles. We would never give out an auto loan for an SUV like a Hummer because of our values.
Our bank would be the biggest micro-lender into Kiva. Rather than giving our mortgages left-and-right, our goal would be to fund every entrepreneur in a developing country through micro-loans. Yes, we would have a 0% profit margin but the warm fuzzy feeling of doing good is priceless.
Our investing banking division would invest into for-profit purpose-driven companies that make the world a better place. Every year, we will set aside 10% of our profits to invest into startups because we believe in supporting entrepreneurship and facilitating innovation. Our private equity division would invest into companies that are already profitable to take them to the next stage of their business.
Obviously, we can’t do everything for everyone, so maybe we would eliminate checking accounts all together? Instead, we would only have savings account to encourage our account-holders to save their money instead of spending it.
These are some ideas off the top of my head. I’m sure I’ll come with more to add to this list. I’m sure you have ideas too so feel free to add them in the comments section below.
I could honestly spend the rest of my life doing this. Maybe I should start by putting together a business plan and raising $10M to launch it? Who’s in to invest or join the startup team?!
Today, digital ideas are easier and cheaper than ever to launch which has unleashed a whole army of young entrepreneurs with an idea and a dream. Long gone are the days of investing millions of dollars into one “idea.” Our generation has seen what happens when an individual invests all his time, money, and sweat into “the big idea” – 9 out of 10 of those startups fail miserably. We’ve heard the horror stories of VC capital and funding, and have rationally chosen to not go down that path. Many of us have built our companies from the ground‐up on sweat equity and our time. It’s easier, faster, and allows us to flex our creative muscles and spread our entrepreneurial wings..
From an investor viewpoint, it’s even harder today to comfortably invest into entrepreneurs. How do you differentiate between two similar founders with great ideas? Investors understand that startups are a combination of many different things including the idea, founders, startup team, luck, timing, network, connections, etc. How can investors invest and minimize the risk while maximizing their return?
What if we created an options market for startups based around the idea of micro-investments? Why invest into one idea when you get invest into dozens?
According to Wikipedia, “an option is a contract between a buyer and a seller that gives the buyer the right—but not the obligation—to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price.”
What if we could allow investors to diversify their investments over many promising entrepreneurs. Rather than investing into one entrepreneur, they can spread investments over dozens. And if any of those startups take off, they can invest additional capital in exchange for equity. Why would anyone invest $250,000 into one startup when they can buy options for $25K in 10 different startups? Odds are that one of them will take off and be successful.
How would it work?
An investor can buy an option for $5,000‐$25,000 which grants them the option to invest capital for equity into startups at a discounted rate when certain revenue milestones are reached. The investor can sleep at night knowing that he will invest more money when startups gain some traction. The entrepreneur can sleep knowing that he can focus on building his business and not worry about raising angel investment down the road.
Ideally, I think hitting revenue milestones should be the main trigger (there can be others), and there will be timeframes, etc. Since the investment amounts are so low, the investor wouldn’t spend too much time on traditional due-diligence. The shift focuses from the idea to a combination of the idea and capability of the entrepreneur. I think the perfect target would be young entrepreneurs that have worked a couple of years (think post Y-Combinator). Also, none of the investors would get equity (since they’re buying options). Lastly, I think if we had general legal documents for these type of investments, it can streamline the whole process. If this work, it can also allow an options market for investors to sell options to each other.
How is this different from Convertible Debt?
Since ideas are so cheap today, it shifts the power from the investor back to the entrepreneur. It levels the playing field and allows both sides to create a favorable deal that’s FAIR to both sides.
What do you guys think? Will it work? Why or why not?
Co-Founder of All Day Buffet & By/Association, HBO Fanatic, Avid Poker Player, Foursquare Mayor of Sweet & Vicious, and likes to Feast on Good. I write about entrepreneurship, creativity & social innovation. Learn more about me or follow me on twitter.
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