The emotional investor

Here is a pretty good piece of advice by Ben Horowitz.

I used this new cool technology that allows me to place keypoints in the video where you can jump to right away.

The statement he makes is that investors are super emotional. I unfortunately found out about this the hard way in 2008 when the market tanked and things went south with KlickSports. Interestingly I also had found out that investors are emotional in their decisions when it came to raising money. In the end this is not good or bad, it's just the way it is. Like Ben, I too thought that investors were rational and super focused. Like he says "with their suits and smart talk" I too thought they are only looking at facts and don't let intangible things affect them. Recently i've been doing some reading - specifically Steve Blank's blog and anything I can get my browser on regarding business models - and I figured this "emotionality" seems to be a norm.

I hope you like the video tags. The company is apparently very new and I just happened to look into it because of some work we had done at KlickSports in the area of video interactivity. I'm not so hot on the "video tagging" stuff - seems more like a feature than a product, etc. But it's a nice to have when posting something on a long video that only happens at minute 34...

Startup Hangover

Yes - I will write more about this as I do research. But in the dawn of 2010 I just wanted to say - I have a major case of Startup Hangover (I never heard this term before but will be writing about this soon).
Let's just say this is on my mind ...and many others I will be linking to on my next post...

Simulacra

So much these days is not what it is. Let me explain. So much today is just valued on the face of what it seems it might be but isn't. We've seen this happen in the financial markets and we see it happen in many other things in life. In the world of startups (need link to definition here) this is also true. I see so many companies get funded on their face value it's gut wrenching. But that's not the reason for my post.

Recently I had to go through this process of interviewing - long story short - I had to qualify for something on the basis of my track record, personality, skills, etc - in general the usual stuff one would need for a job of any kind. When the jury came out I was perplexed with the feedback. I am not a guy who dwells too much on rejection or denial. I really have made a whole life out of plummeting through rejection and persevering, etc. But this one was too much. In short I had been rejected not because I did not have a great background, not because I was not a great guy (that "could even go out for a drink with"), not because I was not smart - so much that whatever I did not know I could figure out. There was just one problem - I was not the right guy for the part. In so much that I did not look "corporate" or "bureaucratic" enough (these are exact words used when giving me feedback). That expression came to mind immediately: it's note enough to be Cesar's wife, one must look like Cesar's wife (paraphrasing). And it prompted me to revisit a French philosopher that I hadn't thought much about for a while - don't know why because Jean Baudrillard has pretty much explained modern society's core value structure with artfulness. Yes, i was being "rejected" because of perception. I did not play the part. This was actually expressed to me.

So much these days is based on the Simulacra (as defined by braudillard). That amazing ability to just look like you are and be valued for what you look like you could be but are not. This is in a way Paris Hilton and so many such people. They never did a thing, they are even unfit for their job, but they fit the part - they look like they are. And today, oh-today so much is about looking rather than being. The essence has been entirely obliterated and all that's left is appearance...

Next blog I will let out how I managed to raise 1.2M on this concept alone...or better, that I only managed to raise a round of 1.2M Angel money when I realized that what you look like is more important to investors than what you really are... even if you are good, their idea of good is a different story. It's like running for president (someone told me). More about that later...

Gogo Inflight Internet - Handheld Device Matrix

Gogo Inflight Internet - Handheld Device Matrix

This is a really interesting concept which seems to defy a lot of assumptions about internet in planes...

"Gut check" should be "Gut do"

Zen or not, "gut feeling" and/or intuition is a real unit operating in everybody's decision process. The question is: when to decide based on gut vs when to take the time to find out if the gut is right.

Gut is not an alternative to rational or logical thought. And it should not be confused with "ego". Gut feeling is the preceding process to rational thought. "Gut check" is perhaps a higher method of thought process for which we haven't yet found a procedural explanation as we have for the scientific method and logic-based decision making processes. Most decisions start with a gut feeling. The world is full of anecdotal stories about this: Lavoisier, Newton, and the list is as large as there are human feats - they all started with someone's "gut feeling". The question is, how much time can you afford to find out if your gut is right or wrong.

To this topic of "gut check" I just said this to another entrepreneur and I thought it would be worth sharing:

When your gut is telling you something, believe it it and act on it right away. Don't doubt and don't spend the energy to find out if you are wrong (if your gut is wrong)...99% of the time your gut will be right and spending time to prove yourself right, in this instance, is a HUGE loss. Better be wrong sometimes and never know than be right all the time and find out.

Yes, I will repeat it in short form: when your gut tells you something, do what it's telling you. Finding out and/or proving your gut was right is costly. This is especially true for BAD things.

The biggest flaw an entrepreneur can have is a inquisitive rational brain. This will lead to self-doubt. I know this sounds crazy coming from a guy with two masters and a Ph.D (one for which I followed rigorously the scientific method) but in the world of startups when it comes to decisions where the time and information are not there, this is what I believe is right. Especially for bad things, like firing an employee or deciding on a deal that is somehow making you uneasy, the best is to just not want to invest anything into finding out. Time is an entrepreneur's biggest asset and anything that minimizes time as a cost is a good thing. Gut feeling is a time cost reducer of huge efficacy.

So in short, when you have a "bad feeling" or a doubt, especially in regards to things that are very important, don't go with the "what if I am wrong" or "we will find out" kind of decision that pretty much bypasses what your gut is telling you to do. Paying to find out will lead you down the path of moving ahead towards finding out if you were right or wrong - and here the expression could not be more accurate: you will for sure have PAID to find out (notice the past-tense). Most of the time, you will be right but because the validation of your initial "gut feeling" is a huge loss; it's best not to find out at all.

Never compromise about this. Most people will think you are crazy. Most experts will say you are crazy for doing X or Y if you don't know all the facts (does one ever?). Most people on the other side of the table will try to put doubt in your decision. Most of your investors, and even advisors, will tell you are "capricious" and so forth. DO NOT give in to the temptation. I am not saying you should not listen and that there is no value to what people around you tell you. But that's the role of a leader - make decisions. Startups are not about collecting facts and going on inquisitive research-like quests to find the bottom of the truth. Startups are about progress, results and goals. Most of the time, although I can base this on nothing more than my experience, the good outcomes will have no explanation but I am sure that the bad outcomes we can find a perfect reason for them (after the fact of course - that's my point).

I have many instances where I can go back in my mind and think "I knew it from the start and I was right all along". This might sound ZEN like but I say, listen to your inner self - always! Startups are about dealing with a lot of uncertainty, lack of information, fuzzy conflicting opinions, etc. Rational thinking and logic have a place, but they usually require more time and more information. This is not for the entrepreneur for whom speed and time are everything. At the speed of startup business intuition is not perfect, but then again for a startup perfection is not a deciding criteria (Guy Kawasaki is always stressing this). You are not an entrapreneur to "find out" but rather to achieve. Especially when it's a negative situation being right about knowing it from the start, in the end does not work to your advantage.