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Scientists Find Positive Correlation Between Wealth & Rudeness

If you are one of the 10,000 members of TheFunded (a private network of entrepreneurs who discuss various things, but mostly aspects of raising venture capital) you will quickly see that, oh, about 1/3 of the conversation is entrepreneurs ranting about how they were treated rudely by some VC.

I always thought that was sour grapes on the part of us entrepreneurs and then today I saw this Bloomberg article.

The article describes research by Stanford scientists who did a study and found that there is a positive correlation between wealth and rudeness.  The hypothesis to explain this behavior is Darwinian.  Basically wealthy people want to show that they have no reliance on others and the preferred way of doing that is to be rude.

If this is true, then it explains a lot.  Since VCs are, on average, wealthier than entrepreneurs seeking their money then it follows that they are systematically rude.

Classic!

Sell Snowblowers in the Winter, Not Lawn Mowers

Every week I get about a dozen or so inquiries from friends, colleagues or readers of this blog asking me what I think about so-and-so idea.  Usually it's in the context of soliciting advice on how to raise money for their idea / business.  The problem with most of the business ideas I see is they they are pretty much the same today as those I've seen for the past few years.  Typically they are very early stage (usually pre-revenue and often pre-product) companies that have a partial management team and hope to raise $2-5 million to "go build it."

I've been repeating myself so many times I'm just going to write it here.  The seasons have changed.  It's now winter....so stop trying to sell lawn mowers in the winter!

All hope is not lost.  Far from it.  People still buy things in the winter, what they buy is different though.  True all the landscaping businesses are in trouble in this economy, at least the ones not forward-thinking enought to have a complementary snow removal service.  Many are going (or have gone) out of business.  But I see a lot of opportunity.

For example, today I got this "business update" from a company called SecondMarket.  They are a self described "marketplace for illiquid assets."  They help companies dispose of investments in PE, VC or even individual companies.  They assist with work-outs and bankruptcy.  Wow, what a great business to be in right now!  Read their update (below).  They hired 13 new people in Q4 of last year!

And it's not just the undertakers that are doing well in this economic winter.  There are bright spots in smart-grid technology, healthcare IT and greentech.  And many more that I don't know of.

So here's my final thought on this topic.  Assume it's going to be "winter" for a few years.  Then take a hard look at your current business (or business plan) and ask yourself if it is a lawn mower or a snowblower.  

Greed is Good

Wall Street was one of the formative movies of my childhood (ok, I was 17 when I saw it).  But I think a lot of the morals of that film have stood the test of time.  The most memorable scene has Michael Douglas (aka Gordon Gekko) saying:

Greed, for lack of a better word, is good. Greed is right.  Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed in all its forms, greed for life, for money, for love, knowledge, has marked the upward surge of mankind — and greed, you mark my words — will not only save Teldar Paper but that other malfunctioning corporation called the USA…

Replace "Teldar Paper" with "AIG" or "Citibank" and you've got a modern story.  The moral of the story (back then and now) is that capalist greed is the engine that will drive us out of trouble, but that motive must not be left unwatched.

Viridus Launches Green Business News Aggregator

This is a shameless plug for my company (Viridus) which I try not to do much on this blog.  But in this case, I think you'll find this interesting and valuable (for some of you at least).

Over the past couple of years, I have collected my favorite sources of "green business" news. For me, it's mostly RSS feeds, but I also get about a dozen daily emails from newsletters, Google Alerts and friends. Keeping all the news organized and being able to categorize and go back and search has been a pain (I have 100+ RSS feeds pertaining to green business) and probably a dozen or two daily emails.

So to solve my own problem (and thinking others might have the same one) we created a green business news aggregator, Viridus News. Viridus News is a service that aggregates news stories at the intersection of business and sustainability (we strip out most non-business green news just the same as business news that isn't related to sustainability). The goal is to simplify busy daily lives by collecting all of the day’s most relevant, and most interesting green business news and articles on a single page.

If you look at the design and functionality, it's really an homage to Hacker News, one of my favorite websites. 

Any user can submit a story and users collectively rate the value and popularity (and of course users can comment as well). One of the cool features of Viridus News is that we aggregate stories from a variety of sources (over 100 so far) filtered for stories that focus on green business, so you're certain not to miss important stories. No more do you have to hunt around looking for stories or tracking RSS feeds full of irrelevant news.

Another valuable feature is the introduction of "categories." In this case, we aimed to create categories that roughly track job descriptions or responsibilities. The feature I personally value the most is the ability to search the news stories.

There is also a bookmarklet that easily drops in your browser links bar which allows users to submit stories to Viridus News.

You can learn more about Viridus News here or just go check it out.

If you've read this far, then there is one more favor I'd like to ask...please tell some of your friends or colleagues who might be interested about Viridus News.

Thank you!

Members of Congress on Twitter

The Electoral College is incredibly obsolete but still remains.  Many institutions in government are slow to change, but one thing I find fascinating is incredible changes in how candidates and politicians communicate.  Imagine if you could follow your representative or senators throughout their day and even communicate with them?  Well exactly that is happening on Twitter!

About 10% of the members of Congress are now on Twitter.  I've detailed the list below and linked to their Twitter pages.  But think about this.  Many of these folks are personally reading their Twitter pages.  If not personally, then someone close to them who probably interacts with them on a weekly basis if not more frequent.  There is probably no better way of interacting with your representative (provided you don't already have a personal relationship with them).

So far as I can tell, 17 senators are active on Twitter (8 Republicans and 9 Democrats).  They all seem to be active although not very followed (Senator McCaskill has the most followers at about 4,300 compared to Lance Armstrong at 80,000 and Robert Scoble at 58,000):

1. Barbara Boxer (D) CA
2. Susan Collins (R) ME
3. John Cornyn (R) TX
4. Jim DeMint (R) SC
5. Chris Dodd (D) CT
6. Dick Durbin (D) IL
7. John Ensign (R) NV
8. Chuck Grassley (R) IA
9. Jim Inhofe (R) OK
10. Mel Martinez (R) FL
11. Claire McCaskill (D) MO
12. Robert Menendez (D) NJ
13. Jeff Merkley (D) OR
14. Mark Udall (D) CO
15. Tom Udall (D) NM
16. Mark Warner (D) VA
17. Roger Wicker (R) MS

As for the House of Representatives, there are 46 members on Twitter (32 Republicans and 14 Democrats) and the one with the most followers seems to be John Culberson (R) from Texas at 6,500:

1. Neil Abercrombie (D) HI
2. Michele Bachmann (R) MN
3. Gresham Barrett (R) SC
4. Earl Blumenauer (D) OR
5. Roy Blunt (R) MO
6. John Boehner (R) OH
7. John Boozman (R) AK
8. Michael Burgess (R) TX
9. Dan Burton (R) IN
10. Eric Cantor (R) VA
11. John Carter (R) TX
12. Jason Chaffetz (R) UT
13. Mike Coffman (R) CO
14. John Culberson (R) TX
15. Keith Ellison (D) MN
16. Jeff Flake (R) AZ
17. Virginia Foxx (R) NC
18. Marcia Fudge (D) OH
19. Pete Hoekstra (R) MI
20. Mike Honda (D) CA
21. Jim Jordan (R) OH
22. Dennis Kucinich (D) OH
23. Tom Latham (R) IA
24. Bob Latta (R) OH
25. Ben Lujan (D) NM
26. Dan Manzullo (R) IL
27. Kevin McCarthy (R) CA
28. Thaddeus McCotter (R) MI
29. Cathy McMorris (R) WA
30. Kendrick Meek (D) FL
31. Candice Miller (R) MI
32. George Miller (D) CA
33. Nancy Pelosi (D) CA
34. Jared Polis (D) CO
35. George Radanovich (R) CA
36. Denny Rehberg (R) MT
37. Dana Rohrabacher (R) CA
38. Ileana Ros-Lehtinen (R) FL
39. Tim Ryan (D) OH
40. Joe Sestak (D) PA
41. Christopher Shays (R) CT
42. John Shimkus (R) IL
43. Zach Wamp (R) TN
44. Joe Wilson (R) SC
45. Rob Wittman (R) VA
46. John Yarmuth (D) KY

Bottom line is that this is great.  The more transparency we bring to government the better.

PS, let me know if you find other members of Congress on Twitter and I'll update the list.

Armageddon Averted?

I saw this story that's making it's way around the InterTubes that, if true, is probably the scariest thing I have ever seen.  LiveLeak has the story.  Basically there was a run on the banks in mid-September and the Fed tried to intervene *unsuccessfully*!  From the video (starting about 2:15):

On Thursday (Sept 18), at 11AM the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there. 

If they had not done that, their estimation is that by 2PM that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. Now we talked at that time about what would have happened.  It would have been the end of our economic system and our political system as we know it.   

Whoa!  I remember the guarantee being announced, but the rest is a surprise.  I suppose the Fed decided that telling the real story would be the equivalent of yelling "fire" in a crowded theater.  Still, waiting 4 months to "let us know," particularly when we had an election just a few weeks later is concerning.

An Engineer's Suggestion For the Stimulus Plan

I'm sick and tired of politicians looking at the same law and proclaiming polar opposite results will occur if it's passed. 

I just saw a clip where McCain is saying a "disaster will occur" if the $800 billion stimulus package is passed and then a few minutes later a clip of Obama saying, a "disaster will occur" if it's not passed immediately.  Come on.  Of course, the problem is that economists themselves can't agree on this (and thus there are brand name economists testifying on behalf of both positions).

Where are the numbers in people's arguments?  Why aren't politicians referencing studies that indicate the efficacy of various programs?  I keep hearing that the $800 billion will "save or create" 4 million jobs.  Do the math...that's $200,000 per job!  So if job creation is the goal, shouldn't spending line items be listed by their relative cost-per-job?

[BTW, doesn't $200K per job seem a bit high?]

I've often herd economists say in their defense that they can't "run experiments."  Really?  This is the difference between engineers and scientists.  The latter like to research what happens.  Engineers like to shape what happens.

Anyway, here's my "engineer" suggestion.  Run an experiment.  Take the $800 billion dollars and distribute it to the states based on population then leave it to the states to decide what to do with their share.  Make the only requirement be that the states agree to provide detailed accounting and reporting into an open database accessible by all.  Red states can send the money back to Washington or cut taxes and the blue states can spend to their heart's delight. 

This way, in 10 years or so we will be in a position to say with some authority whether or not these spending, tax cuts or non-interference programs actually work.

But What Does It Mean?

I saw this chart when someone on Twitter pointed it out.  The chart shows how the US economy is currently shedding jobs at a rate much higher than in the most recent recessions (2002 and 1990).  On the one hand, it's kind of scary in that it implies that, if the shape of the curve for the current recession is the same as those before, then we can expect to lose about 10 million jobs.  Scary.  On the other hand, what if it means that the shapes of the curves are different? 

What if it means that better systems and tools allow companies to shed jobs earlier than before and essentially "rip the band-aid off" instead of slowly peel it off?  What if it is not normalized for total employed?  What if the way the unemployment numbers are collected has changed?  You get the point.

I guess I'm just skeptical of these charts showing a single data point w/ no supporting analysis.  What does it mean?!?

I'm reminded of that quote from Samuel Clemens (Mark Twain), "there are three kinds of lies: lies, damned lies and statistics."

Bill Gates Releases Mosquitoes At TED While Talking About Malaria & Education

Bill is a smart guy, but man is he an average speaker!  That notwithstanding, this is a talk well worth the 20 minutes to watch (and the mosquito bit is not nearly as interesting as the discussion of malaria or education).

Thoughts On Market Timing

A while ago I wrote about an HBS paper that showed entrepreneurial success is driven by two distinct skills of the founder: market timing skill and managerial skill.  Today I was interviewed on background by an author who's writing a book on entrepreneurship and we discussed this topic in some detail.  The interviewer asked the question that begs to be asked, i.e. "what is market timing skill?"

I wish I knew the answer to this.  In any case, here's what I said (and I paraphrase): 

If you are captain of a tall ship, your managerial skills include your ability to ensure the sails are right, the crew is well selected, trained and orderly, executing the routine of the day, the ability to bail water in rough seas and the like.  Basically everything looking inward.

On the other hand, as captain, your market timing skills include your planning of the journey, the route you will take and when, how you react to the clouds on the horizon, the direction of the wind, birds off in the distance that may signal land and more.  It's essentially everything looking outward.

I know, it's not much of an answer.  More of a "the answer might be somewhere over here" response.  The real trick is to identify specifically what are these market timing skills and how can you learn and practice them.

I've gotten market timing wrong both ways (too early for electric passenger cars and arguably too late for hedge funds).  The common mistake, I suppose, is seeing the world (or market) as you would like it to be as opposed to how it really is.  It's not enough to merely understand the mechanics of a market and hope that you get lucky and things go your way.  You also must know the key drivers and the likely trends influencing those drivers.  I've come to believe that these macro issues are far more valuable (and valued) than the simple ability to execute.  Who cares if you're good at bailing water if you're heading into the perfect storm?

I think this is reflected in (and partially caused by) the "entrepreneurs must be optimists" stigma.  Over the past 2 years I have seen hundreds of business plans.  Exactly zero talked about how to exploit a global downturn in the economy.  Everyone was out trying to raise VC or venture debt and not really thinking about what would happen when the music stopped. I have to give myself a little bit of credit on this one in that I thought (and even said a few times) that last year (and this year) would be a bad time to raise money meaning it's a good time to finance with sales.  Anyway, I'd love to hear your thoughts on market timing skill (or even whether such a thing exists).  

TheFunded Coming To Boston

Put this event in your calendar.

On Tuesday, March 10 at 7pm TheFunded is hosting its first event in Boston.  Over 150 CEOs will be in attendance at the MIT Media Lab for talks on business strategy, fundraising and more.  It will be a great opportunity to meet and connect with Boston's finest entrepreneurs.  And if that's not enough, the venue will include some of the most exciting projects at the MIT Media Lab such as the "stackable electric car" and Nexi, the lifelike robot.

Attendance is restricted to startup CEOs and/or company founders only.  TheFunded founder, Adeo Ressi, will be on hand to share his view of the startup world which is incredibly well informed (there are over 10,000 members of TheFunded now.

Click here to register for the event.  Or if you have any questions, feel free to comment here or email me at fn@altgate.com.

How Not To Do Customer Support

This is off topic, but so darn funny I have to share.  It's basically two and half minutes of gut wrenching agony listening to some guy try to explain to Verizon why $0.002 is not 0.002¢.  

Atlas Ventures Crash And Burns

I had lunch with a friend of a friend who told me that Atlas, "fired half of their partners."  That seemed like an exaggeration to me, but then some Googling quickly showed that, yes, in fact they had let go both partners as well as junior staff.  If you look at the team section on their site it currently shows 24 people, however, TheFunded lists at least 31 folks.

What makes this so astounding is that Atlas is a 25+ year old fund and their latest fund (fund 7) is ranked as a "top quartile" fund.  Apparently they laid off staff after the fundraising for their 8th fund came in at about half of expectations.  Talk about canary in the coal mine.  If Atlas can't raise money, that means 80% of VC funds can't.

As an aside, something to watch is the "Transitional Zone" on TheFunded.  I was talking to Adeo about this a while ago and this is the "phantom fund" where he stashes VC profiles of folks who leave a real fund.  Instead of deleting the profiles he moves them here until (or if) they pop up somewhere else.  My guess is the "Transitional Zone" is going to see some serious growth in 2009.