Successful Early Stage Investors are Optimists

Imagine yourself in an office looking at business plan after business plan. Doe eyed first time entrepreneurs and seasoned veteran entrepreneurs with a few successful exits under their belt all approaching you eagerly and trying to put their best foot forward. Each one is explaining what their company does and is looking for funding. "We are building a social network for X", "I want to transform the educational system", or "We have developed a mobile application that will save you $100's of dollars a month". All the entrepreneurs that you meet are all qualified in one way or another and usually very passionate about their idea.

As you can imagine, after a while, you get good at distinguishing crummy business plans from strong business plans and good entrepreneurs from bad entrepreneurs. The problem however, is the fact that the business plan usually changes dramatically (especially seed stage investments), and the entrepreneurs usually learn a ton through the process. So the current business plan that you are reading is only used as a general framework and you are left to rely on your intuition regarding how good the entrepreneur is, and whether they can successfully navigate the impending changes the business will have to make.

An early stage VC's job is figuring out if the management team can handle those changes well. In order to make any investment, they basically take a gamble on a management team. In the end, they do not really know what the business will become. For example, Peter Thiel, Elon Musk and company initially started on a very different idea that had to do with Palm Pilot cryptography and payments. After learning that the idea was pretty crummy, they salvaged what they could and came up with PayPal. Groupon, started off as ThePoint.com, a group campaign website. Twitter started as a side project out of a podcast site called Odeo.

Over and over again, you see the same story ring true. A group of quality entrepreneurs get together and start working on a business. They realize that their businesses stink and they move on to create something else. They iterate over and over until they hit it big with something.

This is why I think early stage investors are some of the most optimistic people I have ever seen. As a VC, how are you supposed to make an investment in a company that you know is going to change dramatically. Outside of going on a gut feeling on the entrepreneur's business chops (that is why it makes sense to only go with experienced entrepreneurs), there seems to be no real way. This is why I'm amazed by investors like Ron Conway, Peter Thiel, Fred Wilson, etc. People who have somehow managed to repeatedly find quality businesses run by high quality entrepreneurs - which is no easy task when they are inundated with thousands of business plans every year.

I have a hard time figuring out how these successful investors always hit it big, but I really think that it has a lot to do with the optimism and support that they provide to the entrepreneurs. And that is why I titled this blog post "Successful" early stage investors are optimists.

How Bad Do You Want It

If you want to be inspired, I highly recommend that you watch this video: http://www.youtube.com/watch?v=lsSC2vx7zFQ&feature=related


It brings up some really interesting points about what it takes to actually succeed. You have to strive towards success, it doesnt just come to you. You have to want it as badly as you want to breathe.

One particular point he mentions, is that you have to want it so much you don't sleep. Sleep is weak. This one struck a chord because I'm the kind of guy who really enjoys sleep. I assumed that getting 6 hours on average was pretty good, but i'm going to try and cut that back. Its amazing how much you can accomplish in a couple hours and sleep, while rewarding and necessary, sometimes holds me back. I wish I could channel some Bruce Wayne type energy and only sleep two hours a night, but I tried cutting to 4 hours of sleep and ended up gaining 15 lbs and looking super unhealthy.

One option is something my old neighbor in Baltimore used to do, Polyphasic Sleep. For those unfamiliar, Polyphasic Sleep is "the practice of sleeping multiple times in a 24-hour period—usually more than two". My neighbor swore by it and said that it was all about getting repetition and building the habit. I tried that for a week and quickly decided that it wasn't for me, however, it might work for some people. Just be careful while attempting, I hear that it sometimes leads to frequent crashes where you sleep 24 hours straight.

At the end of the day, I guess its all about how productive you are in your waking hours. There is no guarantee of success if I cut the number of hours I sleep, but I still want to try and cut back.

What is Average?

The world is going to end according the Mayans...that kinda stinks. However, what stinks even more is the fact that I haven't really done anything of import in my life and I'm already 28 years old. The inferiority complex is further heightened when you read about crazy accomplished people like Clara Shih. At 29 years old she was just appointed to the Board of Directors at Starbucks! How do people get to that level?

People like Shawn Parker, Mark Zuckerberg, Clara Sheh, and others from my generation have already accomplished so much...revolutionary, world-changing stuff! Its amazing and inspiring to read, but it also dramatically effects "normal". People used to think becoming a doctor or engineer was the highest level of achievement. Then the world started to accept finance people such as investment bankers into the level of high achievement. Nowadays...it seems like becoming a skilled worker is dime a dozen...if you go to a decent school, everyone is professional. The bar has been raised. The only people who are seen as accomplished these days are those that go on to change the world by creating something new or leading a revolution. Its mind boggling stuff.

Goes to show that our parents weren't feeding us garbage when they said we could change the world. However, instead of doing it by becoming president of the United States, I can probably accomplish more by becoming a computer programmer and building something amazing. The world is so interconnected.

Clara's LinkedIn is below:

Twitter-verse: The Early Adopter Dilemma

I just realized that I should have secured all the domain names that I own by getting Twitter accounts set up for every name. Not a smart move on my part. As I look back now, all the names I should have secured pretty early on such as @imran, @imranahmad have already been taken. Boohoo I guess.

Should I have been a Twitter demon and created a new account for every four letter word out there like @milk and @car?...is there even a protocol for people who squat on Twitter handles. If you know, shoot me a tweet @immyeatworld. I probably should have been like the guy who owns Milk.com. If you havent seen it, go here: http://milk.com/value/. This guy is legit style asking for over 10 million dollars for the domain name. He barely even uses it. In my opinion, he's squatting, but because he maintains a minimum level of activity, the folks responsible for GotMilk probably can't take any reasonable legal action. However, I gotta hand it to the guy. By buying milk.com early on, he can pretty much retire whenever he wants to.

What is sad is all the things that I have been an early adopter on, such as Facebook, LinkedIn, etc, don't really do anything for me.

Interview from Technori Pitch

Another Technori related post.

Watch live streaming video from hllchicago at livestream.com

Technori Pitch

Great event at Technori on Tuesday to talk about Edit Huddle. Below is a video of the event.

Let me know if there are things I should improve upon...outside of losing some weight (its diet time).

Watch live streaming video from hllchicago at livestream.com

Investment Bankers are Glorified Real Estate Agents

This blog post may come off as sour grapes from my two years as an investment banking analyst, but I'm going to go ahead and tell anyone who will listen why working as an investment banker isn't all its cracked up to be - specifically an M&A banker.



~25% of students at top business schools are hoping to enter the investment banking world. I have no idea why that is, but I suspect that it has a lot to do with money. The list below is why I think people want to go into banking:

1) Money:  Investment bankers get paid an obscene amount of money by any standard. I know money is why I was interested coming out of undergrad. I actually think that this is a great reason to become a banker and is ideal if you are looking for an easy cash cow. That's right, I said EASY. Despite how many hours you work as a banker, the job is pretty easy and requires little actual thought. Developing a positioning statement is probably the most thinking involved. Building models is fairly mind numbing at the end of the day and usually punted off to an analyst who uses some LBO template that allows you to plug and chug.

2) Prestige: Most applicants to i-banking jobs have no idea what they are getting themselves into. They venture forth into the world because they saw Wall Street or they heard it was the thing to do. Working at Goldman for two years will do wonders for the resume.

3) Learning: I'm going to go ahead and call people out on this. No one coming out of business school is going into banking just to learn. You are probably going because of numbers 1 and 2. I'm not saying that you don't learn, i'm just saying that it is probably not your primary motivation. Personally, I spewed that nonsense in interviews and I learned a ton, but I probably could have learned just as much as a strategy consultant.

So why is the title of this blog post "Investment Bankers are Glorified Real Estate Agents"?

On a day to day basis, M&A bankers are responsible for matching up buyers of companies with sellers of companies. Real estate agents do the exact same thing, except they work with houses. The banking process isn't that much more complicated.



Bankers/RE agents are out trying to get clients by pitching anybody who will give them time. They are on the hunt for the next business/house about to be sold and they want to represent the company/home. They do everything for the business/home owners and cultivate relationships over several years. Once they get your business, they create marketing materials and pimp your Company/House to whoever listens. Their goal is to create an auction or bidding war. They handle all inbound inquiries and run your company/house through a dog and pony show to get people interested and bidding more. They each make money on commission, usually as a % of the total value. If they are representing the buy-side, they are always on the hunt for businesses/houses that fit your needs.

Sooo, what am I suggesting. Probably nothing outside of the fact that M&A bankers are glorified real estate agents. I don't think I am saying anything novel, but people who are doing investment banking are bound to be offended because they spend all this time recruiting and gunning to become the next great banker. You should probably invest your time wisely and do what you would do as a managing director at an investment bank...get a real estate license and become a broker. You  can probably do just as well if you dedicate 80-90 hours a week to the job.

If you don't think you would be good as a real estate agent, you should seriously consider whether or not banking is the field for you because that the work real estate agents do is the same as the work managing directors at all the bulge shops do. If your are ok killing yourself to get to that point...more power to you.

Risk Taking

“The biggest risk is not taking any risk…In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” 

There are tons of similar variations of the quote above. I found this one especially poignant because it was said by Mark Zuckerberg...a hero to a lot of startup junkies and the creator of the most successful side project that turned into the behemoth we now know as Facebook.

Not sure if this guy made it.

The idea of taking risks is a concept that was pretty foreign to me growing up. My parents immigrated to the country and strictly focused on making me and my brothers educated and successful. In their eyes, education led to success. More appropriately, education in math and science led to success. Even more appropriately, going to medical school led to success.

In hindsight, it makes perfect sense. Medicine is probably the most stable job in the world. No matter what happens and no matter where you go, there will always be a need for doctors. There is very little risk involved once you become a doctor (i'm talking about career risk). Once you get into medical school, your path is relatively set. My brothers headed this lesson and are now both successful physicians. I on the other hand, decided to venture forth into the business world.

What started out as a stable progression from investment banking to private equity, ended up with me parting ways with finance to start my own endeavor. My father was furious. I was giving everything up to pursue some random pie in the sky dream. 95% of startups fail. There was no way I was going to succeed and even if I did succeed, it wasn't worth the pain - or so everyone told me.

Well, after a year into my startup experience and now starting business school, I can fully say that I learned more doing my little startup than I ever did in two years of investment banking (I will write another post about how useless i-banking is). More importantly, I developed a passion for what I was doing...something that was sorely missing from my gigs in finance. I found myself actually interested in technology and marketing and sales and everything else. It truly was a great experience and is positively helping shape my career decisions.

Now, i'm not saying that I am going to be doing startups all my life (I might just go corporate right after b-school). I'm not even saying my first startup experience was a success (So far it isn't). I'm just saying that it would have been stupid of me to not take the risk. With the world changing so rapidly, I don't think it is wise to sit on the sidelines and let others lead the way. It's relatively easy to implement new technological solutions. Just hop on eLance or other outsourcing services, or better yet, reach out to students at the nearest engineering school. With a lot of effort and a little luck, you can build something great. It's definitely worth taking a shot at.

Or...I could just be an idiot who likes jumping off cliffs every once and a while. Actually, I'm pretty sure that's true.

The Crop Circle

B-School Crop Circles

I just got back from yet another business school event and just wanted to talk about the crop circle phenomenon. For those unfamiliar, crop circles are basically pools of business school students sucking up to any recruiter in site, in the hopes of securing an interview. All the big investment banks and consulting firms host events throughout the year to try and pique student interest in their firms. What starts out as an info session quickly turns into a feeding frenzy. B-school students attack each person they want to talk and elbow each other out for the privilege of talking to one of these freshly minted MBA's who managed to secure a job at McKinsey or Goldman Sachs. It's pretty sad at the end of the day. 

Positives: Usually these things have great spreads of food and drinks. Also, crop circles are a great way to meet people at the firms you are interested in and gain some valuable insights into why the firm is unique. However, they are only useful in this regards if you somehow manage to find someone who is being open and honest (there was one recruiter today who was particularly helpful). 

Negatives: Everything else. These things are huge time drains and don't really provide a way to differentiate from the pack. What ends up happening is people trying to sound smart by asking crazy weird question or boring, stereotypical questions that make me want to poke my eyes with the plastic forks I am using to eat the chicken satay they provide. Today for example, I actually got nudged out of a circle by an overly aggressive student looking to make an impression with the recruiter. In an act of great originality, he used his moment in the sun to ask what McKinsey consultants do on a day to day basis! 

The beauty of the situation is how clueless some of these students are in regards to the impressions that they are giving. People want to make friendly conversation, not be harassed by over eager MBA's. If you are sweating and stiff, I recommend you take a time out and compose yourself before elevating the volume of your voice to overshadow everyone else in the room. Yelling your credentials, faking laughs, and providing a 30 second elevator pitch is not going to win you the job. 

That brings me to another point. Elevator pitches are not appropriate for these forums! It looks canned and forced. No one wants to hear about your random consulting project where you led a team and saved the world (actually, if you save the world that would be saweet)! Crop circles have 5-10 people surrounding one person. Forcing your story into the mix makes you look like a socially inept buffoon. 

I write this with a lot of love. I probably do the same things at times (and I hate myself for it). I just think everyone needs to take a chill pill --myself included. 

Pretty Cool Graphic

Pretty cool word cloud about Edit Huddle that I felt I should share with the world.