Board Observers Weekly - March 25th, 2014. Adaptability is your main competitive advantage in Tech Board Observers. Like everyone else, I read a few weeks ago the Berkshire Hathaway Annual Report from Warren Buffet.
In a passage that struck me, he tells the story of two farms he bought in 1986 and 1993. He made the purchase because he estimated what the properties would produce, deduced its intrinsic value then compared it to its price. Here is what he says about those investments: “Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on.” Warren Buffet is famous for not investing in Tech. For instance, I remember very well some of the debates that were raging when I began working in tech: Myspace CEO was the star on stage at Leweb’08.Will Facebook make any money? Obviously, a lot of things have happened since then. Tech is an industry where market leadership is the most precarious. What is the source of Competitive Advantage in the tech industry?
Sources: The Consumer Internet Sweet Spot — Consumer Internet Trends. We’re F****D, It’s Over: Coming Back from the Brink. In 1997, about a year after launch, Hotmail was growing exponentially, adding thousands of new users every day.
We were on fire. And then one night, it all seemed to unravel. We had a program called the “janitor” that ran as an overnight batch process and it erased all of the email that users put in the “trash” folder. Except this night, a bug spawned an army of other janitors that cleaned out everyone’s inboxes, too. That’s right, deep-sixed their email. It’s pronounced whiff-eee-o, that horrible, terrifying moment that nearly every entrepreneur goes through when they are certain that their company is dead. The Hotmail WFIO Once we had pulled the plug on the extra “janitors”, it turned out that about 25% of our total users were affected.
I remember Hotmail’s CEO Sabeer calling us all in a room. The higher-level problem was that people were just getting comfortable trusting us with hosting their email and now we had completely let them down. The IronPort WFIO Lead from the front. Understanding the Power of Your Human Networks. We all intuitively know how important human connections are in business but for many people it’s like exercise or eating well – one of those things you keep meaning to get around to.
“I know mothafuckas who know mothafuckas.” Please just take 8 seconds to listen to this clip on YouTube – it’s priceless. It always struck a chord with me. The critical skill is not just your immediate network but the network beyond that you can tap into if you’ve earned the right through nurturing your 1-degree relationships. After my first Tweet with the Notorious mothafucka quote, I thought about my role as a VC and I Tweeted the following It came from my weekend activities.
I spent an hour on the phone working with Sam Rosen, the CEO of MakeSpace on a senior exec he is considering hiring. All Revenue is Not Created Equal: The Keys to the 10X Revenue Club. May 24, 2011: May 24, 2011: [Follow Me on Twitter] “ Don’t you know that you are a shooting star,And all the world will love you just as long,As long as you are.
. ” – Paul Rodgers, Shooting Star With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. What drives true equity value? Because of the difficulty of getting DCF right, investors commonly use a handful of other shortcuts to determine valuations.
The following chart highlights 2012 forward price/revenue ratios for 122 global Internet stocks. Are you in a startup career path or are you one and done? Sometimes peoples' first startups are successful.
More power to them. I've been pretty lucky, but not that lucky. In a startup career path, failure becomes experience for the next startup, which unfortunately will probably also fail. Repeat until success. The Hardest Lessons for Startups to Learn. April 2006 (This essay is derived from a talk at the 2006 Startup School.)
The startups we've funded so far are pretty quick, but they seem quicker to learn some lessons than others. I think it's because some things about startups are kind of counterintuitive. We've now invested in enough companies that I've learned a trick for determining which points are the counterintuitive ones: they're the ones I have to keep repeating. So I'm going to number these points, and maybe with future startups I'll be able to pull off a form of Huffman coding. 1.
The thing I probably repeat most is this recipe for a startup: get a version 1 out fast, then improve it based on users' reactions. By "release early" I don't mean you should release something full of bugs, but that you should release something minimal. There are several reasons it pays to get version 1 done fast.