I'm a believer in continuous learning. It's one of the reasons I believe college is overrated (a finite education period doesn't seem all that useful in a world where you can fall behind in a blink of the eye). In addition to continuous learning, I believe in experiential learning (learning by doing). Simple example, if you want to learn how to play basketball go play some basketball. You'll learn a little by reading a book about basketball, but you'll learn a lot more by actually doing it. The same goes for programming, construction work, running a business, or pretty much anything.
About a month ago I was in TX for our family Christmas. I noticed something interesting among the group - most of the learning was being experienced by the older family members and the teaching was coming from the younger family members. I literally watched my 11 year old cousin teach my 50 year old uncle how to use his iPhone. My little brother was teaching my parents how to use the video camera. And another cousin was teaching my grandparents how to connect to the wifi on their new iPad. This was intriguing to me on many levels.
I thought about how backwards (and cool) it would have seemed if my grandma was teaching her grandkids something new about technology. I developed a goal that when I'm a grandparent to stay on top of technology to the point where I can at least teach my grandkids something new about the technology of their time. Maybe not know more than them, but at least know a few things they don't.
In an effort to accomplish my goal I am trying to instill continuous and experiential learning into my every day life. I plan to learn a new piece of technology every week and post it on this blog. It can be something very simple, but must benefit me in some way.
Here are a few things I learned in 2012 that would qualify:
1. Waze - A better navigation app than maps on the iPhone. Also includes reporting of traffic jams, accidents, and police.
2. Boomerang - Gmail plugin that lets you send email at a later time. Comes in handy when you are writing messages late at night and don't want the recipient to see your odd work schedule.
3. Rapportive - Gmail plugin that shows you everyhing about your contacts. It pulls info from their LinkedIn, Facebook, and other online profiles.
4. Flux - It makes the color of your monitor display adapt to the time of day, warm at night, cold during the day. It's supposed to help you sleep better.
5. Audible - Not a new service by any means, but I just started using it in 2012. I don't like to read, but I don't mind listening. I read about 10 times as many books in 2012 as I did in 2011 thanks to audio books.
6. Shutterfly - Turn your photos into books or cards. It's really easy to use and makes a great gift.
7. Venmo - Pay your friends from your phone. It's simple. Takes about 5 minutes to setup and can change the way you think about money (literally)
8. Posterous - Makes micro blogging a cinch. Came in handy for my picture a day project.
9. Postagram - I'm terrible at sending thank you cards or anything by snail mail. This app allows you to deliver a postcard from your phone and include a picture for $1.
10. Trello - A collaborative todo list tool. I mostly use it on my laptop, but there is also a mobile app. Great for sharing todo lists and managing small projects.
Awesome Inc opened the application for its first full-scale class to go through the Awesome Inc Accelerator, Kentucky's annual mentor-driven summer accelerator program for web and mobile startups on January 21st, 2013. The participating teams will be selected during the first week of May with the program beginning on June 10, 2013. The program will run for 3 months. It will be based at the Awesome Inc space with events taking place across the Lexington, Louisville and Northern Kentucky regions.
The Awesome Inc Accelerator is a selective program, accepting only 6 teams for the 2013 class. Founder Brian Raney said, "We're looking for teams with talent and good ideas, but most importantly the ability to execute." Successful candidates will undergo intense training in business, product and customer development under rockstar mentors like Drew Curtis (Fark.com), Nihal Mehta (LocalResponse), Davis Marksbury (Exstream Software), Marc Nager (CEO, Startup Weekend) and others among a total cast of more than 60 mentors.
Upon admission to the program, teams will also receive downtown office space, technical and legal support, funding up to 20,000, and the aforementioned mentorship. Teams will be expected to relocate to the Lexington area for the duration of the program.
The Awesome Inc Accelerator hosted its first class in 2011. It started out as a small, entrepreneur-led accelerator program with 3 teams. Since then, it has grown into a fully funded accelerator.
For more information and applications: http://accelerator.awesomeinc.org
Contact email@example.com with any questions.
As regular readers know, I'm a huge fan of the AIPP data set collected by Rob Wiltbank. In this TechCrunch article from a while back, Rob corrected the mistaken assertion that angels don't make money. He also said that, "Angel investors probably should look to make at least a dozen investments..." While this statement isn't wrong, neither is it as nuanced as I would like.
In this previous post, I used simulated data to examine the issue of adequate diversification. As it happens, I've also privately analyzed this issue using Rob's AIPP data, an analysis I will now make public. [Hat tip to Paul P, a colleague with a professional financial statistics background who inspired and reviewed the original analysis, though any mistakes remain mine.]
To achieve my fully nuanced answer, I need to address two issues. But I'll devote separate posts to each issue. This post addresses the issue that diversification is a tradeoff. More diversification will always protect you slightly more from idiosyncratic risk, all other things being equal (see my diversification posts one and two). But diversification isn't free. It's harder to make 10 investments than 1, and harder still to make 100. As an investor, you want to know how much each additional investment reduces idiosyncratic risk so you can make the right tradeoff for you.
To demonstrate this tradeoff, I'll focus on RSCM's particular investing strategy: seed stage, no follow on, technology sector. I documented how I applied this strategy to the AIPP data set, complete with filtered data file, in this post. In principle, you could create a filtered data file for your own strategy as described in this other post and then apply the procedure below to calculate the precise diversification tradeoff for your strategy.
The key to the whole problem a statistical technique called resampling; I'll take the records from my filtered data file and create 10K portfolios for a variety of portfolio sizes, using random sampling with replacement. Then it's straightforward to determine how much the returns at each portfolio size can vary. Essentially, we're performing the following thought experiment: what if 10K angels randomly invested in the startups that Rob studied? What if they each invested in 10, 20, 30,... companies? How likely would a given angel have been to achieve a given return?
The return for the entire sample is a 42% IRR and a 3.7x payout multiple. The graph below shows the probability of achieving at least 1x, 2x, and 3x the original investment for a range of portfolio sizes. [Excel file with data, sampling macro, and probability macro is here.]
Now you can see the diversification tradeoff. Personally, I think a bare minimum is a 90% chance of getting at least your money back. That's 15 investments. Roughly the same as Rob's answer of a "dozen". But I'd really prefer a 90% chance of doubling my money. That's 70 investments. Now, if I'm managing other people's money, I'd really like to push to an 80% chance of tripling their money, which is over 200 investments. I didn't run 400 investments, but I'm guessing that is roughly the point at which you have a 90% chance of tripling other people's money. As far as I know, 500 Startups is the only firm other than RSCM that is even shooting for that level of diversification in a single portfolio.
So there's my take on the first issue, diversification as a tradeoff. The second issue is essentially the old problem of, "Past performance is no guarantee of future results." What if the return distribution of seed stage technology startups is different going forward than during the period Rob collected data? It turns out there's a nifty way to use resampling to test the sensitivity of different levels of diversification to shifts in the return curve. That's the topic of the next post.
Last week I turned 31 and had an awesome Birthday party. Yes, that is it above. A bunch of my friends sitting around working...working on the project that has been my passion for the last four years.
I'm a huge believer in doing life with your business partners and co workers. I give talks to student entrepreneurs all the time about the importance of having a great team. I believe that most of the success and all of the happiness you'll experience in your business venture will be influenced by the people around you. This is the case for entrepreneurs and non-entrepreneurs alike, but entrepreneurs have an advantage because we get to pick our teammates.
I'm very fortunate that my friends and the people I work with have a lot of overlap. My birthday party last week was a perfect example of this. This was not a typical birthday party, but it was the most appropriate gift my friends could give. We didn't go see a movie, go out to dinner, or hit up the clubs. Instead, we met at the offices at Awesome Inc and spent the entire night working on the 2013 version of the Awesome Inc Experience accelerator program. We created marketing materials, launched a website, designed a logo, created promo videos, and planned scheduled outings for the program.
It was a birthday full of awesome...and full of productivity for my company, Awesome Inc.
I fully recognize that many people will see this as weird or crazy. And that's ok. I never claimed to be normal. One of my friends explained it quite well, "This party IS Brian's idea of fun. A lot of people would pick to go to bowling, watch a basketball game, or go to the bar with their friends for their birthday. Brian enjoys his work and would often pick working with his friends over most other options."
It's not that I don't enjoy watching basketball games or doing other more "normal" fun things with my friends. I actually enjoy those things a lot. I also enjoy being productive and expanding impact. I've found this to be a common theme among entrepreneurs - they enjoy creation more than consumption.
CV #3: "Be a Friend" is being painted on the break room wall at Awesome Inc
The combination of creation and friendship is core to the culture at Awesome Inc. One of the four core values at Awesome Inc is "Be a Friend". The purpose of this core value is to bring the fun to every situation (work related or non-work related) and realize that nothing is more awesome than people. I strongly believe that this is also critical to building a startup community. People are attracted to people that know how to bring the fun and if you're going to build a community you need to know how to attract people.
I'm extremely lucky to have such talented and fun coworkers and friends. It makes success much more likely and the journey along the way much more enjoyable.