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Ten Lessons I Learned from Shark Tank

STCuban

Editor’s note: James Altucher is an investor, programmer, author, and entrepreneur. He is Managing Director of Formula Capital and has written 6 books on investing. His latest book is I Was Blind But Now I SeeYou can follow him @jaltucher.

I just gave up all parenting responsibilities this weekend to Mark Cuban. Meaning, my kids and I watched eight straight episodes of “Shark Tank”.

For the past two years, people have been begging me to watch “Shark Tank”. One friend of mine, who has co-invested with me on two deals, has given me two pieces of advice in life. One is: “you never know what someone is worth until they declare bankruptcy”. The point is, we all speculate that someone is worth $100 million or a billion or whatever, and the next day you read in the newspaper that they declare bankruptcy. Now you know.

The second thing my friend and co-investor was always telling me was that “James, you need to watch Shark Tank”. Now, after watching every episode, I can say I agree with him.

For those of you who don’t know what Shark Tank is, it’s the best reality TV show I’ve seen. 5 investors sit on a stage, keeping them slightly higher than the supplicants who come in asking for money. Then, one by one, aspiring entrepreneurs are led into the “Shark Tank” where they pitch their products and the Sharks, right then and there, decide whether or not to give them money. The entrepreneurs are often humiliated, laughed at, insulted, ask the stupidest questions I’ve ever heard, but occasionally get some good advice and even better, walk away with a check if one or more of the “Sharks” think their business is a good idea.

(A Shark Tank Pitch)

“The Sharks” as the show describes them, “are filthy rich” and invest their own money. It’s not always the same sharks each show. Mark Cuban is often a shark. (See also, “How I Helped Mark Cuban Make a Billion Dollars“) And the rest of the often rotating cast includes Barbara Corcoran, of real estate fame, Kevin O’Leary, who started and sold “The Learning Company” for $3.2 billion to Mattel. Robert Herjavec, who I had never heard of but he’s sold “companies worth $350 million”, Daymond John who started Fubu and “has sold $6 billion worth of products” and Jeff Foxworthy, the comedian who has created an empire out of making fun of rednecks. Power to him. God bless them all.

I’m never jealous of any of these people. Money doesn’t buy happiness but it certainly solves your money problems. It’s up to you after that to be happy or not. To not self sabotage at every opportunity. I can tell you this: I am very good at making money but have often had a talent for self sabotage. A talent I have been hoping these past few years to suppress.

So I think highly of the people who have learned through experience not to sabotage their successes.

So what have I learned from the show. Some items are good for investors, some for entrepreneurs, some for me, and some for my kids.

First,

Math: The first thing that happens when an entrepreneur enters is: “Hi, my name is ABC and I’m asking for a $100,000 for  10% stake in my company.”  At this point we would pause the show and I’d ask my kids how much the company is worth. Any trader, investor, entrepreneur, does this math instantly and I wanted my kids to get good at it.

And they did. At first the answers (from either kid) would be a nervous “I don’t know”. Then they’d start to figure it out but still be nervous “one ….million?” And then finally, by the last episode, they were doing it in their head and blurting it out before I even hit pause.

But sometimes the entrepreneurs would present confusing numbers like, “I’m asking for $85,000 for 15% of my company.” And then they’d launch straight into their story. To be honest, I can’t even do this accurately and quickly in my head. I always wondered if these entrepreneurs did this on purpose, so that the sharks would focus more on the product than the specific valuation.

Second,

Not everything is as it appears. This is a TV show. Not a venture capital firm (where, also, by the way, not everything is as it appears. In fact, in all of life, nothing is as it appears but this is never more true than a “reality” TV show.) For instance, in the beginning intro the show says “Barbara Corcoran took a $1,000 loan and turned it into a real estate empire worth hundreds of millions.” Except she sold her “hundreds of millions” company for “60 million”, which they don’t say.

(Barbara Corcoran)

I’m not saying she’s poor. She’s incredibly smart and successful. But the TV show hypes it up. There’s subterfuge like that throughout the show. Kevin O’Leary, who plays it up as the most obnoxious member of the Sharks, is described as someone who “built a software company in his garage and sold it for $3.7 billion”. That’s true. He built The Learning Company and sold it to Mattel. What they don’t say is how much he owned of it (so we can estimate his worth). He clearly made some money on it. But he bought hundreds of companies first. So each company, assuming it was bought in part for stock, diluted his share. So his stake might have been tiny.

And then, Mattel repeatedly missed their earnings estimates because of the acquisition of his company. In fact, the acquisition has been described as “one of the worst acquisitions in history” in various articles about it. But, fair enough. Kevin turned this “success” into having a role at a venture capital firm. I am guessing it’s his firm’s money (rather than his personal money) which he uses when writing checks on the show.

I went through this exercise with each “Shark” and in every case it was not how they described it on the show (except in the case of Mark Cuban).

My only guidance for the people who are going on the show, or for anyone who pitches any investor, is to carefully study every aspect of the background of the people you are pitching. There are many ways you can use that to your advantage in the actual pitch. And because these guys, in particular, have very public personas, there are a lot of venues you can research their net worth, their successes, their failures, their interests, their distastes, and so on.

Third,

Sell the Dream, not the Sales. Many of the entrepreneurs go in there and say, “I sold $11,000 of this product last year from my garage.” These are the people that get either the worst deals or no deal at all. Nobody cares about $11,000 in sales. Sometimes the Sharks didn’t even care about close to $1 million in sales over the last year. (A great example was games2u.com which I thought was an excellent company but walked away with no deal).

And yet some companies with no sales walked away with a great deal. Here’s what the Sharks, or any investor, want to really understand: Do you have a great product? Do you know what the size of your market is? Do you have some sense of a business model? And, in some cases, do you have big breasts?

How do they know if you have a great product? They can tell by your background, they can tell by the technical expertise you needed to make the product, they can tell if you have a patent, and they can tell if you say, “I have 3 distributors about to send me purchase orders for the product.” You might not have a dime of sales but if you show that people are interested and that your product is special, you’ll get an offer. If you also say, “and for the last three years I’ve had a total of $53,000 in sales even though I’ve had a full time job” then you will definitely not get a deal.

Sell the dream. Better not to have sales unless you are going to blow them away with your sales numbers.

(She sold the dream)

Fourth,

Don’t Nickel and Dime. It’s not so bad to “nickel plus dime” and I’ll explain that in a moment. But if you went in there and said, “I’d like $100 for 25% of my company” and you have no sales and one of the Sharks says, “I’ll give you $100 for 40% of your company” then just say yes. What do you care about the percentage? As Cuban said in one of the episodes, “better to have 20% of a $100 million company than 100% of nothing.”

With one successful company I sold I wanted my partner to take 10%. Instead they asked for 50%. I gave it to them and sold the company 4 months later. To them! Because with 50% they had to care. With 10% maybe they would not have cared.

However, you should nickel plus dime. If Mark Cuban offers you $100k for 30% of your company push forward and ask for a few more nickels. Price is often the least important part of a negotiation. Ask him: can you introduce me to Netflix, can you get me a promotional deal with the Dallas Mavericks, are there any distributors you can help me license my product to?

Get value out of every deal aside from the money. Money won’t save or help your business for more than a short time. But the right deal and connections will make or break you. So while they are playing around with the dimes, make sure you collect as many nickels that they may have left lying on the floor.

If you want a deal, then take a deal. Unless…

Fifth

Don’t Take the ‘Hail Mary’ Deal

Kevin O’Leary is famous for this deal. He waits for the other Sharks to say “I’m Out” and then he knows he’s the only possibility left for the entrepreneur. So then it suddenly doesn’t matter at all what they are asking for. Let’s say the entrepreneur is growing, they  have profits, they have one million in sales, etc. Kevin O’Leary doesn’t care at all.

Instead, he makes the Hail Mary offer. Let’s say they were asking for $500k for 10% of their company, valuing their company at $5 million. Even if the company could be reasonably valued at that, he doesn’t care.

He’ll say “I’ll take 51% of your company for $500k”.

It doesn’t matter to him if they say “yes” or “no”. If they say “yes”, then it’s a great deal for him. He just bought control of a company he knows is worth a lot more. If they say “no”, then no problem, one out of ten will say “yes” and he just has to wait it out. It’s the same concept as the story of the guy who wants to have sex so he stands on a street corner and asks every woman who passes him to have sex with him. Obviously every girl will say “no” to him. Except for maybe one out of 200. He’s just standing there waiting for that one. And he’ll get it. Unless it’s me. Then its one out of three thousand.

(Kevin O'Leary)

Sixth

Be the Source

Kevin O’Leary has two other techniques as a Shark that I have to admire, despite his persona as very obnoxious on the show. That persona becomes an asset in various ways because the entrepreneur is instantly trying to get on his good side. But that’s not the technique I admire (by the way, that technique of being obnoxious first—a technique I would never be able to pull off is similar to Neil Strauss’s “negging” technique in his book “The Game” when he talks about seducing women.)

One technique Kevin does is he sits there while one or two of the Sharks make their offer. Then he asks the entrepreneur to leave the room. Then he turns to the Sharks who made the offer and says, “Lets join forces and do this one together”. Then the entrepreneur comes back and whereas before they had 2 or 3 competing offers (an auction environment is always what you want), now they have only one combined offer. They have a minute to decide, and the offer is worse than the lowest offer they had before. Kevin takes charge of the auction, makes it an “all or nothing” deal and again places himself in a can’t-lose situation.

The other technique he uses is to be the Source for the entrepreneur. Almost as if they are his friend. Three or four of the Sharks might make an offer and are competing. Kevin will then say, “Ok, to summarize, here are your four offers.” So he’s being a source of information. He’s “the bank” all of a sudden, seemingly in control of all four offers, and he can spin them in any way he pleases and quiet the Sharks who protest because he behaves as if it’s a legitimate part of the show. When you are the Bank, it gives you a slight edge over your competitors because the customer wants to do business with the Bank.

Seventh,

The Deal Doesn’t Close Until The Money Hits

Many times the entrepreneur will strike a great deal. He comes in asking for $100 for 10% of his company and he might get $300 for 5% of his company. At the end, the Shark who made the deal and the entrepreneur will smile and shake hands (or hug, in the cases when the entrepreneur has big breasts and the Shark is a male). It’s all good. Then, in typical Mark Burnett reality show-style, there’s the post session interview where the entrepreneur is whooping it up and saying, “Yeah! I just made a deal with the Shark Tank! Yeah!”

My guess is most of these deals don’t close. I only have anecdotal evidence. But I looked up several of the companies afterwards and there’s no mention of their new co-investor. There’s only mention of “see us on ABC’s Shark Tank this Tuesday!”

One deal, Hyconn, got $1.25mm for 100% of his company, from Mark Cuban, with a three year employment agreement and a royalty. He sold some sort of contraption which made it easy to attach your hose to the faucet or whatever you call it. But when you go to his facebook page he talks about another group of investors and he says, the deal with Mark Cuban didn’t work out. No other details.

Any deal in life goes through several stages: sales, initial questions, the auction (if there is one), the accepted offer, the honeymoon period, due diligence, legal contracts, potential buyer/seller remorse, and then cash getting wired. The TV show only takes us through “the accepted offer” but at any point there’s the chance the deal can fail. This is important to remember in any deal at all, including personal relationships.

Eighth,

Know What You Are Good At

When an entrepreneur first steps through the door, we would try to figure out which investor/Shark was good for the entrepreneur and we were usually right. If it was a clothing idea then if the FUBU guy didn’t like it, it was all over. If a product looked like it would be ideal for an infomercial (a pushup machine that makes pushups easier) and the informercial expert didn’t like it then no deal. If it was an Internet play and Mark Cuban didn’t like it, then no deal.

This is useful to me as an investor. I don’t like to think very hard when I invest in private companies. I like to know that expert investors who are experts in the space of the company are co-investing alongside of me. In fact, another Kevin O’Leary trick: he would stay silent, but if he saw that the informercial king was investing, he’d try to get in on the action and partner with him because he knows the infomercial king would make an infomercial, get it on TV, and do all the hard work. It’s also useful to entrepreneurs. Pitch to the right guy. Don’t just throw it out there to Barbara Corcoran, the real estate queen, if you have a product that you are going to sell to fire stations.

Which leads me to

Ninth,

Get Advice When You Can

Some of the pitching entrepreneurs simply had bad ideas. If you’re selling a pair of jeans, for instance, and the FUBU guy doesn’t want to buy it, then that tells you right there that you probably have a bad idea. But I only once on the show heard anyone ask, “what did I do wrong in this pitch” asking for advice. And even then, when they gave him advice, he was defensive and insulting to them. If you don’t get the deal, learn what you did wrong, and either modify your product, your approach, or just start a new business. This is not the end of your life if you don’t get some crappy deal on Shark Tank.

Finally,

Tenth

Who Cares?

You just presented your product for 15 minutes on a nationally broadcasted TV show that will be re-aired at least two or three times and sell a ton of shows on itunes. That sort of advertising would cost about a million dollars or more. So who cares if you get a deal? Make sure your website is ready for publicity, for the onslaught of traffic and orders no matter how good or bad the product is, and be thankful for the free publicity. Some of these people were crying when they couldn’t get a deal. An entrepreneur takes advantage of every situation and opportunity. A million dollars worth of free advertising plus great advice from a bunch of insulting billionaires is a great experience for you and your business. Make the most of it.

These ten lessons are for my daughters, because I told them at the end of our marathon Shark Tank session that if they don’t have an idea by next week that they can build into a business then “No Christmas this year and no summer vacation!” Which would make my life infinitely easier. That’s the way I roll. Take it or leave it.



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James Altucher

February 25th

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How To Get People To Do What You Want

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Editor’s note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo, he hosts a weekly show on business and has published books on success.  Follow him @ashkan.

Leadership in management is the art and science of getting others to do what they don’t necessarily want – or don’t understand why they’re being asked – to do. Doing it at a startup is accomplishing all of that in the face of uncertainty and with little resources. Now imagine doing that without the war chest supplied to you by VCs as you bootstrap. Good times, but also a pain in the ass.

First: Yes, the Usual Clichés

Without a doubt, the mere minimum you need to do to recruit and retain talent is to show respect, empower, provide feedback and be a generally good person to want to work for. Treat employees not just like partners, but also how you want to be treated as an employee.

But, hiring during boom times is very different than during a downturn. Depending on your industry, your company might be grounded due to the inability to hire.

Your Business Isn’t a Fortune Cookie

“Hire slow, fire fast” is a great sound bite, but it’s usually wrong, especially if you lack the cash to hire anyone you want.

Either way, not everyone is a visionary or sees the lay of the land; a lot of people need direction and to be cast in a role. I am not recommending you to hire a putz and promote him, but if you saw something in a candidate and things aren’t working out at first, chances are they may be really good at something else.

Vegetable Lasagnas Need Not Apply

Hire a bunch of plain-vanilla yes-men and I promise you your company is DOA. But that doesn’t mean that you need to go out and try to hire a number of all-stars, because that’s not really how championship teams are built, either.

Life is all about team dynamics and balance.

The Ego Has Landed

Realistically, everyone has an ego, and in all honesty, that’s not a bad thing. As a boss you need to differentiate between self-centered people who place personal objectives ahead of the common good versus those who take pride in their work and will in turn set a good example for others. In fact, those two things are not even mutually exhaustive, so as long as the latter outweighs the former, you should check your own ego and live and let live.

Also, Don’t Lie to Yourself

Moreover, while you as the leader are driven to succeed and may have virtuous and altruistic objectives, ultimately you stand to gain financially when others help you achieve your goals, so you cannot be disingenuous in at least recognizing that others may have their own reasons for participating in your adventure.

But More Importantly, Don’t Lie to or Disrespect Others

The golden rule is candor, because people don’t like to be ridiculed or made fun of. If Maslow’s hierarchy were modified to reflect something other than needs, I’d argue that pride and self-esteem would place rather high. Respect everyone on your way up, even those who have what society perceives to be lower-ranking jobs and functions.

When you’re on a date, for example, a woman will pay particular attention to how you treat a waiter or doorman, because it will say a lot about you. Similarly, if you’re having lunch with a potential hire and you’re rude to the waiter, it sends a red flag to the person you’re trying to recruit.

You Are Neither Il Duce Nor George Washington

The key is to manage like it’s a democracy but to remember that it’s not. After a series of “bad” CEOs, P&G chose nice guy John Pepper as CEO. He had a tendency to agree with the last person he spoke to. That doesn’t work in startups, where everyone has their own ideas of what to do but, but enough resources to do the one thing you need to do properly.

You’re Only As Weak As Your Strongest Link

Saddam Hussein had a peculiar habit of balancing his sons’ powers. While you shouldn’t take management lessons from the Butcher of Baghdad, the reality is that you need to build a team that is balanced, so having one superstar is a recipe for disaster regardless of whether that employee leaves or stays.

The Psychological Value of Equity

Those that have equity tend to envy those with high salaries, and those who have high salaries crave ownership. Equity, as such, isn’t simply a financial motivational tool, but a golden pass that truly aligns and bonds employees to your company and mission statement. That being said, you never know how people’s roles will evolve over time, so despite what some may suggest, be conservative to leave you with more options down the road. Equity is the most important lever you have to offset your lack of money; it’s your lifeline as the bootstrapped CEO.

Creative People, Be It Artistic or Technical, Can’t Be Told To Be Creative In a Sandbox

Not only can’t you micro-manage the best people, but you also can’t kid yourself and think that you can hire the Crazies and expect them to remain successful within a tight, narrow sandbox you create for them.

The best employees are thinking and performing at a level that you can’t imagine even in your wildest dreams. That is why you hire them. If your ego can overcome that, you’re well on your way to greatness.

Perfectionists vs. Shippers

Of course, you can have the big thinkers, the smooth talkers, as well as the perfectionists; unless they actually deliver the goods and ship – or walk the walk – then you’re back to square one. Always go with results and achievers.

You don’t go to war with the army you want, you go with the army you have. But if you play your cards right, you’ll realize that they can be one and the same despite the lack of resources.

(image: Everett Collection, shutterstock)



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Ashkan Karbasfrooshan

February 25th

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In Startups And Life, You Need Plan A, B, And Z

A, B, and Z

Editor’s note: Reid Hoffman is the founder of LinkedIn and a prolific investor. His new book co-authored with Ben Casnocha is The Start-Up Of You, from which this guest post is adapted.

An entrepreneur receives lots of contradictory advice from really smart, experienced people. For example, you’ve probably been told to be both persistent and flexible; to have a clear vision you pursue relentlessly, and yet also to change your vision as the market changes. Simple, right?

This same tension pervades career advice. Some will tell you to think about where you want to be in ten years, work backwards, and construct a long-term career plan for realizing your ambitions. Others tell you that firm plans are like a straitjacket; they will blind you to unexpected breakout opportunities. It’s better, they say, to stay nimble and opportunistic.

Who’s right? Both are not only right, but critical. Entrepreneurs are flexibly persistent. The best entrepreneurs I’ve worked with engage in serious planning and strategy, but they do not set fixed plans. In my new book with Ben Casnocha, The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career, we show how any professional can apply entrepreneurial techniques to their career, even if you never plan to found a company.

I was involved in a number of companies that you wouldn’t have recognized at their inception.  Two in particular serve as great examples since they both have had massive impact: Flickr and PayPal.  Flickr started as a multi-player online game, before morphing into one of the most widely used photo hosting and sharing websites. PayPal started as an encryption platform for mobile phones, then became a service to transit money between Palm Pilots, then finally became the leading online payments company. Both persisted at their initial visions in order to learn and grow: Flickr by being a social experience and PayPal being secure with cash.  Nevertheless, despite being hugely resilient and perseverant, both companies radically changed the type of product and how they engaged with the customer.

How can you be flexibly persistent in your startup or in your career? Here’s a framework I use: ABZ Planning. In business and in life, you should have three plans: Plan A, Plan B, and Plan Z.

Plan A is your current plan, your current thesis about how you can win in the marketplace. For Flickr co-founders Caterina Fake and Stewart Butterfield, the original Plan A was Game Neverending, a multi-player online game.  Unlike most games of the time that only enabled play between a few opponents and through a fixed experience, they wanted theirs to have hundreds of users playing concurrently and creating new things in the game forever. To engage users, they built social features like groups, Instant Messaging, and – crucially – a feature that allowed players to share photographs with one another.

My original career Plan A was to pursue academia because I thought it would be the best way to have impact on the world by spreading ideas about what made a good society. As I studied at Oxford, I learned much about how people come together, interact in groups and relate to society. But I also learned that career success in academia too often meant producing specialized writings that only 50 or so people ever read.

Plan B is what you pivot to when you recognize that a new opportunity has more potential than the one you are working on. Sometimes you change to Plan B because A is not working, which is what most think when they hear “Plan B.” But sometimes A is working, yet Plan B appears to have more potential. Regardless of the reason for shifting, the best Plan B’s are different but related to what you are doing now; this way you can apply the lessons you’ve learned to date to the new plan.

At Flickr, unexpectedly, the photo-sharing feature eclipsed the game itself in popularity.  Caterina and Stewart were faced with a choice: Should they stick with their Plan A or put the game (and its twenty thousand avid users) on hold to focus exclusively on the photo-sharing feature? They shifted to Plan B. To be sure, Caterina and Stewart were still following their original idea to build an online social space—they just saw greater potential in photo sharing than gaming.

In my career, my realizations about academia led me to shift to a Plan B and find a career path that had broader impact. My Plan B was to build new software. Success in the software industry also meant “impact”—but on a much broader scale than academia. In some cases, it meant building a product that improved the lives of millions of people every day. To pursue this alternative route, I first focused on building relevant skills and connections by working in the online divisions of Apple and Fujitsu. Second, I connected with people who could cofound a company of my own. Then, when I started my first company, I recruited as many smart advisors and participants as I could in order to learn and adjust quickly. And, in terms of company formulation, since my first company (SocialNet) was unsuccessful, both PayPal and LinkedIn were my own shifts to new Plan Bs.

Keep in mind that you should rarely write down a specific Plan B, but you should always be aware of your parameters of motion as you are executing your Plan A. You should be thinking about the “adjacent possible.” Your transferable skills. Other opportunities on the horizon.

Plan Z has two critical parts. First, identify how to measure when you’re tracking towards a worst-case scenario. Second, it’s the plan that tells you what to do should that happen. Maybe when your credit card debt bloats to a certain amount you cash out your 401k or get a job at Starbucks. The certainty of a Plan Z backstop is what allows you to take on uncertainty and risk in your career. When I started my first company, Socialnet, my parents offered me a room in their house in the event things didn’t work out. Living there and finding another job was my Plan Z. It gave me the confidence to throw myself into the business knowing that if it all went to hell, I wouldn’t end up on the street. You want to be able to survive failure in order to play again.

TechCrunch readers see, on a daily basis, the adaptable paths of a number of successful companies. Yet few apply this adaptive playbook to their own lives. Frameworks like ABZ planning can help you take control of your career. It’s something we should all remember, whether we’re starting startups, working at a startup, or working at larger companies: the ultimate start-up is you.

 



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February 14th

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Patience is a Virtue, for Losers

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Editor’s note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo.  Follow him @ashkan.

Patience is one of the seven virtues, the lesser-known cousins of the seven sins.  And indeed, “patience is a virtue” – or so goes the saying.  But another saying states that “fortune favors the bold.” So which one is it?

Well, here’s the thing.  Yes, life is a marathon, but whether you define success by recognition, respect, money, power or fame – success is subjective, relative and fluid and boils down to Ambition, Vision, Determination, Execution, Luck and Timing.

In other words, success doesn’t fall in your lap; never has, never will. Besides, life’s too short, so don’t sit back.

 “I haven’t got a lot of patience”, Jeffrey Katzenberg

It’s not that patience isn’t valued; it’s that no one else is actually all that patient.  Whether you are growing a business or chasing a girl or trying to lose weight or auditioning on American Idol, no one will sit around and wait for results.

They will be impatient. This doesn’t mean you should be impatient, it just means that in the words of George Jackson: “Patience has its limits.  Take it too far, and it’s cowardice.”

Success is Most Definitely a Target, Albeit a Moving One

Regardless of what drives you and how you define it, people care about the outcome of your efforts and not the journey; frankly, the experience you gain throughout your journey is really only of value to you.  But since we have limited needs but infinite wants, we tend to compete with everybody for the spoils.  As such, if you think that you will be rewarded for your patience, you’re a sucker, and will end up a loser.

This Ain’t The Super Bowl

It’s commonplace to use sports analogies in business, I do it all the time. But whereas in sports you compete with one or multiple individuals or teams, in business you ultimately compete against yourself: Apple really didn’t care that much about Research In Motion’s Blackberry.

Once you venture into a business, you need to put enough points on the board and then manage the clock (told you I liked sports analogies).  To do that you need to get ahead.

People who Preach Patience are Patronizing You

“We are telling the American people to have patience, courage, resolve and determination” Muammar Gaddafi.

Oftentimes those who urge you to remain patient are in fact patronizing you.  As football coach Steve Spurrier said: ”If people like you too much, it’s probably because they’re beating you”.

Be honest: how often has someone you looked up to told you that if you basically sat on your ambition and dreams they’d eventually open doors for you.

How often did they deliver?  Let me jog your memory: never.  If they did, it’s because you posed no threat to them.  You will be successful despite those people, not because of them.

Life is a Big Game of Musical Chairs

All of this Tony Robbins-esque talk is nice, but how does it help you:

If you’re working on a product, don’t wait for perfection.  “Perfection is the enemy of The Good”.  Even that messiah of perfection and attention to detail, Steve Jobs, reminded  everyone that “real artists ship”.  So did Mark Zuckerberg: Stay Focused, Keep Shipping.

If you see an opening for a job, don’t sit still.  No one will pull you aside and offer you the gig.  Go for it.  No one will think any lesser of you for going after the ball.  They’ll respect you, albeit reluctantly.

Don’t wait to close that round of funding before tackling the big opportunities you see; make it happen to the best of your abilities.

Now, A Word of Caution

1)      Balance is everything in life.  Too much impatience never helped anyone. I can list 100 quotes to that effect.

2)      Shortcuts get a bad rep, but they’re there for a reason. Those who fail to take advantage of them are in fact, ironically, lazy or unimaginative.

3)      Nothing replaces tact, dignity, respect and diplomacy.  It’s fine to press the pedal to the metal, but treat people the way you want to be treated.

4)      Wearing your ambition on your sleeve is a recipe to get cut off at the knees; hence the Russian quote “The tallest blade of grass is the first to be cut by the scythe”.

5)      If you’re perceived as too brazen and ballsy then you won’t even know whose butt you should kiss since no one will give you the time of day to start off with.

6)      Reduced patience only means heightened risk.  You can score by moving down the field 10-yards at a time or throwing a Hail Mary. Clearly, one comes with more danger.

7)      Nothing can replace preparation and practice.

The Paradox of Patience

Of course, patience is in itself not static.  For example,

  • Once you have children, suddenly you become more patient, but ruthlessly, you have less time to spare for those who waste your time.
  • As you become more successful in life, you become more comfortable to let the clock run out.

When it’s over and done: if you want to end up in a better position than where you started, then burn the playbook they give you and write you own.

Photo credit: Nicolò Paternoster



Comments Off on Patience is a Virtue, for Losers

Photo

Ashkan Karbasfrooshan

February 11th

Uncategorized

To Pivot or Not to Pivot

mountain bike

Editor’s note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo.  Follow him @ashkan.

To pivot, or not to pivot, that is the question:
Whether ’tis Nobler in the mind to suffer
The Slings and Arrows of outrageous Fortune,
Or to take Arms against a Sea of troubles.
Hamlet, were it set in Silicon Valley, circa 2011.

Ah, the internet – how you hijack our vocabulary.  A few years ago, “embedded” had connotations of journalists following soldiers.  Today, it’s most associated with YouTube clips.  Similarly, a pivot was something that I vaguely recall my basketball coach talking about.  Today, it’s the repositioning of a company and without a doubt, 2011 was the year of the pivot.

Talk is Cheap

Let’s face it, despite the bravado and brashness, oftentimes Silicon Valley gets scared and zigs when it should zag.  Lean Startup author Eric Ries popularized the term “pivot” but the concept has existed for years.  Nokia used to produce rubber boots; today, well… that’s another story.

But the point is, while the concept of pivoting has become commonplace in startup lore, it’s good to separate the fad from the core concept to answer the question: “to pivot or not to pivot”?

Deconstructing Success

You may be driven by success, recognition, respect, money, power or fame.  Whatever the case, success is i) subjective, ii) relative and iii) fluid.  In other words, i) we define success based on what drives us, ii) but we tend to measure it relative to other people’s success and over time, iii) we convince ourselves to change its definition, revising upwards or downwards, depending on the conditions on the ground.

Don’t Believe the Hype

While Silicon Valley is entirely free and encouraged to have its own set of values, culture and objectives, the 24/7 media coverage startups and entrepreneurs are exposed to gives all entrepreneurs a sense that unless your idea and company blast off, you should pivot.  In that context, the mindset of “fail fast” is understandable given the herd mentality and impatient nature of VCs, but wrong when you consider that 1% of projects fit venture capital’s profile and 1% of those become moderately successful.

In other words, while money may accelerate a company’s ramp-up and growth, the reality is that teams needs to gel, products take time to develop and businesses have a natural life-cycle that can’t really be circumvented.

Exacerbating this, of course, is that technology companies tend to compete in a zero-sum environment where the #1 and #2 players create value for shareholders but all others are left standing when the game of musical chairs stops.  Meanwhile, content companies tend to be long term bets anyway: Machinima is one of the larger content providers on the leading video platform YouTube, but it launched in 2000 (12 years ago!).  Vice is now featured in the pages on Forbes but it’s been around since 1994 (it launched as a magazine).

Despite these realities, boards rush entrepreneurs to adapt or die without letting the child crawl, let alone walk or run.

Yes, Pivots May Work, Sometimes

To be clear, the extreme cases of Groupon and Fab are prime examples for why pivoting is sometimes the only solution to a stagnating or declining project, but those tend to be the exceptions and not the rule.

But Usually, You’ll Simply Just Kill a Good Idea Before Moving to a Fad

As such, before throwing out the baby with the bathwater, understand the following.

Rule #1: Pivoting is a Function of Your Employees

When you recruit engineers and programmers, you can point them in any direction and challenge them to solve a given problem.  If you are a content company, you hire writers or videographers and are, as such, limited to remaining in the content business unless you really choose to blow up the building and start from anew.

However, you can’t assume that a team that has built a search engine can build a better social network.  So don’t let the tech vs. content variable underestimate the inherent challenges with any pivot.

As much as I dread quoting Donald Rumsfeld, “you go to war with the military you have, not the one you might want or wish to have at a later time”.

Time is crucial in any company and hiring a challenge.  If you have good people, it might be better to improve something than assume you need to nuke the joint.

Rule #2: Focus on A Different Target

While the concept of the pivot refers to a radical and transformative change in company direction, strategy, focus and product line, it’s important to note that to become successful sometimes what you need is to pivot what industry or clients you are going after, and not the whole company.  You may be developing a product and aiming for a B2B application, but perhaps by making it go free and targeting a B2C audience it might prevail.

Rule #3: Timing and Externalities Matter More Than You Think

After 9/11, a lot of companies repositioned themselves to serve the national security and defense industries.  They hit the jackpot.  This isn’t so much chasing a fad but realizing that the broader macro environment and trends will affect your industry and company more so than you think.

Rule #4: Success Comes From Incremental Gains, Not Hail Marries

Apple is the ultimate pivot.  Most of its revenues come from iPhone and iPad – products that didn’t exist five years ago!  But it was all born from the iPod.  So the best pivots are not overnight 180-degree turns but progressive shifts and extensions.  They are now charging into the post-PC era, but it was all an extension of their core.  Hulu, too, is pivoting before our eyes (as are YouTube and Netflix), moving from pure-play aggregators to creators of content.  After all, at that velocity even a seemingly small shift in strategy leads to a large change in overall trajectory.

While it’s difficult to define “pivot” and impossible to predict its outcome, you can drown out the noise and clearly ask yourself: “what do I define as success”.  Once you do that, the rest falls in place.

Photo credit: purplemattfish



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Ashkan Karbasfrooshan

January 28th

Uncategorized

Why Every Entrepreneur Should Self-Publish a Book

snoopy_writing

I’ve published eight books in the past seven years, five with traditional publishers (Wiley, Penguin, HarperCollins), one comic book,  and the last two I’ve self-published. In this post I give the specific details of all of my sales numbers and advances with the traditional publishers. Although the jury is still out on my self-published books, “How to be the Luckiest Man Alive” and ”I Was Blind But Now I See”  I can tell you these two have already sold more than my five books with traditional publishers, combined.

If you, the entrepreneur, self-publish a book you will stand out, you will make more money, you will kick your competitors right in the XX, and you will look amazingly cool at cocktail parties. I know this because I am seldom cool but at cocktail parties, with my very own comic book, I can basically have sex with anyone in the room. But don’t believe me, it costs you nothing and almost no time to try it yourself.

The rest of this article is really three discussions: Why self-publish rather than use a traditional publisher, why entrepreneurs should self-publish, and finally, HOW does one go about self-publishing.

WHY: 

A) Advances are going to zero. Book publishers are getting more and more squeezed by declining booksellers so they, in turn, have to squeeze the writers. Because of so much free content on the Internet, the value per unit of content is going to zero unless you are already an established name-brand author.

B) Lag time. When you self-publish, you can have your book up and running on Amazon, paperback and kindle, within days. When you publish with a traditional publisher its a grueling process: book proposal, agents, lawyers, meetings, edits, packaging, catalogs, etc that ensures that your book doesn’t actually get published until a year later. Literally, as I write this a friend of mine just IMed me the details of his book deal he just got with a mainstream publisher. Publication date: 2014.

C) Marketing. Publishers claim they do a lot of marketing for you. That’s laughable. I’ll give you a very specific story. When I published with Penguin they then met with a friend of mine whose book they wanted to publish. They didn’t realize she was my friend. She asked them, “what marketing did you do for James Altucher’s book”. They said, “well, we got him a review in The Financial Times and we got a segment about his book on CNBC and an excerpt in thestreet.com”

Here’s what’s so funny. I had a weekly column in The Financial Times. I WROTE my own review. As a joke. For CNBC, I had a weekly segment on CNBC. So naturally I spoke about my book during my regular segment. And for thestreet.com excerpt, I had just sold my last company to thestreet.com. So instead of doing my usual article for them I did an excerpt. In other words, the publisher did NOTHING, but took credit for EVERYTHING. Ultimately, authors (unless you are Stephen King, etc) have to do their own marketing for books. The first question publishers ask, even, before they look at your proposal is, “How big is your platform?” They want to know how you can market the book and if they can make money on just your own marketing efforts.

D) Better royalties. i.e. when I self-publish I make about a 70% royalty instead of a 15% royalty with a traditional publisher. I also own 100% of the foreign rights instead of 50%. I hired someone to sell the foreign rights and they get 20% (and no upfront fee).

E) More control over content and design. Look at this cover for “SuperCash” designed by a traditional publisher for me (this was my third book). It’s hideous.

Now look at the cover for my last book (self-published), “I Was Blind But Now I See”. You may or may not like it but it’s exactly what I wanted. Publishers even include in the contract that they have final say over the cover and this is one detail they will not negotiate.

You also don’t have any teenage interns sending you editorial comments back that you completely disagree with. YOU control your own content.

Now,

WHY SHOULD ENTREPRENEURS SELF-PUBLISH

A) You have content. I have enough material in my blog right now (including my “Drafts” folder which has 75 unpublished posts in it) to publish five more books over the next year. And I’m sure that number will increase over the next year as I write more posts. You’re an entrepreneur because you feel you have a product or an idea or a vision that stands out among your competitors (if you don’t stand out, pack it in and come up with a new idea).

You know how to do something better than anyone else in the world. How do let the world know that you are better? A business card won’t cut it. People will throw it away. And everyone’s got a website with an “About” button.

Give away part (or all) of your ideas in a book. You’re a brand new social media agency? How should social media work? Write it down. You’re a new CRM software package? How should CRM be better? Tell me. How should online dating services work? Tell some stories. Heck, make them as sexy as possible.

Don’t have time to write it. Then tell it to a ghostwriter you outsource to for almost no money. You don’t need 60,000 words. Do it in 20,000 words. Throw some pictures in. Just do it. Then when you meet someone and they ask for your business card, how cool will it be when you can say, “here, take my book instead.”

B) You have more to say. More and more companies have blogs. Many of the posts on the blog are “evergreen”. i.e. they last forever and are not time specific. If you just take the posts (mentioned in the point above) and publish them people will say, “he’s just publishing a collection of posts”. A couple of comments on that.

1. So what? It’s ok if you are curating what you feel your best posts are. And for a small price people can get that curation and read it in a different format.There’s value there.

2. Don’t just take a collection of your posts.  A blog post is typically 500-2000 words. Usually closer to 500. Do a bit more research for each post. Do intros and outros for each post. Make the chapters 3000-4000 words. Make a bigger arc to the book by using original material to explain WHY this book, with these chapters, presented in this manner is a different read than the blog. Have a chapter specifically explaining how the book is different from the blog.

With my last book, “I Was Blind But Now I See” I had original material in each chapter and several chapters that were completely original. Instead of it being a collection of posts, the overall book was about how we have been brainwashed in society, and how uncovering the brainwashing and using the techniques I describe can bring happiness. This was covered in a much more detailed fashion than the blog ever could even though the material was inspired by several of my posts.

 C) Amazon is an extra platform for you to market your blog. Or vice versa. You won’t make a million dollars on your book (well, maybe you will – never say never) but just being able to say, “I’m a published author” extends your credibility as a writer/speaker/enterpreneur when you go out there now to sell your book, syndicate your blog elsewhere or to get speaking engagements, etc. And when you do a speaking engagement, you can now hand something out – your book! So Amazon and publishing become a powerful marketing platform for your overall writing/speaking/consulting career.

D) Nobody cares. Some people want the credibility of saying “Penguin published me”. I can tell you from experience – nobody ever asked me who was my publisher when Penguin was my publisher. And, by the way, Penguin was the worst publisher I ever had.

E) How will I get in bookstores? I don’t know. How will you? Traditional publishers can’t get you there either. Often bookstores will look at what’s hot on Amazon and then order the books wholesale from the publishers. In many cases, tradtional publishers will take their most-known writers (so if you are in that category, congrats!) and pay to have them featured at a bookstore. As for my experience, my traditional publishers would get a few copies of my books in the bookstores of major cities (i.e. NYC and that’s it) but nothing more.

OK, I’M CONVINCED. HOW DO I SELF-PUBLISH

There’s lots of ways to do it but I’ll tell you my experience.

A) First write the book. For my last two self-published books, as mentioned above, I took some blog posts, rewrote parts of them, added original material, added new chapters, and provided an overall arc as to what the BOOK was about as opposed to it just being a random collection of posts. But, that said, you probably already have the basic material already.

B) Createspace.com. I used createspace because they are owned by Amazon and have excellent customer service. They let you pick the size of your book and then have Microsoft Word templates that you download to format your book within. For my first book I did this by myself, for my second book, for a small fee, I hired Alexanderbecker.net to format the book, create the book design, and create the final PDF that I uploaded. He also checked grammar, made proactive suggestions on font (sans serif instead of serif) and was extremely helpful.

C) Upload the PDF. Createspace approves it, picks an ISBN number, sends you a proof, and then you approve the proof.

D) Within days its available on Amazon. It’s print-on-demand as a paperback. And by the way, your total costs at this point: $0. Or whatever you used to design your cover.

E) Kindle. All of the above (from Createspace) was free. If I didn’t hire Alex to make the cover I could’ve used over 1mm of Createspace’s possible covers (I did that for my first book) and the entire publishing in paperback would be free. But with Kindle, Createspace charges $70 and they take care of everything until it’s uploaded to the Kindle store. Now you are available in paperback and kindle.

F) Marketing.

1. Readers of my blog who asked for it got the first 20 copies or so for free from me. Many of them then posted good reviews on Amazon to get the ball rolling.

2. I’ve been handing out the books at speaking engagements. Altogether, I’ll do around 10 speaking engagements handing my latest book out.

3. I write a blog post about how the bo0k is different from the blog and why I chose to go this route.

4. Writing guests posts for blogs like Techcrunch helps and I’m very grateful.

5. Twitter, Facebook, Linkedin, Google+ are also very helpful.

G) Promotions. You’re in charge of your own promotions (as opposed to a book publisher.). For instance, in a recent blog post I discussed the differences between my latest book and my blog and I also offered a promotion on how to get my next self-published book (“Bad Behavior”, expected in Q1 2012) for free.

Entrepreneurs are always looking for ways to stand out, promote their service, and get validation for their offerings. Writing a book makes you an expert in the field. At the very least, when you hand someone a book you wrote, it’s more impressive than handing a business card. It shows that you have enough expertise to write the book. It also shows you value the relationship with the potential customer enough that you are willing to give him something of value. Something you created.

And you can’t say the excuse “I don’t have time, I’m running a business.” Entrepreneurs make time. And they have the ideas so, again, at the very least you can use elance.com to hire a ghostwriter.

Over the next year I have five different books planned. All on different topics. I’m super-excited about them because I’m allowed to push the barrier in every area I’m interested in and there’s nobody to stop me. There’s nobody I need validation from. I get to pick myself.

You can do this also. And now, you should do it. There’s no more excuses in this environment. Good luck and feel free to write me with any questions.

Follow me on Twitter

Also, see 33 Unusual Ways to Become a Great Writer



Comments Off on Why Every Entrepreneur Should Self-Publish a Book

Photo

James Altucher

January 28th

Uncategorized

Why Every Entrepreneur Should Self-Publish a Book

snoopy_writing

I’ve published eight books in the past seven years, five with traditional publishers (Wiley, Penguin, HarperCollins), one comic book,  and the last two I’ve self-published. In this post I give the specific details of all of my sales numbers and advances with the traditional publishers. Although the jury is still out on my self-published books, “How to be the Luckiest Man Alive” and ”I Was Blind But Now I See”  I can tell you these two have already sold more than my five books with traditional publishers, combined.

If you, the entrepreneur, self-publish a book you will stand out, you will make more money, you will kick your competitors right in the XX, and you will look amazingly cool at cocktail parties. I know this because I am seldom cool but at cocktail parties, with my very own comic book, I can basically have sex with anyone in the room. But don’t believe me, it costs you nothing and almost no time to try it yourself.

The rest of this article is really three discussions: Why self-publish rather than use a traditional publisher, why entrepreneurs should self-publish, and finally, HOW does one go about self-publishing.

WHY: 

A) Advances are going to zero. Book publishers are getting more and more squeezed by declining booksellers so they, in turn, have to squeeze the writers. Because of so much free content on the Internet, the value per unit of content is going to zero unless you are already an established name-brand author.

B) Lag time. When you self-publish, you can have your book up and running on Amazon, paperback and kindle, within days. When you publish with a traditional publisher its a grueling process: book proposal, agents, lawyers, meetings, edits, packaging, catalogs, etc that ensures that your book doesn’t actually get published until a year later. Literally, as I write this a friend of mine just IMed me the details of his book deal he just got with a mainstream publisher. Publication date: 2014.

C) Marketing. Publishers claim they do a lot of marketing for you. That’s laughable. I’ll give you a very specific story. When I published with Penguin they then met with a friend of mine whose book they wanted to publish. They didn’t realize she was my friend. She asked them, “what marketing did you do for James Altucher’s book”. They said, “well, we got him a review in The Financial Times and we got a segment about his book on CNBC and an excerpt in thestreet.com”

Here’s what’s so funny. I had a weekly column in The Financial Times. I WROTE my own review. As a joke. For CNBC, I had a weekly segment on CNBC. So naturally I spoke about my book during my regular segment. And for thestreet.com excerpt, I had just sold my last company to thestreet.com. So instead of doing my usual article for them I did an excerpt. In other words, the publisher did NOTHING, but took credit for EVERYTHING. Ultimately, authors (unless you are Stephen King, etc) have to do their own marketing for books. The first question publishers ask, even, before they look at your proposal is, “How big is your platform?” They want to know how you can market the book and if they can make money on just your own marketing efforts.

D) Better royalties. i.e. when I self-publish I make about a 70% royalty instead of a 15% royalty with a traditional publisher. I also own 100% of the foreign rights instead of 50%. I hired someone to sell the foreign rights and they get 20% (and no upfront fee).

E) More control over content and design. Look at this cover for “SuperCash” designed by a traditional publisher for me (this was my third book). It’s hideous.

Now look at the cover for my last book (self-published), “I Was Blind But Now I See”. You may or may not like it but it’s exactly what I wanted. Publishers even include in the contract that they have final say over the cover and this is one detail they will not negotiate.

You also don’t have any teenage interns sending you editorial comments back that you completely disagree with. YOU control your own content.

Now,

WHY SHOULD ENTREPRENEURS SELF-PUBLISH

A) You have content. I have enough material in my blog right now (including my “Drafts” folder which has 75 unpublished posts in it) to publish five more books over the next year. And I’m sure that number will increase over the next year as I write more posts. You’re an entrepreneur because you feel you have a product or an idea or a vision that stands out among your competitors (if you don’t stand out, pack it in and come up with a new idea).

You know how to do something better than anyone else in the world. How do let the world know that you are better? A business card won’t cut it. People will throw it away. And everyone’s got a website with an “About” button.

Give away part (or all) of your ideas in a book. You’re a brand new social media agency? How should social media work? Write it down. You’re a new CRM software package? How should CRM be better? Tell me. How should online dating services work? Tell some stories. Heck, make them as sexy as possible.

Don’t have time to write it. Then tell it to a ghostwriter you outsource to for almost no money. You don’t need 60,000 words. Do it in 20,000 words. Throw some pictures in. Just do it. Then when you meet someone and they ask for your business card, how cool will it be when you can say, “here, take my book instead.”

B) You have more to say. More and more companies have blogs. Many of the posts on the blog are “evergreen”. i.e. they last forever and are not time specific. If you just take the posts (mentioned in the point above) and publish them people will say, “he’s just publishing a collection of posts”. A couple of comments on that.

1. So what? It’s ok if you are curating what you feel your best posts are. And for a small price people can get that curation and read it in a different format.There’s value there.

2. Don’t just take a collection of your posts.  A blog post is typically 500-2000 words. Usually closer to 500. Do a bit more research for each post. Do intros and outros for each post. Make the chapters 3000-4000 words. Make a bigger arc to the book by using original material to explain WHY this book, with these chapters, presented in this manner is a different read than the blog. Have a chapter specifically explaining how the book is different from the blog.

With my last book, “I Was Blind But Now I See” I had original material in each chapter and several chapters that were completely original. Instead of it being a collection of posts, the overall book was about how we have been brainwashed in society, and how uncovering the brainwashing and using the techniques I describe can bring happiness. This was covered in a much more detailed fashion than the blog ever could even though the material was inspired by several of my posts.

 C) Amazon is an extra platform for you to market your blog. Or vice versa. You won’t make a million dollars on your book (well, maybe you will – never say never) but just being able to say, “I’m a published author” extends your credibility as a writer/speaker/enterpreneur when you go out there now to sell your book, syndicate your blog elsewhere or to get speaking engagements, etc. And when you do a speaking engagement, you can now hand something out – your book! So Amazon and publishing become a powerful marketing platform for your overall writing/speaking/consulting career.

D) Nobody cares. Some people want the credibility of saying “Penguin published me”. I can tell you from experience – nobody ever asked me who was my publisher when Penguin was my publisher. And, by the way, Penguin was the worst publisher I ever had.

E) How will I get in bookstores? I don’t know. How will you? Traditional publishers can’t get you there either. Often bookstores will look at what’s hot on Amazon and then order the books wholesale from the publishers. In many cases, tradtional publishers will take their most-known writers (so if you are in that category, congrats!) and pay to have them featured at a bookstore. As for my experience, my traditional publishers would get a few copies of my books in the bookstores of major cities (i.e. NYC and that’s it) but nothing more.

OK, I’M CONVINCED. HOW DO I SELF-PUBLISH

There’s lots of ways to do it but I’ll tell you my experience.

A) First write the book. For my last two self-published books, as mentioned above, I took some blog posts, rewrote parts of them, added original material, added new chapters, and provided an overall arc as to what the BOOK was about as opposed to it just being a random collection of posts. But, that said, you probably already have the basic material already.

B) Createspace.com. I used createspace because they are owned by Amazon and have excellent customer service. They let you pick the size of your book and then have Microsoft Word templates that you download to format your book within. For my first book I did this by myself, for my second book, for a small fee, I hired Alexanderbecker.net to format the book, create the book design, and create the final PDF that I uploaded. He also checked grammar, made proactive suggestions on font (sans serif instead of serif) and was extremely helpful.

C) Upload the PDF. Createspace approves it, picks an ISBN number, sends you a proof, and then you approve the proof.

D) Within days its available on Amazon. It’s print-on-demand as a paperback. And by the way, your total costs at this point: $0. Or whatever you used to design your cover.

E) Kindle. All of the above (from Createspace) was free. If I didn’t hire Alex to make the cover I could’ve used over 1mm of Createspace’s possible covers (I did that for my first book) and the entire publishing in paperback would be free. But with Kindle, Createspace charges $70 and they take care of everything until it’s uploaded to the Kindle store. Now you are available in paperback and kindle.

F) Marketing.

1. Readers of my blog who asked for it got the first 20 copies or so for free from me. Many of them then posted good reviews on Amazon to get the ball rolling.

2. I’ve been handing out the books at speaking engagements. Altogether, I’ll do around 10 speaking engagements handing my latest book out.

3. I write a blog post about how the bo0k is different from the blog and why I chose to go this route.

4. Writing guests posts for blogs like Techcrunch helps and I’m very grateful.

5. Twitter, Facebook, Linkedin, Google+ are also very helpful.

G) Promotions. You’re in charge of your own promotions (as opposed to a book publisher.). For instance, in a recent blog post I discussed the differences between my latest book and my blog and I also offered a promotion on how to get my next self-published book (“Bad Behavior”, expected in Q1 2012) for free.

Entrepreneurs are always looking for ways to stand out, promote their service, and get validation for their offerings. Writing a book makes you an expert in the field. At the very least, when you hand someone a book you wrote, it’s more impressive than handing a business card. It shows that you have enough expertise to write the book. It also shows you value the relationship with the potential customer enough that you are willing to give him something of value. Something you created.

And you can’t say the excuse “I don’t have time, I’m running a business.” Entrepreneurs make time. And they have the ideas so, again, at the very least you can use elance.com to hire a ghostwriter.

Over the next year I have five different books planned. All on different topics. I’m super-excited about them because I’m allowed to push the barrier in every area I’m interested in and there’s nobody to stop me. There’s nobody I need validation from. I get to pick myself.

You can do this also. And now, you should do it. There’s no more excuses in this environment. Good luck and feel free to write me with any questions.

Follow me on Twitter

Also, see 33 Unusual Ways to Become a Great Writer



Comments Off on Why Every Entrepreneur Should Self-Publish a Book

Photo

James Altucher

January 28th

Uncategorized

The Uphill Battle Of Social Event Sharing: A Post-Mortem for Plancast

plancast_penguin_running_200x225

Editor’s note: Mark Hendrickson is the founder and CEO of Plancast, a social site for planning events, which he has decided to stop working on full-time. In this guest post, Hendrickson takes us through a detailed analysis of why it never took off and what he learned. He is also a former TechCrunch writer.

Nearly three years ago, I left my position at TechCrunch to start my own Internet business, with the idea of creating a web application that’d help people get together in real-life rather than simply helping them connect online as most social networking applications had done.

Plancast was the service conceived a few months later from that basic inclination. Its approach was to provide a really easy way for people to take whatever interesting plans they had in their calendars and share them openly with friends, with the rationale that greater social transparency for this particular type of personal information would facilitate serendipitous get-togethers and enable a greater awareness of relevant events. Personally, I figured that knowing more about the events my friends and peers were attending would lead to a more fulfilling social and professional life because I could join them or at least learn about how they spent their time around town.

Along the way my team built a minimum viable product, launched from obscurity here on TechCrunch, raised a seed round of funding from local venture capitalists and angel investors, and worked like mad to translate our initial success into long-term growth, engagement and monetization.

Alas, our efforts began to stall after several months post-launch, and we were never able to scale beyond a small early adopter community and into critical, mainstream usage. While the initial launch and traction proved extremely exciting, it misled us into believing there was a larger market ready to adopt our product. Over the subsequent year and a half, we struggled to refine the product’s purpose and bolster its central value proposition with better functionality and design, but we were ultimately unable to make it work (with user registration growth and engagement being our two main high-level metrics).

This post-mortem is an attempt to describe the fundamental flaws in our product model and, in particular, the difficulties presented by events as a content type. It’s my hope that other product designers can learn a thing or two from our experience, especially if they are designing services that rely on user-generated content. The challenges I describe here apply directly to events, but they can be used collectively as a case study to advance one’s thinking about other content types as well, since all types demand serious analysis along these lines should one seek to design a network that facilitates their exchange.

Questions are welcome by others who wish to learn more about the product and how we developed it, either by email (drop me a line) or in the comments below. There’s also a possibility that someone who reads this will be inspired to continue the work we’ve begun. And if you’re a user, I’d love to hear about what you do or don’t like about the service (and whether the following points resonate with you).

Sharing Frequency

Social networks (by my general definition and among which I count Plancast) are essentially systems for distributing content among people who care about each other, and the frequency at which its users can share that content on a particular network is critical to how much value it’ll provide them on an ongoing basis.

Unlike other, more frequent content types such as status updates and photos (which can be shared numerous times per day), plans are suitable for only occasional sharing. Most people simply don’t go to that many events, and of those they do attend, many are not anticipated with a high degree of certainty. As a result, users don’t tend to develop a strong daily or weekly habit of contributing content. And the content that does accrue through spontaneous submissions and aggregation from other services is too small to provide most users with a repeatedly compelling experience discovering events.

I run the service, and even I currently have only five upcoming plans listed on my profile, with a total of 500 plans shared over the last couple of years, in contrast to almost 2,800 tweets on Twitter over the same period of time. People often tell me “I like Plancast, but I never have any plans to share”. With social networks, this is sometimes a case of self-awareness (such as when people say they don’t know what to tweet), but often they’re simply telling the truth; many Plancast users don’t have any interesting plans on their calendars.

Consumption Frequency

People also don’t proactively seek out events to attend as you might suppose. I’ve gotten into the habit of thinking about people as divided into two camps: those who have lots of free time and those who don’t.

Those who do are often proactive about filling it, in part by seeking out interesting events to attend in advance. They are generally more inquisitive about social opportunities, and they will take concrete steps to discover new opportunities and evaluate them.

Those who don’t have much free time often desire to conserve it, so rather than seeking out or welcoming additional opportunities, they view them as mentally taxing impositions on a limited resource. For them, planning is a higher-risk endeavor, and usually they’d rather not plan anything at all, since if they’re busy, they likely have a preference to keep their free time just that – free.

It’s hard to generalize by saying most people are in one camp or the other, but suffice to say, there are many people in the latter. And for them, it’s hard to get them excited about a service that will give them more options on how to use their time.

Tendency to Procrastinate

Even putting this bifurcation aside, most people resist making advanced commitments before they absolutely need to make them. People fear missing out on worthwhile events but don’t actually like to take the deliberate initiative to avoid such missed chances, which requires planning.

This can be attributed primarily to people’s desire to keep their options open in case other conflicting opportunities emerge as the date and time of an event approaches. If they can afford to wait and see, they will. Therefore, their commitment will be secured and shared in advance only when they’re particularly confident they’ll attend an event, if they need to reserve a spot before it fills up, or if there’s some other similar prerogative.

Incentives to Share

Returning to the topic of sharing plans, it’s not only a matter of having interesting plans to share but being compelled to actually share them. And unfortunately, people don’t submit information to social networks because they love data set integrity or altruistically believe in giving as much as possible. They do it because the act of contribution selfishly results in something for them in return.

Most social networks feed primarily on vanity, in that they allow people to share and tailor online content that makes them look good. They can help people communicate to others that they’ve attended impressive schools, built amazing careers, attended cool parties, dated attractive people, thought deep thoughts, or reared cute kids. The top-level goal for most people is to convince others they are the individuals they want to be, whether that includes being happy, attractive, smart, fun or anything else.

This vanity compels folks to share content about themselves (or things they’ve encountered) most strongly when there’s an audience ready and able to generate validating feedback. When you post a clever photo on Instagram, you’re telling the world “I’m creative!” and sharing evidence to boot. Those who follow you validate that expression by liking the photo and commenting positively about it. The psychological rush of first posting the photo and then receiving positive feedback drives you to post more photos in the hope of subsequent highs.

Sharing plans, unfortunately, doesn’t present the same opportunity to show off and incur the same subsequent happy feelings. Some plans are suitable for widespread consumption and can make a person look good, such as attending an awesome concert or savvy conference. But, frustratingly, the vainest events are exclusive and not appropriate for sharing with others, especially in detail.

The feedback mechanisms aren’t nearly as potent either, since coming up with a worthy comment for an event is harder than commenting on a photo, and “liking” a plan is confusing when there’s also an option to join. The positive feedback of having friends join is itself unlikely since those friends have considerations to make before they can commit, and they’ll tend to defer that commitment for practical purposes, per above.

Additionally, if a user wants to show off the fact they’re at a cool event, there is little additional benefit to doing so before the event rather than simply tweeting or posting photos about it while at the event. An important exception is to be made for professionals who style themselves as influencers and want to be instrumental parts of how their peers discover events. This exception has indeed been responsible for much of our attendee-contributed event data among an early-adopter community of technology professionals.

Selectivity & Privacy Concerns

Vanity, of course, is not the only possible incentive for users to share their plans. There’s also utility to getting others to join you for an event you’ll be attending, but this turns out to be a weak incentive for broadcasting since most people prefer to be rather picky about who they solicit to join them for real-life encounters.

While event promoters have a financial interest in attracting attendees far and wide, the attendees themselves mainly turn to their closer circle of friends and reach out to them individually. You don’t see a lot of longer-tail plans in particular (such as nights out on the town and trips) because people are both wary of party crashers and usually uninterested in sourcing participants from a wide network.

The Importance of an Invitation

On the flip-side of this reluctance to share plans far and wide is the psychological need for people to get personally invited to events.

Plancast and other social event sharing applications are rooted in an idealistic notion that people would feel confident inviting themselves to their friends’ events if only they knew about them. But the informational need here is not only one of event details (such as what’s going to happen, when, where and with whom). People often also need to know through a personal invitation that at least one friend wants them to join.

When you have a service that helps spread personal event information but doesn’t concurrently satisfy that need, you have a situation where many people feel awkwardly aware of events to which they don’t feel welcome. As a result, the most engaging events on Plancast are those that are open in principle and don’t solicit attendees primarily through invitations, such as conferences and concerts, where the attendance of one’s friends and peers is a much less important consideration for their own.

Content Lifespan

Getting content into a social network is not enough to ensure its adequate value; there’s also an importance of preserving that content’s value over time, especially if it just trickles in.

Unfortunately, plans don’t have a long shelf life. Before an event transpires, a user’s plan for it provides social value by notifying others of the opportunity. But afterwards, its value to the network drops precipitously to virtually nothing. And since most users don’t have enough confidence to share most plans more than one or two weeks in advance, plans are typically rendered useless after that length of time.

Contrast this expiration tendency with more “evergreen” content types, such as profiles and photos. Other people can get value out of your Facebook profile for years after you set it up, and the photos you posted in college appear to have even increased in value. Nostalgia doesn’t even have to play a part; people’s hearts will melt upon viewing this puppy on Pinterest, Tumblr, and other visually-heavy content networks for a long time to come. But how much do you care that I attended a tech meetup in New York last October, even if you’re my friend?

Geographic Limitations

Geographic specificity is another inherent limitation to a plan’s value. Unlike virtually all other content types (with the exception of check-ins), plans provide most of their value to others when those users live or can travel near enough to join.

I may share plans for a ton of great events in San Francisco, but few to none of my friends who live outside of the Bay Area are going to care. In fact, they’ll find it annoying to witness something they’ll miss out on. Sure, they might appreciate simply knowing what I’m up to, but the value to that kind of surveillance is rather modest all by itself.

This is especially problematic when trying to expand the service into new locations. New users will have a hard time finding enough local friends who are either on the service and sharing their plans already, or those who are willing to join them on a new service upon invitation. People who encounter the service from non-urban locations have the hardest time, since there aren’t many events going on in their area in general, let alone posted to Plancast. Trying to view all events simply listed within their location or categories of interest yields little for them to enjoy.

Looking Forward

Despite all of these challenges, I still believe someone will eventually figure out how to make and market a viable service that fulfills our aims, namely to help people share and discover events more socially. There’s simply too much unearthed value to knowing about much of what our friends plan to do to leave information about it so restricted to personal calendars and individuals’ heads.

Another startup may come along that develops insight into an angle of attack we missed. Or, perhaps more likely, an established company with an existing event or calendaring product will progressively provide users with a greater ability to share their personal information contained within. On the calendaring side, Google is possibly the best-situated with Google Calendar and Google+, which together could make for a very seamless event sharing experience (one of the things we considered seriously for Plancast was deep personal calendar integration, but a sufficient platform for it simply wasn’t available). On the events side, companies like Eventbrite, Meetup and Facebook have services that are primarily compelling for event organizers but already contain useful data sets that could be leveraged to create their own social event discovery and sharing experiences for attendees.

Plancast managed to attract a niche audience of early adopters who found it to be among the most efficient ways to share and hear about events (thanks, users! you know who you are). Over 100,000 have registered and over 230,000 people visit each month, not to mention enjoy the event digests we send out by email each day. For that reason alone, and despite its growth challenges, we’re going to keep it up and running for as long as possible and are hopeful we’ll find it a home that can turn it into something bigger. It’s my expectation that one day mainstream society will take for granted the type of interpersonal sharing it currently enables for just this small community, and I look forward to seeing how technological advancements overcome the aforementioned challenges to get us there.



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Mark Hendrickson

January 22nd

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Things Entrepreneurs Should Avoid When Raising Capital

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Editor’s note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo.  Follow him @ashkan.

Alright, in my last post I argued that bootstrapping is just as over-rated as raising venture capital. But for those who decide to pursue fundraising, here are some things entrepreneurs should avoid when raising capital.

For all of the talk about how much excess capital there is, it’s actually hard to raise capital because very few projects fit the VC profile—even though many VC-funded projects come across as frivolous, me-too projects.

Life’s unfair.  To quote Mark Twain: “Don’t go around saying the world owes you a living. The world owes you nothing. It was here first.”  Personally, I’ve bootstrapped my company; initially because I didn’t have to raise capital and then because I didn’t play the game properly or refused to accept what came with the territory.

Do VCs Really Make a Difference?

In Chamath Palihapitiya’s leaked email to AirBNB’s Brian Chesky, he wrote:

I’m all for getting the best valuation you can, minimizing dilution and maximizing control (…) I don’t believe investors add much to a success story, so minimizing their impact is a great strategy when you are onto something that is working.

For the record, a good VC helps through advice and introductions and the best VCs also serve as amazing therapists and coaches.

Zynga’s Mark Pincus blames entrepreneurs for sometimes giving VCs the power to kill your business or take it away from you.  So if you are going to raise VC, here are some things you need to accept and avoid before signing on the dotted line.

What You Need To Accept (it’s the system)

There are some seemingly unfair things about VC:

  • VCs invest in Preferred Shares whereas founders and managers have Common Shares.  This is actually not all that unjust, but many entrepreneurs don’t know the difference, even though preferred shareholders get paid first whenever there is a liquidity event.
  • The VCs’ legal fees are paid from the money you are raising.  That one is a bit more unfair, but it avoids protracted negotiations since VCs will offer you standard terms and don’t plan on deviating much.
  • As the entrepreneur you have one baby whereas the investor has his eggs in multiple baskets, so they won’t care as much about your company as you do –that’s normal and to be expected.

While a term sheet contains more clauses and the subsequent unanimous shareholder agreement will include drag along and piggy back rights clauses, investors do need to protect themselves so expect things to be stacked in their favor.  The Drag Along allows a majority shareholder to enforce minority shareholders to be dragged along in the event of a sale whether they like it or not so that they don’t waste the big shareholder’s time, basically.  The Piggy Back allows a minority shareholder to sell their shares at the same price offered to majority shareholders.

What You Need to Avoid – Part 1 (it’s them)

Board composition

Be careful how much power you give up early on at the board level because before you know it, you will have less than 50% of the voting shares and when the going gets rough, you will want to avoid boardroom shenanigans that may cost you your job and stake.

Chairmanship

This one is tricky.  If you’re the average technical founder, you may have no business (or interest) running a board.  Even most business founders lack the experience of running a board.  But the board is ultimately responsible to appoint the CEO and the Chairman runs the board, so if you can hold on to the Chairmanship, you should.  It’s common for VCs to appoint one of their partners to the board – as they should.  It’s also common sometimes for that VC to become the Chairman.  But unless someone is a major investor in your company or you managed to land a big industry veteran whom you trust, they shouldn’t be the Chairman, though your company will hopefully get to a point where you may step aside and make room for a new Chairman.

Liquidation preference

The liquidation preference determines how the pie is shared in a liquidity event (M&A, IPO).  In a fair situation: investors get their money back before anyone else does, even though the risk and return tradeoff would require that everyone wins or loses together.  But with leverage a VC will be able to land a 1x liquidation preference; which is standard.  If they ask for anything more than that, tell them to take a hike; you’ll never see a return.

Vesting

It’s one thing for investors to back a founder based on a Powerpoint presentation or business plan – the proverbial idea on a napkin – but it’s another thing for VCs to join an ongoing party.  In either case, VCs tend to require founders to essentially give up their equity and earn it back (hence vesting) over a period of years.  In the latter scenario, this feels like marrying a woman after years of dating her but having to earn the right to share a bed.

I understand why VCs want to feel protected against departing or ineffective founders, but there’s a problem when VCs can both push a founder out and require them to vest their shares and earn them back.

What You Need to Avoid – Part 2 (it’s you)

Ok, now stop blaming others – what are you doing wrong?

Raise Money When You Can, Not When You Have To

One of the more popular adages is not raising money when your back is to the wall and instead raising money when you can, under better terms.  As entrepreneurs, we’re occasionally too optimistic and this clouds our judgment.

But Don’t Raise As Much As You Can

Conventional wisdom suggests that you “raise as much money as you can” but that is good for investors but bad for entrepreneurs, raise a reasonable amount – don’t order with your eyes.

Don’t be too Fearful: These are your Partners

Yes, only the paranoid survive, but not all VCs are out to get you and dilute you of your holdings.  Yes, some VC relationships go awry, especially if the company isn’t growing fast enough and the investment is at risk, but ultimately all partnerships risk going sour.  If you go into a VC relationship thinking that they’re out to get you, you’ll poison things.

Don’t be too Greedy: Strike a fair valuation

Yes, greed is good, but too much greed will kill things.  When an investor is considering making an investment, he is driven by greed; once he is involved with a company, fear becomes a factor.  Unless you offer the investor a potential to earn an abnormal return on his investment, he’ll balk and back the next entrepreneur.

While raising capital is hard, what happens afterwards is much harder – make sure you stick around to enjoy the fruits of your labor.

(If you enjoyed this, then you may enjoy my old rant Top 10 Mistakes VCs Make).



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Contributor

January 15th

Uncategorized

The Seductive Danger Of Half Measures

Half beard

Editor’s note: Guest contributor Aaron Harris is a co-founder of Tutorspree, the marketplace for tutoring. Follow him @harris, or take a lesson from him on Tutorspree.

In the wide world of startups, we mostly like to think of ourselves as go-getters, ass kickers, “in all the way” sorts. We also like to think of ourselves as iterators, tinkerers, rapid iterators who test unceasingly. But the combination of those two traits can lead to one of the most dangerous cycles in startup – half measure syndrome (HMS).

Interestingly, HMS starts off as something very intelligent – the team does not want to commit to a single strategy until it can prove that that strategy will create the hockey stick. When controlled and focused, that impulse is an excellent driver of evolution, but when not properly grounded in the reality of where you are, it becomes quite dangerous.

Steve Blank (arguably the inventor of the rapid iteration philosophy) did an incredible job illustrating the dangers of HMS in a post he wrote about a former student who, despite having achieved product market fit, refused to commit his full resources on the found solution – preferring to continue iterating in the belief that something bigger was hopefully around the corner. Looking at his bank account and fearing the prospect of it dwindling to zero, he became locked in a potential death spiral – continually pitching halfsies that did not go anywhere, more desperate each time, rather than committing to the seemingly proven if not 100% certain results already seen.

That mental state makes a lot of sense to me. It is, to a large degree, driven by fear of failure – and not just of your idea. As we build companies, we continually create buy-in from stakeholders – be they friends, family, colleagues, investors, or admirers. That faith in our ability to succeed is, at surface, driven by the particular success of a product. To risk the failure of that product, without the potential recourse of “but we haven’t tried everything” is terrifying. At its heart, it would mean that, fundamentally, you, as a founder, fell short of a goal that others thought you were capable of achieving.

HMS allows a founder to continually list things that have not been tried in total, to believe in the salvation lodged around the corner which they’ll get to before they run out of time. Paradoxically, that faith means that you will likely never uncover that secret – if it does exist (and very rarely is there a single silver bullet for any company).

Committing halfway fundamentally means that you will not fully understand any piece of that halfsies strategy. It means that, should the strategy fail, you will not fully understand the reason for it. While, in some instances, that may mean you avoid a number of bad roads, it will also mean that your ability to identify the right road will be materially decreased.

Then how, really, can you identify whether or not you are pursuing verifiable tests, or are simply caught by HMS? Fundamentally, I believe the answer is in how you approach testing, in the type of framework you build around it. Tests are not half measures when they are designed to prove individual pieces of an overall hypotheses (can I get to 500 tutors in NYC?).

Keeping a conscious eye on what the point of a test or iteration is, not just to itself, but to your overall plan and mission (how building a certain number of tutors in a given area influences student activity and community creation, in my case, rather than just the number of tutors) removes the halfsies quality of a test. Rather than continually shifting a business strategy to reflect the results of a single test, aggregating data across a set of them, and altering your strategy accordingly creates consistent momentum for your company where the success or failure are equally useful.

Within that framework, there needs to be set decision points – moments where you predetermine that, based on given sets of data, you will make a decision. This is, in truth, the most important aspect of not falling to HMS. Create whatever forcing function you need around those decision points – whether a giant whiteboard, a commitment to your cofounders or employees, or an agreement with your investors or board. At each stage, map out what your confidence interval is/will be. Know whether or not you need complete data on any single iteration to make a decision, or if the aggregate will suffice.

And when that decision comes, make the hard choices necessary. Get advice on those decisions if you can, but make the decision. Don’t push it off because, now that it is here, it is scary – that’s what HMS does. Take the most objective point of view you can, and go. Because, fundamentally, your most dangerous enemy at a startup is time, not any single decision. Every minute you spend not deciding is a minute you’re not learning and not evolving. It may feel like being intelligently deliberate, but it might also be half measure syndrome.

Photo credit: JK B



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Contributor

January 15th

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