Archive for December, 2011

December 31, 2011

Chance of a life time – 2012

Seth Godin wrote this post 9 years back… I think it is one of those timeless blog posts! Enjoy the new year and start something new.

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December 31, 2011

How to survive as an Investor

English: Shore Temple, Mahabalipuram, Tamil Na...
Image via Wikipedia

Got the idea to write this post after reading the article by James Altucher titled “How to Survive Your First Year as an Entrepreneur”. It is an excellent article for Entrepreneurs or for that matter anyone running a business. I started on this journey a long time back I have 100% losses and write-offs to show (hello! anyone remember the dot com bubble? or Sun Microsystems?) I bought my first share in an IPO when I was 24 it was in a company in Tamil Nadu called Tamil Nadu Newsprint and Paper Ltd which was making paper from Sugar cane waste, my first environment friendly business investment. I don’t remember what I did with my alloted shares… maybe my Mom still has the share certificate, you see in 1997 they had to physically issue the certificate and mail it to you. I need to check on that investment the company is still active and making a profit. All these suggestions are not my own but what I have heard from investors who have survived the battle to tell the story.

English: CNBC’s “Mad Money with Jim Cramer” ca...
Image via Wikipedia

1. Do your homework on your investments – Nothing happens by things dropping from the sky. You need to do homework on any money you invest. What does homework mean? I think Jim Cramer writes more about this in his book “Sane Investing in an Insane World”. It means listening to the Management calls, reading about the company, sector and understanding where your investment stands compared to the peers. Don’t buy a stock and forget about it the way I did.

2. Be patient and stockpile your capital – If you are investing then you know it is very tempting to just buy anything. I don’t know why human behavior is so, when we have money we just want to spend it no erase that blow it. Why is it so hard for us to hold onto our cash? Every investment takes time to create value, nothing happens fast. I know one thing that happens fast, your decision to blow the money. If you are investing in startup companies like I am doing now, understand that it always takes more money and more time to get to those milestones… being aware of it is more important than not. When I started on this journey I asked my Mentor (he does not know he is my mentor so please don’t tell him) Fred Wilson, what would he do if he was just starting over here is the direct quote from him “You have to be very patient and stockpile your capital. It always takes longer and more money

Cover of "Rule #1: The Simple Strategy fo...
Cover via Amazon



3. Don’t loose money – Easy to recommend but hard to do. This one is from the Oracle himself and popularized by Phil Town in his popular book Rule #1 Investing and now with Payback time.


4. Do it yourself – Everyone of us have the capacity and the passion to care about our future. Don’t trust some “expert” investor to do it for you. There are no experts, believe me I have met most of them their expertise is their connections that gets them in front of the line on investments. As a small time investor we can do better and are not constrained by the challenges that big money managers have. Once you have made your first billion dollars then hand it over to someone like George Soros or someone who really understands the animal spirit that drives the market to manage your money. Once you have a billion dollars then all these experts come to you and you call the shots.


5. Be a student always – The world changes so rapidly in front of our eyes that it beehoves us to be a student all our life. Always be learning and tinkering with what you know because we never get to know everything. Have the courage to say that you were wrong. Bulls make money, Bears make money and Pigs get slaughtered so don’t be pig headed about your ideas on investing you should be flexible to change position and rethink your thesis. Only the paranoid survive! That is my theme for 2012!


Happy New Year!

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December 30, 2011

George Soros

DAVOS/SWITZERLAND, 27JAN10 - George Soros, Cha...
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George Soros known for his hedge fund bets shares his insights about the market. This is classic George Soros, an excellent treatise on market behavior, there is no irrational exuberance there is only rational exuberance and “When I see a bubble the first thing I do is buy because I make money! when I see the flaw in the bubble I am happy because then I have to sell”. If you know markets are unstable and they don’t move to equillibrium…you cannot predict them.
Markets are imperfect and regulators are more so, regulators will always be wrong but they need to recognize it. I see myself argue both sides of the argument, central planning cannot work, market is far superior in allocating resources.  Dollar is a very weak currency except all the others. If the Chinese allow their currency convertible in the capital account then Renbi will be a very strong currency. Chinese have a problem! 25 years of excess needs to be worked off so the future looks pretty bleak. Future is unpredictable therefore I don’t want to predict it. There is always Uncertainty that is what is left by the Risk managers. The range of uncertainty is also uncertain. There are just too many variables that go wrong. This is not the time to have a firm conviction… fading market.http://c.brightcove.com/services/viewer/federated_f8/607698505

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December 30, 2011

Is Iceland being perceived as a just society?

Read this article in Reykjavik Grapevine, it is a finding of a study being conducted by Jón Gunnar Bernburg @University of Iceland, Berglind Hólm Ragnarsdóttir @City University of New York and Sigrún Ólafsdóttir @Boston University. The title of the paper is “Subjective Injustice during the Icelandic Recession 2009-2010″ where the authors have done a survey of 948 people representing a good cross section of the Icelandic population. If you want to read the whole report you can find it here. There were a bunch of graphs that I thought were very interesting.

  • 81% of the respondents felt that it was necessary or quite important to “know the right people”!
  • 75% agree that everything is so uncertain these days that it feels like anything can happen
  • 50% think it is necessary or quite important to have political connection
  • 15% think it is important to bribe somebody
  • Over 57% of the respondents feel that their status in the society is unjust!
  • 35% feel that their standard of living will get much worse in the near future
  • 79% agree that everything is chaotic that it is difficult for people to know where they stand fro day to day
  • 37% get angry or frustrated due to their status in the society


The authors hypothesis the following from the study:

  1. We predict that under the circumstances of reduced living standards and uncertainty about future living standards individuals who have internalized high monetary goals will be more likely to experience status injustice. 
  2. We predict that individuals having expectations about their future economic status tend to exhibit more subjective status injustice, again net of their actual economic position.
  3. We hypothesis individuals who believe that the opportunities for achievement are corrupted by personal ties, political connections, or bribery will be more likely to experience subjective status injustice
  4. We expect the perception of uncertainty and instability regarding social institutions to undermine subjective status justice
I think the consequences of those experiences and perceptions are important. 
This study is quite surprising to me. What do you think? Do you think Iceland is a fair and just society? What about starting a business here?

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December 30, 2011

Is Icelandic economy really growing?

I have been hearing a lot about how the Icelandic economy is showing signs of GDP growth and the new projections of the Central Bank of Iceland and the Government of Iceland are based on that growth projection. I have written about what I think about projections and forecasts… bottom line I DONT BUY IT. Lets look at the number of new companies registered in Iceland vs the number of companies filing for insolvency. If you look at the trend since 2008, the number of insolvencies have been rising dramatically and the number of new companies being formed has been dropping dramatically this is a double whammy. I wonder where is this growth that everyone is talking about is coming from? It could be the existing companies are growing but where? the fishing industry cannot grow because of the quotas, the energy industry cannot grow because there have been no capital investment in any manufacturing industry, tourism is probably the only industry that is growing. I am not sure what is the path forward? which sectors should Iceland focus on growing? I think I know where resources should be devoted, but then again is that where the resources are being devoted? I don’t think it is quite clear looking at the data. I am almost certain that all the new startup companies that have started in the last couple of years are going to suffocate without new investment and capital.
If you are interested in the data you can find it here, the source of the data is Statistics Iceland it is an excellent resource if you have not used it already.

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December 29, 2011

buuteeq – Innovation in the Hospitality business

Image representing buuteeq as depicted in Crun...
Image via CrunchBase

We have invested in a company called buuteeq (pronounced boutique!) I know not the best of names but a kickass concept. The team at buuteeq wants to disrupt the traditional market of marketing and selling hospitality by independent hotel owners. These are the kinds of investments that we love doing:
1. Great team
2. Big market
3. Innovating the traditional way of doing business using the new infrastructure of Google, Facebook, Twitter and Amazon (I have written about this earlier)
4. Executing on the idea (1500 hotels in 20 countries in 12 months, thats traction and scaling)

I have always been associated with the Hospitality industry, for crying out loud my Statement of Purpose to all my graduate school applications was written on the premise that I will eventually get back to working with Hospitality and Hotel development. I am glad to have come a whole circle in pursing that vision. I digress… here is a video that explains what buuteeq does, if you are an independent hotel owner or operator and want to run your property with the same infrastructure of big branded properties in marketing and sales buuteeq is the way. The second video is an interview of Forest Key, CEO of buuteeq on why they are switching to working with Silicon Valley Bank from a traditional bank. To all my banking friends in Iceland… you have a golden opportunity to serve the next generation of fantastic entrepreneurs here in Iceland, try to understand your startup clients and serve them well, if you do that guess what they are going to want to do business with you even when they become the next Google… just sayin…

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December 28, 2011

Pivot table of list of innovative companies in Iceland

Created a list of innovative companies that was part of my original post on Innovation in Iceland. I did some classifications and created a pivot table in Google docs. You can find the Google document here. Of the 162 companies in the list, I was able to classify 133 companies and over 50% of the companies are in the broad classification of Software or Software Consulting. As I had mentioned in my previous post this list was not meant to be an exhaustive list but more a working list. I would like your help in completing the same. If you know any companies that I have missed in this list please share it with me by updating this form and I will update the list. Gives more data to support why I believe software is going to eat fish and aluminium in Iceland.Here is the Pivot table

December 28, 2011

List of Angel and VC investors in Iceland

I think there is dearth of Angel and VC investors in Iceland actually erase that there is no organized angle and/or VC investor group in Iceland. There are many investors who have been funding the startup scene in Iceland. I plan to create a list of Angels and VC investors here. If any of you have ideas or thoughts to organize the list please let me know through the comments. The problem is not that there are no investors in Iceland but they are small and not organized. None of the startups have angle funding most of them have the 3Fs or one of the Government sponsored funds or Grants. I think there is sufficient capital available in the local market but it is not channeled into venture investing. It is understandable why they are not organized as the investor community used to use the local banks to invest but now that the local banks have lost all credibility it is hard to convince the investor community in participate again in the market. In addition, there are no vehicles to channel the investment. 

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December 27, 2011

This time it is different

The Year the Dot-Com Bubble Burst
Image by GDS Infographics via Flickr
For those of us who lost money during the dot com bubble it is painful to jump back into the world of technology, internet business and software. This time it is different, no I am not talking about the book written by Carmen Reinhart and Kenneth Rogoff, although that is a great book and I recommend that everyone reads it. I mean the business of internet has changed dramatically in less than a decade. There has been no point in time where someone sitting in a remote part of the world connected to the internet could create something of value and have the option to distribute, market and sell to over a billion people with a click of a button. The tools, market and infrastructure to do the above has been built, it is being used and many potential customers are waiting to buy the next shiny app through iTunes or Android App Store or through Amazon or any of the online stores. I have been a student and victim of the financial crisis and I am wary of the perils of a financial funding bubble but I have never been more optimistic about the chances of startups that are disrupting traditional businesses using this fantastic infrastructure to actually succeed in this new world. Valuations are another discussion and how they are fueled is well documented.
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December 27, 2011

StartupIceland.com

Image representing Google as depicted in Crunc...
Image via CrunchBase

Registered a new domain http://www.startupiceland.com and made it point to my blog and it took a total of 10 minutes, should have taken less time but I registered with eNOM instead of GoDaddy (read original SOAP support is going to kill GoDaddy) and Google does not have instructions for setting the CNAME and A Records for eNOM. Don’t you love #Google? they have made it so easy to do this, I am surprise not everyone is switching over to Google Apps or maybe they are and I don’t know about it

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