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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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.
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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“
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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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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
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
- 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.
- 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.
- 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
- We expect the perception of uncertainty and instability regarding social institutions to undermine subjective status justice
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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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)
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
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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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