30-Day Facebook Fast

Another great piece from Steve Pavlina. Nothing I haven’t thought for a while, but still a interesting take on the situation.

Plus there’s this gem:

A ***hug*** isn’t a real hug. A smiley isn’t a real smile. All you’re doing is pushing buttons.

Reminds me of people posting status updates about the earthquake in Haiti and me telling them there’s a soup kitchen in their neighborhood that could use their help.

Steve Pavlina starts offering consulting services

For my first significant step in that direction, I’ve decided to begin offering phone consultations for those who wish to directly enlist my expertise to solve problems, overcome challenges, or navigate transitions.

I’ve already been doing this kind of work for years, but until now it’s always been something I did for free on the side. Recently I decided to formalize and structure this one-on-one work and integrate it directly into my business. By turning this into an income-generating activity instead of a side hobby, I’ll have more resources to grow my business, especially when it comes to hiring staff. (I’ll share more about my staffing interests later.)

Hmm…His rationale rings a bell.

It’s incredible what passed for investment advice in 2008

From the Economist in 2008:

My friends who study humanities are shocked and do not believe me when I, a pension economist, tell them they should not be saving. Prudent advice has become: You should always save some fraction of your income. You should save not only for retirement, but also for adverse income shocks. But, Mr Becker points out, these new lines of credit help workers cope with income shocks.

Yeow…. But hey, if you’re making $50k a paycheck, what’s a little debt between friends?

One guy I know took advantage of 0% interest credit-card teaser rates throughout graduate school and immediately paid off $30,000 worth of debt once he received his first pay check.

Debt saddles you, no matter how shrewdly you plan your future.

(via Smart Football Smart Links)

“It was like a Mack truck smashing a Volkswagen”

Incredibly sad story about the current life of a once larger-than-life athlete: William “The Fridge” Perry:

At the time, Perry was still in the intensive care unit at Aiken Regional Medical Centers, a virtual paraplegic. Doctors there said if not for his body strength, he probably wouldn’t have survived. He had needed 20 liters of fluids in his first 36 hours of treatment because of severe dehydration, and had to have mucus sucked out of his throat and chest.

When I was very young, I got a few opportunities to party with Perry and the rest of the ’85 Bears. He was an intimidating sight but one of the nicest people you could ever meet.

OS X & 64-bit Kernel

Little known fact of OS X: while the OS is 64-bit, the kernel that ships with almost every Mac is set to 32-bit. If you’ve got 4GB+ RAM in your Mac, you really should be using the 64-bit kernel. It makes a big difference for RAM intensive apps like Fusion/Parallels, Photoshop and Lightroom/Aperture.

Porto Alegre, Brazil

Two years ago, my life changed. That’s when I met my current girlfriend, a Brazilian ex-pat. Of the many amazing reasons she’s been an incredible influence on my life, one of the biggest ones is the amount of new discoveries I’ve been able to make. It’s like growing up again and getting to discover places, foods and people, except this time I’m old enough to appreciate everything.

Before moving to the US, she spent her childhood in a coastal city in Brazil called Porto Alegre. Being fairly ignorant of foreign cultures when we met, I was amazed to find out just how large many foreign cities are. Hers is no exception. Coming from the 3rd largest city in the US (Chicago), I was impressed by the density & size of Porto Alegre. What surprised me is that it’s the 10th densest city in Brazil. That means Chicago would barely be in the top 10 largest cities in Brazil. After visiting both Rio de Janeiro and San Paulo, the term ‘metropolis’ takes on a whole new meaning.

Ironically, shortly after meeting her, I heard that ThoughtWorks would be opening a new office in South America. In fact, not only is the office in Brazil, but it’s actually in Porto Alegre.

If you want to know more, check out this video. It is a tourist video of Porto Alegre. It really was an amazing place.

Aligning With Your Investors

( When I was writing this, Steve Blank put out a great piece titled “VC’s Are Not Your Friends“. Highly recommended since it echos the message below. )

The startup community was set aflutter last week with news that Russian investor Yuri Milner has offered every startup in the current Y Combinator class $150k in convertible debt. It’s quite an incredible offer. The news coverage of this offer is overwhelmingly positive as it should be.

However, the offer also brings into question some of the lesser talked about aspects of fund raising, entrepreneurship and investing. That is that founders are not always aligned with investors when it comes to a )what the end game is for their company and b) the path to get there. Take this quote from the WSJ linked above, which makes an interesting comparison:

This blanket approach is akin to an index mutual fund where a money manager will invest in all 500 companies in the S&P 500, for example. SV Angel and Milner are assuming that there will be at least a few, if not more, big hits in each batch that will more than make up for the cost of investing in the others.

Now, what does a mutual fund have to do with aligning with your investors? When an investor runs a fund, that investor is investing in several companies with the expectation of returns. The size of the funds & investment dictate the desired returns. In general, though, the investor is hedging their bet that one or two of the aggregated investments will outperform all of the other ones, thus making back their desired returns. This is similar to how a mutual fund manager manages their fund. They can take certain risks knowing that unless they’re very, very unlucky, some of their risks will pan out and make up for the ones that don’t.

This strategy of a few successes canceling out all of the other failures pushes investors to steer & direct the company into becoming one of those successes. No problem there, that’s what they should be used for. The best investors bring more than cash to the table, they bring contacts, experience and credibility. However, they could, in fact, be detrimental to the individual company. They don’t need every risk to succeed, just 1 or 2 of them. While that sounds good to the investor, what about the risks that don’t pan out (for whatever reason ) ?

In other words, if an investor puts money into 10 companies and 2 are successful enough to get him his returns, that’s a good day. However, what about the other 8 companies with less than ideal returns? Some companies could just slow to bake. Some others will never attain the scale that most investors would like. Some could just be bad ideas or have bad execution. Some of those could be enough for the founders, but not for the investors. Hence the importance of being aligned and cognisant of what your investors want. Investors want exponential returns and that usually means growing & scaling the business. If the VC is prematurely pushing a company to grow, grow, grow without being able to sustain itself, the company could burn out quickly and lose its identity in the process.

Think of this like Intel or AMD overclocking their chips to see how fast each individual one can go. If they have to throw out a few that burn out, so be it. It’s worth it to find the ones that exceed their expectations. Good for them, bad for the chips that didn’t need the overclocking to work just fine. It’s great for you when you’re one of the former, bad when you’re one of the latter.

This rambling caution is just that: caution. It’s not a rant against investment, investors or the capital raising process. It’s simply the plea for entrepreneurs to understand the system they’re in, the deals that they make and who has what incentives. Simple economics argues that both parties in a deal will be self-serving first, collaborative second. It’s when one party misunderstands the others incentives and motives thats when things get dicey.

Incentives in English Soccer

James Reade over at the International Journal of Sports Finance rebuts the concept of ‘player loyalty’ in the EPL & other sports leagues:

Of course, these are standard harking-back-to-a-mythical-golden-age type arguments. Back in these days, pre-1992, and maybe even pre-1960s, players really didn’t have much choice – their clubs held their registrations and a lot of power over them. Additionally, pre-Sky there was not a lot of money in the game. So: Players can’t move easily, and there isn’t much money about for them to want to either. Surprise, surprise, nobody moves anywhere. There’s this false sheen of loyalty, but of course it’s fake, it’s just agents responding to incentives.

Incentives are an amazing thing. They are typically disguised, and sometimes lauded, yet they are the power that moves everything in our world.